When it comes to the challenges that businesses in Kashmir face, there are many shades of grey that financial institutions would rather ignore. But, that is something that cannot be disregarded; there are circumstances that have caused the firms to regress, and it would be ineffective to dismiss them or adopt a “why would I care” attitude. These are substantial factors. When it comes to J&K, it all started with the repeal of Article 370, which put an end to business as usual. Next, COVID-19 squeezed out what was left, and if that wasn’t enough, the Russia-Ukraine War had a direct impact on the industry, in addition to the ongoing effects of inflation and several other factors.
The point is that the businesses are struggling; some of them have closed, while others are still operating and working to rebuild. The J&K Bank has a responsibility to play in helping these people on their path to recovery; otherwise, it will come off as bullying and use pressure techniques to recover its money. It must be noted that there is a majority of local borrowers who have pledged large properties as collateral for meagre or lower loan amounts and there are instances where the meagre collateral has been pledged by powerful businesses from outside J&K as security for large loan amounts—that needs to be taken note of. It is immoral for the bank to publicly damage the reputation of local borrowers by using harsh laws like the SARFAESI Act against them.
The Bank must stop harassing debtors and hold off on sending out letters or initiating any other legal action until business representatives can come to an amicable agreement on how to resolve the issue. The implementation of a consistent, non-discriminatory One-Time Settlement System (OTS) with a manageable payback schedule and improved concessions is also necessary, taking into account all the relevant considerations. While dealing with borrowers who are unable to pay back their loans, the Banks must be impartial and responsible. It must take into account a variety of possibilities for debt restructuring, including providing payment holidays, extending loan terms, lowering interest rates, and permitting partial loan forgiveness. J&K Bank has to be flexible in how it handles debt repayment.
