After winning prestigious Financial Express Best Bank Award last year in September, for scaling up its business and strengthening the balance for the year ended March 2011, the Jammu &Kashmir Bank’s continued focus on all areas of banking during the past two years has again won the bank some prestigious national awards which includes two latest awards – “The Sunday Standard FINWIZ-2012 Best Bankers’ Awards” and CNBC TV18 India Best Bank award 2012. The Bank was awarded ‘Best Banker in Financial Inclusion and Customer Friendliness’ and declared runner up for ‘Best Banker in Priority Sector Growth and Agricultural Credit’.
The Sunday Standard, which is a part of the Chennai-based ‘The New Indian Express Group’, had engaged Indicus Analytics, India’s premier economic research agency, to conduct a stringent survey and find out India’s best bankers.
Notably, the CEOs of all 78 Scheduled Commercial Banks operating in India were considered for the rating. The survey has rated Chairman and CEO Mushtaq Ahmad as top ranked CEO for being ‘accomplished in all aspects of banking’. The survey has highlighted his skillful leadership qualities by mentioning the bank’s all round and consistent growth in its operations under his dynamic leadership. Since his taking over, the bank’s business turnover has increased by over Rs.24000 crore, going from Rs.62,000 crore in September 2010 to Rs.86,424 crore in March 2012. The bank posted an all time high profit of Rs.803 crore for the financial year ended March 31, 2012.
Prestigious CNBC TV18 India Best Bank award 2012 was awarded to the Bank by a panel of distinguished jurors comprising of Mr. Jagdish Capoor, former Deputy Governor Reserve Bank of India, former Chairman of HDFC Bank and former Chairman of BSE, Mr. A. K. Purwar, Chairman of India Venture Advisors Pvt. Ltd & former Chairman of State Bank of India, Mr. H. N. Sinor, CEO, Association of Mutual Funds of India, former CEO, Indian Banks Association and former Managing Director of ICICI and Mr. M. V. Nair, former Chairman, Union Bank of India.The award was given to the bank after KPMG conducted a robust and rigorous scoring process for all the Banks and Financial Institutions. KPMG is one of the leading professional services firms in the world in addition to being one of the esteemed members of the Big-4 auditors, along with PwC, Deloitte, and Ernst & Young. KPMG ranked the Banks and Financial Institutions on the basis of criteria’s like growth, profitability, capital ratios and even softer qualities like investor relations / customer care.
J&K Bank follows a circumspect approach in expanding quality credit assets in line with our policy on Credit Risk Management. Coupled with the close monitoring and efficient management of the loan book this has arrested the slippages to an incredibly low level. The result is a quality loan book with a 1.6 percent GNPA and a 0.14 percent NNPA.
In the next stage the Banks and Financial Institutions short-listed by KPMG were examined by the jury who after a marathon debate decided the winner for each category.Given the rigorous selection process, the eminent jury and the caliber of winners, the awards have become a benchmark for excellence in the field of banking and finance in the country.
PROFILE
Mushtaq Ahmad, Chairman & Chief Executive Officer (CEO) of J & K Bank Ltd. has remained associated with the Bank for the last 40 years. During his banking career he has held important and strategic positions in the Bank as part of its Corporate Management / Leadership Team. He has in-depth knowledge and practical experience in the fields of Credit Management, Corporate and Retail Banking, Treasury & Investment Management, International Banking, Liability & Risk Management and HR Management.
Based on his specialized knowledge and practical experience in different fields of contemporary banking, Mushtaq Ahmad was appointed as Chairman and CEO of the Bank on 5th October 2010.
Since Mushtaq Ahmad took over as Chairman and CEO, the Bank has witnessed all round and consistent growth in its operational spheres. During this period the Bank’s Business Turnover increased by over Rs. 24000 Crores from Rs. 62000 Crore in September 2010 to Rs. 86424 Crore in March 2012. The Bank posted an all time high profit of Rs. 803.25 Crore for the FY ended 31stMarch 2012. During FY 2011-12, 55 new branches were added which increased the branch network to 603 at the end of March, 2012. The Bank plans to open about 100 new branches during the current fiscal. Mushtaq Ahmad has set an ambitious target for garnering Business Turnover of Rs. 100,000 Crore and Net Profit of Rs. 1000 Crore by March, 2013. The achievement of this milestone is planned to coincide withthe Bank’s Platinum Jubilee celebrations in 2013.The Kashmir Scenario interviewed Mushtaq Ahmad on various operational matters of the bank. The excerpts of the interview are:
Q: Can you to give us a brief account of the Bank’s growth story at the outset?
A: Over the decades, J&K Bank has evolved from a small banking company to a sound and robust institution. Our uninterrupted growth story and ever-improving balance sheet has been acknowledged for long by the banking analysts and financial experts. Besides, our contribution to the state economy is self-evident.
Over the past four quarters that saw most of the banks operating in India struggling to maintain their growth trajectory, J&K bank stands out. Our consistent performance speaks for itself.
All the key parameters that determine a banking company’s soundness have improved considerably over the years reflecting the Bank’s comprehensive growth and better positioning.
Q: Please take us through the recently announced Q2 results?
A: For the second quarter (Q2), the bank registered a net profit of Rs 269.53 Cr as against Rs 199.65 Cr recorded for the corresponding quarter of last financial year, thus, registering an increase of 35 % during the period.
The business of the Bank reached Rs 89,198 Cr witnessing an increase of 17.89% from Rs 75,660 Cr recorded during the corresponding period last FY.
The interest income has grown by 34.60 % to Rs 2976.75 Cr. The operating profit has gone up by 33.17% from Rs 629.15 Cr to Rs 837.85 Cr. The NPA Coverage Ratio increased to 93.30% from 92% recorded during the corresponding period last FY. The Bank’s Earnings per Share have considerably increased by 35% reaching 212.72 from 157.57.
Q: With such a strong performance in Q2, should we expect similar growth trajectory for the coming quarters?
A: We are moving ahead as per the planned trajectory and believe that growth momentum would be maintained throughout next
quarters as we achieve our targets for our Platinum Jubilee year-2013 i.e. Rs.1,00,000 Cr business and Rs.1000 Cr profit.
Q: Tell us about your asset quality? How did you manage to bring down the NPA during FY12? What is the outlook for NPAs during FY13?
A: J&K Bank follows a circumspect approach in expanding quality credit assets in line with our policy on Credit Risk Management. Coupled with the close monitoring and efficient management of the loan book this has arrested the slippages to an incredibly low level. The result is a quality loan book with a 1.6 per cent GNPA and a 0.14 percent NNPA.
Q: What is the strategy in so far, as meeting the business and profit targets are concerned?
A: Our strategy is based on the premise that we would not only meet but surpass the set target of Rs 1 lac crore business and Rs.1000 crore net profit. The strategy is to continue focus on J&K with thrust on key sectors like agriculture, horticulture, tourism and handicrafts. Of late power sector is also gaining our attention.
For outside state, we will concentrate on rebuilding our corporate loan book and capitalise on SME lending especially in smaller cities.
Besides, keeping in mind the slowdown and challenges in the economic and business environment, the bank will be selective in extending project finance assistance.
Q: Bank’s financial literacy campaign has gained momentum over the last couple of years. Would request you to take us through the objectives and achievements of this campaign?
A: J&K Bank, committed to its slogan of empowering people financially, has always been on the forefront to educate people about matters of personal finance, financial planning and strategic investments. Our approach to understanding of the issue is that there needs to be improved access in terms of peoples’ connectivity to financial services. Further, there needs to be innovation and improvement in quality of financial education so that the broader goal of empowering people is achieved.
While Bank’s financial literacy campaign is based on ensuring that all resources are leveraged in the most effective and efficient way possible to motivate and make people aware about short as well as long term benefits of earning, spending, saving, borrowing, risk-taking, career building, entrepreneurship enadeavours etc, such a counselling or financial education is broadly aimed at making individuals, groups, organizations and even families take more informed financial decisions. And yet, other determining motive behind such campaigns remains financial inclusion – introduction and extension of banking and financial services to the hitherto inaccessible and unreached segments and geographies in the state of J&K.
Q: Something about the bank’s Corporate Social Responsibility?
A: The Corporate Social Responsibility (CSR) of the bank seeks to recognize obligations towards society and aims at optimizing both business and social performance.
There is a lot we have been doing under CSR. The basic aim is to instill a sense of relief and protection among the most vulnerable sections of society. The target groups of the entire bank’s philanthropic programme are particularly needy, women, children, differently-abled, handicapped etc.Education, health, environment and sports continue to be our priority on CSR front. Besides, financial inclusion and institutionalizing the culture of entrepreneurship too are prime thrust areas.
Q: What is the status of Bank’s Financial Inclusion Plan?
A: The Bank’s Financial Inclusion Plan is being pursued as a mission for extending benefits of economic prosperity to the excluded segments and realizing the objective of inclusive growth. The 800+ network of Khidmat Centres (Common Service Centres) has been upgraded to Business Correspondent model to ensure extension of banking services and benefits of financial system to the remotest areas and hitherto unbanked masses. The role of financial intermediaries is being curbed to pave way for formal channels of finance to ensure speedy growth and development of these areas and economic empowerment of the people living there.
Q: What in your view is the key for such a robust growth?
A: Reasons for this unremitting growth are many but yes, I believe confidence of customers, especially those hailing from our home state, in J&K Bank is the key. People’s unflinching faith in J&K Bank transcends monetary transactions. They consider it as their own bank, their ambassador and the catalyst of their economic transformation. And, this perception is not based on hearsay or myths, it is a reality that J&K state and its people have seen, observed, understood and comprehended.
Besides, it needs to be understood that J&K Bank primarily functions in a state which is to a large extent insulated from the rest of India’s economy. The state’s traditional and special sub-economies provide an innovative and productive platform for lending which apart from individual empowerment and development of state provides a cushion to J&K Bank to withstand pressures from global or even national slowdown in economy.
Q: How is J&K Bank helping to promote Agriculture, Horticulture and Tourism sectors?
A: The Bank provides need based financial support to all these sectors with right kind of product-mix.
To empower J&K farming community our Bank is pro-actively reaching out to the agricultural belts of the State to popularize ‘Kissan Credit Card Scheme’. The product has been tailored to meet the credit requirements of growers and traders associated with the agriculture / horticulture.
Up to July-2012 we have issued Kisan Credit Card to 43472 farmers with total credit outlay of Rs. 225.46 crores. Bank has already
adopted interest subvention scheme of Govt. of India and is providing crop loans to farmers for production limit up to maximum of Rs. 3.00 lacs per borrower @ 7% p.a.
J&K Bank is driving the state’s horticultural economy in the form of financial assistance and other support structures to the rowers. In this direction, J&K Bank’s Apple Project endeavors to provide comprehensive financial assistance to enhance apple production. This includes the necessary logistics support with respect to modern cultivation and farming techniques during development of orchards. It also takes care in respect of the post harvest requirements, such as storage and marketing of the produce.
The Bank envisages covering all districts of Kashmir Division under the project within the targeted project implementation period of five years. The project has been initially launched in Shopian and Baramulla districts of Kashmir Division. During the current crop season the Bank envisages to tap 12150 apple growers in the targeted districts with loan outflow of Rs. 324.00 crores.
On account of the response received by the project in the twin districts of Shopian and Baramulla, the Bank has brought two more districts of Kashmir Division i.e. Kulgam and Pulwama within the ambit of this project besides working for complete coverage of the targeted districts of Baramulla and Shopian. The Bank has targeted to tap further 25000 apple growers in the next crop season covering four districts with additional loan outflow of Rs. 700 crores.
Bank has tied up with Enterprise Solution to Poverty (ESP), a US based organization working for microfinance and production community in developing countries of the world. ESP recommends for providing finance, technology upgradation and markets to apple growers for development of apple industry in Kashmir. Apple project has been launched as a step towards achievement of these objectives. From next crop season Bank shall be providing linkages to apple growers for technology up-gradation and market to sell the crop at desired price. Establishment of cold storage / controlled atmosphere facilities for use by the apple growers is being aggressively taken up by the Bank. For the same the existing players as well as new establishments are being explored by the bank.
Special Scheme “Kissan Dost Finance” to help farm mechanization and provide hassle free financial support to the farming community for purchase of wide range of agricultural / horticultural machinery implements which include power tillers, harvesters, pump sets, power sprayers etc. for purchase of Tractors, Load Carriers etc. for transportation of agri inputs and agri produce from and to the market within the scope of the scheme has been launched by the Bank at very competitive interest rates.
Further Bank has devised various credit schemes for boosting agriculture sector and has been implementing the schemes devised by other sponsoring agencies to ensure absorption of credit under this sector. The details of the schemes are as under:-
- Dairy Entrepreneurship Development Schem
- Integrated Development of Small Ruminants and Rabbits.
- Poultry Venture Capital Fund Scheme (PVCFS)
- Scheme for Establishment of Sheep Shearing Units in Private Sector
- JK Bank Giri Finance.
- Scheme for Establishment of Mini Sheep Farms in Private Sector
- Farm Mechanization Scheme (Tractor)
- JK Bank Kissan Dost Finance
- JK Bank Zafran Finance Scheme
Moreover, the Bank has financed a chain of cold storage facilities across the State to provide growers with improved technologies and better access to the market.
Regarding Tourism, the Bank extends credit facilities to the hospitality industry and other allied sectors in the State. It recently financed two 5-star hotels, one each at Srinagar and Gulmarg.
J&K Bank has created multiple products to boost credit flow to the tourism sector like scheme for guest houses, scheme for travel
and tourist taxi operators, to provide hassle-free credit for conversion of residential properties into tourist guest houses, upgrade tourist transport services and generate more employment for the people of State in this Sector.
The Bank has also extended credit facilities for rehabilitation of pony-walas and houseboat owners.
Q: How do you see the growing competition in banking industry in state especially keeping in view the emergence and increasing footprints of new generation private sector banks here?
A: J&K Bank perceives competition as a positive trend for the state’s economy. We are taking it in the spirit of further evolution. With a sound business strategy in place and a committed customer base, we are sure to retain our monopoly within the state.
Healthy competition and a balanced CD ratio is a combination that can really change fortunes of the state. J&K Bank remains committed to the socio-economic development of the state.