J&K to do away with Name and Shame policy to support MSME recovery: FCIK

Posted by admin_kas on 2025-01-30 22:48:11 |

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Srinagar Jan 30: In a significant development, the Jammu and Kashmir Bank (JKB) has decided to do away with its "Name and Shame" policy which was causing distress to the borrowers particularly to Micro, Small, and Medium Enterprises (MSMEs) in the region.

In a statement issued here, assurances were given by the Director and CEO JKB Amitva Chatterjee during his meeting with a delegation of Federation of Chambers of Industries Kashmir (FCIK) led by Shahid Kamili.

"For years, J&K Bank publicly shamed borrowers struggling with loan repayments by publishing SARFAESI notices and e-auction advertisements in newspapers," FCIK in a statement said.

"This practice severely damaged the reputations of businesses and individuals, often hindering their ability to secure future financial support or business opportunities," it reads .

The statement reads that FCIK has criticized this approach as it was disproportionately affecting MSMEs, many of which are already under significant financial strain due to external factors beyond their control.

"FCIK has consistently advocated for a more constructive approach, calling for the bank to adhere to government-mandated revival and restructuring mechanisms," the statement reads.

It reads that the measures, as outlined in the Government of India’s 2015 Notification and the Reserve Bank of India’s 2016 Guidelines on MSME Rehabilitation, are designed to provide businesses with a fair opportunity to recover, rather than prematurely classifying them as Non-Performing Assets (NPAs).

"The Supreme Court of India has also upheld the principle that MSME accounts should not be hastily declared NPAs without proper due process," the FCIK statement reads.

It reads that JKB CEO Chatterjee assured that J&K Bank would discontinue the use of SARFAESI notices and e-auction advertisements for public shaming, especially for MSMEs.

*He confirmed that the premature classification of MSME accounts as NPAs would cease, and all cases would be handled in full compliance with government and RBI guidelines," the FCIK statement reads.

Additionally, the MD has emphasised that bank would prioritize open, constructive dialogue with struggling MSMEs, offering viable restructuring and repayment options to help businesses recover.

"FCIK welcomes this positive shift in the bank's approach. We commend Chatterjee for his cooperative and non-confrontational stance on debt resolution," the statement reads.

The Federation has stressed that J&K Bank should prioritize the revival of businesses over liquidation, giving MSMEs a fair chance to rebuild and avoid forced closures.

"This decision marks a crucial turning point in the bank’s approach to MSME borrowers, fostering financial stability and reinforcing principles of rehabilitation and financial inclusion," it reads.

To further streamline the process of accessing credit and financial services for local businesses, FCIK presented a 25-page charter of demands outlining key measures to address the unique needs of the region’s entrepreneurs.

Recognizing the significant challenges facing local businesses, FCIK proposed a three-pronged strategy for resolving the growing NPA crisis.

The delegation has urged J&K Bank to adopt a more inclusive and structured approach that would ensure the survival and growth of viable enterprises.

FCIK has expressed optimism that, under Chatterjee’s leadership, J&K Bank would proactively work with stakeholders to resolve the NPA issue and support the continued growth of MSMEs in Jammu and Kashmir.