JAMMU — The Jammu and Kashmir government on Thursday clarified that the State Cooperative Agriculture and Rural Development (SCARD) Bank Ltd has not been declared bankrupt, but liquidation proceedings have been initiated in accordance with law due to prolonged financial and operational distress.
Replying to questions by legislators Dr Rajeev Kumar Bhagat, Vikram Randhawa, Surjeet Singh Slathia and Vijay Kumar in the Jammu and Kashmir Legislative Assembly, Minister for Cooperatives Javid Ahmad Dar said the bank, established in 1962 under the Cooperative Societies Act, is not registered under the Banking Regulation Act and therefore does not fall under the purview of the Reserve Bank of India.
He said the bank is presently under the control of the Union Territory government through the Registrar of Cooperative Societies and the administrative department of cooperatives.
The minister attributed the liquidation to accumulated losses, weak governance and internal control systems, poor loan recovery and severe liquidity pressures.
He said the situation worsened due to inadequate refinance support from the National Bank for Agriculture and Rural Development and limited financial assistance from the government, as the bank was largely dependent on refinance and official support.
“Consequently, liabilities exceeded assets, severely impairing its ability to meet depositor obligations,” Dar said.
He informed the House that payments of matured fixed deposits, including at the Bishnah branch, have been stopped due to acute liquidity constraints, leaving several depositors awaiting disbursement.
Dar said repayment of depositors would form part of the liquidation and depositor-protection framework approved by the government. A comprehensive know-your-customer (KYC) verification exercise across all branches has been completed to authenticate claims, he added.
Upon issuance of the winding-up order and appointment of liquidators, duly verified claims will be settled in a phased manner strictly as per statutory provisions and the prescribed order of priority, the minister said.
He clarified that the Deposit Insurance and Credit Guarantee Corporation mechanism has not been invoked, as it applies only to banking institutions registered under the Banking Regulation Act, under which SCARD Bank is not covered.
Reaffirming the government’s commitment to safeguarding depositor interests, Dar said a detailed projection of liabilities has been compiled and submitted for consideration, including provisioning through the budgetary process in accordance with law. — (PTI)