1.  We have audited the accompanying financial statements of The Jammu
 & Kashmir Bank Limited, which comprise the Balance Sheet as at 31st
 March 2011, and the Statement of Profit & Loss and the Cash Flow
 Statement for the year then ended and a summary of significant
 Accounting Policies and other explanatory information. Incorporated in
 these financial statements are the returns of 65 Branches/offices
 audited by us and 517 Branches/Offices audited by Branch auditors.
 
 2.  Management is responsible for the preparation of these financial
 statements in accordance with provisions of Section 29 of the Banking
 Regulation Act, 1949 read with Section 211 of the Companies Act, 1956.
 This responsibility includes the design, implementation and maintenance
 of internal control relevant to the preparation of the financial
 statements that are free from material misstatement whether due to
 fraud or error.
 
 3.  Our responsibility is to express an opinion on these financial
 statements based on our audit. We conducted our audit in accordance
 with the Standards on Auditing issued by the Institute of Chartered
 Accountants of India. Those standards require that we comply with
 ethical requirements and plan and perform the audit to obtain
 reasonable assurance about whether the financial statements are free
 from material misstatement.
 
 4.  An audit involves performing procedures to obtain audit evidence
 about the amounts and disclosures in the financial statements.  The
 procedures selected depend on the auditor’s judgment, including the
 assessment of the risk of material misstatement of the financial
 statements, whether due to fraud or error. In making those risk
 assessment, the auditor considers internal control relevant to the
 Company’s preparation and fair presentation of the financial statements
 in order to design the audit procedures that are appropriate in the
 circumstances. An audit also includes evaluating the appropriateness of
 accounting policies used and the reasonableness of the accounting
 estimates made by the management, as well as evaluating the overall
 presentation of the financial statements.
 
 5.  We believe that the audit evidence we have obtained is sufficient
 and appropriate to provide a basis for our audit opinion.
 
 6.  In our opinion and to the best of our information and according to
 the explanations given to us, the said accounts together with the notes
 thereon give information required by the Banking Regulation Act, 1949
 as well as the Companies Act, 1956, in the manner so required for the
 banking companies and give true and fair view in conformity with the
 accounting principles generally accepted in India:
 
 i) In the case of the Balance Sheet, of the State of Affairs of the
 Bank as at 31st March, 2011;
 
 ii) In the case of the Profit and Loss Account, of the Profit for the
 year ended on that date; and
 
 iii) In the case of the Cash Flow Statement, of the cash flows for the
 year ended on that date.
 
 7.  The Balance Sheet and the Profit and Loss Account have been drawn
 up in accordance with the provisions of Section 29 of the Banking
 Regulation Act, 1949 read with Section 211 of the Companies Act, 1956.
 
 8.  We report that:
 
 a.  We have obtained all the information and explanations which, to the
 best of our knowledge and belief, were necessary for the purpose of our
 audit and have found them to be satisfactory.
 
 b.  The transactions of the Bank, which have come to our notice, have
 been within the powers of the Bank.
 
 c.  The returns received from the offices and branches of the Bank have
 been found adequate for the purpose of our audit.
 
 9.  In our opinion, the Balance Sheet, Profit & Loss Account and Cash
 Flow Statement comply with the Accounting Standards referred to in
 Sub-Section (3C) of Section 211 of the Companies Act, 1956.
 
 10.  We further report that:
 
 i) the Balance Sheet and Profit and Loss Account dealt with by this
 report, are in agreement with the books of account and the returns.
 
 ii) in our opinion, proper books of account as required by law have
 been kept by the bank so far as appears from our examination of those
 books.
 
 iii) the reports on the accounts of the branches audited by the branch
 auditors have been dealt with in preparing our report in the manner
 considered necessary by us.
 
 iv) as per information and explanation given to us, the Central
 Government has, till date, not prescribed any cess payable under
 section 441A of the Companies Act, 1956.
 
 v) on the basis of written representation received from the Directors
 and taken on record by the Board of Directors, none of the Directors is
 disqualified as on 31st March, 2011 from being appointed as a Director
 in terms of Clause (g) of Sub-Section (1) of Section 274 of the
 Companies Act, 1956.
 
 For O P Garg & Co.      For K B Sharma & Co.     For Verma Associates
 Chartered Accountants   Chartered Accountants    Chartered Accountants
 FRN: 001194N            FRN: 002318N             FRN: 002717N 
 
 
 For P C Bindal & Co.    For K K Goel & Associates
 Chartered Accountants   Chartered Accountants
 FRN: 003824N            FRN: 005299N
 
 
 CA. Salil Gupta   CA. Hemant Sharma   CA. Madan Verma
 Partner           Partner             Partner 
 M.No. 097922      M.No. 503080        M.No. 081631 
 
 
 CA. Virender K. Maini    CA. A. K. Kakkar
 Partner                  Partner
 M. No. 088730            M. No. 014493
 
 
 Place : Srinagar 
 Dated : 14th May, 2011