J&K Bank Mulls Special OTS For Stressed Borrowers: MD

(MENAFN- Kashmir Observer) Srinagar- Jammu and Kashmir Bank is contemplating a Special One-Time Settlement (OTS) scheme for stressed borrowers, Managing Director and CEO Amitava Chatterjee said during a meeting with a delegation of the Federation of Chambers of Industries Kashmir (FCIK).

The proposed scheme may be unveiled alongside the new Industrial Policy being formulated by the J&K Government. While the Bank did not disclose the contours of the proposed OTS, Chatterjee indicated that it would seek to provide relief and closure to eligible stressed accounts.

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The issue figured prominently during the meeting between the Bank's senior management and the FCIK delegation, which raised a range of concerns relating to credit flow, stressed accounts, interest rates, collateral requirements, recovery practices and the revival of sick industrial units.

FCIK welcomed the proposed OTS but reiterated its demand for implementation of the SBI OTS-2020 scheme, without dilution, exclusively for borrowers in J&K and Ladakh. The Federation said businesses in the region had accumulated legacy debt amid prolonged disruptions, turmoil and natural calamities.

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The meeting was chaired by Chatterjee and attended by Executive Director Sudhir Gupta, Chief General Managers Imtiyaz Ahmad, Ashutosh Sareen and Rajesh Tickoo Malla, General Managers Tariq Ahmad and Arshid Qadiri, Deputy General Managers Tanveer Farooqi and Shameem Ahmad, besides other senior officers.

The FCIK delegation, led by Advisory Committee Head Shahid Kamili, included former Presidents Meraj Qureshi and Shakeel Qalander and elected presidents of industrial estate and district-based associations from across Kashmir.

The Federation presented a comprehensive memorandum covering credit flow, revival of sick units, regularisation and restructuring of stressed accounts, interest rates, collateral requirements, delayed receivables, government-backed credit schemes, recovery practices, banking infrastructure and procurement from local MSMEs.

Chatterjee responded to the issues raised and announced resolutions on several matters during the meeting, besides issuing directions to concerned officers.

He assured greater credit flow through the Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE) and other government-backed schemes. He also agreed to examine cases involving anomalies in higher interest rates.

The Bank further accepted FCIK's invitation for the MD to visit industrial estates and districts and interact directly with entrepreneurs. Camps will be organised in association with local industrial bodies to assess credit requirements, explain financial products and resolve pending issues wherever possible.

FCIK said such outreach was important as competing banks were entering industrial estates with attractive interest rates, concessions and loan-takeover offers. The Federation offered to help retain J&K Bank's traditional customer base if legitimate concerns were addressed through competitive and responsive services.

The Federation also sought the creation of a dedicated MSME Facilitation and Resolution Cell under an Executive Director or Chief General Manager. It proposed that cases relating to additional finance, renewal, enhancement, regularisation, restructuring, revival and settlement be placed before the Cell for time-bound resolution.

Elected representatives of industrial estates and districts, along with FCIK representatives, offered to assist the Bank in finding case-specific solutions acceptable to both lenders and borrowers.

FCIK also sought a temporary pause on coercive recovery measures against genuine MSMEs while their cases were being examined. It clarified that such protection should not extend to cases involving fraud, wilful default or diversion of funds.

Among other proposals, the Federation sought a rehabilitation package for potentially viable sick units, wider implementation of the Trade Receivables Discounting System (TReDS) to address delayed payments, rational collateral and guarantee requirements, prompt regularisation of eligible accounts after clearance of arrears and greater participation of established local MSMEs in the Bank's procurement.

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FCIK appreciated the Bank's profitability, improved asset quality and progress in priority-sector lending, including the reported surpassing of its lending obligations. While acknowledging improvement in the Credit-Deposit Ratio, it stressed the need for greater local deployment of credit and balanced lending across regions and sub-regions.

With an estimated 40,000 or more manufacturing and processing units across J&K, FCIK said the revival of stressed enterprises and expansion of units operating below capacity represented a significant credit opportunity for the Bank.

The Federation also stressed that J&K Bank should remain insulated from political influence and function as a professionally managed commercial and developmental institution focused on economic growth, productive investment and employment generation.

The meeting concluded with both sides favouring continued institutional dialogue and amicable resolution of pending issues. FCIK expressed hope that a liberal and transparent Special OTS would provide deserving borrowers an opportunity to exit legacy debt and begin afresh.

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