SENSEX NIFTY India | Notes to Account > Banks - Private Sector > Notes to Account from Jammu and Kashmir Bank - BSE: 532209, NSE: J&KBANK

Jammu and Kashmir Bank

BSE: 532209|NSE: J&KBANK|ISIN: INE168A01041|SECTOR: Banks - Private Sector
May 26, 16:00
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VOLUME 65,916
May 26, 15:56
4.25 (5.31%)
VOLUME 422,034
Mar 15
Notes to Accounts Year End : Mar '16
1.  Details of single borrower limit/ group borrower limit exceeded by
 the Bank:
 The Bank has exceeded single borrower exposure limit (SGL)/Group
 Borrower Exposure Limit (GBL) in respect of ONGC Petro additions
 Limited by 4.83% over prudential exposure ceiling during the year.
 2.  Penalty imposed by Reserve Bank of India
 Penalty imposed by Reserve Bank of India during the year: Rs.2.25 lacs
 (Previous year Rs.NIL).
 3.  Disclosures as per Accounting Standards (AS) in terms of RBI
 4. Accounting Standard 5
 Net profit or loss for the period, prior period items and changes in
 accounting policies:
 There is no material Prior Period item included in Profit & Loss
 Account required to be disclosed as per Accounting Standard-5 read with
 RBI Guidelines.
 5. Accounting Standard 9- Revenue Recognition
 There are no material items of income, which are required to be
 disclosed as per Accounting Standard-9, read with the RBI guidelines.
 6. Accounting Standard 15 - Employees Benefit
 Adoption of AS-15 (R) The bank has adopted accounting standard 15 (R) -
 Employee Benefits, issued by the Institute of Chartered Accountants of
 India (ICAI), the Bank recognizes in its books of accounts the
 liability arising out of employee benefits as the sum of the present
 value of obligation as reduced by fair value of plan assets on the
 balance sheet date.
 The disclosure required under Accounting Standard 15 Employee
 Benefits- in line with the accounting policy as per the Accounting
 Standard- issued by the Institute of Chartered Accountants of India are
 as under:
 Particular Basis of assumption:
 Discount rate : Discount rate has been determined by reference to
 market yields on the balance sheet date on Government Bonds of term
 consistent with estimated term of the obligations as per para 78 of
 Expected rate of return on plan assets: The expected return on plan
 assets is based on market expectations, at the beginning of the period,
 for returns over the entire life of the related obligation.
 Rate of escalation in salary: The estimates of future salary increases
 considered in actuarial valuations taking into account inflation,
 seniority, promotion and other relevant factors mentioned in paras
 83-91 of AS-15R.
 Attrition rate: Attrition rate has been determined by reference to past
 and expected future experience and includes all types of withdrawals
 other than death but including those due to disability.
 The above information is based on the information certified by the
 7. Accounting standard 19 - Leases
 The bank has taken premises only on rental basis and has no long-term
 operating leases taken/given and hence reporting under AS-19 is not
 considered necessary.
 8. Accounting Standard -21 (Consolidated Financial Statements)
 The Bank has a fully owned subsidiary company JKB Financial Services
 Ltd. in terms of the approval of Reserve Bank of India vide its letter
 No DBOD.FSD.NO./1124/24.01.001/2007-08 dated July 31, 2007. The
 investment towards the capital of subsidiary company is Rs.20.00 Crores
 (Previous Year Rs.20.00 Crores). The consolidated financial statements
 are placed accordingly in terms of AS 21 issued by the Institute of
 Chartered Accountants of India.
 9. Accounting Standard 26-lntangible Assets
 The Bank has incurred an amount of Rs.97.85 Lacs on Brand names
 bifurcated into two heads namely Business Unit Signage and Brand
 Strategy Project. Expenditure on Business Unit Signage amounting to
 Rs.34.23 Lacs has been debited under the head Furniture & Fixture,
 whereas, Brand strategy project expenses amounting to Rs.63.62 Lacs has
 been charged to Profit & Loss account treating it as a Revenue
 expenditure for the reason that the Bank cannot declare dividend to
 shareholders without writing it off completely in view of the
 provisions of the Banking Regulation Act, 1949.  Accordingly, the Bank
 has not evaluated useful life of this Brand strategy project over which
 the expenses could be amortized.
 Further, the Bank has incurred an amount of Rs.11.04 Crores on account
 of purchase of computer software, not forming integral part of
 computers, and has capitalized the cost of the same.
 10. Accounting Standard 28 - Impairment of Assets
 Majority of Fixed Assets of the Bank are considered as Corporate Assets
 and not cash generating assets and in the opinion of Management there
 is no material impairment in these Fixed Assets. Regarding other Fixed
 Assets generating cash there is no material impairment. As such no
 provision is required as per AS-28 issued by ICAI.
 11. Accounting Standard 29- Provisions, Contingent Liabilities and
 Contingent Assets
 In respect of Contingent Liabilities under each class shown as per
 Schedule 12, in the opinion of the Management, the possibility of any
 out flow in settlement is remote. A provision of Rs.2.23 crores
 (Previous year Rs.1.90 Crores) has been made during the year totaling
 to Rs.7.81 crores (Previous year Rs.5.59 Crores) upto 31.03.2016
 against claims decreed against the Bank. Claims have not been
 acknowledged as debts owing to the appeal filed by the bank before the
 court of competent jurisdiction, pending adjudication.
 12. Foreign Exchange
 a) The net funded exposure of the Bank in respect of Foreign Exchange
 transactions with each country is within 1% of the Total Assets of the
 Bank and hence no Provision and Disclosure is required to be made as
 per the RBI Circular No. 96/21.04.103/2003 dated: 17.06.2004.
 b) Claims pending with ECGC amounts Rs.14.20 Crores (Previous year:
 13.  Letter of comfort (LOC''s) issued by the Bank.
 The Bank has not issued any letter of comfort (LOC) on its behalf.
 However, Letters of Comfort issued on behalf of customers has been
 reported under respective heads of contingent liabilities in the
 financial statements of Bank as on 31st March 2016.
 14.  Provision Coverage Ratio (PCR)
 The provision coverage ratio (PCR) for the Bank as on 31st March 2016
 is 56.15% (Previous Year 59.02%) which is calculated taking into
 account the total technical write offs made by the Bank.
 15.  The Bank follows policy of providing interest on overdue time
 deposits at Saving Bank interest rates in conformity with guidelines of
 Reserve Bank of India.
 16.  Corporate Social Responsibility (CSR Activities)
 Pursuant to section 135 of the Companies Act 2013, it is required to
 expend 2% of the average net profits made during three immediate
 proceeding financial years for CSR activities.  Accordingly, bank is
 required to spend Rs.27.33 Crores (Previous year Rs.29.86 Crores) for
 twelve months period ended 31st March 2016 against which bank has spent
 Rs.28.48 Crores (Previous year Rs.13.75 Crores).The bank has decided to
 include expenditure made on maintenance of Parks and Gardens as CSR
 expenditure from the current year on which an amount of Rs.13.86 Crores
 has been incurred.
 17.  In Compliance to RBI Letter No. DBR.NO.BP.13018/21.04.048/2015-16
 dated April 12, 2016, bank has provided a sum of Rs.22.50 crores being
 7.50% of the existing outstanding balance of Rs.299.95 crores as on
 31.03.2016 under the Food Credit availed by the State Government of
 18.  Micro Small and Medium Enterprises Development Act
 With regard to disclosure relating to MSME under the Micro Small &
 Medium Enterprises Development Act 2006, no Purchases have been made
 from Micro Small Medium Enterprises hence the disclosure be treated as
 19.  Un-hedged Foreign Currency Exposure
 In accordance with RBI circular no DBOD .BP.BC.85/21.06.200/2013-14
 dated 15th January, 2014 and circular no DBOD.
 BP.BC.116/21.06.200/2013-14 dated 3rd June 2014, banks are required to
 make an additional provision in respect of borrowers with Un-hedged
 Foreign Currency Exposures (UFCE) from April 1, 2014 onwards. However
 no provisions were required to be made by the bank for the financial
 year 2015-16 towards this exposure.
 20. Policy to manage currency induced Credit Risk:-
 Foreign currency exposures are hedged under permitted hedging products
 in accordance with guidelines of RBI on Risk Management and inter bank
 dealings, FEDAI norms and guidelines. The objective of the policy is to
 maximize hedging on the foreign currency exposures of borrowers
 Monitoring and review of the un-hedged foreign currency exposures to
 borrowers is undertaken by the bank on monthly basis by obtaining
 borrower-wise statements .Specific action/ suitable
 21. Qualitative disclosure for Liquidity Coverage Ratio (LCR):
 The Bank has robust liquidity risk management framework in place that
 ensures sufficient liquidity including a cushion of unencumbered, high
 quality liquid assets, to withstand a range of stress events, including
 those involving the loss or impairment of both unsecured and secured
 funding sources.
 Liquidity Coverage Ratio (LCR) BLR-1 aims to ensure that a bank
 maintains an adequate level of unencumbered High Quality Liquidity
 Asset (HQLAs) that can be converted into cash to meet liquidity needs
 for a 30 calendar day time horizon under a significantly severe
 liquidity stress scenario.
 Composition of High quality liquid assets (HQLAs)
 High quality liquid assets (HQLAs) comprise of assets that can be
 readily sold or used as collateral to obtain funds in a range of stress
 scenario. These are asset categories which can be easily or immediately
 converted into cash at little or no loss in value.
 With zero percent haircut Level 1 (HQLA) asset comprises of:
 Excess CRR
 Government securities in excess of SLR
 Marginal Standing Facility (MSF)
 Facility to Avail Liquidity for Liquidity Coverage Ratio (FALLCR)
 Marketable securities issued by foreign sovereigns A minimum haircut of
 15% is applied on the following assets and is placed in the category of
 Level 2A (HQLA) assets:
 Marketable securities guaranteed by sovereigns, PSEs or multilateral
 development banks assigned risk weights of up to 20% but are not issued
 by banks/financial institutions/NBFCs Corporate bonds not issued by
 banks/financial institutions/NBFCs Commercial Papers not issued by
 PDs/financial institutions/NBFCs With a haircut of 50%following HQLAs
 are also placed in category of level 2B assets:
 Marketable securities guaranteed by sovereigns having risk weights of
 higher than 20% but not more than 50%.
 Common equity shares included in NSE CNX Nifty index or S&P BSE Sensex
 index but not issued by banks/financial institutions/NBFCs
 From February 2016, In line with the RBI guidelines Corporate debt
 securities (including commercial paper) not issued by a bank, financial
 institution, PD, NBFC or any of its affiliated entities have a
 long-term credit rating from an Eligible Credit Rating Agency between
 A  and BBB- or in the absence of a long term rating, a short-term
 rating equivalent in quality to the long-term rating; traded in large,
 deep and active repo or cash markets characterized by a low level of
 concentration; and have a proven record as a reliable source of
 liquidity in the markets (repo or sale) even during stressed market
 conditions, i.e. a maximum decline of price not exceeding 20% or
 increase in haircut over a 30-day period not exceeding 20 percentage
 points during a relevant period of significant liquidity stress, is
 also reckoned as Level 2B HQLAs,
 All the relevant inflows and outflows as per RBI stipulations are
 captured in the LCR template.
 22.  The Principal Accounting Policies (Schedule 17) and Notes on
 Accounts (Schedule 18) form an integral part of these Accounts.
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