Srinagar: The Bharatiya Janata Party (BJP) and Peoples Democratic Party (PDP) coalition government in Jammu and Kashmir has admitted that people in the state are facing ‘tough times’ due to Prime Minister Narendra Modi’s decision to demonetise the Rs 500 and 1,000 currency notes, which has led to a shortage of currency notes in circulation.
The difficulties have been aggravated across Kashmir due to the lack of bank branches in the state, with banks even refusing to advance loans to businessmen who defaulted on payments of interest due to the four month long shutdown. Majority of the over 2-lakh loan accounts are running in default due to delays in payment of interest.
The government has, for the first time, admitted that people are facing grave inconvenience due to demonetisation. Through an order issued by the state’s finance department on 19 November, it was directed that a part of the salary for the month of November will be released in advance and the employees will be provided cash of Rs 10,000 to overcome the difficulties that they have been facing due to demonetisation.
The government directed that the salary be released by 24 November to non-gazetted officers and other lower income employees. The order read, “the shortage of notes in circulation has resulted in inconvenience to a cross section of society, particularly the low income sections of society including the non-gazetted and class-IV employees.”
Only four days later, however, the government expressed its inability to implement the order and informed the employees that the advance salary can’t be released as the Reserve Bank of India (RBI) had expressed difficulties in providing additional cash to the Jammu and Kashmir (J&K) bank.
The J&K bank is the lead financial institution in the state, with the government holding majority stake in the bank, and the employees’ salaries get credited into the accounts operated by the bank. As per the revised order of the government, “the salary for the month of November 2016 will be credited into the accounts of employees at the end of the month as usual. The employees, however, are free to withdraw the cash requirements from their bank accounts within the ceiling imposed by the RBI.” The order was issued by the Commissioner Secretary, Finance, Navin K Choudhary.
Minister of State for Finance, Ajay Nanda, however, appeared to be optimistic and said that the rush witnessed outside the ATMs had declined. “Once the bar on the withdrawal limits is eased by the government, the situation will improve.”
President of the Kashmir Chamber of Commerce and Industries, Mushtaq Ahmad Wani, said that the cash flow of the business units had dried up due to demonetisation. “The note ban has come at a time when we are already asking the government to restructure the loans. We couldn’t pay back the loans due to the restrictions and the curfews imposed by the government. The onus lies on the government to restructure the loans,” Wani said.
Majority of the banks in Kashmir have decided not to provide any fresh loans to account holders running in default, and to those whose accounts have been declared as non-performing assets (NPAs). The situation is more grave in the state as the banks here were already unable to meet their credit disbursal targets and as there are many areas where the bank branches don’t exist. Across Jammu and Kashmir, the banks have extended credit of Rs 15,753 crore to the 4.8 lakh beneficiaries against the target of Rs 23,605 crore in the last financial year.
The banks have also lagged in opening their branches in the state. The RBI had directed the state that the 104 villages with a population of 5,000 plus, which are devoid of banks, should be covered with new branches. However, against the target of opening 18 new branches in the last fiscal year, only one was opened. And records reveal that against the overall plan of opening of 246 branches in the state during the last financial year, only 54 branches were opened by different banks, thus drawing further flak from the government.
First Published On : Dec 3, 2016 09:34 IST
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