OTS abused in J&K Bank functioning

By Sant Kumar Sharma
The functioning of J&K Bank has come under scrutiny of the regulator, Reserve Bank of India (RBI) and the Anti Corruption Bureau (ACB). Of course, not without sufficient reasons as allegations of corruption were becoming rampant.It appears the modus operandi by unscrupulous elements was fairly simple. Misusing and abusing the process of one time settlement (OTS) in case of loan defaulters.Rich, powerful and well connected people were given loans, far more than they would perhaps have got on the strength of the collaterals or mortgages they could offer. Some bank officials seem to have helped them in getting around the requisite formalities.The next step was then that these people became defaulters and stopped repayments of the loans. This also appeared to have been done deliberately, in connivance with unscrupulous bank staff. The loans then became non performing assets (NPAs). To settle these loans, due process of OTS was then used in an undue manner, repeatedly, in many cases.It appears even before some of these loans were sanctioned, the bank staff knew how things will pan out over the next few years. Any bank has the right to resort to OTS with its customers, and waive off some of the loans to reach settlement.If done properly, and with honest intent and purpose, the process helps recover some of the loans. For the banks, it can help in recovery of some amounts, which can be said to be better than no recovery at all.1. Sanction inflated loans to reach and powerful.2. Repayments become irregular and then stop altogether.3. The loans then become non performing assets (NPAs).4. Bring in one time settlement (OTS) into play. 5. Waive off crores of rupees and wipe them off the books.The defaulters as also unscrupulous bank staff gain. The prime loser is the bank which sees it’s profits being pared. It is not actually paring of the profits but seems like deliberate, well thought out strategy to weaken the bank.The process is repeated many times over and the bank bleeds. To keep a tight lid on all the goings-on, the bank also does corporate spending in a manner to boost its image.It needs to be STRESSED HERE THAT the lower staff of the J&K Bank was working in an intimidating atmosphere for the previous few years. The managers, clerical staff and even mid-level officers were given stiff targets for mobilisation of funds in many cases. They were told that this was a part of the new corporate governance structure that was in place now.IN 2018, THE BANK STAFF CONTRIBUTED NINE DAYS SALARY FOR OSTENTATIOUS CHARITY. This they did on two occasions around four months apart. This was virtually a dictation from the top echleons as the employees also became an instrument for polishing the bank’s image among the public.On the first occasion, all employees of the bank were asked to contribute SIX DAYS SALARY for charity. This money was apparently mobilised for the victims of the Kerala floods. A cut of a day’s salary is something that happens, at times, across the board, and government employees contribute it to different causes in case of an unforeseen natural calamity or some other extraordinary circumstances.THIS CUT OF 6 DAYS SALARY OF J&K Bank employees remains unparalleled!On the second occasion, the bank staff was asked to contribute 3 DAYS SALARY AS CHARITY for ostensibly helping those who had lost due to unseasonal rains in the Kashmir valley in November last year.On the second occasion, the employees were given a choice of saying no to this salary cut. They were asked to individually write to the headquarters informing regarding their unwillingness to contribute three days of salary.Such was the atmosphere prevailing that hardly anyone wrote against the practice.THE J&K BANK STAFF CONTRIBUTED NINE (6+3=9) DAYS SALARY FOR CHARITY DURING 2018. THIS IS PERHAPS THE HIGHEST CONTRIBUTION FROM AN INSTITUTION FOR CHARITY IN A YEAR.OF FREE will, or UNDER DURESS?MORE skeletons may tumble out of J&K Bank cupboards in the days to come, it appears.One thing that can perhaps be done is to scrutinize all the cases of ONE TIME SETTLEMENT done by the Bank during the past few years. That can open more cans of worms and lead to systematic cleansing.