J&K Bank-RBI pact a sellout, says Drabu

Sacked chairman of Jammu and Kashmir Bank Haseeb Drabu has termed the State Government's decision to shift banking operations with the Reserve Bank of India (RBI) as an act of demolishing the only vital pillar from under the edifice of autonomy of Jammu and Kashmir. The agreement signed last fall, came into effect from April 1, 2011.  He has predicted that the Jammu and Kashmir Bank would be nationalised in near future and the State would be at the mercy of North Blockbased bureaucrats.  Drabu was asked to resign on August 26, 2010 by Omar Abdullah-led coalition Government after heading the State's lone listed company for five years. After his resignation, the State Government entered into agreement with the RBI. Describing the agreement as “Machiavellian politics and Shylockian economics“, Drabu has first time gone public on the impact and outcome of the agreement that the State Government has described as “win-win situation“ for the State Government, the J&K Bank and the people of the State. The Finance Ministry and the J&K Bank have not reacted to Drabu's observations.  In an article in prominent monthly magazine The Honour, Drabu has said that the J&K Bank has ceased to be State's banker. “It (J&K Bank) will cease to be lender of last resort to the Government, which it has been since its inception,“ he says.  He says that the RBI's previous role in J&K was related to the Government's securities market involving floatation of Government loans and preparation of calendar for issuance of dated securities. The new agreement has, however, brought the RBI on centre-stage of fiscal management of the State and prmoted its status from “regulatory oversight“ to “operational control“.  “For the purpose of the Government finances, J&K Bank is nothing more than branch of the RBI,“ he said. He says that the new agreement is benef icial to Government of India but neither to the State nor to the J&K Bank.  He says that the State has lost its financial independence.  “A financial crisis can be created by even an un-biased but stickler of a bureaucrat sitting in North Block. Not to speak of what a hostile political party at the helm can do,“ he writes.  “The decisions will now be taken on Mint Street in Mumbai instead of Maulana Azad Road in Srinagar,“ he says.  Referring to the agreement as “disempowerment of the J&K Bank“, Drabu states that it is akin to the political disenfranchising of the institution of the Head of the State.  “When the position of Sadar-e-Riyasat was converted into that of a Governor it was more than the name that changed,“ he says.  Drabu was economic adviser to Mufti Muhammad Sayeed during the latter tenure as Chief Minister in 20022005. He was shown the door by the Omar Abdullah Government a few days after Mufti's People's Democratic Party blamed Abdullah for financial misappropriation and leaked some confidential details on the Government's financial transactions.