The Union government has granted Rs 7,900 crore to the Union Territory (UT) of Jammu and Kashmir (J&K) to clear its dues with the J&K Bank, a senior government official said.
“The special funds have been allocated in the J&K budget to clear the outstanding dues of the J&K government with the J&K Bank. We have provided financial assistance to clear their balance sheet, and the UT government will adhere to all repayment requirements to the J&K Bank,” the official said while requesting anonymity.
The Centre has allocated Rs 42,277.74 crore for J&K in the Union Budget for 2024-25, marking a 1.2 per cent increase from the previous financial year’s allocation. The budget, presented by Finance Minister Nirmala Sitharaman in the Lok Sabha includes Rs 40,619.3 crore as Central Assistance to the UT to address the resource gap.
The official said the money will be used by the J&K government to cover dues for pensions, salary payments, and other expenses of J&K Bank.
“J&K Bank is a viable asset, and its good health is important. Such high debt is definitely not good for the depositors of the bank. It is also not good for the fiscal deficit of the UT,” the official noted.
A bank analyst who wished to remain anonymous said, “By clearing such high dues, the bank’s advances are definitely helped. It also strengthens the bank’s position to give more loans.”
J&K Bank, in its Q1FY25 results, reported a profit-after-tax (PAT) of Rs 415.49 crore, up by 27 per cent year-on-year (YoY) from Rs 326.45 crore recorded for the first quarter of the previous financial year.
Advances of the bank grew by over 13 per cent YoY and stood at Rs 95,449.77 crore compared to Rs 84,475.63 crore in the corresponding quarter a year ago. Deposits also increased by 9 per cent to Rs 1.3 trillion from Rs 1.2 trillion recorded last year.
“On account of the increased outflows of government funds usually witnessed during our first quarter, there is a temporary dip in the Current Account and Savings Account (CASA) ratio this time, but we are confident of maintaining it above 50 per cent annually. We have already sharpened our focus to augment our strong liability franchise,” said Baldev Prakash, MD & CEO of J&K Bank, in a press statement after the Q1FY25 results.
First Published: Aug 02 2024 | 6:36 PM IS