Minister for Cooperatives, Javid Ahmad Dar, today informed the House that the J&K State Co-operative Agriculture & Rural Development Bank Ltd. (J&K SCARD Bank), established in 1962 under the Jammu and Kashmir Co-operative Societies Act, 1960, is not registered under the Banking Regulation Act, 1949 and therefore does not fall under the purview of the Reserve Bank of India.
The Minister stated this while replying to a clubbed question raised by Legislators Dr. Rajeev Kumar Bhagat, Vikram Randhawa, Surjeet Singh Slathia and Vijay Kumar. He said that the Bank is presently under the control of the UT Government through the Registrar of Co-operative Societies (RCS) and the Administrative Department of Cooperatives.
The Minister further said the Bank has not been declared bankrupt and the Government has initiated the process of liquidation in accordance with the provisions of the Jammu and Kashmir Co-operative Societies Act, 1989 due to prolonged financial and operational distress.
The Minister explained that the Bank’s financial stress developed gradually due to accumulated losses, weak governance and internal control systems, poor loan recovery and liquidity pressures. He added the situation worsened due to inadequate refinance support from the National Bank for Agriculture and Rural Development (NABARD) and limited financial assistance from the UT Government, as the Bank was largely dependent on refinance and government support and as a result, liabilities exceeded assets, severely affecting the Bank’s ability to meet depositor obligations.
The Minister said that the Bank has stopped payments of matured fixed deposits, including at Bishnah Branch, due to acute liquidity constraints, leaving several depositors awaiting disbursement. He informed the House that the repayment of depositors forms part of the overall liquidation and depositor-protection framework approved by the Government.
He also said that a comprehensive Know Your Customer (KYC) verification exercise covering all branches, including Bishnah has been completed to authenticate depositor claims. The Minister said that upon issuance of winding-up order and appointment of Liquidator(s), duly verified claims will be settled in a phased manner strictly as per statutory provisions and the prescribed order of priority.
He further stated that the Deposit Insurance and Credit Guarantee Corporation (DICGC) mechanism has not been invoked as it applies only to banking institutions registered under the Banking Regulation Act, 1949, adding that J&K SCARD Bank is not covered under the Act.
Reaffirming the Government’s commitment to safeguarding depositor interests, the Minister said that a detailed projection of depositor liabilities has been compiled and submitted to the Government for consideration, including provisioning through the budgetary process in accordance with law.