Jammu & Kashmir Bank Ltd faces the prospect of a merger with a public sector bank, most likely the State Bank of India, BTVI, a national business media company reported today.

This latest development comes close on the heels of the transformation of J&K Bank into a public sector bank, RTI extension and removal of its chairman, Parvez Ahmed in June 2018.

A senior official in the Finance Ministry confirmed that the merger talks are on “as part of the government’s larger plan of consolidating small, “loss-making” banks with large public sector banks”.

Speaking on condition of anonymity, the official said that this merger plan is being considered in the face of “unsustainable structural issues” having cropped up in J&K Bank in recent past.

Observers in Jammu & Kashmir see this development worrisome, for J&K Bank is widely seen as one of J&K’s strongest economic institutions.

State Bank of India (SBI) has already completed merger formalities of banks like State Bank of Bikaner & Jaipur (SBBJ), State Bank of Mysore (SBM), State Bank of Travancore (SBT), State Bank of Patiala (SBP), State Bank of Hyderabad (SBH) and BMB.

Recent developments

On June 8, 2019, the Jammu and Kashmir government removed J&K Bank Chairman Parvez Ahmad and appointed R K Chibber as interim chairman of the bank.

The state government also approved a proposal that provisions of the J&K Right to Information Act, 2009, shall be applicable to the bank just like other state-owned undertakings. It now follows guidelines of the Central Vigilance Commission.