Avinash Azad
In a dramatic revelation on the last day of the Jammu and Kashmir Legislative Assembly session on Wednesday, the government admitted that the J&K State Cooperative Bank has been running in losses since the financial year 2019-20—triggered by a massive loan scam involving the River Jhelum House Building Cooperative Society.
The issue was raised by Member of Legislative Assembly (MLA) Ali Mohammad Dar, who sought details on the financial health and governance status of the Bank. In a candid written reply, the government stated: “It is a fact that the State Cooperative Bank is running on losses from the F.Y 2019-20, as the bank sanctioned a loan of Rs 223 Crores to River Jhelum House Building Cooperative Society, which turned NPA and subsequently was declared as fraud by the Board on the recommendation of audit committee. Bank had to provide 100% provisioning for the same due to which the bank has incurred heavy losses.”
From Elected to Nominated to No Board at All
Dar further inquired whether the bank’s elected board had been replaced by a nominated one headed by the Divisional Commissioner. The government confirmed this too, saying: “In the year 2019-20, the elected board of the Bank was superseded by government order No JK-Coop. of 2020, dated 15/05/2020 and nominated Board appointed with Divisional Commissioner as its Chairman. As per High Court order dated 15/07/2022, the term of the nominated Board ceased to exist after 04/10/2022.”
The government then reconstituted the Board in January 2023, but the move was struck down by the High Court in April 2023. A legal challenge by the government was also dismissed in July 2024, leaving the Bank without any functioning Board as of now.
“As on date the Bank is working without Board in place, however Govt. has arranged by assigning charge of acting MD to the Additional Commissioner Kashmir with the office of Divisional Commissioner Kashmir on ad-interim basis,” the government said.
Land Attached, Recovery Stalled, ED Steps In
The government also admitted that the loan default was not just a financial loss but involved potential financial crimes. The Bank had sanctioned the loan against land measuring 257 Kanals and 19 Marlas mortgaged through a notarized deed. The land, known as “Seed Farm” at Shivpora in Srinagar, has since been attached by the government and provisionally seized by the Enforcement Directorate.
“The bank could not proceed under SARFAESI Act, as the land stands attached with the District Magistrate by the government… due to violations of the J&K Migrant Immovable Property Prevention Act, 1977, the Benami Transaction (Prohibitions) Amendment Act 2016, and the Prevention of Money Laundering Act, 2002,” the reply stated. On December 14, 2023, the Enforcement Directorate provisionally attached the land under the PMLA, which was confirmed on May 14, 2024, by the adjudicating authority. The Bank has now appealed before the Appellate Tribunal in New Delhi.
Employees Left in the Lurch, No DA or Increments Since 2021
Ali Mohammad Dar also questioned whether the employees of the Bank have been denied basic service benefits like Dearness Allowance (DA) and yearly increments. The government admitted: “Yes, the employees of the bank are not receiving any DA/increment for the last four years. The same can be released in favour of the employees after proper approvals from the competent authority.” With no governing board, mounting financial liabilities, and frozen employee benefits, the future of the J&K State Cooperative Bank looks increasingly uncertain. The shocking disclosures have raised questions on regulatory oversight, the effectiveness of past boards, and the delay in securing justice and recovery in the Rs 223 crore scam. As the government drags its feet on appointing a new Board and with legal proceedings still pending, accountability in this high-stakes cooperative collapse remains elusive.
