NPA crisis: FCIK proposes ways and means to J&K Bank

16 April 2022

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Srinagar, April 16: Federation Chamber of Industries (FCIK) team had a marathon meeting with J&K Bank’s Managing Director & CEO Baldev Prakash and other senior bank officials including Rais Maqbool, Syed Shujhat Andrabi and Shafaat Husain Ahmad.

FCIK team was led by its president, Shahid Kamili, and Ovees Qadir Jamie, Nisar Ahmad, Zubair Bhat, Afaq Qadri, Imran Murtaza and Mohammad Imran.

According to a statement issued to Ziraat Times, FCIK President Shahid Kamli put forth a charter of demands, which includes Reframing of One Time Settlement Scheme (JKB Special OTS 2021), Income Recognition & Asset Classification D3 eligibility be changed to D1, the scheme applicability to all accounts below 15 lakh NPA outstanding and fixation of the upper limit to Rs 50 crores for all MSME units with one year repayment period.

“The bank should frame a committee for revival & rehabilitation of the industrial sector and should identify the potentially viable units which can be rehabilitated along with FCIK being the member of the committte. The bank should also provide exit route to those units which can’t be rehabilitated with friendly exit policy”, FCIK president observed.

Speaking on the occasion, Secretary General Ovees Qadir Jamie said the due payments to the enterprises are not being made in time, resulting in huge losses to the unit holders, besides undermining their reputation with creditors and bankers. “The should asses the borrowers on pending liabilities and support them with the additional funding till the time their payments get released otherwise they will turn NPA without their fault”, he added.

FCIK also proposed that the Mortgage of Proprietary Land as per Sec 133-H of Land Revenue Act should be accepted as a number of entrepreneurs are held up with the bank for obtaining loan facility against the said mortgage.

“Exploitation by insurance companies has made units to suffer as the same insurance cover is having fluctuating rate with insurance companies. The bank should develop a product for MSMEs which have to insure their stocks & mortgage properties. This should be created as facility rather than as an income generation. The business interruptions on account of curfews, strikes, natural calamities etc cause huge losses to the enterprises. We request to take up the matter & to develop a product with the reputed insurance companies of the country”, FCIK further proposed.

Maintaining that the enterprises have dried up their working capital by paying off their establishment cost during the lockdowns and, therefore, additional funding of 10% should be provided on the existing collaterals so the working capital facility of all enterprises may be enhanced irrespective of heir classifications as regular, stressed or else. The Scheme should be framed to provide immediate OD and the powers of same should be with Branch head, FCIK team said.

Further Mr Jamie said that “the Repo Linked Interest Rates (RLLR) should be appplied to all accounts who have restructured in the pandemic & also previously.”

“As on date the implication of RLLR is only on GECL accounts not on other accounts of borrower of same entity. The burden on the enterprises are much more to pay the interest & instalments of the multiple accounts. Further, as the repayment period for instalments are coming closer, so an extension for the same should be granted”, he added.

“The banks should be directed that the collateral mortgage should not be valued below the Government Circle Value as it is the benchmark index for valuation of property issued by the Revenue Department. Market Value may be accepted as valuation rather than distress or realizable value. The Land Lock property should be accepted as mortgage and accept Agriculture Land as mortgage also. One Valuation report to be accepted for MSME upto Rs 25 crores”, FCIK further said.

Calling upon the banks to implement the Credit Guarantee Fund Scheme in letter & spirit, FCIK team maintained that in majority of the cases it has been observed that banks are not implementing the scheme and are asking for collateral security.

“The banks should defer the rating of accounts for 2 years as there has been multiple restructuring of accounts so till the time business environment will stabilize the rating should be deferred. Micro & Small Enterprises should be exempted from rating. Support to Existing & Standard borrowers to safeguard them by exemtion in Renewal Charges on accounts may be exempted for 2 years. Margin on stocks & book debts may be reduced to 15%. Unsecured Loans on Balance sheet may be treated as capital and conversion into capital may be deferred as of now”, the statement added.

The meeting was followed by Iftiyar at J&K Bank Headquarters.