Pahalgam Attack Fallout: Banks seek Govt nod to activate business rehabilitation plan

Srinagar, June 25: Banks operating in Jammu and Kashmir have urged the government to issue a formal notification declaring the recent Pahalgam terror attack and subsequent Indo–Pak border tensions as “Disturbances” across the Union Territory, to activate the Business Rehabilitation Plan aimed at reviving conflict-hit enterprises.

The demand was raised as a special agenda item during the Union Territory Level Bankers’ Committee (UTLBC) meeting held on June 22. The meeting, chaired by Chief Secretary Atal Dulloo, saw unanimous support from representatives of both public and private sector banks for the move.

“As a special agenda item in the meeting, UTLBC (J&K) unanimously requested the J&K Government to consider issuing a notification declaring incidents of the Pahalgam terror attack and Indo–Pak conflict thereon as ‘Disturbances’ across the Union Territory for invoking the Rehabilitation Plan for revival of affected businesses,” read an official statement issued after the meeting.

Bank officials stated that recent events, including the April 22 attack in Pahalgam and the heightened security situation along the border, have disrupted commercial activity and dampened economic sentiment, particularly in the tourism, transport, and retail sectors. A formal notification would allow banks to offer structured financial relief, including loan restructuring, EMI deferment, interest waivers, and emergency credit support as per Reserve Bank of India guidelines.

The terror attack in Pahalgam on April 22, 2025, which resulted in the deaths of 26 civilians—mostly tourists—has severely impacted Kashmir's business and tourism sectors. Business organisations and stakeholders across the Valley are urgently seeking comprehensive plans and government support to recover from the shock and restore confidence in the region.

The attack struck at the start of Kashmir's peak tourist season, leading to mass cancellations of hotel bookings, travel itineraries, and a drastic drop in tourist arrivals. The ripple effect has been severe across the local economy.

Sectors most affected include hotels, restaurants, transporters, tour guides, artisans, and small businesses, many of whom were already under financial strain from prior investments and mounting debts. Shikarawalas, pony handlers, and tourist taxi operators are among those facing acute economic distress, with reports of widespread job losses and collapsing seasonal incomes.

A senior public sector bank official said, “The economic disruption is real and visible. Since the attack, loan demand has dropped by as much as 90 percent in some segments. Businesses that had just begun to recover are now slipping back into distress. A government notification is the only way to activate the relief mechanisms available to us under the rehabilitation policy.”

The demand for intervention has also been vigorously taken up by the Kashmir Chamber of Commerce and Industry and business associations and chambers, which have held consultations with both the government and financial institutions.

“We have taken up this issue with both the government and the banking sector. The economic impact of the Pahalgam terror attack is undeniable, and businesses—especially those dependent on tourism—are suffering immensely. We have clearly stated that handholding is required to revive business and bring back confidence,” said KCCI President Javid Ahmad Tenga.

Tenga said that the Chamber submitted detailed demands in meetings with both the Lieutenant Governor and Chief Minister, including a moratorium on loan repayments, interest relief, protection from NPA classification, soft loans for the transport sector, and tourism promotion initiatives.

Last month, Chief Minister Omar Abdullah met a KCCI delegation at the Civil Secretariat and assured that a dedicated economic relief package would be prepared to address the specific fallout of the Pahalgam attack. He said the proposal would be forwarded to the central government for support.

“We are asking for support in light of the unprecedented circumstances we face. A joint proposal for a package will be prepared, but it must be distinct from regular demands to ensure focused and definite attention,” the Chief Minister said during the meeting.

With borrower distress deepening and commercial activity slowing, the business community and banks are awaiting swift action from the government to enable relief under the established rehabilitation framework.