Jammu and Kashmir Bank shares on Friday encountered shareholders’ fury and tanked as much as 20 per cent after a newspaper in the state reported that the bank has concealed Rs 2,500 crore worth of stressed loans.
The stock of the bank, in which the J&K government holds 53.17 per cent stake, closed down 18.42 per cent at Rs 1,501.35 on the BSE as worried investors hammered down the stock.
Dubbing the media report as “baseless”, Mushtaq Ahmad, J&K Bank chairman & CEO, said, “Our prudent management of balance sheet can be substantiated by non-volatility of earnings for more than last 5 years; we have been showing a consistent growth in profits in highly stressed economic conditions from 2008 to 2013 when the whole industry was experiencing earning volatility.”
“For last many quarters, stress in assets has been rampant across the banking industry. In March 2014, we had gross non-performing assets (NPAs) of around Rs 783 crore while the net NPAs were Rs 102 crore,” he said. “We have been following all the prudential guidelines as stipulated by RBI for declaring sticky loans as NPAs or restructuring advances.”
Ahmad said the bank’s restructured asset portfolio graph was witnessing a downward trend. “Currently it hovers around Rs 1,500 crore which is quite normal as per industry standards. Moreover, while declaring any advance as stressed, restructured or NPA we follow laid down processes and procedures which are quite robust and in accord with prescribed regulations and industry best practices,” he said.
He claimed the bank has been consistently prudent when it comes to dealing with stressed or NPAs. “Like in the case of Kingfisher, when big banks struggled to recover their loan from the grounded airline, we got back 90 per cent of our loan,” he said.