Imagine a customer sitting in front of a credit manager in any of the banks in J&K and asking for a loan. The standard first response of the manager would be; “can you provide guarantee of a government employer?” This typical sample conversation explains the predicaments of banks operating in J&K, the hassles faced by customers and implications on credit pricing.
Banks primarily deal with money and earn their profits by lending money against a cost. Lending in a conflict area like J&K is a risky business because uncertainty, lockdowns, curfews and sometimes weather stall normal business growth and impact the repayment capacities of the borrowers. That is why banks show reluctance to lending in conflict areas and resort to such mitigation measures which have no relation with the business plans of the customers. Seeking mortgages of disproportionate immoveable property to secure a loan is one such measure. For smaller loans, guarantees of government employees are asked for, as the government employees are supposed to have regular and assured income streams.
One more way of risk mitigation generally practised by the banks is to factor in risk premiums into the pricing of the loan. That makes credit much costlier for a businessman in J&K as compared to his counterparts elsewhere. As is evident, this creates a vicious circle of high-cost debt and lower margins for businesses in J&K and impairs their competitiveness and growth.
It has been generally seen that banks in J&K, apart from showing general reluctance to lending to businesses within the state resort to all the above measures to secure their loans. This does not just make loans costlier in terms of rates of interest but also adds opportunity costs to the operations of local businesses by making access to credit difficult.
Denne historien er fra September 22-28, 2019 ; Issue 25 Vol 11 ; ‘OUT OF CIRCULATION’-utgaven av Kashmir Life.
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Denne historien er fra September 22-28, 2019 ; Issue 25 Vol 11 ; ‘OUT OF CIRCULATION’-utgaven av Kashmir Life.
Start din 7-dagers gratis prøveperiode på Magzter GOLD for å få tilgang til tusenvis av utvalgte premiumhistorier og 9000+ magasiner og aviser.
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Before The Kabul Retreat
Described as the ‘Graveyard of Empires’, Afghanistan was always termed to be at peace when it was at war. But the land-locked desert country that was always in turmoil and one of the worst targets of the Great Game suffered immensely throughout, especially in the last 40 years, Masood Hussain writes
FINGERS CROSSED
Almost everybody in academia and politics that Khalid Bashir Gura spoke to, the response over Kabul happens was simple – wait and watch
Parliamentary Committee In Srinagar
The visiting 28-member Parliamentary Standing Committee on Home Affairs have had detailed interactions with top civil administration and discussed developmental scenario and people’s welfare measures in Jammu and Kashmir. It is on a 4-day visit. Congress leader and MP Anand Sharma is heading the committee.
MUSIC IN MUD HOUSE
Deep into north Kashmir, Faheem Mir meet a small community that sings and lives on folk music but is facing a tense situation in the last few years
THE KABUL SPILLOVER?
Security experts are divided over the possible impact of the Kabul situation on Kashmir. But the dramatic Taliban triumph has altered the region’s geopolitics, for the time being, writes Riyaz Wani
Durga Bhawan At Katra
To enhancing facilities for the convenience of the Vaishno Devi pilgrims, Lt Governor Manoj Sinha laid the foundation for the Durga Bhawan, a high utility pilgrim-centric facility worth Rs 24.4 crore. The facility will accommodate 4000 pilgrims.
Women Empowerment
In the first, 480 talented girls from Jammu and Kashmir were included in the degree and diploma courses of the Pragati Scholarship. Jammu and Kashmir has also got nine scholarships under the Saksham Scheme for Persons with Disabilities.
‘SOME HISTORIANS BELIEVE THAT AFGHANISTAN CONFLICT IS THE OUTCOME OF INDIA AND PAKISTAN KASHMIR STAND-OFF'
Foreign policy expert and editor of HardNews magazine, Sanjay Kapoor believes that Taliban 2.0 has more legitimacy unlike in the past as it had signed a deal with the US and negotiated with other countries of the region, but the final verdict can be passed only after it manages ticklish issues involving half of its population, the women
Boredom Is Creative?
Getting bored is not as boring as it gets, writes Azra Hussain
LG In Bangus
Lt Governor, Manoj Sinha inaugurated the Bungus Awaam Mela amidst grand arrangements for village games, exhilarating local performances, and other activities to celebrate the 75th year of Independence.
