Jammu and Kashmir Bank Directors Report, JK Bank Reports by Directors

Jammu and Kashmir Bank

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Directors Report Year End : Mar '16    Mar 15
The Board of Directors has pleasure in presenting the 78th 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, 2016.
 Performance at a Glance
 The aggregate business of the Bank stood at Rs.119583.54 Crore at the
 end of the financial year 2015-16. The total business of the Bank
 increased by Rs.9241.53 Crore from the previous year''s figure of
 Rs.110342.01 Crore, registering a growth of 8.37 percent.
 The total deposits of the Bank grew by Rs.3634.06 Crore from
 Rs.65756.19 Crore as on 31st March, 2015 to Rs. 69390.25 Crore as on
 31st March, 2016, a growth of 5.53 percent. CASA deposits of the Bank
 at Rs.  30620.37 Crore constituted 44.12 percent of total deposits of
 the Bank.
 Cost of deposits for current FY stood at 6.34 percent.
 The net advances of the Bank increased by Rs. 5607.47 Crore from Rs.
 44585.82 Crore as on 31st March, 2015 to Rs. 50193.29 Crore as on 31st
 March, 2016, a growth of 12.58 percent.
 Yield on advances for the current FY stood at 10.90 percent.
 Priority sector advances (Gross) stood at Rs. 19227 Crore as on 31st
 March, 2016.
 The Bank effected cumulative cash recovery, up- gradation of NPA''s and
 technical write-off of Rs. 778.69 Crore during FY 2015-16.
 Investment portfolio of the Bank stood at Rs. 20353.62 Crore as on 31st
 March, 2016.
 Insurance Business
 The Bank earned an income of Rs.43.16 Crore from the Insurance
 Business.  In life insurance, the Bank mobilized business of Rs. 257.32
 Crore and in non-life segment, business of Rs. 140.01 Crore was
 mobilized during the year.
 Income Analysis
 The Interest income of the Bank stood at Rs. 6843.57 Crore in the year
 2015-16. Interest expenses decreased from Rs. 4410.22 Crore to Rs.
 4133.48 Crore during the year. The Net Interest Income stood at Rs.
 2710.09 Crore for FY 2015-16 compared to Rs. 2650.91 for FY 2014-15.
 The Net Income from operations [Interest Spread plus Non-interest
 Income] stood at Rs. 3214.12 Crore in the financial year 2015-16.
 The Operating Expenses registered an increase of Rs. 137.15 Crore
 during the financial year 2015-16 and stood at Rs. 1546.20 Crore as
 compared to Rs. 1409.05 Crore in 2014-15.
 The Cost to Income ratio (Operating Expenses to Net Operating Income)
 stood at 48.11 percent in the financial year 2015-16.
 Gross Profit
 The Gross Profit for the financial year 2015-16 stood at Rs. 1667.92
 The Provision for Loan Losses, Provision on Standard Assets, Taxation
 and others aggregated to Rs. 1251.88 Crore in the financial year
 Net Profit
 The Bank registered a Net Profit of Rs. 416.04 Crore for the financial
 year 2015-16.
 Branch/ATM Network
 During the financial year 2015-16, 40 new branches were established,
 thereby taking the number of branches to 857 as on 31-03-2016, 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 2015-16 is as under:
 Area                    Branches
 Metro                      45
 Urban                     193
 Semi-Urban                157
 Rural                     462
 Total                     857
 During the financial year 2015-16,121 ATMs were commissioned thereby
 taking the number of ATMs to 1006 as on 31.03.2016.
 The Board of Directors has recommended a dividend of 175 per cent for
 the financial year 2015-16 for approval by the shareholders at the 78th
 Annual General Meeting. If approved, the total outflow on account of
 dividend for the year 2015-16 will be Rs. 102.11 Crore including the
 dividend distribution tax.
 Net Worth and Capital Adequacy Ratio (CRAR)
 The Net Worth of the bank increased to Rs. 6423.97 Crore on 31st March
 2016 from Rs. 6110.05 Crore on 31st March, 2015. The Bank has implemented
 the Basel-Ill guidelines on capital regulations w.e.f. June 2013.
 Capital Adequacy Ratio under Basel III stood at 11.81 percent as on
 March, 2016 well above RBI stipulated norm of 9.625 percent. The tier I
 component of CRAR is 10.60 percent as on 31st March 2016.The Return on
 Average Net Worth stood at 6.65 percent for FY 2015-16. Earnings per
 Share and Book Value per Share for the financial year 2015-16 stood at
 Rs. 8.58 and Rs. 87.46.
 Advertising and Publicity
 Promoting our brand image proactively, we kept on positioning our brand
 deeper within the growing public consciousness and thereby enhanced our
 brand equity during the financial year.
 The Bank''s products, services and facilities were successfully
 advertised across the operational geographies while as its functioning
 and achievements were effectively communicated to the respective target
 audiences including customers, share- owners, stakeholders and general
 public through customized and efficiently packaged messages using
 relevant multi-media outlets across the country. Present in the virtual
 space of social media networking, the Bank firmed up its online presence
 and processes of image-building through highly popular mediums of
 Facebook and Twitter.
 Subsidiary Company
 As on March 31, 2016, your Bank has one Subsidiary, JKB Financial
 Services Limited (JKBFSL)
 Performance and Financial Position of JKBFSL
 The operating income of the Company for the year ended 31st March, 2016
 stands at Rs. 466.45 lacs. Other incomes of the company stood at Rs. 
 130.25 lacs. The Total income of the Company for the year ended March 
 31, 2015 stood at Rs. 596.71 lacs. The net loss of the company for the 
 financial year ended 31st March, 2016 stood at Rs. 151.39 Lacs, 
 increasing its accumulated net loss to Rs. 311.97 lacs as on 31st March,
 Progress of Regional Rural Bank Sponsored by J&K Bank: J&K Grameen Bank
 The J&K Grameen Bank came into existence on 30th June 2009 with the
 issuance of statutory notification by Gol, 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. The J&K Grameen Bank commenced business effective from
 Area of Operation:
 The area of operation of the J&K Grameen Bank comprises of 13 districts
 of the State viz. Baramulla, Bandipora, Kupwara, Jammu, Kathua,
 Rajouri, Poonch, Leh, Kargil, Samba, Kishtwar, Ganderbal and Srinagar.
 No. of Branches (as on 31-03-2016):       217
 No. of Employees (as on 31-03-2016):      984
 Capital Structure:
 In terms of the RRBs Act 1976, the authorized capital of Regional Rural
 Banks was fixed at Rs. 5.00 Crore (which stands amended to Rs. two 
 thousand crore in terms of the Regional Rural Banks (Amendment) Act, 2015
 notified in the Gazette of India on 12-05-2015). The issued and paid up
 capital of the J&K Grameen Bank is Rs. 97.16 Crore fully subscribed by 
 the Central Government, State Government and Sponsor Bank in the ratio 
 of 50:15:35 respectively as per details below:
 1.  Authorized Share Capital                 Rs. 2000 Crore
 2.  Subscribed / Paid up Share Capital       Rs. 97.16 Crore
     Central Government (50%)                 Rs. 48.58 Crore
     State Government (15%)                   Rs. 14.57 Crore
     Sponsor Bank (35%)                       Rs. 34.01 Crore
 NOTE: Pursuant to NABARD letter No. NB.IDD.  RRCBD/1637/316
 (Gen)/2015-16 dated March 30, 2016, Additional Share Capital Deposit
 of Rs. 95.16 has been converted to Share Capital on 31-03-2016.
 Tier II perpetual bonds Out of total cost outlay of Rs. 23.34 Crores for
 implementation of 100% CBS by JKGB, 50% i.e., Rs. 11.67 crore has been
 shared by J&K Bank (Sponsor Bank).
 Date of issue: 04-12-2014
 Performance of J&K Grameen Bank as on 31.03.2016 (Un- audited):
 The total business of the Bank as on 31st March 2016 stood at Rs. 4172.78
 crore against Rs. 3760.61 crore as on 31st March 2015, thereby showing an
 increase of Rs. 412.17 crore registering a growth of 10.96 percent during
 the year 2015-16.
 The deposits of the bank have increased from Rs. 2586.69 crore to Rs.
 2833.84 crore during the year 2015-16 thereby registering a growth rate
 of 9.55 percent.
 The gross advances of the Bank as on 31st March 2016 stood at Rs. 1338.94
 crore as against Rs. 1173.92 Crore as on the corresponding date of the
 previous year recording a growth of 14.06 percent.
 CD Ratio:
 The CD. Ratio of the bank has increased by 1.87 percent from 45.38
 percent as on 31st March 2015 to 47.25 percent as on March 31, 2016.
 Priority Sector Advances:
 The priority sector advances outstanding as on 31st March 2016 stood at
 Rs. 996.04 crore against Rs. 857.19 crore outstanding as on 31st March
 2015, thereby showing increase of Rs. 138.85 crore recording a growth of
 16.20 percent during the year 2015- 16. Priority sector constituted 74
 percent of total advances against benchmark of 75 percent (RRB
 NPA Position:
 The gross NPAs of the Bank as on 31.03.2016 stood at Rs. 147.23 Crore
 which accounts for 11 percent of gross advances. The Net NPAs as on
 31.03.2016 stood at Rs. 91.73 Crore which accounts for 7.15 percent of
 net advances.
 Business per Employee:
 The business per employee as on 31st March 2016 stood as Rs. 4.24 Crore
 against Rs.3.92 Crore as on corresponding date of the previous year
 recording a growth of 8.16 percent.
 Business per Branch:
 The business per branch as on 31st March 2016 stood as Rs. 19.22 Crore
 against Rs.17.41 crore as on corresponding date of the previous year
 recording a growth of 10.45 percent.
 The bank has shown net profit of Rs.2.88 Crore as on March 31, 2016
 against previous years'' net profit of Rs.1.79 Crore.
 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 2015-16 was launched in
 time and its implementation was monitored on quarterly intervals in
 State Level Bankers'' Committee meetings. During the FY 2015-16, Banks
 extended a total credit of Rs.15,753.29 Crore in favour of 4,87,736
 beneficiaries (both under Priority as well as Non-priority Sector)
 against annual target of Rs.23,605.23 Crore for 10,57,906 beneficiaries
 under Annual Credit Plan 2015- 16, thereby registering achievement of
 67 percent in financial terms and 46 percent in physical terms.
 This includes Priority Sector credit of Rs.8,754.40 Crore disbursed in
 favour of 3,05,308 beneficiaries against the annual target of
 Rs.14,804.83 Crore for 8,16,524 beneficiaries (constituting 59 percent
 achievement in financial terms and 37 percent in physical terms) and
 Non- priority sector credit of Rs.6,998.89 Crore disbursed in favour of
 1,82,428 beneficiaries against annual target of Rs.8,800.40 Crore for
 2,41,382 beneficiaries (constituting achievement of 80 percent in
 financial and 76 percent in physical terms).
 Out of the total Priority Sector credit of Rs. 8,754.40 Crore disbursed
 by all banks in the State upto 31st March 2016, J&K Bank alone
 disbursed Rs.5,498.18 Crore against the target of Rs.8,290.71 Crore,
 thereby achieving 66 percent of its annual ACP target, which accounts
 for the lion''s share of 63 percent of the total flow of credit to
 priority sector by all banks in the State during FY 2015-16.
 During FY 2015-16, following meetings were conducted:
 Four Quarterly J&K State Level Bankers Committee (SLBC) meetings, viz.
 97th, 98th, 99th and 100th were held on 10th June 2015, 26th August
 2015,16th November 2015 and 19th March 2016 respectively.
 A Special meeting of J&K SLBC held on the occasion of visit of
 Governor, Reserve Bank of India to Srinagar on 14th September 2015.
 Meeting of the Sub-group to devise modalities to bring sericulture
 sector within the purview of KCC Scheme on 18th May 2015.
 One day workshop on Self Help Groups (SHGs)/Joint Liability Groups
 (JLGs) financing organized by J&K SLBC in collaboration with NABARD on
 5th August 2015.
 Two meetings of Steering Sub-Committee of J&K SLBC to monitor IT
 enabled Financial Inclusion, FLCCs & Credit Plus Activities held on 6th
 August 2015 and 12th January 2016.
 A meeting of Sub-Committee of Empowered Committee on MSMEs to monitor
 individual cases of Sick MSME units for rehabilitation held on 8th
 August 2015.
 Meeting of the senior officers of Social Welfare Deptt, J&K Govt.,
 T&ISD Deptt., J&K Bank and SLBC Secretariat J&K Bank was held on 27th
 October 2015 to discuss the impediments in the smooth implementation of
 EBT Scheme in the State.
 Meeting of the Sub-Committee constituted in the 97th SLBC meeting to
 devise strategy for enhancing flow of credit to housing and Education
 sectors in J&K State held on 28th October 2015.
 Meeting of the steering Sub-Committee of J&K SLBC to SHG-Bank Linkage
 b.  Implementation of Financial Inclusion Plan (FIP) under SLBC
 The target for providing Information & Communication Technology
 (ICT)-based banking services in the 795 and 5582 identified unbanked
 villages (having population over 2000) in Phase-I and (villages with
 population below 2000) in phase II of Financial Inclusion Plan was
 accomplished successfully by providing coverage to all the identified
 The roadmap for coverage of 5582 villages (having population below
 2000) during the years 2012-13, 2013-14 and completion upto August 14,
 2015, was formulated as per regulatory requirements of RBI, which were
 allocated to five Financial Inclusion 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). All
 the villages under the plan have been covered as per the prescribed
 J&K SLBC, in coordination with concerned Lead District Managers, has
 identified 235 villages with population of more than 5000 (as per
 Census 2011), out of which 104 villages do not have a branch of any
 Scheduled Commercial Bank. In terms of the directives from RBI, the
 identified 104 villages were allocated among the 8 major Scheduled
 Commercial Banks operating in J&K State (JK Bank - 40; SBI - 20; PNB -
 12; HDFC Bank - 11; ICICI Bank - 6; Canara Bank - 5; UCO Bank - 5;
 Central Bank of India - 5) for opening the Brick & Mortar branches in
 the allocated villages in two phases i.e. Upto March 31, 2016 and from
 01.04.2016 to 31.03.2017. Against the target of 18 branches to be
 opened till March 31, 2016 for all the 8 banks, only J&K bank has
 opened one branch in the allocated villages.
 c.  Setting up of RSETIs in J&K State:
 In terms of guidelines issued by Ministry of Rura Development,
 Government of India, setting up the Rura 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 operationalized by SB as yet. The Performance of RSETIs in
 conducting training camps and the number of persons benefited is being
 regularly reviewed in quarterly SLBC meetings.
 d.  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 ead districts. The performance of FLCs in conducting the
 Financial Literacy Camps in their respective districts is being
 reviewed at various forums including SLBC meetings.
 e.  100 percent coverage of farmers under KCC Scheme:
 The initiative of 100 percent coverage of farmers under KCC Scheme was
 launched in J&K State in terms of Gol, MoF directives. Its
 implementation is being vigorously pursued with all the stakeholders
 including banks, Agriculture Department, Lead District Managers, etc.
 Upto the end of March 2016, banks sanctioned a total number of
 10,00,581 KCCs in J&K State against which 8,83,892 KCCs have been
 disbursed with credit amounting to Rs.7969.41 Crore.
 Board of Directors
 Your Bank has ten (10) Directors consisting of two (2) promoter
 Directors including Chairman & CEO, Eight Non Executive Directors,
 including One RBI Nominee Director, as on March 31,2016.
 Independent and Non-independent Non Independent Executive Director
 Mr. Mushtag Ahmad, Non Independent Executive Director has been serving
 as the Chairman & CEO of the Bank since October 6, 2010, with the
 approval of Reserve Bank of India (RBI).
 Non Independent Non Executive Directors
 Mr. Navin Kumar Choudhary, IAS, Principal Secretary to Hon''ble Chief
 Minister, and Mr. Abdul Majid Mir are the Non independent Non Executive
 Directors of the Bank.
 Independent Non Executive Directors
 In terms of the definition of ''Independent Director'' as prescribed
 under Regulation 16(b) of the SEBI (Listing Obligations 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
 1.  Mr. Vikrant Kuthiala
 2.  Mr. Dalip Kumar Kau
 3.  Mr. Khaver Alam Jeelani
 4.  Mr. R.K.Gupta
 5.  Mr. Azhar Ul Amin
 6.  Mst. Masooda Jabeen
 Reserve Bank Nominee Director
 Mr. J. P. Sharma, General Manger, Reserve Bank of India is the Nominee
 Director of the Reserve Bank of India on the Board of the Bank.
 Appointments/Resignations from the Board of Directors
 a) Mr. B. B. Vyas, IAS, Principal Secretary to Govt. Finance Deptt.
 Govt, of J&K was recalled by the Government of J&K and Mr. Navin Kumar
 Choudhary, IAS Commissioner/ Secretary to Govt. Finance Deptt. Govt, of
 J&K was appointed in his place with effect from 12-06-2015.
 b) Mr. M. I. Shahdad, Director, retired by rotation at the last Annual
 General Meeting of the Bank held on 22-08-2015.  Mr. A. M. Matto and
 Prof. Nisar AN, Directors resigned from the Board of the Bank with
 effect from 22nd August, 2015 owing to personal reasons.
 c) Directors place on record their deep appreciation for the valuable
 services rendered by Mr. B. B. Vyas, IAS ; Mr. M. I. Shahdad, Mr.A. M.
 Matto and Prof. Nisar Ali during their tenure as Directors of the Bank.
 d) Mr. Abdul Majid Mir and Mr. Azhar ul Amin were appointed as
 Directors in the last Annual General Meeting of the Shareholders of the
 Bank held on 22nd August, 2015.
 e) Mst. Masooda Jabeen, Director was appointed to the casual vacancy in
 the off ice of the director with effect from 26-10-2015
 Appointments/Resignations of the Key Managerial Personnel
 Mr. Mushtaq Ahmad Chairman & CEO, Mr. Vagish Chander, Chief Financial
 Officer and Mr. Abdul Majid Bhat, Company Secretary of the Bank are the
 Key Managerial Personnel.  Mr. Mushtaq Ahmad and Mr. Abdul Majid Bhat
 were already in office before the commencement of the Companies Act,
 2013, while as Mr. Vagish Chander was appointed as Chief Financial
 Officer by the Board of the Bank on 10th August, 2015, subsequent to
 the superannuation of Mr. R. K. Shah from the services of the Bank.
 None of the Key Managerial Personnel has resigned during the year under
 Number of Meetings of the Board
 During the year under review, Ten Board Meetings were held, in due
 compliance with statutory provisions, on the following dates:
 16.05.2015; 22.06.2015; 10.08.2015; 24.08.2015; 29.09.2015; 26.10.2015;
 13.11.2015; 21.12.2015; 11.02.2016; 16.03.2016
 Participation of Directors in Board Meetings is provided in the
 Statement on Corporate Governance annexed to this report
 Committees of the Board
 The Bank has following Committees of the Board:
 - Management Committee
 - Audit Committee
 - Monitoring of Large Value Frauds Committee
 - Stakeholders Relationship Committee
 - Information Technology Strategy Committee
 - Corporate Social Responsibility Committee
 - Integrated Risk Management Committee
 - Customer Service Committee
 - Nomination Committee
 - Nomination and Remuneration Committee
 - Legal Committee
 The compositions, powers, roles, terms of reference, etc. of relevant
 committees are given in detail in the statement on Corporate Governance
 annexed to this report.
 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 optimizing its social performance. The CSR
 policy is available on the website of the Bank,
 The Bank retained its comprehensive focus on activities for the larger
 community welfare through CSR initiatives concentrating on people''s
 health, education, environment and society at large. The statutory
 disclosures with respect to the CSR Committee and an Annual Report on
 CSR Activities forms part of this Report as Annexure 1.
 Performance Evaluation of the Board
 The Nomination & Remuneration Committee and the Board of Directors at
 their meetings held on 16th May, 2015 had laid down the criteria for
 performance evaluation of Directors, Chairman & CEO, Board level
 Committees and Board as a whole and also the evaluation process for the
 The performance of the members of the Board, the Board level Committees
 and the Board were evaluated at the meetings of the Committee of
 Independent Directors and the Board of Directors held on 22nd June,
 Process of Performance Evaluation
 The Companies Act, 2013 and Regulation 17(10) of the SEBI(Listing
 Obligations and Disclosure Requirements) Regulations, 2015 stipulates
 the performance evaluation of the Directors including Chairperson,
 Board and its Committees.  Considering the said provisions, the Bank
 has devised the process and the criteria for the performance evaluation
 which has been recommended by the Nomination & Remuneration Committee
 and approved by the Board at their meetings held on May 16, 2015
 The process for performance evaluation is as under:
 Committee of Independent Directors evaluates the performance of
 Non-independent Directors including Chairman of the Bank and the Board
 as a whole
 The Board evaluates the performance of the Independent Directors and
 Board level Committees of the Board.
 Based on the recommendation of Independent Directors in their report,
 Board takes the appropriate action, wherever required.
 The criteria for performance evaluation are as under:
 Performance Evaluation of Non-Executive Directors, MD & CEO and
 Attendance at the meetings; Participation and contribution;
 Responsibility towards stakeholders; Contribution in Strategic
 Planning; Compliance and Governance; Participation and Updation of
 Performance Evaluation of Board
 Composition and Diversity; Committees of the Board; Board & Committee
 meetings; Cohesiveness of Board decisions; Board Procedure; Performance
 Culture; Discussions at Board Meetings; Understanding of the business
 of the Bank; Understanding the role and effectiveness; Foresight to
 avoid crisis and effectiveness in crisis management; Understanding of
 the regulatory environment; Strategy and Growth; Risk Management and
 Financial Controls; Quality of Decision making and Board''s
 Communication systems.
 Performance of the Board Level Committees
 Composition and Balance of skill sets; Frequency and duration;
 interaction with the Board.
 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 stakeholder
 volume. Several matters have been voluntary 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 by the SEES (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.
 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 provides for adequate safeguards against victimization of Whistle
 Blower who avail of such mechanism and also provides for direct access
 to Chairman of the Audit Committee, in exceptional cases. The details
 of the Whistle Blower Policy are available on the website of the Bank
 Risk Management
 The Board of Directors oversees the enterprise wide risk management
 functions of the Bank. A separate Integrated Risk Management Committee
 of the Board is in place for bringing in a top to down focus on risk
 management function. Risk management is coordinated and administered by
 the Integrated Risk Management Department. The Department has three
 dedicated divisions for credit risk, market risk and operational risk
 management. Treasury activities are separately monitored by the Mid
 Office, which reports to Integrated Risk Management Department.
 Business Continuity plans and Information Security plans also form part
 of risk management functions in the Bank. Bank has Board approved Risk
 Management Policies to identify measure and manage all types of risk
 inherent in the banking operations. Risk Management Policies are
 approved by the Board of Directors, and reviewed from time to time.
 Executive level risk management committees, such as Credit Risk
 Management Committee, Asset Liability Management Committee, Operational
 Risk Management Committee, Market Risk Management committee,
 Information Security Committee, regularly assess the functional
 efficiency of the Bank in risk management and refine the policies and
 processes. Responsibility for identification, measurement and
 controlling of risk in various spheres of activities of the Bank is
 vested with a senior executive who reports to Chairman & CEO. All
 material risks of the Bank, emerging in the course of its business are
 identified, assessed and monitored and in our opinion presently there
 is no material risk which threatens the current functioning of the
 Loans, Guarantees or 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 arm''s length basis. There was no
 materially significant related party 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.
 However, M/s Gupta Gupta & Associates, Chartered Accountants, a firm in
 which Mr. R. K. Gupta, Director of the Bank, is a partner acts as Tax
 Consultants of the Bank at an annual consultation fee of Rs.5 lakhs.
 Keeping in view third proviso to Section 188(1) of the Companies Act,
 2013 read with Ministry of Corporate Affairs, Govt, of India
 Notification No. 1/22/2013-CL-V dated 9th June, 2014 the said
 transaction has been entered into in the ordinary course of business of
 the Bank and is at Arm''s length. Hence, no disclosure relating to the
 same needs to be made by 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 (
 disclosure&policy /relatedpartytransactionspolicy.html)
 Consolidated Financial Statements
 Pursuant to Section 129 of the Companies Act, 2013, the Bank has
 prepared Consolidated Financial Statements of the Bank and also of its
 Subsidiary, JKBFSL, in the same form and manner as that of the Bank
 which shall be laid before the ensuing 78th 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, 2016 form part of this Annual Report.
 Statutory Auditors
 The Central Statutory and Branch auditors of the Bank are appointed by
 the Comptroller & Auditor General of India (C&AG) pursuant to Section
 139(5) of the Companies Act, 2013.  The Bank had five (5) Central
 Statutory auditors appointed by the C&AG of India for the year under
 review as under:
 1.  Gupta Sharma & Associates, Chartered Accountants, Jammu
 2.  Dhar Tikoo & Co, Chartered Accountants, Srinagar
 3.  Arora Vohra & Co, Chartered Accountants, Jammu
 4.  Darshan Nagpal & Associates, Chartered Accountants, Srinagar
 5.  Dhram Raj & Co., Chartered Accountants, Jammu
 Secretarial Auditors
 Pursuant to Section 204 of the Companies Act 2013, your Bank has
 appointed M/s Ghulam Geelani Reshi & Associates, Practicing Company
 Secretaries, Srinagar as its Secretarial Auditors to conduct the
 secretarial Audit of the Bank for the FY 2015-16. The Bank provided all
 assistance and facilities to the Secretarial Auditor for conducting
 their audit. The report of Secretarial Auditor for the FY 2015-16 is
 annexed to this report as Annexure 2.
 Employee Remuneration
 No.  Name of the  Designation/  Remuneration  Nature of  Qualification
      Employee     Nature of     received per  Employment 
                   Duties           month
                                (Rs.In lakhs)
 1.   Mr.          Chairman          6.05      In Whole   B. A: CAIIB-I
      Mushtaq      & Chief                     time
      Ahmad        Executive                   employment 
                   Officer                     of the
 Name of the 
 Employee          Experience    Date of       Age of     Last
                   In Years      Commencement  the        Employment
                                 of Employment Employee   held before
                                              (Years)     joining the
 Mr.Mushtaq Ahmad  43 years      06-10-2010      64       J&KBank
 B. The ratio of the remuneration of each director to the median
 employee''s remuneration and other details in terms of sub section 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 conversation of energy:
 Technology initiatives aimed at reducing the carbon footprint of the
 Bank are mentioned below:-
 Banks Data centre is hosted at a high energy efficient and environment
 friendly Data Centre at Noida from Sify Technologies.
 Discontinuation of paper circulars for internal communication.
 Automation of MIS reports to discontinue paper based regulatory and
 internal reports.
 Dedicated intranet site for E-newsletter in place of a paper
 Use of energy star compliant computing and communication hardware.
 Web Page for Green Banking
 (ii) The steps taken by the Bank for utilizing alternate source of
 Endeavour to use Energy efficient Devices: Bank of late has started
 using the equipments which consume less power and are more Energy
 efficient as per the BEE Indian Standards.
 a) Switching over from CFL/ Fluorescent Lamp To LED Lights
 b) Shifting to new technology for Air conditioning i.e. VRV/VRF
 c) Shall explore the possibility of using sensor based Electrical
 devices in future.
 Bank has installed Solar UPS in some of the ATMs of the Bank. We shall
 further explore the use of renewable energy for street lights etc.
 (B) Technology Absorption
 (i) The efforts made towards technology absorption;
 Technology absorption needs stable and conducive policy and governance
 framework. As such, J&K Bank has adopted IT governance model for
 restructuring the IT organizational structure as per the
 recommendations of RBI. Bank has all major business processes automated
 from transactional systems to MIS/DSS reporting, management of assets,
 HR management through state of the art technology available in the
 Trainings are being conducted on regular basis to train the Banks staff
 at gross root level to make full use of the technology in order to
 reduce the operating costs and bring in efficiencies to business
 (ii) The benefits derived like product improvement, cost reduction,
 product development or import substitution
 Following technology initiatives taken by the bank have brought
 efficacy in the processes besides reduction in the effort and cost
 involved in handling such operations.
 i.  ISO 27001 Certification
 SO 27001:2013 Certification project was initiated to provide a model
 for establishing, implementing, operating, monitoring, reviewing,
 maintaining and improving an information security management system in
 the Bank. M/s Delloitte was selected for S027001 Consultancy &
 Certification services for Bank''s Data Centre (facility and
 Operations), DR Site and Near Line Site.  Bank has been awarded with
 the prestigious certification (ISO 27001:2013), by Intertek - a reputed
 agency, for its ''Information Security Management System being compliant
 with the best and latest industry standards in terms of practices,
 controls and effectiveness.
 ii.  Contact Center
 Bank has setup its own contact centre to enhance customer''s service and
 establish an additional channel for supporting business operations.
 Contact center of the Bank is driven by the state of art technology to
 instantly provide most of the banking support services for convenience
 of the customers.
 iii. Implementation of AEPS (Aadhaar Enabled Payment System), e-KYC and
 Rupay Card Interoperability and Atal Pension Yojna applications
 AEPS (Aadhaar Enabled Payment System) has been implemented by the Bank
 in the month of July 2015. The functionality empowers customers to use
 Aadhaar as his/ her identity to access his/ her respective Aadhaar
 enabled bank account and perform basic banking transactions like
 balance enquiry, Cash deposit, cash withdrawal, remittances that are
 intrabank or interbank in nature, through a Business Correspondent.
 iv.  e-KYC
 e-KYC has been implemented by the Bank in the month of Nov 2015. The
 system is available for use at all the branches of the Bank and BC
 locations. Under the electronic know- your-customer (e-KYC) process,
 customers can open a bank account online based on just their Aadhaar
 v.  RuPay Card Interoperability
 RuPay Card interoperability at BC locations has been implemented by the
 Bank in the month of Jan. 2016 which enables use of RuPay as well as
 debit cards for transactions.
 i) Near about 12 lac RuPay cards have been distributed under PMJDY
 ii) BC are able to make the payments to the account holders having
 issued Rupay Cards through pin pad devices provided by the Bank.
 vi.  Atal Pension Yojna
 Bank has deployed an industry standard Software application for Atal
 Pension Yojna Scheme.
 vii.  Priveledge Identity Manqement (PIM)
 As a measure of putting in enhanced security controls and in order to
 monitor activities of privileged system users, Privilege Identity
 management (PIM) solution has been implemented. This PIM solution has
 enabled the Bank to put in place a unified policy based solution that
 secures, manages and logs all the privilege users and activities
 associated with critical resources. This solution takes care of the
 special needs of the privileged users, including their provisioning and
 life cycle management, authentication, authorization, password
 management and monitoring.
 viii.  SOC (Security Operations Centre)
 Bank has implemented SOC with an objective of Risk Management, 24x7
 Monitoring of Logs for applications, OS, databases, Middleware,
 Incident Management and Regulatory information Security Compliance.
 ix.  ATM
 During the financial year 2015-16, 121 ATMs, both onsite & offsite,
 were commissioned thereby taking the number of ATMs to 1006 as on
 31.03.2016. No. of ATM cards issued to customers increased from
 19,00,588 to 24,62,728 during the financial year 2015-16.
 x.  Cash Deposit Machines/Bunch Note Acceptors (BNA)
 In order to facilitate customers with instant cash deposit services
 Bank started deployment of specialized ATM machines known as Bunch Note
 Acceptors which are capable of accepting deposits from customers
 anytime. In the first phase 25 locations have been identified for
 deployment of Bunch Note Acceptor machines.
 xi.  e-Bankinq
 In an endeavor to serve our customers better a new e-Banking
 application was launched with enhanced features. With the new e-banking
 application customer can now use following features:-
 1.  Register for e-banking facility online.
 2.  The passwords can as well be re-generated online.
 3.  Open Term Deposits under various scheme like Cash Certificate,
 Eixed Deposit and Monthly Yield online.
 4.  Schedule transactions for future dates. This scheduling can be
 either for a single transaction or a recurring set of transactions
 spread over a defined period as per your need and requirement.
 5.  View EORM 26 AS online.
 6.  View Demat Holdings online.
 7.  Credit EMI to loan accounts online.
 8.  Corporate Customers can request for LC issuance online and view
 issued LCs & BGs
 9.  Excel Upload for Corporate Customers
 10.  BULK NEET /RTGS for Corporate customers
 xii.  Web Application Firewall (WAF) Implementation
 Web Application Firewall has been implemented as an additional security
 control to protect Bank''s web application against zero-day exploits,
 impersonation and known vulnerabilities and attackers besides
 monitoring , filtering or blocking the HTTP traffic to and from a Web
 application. The system is helping the Bank to monitor traffic before
 it reaches the web applications in real time or near-real time, analyze
 all requests using a rule base to filter out potentially harmful traffic
 or traffic patterns.
 xiii. Automation of Legal Data of the Bank.
 Bank, in its endeavor to bring accuracy/efficiency in the litigation
 data management and its availability concerning the suit file cases,
 SARFAESI Matters, Suits filed by/against Bank, complaints under section
 138 of the Negotiable Instruments Act (N. I. Act), criminal complaints
 filed by/against bank and other allied matters, has implemented a
 Centralized legal software - CRISMAC LEGAL SOFTWARE
 (iii) In case of imported technology (imported during the last three
 years reckoned from the beginning of the financial year).
 (iv) Your Bank has not incurred any expenditure on Research and
 Development during the year under review.
 (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
 During the year ended March 31st, 2016 the Bank earned Rs.31.99 Lacs
 and spent Rs.1.03 Lacs in Foreign currency.  This does not include
 Foreign currency cash flows in derivatives and Foreign currency
 exchange transactions.
 (2) No significant and material orders were passed by the regulators or
 courts or tribunals impacting the going concern status of the Bank''s
 operations in future.
 (3) Number of cases filed, if any, and their disposal under Section 22
 of the Sexual Harassment of Women at Workplace (Prevention, Prohibition
 and redressal) Act, 2013.
 Your Bank has Zero tolerance towards any action on the part of any
 executive/employee which may fall under the ambit of ''Sexual
 Harassment'' at workplace, and is fully committed to uphold and maintain
 the dignity of every women executive/ employee working in the Bank.
 (4) No Stock options were issued to the Director''s of your Bank
 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, 2016 forms part of this report as
 Annexure 4.
 Directors Responsibility Statement
 The Board of Directors hereby confirms 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 financial year and of the profit and
 loss of the company for that period;
 iii. the Directors had taken proper and sufficient care for the
 maintenance of adequate accounting records in accordance with the
 provisions of this Act for safeguarding the assets of the company and
 for preventing and detecting fraud and other irregularities;
 iv. the directors had prepared the annual accounts on a going concern
 basis; and
 v. the directors, had laid down internal financial controls to be
 followed by the company and that such internal financial controls are
 adequate and were operating effectively.
 Explanation.-internal financial controls means the policies and
 procedures adopted by the company for ensuring the orderly and
 efficient conduct of its business, including adherence to company''s
 policies, the safeguarding of its assets, the prevention and detection
 of frauds and errors, the accuracy and completeness of the accounting
 records, and the timely preparation of reliable financial information;
 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.
 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 Genera 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
 Place : Srinagar (J&K)                                 Mushtaq Ahmad
 Date: 24th May, 2016                                  Chairman & CEO
Source :
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