FCIK flays J&K Bank for seizing industrial unit in Lassipora

Srinagar, Aug 8: The Federation of Chambers of Industries Kashmir (FCIK) has regretted the action of J&K Bank to seize an industrial unit at IGC Lassipora on Tuesday within just two months of downgrading of account of the enterprise, which is a “new low hit by the banking intimidation of entrepreneurs”.

FCIK in a statement issued here said that earlier the bank had seized a residential house in Srinagar within 5 months of downgrading the account of the concerned entrepreneur.

In a statement, FCIK has informed that J&K Bank officials forcibly took possession of an industrial unit M/s Mehfooz Agro Products at Industrial Growth Centre Lassipora on Tuesday which has been set up in 2017 by a highly educated young person who had topped the MCA examination. The said unit is engaged in the processing and export of walnut/almond kernels that had unfortunately received a severe setback during COVID-19. Despite this, the entrepreneur was regular in servicing his cash-credit facility of Rs 69.50 lakh and paying instalments towards a Guaranteed Emergency Credit Line (GECL) of Rs 14 lakh sanctioned in his favour under a scheme approved by GOI to combat the crises caused by the pandemic and guaranteed by GoI.

 According to the statement, the promoter of the unit Shahid Gulzar had already paid back Rs 7 lakh out of Rs 14 lakh of GECL and had also paid 50 thousand rupees during May itself when his account was downgraded at the end of the month. Although the bank had demanded a payment of Rs 42000 more, yet he could not arrange and make it for the reason that he was completely busy in the hospital with her ailing young wife who suffered from terminal illness which was well in the knowledge of bank officials, explained the promoter.

FCIK has regretted the harsh treatment meted out by the bank to this young highly educated entrepreneur which has the potential to shatter the faith and confidence of prospective entrepreneurs not only in the lending institutions but also in the government policies and schemes aimed to allure young minds towards entrepreneurship.

“It was beyond our comprehension to guess why the bank in the first instance had denied credit to this entrepreneur under the existing scheme of Credit Guarantee fund Trust for Micro and Small Enterprises (CGTMSE) which has been devised by GOI for such entrepreneurs and assured of collateral-free credit to them up to Rs 5 crore,” asked FCIK.

The question also aroused as to why the bank instead of exploring other options including restructuring the debt of the entrepreneur opted for seizing his property when that property was valued at more than 3 times the total outstanding.

While conveying its dismay on the attachment of properties kept as collateral security within 60 days of downgrading of accounts, FCIK has asked J&K Bank to come clean on whether it would be their new normal now, the statement said.

FCIK wishes to put an end to the growing confrontation between enterprises and the bank and has reiterated its demand for government intervention at the earliest. The matter also needed to be looked into by the government in the context of the massive industrialization programme launched by GOI and the UT government for the engagement of youth in entrepreneurship.

FCIK has called for a meeting of presidents of valley-based industrial associations to deliberate upon the issue on Wednesday. The industrial association of Lassipora is also scheduled to discuss this grave issue.