Banks to Support Loan Borrowers in J&K following Pahalgam Attack

The terrorist attack that took place in Pahalgam, Kashmir, on April 22, 2025, and the subsequent disturbances caused by the Indo-Pak conflict have severely affected economic activities and businesses across the Union Territory of Jammu & Kashmir. This has created stress in all economic sectors, particularly in tourism and allied industries.

Considering these circumstances, the Government of Jammu & Kashmir, through its notification dated 08.08.2025, has declared the entire Union Territory as “affected by disturbances.”

A Special UTLBC (J&K) meeting has approved a rehabilitation plan for the disturbances in the Union Territory. This plan provides relief measures for uniform adoption by banks and is to be implemented on or before 5th November 2025 (i.e., within three months from the date of declaration of disturbance by the Government on 08.08.2025).

Banks have been asked to support the loan borrowers by restructuring/rescheduling of borrower loan accounts. Banks may provide following facilities to loan borrowers:

(a) Extension in the repayment period in the existing term loan with or without moratorium period.
(b) Conversion of interest accrued or to be accrued during the moratorium period in existing working capital into Funded Interest Term Loan (FITL).
(c) Conversion of interest accrued or to be accrued during the moratorium period in existing term loan into FITL.
(d) Sanctioning of additional credit facility in the shape of working capital term loan (WCTL) which shall not exceed existing fund based working capital limit.

The same type of restructuring facility was provided to loan borrowers during COVID-19 pandemic. This time also, Banks have been asked to provide moratorium period of 12 months from 1st April 2025 to 31st March 2026.