1. 1.1. Your Board of Directors have pleasure in
presenting the 76th Annual Report of your bank, together with the
audited Balance Sheet, Proft and Loss Account and the report on
business and operations for the year ended March 31, 2014.
1.2. The bank has delivered a strong performance in 2013-14. The
bank''s strategy of consolidation, re- engineering, re-pricing and
re-organization has resulted in productive and effcient growth, robust
balance sheet, reality asset book and substantial provisions. Financial
highlights for the year under review are presented below:
2. PERFORMANCE AT A GLANCE
2.1 The aggregate business of the bank stood at Rs.115720.46 Crore at the
end of the fnancial year 2013-14, an increase of Rs. 12299.43 Crore over
the previous year''s fgure of Rs.103421.03 Crore. In percentage terms, the
growth registered was 11.89%.
2.2 The total deposits of the bank grew by Rs.5115.24 Crore from
Rs.64220.62 Crore as on 31st March, 2013 to Rs.69335.86 Crore as on 31st
March, 2014. CASA deposits of the bank at Rs.27083 Crore constituted
39.06 % of total deposits of the bank.
2.3 Cost of deposits for current FY stood at 6.70%.
2.4 The bank continued its prudent approach in expanding quality credit
assets in line with its policy on Credit Risk Management. The net
advances of the bank increased by Rs.7184.19 Crore from Rs.39200.41 Crore
as on 31st March, 2013 to Rs.46384.60 Crore as on 31st March, 2014, a
growth of 18.33%.
2.5 Yield on advances for the current FY stood at 12.23 %.
2.6 Priority sector advances (Gross) stood at Rs.13131.66 Crore as on
31st March, 2014.
3. The bank''s performance in the recovery of NPA''s during the year
continued to be good. The bank effected cumulative cash recovery,
up-gradation of NPA''s and technical write-off of Rs.270.95 Crore.
4. Investment portfolio of the bank increased by Rs.454.01 Crore from
Rs.25741.06 Crore as on 31st March 2013 to Rs.26195.07 Crore as on 31st
5. Insurance Business
5.1. The bank earned an income of Rs.31.31 Crore from the Insurance
Business. In life insurance, the bank mobilized business of Rs.63.29
Crore and in non-life segment, business of Rs.113.63 Crore was mobilized
during the year.
6. Income Analysis
6.1. The Interest income of the bank recorded a growth of Rs.630.20
Crore and increased from Rs.6136.80 Crore in the year 2012-13 to Rs.6767.00
Crore in the year 2013-14. Interest expenses increased from Rs.3820.76
Crore to Rs.4082.52 Crore during the year. The Net Interest Income
increased from Rs.2316.04 Crore to Rs.2684.48 Crore on YoY basis.
6.2. The Net Income from operations [Interest Spread plus Non-interest
Income] increased to Rs.3074.74 Crore in the fnancial year 2013-14 from
Rs.2799.77 Crore in the fnancial year 2012- 13.
6.3. The Operating Expenses registered an increase of Rs.185.98 Crore
during the fnancial year 2013- 14 and stood at Rs.1174.99 Crore as
compared to Rs.989.01 Crore in 2012-13.
6.4. The Cost to Income ratio (Operating Expenses to Net Operating
Income) stood at 38.21% in the fnancial year 2013-14.
7. Gross Proft
7.1 The Gross Proft for the fnancial year 2013-14 stood at Rs.1899.75
8.1. The Provision for Loan Losses, Provision on Standard Assets,
Taxation and others aggregated to Rs.717.28 Crore in the fnancial year
9. Net Proft and Dividend
9.1. The bank registered a Net Proft of Rs.1182.47 Crore for the
fnancial year 2013-14.
9.2. The Board of Directors has recommended a dividend of 500 per cent
for the fnancial year 2013-14.
9.3. In terms of extant guidelines, the bank will pay the dividend
distribution tax for the fnancial year 2013-14. Accordingly, the total
outfow on account of dividend for the year 2013-14 will be Rs.283.58
Crore including the dividend distribution tax.
10. Net Worth and CRAR
10.1. The Net Worth of the bank increased to Rs.5723.61 Crore on 31st
March, 2014 from Rs.4864.69 Crore on 31st March, 2013.
10.2. The bank has implemented the Basel-III guidelines on capital
regulations w.e.f. June, 2013.
10.3. Capital Adequacy Ratio under Basel III stood at 12.69 % as on
March, 2014 well above RBI stipulated norm of 9 %. The tier I component
of CRAR is 11.22% as on 31st March, 2014.
10.4. The Return on Average Net Worth stood at 22.34% for FY 2013-14.
Earnings per Share and Book Value per Share for the fnancial year
2013-14 stood at Rs.243.92 and Rs.1159.63 against Rs.217.64 and Rs.992.09
respectively for the previous year.
11. Branch/ATM Network
11.1 During the fnancial year 2013-14, 92 new branches were
established, thereby taking the number of branches to 777 as on 31-03-
2014, spread over 20 states and one union territory. The area-wise
breakup of the branch network (excluding extension counters/ mobile
branches and Service branches) as at the end of FY 2013-14 is as under:
11.2 During the fnancial year 2013-14, 187 ATMs, both onsite & offsite,
were commissioned thereby taking the number of ATMs to 800 as on
12. IT initiatives during FY 2013-14
With a view to provide greater convenience and alternate channels to
the customers, bank launched
various IT initiatives during fnancial year 2013-14. The details of
various technology initiatives taken during FY 2013-14 are enumerated
Cheque Truncation System (CTS) was introduced at RCC Mumbai, Ludhiana,
Nasik, Kolkata, Indore, Bhopal, Raipur, Baroda, Ahmedabad, Surat, Pune
Second Factor Authentication (2FA) was introduced to strengthen the
security mechanism around e-Banking transactions and to avoid
proliferation of cyber attacks.
EMV cards were issued for both credit as well as debit products to
further strengthen their security features.
As part of initiatives to add more features through delivery channels,
Merchant payments were enabled through mobile banking.
The bank established its own payment gateway to offer e-commerce
platform to its customeRs.
13. Advertising and Publicity
Continuing with our proactive brand promotion and positioning within
the wider public consciousness, we maintained and enhanced our brand
equity during the year.
The bank''s products, services & facilities were successfully advertised
while as its functioning and achievements were effectively communicated
to the respective target audiences including customers, share-owners,
stakeholders and general public through properly packaged messages
using wider and relevant mediums.
The bank also entered into the virtual space of social media networking
to augment further its on- line presence and processes of
14. Corporate Social Responsibility-CSR
With ever-increasing focus on activities for the larger community
welfare through CSR, J&K Bank retained a collective focus on its
various dimensions like people and their health, environment, education
and society at large. Year 2013-14 being the Platinum one, the bank
remained more agile towards its societal obligations to further its
vision of People''s Empowerment through Servant Leadership. J&K Bank
through its CSR activities continued to enhance value creation in the
society and the community it operates in through its services, conduct
and initiatives so as to promote sustained growth in fulfllment of its
role as a socially responsible corporate.
15. Major CSR Initiatives taken by the Bank
Health remained the prime CSR activity of the bank. Sizeable
contributions were made to various health related projects, either
directly or through implementing agencies . Under J&K Bank Health for
All bank donated fve (05) Dialysis machines to SKIMS to cater to the
needs of the poor patients suffering from chronic renal failure. Bank
also undertook various Health initiatives through NGOs like Cancer
Society of Kashmir, Maya Foundation, and Hemophilia Society of Delhi.
Free Health Camps were held at far fung areas across the state where
the needy and poor patients were provided free medicines and free
clinical tests. In addition, bank donated vehicles, wheel chairs and
provided monetary donations to the NGOs primarily dealing with
differently-abled children like Voluntary Medicare Society, Hari Prabhu
Sanstha, Chotey Taarey Foundation and otheRs.
Rising to the occasion, bank responded promptly to the earthquake
victims of Chenab Valley after the region was hit by it on 1st May,
2013 and donated around One Thousand (1000) tents to the victims as
their households had either been completely damaged or rendered
Education remained one of the thrust areas of the bank under CSR for
the year 2013-14. In a major initiative under Education for better
tomorrow the bank facilitated Soft Skills Programme for Police
Personnel to educate them about dealing with the general public in
stressful circumstances. More than fve thousand (5000) police
personnel got beneftted through this CSR act of the bank. Bank
continued its partnership with local NGOs for professionally managing
education of more than 100 children having various forms of
disabilities, with particular focus on children belonging to lower
economic strata and orphans.
i Under its fagship programme Save Environment/
Heritage bank continued to maintain nine (09) i , major parks across
A Bank continued to provide a fantastic blend of w banking and
non-banking services to the pilgrims of Shri Amaranth cave ranging from
the services of registration to insurance etc., under the aegis of CSR.
Haj pilgrims and people of all other faiths were also given due
cognizance and support on this front.
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
satisfactorily in 12 out of total 22 districts of J&K State, i. e.
Srinagar, Ganderbal, Budgam, Baramulla, Bandipora, Kupwara, Anantnag,
Kulgam, Pulwama, Shopian, Poonch and Rajouri. 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 2013-14 was launched in
time and its implementation was monitored at quarterly intervals in
State Level Bankers'' Committee meetings. During the FY 2013-14 out of
the total ACP target of Rs.16,322.68 Crore for the State, banks operating
in the State disbursed credit of Rs.10,268.58 Crore, registering an
achievement of 63%. This includes Priority Sector credit of Rs.5,701.15
Crore disbursed by banks in favour of 3,06,919 benefciaries against the
target of Rs.10,142.46 Crore for 6,13,489 benefciaries (56% achievement
in fnancial terms and 50% in physical terms) and Non-priority sector
credit of Rs.4,567.43 Crore in favour of 1,06,569 benefciaries against
the target of Rs.6,180.22 Crore for 1,67,745 benefciaries (74%
achievement in fnancial terms and 64% in physical terms).
Out of the total priority sector credit of Rs.5,701.15 Crore disbursed by
all banks in the State upto 31st March, 2014, J&K Bank alone disbursed
Rs.3,619.13 Crore which constitutes 63.48% of the total credit provided
to priority sector by all banks in the State.
During the FY 2013-14, following meetings were conducted:
- Four Quarterly State Level Bankers Committee (SLBC) meetings, viz.
89th, 90th, 91st and 92nd to review performance under ACP 2013-14 were
held on 6th June, 2013, 29th August 2013, 16th December, 2013 and 10th
March, 2014 respectively.
- One Special SLBC meeting was conducted on 8th May, 2013 on the
occasion of visit of Hon''ble Governor, RBI, Dr. D. Subbarao to J&K
- Two meetings of Steering Sub-Committee of SLBC to monitor IT enabled
Financial Inclusion, FLCCs & Credit plus Activities were held on 24th
July, 2013 and 15th January, 2014.
- Three meetings of Sub-Committee of State Level Inter Institutional
Committee (SLIIC) to discuss and work out the rehabilitation of
Individual Sick MSME units in J&K State were held on 16th May, 2013,
11th October, 2013 and 8th February, 2014.
Implementation of Financial Inclusion Plan (FIP):
- The target of providing Information & Communication Technology
(ICT)-based banking services in the 795 identifed unbanked villages
(having population over 2000) in Phase-I of Financial Inclusion Plan
was accomplished successfully by providing coverage to all the 795
villages. The progress in bringing all the house-holds in the 795
villages under the ambit of banking is being monitored regularly in
quarterly SLBC meetings.
- The roadmap for coverage of 5582 villages (having population below
2000) during the years 2012-13, 2013-14, 2014-15 and beyond 2015, was
formulated as per regulatory requirements of RBI. The Same was
allocated to fve participating banks, viz. J&K Bank (3271 villages),
SBI (753 villages), Punjab National Bank (294 villages), J&K Grameen
Bank (1026 villages) and EDB (238 villages). Its implementation is
being vigorously monitored by J&K Bank.
Responsibility of setting up of RSETIs in J&K State:
In terms of Ministry of Rural Development guidelines, 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. The Performance of RSETIs in conducting training
camps and the number of persons benefted is being regularly reviewed in
quarterly SLBC meetings.
Responsibility of setting up of FLCs in J&K State:
In terms of RBI guidelines, target of setting Financial Literacy
Centres (FLCs) in all the districts of the state has been fully
accomplished with J&K Bank operationalizing 12 FLCs in its 12 allocated
lead districts and SBI operationalizing 10 FLCs in its 10 allocated
lead districts. The performance of FLCs in conducting the Financial
Literacy Camps in their respective districts is being reviewed at
various meetings including SLBC meetings.
100% coverage of farmers under KCC Scheme:
The initiative of 100% coverage of farmers under Kissan Credit Card
(KCC) Scheme was launched in J&K State in compliance to directives of
Ministry of Finance, Government of India. Its implementation is being
vigorously pursued with all the stakeholders including banks,
Agriculture Department, Lead District Managers etc. Upto the end of
March 2014, banks have sanctioned a total number of 7, 44,470 KCCs in
J&K State against which 5, 86,364 KCCs amounting to Rs.3,718.68 Crore
have been disbursed.
Regional Rural Bank sponsored by J&K Bank:
The J & K Grameen Bank came into existence on 30th June, 2009 with the
issuance of statutory notifcation 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 Offce at Jammu.
The bank commenced its business from 01.07.2009.
Area of Operation:
In terms of GoI notifcation dated 30-6-2009, the notifed area of
operation of J&K Grameen Bank comprises of districts of Baramulla,
Bandipora, Kupwara, Jammu, Kathua, Rajouri, Poonch, Leh and Kargil and
parts of three districts viz. Ganderbal, Srinagar and Samba.
The business of the bank increased from Rs.3,022.51 Crore to Rs.3,438.09
Crore during the year 2013-14, registering a growth rate of 13.74%.
The deposits of the bank increased from Rs.2,165.22 Crore to Rs.2,407.43
Crore during the year 2013-14, registering a growth rate of 11.18%.
The gross advances of the bank as on 31st March, 2014 stood at
Rs.1,030.66 Crore as against Rs.857.29 Crore as on the corresponding date
of the previous year, recording a growth of 20.22%
The CD Ratio of the bank increased by 3.22% from 39.59% as on March
2013 to 42.81% as on 31st March, 2014.
Priority Sector Advances:
The priority sector advances of the bank as on 31st March, 2014 stood
at Rs.729.82 Crore as against Rs.590.61 Crore as on the corresponding date
of the previous year, recording a growth of 23.57%. Priority sector
advances constituted 70.81% of total advances which is much above the
bench mark of 60%.
The gross NPAs of the bank as on 31.03.2014 stood at Rs.85.40 Crore which
accounts for 8.29% of gross advances. The Net NPA as on 31.03.2014
stood at Rs.47.44 Crore which accounts for 4.78% of net advances
Net Proft of the bank stood at Rs.13.44 Crore as on 31st March, 2014.
The bank achieved 100% CBS rollover of its branch network.
Capital to Risk-weighted Asset Ratio:
The CRAR position of J&K Grameen Bank as on 31st March, 2014 stood at
13.19%, which is much above the mandatory requirement of 9%.
Business per Employee:
The business per employee as on 31st March, 2014 stood as Rs.3.40 Crore.
Proft per Employee:
The proft per employee as on 31st March, 2014 stood as Rs.1.33 lakh.
Deposits per Employee:
The deposits per employee as on 31st March, 2014 stood as Rs.2.38 Crore.
Advances per Employee:
The advances per employee as on 31st March, 2014 stood as Rs.1.02 Crore.
Business per Branch:
The business per branch as on 31st March, 2014 stood as Rs.16.77 Crore.
Deposits per Branch:
The deposits per branch as on 31st March, 2014 stood as Rs.11.74 Crore.
Advances per Branch:
The advances per branch as on 31st March, 2014 stood as Rs.5.03 Crore.
Proft per Branch:
The Proft per branch as on 31st March, 2014 stood as Rs.6.55 lakh
17. FINANCIAL INCLUSION:
With the objective of reaching out to the large hitherto unbanked
population and extend fnancial services to unlock its growth potential,
the bank formulated Financial Inclusion Plan (FIP) for delivery of
basic banking services in allotted identifed unbanked villages. The
details of village allocation and other FIP related information is
- SLBC has allocated 536 villages having population of above 2000 and
3271 villages having population of below 2000 to the bank for providing
ICT (Information Communication Technology) based fnancial services by
the end of March 2016. Bank has already brought 536 villages ( 2000
Population) under the ambit of fnancial inclusion by opening of
Business units and providing BC (Business Correspondent) coverage in
all the villages.
- Out of 3271 below 2000 population villages scheduled to be covered by
the end of March 2016, 1696 villages have been rolled out for extending
ICT based fnancial services at the end of March 2014 well above the
target of 1600 villages set for FY 2013-14.
- Bank has also identifed and rolled out to BCs 340 unbanked villages
under self set target, thereby taking the total number of villages
rolled out under fnancial inclusion to 2572 as on March 2014.
- As on March 2014, bank had opened 124 Business units in identifed
allocated villages under fnancial inclusion, comprising of 33 business
units in villages having above 2000 population and 91 business Units in
villages having below 2000 population.
- The target for household coverage in the rolled out villages stands
at 7.56 lac, out of which 4.69 lac households have been covered which
constitutes 62.09% of total households.
- 695 VLEs of CSC''s have been engaged as BC and are linked to 439 Base
branches/ Business units for providing ICT enabled fnancial services in
the State, thereby taking the total number of BCs to 697.
- Number of accounts opened in 2572 rolled out villages has reached
12.18 lakh comprising of 6.05 lac No Frill Accounts/ Basic saving bank
deposit accounts/ ISSS/ MGNREGA and 6.13 lac other accounts.
- Upto March 2014, 69686 transactions have been generated through the
operation of Smart Cards involving an amount of Rs. 14.61 Crore.
- Micro Credit products as mentioned below are being utilized for
credit delivery through ICT based smart card mechanism, especially for
fnancial inclusion programme.
Differential Rate of Interest (F I)
Micro Credit Card (FI)
Micro-Overdraft to Ujala accounts (F I)
RBI selected Villages (Progress/ Achievements)
- 15 model villages allocated to the bank by RBI for 100% fnancial
inclusion in the State have been made functional through Smart Cards.
- 5252 smart cards have been issued in 15 RBI selected model villages
and 8695 accounts have been opened.
Implementation of EBT & DBT
The J&K State Government entrusted the responsibility of execution of
EBT/DBT in all the districts of the State to the J&K Bank . To start
with, SLBC identifed six districts (Srinagar, Ganderbal, Rajouri,
Jammu, Kargil, and Leh) on pilot basis for implementation of EBT/DBT.
In these six districts, the monthly benefts under IGNOAP scheme are
being released directly to benefciary accounts through the electronic
mode .Validation of accounts in remaining 16 districts of the State is
Financial Literacy cum Credit Counseling Centres
- In compliance to RBI directive, the bank operationalised Financial
Literacy cum Credit Counseling Centres in 12 districts in the State
where J&K Bank performs the lead bank responsibility.
- 633 outdoor fnancial literacy camps have been conducted by 12 FLCs in
the respective lead districts imparting training and information to
Financial Literacy Camps through Rural Branches
- The bank conducted 1160 fnancial literacy camps in the villages
situated in the close vicinity of various rural branches of the bank. A
total of 56977 persons attended these camps.
18. CORPORATE GOVERNANCE
a) 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
b) Several matters have been voluntarily included in the statement on
corporate governance annexed to this report, besides certifcate from
the Central Statutory Auditors regarding compliance of conditions of
Corporate Governance as stipulated in Clause 49 of the Listing
19. BOARD OF DIRECTORS
a. Mr. Mushtaq Ahmad, Chairman and CEO of the bank was reappointed as
Chairman and CEO of the bank for a period of 3 years with effect from
6th October, 2013 by the Reserve Bank of India.
b. Mr. Bharat Bhushan Vyas, IAS, Principal Secretary to Government,
Finance Department, J&K Govt. was nominated by the Government of J&K as
director on the Board of the bank with effect from 24th April, 2013.
c. Mr. Hari Narayan Iyer, Additional Director was reappointed by the
Reserve Bank of India with effect from 7th Oct. 2013 till 31st Oct.
d. Mr. A. M. Matto and Prof. Nissar Ali, were reappointed as Directors
at the last Annual General Meeting of the Shareholders of the bank held
on 22nd June, 2013.
e. 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 24.06.2013. The bank has gained immensely from his guidance
and wide ranging experience and expertise.
f. Mr. R. K. Gupta retires by rotation at the ensuing Annual General
Meeting in accordance with provisions of Companies Act, 2013 and is
eligible for reappointment.
g. Mr. Vikrant Kuthiala, who in the opinion of Board is eligible for
appointment as Independent Director, is proposed to be appointed as
Independent Director on the Board of the Bank.
20. Name of the Board of Directors of the Bank
1. Mr. Mushtaq Ahmad Chairman & CEO
2. Mr. Bharat Bhushan Vyas, (IAS) Director
3. Mr. Hari Narayan Iyer Director
4. Mr. M. I. Shahdad Director
5. Mr. Vikrant Kuthiala Director
6. Prof. Nisar Ali Director
7. Mr. A. M. Matto Director
8. Mr. R. K. Gupta Director
9. Mr. Nihal C. Garware f Director
21. Directors Responsibility Statement
The Board of Directors hereby confrms that:- i. in the preparation of
the annual accounts, the applicable accounting standards had been
followed along with proper explanation relating to material departures;
ii. the directors had 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 fnancial year and of the proft and
loss of the company for that period;
iii. the directors had taken proper and suffcient care for the
maintenance of adequate accounting records in accordance with the
provisions of Companies Act, 1956 for safeguarding the assets of the
company and for preventing and detecting fraud and other
iv. the directors had prepared the annual accounts on a going concern
v. the directors, had laid down internal fnancial controls to be
followed by the company and that such internal fnancial controls are
adequate and were operating effectively.
vi. the directors had devised proper systems to ensure compliance with
the provisions of all applicable laws and that such systems were
adequate and operating effectively.
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,
Ministry of Corporate Affairs, Registrar of Companies, Comptroller &
Auditor General, Financial Institutions and the Central Statutory
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 realization of the corporate goals in the
0For and on behalf of the Board of
Place: Srinagar (J&K Mushtaq Ahmad
Date: 15.05.2014 Chairman & CEO