JAMMU, Feb 19: The Jammu and Kashmir Legislative Assembly witnessed sharp exchanges over the financial crisis in the J&K State Co-operative Agriculture and Rural Development Bank Ltd (SCARD), with several BJP MLAs terming the situation an “economic fraud” and seeking clarity on the transfer of over Rs 180 crore from the institution.
During Question Hour, BJP legislators R.S. Pathania, Surjeet Singh Slathia, Vikram Randhawa, Rajeev Kumar Bhagat and Vijay Sharma raised serious concerns about the bank’s deteriorating financial health and the fate of thousands of depositors. They questioned whether the Managing Director of the bank had the authority to transfer such a substantial amount and demanded a detailed probe into the transactions.
Describing the episode as a “Rs 223 crore scam,” R.S. Pathania alleged that established financial norms and guidelines had been flouted. Surjeet Singh Slathia sought specific details on who authorised the transfer of Rs 180 crore and under what legal provisions. He pointed out that nearly 22,000 account holders were anxiously awaiting clarity about their hard-earned savings.
Vikram Randhawa remarked that while the bank had not been officially declared bankrupt, its functioning suggested otherwise. He asked the government to disclose details of defaulters and outstanding loans, stating that transparency was essential to restore public confidence. Rajeev Bhagat urged the government to consider releasing at least 25 percent of depositors’ funds immediately to address urgent needs such as marriages and medical treatment. Vijay Sharma added that not only farmers but also retired employees had invested their lifetime savings in the bank and called for a clear timeline for repayment.
Responding to the concerns, Cooperative Minister Javid Ahmed Dar acknowledged the seriousness of the issue and assured the House that appropriate action would be taken. He said the financial condition of the bank had been precarious for the past two to three years, with liabilities estimated at around Rs 180 crore. The government, he informed, has initiated the process of liquidation under the provisions of the Jammu and Kashmir Co-operative Societies Act, 1989.
Dar announced that a Liquidator would soon be appointed to assess genuine claims, evaluate assets and liabilities, and ensure settlement of dues in accordance with statutory priorities. He assured members that those found responsible for mismanagement or wrongdoing would not be spared and that the interests of employees would also be safeguarded.
Clarifying the regulatory position, the Minister stated that SCARD Bank is not registered under the Banking Regulation Act, 1949, and therefore does not fall under the purview of the Reserve Bank of India. Consequently, the Deposit Insurance and Credit Guarantee Corporation mechanism does not apply in this case. The bank is currently under the control of the Union Territory Government through the Registrar of Co-operative Societies and the Cooperatives Department.
Dar explained that the bank’s financial distress resulted from accumulated losses, weak governance, poor loan recovery, liquidity pressures and reduced refinance support from the National Bank for Agriculture and Rural Development. Over time, liabilities exceeded assets, impairing the bank’s ability to meet depositor obligations. Payments of matured fixed deposits, including at branches such as Bishnah, have been halted due to liquidity constraints.
He informed the House that a comprehensive KYC verification exercise covering all branches has been completed to authenticate depositor claims. A detailed projection of liabilities has also been submitted to the government for consideration, including possible budgetary provisioning in accordance with legal procedures.
Reiterating the administration’s commitment to protecting depositor interests, the Minister said verified claims would be settled in phases once the winding-up order is issued and the Liquidator formally assumes charge.