Srinagar, Dec 18: Federation of Chambers of Industries Kashmir (FCIK) has urged on J&K Bank authorities to withdraw their latest decision regarding levying of ‘Commitment Charges’ on the unutilised portion of the loans and credit lines provided to the enterprises.

While expressing its displeasure, the FCIK in a statement issued to Business Kashmir said that it was for the first time in the history of J&K Bank that borrowers were being made to pay for loans or the portion of loans which actually they didn’t lift or utilize. The bank would not so far levy such charges probably in acknowledgement of the un-conducive working atmosphere.

According to the guidelines issued by RBI, levying of commitment charges was not mandatory upon the financing banks but discretionary, and it was left to the wisdom of banks to charge or not to charge it, said the FCIK.

“If the plea of the bank was that they could have earned interest on the unutilised portion of the loan, had they lent it to other borrowers, the question could be asked about the gap between their credit flow and permissible limit of lending which continues to be huge despite some narrowing in the recent past,” reads the statement.

FCIK agreed that J&K Bank had been extending some small concessions including waiver of commitment charges to the borrowers of Jammu, Kashmir and Ladakh, but that was only peanuts in reciprocity to the gesture that 88.2% of the total deposits of the bank comes from the kith and kin of these borrowers at an unprecedentedly low rate of just 3.67%  which was the lowest than available to any other national or commercial bank in the country.

While criticizing the decision, FCIK questioned the wisdom of the bank to perceive that the condition of entrepreneurs had changed for to better now to take additional brunt even after facing long spells of business interruptions from the 2014 floods to the aftermath of the Covid-19 situation. The bank should know that currently the product market appetite ran at its lowest ebb for the complexities caused by these situations besides the change in policies which obviously resulted in the lifting of lower amounts from sanctioned credit lines, reads the statement.

Hailing the prudent entrepreneurs for lifting only the required portion of the amount out of their sanctioned credit line in tune with market demand for their products, FCIK cautioned the bank not to force them to lift entire sanctioned loans for illegally siphoning it off towards any other non-bonafide activity. It was as such imperative upon the bank to withdraw the decision of levying commitment charges till the product market appetite stabilized.

BK NEWS

Sopore, Nov 24: J&K Bank Branch Chinkipora Sopore on Thursday organized a day-long Customer Awareness Program and Financial Literacy Camp. At the request of the local community, a programme was organised in the villages of Rampora and Rajpora, Dangerpora Sopore, Baramulla.

Mohammad Yaqoob Kaloo (Branch Head) presided over the programme assisted by Sameer Gojwari (Manager Credit), and Tawseef Ahmad (Recoveries & Follow-up). Dr Ashraf Ahmad (Veterinary Department), Dr Farooq Ahmad (Veterinary Department), Jahangir Ahmad (Horticulture Department), and Parviaz Ahmad (Khidmat Centre Warpora Sopore) attended the event as well. Several established unit holders under various government-sponsored programmes backed by J&K Bank graced the occasion and motivated the young to pursue the road of entrepreneurship/start-ups.

Yaqoob Kaloo opened the discussion by introducing J&K Bank and its mission of ‘Serving to Empower’ the youth of the country in general and the UT of J&K in particular, followed by the product line provided by the bank for youth development and upliftment to pursue entrepreneurship as a vocation and be job creators rather than job seekers. He introduced the audience to a plethora of government-sponsored programmes for unemployed youth, as well as the role of banks, notably J&K Bank, in establishing these policies through funding and linking the government and the unemployed youth for economic improvement and balance.

PMEGP, MUMKIN, Prime Minister Street Vendor’s AtmaNirbhar Nidhi (PM SVANidhi), DAY-NULM, DUDM, Tejaswini, KCC for Agriculture and allied etc schemes  were discussed.

In addition, Sameer Gojwari emphasised the need for clarity of ideas, followed by thorough project reports on the sort of activity in which youth desire to grow their careers.

“Make in India concept needs to be replicated and implemented in every corner of the country wherein “produce and use local must be too vocal” to put the revolution in deep rural areas,” he said.

The J&K economy is opening up to the rest of the globe, and consumption is expanding in line with per capita and disposable family incomes. To meet that need, a large percentage of it is imported from neighbouring states, which might otherwise be produced in the J&K region. Projects in the pink revolution (meat), white revolution (milk and dairy goods), blue revolution (fish farming), green revolution (agricultural and associated products), and biproducts can breathe new life into the economy and reduce the region’s reliance on tourism and the apple industry. Aspiring entrepreneurs should develop ventures where raw materials are readily available, and the initial consumer should be the region’s native population, leading to profit generation in the early stages of the project with fewer chances of failure.

Youth were encouraged, and the role of J&K Bank in financing sustainable and future-oriented initiatives that prospective entrepreneurs may have in mind was reaffirmed.

Tauseef Ahmad emphasised the need for timely payment of interest dues.

“Once the project is funded and the trajectory is established, the crucial measures that must be taken care of when handling the finance part and its repayment,” he explained.

“It is visible where interest helps in managing leverage ratios can lead to downfall if not managed and paid well in time thus affecting the credit score initially and can lead to blacklisting in the long run which is no option in the modern-day world where in the entire economy and business revolves round the banking sector,” he added.

Parvaiz Ahmad focused on the digital aspect and paperwork linked to various credit products, as well as the online submission of applications for government schemes, and promised to assist ambitious entrepreneurs in this sector.

Yaqoob Kaloo presented a vote of thanks to people from both villages for coming out in large numbers despite the harsh winter. The Chair offered full financial assistance to the young who want to pursue entrepreneurship as a career and have unique ideas for repairing and rebuilding lost crafts and skills that were previously appreciated across the world.

ABRAR UL MUSTAFA

abrarwrites@gmail.com

The essence of any business or industry sector lies in constant change and improvement. This demands to be done in the technology, business model, business policy and strategy and several distinct aspects. Banking is no oddity. This industry has faced multiple setbacks in the recent past. Rising bad debts, cyber-frauds, ineffectual governance, dilution of kernel business and so on have crippled the sector. Consequently, the road ahead is uncertain, and the tunnel is dark. Banking strategies need a timely overhaul if we want the newest and the best avenues to open for this vast enterprise. Change in planning is needed to achieve change in profits.

A strategy is a plan. It is the overall aim of an organisation. It is a carefully crafted roadmap that may be followed to achieve the desired results and lead an organisation to the avenues of prosperity and profit. An avenue is a road we want to take to. It is the desired destination. The milestone we would want to cross. Careful planning is the key to reach the set avenues.

Keeping in view the ongoing banking scenario and the reasons behind the downfall of this great industry, let’s discuss new strategies in banking avenues. Let’s suggest, understand and choose novel strategic ideas.

1. Technology: Yes. Technological up-gradation is a plan that never gets out of fashion. Technology keeps changing like the weather. Any tech upgrade of last year is obsolete this season. Last year, we used to insert a debit card into a swipe machine to shop. This year we just wave our debit card over a POS machine, say hi to the equipment and the transaction is done. Needless to say that technology is the backbone of the banking system. The updated the technology, the better the banking. The strategies we form should adopt technology as one of the central elements of the strategic portfolio. Tech must be at the core of all strategic advancements. The strategists should think of any blueprint they want to put in on the lines of its technological specifications and doctrine. Test each strategy on the scale of technology.

It is important that we don’t remain reluctant to go for the concepts of Cognitive Technology. Cognitive Tech is the application of computers for doing those tasks that only a human being could do. These are the products of Artificial Intelligence (AI). Examples of AI that could be imposed in banking are Blockchain, Robotics and Process Automation. Blockchain is the process of systematically collecting data in blocks and giving it a chronological order and eventually obtaining insightful information. Blockchain is the same technological interface that lies at the spine of Cryptocurrency. Banks should wholeheartedly embrace these marvels of Cognitive Technology to usher new avenues.

2. Back to basics: Traditional banking was the best in terms of focus and specialisation. A banker had to appraise a loan applicant and lend. He had to accept people’s deposit. The difference between the interest earned and interest paid was his profit. As simple as that. The traditional banker was specialised in his business. Unfortunately, today, we have to lend, accept deposits, sell insurances, promote government schemes and what not. Today’s banker is caught between core business and these associated party products. A bank has been reduced to a departmental store where you find everything. And a banker has been reduced to a puppet in the hands of the administrators of social security products and owners of private insurance companies. It is the high time that banking be limited to core banking. Let’s do what we do best. We are masters of banking and not jacks of insurance trades. The model strategy would be to revisit our business model and revise what we are doing. We should go back to our basics and strengthen the basic pillars of our business in accordance with the current trends.

3. Collaborate to innovate: Today, the world has transformed. So has the business of banking. It is time to collaborate and develop networks. The strategy here would be to collaborate with FinTech companies, E-commerce marketplaces and so on. The idea is to make a shift from that traditional Brick-and-Mortar model to Banking as a Service (BAAS) model. Here, third-party financial and technological start-ups connect with banks. This is done with the help of technology, automatic linkages and collaboration. This model is promising as it is likely to offer personalised offers of various products to consumers. Nowadays, a number of banks in the advanced nations have adopted and collaborated with tech giants. This has been done under the concept of Logging as a Service (LAAS). To simply explain, LAAS is an IT architectural model wherein data and logs from different servers and sources are centrally ingested and analysed. In our discussion, logs and data from banks are collected and analysed so as to offer products to customers. This gives rise to a win-win situation for both tech firms and banks.

4. Open doors to Open Banking: In India, we have networked with Insurance companies. It gives us a commission. In many developed countries like the US, banks have been adopting the strategy of ’Open Banking’. It means linking with third-party service providers via Application Programme Interface (API). Here, customer’s data is shared with third-party service providers in a technical and systematic environment. This is of course done with the customer’s consent. Now what makes it different is the perfection in the identification of the customers’ needs. The data—comprising transaction pattern, account details, etc—is analysed and studied in such a way that the real product needs of a client are understood and proposed. It increases the chances of a sale. There is a spectrum of benefits in it: Customised offerings, Credit solutions, Futuristic Banking, Digital Agility, Wider client base and so on. Open Banking is the future of banking.

5. Alter to Attract: There was a time when Bank Deposits were the first choice when it came to investment. Today, the case is a complete opposite. Now, Bank FDs and RDs are the last choices. Mutual Funds and other investment options have diluted the attraction of Bank Deposits. It is the high time that we think of new strategies. Let’s alter our FDs and RDs in such a way that they provide better returns. We still enjoy the advantage of customer trust. These instruments are not risky. Let’s expand their returns by shaping the product bundle in contemporary ways. The strategy to open trending avenues is to make our deposits desirable investment druthers. Link them with the market like Mutual Funds or Gold Bonds. This, linked with the bank’s name, would make them a prefered investment choice and ensure competent returns.

6. Secure everything and everyone: Cyber Security issues, fraudulent transactions, skimming, phishing, calling scams and newest assaults have been robbing people of their hard-earned money. Cyber breaches are harsh actuality. Although, banks have been borrowing every trick in the bag to prevent it, but there has been not a hundred per cent success. It is required that cybersecurity is given all the more significance. No other strategic avenue is going to help unless and until security issue is resolved once for all.

Postscript

Banking is such a vast industry. The need of the hour is to change the strategies and open new avenues. Being technically relevant, partnering with others, ensuring cybersecurity, switching to APIs, BAAS and LAAS, revisiting our core products, embracing Open Banking and making our investment options attractive, are the keys to unlock the avenues of business and prosperity.

The author is MBA, NET, IBPS. He works as Manager Scale-II in the Middle Management of a reputed PSU Bank. The views are personal