Clean-up signals a shift, hurts old consensus in Jammu Kashmir

The crackdown on Jammu & Kashmir Bank is more than just punching holes in the records of a recalcitrant financial institution. It’s a strong political message to Srinagar that Delhi will leave no stone unturned to wreck the consensus which has run the city, the Valley and its politics for the past three decades.

This was an uneasy consensus among the various shades of Kashmir — the militant, the protester, the politician, government employees, civil society, NGOs and yes, even sections of the security establishment — that evolved over time into a sort of ruling class, which became both the threat and guarantor to peace depending on how the conversation stood with the powers in Delhi.

J&K Bank was at the heart of this consensus. From Jamaat-I-Islami and the Hurriyat on one extreme to the National Conference and the People’s Democratic Party on the other, or for that matter, scores of government employees and small business — all dealt with the ‘bank’.

The big advantage was that while it was a state-owned entity for all practical purposes, RBI norms categorised it as an old private sector bank. So, accountability to government was not as strict as it was for usual public sector banks. Yet, all state business went to this bank.

The commercial ventures of the bank weren’t inspiring either, but what always worked was the general assumption that no government will let this lifeline of the Valley go bust. And that was true. Even in the last couple of years, the government’s equity stake has risen from 53.17% in 2015-16 to 59.23% in 2017-18.

This illustrates the growing dependency on equity infusion by the government. But no one ever questioned the economics, because the politics of the day sustained this model. It tied the Valley down to a web of transactions with the Indian financial system, made its key institution dependent on the government and provided those extra levers to keep the balance of this Valley consensus going.

The BJP, however, saw things differently. Yet, it remained acquiescent till the time the coalition with PDP stayed in power. At some point, it appears, the party leadership realised that its national political campaign against dynastic and elitist politics would work splendidly on those who drove the Valley consensus. The security dimension provided the suitable anchor for that narrative.

The facts on the ground were equally compelling, given the kind of family enterprise being run by the Bank’s brass.

The first part of the action happened through investigations into terror financing by the National Investigation Agency, which brought accounts of key Hurriyat and Jamaat leaders under the scanner. This was followed by transparency action, which sought to bring the Bank under CVC and RTI guidelines. Union protests followed but still, an effort to open a branch in Dubai was stopped.

The script of anti-graft crackdown was then worked upon and followed up soon after the second Narendra Modi government took charge.

The sequence when put together lends itself to a big picture that old consensus in the Valley will be dismantled, for it has allegedly become self-serving, elitist, club-like, collusive and corrupt.

This is not to say the bank will go down. In fact, it may well be restructured and resurrected as a public sector entity after the clean-up with fresh equity infusion and a new leadership. But its ‘clean-up’ would by then have marked the beginning of a new political dynamic in the Valley – the terms of which will be set by Delhi and not Srinagar.