Govt Ownership lends credibility, adds to the brand value:
J&K Bank CMD
Tell our readers something about J&K Bank, its vision, numbers and placement in the larger banking industry.
Thank you for allowing me to present an overview of Jammu and Kashmir Bank to your valued readers. We are a scheduled commercial Bank, unique in many attributes, with an impressive history and a proud legacy spanning over eight decades since 1938. Ours is the only bank incorporated as a state government promoted bank, unlike other PSBS of the country. As on date, majority stake of the Bank is held by two union territory governments, i.e. J&K and Ladakh with a combined holding of 68.18%.
Financial empowerment of people being the quintessence of our vision, we have always envisaged our home region, J&K and Ladakh, as financially inclusive, economically vibrant with expanding avenues for entrepreneurship and progressive enterprises. With a business turnover of around Rs 1.70 lac crore, we have over 2400 touch points across the country with major number of outlets in J&K and Ladakh, while having a sizeable presence in all major centers of the country. In J&K, we enjoy market leadership commanding over 65% of the banking business share and owing to this we have been designated as convener bank for bankers’ level committee in J&K UT and also agency bank for undertaking banking business of the government in both UTS of J&K and Ladakh.
How was J&K Bank’s performance in the third quarter of current financial year?
Going by the results, we performed quite well and delivered profits for third consecutive quarter despite tough market conditions because of pandemic-effect.
Backed by higher Net Interest Income (NII) that increased by 15% YOY to Rs 1005.13 Cr, our Q3 profit is up by 32.84% YOY at Rs 65.94 Cr. Our operating profit also jumped 68% to Rs 563.47 Cr as against Rs 335.56
Cr recorded on December 31, 2019. The net NPA’S as percentage to net Advances ratio halved to 2.50% from 4.36 % while as the Gross NPA ratio sharply declined to 8.71% from 11.10% recorded as on December 31, 2019. The Provision Coverage Ratio for the reviewed quarter is at 83.67 % - one amongst highest in the industry - as against 73.30 % recorded during last financial year. The Net Interestmargin (NIM) for the quarter has improved to 3.88% (annualized) as against 3.68%.With these numbers, I think we have laid a stronger and better foundation for growth-momentum that also remains the focus not only of banking industry’s outlook but at the heart of country’s economic stance amid country-wide Covidvaccination drive.
J&K Bank is one of those rare banks that has emerged strong during the ongoing COVID 19 Pandemic. There must have been strong plans that have yielded some encouraging numbers in the times of crisis.
Yes, drawing upon our past experience of working in tough conditions, we have tried to turn this global crisis into an opportunity to reinvent our resolve and resilience as an institution.
Our response to the COVID19 situation, an unprecedented global pandemic, was premised on the principle of survival and revival by Safeguarding Lives, Continuing Operations and Saving livelihoods. With an unflinching support and cooperation from all our stakeholders, we have largely succeeded in safely sailing through the worst phase of the pandemic.
Central government has approved a ₹28,400 crore incentive package to boost industry and gener¬ate jobs in the newly created Union territory of Jammu and Kashmir. How does J&K Bank want to capitalize this being lead bank in the UT?
The industrial developmental scheme approved by the Center for JK UT to boost the region’s economy and provide employment opportunities in both manufacturing and service sectors involves incentivization by way of Capital Investment Subsidy, Capital & Working Capital Interest Subvention.
This will lead to socioeconomic development, boost domestic manufac-turing and help Jammu & Kashmir in becoming self-reliant.
The package is expected to encourage new investment, substantial expansion, and also nurture the existing industries thus accelerating the virtuous cycle of savings and lending. The Bank with its massive outreach and across-the-spectrum client base will not only be the biggest beneficiary but also act as the catalyst for the fast-track economic development that is about to usher in on the back of the scheme.
Post Article 370 abrogation, new players are set to start operations in UT of J&K and Ladakh which means more competition for J&K Bank. You must have some plans to tackle the challenge. Tell us something about those plans.
We see competition as a healthy trend that helps us to bring out the best for our customers. Being a customer-centric organization, we always welcome competition and strive to compete in a healthy and transparent environment
Having said that, our core strength originates from the wellsprings of emotional equity that the people of J&K and
Ladakh have invested in the bank for decades now. Our people are our forte and the increasing presence of any other player here, as you mention, shall further strengthen our resolve to deepen our bonds with our people, improve our customer services and keep offering them with bestin-class, innovative, easily accessible financial products, banking services and facilities at competitive rates across the physical and digital domains. Moreover, we perceive our role in the region as that of a developmental financial institution, which extends our resolve to work for the overall socio-economic empowerment and progress of the people in this region.
Our position is also fortified being designated as lead bank in 12 districts of J&K, out of total 22 districts with more number of districts expected to be added to our kitty shortly. Acting as the agency bank for carrying out banking business of the government in the UT is another important feather in our flag.
Having government as major stake holder must be a great strength, particularly when in crisis.
Having government as the major stake holder has always proved to be of immense strength and support for our Bank. It acts as a great stabilizer in the face of any adversities faced by the Bank from time to time. Government ownership besides adding to the brand value of the Bank, lends creditability and trust, thereby helping its liability franchise which is among the best in the industry.
It’s primarily because of this reason that our bank has been playing fundamental role of
shaping up the financial landscape of the region by scripting countless success stories of individuals and enterprise.
Raising of capital is at the top of Bank’s agenda. What are bank’s plans to attract the investors?
Yes, the raising of capital remains our top priority. The bank has planned to adopt various means, which includes follow up issues, rights issue, and preferential issue to the Govt., QIP/ESPS and other permitted modes for raising of proposed equity capital of Rs 3500 Cr, besides raising Rs. 1000 Cr by way of Non-convertible, Redeemable, Unsecured, BASEL III Compliant TIER 2 bonds in the nature of debentures on a private placement basis.
As a step forward in this direction, Bank is in the process of appointing Merchant Banker/ Book Running Lead Manager
(BLRM) who would assist in the proposed QIP/FPO Rights Issue.
We have a proper media and public relations strategy in place to highlight the bank’s performance, attract the investors and along with the BRLM, we shall be organizing meetings with the key investors to communicate the growth potential of the Bank by articulating key marketing themes and positioning of the Bank. We will also be conducting retail and institutional roadshows besides holding conferences with brokers.
an impressive history and a proud legacy spanning over eight decades since 1938.
What kind of lending strategy do you have in J&K? Is it same outside J&K?
We follow a two-legged business model whereby we have been focusing on retail lending portfolio in our home region i.e. J&K & Ladakh UTS, which results in higher margins despite modest volumes, and at the same time, while maintaining thrust on retail business, we also try to capture niche lending opportunities in corporate segment, on a panindia basis which helps us to build volumes and improve margins.