The Loan Battle Of J&K Banks

The growing NPAs of banks in Jammu & Kashmir are reducing their appetite for disbursing loans, affecting development.

- Ishfaq Naseemv

Despite its special status and separate constitution, in one respect Jammu and Kashmir is distressingly similar to the rest of India – banking non-performing assets (NPAs). As of end-December 2016, NPAs (as a percentage of advances) of 46 public and private sector banks in the state were somewhat lower than the national average – 6.93 per cent as against 9.1 per cent – but that is hardly a consolation considering the rate at which they are growing. In end-March 2015, bad loans had stood at ₹1,699 crore or 5 per cent of advances of ₹33,687 crore. By end December 2016, they had risen to ₹2,677 crore of total advances of ₹38,662 crore or 6.93 per cent. For public sector banks, NPA percentages are comparable – in J&K, 10.81 per cent of advances had turned NPAs by end-2016, when the all-India figure was 11 per cent.

The amount outstanding of PSU banks in end December was ₹7,659 crore. Of this, NPAs were ₹827 crore. The state’s private sector banks had lent much more and had higher NPAs too in absolute terms – ₹27,459 crore and ₹1,235 crore, respectively – though their NPA percentage was lower at 4.5 per cent. Regional rural banks and cooperative banks were in a far worse shape – with NPAs of 19.76 per cent and16.02 per cent, respectively.

Some top national banks have been badly affected, including Punjab National Bank, whose NPAs in the state amounted to 15.38 per cent (₹159 crore) of total advances of ₹1,037 crore. So are local banks such as J&K Grameen Bank, with NPAs of ₹229 crore, 17.18 per cent of total outstanding of ₹1,336 crore. Of State Bank of India’s ₹4,325 crore loans, ₹167 crore, or 3.87 per cent, had turned bad, while the state’s leading bank, J&K Bank, had outstanding loans of ₹25,455 crore, of which ₹1,002 crore, or 3.94 per cent, were NPAs in December-end 2016.