Contents 02
64
78
164
CORPORATE OVERVIEW
02 Five Year Performance Highlights 04 Knowing J&K Bank 06 From the Chairman’s Desk 10 Realising Dreams - Enduring Partnerships 18 Realising Dreams – Business Sustainability 28 Realising Dreams – Inclusive Growth 38 Expanding Footprints
BOARD AND MANAGEMENT REPORTS
64 Directors’ Report 72 Management Discussion & Analysis
FINANCIAL STATEMENTS
78 Standalone 120 Consolidated
GOVERNANCE
164 178 204
Basel-II Pillar-3 disclosures Report on Corporate Governance Corporate Information
39 40 41 42 44 48 54 56 60 62 63
Customer Focused Technological Prowess Strengthening People Potential Risk Management Framework Corporate Social Responsibility Special Children. Special Focus. Events During the Year Board of Directors Executive Committee Vice Presidents Awards of Excellence
When does a bank stop being just a bank? When do customers become stakeholders? And when does an organisation transform into an institution? These aren't easy questions. However, if a single Bank has been part of the warp and weft of an entire state's socioeconomic fabric for 75 years, then perhaps, the answers are not too difficult to find.
At The Jammu & Kashmir Bank (J&K Bank), we are commemorating 75 years of inception this year. In reality, it is a celebration of the Bank having transcended the conventional boundaries of a financial services firm and graduated to an institution that is serving an entire society. It is a celebration of the efforts we have made to ensure that the aspirations of our customers and stakeholders are fulfilled. It is a celebration of the role we have played in national and societal development. It is a celebration of the steps we have taken to ensure financial inclusion even before the term came into vogue. At the same time, it is a celebration of higher performance benchmarks. Reaching ` 100,000 Crores in business volume and ` 1000 Crores in net profit for instance. It is also a celebration of the fact that we are fast increasing our national footprint, and emerging as a favoured boutique Bank pan-India. This annual report chronicles these successes. It celebrates enduring partnerships, business sustainability and inclusive growth. In short, it celebrates the manner in which J&K Bank has worked tirelessly to realise multiple dreams.
Five Year Performance Highlights TURNOVER
(` in Crores)
53,935
FY09
FY09
60,294
FY10
FY13
(` in Crores)
20,930
FY11
33,077
FY12
FY13
FY09 FY10 FY11
(`)
84.54 105.69 126.90
FY12
FY13
2
FY12
39,200
EPS
THE JAMMU & KASHMIR BANK LIMITED ANNUAL REPORT 2012-13
53,347
FY13
409.84 512.38 615.20 803.25 1,055.08
(%)
FY09
37.81
FY10
37.60
FY12
217.64
(` in Crores)
COST TO INCOME
FY11
165.69
64,221
NET PROFIT
FY10
26,194
FY11
44,676
FY13
FY09
23,057
FY10
37,237
FY12
1,03,421
FY09
33,004
FY11
86,424
FY12
TOTAL ADVANCES
(` in Crores)
FY10
70,870
FY11
TOTAL DEPOSITS
FY13
39.77 36.92 35.33
NIMs
(%)
RETURN ON ASSETS
FY09
3.15
FY09
FY10
3.16
FY10
3.69
FY11
FY13
FY09
(%)
16.62
FY13
FY10
(%)
11.53 11.17
FY12
FY13
COST OF DEPOSITS
(%)
6.59 5.77 5.36 6.48
FY13
6.87
NPA COVERAGE
FY09
(%)
48.59 90.13
FY10
10.86
FY11
1.70
FY12
23.56
ADVANCES YIELD
FY09
FY13
FY11
21.22
FY12
1.56
FY10
18.96
FY11
1.38
FY09
18.19
FY10
1.36
FY12
3.97
RETURN ON EQUITY
1.20
FY11
3.84
FY12
(%)
12.12 12.59
FY11
92.71
FY12
93.76
FY13
94.01
Note: NIM, Cost of Deposits and Advances Yield ratios are based on fornightly averages. Return on Assets is based on Average Working Funds reported to RBI in Form X.
CORPORATE OVERVIEW
BOARD AND MANAGEMENT REPORTS
FINANCIAL STATEMENTS
GOVERNANCE
3
Knowing J&K Bank J&K Bank functions as a universal Bank in Jammu & Kashmir and as a specialised Bank in the other parts of India. It is the sole banker in the state carrying out banking business on behalf of the Central Government, besides collecting central taxes for the Central Board of Direct Taxes. J&K Bank follows a multi-pronged business approach. It augments lending in the home state with the aim of enhancing margins, despite modest volumes. On the same note, the Bank endeavours to capitalise on niche lending opportunities across India to multiply volumes and improve margins. J&K Bank operates on the principle of ’social empowerment of banking’, as it seeks to deliver innovative financial solutions for households and SMEs.
DOMINANCE IN JAMMU & KASHMIR
63.38% SHARE OF TOTAL BANK DEPOSITS
62.15%
SHARE IN TOTAL PRIORITY SECTOR ADVANCES
67.49% SHARE IN TOTAL BANK ADVANCES
74.94%
SHARE IN TOTAL NON-PRIORITY SECTOR ADVANCES
VISION
“To catalyze economic transformation and capitalize on growth.” Our vision is to engender & catalyze economic transformation of Jammu & Kashmir and capitalize from growth induced financial prosperity thus engineered. The Bank aspires to make Jammu & Kashmir the most prosperous state in the country, by helping in creation of a vibrant financial architecture for the Jammu & Kashmir economy, at the centre of which will be the J&K Bank.
MISSION
73.50%
60.64%
50.33%
66.76%
SHARE IN AGRICULTURAL LENDING
SHARE IN LENDING TO EDUCATION SECTOR
4
SHARE IN LENDING TO MSME SECTOR
SHARE IN LENDING TO HOUSING SECTOR
THE JAMMU & KASHMIR BANK LIMITED ANNUAL REPORT 2012-13
Our mission is two-fold: “To provide the people of Jammu & Kashmir international quality financial services and solutions and to be a super specialist Bank in the rest of the country”. The strategy is intended to make us one of the best banks in the country.
INDIA PRESENCE Head-quartered in Jammu & Kashmir, India National Business Centre at Mumbai and North Zone Headquarters at Gurgaon 685 pan-India business units (577 business units in Jammu & Kashmir) 613 ATMs nation-wide (544 ATMs in Jammu & Kashmir)
613 ATMs
613 ATMs NATION-WIDE (544 ATMs IN JAMMU & KASHMIR).
CREDIT RATINGS The products are rated CRISIL A1+/FAA+ Stable, IND AA India Ratings (Fitch) Stable and CARE AA, indicating highest degree of safety regarding timely payment of financial obligations. The ratings reflect the Bank's strong capitalisation, good resource profile and highest asset quality.
MARKETING TIE-UPS Reliance Money Express Hindustan Petroleum Corporation Limited (HPCL) Bharat Petroleum Corporation Limited (BPCL) Indian Oil Corporation Limited (IOCL) Maruti Suzuki India Limited Ashok Leyland Limited JCB India Limited TVS Motor Company Limited Mahindra Two Wheelers Limited Bajaj Auto Limited Tata Motors Limited Atul Auto Limited Mahindra & Mahindra Limited VE Commercial Vehicles Limited Piaggio Vehicles Private Limited
ENROUTE TO RURAL GROWTH VIA INCLUSIVE DEVELOPMENT Set up 12 Rural Self Employment Training Institutes (RSETI), which are functioning successfully; has trained hundreds of unemployed people so far Programme underway to reach out and provide basic banking services in 1,260 identified unbanked villages, comprising 535 State Level Bankers’ Committee (SLBC) allocated above-2,000 population villages and 725 other unbanked villages; the Bank is also devoted to deploy delivery channels in SLBCallocated 1,093 villages in the population range of above 1,000 and less than 2000 Rolled out Business Correspondents (BCs) in 1,928 villages comprising 420 self-set target villages, 527 above-2,000 population villages and 981
below-2,000 population villages for extending Information Communication Technology (ICT)-enabled financial services through the operation of smart cards; 15 model villages selected by RBI for 100% financial inclusion in the state, allocated to J&K Bank, have been made operational and already 4,819 smart cards have been issued in these villages Sponsored J&K Grameen Bank, with a strong 201-branch rural network, for deeper penetration and service delivery Main intermediary in distribution and delivery of social security benefits and MGNREGA payments in the state Partnering as Debt Syndicator under Sher-e-Kashmir Employment and Welfare Programme for Youth (SKEWPY), launched by Government of J&K, to generate employment opportunities
Special meeting of J&K SLBC presided over by Dr. D Subbarao, Governor RBI
CORPORATE OVERVIEW
BOARD AND MANAGEMENT REPORTS
FINANCIAL STATEMENTS
GOVERNANCE
5
ENDURING PARTNERSHIPS Partnerships have been the cornerstone of our journey ever since inception. The endurance and resilience of the partnerships we forge lay the foundation for long-term growth, and facilitate the realisation of dreams. With time, they no longer remain just partnerships. They become relationships.
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THE JAMMU & KASHMIR BANK LIMITED ANNUAL REPORT 2012-13
Kh. Saifuddin
ENTREPRENEUR. RISK TAKER. ACHIEVER.
CORPORATE OVERVIEW
Syed Mohammad Rawther
FIRM. FOCUSED. FUTURE-READY.
BOARD AND MANAGEMENT REPORTS
FINANCIAL STATEMENTS
Ziaullah Sheriff
VALUE-CREATOR. VISIONARY. PHILANTHROPIST.
GOVERNANCE
11
ENDURING PARTNERSHIPS
Dreamer-Doer 12
THE JAMMU & KASHMIR BANK LIMITED ANNUAL REPORT 2012-13
A panoramic view from the Saifco Hillcrest Hotel (Taj Vivanta)
Saifco Group is one of the largest business houses in Jammu & Kashmir, comprising Saifco Cements Pvt. Ltd., Saifco Hillcrest Hotels, Saifco Roller Flour Mills, Neelam Theaters, Saifco Plaza and Saifco Construction Corp. Saifco Group’s relationship with the Bank started in 1955. Today the Group is scouting for more opportunities to take the business to the next level and is confident that J&K Bank will be supportive of their endeavours.
CORPORATE OVERVIEW
BOARD AND MANAGEMENT REPORTS
FINANCIAL STATEMENTS
GOVERNANCE
13
“Growing a business across multiple sectors is easier said than done. But when you get an all-weather partner like J&K Bank, things turn easier.
What we have achieved has been financially possible because of the strength of this partnership. We have miles to go, and the Bank has always trusted our confidence and courage to dream bigger, try harder and accomplish more.”
58 YEARS
SAIFCO GROUP'S RELATIONSHIP WITH THE BANK STARTED IN 1955 AND HAS MATURED OVER THE YEARS
Following in the footsteps of his late father, Kh. Saifuddin demonstrated extraordinary capabilities and people management skills to establish himself as a business leader of repute in the State of Jammu & Kashmir. He has proved his entrepreneurial acumen in multiple businesses: hospitality, cement manufacturing plant, flour mill, movie theatre, cold storage and construction of small hydel projects. Despite challenges, Kh. Saifuddin and his associates (Mr. Mohd. Khalil, Mr. Manzoor Ahmed, Mr. Altaf Ahmed and Mr. Suhail Manzoor) kept their chin up and one Bank had faith in their courage. J&K Bank.
Saifco Cements Private Ltd. was established in 1999 with an outlay of ` 16.50 Crores. It has grown from strength to strength to touch an estimated Net Worth of ` 150 Crores. The technologically advanced plant produces about 12,000 cement bags daily and supplies to the major hydel projects in the State. The turnover is ` 98 Crores in FY 2011-12.
`
150 CRORES
ESTIMATED NET WORTH OF SAIFCO CEMENTS Saifco Cements plant
14
THE JAMMU & KASHMIR BANK LIMITED ANNUAL REPORT 2012-13
Kh. Saifuddin
ENTREPRENEUR. RISK TAKER. ACHIEVER. The Group’s relationship with the Bank started in 1955 and matured over the years. The result is an astounding feat of entrepreneurship: Saifco Cements Pvt. Ltd., Saifco Hillcrest Hotels, Saifco Roller Flour Mills, Neelam Theaters, Saifco Plaza and Saifco Construction Corp. Today, Saifco Group is one of the largest business houses in Jammu & Kashmir, inspiring other entrepreneurs and creating socio-economic opportunities for thousands of people.
Located adjacent to the picturesque Cheshmashahi and Dal Lake, Srinagar, Saifco Hillcrest Hotel is the first five-star hotel in the Kashmir Valley. It enjoys a tie-up with (IHCL) Taj Group under the brand name of Vivanta by Taj. Inaugurated in April 2011, the hotel has already earned repute as a coveted destination for meetings and conferences.
Saifco Hillcrest Hotel (Taj Vivanta)
Established in 1975 with a capital investment of ` 4.50 Crores, Saifco Roller flour mill has a manufacturing capacity of 1,000 quintals per day of Maida, Atta, Bran and so on. The ‘SAIFCO’ branded flour enjoys a commanding market share in the State. Providing wholesome entertainment to the people in the State since 1965 is Neelam Theatre. A favourite landmark for the crowd, Neelam Theatre has been popular in Srinagar, where people love to frequent and spend a good time with friends and loved ones. Saifco Plaza (established in 2006) is a shopping-cum-hotel complex at Batmaloo, Srinagar. Built over 11,000 square feet land, the Plaza provides shopping space for 75 shops and a 60-room hotel accommodation facility. It also has a parking facility of about double the size of this land to accommodate over 500 vehicles at a time.
CORPORATE OVERVIEW
Saifco Construction Corp has successfully completed substantial government and private sector projects. This includes construction of by-pass roads, lift irrigation pump-house, truck terminals, hydro projects and so forth. The story continues and the spirit of Saifco surges ahead, unabated by challenges. Today, the Group employs over 2,000 regular employees and the annual salary expenditure is more than ` 15 Crores. The Group is now scouting for more opportunities to take the business to the next level, and Kh. Saifuddin and his business associates are confident that J&K Bank will be supportive of their endeavours. The Group wishes to contribute to the development of the state effectively through numerous projects including Deluxe Hotels at Pahalgam and Sonmarg; construction of new commercial complexes, expansion of existing facilities at Saifco Cements, renovation of the cinema theatre into a shopping mall and multiplex and many others.
BOARD AND MANAGEMENT REPORTS
FINANCIAL STATEMENTS
The Group’s faith in the Bank remains as strong as ever: “The Bank has always acted as a catalyst to encourage entrepreneurs in their journey towards higher achievements.” At J&K Bank, we believe in partnering people and possibilities, and Saifco is a sterling example of an enriching partnership.
`
15
CRORES
THE ANNUAL SALARY EXPENDITURE INCURRED ON 2,000+ PEOPLE EMPLOYED BY SAIFCO.
GOVERNANCE
15
BUSINESS SUSTAINABILITY
North meets South. “The partnership between SA Rawther Spices and J&K Bank represents the coming together of a business enterprise from the South and a Bank that primarily belongs to India’s northern territory: The partnership has fructified into a proud achievement in the realm of agro-products and food industry in the country. The personal touch in interaction and approachable management make banking with J&K Bank all the more special.”
Syed Mohammad Rawther
FIRM. FOCUSED. FUTURE-READY.
From a coffee planter and trader, SA Rawther Spices has emerged as a leading processor and exporter of spices and coffee in India. Today, it is a nationally recognised and internationally acclaimed enterprise. However, this transformation has not happened overnight. It is the result of a powerful vision, painstaking effort and a propelling partnership with a bank - J&K Bank. The Company approached the Bank in 2001 and had no financial limits until 2002. Today, it enjoys a credit facility of about ` 100 Crores. Despite being a Bank originating in North India, J&K Bank understood the dynamics of these southern markets of spices and coffee, and supported it ever since. J&K Bank encouraged them to dream big and helped them realise their goals and surge ahead despite challenges.
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THE JAMMU & KASHMIR BANK LIMITED ANNUAL REPORT 2012-13
The relationship helped them establish a large factory in 2008 with enormous capacities. “J&K Bank’s consistent support has enabled us to report a turnover of more than ` 200 Crores for three years and a steady long-term growth record,” the management of SA Rawther Spices confirms. Before the relationship with the Bank, the Company’s employee strength was 205. Today, “we have a workforce of over 2,000 people involved in agriculture and over 450 people in the business,” the Management says. With an established set up in dehydrated vegetables and fruit, the Company is reinforcing its industry hold. Its business has grown from four commodities to over 30 commodities with 150-plus products. An ingredient specialist needs to
manage over 400 products – a huge challenge. The Company aims to inculcate greater food safety standards, provide more value to customers and enhance brand recall. SA Rawther Spices is well on its way to emerge among the top three processors in its categories and a major player in all food ingredients globally. J&K Bank treasures the trust of its client and will continue to propel its business ambition.
INITIAL TERM LOAN: ` 20 LACS EXPOSURE TODAY: ~ ` 100 CRORES DREAMS: ASPIRES TO TOUCH ` 3,000+ CRORE TURNOVER AND MORE GLOBAL CLIENTS.
BUSINESS SUSTAINABILITY
Vision-vigour “In our modest way, we have always tried to contribute to society in the sphere of employment generation, education, religion and culture.
J&K Bank, our principal banker, also focuses on social uplift as a part of their corporate credo. Our common purpose brings us closer. We respect each other’s vision and vigour, and that makes our partnership more rewarding.” Ziaullah Sheriff of India Builders Group does not believe in separating business from social entrepreneurship. He divides his time between steering thriving businesses and strengthening community initiatives. And he has always found J&K Bank beside him in multiple roles: principal financier, helpful guide, enthusiastic supporter. Sheriff thinks agriculture can play a pivotal role in driving inclusive growth in India. His passion has helped the Group emerge as India’s third largest coffee planter. “We have two big banks tenanted in our premises at Bengaluru, but none of them helped us the way J&K Bank did,” says Sheriff. The relationship started in 1992, when the Bank came forward to discount the rentals of the Group’s Delhi Presidency building for ` 1 Crore. This was a time when investment in real estate was considered a taboo by most banks in the country. Not J&K Bank. “The Bank has always helped the Group’s
CORPORATE OVERVIEW
efforts at the right time,” claims Sheriff. Sheriff also reciprocated with prompt repayment for two decades, reinforcing the relationship with the Bank. For India Builders Group, the beginning was modest, the energy was high and the vision was far-reaching. The results are stupendous. The Group’s asset base has skyrocketed from ` 10 Crores to ` 4,000 Crores in four decades. It has expanded its presence into real estate, plantations, software, hospitality and healthcare, employing around 5,000 people nationally and internationally. Sheriff’s indomitable energy, however, is not consumed by business alone. He has other priorities in the social sector. He has set up the Sheriff Foundation. Besides, he also supports the Al-Ameen Charitable Trust, major orphanages in Bengaluru and contributes to nearly 10 government-run Urdu schools and
BOARD AND MANAGEMENT REPORTS
FINANCIAL STATEMENTS
Ziaullah Sheriff
VALUE-CREATOR. VISIONARY. PHILANTHROPIST. even partnered with the Akshaya Patra initiative. To commemorate the 200th Death Anniversary of Hazrath Tipu Sultan, the Sheriff Foundation has set up an Advanced Research and Study Centre, the Darul Umoor, at Srirangapatna, close to Gumbuz. This is a major step towards the promotion of scholastic research and learning. This then is the universe of Ziaullah Sheriff and the India Builders Group that he leads. J&K Bank is privileged to be a part of this universe of entrepreneurship and social engineering.
INITIAL TERM LOAN: ` 11 CRORES CURRENT EXPOSURE TODAY: OVER ` 300 CRORES DREAMS: ASPIRES TO EXTEND HIS BUSINESS INTO OTHER VERTICALS AND FOCUS MORE ON COMMUNITY INITIATIVES.
GOVERNANCE
17
BUSINESS SUSTAINABILITY Realising dreams is a continuous process. At J&K Bank, our ability to infuse a sense of confidence in our stakeholders and encourage them towards long-term, risk managed growth is an important part of our ethos. Thereby ensuring growth that leads to sustainable value creation.
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THE JAMMU & KASHMIR BANK LIMITED ANNUAL REPORT 2012-13
Aftab Ahmad
ENGINEER. ENERGETIC. OPTIMIST.
Javed Iqbal, Irfan Ahmad Bhat
AGILE. ABLE. AMBITIOUS.
Javid Iqbal
INDUSTRIOUS. INNOVATIVE. INSPIRING.
CORPORATE OVERVIEW
BOARD AND MANAGEMENT REPORTS
FINANCIAL STATEMENTS
Pankaj Mahajan
THINKER. PHOTOGRAPHER. TECHNOLOGY LOVER.
GOVERNANCE
19
BUSINESS SUSTAINABILITY
Let there be light! 20
THE JAMMU & KASHMIR BANK LIMITED ANNUAL REPORT 2012-13
“J&K Bank has supported me from aspirations to achievement.
It has been a saviour in my life. I want others like me – young men with education and aspirations – to be benefited. The Bank can play a pivotal role in driving large-scale employment and entrepreneurship in the Jammu & Kashmir.”
There was a time when Aftab Ahmad’s hopes dimmed with the sunset. That meant long spells of darkness, without any electricity and on wintry nights a fierce struggle against the biting cold. The reasons for power shortage were multiple: poor infrastructure; rampant theft; and lack of collective will to mend the situation. However, Aftab refused to sit quietly and do nothing. Aftab had done his Bachelor of Engineering in Electronics from Bijapur, Karnataka. He used his knowledge to manufacture transformers for power distribution and Aftab Electricals came into being. But he had to weather multiple challenges to make the business sustainable. He had only ` 35 as his capital, and nobody to support. J&K Bank provided him ` 5 lacs to begin with. “The Bank was my saviour during those difficult days. Besides, it guided me right from inception to final setting up of the unit,” says Aftab.
CORPORATE OVERVIEW
Along with repairing old transformers, Aftab supplies 200 fresh transformers annually to all the seven divisions of the South Valley. With the government planning to light up more and more villages, Aftab sees light at the end of the tunnel. However, challenges still exist. Aftab does majority of his business with the Power Development Department (PDD), Kashmir’s chief supplier of electricity. But, business with PDD generally involves hurdles in the form of clearance of bills, creating fund shortage for Aftab. “J&K Bank has always kept the door open for me. They acted as a shock-absorber at times of monetary crunch and helped me sustain”, says Aftab. Aftab is the face of optimism in Jammu & Kashmir. His business today generates a ` 2-Crore turnover, from absolutely nothing a decade ago. “I have 15 technicians and plan to hire 15 more later in
BOARD AND MANAGEMENT REPORTS
FINANCIAL STATEMENTS
Aftab Ahmad
ENGINEER. ENERGETIC. OPTIMIST.
the year”, says the battle-hardened entrepreneur. As the sun sets below the western horizon, Aftab smiles because he will no longer have to brave the darkness alone. With J&K Bank, he has found a way to bring light into the lives of many people like him.
INITIAL TERM LOAN: ` 5 LACS EXPOSURE TODAY: ` 64 LACS DREAMS: PLANS TO FORAY INTO THE EVER-INCREASING MARKET FOR ELECTRIC BLANKETS; ALSO WANTS TO MANUFACTURE TUBULAR POLES OF ALUMINIUM CONDUCTORS
GOVERNANCE
21
“J&K Bank always believes in taking customers along with it and in providing them the best of facilities. With genuine warmth and candour. This is the Bank’s uniqueness and strength.”
Sowing the seeds of industrial regeneration in a challenging landscape like Jammu & Kashmir calls for resolve and resilience. Against multiple roadblocks, predictable and unpredictable. Irfan Ahmad Bhat knew all this, but still he responded to a higher calling. His dream was to help put Jammu & Kashmir on the industrial map of India. “There are multiple challenges relating to land acquisition in the industrial estate, power facilities and finally, financial assistance,” says Irfan. The challenges notwithstanding, Irfan started looking for financial assistance from banks. J&K Bank came forward and Alfarooq Plastic Industries came into being. “In the beginning, just three months after we received credit from the Bank, the Branch Head advised us to avail more working capital. We were hesitant. However, as things turned out, exactly after six months, we required more working capital. This shows how much they care about blooming entrepreneurs like me.
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THE JAMMU & KASHMIR BANK LIMITED ANNUAL REPORT 2012-13
Javed Iqbal, Irfan Ahmad Bhat
AGILE. ABLE. AMBITIOUS.
The Bank has always tried to go out of its way to help us. Once, the Lassipora branch was functioning without online software because of tension in the Valley. But the Bank employees ensured uninterrupted transactions,” recalls a grateful Irfan.
employment significantly”, says Irfan candidly. Since the goods are transported to all the districts of Kashmir, the company outsourced both packaging and transport and generated indirect employment for atleast 50 people.
It took quite some time for Alfarooq Plastic Industries to gain market traction and compete with India’s reputed brands. “The quality of our products has helped us emerge as one of the most trusted brands in the Valley,” asserts Irfan. And throughout the rough and tumble of day-to-day operations, J&K Bank provided rock-solid support to this blooming entrepreneur.
Alfarooq Plastic Industries is now expanding like never before. It now needs more working capital as well as a fresh term loan from J&K Bank. Like always, the Bank will not disappoint Irfan. The reason is not hard to seek: J&K Bank’s vision is same as Irfan’s. To help create a strong, proud and resurgent Jammu & Kashmir. It’s no longer an uphill task, thanks to dynamic entrepreneurs like Irfan and Javed.
From a humble beginning of ` 19.5 lacs in FY 2009-10, the sales of Alfarooq Plastic Industries reached ` 245.3 lacs in FY 2012-13. Besides, Alfarooq Plastic Industries also enjoys 85% market share in the electrical conduit segment and about 4% in the SWR pipe segment. “As the plant is fully automatic, there is not much of a requirement of labour in the production facility. However, we generated indirect
INITIAL TERM LOAN: ` 5 LACS EXPOSURE TODAY: ` 31 LACS DREAMS: TO EMERGE AS A POWERFUL BRAND IN INDIA’S PVC / PLASTIC INDUSTRY AND WORK FOR THE STATE’S INDUSTRIAL REGENERATION.
BUSINESS SUSTAINABILITY
Shaping a dream CORPORATE OVERVIEW
BOARD AND MANAGEMENT REPORTS
FINANCIAL STATEMENTS
GOVERNANCE
23
BUSINESS SUSTAINABILITY
Ability. Adrenaline. 24
THE JAMMU & KASHMIR BANK LIMITED ANNUAL REPORT 2012-13
“I was always ambitious and the association with J&K Bank made me think further.
Today, I am an employer and think about the well-being of families that my business supports. I want to foray into new verticals, embrace new opportunities and do something worthwhile for my State. My partnership with J&K Bank has given me the confidence. It’s not just about financial assistance; it’s about following a dream fearlessly.”
At the turn of the millennium, Javid Iqbal’s career also took a turn. A diploma holder in electrical engineering, he left the security of a government job and decided to look after his father’s 12-room lodge at the famous Patni Top hill station of Jammu. But that didn’t work out for him. Disillusioned, he decided to give up the idea of running his father’s business. But then the story of his life turned again. This time for better. The association with J&K Bank not only changed his plan, but encouraged him to upgrade his lodge into a full-fledged hotel having 51 rooms, a conference hall, state-ofthe-art restaurant, a gym and parking space. How does it feel to become an employer from an employee? Javid smiles and expresses with rare candour: “It feels great. I have a 50-member team. I have been able
CORPORATE OVERVIEW
to fulfil not only my father’s dream, but also the dreams of unemployed youth of the area. This has been possible only because of the timely help by J&K Bank,” says Javid. “J&K Bank provided me the knowhow to excel in the hospitality business. It has also helped strengthen the tourism industry considerably,” informs Javid. Today, Javid’s hotel is among the biggest in Patni Top, which hosts nearly 4,000 to 5,000 guests from India and globally between the three months of May to July.” But the initial years were the most difficult: Other banks were sceptical about the success of my venture. But, J&K Bank thought differently. When others disappointed, they encouraged me. That made a big difference,” Javid recalls. Javid has big plans on the anvil, and looks forward to J&K Bank for
BOARD AND MANAGEMENT REPORTS
FINANCIAL STATEMENTS
Javid Iqbal
INDUSTRIOUS. INNOVATIVE. INSPIRING.
financial assistance and support. The Bank is consistently supporting his endeavours. He is now planning to install a central heating system in his hotel, which will be financed by the Bank. Now that tourism is witnessing surge in the valley Javid’s business prospect is not difficult to predict. The Bank’s support is now encouraging him to think harder for new vistas of entrepreneurship.
INITIAL TERM LOAN: ` 8 LACS EXPOSURE TODAY: ~ ` 1.5 CRORES DREAMS: ASPIRES TO TAKE THE EXISTING BUSINESS TO GREATER HEIGHTS AND FORAY INTO NEW VENTURES IN THE KASHMIR VALLEY
GOVERNANCE
25
“Although it is not easy to start a business, to keep it going is even tougher.
Here, J&K Bank has been of tremendous support to me, by being a sheet anchor at every step. Timing is another important factor. One needs money when one needs it. The Bank’s promptness has certainly enabled me to grow Royal Palace to a significant player in the camera market in the last 5 years” Pankaj Mahajan loves the camera. And the world of vivid imagery that comes along with it. This passion for the lens comes naturally to him, given that his father had started a small colour lab in Jammu many years ago. At that time, J&K Bank had provided him the loan for this venture. When Pankaj passed out of senior school, his dream was to build a career around the camera. Pankaj began with a small photography practice and a colour lab. He used to transform images he captured through the lab, and make a living. His dream, however, was something bigger. Pankaj spotted a trend. The good old film camera was gradually giving way to its digital avatar. People were buying more and more personal cameras. And, there was a robust demand. And, thus Pankaj decided to enter the business of selling digital cameras and related equipment. Not many financiers understood this trade. They either did not believe in his dream, or did not understand his project. This went on for nearly 2 years. Finally, Pankaj thought of
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THE JAMMU & KASHMIR BANK LIMITED ANNUAL REPORT 2012-13
approaching J&K Bank. After all, he was banking with them for a long time now, and they had also helped his father. He was not disappointed. The Bank was quick to embrace this apparently new idea, and did not hesitate to support his dream. Pankaj got his first loan of ` 3 lacs. And he started his showroom ‘Royal Palace’ which is today an exclusive outlet in the J&K State for the leading global photography brand – Nikon. This was 2009. Today, his total exposure is ` 18 lacs. And his total sales nearly ` 40 lacs. Business has grown manifold since he started, and he recognises the role of the Bank in this journey. Today, he not only sells cameras, but also trades in a large variety of related digital and electronic equipment. Pankaj believes in moving with the times. He is a regular user of the internet banking and mobile banking services of the Bank, and believes that technology-aided banking enables him to transact quicker. He has since taken a car loan from the Bank as well – a sign both of sustainable success and a maturing partnership.
Pankaj Mahajan
THINKER. PHOTOGRAPHER. TECHNOLOGY LOVER.
“I have missed a few instalments. At such times, the Bank has not embarrassed me. Instead, it has helped me through timely reminders and extensions where necessary”, says Pankaj. He believes that his success will also enable the Bank to explore greater opportunities in the electronics market. We agree. Pankaj believes that the Bank empowers the masses through specific interventions, besides serving them through banking. He dreams of reaching greater heights in ten years, by maintaining his collaborative relationship with the Bank.
INITIAL LOAN: ` 3 LACS EXPOSURE TODAY: ` 18 LACS DREAMS OF: A TURNOVER OF ` 1 CRORE IN 2 YEARS FROM ` 40 LACS TODAY
BUSINESS SUSTAINABILITY
Picture-perfect CORPORATE OVERVIEW
BOARD AND MANAGEMENT REPORTS
FINANCIAL STATEMENTS
GOVERNANCE
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INCLUSIVE GROWTH Collective dreams can never be realised in isolation. At J&K Bank, our 75-year history is replete with instances demonstrating our commitment to inclusion. We believe that true growth is achieved only if it encompasses those who need it most. It is this belief that inspires us to ensure that development continues to happen. And, inclusion becomes a vibrant reality.
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Manmohan Bhat
DREAMER. BELIEVER. SOCIAL TRANSFORMER.
Ajaz Masoodi
EDUCATIONIST. EMPLOYMENT GENERATOR. GOODWILL AMBASSADOR.
Ghulam Rasool Dhobi
FOCUSED. FUTURISTIC. FIGHTING FIT.
CORPORATE OVERVIEW
BOARD AND MANAGEMENT REPORTS
FINANCIAL STATEMENTS
Nuzhat Maqbool
ENLIGHTENED. EMPOWERED. ENTERPRISING.
GOVERNANCE
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“Thirteen years have sped past, and it just seems yesterday. Coventry has certainly come a long way. From a modest rented accommodation, now we have our own prized building, humming with cheerful voices of students. Education is steadily transforming lives in Jammu & Kashmir. We owe it to J&K Bank that we have been able to pursue our dream of serving the people of our State. With the priceless gift of education.”
This is the story of four young Kashmiris (Manmohan Bhat, Rajesh Kumar Dhar, Shashi Bhushan Bhat, Sanjeev Kumar Tickoo), who were once displaced by social adversities, but never gave up. They shared one objective in life: an overriding passion to serve people through education. In all the 14 years they worked in the private sector, they never quite let this passion die. All of them had Bachelor's Degree in Education and thought it would be better to start an educational institute in Jammu. The journey began in a four-room rented accommodation, admitting six students of lower primary level. The beginning was modest, but the vision was not. And the vision paved the way for an enriching partnership with J&K Bank. When the four young men thought of upgrading their lower primary school to senior secondary level, J&K Bank provided them financial support and a headstart to large-scale educational entrepreneurship. This was the year 2000. A dream was slowly taking
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THE JAMMU & KASHMIR BANK LIMITED ANNUAL REPORT 2012-13
shape, and J&K Bank had been a participant of this transformation. “Of course there were challenges. The first hurdle was the complete lack of confidence shown by other banks to finance our venture. But J&K Bank was different. We had the confidence that we could pull it off with the consistent support from the Bank. It showed keen interest in the uplift of educational standards by financially helping private schools and colleges. And we knew that we had found our calling...”, reminisces one of the founders. Another uniqueness they discovered in the Bank’s approach, “Besides providing finance, the unique thing about J&K Bank has been its customer-centric approach. Once we got the initial funding, the Bank kept encouraging us to upgrade our institution” says Mr. Manmohan Bhat. The school has now grown in its stature, but the headwinds of competition are coming from all directions. Coventry School is
Mr. Manmohan Bhat, Partner, Coventry Scholars Senior Secondary School.
DREAMER. BELIEVER. SOCIAL TRANSFORMER.
also upgrading its facilities (health clubs, drama, music and so on) to attract more students and make a difference. Even in this endeavour, the school received J&K Bank’s financial assistance. Coventry Scholars Senior Secondary School in Jammu stands as a testimony of an enduring partnership in the sphere of education. Between four dreamers, a wonderful idea and an enterprising Bank.
INITIAL TERM LOAN: ` 15 LACS EXPOSURE TODAY: ` 100 LACS AT TWO BUSINESS UNITS OF J&K BANK
DREAMS: FOUR PARTNERS WANT TO BUILD ANOTHER GREAT EDUCATIONAL INSTITUTION IN KASHMIR, THEIR HOMELAND; ROOT OUT UNEMPLOYMENT FROM THE STATE THROUGH EDUCATION
INCLUSIVE GROWTH
A gift for life CORPORATE OVERVIEW
BOARD AND MANAGEMENT REPORTS
FINANCIAL STATEMENTS
GOVERNANCE
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INCLUSIVE GROWTH
Man-Mission 32
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“I have always valued education in my life and I wanted to do something for my town in the sphere of education. J&K Bank was the obvious choice for financial assistance as they understand local sentiments and acknowledge positive efforts to do something for our State. Today, our conditions have changed, and we can see better days of prosperity. The partner who has helped drive this transformation is J&K Bank. You are not only our banker, you are our ambassador to the world outside.” Sopore. North Kashmir. Early 1990s. Scene of turmoil. The fruit business was good, but the area lagged in infrastructure. Alarmingly so, when it came to modern educational institutions. Disturbing academic environment. Fast forward to 2013, and the backdrop changes instantly. Good educational institutions running amid thriving businesses, modern infrastructure, self reliant population. One man - Azad Masoodi - has seen it all. And he participated in this transformation in his own modest way. Nether Field School is the result of his efforts to promote quality education in his home land, and one institution supported him through thick and thin - J&K Bank. After completing his Master's Degree in English, Ajaz was working as a lecturer in a Government College. But he had other plans. He wanted to launch a private educational enterprise. So he left his job and started teaching English language
CORPORATE OVERVIEW
Ajaz Masoodi
EDUCATIONIST. EMPLOYMENT GENERATOR. GOODWILL AMBASSADOR.
under the banner of Bright Star Coaching Centre. This was 1997. The bigger dream was still to be accomplished. He wanted to build a good school for his town. With no financial support, building such a school was almost impossible. The next step for him was to approach banks and convince them about his business plans. But banks were reluctant to lend because of social unrest in the Valley. J&K Bank came forward to help, when Ajaz was losing all hope.
Today, the school has two thousand students and 135 academic and non-academic staff. It is one of the biggest private schools in North Kashmir. Every month Ajaz pays ` 9 lacs as salary to his staff. He also deals in clothing for ladies under the banner of Precise in Sopore (Srinagar), Subash Nagar (Jammu) and Zakir Nagar (Delhi). This is not solely a business endeavour, but the desire to create an impact, says Ajaz: “I want to generate employment opportunities in whatever way I can.”
The school was up and running for some time. But something else tormented Ajaz. Families were not ready to admit their children to private institutions and pay fees. But the school’s performance in the exams slowly made them realise the importance of quality education. “For two decades, I am associated with J&K Bank. It has given me respect and always supported my dreams with financial assistance and moral support.” says Ajaz. With the Bank’s support, Ajaz steadily upgraded his school’s infrastructure as more students joined.
Ajaz is the face of social and economic transformation in Jammu & Kashmir. He has more aspirations and strategies to drive forward his business. And, he believes that J&K Bank will continue to support his endeavour.
BOARD AND MANAGEMENT REPORTS
FINANCIAL STATEMENTS
INITIAL TERM LOAN: ` 4.5 LACS EXPOSURE TODAY: ~ ` 1.4 CRORES DREAMS: WANTS TO BUILD A COLLEGE TO IMPART TECHNICAL EDUCATION TO YOU PEOPLE AND GENERATE EMPLOYMENT
GOVERNANCE
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“A life of dignity is a life hard earned for me. Today, I am self- reliant and the society respects me. But all this was once an impossible dream.
My journey started from being a borrower of ` 1,000 for travel expenses, striving hard to do something worthwhile. J&K Bank has supported me in times of distress. It has always been a friend in need.” Ghulam Rasool Dhobi’s story is worth telling, because he refused to accept his lot in life. He fought hard against social injustice and economic hardship. His dream was to become a teacher, but poverty came in the way. Teacher he couldn’t become, but the spirit to achieve something remained with him. He took a shot at entrepreneurship. He knew things wouldn’t be easy. Nevertheless, he persisted. One day, he came across an advertisement from JK Entrepreneurship Development Institute regarding the Government’s ‘SEED Capital Scheme’, in association with J&K Bank to finance the entrepreneurship programme. He capitalised on the opportunity and decided to do the business of steel and iron. The time was in his favour. The Government was making considerable investment in development programmes. Construction work was booming. And yet, locals used to buy steel and other construction material from Srinagar or Sopore. Ghulam saw an opportunity in this. His idea was to
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ensure that construction material was available locally at comparable prices. This would feed the significant demand in the region. At the beginning, he borrowed ` 1000 from a relative as he didn’t have even ` 200 to travel to Srinagar for attending a training programme in JKEDI Pampore. For his project report, he had borrowed ` 2500 from a friend. Finally, he submitted the report and his loan was sanctioned in two days. He thinks society treated him with respect the day the Bank sanctioned the loan. He had social standing, people were ready to listen to his aspirations and friends and family members looked up to him. The journey from a borrower of ` 1000 for travelling expenses to an owner of a car, four shops and a house worth ` 50 lacs was possible, because one Bank believed in his ambition and supported him all along - J&K Bank. Ghulam Rasool’s banker, friend-in-need, constant companion, supportive partner.
Ghulam Rasool Dhobi,
FOCUSED. FUTURISTIC. FIGHTING FIT.
It has been a decade since his partnership with the Bank first began. Today, Rasool looks back on those initial days of struggle with less pain, more pride. He acknowledges the role the Bank has played in his life. The relationship has deepened further after 2011. His business is prospering every day. His annual turnover is over ` 4 Crores. With the growth of business, his limit has already increased to ` 50 lacs. Rasool is a happy man today; he has finally been able to come out of the long shadow of poverty and disgrace that blighted his early career. Rasool’s children will never see the life that he saw in his childhood. Today, he has all the comforts one can hope for. But the most important thing for him is still a very small word: Dignity.
INITIAL TERM LOAN: ` 8.24 LACS PROPOSED ENHANCEMENT: ` 50 LACS DREAMS: ASPIRES TO BE ONE OF THE LEADING BUSINESSMEN OF NORTH KASHMIR 10 YEARS HENCE
INCLUSIVE GROWTH
Hard-earned dignity CORPORATE OVERVIEW
BOARD AND MANAGEMENT REPORTS
FINANCIAL STATEMENTS
GOVERNANCE
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INCLUSIVE GROWTH
Pretty-Powerful 36
THE JAMMU & KASHMIR BANK LIMITED ANNUAL REPORT 2012-13
“Businesswoman! Sounds nice. But I still can’t believe what I have achieved.
I never thought, I would be running my own business, especially in a society where men often have the last word. But today when I stand before the world as a confident entrepreneur, I can’t possibly forget the support I have received from J&K Bank. The Bank always listened to my problems as a woman, reposed faith in my abilities and walked the difficult road along with me.”
It’s hard to identify the real spark that drives Nuzhat Maqbool, unless you listen to her story. She started her career as a computer operator with an organisation dealing with a distribution business after she completed her studies. So far, nothing, extraordinary. Most newgeneration women walk the same road. But like other colleagues, Nuzhat never just busied herself with day-to-day operations. She delved deep into the nature of the business, closely looked at the operating model and felt confidence growing inside her. In 2002, the real turnaround happened in her career. It was in that year that she commenced her own distribution chain of Fast Moving Consumer Goods (FMCG). The only lady in the distribution business of FMCG in the J&K State, the promoter of EN EM Agencies, was ready to take on the world.
How far has she travelled in all these years? From a day’s sale of ` 150 to a turnover of over ` 2 Crores, Nuzhat Maqbool has indeed come a long way. “Once, I used to venture out into the market myself. I was hesitant first, but other people and family members supported me,” Nuzhat says. Another institution provided rock-solid support to this blooming entrepreneur - J&K Bank. The Bank has always encouraged economic empowerment and she could count upon it in times of hardships. “Once I was in urgent need of money and approached the Bank branch for an overdraft. I received the support of the entire staff of the branch, showing how much relationships matter to them,” recollects the confident woman entrepreneur. As business grew, the Bank kept increasing her finance limits to the required extent. It has been more than a decade now, but Nuzhat is still flush with excitement when she describes those initial days of her struggle, when
CORPORATE OVERVIEW
BOARD AND MANAGEMENT REPORTS
FINANCIAL STATEMENTS
Nuzhat Maqbool
ENLIGHTENED. EMPOWERED. ENTERPRISING.
she found the Bank to be a friend J&K Bank. “I will never forget those formative days, which shaped my career,” she asserts. Today, Nuzhat is not alone, she now relies upon her 10-member team for marketing and delivery of goods. Where does Nuzhat see herself 10 years from now? “I have big plans to expand the business. I will perhaps look for newer avenues. In the modern integrated world, there are so many things a woman can do. The list is endless,” she smilingly replies. Nuzhat’s smile strengthens a new world of women empowerment, which we all can be proud of.
INITIAL CREDIT FACILITY: ` 2 LACS CREDIT FACILITY SIGNIFICANTLY ENHANCED WITH GROWING STATURE OF THE BUSINESS DREAMS: WANTS TO SEE HER BUSINESS GROW TO THE NEXT LEVEL
GOVERNANCE
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CORPORATE FUNCTIONS REPORT
Expanding Footprints As a part of J&K Bank’s marketing strategy, huge emphasis was laid on increasing the physical presence of the Bank all across.
685 BUSINESS UNITS
685 PAN–INDIA BUSINESS UNITS SPREAD OVER 20 STATES AND ONE UNION TERRITORY
Accordingly, during FY 2012-13, as many as 70 new business units were established and 12 extension counters upgraded, taking the number of business units to 685, spread over 20 states and one Union Territory. The commissioning of new ATMs was dealt with even more aggressively: 105 ATMs were commissioned, taking the aggregate to 613. The area-wise break-up of the business unit network is provided below. This excludes extension counters, mobile business units and service business units.
J&K BANK’S BUSINESS UNITS NETWORK Metros Urban Semi-urban Rural Total
Inauguration of First ever ATM at Drass (Second coldest inhabited place on earth) by Mr. Tafazal Hussain
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THE JAMMU & KASHMIR BANK LIMITED ANNUAL REPORT 2012-13
39 178 136 332 685
Customer Focused J&K Bank's mission has always been to accord the highest priority to quality customer service. The Bank is keenly engaged in either launching new products or improving the existing ones to offer a highly diversified product portfolio and exceed customer expectations. Emphasis is laid on the quality of delivery systems and the adoption of advanced customer-friendly technologies. Continuous evaluation of customer satisfaction and an effective grievance redressal mechanism are also given great prominence. Mentioned below are some of the products/ services, which were introduced or revamped during FY 2012-13: JK Bank Weavers Credit Card Scheme JK Bank Rice/ Wheat Plus Scheme for Rice/Wheat Mill Units operating in J&K state JK Bank Debt Swap Scheme for Farmers JK Bank Finance for establishment of Adventure Equipment Hire Shops JK Bank Solar Lighting and Photo Voltaic Finance JK Bank Education Loan Scheme for Vocational Education and Training
CORPORATE OVERVIEW
BOARD AND MANAGEMENT REPORTS
FINANCIAL STATEMENTS
Mobile Banking JK Bank Construction Equipment Finance Scheme JK Bank Commercial Vehicle Finance Scheme The Bank aims to continue with its endeavour of offering innovative and highly-customised products to live up to the expectations of cross-section of customers and cater to market demand.
GOVERNANCE
39
CORPORATE FUNCTIONS REPORT
Technological Prowess Technology plays a critical role in the Bank’s growth, service integration and efficient operations. At J&K Bank, technology is being leveraged to deliver solutions in line with the changing business needs of the organisation. Aligning technology with business goals is at the centre of all IT initiatives.
MOBILE BANKING
CORE BANKING SOLUTION
The Bank introduced mobile banking with most significant features like Intra Bank Fund Transfer, Inter Bank Fund Transfer (IMPS), Balance Inquiry, Statement Request, Cheque Stop Request and Cheque Book Enquiry.
Supporting the Organisation’s branch expansion plan, 77 new SOLs were opened on CBS, taking the total SOL count to 748, which includes Branches, Offices and Extension counters. All network-related infrastructures have been provided at all the branches opened during the financial year.
CHEQUE TRUNCATION SYSTEM (CTS) CTS was deployed at Hyderabad, Thiruvanthapuram, Kochi, Mysore, Kolkata, Chandigarh and Coimbatore.
EXPANDING ATM NETWORK 105 new ATMs were commissioned during the year, taking the total number of ATMs to 613.
DISASTER RECOVERY PROJECT The three-way disaster recovery (DR) project has been completed and two successful DR drills were conducted on the new setup. During the financial year, DR for SWIFT and ITMS has been put in place. The DR set up for CTS is under implementation.
MULTI-POINT LEVEL SWITCH
SOLs
77 NEW SOLs WERE OPENED ON CBS, TAKING THE TOTAL SOL COUNT TO 748
REDUCING CUSTOMER COMPLAINTS As part of compliance to the mandate on LTS/TVS from NPCI, necessary customisation stands implemented on ATM Switch. This feature will reduce Customer complaints on account of failed transactions.
IT GOVERNANCE
The network of all the outside state branches was migrated to MPLS with higher bandwidth and inbuilt redundancy.
MIS SOLUTION MIS/ADF solution implemented. Parallel runs conducted for Financial Consolidator.
Implemented the IT Governance framework, as prescribed by RBI; independent functions for assurance and security were put in place.
SYSTEM LEVEL ASSET CLASSIFICATION
COMPLIANCE
Besides, Clearing House at Kargil was made functional.
System Level Asset Classification was upgraded to include all the accounts, as against the ceiling of sanction limit of ` 50 lacs in the first phase.
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THE JAMMU & KASHMIR BANK LIMITED ANNUAL REPORT 2012-13
To facilitate eBRC issuance in our Bank, which has replaced the system of uploading eBRC, an in house WebApplication has been developed to comply with RBI directives.
Strengthening People Potential The Bank continues to attract fresh talent to strengthen its human resource base. Simultaneously, to enhance skill profile of employees, need-based and updated trainings have been imparted to them across categories. The recruitment process of Relationship Executives is underway and nearly 35,000 candidates from the state appeared for the written examination; out of them 1,823 meritorious candidates were shortlisted. The shortlisted candidates have also been interviewed. KEY HIGHLIGHTS, FY 2012-13 Awarded over 486 promotions across various cadres Recruited 91 Relationship Executives – Information Technology The promotions include that of 24 Assistant Vice Presidents to the position of Vice Presidents and 96 Executive Managers to the position of Assistant Vice Presidents. Further 366 Banking Associates have been promoted to the cadre of Associate Executives.
35,000 CANDIDATES
APPEARED FOR THE WRITTEN EXAMINATION FOR RECRUITMENT OF RELATIONSHIP EXECUTIVES
CORPORATE OVERVIEW
BOARD AND MANAGEMENT REPORTS
FINANCIAL STATEMENTS
GOVERNANCE
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CORPORATE FUNCTIONS REPORT
Risk Management Framework Risk is inherent and an integral part of the banking business. At J&K Bank, we aim to deliver superior stakeholder value by achieving an appropriate trade-off between risks and returns. Our risk management strategy is based on identification, understanding assessment and mitigation of associated risks. The key principles underlying our risk management framework are mentioned below: The Board of Directors has oversight of all the associated risks and specific committees have been formed to facilitate the oversight of various risks. The Integrated Risk Management Committee (IRMC) of the Board reviews the management policies and practices, in relation to different types of risks within regulatory requirements. It also evaluates credit risk, market risk, operational risk, interest rate risk and liquidity risk. Various limits and caps are stipulated to monitor these risks with stress testing and back testing. IRMC also carries out assessment of the capital adequacy, based on the risk profile of the balance sheet, besides reviewing the status of Basel norms implementation.
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THE JAMMU & KASHMIR BANK LIMITED ANNUAL REPORT 2012-13
Our Audit Committee provides direction to and also monitors the quality of the internal audit function. The Board’s IRMC is supported by four separate Executive level Committees, viz. Credit Risk Management Committee (CRMC), Asset-Liability Management Committee (ALCO), Market Risk Management Committee (MRMC) and Operational Risk Management Committee (ORMC). The Credit Committee analyses developments in key industrial sectors and our exposure to these sectors. It also reviews major portfolios on a periodic basis. Our Asset Liability Management Committee is responsible for managing the balance sheet within the risk parameters laid down by the Board/Risk Committee and reviewing our asset-liability position.
The policies approved by the Board of Directors/Committees from time to time govern the framework of each risk type. The Bank has formed independent groups and sub-groups to work within the policy framework and facilitate independent evaluation, monitoring and reporting of various risks. These groups function independent of the business operations.
CREDIT RISK
MARKET RISK
OPERATIONAL RISK
All credit risk-related aspects are governed by credit and recovery policy, which outlines the product types, customer categories, industrial and other sectors and the credit approval process and limits. The credit and recovery policy is approved by our Board of Directors. Our credit risk management framework aims to maintain a sustained growth of healthy loans, both at unit and portfolio levels. The Bank has a structured and standardised credit approval process that includes a well established procedure of comprehensive credit appraisal and credit rating. The rating serves as a key input in the pre-approval as well as post-approval credit processes. The asset review framework has also been put in place that reviews assets of higher exposure with high frequency. The rating of loans and advances also serves as an effective tool for pricing of loan products.
Market risk is the possibility of loss arising from changes in the value of a financial instrument as result of changes in market variables, such as interest rates, exchange rates and other asset prices. The prime source of market risk for the Bank is the interest rate risk we are exposed to as a financial intermediary. In addition to the interest rate risk, other elements of market risks, like liquidity or funding risk, price risk on trading portfolios, exchange rate risk on foreign currency positions and others, are also taken into account. These risks are monitored through limits, such as duration, value-atrisk, stop loss, net open position, gap limits and so on. The limits and control measures are stipulated in Investment and Trading Policy, ALM Policy and Market Risk Policy, which are reviewed and approved by our Board of Directors.
The Bank’s operational risk is managed through a comprehensive internal control system and proper procedures to monitor transactions, supervise key back-up procedures and undertake regular contingency planning. J&K Bank’s operational risk management governance and framework are defined in the Operational Risk Management Policy, approved by the Board of Directors. The policy provides a broad framework and detailed standard operating procedures for operational risk management. It also aims to ensure clear accountability, responsibility and mitigation of operational risks. The Bank has constituted an Operational Risk Management Committee (ORMC) to oversee this form of risk management in the Bank. The policy also specifies the composition, roles and responsibilities of the ORMC. The framework comprises identification and assessment of risks and controls, approval framework of new products and processes, measurement through incidents and exposure reporting, monitoring through key risk indicators and mitigation through process control enhancement and insurance. The Bank has Business Continuity Plan (BCP) in place to take care of the continuity of critical operations in case of any disruptions.
The credit approval authorisation framework is laid down by our Board of Directors. There are several levels of credit approval authorities for corporate banking activities, like the Credit Committees of senior management. The credit policy also covers risks emanating from offbalance sheet exposures.
CORPORATE OVERVIEW
The Asset Liability Management Committee meets on a regular basis to review trading positions, monitor interest rate and liquidity gap positions, formulate views on interest rates, set benchmark lending and base rates, and determine the asset liability management strategy, in light of the current and expected business environment. The Market Risk Management Committee recommends changes in risk policies and methodologies for quantifying and assessing market risks. The Bank uses various tools to measure liquidity risk, including the structural liquidity statement, dynamic liquidity gap statements, liquidity ratios and stress testing.
BOARD AND MANAGEMENT REPORTS
FINANCIAL STATEMENTS
GOVERNANCE
43
CORPORATE FUNCTIONS REPORT
Corporate Social Responsibility: Sharing Profits with People J&K Bank collaborates with communities to drive inclusive growth. Contributions towards Corporate Social Responsibility (CSR) are considered as assets rather than expenditure. The emotional equity of our people forms the cornerstone of our uninterrupted growth and performance. From health to heritage, education to entrepreneurship, poverty to painful disabilities − our CSR initiatives aim to encompass everything. Our aim is to empower people through generous economic support and innovative financial intervention and instil a sense of relief and protection among society’s most vulnerable sections. We also endeavour to provide people with entertainment, sustenance and avenues for career progression. J&K Bank believes that CSR is not simply about giving, but garnering long-term socio-economic dividends. Be it seeking assistance or guidance from persons or organisations, which have relevant experience and expertise, or, at times, directly doing creative and productive interventions, we aim to serve multiple purposes through our CSR initiatives.
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Free Medical Camp held at Corporate Head Quarters on 7th April, 2013
EDUCATION
HEALTH
Provided 23 computers to establish a computer lab and donated books to set up a library at a school to educate children at the remote Kaprin village in Shopian district; also helped launch minicomputer labs elsewhere at remote locations Sponsored education for 20 underprivileged children by partnering with a local NGO to launch its scientifically-oriented Remote Child Sponsorship Programme Worked along with a few other organisations to help educate / rehabilitate differently-abled children by meeting their requirements, including tuition fees, stationery, uniforms and various learning aids
CORPORATE OVERVIEW
Contributed significant amounts to various healthcare projects undertaken by reputed not-forprofit organisations, like Indian Red Cross Society, and Cancer Society of Kashmir among others Participated in the programmes of Aditya-Jyoti and CENQUIN (two reputed NGOs) to rehabilitate slum dwellers and help people of the lower stratum of the society outside J&K State Organised various health camps to take health services to the doorsteps of the people living in remote locations Around 5,000 people from across Jammu, especially from rural areas, benefited from the two-day free medical camp; it was conducted in association with MEDANTA, The Medicity at Jammu; the idea was to bring super-specialist doctors at the doorsteps of those who could not afford the luxury of visiting metro cities for specialised treatment Sponsored treatments of hemophilia patients from Tullwari, a remote and backward village along the LoC, adopted by the Bank in 2011
BOARD AND MANAGEMENT REPORTS
FINANCIAL STATEMENTS
Paid for the treatment expenses of several poor patients by forming direct liaisons with panIndia hospitals Participated in various research projects, academic activities and technical workshops, in collaboration with reputed health institutions to promote academic excellence in the field of medicine
5,000 PEOPLE
WERE BENEFITTED FROM A TWODAY MEDICAL CAMP CONDUCTED IN ASSOCIATION WITH MEDANTA, THE MEDICITY AT JAMMU
GOVERNANCE
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CORPORATE FUNCTIONS REPORT
Corporate Social Responsibility: Sharing Profits with People
Chairman & CEO planting trees on World Plantation day at Jammu
Rani Bagh Park dedicated to public by Chairman & CEO Mr. Mushtaq Ahmad
GREEN INITIATIVES Kick-started Platinum Jubilee Celebrations by observing World Arbour Day on 8th March, 2013 Planted about 75,000 saplings of various species throughout Jammu & Kashmir, in a week-long plantation drive Develops and maintains parks to enhance eco-preservation and help people socialise; the Company created its ninth park Rani Bagh and dedicated it to the people of South Kashmir
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THE JAMMU & KASHMIR BANK LIMITED ANNUAL REPORT 2012-13
Distribution of relief cheques at Frislan
RELIEF AND REHABILITATION Provided relief and rehabilitation to accident victims; the Bank extended timely assistance – in both cash and kind – to the people of Frislan (a village near the famous tourist resort of Pahalgam) – when a devastating fire engulfed more than thirty houses to leave the homeless villagers in a state of despair Extended a helping hand to victims of natural calamities across the state
FINANCIAL INCLUSION Purchases handbags from HELP Foundation and Madre Meharbaan Welfare Trust – two NGOs running tailoring and stitching centres for poor and destitute women. These are provided to aspiring Hajis as a goodwill gesture. Traditional embroidery is also done on these bags with a view to preserve and promote the rich handicrafts culture of Kashmir Innovatively engages in the financial betterment of impoverished women to help them earn a dignified livelihood
PROMOTING HANDICRAFT – KASHMIR’S PRIDE Preserves the heritage and handicrafts of Kashmir to economically empower local artisans. As a part of its evolving brand strategy, the Bank blends the aesthetically rich traditional Kashmiri architecture with contemporary trends to impart an authentic Kashmiri touch to its business units Engages local craftsmen to incorporate Jaalis, Khatmband work, stone inlays and similar other local architectural styles in its business units
SPORTS J&K Bank has a full-fledged Sports Board in place to help engage in promoting sports; the Company has established its own Football Academy, which helps identify, train and groom the budding football talents to help them compete at higher levels
CORPORATE OVERVIEW
Encourages various sports activities in the state by making hefty financial contributions and professional interventions in organising the games and upgrading their standards Continued focus on encouraging specially-abled sportsmen
SERVING PILGRIMS Continued rendering a wonderful mix of banking and non-banking services to the pilgrims of Shri Amarnathji cave, situated at a very high altitude in Kashmir Not only registers the intending pilgrims across the country through its network of business units, but also provides all banking facilities at remotest places enroute the holy cave, under harsh weather conditions and difficult terrains Apart from keeping two cash/ service counters exclusively for the pilgrims, a Mobile ATM Van is also kept available for them for the entire yatra period at an altitude of 9,577 feet Providing refreshment and other support services to pilgrims and devotees visiting various religious places, especially on annual gatherings and other special occasions; lot of effort is put in, extending such gesture on big annual gatherings in highly revered places like Hazratbal Shrine, Shri Mata Vaishno Devi Temple, Kheerbawani Temple and Gurudwara Shri Chatti Patshahi Sahib among others
BOARD AND MANAGEMENT REPORTS
FINANCIAL STATEMENTS
GOVERNANCE
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THE JAMMU & KASHMIR BANK LIMITED ANNUAL REPORT 2012-13
Bringing specially-abled children into the social and educational mainstream is a core objective of the social responsibility initiatives at J&K Bank. As a part of this objective, the Bank has partnered with schools that work in the areas of educating and rehabilitating special children. Fifty specially-abled children belonging to underprivileged families were identified through a survey and assigned to two specialised not-for-profit organisations operating in the city of Srinagar - Chotay Taray Foundation and Shafqat School run by the Voluntary Medicare Society. The Bank’s financial assistance covers tuition fee, stationery, uniform, physiotherapy, speech therapy, transportation and all other related expenditures on education/ rehabilitation of these children. Here are a few inspiring stories of courage and compassion.
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THE STORY OF
HAROOFA (12) AND HAYAAT (8)
Haroofa and Hayat were born with what is medically called Micro-cephaly (a condition where the circumference of the head is smaller than normal). Their developmental milestones based on age were delayed, and they also have behavioural traits such as hyperactivity, restlessness, inconsistency in daily ablutions, banging their heads against the wall, and unnecessary licking of objects. Besides this, they are totally dependent for their daily needs and also suffer from recurrent respiratory infections, given their weak immune systems. For their parents, this was a difficult situation to be in, given their financial condition. The father is the sole provider, and his meagre income from driving an auto rickshaw makes it difficult to make ends meet. Their mother had a traumatic pregnancy, and doctors had warned that Haroofa would have development related problems. This trauma persisted during the conception of Hayat as
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THE JAMMU & KASHMIR BANK LIMITED ANNUAL REPORT 2012-13
well, and as a result, he too was born with similar conditions. It was also found that he also has Right Hameperesis, making him unable of holding anything with his right hand. Despite their problems, and with a desire to help their children lead a better life, the parents consulted multiple doctors. The results were not positive. Just when they were about to give up hope, they came to know of Chotay Taray Foundation, and J&K Bank’s supportive intervention. This brought renewed determination to their mission, and they admitted both children here. The therapists at Chotay Taray got to work almost immediately. Their rehabilitation process commenced with improving the concentration levels and stability of both children. They were made to rest at one place without moving for a specific time, and gradually engaged with activities such as building blocks, handling toys and so on. This increased their
attention span and helped reduce restlessness. Very soon, both Haroofa and Hayat were toilet-trained. This was followed by a more intensive therapy for behavioral modification to ensure that they are self-sufficient in basic daily activities. Hayat is also undergoing physiotherapy for his Hameperesis.
Today, both children are showing rapid improvement. They are responding to simple commands, and are indicating their needs without difficulty. Hayat is able to lift his toys with his right hand. They are looking ahead to a brighter and more independent future. And their parents are finally smiling.
THE STORY OF
IFRA REYAZ (8)
Ifra is a typical young 8 year old girl. Smart, cheerful, and someone who loves to read and write. She enjoys reciting her nursery rhymes as much as she enjoys swaying to the latest bollywood Songs. As you enter the classroom of Chotay Taray, you will find her playing with her friends, using a special spoon to eat her food and sincerely learning to read and write.
unable to write anything beyond the digit ‘1’ and had a speech disorder. At the time her mother was pregnant with her, the doctors had advised against bringing Ifra into this world. Her parents did not agree. Her father is a driver. He is the sole support for a family of six. And yet, together with his wife, he decided to accept Ifra as a gift from God, and try and make her life as beautiful as he could.
But before November 2011, the story for Ifra was very different. For the first six years of her life, Ifra was confined to her room as she was born with a condition called Phocomelia (A congenital condition where the hands and legs are either short or absent). Ifra is unable to stand or walk and hence was dependent for a lot of her daily activities. She was
The going however, wasn’t easy. Ifra would watch other children going to school, playing and studying and would also want to attend school. But none of the schools were willing to admit her due to her disability. This is where Chotay Taray stepped in and took on Ifra as one of their students, to ensure her rehabilitation.
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At Chotay Taray, a very shy Ifra was given modified spoons, pencils which were custom-made for her condition. Flash cards, vocational training, and other teaching, learning material were used to improve her reading skills.
Today, Ifra is much more independent and socially adept and has dreams like any other child. And yes, her eyes still light up at the sound of the latest item numbers.
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THE STORY OF
AFREEN KHURSHID (20)
Afreen Khurshid is a young woman living with her grandparents. Orphaned at an early age, she grew up in a disturbed domestic environment. Perhaps, this explains her behavioural disorders. Aggressive and restless, Afreen used abusive language, would never interact socially with anyone, and would roam the streets in gay abandon. For Afreen’s grandparents, the situation was hard to tackle. Their financial condition did not allow them to afford expensive treatment. However, they did not give up the hope of seeing their grandchild lead a normal life. Their tenacity met with optimism when they learnt about
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THE JAMMU & KASHMIR BANK LIMITED ANNUAL REPORT 2012-13
the Shafqat School run by voluntary Medicare Society and through them, J&K Bank’s efforts to support children and young adults. Afreen was admitted and her rehabilitation process started immediately. She went through developmental therapy and received special education. She attended vocational training and art classes. Afreen was also trained on Activities of Daily Living (ADLs) and was made to undergo physiotherapy sessions. The objective was to ensure that she could lead a normal and independent life. The results were obvious and positive. She was able to study and
could concentrate more on the tasks assigned to her. She responded better to stimuli and gradually became independent in her ADLs. Her grandparents were delighted to see her improved social skills.
Today, Afreen is living like any other young adult of her age – studying and aspiring for a life of hope, joy and health. More than anything, she now wants to help her grandparents through their old age.
THE STORY OF
KHUSHBOO AKBAR (12)
Even though Khushboo Akbar was born differently-abled, the dream of leading a normal life never abandoned her. She was a slow learner, could hardly concentrate on the tasks assigned to her, and had to depend on her parents for her day-today activities. Yet, she always wanted to enter the world from where she was exiled, the world of sound. And Khushboo is living her dream today. Things were not so smooth in the beginning. Khushboo’s father is a green grocer and her mother is a housewife. Her younger brother also had speech problems. And with a monthly family income of only ` 5,000, it was difficult for her parents to afford a proper treatment for their daughter. But the impediments were done away with by an overriding desire to
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see their daughter lead a normal life. When consulting different doctors delivered no result, Khushboo’s parents approached Shafqat School for a solution. And the School, with financial support from J&K Bank did not disappoint them. After being admitted, Khushboo’s rehabilitation process started. She was provided with different therapies for all-round development. She went through physiotherapy sessions and ADLs trainings. Khushboo also received special education and vocational art to help develop her mentally. The results were palpable. Khushboo’s cognitive and motor skills improved. She became independent in terms of ADLs. She went through speech therapy and started using hearing-aid, which helped improve
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her speech and hearing skills. She also developed abilities to read and write.
Today, Khushboo leads a normal life. She has successfully completed a sixmonth course of commercial art from Kashmir Government Polytechnic, Srinagar, and likes to create small items. She aspires to sell her creations and help her father supplement their family income.
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