J&K Bank slipped 13 per cent to Rs 42.30, plunging 29 per cent in three trading days, after the Anti-Corruption Bureau (ACB) alleged Parvez Ahmed, now-removed chairman-cum-managing director, of indulging in unlawful activities.
Soon after Ahmed's removal from the post of chairman-cum-managing director, RK Chhibber was appointed as the interim chairman-cum-managing director with effect from June 8, 2019.
The Jammu and Kashmir government holds 59 per cent stake in the J&K Bank.
According to analysts with foreign broking firm CLSA, the timely appointment of a full-time chairman and CEO at J&K Bank is critical. The transition may raise uncertainty at the bank even as it enjoys a strong deposit franchise in its home state, reflected in its high CASA (current account and savings account) ratio of 51 per cent.
“We would also watch out for asset quality trends, especially the quality of state loans that saw higher slippage during Q4FY19, and timely capitalisation given the bank’s ore Tier I CAR of 9.1 per cent is lower and capital infusion can be dilutive,” the brokerage firm said in a conference call update.
Shares of Lakshmi Vilas Bank was locked in the lower circuit of 10 per cent at Rs 61.40 with only sellers were seen on the counter. The stock of private sector lender has slipped 16 per cent in the past two trading days after media reports alleged Indiabulls Housing Finance for misappropriating Rs 98,000 crore of public money.
On April 22, 2019, the bank's board had approved the issuance of up to 16.8 million shares, on a preferential basis to Indiabulls Housing Finance at a price of Rs 112 per share for the purpose of the proposed scheme of amalgamation. The scheme is subject to the receipt of approval from the Reserve Bank of India (RBI), other regulatory approvals and other applicable compliances thereafter.