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Mega-merger for PSU Banks, But No Mention of J&K Bank Yet

Image of J&K Bank. headquarters in Srinagar.

Image of J&K Bank. headquarters in Srinagar.

Jammu and Kashmir Bank was expected to see some changes in shareholding after the withdrawal of statehood for Jammu and Kashmir. The bank is 59.23% owned by the state government.

Finance Minister Nirmala Sitharaman on Friday evening announced a major consolidation plan for public sector banks, which in turn would reduce their total count from 27 in 2017 to 12 now.

However, there was no mention of Jammu and Kashmir Bank Ltd in Sitharaman’s bank amalgamation scheme. Notably, shares of J&K Bank had risen over 12% on Friday in anticipation of the announcement of bank mergers.

Jammu and Kashmir Bank was expected to see some changes in shareholding after the withdrawal of statehood for Jammu and Kashmir. The bank is 59.23% owned by the state government. But, as Jammu and Kashmir becomes a union territory, a change in the shareholding is on the cards.

A media report had earlier said that with Jammu and Kashmir becoming a union territory, shares will be transferred to the Centre and this will in effect turn the bank into a public sector entity. However, there is no formal announcement on that front yet.

Since Jammu and Kashmir Bank was kept away from Friday’s rejig, it suggests that there are still some hurdles in they way of the Centre claiming stake on the bank.

Jammu and Kashmir Bank has been in the news recently over alleged charges of corruption and nepotism. Pervez Ahmed Negroo was removed as the bank’s chairman following allegations of irregularities during his tenure.

The Anti-Corruption Bureau had also recently sent a notice to former J&K chief minister Mehbooba Mufti, seeking clarification on certain appointments made during her term.