NL Correspondent
Jammu Tawi, Mar 31: J&K Bank today received Rs 500 Cr capital infusion from the Jammu and Kashmir Administration today provided Rs. 500 Crore additional capital infusion to improve Bank's capital adequacy and to fund general business needs of the bank.
The fresh infused Rs 500 crore in being lent against allotment of equity on preferential basis in favour of J&K UT Administration (the successor of erstwhile J&K Government). The erstwhile J&K government held 59.23 per cent stake in Jammu & Kashmir Bank, and with the proposed allotment of 15, 65, 92, 546 equity shares of the lender would increase its stake by 8.95 per cent to 68.18 per cent.
Besides, the public shareholding in the bank will decrease from 40.77 per cent to 31.82 per cent subsequent to the proposed acquisition.
The government had already set aside the amount meant for equity infusion or recapitalization of the bank earlier pending clearance from the Markets regulator Security Exchange Board of India (SEBI) that has exempted Jammu and Kashmir government from making an open offer to shareholders of Jammu & Kashmir Bank following proposed equity infusion that would hike its stake in the lender by 8.95 per cent.
The bank had filed an application in February on behalf of its promoter — Government of Jammu & Kashmir — seeking exemption from applicability of SAST (Substantial Acquisition of Shares and Takeovers) or Takeover Regulations.
Expressing his gratitude towards the government, the Chairman and Managing Director (CMD) of J&K Bank, Rajesh Kumar Chhiber said that besides improving the bank's capital adequacy under the Basel-III norms, the capital infusion will substantially improve its risk bearing capacity. He added that the much needed infusion shall also help the bank in revising its lending policies particularly towards the retail segment like housing, education, government sponsored schemes, agriculture etc.
As already reported in the media, Jammu and Kashmir Bank has been facing the capital adequacy norms due to huge bad debts and NPAs thanks to political interference and unprofessional lending to select parties.
Mr. Chibber said that the infusion will translate into growth and expansion and at the same time boost the confidence of all other stakeholders in the bank.
J&K Bank has already announced a implementation of a 3-month moratorium on the repayment of installments of term loans and deferment of interest on working capital facilities outstanding as on March 1, 2020 also for three months, besides slashing the key lending rate by 75 basis points (0.75 percentage point) in line with the directions of the RBI.
Responding to apprehensions and the reports of deduction of EMIs and charging of interest by the bank despite directions from the RBI, the CMD said, “There have been reports that the bank has deducted EMIs in contravention to the directions of the RBI. Let me assure my valuable customers that the bank is bound to follow the directions of the regulator in letter and spirit. There would be no EMI deduction for the months of March, April and May 2020 as of now. If any EMI has been deducted from the account that must have been already overdue from previous month or the same may have been deducted before the announcement by the Reserve Bank of India.”
The bank had earlier also announced that there would be no charges on debit card transactions on domestic ATMs, NEFT/RTGS transactions initiated on mPay or ebanking and on UPI transactions. Also, no charges would be levied on account of non-maintenance of minimum balance.
