FCIK to launch peaceful protest campaign against bank ‘excesses’

13 December 2024

Srinagar: The Federation of Chambers of Industries, Kashmir (FCIK) today said it is determined to launch a campaign across the Kashmir Valley to challenge the ‘relentless harassment and intimidation tactics employed by J&K Bank against MSMEs and borrowers from various sectors’.

In a statement to Ziraat Times, FCIK said that these borrowers, ‘through no fault of their own, are struggling to meet their debt obligations due to unavoidable circumstances.’

This decision follows extensive discussions among industry leaders from across the Kashmir valley, including Presidents and representatives of organized industrial estates, district unorganized sectors, and various lines of activity. The discussions were prompted by the ongoing harassment faced by borrowers, which includes the issuance of SARFAESI notices, possession notices, e-auction notices, and the bank’s persistent efforts to obtain eviction orders from courts, seeking to forcibly displace borrowers from their business premises and mortgaged properties, most of which are their homes, the statement said.

The protest program will include organizing peaceful sit-in protests at industrial estates and district headquarters, holding press conferences, and pushing for intervention from both local and union governments, as well as the Reserve Bank of India.

Industry leaders also highlighted that accounts of Micro, Small, and Medium Enterprises (MSMEs) and other borrowers are being classified as Non-Performing Assets (NPAs) due to a failure to service debt, specifically missing interest payments or monthly installments for three consecutive months. This classification fails to account for the underlying reasons for the repayment failure, such as delays in payments from customers, including government departments, and other circumstances beyond the control of these enterprises.

“The bank has shown a complete disregard for the unique challenges faced by businesses in the Kashmir Valley, especially over the past three decades, when local enterprises have been impacted by natural calamities. Notably, during the 2014 floods, when the bank itself was severely affected and unable to provide services for nearly two months, it did not offer any concessions on interest charges”, FCIK said.

Additionally, industry leaders raised concerns about the bank’s consistent practice of charging exorbitant interest rates, 4% to 5% higher than the rates charged by banks in other states, justifying the excess as a risk factor due to the volatile law and order situation. The bank has also routinely demanded additional layers of securities and guarantees beyond the primary collateral, a practice viewed as exploitative and contrary to regulatory norms, it said.

Participants further expressed alarm that while loans to local borrowers are fully secured with collateral and personal guarantees, the bank has extended thousands of crores in collateral-free loans to external borrowers. This risky approach recalls past mistakes, such as the significant losses incurred from lending to Non-Banking Financial Companies (NBFCs) based on faulty credit ratings, one of which led to a loss of 750 crores within just a month, it said.

The members also expressed regret over the bank’s “sluggishness” in providing loans under various Government of India collateral-free schemes, raising concerns about the effectiveness of both the government and regulatory bodies in ensuring these schemes are properly implemented and accessible to businesses in need.

The industry leaders have urged the Advisory Committee of FCIK to take a leadership role in the protest program on behalf of the business community, vowing not to rest until the issue of Non-Performing Assets (NPAs) is fully resolved.

The Advisory Committee has assured members that this issue will be prioritized, with all options presented by the members being carefully considered. They have committed to raising the matter in the upcoming meeting with the Deputy Chief Minister and seeking immediate intervention from the government.