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Jammu and Kashmir Bank Ltd.

BSE: 532209 Sector: Financials
NSE: J&KBANK ISIN Code: INE168A01041
BSE 00:00 | 28 Oct 14.76 0.07






NSE 00:00 | 28 Oct 14.70 0.05






OPEN 14.84
VOLUME 39285
52-Week high 36.00
52-Week low 11.05
Mkt Cap.(Rs cr) 1,053
Buy Price 14.70
Buy Qty 31.00
Sell Price 14.76
Sell Qty 2.00
OPEN 14.84
CLOSE 14.69
VOLUME 39285
52-Week high 36.00
52-Week low 11.05
Mkt Cap.(Rs cr) 1,053
Buy Price 14.70
Buy Qty 31.00
Sell Price 14.76
Sell Qty 2.00

Jammu and Kashmir Bank Ltd. (J&KBANK) - Director Report

Company director report

To the Members

Your Board of Directors has pleasure in presenting the 81st Annual Report ofyour Bank together with the audited

Balance Sheet Profit and Loss Account and the report on business and operations forthe year ended 31st March 2019.

Performance at a Glance

• The aggregate business of the bank stood at र 155910.40 Crore at the end ofthe financial year 2018-19.

• The total deposits of the Bank grew by र 9632.40 Crore from र 80006.50Crore as on 31st March 2018 to र 89638.90 Crore as on 31st March2019 a growth of 12.04 percent. CASA deposits of the bank at र 45442.63 Croreconstituted 50.70 percent of total deposits of the bank.

• Cost of deposits for current FY stood at 4.90 percent.

• The net advances of the Bank stood at र 66271.51 Crore as on 31stMarch 2019.

• Yield on advances for the current FY stood at 9.05 percent.

• Priority sector advances (Gross) stood at र 25057.33 Crore as on 31stMarch 2019.

• The bank effected cumulative cash recovery upgradation of NPA's and technicalwrite-off of र 2749.95 Crore during FY 2018-19.

• Investment portfolio of the bank stood at र 23160.50 Crore as on 31stMarch 2019.

Insurance Business

The bank earned an income of र 41.11 Crore from the Insurance Business. The bankmobilized business of र 81.83 Crore and र 201.42Crore during the year in life andnon-life insurance segments respectively.

Income Analysis

• The Interest income of the bank stood at र 7675.56

Crore in the year 2018-19. Interest expenses stood at र 4291.63 Crore for FY2018-19. The Net Interest Income stood at र 3383.93 Crore for FY 2018-19.

• The Net Income from operations [Interest Spread plus Non-interest Income] stoodat र 4196.55 Crore in the FY 2018-19.

The Operating Expenses registered an increase of र 494.43 Crore during the financialyear 2018-19 and stood at र 2478.66 Crore as compared to र 1984.23 Crore in 2017-18.

The Cost to Income ratio (Operating Expenses to Net Operating Income) stood at 59.06percent in the financial year 2018-19

Gross Profit

The Gross Profit for the financial year 2018-19 stood at र 1717.90 Crore.


The Provision for Loan Losses Standard Assets Taxation and others aggregated to र1253.02 Crore in the financial year 2018-19.

Net Profit/Loss

The bank registered a Net Profit of र 464.88 Crore for the financial year 2018-19


In order to conserve/augment capital base of the Bank your directors did not recommendany dividend for the financial year 2018-19.

Branch/ATM Network

During the financial year 2018-19 36 new branches were established thereby taking thenumber of branches to 938 as on 31-03-2019 spread over 20 states and one union territory.The area-wise breakup of the branch network (excluding extension counters/ mobile branchesand Service branches) on the basis of census 2011 as at the end of FY 2018-19 is as under:














During the financial year 2018-19 96 ATMs were commissioned thereby taking the numberof ATMs to1294 as on 31.03.2019.


The capital management framework of the Bank includes a comprehensive internal capitaladequacy assessment process conducted periodically which determines the adequate level ofcapitalization needed to meet regulatory norms and current and future business needs.

In order to meet these needs of its growing business including long term capitalrequirements for pursuing its growth plans and to maintain its Capital Adequacy Ratio asper the regulatory guidelines/ norms laid down by the Reserve

Bank of India the Bank issued non-convertible redeemable unsecured Basel IIIcompliant Tier I bonds in the nature of debentures for augmenting TIER-I capital in thenature of debentures of र 10.00 lacs each for an aggregate amount of र 1000.00 croreon private placement basis during the financial year 2018-19 allotted on 14.06.2018.

The capital management framework of the bank is complemented by the risk managementframework which covers the business and capital plans and stress testing resultsintegrated with the internal capital adequacy assessment process while assessing itsimpact on the capital ratios and adequacy of capital buffers for current and futureperiods.

Net Worth and Capital Adequacy Ratio (CRAR)

• The Net Worth of the bank stood at र 6020.35 Crore on 31st March2019 after excluding the revaluation reserves.

• Capital Adequacy Ratio under Basel III stood at 12.46 percent as on March 2019.The tier I component of CRAR is 10.60 percent as on 31st March 2019. Book Valueper Share for the financial year 2018-19 stood atर 118.99

Board of Directors

Your Bank had Eleven (11) Directors as on 31st March 2019 consisting of two(2) promoter Directors including Chairman & CEO 10 Non-Executive Directors. As on 15thJune 2019 Bank has Nine (9) Directors consisting of two (2) promoter Directorsincluding Interim Chairman & Managing Director 8

Non-Executive Directors

Independent and Non – Independent

Non-Independent Executive Director

Mr. Rajesh Kumar Chhibber

Mr. Rajesh Kumar Chhibber Non-Independent Executive Director has been serving as theInterim Chairman & MD of the Bank since June 10 2019 with the approval of ReserveBank of India (RBI).

Mr. Parvez Ahmed

Mr. Parvez Ahmed Non-Independent Executive Director was serving as the Chairman &CEO of the Bank since October 6 2016 to 8th June 2019 with the approval ofReserve Bank of India (RBI).

Non-Independent Non-Executive Director

Dr. Arun Kumar Mehta IAS Financial Commissioner to Govt. of J&K FinanceDepartment Mr. Azhar ul Amin Mr. Dhaman Kumar Pandoh Mr. Rahul Bansal and Mr. VikramGujral are the Non-Independent Non-Executive Directors of the Bank.

Independent Non-Executive Director

In terms of the definition of ‘Independent Director' as prescribed underRegulation 16(b) of the SEBI (Listing Obligation and Disclosure Requirements) Regulations2015 and Section 149(6) of the Companies Act 2013 and based on thedeclarations/disclosures received from the Directors the following Non ExecutiveDirectors are Independent Directors:-

1. Mr. Mohammad Ashraf Mir

2. Dr. Pronab Sen

3. Dr. Sanjiv Agarwal

4. Mr. Sunil Chandiramani

All Independent Directors of the Bank have given their respective declarations statingthat they meet the criteria of Independence as laid down under the applicable laws and inthe opinion of the Board the independent directors meet the said criteria.

Appointments/Resignations from the Board of Directors

During the year under review Mr. Yogesh Kumar Dayal (DIN: 07584913) ceased to beDirector on the Board of the Bank on 30th June 2018 due to withdrawal ofnomination by Reserve Bank of India. Mr. Abdul Majid Mir (DIN: 02175199) ceased to beDirector of the Bank on 07th July 2018 and Mrs. Vijayalakshmi R Iyer (DIN:05242960) resigned from Directorship of the Bank on 27th March 2019. Dr. ArunKumar Mehta IAS (DIN: 07218193) was appointed as nominee Director by the Govt. of Jammu& Kashmir in place of Mr. Navin Kumar Choudhary IAS (DIN: 07218193) on 15thMarch 2019 and Mr. Vikram Gujral (DIN: 03637222) was appointed as Additional Director onthe Board of the Bank on 26th March 2019. Further Mr. Mohammad Maqbool Rather(DIN:07586779) having attained the age of 75 years has ceased to be Director of the Bankwith effect from 1st April 2019 in compliance to Regulation 17(1A) of SEBI(Listing and Obligations Disclosures Requirement)

(Amendment) Regulations 2018.

Directors place on record their deep appreciation for the valuable services rendered byMr. Navin Kumar Choudhary IAS Mr. Yogesh Kumar Dayal Mr. Abdul Majid Mir Mrs.Vijayalakshmi R Iyer & Mr. Mohammad Maqbool Rather during their tenure as Directorsof the Bank.

Changes in the Board of Directors after the Closure of Financial Year

Mr. Azhar ul Amin Non Executive Non Independent Director resigned from the Board ofthe Bank with effect from 23rd April 2019. Mr. Parvez Ahmed pursuant to theGovernment Order dated 8th June 2019 ceased to be Director and Chairman &CEO of the Bank and pursuant to approval of the J&K Govt./RBI Mr. Rajesh KumarChhibber was nominated as director and appointed as interim Chairman & MD w.e.f. 10thJune 2019 for a period of 3 months. RBI in exercise of powers conferred by Section36AB (1) of Banking Regulation Act 1949 appointed Shri A.K. Misra Ex-Executive DirectorRBI as Additional Director on the Board of the Bank for a period of 2 years w.e.f. 3rdJuly 2019 to 2nd July 2021 or till further orders whichever is earlier videRBI order DBR.PSBD

No. 110/16.05.008/2019-20 dated 3rd July 2019.

Directors seeking appointment/re-appointment at AGM

Mr. Rahul Bansal (DIN: 01216833) who is retiring by rotation has offered himself forre-appointment. Mr. Vikram Gujral (DIN: 03637222) appointed as Additional Director and whovacates office at this AGM has offered himself for appointment as Director. Mr. MohammadAshraf Mir (DIN: 07586792) Dr. Sanjiv Agarwal (DIN 00110392) and Mr. Sunil Chandiramani(DIN: 00524035) Independent Directors are seeking re-appointment for a 2nd term of 2years. The profiles and necessary details of the above mentioned directors have beenincluded in the explanatory statement and Corporate Governance Report.

Appointments/Resignations of the Key Managerial Personnel

Mr. Rajesh Kumar Chhibber Interim Chairman & MD Mr. Rakesh Gandotra ChiefOfficerand Financial Mr. Mohammad Shafi Mir Company Secretary are the Key ManagerialPersonnel of the Bank. Mr. Rajesh Kumar Chhibber was appointed as Interim Chairman &Managing Director of the Bank w.e.f 10th June 2019 in place of Mr. ParvezAhmed who ceased to be the Chairman & CEO on 8th June 2019.

Number of Meetings of the Board

During the year under review Thirteen (13) Board Meetings were held in due compliancewith statutory provisions on the following dates:

19.05.2018 30.05.2018 23.06.2018 07.07.2018 26.07.2018 26.08.2018 17.09.201816.10.2018 26.11.2018 27.12.2018 12.01.2019 23.02.2019 26.03.2019

Committees of the Board

The Bank has following committees of the Board:

• Management Committee

• Audit Committee

• Special Committee of Board on Frauds

• Stakeholders Relationship Committee

• Information Technology Strategy Committee

• Corporate Social Responsibility Committee

• Integrated Risk Management Committee

• Customer Service Committee

• Nomination and Remuneration Committee

Legal and Impaired Assets Resolution Committee

• Human Resource Development Committee

• Investment Committee

• GST Steering Committee

The compositions powers roles terms of reference etc. of aforesaid committees aregiven in detail in the statement on

Corporate Governance annexed to this report.

Subsidiary Company

As on March 31 2019 your Bank had one unlisted wholly owned subsidiary JKB FinancialServices Limited (JKBFSL). JKB Financial Services Ltd. was set up in the year 2008 tocarry on the activities of Stock Broking Depository Services Distribution of Insuranceproducts (both life and non-life) Distribution of mutual Funds Distribution of creditcards and collection of utility bills.

The Company took over the depository business of NSDL/ CDSL from J&K Bank andstarted operations as a full-fledged Broker of NSE/BSE w.e.f. 1st March2013.The Company planted its roots in first instance in depository and broking servicesand is currently offering Stock Broking activities in NSE/BSE cash segment and NSEF&O. The JKBFSL offers the state of art infrastructure powered by the renowned ThomsonReuters Ltd. The JKBFSL network spans over Jammu Kashmir Gurgaon and Mumbai.

Performance and Financial Position of JKBFSL

The operating income of the Company for the year ended 31st March 2019stands at र 4.43 Crores. Other income of the company stood at र 93.06 lacs. TheTotal income of the Company for the year ended 31st March 2019 stood at र5.36 Crores. The net loss of the company for the financial year ended 31st March2019 stood at र 71.50 Lacs increasing its accumulated net loss to ` 4.34 Crores as on31st March 2019.

Salient features of the financial statement of JKBFSL are attached herewith as Annexure5.

Regional Rural Bank Sponsored by J&K Bank: J&K Grameen Bank

The J&K Grameen Bank has come into existence on 30th June 2009 with the issuance ofstatutory notification by GoI MoF Department of Financial Services under Sub-section (1)of Section 23 (A) of the Regional Rural Banks Act 1976 vide F. No. 1/4/2006-RRB providingfor amalgamation of Kamraz Rural Bank and Jammu Rural Bank into a single new RegionalRural Bank under the name of J&K Grameen Bank with its Head Office at Jammu and hascommenced business effective from 01.07.2009. Presently bank is operating in 13 districtsof the State viz. Baramulla Bandipora Kupwara Jammu Kathua Rajouri Poonch LehKargil Samba Kishtwar Ganderbal and Srinagar having 217 branches with 1019 employees.

Capital Structure:

In terms of the RRBs Act 1976 the authorized capital of

Regional Rural Banks was fixed र 5.00 Crore (which standsat amended to र TwoThousand Crore in terms of the Regional Rural Banks (Amendment) Act 2015 notified in theGazette of India on 12-05-2015).

1. Authorized Share Capital

र 2000 Crore

2. Subscribed / Paid up Share Capital

र 97.16 Crore

Central Government (50%)

र 48.58 Crore

State Government (15%)

र 14.57 Crore

Sponsor Bank (35%)

र 34.01 Crore


Tier II perpetual bonds: For implementation of 100% CBS in JKGB J&K Bank hascontributed an amount of 11.67 crores in the shape of perpetual bonds being 50% cost forimplementation of Core Banking Solution in J&K Grameen Bank.

Performance of the Bank as on 31.03.2019 (Un-audited)


The total business of the bank as on 31st March 2019 stood at र 5717.20crore against र 4999.44 Crore as on 31st March 2018 thereby showing anincrease of र 717.76 crore registering a growth of 14.36% during the financial year2018-19.


The deposits of the bank have increased from र 3404.63 crore to र 3823.72 croreduring the financial year 2018-19 thereby registering a growth rate of 12.31%.


The gross advances of the Bank as on 31st March 2019 stood at ` 1893.49crore as against ` 1594.81 Crore as on the corresponding date of the previous yearrecording a growth of 18.73%

CD Ratio:

The C.D. Ratio of the bank has increased by 2.68% from 46.84% as on March 31 2018 to49.52% as on March 31 2019.

NPA Management:

JKGB has made recoveries/ up gradations for an amount of

र 140.21 crore in the NPAs during the FY 2018-19 under review with fresh slippagesto the tune of र 138.29 crore. The Gross NPAs of the bank as on March 31 2019 at 9.16%(र 173.46 crore) of the gross advances has decreased from 11.00% (र 175.38 crore) ason March 31 2018. Similarly Net NPAs of the bank as on March 31 2019 at 4.89% (` 88.46crore) has decreased from 6.41% (` 97.17 crore) as on March 31 2018.

Detailed NPA position as on March 31 2019 is as under:-

(Amount in Crore)


FY 18-19 (01-04-2018 To 31-03-2019)

1 NPA at the beginning of FY


2 Slippage


3 TOTAL (1+2)


4 Recovery/ up gradation


5 NPA at the end (3-4)


6 %age to gross advances


7 Provisions


8 Net NPA at the end


9 %age to net advances


10 NPA Coverage %



Future Business Plan for the FY 2019-20

As per the future business plan of Grameen Bank duly approved by NABARD and J&KBank Grameen Bank will generate Business for F.Y 2019-2020 as per the below details:-


(Amount in Crore)

1 Deposits


2 Advances


3 Fresh loans to be disbursed


4 CD Ratio


5 Net Profit


6 Gross NPA


7 Net NPA




Against Net Profit of र 14.10 crore recorded as at the end of the previous FY2017-18 the bank has recorded Net Profit of

र 22.00 crore as on 31st March 2019.

Lead Bank Responsibility

a. Convener JKSLBC

The J&K Bank is the only Private Sector Bank in the country assigned with theresponsibility of convening

State Level Bankers' Committee meetings. The Bank continued to discharge its Lead Bankresponsibility in

12 districts i.e. Srinagar Ganderbal Budgam Baramulla Bandipora Kupwara AnantnagKulgam Pulwama Shopian Poonch and Rajouri out of 22 districts of J&K Statesatisfactorily. The other 10 districts i.e. Jammu Samba Kathua Udhampur Reasi DodaRamban

Kishtwar Leh and Kargil are managed by State Bank of India.

The State Annual Credit Plan (ACP) for the FY 2018-

19 was launched in time and its implementation was monitored on quarterly intervals inState Level Bankers' Committee meetings. During the FY 2018-19 banks have extended atotal credit of र 28333.21 Crore in favour of 824254 beneficiaries (both underPriority as well as Non-priority Sector) against annual target of र 31697.61 Crore for1068686 beneficiaries under Annual Credit Plan 2018-19 thereby registering achievementof 89% in financial terms and 77% in physical terms. This includes Priority Sector creditof र 15154.57 Crore disbursed in favour of 521391 beneficiaries against the annualtarget of र 741.91 Crore for 839476 beneficiaries (constituting 64% achievement infinancial terms and 62% in physical terms) and Non-Priority Sector credit of र13178.65 Crore disbursed in favour of 302863 beneficiaries against annual target of `7955.70 Crore for 229210 beneficiaries (constituting achievement of 166% in financialand 132% in physical terms).

Out of the total Priority Sector credit of र 15154.57 Crore disbursed by all banksin the State during FY 2018-19 J&K Bank alone has disbursed र 15 949.71 Croreagainst the target of र 1512193.27 Crore thereby achieving 82% of its annual ACPtarget which accounts for a share of 66% of the total flow of credit to priority sector byall banks together in the State during FY 2018-19.

Implementation of Financial Inclusion Plan

by Agriculture Production


After successful completion of FIP-I and FIP-II under directives from RBI a roadmapfor opening "Brick & Mortar" branches or CBS-Enabled Banking Outlets in thevillages with population more than 5000 where there is no branch of any ScheduledCommercial Bank was formulated. J&K SLBC in coordination with concerned Lead DistrictManagers identified 104 such villages in J&K State. In terms of the directives fromRBI these villages were allocated among the 8 major Scheduled Commercial Banks operatingin J&K State (JK Bank – 48; SBI – 15; PNB – 11; HDFC Bank – 11;ICICI Bank – 5;

Canara Bank 5; UCO Bank 5; Central Bank of India - 4) for opening "Brick &Mortar" branches or CBS-Enabled Banking Outlets. As at 31.03.2019 53 villages havebeen covered for banking services with opening of 10 branches and 43 CBS-Enabled BankingOutlets in the identified villages out of which 28 villages have been covered by J&KBank; 13 villages by SBI; 8 villages by PNB; 2 villages by UCO Bank and 1 village each byICICI Bank & Canara Bank.

Responsibility of setting up of RSETIs in J&K State:

In terms of guidelines issued by Ministry of Rural Development Government of Indiasetting up the Rural Self Employment Training Institutes (RSETIs) in all the districts ofJ&K State was assigned by Lead Bank Department /J&K SLBC to two Banks viz.J&K Bank and SBI as per their Lead Bank responsibility.

Accordingly J&K Bank has set up 12 RSETIs in its allocated 12 lead districts ofSrinagar Ganderbal Budgam Baramulla Bandipora Kupwara Anantnag Kulgam PulwamaShopian Poonch and Rajouri. State Bank of India has also set up 9 RSETIs in its allocated10 lead districts of Jammu Samba Kathua Udhampur Reasi Doda Ramban Kishtwar andLeh. RSETI at Kargil has not been operationalised by SBI as yet. The performance of RSETIsin conducting training programmes and the number of persons benefited through creditlinkage is being reviewed in quarterly SLBC meetings.

Responsibility of setting up of FLCs in J&K State:

In terms of RBI guidelines target of setting of Financial

Literacy Centres (FLCs) in all the districts of the state has been fully accomplishedwith J&K Bank having made 12 FLCs operational in its 12 allocated lead districts andSBI having made 10 FLCs operational in its 10 allocated lead districts.

In addition PNB JKGB EDB and J&K State Cooperative Bank have also established 42 2 & 1 FLCs respectively in various districts of the state which takes the totalnumber of FLCs in J&K State as at 31.03.2019 to 31. The performance of FLCs inconducting the Financial Literacy Camps as per the guidelines from RBI is being reviewedat various forums including quarterly SLBC Meetings.

100% coverage of farmers under KCC Scheme

The initiative of 100% coverage of farmers under KCC Scheme with the target to cover9.81 lakh interested farm operating families(target fixed Department) which was launchedin J&K State in January 2012 in terms of directives of GoI MoF stands accomplished inthe State. Banks in J&K State have already accomplished the assigned targets bycovering all the identified farm operating families under KCC.

Brand Building

In the world of banking and finance it is the brand perception that primarilyrepresents the health of an organization in the public imagination besides numbers in itsbalance sheet.

Being proactive in our brand promotion we have consistently and successfully increasedour brand exposure thereby deepening the requisite awareness within the evolving publicconsciousness to increase brand recall thus enhancing our brand value during thefinancial year 2018-19. The bond of trust between all the stakeholders and the bank wasfurther cemented through regular streaming of effective and needful messaging at all thelevels through all the means during the financial year.

The bank's products services and facilities were successfully publicized across theoperational geographies. Also the marketing campaigns initiated by the bank to garnermore business and meet the quarterly targets were duly publicized with proper follow-upprocesses.

Besides the functioning and accomplishments of the bank were effectively communicatedto the relevant target audiences including the major stakeholders along with thecustomers share-owners other stakeholders and the general public through customized andefficiently communications using print and multi-media outlets within the state andrelevant channels across the country. Leveraging our presence in the social-mediauniverse we further strengthened and streamlined our online presence to reach out to thelarger audiences and enhance the bank's brand image using highly popular mediums of socialconnectivity platforms especially Facebook Twitter Instagram and YouTube.

Corporate Social Responsibility Policy

As a responsible institution J&K Bank is committed to Corporate SocialResponsibility (CSR). The Bank has in place Board approved policy on Corporate SocialResponsibility. With an aim to instill a sense of relief and protection among the mostvulnerable sections of society the Corporate Social Responsibility (CSR) policy of thebank identifies key responsibility areas and seeks to assimilate the CSR ideals into itsempowerment mission for optimising its social performance. The CSR policy is available onthe website of the Bank. ( php).

The Bank retained its comprehensive focus on activities for the larger communitywelfare through CSR initiatives concentrating on people's health education environmentand society at large. The statutory disclosures with respect to the CSR Committee and areport on CSR Activities forms part of this Report as Annexure 1.

Performance Evaluation of the Board

The Nomination and Remuneration Committee (NRC) has approved a framework/policy forevaluation of the Board Committees of the Board and the individual Members of the Board(including the Chairperson). In conformity with the said policy requirements following isthe process of evaluation:

• The performance evaluation of all the independent directors is conducted by theentire Board excluding the Director being evaluated.

• Independent Directors evaluates the performance of non – independentdirectors Chairperson and Board as a whole and submits its report to the Board along withnecessary comments and suggestive course of action arising out of the evaluation.

• The performance evaluation of the Committees of the Board is conducted by theentire Board.

A questionnaire for the evaluation of the Board its Committees and the individualMembers of the Board (including the Chairperson) designed in accordance with the saidframework and covering various aspects of the performance relating to the following isforwarded to individual Directors:

Board :
Committees of the Board: Board composition & quality Board meetings & procedures Board development Strategy & Risk management Board & Management relations Succession planning and stakeholder value & responsibility. Functions & duties Management relations Committee meetings & Procedures
Chairman of the Board: Managing Relationships Leadership Role & Responsibility
Individual Directors: Participation in meetings managing relationships Knowledge & skills & Personal attributes.


The responses received to the questionnaires on evaluation of the Board its Committeeindividual Directors and Chairman are consolidated and discussed by the Board.

Your Bank has in place a process wherein declarations are obtained from the Directorsregarding fulfilment of the ‘fit and proper' criteria in accordance with RBIguidelines. The declarations from the Directors other than members of the NRC are placedbefore the NRC and the declarations of the members of the NRC are placed before the Board.

Assessment on whether the Directors fulfil the said criteria is made by the NRC and theBoard on an annual basis.

Corporate Governance

The Bank has established a tradition of exemplary practices in corporate governance. Itencompasses not only regulatory and legal requirements but also several voluntarypractices aimed at high level business ethics effective supervision and enhancement ofstakeholders volume. Several matters have been voluntarily included in the statement oncorporate from governance annexed to this report besides certificate the CentralStatutory Auditors regarding compliance of conditions of Corporate Governance asstipulated by the SEBI

(Listing Obligations & Disclosure Requirement) Regulations 2015.

Management Discussion and Analysis

The Management Discussion and Analysis Report for the year under review is presented ina separate section forming part of this report.

Whistle Blower Policy & Vigil Mechanism

The Bank has implemented a Whistle Blower Policy pursuant to which Whistle Blowers canraise concerns relating to reportable matters (as defined in the policy) such as breach ofJ&K Bank Code of Conduct fraud bribery corruption employee misconduct illegalityhealth & safety environmental issues and wastage/misappropriation of banksfunds/assets etc. Further the mechanism adopted by the Bank encourages the WhistleBlower to report genuine concerns or grievances and also provides for direct access toChairman of the Audit Committee in exceptional cases.

The policy is available on the website of the Bank at the link:

It is hereby affirmed that the Bank has not denied any of its personnel access to theChairman of the Audit Committee of the Board and that the policy contains adequateprovisions for protecting Whistle blowers from unfair termination and other unfairprejudicial and employment practices. However none of the cases were referred to theAudit Committee of the Bank.

Risk Management

The risk management framework of our bank is based on accepting various riskscontrolled risk assessment measurement and monitoring of these risks. The Board sets theoverall risk appetite and philosophy for the Bank. The Board Integrated Risk ManagementCommittee of the

Board (IRMC) which is a sub-committee of the Board reviews various aspects of riskarising from the businesses of the Bank & frames monitors and reviews the riskmanagement framework. The Bank's risk management processes are guided by way ofwell-defined policies adopted appropriately for various risk categories independent riskoversight and periodic monitoring through the sub-committees of the Board of Directors& Asset Liability Committee (ALCO). Executive/ senior management committees; CreditRisk Management Committee (CRMC) Operational Risk Management Committee (ORMC) and MarketRisk Management Committee (MRMC) operate within the broad risk management framework of theBank.

To monitor and manage risk the Bank has a multi-layered risk management structure toidentify measure monitor control mitigate risks and has in place policies relating tomanagement of credit risk market risk operational risk asset-liability and Pillar IIrisks. Risk management is administered by Executive/ Senior management committees &Chief Risk Officer (CRO) through Integrated Risk Management Department (IRMD). IRMD hasdedicated divisions for credit risk operational relatedrisk market risk management &pillar II risks. Business continuity plan and Information security plan also forms part ofrisk management functions in the Bank. Treasury activities are separately monitored by midoffice which reports to

Risk Management Vertical. The Bank has formulated a comprehensive Stress Testing Policyto measure impact of adverse stress scenarios on the adequacy of capital.

The key components of the Bank's risk management rely on the risk governance structurecomprehensive processes and internal control mechanism based on approved policies andguidelines. The policies approved from time to time by Board of Directors/ IRMCCommittees of Board form the governing framework for each type of risk.

Business Responsibility Report

In terms of Regulation 34(2)(f) of the SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015 top 500

Listed Entities based on their market capitalization as on

31st March every year are required to submit their Business ResponsibilityReport (BRR) as a part of the Annual Report. The Bank's Business Responsibility Reportdescribing the initiatives taken by the Bank from an environmental Social and governanceperspective has been attached as "Annexure

7" to this report.

Information under the Sexual Harassment of Women at Workplace (Prevention Prohibitionand Redressal) Act 2013

The Bank does not engage in any form of child labour/ forced labour/involuntary labourand does not adopt any discriminatory employment practices. The Bank has a policy againstsexual harassment and a committee "Internal

Complaints Committee for Prevention Prohibition and

Redressal of Sexual Harassment of Women at Workplace" which 3has been constitutedfor dealing with complaints of harassment or discrimination. The said policy is in linewith the Sexual Harassment of Women at workplace (Prevention

Prohibition and Redressal) Act 2013 passed by the parliament in 2013. The Bank throughthe policy ensures that all such complaints are resolved within defined timelines. Duringthe year two complaints were lodged before the committee and both the cases were disposedoff after proper enquiry.

Loans Guarantees & Investment in Securities

Pursuant to section 186(11) of the Companies Act 2013 loans made guarantees given orsecurities provided or acquisition of shares by a Banking company in the ordinary courseof its business are exempted from disclosure in the Annual Report.

Contracts or Arrangements with Related Parties

Considering the nature of the Industry in which the Bank operates transactions withrelated parties of the Bank are in the ordinary course of business and are also at arm'slength party basis. There was no materially significant transaction entered by the Bankwith promoters Directors Key managerial personnel or other persons which may have apotential conflict with the interests of the Bank. The policy on Related PartyTransactions and dealing with related parties as approved by the Audit Committee and theBoard of Directors is uploaded on the website of the Bank and the link for the same is( php) Disclosure on related party transactions atArms length price under sub section (1) of section 188 of the Companies

Act 2013 is attached herewith as Annexure 6.

Information under Insolvency and Bankruptcy Code 2016

The Bank as on 31st March 2019 has 29 cases under the IBC resolution thedetails whereof along with existing status is tabulate as under: (Amount in Crores)

No. of Accounts Stage of Process

NPA / NPI outstanding

Recoveries if any

1 20 Resolution



process(Pending with NCLT)
2 6 Liquidation



3. 3 Resolution approved/ implemented during the year




Frauds reported by the Bank.

The Bank during the financial year 2018-19 has 11 cases of frauds detected/ reported tothe Reserve Bank of India involving an amount of ` 182.90 crores.

Consolidated Financial Statements

Pursuant to Section 129 of the Companies Act 2013 the Bank has prepared ConsolidatedFinancial Statements of the Bank and its Subsidiary JKBFSL in the same form and manneras that of the Bank which shall be laid before the ensuing 81st Annual GeneralMeeting of the Bank along with laying of the

Banks Financial Statements under sub-section (20) of Section

129 i.e. Standalone Financial Statements of the Bank. Further pursuant to theprovisions of Accounting Standard (AS) 21

Consolidated Financial Statements notified under section 133 of the Companies Act 2013read together with Rule 7 of the Companies (Accounts) Rules 2014 issued by the Ministry ofCorporate Affairs the Consolidated Financial Statements of the Bank along with itssubsidiary for the year ended March 31 2019 form part of this Annual Report.

Statutory Auditors

Historically the appointment of Statutory Auditors of the Bank was made by the C&AGof India and the remuneration was fixed by the Shareholders as per the RBI circularapplicable to Public Sector Banks. However during the FY 2018-19

Reserve Bank of India advised the Bank to seek its approval for appointment of Auditorsas mandated under section 30(1A) of the Banking Regulation Act 1949. The Bank in turnapproached RBI/ C&AG for allowing the Bank to appoint auditors subject to priorapproval of RBI. The communication in this regard continued till the end of previousFinancial

Year. Owing to paucity of time for finalization of accounts the Bank requested RBI toapprove auditors selected by

C&AG for the previous financial year only. The Bank had four

(4) Central Statutory auditors appointed by the C&AG of India for the year underreview as under:

1. O.P Garg & Co Chartered Accountants Jammu

2. P.C Bindal & Co Chartered Accountants Srinagar

3. K.K Goel & Associates Chartered Accountants Jammu

4. Verma Associates Chartered Accountants Srinagar

For the FY 2019-20 the appointment of Statutory Auditors of the Bank will be subjectto appropriate directions from the RBI / C&AG.

There are no qualifications reservations or adverse remarks by the statutory auditorsin their report. Further pursuant to section 143(12) of the Companies Act 2013 thestatutory auditors of the Bank have not reported any instances of frauds committed in theBank by its officers and employees.

Comments of C & AG

Comments under Section 143(6) of the Companies Act 2013 on the accounts of the Bankfor the Financial Year ended 31st March 2019 were received by the Bank on 15thJuly 2019. The Banks reply to the comments of C & AG are furnished as under:

Comments of C&AG of India

A Appropriations

Statutory Reserves `l6.22 crore

Above does not include र 3.61 crore being appropriation of 25 per cent of the netprofit earned during the year.

Since an amount of र 14.43 crore has been charged to

Profit and Loss Account on account of depreciation on revalued portion offixedassetsand equivalent amount has been transferred from Revaluation Reserve Account to RevenueReserve Account without routing through P&L Account the net profit for the year hasbeen understated to the extent of ` 14.43 crore. This has resulted in less appropriationof र 3.61 crore to the Statutory Reserve and excess appropriation to the revenuereserve to the same extent

B Expenditure

Operating Expenses (Schedule l6) Other Expenditure र 454.73 crore

Above includes expenditure of र 95.71 crore shown as "Miscellaneousexpenditure" incurred by the bank during the year 2018-19. As per Guidance Note onAudit of Banks issued (2019 Edition) by ICAI in case any particular item under the head‘Other Expenditure' exceeds one per cent of the total income particulars thereof arerequired to be given by way of notes. However the Bank has not given particulars ofmiscellaneous expenditure in notes to accounts despite the same being in excess of onepercent of total income.

C The Bank has not been forwarding its annual report on its working and affairs to theState Government to enable its placement in the State Legislature as required Underprovisions of Section 395 of the Companies Act 2013.

Bank's Response

A The Accounting Standard AS 10 (Revised 2016) relating to Property Plant Equipmentprovides that the revaluation surplus included in owners' interests in respect of an itemof property plant and equipment may be transferred to the revenue reserves when the assetis derecognised. This may involve transferring the whole of the surplus when the asset isretired or disposed of. However some of the surplus may be transferred as the asset isused by an enterprise. In such a case the amount of the surplus transferred would be thedifference between depreciation based on the revalued carrying amount of the asset anddepreciation based on its original cost. Transfers from revaluation surplus to the revenuereserves are not made through the statement of profit and loss".

As per the Statutory Central Auditors of the Bank the treatment is in accordance withAS 10 (Revised 2016)

B Noted for Compliance. Necessary instructions regarding Debit freezing of MiscExpenditure Head stand implemented in the Bank. As such in future no expenditure havinga distinct accounting head shall be debited to Misc. Expenditure head. The breakup of MiscExpenditure for FY 2018-19 shall be read out at the AGM.

C Noted for compliance. The Bank has been forwarding Annual Report to the State the capacity of shareholder. However Annual Report for the FY 2018-19 shall beforwarded to the State Government separately after the approval of shareholders at theensuing AGM of the Bank.

Secretarial Auditors

Pursuant to Section 204 of the Companies Act 2013 your Bank has appointed M/s DSMR& Associates Practicing

Company Secretaries Hyderabad as its Secretarial Auditors to conduct the SecretarialAudit of the Bank for the FY 2018-

19. The Bank provided all assistance and facilities to the Secretarial Auditor forconducting their audit.

Secretarial Audit Report

There are no qualifications by the Secretarial Auditor in their report. The report of

Secretarial Auditor for the FY 2018-19 is annexed to this report as Annexure 2.

Compliance with Secretarial Standards

The Bank is in compliance with all applicable Secretarial

Standards as notified from time to time.

Employee's Remuneration

A. Particulars of employees as per rule 5(2) of the companies (appointment andremuneration of managerial personnel) rules 2014 for the year ended 31stmarch 2019 are as under:

I. Employed Throughout the Financial Year and in Receipt of Remuneration Aggregating `1.02 Crore or more Per Annum: NIL

II. Employed for a Part of the Financial Year and in Receipt of RemunerationAggregating ` 8.50 Lakhs or more per month: NIL

B. List of top ten employees (other than Chairman & CEO) in terms of remunerationdrawn during the FY 2018-19

Name of the employee

Designation of the employee

Remuneration drawn

Nature of employment whether contractual or otherwise

Qualification and experience of the employee

Date of commencement of employment


Last employment held by such employee before joining the company

Percentage of equity shares held by the employee in the company

Whether any such employee is a relative of any director or manager of the company and if so name of such director or manager

1 Rajesh Kumar Chhibber

Executive President



B. Sc.


59.5 -



2 Pushap Kumar Tickoo

Executive President



B. Sc.


59.1 -



3 Abdul Rashid Sheigan

Executive President





60 -



4 Rakesh Gandotra




B. Sc. /LLB


59.9 -



5 Gulam Mohd. Sadiq




B. Com.


59.8 -



6 Ghulam Nabi Teli






57.11 -



7 Sunil Gupta




B. Com.


57 -



8 Rajni Saraf




BA / M. Com.


56.9 -



9 Mohammad Younis Patoo




M. Sc.


59.5 -



10 Fayaz Ahmad Sidique

Vice President



M. Com.


59 -




C. The ratio of the remuneration of each director to the median employee's remunerationand other details in terms of subsection 12 of section 197 of the Companies Act 2013 readwith Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel)Rules 2014 are forming part of this report as

Annexure 3.

Statutory Disclosures

1) The disclosures to be made under sub-section (3)(m) of

Section 134 of the Companies Act 2013 read with Rule (8)(3) of the Companies (Accounts)Rules 2014 by your

Bank are explained as under:

A. Conservation of energy

(i) The steps taken or impact on conservation of energy.

The bank operates in a non-energy intensive environment. However ample measures havebeen taken by the bank wherever necessary to reduce the carbon footprint. The same aregiven below:

• Document Management system will be put in place to ensure zero paper involvementin account opening process.

• All circulars / newsletters issued for internal communication are uploaded on adedicated Intranet site.

• Data Centre of the bank is hosted at a high energy efficient and environmentfriendly

Data Centre at Noida.

• For green Banking login complaint management QRweb page has been put in place.

• Energy star compliant computing and communication hardware is used by the bank.

• An automated MIS System has been put in place to discontinue paper basedregulatory and internal reporting.

(ii) The steps taken by the company for utilizing alternate sources of energy.

The bank operates in a non-energy intensive environment. However alternate sources ofenergy shall be explored as and when required to make the bank energy intensive.

(iii) The capital investment on energy conservation equipment.

Procurement of servers and desktops for the year

2018-19 is 24.5 cr. (approx)

B. Technology Absorption

(i) The efforts made towards technology absorption. Technology Absorption refers to theacquisition development assimilation & utilization of technological knowledge andcapability by the bank from an external source. It needs steady and favourable policy andgovernance framework. Bank has adopted IT governance model for restructuring the ITorganizational structure as per the recommendations of RBI. Also as part of the ITtransformation the IT Vertical was completely revamped by changing the structure andprocesses on the recommendations of M/s Deloitte (Banks Consultant) to ensure that theyare at par with the industry standards.

Regular trainings are being conducted for the banks staff at branch level to make fulluse of the technology to reduce the operating costs and to ensure the business processfollowed by the bank is more efficient.

(ii) The benefits derived like product improvement cost reduction product developmentor import substitution.

The bank has undertaken following technology initiatives to bring efficacy in theprocesses besides reduction in the effort and cost involved in handling such operations.

a. Mobile banking Application Upgrade

Mobile banking upgrade was initiated to provide more user friendly and robust Mobilebanking application. New user interface at par with industry standard/private sectorbanks. New features like

Code fingerprint regeneration term deposit closure changes in

Loan module debit card management payments credit card integration would be included

b. Document management System (DMS)

DMS Solution has been envisaged to support the complete digitization and associatedworkflow of documents used/ created by all the Business Units and departments of the Bank.The DMS and workflow solution shall cater to Enterprise wide document management andworkflow functions of Account Opening (Liability & Assets) Automation of the NoteSheet preparation and associated workflow - Business Process Management (BPM) through theDMS solution of various departments / offices of the Bank digitizing the Account openingforms and associated documents and the legacy documents of various departments andoffices.

DMS solution would be an engine for the overall Business Process Management andInherent

Workflow processes in the Bank.

c. IT Security

The Bank has Information Security Policy which is approved by Board and reviewed eachyear to keep it updated as per latest trend and best practices.

Bank has got ISO 27001:2013 Certification centre operations Data Centre Facility andDR Site.

(iii) In case of imported technology (imported during the last three years reckonedfrom the beginning of the financial year) ..... None.

(iv) The expenditure incurred on Research and

Development. Nil

(C) Foreign Exchange Earnings and Outgo

The Foreign Exchange earned in terms of actual inflows during the year and the ForeignExchange outgo during the year in terms of actual outflow.

During the year ended 31st March 2019 the Bank earned र 230.37 lacs andspent र 55.89 lacs in foreign currency. The term does not include Foreign Currency Cash

Flow in derivatives and Foreign Currency Exchange


by the (2) No significant regulators or courts or tribunals impacting the going concernstatus of the Bank's operations in future.

(3) The Bank is not required to maintain cost records as specified under section 148 ofthe Companies Act 2019.

Extracts of Annual Return

Pursuant to sub-section 3(a) of Section 134 and sub-section

(3) of Section 92 of the Companies Act 2013 read with Rule 12 of the Companies(Management and Administration) Rules

2014 the extracts of the Annual Return as at March 31 2019 forms part of this reportas Annexure 4.

Director's Responsibility Statement

Pursuant to Section 134(3)(c) read with Section 134(5) of the Companies Act 2013 theBoard of Directors hereby state that:-i. In the preparation of the annual accounts theapplicable accounting standards have been followed along with proper explanation relatingto material departures if any; ii. We have selected such accounting policies and appliedthem consistently and made judgments and estimates that are reasonable and prudent so asto give a true and fair view of the state of affairs of the Bank as on 31st

March 2019 and of the profit of the Bank for the year ended on that date; iii. We havetaken proper and sufficient care for the maintenance of adequate accounting records inaccordance with the provisions of the Companies Act

2013 for safeguarding the assets of the Bank and preventing and detecting fraud andother irregularities; iv. We have prepared the annual accounts on a going concern basis;for Data v. We have laid down internal financial controls to be followed by the Bank andensure that such internal financial controls were adequate and operating effectively. vi.We have devised proper systems to ensure compliance with the provisions of all applicablelaws and that such systems were adequate and operating effectively.

Adequacy of Internal Financial Controls related to Financial Statement

The Bank has adequate internal controls and processes in place with respect to itsfinancial statements which provide reasonable assurance regarding the reliability offinancial reporting and the preparation of financial statements. These controls andprocesses are driven through various policies procedures and certifications. Theprocesses and controls are reviewed periodically. The Bank has a mechanism of testing thecontrols at regular intervals for their design and operating effectiveness to ascertainthe reliability and authenticity of financial information.

CEO & CFO Certification


Mr. Rakesh Gandotra CFO of the Bank for the financial year under review was placedbefore the Board of Directors at its meeting held on 15th May 2019 in termsof Regulation 17(8) of the SEBI (LODR) Regulations 2015.

Important events after the closure of Financial Year ended 31-03-2019

The Board of Directors of the Bank in their meeting held on 15th June 2019keeping in view regulation 17(1B) of the

SEBI (LODR) regulations 2015 and to strengthen Corporate

Governance at the Bank decided to split the post of Chairman & Managing Director ofthe Bank such that the office of Chairman of the Board is held by a Non-Executive

Director. The Board in the same meeting also approved implementation of J&K Rightto Information Act 2009 in the Bank w.e.f June 17th 2019 and adoption ofCentral Vigilance Commission Guidelines as far as these are not inconsistent with themaster guidelines on frauds issued by RBI.

The State Government ordered investigation by Anti Corruption Bureau (ACB) intofunctioning of the Bank on the basis of some reports of alleged nepotism/favouritismmainly with regard to recruitments in the Bank pursuant to which the agency is seekingdesired information from the Bank. We shall keep the shareholders informed about theoutcome of investigation and further developments in the matter.


The Directors thank the valued customers shareholders well-wishers and correspondentsof the Bank in India and abroad for their goodwill patronage and support. The Directorsacknowledge with gratitude the valuable and timely advice guidance and support receivedfrom Government of India Government of Jammu & Kashmir Reserve Bank of India

Securities and Exchange Board of India (SEBI) Insurance

Regulatory Developmental Authority (IRDA) NABARD SIDBI

IBA FIMMDA FEDAI Stock Exchanges Ministry of Corporate

Affairs Registrar of Companies Comptroller & Auditor General of India FinancialInstitutions and the Central Statutory Auditors of the bank in the functioning of thebank. The Directors place on record their deep appreciation of the valuable contributionof the members of the staff at all levels for the progress of the bank during the year andlook forward to their continued cooperation in realization of the corporate goals in theyears ahead.

For and on behalf of the Board of Directors R. K Chhibber Interim Chairman & MDDIN: 08190084

Place: Srinagar (J&K) Date: 16th July 2019