Jammu and Kashmir Bank Ltd Directors Report.

To the Members,

Your Directors have pleasure in presenting the 82nd Annual Report of your Bank, together with the audited Balance Sheet, Profit and Loss Account and the report on business and operations for the year ended 31st March, 2020.

Performance at a Glance

The aggregate business of the bank stood at Rs. 162187.30 Crore at the end of the financial year 2019-20.

The total deposits of the Bank grew by Rs. 8149.33 Crore from Rs. 89638.90 Crore as on 31st March, 2019 to Rs. 97788.23 Crore as on 31st March, 2020, recording a YoY growth of 9 percent. CASA deposits of the bank at Rs. 52469.32 Crore constituted 53.66% of total deposits of the Bank.

Cost of deposits for current FY stood at 4.96 percent.

The net advances of the Bank stood at Rs. 64399.07 Crore as on 31st March, 2020.

Yield on advances for the current FY stood at 9.48 percent.

The Average Priority Sector advances for the FY 2019-20 stood at Rs. 27157.85 Crore as on 31st March, 2020.

The bank effected cumulative cash recovery, up-gradation of NPAs of Rs. 2603.51 Crore during FY 2019-20.

Investment portfolio of the bank stood at Rs. 23052.24 Crore as on 31st March, 2020.

Insurance Business

The bank earned an income of Rs 45.34 Crore from the Insurance Business. The bank mobilized business of Rs 71.55 Crore and Rs 197.94 Crore during the year in life and non-life insurance segments respectively.

Income Analysis

The Interest income of the bank stood at Rs. 8446.29 Crore in the year 2019-20. Interest expenses stood at Rs. 4739.62 Crore for FY 2019-20. The Net Interest Income stood at Rs. 3706.67 Crore for FY 2019-20.

The Net Income from operations [Interest Spread plus Non-interest Income] stood at Rs. 4252.59 Crore in the FY 2019-20.

The Operating Expenses registered an increase of Rs. 248.88 Crore during the financial year 2019-20 and stood at Rs. 2727.54 Crore as compared to Rs. 2478.66 Crore in 2018-19.

The Cost to Income ratio (Operating Expenses to Net Operating Income) stood at 64.14 percent for the financial year 2019-20.

Gross Profit

The Gross Profit for the financial year 2019-20 stood at Rs. 1525.05 Crore.


The Provision for Loan Losses, Standard Assets, Taxation and others aggregated to Rs. 2664.46 Crore in the financial year 2019-20.

Net Profit/Loss

The bank registered a Net Loss of Rs. 1139.41 Crore for the financial year 2019-20 owing to 148% increase in the Provisions and contingencies.


Keeping in view the loss suffered by the Bank during the year and the Reserve Bank of Indias circular dated April 17, 2020, directing all banks not to make dividend pay-outs pertaining to the financial year ended March 31, 2020 until further instructions from the RBI, to conserve capital in an environment of heightened uncertainty caused by COVID-19, the Board of Directors of the Bank has not proposed any dividend for the year ended March 31, 2020.

Organisational Changes

The Reserve Bank of India has approved the amendments in the Articles of Association of the Bank for separation of the posts of Chairman and Managing Director. In June, 2019, the Board of Directors of your Bank approved implementation of J&K RTI Act, 2009 and adoption of Central Vigilance Commission (CVC) guidelines. In furtherance thereof, a Group Compliance Officer has been designated in order to strengthen compliance to various regulations, governance and accountability framework of your Bank, thereby enhancing transparency and efficiency and help in making the institution much stronger and healthier.

Branch/ATM Network

During the financial year 2019-20, 15 new branches were established, thereby taking the number of branches to 955 (including IARBs)as on 31.03.2020, spread over 17 states and 4 union territories. The area-wise breakup of the branch network (excluding extension counters/ mobile branches and Service branches) on the basis of census 2011, as at the end of FY 2019-20 is as under:

Area Business Units
(including IARBs)
Metro 175
Urban 110
Semi-Urban 159
Rural 511
Total 955

During the financial year FY19-20, 3 EBUs/USBs were established, 66 ATMs were commissioned thereby taking the number of ATMs to 1354 as on 31.03.2020.


As on March 31, 2020, the subscribed and paid up capital of your Bank stood at Rs. 71,34,50,938 comprising of 71,34,50,938 equity shares of Re. 1 each. This is subsequent to the preferential allotment of 15,65,92,546 equity shares of Re. 1/- each fully paid up for cash to the Government of Jammu and Kashmir at the issue price of Rs. 31.93 (Rupees Thirty One and Ninety Three Paisa Only) per Equity Share (including premium of Rs. 30.93 per Equity Share) aggregating to Rs. 4,99,99,99,994.00 (Rupees Four Hundred Ninety Nine Crore Ninety Nine Lacs Ninety Nine Thousand Nine Hundred Ninety Four Only) to meet the needs of its growing business, including long term capital requirements and to maintain its Capital Adequacy Ratio as per the regulatory guidelines/ norms laid down by the Reserve Bank of India.

Net Worth and Capital Adequacy Ratio (CRAR)

The Net Worth of the bank stood at Rs. 5397.48 Crore on 31st March 2020 after excluding the revaluation reserves. Book Value per Share for the financial year 2019-20 stood at Rs. 75.65.

Capital Adequacy Ratio under Basel III stood at 11.40 percent as on March, 2020. The tier I component of CRAR is 9.88 percent as on 31st March 2020.

Board of Directors

Your Bank has Nine (9) Directors consisting of two (2) promoter Directors, 8 Non-Executive Directors, as on 31st March, 2020.

Non Independent Executive Directors

Mr. R. K. Chhibber, Non Independent Executive Director has served as Interim Chairman & MD of the Bank from June 10, 2019 to October 09, 2019 and has been serving as the Chairman & MD of the Bank under section 10BB of the Banking Regulation Act, 1949 since October 10, 2019.

Mr. Parvez Ahmed, Non Independent Executive Director served as the Chairman & CEO of the Bank from October 06, 2016 to June 08, 2019.

Non Independent Non-Executive Directors

Dr. Arun Kumar Mehta, IAS, Financial Commissioner to Govt. of J&K, Finance Department, Mr. Bipul Pathak, IAS Principal Secretary to Lt. Governor, Govt. of J&K, Mr. Anil Kumar Misra (RBI Nominee), Mr. Vikram Gujral and Mr. Sonam Wangchuk are the Non Independent Non-Executive Directors of the Bank.

Independent Non-Executive Directors

In terms of the definition of ‘Independent Director as prescribed under Regulation 16(b) of the SEBI (Listing Obligation and Disclosure Requirements) Regulations, 2015 and Section 149(6) of the Companies Act, 2013 and based on the declarations/disclosures received from the Directors, the following Non–Executive Directors are Independent Directors:-

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 stating that they meet the criteria of Independence as laid down under the applicable laws and in the opinion of the Board, the independent directors meet the said criteria.

Appointments/Resignations from the Board of Directors

During the year under review;

Mr. Azhar ul Amin (DIN: 07265913) resigned from Directorship of the Bank on April 23, 2019.

Mr. R. K. Chhibber (DIN: 08190084) was appointed as Interim Chairman & MD from June 10, 2019 to October 09, 2019 and as Chairman & MD of the Bank under section 10BB of the Banking Regulation Act, 1949 from October 10, 2019.

Mr. Parvez Ahmad ceased to be Director and subsequently Chairman and CEO of the Bank with effect from June 08, 2019.

Mr. Anil Kumar Misra (DIN:08066460) (RBI Nominee) was appointed as an additional director by Reserve Bank of India for a period of two years on July 03, 2019.

Dr. Pronab Sen (DIN: 07831725) ceased to be the Director on the Board of the Bank with effect from September 26, 2019 after completion of his term.

Mr. Mohammad Ashraf Mir (DIN: 07586792), Dr. Sanjiv Agarwal (DIN: 00110392), Mr. Sunil Chandiramani (DIN: 00524035) and Mr. Rahul Bansal (DIN: 01216833) ceased to be the Directors of the Bank with effect from September 26, 2019 as they were not re-appointed at the 81st Annual General Meeting of the Bank.

Mr. Vikram Gujral (DIN: 03637222) and Mr. Sonam Wangchuk (DIN: 07662456) were re-appointed / appointed as Directors on the Board of the Bank at the 81st Annual General Meeting of the Bank held on September 26, 2019.

Mr. Dhaman Kumar Pandoh (DIN: 01332068) resigned from Directorship of the Bank on October 07, 2019.

Mr. Umang Narula, IAS (DIN: 03536402) was appointed as Government Nominee Director on the Board of the Bank with effect from October 09, 2019.

Mr. Bipul Pathak, IAS (DIN: 08077260) was appointed as Government Nominee Director on the Board of the Bank in place of Mr. Umang Narula, IAS with effect from November 11, 2019.

Dr. Rajeev Lochan Bishnoi (DIN: 00130335) and Ms. Monica Dhawan (DIN: 01963007) were appointed as Independent Directors on the Board of the Bank on January 11, 2020. Mr. Naba Kishore Sahoo (DIN: 07654279) was appointed as Independent Director on the Board of the Bank with effect from March 01, 2020.

Board of Directors places on record their deep appreciation for the valuable services rendered by the ex-directors during their tenure as Directors of the Bank.

Directors seeking appointment/re-appointment at AGM

Mr. Vikram Gujral (DIN:03637222) who is retiring by rotation, has offered himself for re-appointment. The profile and necessary details of the mentioned Director have been included in the Corporate Governance Report.

Appointments/Resignations of the Key Managerial Personnel

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

Mr. R. K. Chhibber was appointed as Interim Chairman & MD of the Bank from June 10, 2019 to October 09, 2019 and has been serving as the Chairman & MD of the Bank under section 10BB of the Banking Regulation Act, 1949 with effect from October 10, 2019

Mr. Parvez Ahmed, ceased to be the Chairman and CEO of the Bank with effect from June 08, 2019.

Ms. Rajni Saraf was appointed as Chief Financial Officer of the Bank with effect from July 05, 2019 in place of Mr. Rakesh Gandotra who ceased to be Chief Financial Officer of the Bank with effect from June 30, 2019 after attaining the age of superannuation.

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

Number of Meetings of the Board

During the year under review, Ten (10) Board Meetings were held, in due compliance with statutory provisions, on the following dates:

15.05.2019, 08.06.2019, 15.06.2019, 03.08.2019, 25.09.2019, 23.10.2019, 30.12.2019, 11.01.2020, 31.01.2020, 07.02.2020

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 are given in detail in the statement on Corporate Governance annexed to this report.

Performance Evaluation of the Board

The Nomination and Remuneration Committee (NRC) has approved a framework / policy for evaluation 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 is the process of evaluation:

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

Independent Directors evaluates the performance of non – independent directors, Chairperson and Board as a whole and submits its report to the Board alongwith necessary comments and suggestive course of action arising out of the evaluation.

The performance evaluation of the Committees of the Board is conducted by the entire Board.

A questionnaire for the evaluation of the Board, its Committees and the individual Members of the Board (including the Chairperson), designed in accordance with the said framework and covering various aspects of the performance relating to the following is forwarded 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, its Committees, individual Directors and Chairman are consolidated and discussed by the Board.

Your Bank has in place a process wherein declarations are obtained from the Directors regarding 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 the NRC and the declarations of the members of the NRC are placed before the Board. Assessment on whether the Directors fulfill the said criteria is made by the NRC/Board on an annual basis.

Subsidiary Company

As on March 31, 2020, your Bank has one unlisted wholly owned subsidiary, JKB Financial Services Limited (JKBFSL). JKB Financial Services Ltd. was set up in the year 2008 to carry on the activities of Stock Broking, Depository Services, Distribution of Mutual Funds, Distribution of Credit Cards and collection of Utility Bills. The Company took over the depository business of NSDL/CDSL from J&K Bank and started operations as a full-fledged Broker of NSE/BSE with effect from March 01, 2013. The Company planted its roots in first instance in depository and broking services and is currently offering Stock Broking services in NSE/BSE cash segment and NSE F&O. The company has embarked on an aggressive journey of profitable growth through a collaborative model, customer outreach, state of the art technology application platforms, diversified product portfolio and customer awareness and advisory services. The JKBFSL network spans over Jammu, Kashmir and Gurugram and the company strives to be the premier provider of financial planning and investment management products and services in J&K and Ladakh besides having presence in other major centres of the country.

Performance and Financial Position of JKBFSL

The operating income of the Company for the year ended 31st March, 2020 stands at 4.39 Crores. Other income of the company stood at 43.48 lacs. The total income of the Company for the year ended 31st March, 2020 stood at 4.82 Crores. The company posted a net loss of 1.52 crores for the financial year ended 31st March, 2020, however during the fourth quarter of the financial year 2019-20 the company posted a net profit of 0.18 crores. Salient features of the financial statement of JKBFSL are placed as Annexure 5 to this report.

Regional Rural Bank Sponsored by J&K Bank: J&K Grameen Bank (Associate)

The J&K Grameen Bank has come into existence on 30th June 2009 with the issuance of statutory 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 providing for amalgamation of Kamraz Rural Bank and Jammu Rural Bank into a single new Regional Rural Bank under the name of J & K Grameen Bank with its Head Office at Jammu and has commenced business effective from 01.07.2009. Presently, bank is operating in 13 districts of the UTs of J&K and Ladakh viz. Baramulla, Bandipora, Kupwara, Jammu, Kathua, Rajouri, Poonch, Leh, Kargil, Samba, Kishtwar, Ganderbal and Srinagar having 217 branches with 1051 employees.

Capital Structure:

In terms of the RRBs Act 1976, the authorized capital of Regional Rural Banks was fixed at Rs.5.00 Crore (which stands amended to Rs. Two Thousand Crore in terms of the Regional Rural Banks (Amendment) Act, 2015 notified in the Gazette of India on 12-05-2015). The issued and paid up capital of the J&K Grameen Bank is Rs.97.16 Crore fully subscribed by the Central Government, State/UT Government and Sponsor Bank in the ratio of 50:15:35 respectively. The details are tabulated hereunder:

1. Authorized Share Capital Rs.2000 Crore
2. Subscribed / Paid up Share Rs.97.16 Crore
Central Government (50%) Rs.48.58 Crore
State/UT Government (15%) Rs.14.57 Crore
Sponsor Bank (35%) Rs.34.01 Crore

Tier II perpetual bonds:

For implementation of 100% CBS in JKGB, J&K Bank has contributed an amount of Rs. 11.67 crores in the shape of perpetual bonds being 50% cost for implementation of Core Banking Solution in J&K Grameen Bank.

Performance of J&K Grameen Bank as on 31.03.2020


The total business of the bank as on 31st March 2020 stood at Rs. 6310.13 Crore against Rs. 5716.91 Crore as on 31st March 2019, thereby showing an increase of Rs. 593.22 Crore registering a growth of 10.38% during the financial year 2019-20.


The deposits of the bank have increased from Rs. 3823.72 Crore to Rs. 4106.91 Crore during the financial year 2019-20 thereby registering a growth rate of 7.41%.


Gross advances of the Bank as on 31st March 2020 stood at Rs. 2203.22 Crore as against Rs. 1893.19 Crore as on the corresponding date of the previous year recording a growth of 16.38%

CD Ratio:

The C.D. Ratio of the bank has increased by 4.14% from 49.51% as on 31st March 2019 to 53.65% as on March 31, 2020.

NPA Management:

JKGB has made recoveries/ up gradations for an amount of

115.34 Crore in the NPAs during the FY 2019-20 with fresh slippages to the tune of 136.78 Crore. The Gross NPAs of the bank as on March 31, 2020 at 9.11% ( 200.75 Crore) of the gross advances has decreased from 9.47% ( 179.31 Crore) as on March 31, 2019. Similarly Net NPAs of the bank as on March 31, 2020 at 4.57% (Rs. 95.83 Crore) has decreased from 4.99% (Rs. 90.05 Crore) as on March 31, 2019.

Detailed NPA position as on March 31, 2020 is given hereunder: (Amount in Crore)

NPA at the beginning of FY 179.31
Slippage 136.78
TOTAL (1+2) 316.09
Recovery/ up gradation 115.34
NPA at the end (3-4) 200.75
%age to gross advances 9.11%
Provisions 104.92
Net NPA at the end 95.83
%age to net advances 4.57%
NPA Coverage % 52.26

Priority Sector Advances:

The priority sector advances outstanding as on 31st March 2020 stood at Rs. 1737.44 Crore against Rs. 1458.94 Crore outstanding as on 31st March 2019, registering a growth of 19.09% (Rs.278.50 Crore) on YoY basis. RRB specific benchmark of 75% portion of priority sector advances to total advances outstanding has been well maintained with 78.86% advances portfolio comprising of Priority Sector loans.

NPA Position:

The gross NPA level of the Bank as on 31.03.2020 is at Rs. 200.75 Crore, i.e. 9.11% of the gross advances. The Net NPAs as on 31.03.2020 stood at Rs.95.83 Crore which accounts for 4.57% of net advances.

Business per Employee:

The business per employee as on 31st March 2020 stood at Rs. 6.00 Crore against Rs. 5.61 Crore as on corresponding date of the previous year.

Business per Branch:

The business per branch as on 31st March 2020 stood as Rs. 29.08 Crore against Rs. 26.35 Crore as on corresponding date of the previous year recording a growth of 10.36%.


Against Net Profit of Rs. 8.06 Crore recorded at the end of the previous FY 2018-19, the bank has recorded Net loss of Rs. 119.34 Crore as on 31st March 2020 mainly because of provisioning of Rs. 172.83 Crores as per the NABARD guidelines being 40% of pension liability.

Lead Bank Responsibility

J&K Bank is the only Private Sector Bank in the country assigned with responsibility of convening State/UT Level Bankers Committee (SLBC/UTLBC) meetings. The Bank continued to discharge its lead bank responsibility satisfactorily in 12 districts of UT of J&K, i.e. Srinagar, Ganderbal, Budgam, Baramulla, Bandipora, Kupwara, Anantnag, Kulgam, Pulwama, Shopian, Poonch and Rajouri. Lead bank responsibility in the other 8 districts, i.e. Jammu, Samba, Kathua, Udhampur, Reasi, Doda, Ramban and Kishtwar is assigned with State Bank of India.

The Annual Credit Plan for J&K for FY 2019-20 was launched in time and its implementation was monitored in the J&K SLBC/UTLBC meetings. During FY 2019-20, banks operating in J&K disbursed credit of Rs. 28,164.79 Crore in favour of 10,25,447 beneficiaries against target of Rs. 35,771.55 Crore for 12,32,611 beneficiaries, registering an achievement of 79% in financial terms and 83% in physical terms. This includes Priority Sector credit of Rs. 15,624.91 Crore and Non-Priority Sector credit of Rs. 12,539.88 Crore.

Out of total Priority Sector credit of Rs. 15,624.91 Crore disbursed by all banks in the UT of J&K during the FY 2019-20, J&K Bank alone has disbursed Rs. 10, 072.52 Crore against the target of Rs. 15,156.63 Crore, thereby achieving 66.46% of its annual target, which accounts for 64.46% of the total credit disbursed to priority sector by all banks in the UT.

During the FY 2019-20, following meetings were conducted:

Due to non-availability of Government functionaries only two meetings of State/UT Level Bankers Committee (SLBC/UTLBC) were conducted by the Lead Bank during FY 2019-20, i.e. 110th meeting of J&K SLBC held on 29th August, 2019 and consequent to re-organization of erstwhile J&K State into two UTs of J&K and Ladakh, first J&K UT Level Bankers Committee meeting (UTLBC) was held on 28th January, 2020.

A Special Meeting of J&K SLBC to address difficulties faced by the borrowers and banks due to disruption in business in J&K since August, 2019 was held on 10th September, 2019.

One meeting of the Steering Sub-Committee of J&K UTLBC to monitor IT-enabled Financial Inclusion, FLCs & Credit Plus activities in J&K under the Chairmanship of Regional Director, Reserve Bank of India, R.O., Jammu, was conducted on 3rd December, 2019.

One meeting of the Steering Sub-Committee of J&K UTLBC to monitor SHG-Bank Linkage Programme in J&K under the Chairmanship of Chief General Manager, NABARD, R.O. Jammu, was conducted on 28th Feb., 2020.

A meeting of the Sub-Committee of Empowered Committee on MSMEs {Erstwhile Sub-Committee of State-Level Inter-Institutional Committee (SLIIC)} to discuss rehabilitation of sick MSMEs units in J&K State was held on 25th October, 2019.

Lead Bank ensured that the district-level and block-level meetings, such as DCC/ DLRC/ BLBC, and other relative meetings under Lead Bank Scheme were held in all the 20 districts of UT of J&K during the FY 2019-20 as per schedule.

Implementation of Financial Inclusion Plans (FIPs):

After successful implementation of FIP-I and FIP-II, under the directions from Reserve Bank of India, a roadmap for opening "brick & mortar" branches or CBS-enabled Banking Outlets in the identified 104 villages having population over 5000 in J&K is presently under implementation. These villages have been allocated to 8 major scheduled commercial banks operating in J&K (viz. J&K Bank -48, SBI-15, PNB-11, HDFC Bank-10, ICICI Bank-06, Canara Bank-5, UCO Bank-5 and CBI-4). As of 31.03.2020, 53 villages have been covered for banking services with opening of 10 brick & mortar branches and 43 CBS-enabled banking outlets, out of which 28 have been covered by J&K Bank, 13 by SBI, 8 villages by PNB, 2 villages by UCO Bank and 1 village each covered by ICICI Bank and Canara Bank. Out of the remaining 51 villages, India Post Payments Bank (IPPB) is having its outlets in 21 villages and these are, as such, deemed to be covered by IPPB leaving 30 villages yet to be covered. Progress is being monitored in quarterly meeting of UTLBC J&K/ Steering Sub-Committee meetings.

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

In terms of guidelines issued by Ministry of Rural Development, Government of India, setting up the Rural Self Employment Training Institutes (RSETIs) in all the districts of J&K was assigned by J&K UTLBC 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 (Srinagar, Ganderbal, Budgam, Baramulla, Bandipora, Kupwara, Anantnag, Kulgam, Pulwama, Shopian, Poonch and Rajouri). State Bank of India has set up 8 RSETIs in its allocated 8 lead districts of Jammu, Samba, Kathua, Udhampur, Reasi, Doda, Ramban, Kishtwar. Performance of RSETIs in conducting training programmes and the number of persons benefited through credit linkage is 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 all the districts of Jammu and Kashmir, J&K Bank has made 12 FLCs operational in its 12 allocated lead districts (viz. Srinagar, Ganderbal, Budgam, Baramulla, Bandipora, Kupwara, Anantnag, Kulgam, Pulwama, Shopian, Poonch and Rajouri) and SBI having made 8 FLCs operational 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 and J&K State Cooperative Bank have also established 6, 2, 2 & 1 FLCs respectively, in various districts of J&K, which as on 31.3.2020 takes the total number of FLCs in UT of J&K to 31. The performance of FLCs in conducting the Financial Literacy Camps as per the guidelines from RBI is being reviewed at various forums including quarterly UTLBC meetings.

100% Saturation Drive for KCC Crop

In terms of instructions from Government of India, a Special Saturation Drive for 100% coverage of farmers under the KCC Scheme was launched in UT of J&K in the month of February, 2020. During the said special drive, 4,38,987 fresh KCCs were issued by banks in UT of J&K, taking the total number of KCCs as on 31.07.2020 to 8,80,200.

Brand Building

In the world of banking and finance, it is primarily the brand perception that instantly manifests the health of an organization within the public imagination besides the numbers displayed in its balance sheet. Thus, being proactive in our brand promotion through advertising and publicity, we have successfully improved our brand exposure during the FY 2019-20 to increase the brand recall thereby enhancing our brand perception and increasing our brand value.

The bond of trust with all our stakeholders was further strengthened and cemented by leveraging all the means and channels of communications available for uninterrupted messaging throughout the financial year. Besides, the banks products, services and facilities were successfully advertised and publicized through all the available channels of dissemination across the operational geography of the bank. Also, the marketing campaigns initiated by the bank to enhance the overall business, while meeting the set targets, were duly publicized with proper follow-up communications.

Moreover, the functioning and accomplishments of the bank were effectively communicated to the relevant target audiences including the major stakeholders along with the customers, shareowners, other stakeholders and general public through customized and efficiently packaged messages/ hand-outs using print and multi-media outlets within the Union Territory and relevant channels across the country. Increasing our presence in the social-media universe, we further strengthened and streamlined our online presence to reach out to the larger audiences and enhance the banks brand image by optimally leveraging the highly popular mediums of social connectivity platforms especially Facebook, Twitter, Instagram and YouTube.

Corporate Social Responsibility (CSR) Policy

As a responsible corporate citizen, J&K Bank envisions to integrate its strategic intent and business goals with the needs of the society in order to achieve an inclusive, sustainable and harmonious ecosystem. This represents the core principle and forms the basis of the banks CSR policy.

The Corporate Social Responsibility (CSR) policy of the bank envisages not only an inclusive and sustainable socioeconomic empowerment of the underprivileged, it strives to help achieve a vibrant and environmentally conscious ecosystem. The CSR policy is available on the website of the bank https://www.jkbank.com/others/common/policy.php.

During the Financial Year (FY) 2019-20, the bank continued to intervene and enhance value creation in the society through CSR activities in consonance with its mission of ‘Serving to Empower. The statutory disclosures with respect to the CSR committee and a report on the CSR activities forms part of this report at Annexure 1.

Corporate Governance

The Bank has established a tradition of exemplary practices in corporate governance. It encompasses not only regulatory and legal requirements, but also several voluntary practices, aimed at high level business ethics, effective supervision and enhancement of stakeholder volume. Several matters have been voluntary included in the statement on corporate governance annexed to this report, besides certificate from the Central Statutory Auditors regarding compliance of conditions of Corporate Governance as stipulated 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 in a 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 can raise concerns relating to reportable matters (as defined in the policy) such as breach of J&K Bank Code of Conduct, fraud, bribery, corruption, employee misconduct, illegality, health & safety, environmental issues and wastage/ misappropriation of bank funds/ assets, etc. Further, the mechanism adopted by the Bank encourages the Whistle Blower to report genuine concerns or grievances and also provides for 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 https://www.jkbank.com/others/common/policy.php.

It is hereby affirmed that the Bank has not denied any of its personnel access to the Chairman of the Audit Committee of the Board and that the policy contains adequate provisions for protecting whistle blowers from unfair termination and other unfair prejudicial and employment practices. However, no case was referred to the Audit Committee of the Bank during the year.

Risk Management

A well-defined, comprehensive risk management framework of our bank is based on accepting various risks, controlled risk assessment, measurement and monitoring of these risks. The key components of the Banks Risk Management architecture rely on the risk governance structure, comprehensive processes and internal control mechanism based on approved policies and guidelines. The Banks risk management processes are guided by way of policies adopted appropriately for various risk categories, independent risk oversight and periodic monitoring by Board of Directors, the sub-committees of the Board of Directors, Senior Management Committees – Credit Risk Management Committee, Market Risk Management Committee, Operational Risk Management Committee & Asset Liability Committee (ALCO).

These policies approved from time to time by Board of Directors, Committees of Board form the basis for governing framework for each type of risk. The Board sets the overall risk appetite and philosophy for the Bank and have an oversight on all the risks assumed by the Bank. The Banks Risk Management frwork focuses on the management of key areas of 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 Bank strives to proactively anticipate vulnerabilities in the business operations through quantitative or qualitative examination of the embedded risks for effective and continuous monitoring and control. An independent risk management function ensures that risk is managed through a risk management architecture as well as through policies and processes approved by Board of Directors. The risk management policies and procedures established are updated on continuous basis in compliance to RBI guidelines and benchmarked to best practices. The Board of Directors with its sub-committee Integrated Risk Management Committee (IRMC) reviews risk management policies of the Bank pertaining to credit, market, liquidity, operational & Pillar II risks that includes strategic risk and reputational risk, Internal Capital Adequacy Assessment Process (ICAAP) and stress testing.

Risk management is administered by Executive/ Senior management committees & Chief Risk Officer (CRO) through Integrated Risk Management Department (IRMD). IRMD has structured management committees; Credit Risk Management Committee (CRMC), Operational Risk Management Committee (ORMC) and Market Risk Management Committee (MRMC) for credit risk, operational risk and market risk that operate within the broad risk management framework of the Bank to assess and minimize these risks.

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

Business Responsibility Report

In terms of Regulation 34(2)(f) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, top 1000 Listed Entities based on their market capitalization as on 31st March every year are required to submit their Business Responsibility Report(BRR) as a part of the Annual Report. The Banks Business Responsibility Report describing the initiatives taken by the Bank from an environmental, Social and governance perspective is enclosed as Annexure- 7.

Information under the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013

The Bank does not engage in any form of child labour/ forced labour/involuntary labour and does not adopt any discriminatory employment practices. The Bank has a policy against sexual harassment and an "Internal Complaints Committee for Prevention, Prohibition and Redressal of Sexual Harassment of Women at Workplace" for dealing with complaints of harassment or discrimination. The said policy is in line with relevant Act passed by the parliament in 2013. The Bank, through the policy ensures that all such complaints are resolved within defined timelines. During the year, no complaint was lodged before the committee and no case is pending for disposal.

Loans, Guarantees & Investment in Securities

Pursuant to section 186(11) of the Companies Act, 2013, the provisions of section 186 of the Companies Act, 2013, except sub-section (1), do not apply to loans made, guarantees given or security provided by a Banking company in the ordinary course of business.The particulars of investments made by the bank are disclosed in Schedule 8 of the Financial Statements as per the applicable provisions of the Banking Regulation Act, 1949.

Contracts or Arrangements with Related Parties

Considering the nature of the Industry in which the Bank operates, transactions with related parties of the Bank are in the ordinary course of business and are also at arms length basis. There was no materially significant related party transaction entered by the Bank with promoters, Directors, Key managerial personnel or other persons which may have a potential conflict with the interests of the Bank. The policy on Related Party Transactions and dealing with related parties as approved by the Audit Committee and the Board of Directors is uploaded on the website of the Bank and the link for the same is (http://jkbank.com/others/common/ policy.php). Statement of related party transactions under sub section (1) of section 188 of the Companies Act, 2013 is attached herewith as Annexure 6.

Information under Insolvency and Bankruptcy Code, 2019

The Bank as on 31st March, 2020 has cases under the IBC resolution the details whereof along with existing status is tabulated as under:

(Amt. in Crs)

No. of Ac- counts Stage of Process Resolution process(Pending NPA / NPI outstanding R e c o v- e r i e s d u r i n g the year , if any
1 35 with NCLT) Liquidation 2812.98 Nil
2 10 Process Resolution approved/ 1094.32 0.65
3 1 implemented during the year 45.78 4.03

Frauds reported by the Bank

The Bank during the financial year 2019-20 has detected/ reported 23 cases of fraud to Reserve Bank of India involving an amount of Rs. 221.14 Crore.

Frauds reported by Auditors

During the year under review, one fraud was reported by one of the Joint statutory auditors under section 143 (12) of the Companies Act, 2013 to the Ministry of Corporate Affairs, Govt. of India.

Consolidated Financial Statements

Pursuant to Section 129 of the Companies Act, 2013, the Bank has prepared Consolidated Financial Statements of the Bank, its Subsidiary (JKB Financial Services Ltd.)and also its Associate (J&K Grameen Bank) which shall be laid before shareholders at the ensuing 82nd Annual General Meeting of the Bank alongwith Banks Financial Statements under sub-section (20) of Section 129 i.e. Standalone Financial Statements of the Bank. Further, pursuant to the provisions of Accounting Standard (AS) 21 - Consolidated Financial Statements notified under section 133 of the Companies Act 2013, read together with Rule 7 of the Companies (Accounts) Rules 2014 issued by the Ministry of Corporate Affairs, the Consolidated Financial Statements of the Bank along with its subsidiary/Associate for the year ended March 31, 2020 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 Act, 2013. The Bank had four (4) Joint Statutory Auditors appointed by the C&AG of India for 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, for all services, paid by the Bank on a consolidated basis to the Statutory Central Auditors are tabulated below:

Particulars Amount (In Lakhs)
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 Central Statutory Auditors Rs. 76.41 Rs. 78.19 Rs. 76.51 Rs. 76.09 Rs.307.20
2 Fee payment by J & K Grameen Bank (Associate) to Central Statutory Auditors of the Bank Rs.21.08 Rs.21.08

Comments of C & AG

Comments under Section 143 (6) of The Companies Act, 2013 on the accounts of the Jammu and Kashmir Bank Ltd. for the year ended 31st March 2020 were not received upto the date of this report and accordingly coud not be incorporated in the report. The comments if any along with the reply of the Bank will be read out at the meeting itself.

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 Secretarial Audit of the Bank for the FY 2019-20. The Bank provided all assistance and facilities to the Secretarial Auditor for conducting their audit.

Secretarial Audit Report

The report of Secretarial Auditor for the FY 2019-20 is annexed to this report as Annexure 2. The Banks replies to the comments of Secretarial Auditor arefurnished as under:

Observations of Secretarial Auditor Response by the Bank
• The vacancy caused by the resignation of Mrs. Vijayalakshmi Iyer was filled up on 11th January, 2020 consequent to appointment Mrs. Monica Dhawan as Independent Woman Director beyond the time limit prescribed under the Regulation 17 (1)(a) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.
• The vacancy caused by non-reappointment of Independent directors namely Mr. Pronab Sen, Mr. Sanjiv Agarwal, Mr. Sunil Chandiramani and Mr. Mohammad Ashraf Mir by the members in the Annual General Meeting held on 26th September, 2019 was filled by the Bank by appointing Dr. Rajeev Lochan Bishnoi, Mrs. Monica Dhawan and Mr. Naba Kishore Sahoo as Independent Directors with effect from 11th January 2020 and 1st March 2020 respectively. During the year under review, due to unprecedented and extraordinary reasons beyond its control, the Bank has involuntarily become non-compliant with certain regulations of the Listing Regulations/Companies Act, 2013 relating to Composition of Board of Directors, inability to reconstitute the statutory committees of the Board within the stipulated period and convening of meetings thereof. Consequent upon the appointment of Independent Directors, the composition of the Board and Committees thereof were re-aligned to the Regulatory requirements. Subsequently, the meetings of the Board and Committees thereof were held as per the regulatory requirements.
The aforesaid appointments were made beyond the time limits prescribed under Section 149 of the Act read with the rules made there under and Regulation 25(6) of the SEBI (Listing Obligations & Disclosure Requirements) Regulations, 2015.
• Pursuant to Section 177 and 178 of the Companies Act, 2013 read with Companies (Meetings of Board and its Powers) Rules, 2014 and Regulation 17(2) and 18(2((a) of the SEBI (Listing Obligations & Disclosure Requirements) Regulations, 2015, the composition of the Audit Committee, Nomination and Remuneration Committee and Stakeholders Relationship Committee was not in compliance for the period beginning from 26th September 2019 and 10th January, 2020 since the Bank did not have any Independent Directors.
• The Bank has conducted Board Meetings held on 23rd October, 2019 and 30th December, 2019 without the presence of at least one Independent Director. The gap between the meetings of the Audit committee held on 2nd August 2019 and 30th January 2020 is 180 days which is beyond the time limit specified in the Secretarial Standards.
• Article 69(i) of the Articles of Association prescribes that the Bank shall have minimum Seven (7) directors on the Board. However during the period from 7th October, 2019 to 11th January, 2020 the Bank had only six directors on its Board.

Compliance with Secretarial Standards

The Bank is in compliance with all applicable Secretarial Standards as notified from time 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) of the Companies Act, 2013 read with rule 5 (2) of the Companies (Appointment and Remuneration 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 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:

Your Banks technology infrastructure works in an energy efficient manner with an objective to keep the carbon footprint at a very low level. Various IT initiatives have been initiated in this regard by your bank, which are given below:

Usage of corporate email has been maximized across bank to ensure digital communication is increased.

Internal communication in the forms of circulars, guidelines, newsletters, policies and procedures is done through a dedicated Intranet site.

Banks Data Center is hosted at a high energy efficient hosting facility in Noida which operate on the ITIL based service delivery framework and follow ISO 9001 and ISO 20000 standards.

Energy star compliant computing and communication hardware is used by the bank across all offices and banking outlets.

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

Your bank operates in a non-energy intensive environment. However, it is always ensured that energy efficient hardware / equipment which consumes less power is procured and put in operation. Besides replacement of CFL Lamps with LED Lamps / fixtures wherever needed stands changed.

iii. The capital investment on energy conservation equipment:

Your bank has made sizable investment on energy conservation equipments like Procurement of servers, desktops, Printers, Scanners, Routers & Switches.

B. Technology Absorption :

Investment in advance technology platforms and continuous innovation to deliver various product offerings and services to customers has always been an endeavor and important constituent of your Banks business strategy. Various new features such as utility payments including integration with PHE, PDD and through single platforms like BBPS has been introduced for customer convenience and ease. The Bank is on a journey towards compete digitization and associated work flow of documents created by all business units and offices using Document Management System platform.

The Bank has started migration process of moving to an advanced version of Core Banking Solution (Finacle 10) that will enhance the functionality richness and provide features that will enable your bank to innovate more products and service offerings with added benefits like 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 Foreign Exchange outgo during the year in terms of actual outflow:

During the year ended 31st March, 2020 the Bank earned Rs. 240.23 lacs and spent Rs. 182.63 lacs in foreign currency. This does not include Foreign Currency Cash Flow in derivatives and Foreign Currency Exchange Transaction.

2. No significant and material orders were passed by the regulators or courts or tribunals impacting the going concern status of the Banks operations in future.

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

Your Bank has Zero tolerance towards any action on the part of any executive/employee which may fall under the ambit of ‘Sexual Harassment at workplace, and is fully committed to uphold and maintain the dignity of every women executive/employee working in the Bank. No such case was reported during the period under report.

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

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, 2020 forms part of this report as Annexure 4.

Directors Responsibility Statement

Pursuant to Section 134(3)(c) read with Section 134(5) of the Companies Act, 2013, the Board of Directors hereby state that:-

i. In the preparation of the annual accounts, the applicable accounting standards have been followed along with proper explanation relating to material departures, if any;

ii. We have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Bank as on 31st March, 2020 and of the profit and loss of the Bank for the year ended on that date;

iii. We have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013, for safeguarding the assets of the Bank and preventing and detecting fraud and other irregularities;

iv. We have prepared the annual accounts on a going concern basis;

v. We have laid down internal financial controls to be followed by the Bank and ensure that such internal financial controls were adequate and operating effectively;

vi. We have devised proper systems to ensure compliance with the provisions of 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 its financial statements which provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements. These controls and processes are driven through various policies, procedures and certifications. The processes and controls are reviewed periodically. The Bank has a mechanism of testing the controls at regular intervals for their design and operating effectiveness to ascertain the 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 the Companies 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, CFO of the Bank, for the financial year under review, was placed before the Board of Directors at its meeting held on 29thJune, 2020 in terms of Regulation 17(8) of the Listing Regulations.

Important events after the closure of Financial Year ended 31.03.2020

This report covers the period of financial year beginning on 1st April, 2019 to 31st March, 2020. There were no material events from 1st April, 2020 to 29th June, 2020 - the date when the annual accounts were adopted by the Board of Directors of the Bank. For the impact of COVID-19 on the performance of the Bank refer "note no. 25.1 of schedule 18 - Notes on standalone/consolidated accounts of the Bank.

The Bank subsequent to the receipt of RBI approval for separation of the position of Chairman & CEO into a Chairman of the Board and a Managing Director & CEO of the Bank, has appointed Mr. R. K. Chhibber, as Chairman of the Board and Mr. Zubair Iqbal as Managing Director & CEO of the Bank subject to the approval of RBI. The Bank has applied to RBI for approval of aforesaid appointments under section 35B of Banking Regulations Act, 1949, which are under the consideration of Reserve Bank of India.


The Directors thank the valued customers, shareholders, well-wishers and correspondents of the bank in India and abroad for their goodwill, patronage and support. The Directors acknowledge with gratitude the valuable and timely advice, guidance and support received from 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, Financial Institutions and the Central Statutory Auditors of the bank in the functioning of the bank. The Directors place on record their deep appreciation of the valuable contribution of the members of the staff at all levels for the progress of the bank during the year and look forward to their continued cooperation in realization of the corporate goals in the years ahead.

For and on behalf of the Board of Directors