Giving a new twist to the J&K Bank row pertaining to its conversion into a Public Sector Undertaking (PSU), former chief minister Mehbooba Mufti said on Wednesday Governor Satya Pal Malik’s decision would cause further alienation of Jammu and Kashmir.

Mehbooba, who spoke to the Finance Minister Arun Jaitley on the issue, tweeted: “spoke with @arunjaitley ji about the intrusive and regressive move to declare J&K Bank as a PSU. This decision will add to the woes of the state and alienate them further. The FinMin assured that the government will re-examine the matter”.

Spoke with @arunjaitley ji about the intrusive and regressive move to declare J&K Bank as a PSU. This decision will add to the woes of the state and alienate them further. The FinMin assured that the government will reexamine the matter.

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— Mehbooba Mufti (@MehboobaMufti) November 28, 2018

Declaring the J&K Bank a PSU and also bringing it under the purview of RTI has snowballed into a regional controversy with the Kashmir-centric leadership opposing the action of the Governor, while in Jammu several organisations have welcomed the move.

The State Administrative Council (SAC) headed by the Governor had last week taken the step to streamline functioning of the bank that has from time to time faced allegations of nepotism and mismanagement.

Malik had recently said a complete list of 582 duly selected candidates for recruitment to the bank during the previous PDP-BJP regime was set aside to appoint political workers in their place. However, Malik took a U-turn the next day and described the bank as a very fine institution.

Under the new arrangement, the bank would also come under the radar of the CVC and the Comptroller and Auditor General of India (CAG). There are allegations that rules and regulations had been flouted in the past.

Even though the state government holds 59.3% stake in the bank, it continued to be categorised as an Old Private bank as a result of which it neither came under the RTI nor under the CAG. Heated arguments on alleged nepotism in the bank were at times witnessed on the floor of the legislature. The state government recently pumped in Rs.532 crores to rescue the bank from financial crisis.

The J&K Bank was recently fined Rs 3 crore by the RBI for not following KYC/ Anti-money laundering norms.

Reacting to the Governor’s action, former chief ministers Omar Abdullah and Mehbooba Mufti have described Malik as head of a “caretaker” government and criticised him for turning the bank into a PSU.

Omar described it as a “disturbing development” and said the governor was a caretaker administrator who did not “have the people’s mandate to take such major decisions with far-reaching implications”.

Mehbooba urged a rollback and termed it a “disturbing step to snatch every bit of autonomy that our institutions have”.

Former finance minister Haseeb Drabu, who was chairman of the bank before becoming the minister, said: “Making J&K Bank a PSU is a curse worse than the disease. An extremely successful institution is being put into a framework of sickness, ad-hocism & mismanagement.”

The full bench of the State Information Commission had in April 2012 declared the bank a Public Authority as defined in Section 2 of the State Right to Information Act. However, successive governments did not implement the directions.