LESS than a fortnight after turning the Jammu and Kashmir Bank (J&K Bank) Ltd into a public sector undertaking and making it answerable to the state legislature, Governor Satya Pal Malik Tuesday said that the government would re-examine the issue and that the bank board was the right forum to take all decisions.
Malik’s assurance came after a delegation of bank employees met him Tuesday. His November 22 decision sparked outrage across the political spectrum and leaders in the state including Mehbooba Mufti, Omar Abdullah and Sajad Lone called it an assault on the bank’s autonomy.
The Governor Tuesday clarified that J&K Bank, which was registered as a government company under the Companies Act, was and would continue to be regulated by the Reserve Bank of India (RBI). The RBI had licensed J&K Bank, incorporated in October 1938, as an “old generation private sector bank.”
The clarification puts at rest speculation in J&K that the state government’s stake in the bank may be taken over by the Central government. The state is the single-largest shareholder and holds a majority 59.3 per cent in the bank.
On November 22, a day after he dissolved the House, the State Administrative Council, chaired by the Governor, had approved a proposal for “treating the Jammu and Kashmir Bank Limited as a public-sector undertaking (PSU)”.
It said the finance department would issue appropriate directions to the bank to implement this decision. “But no directions have been passed till date,” said a government source.
The November 22 decision would have meant that the bank would be accountable to the state legislature like other state PSUs with its annual report required to be placed before the legislature. Further, the bank would have to follow CVC guidelines and the provisions of the J&K Right to Information Act too would be applicable to it.
“In view of the concerns expressed, and to give comfort to the employees, the government will re-examine the issue of accountability to the legislature,’’ the state’s directorate of information said in a statement after the Governor’s meeting with the delegation, adding that the “word PSU has no legal connotation”. “No new changes are being made here,” it said.
According to a J&K Bank board member, the biggest worry in making the bank accountable to the state legislature was that the standing committee could call the management and push it to take decisions that are not in the bank’s best interests. “Not doing their bidding exposed the management to the threat of attracting privilege motions by the legislature,” said the board member who did not wish to be named.
On Tuesday, the Governor also clarified that the “Board of the Bank is an appropriate forum for taking and implementing all decisions of the bank” and “safeguarding the autonomy and operational independence of the bank is key objective of the government at all times”.
However, as a government company, the J&K Bank is a Public Authority under the Right to Information Act (RTI) and hence is automatically subject to transparency provisions of the RTI, the statement said, adding that “transparency is good for the bank in the long term”.
The Governor asked the employees not to be concerned about their employment, future prospects, or salary structure under any circumstances. The Bank’s Board of Directors is competent and vested with the powers to take decisions in this regard and no changes are being made here or contemplated,” the statement said.
Tuesday’s statement also said that besides the RBI, the banking company was also regulated by SEBI and the Registrar of Companies.