J&K Bank targets 25% growth in loanbook in 2013-14

In deposits, it plans 18% growth, with a 20% deposit growth in Jammu and Kashmir and 17% outside J&K

Srinagar-headquartered J&K Bank on Monday said it intended to grow its loanbook by 25 per cent in this financial year, with a 30 per cent growth in loans from its home state, Jammu and Kashmir (J&K). In deposits, it plans 18 per cent growth, with a 20 per cent deposit growth in Jammu and Kashmir and 17 per cent outside J&K.

"J&K continues to be a focus area for us," Mushtaq Ahmed, chairman and chief executive told Business Standard on Monday. It also plans to maintain its net interest margin (NIM) in the range of four per cent, backed by the higher NIM in J&K, in the range of 6 per cent.

According to bank officials, in the state of J&K, low cost current account-saving accounts are a large part of the total deposits, resulting into higher NIMs. As of March 2013, 64 per cent of its total deposits are from the state. However, 61 per cent of its loanbook is from outside Jammu and Kashmir.

For the year 2012-13, the bank registered net profit growth of 31 per cent to Rs 1,055 crore, aided by the strong profit in treasury and wholesale banking.

Apples reap benefits
During the last financial year (2012-13), the bank rejuvenated its scheme for financing apple growers of the state. In this one year alone, the bank disbursed Rs 900 crore of loans to apple growers and traders. J&K Bank intends to take this portfolio to Rs 1,500 crore this year and to Rs 5,000-6,000 crore in the medium term.

The lender disburses these loans to farmers under the interest subvention scheme of the central government, charging seven per cent rate of interest and giving a further three per cent subvention as desired by the scheme on timely repayment. Outside the subvention scheme, it charges between one and two per cent over its base rate, which currently stands at 10.5 per cent.

"This is a very profitable business with NPAs just being at Rs 5 crore out of a total portfolio of Rs 900 crore," said Ahmed.

"The bank started the pilot project with Shopian and Baramulla districts and seeing the encouraging response, extended the scheme to the whole state," said Parvez Ahmed, executive president, J&K Bank.

Currently, though traders constitute a major part of this portfolio, the lender expects apple growers' number to increase substantially in the near future. The bank has financed 40,000 people, including traders and farmers in the first year and incrementally plans to have 1,00,000 accounts this year. J&K has an apple output of 20 lakh metric tonnes per year.