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Srinagar: This financial year FY-26 Jammu & Kashmir Bank recorded its highest ever profits of around Rs 2363.47 crore after hiccups due to several challenges over the past decade. MD and CEO of the bank Amitava Chatterjee spoke with Hakeem Irfan Rashid on the historic feat of the bank, the journey behind and challenges and risks ahead.

Tell us about J&K Bank’s journey over the past few years...

J&K bank was at its lowest in 2020, when it posted losses of Rs 1200 crore. Since then governance structure has changed and a very sound and prudent board was constituted and discipline instilled. The bank was also fortunate to have the support of the government of J&K.

Since 2021-22 the journey has been upward. Also, the bank was in a bad shape with NPA levels of 8 to 10 percent. We focussed on recoveries and discipline on provisioning. This helped the bank to start posting profits. This year we have posted a profit of Rs 2363.47 crore and Gross Non Performing Assets is at 2.5 percent. It is historic for the bank.

Is there a downward trend in Deposits?

This is an industry phenomenon. Any developing economy goes through this transition when people change their saving habits. People have shifted to mutual funds, capital markets and others. EMIs have gone up for every household and they need higher returns to cover that. It is happening everywhere including J&K.

Do top 100 accounts constitute half of the bank's NPAs?

I would say we had these NPAs from around 2014-15. Most of them are either fully provided or written off. The bank has been receiving recoveries in these accounts continuously over the past few years. They have added to the profits and have been instrumental in the recovery journey of the bank.

Is the J&K Bank customer service problem a technology or human resource issue?

This bank has enjoyed monopoly for a long time as other banks were hardly present in this area. J&K bank would never go to the customer. There has been complacency in the branches. All that has changed now. We have severe competition. Taking a cue from that the branches are more of a sales unit than a service unit now. Customer service issues are related to men on ground who have been complacent in the way business was being done. We have improved our services.

Why did the bank face penalties from the RBI?

I am not allowed to divulge details of our rating. Observations have almost halved, rating of the bank in the last four five years has gone up two notches and current rating of the bank is at par with any other bank of the country. Regulators are very tough but we should not be incurring penalties.

Tell us about 128 cases of fraud of around 2360.93 crores reported in J&K Bank in the last five financial years

RBI rates us very high in Cyber security. The bank has not lost a single rupee on account of online fraud till date. We had some cases of frauds and most of them were related to loan related frauds, like fake securities. In a few cases, staff compromised their IDs and passwords and allowed people to transfer money. We have removed people for that.

Does J&K Bank give more loans to non locals?

The question is has this bank improved or deteriorated and where is this improvement going? A stronger bank is better for this economy. 70 percent of the investment of this bank is in the local economy. If I have to keep earning, I cannot risk earning money from local people to serve them. So I have to promote it elsewhere. This balance has to be maintained.

In the last three years we spent 96 crores through CSR for upliftment of the society. We do 70 priority sector lending. Through the government's Mission Yuva we have lended money to 25,000 people in one year. Ask other banks to participate in government schemes and give priority sector lending. Our intention is not to earn. Taking this bank away from the people of this place is impossible. A government here not supporting the bank is also not possible.

Is J&K Bank a public sector bank or a private sector Bank?

RBI categorizes J&K bank as a private sector bank. The Union Territory government has major share holding, so we are a public sector bank. We have adopted the best of both worlds.

We take help from the government and when we have to function we take advantage of the private sector. So we are in a very unique position and I am happy about this current status. We have adopted CVC, RTI voluntarily, to improve the governance.

What is the participation of local stakeholders at decision making level?

Our board constitution is largely decided by the government of J&K, we try to have local representation and industry experts for value addition. However local representation at times cannot put in the value for running a big organization. So we need industry experts for that.

What are the biggest risks and challenges ahead?

The biggest challenge the banking industry faces is the cyber threat. The second biggest challenge is the deposits. If the deposit rate continues the way it has been for the last few years and deposits won't come back, it will be a big challenge for the industry.

Specifically, about J&K Bank we are lucky, we have been good and insulated from the geo-political changes happening. But uncertainty is a problem. Something suddenly happens here like the Pahalgam attack and that makes a huge impact on the economy which is dependent on a few sectors. So, we cannot afford to be affected by incidents like these. If we are doing well despite these incidents, imagine if there are no such incidents, how well the bank will do.

Are J&K Bank’s interest rates competitive?

We are mindful of rates of other banks and in no bucket we are lower than anyone else. Private sector banks declare certain rates on their websites, but they have the flexibility of changing the rate by a few bps. We cannot do that as a prudent government backed bank.

What does the NPA levels in the service and manufacturing sector tell us?

We are facing problems in the business and manufacturing sector. This region has ab initio geographical disadvantage. The government is in the process of coming out with a new industrial policy to support this business sector. There is a strong sense of survival in spite of all the difficult and tough conditions. Years and years of difficulties people faced here have made them experienced and resilient in dealing with the challenges. God forbid after Pahalgam attack, its fallout and the floods, for any other bank in any other state NPAs would have gone up by at least 100 business points and yet here we have come down.

Cases are going on against the last two heads of the J&K Bank...

I should not comment on the ongoing cases against previous seniors in the bank as they are subjudice. I cannot say whether they are right or wrong. This bank had indigenous process of recruitment so all that would have resulted in authorities taking a view on those recruitments.

How big is the issue of mule accounts?

Mule accounts are a menace every bank is facing. The staff unknowingly gets entangled in it. Opening accounts after all the due diligence sometimes lands them in trouble. RBI is very concerned about it and we have monthly meetings with the RBI who monitor this seriously. We are now using Mule Hunter software.

How is J&K Bank dealing with the competition?

We have strong loyalty towards the citizens of J&K. I believe that not a single citizen of J&K will go away from J&K bank if they get good service. We have lost many accounts two years back but we have got many back in the last one year.