FCIK appeals CM to protect MSMEs from harsh recovery measures

Srinagar, Oct 20: The Federation of Chambers of Industries Kashmir (FCIK) has reached out to Chief Minister Omar Abdullah, urgently seeking his intervention to protect hundreds of defaulting business enterprises, particularly Micro, Small, and Medium Enterprises (MSMEs), from the stringent recovery measures currently imposed by J&K Bank.

In a letter to the Chief Minister, the leading industrial chamber expressed concerns that over the years, J&K Bank has employed aggressive tactics to publicly intimidate and harass local borrowers. These actions have not only continued unabated but have escalated since the establishment of the popular government in the Union Territory with recent persuasion and orders obtained from the Chief Judicial Magistrate to allow the forfeiture of mortgaged properties, including borrowers' residential homes, under the stringent provisions of the SAFAESI Act.

FCIK informed the Chief Minister that the bank has consistently disregarded the Centre's directives outlined in the notification of May 29, 2015, regarding the "Framework for Revival and Rehabilitation of MSMEs," along with subsequent directions from the Reserve Bank of India in 2016 which emphasizes the need to identify incipient sickness for revival of MSMEs before classifying them as Non-Performing Assets (NPAs). Ironically the bank has now disregarded the orders issued by Supreme Court as well, a statement said.

“The Supreme Court of India, on August 1, 2024, reaffirmed that these guidelines have statutory force and are binding on all scheduled commercial banks in India. The Court explicitly stated that the provisions outlined in the 2015 notification and subsequent guidelines must be followed prior to classifying a borrower’s account as an NPA” stated FCIK in the letter.

The Chamber pointed out that the fresh orders for forfeiture of properties were obtained just days after the establishment of popular government in J&K apart from that the intimidation of borrowers through newspapers and other means has intensified despite the bank’s long-standing pattern of harassing local borrowers under the pretext of adhering to Standard Operating Procedures (SOPs).

“It needs to be looked into whether the concerned CJMs were made aware of the Supreme Court ruling of August 2024 or not while obtaining such possession orders”, observed FCIK.

FCIK has called on the government to urge the bank to reevaluate its classification of NPAs among MSMEs in alignment with the Government of India's notification and the RBI guidelines. They have also requested the initiation of discussions aimed at the revival of viable units as soon as possible.

The chamber has sought the Chief Minister's support in halting all actions by the bank, including public notices, e-auctions, and property forfeiture until a resolution was reached. FCIK has also requested that the Revenue authorities, in collaboration with District Development Commissioners, ensure that banks comply with the mandatory orders and guidelines set by the Union Government and the RBI prior to obtaining forfeiture orders from the respective Chief Judicial Magistrates (CJMs).

Moreover, FCIK has expressed hope that the scope of the High-Level Committee established by the UT Government vide Order No: 940-JK (GAD) of 2024, dated April 8, 2024 will be expanded to address these critical issues and explore necessary remedial measures including launching of a special uniform One Time Settlement Scheme. FCIK has proposed that the President of FCIK be incorporated as a member from the stakeholders' side in this committee to ensure that the interests of local businesses are adequately represented.