J&K Bank’s FY24 results renew hopes of J&K’s economic revival. More work lies ahead

12 May 2024

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The Jammu and Kashmir Bank’s (J&K Bank) recent announcement of a significant reduction in its Non-Performing Assets (NPAs) and a record-breaking net profit in FY24 is not just positive news for the bank itself, but a potential turning point for Jammu & Kashmir’s economic revival. One of the most critical aspects of J&K Bank’s FY24 performance is the substantial decrease in its NPAs. J&K Bank’s success in bringing down gross NPAs from 9.67% to 4.08% and net NPAs to a mere 0.79% indicates that the bank’s focus on loan repayments has paid dividends, and that it would need to embrace a more considerate approach in its engagement with J&K’s genuine businesses struggling with their balance sheets.

J&K Bank’s remarkable 48% increase in net profit, reaching ₹1,767 crore, seems to suggest that J&K’s economy is overall doing well and that the fundamentals, despite set-backs, remain strong. Significant public expenditure, booming tourism, a thriving fruit economy and newer investments in industries seem to manifest in the bank’s improved bottomline. This profitability should, however, propel the bank to re-prioritise its investment in crucial areas like infrastructure development, loan expansion for local businesses, and social initiatives. In the current circumstances, increased access to credit, particularly for small and medium enterprises (SMEs), is vital for stimulating economic growth and job creation in Jammu & Kashmir in the private sphere.

The bank’s decision to declare a dividend of ₹2.15 per share is another good news for its shareholders and the overall economic system in J&K. Its trickle down effect would definitely manifest in improved economic activity in J&K in the months to come.

A stable and profitable J&K Bank is long known to strengthen investor sentiment towards Jammu & Kashmir, potentially attracting new businesses and ventures to the region. This renewed confidence can play a crucial role in accelerating economic growth and prosperity. To capitalize on this momentum, it is essential to create a conducive business environment that existing genuine businesses and youth-led innovation and entrepreneurship. Towards that, it is important to demonstrate more understanding and consideration towards those business and industrial ste-ups in J&K that have made investments in good faith but are struggling. It is a well known fact that J&K Bank’s certain loan instruments have been deeply manipulated in the past by certain vested interests who have diverted finances obtained from the bank to more lucrative businesses and declared themselves insolvent. The NPAs accrued from that group of borrowers have put tremendous stress on the bank’s genuine borrowers and investors and the bank’s bottomline itself. While it is important to ensure that the bank’s borrowing instruments are no more abused, it is crucial to make a distinction for those businesses and industries who have made investments in good faith and whose accounts have turned bad by the circumstances and not wilful actions of default. That consideration would further improve the bank’s NPA situation and profitability.

Given the stiff competition from other institutions to J&K Bank, both in terms of the quality of services and attractiveness of financial instruments, the bank still has significant work to do. J&K Bank’s this year’s remarkable performance will renew hope for Jammu & Kashmir’s better economic future. By effectively managing NPAs, achieving record profits, and prioritizing shareholder value, the bank has re-positioned itself as a key player in the region’s economic revival after a few years of disappointments and a difficult business environment. This growth streak must sustain.