J&K Bank to get up to Rs 500 crore to maintain adequate capital buffers

The Jammu & Kashmir government will infuse up to Rs 500 crore more as equity into Jammu and Kashmir Bank (J&K Bank) as its promoter shareholder.

Rating agency India Ratings (Ind-Ra) said J&K Bank will need substantial equity infusion in the first half of this financial year to maintain adequate capital buffers amid high credit costs, until March 2023. The bank’s common equity tier 1 (CET1) ratio marginally improved to 8.56 per cent in December 2020 as against a minimum CET1 requirement of 7.38 per cent.

The capital adequacy improved on equity infusion of Rs 500 crore by the J&K government in Q4FY20 and three profitable quarters in FY21. Its CET1 was 8.42 per cent in March 2020 and 9.13 per cent in March 2019. The bank’s board will discuss the proposal of capital infusion.

Meanwhile, the Reserve Bank extended the term of R K Chhibber as chairman and managing director of J&K Bank by six months from April 10 or till the appointment of a MD & chief executive, whichever is earlier.