The Indian banking and financial system has been ridden with financial manipulation and frauds, as seen in the case of ILFS, or the window dressing of financial statements by banks like ICICI Bank, Yes Bank, Axis Bank etc. Since it is generally assumed that banks hide their NPAs, to show a rosy picture, the revelations of their false financial statements did not come as a shocker, as much as the fraudulent collapse of the giant ILFS did, and shook the entire Indian NBFC system. In the growing series of banking frauds comes the case of J&K Bank, which is far more sinister and serious in its ramifications. This bank, apart from its blatant violations of banking laws, has been merrily involved in criminal and anti national activities, by permitting activities such as terror funding, money laundering etc.
The Bank was founded in 1938, is headquartered at Srinagar and has over 950 branches spread all over India. Though the J&K government owns 59% of its shareholding, it is yet categorised as a private sector bank. Being government owned, it gets all the J&K government business and being called a private sector bank, it is not required to be accountable to the government with mandatory disclosures, as any government owned bank would be. It has thus cleverly kept itself outside the purview of the CVC and the RTI Act, thus diminishing its accountability even further. The Bank is a lifeline for the J&K state and is also its interface into India’s banking system. It caters to the banking needs of the common Kashmiri, its political parties and the government, but shockingly as per the recent findings, also of the militants and separatists like the Hurriyat, Jamaat-I-Islami etc. With its pan India presence, the Bank provides such crimes with an all India reach.
The Bank’s sordid and scammy state of affairs started getting revealed, when a few months ago, the J&K Governor proposed to bring the Bank under the purview of the CVC and the RTI Act. That raised a hue and cry among the Kashmiri politicians, which itself was a clear indicator that all was not well with the Bank, or else why the hue and cry. With the BJP led government back in power, it has decided to continue its investigation into the affairs of J&K Bank. The ACB recently conducted extensive raids at the Bank, which have revealed incriminating findings. The Bank is an elitist, self serving, club like shady organisation taking illegal orders from politicians and is a hotbed of corruption, favouritism and nepotism. It has sanctioned huge fraudulent loans under political instructions, siphoned away over Rs.1000 crores through dud loans, NPA accounts have been illegally written off, loans have been given to defaulters, ineligible relatives of the then chairman Pervez Ahmed have been fraudulently recruited, CSR funds of Rs.8 crores have been siphoned away and it has been involved in hawala, money laundering and terror funding activities. These are grave charges, which indicate that the Bank is being used for subversive activities, now for many decades.
While the ACB investigation continues, a slew of other criminal investigation agencies too have got into motion, investigating the affairs of J&K Bank. CBI is to look into charges of corruption, NIA into terror funding activities, ED for money laundering and hawala, CBDT for tax evasion and a forensic audit to ascertain the actual state of affairs. Its chairman Pervez Ahmed has been sacked, and an interim one has been appointed. The Bank has also been brought under the domain of the CVC and the RTI Act, as the government attempts its clean up and resurrection, and to make it accountable. Since such activities were conducted for decades, there are bound to be far more shocking revelations coming out of all these investigations. It is clear that this lawless state of affairs of J&K Bank was in the know of the Central Government too for long and had its blessings, which explains why authorities like the RBI did nothing to restrain the illegal activities of J&K Bank.