Action Under SARFAESI Act Last Resort To Recover Loans : JK Bank MD

“Last year, we were very liberal as far as OTS (one-time settlement) scheme is concerned. Three OTS schemes were launched last year. All these schemes were very liberal and the borrowers were reached out to take benefit of the schemes. Many took the OTS scheme, but many others have not. So, the SARFAESI action is the last resort we have,” Prakash said
Banks Mulling: To Allow Or Disallow NBFC Loans Under 3-Month Moratorium?
Banks Mulling: To Allow Or Disallow NBFC Loans Under 3-Month Moratorium?

Action under the SARFAESI Act is the last resort with the bank to recover loans and is undertaken only after borrowers fail to repay, Jammu and Kashmir Bank’s Managing Director and CEO Baldev Prakash said here on Thursday.

Prakash, however, said the bank will follow the laid down SOPs while implementing the Act.

He also announced a revamped mobile banking app, 'M-Pay Delight Plus' for the bank customers after wide-ranging complaints about its existing app.

“Last year, we were very liberal as far as OTS (one-time settlement) scheme is concerned. Three OTS schemes were launched last year. All these schemes were very liberal and the borrowers were reached out to take benefit of the schemes. Many took the OTS scheme, but many others have not. So, the SARFAESI action is the last resort we have,” Prakash said.

He was addressing a press conference after the 85th annual general meeting of the bank which took place in physical mode after a long time this year.

Prakash said when the bank takes any action under the SARFAESI Act, 100 per cent SOPs as per rules are followed by the team.

“We are giving sufficient time to the customers to come out and deposit money. When this money is coming back, we can improve our interest rates, and for loans, we can reduce interest rates,” he said.

Asked if there has been a spike in the bank's action under the Act recently, Prakash said the lender was not able to reach out to the customers due to law and order issues as well as Covid in the past few years.

“Our people were not able to properly reach out to the customers because of Covid and issues relating to (abrogation of Article) 370. So, it could be hesitation from our side, but now that Covid and Article 370 are past us, now this recovery is going on as per the rules.

“The implementation of SARFAESI Act before 2019 was not as good as it is today. It could have been a hesitation from our side or the customer’s side. The people were not able to reach out due to law and order issues as well as Covid issues,” he said.

Referring to NPAs, Prakash said the bank has been able to bring them down significantly.

“Last year, we ended at 6.04 per cent of NPA, we were at 8.67 per cent to start with and then in between it had gone to 9 per cent also. In the first quarter this year, we have further improved to 5.7 per cent,” he said.

“A few borrowers are there, who have the capacity to repay, but they have not paid it. They have diverted the money. The bank’s money was taken for ‘x’ purpose but was utilised for ‘y’ purpose. So, that is where the problem lies. We have been requesting those borrowers to immediately repay that money,” he added.

To a question on widespread complaints about its mobile banking app, Prakash said M-Pay was a very popular payment app but maybe because of bandwidth or other issues, it was not performing up to the expectations, particularly when the increased inflow of transactions happened.

“We have taken note of that and I am happy to tell you that we are now ready with a state-of-the-art solution – 'M-Pay Delight Plus' -- which will be launched in a very few days’ time and this problem will be a thing of past now,” he said.

Asked about the recent termination of a bank employee for allegedly being a threat to the security of the state, and recruitment scams in the past, Prakash said law will take its own course.

“Wherever the wrong doings have happened, appropriate agencies and the bank will be looking into those things and whatever actions will be taken, we will inform the public also. I think that those things which have happened, are history now, and a lot of transparency has come into the system. So, those things are past now for us,” he added.

He said the bank is on a rising trajectory, having booked the highest ever profit of Rs 1,197 crore last year.

“We are in the same journey this year also. The first quarter has been very good. The business is growing very well. The assets quality of the bank is improving.

“The capital adequacy ratio of the bank, after a very long time, has crossed 15 per cent. We are at 15.38 per cent as of now. The economy of our core territory – J-K – is doing very well," he said.

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