J&K Bank may exit from MetLife India

SRINAGAR: State-run Jammu & Kashmir Bank plans to completely or partially sell its 5% stake in life insurance joint venture MetLife India.

“We have already divested partially from MetLife by reducing our equity from 11% to 5%,” said Mushtaq Ahmed CEO and Chairman J&K Bank. “We still hold 102.2 million shares that we can divest anytime we have a better opportunity.”

The bank had raised Rs 190 crore by selling 118.1 million shares to Punjab National Bank, when the latter bought 30% stake in the life insurance venture. Funds raised by selling equity has been put into the bank's reserves, bank chairman said. The bank may partially or totally divest from the insurance venture.

J&K Bank is a corporate agent of Metlife India. It sells life insurance products through its branches network. The bank controls 68% of the loan book in J&K and has 63% share in deposits in the state.

J&K Bank has less than 1% NPA. “While every bank is struggling to get its money back, we took the ICICI bank track and sold the UB equities to recover our investments in the Kingfisher,” Mushtaq said. “At a time, we had an exposure of Rs 100 crore, now it is slightly around Rs 7 crore because we sold the UB equities.”

Mushtaq said J&K Bnak has provisioning coverage ratio of 94%. “Our capital adequacy ratio is 13% while the requirement is only 9%,” he said.

The bank intends to add 250 branches to its 750 branch network. “We are not in a rush to expand overseas,” Mushtaq said. “Let us have better network across the state and let us improve within the country.”

At one point of time, the bank had sought permission to revive its two branches in Mirpur and Muzzafarabad (PoK) on the other side of the LoC which had fell in wake of partition of J&K. It has argued that the branches will help improve the cross-LoC barter. No decision was taken on that front by the RBI. Now Mushtaq says the decision lies with the two nations. “Let the barter stabilize first,” Mushtaq said.