The Federation of Chambers of Industries Kashmir (FCIK) has expressed serious concerns about the long-term financial health of Jammu Kashmir Bank, citing its growing dependence on non-core income for profits.
During a meeting at the FCIK headquarters, senior members and the Advisory Committee reviewed the bank’s latest financial reports and flagged issues that could undermine its stability in a volatile economic climate.
The FCIK emphasized that while J&K Bank has reported significant financial gains, much of this success is tied to non-core income sources, such as trading and asset recoveries.
The chamber pointed out that such gains, particularly from settling Non-Performing Assets (NPAs), lack the stability required for sustainable growth.
“Over-reliance on non-core income exposes weaknesses in the bank’s core operations, like lending and interest income,” noted the FCIK, warning that this could pose challenges in the future.
Members also criticized the reduction in the bank’s Provisioning Coverage Ratio (PCR), suggesting it artificially inflates profits and could create long-term risks.
Additionally, concerns were raised about the bank’s Capital Adequacy Ratio (CAR), now at 14.88%, which FCIK argued had been manipulated by excluding profits from the last six months. This, the chamber warned, paints a misleading picture of the bank’s financial strength.
The FCIK also called for greater transparency in J&K Bank’s NPA recovery strategies, urging the bank to distinguish between recoveries backed by collateral and those based on risk ratings alone.
They stressed the need for more robust credit risk management and lending practices to prevent future financial vulnerabilities.
The industry body urged J&K Bank to focus more on supporting local industries and promoting economic growth in the region. “Instead of taking a harsh approach towards struggling enterprises, the bank should offer flexible financial solutions,” the FCIK recommended, adding that this would not only benefit local businesses but also help the bank foster long-term client relationships.
In conclusion, the FCIK urged J&K Bank to re-evaluate its strategies and prioritize sustainable growth by addressing its operational weaknesses. By doing so, the bank could strengthen both its financial stability and its role in the region’s economic development.
The FCIK hopes that the bank’s management will take these recommendations into account to secure a more resilient and community-focused future.