SAC decision to promote good governance, transparency in JK Bank: Govt
Says bank’s functional autonomy will rest with its BoD; it will continue to be regulated by RBI
Jammu, Nov 24: Defending its recent decision on the J&K Bank, the government on Saturday clarified that it has no intention of interfering in the day-to-day affairs of the bank.
It said the J&K Bank’s functional autonomy with its Board of Directors as supreme decision-making body remains unquestioned and that the bank will continue to be regulated by the Reserve Bank of India (RBI).
It said the latest decision taken by the State Administrative Council (SAC) is only aimed at promoting good governance and transparency in the functioning of the bank.
“Extension of RTI Act and CVC guidelines is only aimed at promoting good governance and transparency in the functioning of the bank, as this premiere financial institution has often been questioned on both these counts by the general public,” an official spokesman said.
He said while concerns have been raised in certain isolated quarters, people of the State by and large have hailed the decision across the board as a welcome step.
“The concerns raised by certain isolated quarters mainly relate to the operational autonomy of the bank,” the spokesman said and clarified that the SAC decision has three main elements including J&K Bank being treated as a Public Sector Undertaking (PSU), the bank being brought under the ambit of the Right to Information (RTI), the bank to follow CVC guidelines and the bank to be accountable to the Legislative Assembly and its Annual Report to be tabled in the State Legislature.
The spokesperson made it clear that as far as treating J&K Bank as a PSU is concerned, it is just a matter of fact and only restating the obvious.
“Since the State government holds 60 percent of majority shares in J&K Bank, for all practical purposes it is a Public Sector Undertaking. Therefore, all transparency and accountability features that arise from this have to apply to the bank,” he said and added that the main elements of transparency in J&K Bank will come through the application of the RTI Act as all recruitments and administrative issues of the bank would be subject to transparency provisions, like all public sector banks of the Government of India and “it is being hailed by the people of the state overwhelmingly”.
The spokesman said that as far as following CVC guidelines are concerned, these are followed by all government-owned banks to bring about certain probity into the banking decisions.
“It may be pointed out that J&K Bank was recently fined Rs 3 crore by RBI for not following KYC/anti-money laundering norms,” he said and added that bringing the bank under the ambit of CVC guidelines will ensure better adherence to RBI norms in future.
The spokesperson further clarified the only other decision taken by the SAC is to table Annual Report of the bank in the State Legislature through the Finance department.
“In any case, the Annual Report of J&K Bank is placed in the public domain through newspapers and on the official website of the bank after every Annual General Meeting,” he said.
The spokesperson further explained that since the State government holds almost 60 percent share of the J&K Bank, it has the characteristics of a Public Sector Undertaking.
“Only a couple of years back, when the bank was faced with a severe financial crisis, the State government came to its rescue by infusing capital worth Rs 532 crores,” he said and added that J&K Bank also gets a lion’s share of government business. Therefore placing the Annual Report in the State Legislature like any other PSU is expected.
“As far as accountability to the legislature is concerned, this is normal for all government-owned banks and is a very limited exercise,” he said and added that the commercial decisions of the bank are not a subject matter of Legislative control.