1.  Accounting Conventions
 
 The accompanying financial statements are prepared by following the
 going concern concept and on the historical cost basis unless otherwise
 stated and conform to the statutory provisions and practices prevailing
 within the Banking Industry in the country.
 
 2.  Transactions involving Foreign Exchange
 
 i) Monetary Assets and Liabilities as on Balance Sheet date have been
 translated using closing rate as at year-end announced by Foreign
 Exchange Dealers Association of India.
 
 ii) Exchange differences arising on settlement of monetary items have
 been recognized as income or as expense in the period in which they
 arise.
 
 iii) The premium or discount arising at the inception of a forward
 exchange contract, which is not intended for trading purpose, has been
 amortized as expense or income over the period of contract.
 
 3.  Investments
 
 i) Investments are classified into Held-to-Maturity,
 Available-for-Sale and Held-for-Trading categories, in accordance
 with the guidelines issued by Reserve Bank of India.
 
 ii) Bank decides the category of each investment at the time of
 acquisition and classifies the same accordingly.
 
 iii) Held-to- Maturity category comprises securities acquired by the
 Bank with the intention to hold them up to maturity.
 Held-for-Trading category comprises securities acquired by the Bank
 with the intention of trading. Available-for-Sale securities are
 those, which do not qualify for being classified in either of the above
 categories.
 
 iv) Investments classified as Held-to-Maturity (HTM) category are
 carried at acquisition cost unless it is more than the face/ redemption
 value, in which case the premium is amortized over the period remaining
 to the maturity.
 
 v) a) The individual scrip’s in the Available-for-Sale category are
 marked to market at quarterly intervals. The net depreciation under
 each of six classifi cations under which investments are presented in
 the balance sheet is fully provided for, whereas the net appreciation
 under any of the aforesaid classifications is ignored.
 
 b) The market value for the purpose of periodical valuation of
 investments, included in Available for Sale and Held for trading
 categories is based on the market price available from the
 trades/quotes on stock exchanges. Central/ State Government securities,
 other approved securities, debentures and Bonds are valued as per the
 prices/YTM rates declared by FIMMDA.
 
 Unquoted shares are valued at break up value ascertained from the
 latest balance sheet and in case the latest balance sheet is not
 available the same are valued at Re1/- per Company, as per RBI
 guidelines.
 
 Investment in quoted Mutual Fund Units is valued as per Stock Exchange
 quotations. An investment in un-quoted Mutual Fund Units is valued on
 the basis of the latest re-purchase price declared by the Mutual Fund
 in respect of each particular Scheme. In case of Funds with a lock-in
 period, where repurchase price/market quote is not available, Units are
 valued at NAV. If NAV is not available, then these are valued at cost,
 till the end of the lock-in period. Wherever the re-purchase price is
 not available the Units are valued at the NAV of the respective scheme.
 
 vi) The individual scrips in the held-for-trading category are marked
 to market at monthly intervals and the net depreciation under each of
 the six classifications under which investments are presented in the
 Balance Sheet is accounted for in the Profit and loss account and
 appreciation is ignored.
 
 vii) The depreciation in value of investments where interest/principal
 is in arrears is not set-off against the appreciation in respect of
 other performing securities. Such investments including Non-performing
 Non-SLR investments are treated applying RBI prudential norms on NPA
 Classifi cation and appropriate provisions are made as per RBI norms
 and no income on such investments is recognized.
 
 viii) a) Profit or Loss on sale of Government Securities is computed on
 the basis of weighted average cost of the respective security
 
 b) Profit or loss on sale of investments in any category is taken to
 the Profit and Loss account. In case of profit on sale of investments
 in Held-to-Maturity category, an equivalent amount of profit net of
 taxes is appropriated to the Capital Reserve Account.
 
 ix) Interest accrued up to the date of acquisition of securities i.e.
 broken period interest is excluded from the acquisition cost and
 recognized as interest expense. Broken period interest received on Sale
 of securities is recognized as interest income.
 
 x) Brokerage paid on securities purchased is charged to revenue
 account.
 
 xi) Investments in J&K Grameen Bank/Sponsored Institutions have been
 accounted for on carrying cost basis.
 
 xii) Transfer of securities from one category to another is done at the
 least of the acquisition cost/book value/market value on the date of
 transfer.
 
 xiii) Repurchase & Reverse repurchase transactions are accounted for in
 accordance with the extant RBI guidelines.
 
 xiv) Bank is following settlement date accounting policy as per RBI
 guidelines.
 
 xv) In accordance with RBI circular No. IDMD 4135/11.08.43/2009-10
 dated 23.03.2010, the Bank has made changes in accounting for Repo/
 Reverse Repo transactions (Other than transactions under the liquidity
 adjustment facility (LAF) with the RBI).  Accordingly the securities
 sold and purchased under Repo/Reverse Repo are accounted for as
 collateralized lending and borrowing transactions.  However, securities
 are transferred as in case of normal outright sale/purchase
 transactions and such movement of security is reflected using
 Repo/Reverse Repo accounts and contra entries. The above entries are
 reversed on the date of maturity. Cost and revenue are accounted as
 interest expenditure/Income as the case may be. Balance in Repo account
 is classified under schedule 4 (Borrowing) and balance in Reverse Repo
 account is classified under schedule 7 (Balance with Banks & money at
 call & short notice).
 
 4.  Advances
 
 i) Classification of Advances and Provisions thereof have been made as
 per the Income Recognition and Asset Classification norms formulated by
 the RBI viz., Standard, Sub-Standard, Doubtful and Loss Assets and
 accordingly requisite provisions have been made thereof.
 
 ii) Advances are shown net of provisions required for NPA’s. Provisions
 for advances classified as Standard Assets is shown under Other
 Liabilities & Provisions.
 
 5.  Fixed Assets
 
 a) Premises and other fixed assets are accounted for at historical
 cost.
 
 b) Premises include free hold as well as lease hold properties.
 
 c) Premises include capital work in progress.
 
 However, in terms of RBI guidelines depreciation on computers
 (including ATMs) along with software forming integral part of computers
 is charged at the rate of 33.33% on straight-line method for the full
 year even if the computers (including ATMs) have been purchased during
 the second half. In respect of Computer software, not forming integral
 part of computers, acquisition cost has been charged fully in the year
 of purchase. The depreciation on mobile phones is being charged @50% on
 straight line method.
 
 e) The expenditure incurred towards furniture & fixture in building
 (M-6G) being used as Chairman’s residence has been treated as asset of
 the Bank under this head. The expenditure on repairs and renovation of
 this building has been charged to revenue, as the building is not owned
 by the Bank, hence not capitalized.
 
 f) Depreciation on additions to Assets made up to 30th September of the
 year is provided for at full rates and on additions thereafter at 50%
 of the rates. No depreciation is provided on assets sold/ discarded
 during the year.
 
 g) Premium paid for Leasehold properties is amortized over the period
 of the lease.
 
 6.  Employees Benefits
 
 i) Short-term employee benefits are charged to revenue in the year in
 which the related service is rendered.
 
 ii) In respect of employees who have opted for provident fund scheme,
 matching contribution is made.
 
 iii) Contribution to Defined Benefit Plans (Gratuity, Pension and Leave
 Encashment) has been made as per AS 15 (Revised 2005) issued by the
 Institute of Chartered Accountants of India. However, in respect of
 transition liability the Bank has opted an irrevocable choice to
 recognize the increase in its defined benefit liability determined as
 per Actuarial valuation as an expense on a straight-line basis over a
 period of five years beginning from 01.04.2007.
 
 7.  Income Recognition and Expenditure booking
 
 Income and expenditure is accounted for on accrual basis unless
 otherwise stated
 
 a) Interest and other income on advances/ investments classified as Non
 Performing Advances/ investments are recognized to the extent realized
 in accordance with the guidelines issued by the Reserve Bank of India.
 
 b) Recovery in Non Performing Assets is appropriated first towards the
 interest and there after towards principal/ arrears of asset.
 
 c) Interest on overdue term deposits is provided at Savings Bank Rate
 of Interest.
 
 d) Fee, commission (other than insurance commission), exchange, locker
 rent, insurance claims and dividend on shares and units in Mutual Fund
 are recognized on realization basis.
 
 e) Income from interest on income tax/ other tax refunds is accounted
 for on the basis of orders passed by the Competent Authorities.
 
 f) Unforeseen income/ expenses are accounted for in the year of
 receipt/ payment.
 
 g) Stationery issued to branches has been considered as consumed.
 
 8.  Credit Card reward Points
 
 The Bank has estimated the probable redemption of reward points by not
 using actuarial method but has made 100% provision for redemption
 against the loyalty points as on the reporting date.
 
 9.  Profit
 
 The net profit is disclosed in the Profit and Loss account after
 providing for:
 
 i) Income Tax, wealth tax and Deferred Tax.
 
 ii) Standard Assets, Non Performing Advances/ Investments as per RBI
 guidelines.
 
 iii) Depreciation/ amortization on Investments.
 
 iv) Transfer to contingency reserves.
 
 v) Other usual and necessary provisions.
 
 10.  Taxation
 
 Tax expense includes Income Tax, Wealth Tax and Deferred Tax determined
 in accordance with the provisions of Income/Wealth Tax Act, and the
 Accounting Standards issued by The Institute of Chartered Accountants
 of India.
 
 The deferred tax charge or credit is recognized using the tax rates
 that have been enacted or substantially enacted by the Balance Sheet
 date. In terms of Accounting Standard 22 issued by ICAI, provision for
 deferred tax liability is made on the basis of review at each Balance
 Sheet date and deferred tax assets are recognized only if there is
 virtual certainty of realization of such assets in future.
 
 11.  Contingency Funds
 
 Contingency Funds have been grouped in the Balance Sheet under the head
 Other Liabilities and Provisions.