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Jammu and Kashmir Bank Ltd.

BSE: 532209 Sector: Financials
NSE: J&KBANK ISIN Code: INE168A01041
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VOLUME 1385834
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OPEN 55.55
CLOSE 56.30
VOLUME 1385834
52-Week high 62.75
52-Week low 23.80
P/E 4.70
Mkt Cap.(Rs cr) 5,033
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

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

Company director report

To the Members

Your Directors have pleasure in presenting the 83rd Annual Report of yourBank together with the audited Balance Sheet Profit and Loss Account and the report onbusiness and operations for the year ended 31st March 2021.

Performance at a Glance

• The aggregate business of the Bank stood at Rs. 174902.88 Crore at the end ofthe financial year 202021.

• The total deposits of the Bank grew by Rs. 10272.92 Crore from Rs. 97788.23Crore as on 31st March 2020 to Rs. 108061.15 Crore as on 31stMarch 2021 recording a YoY growth of 10.51 percent. CASA deposits of the Bank at Rs.61424.94 Crore constituted 56.84% of total deposits of the Bank.

• Cost of deposits for current FY stood at 4.10 percent.

• The net advances of the Bank stood at Rs. 66841.73 Crore as on 31stMarch 2021.

• Yield on advances for the current FY stood at 8.54 percent.

• The Average Priority Sector advances for the FY 202021 stood at Rs. 29970.89Crore as on 31st March 2021.

• The Bank effected cumulative cash recovery up- gradation of NPA's of Rs.1823.77 Crore during FY 202021 including Technical Write-off of Rs. 1203.49 Crore.

• Investment portfolio of the Bank stood at Rs. 30814.24 Crore as on 31stMarch 2021.

Insurance Business

The Bank earned a commission income of Rs. 52.50 Crore from Insurance Business bymobilizing a business of Rs. 382.95 Crore in life insurance and Rs. 205.98 Crore innonlife insurance during financial year 2020-21.

Income Analysis

• The Interest income of the Bank stood at Rs. 8111.09 Crore for the year 2020-21.Interest expenses stood at Rs. 4340.31 Crore for FY 2020-21. The Net Interest Income stoodat Rs. 3770.78 Crore for FY 2020-21.

• The Net Income from operations [Net Interest Income plus Non-interest Income]stood at Rs. 4489.77 Crore for the FY 2020-21.

• The Operating Expenses registered an increase of Rs. 151.00 Crore during thefinancial year 2020-21 and stood at Rs. 2878.54 Crore as compared to Rs. 2727.54 Crore for2019-20.

• The Cost to Income ratio (Operating Expenses to Net Operating Income) stood at64.11 percent for the financial year 2020-21.

Gross Profit

The Gross Profit for the financial year 2020-21 stood at Rs. 1611.23 Crore.


The Provision for Loan Losses Standard Assets Taxation and others aggregated to Rs.1179.11 Crore in the financial year 2020-21.

Net Profit/Loss

The Bank registered a Net Profit of Rs. 432.12 Crore for the financial year 2020-21.


In terms of Regulation 43A of the SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015 the Bank has formulated and adopted a DividendDistribution Policy with the objective of appropriately rewarding Shareholders throughdividends while retaining the capital required for supporting its future growth. The saidPolicy has been hosted on the website of the Bank at Exchange Intimation/corporate Governance Reports.php The Reserve Bank of India(RBI) through its notification dated 4th December 2020 has advised that inview of the ongoing stress and heightened uncertainty on account of COVID-19 banks shouldcontinue to conserve capital to support the economy and absorb losses. The notificationalso stated that in order to further strengthen the banks' balance sheets while at thesame time support lending to the real economy banks shall not make any dividend paymenton equity shares from the profits pertaining to the financial year ended 31stMarch 2020. The Bank did not declare any dividend for the year ended 31stMarch 2020. Further the Board of Directors has considered it prudent to not propose anydividend for the year ended 31st March 2021 also in light of the situationevolving around COVID-19 in the country and related uncertainty arising there from.

Branch/ATM Network

During the financial year 2020-21 3 new branches were established thereby taking thenumber of branches to 955 (including ARBs) as on 31.03.2021 spread over 18 states and 4union territories. The area-wise breakup of the branch network (excluding extensioncounters/ mobile branches and Service branches) on the basis of census 2011 as at the endof FY 2020-21 is as under:

Area Business Units (including IARBs)
Metro 174
Urban 109
Semi-Urban 159
Rural 513
Total 955

During the financial year FY 20-21 3 EBUs/USBs were established 29 ATMs werecommissioned thereby taking the number of ATMs to 1383 as on 31.03.2021.


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.

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.

During the year Bank has raised the Authorized Capital from Rs. 95 Crores to Rs. 250Crores.

Net Worth and Capital Adequacy Ratio (CRAR)

The Net Worth of the Bank stood at Rs.5852.98 Crore on 31st March 2021 afterexcluding the revaluation reserves.

Capital Adequacy Ratio under Basel III stood at 12.20 percent as on 31stMarch 2021. The tier I component of CRAR is 10.28 percent as on 31st March2021. Book Value per Share for the financial year 2020-21 stood at Rs. 82.04.

Board of Directors

As on date of this report the Board consists of Nine (09) Directors consisting ofChairman & MD and 08 Non-Executive Directors.

Independent and Non-Independent

Non-Independent Executive Director

Mr. R. K. Chhibber Non Independent Executive Director has been serving as the Chairman& MD of the Bank under Section 10BB of the Banking Regulation Act 1949 since October10 2019 with the approval of Reserve Bank of India (RBI).

Non-Independent Non-Executive Director

Mr. Atal Dulloo IAS Financial Commissioner to Govt. of J&K Finance Department(Additional Chief Secretary) Mr. Nitishwar Kumar IAS Mr. Anil Kumar Misra (RBIAppointed Additional Director) Mr. Vikram Gujral and Dr. Mohmad Ishaq Wani are theNon-Independent Non-Executive Directors of the Bank.

Independent Non-Executive Director

In terms of the definition of 'Independent Director' as prescribed under Regulation16(b) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015 andSection 149(6) of the Companies Act 2013 and based on the declarations/disclosuresreceived from the Directors the following Non-Executive Directors are IndependentDirectors:

1. Dr. Rajeev Lochan Bishnoi

2. Ms. Monica Dhawan

3. Mr. Naba Kishore Sahoo

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

• Mr. Zubair Iqbal (DIN: 08742685) was appointed as Government Nominee Director onthe Board of the Bank w.e.f 15th May 2020

• Mr. Nitishwar Kumar IAS (DIN: 05326456) was appointed as Additional Director onthe Board of the Bank w.e.f 09th October 2020

• Dr. Mohmad Ishaq Wani (DIN: 08944038) was appointed as Additional Director onthe Board of the Bank w.e.f 06th November 2020 and

• Mr. Rigzian Sampheal IAS (DIN: 08157221) was appointed as Director in CasualVacancy on the Board of the Bank w.e.f 22nd December 2020.

• Mr. Sonam Wangchuk (DIN: 07662456) resigned from Directorship of the Bank w.e.f16th September 2020.

• Mr. Bipul Pathak IAS (DIN: 08077260) and Mr. Zubair Iqbal (DIN: 08742685)ceased to be Government Nominee Directors on the Board of the Bank w.e.f 17th September2020 and 03rd March 2021 respectively consequent upon withdrawal of theirnomination as Director by Government of Jammu and Kashmir.

• Mr. Rigzian Sampheal IAS (Director in Casual Vacancy) resigned from the Boardof the Bank on 21st April 2021.

• Mr. Atal Dulloo IAS (DIN: 03542909) was appointed as Govt. Nominee Director onSeptember 01 2021 in place of Dr. Arun Kumar Mehta IAS.

During the year under review no Independent Director resigned before the expiry ofhis/her tenure.

Directors seeking appointment/re-appointment at AGM

Mr. Nitishwar Kumar IAS (DIN: 05326456) and Dr. Mohmad Ishaq Wani (DIN: 08944038)Additional Directors on the Board of Bank being eligible are seeking appointment asDirectors liable to retire by rotation. Mr. Vikram Gujral (DIN: 03637222) who is retiringby rotation has offered himself for re-appointment. The profile and necessary details ofthe above mentioned Directors have been annexed to the Notice of the AGM and included inthe Corporate Governance Report.

Appointments/Resignations of the Key Managerial Personnel

Mr. R. K. Chhibber Chairman & Managing Director Ms. Rajni Saraf Chief FinancialOfficer and Mr. Mohammad Shafi Mir Company Secretary are the Key Managerial Personnel ofthe Bank.

None of the Key Managerial Personnel has resigned during the year under review.

Number of Meetings of the Board

During the year under review Sixteen (16) Board Meetings were held in due compliancewith statutory provisions on the following dates:

15.04.2020 22.04.2020 16 & 17.05.2020 01.06.2020

29.06.2020 28.08.2020 08.09.2020 10.09.2020

09.10.2020 06.11.2020 22.12.2020 29.12.2020 19.01.2021

09.02.2021 25.02.2021 23.03.2021.

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 forming part of this report.

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 and the RBI appointed AdditionalDirector.

• Independent Directors evaluates the performance of Non-Independent DirectorsChairperson and Board as a whole and submits its report to the Board along with necessarycomments and suggestive course of action arising out of the evaluation.

• The performance evaluation of the Committees of the Board is conducted by theentire Board excluding the RBI appointed Additional Director.

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 Board composition & quality board meetings & procedures Board development strategy & Risk management Board & Management relations succession planning and stakeholder value & responsibility etc.
Committees of the Board Functions & duties management relations committee meetings & procedures etc.
Chairman of the Board Managing Relationships Leadership Role & Responsibility etc.
Individual Directors Participation in meetings managing relationships knowledge & skills & personal attributes etc.

The responses received to the questionnaires on evaluation of the Board itsCommittees individual Directors and Chairperson are consolidated and discussed by theBoard.

Your Bank has in place a process wherein declarations are obtained from the Directorsregarding fulfillment of the 'fit and proper' criteria in accordance with RBI guidelines.The declarations from the Directors other than members of the NRC are placed before theNRC and the declarations of the members of the NRC are placed before the Board. Assessmenton whether the Directors fulfill the said criteria is made by the NRC/Board on an annualbasis.

Subsidiary Company

As on March 31 2021 your Bank has 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 mutualFunds distribution of Credit Cards and collection of utility bills. The Company took overthe depository business of NSDL/CDSL from J&K Bank and started operations as afull-fledged Broker of NSE/BSE with effect from 1st March 2013. The Companyplanted its roots in first instance in depository and broking services and is currentlyoffering Stock Broking services in NSE/BSE cash segment and NSE F&O segment. Thecompany has embarked on an aggressive journey of profitable growth through a collaborativemodel customer outreach state of the art technology applications platforms diversifiedproduct portfolio and customer awareness and advisory services. The JKBFSL network spansover Jammu Kashmir and Gurgaon and the company strives to be the premier provider offinancial planning and investment management products and services in J&K and Ladakhbesides having presence in other major centres of the country.

Performance and Financial Position of JKBFSL

The Company saw a remarkable turnaround during the year breaking the cycle ofcontinuous losses and posting profits with significant growth in all revenue segments.Following are the performance highlights of the company during the year:


- The broking income of the Company grew from '384.64 lakhs as on 31.03.2020 to '812.34lakhs thereby registering a YOY growth of 111%.

- The depository income grew from '46.32 lakhs to 108.52 lakhs during the yearregistering a YOY growth of 134.28%.

- The mutual fund commission grew from '5.29 lakhs to 12.30 lakhs thereby recording aYOY growth of 132.51%.

- The total income of the Company grew from '482.35 lakhs to '984.30 lakhs a YOYgrowth of 104.06%


- The Company laid emphasis on cutting down its operating expenses wherever possible.

- The employee expenses saw a YOY decline of 33.57% from '458.41 lakhs to '304.54 lakhsduring the year.

- The overall expenses saw a YOY decline of 20% from '702.80 lakhs as on 31.03.2020 to'562.24 lakhs as on



- The Company registered an operating profit of '410.20 lakhs in comparison to anoperating loss of '236.93 lakhs a year ago.

- The net profit achieved was '267.14 lakhs in comparison to a net loss of 152.34 lakhsduring the previous year.

Accumulated losses:

- The Company reduced its accumulated losses from '586.39 lakhs to '319.25 lakhs duringthe year.

Branch Network:

- The company opened two new branches during the year-one at Anantnag in south Kashmirand another at Janipur in Jammu. This has taken the total number of branches to 12.

- In order to make financial services accessible to the people of JK and Ladakh theCompany plans to increase its branch footprint across the 22 district headquarters of thetwo UTs in the near future.

New Products and Services:

- The Company launched Margin Trading Facility (MTF) product during the year whichoffers funding facility to the customers for purchasing of stocks against margins only.Such funded positions can be carried on for a period of up to 180 days.

- Gold ETF (My SIP My Choice) was launched by the Company to enable its customers toinvest in digital gold through flexible instalments. The product gives the customers theluxury of investing in gold on frequent intervals to build wealth in the shape ofaccumulated gold over a period of time without worrying about the purity safety orsecurity of gold.

- The Company launched a new website with tools enabling a customer to open DEMAT/trading account online. Besides the website enables a customer to invest in mutual fundschemes of all AMCs online in a paperless manner.

Collaborative Business Model:

The Bank has after obtaining a go-ahead from RBI entered into a collaborative businesstie-up with the Company through which the Company's products viz. DEMAT/Trading accountsand Mutual Fund investments shall be made accessible to J&K Bank clients across allits branches. This would make investing in financial services products easily accessibleto people living in far flung rural areas of the UTs of JK and Ladakh.

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 withthe issuance of statutory notification by GoI MoF Department of Financial Services undersub-section (1) of section 23 (A) of the Regional Rural Banks Act 1976 vide F. No.1/4/2006-RRB providing for amalgamation of Kamraz Rural Bank and Jammu Rural Bank into asingle new Regional Rural Bank under the name of J & K Grameen Bank and has commencedbusiness from 01.07.2009. With its Head Office situated at Jammu the Bank is operating in13 districts of the UTs of J&K and Ladakh viz. Baramulla Bandipora Kupwara JammuKathua Rajouri Poonch Leh Kargil Samba

Kishtwar Ganderbal and Srinagar through its 217 branches with 1058 employees(including 11 officials on deputation from Sponsor Bank) as on March 31 2021.

Capital Structure:

In terms of the RRBs Act 1976 the authorized capital of Regional Rural Banks was fixedat Rs. 5.00 Crore which stands amended to Rupees Two Thousand Crore in terms of theRegional Rural Banks (Amendment) Act 2015 notified in the Gazette of India on 12-05-2015.The paid up capital of J&K Grameen Bank is Rs. 97.16 Crore which is held by theCentral Government JK Government and Sponsor Bank (J&K Bank) in the ratio of 50:15:35respectively. The details are tabulated hereunder:

(Amount in Crore)

1. Authorized Share Capital 2000.00
2. Total Subscribed / Paid up Share Capital 97.16
Central Government (50%) 48.58
J&K UT Government (15%) 14.57
Sponsor Bank (J&K Bank) (35%) 34.01

Tier II perpetual bonds:

For implementation of 100 % CBS in JKGB J&K Bank has contributed an amount of Rs.11.67 Crore through perpetual bonds being 50 % cost for implementation of Core BankingSolution in J&K Grameen Bank.

Performance of the Bank as on 31.03.2021


The total Business of the Bank as on 31st March 2021 stood at Rs. 7036.94Crore against Rs. 6310.13 Crore as on 31st March 2020 registering a growth of11.52 % during the financial year 2020-21.


The Deposits of the Bank have increased from Rs. 4106.91 Crore to Rs. 4472.43 Croreduring the financial year 2020-21 thereby registering a growth rate of 8.90 %.


Gross Advances of the Bank as on 31st March 2021 stood at Rs. 2564.51 Croreas against Rs. 2203.22 Crore as on the corresponding date of the previous year recordinga growth of 16.40 %.

CD Ratio:

The C.D. Ratio of the Bank has increased by 369 bps from 53.65 % as on 31stMarch 2020 to 57.34 % as on 31st March 2021.

NPA Management:

JKGB has made recoveries/ up gradations for an amount of Rs. 36.82 Crore in the NPAsduring the FY 2020-21 with fresh slippages to the tune of Rs. 55.93 Crore. The Gross NPAsof the Bank which as on 31st March 2021 stood at 7.19 % (Rs. 184.42 Crore) hasdecreased from 9.11 % (Rs. 200.75 Crore) as on 31st March 2020. Similarly NetNPAs of the bank which as on 31st March 2021stood at 3.97 % (Rs. 98.47 Crore)has decreased from 4.57 % (Rs. 95.83 Crore) as on 31st March 2020.

Detailed NPA position as on 31st March 2021 is given hereunder:

(Amount in Crore)

NPA at the beginning of FY 200.75
Slippage 55.93
TOTAL (1+2) 256.68
Recovery/ up gradation 36.82
NPA at the end (3-4) 219.86
Technical Write Off 35.44
Gross NPA less technical write off 184.42
%age to gross advances 7.19 %
Provisions 85.95
Net NPA at the end 98.47
%age to net advances 3.97 %
NPA Coverage % 55.21

Priority Sector Advances:

The priority sector advances outstanding as on 31st March 2021 stood atRs.2050.89 Crore against Rs. 1737.44 Crore outstanding as on 31st March 2020registering a growth of 18.04% on YOY basis. RRB specific benchmark of 75% portion ofpriority sector advances to total advances outstanding has been well maintained with79.97% as on 31st March 2021.

Business per Employee:

The Business per employee as on 31st March 2021 stood at Rs.6.65 Croreagainst Rs.5.92 Crore as on corresponding date of the previous year.

Business per Branch:

The Business per branch as on 31st March 2021 stood as Rs.32.43 Croreagainst Rs.29.08 Crore as on corresponding date of the previous year.


Against Net Loss of Rs.119.34 Crore recorded during previous FY 2019-20 the Bank hasrecorded Net loss of Rs.18.14 Crore as on 31st March 2021. On account of pensionprovisioning of Rs. 92.85 Crore for FY 2020-21 (being 20 % of total pension liability ofRs. 464.25 Crore worked out as per GOI directives) Bank recorded net loss of Rs. 18.14Crore during FY 2020-21.

Lead Bank Responsibility:

J&K Bank is the only Private Sector Bank in the country assigned withresponsibility of convening UT Level Bankers Committee-UTLBC meetings. The Bank continuedto satisfactorily discharge its lead Bank responsibility in 12 districts of UT of J&Ki.e. Srinagar Ganderbal Budgam Baramulla Bandipora Kupwara Anantnag KulgamPulwama Shopian Poonch and Rajouri. Lead bank responsibility in the other 8 districts ofthe UT i.e. Jammu Samba Kathua Udhampur Reasi Doda Ramban and Kishtwar is assignedto State Bank of India.

The Annual Credit Plan for UT of J&K for FY 2020-21 was launched on Ist April2020envisaging a total credit target of Rs. 44630.02 Crore for 1537993 beneficiaries.During the FY 2020-21 banks operating in UT of J&K have disbursed total credit of Rs.30688.49 Crore in favour of 1236419 beneficiaries thus registering an achievement ofalmost 69% in financial terms and more than 80% in physical terms. The total creditdisbursed includes Rs.17 307.50 Crore as Priority Sector and Rs. 13 380.99 Crore asNon-Priority Sector.

Out of total priority Sector target of Rs. 35701.41 Crore for FY 2020-21 Banksoperating in UT of J&K have disbursed Rs. 17307.50 Crore (48.48 %) during the yearconcluded on 31.03.2021.

J&K Bank was assigned annual target of Rs. 18222.99 Crore under Priority Sectorfor FY 2020-21 against which Rs. 10650.06 (58.44 %) were disbursed during the year.

During the FY 2020-21 following meetings were conducted:

• Special Meeting of J&K UTLBC on "Measures under AtmaNirbhar BharatAbhiyan" was held on 23.06.2020.

• 2nd Meeting of J&K UTLBC was held on 21.01.2021.

• Meeting of the Sub-Committee of Empowered Committee on MSMEs to discussrehabilitation of Sick MSMEs units in UT of J&K was held on 29.03.2021.

• Lead Bank ensured that the District- level and block- level meetings such asDCC/ DLRC/ BLBC and other relative meetings under Lead Bank Scheme were held as perschedule in all the 20 districts of UT of J&K during the FY 2020-21.

Implementation of Financial Inclusion Plans (FIPs):

1. After successful implementation of FIP-I and FIP-II under the directions fromReserve Bank of India a roadmap for opening "Brick & Mortar" branches orCBS-enabled Banking Outlets in the identified 104 villages having population over 5000 inUT of J&K is presently under implementation. These villages have been allocated to 8major scheduled commercial banks operating in UT of J&K viz. J&K Bank -48 SBI-15PNB-11 HDFC Bank-11 ICICI Bank-05 Canara Bank-05 UCO Bank-05 and CBI-04. As of31.03.2021 77 villages have been covered for banking services with opening of 10 brick& mortar branches and 67 CBS-enabled Banking outlets including 20 Access Points ofIndia Post Payments Bank (IPPB). Out of the 77 covered villages besides 20 villagescovered through Access Points of IPPB 31 villages have been covered by J&K Bank 12by SBI 8 villages by PNB 2 villages by HDFC & UCO Bank and 1 village each covered byICICI Bank and Canara Bank.

2. Providing Banking Services within a radius of 5 KMs of every village:

Though the banking services as per Sub Service Area (SSA) Plan were provided across theerstwhile J&K State by 2016 however in the year 2019 National Informatics Centre(NIC) conducted a GPS (Latitude/ Longitude) based verification of available Banking TouchPoints uploaded by banks on Jan Dhan Darshak App - (GIS App) and a fresh list of uncoveredvillages (i.e. villages not having a Bank Branch/BC/Post Office within 5 KMs distance) wasarrived at by DFS and shared with respective SLBC/ UTLBC in the month of October 2019 forassigning same to banks for providing the necessary Banking Touch Points as per the 5 KMcriteria fixed by DFS. Once the banks provides/ deploys the necessary Banking Touch Pointin the allocated villages the details of the same including Latitude/ Longitude Positionsare to be uploaded/ updated to Jan Dhan Darshak App by the concerned bank so that villagesis reflected as "covered" as per the GPS Mapping.

For UT of J&K 147 villages were identified by DFS as "uncovered" underGPS system of identification. The progress as on 31.03.2021 is as under:

1 J&K BANK 75 62 13
2 SBI 20 20 0
3 PNB 07 07 0
4 JKGB 28 28 0
5 EDB 05 05 0
6 IPPB 12 12 0
TOTAL 147 134 13

Reserve Bank of India Central Office Mumbai under programme "Universal Access toFinancial Services" under National Strategy For Financial Inclusion (NFSI) has interalia referred to the directions/ programme of the DFS for providing Banking Touch Pointswithin a range of 5 KMs of each village and has been monitoring/ reviewing the progress onregular basis through their Regional Office.

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

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 ofUT of J&K was assigned by J&K UTLBC to two banks viz. J&K Bank and SBI as pertheir Lead Bank responsibility. Accordingly J&K Bank has set up 12 RSETIs in itsallocated 12 lead districts (Srinagar Ganderbal Budgam Baramulla Bandipora KupwaraAnantnag Kulgam Pulwama Shopian Poonch and Rajouri. Performance of RSETIs inconducting training programmes and the number of persons benefited through credit linkageis being reviewed in all Quarterly UTLBC meetings.

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

In terms of RBI guidelines for setting up of Financial Literacy Centres (FLCs) in allthe districts of UT of Jammu and Kashmir J&K Bank has made 12 FLCs operational in its12 allocated lead districts viz. Srinagar Ganderbal Budgam Baramulla BandiporaKupwara Anantnag Kulgam Pulwama Shopian Poonch and Rajouri and SBI having made 8 FLCsoperational in its 8 allocated lead districts of UT of J&K viz. Jammu

Samba Kathua Udhampur Reasi Doda Ramban Kishtwar. In addition PNB JKGB EDB andJ&K State Cooperative Bank have also established 6 2 2 & 1 FLCs respectively invarious districts of UT of J&K which as on 31.03.2021 takes the total number of FLCsin UT of J&K to 31. The performance of FLCs in conducting the Financial Literacy Campsas per the guidelines from RBI is being reviewed at various forums including quarterlyUTLBC meetings.

100% Saturation Drive for KCC Crop

In line with the vision of GoI to achieve 100% KCC saturation of farmers across thenation J&K UTLBC in collaboration with Agriculture Production Department J&K UTGovernment organized a special drive named "Kisan Pakhwada" across the UT ofJ&K from 7th July 2020 to 21st July 2020 with a view to ensure100% coverage of farmers in UT of J&K under KCC Scheme. The Kissan Pakhwada wasinaugurated by the Hon'ble Lt. Governor UT of J&K.

As a result of above programme the number of KCCs issued by banks in UT of J&K hassubstantially increased from 7.51 lac as on 31.03.2020 to 9.97 lac as on 31.03.2021.

Brand Building

In the world of banking and finance it is primarily the brand perception thatmanifests the health of an organization within the public imagination along with thenumbers displayed in its balance sheet. Thus being proactive in our brand buildingthrough advertising and promotions we have sufficiently improved our brand exposureduring the financial year 202021 to increase the brand recall thereby increasing our brandvalue.

To enhance brand visibility and explore the possibility of positioning it at importantlocales the Bank has recently entered into an arrangement with Airport Authority of Indiafor Trolley Branding Rights on 800 trolleys available at Srinagar International Airport.

The strategic focus on enhancing the brand image of the Bank and improving its brandvalue has strengthened and cemented the bond of trust further with all our stakeholderswhile providing best products and services to the customers besides leveraging all themeans and channels of communications available for uninterrupted messaging throughout thefinancial year. While doing this all the elements of our brand identity which includeour logo its colors besides the fonts used advertising website design content and theoverall packaging were uniformly and consistently applied across all the channels ofcommunication.

Corporate Social Responsibility (CSR) Policy

As a responsible corporate citizen J&K Bank envisions to integrate its strategicintent and business goals with the needs of the society in order to achieve an inclusivesustainable and harmonious ecosystem. This represents the core principle and forms thebasis of the Bank's CSR policy.

The Corporate Social Responsibility (CSR) policy of the bank envisages not only aninclusive and sustainable socioeconomic empowerment of the underprivileged but it alsostrives to help achieve a vibrant and environmentally conscious ecosystem. The CSR policyis available on the website of the Bank

The Bank had not allocated any budget for CSR activities for FY 2020-21 in conformitywith the regulatory guidelines set to arrive at the budget for CSR spend. However thestatutory disclosures with respect to the CSR committee of the Board and a report on theCSR forms part of this report at Annexure-1.

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 ofstakeholder volume. Several matters have been voluntary included in the statement oncorporate governance annexed to this report besides certificate from the CentralStatutory Auditors regarding compliance of conditions of Corporate Governance asstipulated by the SEBI (Listing Obligations & Disclosure Requirement) Regulations2015.

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 whistleblowers can raise concerns relating to reportable matters (as defined in the policy) suchas breach of J&K Bank Code of Conduct fraud bribery corruption employeemisconduct illegality health & safety environmental issues and wastage/misappropriation of bank funds/ assets etc. Further the mechanism adopted by the Bankencourages the Whistle Blower to report genuine concerns or grievances and also providesfor direct access to Chairman of the Audit Committee of the Board in exceptional cases.

The policy is available on the website of the Bank at the link Whistle Blower-24082020.pdf

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 unfairpreiudicial employment practices. However no case was referred to the Audit Committee ofthe Bank during the year.

Risk Management

A well-defined comprehensive risk management framework of our bank is based onaccepting various risks controlled risk assessment measurement and monitoring of theserisks. The key components of the Bank's Risk Management architecture rely on the riskgovernance structure comprehensive processes and internal control mechanism based onapproved policies and guidelines. The Bank's risk management processes are guided by wayof policies adopted appropriately for various risk categories independent risk oversightand periodic monitoring by Board of Directors Committees of the Board of Directors andSenior Management Committees - Credit Risk Management Committee Market Risk ManagementCommittee Operational Risk Management Committee and Asset Liability Committee (ALCO).

These policies approved from time to time by Board of Directors Committees of Boardform the basis for governing framework for each type of risk. The Board sets the overallrisk appetite and philosophy for the Bank and have an oversight of all the risks assumedby the Bank. The Bank's Risk Management framework focuses on the management of key areasof Risk such as Credit Market Operational Risk and Liquidity Risk and Pillar II risks;quantification of these risks wherever possible. The risk management function in the Bankstrives to proactively anticipate vulnerabilities in the business operations throughquantitative or qualitative examination of the embedded risks for effective and continuousmonitoring and control. An independent risk management function ensures that risk ismanaged through a risk management architecture as well as through policies and processesapproved by Board of Directors. The risk management policies and procedures establishedare updated on continuous basis in compliance to RBI guidelines and benchmarked to bestpractices. The Board of Directors with its committee-Integrated Risk Management Committee(IRMC) reviews risk management policies of the Bank pertaining to credit marketliquidity operational & Pillar II risks that includes strategic risk and reputationalrisk Internal Capital Adequacy Assessment Process (ICAAP) and stress testing.

Risk management is administered by Executive/ Senior management committees & ChiefRisk Officer (CRO) through Integrated Risk Management Department (IRMD). The Bank hasstructured management committees; Credit Risk Management Committee (CRMC) OperationalRisk Management Committee (ORMC) and Market Risk Management Committee (MRMC) for creditrisk operational risk and market risk that operate within the broad risk managementframework of the Bank to assess and minimize these risks.

Information security and business continuity plan also forms part of risk managementfunctions in the Bank. Treasury activities are separately monitored by mid office whichreports to IRMD. The Bank has Stress Testing Policy to measure impact of adverse stressscenarios on the adequacy of capital. The stress scenarios are idiosyncratic generic anda combination of both.

Business Responsibility Report

In terms of Regulation 34(2)(f) of the SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015 top 1000 Listed Entities based on their marketcapitalization as on 31st March every year are required to submit theirBusiness Responsibility Report (BRR) as a part of the Annual Report. The Bank's BusinessResponsibility Report describing the initiatives taken by the Bank from an environmentalSocial and governance perspective is enclosed as Annexure- 7.

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 PreventionProhibition and Redressal of Sexual Harassment of Women at Workplace" has beenconstituted for dealing with complaints of harassment or discrimination. The said policyis in line with relevant Act passed by the Parliament in 2013. The Bank through thepolicy ensures that all such complaints are resolved within defined timelines. During theyear one complaint was lodged before the Internal Complaints Committee duly constitutedunder the Sexual Harassment of Women at Work Place (Prevention and Redressal) Act 2013and the rules made thereunder. Accordingly due inquiry proceedings were conducted in thecase as stipulated in the Act and adequate opportunity was provided to both complainantand respondent to present/ defend their case. Finding the case devoid of any merits thesame was disposed of within the requisite time frame of 90 days.

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 basis. There was no materially significant related party transaction entered by theBank with 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( policy/Related%20Party%20Transactions%20Policy%2022.04.2020-09062020.pdf). Statement of related party transactions under sub section (1) ofsection 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 2021 has cases under the IBC resolution thedetails whereof along with existing status is tabulated as under

(Amt. in Crs)

S. No. of No. Accounts Stage of Process NPA / NPI outstanding Recoveries during the year if any
1 31 Resolution process( Pending with NCLT) 2641.80 Nil
2 16 Liquidation Process 1372.42 0.54
3 0 Resolution approved/ implement ed during the year 0 0

Frauds reported by the Bank

The Bank during the financial year 2020-21 has detected/ reported 23 cases of frauds toReserve Bank of India involving an amount of Rs 1519.62 Crore.

Frauds reported by Auditors

During the year under review no fraud was reported by any of the statutory auditorsunder section 143 (12) of the Companies Act 2013 to the Ministry of Corporate AffairsGovt. of India.

Consolidated Financial Statements

Pursuant to Section 129 of the Companies Act 2013 the Bank has prepared ConsolidatedFinancial Statements of the Bank its Subsidiary (JKB Financial Services Ltd.) and alsoits Associate (J&K Grameen Bank) which shall be laid before shareholders at theensuing 83rd Annual General Meeting of the Bank along with Bank's FinancialStatements under sub-section (2) of Section 129 i.e. Standalone Financial Statements ofthe Bank. Further pursuant to the provisions 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 and Accounting Standard (AS) 23 - investment in Associates theConsolidated Financial Statements of the Bank along with its Subsidiary/Associate for theyear ended March 31 2021 form part of this Annual Report.

Statutory Auditors

The Central Statutory and Branch auditors of the Bank are appointed by the Comptroller& Auditor General of India (C&AG) pursuant to Section 139(5) of the Companies Act2013. The Bank had four (4) Central Statutory auditors appointed by the C&AG of Indiafor the year under review 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 Fees paid to Statutory Auditors

The details of total fees (excluding taxes) for all services paid by the Bank on aconsolidated basis to the Statutory Central Auditors are tabulated below:

S. No Particular M/S Verma Associates M/S K K Goel & Associates M/S P C Bindal & Co M/S O P Garg & Co Total
1 Fee payment by Bank to Statutory Central Auditors 85.54 86.69 85.87 71.42 329.52
2 Fee payment by J & K Grameen Bank (Associate) to Statutory Central Auditors of the Bank 0.83 Nil 6.77 1.14 8.74

Comments of C & AG

Comptroller and Auditor General of India has "Nil" Comments under Section 143(6) of The Companies Act 2013 on the accounts of the Bank for the year ended 31stMarch 2021.

Secretarial Auditors

Pursuant to Section 204 of the Companies Act 2013 your Bank has appointed Pawan KumarCompany Secretaries as its Secretarial Auditors to conduct the Secretarial Audit of theBank for the FY 2020-21. The Bank provided all assistance and facilities to theSecretarial Auditor for conducting their audit.

Secretarial Audit Report

The report of Secretarial Auditor for the FY 2020-21 is annexed to this report asAnnexure 2. The Bank's replies to the comments of Secretarial Auditor are furnished asunder:

S. No. Observations of the Secretarial Auditor Response of the Bank
1 During the audit period the composition of the Board was not in compliance with the provisions of Section 152 of the Companies . Act 2013 as the Bank didn't have adequate number of Rotational Directors. During the period under review due to some extraordinary circumstances the Bank has involuntarily become noncompliant with certain regulatory requirements relating to the Composition of Board of Directors. Currently the Bank is in the process of reconstituting its Board and re-aligning its structure with the regulatory requirements.
2 Since the Chairman of the company was Executive during the audit period half of the Board should comprise of Independent Directors as mandated under Regulation 17(1)(b) of The Securities and Ex- change Board of India (Listing Obligations and Disclosure Require. ments) Regulations 2015 whereas company had only three Independent directors throughout the financial year under audit which was less than half of the Board strength.
3 During the audit period the reserve Bank of India has imposed fine . of Rs. 2.81 lacs on currency chests. The fine has been imposed by RBI in the routine course of operations at the currency chests. Pertently out of this penalty Rs. 2.00 lakhs have been subsequently waived off by the RBI. The imposed fine has been recovered from the erring officials.
Certain circulars issued by Reserve Bank of India /NPCI which were 4. not complied with as at the end of the financial year ended on 31st March 2021 as per Annexure A of the audit report As on date most of the circulars issued by RBI / NCPI have been fully complied with and the rest are expected to be complied with in the earliest possible time.
During the audit period a penalty of Rs. 2.00 lacs was imposed by FIU INDIA under Section 13 of the PML Act 2002 for failure to 5. submit the requisite reports as stipulated under Alert No. 5/2019 dated 27.03.2019 The penalty has been imposed for non-reporting of STR to FIU India in the prescribed format. The Bank has filed an appeal against the penalty on the grounds that there were "nil reportable items". The matter is pending before the Appellate Tribunal.

Compliance with Secretarial Standards

The Bank is in compliance with all applicable Secretarial Standards as notified fromtime to time except to the extent stated in the secretarial audit report.

Employee Remuneration

The statement containing particulars of employees as required under section 197(12) ofthe Companies Act 2013 read with rule 5 (2) of the Companies (Appointment andRemuneration of Managerial Personnel) Rules 2014 is given in "Annexure 3"forming part of this report.

Statutory Disclosures

1. The disclosures to be made under sub- section (3)(m) of Section 134 of the CompaniesAct 2013 read with rule (8) (3) of the Companies (Accounts) Rules 2014 by your Bank areexplained as under:

A. Conservation of energy:

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

Bank has taken various steps to use energy efficient IT equipment & continuouslyworking towards achieving low carbon footprint levels.

Various IT initiatives have been initiated in this regard by the Bank which are givenbelow:

- Usage of Note sheet Automation Application to digitize the paper based File System

- Internal communication in the forms of circulars guidelines newsletters policiesand procedures is done through a dedicated Intranet site.

- Bank's Data Center is hosted at a high energy efficient hosting facility in Noidawhich operate on the ITIL based service delivery framework and follow ISO 9001 and ISO20000 standards.

- Increased usage of email across Bank to ensure digital communication is increased.

- Energy star compliant computing and communication hardware is used by the Bank acrossall offices and banking outlets.

- Promotion of various non-conventional sources of energy products among staff &public like Financing of Solar Devices etc.

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

Bank operates in a non-energy intensive environment. However it is always ensured thatenergy efficient hardware / equipment which consumes less power is procured and put inoperation. Besides replacement of CFL Lamps with LED Lamps / fixtures wherever neededstands completed.

iii. The capital investment on energy conservation equipment

Bank is continuously striving to ensure energy conservation equipment are used acrossenterprise like Virtual Servers Thin Clients Multi-purpose Printers scanners etc.

B. Technology Absorption:

Due to COVID-19 pandemic the increased shift of customers towards digital &touch-less banking experience has helped Bank to take advantage of this opportunity byrolling out more digital services and has thus helped to reduce the customer footfall inthe branches. This paradigm shift has helped customers to become independent and use anybanking facility digitally anywhere in a matter of minutes rather than being dependent onbanking branches/outlets.

Our Bank has ensured that continuous support is provided to new customers availingvarious digital services & also hand hold the traditional customers who are first timeusers of various online services.

Various new IT initiatives have been taken with focus on customer convenience likeMigration of new Mobile Banking to enhanced version NETC FASTag Kiosk Banking IMPS ATMMonitoring Contactless Transactions etc.

The Bank has started migration process of moving to an advanced version of Core BankingSolution (Finacle) that will enhance the functionality richness and provide features thatwill enable the Bank to innovate more products and service offerings with added benefitslike increasing operational agility interoperability and productivity.

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 2021 the Bank earned Rs. 78.86 lacs andspent Rs. 160.86 lacs in foreign currency. This does not include Foreign Currency CashFlow in derivatives and Foreign Currency Exchange Transaction.

2. No significant and material orders were passed by the regulators or courts ortribunals impacting the going concern status of the Bank's operations in future.

3. Number of cases filed if any and their disposal under Section 22 of the SexualHarassment of Women at Workplace (Prevention Prohibition and Redressal) Act 2013:

Your Bank has Zero tolerance towards any action on the part of any executive/employeewhich may fall under the ambit of 'Sexual Harassment' at workplace and is fully committedto uphold and maintain the dignity of every woman executive/ employee working in the Bank.Only one complaint of sexual harassment was lodged with the Internal Complaints Committeeduring the year 2020-21 and the same was disposed off within the required time frame of 90days.

4. No Stock options were issued to the Directors of your Bank during the year.

Extracts of Annual Return

Pursuant to sub-section 3(a) of Section 134 and sub-section (3) of Section 92 of theCompanies Act 2013 read with Rule 12 of the Companies (Management and Administration)Rules 2014 the extracts of the Annual Return as at March 31 2021 forms part of thisreport as Annexure 4.

Directors Responsibility Statement

Pursuant to Section 134(3)(c) of the Companies Act 2013 the Board of Directors herebystate that:

(a) in the preparation of the annual accounts the applicable accounting standards hadbeen followed along with proper explanation relating to material departures;

(b) the directors had selected such accounting policies and applied them consistentlyand made judgments and estimates that are reasonable and prudent so as to give a true andfair view of the state of affairs of the company at the end of the financial year and ofthe profit and loss of the company for that period;

(c) the directors had taken proper and sufficient care for the maintenance of adequateaccounting records in accordance with the provisions of the Act for safeguarding theassets of the company and for preventing and detecting fraud and other irregularities;

(d) the directors had prepared the annual accounts on a going concern basis; and

(e) the directors had laid down internal financial controls to be followed by thecompany and that such internal financial controls are adequate and were operatingeffectively.

(f) the directors had devised proper systems to ensure compliance with the provisionsof all applicable laws 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.

Requirement for maintenance of cost Records

The cost records as specified by the Central Government under section 148(1) of theCompanies Act 2013 are not required to be maintained by the Bank.

CEO & CFO Certification

Certificate issued by Mr. R. K. Chhibber Chairman & MD and Mrs. Rajni Saraf CFOof the Bank for the financial year under review was placed before the Board of Directorsat its meeting held on 13th August 2021 in terms of Regulation 17(8) of theListing Regulations.

Important events after the closure of Financial Year ended 31-03-2021

This report covers the period of financial year of the Bank beginning on 1stApril 2020 to 31st March 2021. However few material events listed belowhappened after 1st April 2021:

a) Board of Directors of the Bank on 18th June 2021 decided to obtainconsent of the Members of the Bank through Postal Ballot by way of special resolutions:

• Issue equity shares on a preferential basis to Government of Jammu and KashmirPromoter and Majority Shareholder of the Bank in accordance with Sections 42 and Section62 of the Companies Act 2013 read with the relevant rules thereunder and Chapter V ofSecurities and Exchange Board of India (Issue of Capital and Disclosure Requirements)Regulations 2018.

• Issue of shares to employees and whole time directors of the Bank

The shareholders of the Bank approved the above mentioned resolutions on 21stJuly 2021.

b) The Reserve Bank of India in exercise of powers conferred under Section 47A(1)(c)read with Section 46(4)(i) of the Banking Regulation Act 1949 imposed a penalty of Rs. 1crore (rupees one crore) on the Bank on account of contravention of directions containedin Circulars on 'lending to non-banking financial companies (NBFCs) and Bank Finance toNBFCs.

Transfer of Shares to UT of Ladakh

The J&K Govt. General Administration Department S.O. No. 339 dated 30/10/2020apportioned the Assets Liabilities and Posts of the erstwhile State of Jammu and Kashmirbetween the Union Territory of Jammu and Kashmir and Union Territory of Ladakh w.e.f.31.10.2020. As per the said notification 8.23% shareholding of Jammu & Kashmir BankLtd which amounts to 13.89% of the shareholding of the erstwhile state of Jammu andKashmir as on 31.10.2019 shall be transferred to the UT of Ladakh and the then remaining51% of shareholding of erstwhile Jammu and Kashmir state would remain with the UT of Jammuand Kashmir. The Reserve Bank of India vide letter no. D0R.H0L.No.S481/16.01.063/2021- 22dated July 26 2021 has accorded approval for the said apportionment. The saidarrangement is however subject to other necessary legal formalities.


The Directors thank the valued customers shareholders well- wishers andcorrespondents of the Bank in India and abroad for their goodwill patronage and support.The Directors acknowledge with gratitude the valuable and timely advice guidance andsupport received from Government of India Government of Jammu & Kashmir Reserve Bankof India Securities and Exchange Board of India (SEBI) Insurance RegulatoryDevelopmental Authority (IRDA) NABARD SIDBI IBA FIMMDA FEDAI Stock ExchangesMinistry of Corporate Affairs Registrar of Companies Comptroller & Auditor Generalof India Financial Institutions and the Central Statutory Auditors of the Bank in thefunctioning of the Bank. The Directors place on record their deep appreciation of thevaluable contribution of the members of the staff at all levels for the progress of theBank during the year and look forward to their continued cooperation in realization of thecorporate goals in the years ahead.

For and on behalf of the Board of Directors

R. K. Chhibber Chairman & MD
Place: Srinagar (J&K)
Date: September 08 2021