1.  1.1 Your Board of Directors have the pleasure in presenting the
 73rd 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, 2011.
 
 1.2 The Bank has delivered a strong performance in 2010-11. The Banks
 strategy of consolidation, re- engineering, re-pricing and
 re-organization has resulted in productive and efficient growth, robust
 balance sheet, top-notch asset book and substantial provisions.
 Financial highlights for the year under review are presented below:
 
 2.  PERFORMANCE AT A GLANCE
 
 2.1 The Bank’s aggregate business crossed yet another psychological
 mark and stood at Rs. 70,869.57 Crores at the end of the financial year
 2010-11. The Bank’s total business increased by Rs. 10,575.18 Crores
 from the previous year’s figure of Rs. 60,294.39 Crores, registering a
 growth of 17.54%.
 
 2.2 The total deposits of the Bank grew by Rs. 7,438.77 Crores from Rs.
 37,237.16 Crores as on 31st March, 2010 to Rs. 44,675.93 Crores as on
 31st March, 2011, registering 19.98% growth. CASA deposits of the Bank
 at Rs. 18,084.82 Crores constituted 40.48% of total deposits.
 
 2.3 The Bank continued its prudent approach in expanding quality credit
 assets in line with its policy on Credit Risk Management. Its net
 advances increased by Rs. 3,136.41 Crores from Rs. 23,057.23 Crores as
 on 31st March, 2010 to Rs. 26,193.64 Crores as on 31st March, 2011,
 growing by 13.60%. The growth was recorded even after repayment of Rs.
 2,300 Crores by the State Govt. of J&K as an arrangement with RBI/J&K
 Bank.
 
 2.4 Priority sector advances increased from Rs. 8,632.29 Crores to Rs.
 10,274.46 Crores during the year.
 
 3.  The Bank’s performance in the recovery of NPAs during the year
 continued to be good. During the year, the Bank effected a cumulative
 cash recovery, up-gradation of NPAs and technical write-off of Rs.
 232.63 Crores compared to Rs. 285.74 Crores in the previous year.
 
 4.  Investment portfolio increased by Rs. 5,739.52 Crores from Rs.
 13,956.25 Crores as on 31st March, 2010 to Rs. 19,695.77 Crores as on
 31st March, 2011.
 
 5.  INSURANCE BUSINESS
 
 5.1 The Bank earned an income of Rs. 26.14 Crores from the Insurance
 Business. In life insurance, mobilized a business of Rs. 103.02 Crores
 and in non-life segment, business of Rs. 59.36 Crores was mobilized
 during the year.
 
 6.  INCOME ANALYSIS
 
 6.1 The Bank’s interest income grew by Rs. 656.25 Crores from Rs.
 3,056.88 Crores in the year 2009-10 to Rs. 3,713.13 Crores in 2010-11.
 Interest expenses marginally increased from Rs. 1,937.54 Crores to Rs.
 2,169.47 Crores during the year. The Net Interest Income increased from
 Rs. 1,119.33 Crores to Rs. 1,543.66 Crores.
 
 6.2 The Net Income from operations [Interest Spread plus Non-interest
 Income] increased to Rs. 1,908.42 Crores in the financial year 2010-11
 from Rs. 1,535.57 Crores in the financial year 2009-10, growing by
 24.28%.
 
 6.3 The Operating Expenses witnessed an increase of Rs. 181.57 Crores
 during the financial year 2010-11 and stood at Rs.  758.93 Crores,
 compared to Rs. 577.37 Crores in 2009-10.
 
 6.4 The Cost to Income ratio (Operating Expenses to Net Operating
 Income) marginally increased from 37.60% in the fi nancial year 2009-10
 to 39.77% in the financial year 2010-11 even after substantial increase
 in operating expenses.
 
 7.  GROSS PROFIT
 
 7.1 The Gross Profit for the financial year 2010-11 stood at Rs.
 1,149.49 Crores, compared to Rs. 958.21 Crores in the financial year
 2009-10, an increase of Rs. 191.28 Crores.
 
 8.  PROVISIONS
 
 8.1 The Provision for Loan Losses, Provision on Standard Assets,
 Taxation and others aggregated to Rs. 534.29 Crores in the financial
 year 2010-11 compared to Rs. 445.83 Crores in the financial year
 2009-10.
 
 9.  NET PROFIT AND DIVIDEND
 
 9.1 The Bank registered highest ever Net Profit of Rs. 615.20 Crores
 for the financial year 2010-11 compared to Rs. 512.38 Crores for the
 financial year 2009-10, registering 20.07% surge.
 
 9.2 The Board of Directors has recommended record dividend of 260 per
 cent for the financial year 2010-11.
 
 9.3 In terms of extant guidelines, the Bank will pay the dividend
 distribution tax for the financial year 2010-11.  Accordingly the total
 outflow on account of dividend for the year 2010-11 will be Rs. 146.98
 Crores including the dividend distribution tax.
 
 10.  NET WORTH AND CRAR
 
 10.1 The Bank’s Net Worth increased to Rs. 3,478.68 Crores on 31st
 March, 2011 from Rs. 3,010.46 Crores on 31st March, 2010.
 
 10.2 The Capital to Risk Adjusted Assets Ratio [CRAR] stood at 13.30%
 as on 31st March, 2011 as against 14.81% as on 31st March, 2010, which
 comfortably exceeds the norm of 9% stipulated by the Reserve Bank of
 India. The Tier I component of CRAR is 10.99% as on 31st March, 2011,
 compared to 11.91% as on 31st March, 2010.
 
 10.3 The Bank has implemented new capital adequacy framework w.e.f.
 31st March, 2009. Under new norms, the bank’s CRAR works out to 13.72%,
 which is higher than the CRAR as computed under BASEL- I norms.  The
 advantage has stemmed mainly from higher rated Investment / Credit
 portfolio. The Tier I component of CRAR under new norms is 11.33% as
 against 10.99% under BASEL -I.
 
 10.4 The Return on Average Net Worth, Earnings per Share and Book Value
 per Share for the financial year 2010- 11 stood at 18.96%, Rs. 126.9/-
 and Rs. 717.58/- , against 18.19%, Rs. 105.69 and Rs. 621/-
 respectively for the previous year.
 
 11.  BRANCH NETWORK
 
 11.1 During the financial year 2010-11, 16 branches were added, taking
 the number of branches to 548 as on 31-03-2011, spread across 20 states
 and one union territory. The area-wise breakup of the branch network
 (excluding extension counters/ mobile branches and service branches) is
 as under:
 
 Area                    Branches
 
 Metro                        039
 
 Urban                        168
 
 Semi-Urban                   118
 
 Rural                        223
 
 Total                        548
 
 
 12.  IT INITIATIVES DURING FY 2010-11
 
 We have made sustained and focused efforts to leverage the Bank’s
 existing IT infrastructure and to develop new technological solutions
 to increase customer convenience and providing multiple delivery
 channels for easy access to banking services. Some of the major
 initiatives are highlighted below:-
 
 - 25 branches were computerized during the year taking the total count
 of computerized branches as on 31st March, 2011 to 567 out of a total
 branch count of 583 (including Extension Counters).
 
 - 143 branches were migrated to Core Banking Platform during 2010-11
 taking the total count of branches on CBS as on 31st March, 2011 to
 550.  (Including Extension Counters).
 
 - 73 new ATMs were installed during the year taking the aggregate
 number of commissioned ATMs to 361 as on 31st March, 2011.
 
 - e-Banking facility has been made available at all the 550 CBS
 branches of the Bank and the number of e-Banking customers at 1,08,828
 has registered a 387% increase during the year.
 
 - The Bank has integrated with more than 900 online merchants like
 BSNL, Air Tel, LIC, Metlife, Tata Sky, Make My Trip, among others to
 provide online bill payment / shopping facility to its customers.
 
 - The Bank’s CBS branches have been enabled for RTGS and NEFT facility.
 
 - In far-flung and unbanked areas, the bank is providing basic banking
 services through three mobile vans.
 
 - A new innovative customer convenient facility ‘SMS Alert’ has been
 introduced.
 
 13.  ADVERTISING AND PUBLICITY
 
 During the year, the Bank reinforced its brand positioning to enhance
 mind share. The products, services, achievements and future plans were
 effectively communicated to the customers, shareholders and the general
 public through creatively conceived, developed and packaged
 advertisements.
 
 14.  CORPORATE SOCIAL RESPONSIBILITY
 
 At J&K Bank, sustainability entails acting responsibly on behalf of
 future generations to achieve economic, environmental and social
 progress. The Bank has maintained its reputation of being a remarkably
 responsible premier institution. We have formulated an all-embracing
 Corporate Social Responsibility (CSR) policy , which extends beyond the
 framework of familiar philanthropy with a broader perspective of
 socio-economic empowerment.
 
 The Bank’s key initiatives in this regard focus primarily on providing
 education facilities to the disadvantaged sections of society,
 extending financial assistance for medical treatment and taking
 meaningful initiatives for preserving and promoting the endemic
 culture, heritage and handicraft of Jammu and Kashmir.
 
 15.  MAJOR CSR INITIATIVES
 
 - Increased the number of sponsored special students (mentally
 challenged) of Voluntary Medicare Society’s Shafakat School from 10 to
 25.
 
 - Enhanced the Cancer Society of Kashmir’s Annual Revolving Fund from
 Rs. 1.50 lacs to Rs. 5.00 lacs in view of the alarming increase in
 cancer diagnosis in the
 
 state. Besides, an amount of? 10 lacs was donated to the society for
 the purchase of Hospital Furniture and other related items.
 
 - Gifted several computers, sewing machines, knitting machines, musical
 instruments, interlock machine, electric irons and a gas connection to
 differently abled persons, helping the vulnerable sections of society.
 
 - Sponsored the education of 16 most deserving students of HELP
 Foundation, a non-governmental organization pursuing the welfare of
 poor, orphans and underprivileged children to widen educational
 opportunities for the underprivileged.
 
 - Sponsored various state-level sports tournaments including
 tournaments organized for physically challenged persons; paid entry fee
 of three local athletes for participation in sports activities at
 Estonia, Europe.
 
 - Financed a project to revive the legacy of Kashmir Dalgate Pottery;
 the first phase has successfully culminated while the work on the
 second phase of the project is being continued with commitment.
 
 16.  LEAD BANK RESPONSIBILITY
 
 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 out of 22 districts of J&K State satisfactorily.
 
 16.1 J&K Bank has been assigned the responsibility of setting up Rural
 Self Employment and Training Institutes (RSETIs) in the assigned 12
 lead districts.  In this regard, one RSETI in district Baramulla has
 commenced the functioning with effect from 11th March, 2011. Two more
 RSETIs in District Anantnag and District Pulwama are expected to be
 operationalized soon.
 
 16.2 During the FY 2010-11, the Bank conducted the following meetings:
 
 - Two State Level Bankers Committee (SLBC) meetings.
 
 - Two special State Level Bankers Committee (SLBC) on MSMEs.
 
 - Meeting of the Coordination Task Force constituted to look out for
 solutions to problems faced in implementation of Government Sponsored
 Schemes in J&K State.
 
 - Meeting of Sub-Committee of J&K SLBC on Relaxation/Concessions to
 trade and industry in J&K state.
 
 - Two workshops on Credit Guarantee Trust Fund Scheme.
 
 - The district level and block level meetings, such as DCC/ DLRC/ BLBC,
 and other relative meetings under Lead Bank Scheme were held as per
 schedule in all of the state lead districts.
 
 17.  REGIONAL RURAL BANK
 
 The J&K Grameen Bank is the regional rural bank sponsored by your Bank.
 Its area of operation spans over 11 districts (Baramulla, Bandipora,
 Kupwara, Jammu, Kathua, Rajouri, Poonch, Leh, Kargil, Samba and
 Kishtwar) of J&K state. It has a branch network of 176 branches with
 759 employees.  The performance of the Grameen Bank has improved
 considerably during FY 2010-11. The financial highlights (un-audited)
 of the Bank for the year under review are presented below:
 
 17.1 Business
 
 The business of the Bank increased from Rs. 1,834.29 Crores to Rs.
 2,116.50 Crores during the year 2010-11 registering a growth rate of
 15.43%.
 
 17.2 Deposits
 
 The Bank’s deposits increased from Rs. 1,397.43 Crores to Rs. 1,595.01
 Crores during 2010-11, growing 14.17%.  The percentage of CASA to total
 deposits works out to 53.41%, against 52.41% on March, 2010.
 
 17.3 Advances
 
 The gross advances of the Bank as on 31st March, 2011 stood at Rs.
 521.49 Crores as against Rs. 436.86 Crores as on the corresponding date
 of the previous year, recording a growth of 19.22%.
 
 17.4 Priority Sector Advances
 
 The priority sector advances of the Bank as on 31st March, 2011 stood
 at Rs. 357.29 Crores as against Rs.  292.84 Crores as on the
 corresponding date of the previous year recording a growth of 21.84%.
 Advances to priority sector constitute 68.51% of total advances.
 
 17.5 NPA Position
 
 The gross NPA of the Grameen Bank as on 31.03.2011 is 7.73% while Net
 NPA is 1.33%.
 
 17.6 Profitability
 
 The Bank registered a net profit of Rs. 6.51 Crores as on 31st March,
 2011.
 
 18.  FINANCIAL INCLUSION
 
 To serve the unbanked population in rural areas and special segments in
 urban areas, the Bank has formulated a comprehensive Financial
 Inclusion Plan. The FIP envisages providing basic banking services in
 535 SLBC allotted villages and in 725 other unbanked villages of the
 State of Jammu & Kashmir in a phased manner upto March, 2013. FIP is
 being implemented through a mix of branch network and Business
 Correspondent Model in identified unbanked areas, with added focus on
 under banked & unbanked villages.
 
 18.1 The Bank has undertaken the setting up of Common Service Centres
 under the e-governance initiative of Government of India.  In the first
 phase, 1106 Common Service Centers are planned to be set up. Five
 hundred five Common Service Centers were established across the state
 upto March, 2011.
 
 19.  CORPORATE GOVERNANCE
 
 19.1 J&K 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 a high
 level of business ethics, effective supervision and enhancement of
 stakeholder value.
 
 19.2 Several matters have been voluntarily 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 in Clause 49 of the Listing
 Agreement.
 
 20.  BOARD OF DIRECTORS
 
 a.  Mr. M. S. Verma, ceased to be the Additional Director at the last
 Annual General Meeting of the Shareholders held on 31-07-2010 and Dr.
 Haseeb A. Drabu, tendered his resignation and ceased to be the Chairman
 & CEO from 27-08-2010.
 
 Directors place on record their deep appreciation for the valuable
 service rendered by Mr. M. S. Verma and Dr. Haseeb A. Drabu during
 their tenure as Director and Chairman and CEO, respectively of the
 Bank.
 
 b.  Mr. B. L. Dogra and Mr. A. M. Matto were reappointed as Directors
 at the last Annual General Meeting of the Shareholders of the Bank held
 on 31-07-2010.
 
 c.  With a view to broad-basing the Board, Mr. Nihal C.  Garware, an
 eminent personality, was re-appointed as Additional Director of the
 Bank w.e.f 31-07-2010. The Bank has gained immensely from his guidance
 and wide ranging experience and expertise.
 
 d.  Prof. Nisar Ali and Mr. R. K. Gupta retire by rotation at the
 ensuing Annual General Meeting in accordance with Article 76 of the
 Articles of Association of the Bank and provisions of Companies Act,
 1956 and are eligible for reappointment.
 
 21 NAME OF THE BANK’S BOARD OF DIRECTORS
 
 1    Mr. Mushtaq Ahmad                           Chairman & CEO
 
 2    Mr. Sudhanshu Pandey, IAS                         Director
 
 3    Mr. Arnab Roy                                     Director
   
 4    Mr. Ashok Kumar Mehta                   Executive Director
 
 5    Mr. Abdul Majid Mir                     Executive Director
 
 6    Mr. B. L. Dogra                                   Director
 
 7    Mr. M. I. Shahdad                                 Director
 
 8    Mr. Vikrant Kuthiala                              Director
 
 9    Prof. Nisar Ali                                   Director
 
 10   Mr. A. M. Matto                                   Director
 
 11   Mr. R. K. Gupta                                   Director
 
 12   Mr. Nihal C. Garware                              Director
 
 
 22 DIRECTORS RESPONSIBILITY STATEMENT
 
 The Board of Directors hereby confirms that:- 
 
 i) In the preparation of the annual accounts, the applicable accounting
 standards have been followed along with proper explanation relating to
 material departures.
 
 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 company at the end of the financial year and the profit /loss for
 the period under report.
 
 iii) We have taken proper and sufficient care for the maintenance of
 adequate accounting records in accordance with the provisions of the
 Companies Act, 1956 for safeguarding the assets of the company and for
 preventing and detecting frauds and other irregularities.
 
 iv) We have prepared the annual accounts on a going concern basis.
 
 23.  PARTICULARS OF EMPLOYEES
 
 PARTICULARS OF EMPLOYEES AS PER SECTION 217(2A) OF THE COMPANIES ACT,
 1956, READ WITH THE COMPANIES (PARTICULARS OF EMPLOYEES) RULES, 1975,
 FOR THE YEAR ENDED 31st MARCH, 2011, ARE AS UNDER:
 
 a.  EMPLOYED THROUGHOUT THE FINANCIAL YEAR AND IN RECEIPT OF
 REMUNERATION AGGREGATING Rs. 60,00,000/- OR MORE PER ANNUM - NIL.
 
 b.  EMPLOYED FOR PART OF THE FINANCIAL YEAR AND IN RECEIPT OF
 REMUNERATION AGGREGATING Rs. 5,00,000/- OR MORE PER MONTH - NIL.
 
 24 ACKNOWLEDGEMENTS
 
 a.  The Directors thank the valued customers, shareholders,
 well-wishers and correspondents of the Bank in India and abroad for
 their goodwill, patronage and support.
 
 b.  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,
 Deptt. of Company Affairs, Registrar of Companies, Comptroller &
 Auditor General, Financial Institutions and the Statutory Central
 Auditors of the Bank in the functioning of the Bank.
 
 c.  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 co-operation in realisation of the corporate goals in the
 years ahead.
 
 
 
                          For and on behalf of the Board of Directors
 
                                                        Mushtaq Ahmad
 
                                                       Chairman & CEO
 
 
 Place: Srinagar (J&K) 
 Dated: 14th May, 2011