Jammu and Kashmir Bank Directors Report, JK Bank Reports by Directors
Jammu and Kashmir Bank
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Directors Report Year End : Mar '15    « Mar 14
 Dear Members,
 The Board of Directors have pleasure in presenting the 77th 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, 2015.
 Performance at a Glance
 * The aggregate business of the bank stood at Rs. 110342.01 Crore at
 the end of the financial year 2014-15.
 * The bank achieved deposit figure of Rs. 65756.19 Crore as on 31st
 March, 2015. CASA deposits of the bank at Rs. 27476.39 Crore
 constituted 41.79 percent of total deposits of the bank.
 * Cost of deposits for current FY stood at 6.72 percent.
 * The net advances of the bank stood at Rs. 44585.82 Crore as on 31st
 March, 2015.
 * Yield on advances for the current FY stood at 11.52 percent.
 * Priority sector advances (Gross) stood at Rs. 17124 Crore as on 31st
 March, 2015.
 * The bank effected cumulative cash recovery, up-gradation of NPA''s and
 technical write-off of Rs. 545.14 Crore during FY 2014-15.
 * Investment portfolio of the bank stood at Rs. 25124.30 Crore as on
 31st March, 2015.
 Financial Performance
                                                      Rs. In Crore
                          April 1, 2014 to      April 1, 2013 to
 Particulars               March 31, 2015       March 31, 2014
 Deposits                     65,756               69,336
 Borrowings                    2,340                1,765
 Advances                     44,586               46,385
 Total Assets/                76,085               78,620
 Net Interest                  7,061                6,767
 Non Interest                    594                  390
 Operating Profit              1,836                1,900
 Provisions and                1,016                  148
 Profit before Tax               821                1,752
 Provision for                   312                  570
 Net Profit                      509                1,182
 Amount available                509                1,182
 for appropriation
 Statutory Reserve
 under section 17 of
 the Banking
 Regulation Act, 1949            127                  296
 Capital Reserve                 --                    --
 General Reserves                247                  596
 Investment Reserve               12                    7
 Proposed Dividend
 and Tax thereon                 123                  283
 Key performance
 Net Interest Margin            3.81%                4.16%
 Post tax return                0.70%                1.74%
 on assets
 Post Tax Return
 on Equity                      8.60%               22.34%
 Cost to Income
 Ratio                         43.42%               38.21%
 Insurance Business
 The bank earned an income of Rs. 33.42 Crore from the Insurance
 Business. In life insurance, the bank mobilized business of Rs. 199.61
 Crore and in non-life segment, business of Rs. 122.35 Crore was
 mobilized during the year.
 Income Analysis
 * The Interest income of the bank recorded a growth of Rs. 294.13 Crore
 and increased from Rs. 6767.00 Crore in the year 2013-14 to Rs. 7061.13
 Crore in the year 2014-15. Interest expenses increased from Rs. 4082.52
 Crore to Rs. 4410.22 Crore during the year. The Net Interest Income
 stood at Rs. 2650.91 Crore for FY 2014-15.
 * The Net Income from operations [Interest Spread plus Non-interest
 Income] increased to Rs. 3244.88 Crore in the financial year 2014-15
 from Rs. 3074.74 Crore in the financial year 2013-14.
 * The Operating Expenses registered an increase of Rs. 234.06 Crore
 during the financial year 2014-15 and stood at Rs.1409.05 Crore as
 compared to Rs. 1174.99 Crore in 2013-14.
 * The Cost to Income ratio (Operating Expenses to Net Operating Income)
 stood at 43.42 percent in the financial year 2014-15.
 Gross Profit
 The Gross Profit for the financial year 2014-15 stood at Rs.1835.83
 The Provision for Loan Losses, Provision on Standard Assets, Taxation
 and others aggregated to Rs. 1327.23 Crore in the financial year
 Net Profit
 The bank registered a Net Profit of Rs. 508.60 Crore for the financial
 year 2014-15.
 Branch/ATM Network
 During the financial year 2014-15, 40 new branches were established,
 thereby taking the number of branches to 817 as on 31-03-2015, 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 2014-15 is as under:
 Area                          Branches
 Metro                         45
 Urban                         186
 Semi-Urban                    152
 Rural                         434
 Total                         817
 During the financial year 2014-15, 85 ATMs were commissioned thereby
 taking the number of ATMs to 885 as on 31.03.2015.
 Your Bank is rewarding its shareholders by way of consecutive cash
 dividends considering the consistent financial performance of your bank
 and promising future prospects while retaining capital to maintain a
 healthy Capital Adequacy Ratio and to support future growth. In
 continuance of the earlier trends of cash dividends, the Board of
 Directors have recommended Dividend at a rate of 210% (Rs. 2.10 per
 equity share) for approval by the shareholders at this Annual General
 Net worth & Capital Adequacy Ratio (CAR)
 * The Net Worth of the Bank increases to Rs. 6110.05 Crore on 31st
 March, 2015 from Rs. 5723.61 Crore on 31st March, 2014. The Bank has
 implemented the Basel III guidelines on capital regulations w.e.f. June,
 * Capital Adequacy Ratio under Basel III stood at 12.57% as on 31st
 March, 2015 well above RBI stipulated norm of 9%.  The tier I component
 of CRAR is 11.26% as on 31st March, 2015. The Return on Average Net
 Worth stood at 8.60% for the FY 2014-15. Earnings per share and Book
 Value per Share for the FY 2014-15 stood at Rs. 10.49 and Rs. 100.54
 awards & Recognitions
 During the year under review, your bank was recognized by various
 institutions and following awards were presented to the Bank.
 * Excellence award for pMJDY for outstanding performance under the
 Pradhan Mantri Jan Dhan Yojna which aims to eradicate financial
 untouchability and bring all the unbanked areas within the folds of
 formal economy.
 * Global csR excellence & Leadership award by ABP News in the category
 of Community Service for outstanding achievements in economic,
 environmental and social dimensions by identifying and rewarding
 exemplary businesses in various aspects of Corporate Social
 * star performance award 2014 to JKB Financial Services Ltd. (A wholly
 owned subsidiary of the Bank) under best performer among active Demat
 accounts (Big DP''s Category) by National Securities Depository Limited.
 advertising and publicity
 Promoting our brand image proactively, we further positioned our brand
 deeper within the ever-widening public consciousness and thereby
 enhanced our brand equity during the year.
 The bank''s products, services and facilities were successfully
 advertised while as it''s functioning and achievements were effectively
 communicated to the respective target audiences including customers,
 share-owners, stakeholders and general public through properly tailored
 and packaged messages using relevant multi-media outlets across our
 operational geography.  Present in the virtual space of social media
 networking, the bank firmed up its online presence and processes of
 Subsidiary Company
 As on March 31, 2015, your Bank has one Subsidiary, JKB Financial
 Services Limited (JKBFSL)
 Performance and Financial Position of JKBFSL
 JKB Financial Services Ltd. performed well during the Financial year
 2014-15. The operating income of the Company for the year ended 31st
 March, 2015 stands at Rs. 506.61 lacs as against Rs. 293.27 lacs for
 the year ended 31st March, 2014, registering an increase of 72.74%.
 Other incomes of the company increased by Rs. 100.51 lacs to Rs. 164.47
 lacs from Rs. 63.96 lacs for the immediately preceding year,
 registering an increase of 158%.  The Total income of the Company has
 registered an increase of 88% during the year increasing from Rs.
 357.23 lacs for the year ended March 31, 2014 to Rs. 671.08 lacs for
 the year ended March 31, 2015. The Company has been able to reduce its
 net loss before tax to Rs. 11.60 lacs for the year ended 31st March,
 2015 as against a loss of Rs. 142.06 lacs for the year ended 31st March
 2014, registering a decrease of 91.83%.
 During the year under review, bank increased its stake in JKBFSL by
 100% by contributing Rs. 1000 lacs in share capital of the company,
 increasing its paid up capital to 2000 lacs for the year ended 31st
 March, 2015 as against Rs. 1000 lacs as on 31st March, 2014.
 J&K Grameen Bank (Regional Rural Bank Sponsored by J&K Bank)
 The J & K Grameen Bank (JKGB) came into existence on 30th June ,2009
 with the issuance of statutory notification 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 Office at Jammu and has commenced business effective from
 Area of operation:
 The area of operation of the J&K Grameen Bank comprises of 11 districts
 of the State viz. Baramulla, Bandipora, Kupwara, Jammu, Kathua,
 Rajouri, Poonch, Leh, Kargil, Samba, Kishtwar and parts of three
 districts viz. Ganderbal, Srinagar and Samba.
 No. of Branches (as on 31-03-2015)   :        216
 No. of Employees (as on 31-03-2015)  :        960
 Capital structure:
 In terms of the RRBs Act, 1976, the authorized capital of J&K Grameen
 Bank is fixed at Rs. 5.00 Crore. The issued and paid up capital of the
 bank is Rs. 2.00 Crore, fully subscribed by the Central Government,
 State Government and Sponsor Bank in the ratio of 50:15:35 respectively.
 Like-wise the Additional Share Capital of the bank amounting to Rs.
 95.16 Crores is fully subscribed by all the three shareholders as per
 above prescribed ratio.
 Performance of J&K Grameen Bank as on 31.03.2015 (Audited):
 The business of the bank increased from Rs. 3430.82 Crores to Rs.
 3760.61 Crores during the year 2014-15, registering a growth rate of
 9.61 percent.
 The deposits of the bank increased from Rs. 2405.90 Crore to Rs.
 2586.69 Crore during the year 2014-15, thereby registering a growth
 rate of 7.51 percent.
 The gross advances of the bank as on 31st March 2015 stood at
 Rs.1173.92 Crores as against Rs. 1024.92 Crore as on the corresponding
 date of the previous year, recording a growth of 14.54 percent.
 cD Ratio:
 The CD Ratio of the bank stood at 45.38 percent as on 31st March 2015
 against 42.60 percent as on 31st March 2014 indicating an increase of
 2.78 percent.
 priority sector advances:
 The priority sector advances of the bank as on 31st March 2015 stood at
 Rs. 857.19 Crore as against Rs. 725.71 Crore as on the corresponding
 date of the previous year, recording a growth of 18.12 percent.
 Priority sector constituted 72 percent of total advances against
 benchmark of 60 percent (RRB Specific).
 NpA position:
 The gross NPAs of the bank as on 31.03.2015 stood at Rs. 156.99 Crore
 which accounts for 13.37 percent of gross advances. The Net NPA as on
 31.03.2015 stood at Rs. 105.23 Crore which accounts for 9.38 percent of
 net advances.
 Business per Employee:
 The business per employee as on 31st March 2015 stood as Rs. 3.92
 Business per Branch:
 The business per branch as on 31st March 2015 stood as Rs. 17.41 Crore
 as against Rs. 16.74 Crores as on corresponding date of the previous
 year, recording a growth of 4 percent.
 The bank has shown net profit of Rs. 1.79 Crore as on 31st March 2015
 against previous year''s Net profit of Rs. 12.55 Crore.
 Per Employee Net profit:
 The Net Profit per employee as on 31st March 2015 stood as Rs. 0.19
 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
 (SLBC) 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
 The State Annual Credit Plan (ACP) for the FY 2014-15 was launched in
 time and its implementation was monitored on quarterly intervals in
 State Level Bankers'' Committee meetings. During the FY 2014-15, out of
 the total ACP target of Rs. 19,993.88 Crore for the State, banks
 operating in the State disbursed credit of Rs. 16,886.64 Crore,
 registering an achievement of 84.46 percent. This includes Priority
 Sector credit of Rs. 9,025.40 Crore disbursed by banks in favour of
 3,74,083 beneficiaries against the target of Rs.12,464.10 Crore for
 6,74,773 beneficiaries (72.41 percent achievement in financial terms
 and 55.44 percent in physical terms) and Non-priority sector credit of
 Rs. 7,861.24 Crore in favour of 1,30,173 beneficiaries against the
 target of Rs. 7,529.78 Crore for 2,08,685 beneficiaries (104.40 percent
 achievement in financial terms and 62.37 percent in physical terms).
 Out of the total Priority Sector credit of Rs. 9,025.40 Crore disbursed
 by all banks in the State upto 31st March 2015, J&K Bank alone has
 disbursed Rs. 6,245.92 Crore against the target of Rs. 7,036.58 Crore,
 thereby achieving 89 percent of its annual ACP target, which accounts
 for a lion''s share of 69 percent of the total flow of credit to
 priority sector by all banks in the State.
 During FY 2014-15, following meetings were conducted
 * Four Quarterly J&K State Level Bankers Committee (SLBC) meetings,
 viz. 93th, 94th, 95th and 96th to review performance under ACP 2014-15
 were held on 22nd May 2014, 20th August 2014, 3rd December 2014 and
 23rd February 2015 respectively.
 * One meeting of Steering Sub-Committee of J&K SLBC to monitor IT
 enabled Financial Inclusion, FLCCs & Credit Plus Activities was held on
 24th June 2014.
 * A Meeting of the Sub-Committee of J&K SLBC on Relaxation to Trade and
 Industry in J&K State was held on 24th June 2014.
 * Two meetings of the Sub-Committee of J&K SLBC for Export Promotion in
 J&K State were held on 28th June 2014 and 30th January 2015.
 * One meeting of Sub-Committee of J&K SLBC for State Level Rural
 Livelihood Mission (SRLM) was held on 10th July 2014.
 * Two meetings of Sub-Committee of State Level Inter Institutional
 Committee (SLIIC) to work out the rehabilitation of Sick MSMEs units in
 J&K State were held on 3rd July 2014 and 20th January 2015.
 * One Special J&K SLBC meeting was conducted on 23rd September 2014 for
 taking stock of the situation in aftermath of natural calamity (Floods)
 that hit the J&K State in the month of September 2014.
 * One meeting of Sub-Committee of J&K SLBC for reviewing the progress
 made in implementation of various packages approved by RBI post 2014
 floods was held on 4th October 2014.
 * One meeting of State Level Implementation Committee (SLIC) for
 Pradhan Mantri Jan Dhan Yojana (PMJDY) was held on 31st December 2014.
 * One meeting of State Level Steering Committee (SLRC) for RSETIs was
 held on 29th January 2015.
 * One meeting to review the progress made in implementation of National
 Crop Insurance Programme /Rashtriya Fasal Bima Karyakaram was held on
 26th March 2015.
 b.  Implementation of Financial Inclusion Plan (FIP) under SLBC
 * The target for providing Information & Communication Technology (ICT)
 based banking services in the 795 identified 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 the house-holds under the ambit of
 banking in the said 795 villages 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 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). Its implementation is being monitored quarterly by Lead Bank
 Department and against the target of 4077 villages set for coverage
 upto the end of FY 2014-2015 - 4319 villages stand covered by the FIP
 Participating banks upto 31st March 2015 constituting 106 percent of
 the target set for said period. The remaining 1263 villages are to be
 covered till August 14, 2015, as per the revised statutory directives.
 c. 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. State Bank of India has also set up 10 RSETIs in
 its allocated 10 lead districts of Jammu, Samba, Kathua, Udhampur,
 Reasi, Doda, Ramban, Kishtwar, Leh and Kargil. 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 lead 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 GoI, 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 2015, banks sanctioned a total number of 8,41,879
 KCCs in J&K State against which 7,17,576 KCCs holders have been
 disbursed credit amounting to Rs. 5276.47 Crore.
 Board of Directors
 Your Bank has ten (10) Directors consisting of two( 2) promoter
 Directors (Non Independent) including Chairman & CEO, Three (03) Non
 Executive Independent Directors, Four (04) Non Executive Rotational
 Directors, and One (1) RBI Nominee Director, as on March 31, 2015.
 Independent and Non-Independent
 Non independent Executive director
 Mr. Mushtaq 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 director
 Mr. Bharat Bhushan Vyas, IAS, Principal Secretary to Govt.  Finance
 Department, J&K Govt. is the Non Independent non Executive Director of
 the Bank.
 independent Non executive directors
 In terms of the definition of ''Independent Director'' as prescribed
 under Clause 49 of the Listing Agreement entered with Stock Exchanges
 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 Directors:-
 1. Mr. Vikrant Kuthiala
 2. Mr. Dalip Kumar Kaul
 3. Mr. Khaver Alam Jeelani
 Non executive Rotational directors
 The following directors are non Executive Rotational directors on the
 Board of the bank.
 1. Mr. M. I. Shahdad Rotational Director
 2. Prof. Nisar Ali Rotational Director
 3. Mr. A. M. Matto Rotational Director
 4. Mr. R. K. Gupta Rotational Director
 Non executive reserve Bank Nominee Director
 Mr. J. P. Sharma, General Manger, Reserve Bank of India is the RBI
 Nominee Director on the Board of the Bank.
 Appointments/Resignations from the Board of Directors
 a. Mr. Hari Narayan Iyer, Additional Director was recalled by the
 Reserve Bank of India on 31-10-2014 and was replaced by Mr. D. K.
 Meena, General Manager RBI on the Board of the Bank. Mr. D. K., Meena
 was replaced by Mr. N. P. Topno General Manager by the Reserve Bank of
 India on 26-11- 2014. Mr. J. P. Sharma, General Manager, Reserve Bank
 of India replaced Mr. N. P. Topno as additional Director on the Board
 of the Bank w.e.f 12.03.2015
 b. Mr. Nihal C. Garware, appointed as Additional Director of the Bank
 w.e.f 4th August, 2014, resigned from the Board of the Bank with effect
 from 23rd December, 2014 owing to personal reasons.
 Directors place on record their deep appreciation for the valuable
 services rendered by Mr. Hari Narayan Iyer, Mr. N. P. Topno and Mr.
 Nihal C. Garware during their tenure as Directors of the Bank.
 c. Mr. R. K. Gupta was reappointed as Director in the last Annual
 General Meeting of the Shareholders of the Bank held on 2nd August,
 d. Mr. Vikrant Kuthiala, Mr. Dalip Kumar Kaul and Mr. Khaver Alam
 Jeelani were appointed as Independent Directors in the last Annual
 General Meeting of the Shareholders of the Bank held on 2nd August,
 directors retiring by rotation
 In terms of Section 152 of the Companies Act, 2013, Mr. M. I.  Shahdad
 being longest in the office shall retire at the ensuing Annual General
 Meeting of the Bank.
 Appointments/Resignations of the Key Managerial Personnel
 Mr. Mushtaq Ahmad Chairman & CEO, Mr. R. K. Shah, Chief Financial
 Officer and Mr. Abdul Majid Bhat, Company Secretary of the Bank are the
 Key Managerial Personnel as per the provisions of the Companies Act,
 2013. Mr. Mushtaq Ahmad and Mr. Abdul Majid Bhat were already in office
 before the commencement of the Companies Act, 2013, while as Mr. R. K.
 Shah was appointed as Chief Financial officer of the Bank by the Board
 of the Bank on 16th May, 2015.
 None of the Key Managerial Personnel has resigned during the year under
 Number of Meetings of the Board
 During the year under review, eleven Board Meetings were held, in due
 compliance with statutory provisions, on following dates:
 15.05.2014; 12.06.2014; 14.07-2014; 04.08.2014; 13.08.2014;
 25.08.2014; 09.10.2014; 12.11.2014; 22.12.2014; 07.02.2015;
 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:
 * Audit Committee
 * Management 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 & Estates 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
 The Bank has in place Board approved Policy on Corporate Social
 Responsibility. The policy is available on the website of the Bank.  ( 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 revised Clause 49 of the Listing Agreement
 entered with the Stock Exchanges 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; Induction Program; Team Work; Cohesiveness of Board
 decisions; Board Procedure; Performance Culture; Succession planning;
 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 by the Board Level committees
 Composition and Balance of skill sets; Frequency and duration; Overall
 contribution; Relationships; Communication; Understanding of regulatory
 environment and developments; 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
 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 in Clause 49 of the Listing
 management Discussion and analysis
 The Management Discussion and Analysis Report for the year under review
 as stipulated under Clause 49 of the listing agreement with the Stock
 Exchanges is presented in a separate section forming part of this
 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 Policy
 Bank has Board approved risk management policies to identify measure
 and manage all types of risk inherent in the banking operations.
 The credit risk policy aims at ensuring sustained growth of healthy
 loan portfolio while identifying and managing various risk components
 of credit portfolio. The policy articulates the different areas of
 credit risk in the backdrop of strategy and business goals of the Bank.
 It identifies high risk areas / promising industries / sectors /
 segments and aims at striking a balance between risk and return on
 assets to ensure optimal value to all stakeholders.
 The Market Risk Policy aligned to regulatory guidelines, defines and
 stipulates internal limits for various products and business activities
 relating to trading book and for taking exposures across all segments
 of the market based on relevant market analysis, business strategy and
 Bank''s risk appetite. The policy stipulates risk limits such as
 stop-loss limits, overnight limit, daylight limit, aggregate gap limit,
 individual gap limit, inter-bank dealing limits and Investment limits.
 These are aligned with market dynamics, business strategy, investment
 size, management experience and Bank''s risk appetite.
 The operational risk management policy outlines a suitable framework
 for managing operational risk as per the regulatory guidelines. The
 policy addresses a wide range of matters relating to organizational
 structure for operational risk, role of various operational risk
 responsibility centres, identification, assessment, control and
 mitigation of operational risk and framework for risk reporting. A
 comprehensive Business Continuity Plan (BCP) has been formulated and
 Disaster Recovery setup has been put in place to ensure continuity of
 critical operations in the event of any business disruption.
 A Board approved Internal Capital Adequacy Assessment Process (ICAAP)
 policy has been put in place to assess adequacy of capital under stress
 conditions that supports not only three primary risks of credit, market
 and operational risk but other residual risks like Interest rate risk
 in banking book, liquidity risk, credit concentration risk, strategic
 risk and reputational risk.
 The Bank has Board approved Stress Testing Policy in place that
 determines the stress testing framework in tune with the regulatory
 guidelines and market practices. The two categories of stress tests
 used by the Bank are Sensitivity Analysis and Scenario
 Analysis. Stress testing is undertaken with respect to relevant
 parameters at three levels of severity - Baseline, Medium, and Severe.
 The Bank adopts different approaches of running a stress test to see
 the net impact on Bank''s Capital Adequacy under stress condition.
 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 on arm''s length basis. There were no
 materially significant related party transactions 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 also on dealing with
 related party transactions 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 (
 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 77th Annual General Meeting of
 the Bank along with the 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, 2015 form part of this Annual Report.
 Internal Financial Control systems and their adequacy
 Your bank had laid down set of standards, processes and structures
 which enables to implement internal financial control across the
 organization and ensure that the same are adequate and operating
 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 2014-15. The Bank provided all
 assistance and facilities to the Secretarial Auditor for conducting
 their audit.
 Secretarial Audit Report
 The report of Secretarial Auditor for the FY 2014-15 is annexed to this
 report as Annexure 2. The Board''s replay to Observations of the
 Secretarial Auditor are furnished as under:
 Observation 1:
 Appointment of the Woman Director on the Board is yet to take place, as
 mandated by the provisions of the Section 149 of the Companies Act,
 2013 and in pursuance to Clause 49 of the Listing Agreement governing
 Corporate Governance
 Board''s response:
 Bank is in the process of identifying suitable candidate with relevant
 banking experience and knowledge for appointment as woman Director on
 the Board of the Bank
 observation 2:
 The Reserve Bank of India (RBI) Nominee director, Mr. D.K.  Meena has
 not intimated Director identification Number to the Bank and
 consequently Bank has not filed form DIR_12/11 in respect of his
 appointment and removal, appointed vide RBI Order
 DBOD.PSBD.NO.62981/16.05.08/2014-15 dated Oct, 28th, 2014 However RBI
 has overriding power on companies Act, 2013 to appoint Director
 pursuant to provisions of Sub Section (1) of Section 36AB of Banking
 Regulation Act, 1949.
 Board''s Response:
 Mr. D. K. Meena was appointed as Director on the Board of the Bank on
 1st Nov. 2014 by the Reserve Bank of India vide its order DBOD. PSBD.No
 6298/16.05.08/2014- 15 Dated 28th Oct. 2014 under section 36AB of the
 Banking Regulation Act, 1949. However, 36AC of the Act provides that
 any appointment or removal of a director, chief executive officer or
 other officer or employee in pursuance of section 36AA or section 36AB
 shall have effect notwithstanding anything to the contrary contained in
 the Companies Act, 1956 (1 of 1956) or any other law for the time being
 in force or in any contract or any other instrument. Thus an order
 issued by the RBI under section 36AB of the Act has overriding effect
 over the provisions of the Companies Act, 1956 (Now Companies Act,
 2013). However the relevant forms stand filed as on date.
 Employee Remuneration
 sr.    Name of        Designa-       Remuneration    Nature of
 No.    the            tion/          received per    Employment
        Employee       Nature of      month
                       Duties         (Rs in lakhs)
 1      Mr.            Chairman             5.50         In whole
        Mushtaq        &Chief                            time
        Ahmad          Executive                         employment
                       Officer                           of the Bank
 Name of    Qualification   Experience    Date of      Age of     Last
 the                        in years      commence-    the      employee
 Employee                                 ment         employee    ment
                                          of          (Years)     held
                                          employ -               before
                                          ment                   joining
 Mr.         B. A:          43 years     06-10-2010       64    J&K Bank
 Mushtaq     CAIIB-I                                               Ltd.
 In addition during the year Chairman & CEO of the Bank was paid
 performance bonus @ 35% of basic pay for the FY 2013-14, which was duly
 approved by the Reserve Bank of India.
 B. The ratio of the remuneration of each director to the median
 employees'' 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:-
 * Relocation of Banks Data centre to 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
 (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. As part of the implementing IT governance
 model, J&K bank has taken following steps:
 a) Board level IT Strategy Committee was constituted to assist the
 Board on all aspects of IT Governance including monitoring the
 implementation of all strategic plans.
 b) IT Steering Committee and Project Steering Committee were
 constituted to take the Bank closer to a more effective and efficient
 way of managing IT so as to deliver the ultimate value.
 c) Restructured IT organizational structure in the bank by creating
 different functional departments/divisions like i) Technology and
 Development ii) IT Operations and iii) IT Assurance.
 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.
 a. Fixed Asset Management Automation
 In order to centralize the Asset data of the Bank for effective
 monitoring and application of depreciation, a centralized system was
 put in place. Automation of Asset Management has helped the bank in
 effective and efficient centralized monitoring of banks assets besides
 saving effort and time involved in application of depreciation.
 b. MIs Reporting automation
 Implementation of MIS system in the Bank has replaced time consuming
 periodic paper reports/ statements submitted by the branches to the
 concerned authorities besides building an efficient decision support
 system. The MIS application provides timely, accurate, reliable and
 verifiable information that hasten reporting as well as Banks decision-
 making process.
 c. Automation of Banks stationery Department.
 Automation of Banks Stationery department has integrated the central
 stationery department and all stationery depots of the bank through a
 centralized software application which has an industry standard
 inventory management system. The system provides stock
 issuance/management services with real-time inventory maintenance.
 d. WAN Acceleration.
 Implementation of WAN acceleration was taken up to accelerate the wide
 area application traffic of VSATs and low speed leased lines to ensure
 improved and efficient delivery of services to the customer of the
 e. High speed Network for ATMs & Branches.
 In order to enhance service quality of branches and ATMs, network of
 150 branches and 130 ATMs in J&K State were upgraded to high speed MPLS
 and 3G network respectively.
 (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, 2015 the bank earned '' 24.78 Lacs and
 spent Rs. 5.59 Lacs in Foreign currency. This does not include Foreign
 currency cash flows in derivatives and Foreign currency exchange
 (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, 2015 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 General 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  : 22nd June, 2015                                  Chairman & CEO
Source : Dion Global Solutions Limited
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