J&K Bank’s rehabilitation package aims to ease economic fallout of post-Pahalgam disturbances

Srinagar, Oct 19: J&K Bank’s Rehabilitation Package is being implemented across the Union Territory to support borrowers affected by the disturbances that followed the Pahalgam incident.

The bank has designed the package to provide relief to individuals, small traders, and enterprises that have been severely impacted by disruptions, aiming to restore liquidity, financial stability, and business continuity in the region.

The decision to roll out the package comes in the aftermath of the Pahalgam attack, in which 26 tourists, including a local guide, were killed by terrorists in Baisaran, Pahalgam, on April 22. The tragic incident triggered a strong response from the Government of India, which launched military action against Pakistan in retaliation. In the aftermath of the attack and the subsequent escalation, Kashmir’s economy suffered a sharp downturn.

Tourism, the mainstay of the Valley’s economy, came to a standstill as travel advisories were issued, bookings were cancelled, and security restrictions tightened. Hotels, transport operators, houseboat owners, and small businesses dependent on tourism continue to face losses, with the sector yet to see a full revival months after the incident.

Speaking to Greater Kashmir, Chief General Manager (Credit) J&K Bank, Rakesh Magrota, said the rehabilitation initiative was structured in line with the RBI’s master circular that prescribes specific guidelines for providing relief in areas affected by natural calamities or disturbances.

He explained that a government notification declaring the affected areas as “disturbance-affected” is a mandatory precondition under the RBI framework. Only after such a declaration can banks legally implement relief and rehabilitation measures for borrowers in those areas.

“When this happened, most of our businesses remained under stress. The government proactively decided that we should come up with a package. We took it up with the government and the Reserve Bank of India, and subsequently, a notification was issued by the government on August 8,” he said.

“As per the RBI procedures, such measures are initiated only when the UT or state government declares an area affected by natural calamities or disturbances. Following that declaration, a committee was set up by the UTLBC comprising J&K Bank, State Bank of India, and Punjab National Bank. J&K designed the package in the best interest of our stakeholders—covering tourism stakeholders, rural artisans, traders, and MSMEs.”

The Chief General Manager explained that the package was designed to address both the repayment burden and the liquidity stress faced by borrowers. Under the rehabilitation plan, borrowers can avail repayment relief through the extension of existing term loans, with or without a moratorium. Any unpaid or accrued interest on outstanding loans will be converted into a Funded Interest Term Loan (FITL), allowing customers to spread their repayment over time. In addition, borrowers can access up to 15 percent additional working capital through a Working Capital Term Loan (WCTL) to help revive operations and sustain employment. A moratorium period from April 1, 2025, to March 31, 2026, has also been announced to provide financial breathing space for recovery.

Both FITL and WCTL will be repayable over 36 months after the moratorium, ensuring a gradual repayment schedule. The interest rate for both facilities has been capped at 8.45 percent per annum, which the bank described as highly customer-friendly. “There was stress on liquidity, and that has been taken care of through conversion of interest into FITL, a moratorium on repayments, and an extension of existing repayment schedules by another nine months to a year. There’s also additional working capital up to 15% of existing limits, and the interest rate is very customer-friendly—capped at 8.45%,” the Chief General Manager said.

He added that as per the RBI’s framework, the implementation window for such rehabilitation packages remains open for 90 days from the date of the government’s notification. “The RBI’s framework clearly mentions a 90-day window from the date of declaration. We observed initially that traction was low—perhaps because people were taking time to decide—but we decided to popularise the package further so that more affected individuals could come forward, stabilise their livelihoods, and revive economic confidence,” he said.

The bank has also made provisions to upgrade downgraded but eligible accounts once the rehabilitation measures are implemented, thereby restoring the credit standing of borrowers whose accounts were affected by the post-disturbance slowdown.

The Chief General Manager emphasised that the overarching objective of the package is to ensure financial stability and business continuity for all affected enterprises across Jammu and Kashmir.

“Our aim is to provide financial stability and ensure business continuity for all affected enterprises. This package represents a unique alignment between the bank, the government, and the RBI—all working on the same page to support our people,” he said.

The benefits of the Rehabilitation Package 2025 will be available only if implemented on or before November 5.  J&K Bank has advised borrowers to contact their nearest branches for assistance and to complete formalities within the stipulated time. The bank has also initiated awareness efforts through customer communication channels to ensure wider participation.