The Saga of J & K Bank: When The Killers Turn Saviours

kashmir bank

Governor Malik’s decision to classify J&K Bank as a Public sector undertaking (PSU) should be seen in the broader scheme of Indian efforts to strengthen the tools of occupation which aim at controlling economic resources besides political, military & cultural control of the occupied.

Before commenting on the specific act of J&K Bank, it needs to be stated that Under the constitution of J&K, the powers of the Governor to frame laws, rules or policy decisions are limited to emergent situations requiring urgent attention. But  Going by his speed of  changing laws & taking policy decisions, he is committing a sacrilege of the same constitution of which he is a creation.

Now coming to the specific case of J&K Bank, it needs to be mentioned that this bank was incorporated in 1938 as a joint stock company under the state laws  with the joint efforts of  Kashmir Govt. & few local private enterprising individuals. It was a time when the contemporary India was not even born. Come 1947 and the temporary & conditional accession on three subjects of defense, foreign affairs & communication was entered by State with New-Delhi . J&K Bank, being outside the purview of these three subjects,  continued to act as the central  bank of J&K state looking after its fiscal & financial arrangements. Even the jurisdiction of   Reserve Bank of India Act 1949 or the banking regulation Act 1949, two principal Indian legislation on banks , didn’t apply to it.

The first evil eye of New-Delhi fell on the bank  in 1956  when the process of gradual erosion of State autonomy was put in motion by New-Delhi  post 1953 coup-de-tat . The jurisdiction of above two laws was applied to J&K Bank in the same year and the bank came under the supervisory jurisdiction of  Reserve bank of India.

The second nail in the coffin came in 1973 when the public debt function of the state was taken over by RBI. No tears were shed then as the agenda of New-Delhi was being faithfully carried out by the ruling elite. For opposition, Beg-Parthasarthy talks had just started and the  beneficiaries –in-waiting too were not interested in frustrating the process.

The other part  of the financial arrangement ,however continued to remain with the J&K Bank. All Plan & non-plan Funds, tax & non-tax revenue  were transacted through this bank. The ways & means advance, meant to bridge the gap between receipt & payments of the State  was also provided by this bank. In more ways than one , the arrangement ,though considerably depleted by the ambush of 1956 &1973, was symbolic of uniqueness &  financial autonomy enjoyed by the State . And symbolic  do matter.

The third assault on the autonomous character of the bank was launched in 2010 when pursuant to a request of the State Govt. for a structural reform grant of Rs. 2300 crores  made through 13th Finance commission, the Union Finance Ministry agreed to provide   Rs. 1000 crores  in the first instance  . As a quid-pro-quo, New-Delhi wanted  total financial control by Reserve  Bank of India under the garb of enforcing financial discipline .In the process J&K Bank was deprived  of the role of providing finances to Govt., its status of ‘Bankers to J&K Govt. snatched ’and its role reduced to just like any other bank in State. The then Finance Minster of the State defended this assault in the most bizarre words, one could have ever heard.

And now comes the proverbial last nail in the coffin of J&K Bank by classifying it as a Public sector undertaking (PSU) bringing  it within the ambit of  RTI Act as well as jurisdiction of chief vigilance commissioner(CVC) under the pretext of transparency. No-body is or should be against the transparency in the working of the bank. But one should also know that  banks survive on public trust and its affairs cannot  be a matter of street debate. That is why Banking regulation Act 1949, permits a bank to create secret reserves &keep certain figures ,like provision for bad & doubtful debts, out of public gaze by allowing banks to adjust these  directly  through these secret reserves.

Now let us come to specifics. As far as application of RTI Act is concerned, former Chief information commissioner has already held in favor of application of RTI Act on bank. The said decision has been disputed by the bank and the matter is pending adjudication before before the J&K High Court. The Governor should have atleast waited for the Honb’le Courts decision before giving his own on the issue.

As far as jurisdiction of CVC is concerned, we need to first have a look at the working of similar institutions in New-Delhi . CBI has been called a ‘caged parrot’ by Supreme court of India. At the moment its two highest officers , are accusing each other of corruption and have been shunted out in a midnight political coup and are now washing their dirty linen in Supreme Court. One of them is on record to state that pressure was exerted on him by PMO, Sushil Modi of Bihar & other political high ups to somehow implicate Lalu Prasad Yadav in IRCTC scam, so as to make his perpetual incarceration possible. Enforcement Directorate (ED) is openly being called as ‘Extortion Department’. NIA, primarily incorporated to investigate terror related crimes is used by political class to investigate  so-called ‘Love-jihad’ cases. It’s role is now limited to harass Kashmiris  seeking redemption of their historical right. Rohini Salian, Former Special Public Prosecutor in Malegaon 2008 blast case, in which four Muslims were killed during Ramzan and in which Hindu extremists are the accused, has publicly said that since the Modi government came to power, she has been under pressure from the NIA to go “soft” in the case. A top CBI officer has accused  Central vigilance commissioner of bias & acting under political pressure. The political interference exerted over & through these agencies is too visible  to be missed by a common man. And if this is the position with central agencies, one can imagine the  interference, the politicians can exert through CVC, a poor cousin of these big institutions. Remember State CVC  was once headed by a person even involved in killing of innocent persons in fake encounters.

The only agenda of the Governor, working as agent of New-Delhi ,in classifying  J&K Bank as a PSU is to exercise greater control & influence over this institution which has kept the wheels of Kashmir economy moving even during the most turbulent times. In the process, the bank will be ruined like other state PSUs and Kashmir economy will be deprived of a strong supportive pillar. It is a win-win situation for New-Delhi.

But what  is most bewildering is  that the  past  killers of this institution have become its current saviours ?

(The author is a practicing Chartered Accountant . E mail:


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