Jammu and Kashmir Bank Ltd Directors Report.

To the Members,

Your Board of Directors has pleasure in presenting the 81st 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, 2019.

Performance at a Glance

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

• The total deposits of the Bank grew by र 9632.40 Crore from र 80006.50 Crore as on 31st March, 2018 to र 89638.90 Crore as on 31st March, 2019, a growth of 12.04 percent. CASA deposits of the bank at र 45442.63 Crore constituted 50.70 percent of total deposits of the bank.

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

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

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

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

• The bank effected cumulative cash recovery, upgradation of NPAs and technical write-off of र 2749.95 Crore during FY 2018-19.

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

Insurance Business

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

Income Analysis

• The Interest income of the bank stood at र 7675.56

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

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

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

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

Gross Profit

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


The Provision for Loan Losses, Standard Assets, Taxation and others aggregated to र 1253.02 Crore in the financial year 2018-19.

Net Profit/Loss

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


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

Branch/ATM Network

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














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


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

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

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

The capital management framework of the bank is complemented by the risk management framework, which covers the business and capital plans and stress testing results integrated with the internal capital adequacy assessment process while assessing its impact on the capital ratios and adequacy of capital buffers for current and future periods.

Net Worth and Capital Adequacy Ratio (CRAR)

• The Net Worth of the bank stood at र 6020.35 Crore on 31st March 2019 after excluding the revaluation reserves.

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

Board of Directors

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

Non-Executive Directors

Independent and Non – Independent

Non-Independent Executive Director

Mr. Rajesh Kumar Chhibber

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

Mr. Parvez Ahmed

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

Non-Independent Non-Executive Director

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

Independent Non-Executive Director

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. Mr. Mohammad Ashraf Mir

2. Dr. Pronab Sen

3. Dr. Sanjiv Agarwal

4. Mr. Sunil Chandiramani

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

(Amendment) Regulations, 2018.

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

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

Mr. Azhar ul Amin, Non Executive Non Independent Director resigned from the Board of the Bank with effect from 23rd April 2019. Mr. Parvez Ahmed, pursuant to the Government Order dated 8th June, 2019 ceased to be Director and Chairman & CEO of the Bank and pursuant to approval of the J&K Govt./RBI Mr. Rajesh Kumar Chhibber was nominated as director and appointed as interim Chairman & MD w.e.f. 10th June, 2019 for a period of 3 months. RBI in exercise of powers conferred by Section 36AB (1) of Banking Regulation Act, 1949 appointed Shri A.K. Misra, Ex-Executive Director RBI as Additional Director on the Board of the Bank for a period of 2 years w.e.f. 3rd July, 2019 to 2nd July 2021 or till further orders whichever is earlier vide RBI order DBR.PSBD

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

Directors seeking appointment/re-appointment at AGM

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

Appointments/Resignations of the Key Managerial Personnel

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

Number of Meetings of the Board

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

19.05.2018, 30.05.2018, 23.06.2018, 07.07.2018, 26.07.2018, 26.08.2018, 17.09.2018, 16.10.2018, 26.11.2018, 27.12.2018, 12.01.2019, 23.02.2019, 26.03.2019

Committees of the Board

The Bank has following committees of the Board:

• Management Committee

• Audit Committee

• Special Committee of Board on Frauds

• Stakeholders Relationship Committee

• Information Technology Strategy Committee

• Corporate Social Responsibility Committee

• Integrated Risk Management Committee

• Customer Service Committee

• Nomination and Remuneration Committee

Legal and Impaired Assets Resolution Committee

• Human Resource Development Committee

• Investment Committee

• GST Steering Committee

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

Corporate Governance annexed to this report.

Subsidiary Company

As on March 31, 2019, your Bank had one unlisted wholly owned subsidiary, JKB 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 Insurance products (both life and non-life), 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 w.e.f. 1st March 2013.The Company planted its roots in first instance in depository and broking services and is currently offering Stock Broking activities in NSE/BSE cash segment and NSE F&O. The JKBFSL offers the state of art infrastructure powered by the renowned Thomson Reuters Ltd. The JKBFSL network spans over Jammu, Kashmir, Gurgaon and Mumbai.

Performance and Financial Position of JKBFSL

The operating income of the Company for the year ended 31st March, 2019 stands at र 4.43 Crores. Other income of the company stood at र 93.06 lacs. The Total income of the Company for the year ended 31st March, 2019 stood at र 5.36 Crores. The net loss of the company for the financial year ended 31st March, 2019 stood at र 71.50 Lacs, increasing its accumulated net loss to 4.34 Crores as on 31st March, 2019.

Salient features of the financial statement of JKBFSL are attached herewith as Annexure 5.

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

The J&K Grameen Bank has come into existence on 30th June 2009 with the issuance 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 State viz. Baramulla, Bandipora, Kupwara, Jammu, Kathua, Rajouri, Poonch, Leh, Kargil, Samba, Kishtwar, Ganderbal and Srinagar having 217 branches with 1019 employees.

Capital Structure:

In terms of the RRBs Act 1976, the authorized capital of

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

1. Authorized Share Capital

र 2000 Crore

2. Subscribed / Paid up Share Capital

र 97.16 Crore

Central Government (50%)

र 48.58 Crore

State Government (15%)

र 14.57 Crore

Sponsor Bank (35%)

र 34.01 Crore


Tier II perpetual bonds: For implementation of 100% CBS in JKGB, J&K Bank has contributed an amount of 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 the Bank as on 31.03.2019 (Un-audited)


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


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


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

CD Ratio:

The C.D. Ratio of the bank has increased by 2.68% from 46.84% as on March 31, 2018 to 49.52% as on March 31, 2019.

NPA Management:

JKGB has made recoveries/ up gradations for an amount of

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

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

(Amount in Crore)


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

1 NPA at the beginning of FY


2 Slippage


3 TOTAL (1+2)


4 Recovery/ up gradation


5 NPA at the end (3-4)


6 %age to gross advances


7 Provisions


8 Net NPA at the end


9 %age to net advances


10 NPA Coverage %



Future Business Plan for the FY 2019-20

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


(Amount in Crore)

1 Deposits


2 Advances


3 Fresh loans to be disbursed


4 CD Ratio


5 Net Profit


6 Gross NPA


7 Net NPA




Against Net Profit of र 14.10 crore recorded as at the end of the previous FY 2017-18, the bank has recorded Net Profit of

र 22.00 crore as on 31st March 2019.

Lead Bank Responsibility

a. Convener JKSLBC

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

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

12 districts i.e. Srinagar, Ganderbal, Budgam, Baramulla, Bandipora, Kupwara, Anantnag, Kulgam, Pulwama, Shopian, Poonch and Rajouri out of 22 districts of J&K State satisfactorily. The other 10 districts i.e. Jammu, Samba, Kathua, Udhampur, Reasi, Doda, Ramban,

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

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

19 was launched in time and its implementation was monitored on quarterly intervals in State Level Bankers Committee meetings. During the FY 2018-19, banks have extended a total credit of र 28,333.21 Crore in favour of 8,24,254 beneficiaries (both under Priority as well as Non-priority Sector) against annual target of र 31,697.61 Crore for 10,68,686 beneficiaries under Annual Credit Plan 2018-19, thereby registering achievement of 89% in financial terms and 77% in physical terms. This includes Priority Sector credit of र 15,154.57 Crore disbursed in favour of 5,21,391 beneficiaries against the annual target of र 741.91 Crore for 8,39,476 beneficiaries (constituting 64% achievement in financial terms and 62% in physical terms) and Non-Priority Sector credit of र 13,178.65 Crore disbursed in favour of 3,02,863 beneficiaries against annual target of 7,955.70 Crore for 2,29,210 beneficiaries (constituting achievement of 166% in financial and 132% in physical terms).

Out of the total Priority Sector credit of र 15,154.57 Crore disbursed by all banks in the State during FY 2018-19, J&K Bank alone has disbursed र 15 ,949.71 Crore against the target of र 1512,193.27 Crore, thereby achieving 82% of its annual ACP target which accounts for a share of 66% of the total flow of credit to priority sector by all banks together in the State during FY 2018-19.

Implementation of Financial Inclusion Plan

by Agriculture Production


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

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

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

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

Accordingly, J&K Bank has set up 12 RSETIs in its allocated 12 lead districts of Srinagar, Ganderbal, Budgam, Baramulla, Bandipora, Kupwara, Anantnag, Kulgam, Pulwama, Shopian, Poonch and Rajouri. State Bank of India has also set up 9 RSETIs in its allocated 10 lead districts of Jammu, Samba, Kathua, Udhampur, Reasi, Doda, Ramban, Kishtwar, and Leh. RSETI at Kargil has not been operationalised by SBI as yet. The performance of RSETIs in conducting training programmes and the number of persons benefited through credit linkage is being reviewed in quarterly SLBC meetings.

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

In terms of RBI guidelines, target of setting of Financial

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

In addition, PNB, JKGB, EDB and J&K State Cooperative Bank have also established 4, 2, 2 & 1 FLCs respectively in various districts of the state which takes the total number of FLCs in J&K State as at 31.03.2019 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 SLBC Meetings.

100% coverage of farmers under KCC Scheme

The initiative of 100% coverage of farmers under KCC Scheme with the target to cover 9.81 lakh interested farm operating families(target fixed Department) which was launched in J&K State in January 2012 in terms of directives of GoI, MoF stands accomplished in the State. Banks in J&K State have already accomplished the assigned targets by covering all the identified farm operating families under KCC.

Brand Building

In the world of banking and finance, it is the brand perception that primarily represents the health of an organization in the public imagination besides numbers in its balance sheet.

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

The banks products, services, and facilities were successfully publicized across the operational geographies. Also, the marketing campaigns initiated by the bank to garner more business and meet the quarterly targets were duly publicized with proper follow-up processes.

Besides, the functioning and accomplishments of the bank were effectively communicated to the relevant target audiences including the major stakeholders along with the customers, share-owners, other stakeholders and the general public through customized and efficiently communications using print and multi-media outlets within the state and relevant channels across the country. Leveraging 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 using highly popular mediums of social connectivity platforms especially Facebook, Twitter, Instagram, and YouTube.

Corporate Social Responsibility Policy

As a responsible institution, J&K Bank is committed to Corporate Social Responsibility (CSR). The Bank has in place Board approved policy on Corporate Social Responsibility. With an aim to instill a sense of relief and protection among the most vulnerable sections of society, the Corporate Social Responsibility (CSR) policy of the bank identifies key responsibility areas and seeks to assimilate the CSR ideals into its empowerment mission for optimising its social performance. The CSR policy is available on the website of the Bank. (https://www.jkbank.com/others/common/policy. php).

The Bank retained its comprehensive focus on activities for the larger community welfare through CSR initiatives concentrating on peoples health, education, environment and society at large. The statutory disclosures with respect to the CSR Committee and a report on CSR Activities forms part of this Report as Annexure 1.

Performance Evaluation of the Board

The Nomination and Remuneration Committee (NRC) has approved a framework/policy 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 along with 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 :
Committees of the Board: Board composition & quality, Board meetings & procedures, Board development, Strategy & Risk management, Board & Management relations, Succession planning and stakeholder value & responsibility. Functions & duties, Management relations, Committee meetings & Procedures,
Chairman of the Board: Managing Relationships, Leadership, Role & Responsibility
Individual Directors: Participation in meetings, managing relationships, Knowledge & skills & Personal attributes.


The responses received to the questionnaires on evaluation of the Board, its Committee, 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 fulfilment 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 fulfil the said criteria is made by the NRC and the Board on an annual basis.

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 stakeholders volume. Several matters have been voluntarily included in the statement on corporate from governance annexed to this report, besides certificate 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 banks 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, 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, none of the cases were referred to the Audit Committee of the Bank.

Risk Management

The risk management framework of our bank is based on accepting various risks, controlled risk assessment, measurement and monitoring of these risks. The Board sets the overall risk appetite and philosophy for the Bank. The Board, Integrated Risk Management Committee of the

Board (IRMC), which is a sub-committee of the Board, reviews various aspects of risk arising from the businesses of the Bank & frames, monitors and reviews the risk management framework. The Banks risk management processes are guided by way of well-defined policies adopted appropriately for various risk categories, independent risk oversight and periodic monitoring through the sub-committees of the Board of Directors & Asset Liability Committee (ALCO). Executive/ senior management committees; Credit Risk Management Committee (CRMC), Operational Risk Management Committee (ORMC) and Market Risk Management Committee (MRMC) operate within the broad risk management framework of the Bank.

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

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

The key components of the Banks risk management rely on the risk governance structure, comprehensive processes and internal control mechanism based on approved policies and guidelines. The policies approved from time to time by Board of Directors/ IRMC, Committees of Board form the governing framework for each type of risk.

Business Responsibility Report

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

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 has been attached as "Annexure

7" to this report.

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 a committee "Internal

Complaints Committee for Prevention, Prohibition and

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

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

Loans, Guarantees & Investment in Securities

Pursuant to section 186(11) of the Companies Act, 2013 loans made, guarantees given or securities provided or acquisition of shares by a Banking company in the ordinary course of 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 with related parties of the Bank are in the ordinary course of business and are also at arms length party basis. There was no materially significant 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) Disclosure on related party transactions at Arms length price under sub section (1) of section 188 of the Companies

Act, 2013 is attached herewith as Annexure 6.

Information under Insolvency and Bankruptcy Code, 2016

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

No. of Accounts Stage of Process

NPA / NPI outstanding

Recoveries, if any

1 20 Resolution



process(Pending with NCLT)
2 6 Liquidation



3. 3 Resolution approved/ implemented during the year




Frauds reported by the Bank.

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

Consolidated Financial Statements

Pursuant to Section 129 of the Companies Act, 2013, the Bank has prepared Consolidated Financial Statements of the Bank and its Subsidiary, JKBFSL, in the same form and manner as that of the Bank which shall be laid before the ensuing 81st Annual General Meeting of the Bank along with laying of the

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

129 i.e. Standalone Financial Statements of the Bank. Further, pursuant to 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 for the year ended March 31, 2019 form part of this Annual Report.

Statutory Auditors

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

Reserve Bank of India advised the Bank to seek its approval for appointment of Auditors as mandated under section 30(1A) of the Banking Regulation Act, 1949. The Bank in turn approached RBI/ C&AG for allowing the Bank to appoint auditors subject to prior approval of RBI. The communication in this regard continued till the end of previous Financial

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

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

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

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

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

Comments of C & AG

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

Comments of C&AG of India

A Appropriations

Statutory Reserves l6.22 crore

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

Since an amount of र 14.43 crore has been charged to

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

B Expenditure

Operating Expenses (Schedule l6) Other Expenditure र 454.73 crore

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

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

Banks Response

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

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

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

C Noted for compliance. The Bank has been forwarding Annual Report to the State Govt. in the capacity of shareholder. However, Annual Report for the FY 2018-19 shall be forwarded to the State Government separately after the approval of shareholders at the ensuing AGM of the Bank.

Secretarial Auditors

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

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

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

Secretarial Audit Report

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

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

Compliance with Secretarial Standards

The Bank is in compliance with all applicable Secretarial

Standards as notified from time to time.

Employees Remuneration

A. Particulars of employees as per rule 5(2) of the companies (appointment and remuneration of managerial personnel) rules, 2014 for the year ended 31st march, 2019, are as under:

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

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

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

Name of the employee

Designation of the employee

Remuneration drawn

Nature of employment, whether contractual or otherwise

Qualification and experience of the employee

Date of commencement of employment


Last employment held by such employee before joining the company

Percentage of equity shares held by the employee in the company

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

1 Rajesh Kumar Chhibber

Executive President



B. Sc.


59.5 -



2 Pushap Kumar Tickoo

Executive President



B. Sc.


59.1 -



3 Abdul Rashid Sheigan

Executive President





60 -



4 Rakesh Gandotra




B. Sc. /LLB


59.9 -



5 Gulam Mohd. Sadiq




B. Com.


59.8 -



6 Ghulam Nabi Teli






57.11 -



7 Sunil Gupta




B. Com.


57 -



8 Rajni Saraf




BA / M. Com.


56.9 -



9 Mohammad Younis Patoo




M. Sc.


59.5 -



10 Fayaz Ahmad Sidique

Vice President



M. Com.


59 -




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

Annexure 3.

Statutory Disclosures

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

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

Bank are explained as under:

A. Conservation of energy

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

The bank operates in a non-energy intensive environment. However, ample measures have been taken by the bank wherever necessary to reduce the carbon footprint. The same are given below:

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

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

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

Data Centre at Noida.

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

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

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

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

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

(iii) The capital investment on energy conservation equipment.

Procurement of servers and desktops for the year

2018-19 is 24.5 cr. (approx)

B. Technology Absorption

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

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

(ii) The benefits derived like product improvement, cost reduction, product development or import substitution.

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

a. Mobile banking Application Upgrade

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

Code fingerprint regeneration, term deposit closure, changes in

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

b. Document management System (DMS)

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

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

Workflow processes in the Bank.

c. IT Security

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

Bank has got ISO 27001:2013 Certification centre operations, Data Centre Facility and DR Site.

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

(iv) The expenditure incurred on Research and

Development. Nil

(C) Foreign Exchange Earnings and Outgo

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

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

Flow in derivatives and Foreign Currency Exchange


by the (2) No significant regulators or courts or tribunals impacting the going concern status of the Banks operations in future.

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

Extracts of Annual Return

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

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

2014 the extracts of the Annual Return as at March 31, 2019 forms part of this 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, 2019 and of the profit 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; for Data 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.

CEO & CFO Certification


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

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

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

SEBI (LODR) regulations 2015 and to strengthen Corporate

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

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

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


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 R. K Chhibber Interim Chairman & MD DIN: 08190084

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