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JK Bank battling current crisis; shares nosedive

Bankers question leadership over tremendous drops in bank stock

Malik Sameed

Srinagar, May 15 (KNB): With the country in a virtual lockdown mode and companies announcing temporary shutdowns over the COVID-19 outbreak, the Jammu and Kashmir Bank too has witnessed a tremendous free fall in share prices from past few months—leaving the leading public sector Bank into deep crisis.

According to insiders, the J&K Bank was facing the “deep crisis”. They said that the Bank witnessed a constant decline in share prices from past few months immediately after R.K Chhibber took as Chairman cum Managing Director, amid nationwide lockdown imposed by government to combat Covid -19, share prices moved down by -4.01% from its previous close of Rs 14.95 with last stock traded price being 14.35.

In the month of January standalone net profit of the bank fell by 52 percent year-on-year to Rs 49.64 crore in the third quarter of 2019-20, share price declined over 4 percent in on BSE in February to a fresh 52-week low of Rs 24.90 and looked on course to extend losses into the second consecutive session citing the reason as the abrogation of Article 370 in J&K impacted business activities and cash flows.

It may be recalled J&K Bank Ltd incorporated in the year 1938, is a banking company (having a market cap of Rs 938.19 Crore) while a Gross Non-Performing Assets (Gross NPAs) of Rs 7711.60 Crore and Net Non-Performing Assets (Net NPAs) of Rs 2810.32 Crore.

J&K Bank share price which touched Rs 52 weeks high of Rs 63 has now came down to 52 weeks low of Rs 11.05 and as a result shareholders have lost 75 percent of their wealth while a rise was seen in gross bad loans as the non-performing assets rose to 11.10 percent of the gross advances in the month of December 2019 but the net NPAs came down to 4.36 percent of net advances by the end of December 2019 quarter from 4.69 percent a year ago. However, achievements of the bank were on a constant increase in past four years when Parvez Ahmad Nengroo was chairman cum managing director of the bank as Tier II bonds raised Rs. 500 cr in FY 2017 and Rs. 500 Cr (2018) viz Infusion of Rs. 532 Cr. By J&K state Govt. in two branches in FYs 2017-2018, creation of revaluation reserve of Rs. 634.81 Cr. In FY 2017 with Net Worth accretion of Rs. 285 Cr, Additional Tier 1 of Rs. 1000 crore raised innovatively from local institutions to add value to the state.

Moreover, total of Rs. 14000 Cr of net credit added in the J&K state business with more than 100000 new micro & small enterprises financed in 02 years successfully managed the implementation of all flagship programs of the Govt while as many prestigious awards were also laureled by the bank in J&K State as a Part of development & Social Security initiatives.

Pertinently, Perveez besides personally bestowed with the Elite Ambassador of the Institute of Company Golden Memoir award by the Institute of Company Secretaries of India also brought Award for “Outstanding Contribution through Innovative Initiatives in the housing sector under Pradhan Mantri Awas Yojana “by the Housing and urban Development Corporation (HUDCO), SKOCH award in “Banking and Finance (D&F) silver category” for its inclusive banking, Top Banker Award for its outstanding performance under Prime Minister’s Employment generation Programme (PMGEP) in the entire North Zone, by Ministry of MSME (GOI).

Talking to Kashmir News Bureau (KNB), one of the lead bankers at J&K Bank Headquarters said, “Like the state Government promoter of Bank whose investment value in JK Bank shares was around 2100 crore a year ago has now shrinked to around 600 crore and market cap which was around 3200 crore a year back has come down to around 900 crores as on date.”

He further said, “On the basis of 9 months results ended 31st December, 2019bank has registered a loss of 845 crores against profit of Rs 465 crores as on 31st March, 2019 despite bank operations remained operational post abrogation of Article 370 & restrictions remained only in Kashmir region.”

Another banker—, who has been writing on the Bank issues, said that “It is a failure of the current incompetent leadership that we are witnessing tremendous drops in bank shares,” he alleged. (KNB)

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