KCCI urges J&K Bank to revise 'Karz-se-Mukti' scheme

Srinagar, Jan 2: The Kashmir Chamber of Commerce and Industry (KCCI) has called upon Jammu & Kashmir Bank to remove all monetary caps and ceilings from its recently announced special one-time settlement scheme, known as "Karz-se-Mukti."

in a statement, the Chamber stressed that the scheme must operate without any upper limits to effectively address the diverse needs of borrowers across all segments of the business community.

"The existing scheme's ceiling of Rs 5 crore has been identified as a major impediment to its effectiveness. The Chamber maintains that such arbitrary caps fundamentally restrict the scheme's ability to provide meaningful relief to larger borrowers who equally require assistance. This limitation, along with the restrictive three-month time frame, represents a significant departure from the comprehensive relief measures discussed with Lieutenant Governor Manoj Sinha and Chief Minister Omar Abdullah."

In its detailed review of the scheme, the Chamber has identified several critical areas requiring immediate modification. Of particular concern is the scheme's stance on cases where recovery suits have not been filed, which are currently excluded from eligibility. The Chamber argues that this exclusion creates an unwarranted distinction among borrowers and should be reconsidered.

The Chamber also raises concerns about the treatment of collateral in the current scheme. Many borrowers have offered their homes and other properties as collateral in good faith, yet the scheme imposes higher payment demands on these cases despite the presence of sufficient collateral. This approach, according to the Chamber, penalizes borrowers who have demonstrated commitment by providing substantial security.

Regarding pending cases, the Chamber notes that RBI guidelines permit their inclusion in one-time settlement schemes with Board approval. Given that the special OTS scheme itself has received Board approval, the Chamber advocates for the inclusion of these cases, while maintaining that any ongoing proceedings should continue as required by law.

The Chamber further emphasizes the importance of including cases currently under investigation where no adverse orders have been issued. Their position is that the bank can take a commercial approach to these cases while safeguarding public money, with the provision that investigating agencies be informed upon OTS sanction.

On the temporal aspect, the Chamber strongly recommends extending the scheme's duration to a minimum of one year, with provisions for minimal interest charges on repayments extending beyond three months. The KCCI advocates for a more flexible approach to determining relief, based on factors such as account ageing and bank comfort, without rigid security requirements.

The modifications we propose are essential for creating a truly effective one-time settlement scheme.

KCCI appeals LG Manoj Sinha, Chief Minister, Omar Abdullah, Chief Secretary, Atal Duloo, CEO, MD J&K Bank Amitava Chatterjee to reconsider this scheme in a way so that the account holders become eligible to avail this scheme and at the same time J&K Bank bank to further improve its NPA ratio.