"The pact has only cancelled the overdraft facility to the state government, which had risen from Rs 700 crore to Rs 2,300 crore in a few years. J&K Bank continues to be the financier to the state government," Omar told reporters here.
He said the Union Finance Commission has recommended an award of Rs 1,000 crore to the state government and the provision of borrowing another Rs 1,000 crore at low interest rates from the market.
"This will save the state government the interest it had to pay to the Jammu & Kashmir bank, while the bank will have Rs 2,000 crore to pump into the market. The only thing is that the bank employees will now have to work harder to get people to sell loans to customers," the Chief Minister said, adding that people will have more access to funds from the bank, as earlier, these used to be tied up by the state government.
Omar sought to dispel the notion that the RBI has taken over J&K Bank.
"The bank continues to be the property of the people of Jammu & Kashmir and the RBI has allowed a special dispensation for it (J&K Bank) to be the sole financier to the state government," he said.
Omar was responding to a question about former bank chairman Haseeb Drabu claiming that the state's financial institution was going to lose its identity in the next two to three years following the pact signed with the RBI.
In response to a question, the Chief Minister said Drabu was not sacked by the state government.
"As far as my knowledge is concerned, he was not sacked. There was no indication from the government that his tenure as chairman will be extended. So he resigned," Omar added.