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Directors Report of Jammu & Kashmir Bank Ltd.

Mar 31, 2023

Your Board of Directors has pleasure in presenting the 85th 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, 2023.

Performance at a Glance

• The aggregate business of the Bank stood at Rs.204323.19 Crore at the end of the financial year 2022-23.

• The total deposits of the Bank grew by Rs.7327.36 Crore from Rs.114710.38 Crore as on 31st March, 2022 to Rs.122037.74 Crore as on 31st March, 2023, a growth of 6.39 percent.

• CASA deposits of the Bank at Rs. 66017.98 Crore constituted 54.10 percent of total deposits of the Bank.

• Cost of deposits for current FY stood at 3.79 percent.

• The net advances of the Bank stood at Rs.82285.45 Crore as on 31st March, 2023.

• Yield on advances for the current FY stood at 8.91 percent.

• Average Priority sector advances stood at Rs.32,800.26 Crore as on 31st March, 2023.

• The Bank effected cumulative cash recovery, up-gradation of NPA''s and technical write-off of Rs.8762.71 Crores during FY 2022-23.

• Investment portfolio of the Bank stood at Rs.34829.15 Crore as on 31st March, 2023.

Insurance Business

The Bank earned a commission income of Rs. 70.69 Crore from Insurance Business by mobilizing a business of Rs 568.2 Crore in life insurance (including fresh retail life business of Rs 155.17 Crore, Credit life business of Rs 96.68 Crore and renewal business of Rs 316.35 Crore) and Rs 245.66 Crore in non-life insurance during financial year 2022-23.

Income Analysis

• The Interest income of the Bank stood at Rs.9355.11 Crore in the year 2022-23. Interest expenses stood at Rs.4609.83 Crore for FY2022-23. The Net Interest Income stood at Rs. 4745.28 Crore for FY2022-23.

• The Net Income from operations [Interest Spread plus Non-interest Income] stood at Rs.5502.09 Crore in the financial year 2022-23.

• The Operating Expenses registered an increase of Rs.50.82 Crore during the financial year 2022-23 and stood at Rs.3643.60 Crore as compared to Rs.3592.78 Crore in 2021-22.

• The Cost to Income ratio (Operating Expenses to Net Operating Income) stood at 66.22 percent in the financial year 2022-23.

Gross Profit

The Gross Profit for the financial year 2022-23 stood at

Dc 1QCQ A O

Provisions

The Provision for Loan Losses, Standard Assets, Taxation and others aggregated to Rs.661.11 Crore in the financial year 2022-23.

Net Profit/Loss

The Bank registered a Net Profit of Rs.1197.38 Crore for the financial year 2022-23.

Dividend

In view of the overall performance of the Bank and while retaining capital to support future growth, the Board at its meeting held on 4th & 5th May, 2023, recommended dividend of 50 per cent for the financial year 2022-23 for approval by the shareholders at the 85th Annual General Meeting. If approved, the total outflow on account of dividend for the year 2022-23 will be Rs. 51.57 Crore. The record date for payment of dividend is mentioned in the notice of the ensuing 85th AGM of the Bank. In terms of the Income Tax Act, 1961, the dividend income is taxable in the hands of the Members. Therefore, the dividend will be paid to the Members after deduction of applicable tax, if any.

In terms of Regulation 43A of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Bank has formulated and adopted a Dividend Distribution Policy with the objective of appropriately rewarding Shareholders through dividends while retaining the capital required for meeting regulatory capital requirements, maintaining adequate buffers and supporting its future growth. The said Policy has been hosted on the

website of the Bank at https://www.jkbank.com/investor/ stockExchangeIntimation/corporateGovernancepolicies.php.

Branch/ATM Network

During the financial year 2022-23, 10 new branches were established, thereby taking the number of branches to 990 (including IARBs) as on 31.03.2023, spread over 18 states and 4 union territories. The area-wise breakup of the branch network (excluding extension counters/ mobile branches and Service branches) on the basis of census 2011 as at the end of FY 2022-23 is as under:

Area

Business Units (including

IARBs)

Metro

174

Urban

110

Semi-Urban

162

Rural

544

Total

990

During the financial year FY 2022-23, 5 EBUs/USBs were established taking the total number of EBUs/USBs to 82 and 17 ATMs were added taking the ATM network of the Bank to 1421 as on 31.03.2023.

Capital

The capital management framework of the Bank includes a comprehensive internal capital adequacy assessment process conducted periodically, which determines the adequate level of capitalization needed to meet the regulatory norms and current and future business needs.

The capital management framework of the Bank is complemented by the risk management framework, which covers the business and capital plans and stress testing results integrated with the internal capital adequacy assessment process while assessing its impact on the capital ratios and adequacy of capital buffers for current and future periods.

As at March 31, 2023, the Subscribed and Paid-up Capital of the Bank stood at Rs.103,14,79,861.00 comprising of 103,14,79,861 equity shares, which is 9,85,93,267 equity shares more than as at March 31, 2022. The said capital was raised by way of:

• Allotment of 2,85,93,267 equity shares at a price of Rs.32.70 which was at a discount of 4.97% (i.e. Rs.1.71 per equity share) to the Qualified Institutional Buyers (QIB) aggregating to a total amount of Rs.93,49,99,830.90. The Issue opened on March 28,

2022 and closed on March 31, 2022. The allotment was made on April 01, 2022, and

• Allotment of 7,00,00,000 equity shares at a price of Rs.39.25 to the eligible employees of the Bank under J&K Bank Employee Stock Purchase Scheme,

2023 (JKBESPS 2023) amounting to a total of Rs.274,75,00,000.00.

Employees Stock Purchase Scheme Jammu and Kashmir Bank Employee Stock Purchase Scheme, 2023 (JKBESPS, 2023) was approved and implemented by the Bank and shares were granted to the eligible employees in accordance with guidelines applicable to ESPS. The Statutory Central Auditors have however issued a qualified opinion with respect to the funds raised through ESPS. For Management Response to the observations of the Auditors, please refer to Corporate Governance Section of this Report. The Bank has received a certificate from the Secretarial Auditor of the Bank pursuant to Regulation 13 of the Securities and Exchange Board of India (Share Based Employee Benefits and Sweat Equity) Regulations, 2021 and the same is available on the website of the Bank at https:// www.ikbank.com/investor/investorlnfo/ESPS.php

Net Worth and Capital Adequacy Ratio (CRAR)

• The Net Worth of the Bank stood at Rs.8323.67 Crore on 31st March 2023.

• Capital Adequacy Ratio under Basel III stood at 15.38 percent as on March, 2023. The tier I component of CRAR is 11.04 percent as on 31st March 2023.

• Adjusted Book Value per Share for the financial year 2022-23 stood at Rs.67.76.

Board of Directors

Your Bank has Nine (9) Directors consisting of MD & CEO, Executive Director and 7 Non-Executive Directors as on 31st March, 2023.


Independent and Non-Independent Directors

• Non-Independent Executive Director

Mr. Baldev Prakash (DIN: 09421701), Non Independent Executive Director has been serving as the MD & CEO of the Bank since December 30, 2021, with the approval of Reserve Bank of India (RBI). Mr. Sudhir Gupta (DIN: 09614492), Non Independent Executive Director has been serving as the Executive Director of the Bank since December 14, 2022, with the approval of Reserve Bank of India (RBI).

• Non-Independent Non-Executive Director

Mr. R K Chhibber is the Non-Independent Non-Executive Director of the Bank.

• Independent Non-Executive Director

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 Directors:-

1. Dr. Rajeev Lochan Bishnoi

2. Mr. Naba Kishore Sahoo

3. Mr. Umesh Chandra Pandey

4. Mr. Anil Kumar Goel

5. Mr. Anand Kumar

6. Ms. Shahla Ayoub

All Independent Directors of the Bank have given their respective declarations stating that they meet the criteria of independence as laid down under the applicable laws and in the opinion of the Board, the independent directors meet the said criteria.

Appointments/Resignations from the Board of Directors

During the FY 2022-23, there were following changes in the composition of the Board:

• Mr. Vivek Bhardwaj, IAS (DIN: 02847409) was appointed as Govt. Nominee Director w.e.f May 17, 2022 in place of Mr. Atal Dulloo, IAS (DIN: 03542909).

• Dr. Mohmad Ishaq Wani (DIN: 08944038) ceased to be the Director on the Board of the Bank w.e.f. August 24, 2022 consequent upon his non-re-appointment at the 84th Annual General Meeting of the Bank.

• Mrs. Sushmita Chadha (DIN: 02939808) resigned as an Independent Director on the Board of the Bank w.e.f. September 27, 2022 due to her personal reasons.

• Mr. Nitishwar Kumar (DIN: 05326456) resigned as a Director on the Board of the Bank w.e.f October 13,2022.

• Mr. Sudhir Gupta (DIN: 09614492) was appointed as an Executive Director on the Board of the Bank w.e.f. December 14, 2022

• Ms. Shahla Ayoub (DIN: 09834993) was appointed as Independent Director on the Board of the Bank w.e.f. December 26, 2022

• Mr. Vivek Bhardwaj, IAS (DIN: 02847409) ceased to be the Govt. Nominee Director on the Board of the Bank w.e.f. January 25, 2023 consequent upon withdrawal of his nomination by the Government of UT of Jammu and Kashmir.

During the year under review, Mrs. Sushmita Chadha, Independent Director and Mr. Nitishwar Kumar, IAS resigned from the Board of the Bank w.e.f. September 27, 2022 and October 13, 2022 respectively due to their personal reasons before the expiry of their tenure. Further, it has been confirmed by the said Directors that there were no material reasons other than personal reasons for their resignations.

The Board acknowledges the invaluable contributions rendered by the outgoing Directors during their tenure as Directors on the Board of the Bank and places on record deep appreciation for their invaluable contribution/ guidance as Members of the Board.

Changes in the Board of Directors after the Closure of Financial Year

Mr. Pawan Kotwal (DIN: 02455728) was appointed as an Additional Director on the Board of the Bank on July 24, 2023.

Directors seeking appointment/re-appointment at AGM

Mr. Pawan Kotwal (DIN: 02455728), Additional Director on the Board of Bank being eligible has offered himself for appointment as Director liable to retire by rotation. Mr. R K Chhibber (DIN: 08190084), who is retiring by rotation, has offered himself for re-appointment. The profile and necessary details of the above mentioned Directors have been included in the Corporate Governance Report.

Appointments/Resignations of the Key Managerial Personnel

Mr. Baldev Prakash, Managing Director & Chief Executive Officer, Mr. Sudhir Gupta, Executive Director, Mr. Pratik D Punjabi, Chief Financial Officer and Mr. Mohammad Shafi Mir, Company Secretary are the Key Managerial Personnel of the Bank.

Mr. Sudhir Gupta was appointed as Executive Director of the Bank in the Board meeting held on December 14, 2022. Mrs. Rajni Saraf was appointed as Chief Financial Officer of the Bank on April 27, 2022 in place of Mr. Balvir Singh Gandhi, who ceased to be the Chief Financial Officer of the Bank. Mr. Pratik D Punjabi was appointed as Chief Financial Officer of the Bank to be effective from the date of his joining i.e. July 01, 2022 in place of Mrs. Rajni Saraf, who ceased to be the Chief Financial Officer of the Bank after attaining the age of superannuation on June 30, 2022.

None of the Key Managerial Personnel has resigned during the year under review.

Changes in the Key Managerial Personnel after the Closure of Financial Year

There were no changes in the Key Managerial Personnel after the closure of Finalcial Year.

Number of Meetings of the Board

During the year under review, Seventeen (17) Board Meetings were held, in due compliance with statutory provisions, on the following dates:

08.04.2022, 27.04.2022, 12.05.2022, 16.06.2022,

28.06.2022, 13.07.2022, 10.08.2022, 24.08.2022,

26.09.2022, 21.10.2022, 15.11.2022, 14.12.2022, 26.12.2022,

23.01.2023, 20.02.2023, 06.03.2023, 15.03.2023.

Committees of the Board

The Bank has following Committees of the Board:

• Management Committee

• Audit Committee

• Special Committee of Board on Frauds

• Stakeholders Relationship Committee

• Information Technology Strategy Committee

• Corporate Social Responsibility & Environmental, Social and Governance Committee

• Integrated Risk Management Committee

• Customer Service Committee

• Nomination & Remuneration Committee

• Legal and Impaired Assets Resolution Committee

The compositions, powers, roles, terms of reference, etc. of aforesaid Committees are given in detail in the statement on Corporate Governance annexed to this report.

Performance Evaluation of the Board

The Nomination and Remuneration Committee (NRC) has approved a framework / policy for evaluation of the Board, Committees of the Board and the individual Members of the Board (including the Chairperson). In conformity with the said policy requirements, following is the process of evaluation:

• The performance evaluation of all the Independent Directors is conducted by the entire Board excluding the Director being evaluated.

• Independent Directors evaluate the performance of Non-Independent Directors, Chairperson of the Board, Whole Time Directors and Board as a whole and submits its report to the Board alongwith necessary comments and suggestive course of action arising out of the evaluation.

• The performance evaluation of the Committees of the Board is conducted by the entire Board.

A questionnaire for the evaluation of the Board, its Committees and the individual Members of the Board (including the Chairperson) designed in accordance with the said framework and covering various aspects of the performance relating to the following is forwarded to individual Directors:

Board

Board Composition & Quality, Board Meetings & Procedures, Board Development, Board Strategy & Risk Management, Board & Management Relations, Succession Planning and Stakeholder Value & Responsibility, etc.

Committees of the Board

Functions & Duties, Management Relations, Committee Meetings & Procedures, etc.

Chairman of the Board

Managing Relationships, Leadership, Role & Responsibility, etc.

Whole Time Directors

Participation at Board / Committee Meetings, Managing Relationships, Knowledge and Skills, Personal Attributes, Contribution towards growth, Leadership and Initiative.

Individual

Directors

Participation in meetings, managing relationships, knowledge & skills & personal attributes, etc.

The responses received to the questionnaires on evaluation of the Board, its Committees, individual Directors including Chairperson are consolidated and discussed by the Board.

Your Bank has in place a process, wherein, declarations are obtained from the Directors regarding fulfillment of the ''fit and proper'' criteria in accordance with the RBI guidelines/ Companies Act, 2013. The declarations from the Directors other than Members of the NRC are placed before the NRC and the declarations of the Members of the NRC are placed before the Board. Assessment on whether the Directors fulfill the said criteria is made by the NRC / Board on an annual basis.

Fiscal Year

The Fiscal Year for the Bank is reckoned as starting from 01st April to 31st March every year.

Lead Bank Responsibility:

J&K Bank is the only Private Sector Bank in the Country assigned with responsibility of convening UT Level Bankers Committee - UTLBC meetings. The Bank continued to satisfactorily discharge its Lead Bank responsibility in 12 districts of UT of J&K, i.e. Srinagar, Ganderbal, Budgam, Baramulla, Bandipora, Kupwara, Anantnag, Kulgam, Pulwama, Shopian, Poonch and Rajouri. Lead bank responsibility in other 8 districts of the UT, i.e. Jammu, Samba, Kathua, Udhampur, Reasi, Doda, Ramban and Kishtwar is assigned to State Bank of India.

The Annual Credit Plan for UT of J&K for FY 2022-23 was launched on 1st April 2022, envisaging a total credit target of Rs.50,790.08 Crore for 16,51,877 beneficiaries. During FY 2022-23 banks operating in UT of J&K have disbursed total credit of Rs.60,048.27 Crore in favour of 17,16,527 beneficiaries, registering an achievement of 118% in financial terms and 104% in physical terms. This includes disbursement of Rs. 26,411.85 Crore in favour of 9,60,347 beneficiaries against the annual target of Rs.40,342.37 Crore for 13,38,894 beneficiaries under Priority Sector and Rs.33,636.42 Crore in favour of 7,56,180 beneficiaries against the annual target of Rs.10,447.71 Crore for 3,12,983 beneficiaries under NonPriority Sector thereby registering achievement of 65% and 322% in financial terms respectively.

J&K Bank was assigned annual target of Rs.25,324.42 Crore for 8,32,205 beneficiaries under Priority and Non-Priority Sectors of economy during FY 2022-23 against which Rs.39,270.12 Crore were disbursed in favour of 12,14,233 beneficiaries registering an achievement of 155% in financial terms and 146% in physical terms.

During the FY 2022-23, following meetings were conducted:

• 7th Meeting of J&K UTLBC held on 22nd June, 2022 to review the performance of Banks/ FIs in UT of J&K in dispensation of credit and other banking services during the Financial Year ending 31st March, 2022.

• 8th Meeting of J&K UTLBC held on 19th October, 2022 to review the performance of Banks/ FIs in UT of J&K during the quarter/ Half Year ending September, 2022.

• 9th Meeting of J&K UTLBC held on 2nd March, 2023 to review the performance of Banks/ FIs in UT of J&K during the quarter ending December, 2022.

• Special Meeting of J&K UTLBC held on 22nd November, 2022 to take the general review of the performance of Banks/ FIs in UT of J&K.

• Steering Sub-Committee of J&K UTLBC held on 12th October, 2022 to monitor SHG-Bank Linkage Programme

• Two Meetings of Steering Sub-Committee of J&K UTLBC held on 25th August, 2022 and 6th February, 2023 to finalise the agenda for meetings of J&K UTLBC

Convening of District Level/ Block level meetings as per Lead bank Scheme

Lead Bank ensured that District- level and block level meetings, such as DCC/ DLRC/ BLBC, and other relative meetings under Lead Bank Scheme are held as per schedule in all the 20 districts of UT of J&K during the FY 2022-23.

Implementation of Financial Inclusion Plans (FIPs):

Reserve Bank of India initiated the concept of Financial Inclusion by setting up the Khan Commission in 2004 and later on mooted a campaign under Financial Inclusion Plan to make efforts to provide financial services to the financially excluded segment of the society. Accordingly "Swabhimaan” campaign to cover 74,000 identified villages in India with population more than 2000 (as per census 2001), was launched by Government of India in February 10, 2011. Consequently, a total of 795 villages in J&K State having population of over 2000 (FIP-I) but without banking facilities were identified by the concerned Lead District Managers/ Lead Bank Officers, and accordingly allocated to 5 major banks for providing banking services by March 2012. After providing coverage of banking services in all the identified 795 villages, RBI advised SLBCs to prepare a roadmap covering all unbanked villages of population less than 2000 (FIP-II) and notionally allot these villages to banks for providing banking services in a time-bound manner. Accordingly, a total of 5582 villages having population less than 2000 were identified in J&K State, and allocated to 5 major banks operating in J&K. All the allocated villages in this segment stand covered by providing Banking service outlets in the form of Bank Branch/ Banking Correspondents or other Modes of coverage.

Subsequently, FIDD RBI issued direction to all SLBC Convenor Banks to identify the villages, with population more than 5000 (FIP-III), which do not have a Brick & Mortar Branch of any Scheduled Commercial Bank and allocate the same among the Scheduled Commercial Banks operating in the state for opening of branches. All the identified 104 villages'' stands covered by Brick & Mortar branches or CBS-enabled Banking outlets.

Reserve Bank of India in consonance to Government of India Sub-Service Area (SSA) plan envisaged to provide Banking Touch Point (Bank Branch/BC/IPPB) within a radius of 5 KMs of every village across the country. In this connection, National Informatics Centre (NIC) in the year 2019 conducted a GPS (Latitude/ Longitude) based verification of Banking Touch Points across the country on the basis of the details uploaded by banks on Jan Dhan Darshak App - (GIS App) and a list of 11,278 uncovered villages across the country was arrived at and shared with respective SLBCs/ UTLBCs in the month of October 2019 for opening Banking Touch Points.

For UT of J&K 147 villages were identified as Uncovered (Phase IV). All the 147 villages stand covered by banking touch points.

Department of Financial Services, MoF, GoI identified 363 unbanked villages with population more than 3000 across the Country for opening of Brick and Mortar branches and in the matter SLBCs/ UTLBCs were requested to allocate the locations among the member banks for opening of branches and monitoring the progress thereof. Out of the total 363 locations, 10 locations (Phase V) have been identified in seven districts of UT of J&K of which 7 villages stands covered.

Responsibility of setting up of RSETIs in UT of J&K:

In terms of guidelines issued by Ministry of Rural Development, Government of India, setting up the Rural Self Employment Training Institutes (RSETIs) in all the districts of UT of J&K was assigned by J&K UTLBC 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 (Srinagar, Ganderbal, Budgam, Baramulla, Bandipora, Kupwara, Anantnag, Kulgam, Pulwama, Shopian, Poonch and Rajouri). Performance of RSETIs in conducting training programmes and the number of persons settled and benefited through credit linkage is being reviewed in Quarterly UTLBC meetings.

Responsibility of setting up of FLCs in UT of J&K:

In terms of RBI guidelines for setting up of Financial Literacy Centres (FLCs) in all the districts of UT of Jammu and Kashmir, J&K Bank has made 12 FLCs operational in its 12 allocated lead districts viz. Srinagar, Ganderbal, Budgam, Baramulla, Bandipora, Kupwara, Anantnag, Kulgam, Pulwama, Shopian, Poonch and Rajouri and SBI having made 8 FLCs operational in its 8 allocated lead districts of UT of J&K, viz. Jammu, Samba, Kathua, Udhampur, Reasi, Doda, Ramban, Kishtwar. In addition, PNB, JKGB, EDB and J&K State Cooperative Bank have also established 6, 2, 2 & 1 FLCs respectively, in various districts of UT of J&K, which as on 31.03.2023 takes the total number of FLCs in the UT of J&K to 31. The performance of FLCs in conducting the Financial Literacy Camps as per the guidelines from RBI is being reviewed at various forums including quarterly UTLBC meetings.

100% Saturation Drive for KCC

Banks/ FIs in J&K have issued 54,929 fresh KCCs during FY 2022-23 involving an amount of Rs.557.23 Crore. This includes Rs.289.45 Crore disbursed in favour of 26,352 beneficiaries under KCC Crop and Rs.267.79 Crore to 28,577 beneficiaries under KCC-AH& F.

With the above achievement during FY 2022-23 the total number of active KCCs in J&K has reached to 9,28,504 as on 31.3.2023 with an outstanding credit of Rs.6,777.06 Crore.

Performance of Associate /Subsidiary Companies Subsidiary:

As on March 31, 2023, the Bank has one unlisted wholly owned subsidiary namely, JKB Financial Services Limited (JKBFSL) which was incorporated on August 27, 2008. JKB Financial Services Limited was floated with the objective to primarily meet the para-banking requirements of J&K Bank customers in particular and other customers of the UT of J&K in general. JKBFSL is a member of the National Stock Exchange of India

Limited (NSE) & The BSE Limited (BSE). As a leading broking entity in the Union Territory of J&K, JKBFSL at present provides a wide range of financial services to its clients which include;

Equity Broking Services: JKBFSL provides broking services in equity (cash/delivery, intra-day, futures and option). As a part of broking services offered by the company, JKBFSL also facilitates opening of DEMAT accounts for its clients.

Margin Trading Facility: JKBFSL is providing margin-trading facility to its clients for leveraging their eligible collaterals by funding their requirements on the cash-delivery segment of equities in NSE. The exposure is provided as per the norms set by SEBI and other regulatory bodies.

Gold ETF: JKBFSL is providing the facility to its customers for buying and selling Gold ETF. This product being an exchange-traded fund can be bought and sold only on stock exchanges, thus saving investors from the trouble of keeping physical gold. The transparency in pricing/purity is another advantage. Exchange Traded Funds are open-ended mutual fund schemes based on the ever-fluctuating cost of gold. Gold ETFs give investors exposure to the gold market, they are an excellent choice of investment for investors with conservative risk profile as gold as an asset is less volatile when compared to equities.

Initial Public Offer: To complement its broking business, JKBFSL also facilitates its client''s participation in the IPO''s undertaken by various companies. To provide these services, the company uses the ASBA platform of J&K Bank through offline mode. However, the Company is working on the application that will enable client to apply for IPO through Mobile Application.

Third Party Product Distribution: JKBFSL undertakes distribution of third party products like mutual funds and ETF''s according to its client''s requirements. The company provides such distribution through online channels as well as through the BSE Star Mutual Fund platform. JKBFSL has recently launched a mobile app called JKB mGrow, which offers better user interface and experience for distributing mutual fund products.

Performance highlights of the JKBFSL during the financial year 2022-23:

Income:

• The total income of the Company surpassed 100 Million mark during the financial year 2022-23 & grew by 6% from '' 991.25 lakhs to 1046.39 lakhs.

• Income from MTF (Margin Trade Funding) is ''255.91 lakhs for the financial year 2022-23 as compared to 180.42 lakhs in FY 2021-22 thereby registering a YoY growth of 42 %.

• Revenue from 3rd party products has been marked as a growth area for the company.

The company has recorded AUM growth of around 82% on YoY basis and accordingly the mutual fund commission grew from '' 22.37 lakhs in 2021-22 to ''53.89 in 2022-23 thereby recorded a YOY growth of 141%.

• The income from Equity broking for the financial year 2022-23 is '' 510.55 lakhs & the cash market

trading volumes of the company during the year remained in line with the market.

• The depository income during the financial year 2022-23 reached at 121.57 lakhs.

Expenditure:

• The total expenses during the financial year 202223 is ''879.22 lakhs as compared to '' 590.03 lakhs in the previous financial year. Total expenditures have increased by 49% YOY basis. The substantial increase in the total costs on YOY basis was mainly because of employment costs due to regularisation of the services of employees of the company & investments made in technology platforms during FY 2022-23.

Profits:

• The Company registered a profit before tax of 167.16 lakhs during the given financial year and the net profit achieved was 120.65 lakh during the same period.

Associate:

Regional Rural Bank Sponsored by J&K Bank: J&K Grameen Bank

The J & K Grameen Bank ( JKGB) has come into existence on 30th June 2009 with the issuance of statutory notification by Gol, MoF, Department of Financial Services under subsection (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 01.07.2009.

• Area of Operation:

The area of operation of the J&K Grameen Bank comprises of 13 districts of the UT of J&K and UT of Ladakh viz. Baramulla, Bandipora, Kupwara, Ganderbal, Srinagar Jammu, Kathua, Rajouri, Poonch, Samba, Kishtwar, Leh and Kargil.

No. of Branches

(as on 31st March, 2023) : 215

No. of Employees

(as on 31st March, 2023) : 1161

(includes 12 officials on deputation from J&K Bank - Sponsor Bank).

• Capital Structure:

In terms of the RRBs Act 1976, the authorized capital of Regional Rural Banks was fixed at '' 5.00 Crore (which stands amended to '' 2000 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 '' 97.16 Crores fully subscribed by the Central Government, State/ UT Government and Sponsor Bank in the ratio of 50:15:35 respectively.

Besides during FY 2022-23 Bank has received an additional capital support of '' 287.79 Crores from its promoters in the prescribed ratio of 50:15:35 till March 31, 2023, which was kept under Share Capital Deposit Account. The details of Bank''s total Capital of '' 384.96

Crores as on March 31, 2023 are given hereunder:

Authorised Capital

'' 2,000 Crores

Particulars

Paid up Share Capital

Share Capital Deposit

Total

Capital

Share of Government Of India

48.58

143.90

192.48

Share of Government of U.T of J&K

14.57

43.17

57.74

Share of J&K Bank (Sponsor Bank)

34.01

100.73

134.74

• Tier II Perpetual Bonds : Date of issue: 04-12-2014

Out of total cost outlay of Rs. 23.34 Crores for implementation of 100% CBS by JKGB, 50% i.e. '' 11.67 crore has been shared by J&K Bank (Sponsor Bank) in the form of perpectual debt (bonds).

Business Performance of the J&K Grameen Bank as on 31.03.2023

• Total Business:

The total business of the bank as on 31st March 2023 stood at '' 8513.30 Crores against ''7646.50 Crores as on 31st March 2022, thereby registering a growth of 11.34% during the financial year 2022-23.

• Deposits:

The deposits of the bank have increased from '' 4767.90 Crores to '' 5268.76 Crores during the financial year 2022-23 thereby registering a growth rate of 10.50%.

• Advances:

The gross advances of the Bank as on 31st March 2023 stood at ''3244.54 Crores as against '' 2878.60 Crores as on the corresponding date of the previous year recording a growth of 12.71%.

• CD Ratio:

The C.D. Ratio of the bank has increased by 121 bps from 60.37% as on 31st March 2022 to 61.58% as on 31st March, 2023.

• Priority Sector Advances:

The Priority Sector Advances outstanding as on 31st March 2023 stood at '' 2595.45 Crores against '' 2327.61 Crores outstanding as on 31st March 2022, registering a growth of 11.51 % on Y-o-Y basis. RRB specific benchmark of 75% portion of priority sector advances to total advances outstanding has been well maintained with 79.99% as on 31st March, 2023.

• NPA Management:

Gross NPAs of the Bank as on 31st March, 2023 stood at '' 147.51 Crores (4.55%) against '' 152.07 Crores (5.28%) as on 31st March, 2022. Accordingly Net NPAs as on 31st March, 2023 stood at '' 55.89 Crores (1.77%) against '' 69.75 Crores (2.49%) as on 31st March, 2022.

• Business per Employee:

The business per employee as on 31st March 2023 stood at '' 7.33 Crores against ''6.78 Crores as on corresponding date of the previous year.

• Business per Branch:

The business per branch as on 31st March 2023 stood as ''39.60 Crores against '' 35.24 Crores as on corresponding date of the previous year.

• Profitability:

The Bank has incurred a net loss of '' 51.63 Crores as on 31st March, 2023, which is mainly due to the pension provision liability of '' 117.61 Crores during the year 202223.

Advertising and Publicity

During the FY 2022-23, we have been successful in strengthening the bond of trust with all our stakeholders by leveraging all the means and channels available for uninterrupted communication throughout the financial year. The Bank''s products, services and facilities were successfully advertised and publicized in the form of mass-media campaigns across the operational geographies of the Bank. Also, the advertising campaigns initiated by the Bank to increase in the overall business, while meeting the set targets, were duly publicized with proper follow-up communications. Also, the functioning and accomplishments of the Bank were effectively communicated to relevant target audiences including major stake-holders, customers, shareowners, other stakeholders and general public through customized and efficiently packaged messages/hand-outs using mass media within J&K and Ladakh, besides rest of the country to earn high credibility and enhance our brand image.

To leverage the power of internet for reaching out to a wider audience, we successfully increased our presence in the social-media universe further by strengthening and streamlining our online presence through highly popular mediums of social connectivity platforms especially Facebook, Twitter, Instagram, YouTube and LinkedIn.

Brand Building

Brand perception forms the fulcrum of any communication plan, which is devised to complement the Bank''s business strategy. Therefore, in line with the Bank''s vision to scale up its business and expand presence in rest of the country while deepening its foot-prints in Jammu & Kashmir and Ladakh (JKL), we aligned the Brand Building campaigns accordingly to better leverage Bank''s success in financial and institutional terms. With an established identity and image in the JKL market, our focus remained to enhance Bank''s position and boost its brand appeal in aesthetically vibrant terms to complement its financial standing. While as in rest of the country, we successfully increased our brand exposure activities during the FY 2022-23 both on and off-line thereby enhancing Bank''s brand awareness, deepening its brand perception and increasing its brand value.

During the FY 2022-23, the Bank undertook various promotional activities to position its brand further favorably among the people, complementing ever-strengthening significance of our institution on financial landscape of JKL and beyond. While Brand J&K Bank continues to hold the sway among the people, Bank has ensured to put an effective and efficient communication strategy in place to reinforce the brand recall.

While the thrust for using digital channels to communicate to the people has been mandated in the face of ever changing technological landscape with Bank enhancing its digital footprints by leveraging its presence on social media platforms, it has increased usage of traditional advertisement genres like outdoor advertising (OOH) through hoardings to garner better mileage in terms of brand visibility and reach. A well-drilled brand visibility enhancing activity was carried out by displaying Bank''s products and schemes at ATMs/CRMs & Branches while making sure Glow Signboards-an important tool of brand identity-are properly maintained. Hoardings were placed in twin cities of Jammu and Srinagar, national

highways and other key locations across all major towns and areas of JKL and rest of the country.

Moreover, people-centric and environment-friendly initiatives commenced under CSR during FY2022-23 were properly highlighted to earn public goodwill, strengthen the trust and bond between Bank and its stakeholders, and create a continuity in the positive perception about the Bank.

While doing all this, the key components of brand identity like logo, its colors, font, and other aspects were properly utilized and placed to strengthen the brand loyalty among the stakeholders.

Awards & Certifications received by the Bank during FY 2022-23

J&K Bank''s illustrious history of more than eight decades is decorated with awards and accolades. Over the years, the Bank has collected numerous honors in various categories. During the FY 2022-23, the Bank outperformed its competitors to grab the headlines in following categories;

1. Award from Housing and Urban Development Corporation Ltd (HUDCO) for its outstanding contribution towards housing sector under PM Awas Yojana for FY 2022-23.

2. Awarded as Best MSME Bank by Chamber of Indian Micro, Small and Medium Enterprises (CIMSME) at MSME Banking Excellence Awards

3. MSME Friendly Bank Award by CIMSME at MSME Banking Excellence Awards

4. Award for Government Schemes Implementing Bank by CIMSME at MSME Banking Excellence Awards

5. Best Branding Bank Award by CIMSME at MSME Banking Excellence Awards

6. Best Bank for Implementing COVID Schemes at MSME Banking Excellence Awards - 2022 organized by CIMSME

7. Award for outstanding performance in promoting digital payments at Digital Payments Utsav organized by Ministry of Electronics and Information Technology, Government of India at India New Delhi

8. CSO 100 Award - 2022 at CSO100 Awards & Symposium - 2022 from Foundry India, an Indian chapter of Foundry - an IDG Inc.

9. Special Cyber Security Award 2022 on Access and Identity Management for its Privilege and Customer Authentication Framework from Foundry India.

10. Certification of prestigious ISO 27001:2013 from Intertek - a reputed London-based Total Quality Assurance provider - for being compliant with the best industry standard in terms of privacy and security protocols.

Corporate Social Responsibility (CSR) Policy

As a responsible corporate citizen, J&K Bank envisions to integrate its strategic intent and business goals with the needs of the society in order to achieve an inclusive, sustainable and harmonious environment. This represents the core principle and forms the basis of the Bank''s CSR policy.

The Bank, guided by the founding principles of its CSR policy, takes and encourages initiatives aimed at improving the lives and living conditions of the vulnerable sections of the society besides lending support to the society''s endeavors aimed at

making the world a better place to live in.

In line with the same, the Bank continued its ''social investment'' by undertaking projects of varied nature to alleviate the hardships of different sections of the society and address issues of environmental sustainability. In turn, the Bank reaped benefits in the form of increased emotional equity, brand-connect and goodwill.

During the financial year FY2022-23, the Bank continued to intervene and enhance value creation in the society through CSR activities in consonance with its mission of ''Serving to Empower''. While CSR initiatives undertaken during FY2022-23 have, directly or indirectly, benefitted hundreds of thousands of people across UTs of J&K and Ladakh, some eco-centric activities have contributed towards reducing carbon footprint and encouraging green energy solutions. The statutory disclosures with respect to the CSR&ESG Committee of the Board, including a report on the CSR, forms part of this report at Annexure 1. The key areas of intervention and the activities undertaken under CSR by the Bank during the FY 2022-23 are detailed as under:

Key areas of intervention under the CSR programme

a) Healthcare

b) Education

c) Community Development

d) Ecology & Environment

e) Employment Generation & Skill Development

f) Promotion of Sports

Details of activities undertaken under CSR during the FY

2022-23

Healthcare

Ambulance to Government Psychiatric Hospital Jammu

Realizing the indispensable role of ambulance services in emergency pre-hospital medical care, patient transfer, ease of access to health services particularly to underprivileged, the initiative of providing ambulance to the Psychiatric Hospital, Jammu under Corporate Social Responsibility (CSR) was taken up by the Bank.

The Govt. Psychiatric Diseases Hospital (GPDH) Jammu, a tertiary care hospital of psychiatric diseases catering to the whole Jammu division, had just one ambulance (8-year old) to cater to a huge rush of patients. Notably, the Hospital also provides 24-hour psychiatric emergency services on all days. The Ambulance provided under Bank''s CSR will go a long way in bettering the existing infrastructure of the hospital in so far as ''ferrying the patients and attend to the emergencies in the hospital and also to shift patients to GMC Jammu and associated hospitals round the clock'' is concerned.

Mobile Charging Stations in premier hospitals

In an attempt to ease the sufferings of general public, the Bank installed 45 Mobile Charging stations at three prominent government- run hospitals (SMHS Hospital Karan Nagar, Children''s Hospital Bemina and Lal Ded Maternity Hospital) of Srinagar city for convenience and facilitation of patients/ attendants visiting the Hospital''s OPD or those admitted in IPDs.

Installing phone-charging stations inside these hospitals will provide much needed relief and support to patients

and attendants alike especially in desperate times of health emergencies. Besides, the three premier health facilities apart from treating hundreds of admitted patients on daily basis, cater to a monthly OPD footfall of over two lakh people in a month, which further adds to the utility of such stations in these facilities.

Apheresis kits to children suffering from blood cancer and other blood dysfunctional diseases

The incidence of Blood Cancer has seen alarming rise in Kashmir valley over the years thereby necessitating the need for Apheresis Kits (Platelet/ Therapeutic kits with ACD and saline) to ensure treatment of the diagnosed patients. Pertinently, the poor and the under-privileged find it hard to mobilize finances for procurement of these kits, especially considering the fact that the treatment/expenditure for this disease is not covered under "Ayushman Bharat/Golden Card Scheme”.

The Bank Understanding the need collaborated with SK Institute of Medical Sciences Srinagar (SKIMSS), Srinagar, and provided apheresis kits to 90 deserving child patients suffering from cancer and other blood dysfunctional diseases so as to make a difference in the lives of these underprivileged patients.

Pertinently, SKIMSS is the only hospital in J&K that caters exclusively to the pediatric oncology patients from Jammu, Kashmir & Ladakh and treats around 350 pediatric cancer patients every year.

Sponsoring 50 TB patients from Kargil, Ladakh under Pradhan Mantri TB Mukt Bharat Abhiyan

The government of India under The Pradhan Mantri TB Mukt Bharat Abhiyaan is committed to eliminate TB in India by 2025. Struggling to achieve its TB elimination target, the Union Health Ministry launched a campaign inviting citizens, non-governmental organizations and the corporate sector to sponsor monthly food baskets for TB patients who require good quality nutrition to tame the infection in the month of September 2022. There are identified food baskets for adults and parents, which the sponsor can fund through the district-level officials managing the TB programme.

The Bank realizing the importance of this mission and in consonance with the Ministry of Health and Family Welfare, GOI''s directive for corporates and other organizations, collaborated with Kargil Health Authorities to provide such support to 50 TB patients for one year.

Construction of fabricated structure for convenience of patients and their attendants at ENT OPD of SMGS Hospital

Considering the Bank''s commitment towards community development and improving allied infrastructure related to healthcare with a larger objective of contributing our bit to add convenience to people, Bank undertook the project of constructing a fabricated structure on modern lines fitted with turbo ventilators to bring relief to the poor patients and their attendants waiting for their turn at the waiting area of ENT-OPD at SMGS Hospital, a leading government healthcare facility in Jammu city that caters to the health assistance needs of tens of thousands of patients annually.

Education

Setting up of Computer Laboratory at Bhartiya Vidya Mandir, High School Udhampur

To complement the efforts of Bhartiya Shiksha Samiti J&K in the field of education, Bank, after assessing the need, set up a computer lab for the benefit of underprivileged students receiving education from its Udhampur based Bhartiya Vidya Mandir High School, located on the banks of holy Devika River in Nianso village.

In place to mention that Bhartiya Vidya Mandir High School Udhampur is one of the 36 schools run by Bhartiya Shiksha Samiti across the UTs of J&K and Ladakh (most of these schools are located in remote areas like Kishtwar, Doda, Leh & Kargil districts). A reputed NGO, registered with Ministry of Corporate Affairs for undertaking CSR activities, Bhartiya Shiksha Samiti is working in the field of education and is running a chain of schools for the students belonging to poor and weaker sections of society. Samiti provides basic infrastructure in most of these schools like transport facility, furniture, science laboratories, computer labs, libraries, meeting halls etc. These schools called as ''Bhartiya Vidya Mandirs'' provide quality education to the students by creating a healthy educational and cultural atmosphere.

The students of the said school, right from pre-primary to tenth class, were found to be in dire need of computer lab as the school has only four old computers for the use of students. Moreover, the computer lab will help students of 30 villages living in and around Udhampur town to connect with digital teaching-learning process along with other government & private school students.

Pertinently, the computer lab will have 20 - 25 PCs, one UPS for uninterrupted power supply to meet the lab requirements, one 3-in-1 color-printer and two 3-in-1 black and white printers.

Community Development

100 Wheelchairs and 100 Tricycles to the specially-abled persons

Jammu and Kashmir Bank has always contributed to the development of local communities in different capacities and varied ways. On these lines, Bank collaborated with SAKSHAM, a leading national level not-for-profit organization to provide 100 wheelchairs and 100 special tricycles to the specially-abled persons belonging to various districts of Jammu region and beyond. The initiative is primarily aimed at contributing Bank''s bit towards the welfare and development of specially-abled community and to ensure their physical, social and psychological rehabilitation.

Upgrading of facilities at Sainik Bhawan Srinagar

Conscious of the sacrifices rendered by the armed forces for the security of the nation, Bank considers itself duty bound to contribute its bit in complimenting Government and society''s efforts towards looking after the families of the martyred soldiers. It was towards this end that Bank provided one 1.5 ton Air Conditioner (Hot and Cold) and one Water Purifier to Sainik Bhawan Srinagar, the organization engaged in welfare activities carried out for the families of 115 forces Martyrs of the Valley.

Upgrading of facilities at Balgran Jammu

Contributing towards the welfare of lesser privileged children, Bank collaborated with Balgran, Jammu (a charitable home

for destitute children), which provides boarding/lodging, education, healthcare, vocational training etc. to orphan and destitute children.

Bank provided 380 sitting chairs to Balgran for upgrading their furniture-infrastructure as a humble contribution of Bank towards the noble cause of Child welfare.

Ecology & Environment Plantation drives

As part of enhancing environment sustainability, Bank collaborated with Border Security Force (BSF) in undertaking a plantation drive at its Subsidiary Training Center (STC) at Humhama Srinagar that encompasses an area of over 300 acres. The Bank provided plant stems of apple, almond, walnut, cherry and pear with an aim to improving green cover in this ecologically sensitive area. The initiative assumes greater importance as the green cover through plantation will go a long way in protecting not only the campus residents from the ill effects of pollution but also the people living in the adjoining areas.

A similar plantation drive was carried out in collaboration with Rahim Greens Srinagar and pine & apple trees were planted at different educational institution in Srinagar which included NIT Srinagar, Women''s Degree College Zakura, etc

Installation of 15KW Solar Grid at Voluntary Medicare Society''s Srinagar facility

Bank installed a 15KW solar power grid at Voluntary Medicare Society, Srinagar, a Srinagar based medico-social voluntary organization (registered with Ministry of Corporate Affairs for mobilizing CSR funds), dedicated to the care, treatment, education, rehabilitation and empowerment of physically and mentally challenged persons of all the factions of the society. For over 50 years, VMS is providing its services in all the districts of J&K and Ladakh UTs. VMS provides institutional and community based rehabilitation services to the needy persons with disabilities with focus on children and women. Apart from attending to 85 on-roll and over 300 off-roll specially-abled students per month, VMS provides medical treatment to almost 2000 patients per month, including children with special needs, in their Srinagar based facility.

As most of the equipment-oriented services provided at their facility run on electricity and given the frequent interruptions in the power supply, along with huge energy cost involved to run these machines and equipment, providing undisturbed services to the patients and students becomes really difficult. As such, the Bank keeping in view long-term viability, utility and also sustainability issues into consideration, installed the solar grid at its Srinagar facility spanned over 46 Kanals of land.

The initiative while ensuring support to the specially-abled people especially children and women serves the larger purpose of encouraging and promoting clean and green energy resources.

E-Rickshaws to the University of Ladakh and Kashmir University''s South Campus

Sensitive to the value and importance of protection of environment for sustenance of the economic and social progress of a country, J&K Bank, notwithstanding meagre

budget, invested in an environmental friendly endeavor of providing two e-rickshaws to University of Ladakh (UOL) and one to Kashmir University''s South campus under CSR.

The two campuses are situated in ecologically sensitive areas and Bank''s endeavor aims at encouraging ecofriendly transportation facilities within these campuses while considerably reducing the pollution levels.

Collaboration with NIT Srinagar for its Green/Clean Campus initiative under Swachh Bharat Abhiyaan

Situated in vast campus spread over 67 acres of land on the banks of the world famous Dal Lake, with Nigeen Lake too being in its close vicinity, National Institute of Technology (NIT) Srinagar is located in a highly ecologically sensitive environment.

NIT Srinagar is taking concrete steps to become one-of-its-kind green campuses with a focus on reduction of carbon emissions, encouragement of green energy initiatives and preservation of ecology and environment. It was with this understanding that J&K Bank collaborated with NIT Srinagar in its Green & Clean campus initiatives under Swachh Bharat Abhiyan by providing dust-bins and garden benches to be placed across their vast campus.

Employment Generation & Skill Development Up-gradation of infrastructure of Rural Self Employment Training Institutes (RSETIs)

An initiative of Ministry of Rural Development Government of India, RSETIs act as dedicated institutions designed to ensure necessary skill training and skill up-gradation of the rural youth especially those belonging to BPL category to mitigate the problem of unemployment by encouraging and nourishing the culture of entrepreneurship. J&K Bank, with the support of Central and UT government, runs 12 RSETIs across J&K, making it a key member of the RSETI network of the nation.

In order to compliment the efforts of RSETIs in imparting quality and practical trainings to the aspiring entrepreneurs, Bank provided dozens of plumbing/sanitation kits and electric fitting kits, to these RSETIs. The initiative will help RSETIs (run by J&K Bank) across J&K to further enhance the level of practicality/ demonstration in their trainings to ensure better quality and well trained output.

Promotion of Sports

J&K Bank has a long history of encouraging nationally recognized sports and in this context promotion and propagation of football assumes special significance. Apart from having its own football team, Bank is running two football academies, one each in Jammu and Srinagar. These initiatives have, over the years, helped scores of youth to polish and nourish their sporting talent and emerge as professional footballers, with many of them having carved their place in prestigious teams and clubs across country. Under the instant project, the Bank provided match uniforms, practice uniforms, tracksuits and footballs to the two academies to meet the immediate needs of the budding footballers receiving training through these academies.


Corporate Governance

The Bank has established a tradition of exemplary practices in corporate governance. It encompasses not only regulatory and legal requirements, but also several voluntary practices, aimed at high level business ethics, effective supervision and enhancement of stakeholder volume. Several matters have been voluntarily included in the statement on corporate governance annexed to this report, besides certificate from the Secretarial Auditors regarding compliance of conditions of Corporate Governance as stipulated by the SEBI (Listing Obligations & Disclosure Requirement) Regulations, 2015.

Management Discussion and Analysis

The Management Discussion and Analysis Report for the year under report is presented in a separate section forming part of this report.

Whistle Blower Policy & Vigil Mechanism

The Bank has a Whistle Blower mechanism in place which enhances the transparency in the organization by encouraging the employees/ directors/ other specified stakeholders to report any wrongdoing, which comes to their knowledge in the day-to-day performance of their duties or interaction with other fellow-colleagues/ Bank staff without fear of retaliation, victimization and unfair-treatment. The Bank has formulated the "Whistle Blower Policy” to guarantee them protection from any adverse departmental proceedings. The Policy is compliant to regulatory requirements under Section 177 (9) of the Companies Act 2013, and SEBI Listing Regulations. The policy document is available on the Bank''s official website under link:

https://www.jkbank.com/investor/stockExchangeIntimation/

corporateGovernancepolicies.php

Further, the mechanism adopted by the Bank encourages the Whistle Blower to report genuine concerns or grievances and also provides for direct access to Chairman of the Audit Committee of the Board, in exceptional cases.

The grievance under Whistle Blower mechanism can be lodged on the Bank''s official website under link:

https://www.jkbank.com/others/common/wbGrievences.php

It is hereby affirmed that the Bank has not denied any of its personnel access to the Chairman of the Audit Committee of the Board and that the policy contains adequate provisions for protecting whistle blowers from unfair termination and other unfair prejudicial employment practices. In the FY 2022-23, three (03) complaints received under Whistle Blower Mechanism were placed before the Audit Committee of Board.

Protected Disclosures Scheme

The Bank in line with the RBI prescribed framework, has devised a Policy Document on the "Protected Disclosure Scheme” The complaints under the Scheme cover the areas such as corruption, misuse of office, criminal offences, suspected/ actual fraud, failure to comply with existing rules and regulations such as Reserve Bank of India Act, 1934, Banking Regulation Act 1949, etc. and acts resulting in financial loss/ operational risk, loss of reputation, etc. detrimental to depositors'' interest/ public interest. Reserve

Bank of India (RBI) will be the Nodal Agency to receive complaints under the Scheme.

The complaint under the scheme should be sent in a closed/ secured envelope addressed to The Chief General Manager, Reserve Bank of India, Department of Banking Supervision, Fraud Monitoring Cell, Third Floor, World Trade Centre, Centre 1, Cuffe Parade, Mumbai 400 005. The envelope should be superscripted "Complaint under Protected Disclosures Scheme for Banks”. Complaints can also be made to RBI through e-mail: [email protected] by giving full details as specified above.

The policy document is available on the intranet page of the bank as well as on the Bank''s official website under link https:// www.ikbank.com/pdfs/policy/latest/Policy protected.pdf It is hereby affirmed that No unfair treatment will be meted out to a Complainant by virtue of his/her having reported a Disclosure under this Policy. The Bank, as a policy, condemns any kind of discrimination, harassment, victimization or any other unfair employment practice being adopted against Complainant(s). Complete protection will, therefore, be given to Complainant(s) against any unfair practice like retaliation, threat or intimidation of termination/suspension of service, disciplinary action, transfer, demotion, refusal of promotion, including any direct or indirect use of authority to obstruct the Complainant''s right to continue to perform his duties/ functions including making further Disclosure under the policy. The Bank has not received any complaint under the "Protected Disclosure Scheme”.

Risk Management

A well-defined, comprehensive risk management framework of our bank is based on a clear understanding of different risks, accepting various risks, disciplined risk assessment, measurement & continuous monitoring. The Bank has put in place a Risk Management and Risk Appetite Framework (RAF) that articulates the risk appetite and drills down the same into a limit framework for various risk categories. Risk appetite defines the levels and types of risk that are acceptable, within risk capacity, in order to achieve strategic obiectives and business plans. The risk appetite framework, which is approved by the Board, bolsters effective risk management by promoting sound risk-taking through a structured approach, within agreed boundaries. The key components of the Bank''s Risk Management architecture rely on the risk governance structure, comprehensive processes and internal control mechanism based on approved policies and guidelines. The Bank''s risk management processes are guided by way of policies adopted appropriately for various risk categories, independent risk oversight and periodic monitoring by Board of Directors, Committee of the Board of Directors (Integrated Risk Management Committee of Board) and Senior Management Committees - Credit Risk Management Committee, Market Risk Management Committee, Operational Risk Management Committee and Asset Liability Committee (ALCO). The policies approved from time to time by Board of Directors, Committees of Board (IRMC) form the basis for governing framework for each type of risk. The Board sets the overall risk appetite and philosophy for the Bank and have an oversight of all the risks assumed by the Bank. The Bank''s Risk Management framework focuses on the management of key areas of Risk such as

Credit, Market, Operational Risk and Liquidity Risk and Pillar II risks; quantification of these risks, wherever possible. The risk management function in the Bank strives to proactively anticipate vulnerabilities in the business operations through quantitative or qualitative examination of the embedded risks for effective and continuous monitoring and control. An independent risk management function ensures that risk is managed through a risk management architecture as well as through policies and processes approved by Board of Directors. The risk management policies and procedures established are updated on continuous basis in compliance to RBI guidelines and benchmarked to best practices. The Board of Directors with its committee-Integrated Risk Management Committee (IRMC) reviews risk management policies of the Bank pertaining to credit, market, liquidity, operational & Pillar II risks that includes strategic risk and reputational risk, Internal Capital Adequacy Assessment Process (ICAAP) and stress testing. The senior Management Committees - Credit Risk Management Committee (CRMC), Operational Risk Management Committee (ORMC) and Market Risk Management Committee (MRMC) for credit risk, operational risk and market risk operate within the broad risk management framework of the Bank to assess and minimize these risks. Bank has an independent Risk Management vertical headed by Chief Risk Officer, who reports to IRMC of Board and monitors the development and implementation of methodologies for risk identification, assessment, measurement, monitoring and mitigation for all risks. Information security and business continuity plan also forms part of risk management functions in the Bank. Treasury activities are separately monitored by mid office, which reports to Risk Management Vertical. The Bank has Stress Testing Policy to measure impact of adverse stress scenarios on the adequacy of capital. The stress scenarios are idiosyncratic, generic and a combination of both.

Business Responsibility and Sustainability Report (BRSR)

In terms of Regulation 34(2)(f) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, top 1000 Listed Entities based on their market capitalization as on 31st March every year are required to submit their Business Responsibility and Sustainability Report (BRSR) on the environmental, social and governance disclosures as a part of the Annual Report. The Bank''s BRSR describing the initiatives taken by the Bank from an environmental, Social and governance perspective is enclosed as Annexure- 6.

Information under the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013

The Bank does not engage in any form of child labour / forced labour / involuntary labour and does not adopt any discriminatory employment practices. The Bank has a Policy against sexual harassment and a Committee "Internal Complaints Committee for Prevention, Prohibition and Redressal of Sexual Harassment of Women at Workplace” has been constituted for dealing with complaints of harassment or discrimination. The said policy is in line with relevant Act passed by the parliament in 2013. The Bank, through the policy ensures that all such complaints are resolved within defined timelines. During the year, one complaint was lodged before the Internal Complaints Committee duly constituted under the Sexual Harassment of Women at Work Place (Prevention

and Redressal) Act, 2013 and the rules made thereunder. Accordingly, due inquiry proceedings were conducted in the case, as stipulated in the Act and adequate opportunity was provided to both complainant and respondent to present/ defend their case. The same was disposed of within the requisite time frame of 90 days.

Employee accidental deaths

During the year 2023, there were no occurrences of employee accidental death at the workplace.

Loans, Guarantees & 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. 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 at https://www.jkbank.com/investor/ stockExchangeIntimation/corporateGovernancepolicies.php Statement of related party transactions under sub section (1) of Section 188 of the Companies Act, 2013 is attached herewith as Annexure 5.

Information under Insolvency and Bankruptcy Code, 2016

The Bank as on 31st March, 2023 has cases under the IBC resolution, the details whereof along with existing status is tabulated as under:

(Amt. in Crs)

S .

No.

No. of Accounts

Stage of NPA / NPI Process Outstanding

Recoveries during the year , if any

1

26

Resolution

Process

Pr e ''fh 1876.60 (Pending with

NCLT)

-

2

22

Liquidation i8o927 Process .

61.83

3

3

Resolution

approved/

implemented 130.62

during the

year.

25.66

Frauds reported by the Bank

The Bank during the financial year 2022-23 has detected/ reported 20 cases of frauds to Reserve Bank of India involving an amount of Rs. 380.04 Crores.

Frauds reported by Auditors

During the year under review, no fraud was reported by any of the statutory auditors under Section 143 (12) of the Companies Act, 2013 to the Ministry of Corporate Affairs, Govt. of India.

Consolidated Financial Statements

Pursuant to Section 129 of the Companies Act, 2013, the Bank has prepared Consolidated Financial Statements of the Bank, its Subsidiary (JKB Financial Services Ltd.) and also its Associate (J&K Grameen Bank) which shall be laid before shareholders at the 85th Annual General Meeting of the Bank along with Bank''s Financial Statements under sub-section (2) 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 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/ Associate for the year ended March 31, 2023 form part of this Annual Report. The statement in form AOC-1 pursuant to first proviso to sub-section (3) of Section 129 read with Rule 5 of Companies (Accounts) Rules 2014 is annexed as Annexure-4.

Statutory Auditors

The Statutory Central 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 three (3) Statutory Central Auditors appointed by the C&AG of India for the year under report as given below:

1. O Aggarwal & Co, Chartered Accountants

2. Dharam Raj & Co, Chartered Accountants

3. Arora Vohra & co, Chartered Accountants

Compliance with Secretarial Standards

The Bank is in compliance with all applicable Secretarial Standards as notified from time to time.

Employee Remuneration

The statement containing particulars of employees as required under Section 197(12) of the Companies Act, 2013 read with Rule 5 (2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is given in "Annexure 2” forming part of this report.

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 conservation of energy. Bank is continuously working towards achieving low carbon footprint for which many steps have been taken including use energy efficient IT equipment Various initiatives taken in this regard by the bank are given below:

• The Bank''s Data Center is strategically located in a high-energy-efficient hosting facility in Noida. The facility adheres to an ITIL-based service delivery framework, ensuring efficient operations and optimal service levels. Furthermore, it complies with internationally recognized standards such as ISO 9001 and ISO 20000, emphasizing the commitment to quality management and IT service management. This choice of hosting facility not only ensures the security and reliability of the Bank''s data infrastructure but also contributes to energy conservation initiatives through its efficient design and operational practices.

• Bank''s Disaster Recovery Center has been shifted to a new co-location site CtrlS located in Navi Mumbai, which is Asia''s Largest Rated

4 Hyper scale Datacenter aligned to TIA-942 standard having strong focus on various environmental considerations. The new Facility is USGBC LEED Platinum Certified Rated4 Datacenter and is World''s 1st DC to Win Golden Peacock Eco-Innovation Award.

• The Bank has taken a proactive stance towards environmental sustainability and energy conservation by implementing an e-Office solution. This initiative aims to significantly reduce paper consumption, minimize the reliance on printers, and conserve energy resources. By transitioning to a digital work environment, the Bank not only improves operational efficiency and streamlines processes but also demonstrates its commitment to reducing its carbon footprint.

• The Bank has increased the usage of Digital Signage Screens as an energy-efficient alternative to traditional paper-based notices. By adopting this technology, the Bank significantly reduces the energy consumption associated with printing, distribution, and disposal of paper notices. The Digital Signage Screens are designed with energy-saving features, such as low-power LED displays, which contribute to overall energy conservation efforts.

• Energy star compliant computing and communication hardware is used by the bank across all offices and banking outlets.

• The bank ensures the use of Energy Star compliant computing and communication hardware across all its offices and banking outlets, actively reducing power consumption and promoting energy conservation.

(ii) The steps taken by the company for utilizing alternate sources of energy.

Bank operates in a non-energy intensive environment.

However, it is always ensured that energy efficient hardware / equipment which consumes less power is procured and put in operation. Besides replacement of CFL Lamps with LED Lamps / fixtures wherever needed stands changed.

(iii) The capital investment on energy conservation equipment.

Bank is steadfast in its commitment to implementing energy conservation measures throughout the enterprise. This includes the utilization of energy-efficient equipment such as virtual servers, thin clients, multi-purpose printers, kiosks, and scanners. By incorporating these technologies, the bank aims to minimize energy consumption and promote sustainability across its operations.

(iv) Paperless e-Office Initiative.

Bank has successfully adopted paperless e-Office across all departments at corporate office and is in process of adopting the initiative across enterprise.

(v) USGBC LEED Platinum Certified Rated 4 Datacenter (World''s 1st DC to Win Golden Peacock Eco-Innovation Award).

Bank successfully relocated its Disaster Recovery Center to CtrlS, a state-of-the-art co-location site in Mumbai. This new site is recognized as Asia''s largest rated LEED Platinum V4 O M Certified Rated 4 Hyperscale Datacenter, ensuring top-notch environmental sustainability and operational efficiency. The new Facility is USGBC LEED Platinum Certified Rated4 Datacenter and is World''s 1st DC to Win Golden Peacock Eco-Innovation Award.

B. Technology Absorption

Our Bank has a strong commitment to simplifying banking experiences for our customers by focusing on technology driven new business initiatives. These initiatives are aimed at delivering value through continuous technology adoption and innovation. Throughout the year, the Bank has implemented number of initiatives leveraging the power of technology to enhance the overall banking experience for its customers.

Bank has successfully upgraded its core banking system to the newest version (Finacle 10). This upgrade has introduced new automation capabilities, enabling the Bank to drive new and innovative business initiatives. Several initiatives have already been implemented, leveraging the enhanced features, while additional projects are currently underway to further leverage the system''s capabilities and support the Bank''s digital transformation goals.

The bank successfully launched its flagship digital offering, "J&K Bank Instant Digital Loan,” catering to the unique needs of employees belonging to the J&K Government and other organizations/institutions covered by existing Memorandums of Understanding (MOUs). This state-of-the-art solution, built on a robust Straight through Processing (STP) platform, represents a significant upgrade from the previous "Phone pe Loan” facility. By leveraging advanced automation and selfservice capabilities, customers can now enjoy a seamless and hassle-free loan application process. This end-to-end digital solution empowers customers to apply for loans online, eliminating the need for manual paperwork and reducing processing time. With a focus on providing the best personal retail lending experience, the "J&K Bank Instant Digital Loan” ensures convenience, speed, and transparency throughout the entire loan journey.

Bank has started complete revamp of its customer facing digital platforms including Mobile Banking, Internet Banking and Kiosk Banking. A Modern and resilient mobile banking application will be rolled out in this Financial Year which will be scalable to handle daily transaction load in crores besides being loaded with features like corporate banking, online loan processing, deposit management, customer digital engagements etc. The mobile banking UI would be one stop shop for catering to all customer requirements of banking and wealth management like gold, mutual funds, insurance etc., besides acting as customer engagement platform for other services and grievance management. A cloud based UPI /IMPS solution will also be rolled out this year through which our bank will be offering interoperable and scalable payment solutions through the UPI/IMPS ecosystem which will also converge under the new Mobile Banking application.

The bank has also invested in AI/ML Technology and we have rolled out first version of Chatbot & WhatsApp Banking through Online Personal Assistant "JIA”. The application in its first phase is being used by our valuable customers to get their financial queries answered, and the bank is in process of adding more services to the Chabot /WhatsApp banking platform to enrich the customer experience as per their dynamically changing needs.

Bank has setup a Fintech Initiative and Cloud Adoption Programs, and in the ensuing financial year it will start with deployment of an Open Banking Platform for seamless interfacing with partners and customers, and also initiate the Cloud Migration of selective applications besides deployment of new applications over cloud as part of its Pilot Cloud Program.

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 outflow: During the Year ended 31.03.2023 the Bank earned Rs.95.98 lacs and spent Rs.182.45 lacs in foreign currency. This does not include foreign currency cash flow in derivatives and foreign currency exchange transactions.

2. No significant and material orders were passed by the regulators or courts or tribunals impacting the going concern status of the Bank''s operations in future.

3. Number of cases filed, if any and their disposal under Section 22 of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013:

Your Bank has Zero tolerance towards any action on the part of any executive/employee which may fall under the ambit of ''Sexual Harassment'' at workplace, and is fully committed to uphold and maintain the dignity of every women executive/ employee working in the Bank. Only one complaint of sexual harassment was lodged with the Internal Complaints Committee during the year 2022-23 and the same was disposed off within the required time frame of 90 days.

4. No Stock options were issued to the Directors of your Bank

Annual Return

In accordance with the provisions of Companies Act, 2013, the Annual Return of the Bank for the financial year 2022-23 in the prescribed Form MGT-7 will be available on the website of the Bank at: https://www.jkbank.com/investor/financials/ annualReturns.php.

Directors Responsibility Statement

Pursuant to Section 134 (3) (c) of the Companies Act, 2013, the Board of Directors hereby state that:

(a) in the preparation of the annual accounts, the applicable accounting standards had been followed along with proper explanation relating to material departures;

(b) 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;

(c) 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;

(d) the directors had prepared the annual accounts on a going concern basis; and

(e) 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.

(f) 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.

Adequacy of Internal Financial Controls related to Financial Statement

The Bank has adequate internal controls and processes in place with respect to its financial statements which provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements in accordance with Generally Accepted Accounting Principles. These controls and processes are driven through various policies, procedures and certifications. The control

environment of the Bank is adequate enough to provide reasonable assurance regarding the reliability of financial reporting and the preparation of the Bank''s financial statements. The processes and controls are reviewed periodically.

Requirement for maintenance of Cost Records

The cost records as specified by the Central Government under section 148(1) of the Companies Act, 2013 are not required to be maintained by the Bank.

CEO & CFO Certification

Certificate issued by Mr. Baldev Prakash, MD & CEO and Mr. Pratik D Punjabi, CFO of the Bank, for the financial year under review, was placed before the Board of Directors at its meeting held on 04th / 5th May, 2023 in terms of the Regulation 17(8) of the Listing Regulations.

Important events after the closure of Financial Year ended 31-03-2023

This report covers the period of financial year of the Bank beginning on 1st April, 2022 to 31st March, 2023. However, few material events listed below happened from 1st April, 2023 till the date of this report.

1. Reserve Bank of India (RBI) has by an order dated June 22, 2023 (received by us on June 23, 2023) imposed a monetary penalty of ''2.50 crores on the Bank for non-compliance with certain directions issued by RBI on ''Creation of a Central Repository of Large Common Exposures-Across Banks'', read with ''Central Repository of Information on Large Credits (CRILC) - Revision in Reporting'', ''Loans and Advances - Statutory and other Restrictions'' and ''Time-bound implementation and strengthening of SWIFT-related operational controls''. The said penalty has been imposed by the RBI in exercise of powers vested under the provisions of section 47 A (1) (c) read with section 46 (4) (i) of the Banking Regulation Act, 1949.

2. Dr. Pawan Kotwal, IAS (DIN: 02455728) was appointed as an Additional Director in the category of Rotational Directors by the Board of Directors of the Bank in their meeting held on 24th July, 2023.

Transfer of Shares to UT of Ladakh

The J&K Govt. General Administration Department S.O. No. 339 dated 30/10/2020 apportioned the Assets, Liabilities and Posts of the erstwhile State of Jammu and Kashmir between the Union Territory of Jammu and Kashmir and Union Territory of Ladakh w.e.f. 31.10.2020. As per the said notification 8.23% shareholding of Jammu & Kashmir Bank Ltd. consisting of 4,58,29,445 shares which amounts to 13.89% of the shareholding of the erstwhile state of Jammu and Kashmir as on 31.10.2019 were to be transferred to the UT of Ladakh and the then remaining 51% of shareholding of erstwhile Jammu and Kashmir state would remain with the UT of Jammu and Kashmir. The UT of Jammu and Kashmir has completed the transfer of the said 4,58,29,445 shares to UT of Ladakh on February 10, 2023.

Acknowledgements

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

Naba Kishore Sahoo Baldev Prakash

Independent Director MD & CEO

Place: Srinagar (J&K)

Date: July 15, 2023


Mar 31, 2022

Your Board of Directors has pleasure in presenting the 84th 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, 2022.

Performance at a Glance

• The aggregate business of the Bank stood at Rs. 185111.06 Crore at the end of the financial year 2021-22.

• The total deposits of the Bank grew by Rs. 6649.23 Crore from Rs.108061.15 Crore as on 31st March, 2021 to Rs. 114710.38 Crore as on 31st March, 2022, a growth of 6.15 percent.

• CASA deposits of the Bank stood at Rs. 64874.61 Crore and constituted 56.56 percent of total deposits of the Bank.

• Cost of deposits for the FY 2021-22 stood at 3.65 percent.

• The net advances of the Bank stood at Rs. 70400.68 Crore as on 31st March, 2022.

• Yield on advances for the FY 2021-22 stood at 8.32 percent.

• Average Priority Sector advances stood at Rs. 33982.00 Crore as on 31st March, 2022.

• The Bank effected cumulative cash recovery, up-gradation of NPA''s and technical write-off of Rs. 2939.28 Crore during FY 2021-22.

• Investment portfolio of the Bank stood at Rs. 33834.99 Crore as on 31st March, 2022.

Insurance Business

The Bank earned a commission income of Rs 62.13 Crore from Insurance Business by mobilizing a business of Rs 477.79 Crore in life insurance (including fresh retail life business of Rs 133.94 Crore, Credit life business of Rs 82.85 Crore and renewal business of Rs 261 Crore) and Rs 223.99 Crore in non-life insurance during financial year 2021-22.

Income Analysis

• The Interest income of the Bank stood at Rs.8013.48 Crore in the year 2021-22. Interest expenses stood at Rs. 4102.25 Crore for FY2021-22. The Net Interest Income stood at Rs. 3911.23 Crore for FY2021-22.

• The Net Income from operations [Interest Spread plus Non-interest Income] stood at Rs. 4692.16 Crore in the financial year 2021-22.

• The Operating Expenses registered an increase of Rs.714.24 Crore during the financial year 2021-22 and stood at Rs.3592.78 Crore as compared to Rs. 2878.54 Crore in 2020-21.

• The Cost to Income ratio (Operating Expenses to Net Operating Income) stood at 76.57 percent in the financial year 2021-22.

Gross Profit

The Gross Profit for the financial year 2021-22 stood at Rs. 1099.38 Crore.

Provisions

The Provision for Loan Losses, Standard Assets, Taxation and others aggregated to Rs.597.82 Crore in the financial year 2021-22.

Net Profit/Loss

The Bank registered a Net Profit of Rs.501.56 Crore for the financial year 2021-22.

Dividend

In terms of Regulation 43A of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Bank has formulated and adopted a Dividend Distribution Policy with the objective of appropriately rewarding Shareholders through dividends while retaining the capital required for supporting its future growth. The said Policy has been hosted on the website of the Bank at https://www.jkbank.com/pdfs/ policy/Dividend%20Distribution%20Policy.pdf In order to conserve/ augment capital base of the Bank, your Directors do not recommend any dividends for the financial year 202122.

Branch/ATM Network

During the financial year 2021-22, 25 new branches were established, thereby taking the number of branches to 980 (including IARBs) as on 31.03.2022, spread over 18 states and 4 union territories. The area-wise breakup of the branch network (excluding extension counters/ mobile branches and Service branches) on the basis of census 2011 as at the end of FY 2021-22 is as under:

Area

Business Units (including IARBs)

Metro

174

Urban

108

Semi-Urban

162

Rural

536

Total

980

During the financial year FY 2021-22, 6 EBUs/USBs were established taking the total number of EBUs/USBs to 77, 21 ATMs were commissioned thereby taking the number of ATMs to 1404 as on 31.03.2022.

Capital

The capital management framework of the Bank includes a comprehensive internal capital adequacy assessment process conducted periodically, which determines the adequate level of capitalization needed to meet regulatory norms and current and future business needs.

The capital management framework of the Bank is complemented by the risk management framework, which covers the business and capital plans and stress testing results integrated with the internal capital adequacy assessment process while assessing its impact on the capital ratios and adequacy of capital buffers for current and future periods.

In order to comply with the requirements of section 12(1) (i) of the Banking Regulation Act, 1949, the authorized capital of the Bank was reduced from '' 250,00,00,000 to '' 185,00,00,000 after seeking Shareholders/ Reserve Bank of India approval.

As at March 31, 2022, the Subscribed and Paid-up Capital of the Bank stood at Rs.93,28,86,594.00 comprising of 93,28,86,594 equity shares, which is 21,94,35,656 equity shares more than as at March 31, 2021. The said capital was raised by way of:

• Allotment of 16,76,72,702 equity shares at a price of Rs.29.82 to Government of Jammu and Kashmir on preferential basis amounting to a total of Rs. 499,99,99,973.64, and

• Allotment of 5,17,62,954 equity shares at a price of Rs. 28.97 to the eligible employees of the Bank under J&K Bank Employee Stock Purchase Scheme, 2021 (JKBESPS 2021) amounting to a total of Rs.149,95,72,777.38.

The Bank also allotted 2,85,93,267 equity shares at a price of Rs. 32.70 which was at a discount of 4.97% (i.e. Rs 1.71 per equity share) to the Qualified Institutional Buyers (QIB) aggregating to a total amount of Rs. 93,49,99,830.90. The Issue opened on March 28, 2022 and closed on March 31, 2022. The allotment was, however, made on April 01, 2022.

Net Worth and Capital Adequacy Ratio (CRAR)

• The Net Worth of the Bank stood at Rs.7063.82 Crore on 31st March 2022.

• Capital Adequacy Ratio under Basel III stood at 13.23 percent as on March, 2022. The tier I component of CRAR is 11.73 percent as on 31st March 2022.

• Book Value per Share for the financial year 2021-22 stood at Rs.75.72.

Board of Directors

Your Bank has Eleven (11) Directors consisting of MD & CEO and 10 Non-Executive Directors as on 31st March, 2022.

Non-Independent Executive Director

Mr. Baldev Prakash, Non Independent Executive Director has been serving as the MD & CEO of the Bank since December 30, 2021, with the approval of The Reserve Bank of India (RBI).

Non-Independent Non-Executive Director

1) Mr. Atal Dulloo, IAS, Financial Commissioner (Additional Chief Secretary) to Govt. of J&K, Finance Department,

2) Mr. Nitishwar Kumar, IAS, Principal Secretary to Lt. Governor Govt. of J&K,

3) Mr. R K Chhibber

4) Mr. Mohmad Ishaq Wani

Independent Non-Executive Director

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 Directors of the Bank:-

1. Dr. Rajeev Lochan Bishnoi

2. Mr. Naba Kishore Sahoo

3. Mr. Umesh Chandra Pandey

4. Mr. Anil Kumar Goel

5. Mrs. Sushmita Chadha

6. Mr. Anand Kumar

All Independent Directors of the Bank have given their respective declarations stating that they meet the criteria of Independence as laid down under the applicable laws and in the opinion of the Board, the independent directors meet the said criteria.

Appointments/Resignations from the Board of Directors

During the FY 2021-22, there were following changes in the composition of the Board:

• Mr. Rigzian Sampheal, IAS, (DIN: 08157221) ceased to be the Director on the Board of the Bank w.e.f April 21, 2021 consequent upon his resignation from the Board of Directors of the Bank.

• Mr. Atal Dulloo, IAS (DIN: 03542909) was appointed as Govt. Nominee Director w.e.f September, 01, 2021 in place of Dr. Arun Kumar Mehta, IAS (DIN: 02712778).

• Mr. Vikram Gujral (DIN: 03637222) ceased to be Director on the Board of the Bank w.e.f September 30, 2021 consequent upon his non re-appointment at the 83rd Annual General Meeting of the Bank.

• Mr. Baldev Prakash (DIN: 09421701) was appointed as a Govt. Nominee Director on December 27, 2021 and further as Managing Director and CEO (''MD&CEO'') of the Bank to be effective from the date of his actual joining. Upon his joining as the MD&CEO of the Bank on December 30, 2021, Mr. R K Chhibber ceased to be Chairman and Managing Director of the Bank.

• Mr. Anil Kumar Misra (DIN: 08066460) ceased to be RBI appointed Additional Director on the Board of the Bank w.e.f January 04, 2022 consequent upon withdrawal of his nomination by The Reserve Bank of India.

• Dr. Rajeev Lochan Bishnoi (DIN: 00130335) and Ms. Monica Dhawan (DIN: 01963007) ceased to be Independent Directors on the Board of the Bank w.e.f January 11, 2022 consequent upon completion of their terms.

• Dr. Rajeev Lochan Bishnoi (DIN: 00130335) was appointed as an Independent Director on the Board of the Bank for a second term w.e.f. January 21, 2022.

• Mr. Umesh Chandra Pandey (DIN: 01185085) and Mr. Anil Kumar Goel (DIN: 00672755) were appointed as Independent Directors on the Board of the Bank w.e.f January 21, 2022.

• Mrs. Sushmita Chadha (DIN: 02939808) was appointed as an Independent Director on the Board of the Bank w.e.f January 31, 2022.

• Mr. Naba Kishore Sahoo (DIN: 07654279) was reappointed as an Independent Director on the Board of the Bank w.e.f March 01, 2022.

• Mr. Anand Kumar (DIN: 03041018) was appointed as an Independent Director on the Board of the Bank w.e.f March 03, 2022.

During the year under report, no Independent Director resigned before the expiry of his/her tenure.

Changes in the Board of Directors after the Closure of Financial Year

Mr. Vivek Bharadwaj, IAS (DIN: 02847409) was appointed as Government Nominee Director vide order no. 567-JK(GAD) of 2022 dated May 17, 2022 on the Board of the Bank in place of Mr. Atal Dulloo, IAS (DIN: 03542909) w.e.f May 17, 2022.

Directors seeking appointment/re-appointment at AGM

Mr. Rajesh Kumar Chhibber (DIN: 08190084), Additional Director on the Board of Bank being eligible has offered himself for appointment as Director liable to retire by rotation. Dr. Mohmad Ishaq Wani (DIN: 08944038) who is retiring by rotation, has offered himself for re-appointment. The profile and necessary details of the above mentioned Directors have been included in the Notice & Corporate Governance Report.

Number of Meetings of the Board

During the year under review, Fourteen (14) Board Meetings were held, in due compliance with statutory provisions, on the following dates:

04.06.2021, 17 & 18.06.2021, 13.08.2021, 02.09.2021, 13 & 14.09.2021, 18.10.2021, 12.11.2021, 16.11.2021, 28.12.2021,

21.01.2022, 31.01.2022, 08.02.2022, 03.03.2022 and

17.03.2022,

Committees of the Board

During the period under review, the Bank had following Committees of the Board:

• Management Committee

• Audit Committee

• Special Committee of Board on Frauds

• Stakeholders Relationship Committee

• Information Technology Strategy Committee

• Corporate Social Responsibility Committee

• Integrated Risk Management Committee

• Customer Service Committee

• Nomination & Remuneration Committee

• Legal and Impaired Assets Resolution Committee

• Human Resource Development Committee

• Investment Committee

• GST Steering Committee

Besides the above, the Bank had few specific purpose Committee of the Board:

• Special Committee of Board (Constituted to devise a roadmap for alignment of pay structure of the Bank compliant with the IBA pay scales)

• Compensation Committee

• Special Committee of Board (Constituted for the purpose of reviewing the down-gradation of M/s Bharat Hotels Ltd.)

• Capital Issuance Committee (Erstwhile Share Allotment Committee)

The composition, power, role, terms of reference, etc. of aforesaid committees are given in detail in the statement on Corporate Governance annexed to this report.

Performance Evaluation of the Board

The Nomination and Remuneration Committee (NRC) has approved a framework / policy for evaluation of the Board, Committees of the Board, Chairman of the Board, Managing Director & CEO and the individual Members of the Board (including the Chairperson). In conformity with the said policy requirements following is the process of evaluation:

• The performance evaluation of all the Independent Directors is conducted by the entire Board excluding the Directors being evaluated.

• Independent Directors evaluate the performance of NonIndependent Directors, Chairman of the Board, Managing

Director & CEO and Board as a whole and submit its report to the Board alongwith necessary comments and suggestive course of action arising out of the evaluation. • The performance evaluation of the Committees of the Board is conducted by the entire Board.

A questionnaire for the evaluation of the Board, its Committees and the individual Members of the Board (including the Chairperson) designed in accordance with the said framework and covering various aspects of the performance relating to the following is forwarded to individual Directors:

Board

Board Composition & Quality, Board Meetings & Procedures, Board Development, Strategy & Risk Management, Board & Management Relations, Succession Planning and Stakeholder Value & Responsibility, etc.

Committees of the Board

Functions & Duties, Management Relations, Committee Meetings & Procedures, etc.

Chairman of the Board

Managing Relationships, Leadership, Role & Responsibility, etc.

Managing Director & CEO

Participation at Board / Committee Meetings, Managing Relationships, Knowledge and Skills, Personal Attributes, Contribution, Leadership and Initiative

Individual Directors

Participation in meetings, managing relationships, knowledge & skills and personal attributes, etc.

The responses received to the questionnaires on evaluation of the Board, its Committees, individual Directors Chairman and MD & CEO are consolidated and discussed by the Board.

Your Bank has in place a process wherein declarations are obtained from the Directors regarding fulfillment of the ''fit and proper'' criteria in accordance with RBI guidelines. The declarations from the Directors other than Members of the N&RC are placed before the N&RC and the declarations of the Members of the N&RC are placed before the Board. Assessment on whether the Directors fulfill the said criteria is made by the N&RC/Board on an annual basis.

Change in Key Managerial Personnel

As at March 31, 2022, Mr. Baldev Prakash, Managing Director & CEO, Mr. Balvir Singh Gandhi, Chief Financial Officer and Mr. Mohammad Shafi Mir, Company Secretary were the Key Managerial Personnel of the Bank.

Mr. Baldev Prakash was appointed Managing Director & Chief Executive Officer of the Bank in the Board meeting held on December 28, 2021 to be effective from December 30, 2021 (Date of actual joining) thereby relieving Mr. R K Chhibber as Chairman and Managing Director of the Bank. Mr. Balvir Singh Gandhi was appointed as Chief Financial Officer of the Bank on December 28, 2021 in place of Mrs. Rajni Saraf, who ceased to be the Chief Financial Officer of the Bank.

None of the Key Managerial Personnel has resigned during the year under review.

Changes in the Key Managerial Personnel after the Closure of Financial Year

Mrs. Rajni Saraf was appointed as Chief Financial Officer of the Bank on April 27, 2022 in place of Mr. Balvir Singh Gandhi, who ceased to be the Chief Financial Officer of the Bank.

Mr. Pratik D Punjabi was appointed as Chief Financial Officer of the Bank to be effective from the date of his joining (July 01, 2022) in place of Mrs. Rajni Saraf, who ceased to be the Chief Financial Officer of the Bank after attaining the age of superannuation on June 30, 2022.

Performance of Associate /Subsidiary CompaniesSubsidiary:

As on March 31, 2022, the Bank has one unlisted wholly owned subsidiary - JKB Financial Services Limited (JKBFSL), which was incorporated on August 27, 2008. It is a member of the National Stock exchange (NSE) & Bombay Stock Exchange (BSE). A leading broker in the Union Territory of J&K, JKBFSL provides broking services in equity (cash/delivery, intra-day, futures and option), distributes Mutual Funds of leading Asset Management Companies & also banking products of J&K Bank.

Following are the performance highlights of the company during the year:Income:

¦ The income from Equity broking for the financial year 2021-22 is '' 604.17 lacs compared with '' 705.75 lacs during previous FY 2020-21 thereby registering a YoY decline of 14.39 %.

¦ Income from MTF (Margin Trade Funding) is '' 180.42 lacs for the financial year 2021-22 as compared to '' 106.57 lacs in FY 2020-21 thereby registering a YoY growth of 69.30 %

¦ The depository income grew from '' 108.52 lakhs to 141.23 lakhs during the year registering a YOY growth of 30.14%.

¦ Revenue from 3rd party products has been marked as a growth area for the company. The company has recorded AUM growth of around 150% on YoY basis and accordingly the mutual fund commission grew from 12.30 lakhs to ''22.37 lakhs thereby recording a YOY growth of 81.86%.

¦ The total income of the Company grew from '' 984.30 lakhs to '' 991.25 lakhs.

Expenditure:

¦ The total expenses during the financial year 2021-22 is '' 590.03 lacs as compared to '' 562.23 lacs in the previous financial year. The company has increased its investments in technology platforms & human capital.

Profits:

¦ The Company registered profit before tax of '' 401.22 lakhs during the given financial year and the net profit achieved was ''287.61 lakhs in comparison to a net profit of '' 267.13 lakhs during the previous financial year.

Associates:

As on March 31, 2022, the Bank has two associates viz. J&K Grameen Bank (Regional Rural Bank Sponsored by J&K Bank)

and M/s Jammu and Kashmir Asset Reconstruction Limited. The performance highlights of the associates during the year are provided as under:

J&K Grameen Bank - Regional Rural Bank Sponsored by J&K Bank:

The J&K Grameen Bank has come into existence on 30thJune 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 01.07.2009.

Area of Operation:

The area of operation of the J&K Grameen Bank comprises of 13 districts of the UT of J&K and UT of Ladakh viz. Baramulla, Bandipora, Kupwara, Ganderbal, Srinagar Jammu, Kathua, Rajouri, Poonch, Samba, Kishtwar, Leh and Kargil.

No. of Branches (as on 31st March, 2022):

217

No. of Employees (as on 31st March, 2022):

1127 (includes 21 officials on deputation from J&K Bank -Sponsor Bank)

Capital Structure:

In terms of the RRBs Act 1976, the authorized capital of Regional Rural Banks was fixed at Rs.5.00 Crore (which stands amended to Rs. Two Thousand Crore in terms of the Regional Rural Banks (Amendment) Act, 2015 notified in the Gazette of India on 12-05-2015). The issued and paid up capital of the J&K Grameen Bank is Rs.97.16 Crore fully subscribed by the Central Government, State Government and Sponsor Bank in the ratio of 50:15:35 respectively. The details are tabulated hereunder:

1.

Authorized Share Capital

Rs. 2000 Crore

Subscribed / Paid up Share Capital

Rs. 97.16 Crore

2.

Central Government (50%)

Rs. 48.58 Crore

State Government (15%)

Rs. 14.57 Crore

Sponsor Bank (35%)

Rs. 34.01 Crore

Tier II perpetual bonds (Date of issue: 04-12-2014):

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 provided by J&K Bank (Sponsor Bank) in the form of perpetual debt (bonds) eligible as Tier - II of the sponsored bank.

Performance of the J&K Grameen Bank as on 31.03.2022 Business:

The total business of the bank as on 31st March 2022 stood at Rs.7646.50 Crore against Rs.7036.94 Crore as on 31st March 2021, thereby registering a growth of 8.66% during the financial year 2021-22.

Deposits:

The deposits of the bank have increased from Rs.4472.43 Crore to Rs.4767.90 Crore during the financial year 2021-22 thereby registering a growth rate of 6.61%.

Advances:

The gross advances of the Bank as on 31st March 2022 stood at Rs.2878.60 Crore as against Rs. 2564.51 Crore as on the corresponding date of the previous year recording a growth of 12.25%

CD Ratio:

The C.D. Ratio of the bank has increased by 303 bps from 57.34% as on 31st March 2021 to 60.37% as on 31st March, 2022.

Priority Sector Advances:

The priority sector advances outstanding as on 31st March 2022 stood at Rs. 2327.61 Crore against Rs. 2050.90 Crore outstanding as on 31st March 2021, registering a growth of 13.49% on Y-o-Y basis. RRB specific benchmark of 75% portion of priority sector advances to total advances outstanding has been well maintained with 80.86% as on 31st March, 2022.

NPA Management:

Gross NPAs of the Bank as on 31.03.2022 stood at Rs. 152.07 Crore (5.28%) against Rs. 184.42 Crore (7.19%) as on 31st March, 2021. Accordingly Net NPAs as on 31st March, 2022 stood at Rs. 69.75 Crore (2.49%) against Rs. 98.47 Crore (3.97%) as on 31st March, 2021.

Business per Employee:

The business per employee as on 31st March 2022 stood at Rs.6.78 Crore against Rs.6.65 Crore as on corresponding date of the previous year.

Business per Branch:

The business per branch as on 31st March 2022 stood as Rs. 35.24 Crore against Rs. 32.43 Crore as on corresponding date of the previous year.

Profitability:

Mainly due to the pension provision liability of Rs. 92.85 Crore during the year 2021-22, Bank has incurred a net loss of Rs. 27.39 Crore as on 31st March, 2022.

Lead Bank Responsibility:

J&K Bank is the only Private Sector Bank in the Country assigned with responsibility of convening UT Level Bankers Committee - UTLBC meetings. The Bank continued to satisfactorily discharge its Lead Bank Responsibility in 12 districts of UT of J&K, i.e. Srinagar, Ganderbal, Budgam, Baramulla, Bandipora, Kupwara, Anantnag, Kulgam, Pulwama, Shopian, Poonch and Rajouri. Lead bank responsibility in other 8 districts of the UT, i.e. Jammu, Samba, Kathua, Udhampur, Reasi, Doda, Ramban and Kishtwar is assigned to State Bank of India.

The Annual Credit Plan for UT of J&K for FY 2021-22 was launched on 1st April, 2021, envisaging a total credit target of Rs. 44,980.57 Crore for 14,97,700 beneficiaries. During FY 2021-22, banks operating in UT of J&K have disbursed total credit of Rs.36,758.34 Crore in favour of 12,53,654

beneficiaries, registering an achievement of 82% in financial terms and 84% in physical terms. This includes disbursement of Rs.19,095.87 Crore in favour of 8,46,050 beneficiaries against the annual target of Rs.35,482.62 Crore for 12, 11,772 beneficiaries under Priority Sector and Rs.17,662.47 Crore in favour of 4,07,604 beneficiaries against the annual target of Rs.9,497.95 Crore for 2,85,928 beneficiaries under NonPriority Sector thereby registering achievement of 54% and 186% in financial terms respectively.

J&K Bank was assigned annual target of Rs.22,346.39 Crore for 7,54,694 beneficiaries under Priority and NonPriority Sectors of economy during FY 2021-22 against which Rs.23,633.84 Crore were disbursed in favour of 8,71,928 beneficiaries registering an achievement of 106% in financial terms and 116% in physical terms.

During the FY 2021-22, following meetings were conducted:

• 3rd Meeting of J&K UTLBC held on 23rd June 2021 to review the performance of Banks/ FIs in UT of J&K in dispensation of credit and other banking services during the Financial Year ending 31st March 2021.

• 4th Meeting of J&K UTLBC held on 20th September 2021 to review the performance of Banks/ FIs in UT of J&K during the quarter ending June 2021.

• 5th Meeting of J&K UTLBC held on 30th November 2021 to review of the performance of Banks/ FIs in UT of J&K during the quarter ending September 2021.

• 6th Meeting of J&K UTLBC held on 30th March 2022 to review the performance of Banks/ FIs in UT of J&K during the quarter ending December 2021.

• Special Meeting of J&K UTLBC held on 7th January 2022 to review Action Taken by Banks/ Government Departments on the Actionable Points emerged during the visit of Hon''ble Union Finance Minister to UT of J&K on 23rd November 2021.

• Two Meetings of Sub-Committee of J&K UTLBC on Priority Sector were held on 30th December 2021 and 25th February 2022 to review the performance of banks in disbursement of credit to Priority Sector against Annual Credit Plan.

Convening of District Level/ Block level meetings as per Lead bank Scheme

Lead Bank ensured that District- level and block level meetings, such as DCC/ DLRC/ BLBC, and other relative meetings under Lead Bank Scheme are held as per schedule in all the 20 districts of UT of J&K during the FY 2021-22.

Implementation of Financial Inclusion Plans (FIPs):

1. After successful implementation of FIP-I and FIP-II, under the directions from Reserve Bank of India, a roadmap for opening "Brick & Mortar” branches or CBS-enabled Banking Outlets in the identified 104 villages having population over 5000 in UT of J&K is presently under implementation. These villages have been allocated to 8 major scheduled commercial banks operating in UT of J&K viz. J&K Bank-48, SBI-15, PNB-11, HDFC Bank-11, ICICI Bank-05, Canara Bank-05, UCO Bank-05 and CBI-04. As of 31.03.2022, 99 villages have been covered for banking

services with opening of 13 brick & mortar branches and 86 CBS-enabled Banking outlets including 22 Access Points of India Post Payments Bank (IPPB). Out of the 99 covered villages, 48 villages have been covered by J&K Bank, 14 by SBI, 11 villages each by PNB & HDFC Bank, 4 villages each by ICICI Bank & Canara bank, 5 villages by UCO Bank and 2 village by Central bank of India.

2. Providing Banking Services within a radius of 5 KMs of every village:

Though the banking services as per Sub Service Area (SSA) Plan were provided across the erstwhile J&K State by 2016, however in the year 2019, National Informatics Centre (NIC) conducted a GPS (Latitude/ Longitude) based verification of available Banking Touch Points uploaded by banks on Jan Dhan Darshak App - (GIS App) and a fresh list of uncovered villages (i.e. villages not having a Bank Branch/BC/Post Office within 5 KMs distance) was arrived at by DFS and shared with respective SLBC/ UTLBC in the month of October 2019 for assigning same to banks for providing the necessary Banking Touch Points as per the 5 KM criteria fixed by DFS. Once the banks provide/ deploy the necessary Banking Touch Point in the allocated villages, the details of the same including Latitude/ Longitude Positions are to be uploaded/ updated to Jan Dhan Darshak App by the concerned bank so that village is reflected as "covered” as per the GPS Mapping.

For UT of J&K, 147 villages were identified by DFS as "uncovered” under GPS system of identification. All 147 locations stand covered by 6 banks i.e. J&K Bank-75, SBI-20, PNB-7, JKGB-28, IPPB-16 and EDB-1 by providing Banking Touch Points

Responsibility of setting up of RSETIs in UT of J&K:

In terms of guidelines issued by Ministry of Rural Development, Government of India, setting up the Rural Self Employment Training Institutes (RSETIs) in all the districts of UT of J&K was assigned by J&K UTLBC 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 (Srinagar, Ganderbal, Budgam, Baramulla, Bandipora, Kupwara, Anantnag, Kulgam, Pulwama, Shopian, Poonch and Rajouri). Performance of RSETIs in conducting training programmes and the number of persons benefited through credit linkage is being reviewed in Quarterly UTLBC meetings.

Responsibility of setting up of FLCs in UT of J&K:

In terms of RBI guidelines for setting up of Financial Literacy Centres (FLCs) in all the districts of UT of Jammu and Kashmir, J&K Bank has made 12 FLCs operational in its 12 allocated lead districts viz. Srinagar, Ganderbal, Budgam, Baramulla, Bandipora, Kupwara, Anantnag, Kulgam, Pulwama, Shopian, Poonch and Rajouri and SBI having made 8 FLCs operational in its 8 allocated lead districts of UT of J&K, viz. Jammu, Samba, Kathua, Udhampur, Reasi, Doda, Ramban, Kishtwar. In addition, PNB, JKGB, EDB and J&K State Cooperative Bank have also established 6, 2, 2 & 1 FLCs respectively, in various districts of UT of J&K, which as on 31.03.2022 takes the total number of FLCs in UT of J&K to 31. The performance of FLCs in conducting the Financial Literacy Camps as per the guidelines from RBI is being reviewed at various forums including quarterly UTLBC meetings.

100% Saturation Drive for KCC Crop.

Banks/ FIs in J&K has issued 68,186 fresh KCCs during FY 2021-22 involving an amount of Rs.591.41 Crore. This includes Rs.363.02 Crore disbursed in favour of 35,634 beneficiaries under KCC Crop and Rs.228.39 Crore to 32,552 beneficiaries under KCC-AH & F.

With the above achievement during FY 2021-22 the total number of active KCCs in J&K has reached to 9,52,896 as on 31.03.2022 with an outstanding credit of Rs.6,506.48 Crore.

Advertising and Publicity

To enhance the already established identity and image of the Bank, we branded and positioned our Bank in a way so that it stands out financially, aesthetically and intellectually within the public domain. By being relevant and compelling in our vigorous brand promotion through advertising and publicity, we have successfully improved our brand exposure during the FY 2021-22 thereby enhancing our brand perception and increasing our brand value. We have been successful in strengthening the bond of trust with all our stakeholders by leveraging all the means and channels of communications available for uninterrupted communication throughout the financial year. Besides, the Bank''s products, services and facilities were successfully advertised and publicized through mass marketing strategies across the operational geography of the Bank. Also, the advertising campaigns initiated by the Bank to enhance the overall business, while meeting the set targets, were duly publicized with proper follow-up communications. Moreover, the functioning and accomplishments of the Bank were effectively communicated to relevant target audiences including major stake-holders, customers, shareowners, other stakeholders and general public through customized and efficiently packaged messages/hand-outs using mass media within the Union Territory and relevant channels across the country to earn high credibility and enhance our brand image. To leverage the power of internet for reaching out to a wider audience, we were successful in increasing our presence in the social-media universe by further strengthening and streamlining our online presence through highly popular mediums of social connectivity platforms especially Facebook, Twitter, Instagram and YouTube.

Brand Building

Brand perception forms the fulcrum of any communication marketing strategy. Bank has, as has been case over the years, undertook various promotional activities to position its brand further favourably among the masses, complementing ever-strengthening significance of our institution on financial landscape of UTs of J&K, Ladakh and beyond.

While Brand J&K Bank continues to hold the sway among the masses, Bank has ensured it put an effective and efficient communication strategy in place to bolster the brand recall.

While the thrust for using digital channels to communicate with the masses has been mandated in the face of ever changing technological landscape with Bank enhancing its digital footprints by leveraging its presence on social media platforms, it has also put in use traditional advertisement genres like outdoor advertising (OOH) through hoardings

to garner mileage in terms of brand visibility and reach. A well-drilled brand visibility enhancing activity was carried out by displaying Bank''s products and schemes at ATMs & Branches while making sure Glow Signboards - an important tool of brand identity - are properly maintained. Hoardings were placed in twin cities of Jammu and Srinagar, national highways and other key locations.

With Covid-19 ruling the roost in most of FY 2021-22, Bank earned public goodwill through continuity of its relentless Banking service amidst the crisis. Bank''s role in mitigating the problems during the unprecedented Pandemic was effectively highlighted through appropriate communication channels which added to the brand value and engineering a positive perception and imagination which only furthered and strengthened the trust and bond between Bank and its stake-holders.

The key components of brand identity like logo, its colours, font and other aspects weren''t compromised while positioning the brand among the stakeholders.

Awards & Certifications received by the Bank during FY 2021-22

J&K Bank''s illustrious history of more than eight decades is decorated with awards and accolades. Over the years, the Bank has collected numerous honors in various categories. During the FY 2021-22, the Bank outperformed its competitors to grab the headlines in following categories;

‘Best Digital Financial Inclusion Initiatives'' Award

J&K Bank won ''Best Digital Financial Inclusion Initiatives'' Award at Indian Banks'' Association''s 17th Annual Banking Technology Conference and Awards 2020-21.

‘Best IT Risk & Cyber Security Initiatives'' Award

J&K Bank was adjudged as Runner Up for ''Best IT Risk & Cyber Security Initiatives'' Award at Indian Bank''s Association''s 17th Annual Banking Technology Conference and Awards: 202021'' under Small Bank Category.

‘Utkarsh Puraskar'' of DigiDhan Award - 2020-21

J&K Bank won ''UtkarshPuraskar'' of DigiDhan Award - 202021 for achieving 2nd highest percentage of digital payment transactions under the category of Small & Micro banks from Union Minister for Communications, Electronics & Information Technology and Railways (GoI), Ashwini Vaishnaw.

Khadi India Award - Pan India Category

J&K Bank won 4th position under Khadi India Awards from Khadi & Village Industries Commission (KVIC) Mumbai, Ministry of MSME (GoI), for implementing Prime Ministers Employment Generation Programme (PMEGP) across the country during FY 2020-21.

Khadi India Award - North India Category

J&K Bank ranked No. 1 by the Ministry of Micro, Small & Medium Enterprises (GoI) under Khadi India Awards for its excellent performance in implementing the Prime Minister''s Employment Generation Programme (PMEGP) in North India during FY 2020-21.

National Award for SHG Bank Linkage

J&K Bank bagged ''National Award for Outstanding

Performance in Self Help Group (SHG) Bank Linkage for FY

2020- 21'' by the Ministry of Rural Development (GoI).

ISO 27001:2013 Certification

J&K Bank has received the latest certification of prestigious ISO 27001:2013 from Intertek - a reputed London-based Total Quality Assurance provider - for being compliant with the best industry standards in terms of privacy and security protocols.

Corporate Social Responsibility (CSR)

As a responsible corporate citizen, J&K Bank envisions to integrate its strategic intent and business goals with the needs of the society in order to achieve an inclusive, sustainable and harmonious ecosystem. This represents the core principle and forms the basis of the Bank''s CSR policy.

The Corporate Social Responsibility (CSR) policy of the Bank envisages not only an inclusive and sustainable socio-economic empowerment of the underprivileged, but also strives to help achieve a vibrant and environmentally conscious ecosystem. The Bank, guided by the founding principles of its CSR policy, helps support initiatives to improve the lives and living conditions of the indigent sections of the society besides lending support to the society''s endeavors aimed at making the world a better place to live.

In line with the same, the Bank continued its ''social-investment'' in the form of monetary and other logistics support to systemically vital healthcare institutions to alleviate the hardships of different sections of the society. In turn, the Bank reaped benefits in the form of increased emotional equity, brand-connect and goodwill.

During the financial year (FY) 2021-22, the Bank continued to intervene and enhance value creation in the society through CSR activities in consonance with its mission of ''Serving to Empower''. The statutory disclosures in the format prescribed in the Companies (Corporate Social Responsibility Policy) Rules, 2014 forms part of this report at Annexure 1.The policy is available on the Bank''s website at https://www.jkbank. com/pdfs/policy/JKB CSR Policy V3.pdf

Key areas of intervention under the CSR Programme

a) Livelihood Generation

b) Preventive Healthcare

Details of activities undertaken under CSR during the FY

2021- 22

Initiatives undertaken under CSR during the FY 2021-22 include:

Livelihood Generation

J&K Bank has been steadfast in its approach to empower communities and create opportunities for sustainable livelihoods. Offering every individual a chance to earn an honest living and inspiring people to lead a life of dignity and self-sufficiency has been the key role of the organization. The Bank considers it a mission to measurably improve the lives of under-privileged and differently abled persons by addressing their needs so as to facilitate their movement from margins of society towards the socio-economic mainstream. With this vision, J&K Bank undertook the project of providing financial assistance to Humanity Welfare Organization Helpline, an NGO, for their project of providing vocational training cum

livelihood generation for specially-abled youth.

On the same lines, J&K Bank also contributed towards the construction of the NAR (National Academy of RUDSETI) building at Bengaluru. National Academy of RUDSETI is providing its services to all the RSETIs across the country. RSETIs act as dedicated institutions designed to ensure necessary skill training and skill up gradation of the rural BPL youth to mitigate the problem of unemployment. To eliminate poverty, it is necessary to create livelihood opportunities on sustainable basis for the people living below the poverty line as it will enable them to fulfill basic need of life i.e. food, health and shelter and that is what RSETIs deal with - training of youth for self-employment.

Preventive Healthcare

Preventive healthcare is an important dimension of health that needs significant attention and investment from all sections of the society. J & K Bank considers working in this sector as an ethical obligation to provide extensive support and assistance with regard to protecting and promoting health. The Bank remains at the forefront in this sector to help Institutes upgrade the healthcare facilities thereby enabling people to have access to the best-in-class medical treatment. The bank, as such, continued to extend support in this sector by helping procure the ''Platelet/Therapeutic Plasma Apheresis Kits'' for the treatment of patients suffering from blood cancer and other blood dysfunctional diseases at SKIMS, Srinagar and GMC Jammu.

The world has changed dramatically since the emergence of the Coronavirus Disease 2019 (COVID-19) pandemic. The pandemic swiftly and harshly interrupted life and economies, forcing businesses and governments to quickly make difficult choices to balance risks to individual health and economic health. While health organizations and Governments across globe are trying hard to curb the disease and deflate its impact, corporates too have contributed their bit to ensure human safety. Looking at the situation emerging because of this deadly virus, J & K Bank decided to do its bit and started an initiative called "Wear a Mask”. The Bank procured and distributed face masks (three layer surgical masks) in and around health facilities, educational institutions etc in the capital cities of J&K i.e., Srinagar and Jammu, which have seen the bulk of Covid-19 cases in the UT.

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 value. 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 SEBI (Listing Obligations & Disclosure Requirements) 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.

Whistle Blower Policy & Vigil Mechanism

The Bank has a Whistle Blower mechanism in place which enhances the transparency in the organization by encouraging the employees/ directors/ other stakeholders to report any wrongdoing, which comes to their knowledge in the day-to-day performance of their duties or interaction with other fellow-colleagues/ bank staff without fear of retaliation, victimization and unfair-treatment. The "Whistle Blower Policy” has been formulated to guarantee them protection from any adverse departmental proceedings. The Policy is compliant to regulatory requirements under Section 177 (9) of the Companies Act 2013, Regulation 22 of Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015.

Further, the mechanism adopted by the Bank encourages the Whistle Blower to report genuine concerns or grievances and also provides for direct access to Chairman of the Audit Committee of the Board, in exceptional cases. The grievance under Whistle Blower mechanism can be lodged on the Bank''s official website under link.

https://www.jkbank.com/others/common/wbGrievences.php

It is hereby affirmed that the Bank has not denied any of its personnel access to the Chairman of the Audit Committee of the Board and that the policy contains adequate provisions for protecting whistle blowers from unfair termination and other unfair prejudicial employment practices. However, no case under the Whistle Blower Mechanism was referred to the Audit Committee of the Bank during the year.

Protected Disclosures Scheme:

The Bank in line with the RBI prescribed framework, has devised a Policy Document on the "Protected Disclosure Scheme” The complaints under the Scheme cover the areas such as corruption, misuse of office, criminal offences, suspected/ actual fraud, failure to comply with existing rules and regulations such as Reserve Bank of India Act, 1934, Banking Regulation Act 1949, etc. and acts resulting in financial loss/ operational risk, loss of reputation, etc. detrimental to depositors'' interest/ public interest. Reserve Bank of India (RBI) will be the Nodal Agency to receive complaints under the Scheme.

The complaint under the scheme should be sent in a closed/ secured envelope addressed to The Chief General Manager, Reserve Bank of India, Department of Banking Supervision, Fraud Monitoring Cell, Third Floor, World Trade Centre, Centre 1, Cuffe Parade, Mumbai 400 005. The envelope should be superscripted "Complaint under Protected Disclosures Scheme for Banks”. Complaints can also be made to RBI through e-mail: [email protected] by giving full details as specified above.

The policy document is available on the intranet page of the bank as well as on the Bank''s official website under link https://www.ikbank.com/pdfs/policv/latest/Policv protected.pdf

It is hereby affirmed that No unfair treatment will be meted out to a Complainant by virtue of his/her having reported a Disclosure under this Policy. The Bank, as a policy, condemns any kind of discrimination, harassment, victimization or any other unfair employment practice being adopted against

Complainant(s). Complete protection will, therefore, be given to Complainant(s) against any unfair practice like retaliation, threat or intimidation of termination/suspension of service, disciplinary action, transfer, demotion, refusal of promotion, including any direct or indirect use of authority to obstruct the Complainant''s right to continue to perform his duties/ functions including making further Disclosure under the policy. No compliant has been referred to the Bank under the "Protected Disclosure Scheme”.

Risk Management

A well-defined, comprehensive risk management framework of our bank is based on accepting various risks, controlled risk assessment, measurement and monitoring of these risks. The key components of the Bank''s Risk Management architecture rely on the risk governance structure, comprehensive processes and internal control mechanism based on approved policies and guidelines. The Bank''s risk management processes are guided by way of policies adopted appropriately for various risk categories, independent risk oversight and periodic monitoring by Board of Directors, Committees of the Board of Directors and Senior Management Committees -Credit Risk Management Committee, Market Risk Management Committee, Operational Risk Management Committee and Asset Liability Committee (ALCO). These policies approved from time to time by Board of Directors, Committees of Board form the basis for governing framework for each type of risk. The Board sets the overall risk appetite and philosophy for the Bank and have an oversight of all the risks assumed by the Bank. The Bank''s Risk Management framework focuses on the management of key areas of Risk such as Credit, Market, Operational Risk and Liquidity Risk and Pillar II risks, quantification of these risks, wherever possible. The risk management function in the Bank strives to proactively anticipate vulnerabilities in the business operations through quantitative or qualitative examination of the embedded risks for effective and continuous monitoring and control. An independent risk management function ensures that risk is managed through a risk management architecture as well as through policies and processes approved by Board of Directors. The risk management policies and procedures established are updated on continuous basis in compliance to RBI guidelines and benchmarked to best practices. The Board of Directors with its committee-Integrated Risk Management Committee (IRMC) reviews risk management policies of the Bank pertaining to credit, market, liquidity, operational & Pillar II risks that includes strategic risk and reputational risk, Internal Capital Adequacy Assessment Process (ICAAP) and stress testing. Risk Management is administered by Executive/ Senior Management Committees & Chief Risk Officer (CRO) through Integrated Risk Management Department (IRMD). The Bank has structured management committees; Credit Risk Management Committee (CRMC), Operational Risk Management Committee (ORMC) and Market Risk Management Committee (MRMC) for credit risk, operational risk and market risk that operate within the broad risk management framework of the Bank to assess and minimize these risks. Information security and business continuity plan also forms part of risk management functions in the Bank. Treasury activities are separately monitored by mid office, which reports to IRMD. The Bank has Stress Testing Policy to measure impact of adverse stress scenarios on the adequacy of capital. The stress scenarios are idiosyncratic, generic and a combination of both.

Business Responsibility Report

In terms of Regulation 34(2)(f) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, top 1000 Listed Entities based on their market capitalization as on 31st March every year are required to submit their Business Responsibility Report (BRR) as a part of the Annual Report. The Bank''s Business Responsibility Report describing the initiatives taken by the Bank from an environmental, Social and governance perspective is enclosed as Annexure - 6.

Employees Stock Purchase Scheme

During the period under report, the Bank implemented J&K Bank Employee Stock Purchase Scheme, 2021 (JKBESPS, 2021), under which equity shares of the Bank were offered and allotted to the eligible employees, in accordance with the scheme parameters and the regulatory guidelines applicable to ESPS.

The Bank has received a certificate from its Secretarial Auditor to the effect that the scheme has been implemented in accordance with the SEBI Regulations and as per the resolution passed by the Members of the Bank authorising issuance of the said shares. The details, as required to be disclosed under Securities and Exchange Board of India (Share Based Employee Benefits and Sweat Equity) Regulations, 2021 {Erstwhile Securities and Exchange Board of India (Share Based Employee Benefits) Regulation, 2014}, including the aforesaid certificate from the Secretarial Auditor are available on the Bank''s website at https://www. jkbank.com/investor/investorInfo/ESPS.php

Information under the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013

The Bank does not engage in any form of child labour / forced labour / involuntary labour and does not adopt any discriminatory employment practices. The Bank has a Policy against sexual harassment and a Committee "Internal Complaints Committee for Prevention, Prohibition and Redressal of Sexual Harassment of Women at Workplace” has been constituted for dealing with complaints of harassment or discrimination. The said policy is in line with relevant Act passed by the parliament in 2013. The Bank, through the policy, ensures that all such complaints are resolved within defined timelines. During the year, one complaint was lodged before the Internal Complaints Committee duly constituted under the Sexual Harassment of Women at Work Place (Prevention and Redressal) Act, 2013 and the rules made thereunder. Accordingly, due inquiry proceedings were conducted in the case, as stipulated in the Act and adequate opportunity was provided to both complainant and respondent to present/ defend their case. The same was disposed of within the requisite time frame of 90 days.

Loans, Guarantees & 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. The particulars of investments made by the Bank are disclosed in notes number 5 to 8 of Schedule 18 of the Financial Statements as per the applicable provisions of the Banking Regulation Act, 1949.

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. 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 https://www.jkbank.com/pdfs/policy/ Related%20Party%20Transactions%20Policy.pdf Statement of related party transactions under sub section (1) of section 188 of the Companies Act, 2013 is attached herewith as Annexure 5.

Information under Insolvency and Bankruptcy Code, 2016

The Bank as on 31st March, 2022 has cases under the IBC resolution the details whereof along with existing status is tabulated as under:

(Amt. in Crs)

S. No.

No. of Accounts

Stage of Process

NPA / NPI outstanding

Recoveries during the year , if any

1

27

Resolution process (Pending with NCLT)

2682.57

Nil

2

19

Liquidation

Process

1501.56

2.08

3

0

Resolution approved/ implemented during the year

0

0


Frauds reported by the Bank

The Bank during the financial year 2021-22 has detected/ reported 19 cases of frauds to Reserve Bank of India involving an amount of Rs 246.16 Crore.

Frauds reported by Auditors

During the year under review, no fraud was reported by any of the statutory auditors under section 143 (12) of the Companies Act, 2013 to the Ministry of Corporate Affairs, Govt. of India.

Consolidated Financial Statements

Pursuant to Section 129 of the Companies Act, 2013, the Bank has prepared Consolidated Financial Statements of the Bank, its Subsidiary (JKB Financial Services Ltd.) and also its Associate (J&K Grameen Bank) which shall be laid before shareholders at the ensuing 84th Annual General Meeting of the Bank along with Bank''s Financial Statements under sub-section (2) 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/Associate for the year ended March 31, 2022 form part of this Annual Report.

Statutory Auditors

The Central Statutory and Branch auditors of the Bank are appointed by the Comptroller & Auditor General of India (C&AG) pursuant to Section 139(5) of the Companies Act, 2013. The Bank had four (4) Central Statutory auditors appointed by the C&AG of India for the year under review as given below:

1. O AGGARWAL & CO, Chartered Accountants

2. DHARAM RAJ & CO, Chartered Accountants

3. ARORA VOHRA & CO, Chartered Accountants

4. HEM SANDEEP & CO, Chartered Accountants

Compliance with Secretarial Standards

The Bank is in compliance with all applicable Secretarial Standards as notified from time to time except to the extent stated in the secretarial audit report.

Employee Remuneration

The statement containing particulars of employees as required under section 197(12) of the Companies Act, 2013 read with rule 5 (2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is given in "Annexure 3” forming part of this report.

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 conservation of energy.

Bank is continuously working towards achieving low carbon footprint for which many steps have been taken including use of energy efficient IT equipment

Various initiatives taken in this regard by the Bank are given below:

• Bank''s Data Center is hosted at a high energy efficient hosting facility in Noida which operate on the ITIL based service delivery framework and follow ISO 9001 and ISO 2000 standards.

• Bank is shifting its Disaster Recovery Site to a new co-location site in Mumbai which is Asia''s Largest Rated 4 Hyper scale Datacenter aligned to TIA-942 standard having strong focus on various environmental considerations

• Integration with Government Digi locker Platform has been achieved to increase the usage of digitized documents for providing various banking facilities to customers which shall help to reduce the need of printing various documents.

• Usage of Digital Signage Screens has been increased across the Bank to display various regulatory notifications /advisories digitally therefore eliminating the paper usage.

• Energy star compliant computing and communication hardware is used by the Bank across all offices and banking outlets.

(ii) The steps taken by the Bank for utilizing alternate sources of energy.

Bank operates in a non-energy intensive environment. However, it is always ensured that energy efficient hardware / equipment which consumes less power is procured and put in operation. Besides replacement of CFL Lamps with LED Lamps / fixtures wherever needed stands achieved.

(iii) The capital investment on energy conservation equipment.

Bank is continuously striving to ensure energy conservation equipment are used across enterprise like Virtual Servers, Thin Clients, Multi-purpose Printers, multi-purpose kiosks, scanners, etc.

B. Technology Absorption :-

With increased adoption & demand for digital channels by customers, our Bank has been at forefront to introduce new digital services, leverage advanced technological platforms for better & enhanced customer experience Many new digital services have been introduced with customer centric focus which includes new Mobile banking platform (mPay Delight), Contactless Card transactions, RuPay Debit Card, Digilocker, GRAS, Enterprise Fraud Risk Monitoring, Contact Centre feature enhancement etc.

As part of the long term IT Strategy Bank has recently migrated to the latest version of Core Banking Solution (Finacle 10) that has powerful transformational capabilities for increased productivity, rapid innovation and a comprehensive set of offerings to meet diverse customer demands.

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 outflow: During the Year ended 31.03.2022 the Bank earned Rs.78.51 lacs and spent Rs.152.86 lacs in foreign currency. This does not include foreign currency cash flow in derivatives and foreign currency exchange transactions.

2. No significant and material orders were passed by the regulators or courts or tribunals impacting the going concern status of the Bank''s operations in future.

3. Number of cases filed, if any and their disposal under Section 22 of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013:

Your Bank has Zero tolerance towards any action on the part of any executive/employee which may fall under the ambit of ''Sexual Harassment'' at workplace, and is fully committed to uphold and maintain the dignity of every women executive/employee working in the Bank. One complaint of sexual harassment was lodged with the Internal Complaints Committee during the year 2021-22 and the same was disposed-off within the required time frame of 90 days.

4. No Stock options were issued to the Directors of your Bank

Annual Return

In accordance with the provisions of Companies Act, 2013, the Annual Return of the Bank for the financial year 202122 in the prescribed Form MGT-7 is available on the website of the Bank at:https://www.jkbank.com/investor/financials/ annualReturns.php

Directors Responsibility Statement

Pursuant to Section 134(3)(c) of the Companies Act, 2013, the Board of Directors hereby state that:

(a) in the preparation of the annual accounts, the applicable accounting standards had been followed along with proper explanation relating to material departures;

(b) 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 Bank at the end of the financial year and of the profit and loss of the Bank for that period;

(c) 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;

(d) the directors had prepared the annual accounts on a going concern basis;

(e) the directors, had laid down internal financial controls to be followed by the Bank and that such internal financial controls are adequate and were operating effectively and;

(f) 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.

Adequacy of Internal Financial Controls related to Financial Statement

The Bank has adequate internal controls and processes in place with respect to its financial statements which provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements. These controls and processes are driven through various policies, procedures and certifications. The processes and controls are reviewed periodically. The Bank has a mechanism of testing the controls at regular intervals for their design and operating effectiveness to ascertain the reliability and authenticity of financial information.

Requirement for maintenance of cost Records

The cost records as specified by the Central Government under section 148(1) of the Companies Act, 2013 are not required to be maintained by the Bank.

CEO & CFO Certification

Certificate issued by Mr. Baldev Prakash, MD & CEO and Mrs. Rajni Saraf, CFO of the Bank, for the financial year under review, was placed before the Board of Directors at its meeting held on 12th May, 2022 in terms of Regulation 17(8) of the Listing Regulations.


Important Events after the Closure of Financial Year ended 31-03-2022

This report covers the period of financial year of the Bank beginning on 1st April, 2021 to 31st March, 2022. However, few material events listed below happened from 1st April, 2022 till the date of this report:

a) The Board of Directors of the Bank on 27th April, 2022 decided to obtain consent of the Members of the Bank through Postal Ballot by way of special resolutions:

• Re-appointment of Mr. Naba Kishore Sahoo (DIN: 07654279) as an Independent Director on the Board of the Bank

• Appointment of Mr. Anand Kumar (DIN: 03041018) as an Independent Director on the Board of the Bank

The shareholders of the Bank approved the above mentioned resolutions on 29th May, 2022.

b) The Government of Jammu & Kashmir vide order no. 567-JK(GAD) of 2022 dated 17th May, 2022 has nominated Mr. Vivek Bharadwaj, IAS {Financial Commissioner (Additional Chief Secretary), Finance Department} as Government Nominee Director on the Board of Directors of the Bank in place of Mr. Atal Dulloo, IAS (Additional Chief Secretary) with effect from 17th May, 2022 and the same was taken on record by the Board of Directors of the Bank in their meeting held on 10th June, 2022.

c) On 1st April, 2022, the bank has allotted 2,85,93,267 (Two Crore Eighty Five Lac Ninety Three Thousand Two Hundred And Sixty Seven) equity shares at a price of Rs. 32.70 (Rupees Thirty Two and Seventy Paisa Only) which was at a discount of 4.97% (i.e. Rs 1.71 per equity share) to the Qualified Institutional Buyers (QIB) aggregating to a total of Rs. 93,49,99,830.90 (Rupees Ninety Three Crore Forty Nine Lacs Ninety Nine Thousand Eight Hundred Thirty and Ninety Paisa Only). The Issue opened on March 28, 2022 and closed on March 31, 2022.

d) Mrs. Rajni Saraf was appointed as Chief Financial Officer of the Bank on April 27, 2022 in place of Mr. Balvir Singh Gandhi, who ceased to be the Chief Financial Officer of the Bank.

e) Mr. Pratik D Punjabi was appointed as Chief Financial Officer of the Bank to be effective from the date of his joining i.e. July 01, 2022 in place of Mrs. Rajni Saraf, who ceased to be the Chief Financial Officer of the Bank after attaining the age of superannuation on June 30, 2022.

Transfer of Shares to UT of Ladakh

The J&K Govt. General Administration Department S.O. No. 339 dated 30/10/2020 apportioned the Assets, Liabilities and Posts of the erstwhile State of Jammu and Kashmir

between the Union Territory of Jammu and Kashmir and Union Territory of Ladakh. As per the said notification, 8.23% shareholding of Jammu & Kashmir Bank Ltd as on the date of enforcement of Jammu & Kashmir Reorganisation Act, 2019 i.e. October 31, 2019 (which amounts to 13.89% of the shareholding of the erstwhile state of Jammu and Kashmir as on 31.10.2019) shall be transferred to the UT of Ladakh and then the remaining 51% of shareholding of erstwhile Jammu and Kashmir state would remain with the UT of Jammu and Kashmir. The Reserve Bank of India vide letter no. DOR. HOL.No.S481/16.01.063/2021- 22 dated July 26, 2021, has accorded approval for the said apportionment. For want of formalities, the shares earmarked to the Union Territory of Ladakh are yet to be transferred.

Acknowledgements

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

Naba Kishore Sahoo Baldev Prakash

Independent Director MD & CEO

Date: 30th July, 2022


Mar 31, 2018

To the Members,

The Board of Directors has pleasure in presenting the 80th 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, 2018.

Performance at a Glance

- The aggregate business of the bank stood at Rs.136919 Crore at the end of the financial year 2017-18.

- The total deposits of the Bank grew by Rs.7543 Crore from Rs.72463 Crore as on 31st March, 2017 to Rs.80006 Crore as on 31st March, 2018, a growth of 10.41 percent. CASA deposits of the bank at Rs.40715 Crore constituted 50.89 percent of total deposits of the bank.

- Cost of deposits for current FY stood at 5.01 percent.

- Return on Assets improved to 0.25% for the FY ended 31st March 2018 from -2.04 % for the previous financial year.

- CD Ratio improved to 71.14% as on 31st March 2018 compared to 68.75% as on 31st March 2017.

- The net advances of the Bank stood at Rs.56913 Crore as on 31st March, 2018.

- Yield on advances for the current FY stood at 8.77 percent.

- Priority sector advances (Gross) stood at Rs. 21621.43 Crore as on 31st March, 2018.

- The bank effected cumulative cash recovery, up-gradation of NPA''s and technical write-off of Rs.3098.00 Crore during FY 2017-18.

- Investment portfolio of the bank stood at Rs.18880 Crore as on 31st March, 2018.

Insurance Business

The bank earned an income of Rs.31.40 Crore from the Insurance Business. The bank mobilized business of Rs.75.15 Crore and Rs.181.98 Crore during the year in life and non-life insurance segments respectively.

Income Analysis

- The Interest income of the bank stood at 6621 Crore in the year 2017-18. Interest expenses stood at 3751 Crore for FY 2017-18. The Net Interest Income stood at Rs. 2871 Crore for FY 2017-18.

- The Net Income from operations [Interest Income plus Non-interest Income] stood at Rs.7117 Crore in the financial year 2017-18.

- The Operating Expenses registered an increase of 274 Crore during the financial year 2017-18 and stood at Rs.1984 Crore as compared to Rs.1710 Crore in 2016-17.

- The Cost to Income ratio (Operating Expenses to Net Operating Income) stood at 58.95 percent in the financial year 2017-18.

Gross Profit

The Gross Profit for the financial year 2017-18 stood at Rs. 1381.87 Crore.

Provisions

The Provision for Loan Losses, Standard Assets, Taxation and others aggregated to Rs.1179 Crore in the financial year 2017-18.

Net Profit/Loss

The bank registered a Net Profit of Rs.202.72 Crore for the financial year 2017-18.

Dividend

In order to conserve/ augment capital base of the Bank, your directors do not recommend any dividends for the financial year 2017-18.

Branch/ATM Network

During the financial year 2017-18, 39 new branches were established, thereby taking the number of branches to 904 as on 31-03-2018, spread over 20 states and one union territory. The area-wise breakup of the branch network (excluding extension counters/ mobile branches and Service branches) on the basis of census 2011 as at the end of FY 2017-18 is as under:

Area

Branches

Metro

170

Urban

106

Semi-Urban

152

Rural

476

Total

904

During the financial year 2017-18, 103 ATMs were commissioned thereby taking the number of ATMs to 1199 as on 31.03.2018.

Net Worth and Capital Adequacy Ratio (CRAR)

- The Net Worth of the bank stood at Rs.6161.21 Crore on 31st March 2018.

- Capital Adequacy Ratio under Basel III stood at 11.42 percent as on March, 2018. The tier I component of CRAR is 9.24 percent as on 31st March 2018. Book Value per Share for the financial year 2017-18 stood at Rs.110.60.

Advertising & Publicity

Promoting our brand image proactively, we successfully positioned our brand image deep within the evolving public consciousness thereby enhancing our brand value during the financial year 2017-18. The bond of trust between stakeholders and the bank was further cemented through effective and needful messaging at relevant junctures throughout the financial year.

The bank''s products, services and facilities were successfully advertised across the operational geographies. Besides it''s functioning and achievements were effectively communicated to the respective target audiences including customers, shareowners, stakeholders and general public through customized and efficiently packaged messages using relevant multi-media outlets across the country. Leveraging its presence in the social-media universe, the bank firmed up its online presence further to enhance its brand image using highly popular mediums of social connectivity platforms like Facebook and Twitter.

Capital

In order to meet the needs of its growing business, including long term capital requirements for pursuing its growth plans and to maintain its Capital Adequacy Ratio as per the regulatory guidelines/ norms laid down by the Reserve Bank of India, your Bank made Preferential Allotment of 3,55,25,321 equity shares of Re. 1/- each fully paid up for cash to the Government of Jammu and Kashmir at the issue price of Rs. 79.38 (Rupees Seventy Nine and Thirty Eight Paisa only) per Equity Share (including premium of Rs. 78.38 per Equity Share) aggregating to Rs. 282 crores during the year under report. Further the Bank also raised unsecured, redeemable, subordinated, non-convertible, Basel III compliant Tier 2 bonds in the nature of debentures for inclusion in Tier 2 Capital of the Bank of face value of Rs. 10.00 lacs each at par aggregating to Rs. 500 crores.

Subsidiary Company

As on March 31, 2018, your Bank had one unlisted Subsidiary, JKB Financial Services Limited (JKBFSL). Salient features of the financial statement of JKBFSL are attached herewith as Annexure 5.

Performance & Financial Position of JKBFSL

The operating income of the Company for the year ended 31st March, 2018 stands at Rs. 5.49 Crores. Other incomes of the company stood at Rs. 49.59 lacs. The Total income of the Company for the year ended 31st March, 2018 stood at Rs. 5.98 Crores. The net loss of the company for the financial year ended 31st March, 2018 stood at Rs. 2.19 Lacs, increased its accumulated net loss to Rs. 3.63 Crores as on 31st March, 2018.

Regional Rural Bank Sponsored by J&K Bank: J&K Grameen Bank J&K Grameen Bank (JKGB)

The J & K Grameen Bank has come 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 01.07.2009.

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 31-03-2018): 217 No. of Employees (as on 31-03-2018): 1021

Capital Structure:

In terms of the RRBs Act 1976, the authorized capital of Regional Rural Banks was fixed at Rs.5.00 Crore (which stands amended to Rs. Two Thousand Crore in terms of the Regional Rural Banks (Amendment) Act, 2015 notified in the Gazette of India on 12-05-2015). The issued and paid up capital of the J&K Grameen Bank is Rs.97.16 Crore fully subscribed by the Central Government, State Government and Sponsor Bank in the ratio of 50:15:35 respectively. The details are tabulated hereunder:

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

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 the Bank as on 31.03.2018 (Audited)

Business:

The total business of the bank as on 31st March 2018 stood at Rs.4999.44 crore against Rs.4632.66 crore as on 31st March 2017, thereby showing an increase of Rs.366.78 crore registering a growth of 7.92% during the financial year 2017-18.

Deposits:

The deposits of the bank have increased from Rs.3230.43 crore to Rs.3404.63 crore during the financial year 2017-18 thereby registering a growth rate of 5.39%.

Advances:

The gross advances of the Bank as on 31st March 2018 stood at Rs.1594.81 crore as against Rs.1402.24 Crore as on the corresponding date of the previous year recording a growth of 13.73%

CD Ratio:

The C.D. Ratio of the bank has increased by 3.43% from 43.41% as on 31st March 2017 to 46.84% as on March 31, 2018. Priority Sector Advances:

The priority sector advances outstanding as on 31st March 2018 stood at Rs.1235.21 crore against Rs.1058.86 crore outstanding as on 31st March 2017, registering a growth of 16.65% (Rs.176.35 crore) on YoY basis.

RRB specific benchmark of 75% portion of priority sector advances to total advances outstanding has been well maintained with 77% advances portfolio comprising of Priority Sector loans.

NPA Position:

The gross NPA level of the Bank as on 31.03.2018 is at Rs.175.38 crore i.e. 11.00% of the gross advances. The Net NPAs as on 31.03.2018 stood at Rs. 97.17 crore which accounts for 6.41% of net advances.

Business per Employee:

The business per employee as on 31st March 2018 stood at Rs.4.90 crore against Rs.5.01 crore as on corresponding date of the previous year.

Business per Branch:

The business per branch as on 31st March 2018 stood as Rs.23.04 crore against Rs.21.34 crore as on corresponding date of the previous year recording a growth of 7.97%.

Profitability:

Against Net Loss of Rs.13.07 crore recorded for the previous FY 2016-17, the bank has recorded Net Profit of Rs.14.10 crore for the year ended 31st March 2018.

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 2017-18 was launched in time and its implementation was monitored on quarterly intervals in State Level Bankers'' Committee meetings. During the FY 2017-18 Banks have extended a total credit of Rs.23,592.91 Crore in favour of 7,33,025 beneficiaries (both under Priority as well as Non-priority Sector) against annual target of Rs.28,841.64 Crore for 9,66,047 beneficiaries under Annual Credit Plan 2017-18, thereby registering achievement of 82% in financial terms and 76% in physical terms.

This includes Priority Sector credit of Rs.12,817.84 Crore disbursed in favour of 4,62,136 beneficiaries against the annual target of Rs.19,933.02 Crore for 7,40,847 beneficiaries (constituting 64% achievement in financial terms and 62% in physical terms) and Non-Priority Sector credit of Rs.10,775.06 Crore disbursed in favour of 2,70,889 beneficiaries against annual target of Rs.8,908.62 Crore for 2,25,200 beneficiaries (constituting achievement of 121% in financial and 120% in physical terms).

Out of the total Priority Sector credit of Rs.12,817.84 Crore disbursed by all banks in the State during FY 2017-18, J&K Bank alone has disbursed Rs.8,912.08 Crore against the target of Rs.10,646.34 Crore, thereby achieving 84% of its annual ACP target which accounts for a share of 70% of the total flow of credit to priority sector by all banks together in the State during FY 2017-18.

During the FY 2017-18, following meetings were conducted:

- Four J&K State Level Bankers Committee (SLBC) meetings, viz. 104th, 105th, 106th and 107th were held on 29th June 2017, 29th August 2017, 21st December 2017 and 21st February 2018 respectively.

- Sub-Committee of Empowered committee on MSMEs held on 21st April 2017.

- A special SLBC meeting on banking related security issues held on 5th May 2017.

- Sub-Committee of J&K SLBC on Export Promotion held on 25th August 2017.

- A meeting of Steering Sub-Committee of J&K SLBC to monitor IT-enabled Financial Inclusion, FLCCs & Credit Plus Activities held on 11th October, 2017.

- Steering Sub-Committee of SLBC on SHGs held on 12th February 2018.

- A meeting of the Sub-Committee of SLBC to approve Annual Credit Plan for FY 2018-19 held on 29th March, 2018.

Implementation of Financial Inclusion Plan (FIP)

- 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 villages.

- Roadmap for opening "Brick & Mortar" branches or CBS-Enabled Banking Outlets in the villages with population more than 5000 where there is no branch of any Scheduled Commercial Bank was formulated. J&K SLBC, in coordination with concerned Lead District Managers, identified 104 villages out of the total 235 villages with population of more than 5000 (as per Census 2011) in J&K, without any branch of 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 (J&K Bank - 48; SBI - 15; PNB - 11; HDFC Bank - 11; ICICI Bank - 5; Canara Bank - 5; UCO Bank - 5; Central Bank of India - 4) for opening "Brick & Mortar" branches or CBS-Enabled Banking Outlets in the allocated villages. As at 31.03.2018, 15 villages have been covered for banking services with opening 6 branches and 9 CBS-Enabled Banking Outlets in the identified villages. Out of the 15 villages covered, 5 branches have been opened by J&K Bank and 1 branch and 6 CBS-Enabled Banking Outlets opened by SBI and 3 CBS-Enabled Banking Outlets opened by UCO Bank.

Responsibility of setting up of RSETIs in J&K State:

In terms of guidelines issued by Ministry of Rural Development, 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 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 SBI as yet. The Performance of RSETIs in conducting training programmes and the number of persons benefited through credit linkage is being reviewed in quarterly SLBC meetings.

Responsibility of 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. In addition, PNB, JKGB, EDB and J&K State Cooperative Bank have also established 4, 2, 2 & 1 FLCs respectively in various districts of the state which takes the total number of FLCs in J&K State to 31. The performance of FLCs in conducting the Financial Literacy Camps as per the guidelines from RBI is being reviewed at various forums including quarterly SLBC Meetings.

100% coverage of farmers under KCC Scheme

The initiative of 100% coverage of farmers under KCC Scheme with the target to cover 9.81 lakh interested farm operating families (target fixed by Agriculture Production Deptt.) which was launched in J&K State in January 2012 in terms of directives of GoI, MoF stands accomplished in the State. Banks operating in J&K State have issued a total of 10,46,548 KCCs to the farm operating families in the state upto March 2018 to whom a cumulative credit of Rs.10,361.27 Crore stands disbursed.

Board of Directors

Your Bank has thirteen (13) Directors consisting of two (2) promoter Directors including Chairman & CEO, 12 Non Executive

Directors, including One RBI Nominee Director as on 31st March, 2018.

Independent and Non - Independent Non Independent Executive Director

Mr. Parvez Ahmed, Non Independent Executive Director has been serving as the Chairman & CEO of the Bank since October 6, 2016, with the approval of Reserve Bank of India (RBI).

Non Independent Non Executive Director

Mr. Navin Kumar Choudhary, IAS, Principal Secretary to Govt. of J&K, Finance Department, Mr. Abdul Majid Mir, Mr. Azhar ul Amin, Mr. Dhaman Kumar Pandoh and Mr. Rahul Bansal are the Non Independent Non Executive Director of the Bank.

Independent Non-Executive Director

In terms of the definition of ‘Independent Director'' as prescribed under Regulation 16(b) of the SEBI (Listing Obligation 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 Directors:-

1. Mr. Mohammad Maqbool Rather

2. Mr. Mohammad Ashraf Mir

3. Dr. Pronab Sen

4. Mrs. Vijayalakshmi R. Iyer

5. Dr. Sanjiv Agarwal

6. Mr. Sunil Chandiramani

All Independent Directors of the Bank have given their respective declarations stating that they meet the criteria of Independence as laid down under the applicable laws and in the opinion of the Board, the independent directors meet the said criteria.

Reserve Bank Nominee Director

Mr. Yogesh Kumar Dayal, General Manager, 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

Mr. Azhar-ul Amin, was re-appointed at the 79th Annual General Meeting of the Bank held on 17th June, 2017 as Director liable to retire by rotation. Mr. Mohammad Maqbool Rather, Mr. Mohammad Ashraf Mir, Dr. Pronab Sen, Mrs. Vijayalakshmi R. Iyer, Dr. Sanjiv Agarwal and Mr. Sunil Chandiramani, were appointed as Independent Directors for a period of two years at the same meeting.

None of the Directors has resigned during the year under review.

Appointments/Resignations of the Key Managerial Personnel

Mr. Parvez Ahmed, Chairman & CEO, Mr. Pushap Kumar Tickoo, Chief Financial Officer and Mr. Mohammad Shafi Mir, Company Secretary are the Key Managerial Personnel of the Bank. Mr. Pushap Kumar Tickoo, was appointed as Chief Financial Officer of the Bank with effect from 22-07-2017 in place of Mr. S. K. Bhat who ceased to be CFO of the Bank consequent upon attaining the age of superannuation with effect from 13.05.2017.

None of the Key Managerial Personnel has resigned during the year under review.

Number of Meetings of the Board

During the year under review, Twelve Board Meetings were held, in due compliance with statutory provisions, on the following dates: 15.04.2017, 13.05.2017, 29.05.2017, 22.07.2017, 19.08.2017, 22.09.2017, 27.10.2017, 19.12.2017, 26.12.2017, 31.01.2018, 19.02.2018, 12.03.2018

Committees of the Board

The Bank has following committees of the Board:

- Management Committee

- Audit Committee

- Monitoring of Large Value Frauds/Frauds Review/Wilful Defaulters Classification Review Committee

- Stakeholders Relationship Committee

- Information Technology Strategy Committee

- Corporate Social Responsibility Committee

- Integrated Risk management Committee

- Customer Service Committee

- Nomination and Remuneration Committee

- Legal and Impaired Assets Resolution Committee

- Human Resource Development 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. (http://www.jkbank.net).

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

Board shall be assessed by Independent Directors as to whether Board of the Bank is a professional and an active Board which meets frequently during the year to chart out policies and practices, ensuring that principles of Corporate Governance, both as imbibed in law and regulations and those expected by stakeholders, are religiously and voluntarily complied with and the stakeholder''s interests are kept at utmost high level.

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 19th December, 2017

The process for performance evaluation is as under:

- In conformity with the statutory requirement, the performance evaluation of all the independent directors shall be done by the Board, which shall submit its report to the Chairman with necessary comments and suggestive course of action arising out of the evaluation,

- Independent Directors shall evaluate the performance of non - independent directors and Board as a whole and shall submit its report to the Board for necessary comments and suggestive course of action arising out of the evaluation.

- The performance evaluation of the Committees of the Board shall be conducted by the entire Board.

- Atleast one Meeting of the Independent Directors on the Board of the Bank shall be held every year to review the performance of non-Independent directors including the Chairman and the Board as a whole.

The criteria for performance evaluation are as under:

Performance Evaluation of Chairman & CEO

Managing Relationships, Leadership, Roles and Responsibilities and other parameters, Responsibility towards stakeholders; Contribution in Strategic Planning; Compliance and Governance; Participation and Updation of Knowledge.

Performance Evaluation of Board

Composition and Diversity; Committees of the Board; Board & Committee meetings; Cohesiveness of Board decisions; Board Procedure; Performance Culture; Discussions at Board Meetings; Understanding of the business of the Bank; Understanding the role and effectiveness; Foresight to avoid crisis and effectiveness in crisis management; Understanding of the regulatory environment; Strategy and Growth; Risk Management and Financial Controls; Quality of Decision making and Board''s Communication systems.

Performance of the Board Level Committees

Composition and Balance of skill sets; Frequency and duration; Interaction with the Board.

Corporate Governance

The Bank has established a tradition of exemplary practices in corporate governance. It encompasses not only regulatory and legal requirements, but also several voluntary practices, aimed at high level business ethics, effective supervision and enhancement of stakeholder volume. Several matters have been voluntary included in the statement on corporate governance annexed to this report, besides certificate from the Central Statutory Auditors regarding compliance of conditions of Corporate Governance as stipulated by the SEBI (Listing Obligations & Disclosure Requirement) Regulations, 2015.

Management Discussion and Analysis

The Management Discussion and Analysis Report for the year under review are presented in a separate section forming part of this Report.

Whistle Blower policy & 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 (www.jkbank.net)

Risk Management

Bank has adopted a robust, comprehensive and well-defined Risk management framework. Whilst Board is responsible for framing, Implementing, monitoring and reviewing of risk management framework, Bank''s risk management processes are guided by well-defined policies appropriate for various risk categories, independent risk oversight and periodic monitoring through the sub-committees of the Board of Directors. The Board sets the overall risk appetite and philosophy for the Bank. The Board of Directors, the Integrated Risk Management Committee of the Board, which is a sub-committee of the Board, review various aspects of risk arising from the businesses of the Bank. Three Executive/ senior management committees; Credit Risk Management Committee (CRMC), Operational Risk Management Committee (ORMC) and Market Risk Management Committee (MRMC) operate within the broad risk management framework of the Bank.

The Bank has put in place policies relating to management of credit risk, market risk, operational risk, asset-liability and Pillar

II risks. Risk management is administered by Executive/ senior management committees through Integrated Risk Management Department (IRMD). IRMD has three dedicated divisions for credit risk, operational risk and market risk management. Business continuity plan and Information security plan also forms part of risk management functions in the Bank. Treasury activities are separately monitored by mid office, which reports to IRMD. The Bank has formulated a comprehensive Stress Testing Policy to measure impact of adverse stress scenarios on the adequacy of capital. The stress scenarios are idiosyncratic, market wide and a combination of both.

The key components of the Bank''s risk management rely on the risk governance structure, comprehensive processes and internal control mechanism based on approved policies and guidelines. The Bank''s risk management framework focuses on the key areas of risk such as credit, market, operational risk and liquidity risk and quantification of these risks, wherever possible, for effective and continuous monitoring and control.

Business Responsibility Report

In terms of Regulation 34(2)(f) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, top 500 Listed Entities based on their market capitalization as on 31st March every year are required to submit their Business Responsibility Report (BRR) as a part of the Annual Report. The Bank''s Business Responsibility Report describing the initiatives taken by the Bank from an environmental, Social and governance perspective has been attached as "Annexure 7" to this Annual Report.

Loans, Guarantees & 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. 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://jkbank. net/others/common/policy.php) Statement of related party transactions under sub section (1) of section 188 of the Companies Act, 2013 is attached herewith as Annexure 6.

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 80th 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, 2018 form part of this Annual Report.

Auditors 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 four (4) Central Statutory auditors appointed by the C&AG of India for the year under review as under:

1. O.P Garg & Co, Chartered Accountants, Jammu

2. P.C Bindal & Co, Chartered Accountants, Srinagar

3. K.K Goel & Associates, Chartered Accountants, Jammu

4. Verma Associates, Chartered Accountants, Srinagar

Secretarial Auditors

Pursuant to Section 204 of the Companies Act 2013, your Bank has appointed M/s DSMR & Associates, Practicing Company Secretaries, Hyderabad as its Secretarial Auditors to conduct the secretarial Audit of the Bank for the FY 2017-18. 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 2017-18 is annexed to this report as Annexure 2.

Employee Remuneration

A. PARTICULARS OF EMPLOYEES AS PER RULE 5(2) OF THE COMPANIES (APPOINTMENT AND REMUNERATION OF MANAGERIAL PERSONNEL) RULES, 2014 FOR THE YEAR ENDED 31st MARCH, 2018, ARE AS UNDER:

I. Employed Throughout the Financial Year and in Receipt of Remuneration Aggregating Rs. 1.02 Cr. or more Per Annum: NIL

II. Employed for a Part of the Financial Year and in Receipt of Remuneration Aggregating Rs. 8,50,000/- 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.

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 conservation of energy.

The operation of the bank are not energy intensive, however adequate measures have been taken for reducing carbon footprint as mentioned below:

- Banks Data centre is hosted at a high energy efficient and environment friendly Data Centre at Noida.

- Bank has discontinued paper circulars/newsletters for internal communication for which a dedicated intranet site is maintained.

- To discontinue paper based regulatory and internal reporting, Bank has placed an automated MIS system.

- Bank uses energy star compliant computing and communication hardware.

- Web Page for Green Banking

(ii) The steps taken by the company for utilizing alternate sources of energy.

Though the operations of the Bank are not energy intensive, however, Bank shall explore alternative sources of energy, as and when necessity arises.

(i) The capital investment on energy conservation equipment.

INR 15.71 Crores. (On procuring energy star compliant servers and desktops)

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.

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 processes.

(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. Mobile banking Application Upgrade

To provide user friendly and robust Mobile banking application, mobile banking upgrade was initiated. The new mobile banking application was designed with enhanced features vis-a-vis IMPS and PDD bill payment and has been made live for public. As of now following functionalities are live:-

i) Balance Inquiry ii) Statement iii) Stop Cheque iv) All Intra Bank Transactions v) NEFT vi) IMPS vii) PDD Bill payment viii) Mobile Bill Payment / Recharge ix) DTH Recharge x) QR Code

b. Digital Transformation

Apart from several initiatives taken by the bank in its continued efforts to provide better, prompt and efficient services to the customers, digital transformation was pushed at the highest level to enable customers use digital channels of the bank. These efforts resulted in a substantial growth in digital ecosystem of the bank with an overall 22% increase in digital transactions.

c. IT Security

The Bank has Information Security Policy which is approved by Board and reviewed each year to keep it updated as per latest trend and best practices. Bank has got ISO 27001:2013 Certification for Data centre operations, Data Centre Facility and DR Site.

(iii) In case of imported technology (imported during the last three years reckoned from the beginning of the financial year): None

(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 outflow.

During the year ended March 31st 2018 the Bank earned Rs 156.34 lacs and spent Rs 55.09 lacs in foreign currency. The term does not include Foreign Currency cash flow in derivatives and Foreign currency exchange transaction".

(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. No such case was reported during the period under report.

(4) No Stock options were issued to the Directors 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, 2018 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.

Adequacy of Internal Financial Controls related to Financial Statement

The Bank has adequate internal controls and processes in place with respect to its financial statements which provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements. These controls and processes are driven through various policies, procedures and certifications. The processes and controls are reviewed periodically. The Bank has a mechanism of testing the controls at regular intervals for their design and operating effectiveness to ascertain the reliability and authenticity

of financial information.

CEO &CFO Certification

Certificate issued by Mr. Parvez Ahmed, Chairman & CEO and Mr. P.K Tickoo, CFO of the Bank, for the financial year under review, was placed before the Board of Directors at its meeting held on 30th May, 2018, in terms of Regulation 17(8) of the Listing Regulations.

Acknowledgements

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

Parvez Ahmed Chairman & CEO

Place: Srinagar (J&K)

Date: 30th May, 2018


Mar 31, 2017

To the Members,

The Board of Directors has pleasure in presenting the 79th 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, 2017.

Performance at a Glance

- The aggregate business of the bank stood at Rs.112279.20 Crore at the end of the financial year 2016-17.

- The total deposits of the Bank grew by Rs. 3072.84 Crore from Rs. 69390.25 Crore as on 31st March, 2016 to Rs.72463.09 Crore as on 31st March, 2017, a growth of 4.43 percent. CASA deposits of the bank at Rs. 37460.16 Crore constituted

51.70 percent of total deposits of the bank.

- Cost of deposits for current FY stood at 5.87 percent.

- The net advances of the Bank stood at Rs. 49816.11 Crore as on 31st March, 2017.

- Yield on advances for the current FY stood at 10.02 percent.

- Priority sector advances (Gross) stood at Rs. 15317.24 Crore as on 31st March, 2017.

- The bank effected cumulative cash recovery, up-gradation of NPA’s and technical write-off of Rs. 1647.02 Crore during FY 2016-17.

- Investment portfolio of the bank stood at Rs. 21290.89 Crore as on 31st March, 2017.

Insurance Business

The bank earned an income of Rs. 32.82 Crore from the Insurance Business. The bank mobilized business of Rs. 210.46 Crore and Rs. 145.89 Crore during the year in life and non-life insurance segments respectively.

Income Analysis

- The Interest income of the bank stood at Rs. 6685.80 Crore in the year 2016-17. Interest expenses stood at Rs. 4173.86 Crore for FY 2016-17. The Net Interest Income stood at Rs.2511.94 Crore for FY 2016-17

- The Net Income from operations [Interest Spread plus Non-interest Income] stood at Rs. 3004.80 Crore in the financial year 2016-17.

- The Operating Expenses registered an increase of Rs.164.26 Crore during the financial year 2016-17 and stood at Rs. 1710.46 Crore as compared to Rs.1546.20 Crore in 2015-16.

- The Cost to Income ratio (Operating Expenses to Net Operating Income) stood at 56.92 percent in the financial year 2016-17.

Gross Profit

The Gross Profit for the financial year 2016-17 stood at Rs.1294.34 Crore.

Provisions

The Provision for Loan Losses, Standard Assets, Taxation and others aggregated to Rs. 2926.63 Crore in the financial year 2016-17.

Net Profit/Loss

The bank registered a Net loss of Rs. 1632.29 Crore for the financial year 2016-17.

Branch/ATM Network

During the financial year 2016-17, 8 new branches were established, thereby taking the number of branches to 865 as on 31-03-2017, spread over 20 states and one union territory. The area-wise breakup of the branch network (excluding extension counters/ mobile branches and Service branches) on the basis of census 2011 as at the end of FY 2016-17 is as under:

Area Branches

Metro 167

Urban 101

Semi-Urban 146

Rural 451

Total 865

During the financial year 2016-17, 90 ATMs were commissioned thereby taking the number of ATMs to 1096 as on 31.03.2017.

Net Worth and Capital Adequacy Ratio (CRAR)

- The Net Worth of the bank stood at Rs. 5676.50 Crore on 31st March 2017.

- Capital Adequacy Ratio under Basel III stood at 10.80 percent as on March, 2017. The tier I component of CRAR is 8.70 percent as on 31st March 2017. Book Value per Share for the financial year 2016-17 stood at Rs. 116.80.

Advertising and Publicity

Promoting our brand image proactively, we successfully positioned our brand image deep within the evolving public consciousness thereby enhancing our brand value during the financial year 2016-17. The bond of trust between stakeholders and the bank was further cemented through effective and needful messaging at relevant junctures throughout the financial year.

The bank''s products, services and facilities were successfully advertised across the operational geographies. Besides it''s 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. Leveraging its presence in the social-media universe, the bank firmed up its online presence further to enhance its brand image using highly popular mediums of social connectivity platforms like Face book and Twitter.

Subsidiary Company

As on March 31, 2017, your Bank has one unlisted Subsidiary, JKB Financial Services Limited (JKBFSL).Salient features of the financial statement of JKBFSL are attached herewith as Annexure 5.

Performance and Financial Position of JKBFSL

The operating income of the Company for the year ended 31st March, 2017 stands at Rs. 438.62 lacs. Other incomes of the company stood at Rs. 88.12 lacs. The Total income of the Company for the year ended 31st March, 2017 stood at Rs. 526.75 lacs. The net loss of the company for the financial year ended 31st March, 2017 stood at Rs. 48.37 Lacs, increased its accumulated net loss to Rs. 360.34 lacs as on 31st March, 2017.

Regional Rural Bank sponsored by J&K Bank:

J&K Grameen Bank

The J & K Grameen Bank has come 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 01.07.2009.

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 31-03-2017): 217

No. of Employees (as on 31-03-2017): 925

Capital Structure:

In terms of the RRBs Act 1976, the authorized capital of Regional Rural Banks was fixed at Rs.5.00 Crore (which stands amended to Rs. two thousand crore in terms of the Regional Rural Banks (Amendment) Act, 2015 notified in the Gazette of India on 12-05-2015). The issued and paid up capital of the J&K Grameen Bank is Rs.97.16 Crore fully subscribed by the

Central Government, State Government and Sponsor Bank in the ratio of 50:15:35 respectively. The details are tabulated hereunder:

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

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 the Bank as on 31.03.2017 (Un-audited)

Business:

The total business of the bank as on 31st March 2017 stood at Rs. 4633.97 crore against Rs.4171.37 crore as on 31st March 2016, thereby showing an increase of Rs. 462.60 crore registering a growth of 11.09% during the year 2016-17.

Deposits:

The deposits of the bank have increased from Rs. 2833.84 crore to Rs.3230.42 crore (unaudited) during the year 2016-17 thereby registering a growth rate of 13.99%.

Advances:

The gross advances of the Bank as on 31st March 2017 stood at Rs.1403.55 crore (unaudited) as against Rs.1337.53 Crore as on the corresponding date of the previous year recording a growth of 4.94%

CD Ratio:

The C.D. Ratio of the bank has decreased by 3.75% from 47.20% as on 31st March 2016 to 43.45% as on March 31, 2017 Priority Sector Advances:

The priority sector advances outstanding as on 31st March 2017 stood at Rs. 1054.48 crore against 986.06 crore outstanding as on 31st March 2016, registering a growth of 6.94% (Rs. 68.42 crore) on YoY basis.

The priority sector advances at Rs. 1054.48 crore as at the end of the FY 2015-16 constitute 75% of total advances, which is as per the prescribed benchmark of 75% for RRBs.

NPA Position:

The gross NPAs of the Bank as on 31.03.2017 stood at Rs.175.92 crore i.e. 12.53% (un-audited) of gross advances. The Net NPAs as on 31.03.2017 stood at Rs.110.54 crore which accounts for 8.26% (un-audited) of net advances.

Business per Employee:

The business per employee as on 31st March 2017 stood at Rs.5.01 crore against Rs.4.24 crore as on corresponding date of the previous year recording a growth of 18.16%.

Business per Branch:

The business per branch as on 31st March 2017 stood as Rs. 21.35 crore against Rs.19.22 crore as on corresponding date of the previous year recording a growth of 11.08%.

Profitability:

Against Net profit of Rs.2.80 crore recorded as at the end of the previous FY 2015-16, there is a net Loss of Rs. 8.28 crore as on 31st March 2017.

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 2016-17 was launched in time and its implementation was monitored on quarterly intervals in State Level Bankers'' Committee meetings. During the FY 2016-17 Banks have extended a total credit of Rs.16,802.34 Crore in favour of 5,53,975 beneficiaries (both under Priority as well as Non-priority Sector) against annual target of Rs.27,649.47 Crore for 12,42,750 beneficiaries under Annual Credit Plan 2016-17, thereby registering achievement of 61% in financial terms and 45% in physical terms.

This includes Priority Sector credit of Rs.9,331.49 Crore disbursed in favour of 3,55,838 beneficiaries against the annual target of Rs.18,267.84 Crore for 9,39,363 beneficiaries (constituting 51% achievement in financial terms and 38% in physical terms) and Non-Priority Sector credit of Rs.7,470.85 Crore disbursed in favour of 1,98,137 beneficiaries against annual target of Rs.9,381.64 Crore for 3,03,387 beneficiaries (constituting achievement of 80% in financial and 65% in physical terms).

Out of the total Priority Sector credit of Rs.9,331.49 Crore disbursed by all banks in the State during FY 2016-17 upto 31st March 2017, J&K Bank alone has disbursed Rs.6,260.38 Crore against the target of Rs.10,151.38 Crore, thereby achieving 62% of its annual ACP target which accounts for a share of 67% of the total flow of credit to priority sector by all banks together in the State during FY 2016-17

During FY 2016-17, following meetings were conducted:

- Three J&K State Level Bankers Committee (SLBC) meetings, viz. 101th, 102nd and 103rd were held on 30th May, 2016, 24th November, 2016 and 2nd March, 2017 respectively.

- Two Special meetings of J&K SLBC to discuss implementation of the Relief Measures in the areas affected by Riots/ Disturbances in J&K State, were held on 8th September, 2016 and 13th December, 2016.

- A Special Meeting of J&K SLBC for Digital Banking was held on 21st December 2016.

- A meeting of Sub-Committee of Empowered Committee on MSMEs was held on 4th May, 2016.

- A meeting of the Sub-Group on Area Development Schemes in J&K State was held on 31st August, 2016.

- A meeting of Chairman & CEO, J&K Bank with all Lead District Managers in J&K State was held on 25th November, 2016.

- A meeting of Steering Sub-Committee of J&K SLBC to monitor IT-enabled Financial Inclusion, FLCCs, & Credit Plus Activities was held on 25th January, 2017.

- A meeting of the Sub-Committee of SLBC to approve Annual Credit Plan for FY 2017-18 was held on 29th March, 2017

b. Implementation of Financial Inclusion Plan (FIP)

- 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 villages.

- The Roadmap for providing banking services through Branches/ BCs/ Other Modes in the villages with population less than 2000 was initiated as per the regulatory requirements of RBI. Accordingly 5582 villages (having population below 2000) were identified and 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) for providing banking service coverage within the scheduled timeline of August 14, 2015. All the villages were covered through various modes of banking as per the prescribed timeline.

- Roadmap for opening “Brick & Mortar” branches in the villages with population more than 5000 where there is no branch of any Scheduled Commercial Bank was formulated. J&K SLBC, in coordination with concerned Lead District Managers, identified 104 villages out of the total 235 villages with population of more than 5000 (as per Census 2011)in J&K, without any branch of branch of 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 - 48; SBI - 15; PNB - 11; HDFC Bank - 11; ICICI Bank - 5; Canara Bank - 5; UCO Bank - 5; Central Bank of India - 4 for opening the “Brick & Mortar” branches in the allocated villages by 31.03.2017. However, as on 31.03.2017 only three branches have been opened in the identified villages with 2 branches by J&K Bank and 1 branch by SBI. Reserve Bank of India recently has extended the timeline by three months i.e. the branches are now to be opened by 30.06.2017.

c. Responsibility of setting up of RSETIs in J&K State:

In terms of guidelines issued by Ministry of Rural Development, 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 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 SBI as yet. The Performance of RSETIs in conducting training programmes and the number of persons benefited through credit linkage is being reviewed regularly in quarterly SLBC meetings.

d. Responsibility of 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. In addition, PNB, JKGB and EDB have also established 4, 2 & 2 FLCs respectively in various districts of the state which takes the total number of FLCs in J&K State to 30. The performance of FLCs in conducting the Financial Literacy Camps as per the guidelines from RBI is being reviewed at various forums including quarterly SLBC Meetings.

e. 100% coverage of farmers under KCC Scheme

The initiative of 100% coverage of farmers under KCC Scheme was launched in J&K State in terms of directives of GoI, MoF. Its implementation is being vigorously pursued with all the stakeholders including banks, Agriculture Department, Lead District Managers etc. Against the total 9.81 lakh interested farm operating families under KCC Scheme in J&K State various banks upto the end of March 2017 have sanctioned 10,66,275KCCs in J&K State against which 9,45,073 KCCs have been disbursed with credit amounting to Rs.8992.15 Crore.

Board of Directors

Your Bank has Seven (07) Directors consisting of two (2) promoter Directors including Chairman & CEO, Five Non Executive Directors, including One RBI Nominee Director, as on 31st March, 2017.

Independent and Non-Independent Non Independent Executive Director

Mr. Parvez Ahmed, Non-Independent Executive Director has been serving as the Chairman & CEO of the Bank since October 6, 2016, with the approval of Reserve Bank of India (RBI).

Non Independent Non Executive Directors

Mr. Navin Kumar Choudhary, IAS, Commissioner/Secretary to Govt. of J&K, Finance Department, Mr. Abdul Majid Mir and Mr. Azhar-ul-Amin 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 Directors:-

1. Mr. Mohammad Maqbool Rather

2. Mr. Mohammad Ashraf Mir

Both the Independent Directors of the Bank have given their respective declarations stating that they meet the criteria of Independence as laid down under the applicable laws and in the opinion of the Board, the independent directors meet the said criteria.

Reserve Bank Nominee Director

Mr. Yogesh Kumar Dayal, 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. Vikrant Kuthiala, Mr. Dalip Kumar Kaul, Mr. Khaver Alam Jeelani, Directors, resigned from the Board of the Bank with effect from 29th June, 2016 owing to personal reasons.

b. Mr. J.P Sharma, Director was recalled by RBI and Mr. Yogesh Kumar Dayal was appointed in his place w.e.f 01.07.2016.

c. Mr. R.K. Gupta, Director, resigned from the Board of the Bank with effect from 31st January, 2017 owing to personal reasons.

Directors place on record their deep appreciation for the valuable services rendered by Mr. J.P Sharma, Mr. R.K. Gupta, Mr. Vikrant Kuthiala, Mr. Dalip Kumar Kaul and Mr. Khaver Alam Jeelani during their tenure as Directors of the Bank.

d. Mr. Mohammad Maqbool Rather and Mr. Mohammad Ashraf Mir were appointed as Directors by the Board of Directors to fill the casual vacancies, in the office of directors with effect from 10.08.2016

Appointments/Resignations of the Key Managerial Personnel

Mr. Parvez Ahmed Chairman & CEO, Mr. S. K. Bhat, Chief Financial Officer and Mr. Mohammad Shafi Mir, Company Secretary of the Bank are the Key Managerial Personnel. Mr. Mushtaq Ahmad on completion of his term ceased to be the Chairman & CEO of the Bank with effect from 05.10.2016 and Mr. Parvez Ahmed was appointed as Chairman & CEO of the Bank with effect from 06.10.2016. Mr.

S. K. Bhat and Mr. Mohammad Shafi Mir, were appointed as Chief Financial officer and Company Secretary by the Board of the Bank on 12th November, 2016 and 22nd November, 2016 respectively, consequent upon change in the assignments of Mr. Vagish Chander and Mr. Abdul Majid Bhat.

None of the Key Managerial Personnel has resigned during the year under review.

Number of Meetings of the Board

During the year under review, Twelve Board Meetings were held, in due compliance with statutory provisions, on the following dates:

21.04.2016, 24.05.2016, 29-6-2016, 10.08.2016, 20-09-2016, 06.10.2016, 12.11.2016, 15.12.2016, 04.02.2017, 03.03.2017, 04.03.2017, 20.03.2017

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/Frauds Review/Willful Defaulters Classification Review 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

- Human Resource Development 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. (http://www.jkbank.net).

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 same.

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 30th June, 2016 and 29th June, 2016 respectively.

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.

Performance Evaluation of Non-Executive Directors, MD & CEO and Chairman

Attendance at the meetings; Participation and contribution; Responsibility towards stakeholders; Contribution in Strategic Planning; Compliance and Governance; Participation and Updation of Knowledge.

Performance Evaluation of Board

Composition and Diversity; Committees of the Board; Board & Committee meetings; Cohesiveness of Board decisions; Board Procedure; Performance Culture; Discussions at Board Meetings; Understanding of the business of the Bank; Understanding the role and effectiveness; Foresight to avoid crisis and effectiveness in crisis management; Understanding of the regulatory environment; Strategy and Growth; Risk Management and Financial Controls; Quality of Decision making and Board''s Communication systems.

Performance of the Board Level Committees Composition and Balance of skill sets; Frequency and duration; Interaction with the Board.

Corporate Governance

The Bank has established a tradition of exemplary practices in corporate governance. It encompasses not only regulatory and legal requirements, but also several voluntary practices, aimed at high level business ethics, effective supervision and enhancement of stakeholder volume. Several matters have been voluntary included in the statement on corporate governance annexed to this report, besides certificate from the Central Statutory Auditors regarding compliance of conditions of Corporate Governance as stipulated by the SEBI (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.

Whistle Blower Policy and 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 (www.jkbank. net)

Risk Management

Bank has a comprehensive and a well-defined Risk management framework in place. The key components of the Bank''s Risk Management architecture rely on the risk governance structure, comprehensive processes and internal control mechanism based on approved policies and guidelines. The Bank''s Risk Management framework focuses on the key areas of Risk such as Credit, Market, Operational Risk and Liquidity Risk; quantification of these risks, wherever possible, for effective and continuous monitoring and control.

The Bank''s Risk management processes are guided by well-defined policies appropriate for various risk categories, independent risk oversight and periodic monitoring through the sub-committees of the Board. The Board sets the overall risk appetite and philosophy for the Bank. The Committee of Directors, the Integrated Risk Management Committee of the Board, which is a sub-committee of the Board, reviews various aspects of Risk arising from the businesses of the Bank. Three Executive/ Senior management committees; Credit Risk Management Committee (CRMC), Operational Risk Management Committee (ORMC) and Market Risk Management Committee (MRMC) operate within the broad Risk Management framework of the Bank.

The Bank has put in place policies relating to management of Pillar I and Pillar II risks. Risk management is administered by Executive/ Senior management committees through Integrated Risk Management Department (IRMD). IRMD has three dedicated divisions for Credit risk, Operational risk and Market risk management. Business Continuity plan and Information Security plan also forms part of Risk Management functions in the Bank. Treasury activities are separately monitored by mid office, which reports to IRMD. The Bank has formulated a comprehensive Stress Testing Policy to measure the impact of adverse stress scenarios on the

Business Responsibility Report

In terms of Regulation 34(2)(f) of the Listing Regulations, top 500 Listed Entities based on their market capitalization as on 31st March every year are required to submit their Business Responsibility Report(BRR) as a part of the Annual Report. The Bank''s Business Responsibility Report describing the initiatives taken by the Bank from an environmental, Social and governance perspective has been hosted on the website of the Bank, www.jkbank.net. Any member interested in obtaining a copy of the BRR may write to the Company Secretary of the Bank at its Registered Office: Corporate Headquarters, M. A. Road Srinagar.

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. 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://jkbank.net/others/common/ policy.php)

Statement of related party transactions under sub section (1) of section 188 of the Companies Act, 2013 is attached herewith as Annexure 6.

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 79th 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, 2017 form part of this Annual Report.

Auditors

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 three (3) Central Statutory auditors appointed by the C&AG of India for the year under review as under:

1. Dhar Tiku & Co, Chartered Accountants, Srinagar

2. Arora Vohra & Co, Chartered Accountants, Jammu

3. Dhram Raj & Co., Chartered Accountants, Jammu

Secretarial Auditors

Pursuant to Section 204 of the Companies Act 2013, your Bank has appointed M/s DSMR & Associates, Practicing Company Secretaries, Hyderabad as its Secretarial Auditors to conduct the secretarial Audit of the Bank for the FY 2016-17. 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 2016-17 is annexed to this report as Annexure 2. The Bank''s reply to the comments of secretarial Auditor are furnished as under.

a. Delayed submission of Form No. MGT 14, MGT 10 & AOC 4

Bank''s Response The delay in submission of the forms was due to technical problems arising in transmission of data to the Ministry of Corporate Affairs and time involved in mandatory procedural aspects before the submission of Forms.

b. Non submission of Form AOC I relating to financial details of subsidiary company and Form AOC 2 relating to Related Party Disclosure.

Bank''s Response Though the information has been provided in the Directors Report, the same has not been provided as required in the prescribed format. However, information in the prescribed Forms has been included in the Annual Report of the Bank for the year 2016-17.

c. Improper balance of independent Directors.

d. Not appointed Woman Director.

e. Non independent Directors acting as Chairman of Audit Committee and Nomination & Remuneration Committee.

f. Specific policies for listed companies relating to preservation of Documents, Determination of Materiality & Material subsidiary, not framed by the Bank.

Bank''s Response The Bank is governed by the provisions of Banking Regulation Act, 1949 and the provisions applicable to a Government Company apart from the provisions of the Companies Act, 2013 and the SEBI (Listing Obligations and Disclosure Requirements), 2015. The Bank could not appoint requisite Independent Directors as the provisions relating to appointment of Independent Directors was not provided in the Articles of Association of the Bank. The Bank had to obtain the approvals of the Reserve Bank of India and the State Government for change in the composition of the Board to comply with the provisions of the Companies Act, 2013 and Listing Regulations, 2015.

The Bank is seeking necessary approvals from the Reserve Bank of India in this regard and the modifications in the Articles of Association providing enabling provisions relating to appointment of requisite number of Independent Directors have been proposed at the ensuing Annual General Meeting. After approval of the members at the ensuing Annual General Meeting the Composition of our Board of Directors and various Committees of the Board shall be aligned with the provisions of the Companies Act, 2013 and SEBI (LODR) Regulations, 2015

The required policies as specified under SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 would be placed on the website of the Bank shortly after obtaining the approval of Board of Directors.

Employee Remuneration

A. PARTICULARS OF EMPLOYEES AS PER RULE 2 OF THE COMPANIES (APPOINTMENT AND REMUNERATION OF MANAGERIAL PERSONNEL) RULES, 2014 FOR THE YEAR ENDED 31st MARCH, 2017, ARE AS UNDER:

I. EMPLOYED THROUGHOUT THE FINANCIAL YEAR AND IN RECEIPT OF REMUNERATION AGGREGATING Rs. 60,00,000/- OR MORE PER

ANNUM NIL

II. EMPLOYED FOR A PART OF THE FINANCIAL YEAR AND IN RECEIPT OF REMUNERATION AGGREGATING Rs. 5, 00,000/- OR MORE PER MONTH

Sr.No.

Name of the Employee

Designation/ Nature of Duties

Remuneration received per month (Rs. In lakhs)

Nature of Employment

Qualification

Experience In Years

Date of Commencement of Employment

Age of the Employee (Years)

Last Employment held before joining the Company

1.

Mr. Parvez Ahmed

Chairman & Chief Executive Officer

5.50

In Whole time employment of the Bank

Associate Company Secretary (ACS)

18 years

06-10-2016

53

J&K Bank Ltd.

2.

Mr. Mushtaq Ahmad

Chairman & Chief Executive Officer

5.50

In Whole time employment of the Bank

B. A: CAIIB -I

43 years

06-10-2010 to 0510-2016

67

J&K Bank Ltd.

B. The ratio of the remuneration of each director to the median employee''s remuneration and other details in terms of sub section 12 of section 197 of the Companies Act, 2013 read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 are forming part of this report as Annexure 3.

Statutory Disclosures

(1) The disclosures to be made under sub-section (3)(m) of Section 134 of the Companies Act 2013 read with Rule (8)(3) of the Companies (Accounts) Rules , 2014 by your Bank are explained as under:

A. Conservation of energy-

(i) The steps taken or impact on conservation of energy:

- The operation of the bank are not energy intensive, however adequate measures have been taken for reducing carbon footprint as mentioned below:

- Banks Data centre is hosted at a high energy efficient and environment friendly Data Centre at Noida.

- Bank has discontinued paper circulars/newsletters for internal communication for which a dedicated intranet site is maintained.

- To discontinue paper based regulatory and internal reporting, Bank has placed an automated MIS system.

- Bank uses energy star compliant computing and communication hardware.

- Web Page for Green Banking.

(ii) The steps taken by the company for utilizing alternate sources of energy.

Though the operations of the Bank are not energy intensive, however, Bank shall explore alternative sources of energy, as and when necessity arises.

(i) The capital investment on energy conservation equipments.

INR 11.61 Crores. (On procuring energy star compliant servers and desktops).

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.

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 processes.

(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. Mobile banking Application Upgrade

To provide user friendly and robust Mobile banking application, mobile banking upgrade was initiated. The new mobile banking application was designed with enhanced features vis-a-vis IMPS and PDD bill payment and has been made live for public. As of now following functionalities are live:-

i. a)Balance Inquiry b)Statement c)Stop Cheque d) All Intra Bank Transactions e) NEFT f) IMPS g) PDD Bill payment

b. Digital Transformation

Apart from several initiatives taken by the bank in its continued efforts to provide better, prompt and efficient services to the customers, digital transformation was pushed at the highest level to enable customers use digital channels of the bank. These efforts resulted in a substantial growth in digital ecosystem of the bank with an overall 13% increase in digital transactions.

c. IT Security

The Bank has Information Security Policy which is approved by Board and reviewed each year to keep it updated as per latest trend and best practices. Bank has got ISO 27001:2013 Certification for Data centre, Operations Centre and DR Site.

(iii) In case of imported technology (imported during the last three years reckoned from the beginning of the financial year) None.

(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 outflow.

During the year ended March 31st, 2017 the Bank earned Rs. 76.93 Lacs and spent Rs. 60.50 Lacs in Foreign currency. This does not include Foreign Currency cash flows in derivatives and Foreign currency exchange transactions.

(2) No significant and material orders were passed by the regulators or courts or tribunals impacting the going concern status of the Bank''s operations in future.

(3) Number of cases filed, if any, and their disposal under Section 22 of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and redressal) Act, 2013.

Your Bank has Zero tolerance towards any action on the part of any executive/employee which may fall under the ambit of ‘Sexual Harassment'' at workplace, and is fully committed to uphold and maintain the dignity of every women executive/ employee working in the Bank. No such case was reported during the period under report.

(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, 2017 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.

Adequacy of Internal Financial Controls related to Financial Statements

The Bank has adequate internal controls and processes in place with respect to its financial statements which provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements. These controls and processes are driven through various policies, procedures and certifications. The processes and controls are reviewed periodically. The Bank has a mechanism of testing the controls at regular intervals for their design and operating effectiveness to ascertain the reliability and authenticity of financial information.

CEO & CFO Certification

Certificate issued by Mr. Parvez Ahmed, Chairman & CEO and Mr. Surender Kishen Bhat, CFO of the Bank, for the financial year under review, was placed before the Board of Directors at its meeting held on 13th May, 2017, in terms of Regulation 17(8) of the Listing Regulations.

Acknowledgement

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

Parvez Ahmed

Chairman & CEO

Place: Srinagar (J&K)

Date: 22nd May, 2017


Mar 31, 2015

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 Liabilities

Net Interest 7,061 6,767 Income

Non Interest 594 390 Income

Operating Profit 1,836 1,900

Provisions and 1,016 148 Contingencies

Profit before Tax 821 1,752

Provision for 312 570 taxes

Net Profit 509 1,182

Amount available 509 1,182 for appropriation

Appropriations

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 Indicators

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 Crore.

Provisions

The Provision for Loan Losses, Provision on Standard Assets, Taxation and others aggregated to Rs. 1327.23 Crore in the financial year 2014-15.

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.

Dividend

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 Meeting.

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, 2013.

* 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 respectively.

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 Responsibility.

* 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 image-building.

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 01.07.2009.

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):

Business:

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.

Deposits:

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.

Advances:

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 Crore.

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.

Profitability:

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 lacs.

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 India.

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, 2014.

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, 2014.

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 review.

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; 17.03.2015.

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. ( http://www.jkbank.net). 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 same.

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, 2015.

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 chairman

Attendance at the meetings; Participation and contribution; Responsibility towards stakeholders; Contribution in Strategic Planning; Compliance and Governance; Participation and Updation of Knowledge.

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 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 in Clause 49 of the Listing Agreement.

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 Report.

Vigil Mechanism

The Bank has implemented a Whistle Blower Policy pursuant to which Whistle Blowers can raise concerns relating to reportable matters (as defined in the policy) such as breach of J&K Bank Code of Conduct, fraud, bribery, corruption, employee misconduct, illegality, health & safety, environmental issues and wastage/misappropriation of banks funds/assets, etc. Further, the mechanism adopted by the Bank encourages the Whistle Blower to report genuine concerns or grievances and provides for adequate safeguards against victimization of Whistle Blower who avail of such mechanism and also provides for direct access to Chairman of the Audit Committee, in exceptional cases. The details of the Whistle Blower Policy are available on the website of the Bank (http://www.jkbank.net)

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 (http://www.jkbank.net/ disclosure&policy/relatedpartytransactionspolicy.html)

Consolidated Financial Statements

Pursuant to Section 129 of the Companies Act, 2013, the Bank has prepared Consolidated Financial Statements of the Bank and also of its Subsidiary, JKBFSL, in the same form and manner as that of the Bank which shall be laid before the ensuing 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 effectively.

Auditors

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

A. PARTICULARS OF EMPLOYEES AS PER RULE 2 OF THE COMPANIES (APPOINTMENT AND REMUNERATION OF MANAGERIAL PERSONNEL) RULES, 2014 FOR THE YEAR ENDED 31st MARCH, 2015, ARE AS UNDER:

I. EMPLOYED THROUGHOUT THE FINANCIAL YEAR AND IN RECEIPT OF REMUNERATION AGGREGATING Rs. 60,00,000/- OR MORE PER ANNUM

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 the company

Mr. B. A: 43 years 06-10-2010 64 J&K Bank Mushtaq CAIIB-I Ltd. Ahmad

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.

II. EMPLOYED FOR A PART OF THE FINANCIAL YEAR AND IN RECEIPT OF REMUNERATION AGGREGATING Rs. 5, 00,000/- OR MORE PER MONTH NIL

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 newsletter.

* 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 energy:

* 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. 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 processes.

(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 Bank.

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).

Nil

(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 outflow.

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 transactions.

(2) No significant and material orders were passed by the regulators or courts or tribunals impacting the going concern status of the Bank's operations in future.

(3) Number of cases filed, if any, and their disposal under Section 22 of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and redressal) Act, 2013.

Your Bank has Zero tolerance towards any action on the part of any executive/employee which may fall under the ambit of 'Sexual Harassment' at workplace, and is fully committed to uphold and maintain the dignity of every women executive/ employee working in the Bank.

(4) No Stock options were issued to the Director's of your Bank

Extracts of annual Return

Pursuant to sub-section 3(a) of Section 134 and sub-section (3) of Section 92 of the Companies Act 2013, read with Rule 12 of the Companies (Management and Administration) Rules, 2014 the extracts of the Annual Return as at March 31, 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.

acknowledgement

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


Mar 31, 2014

1. 1.1. Your Board of Directors have pleasure in

presenting the 76th Annual Report of your bank, together with the audited Balance Sheet, Proft and Loss Account and the report on business and operations for the year ended March 31, 2014.

1.2. The bank has delivered a strong performance in 2013-14. The bank''s strategy of consolidation, re- engineering, re-pricing and re-organization has resulted in productive and effcient growth, robust balance sheet, reality asset book and substantial provisions. Financial highlights for the year under review are presented below:

2. PERFORMANCE AT A GLANCE

2.1 The aggregate business of the bank stood at Rs.115720.46 Crore at the end of the fnancial year 2013-14, an increase of Rs. 12299.43 Crore over the previous year''s fgure of Rs.103421.03 Crore. In percentage terms, the growth registered was 11.89%.

2.2 The total deposits of the bank grew by Rs.5115.24 Crore from Rs.64220.62 Crore as on 31st March, 2013 to Rs.69335.86 Crore as on 31st March, 2014. CASA deposits of the bank at Rs.27083 Crore constituted 39.06 % of total deposits of the bank.

2.3 Cost of deposits for current FY stood at 6.70%.

2.4 The bank continued its prudent approach in expanding quality credit assets in line with its policy on Credit Risk Management. The net advances of the bank increased by Rs.7184.19 Crore from Rs.39200.41 Crore as on 31st March, 2013 to Rs.46384.60 Crore as on 31st March, 2014, a growth of 18.33%.

2.5 Yield on advances for the current FY stood at 12.23 %.

2.6 Priority sector advances (Gross) stood at Rs.13131.66 Crore as on 31st March, 2014.

3. The bank''s performance in the recovery of NPA''s during the year continued to be good. The bank effected cumulative cash recovery, up-gradation of NPA''s and technical write-off of Rs.270.95 Crore.

4. Investment portfolio of the bank increased by Rs.454.01 Crore from Rs.25741.06 Crore as on 31st March 2013 to Rs.26195.07 Crore as on 31st March, 2014.

5. Insurance Business

5.1. The bank earned an income of Rs.31.31 Crore from the Insurance Business. In life insurance, the bank mobilized business of Rs.63.29 Crore and in non-life segment, business of Rs.113.63 Crore was mobilized during the year.

6. Income Analysis

6.1. The Interest income of the bank recorded a growth of Rs.630.20 Crore and increased from Rs.6136.80 Crore in the year 2012-13 to Rs.6767.00 Crore in the year 2013-14. Interest expenses increased from Rs.3820.76 Crore to Rs.4082.52 Crore during the year. The Net Interest Income increased from Rs.2316.04 Crore to Rs.2684.48 Crore on YoY basis.

6.2. The Net Income from operations [Interest Spread plus Non-interest Income] increased to Rs.3074.74 Crore in the fnancial year 2013-14 from Rs.2799.77 Crore in the fnancial year 2012- 13.

6.3. The Operating Expenses registered an increase of Rs.185.98 Crore during the fnancial year 2013- 14 and stood at Rs.1174.99 Crore as compared to Rs.989.01 Crore in 2012-13.

6.4. The Cost to Income ratio (Operating Expenses to Net Operating Income) stood at 38.21% in the fnancial year 2013-14.

7. Gross Proft

7.1 The Gross Proft for the fnancial year 2013-14 stood at Rs.1899.75 Crore.

8. Provisions

8.1. The Provision for Loan Losses, Provision on Standard Assets, Taxation and others aggregated to Rs.717.28 Crore in the fnancial year 2013-14.

9. Net Proft and Dividend

9.1. The bank registered a Net Proft of Rs.1182.47 Crore for the fnancial year 2013-14.

9.2. The Board of Directors has recommended a dividend of 500 per cent for the fnancial year 2013-14.

9.3. In terms of extant guidelines, the bank will pay the dividend distribution tax for the fnancial year 2013-14. Accordingly, the total outfow on account of dividend for the year 2013-14 will be Rs.283.58 Crore including the dividend distribution tax.

10. Net Worth and CRAR

10.1. The Net Worth of the bank increased to Rs.5723.61 Crore on 31st March, 2014 from Rs.4864.69 Crore on 31st March, 2013.

10.2. The bank has implemented the Basel-III guidelines on capital regulations w.e.f. June, 2013.

10.3. Capital Adequacy Ratio under Basel III stood at 12.69 % as on March, 2014 well above RBI stipulated norm of 9 %. The tier I component of CRAR is 11.22% as on 31st March, 2014.

10.4. The Return on Average Net Worth stood at 22.34% for FY 2013-14. Earnings per Share and Book Value per Share for the fnancial year 2013-14 stood at Rs.243.92 and Rs.1159.63 against Rs.217.64 and Rs.992.09 respectively for the previous year.

11. Branch/ATM Network

11.1 During the fnancial year 2013-14, 92 new branches were established, thereby taking the number of branches to 777 as on 31-03- 2014, spread over 20 states and one union territory. The area-wise breakup of the branch network (excluding extension counters/ mobile branches and Service branches) as at the end of FY 2013-14 is as under:

Area Branches

Metro 44

Urban 181

Semi-Urban 152

Rural 400

Total 777

11.2 During the fnancial year 2013-14, 187 ATMs, both onsite & offsite, were commissioned thereby taking the number of ATMs to 800 as on 31.03.2014.

12. IT initiatives during FY 2013-14

With a view to provide greater convenience and alternate channels to the customers, bank launched

various IT initiatives during fnancial year 2013-14. The details of various technology initiatives taken during FY 2013-14 are enumerated below:

Cheque Truncation System (CTS) was introduced at RCC Mumbai, Ludhiana, Nasik, Kolkata, Indore, Bhopal, Raipur, Baroda, Ahmedabad, Surat, Pune and Nagpur.

Second Factor Authentication (2FA) was introduced to strengthen the security mechanism around e-Banking transactions and to avoid proliferation of cyber attacks.

EMV cards were issued for both credit as well as debit products to further strengthen their security features.

As part of initiatives to add more features through delivery channels, Merchant payments were enabled through mobile banking.

The bank established its own payment gateway to offer e-commerce platform to its customeRs.

13. Advertising and Publicity

Continuing with our proactive brand promotion and positioning within the wider public consciousness, we maintained and enhanced our brand equity during the year.

The bank''s products, services & facilities were successfully advertised while as its functioning and achievements were effectively communicated to the respective target audiences including customers, share-owners, stakeholders and general public through properly packaged messages using wider and relevant mediums.

The bank also entered into the virtual space of social media networking to augment further its on- line presence and processes of image-building .

14. Corporate Social Responsibility-CSR

With ever-increasing focus on activities for the larger community welfare through CSR, J&K Bank retained a collective focus on its various dimensions like people and their health, environment, education and society at large. Year 2013-14 being the Platinum one, the bank remained more agile towards its societal obligations to further its vision of "People''s Empowerment through Servant Leadership". J&K Bank through its CSR activities continued to enhance value creation in the society and the community it operates in through its services, conduct and initiatives so as to promote sustained growth in fulfllment of its role as a socially responsible corporate.

15. Major CSR Initiatives taken by the Bank

Health remained the prime CSR activity of the bank. Sizeable contributions were made to various health related projects, either directly or through implementing agencies . Under "J&K Bank Health for All" bank donated fve (05) Dialysis machines to SKIMS to cater to the needs of the poor patients suffering from chronic renal failure. Bank also undertook various Health initiatives through NGOs like Cancer Society of Kashmir, Maya Foundation, and Hemophilia Society of Delhi. Free Health Camps were held at far fung areas across the state where the needy and poor patients were provided free medicines and free clinical tests. In addition, bank donated vehicles, wheel chairs and provided monetary donations to the NGOs primarily dealing with differently-abled children like Voluntary Medicare Society, Hari Prabhu Sanstha, Chotey Taarey Foundation and otheRs.

Rising to the occasion, bank responded promptly to the earthquake victims of Chenab Valley after the region was hit by it on 1st May, 2013 and donated around One Thousand (1000) tents to the victims as their households had either been completely damaged or rendered unlivable.

Education remained one of the thrust areas of the bank under CSR for the year 2013-14. In a major initiative under "Education for better tomorrow" the bank facilitated "Soft Skills Programme for Police Personnel" to educate them about dealing with the general public in stressful circumstances. More than fve thousand (5000) police personnel got beneftted through this CSR act of the bank. Bank continued its partnership with local NGOs for professionally managing education of more than 100 children having various forms of disabilities, with particular focus on children belonging to lower economic strata and orphans.

i Under its fagship programme "Save Environment/

Heritage" bank continued to maintain nine (09) i , major parks across the state.

A Bank continued to provide a fantastic blend of w banking and non-banking services to the pilgrims of Shri Amaranth cave ranging from the services of registration to insurance etc., under the aegis of CSR. Haj pilgrims and people of all other faiths were also given due cognizance and support on this front.

16. LEAD BANK RESPONSIBILITY

The J&K Bank is the only private sector bank in the country assigned with the responsibility of convening State Level Bankers'' Committee meetings. The bank continued to discharge its Lead Bank responsibility satisfactorily in 12 out of total 22 districts of J&K State, i. e. Srinagar, Ganderbal, Budgam, Baramulla, Bandipora, Kupwara, Anantnag, Kulgam, Pulwama, Shopian, Poonch and Rajouri. The other 10 districts i. e Jammu, Samba, Kathua, Udhampur, Reasi, Doda, Ramban, Kishtwar, Leh and Kargil are managed by State Bank of India.

The State Annual Credit Plan (ACP) for the FY 2013-14 was launched in time and its implementation was monitored at quarterly intervals in State Level Bankers'' Committee meetings. During the FY 2013-14 out of the total ACP target of Rs.16,322.68 Crore for the State, banks operating in the State disbursed credit of Rs.10,268.58 Crore, registering an achievement of 63%. This includes Priority Sector credit of Rs.5,701.15 Crore disbursed by banks in favour of 3,06,919 benefciaries against the target of Rs.10,142.46 Crore for 6,13,489 benefciaries (56% achievement in fnancial terms and 50% in physical terms) and Non-priority sector credit of Rs.4,567.43 Crore in favour of 1,06,569 benefciaries against the target of Rs.6,180.22 Crore for 1,67,745 benefciaries (74% achievement in fnancial terms and 64% in physical terms).

Out of the total priority sector credit of Rs.5,701.15 Crore disbursed by all banks in the State upto 31st March, 2014, J&K Bank alone disbursed Rs.3,619.13 Crore which constitutes 63.48% of the total credit provided to priority sector by all banks in the State.

During the FY 2013-14, following meetings were conducted:

- Four Quarterly State Level Bankers Committee (SLBC) meetings, viz. 89th, 90th, 91st and 92nd to review performance under ACP 2013-14 were held on 6th June, 2013, 29th August 2013, 16th December, 2013 and 10th March, 2014 respectively.

- One Special SLBC meeting was conducted on 8th May, 2013 on the occasion of visit of Hon''ble Governor, RBI, Dr. D. Subbarao to J&K State.

- Two meetings of Steering Sub-Committee of SLBC to monitor IT enabled Financial Inclusion, FLCCs & Credit plus Activities were held on 24th July, 2013 and 15th January, 2014.

- Three meetings of Sub-Committee of State Level Inter Institutional Committee (SLIIC) to discuss and work out the rehabilitation of Individual Sick MSME units in J&K State were held on 16th May, 2013, 11th October, 2013 and 8th February, 2014.

Implementation of Financial Inclusion Plan (FIP):

- The target of providing Information & Communication Technology (ICT)-based banking services in the 795 identifed unbanked villages (having population over 2000) in Phase-I of Financial Inclusion Plan was accomplished successfully by providing coverage to all the 795 villages. The progress in bringing all the house-holds in the 795 villages under the ambit of banking is being monitored regularly in quarterly SLBC meetings.

- The roadmap for coverage of 5582 villages (having population below 2000) during the years 2012-13, 2013-14, 2014-15 and beyond 2015, was formulated as per regulatory requirements of RBI. The Same was allocated to fve participating banks, viz. J&K Bank (3271 villages), SBI (753 villages), Punjab National Bank (294 villages), J&K Grameen Bank (1026 villages) and EDB (238 villages). Its implementation is being vigorously monitored by J&K Bank.

Responsibility of setting up of RSETIs in J&K State:

In terms of Ministry of Rural Development guidelines, Government of India, setting up the Rural Self Employment Training Institutes (RSETIs) in all the districts of J&K State was assigned by Lead Bank Department /J&K SLBC to two banks, viz. J&K Bank and SBI as per their Lead Bank responsibility. Accordingly, J&K Bank has set up 12 RSETIs in its allocated 12 lead districts of Srinagar, Ganderbal, Budgam, Baramulla, Bandipora, Kupwara, Anantnag, Kulgam, Pulwama, Shopian, Poonch and Rajouri. The Performance of RSETIs in conducting training camps and the number of persons benefted is being regularly reviewed in quarterly SLBC meetings.

Responsibility of setting up of FLCs in J&K State:

In terms of RBI guidelines, target of setting Financial Literacy Centres (FLCs) in all the districts of the state has been fully accomplished with J&K Bank operationalizing 12 FLCs in its 12 allocated lead districts and SBI operationalizing 10 FLCs in its 10 allocated lead districts. The performance of FLCs in conducting the Financial Literacy Camps in their respective districts is being reviewed at various meetings including SLBC meetings.

100% coverage of farmers under KCC Scheme:

The initiative of 100% coverage of farmers under Kissan Credit Card (KCC) Scheme was launched in J&K State in compliance to directives of Ministry of Finance, Government of India. Its implementation is being vigorously pursued with all the stakeholders including banks, Agriculture Department, Lead District Managers etc. Upto the end of March 2014, banks have sanctioned a total number of 7, 44,470 KCCs in J&K State against which 5, 86,364 KCCs amounting to Rs.3,718.68 Crore have been disbursed.

Regional Rural Bank sponsored by J&K Bank:

The J & K Grameen Bank came into existence on 30th June, 2009 with the issuance of statutory notifcation by GoI, MoF, Department of Financial Services under sub-section (1) of section 23 (A) of the Regional Rural Banks Act, 1976 vide F. No. 1/4/2006-RRB providing for amalgamation of Kamraz Rural Bank and Jammu Rural Bank into a single new Regional Rural Bank under the name of J&K Grameen Bank, with its Head Offce at Jammu. The bank commenced its business from 01.07.2009.

Area of Operation:

In terms of GoI notifcation dated 30-6-2009, the notifed area of operation of J&K Grameen Bank comprises of districts of Baramulla, Bandipora, Kupwara, Jammu, Kathua, Rajouri, Poonch, Leh and Kargil and parts of three districts viz. Ganderbal, Srinagar and Samba.

Business:

The business of the bank increased from Rs.3,022.51 Crore to Rs.3,438.09 Crore during the year 2013-14, registering a growth rate of 13.74%.

Deposits

The deposits of the bank increased from Rs.2,165.22 Crore to Rs.2,407.43 Crore during the year 2013-14, registering a growth rate of 11.18%.

Advances

The gross advances of the bank as on 31st March, 2014 stood at Rs.1,030.66 Crore as against Rs.857.29 Crore as on the corresponding date of the previous year, recording a growth of 20.22%

CD Ratio:

The CD Ratio of the bank increased by 3.22% from 39.59% as on March 2013 to 42.81% as on 31st March, 2014.

Priority Sector Advances:

The priority sector advances of the bank as on 31st March, 2014 stood at Rs.729.82 Crore as against Rs.590.61 Crore as on the corresponding date of the previous year, recording a growth of 23.57%. Priority sector advances constituted 70.81% of total advances which is much above the bench mark of 60%.

NPA Position:

The gross NPAs of the bank as on 31.03.2014 stood at Rs.85.40 Crore which accounts for 8.29% of gross advances. The Net NPA as on 31.03.2014 stood at Rs.47.44 Crore which accounts for 4.78% of net advances (Pre-audit).

Proftability:

Net Proft of the bank stood at Rs.13.44 Crore as on 31st March, 2014. (Pre-audit fgures)

CBS/ Computerization:

The bank achieved 100% CBS rollover of its branch network.

Capital to Risk-weighted Asset Ratio:

The CRAR position of J&K Grameen Bank as on 31st March, 2014 stood at 13.19%, which is much above the mandatory requirement of 9%.

Business per Employee:

The business per employee as on 31st March, 2014 stood as Rs.3.40 Crore.

Proft per Employee:

The proft per employee as on 31st March, 2014 stood as Rs.1.33 lakh.

Deposits per Employee:

The deposits per employee as on 31st March, 2014 stood as Rs.2.38 Crore.

Advances per Employee:

The advances per employee as on 31st March, 2014 stood as Rs.1.02 Crore.

Business per Branch:

The business per branch as on 31st March, 2014 stood as Rs.16.77 Crore.

Deposits per Branch:

The deposits per branch as on 31st March, 2014 stood as Rs.11.74 Crore.

Advances per Branch:

The advances per branch as on 31st March, 2014 stood as Rs.5.03 Crore.

Proft per Branch:

The Proft per branch as on 31st March, 2014 stood as Rs.6.55 lakh (Pre-audit).

17. FINANCIAL INCLUSION:

With the objective of reaching out to the large hitherto unbanked population and extend fnancial services to unlock its growth potential, the bank formulated Financial Inclusion Plan (FIP) for delivery of basic banking services in allotted identifed unbanked villages. The details of village allocation and other FIP related information is mentioned hereunder:

- SLBC has allocated 536 villages having population of above 2000 and 3271 villages having population of below 2000 to the bank for providing ICT (Information Communication Technology) based fnancial services by the end of March 2016. Bank has already brought 536 villages ( 2000 Population) under the ambit of fnancial inclusion by opening of Business units and providing BC (Business Correspondent) coverage in all the villages.

- Out of 3271 below 2000 population villages scheduled to be covered by the end of March 2016, 1696 villages have been rolled out for extending ICT based fnancial services at the end of March 2014 well above the target of 1600 villages set for FY 2013-14.

- Bank has also identifed and rolled out to BCs 340 unbanked villages under self set target, thereby taking the total number of villages rolled out under fnancial inclusion to 2572 as on March 2014.

- As on March 2014, bank had opened 124 Business units in identifed allocated villages under fnancial inclusion, comprising of 33 business units in villages having above 2000 population and 91 business Units in villages having below 2000 population.

- The target for household coverage in the rolled out villages stands at 7.56 lac, out of which 4.69 lac households have been covered which constitutes 62.09% of total households.

- 695 VLEs of CSC''s have been engaged as BC and are linked to 439 Base branches/ Business units for providing ICT enabled fnancial services in the State, thereby taking the total number of BCs to 697.

- Number of accounts opened in 2572 rolled out villages has reached 12.18 lakh comprising of 6.05 lac No Frill Accounts/ Basic saving bank deposit accounts/ ISSS/ MGNREGA and 6.13 lac other accounts.

- Upto March 2014, 69686 transactions have been generated through the operation of Smart Cards involving an amount of Rs. 14.61 Crore.

- Micro Credit products as mentioned below are being utilized for credit delivery through ICT based smart card mechanism, especially for fnancial inclusion programme.

Differential Rate of Interest (F I)

Micro Credit Card (FI)

Micro-Overdraft to Ujala accounts (F I)

RBI selected Villages (Progress/ Achievements)

- 15 model villages allocated to the bank by RBI for 100% fnancial inclusion in the State have been made functional through Smart Cards.

- 5252 smart cards have been issued in 15 RBI selected model villages and 8695 accounts have been opened.

Implementation of EBT & DBT

The J&K State Government entrusted the responsibility of execution of EBT/DBT in all the districts of the State to the J&K Bank . To start with, SLBC identifed six districts (Srinagar, Ganderbal, Rajouri, Jammu, Kargil, and Leh) on pilot basis for implementation of EBT/DBT. In these six districts, the monthly benefts under IGNOAP scheme are being released directly to benefciary accounts through the electronic mode .Validation of accounts in remaining 16 districts of the State is in progress.

Financial Literacy cum Credit Counseling Centres

- In compliance to RBI directive, the bank operationalised Financial Literacy cum Credit Counseling Centres in 12 districts in the State where J&K Bank performs the lead bank responsibility.

- 633 outdoor fnancial literacy camps have been conducted by 12 FLCs in the respective lead districts imparting training and information to 59133 persons.

Financial Literacy Camps through Rural Branches

- The bank conducted 1160 fnancial literacy camps in the villages situated in the close vicinity of various rural branches of the bank. A total of 56977 persons attended these camps.

18. CORPORATE GOVERNANCE

a) J&K Bank has established a tradition of exemplary practices in corporate governance. It encompasses not only regulatory and legal requirements, but also several voluntary practices, aimed at a high level of business ethics, effective supervision and enhancement of stakeholder value.

b) Several matters have been voluntarily included in the statement on corporate governance annexed to this report, besides certifcate from the Central Statutory Auditors regarding compliance of conditions of Corporate Governance as stipulated in Clause 49 of the Listing Agreement.

19. BOARD OF DIRECTORS

a. Mr. Mushtaq Ahmad, Chairman and CEO of the bank was reappointed as Chairman and CEO of the bank for a period of 3 years with effect from 6th October, 2013 by the Reserve Bank of India.

b. Mr. Bharat Bhushan Vyas, IAS, Principal Secretary to Government, Finance Department, J&K Govt. was nominated by the Government of J&K as director on the Board of the bank with effect from 24th April, 2013.

c. Mr. Hari Narayan Iyer, Additional Director was reappointed by the Reserve Bank of India with effect from 7th Oct. 2013 till 31st Oct. 2014.

d. Mr. A. M. Matto and Prof. Nissar Ali, were reappointed as Directors at the last Annual General Meeting of the Shareholders of the bank held on 22nd June, 2013.

e. With a view to broad-basing the Board, Mr. Nihal C. Garware, an eminent personality, was re-appointed as Additional Director of the bank w.e.f 24.06.2013. The bank has gained immensely from his guidance and wide ranging experience and expertise.

f. Mr. R. K. Gupta retires by rotation at the ensuing Annual General Meeting in accordance with provisions of Companies Act, 2013 and is eligible for reappointment.

g. Mr. Vikrant Kuthiala, who in the opinion of Board is eligible for appointment as Independent Director, is proposed to be appointed as Independent Director on the Board of the Bank.

20. Name of the Board of Directors of the Bank

1. Mr. Mushtaq Ahmad Chairman & CEO

2. Mr. Bharat Bhushan Vyas, (IAS) Director

3. Mr. Hari Narayan Iyer Director

4. Mr. M. I. Shahdad Director

5. Mr. Vikrant Kuthiala Director

6. Prof. Nisar Ali Director

7. Mr. A. M. Matto Director

8. Mr. R. K. Gupta Director

9. Mr. Nihal C. Garware f Director

21. Directors Responsibility Statement

The Board of Directors hereby confrms that:- i. in the preparation of the annual accounts, the applicable accounting standards had been followed along with proper explanation relating to material departures;

ii. the directors had selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the company at the end of the fnancial year and of the proft and loss of the company for that period;

iii. the directors had taken proper and suffcient care for the maintenance of adequate accounting records in accordance with the provisions of Companies Act, 1956 for safeguarding the assets of the company and for preventing and detecting fraud and other irregularities;

iv. the directors had prepared the annual accounts on a going concern basis; and

v. the directors, had laid down internal fnancial controls to be followed by the company and that such internal fnancial controls are adequate and were operating effectively.

vi. the directors had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

23. Acknowledgements

a. The Directors thank the valued customers, shareholders, well-wishers and correspondents of the bank in India and abroad for their goodwill, patronage and support.

b. The Directors acknowledge with gratitude the valuable and timely advice, guidance and support received from Government of India, Government of Jammu & Kashmir, Reserve Bank of India, Securities and Exchange Board of India (SEBI), Insurance Regulatory Developmental Authority (IRDA), NABARD, SIDBI, IBA, FIMMDA, FEDAI, Stock Exchanges, Ministry of Corporate Affairs, Registrar of Companies, Comptroller & Auditor General, Financial Institutions and the Central Statutory Auditors of the bank in the functioning of the bank.

c. The Directors place on record their deep appreciation of the valuable contribution of the members of the staff at all levels for the progress of the bank during the year and look forward to their continued co- operation in realization of the corporate goals in the years ahead.

0For and on behalf of the Board of Directors Place: Srinagar (J&K Mushtaq Ahmad

Date: 15.05.2014 Chairman & CEO


Mar 31, 2012

Dear Members,

1.1. The Board of Directors have pleasure in presenting the 74th Annual Report of your Bank, together with the audiThed Balance Sheet, Profit and Loss Account and the report on business and operations for the year ended 31st March, 2012.

1.2. The Bank has delivered a strong performance in 2011-12. The Bank's straThegy of consolidation, re- engineering, re-pricing and re-organisation has resulThed in productive and efcient growth, robust balance sheet, top- notch asset book and substantial provisions. Financial highlights for the year under review are presenThed below:

2. PERFORMANCE AT A GLANCE

2.1 The aggregaThe business of the Bank crossed yet another psychological mark and stood at Rs. 86,424.32 Crores at the end of the FY 2011- 12. The total business of the Bank increased by Rs. 15,554.75 Crores from the previous year's fgure of Rs. 70,869.57 Crores, regisThering a growth of 22%.

2.2 The total deposits of the Bank have grown by Rs. 8,670.97 Crores from Rs. 44,675.93 Crores as on 31st March, 2011 to Rs. 53,346.90 Crores as on 31st March, 2012, regisThering growth of 19.41%. CASA deposits of the Bank at Rs. 21,715 Crores constituThed 40.71% of total deposits of the bank.

2.3 Cost of deposits for current FY stood at 5.92% compared to 5.05% for FY 2010-11.

2.4 The Bank continued its prudent approach in expanding quality credit assets in line with its policy on Credit Risk Management. The net advances of the Bank increased by Rs. 6,883.78 Crores from Rs. 26,193.64 Crores as on 31st March, 2011 to Rs. 33,077.42 Crores as on 31st March, 2012, a growth of 26.28%.

2.5 Yield on advances for the current FY improved to 11.45% compared to 10.68% for FY 2010-11.

2.6 Priority sector advances stood at Rs. 10,294.38 Crores as on 31st March, 2012.

3. The Bank's performance in the recovery of NPA's during the year continued to be good. The Bank efecThed cumulative cash recovery; up-gradation of NPA's and Thechnical wriThe-of of Rs. 316.91 Crores compared to Rs. 232.63 Crores in the previous year.

4. Investment portfolio of the bank increased by

Rs. 1,928.55 Crores from Rs. 19,695.77 Crores as on 31st March, 2011 to Rs. 21,624.32 Crores as on 31st March, 2012.

5. INSURANCE BUSINESS

5.1. The Bank earned an income of Rs. 29.56 Crores from the Insurance Business. In life insurance, the Bank mobilised business of Rs. 100.39 Crores and in non-life segment, business of Rs. 77.53 Crores was mobilised during the year.

6. INCOME ANALYSIS

6.1. InTherest income of the Bank recorded a growth of Rs. 1,122.45 Crores and increased from Rs. 3,713.13 Crores in the year 2010-11 to Rs. 4,835.58 Crores in the year 2011-12. InTherest expenses increased from Rs. 2,169.47 Crores to Rs. 2,997.22 Crores during the year. The Net InTherest Income increased from Rs. 1,543.66 Crores to Rs. 1,838.36 Crores on YoY basis.

6.2. The Net Income from operations [InTherest Spread plus Non-inTherest Income] has increased to Rs. 2,172.48 Crores in the FY 2011-12 from Rs. 1,908.42 Cr in the FY 2010-11, growing by 13.84%.

6.3. The Operating Expenses have shown an increase of Rs. 43.22 Crores during the

FY 2011-12 and stood at Rs. 802.15 Crores as compared to Rs. 758.93 Crores in 2010-11

6.4. The Cost to Income ratio (Operating

Expenses to Net Operating Income) has come down from 39.77 % in the FY 2010-11 to 36.92% in the FY 2011-12.

7. GROSS PROFIT

7.1. The Gross Profit for the FY 2011-12 stood at Rs. 1,370.33 Crores as compared to Rs. 1,149.49 Crores in the FY 2010-11 regisThering a growth of 19.21%.

8. PROVISIONS

8.1. The Provision for Loan Losses, Provision on Standard Assets, Taxation and others aggregaThed to Rs. 567.08 Crores in the FY 2011-12 as compared to Rs. 534.29 Crores in the FY 2010-11.

9. NET PROFIT AND DIVIDEND

9.1. The Bank regisThered highest ever Net Profit of Rs. 803.25 Crores for the FY 2011-12 compared to Rs. 615.20 Crores for the FY 2010-11, regisThering an impressive growth of 30.57%.

9.2. The Board of Directors has recommended record dividend of 335% for the FY 2011-12.

9.3. In Therms of extant guidelines, the Bank will pay the dividend distribution tax for the FY 2011-12. Accordingly the total outfow on account of dividend for the year 2011-12 will be Rs. 188.76 Crores including the dividend distribution tax.

10. NET WORTH AND CRAR

10.1. The Net Worth of the Bank increased to Rs. 4,093.18 Crores on 31st March, 2012 from Rs. 3,478.68 Crores on 31st March, 2011.

10.2. The Capital to Risk AdjusThed Assets Ratio [CRAR] under BASEL-I stood at 12.53% as on 31st March, 2012 as against 13.30% as on 31st March, 2011 which is much above the norm of 9% stipulaThed by the Reserve Bank of India. The Tier I component of CRAR is 10.43% as on 31st March, 2012 compared to 10.99% as on 31st March, 2011.

10.3. The Bank has implemenThed new capital adequacy framework w.e.f. 31st March, 2009. Under new norms, bank's CRAR (BASEL-II) works out to 13.36% which is higher than the CRAR as compuThed under BASEL- I norms. The advantage has sThemmed mainly from higher raThed Investment / Credit portfolio. The Tier I component of CRAR under new norms is 11.12% as against 10.43% under BASEL -I.

10.4. The Return on Average Net Worth, Earnings per Share and Book Value per Share for the FY 2011-12 stood at 21.22%, Rs. 165.69 and Rs. 844.34, against 18.96%, Rs. 126.90 and Rs. 717.58 respectively for the previous year.

11. BRANCH NETWORK

11.1. During the FY 2011-12, 55 new branches were established, thereby taking the number of branches to 603 as on 31-03-2012, spread over 20 staThes and one union Therritory. The area-wise breakup of the branch network (excluding exThension counThers/ mobile branches and service branches) is as under:

Area Business Units

Metro 039

Urban 168

Semi-Urban 123

Rural 273

TOTAL 603

12. IT INITIATIVES DURING FY 2011-12

12.1. Thechnology has played a pivotal role in the growth of the Bank. T&ISD department has always been in the forefront in delivering solutions in line with the changing business needs of the organisation. As a matTher of policy the department has always provided industry best solutions so as to align the Thechnology with business goals. The details of various Thechnology initiatives taken during the FY 2011-12 are enumeraThed below:

10 branches were compuTherised

during the year taking the total count of compuTherised business units as on 31st March, 2012 to 634 out of a total business unit count of 640 which includes 603 business units & 37 ExThension CounThers.

90 new SOLs were opened on Core

Banking Platform during 2011-12 taking the total count of SOLS on CBS as on 31st March, 2012 to 671.

177 ATMs were procured, out of which 147 were commissioned during FY 2011-12 taking the aggregaThe number of commissioned ATMs to 508 as on 31st March, 2012.

E-Banking facility has been made available at all the CBS branches of the Bank and the number of e-Banking customer accounts stood at 164,580 as on 31.03.2012.

The project covering Domestic, Forex and derivative modules stands implemenThed. The VaR engine also stands implemenThed and various combinations of VaR modules are being ThesThed by the users.

All the CBS branches of the Bank are enabled for RTGS and NEFT facility.

In far fung and unbanked areas, the bank is providing basic banking services through three mobile vans.

CorporaThe Module of CTS (Cheque Truncation) was deployed and made functional at Chennai grid in addition to already functioning grid at NCR (Delhi) region. The new software will support country wide CTS and in future the sysThem will pave way for setting up a country-wide centralised Inward Clearing Centre for betTher and speedy customer service.

The CCTVs were installed at 23 more branches taking the total count to 219. In addition, CCTVs were installed at 300 ATM locations.

Out of 13 Currency Chests, 12

Currency Chests have been equipped with all the Security gadgets required under regulatory guidelines.

SysThem Level Asset Classifcation for bringing transparency and efciency in asset classifcation was implemenThed and in the frst phase asset classifcation of accounts with sanctioned limit of ? 50 lakh and above was implemenThed through the sysThem.

13. ADVERTISING AND PUBLICITY

During the year, the Bank continued to position its brand favourably in public memory and psyche. The products, services, achievements and future plans were efectively communicaThed to the customers, shareholders and the general public through creatively conceived, developed and packaged advertisements.

14. CORPORAThe SOCIAL RESPONSIBILITY-CSR

The CorporaThe Social Responsibility (CSR) of the J&K Bank seeks to recognise obligations towards society and aims to inThegraThe the CSR ideals into its mission for optimising both business and social performance. The contribution to CSR is considered as an asset rather than expenditure.

Our CSR revolves round peoples' empowerment through generous and innovative economic support and fnancial inThervention. From matThers of health to heritage, education to entrepreneurship, poverty to pathetic disabilities, our CSR policy covers it all. The aim is to instill a sense of relief and proThection among the most vulnerable sections of society, provide avenues for peoples' enThertainment, susThenance and empowerment. The approaches adopThed in conceiving, handling and implementing CSR initiatives are simple yet professional and at times massive yet methodical.

We believe in employing innovative and inTherventionary means to ensure maximisation of returns; both social and economical, though from a long-Therm perspective. Capitalising on the expertise of the professionals and organisations pursuing various causes of societal concern continue to be our guiding force in the implementation and execution of our CSR initiatives.

15. MAJOR CSR INITIATIVES TAKEN BY THE BANK

Education Sector continued to receive priority in the Bank's CSR expenditure. Besides providing free stationery to large number of children coming from poor economic backgrounds, Bank donaThed dozens of compuThers, laptops and other learning aids to the individuals as well as instituThes. Apart from providing educational sponsorship by way of bearing tuition fee, cost of stationery and uniform of scores of poor students, Bank donaThed a hefty sum for purchase of books for library of a remoThe educational instituThe in South Kashmir. Moreover, a school bus was donaThed to a local welfare Trust for ferrying poor students receiving free quality education in the Trust schools.

More than one hundred trolleys and wheel chairs were distribuThed to the leading hospitals of the staThe to contribuThe for betTher patient care. The initiative followed the growing public concern regarding incapacities of health instituThes in providing quality healthcare.

The Bank adopThed Tulwari, a remoThe village along the LoC in district Baramulla, for treatment and rehabilitation of village children sufering from 'Hemophilia A, a life consuming inheriThed disorder in which patient's blood doesn't clot to stop the bleeding. A mechanism, to provide quality treatment, worked out with the Society for Hemophilia care, New Delhi authorities has proved a life saver for the children of the village afecThed with this deadly disorder.

Apart from continuing generous support to various activities and initiatives of the diferently abled persons, J&K Bank undertook the responsibility of sponsoring education and rehabilitation of 25 special children belonging to poor families. The students were identifed following a survey and laTher their education/ rehabilitation was arranged through a local not-for- Profit foundation espousing the cause of and running a school for such children. Sponsorship includes all expenses including tuition fee, stationery, uniform, physiotherapy and other relaThed things.

Massive plantation drive on World Plantation Day, fnancing and encouraging of cycling events, road shows and other events organised for promoting the cause of environment also remained among the priorities. Pertinently, subsequent to its development, the Bank dedicaThed Shaheed Park to people in South Kashmir.

AfTher formation of a full-fedged Sports Board during FY10-11, Bank took the initiative forward in FY 2011-12 by formally launching its own Football Academy. CommitThed to the development of sports especially football, which happens to be the staThe game of J&K, the idea behind launching J&K Bank Football Academy is to nurture and groom the budding footballers of the staThe to prepare them to fnd a berth in senior side at national and inThernational level.

16. LEAD BANK RESPONSIBILITY

The J&K Bank is the only PrivaThe Sector Bank in the country assigned with the responsibility of convening StaThe Level Bankers' CommitThee meetings. The Bank continued to discharge its lead bank responsibility in 12 out of 22 districts of J&K StaThe satisfactorily.

16.1. In Therms of guidelines issued by Ministry of Rural Development, Government of India, J&K Bank was assigned the responsibility of setting up Rural Self Employment & Training InstituThes (RSETIs) in the assigned 12 lead districts. In this regard, the Bank has already accomplished the target by setting up RSETIs in all allocaThed Lead Districts.

16.2. During the FY 2011-12, the following meetings were conducThed by the Bank:

Four QuarTherly StaThe Level Bankers CommitThee (SLBC) meetings, viz. 81st, 82nd, 83rd and 84th to review performance under ACP.

One Special SLBC meeting addressed by Dr. D. Subbarao, Hon'ble Governor, Reserve Bank of India.

Meeting of Sub-CommitThee of J&K SLBC on Relaxation/ Concessions to trade and industry in J&K staThe.

Workshop on Credit GuaranThee Trust Fund Scheme and enhancing fow of credit to Agriculture Sector in J&K.

Meeting of the STheering Sub-

CommitThee of J&K SLBC to monitor fow of credit to Agriculture Sector.

Meeting of the STheering Sub-CommitThee of J&K SLBC to monitor IT enabled Financial Inclusion in J&K StaThe.

Meeting of the Sub-group of J&K SLBC constituThed to prepare a Workable Action Plan for enhancing CD. Ratio of J&K StaThe.

Meeting of the Sub-CommitThee of J&K SLBC for Export Promotion.

The district level and block level meetings, such as DCC/ DLRC/ BLBC, and other relative meetings under Lead Bank Scheme were held during the FY 2011-12 as per schedule in all the 12 lead districts.

17. REGIONAL RURAL BANK

The J&K Grameen Bank is the regional rural bank sponsored by the Bank. The area of operation of the J&K Grameen Bank spans over 11 districts (Baramulla, Bandipora, Kupwara, Jammu, Kathua, Rajouri, Poonch, Leh, Kargil, Samba and Kishtwar) of J&K StaThe. The Grameen Bank has a branch network of 184 branches with 944 employees. The performance of the Grameen Bank has improved considerably during FY 2011-12. The fnancial highlights (unaudiThed) of the Bank for the year under review are highlighThed below:

17.1. Business

The business of the Bank increased from ? 2,116.50 Crores to ? 2,549.51 Crores during the year 2011-12 regisThering a growth raThe of 20.46%.

17.2. Deposits

The deposits of the Bank have increased from ? 1,594.99 Crores to ? 1,870.86 Crores during the year 2011-12 thereby regisThering a growth raThe of 17.30%.

17.3. Advances

The gross advances of the Bank as on 31st March, 2012 stood at Rs. 678.65 Crores as against Rs. 521.39 Crores as on the corresponding daThe of the previous year recording a growth of 30.16%.

17.4. Priority Sector Advances

The priority sector advances of the Bank as on 31st March, 2012 stood at Rs. 479.02 Crores as against Rs. 359.85 Crores as on the corresponding daThe of the previous year recording a growth of 33.12%. Advances to priority sector constituThe 70.58% of total advances.

17.5. NPA Position

The gross NPA of the Grameen Bank as on 31.03.2012 stood at Rs. 43.86 Crores constituting 6.46% of gross advances, while as Net NPA as on 31.3.2012 stood at 6.97 Crores constituting 1% of net advances.

17.6. Profitability

The bank has shown operating Profit of Rs. 25.00 Crores and net Profit of Rs. 11.00 Crores as on 31st March, 2012.

18. FINANCIAL INCLUSION

In order to cover the unbanked population in rural areas and special segments of population in urban areas, the Bank has formulaThed a comprehensive Financial Inclusion Plan. The FIP envisages providing basic banking services in 535 SLBC allotThed villages and 725 other unbanked villages of the StaThe of Jammu & Kashmir in a phased manner upto March, 2013. FIP is being implemenThed through a mix of branch network and Business Correspondent Model by engaging Common Service Centres (CSC) for delivery of services through Smart cards. The coverage has reached 836 unbanked villages comprising of 467 SLBC and 369 Non-SLBC villages as on 31.03.2012. The total number of 4.34 lac accounts have been opened in these identifed villages, covering 1.92 lacs households.

18.1. The Bank has undertaken setting up of

Common Service CenThers known as Khidmat Centres under the e- governance initiative of Government of India. Out of 1109 Common Service CenThers to be set up, seven hundred Common Service CenThers have been established across the StaThe upto March, 2012.

19. CORPORAThe GOVERNANCE

19.1 J&K Bank has established a tradition of exemplary practice in CorporaThe Governance. It encompasses not only regulatory and legal requirements, but also several voluntary practices, aimed at a high level of business ethics, efective supervision and enhancement of stakeholder value.

19.2 Several matThers have been voluntarily included in the staThement on CorporaThe Governance annexed to this report, besides certifcaThe from the Central Statutory Auditors regarding compliance of conditions of CorporaThe Governance as stipulaThed in Clause 49 of the Listing Agreement.

20. BOARD OF DIRECTORS

a. Mr. Sudanshu Pandey, IAS, Commissioner/ Secretary, Finance Department, J&K Govt. was recalled by the StaThe Government of J&K with efect from 02.03.2012.

b. Mr. Arnab Roy, Regional Director, Reserve Bank of India, ceased to be a Director w.e.f 6th October, 2011 pursuant to RBI directives.

c. Mr. Ashok Kumar Mehta and Mr. Abdul Majid Mir, Executive Directors retired from the services of the Bank w.e.f 31st May, 2011 and 30th June, 2011 on attaining the age of superannuation.

d. Mr. B. L. Dogra, afTher completing eight years of continuous services on the Board of the Bank ceased to hold the ofce of Director afTher 1st June, 2011 in view of the provision of Section 10A (2A) (i) of the Banking Regulation Act. 1949.

Directors place on record their deep appreciation for the valuable service rendered by Mr. Sudhanshu Pandey, IAS, Mr. Arnab Roy, Mr. A. K. Mehta, Mr. Abdul Majid Mir and Mr. B. L. Dogra during their Thenure as Directors of the Bank.

e. Mr. Hari Narayan Iyer, General Manager, Reserve Bank of India, Rural Planning & Credit Department, Jaipur was appoinThed as Additional Director on the Board of the Bank by the Reserve Bank of India with efect from 7th October, 2011 for a period of 2 years.

f. Mr. R. K. Gupta and Prof. Nisar Ali were reappoinThed as Directors at the last Annual General Meeting of the Shareholders of the Bank held on 09.07.2011.

g. With a view to broad-basing the Board, Mr. Nihal C. Garware, an eminent personality, was re-appoinThed as Additional Director of the Bank w.e.f 09.07.2011. The Bank has gained immensely from his guidance and wide ranging experience and expertise.

h. Mr. M. I. Shahdad and Mr. Vikrant Kuthiala, retiring by rotation at the ensuing Annual General Meeting in accordance with Article 76 of the Articles of Association of the Bank and provisions of Companies Act, 1956 and are eligible for reappointment.

21. NAME OF THE BOARD OF DIRECTORS OF THE BANK

1. Mr. Mushtaq Ahmad Chairman & CEO

2. Mr. Hari Narayan Iyer Director

3. Mr. M. I. Shahdad Director

4. Mr. Vikrant Kuthiala Director

5. Prof. Nisar Ali Director

6. Mr. A. M. Matto Director

7. Mr. R. K. Gupta Director

8. Mr. Nihal C. Garware Director

22 DIRECTORS RESPONSIBILITY STATheMENT

The Board of Directors hereby confrms that:- i) In the preparation of the annual accounts, the applicable accounting standards have been followed along with proper explanation relating to maTherial departures.

ii) We have selecThed such accounting policies and applied them consisThently and made judgments and estimaThes that are reasonable and prudent so as to give a true and fair view of the staThe of afairs of the Company at the end of the fnancial year and the Profit /loss for the period under report.

iii) We have taken proper and sufcient care for the mainThenance of adequaThe accounting records in accordance with the provisions of the Companies Act, 1956 for safeguarding the assets of the Company and for preventing and deThecting frauds and other irregularities.

iv) We have prepared the annual accounts on a going concern basis.

23. PARTICULARS OF EMPLOYEES

PARTICULARS OF EMPLOYEES AS PER SECTION 217(2A) OF THE COMPANIES ACT, 1956, READ WITH THE COMPANIES (PARTICULARS OF EMPLOYEES) RULES, 1975, FOR THE YEAR ENDED 31st MARCH, 2012, ARE AS UNDER:

a. EMPLOYED THROUGH OUT THE FINANCIAL YEAR AND IN RECEIPT OF REMUNERATION AGGREGATING Rs. 6,000,000/- OR MORE PER ANNUM: -NIL- b. EMPLOYED FOR PART OF THE

FINANCIAL YEAR AND IN RECEIPT OF REMUNERATION AGGREGATING Rs. 500,000/- OR MORE PER MONTH: - NIL -

24 ACKNOWLEDGEMENTS

a. The Directors thank the valued customers, shareholders, well-wishers and correspondents of the Bank in India and abroad for their goodwill, patronage and support.

b. The Directors acknowledge with gratitude the valuable and timely advice, guidance and support received from Government of India, Government of Jammu & Kashmir, Reserve Bank of India, Securities and Exchange Board of India (SEBI), Insurance Regulatory Developmental Authority (IRDA), NABARD, SIDBI, IBA, FIMMDA, FEDAI, Stock Exchanges, Deptt. of Company Afairs, Registrar of Companies, Comptroller & Auditor General, Financial Institutions and the Statutory Central Auditors of the Bank in the functioning of the Bank.

c. The Directors place on record their deep appreciation of the valuable contribution of the members of the staf at all levels for the progress of the Bank during the year and look forward to their continued co-operation in realisation of the corporaThe goals in the years ahead.

For and on behalf of the Board of Directors

Mushtaq Ahmad

Chairman & CEO

Place: Srinagar (J&K) DaThed: 12th May, 2012


Mar 31, 2011

1. 1.1 Your Board of Directors have the pleasure in presenting the 73rd 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, 2011.

1.2 The Bank has delivered a strong performance in 2010-11. The Banks strategy of consolidation, re- engineering, re-pricing and re-organization has resulted in productive and efficient growth, robust balance sheet, top-notch asset book and substantial provisions. Financial highlights for the year under review are presented below:

2. PERFORMANCE AT A GLANCE

2.1 The Bank’s aggregate business crossed yet another psychological mark and stood at Rs. 70,869.57 Crores at the end of the financial year 2010-11. The Bank’s total business increased by Rs. 10,575.18 Crores from the previous year’s figure of Rs. 60,294.39 Crores, registering a growth of 17.54%.

2.2 The total deposits of the Bank grew by Rs. 7,438.77 Crores from Rs. 37,237.16 Crores as on 31st March, 2010 to Rs. 44,675.93 Crores as on 31st March, 2011, registering 19.98% growth. CASA deposits of the Bank at Rs. 18,084.82 Crores constituted 40.48% of total deposits.

2.3 The Bank continued its prudent approach in expanding quality credit assets in line with its policy on Credit Risk Management. Its net advances increased by Rs. 3,136.41 Crores from Rs. 23,057.23 Crores as on 31st March, 2010 to Rs. 26,193.64 Crores as on 31st March, 2011, growing by 13.60%. The growth was recorded even after repayment of Rs. 2,300 Crores by the State Govt. of J&K as an arrangement with RBI/J&K Bank.

2.4 Priority sector advances increased from Rs. 8,632.29 Crores to Rs. 10,274.46 Crores during the year.

3. The Bank’s performance in the recovery of NPAs during the year continued to be good. During the year, the Bank effected a cumulative cash recovery, up-gradation of NPAs and technical write-off of Rs. 232.63 Crores compared to Rs. 285.74 Crores in the previous year.

4. Investment portfolio increased by Rs. 5,739.52 Crores from Rs. 13,956.25 Crores as on 31st March, 2010 to Rs. 19,695.77 Crores as on 31st March, 2011.

5. INSURANCE BUSINESS

5.1 The Bank earned an income of Rs. 26.14 Crores from the Insurance Business. In life insurance, mobilized a business of Rs. 103.02 Crores and in non-life segment, business of Rs. 59.36 Crores was mobilized during the year.

6. INCOME ANALYSIS

6.1 The Bank’s interest income grew by Rs. 656.25 Crores from Rs. 3,056.88 Crores in the year 2009-10 to Rs. 3,713.13 Crores in 2010-11. Interest expenses marginally increased from Rs. 1,937.54 Crores to Rs. 2,169.47 Crores during the year. The Net Interest Income increased from Rs. 1,119.33 Crores to Rs. 1,543.66 Crores.

6.2 The Net Income from operations [Interest Spread plus Non-interest Income] increased to Rs. 1,908.42 Crores in the financial year 2010-11 from Rs. 1,535.57 Crores in the financial year 2009-10, growing by 24.28%.

6.3 The Operating Expenses witnessed an increase of Rs. 181.57 Crores during the financial year 2010-11 and stood at Rs. 758.93 Crores, compared to Rs. 577.37 Crores in 2009-10.

6.4 The Cost to Income ratio (Operating Expenses to Net Operating Income) marginally increased from 37.60% in the fi nancial year 2009-10 to 39.77% in the financial year 2010-11 even after substantial increase in operating expenses.

7. GROSS PROFIT

7.1 The Gross Profit for the financial year 2010-11 stood at Rs. 1,149.49 Crores, compared to Rs. 958.21 Crores in the financial year 2009-10, an increase of Rs. 191.28 Crores.

8. PROVISIONS

8.1 The Provision for Loan Losses, Provision on Standard Assets, Taxation and others aggregated to Rs. 534.29 Crores in the financial year 2010-11 compared to Rs. 445.83 Crores in the financial year 2009-10.

9. NET PROFIT AND DIVIDEND

9.1 The Bank registered highest ever Net Profit of Rs. 615.20 Crores for the financial year 2010-11 compared to Rs. 512.38 Crores for the financial year 2009-10, registering 20.07% surge.

9.2 The Board of Directors has recommended record dividend of 260 per cent for the financial year 2010-11.

9.3 In terms of extant guidelines, the Bank will pay the dividend distribution tax for the financial year 2010-11. Accordingly the total outflow on account of dividend for the year 2010-11 will be Rs. 146.98 Crores including the dividend distribution tax.

10. NET WORTH AND CRAR

10.1 The Bank’s Net Worth increased to Rs. 3,478.68 Crores on 31st March, 2011 from Rs. 3,010.46 Crores on 31st March, 2010.

10.2 The Capital to Risk Adjusted Assets Ratio [CRAR] stood at 13.30% as on 31st March, 2011 as against 14.81% as on 31st March, 2010, which comfortably exceeds the norm of 9% stipulated by the Reserve Bank of India. The Tier I component of CRAR is 10.99% as on 31st March, 2011, compared to 11.91% as on 31st March, 2010.

10.3 The Bank has implemented new capital adequacy framework w.e.f. 31st March, 2009. Under new norms, the bank’s CRAR works out to 13.72%, which is higher than the CRAR as computed under BASEL- I norms. The advantage has stemmed mainly from higher rated Investment / Credit portfolio. The Tier I component of CRAR under new norms is 11.33% as against 10.99% under BASEL -I.

10.4 The Return on Average Net Worth, Earnings per Share and Book Value per Share for the financial year 2010- 11 stood at 18.96%, Rs. 126.9/- and Rs. 717.58/- , against 18.19%, Rs. 105.69 and Rs. 621/- respectively for the previous year.

11. BRANCH NETWORK

11.1 During the financial year 2010-11, 16 branches were added, taking the number of branches to 548 as on 31-03-2011, spread across 20 states and one union territory. The area-wise breakup of the branch network (excluding extension counters/ mobile branches and service branches) is as under:

Area Branches

Metro 039

Urban 168

Semi-Urban 118

Rural 223

Total 548

12. IT INITIATIVES DURING FY 2010-11

We have made sustained and focused efforts to leverage the Bank’s existing IT infrastructure and to develop new technological solutions to increase customer convenience and providing multiple delivery channels for easy access to banking services. Some of the major initiatives are highlighted below:-

- 25 branches were computerized during the year taking the total count of computerized branches as on 31st March, 2011 to 567 out of a total branch count of 583 (including Extension Counters).

- 143 branches were migrated to Core Banking Platform during 2010-11 taking the total count of branches on CBS as on 31st March, 2011 to 550. (Including Extension Counters).

- 73 new ATMs were installed during the year taking the aggregate number of commissioned ATMs to 361 as on 31st March, 2011.

- e-Banking facility has been made available at all the 550 CBS branches of the Bank and the number of e-Banking customers at 1,08,828 has registered a 387% increase during the year.

- The Bank has integrated with more than 900 online merchants like BSNL, Air Tel, LIC, Metlife, Tata Sky, Make My Trip, among others to provide online bill payment / shopping facility to its customers.

- The Bank’s CBS branches have been enabled for RTGS and NEFT facility.

- In far-flung and unbanked areas, the bank is providing basic banking services through three mobile vans.

- A new innovative customer convenient facility ‘SMS Alert’ has been introduced.

13. ADVERTISING AND PUBLICITY

During the year, the Bank reinforced its brand positioning to enhance mind share. The products, services, achievements and future plans were effectively communicated to the customers, shareholders and the general public through creatively conceived, developed and packaged advertisements.

14. CORPORATE SOCIAL RESPONSIBILITY

At J&K Bank, sustainability entails acting responsibly on behalf of future generations to achieve economic, environmental and social progress. The Bank has maintained its reputation of being a remarkably responsible premier institution. We have formulated an all-embracing Corporate Social Responsibility (CSR) policy , which extends beyond the framework of familiar philanthropy with a broader perspective of socio-economic empowerment.

The Bank’s key initiatives in this regard focus primarily on providing education facilities to the disadvantaged sections of society, extending financial assistance for medical treatment and taking meaningful initiatives for preserving and promoting the endemic culture, heritage and handicraft of Jammu and Kashmir.

15. MAJOR CSR INITIATIVES

- Increased the number of sponsored special students (mentally challenged) of Voluntary Medicare Society’s Shafakat School from 10 to 25.

- Enhanced the Cancer Society of Kashmir’s Annual Revolving Fund from Rs. 1.50 lacs to Rs. 5.00 lacs in view of the alarming increase in cancer diagnosis in the

state. Besides, an amount of? 10 lacs was donated to the society for the purchase of Hospital Furniture and other related items.

- Gifted several computers, sewing machines, knitting machines, musical instruments, interlock machine, electric irons and a gas connection to differently abled persons, helping the vulnerable sections of society.

- Sponsored the education of 16 most deserving students of HELP Foundation, a non-governmental organization pursuing the welfare of poor, orphans and underprivileged children to widen educational opportunities for the underprivileged.

- Sponsored various state-level sports tournaments including tournaments organized for physically challenged persons; paid entry fee of three local athletes for participation in sports activities at Estonia, Europe.

- Financed a project to revive the legacy of Kashmir Dalgate Pottery; the first phase has successfully culminated while the work on the second phase of the project is being continued with commitment.

16. LEAD BANK RESPONSIBILITY

The J&K Bank is the only private sector bank in the country assigned with the responsibility of convening State Level Bankers’ Committee meetings. The Bank continued to discharge its lead bank responsibility in 12 out of 22 districts of J&K State satisfactorily.

16.1 J&K Bank has been assigned the responsibility of setting up Rural Self Employment and Training Institutes (RSETIs) in the assigned 12 lead districts. In this regard, one RSETI in district Baramulla has commenced the functioning with effect from 11th March, 2011. Two more RSETIs in District Anantnag and District Pulwama are expected to be operationalized soon.

16.2 During the FY 2010-11, the Bank conducted the following meetings:

- Two State Level Bankers Committee (SLBC) meetings.

- Two special State Level Bankers Committee (SLBC) on MSMEs.

- Meeting of the Coordination Task Force constituted to look out for solutions to problems faced in implementation of Government Sponsored Schemes in J&K State.

- Meeting of Sub-Committee of J&K SLBC on Relaxation/Concessions to trade and industry in J&K state.

- Two workshops on Credit Guarantee Trust Fund Scheme.

- The district level and block level meetings, such as DCC/ DLRC/ BLBC, and other relative meetings under Lead Bank Scheme were held as per schedule in all of the state lead districts.

17. REGIONAL RURAL BANK

The J&K Grameen Bank is the regional rural bank sponsored by your Bank. Its area of operation spans over 11 districts (Baramulla, Bandipora, Kupwara, Jammu, Kathua, Rajouri, Poonch, Leh, Kargil, Samba and Kishtwar) of J&K state. It has a branch network of 176 branches with 759 employees. The performance of the Grameen Bank has improved considerably during FY 2010-11. The financial highlights (un-audited) of the Bank for the year under review are presented below:

17.1 Business

The business of the Bank increased from Rs. 1,834.29 Crores to Rs. 2,116.50 Crores during the year 2010-11 registering a growth rate of 15.43%.

17.2 Deposits

The Bank’s deposits increased from Rs. 1,397.43 Crores to Rs. 1,595.01 Crores during 2010-11, growing 14.17%. The percentage of CASA to total deposits works out to 53.41%, against 52.41% on March, 2010.

17.3 Advances

The gross advances of the Bank as on 31st March, 2011 stood at Rs. 521.49 Crores as against Rs. 436.86 Crores as on the corresponding date of the previous year, recording a growth of 19.22%.

17.4 Priority Sector Advances

The priority sector advances of the Bank as on 31st March, 2011 stood at Rs. 357.29 Crores as against Rs. 292.84 Crores as on the corresponding date of the previous year recording a growth of 21.84%. Advances to priority sector constitute 68.51% of total advances.

17.5 NPA Position

The gross NPA of the Grameen Bank as on 31.03.2011 is 7.73% while Net NPA is 1.33%.

17.6 Profitability

The Bank registered a net profit of Rs. 6.51 Crores as on 31st March, 2011.

18. FINANCIAL INCLUSION

To serve the unbanked population in rural areas and special segments in urban areas, the Bank has formulated a comprehensive Financial Inclusion Plan. The FIP envisages providing basic banking services in 535 SLBC allotted villages and in 725 other unbanked villages of the State of Jammu & Kashmir in a phased manner upto March, 2013. FIP is being implemented through a mix of branch network and Business Correspondent Model in identified unbanked areas, with added focus on under banked & unbanked villages.

18.1 The Bank has undertaken the setting up of Common Service Centres under the e-governance initiative of Government of India. In the first phase, 1106 Common Service Centers are planned to be set up. Five hundred five Common Service Centers were established across the state upto March, 2011.

19. CORPORATE GOVERNANCE

19.1 J&K Bank has established a tradition of exemplary practices in corporate governance. It encompasses not only regulatory and legal requirements, but also several voluntary practices, aimed at a high level of business ethics, effective supervision and enhancement of stakeholder value.

19.2 Several matters have been voluntarily 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 Agreement.

20. BOARD OF DIRECTORS

a. Mr. M. S. Verma, ceased to be the Additional Director at the last Annual General Meeting of the Shareholders held on 31-07-2010 and Dr. Haseeb A. Drabu, tendered his resignation and ceased to be the Chairman & CEO from 27-08-2010.

Directors place on record their deep appreciation for the valuable service rendered by Mr. M. S. Verma and Dr. Haseeb A. Drabu during their tenure as Director and Chairman and CEO, respectively of the Bank.

b. Mr. B. L. Dogra and Mr. A. M. Matto were reappointed as Directors at the last Annual General Meeting of the Shareholders of the Bank held on 31-07-2010.

c. With a view to broad-basing the Board, Mr. Nihal C. Garware, an eminent personality, was re-appointed as Additional Director of the Bank w.e.f 31-07-2010. The Bank has gained immensely from his guidance and wide ranging experience and expertise.

d. Prof. Nisar Ali and Mr. R. K. Gupta retire by rotation at the ensuing Annual General Meeting in accordance with Article 76 of the Articles of Association of the Bank and provisions of Companies Act, 1956 and are eligible for reappointment.

21 NAME OF THE BANK’S BOARD OF DIRECTORS

1 Mr. Mushtaq Ahmad Chairman & CEO

2 Mr. Sudhanshu Pandey, IAS Director

3 Mr. Arnab Roy Director 4 Mr. Ashok Kumar Mehta Executive Director

5 Mr. Abdul Majid Mir Executive Director

6 Mr. B. L. Dogra Director

7 Mr. M. I. Shahdad Director

8 Mr. Vikrant Kuthiala Director

9 Prof. Nisar Ali Director

10 Mr. A. M. Matto Director

11 Mr. R. K. Gupta Director

12 Mr. Nihal C. Garware Director

22 DIRECTORS RESPONSIBILITY STATEMENT

The Board of Directors hereby confirms that:-

i) In the preparation of the annual accounts, the applicable accounting standards have been followed along with proper explanation relating to material departures.

ii) We have 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 the profit /loss for the period under report.

iii) We have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956 for safeguarding the assets of the company and for preventing and detecting frauds and other irregularities.

iv) We have prepared the annual accounts on a going concern basis.

23. PARTICULARS OF EMPLOYEES

PARTICULARS OF EMPLOYEES AS PER SECTION 217(2A) OF THE COMPANIES ACT, 1956, READ WITH THE COMPANIES (PARTICULARS OF EMPLOYEES) RULES, 1975, FOR THE YEAR ENDED 31st MARCH, 2011, ARE AS UNDER:

a. EMPLOYED THROUGHOUT THE FINANCIAL YEAR AND IN RECEIPT OF REMUNERATION AGGREGATING Rs. 60,00,000/- OR MORE PER ANNUM - NIL.

b. EMPLOYED FOR PART OF THE FINANCIAL YEAR AND IN RECEIPT OF REMUNERATION AGGREGATING Rs. 5,00,000/- OR MORE PER MONTH - NIL.

24 ACKNOWLEDGEMENTS

a. The Directors thank the valued customers, shareholders, well-wishers and correspondents of the Bank in India and abroad for their goodwill, patronage and support.

b. The Directors acknowledge with gratitude the valuable and timely advice, guidance and support received from Government of India, Government of Jammu & Kashmir, Reserve Bank of India, Securities and Exchange Board of India (SEBI), Insurance Regulatory Developmental Authority (IRDA), NABARD, SIDBI, IBA, FIMMDA, FEDAI, Stock Exchanges, Deptt. of Company Affairs, Registrar of Companies, Comptroller & Auditor General, Financial Institutions and the Statutory Central Auditors of the Bank in the functioning of the Bank.

c. The Directors place on record their deep appreciation of the valuable contribution of the members of the staff at all levels for the progress of the Bank during the year and look forward to their continued co-operation in realisation of the corporate goals in the years ahead.



For and on behalf of the Board of Directors

Mushtaq Ahmad

Chairman & CEO

Place: Srinagar (J&K) Dated: 14th May, 2011


Mar 31, 2010

Snap Shot of Key Financial Indicators 2006 - 2010

(Rs. in Crores)

FINANCIAL HIGHLIGHTS 2005 - 2006 2006 - 2007 2007 - 2008

Total Deposits 23,484.64 25,194.29 28,593.26

- Savings Bank Deposits 5,013.51 5,848.83 6,902.54

- Current Account Deposits 3,011.40 3,479.18 4,294.96

Total Advances 14,483.11 17,079.94 18,882.61

- Priority Advances 2,827.86 3,286.98 4,874.33

Total Investments 8,993.84 7,392.19 8,757.66

Shareholders Funds 1,799.47 2,008.73 2,280.83

Total Assets / Liabilities 26,448.98 28,646.53 32,755.99

Net Interest Income 663.72 767.85 810.44

Other Income 110.85 160.21 245.01

Operating Revenue 774.57 928.06 1,055.45

Operating Expenses 345.25 372.44 403.61

Operating Profit 429.32 555.62 651.84

Provisions and Contingencies 252.48 281.13 291.83

Net Profit 176.84 274.49 360.01



FINANCIAL HIGHLIGHTS 2008 - 2009 2009 - 2010 CAGR

Total Deposits 33,004.10 37,237.16 12.2%

- Savings Bank Deposits 7,953.49 10,260.81 19.6%

- Current Account Deposits 4,625.18 4,892.39 12.9%

Total Advances 20,930.41 23,057.23 12.3%

- Priority Advances 7,345.95 8,632.29 32.2%

Total Investments 10,736.33 13,956.25 11.6%

Shareholders Funds 2,622.86 3,010.46 13.7%

Total Assets / Liabilities 37,693.26 42,546.79 12.6%

Net Interest Income 983.84 1,119.34 14.0%

Other Income 261.48 416.24 39.2%

Operating Revenue 1,245.32 1,535.58 18.7%

Operating Expenses 470.86 577.37 13.7%

Operating Profit 774.46 958.21 22.2%

Provisions and Contingencies 364.62 445.83 15.3%

Net Profit 409.84 512.38 30.5%



FINANCIAL RATIOS 2005-2006 2006-2007 2007-2008 2008-2009 2009-2010

Earnings Per Share (Basic) (in Rs.) 36.48 56.62 74.26 84.54 105.69

Book Value (in Rs.) 371.19 414.36 470.49 541.04 621.00

Return on Equity 10.21% 14.42% 16.79% 16.62% 18.19%

Return on Assets 0.67% 0.96% 1.09% 1.09% 1.20%

Capital Adequacy Ratio (CRAR) 13.52% 13.24% 12.80% 13.46% 14.81%

Tier I Capital (CRAR) 13.09% 12.60% 12.14% 12.77% 11.91%

Dividend Per Share (in Rs.) 8.00 11.50 15.50 17.00 22.00

Dividend Payout Ratio 25.01% 23.76% 24.42% 23.40% 24.35%



1. Your Board of Directors have pleasure in presenting the Seventy-second Annual Report of your Bank, together with the audited Balance Sheet, Profi t and Loss Account and the report on business and operations for the year ended 31st March, 2010.

1.1. The Bank has delivered a strong performance in 2009-10 in the backdrop of widespread turbulence in the global fi nancial markets, as well as a slowdown of Indias economic growth. The Banks strategy of consolidation, reengineering, re-pricing and reorganization have resulted in fructuous and effi cient growth, robust balance sheet, top-notch asset book and substantial provisions. Financial highlights for the year under review are presented below:

2. Performance at a glance

2.1 The Banks aggregate business crossed yet another psychological mark and stood at Rs. 60,294.39 Crores at the end of 2009-10. The total business of the Bank increased by Rs. 6,359.88 Crores from the previous years fi gure of Rs. 53,934.51 Crores, registering 11.79 per cent growth.

2.2 The total deposits of the Bank grew by

Rs. 4,233.06 Crores from Rs. 33,004.10 Crores as on 31st March, 2009 to Rs. 37,237.16 Crores as on 31st March, 2010, registering growth of 12.83 per cent. During the same period, CASA deposits of the Bank grew at an impressive rate of over 20 per cent contributing to substantial improvement in CASA and reduction in cost of deposits.

2.3 The Bank continued its prudent approach in expanding quality credit assets in line with its policy on Credit Risk Management. The Banks net advances increased by Rs. 2,126.82 Crores from Rs. 20, 930.41 Crores as on 31st March, 2009 to Rs. 23, 057.23 Crores as on 31st March, 2010, registering a 10.16 per cent growth.

Priority sector advances recorded a growth of 17.51 per cent during 2009-10.

2.4 The Bank, in line with its policy stance, has recorded higher credit growth in Jammu & Kashmir than that in rest of India. This has resulted in the improvement of CD ratio for the Bank in the state to 48 per cent (excluding an advance to the State Govternment) from sub-30 per cent levels and rationalization of CD ratio for the bank in rest of India to below 100 per cent from peak levels of over 150 per cent.

2.5 The Banks performance in recovery of NPAs during the year continued to be good. During the year, the Bank effected cash recovery, up- gradation of NPAs and technical write-off of Rs. 285.74 Crores compared to. Rs. 327.85 Crores in the previous year. However, the exemplary feature has been prompt asset monitoring, which ensured that the slippage during the year was only 0.80 per cent, against 1.90 per cent for the previous year.

2.6 The Banks investment portfolio increased by 29.99 per cent from Rs. 10,736.33 Crores as on 31st March, 2009 to Rs. 13,956.25 Crores as on 31st March, 2010. The investment book comprises 61 per cent SLR and 39per cent per cent Non-SLR investments.

3. Insurance Business

3.1 The Bank earned an income of Rs. 30.60 Crores from the insurance business, registering a 14.2 per cent growth over the last years income of Rs. 26.80 Crores.

3.2 In life insurance, the Bank mobilized a business of Rs. 102.10 Crores, recording a growth of 4 per cent over the last years business of Rs. 98.16 Crores. In non-life business, the Bank mobilized a business of Rs. 50.05 Crores as against Rs. 40.52 Crores mobilized during the preceding year, thereby registering growth of 24 per cent.

4. Income Analysis

4.1 Interest income of the Bank recorded a growth of Rs. 85.18 Crores from Rs. 2,971.70 Crores in 2008-09 to Rs. 3,056.88 Crores [+2.87 per cent] in 2009-10, as against the interest expenses which declined by 2.53 per cent from Rs. 1,987.86 Crores during 2008- 09 to Rs. 1,937.54 Crores during the year 2009-10. The Net Interest Income recorded a growth of Rs. 135.50 Crores [+13.77 per cent] during the same period.

4.2 The net income from operations [Interest Spread plus Non-interest Income] increased to Rs. 1,535.58 Crores in 2009- 10 from Rs. 1,245.31 Crores in 2008-09, recording 23.31 per cent growth.

4.3 The operating expenses witnessed a 22.62 per cent increase during 2009- 10 and stood at Rs. 577.37 crore as compared to Rs. 470.86 crore in 2008- 09.

4.4 The Cost to Income ratio (operating expenses to Net Operating Income) marginally improved from 37.81 per cent in 2008-09 to 37.60 per cent in 2009- 10, even after substantial increase in operating expenses.

5. Gross Profi t

5.1 The Gross Profi t for 2009-10 stood at Rs. 958.21 Crores as compared to Rs. 774.45 Crores in 2008-09, registering an increase of Rs. 183.75 Crores [a 23.73 per cent growth].

5.2 The Asset Utilization Ratio [percentage of Gross Profi t to Average Working Funds] improved to 2.54 per cent in 2009-10 [previous year 2.27 per cent].

6. Provisions

6.1 The Provision for Loan Losses, Provision on Standard Assets, Taxation and others aggregated to Rs. 445.83 Crores in 2009-10 as compared to Rs. 364.62 Crores in 2008-09.

7. Net Profi t and Dividend

7.1 The Bank registered highest ever Net Profi t of Rs. 512.38 Crores for 2009-10 compared to Rs. 409.84 Crores in 2008- 09, recording a growth of over 25 per cent.

7.2 The Board of Directors has recommended a record dividend of 220 per cent for 2009-10.

7.3 In terms of extant guidelines, the Bank will pay the dividend distribution tax for 2009-10. Accordingly, the total outfl ow on account of dividend for 2008-09 will be Rs. 124.78 Crores including the dividend distribution tax.

8. Net Worth and CRAR

8.1 The net worth of the Bank improved to Rs. 3,010.46 Crores as on 31st March, 2010 from Rs. 2,622.86 Crores as on 31st March, 2009.

8.2 The Capital to Risk Adjusted Assets Ratio [CRAR] stood at 14.81 per cent as on 31st March, 2010 as against 13.46 per cent as on 31st March, 2009, which is much above the norm of 9 per cent stipulated by the Reserve Bank of India. The Tier I component of CRAR is 11.91 per cent as on 31st March, 2010 compared to 12.77 per cent as on 31st March, 2009.

8.3 The Bank has implemented new capital adequacy framework w.e.f. 31st March, 2009. Under new norms, Banks CRAR works out to 15.89 per cent, which is higher than the CRAR as computed under BASEL I norms. The advantage has stemmed mainly from higher rated Investment / Credit portfolios. The Tier component of CRAR under new norms is 12.79 per cent as against 11.91 per cent under BASELI.

8.4 The Bank raised lower Tier II capital of Rs. 600.00 Crores through subordinated debt (Unsecured Redeemable Debentures maturing on 30th December, 2019) during 2009-10.

8.5 The Tier I leverage ratio of the Bank stands at 7.08 per cent as on 31 March, 2010 against 6.96 per cent as on 31 March, 2009.

8.6 The Return on Net Worth, Earnings Per Share and Book Value per Share for 2009-10 stood at 18.19 per cent, Rs. 105.69 and Rs. 621.00 respectively, against 16.62 per cent, Rs. 84.54 and Rs. 541.04 respectively for the previous year.

9. Branch Network

9.1 During the fi nancial year 2009-10, 3 branches were added, thereby taking the number of branches to 536 as on 31-03- 2010, spread over 20 states and 1 union territory. The area-wise breakup of the branch network (excluding Extension counters) is as under:

Area Branches

Metro 41

Urban 168

Semi-Urban 121

Rural 206



10. IT Initiatives During FY 2010

10.1 Conscious efforts have been made to leverage the Banks existing infrastructure as also to develop new technological solutions to increase customer convenience and providing multiple delivery channels for easy access to banking services. Some of the major initiatives are highlighted below:

* 32 branches have been computerized during the year taking the total count of computerized branches as on 31st March, 2010 to 542, out of a total branch count of 580 (including Extension Counters / Service Branches).

* 87 branches have been migrated to Core Banking Platform during 2009-10 taking the total count of branches on CBS as on 31st March, 2010 to 407.

* 44 new ATMs have been installed during the year taking the aggregate number of ATMs to 288 as at end of FY2010.

* e-Banking facility has been made available at all the 407 CBS branches of the Bank, with the number of e-Banking users crossing 22,323, an increase of around 11,000 users.

* Your Bank has integrated with more than 300 billers / online merchants like BSNL, AirTel, LIC, Metlife, Tata Sky, Make My Trip etc. for the purpose of providing online bill payment / shopping facility to its customers.

* All the CBS branches of the Bank have been enabled for RTGS and NEFT facility.

* Anywhere banking facility has now been made available at 511 branches as against 456 branches as at the end of previous year.

* A web based software application (E-NOC) has been developed by our Bank for digitized delivery, receipt and tracking of ‘No Objection Certifi cate at all networked business units.

* Creation / operationalisation of ‘Centralized Pension Payment application

* Online payment of TDS provided at all Business Units.

11. Advertising and Publicity

11.1 During the year, concerted efforts were made for brand building and the Bank continued to communicate messages on its products, services, interest rates and performance to the customers, shareholders and the general public through advertisements and outdoor publicity units.

12. Corporate Social Responsibility-CSR

12.1 To organize and expand various acts of social philanthropy besides heritage and eco-preservation initiatives, the bank this year constituted a trust under the title ‘Jammu & Kashmir Bank Social Conscience Trust (JKBSCT).

12.2 As in the previous years, the Bank took several measures during 2009-10, including but not limited to the following, to fulfi ll its social commitment.

* Providing of computer systems for orphanages, Sports Association for deaf and dumb

* Meaningful contributions for education of downtrodden besides aiding agencies active in empowerment of women and children through education

* Providing financial assistance for treatment of destitute patients directly and through organizations like Cancer Society of Kashmir, Voluntary Medicare Society and Artifi cial Limb Center.

* Organizing plantation drives - plantation of rare species of trees like Ginkgoaceae - a family of gymnosperms planted in the state after a gap of nearly 100 years.

* Sponsoring Talent hunt “Milay Sur” an immensely popular mega musical reality show telecast on DD Kashmir.

13. Lead Bank Responsibility

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 out of 22 districts of Jammu & Kashmir satisfactorily.

13.1 The Bank constituted the J&K Bank Rural Self Employment Training Institutes (JKBRSETI) Society, registered with Registrar of Societies, Directorate of Industries & Commerce (Kashmir), Srinagar for setting up JKBRSETIs in all the 12 lead districts of the Bank.

13.2 During the FY 2008-09 the following meetings were conducted by the Bank:

* Four quarterly State Level Bankers Committee (SLBC) meetings,

* Five Special monthly SLBC meetings to review progress in implementation of the IBA package on MSMEs,

* One Special SLBC on the theme of Government Sponsored Schemes in Jammu & Kashmir

* One meeting of the Sub-Committee of J&K SLBC for Relaxation to Trade & Industry in Jammu & Kashmir State;

* Two meeting of the Sub-group of J&K SLBC to look into the issues of Small Artisans and Weavers

* The district level and block level meetings such as DCC/ DLRC/ BLBC and Standing Committee meetings were held as per schedule in all the lead districts of the State.

14. Regional Rural Banks

14.1 Two Regional Rural Banks sponsored by J&K Bank in Jammu & Kashmir namely Kamraz Rural Bank and Jammu Rural Bank have been amalgamated and now operate under a single new Regional Rural Bank - “J&K Grameen Bank” from 1st July, 2009. The area of operation of J&K Grameen Bank is the combined area of operation of amalgamated RRBs. The head offi ce of the bank is located at Jammu.

The performance of the sponsored RRB has improved considerably during 2009- 10.

14.2 Business of the RRB increased from Rs. 1,577 Crores as on 31.03.2009 to Rs. 1,834 Crores recording growth of 16.30 per cent. Deposits, during the year under review, increased from Rs. 1,189 Crores to Rs. 1,397 Crores (a 17.52 per cent growth) while advances increased to Rs. 437 Crores from Rs. 388 Crores (a 12.51 per cent growth). The share of CASA deposits to total deposits stands at 52.41 per cent. Gross NPA of the RRB is 8.56 per cent while net NPA is 1.77 per cent.

14.3 The RRB has recorded operating profi t of Rs. 23.97 Crores for 2009-10 against Rs. 17.65 Crores for 2008-09 (a 36 per cent growth).

15. Corporate Governance

15.1 J&K Bank has established a tradition of best practices in corporate governance. The corporate governance philosophy encompasses not only regulatory and legal requirements ,such as terms of listing agreement with stock exchanges, but also several voluntary practices aimed at a high level of business ethics, effective supervision and enhancement of value to all stakeholders.

15.2 Several matters have been voluntarily included in the statement on Corporate Governance annexed to this report besides certifi cate from the Central Statutory Auditors regarding compliance of conditions of Corporate Governance as stipulated in clause 49 of the Listing Agreement.

16. Board of Directors of the Bank

16.1 Mr. G. P. Gupta ceased to be Director, w.e.f. 10-06-2009 pursuant to Section 10A (2A) (i) of the Banking Regulation Act, 1949. Mr. G. M. Dug, appointed as Director in casual vacancy, ceased to be Director at the last Annual General Meeting.

16.2 Directors place on record their appreciation for the valuable services rendered by Mr. G. P. Gupta and Mr. G. M. Dug during their tenure as Directors of the Bank.

16.3 Mr. M. I. Shahdad, Mr. Vikrant Kuthiala, Prof. Nisar Ali, Mr. A. M. Matto and Mr. R. K. Gupta were appointed as Directors at the last Annual General Meeting of the shareholders of the Bank held on 26-09-2009.

16.4 With a view to broad-base the Board, eminent personalities - Mr. Maya Shanker Verma and Mr. Nihal C. Garware, were re-appointed/appointed as additional Directors of the Bank w.e.f. 01-10-2009

16.5 In exercise of the powers conferred by Sub Section (1) of Section 36AB of Banking Regulation Act., 1949 (10 of 1949), the Reserve Bank of India appointed Mr. Arnab Roy, Regional Director, RBI, Jammu as additional director on the Board of Directors of the Bank w.e.f. 05-11-2009.

16.6 The Bank has gained immensely from their incisive observations, guidance, wide-ranging expertise and practical acumen.

16.7 Mr. B. L. Dogra and Mr. A. M. Mattoretire by rotation at the ensuing Annual General Meeting in accordance with Article 76 of the Articles of Association of the Bank and Provisions of Companies Act, 1956 and being eligible, offer themselves for reappointment.

16.8

Name of the Board of Directors

Haseeb A. Drabu Chairman & CEO

M. S. Verma Director

Sudhanshu Pandey, IAS Director

Arnab Roy Director

Ashok Kumar Mehta Executive Director

Abdul Majid Mir Executive Director

B. L. Dogra Director

M. I. Shahdad Director

Vikrant Kuthiala Director Prof. Nisar Ali Director

A. M. Matto Director

R. K. Gupta Director

Nihal C. Garware Director



17. Directors Responsibility Statements

The Board of Directors hereby confi rms that:

17.1 In the preparation of the annual accounts, the applicable accounting standards have been followed along with proper explanation relating to material departures;

17.2 We have 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 fi nancial year and the profi t /loss for the period under report;

17.3 We have taken proper and suffi cient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956 for safeguarding the assets of the company and for preventing and detecting fraud and other irregularities;

17.4 We have prepared the annual accounts on a going concern basis.

18. Particulars of Employees

PARTICULARS OF EMPLOYEES AS PER SECTION 217(2A) OF THE COMPANIES ACT, 1956, READ WITH THE COMPANIES (PARTICULARS OF EMPLOYEES) RULES, 1975, FOR THE YEAR ENDED 31st MARCH, 2010, ARE AS UNDER:

18.1 EMPLOYED THROUGHOUT THE FINANCIAL YEAR AND IN RECEIPT OF REMUNERATION AGGREGATING RS. 24,00,000/- OR MORE PER ANNUM

Name and Age (Years) Haseeb A. Drabu (48)

Designation Nature of duties Chairman & CEO

Remuneration Rs. 39,66,000

Qualifi cation M & D.Phil Economics

Experience (years) 18 years

Date of employment 09.06.2005

Last employment Economic Advisor

Govt. of Jammu & Kashmir



(Remuneration includes Basic salary, DA and contribution to provident fund.)

18.2 EMPLOYED FOR PART OF THE FINANCIAL YEAR AND IN RECEIPT OF REMUNERATION AGGREGATING RS. 2,00,000/- OR MORE PER MONTH - NIL -

19. Acknowledgements

19.1 The Directors thank the valued customers, shareholders, well-wishers and correspondents of the Bank in India and abroad for their goodwill, patronage and support.

19.2 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, Department of Company Affairs, Registrar of Companies, Comptroller & Auditor General, Financial Institutions and the Statutory Central Auditors of the Bank in the functioning of the Bank.

19.3 The Directors place on record their deep appreciation of the valuable contribution of the members of the staff at all levels for the progress of the Bank during the year and look forward to their continued co-operation in realisation of the corporate goals in the years ahead.

For and on behalf of the Board of Directors

Haseeb A. Drabu

Chairman & CEO

Place : Srinagar (J&K)

Date : 15-06-2010

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