Banking operations in Jammu and Kashmir saw a period of steady, if unspectacular, growth in the 2025-26 fiscal year, yet the region’s financial landscape reveals a widening divergence between absolute gains and systemic health. By the close of the financial year on March 31, 2026, the banking system reported total deposits of Rs 2,16,352 crore—a 9.84 per cent increase from the previous year—while total advances rose 9.86 per cent to reach Rs 1,32,296 crore.
Despite these figures, the region is trailing significantly behind the national growth trajectory, where deposits and advances surged by 13.40 per cent and 16 per cent, respectively. Most concerning for policymakers is the stagnation of the Credit-Deposit (CD) ratio, which barely moved from 61.14 per cent to 61.15 per cent, leaving the region as a “saving economy” rather than a borrowing one, far behind the national average of 81.71 per cent.
The structural divide between Jammu and Kashmir Bank (JK Bank) and its private sector competitors has become increasingly pronounced. While the total number of banking touchpoints jumped to 11,703—largely due to a massive increase in banking correspondents—physical branch expansion has slowed. JK Bank continues to shoulder the burden of rural banking, with 62 per cent of its branches located in rural areas. In contrast, private lenders like HDFC, ICICI, and Axis have focused their growth almost exclusively in urban centers, effectively cherry-picking low-risk, high-margin business while avoiding the heavy infrastructure and maintenance costs associated with rural coverage.
This strategic retreat by competitors has left JK Bank with a shrinking slice of the lending pie. While the bank has successfully retained roughly 63 per cent of the region’s deposit market, its share of advances has experienced a persistent slide, falling from its post-2019 peaks to approximately 58 per cent today. Newer entrants, including the State Bank of India, have instead captured market share by focusing on corporate-sector advances and aggressive, target-driven lending that often prioritizes urban clients.
Regional disparities further complicate the data. The Kashmir valley continues to punch above its weight, lending out over 81 per cent of its deposits, closely aligning with national standards. Conversely, the Jammu division, which holds a larger share of the region’s deposits, converts less than 50 per cent into local credit. This drag pulls down the Union Territory’s aggregate CD ratio significantly.
Looking ahead, the systemic strain of government-sponsored, low-ticket lending is becoming a defining feature of the region’s fiscal health. Priority sector advances, encompassing schemes like the Pradhan Mantri Mudra Yojana and Mission Yuva, grew at more than double the pace of commercial credit. While this ensures financial inclusion, it places a heavy administrative and monitoring burden on banks, particularly on JK Bank, which holds the lion’s share of these micro-loan accounts. As the fiscal year closes, the challenge remains clear: while the region has successfully cleaned up its bad debt—dropping gross NPAs to 3.10 per cent—it must now grapple with a lopsided banking model that favors deposit collection over productive, regional investment.
Disclaimer: This content is auto-generated for informational purposes only.
Source: Read Original News
