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
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
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
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.
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.
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
The Bank registered a Net Profit of Rs. 416.04 Crore for the financial
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:
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.
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
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.
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
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
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
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
Performance of the Board Level Committees
Composition and Balance of skill sets; Frequency and duration;
interaction with the Board.
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.
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
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 (http://www.jkbank.net/
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.
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
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.
A. PARTICULARS OF EMPLOYEES AS PER RULE 2 OFTHE COMPANIES (APPOINTMENT
AND REMUNERATION OF MANAGERIAL PERSONNEL) RULES, 2014 FOR THE YEAR
ENDED 31st MARCH, 2016, ARE AS UNDER:
I. EMPLOYED THROUGHOUT THE FINANCIAL YEAR AND IN RECEIPT OF
REMUNERATION AGGREGATING Rs.60,00,000/- OR MORE PER ANNUM
No. Name of the Designation/ Remuneration Nature of Qualification
Employee Nature of received per Employment
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
II. EMPLOYED FOR A PART OF THE FINANCIAL YEAR AND IN RECEIPT OF
REMUNERATION AGGREGATING ?5, 00,000/- OR MORE PER MONTH NIL
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.
(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
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.
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.
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.
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
(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
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
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
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