J&K Bank raises funds locally but lends more outside: CAG

Srinagar:  The Comptroller and Auditor General (CAG) has revealed that the J&K Bank raised funds locally but lent more outside Jammu and Kashmir.

“With this approach, the Bank may not succeed in fulfilling its vision to engender and catalyze the economic transformation of Jammu and Kashmir,” the CAG said in its annual report.

What is more baffling is that despite lending more, deposits have fallen considerably outside the UT.

“Analysis showed that deposits outside the state had come down from Rs 24,142.48 crores at the end of March 2014 to Rs 8,534 crore by the end of March 2018. Further, the percentage of deposits outside the State which constituted 34.82 percent of its total deposits at the end of March 2014 had decreased to 10.67 percent by the end of March 2018,” the report said.

Comparatively, deposits within the Jammu and Kashmir had grown from Rs 45, 193.38 crores in March 2014 to 71,472 crores in March 2018.

“However, poor CD ratio within the State indicated that the Bank had not been able to advance the funds within the State commensurate to the deposits raised within the State,” the CAG report said.

The CAG said the Bank has failed to maintain the Credit- Deposit (CD) ratio in the union territory.

CD ratio is an index of the health of the banking system in terms of demand for credit in proportion to total deposit growth in the banking sector.

The CD ratio of the bank during 2013-14 to 2017-18 remained below the national average of Scheduled Commercial Banks (SCBs).

The audit report highlighted that the CD ratio in Jammu and Kashmir branches remained low compared to Bangalore, Mumbai, and Delhi zone.

“During 2017-18, the CD Ratio in Jammu Central-I and Kashmir Central-I remained as low as 25.28 percent and 52.40 percent respectively. In comparison, the CD ratio remained as high as 350.19 percent in Bangalore Zone, 844.21 percent in Mumbai Zone and 230.78 percent in Delhi Zone during 2017-18,” the report said.

The management, as per the report, attributed the low CD ratio in the J&K zones during 2016-17 to the inflow of large deposits during the implementation of demonetization in Quarter III of the financial year.

“The reply of management is not tenable as the effect of demonetization in the year 2016-17 was evident for all SCBs. The fact remained that the CD ratio of J&K Bank remained the lowest in four out of the five years among all the categories compared,” the report said.

CAG noted that the growth rate of the bank has also been low compared to the Scheduled Commercial Banks from 2013 to 2017.

The report has highlighted deficiencies in the functioning of the Jammu and Kashmir Bank.