ASSIGNMENT – 2

BANKING AND
INSURANCE
TOPIC- DEVELPOMENT OF JAMMU & KASHMIR
BANK BEFORE LIBERALIZATION AND POST
LIBERLIZATION

SUBMITTED TO SUBMITTED BY
RAZIA SEHDEV NITISH ARORA
ROLL NO- 21
SEC-RQ1809
REG-10806134
INTRODUCTION:
FACTS:
INDUSTRY Financial, commercial bank.
FOUNDED 1938
HEADQUATE Srinagar India
NO. OF LOCATION >577 Branches/offices
AREA SERVED Mostly J&K
The Jammu & Kashmir Bank was founded on October 1 1938 under letters patent issued by
the Maharaja of Kashmir, Hari Singh. The Maharaja invited eminent Kashmiri investors to
become founding directors and shareholders of the bank, the most notable of which were Abdul
Aziz Mantoo, Pesten Gee and the Bhaghat Family, all of whom acquired major shareholdings.

The Bank commenced business on July 4, 1939 and was considered the first of its nature and
composition as a State owned bank in the country. The Bank was established as a semi-State
Bank with participation in capital by State and the public under the control of State Government.

Jammu and Kashmir Bank had to face serious problems in 1947 i.e. at the time of independence.
With the partition of Pakistan, two out of the total ten branches of the bank, namely the ones in
Muzaffarabad and Mirpur, fell to the other side of the line of control (now Pak Occupied
Kashmir), along with cash and other assets. At that point of time, in keeping with the extended
Central laws of the state, J&K Bank was categorized as a Government Company, as per the
provisions of Indian Companies Act 1956.

It was in the year 1971 that Jammu and Kashmir Bank was granted the status of a 'Scheduled
Bank'. Five years later, it was declared as "A" Class Bank, by the Reserve Bank of India (RBI).
As the years passed on, the bank started achieving more and more success. Today, it boasts of
more than 500 branches across the country. It was only recently that Jammu and Kashmir Bank
became a billion dollar company. Governed by the Companies Act and Banking Regulation Act
of India, it is regulated by RBI and SEBI. It finds a listing on the National Stock Exchange
(NSE) and Bombay Stock Exchange (BSE) as well
 UNIQUE CHARACTERISTICS & SERVICES
• J&K Bank carries out banking business of the Central Government
• In spite of a government equity holding of 53 per cent, Jammu & Kashmir Bank (J&K
Bank) is regarded as a private sector bank
• J&K Bank is the one and only banker and lender of last resort to the Government of J&K
• Plan and non-plan funds, taxes and non-tax revenues are routed through the J&K Bank
• J&K Bank claims the distinction of being the only private sector bank that has been
designated as agent of RBI for banking
• The services of J&K Bank are utilized for the purposes of disbursing the salaries of
Government officials
• J&K Bank collects taxes pertaining to Central Board of Direct Taxes, in Jammu &
Kashmir

PRODUCTS AND SERVICES

SERVICES:
• Anywhere Banking
• Internet Banking
• SMS Banking
• ATM Services
• Debit Cards
• Credit Cards
• Merchant Acquiring

Depository Services
• Demat Account
• Other Services

Third Party Services

• Mutual Funds
• Insurance Services - Life & Non-Life
• Remittance Services

Cash Management Services

• Real Time Gross Settlement (RTGS)
• National Electronic Fund Transfer (NEFT)
 (Rs crore)

• Balance sheet
Mar ' 10 Mar ' 09 Mar ' 08 Mar ' 07 Mar ' 06

Sources of funds
Owner's fund

Equity share capital 48.49 48.49 48.49 48.49 48.49

Share application money - - 28.10 - -

Preference share capital - - - - -

Reserves & surplus 2,961.97 2,574.37 2,232.34 1,960.24 1,750.98

Loan funds
Secured loans - - - - -

Unsecured loans 37,237.16 33,004.10 28,593.26 25,194.29 23,484.64

Total 40,247.62 35,626.96 30,902.19 27,203.03 25,284.11

Uses of funds
Fixed assets

Gross block 561.35 517.90 471.32 433.63 412.23

Less : revaluation reserve - - - - -

Less : accumulated depreciation 358.54 321.61 289.10 256.94 223.80

Net block 202.81 196.29 182.22 176.69 188.42

Capital work-in-progress 1.32 3.13 9.79 6.76 6.29

Investments 13,956.25 10,736.33 8,757.66 7,392.19 9,002.34

Net current assets

Current assets, loans & advances 714.95 552.34 486.47 377.19 481.41

Less : current liabilities & provisions 1,198.97 1,069.67 1,102.02 823.31 900.94

Total net current assets -484.01 -517.33 -615.55 -446.12 -419.53

Miscellaneous expenses not written - - - - -

Total 13,676.37 10,418.42 8,334.12 7,129.52 8,777.53

Notes:
Book value of unquoted investments - - - - -

Market value of quoted investments - - - - -

Contingent liabilities 12,091.51 10,080.96 11,892.97 3,840.87 5,350.32

 Mar ' 10 Mar ' 09 Mar ' 08 Mar ' 07 Mar ' 06

Number of equity shares outstanding (Lacs) 484.78 484.78 484.78 484.78 484.78

IMPLEMENTATION OF LPG MODEL

The 1991 LPG model brought various banking reforms in India and at that time the Reserve
Bank of India permitted commercial banks to engage in diverse activities such as securities
related transactions (for example, underwriting, dealing and brokerage), foreign Exchange
transactions and leasing activities.
Ø The 1991 reforms lowered the CRR and SLR, enabling banks to diversify their activities.
Ø Banks were given the license to go into financial services.
Ø Foreign bank were given the license to open there branches in all over India.
Ø Syndicate bank capitalized in these banking reforms and increased its footprint in domestic
market whereas it has started its foreign operations before the liberalization.
Ø In 1991 when government lowered the SLR and CRR enabling the bank to diversify its
activities, syndicate bank entered into activities like underwriting and brokerage and increased its
growth subsequently.
Ø Syndicate Bank was one of the first public sector banks (PSBs) in India to adopt Core Banking
as early as 2001. With this key milestone of having implemented CBS in 1001 branches,
SyndicateBank becomes the first Indian PSB with the unique distinction of having covered 80%
of its business under Core Banking.

PERFORMANCE OF J&K BANK BEFORE

LIBERLIZATION :
Reserve Bank of India had introduced the Lead Bank Scheme in December 1969 “Area
Approach” and allotment of districts to the commercial banks for development to achieve
objectives of national plans The following two recommendations made were also accepted by
Reserve Bank of India:

1. In the first phase, the scheme aimed at identifying potential centres for bank operation and
opening of branches in the district to strengthen banking infrastructure.
2. The second phase aimed at preparing District Credit Plans for specific area development.
To achieve these goals, there would be need to lay more stress on promoting optimum use of
land, labour and financial resources for promoting productivity and production. It is also
necessary to further improve the co-ordination arrangements between Government development
programmes and bank lending and promote availability of institutional credit assistance.

SLBC CONVENOR IN J&K STATE (J&K BANK):

SBI happened to be the Convenor Bank of SLBC in J&K State till June 1983 and thereafter the
Convenorship of SLBC has been entrusted to J&K Bank. Thus our bank has become the only
Private Sector Bank in the country to be entrusted with the responsibility of Convenorship of
State Level Bankers’ Committee (SLBC) by Reserve Bank of India.

The State Level Bankers’ Committee (J&K State) is comprised of about 130 members including
all the banks / financial institutions operating in the state, high level representatives from the
concerned developmental departments/ agencies of the State/ Central Government, Reserve Bank
of India, NABARD, etc. The meetings are generally presided over by the Chief Secretary of the
State.

Lead Bank Scheme is aimed at achieving the national plan objectives viz., (i) Removal of
unemployment and under-employment; (ii) Appreciable rise in the standard of living of the
poorest sections of the population; and (iii) Provision of some of the basic needs of the people
belonging to the poorer sections.

To achieve these goals, District Credit Plans are prepared under Lead Bank Scheme to
focus on

Increasing productivity, production and employment opportunities in different sectors in

rural areas, especially among weaker sections, to enable them to move above the poverty
line.

2. Promoting balanced development of different districts/ blocks within the districts.

To achieve these goals, there would be need to lay more stress on promoting optimum use of
land, labour and financial resources for promoting productivity and production. It is also
necessary to further improve the co-ordination arrangements between Government development
programmes and bank lending and promote availability of institutional credit assistance.

Before liberalization J&K bank was considered the first of its nature and composition as a State
owned bank in the country. The Bank was established as a semi-State Bank with participation in
capital by State and the public under the control of State Government.As J&k bank was
established in 1938 it was performing really well 53% of share were owned by the government
and other were owned by the public, but after independence of the country the bank face really
bad situations, as banks some of major branches comes under Pakistan and now they had no link
with them even the head office was also in Pakistan. This was the problem which they face
before liberalization.
It was in the year 1971 that Jammu and Kashmir Bank was granted the status of a 'Scheduled
Bank'. Five years later, it was declared as "A" Class Bank, by the Reserve Bank of India (RBI).
As the years passed on, the bank started achieving more and more success.

In spite of a government equity holding of 53 per cent, Jammu & Kashmir Bank (J&K Bank) is
regarded as a private sector bank. J&K Bank is the one and only banker and lender of last resort
to the Government of J&K Plan and non-plan funds, taxes and non-tax revenues are routed
through the J&K Bank. J&K Bank claims the distinction of being the only private sector bank
that has been designated as agent of RBI for banking. This the performance of J&K bank before
liberalization.

PERFORMANCE OF J&K BANK POST

LIBERLIZATION :
As the years passed by post liberalization, the bank started achieving more and more success.
Today, it boasts of more than 500 branches across the country. It was only recently that Jammu
and Kashmir Bank became a billion dollar company. Governed by the Companies Act and
Banking Regulation Act of India, it is regulated by RBI and SEBI. It finds a listing on the
National Stock Exchange (NSE) and Bombay Stock Exchange (BSE) as well.

J&K bank is the billion dollar company and it is declared as A class bank after liberalization the
bank has achieved many big things, it has been enlisted in BSE and NSE, and it has also won
many prizes for the development of economic condition of the Jammu and Kashmir. After
liberalization many things has been changed in the field of banking, one other major thing which
arrives is cut throat completion many new private foreign banks arrive in the country , as a result
of this to sustain in the business , bank launches many new products like Anywhere

• Internet Banking
• SMS Banking
• ATM Services
• Debit Cards
• Credit Cards
• Merchant Acquiring

Before and after the bank works really enormously and grows a lot but with passage of
time and cut throat competition the bank starts lacking behind it loses its customer
because the bank was not able to open its branches in other states. Which is the
advantage taken by other banks,, but still bank is performing well within the state.

J&K BANK over –achieves lending targets . we offer other banks

500cr portfolio to increase their priority sector in J&K .
J&K Bank has once again surfaced as the dominant credit player in J&K. The bank has the
largest share of Rs.12, 173.65 crore (71%) of the aggregate outstanding credit of banking sector
of Rs.17, 117.66 crore in the J&K state at the end of March 2010. While as the two major banks
of the country State Bank of India (SBI) and Punjab National Bank (PNB) have contributed just
8 and 5 percent respectively to the outstanding credit portfolio. Besides, the Bank has over-
achieved its targets by 106% by surpassing the Annual Credit Plan (ACP) goal of Rs.904 Crore
with a credit flow of Rs.1861.65 Crore to priority sector. Here too, the share of J&K Bank alone
in the total credit flow to priority sector during the year 2009-10 is quite outstanding at 70% as
against the residual 30% contribution by all other banks operating in the State taken together.
Notably, under ACP 2009-10, bank were given a target of Rs.2301.30 crore for 183548
beneficiaries and at the end of March 2010, the banks disbursed Rs.2667.16 crore to 140168
beneficiaries. Thus, achieving 116 per cent of the given target.
Expressing displeasure over the poor performance and lackadaisical attitude of the other banks
operating in the state in terms of credit disbursement to priority sector, Dr Drabu has offered to
sell 500 crore portfolio to other banks to help them ramp up their priority sector credit
dispensation volumes.
“If other banks operating in the state of Jammu & Kashmir are facing problems in lending to the
priority sector, J&K Bank, to give comfort to them, is ready to sell 500 crore of its credit
portfolio”, Dr. Drabu, who was speaking on the occasion as convener State Level Bankers’
Committee (SLBC, J&K).
Stating that the offer was on non-reciprocal basis, Dr. Drabu insisted that if the other major
banks operating in the state were ready to respond to his offer, J&K Bank would work for
identifying fresh areas to lend in the priority sector. “And I assure you that the J&K Bank would
still be there at the top”
J&K Bank has been a major contributor to the achievements under almost all the sectors. Under
agriculture sector an amount of Rs.546.81 Crore have been disbursed to 52,223 beneficiaries
against the annual target of Rs.544.90 Crore for 1,11,812 beneficiaries thereby achieving 100%
in financial and 47% in physical target. The J&K Bank alone has disbursed Rs.402.50 Crore
thereby achieving 168% of its ACP target of 240.29 Crore, which constitutes 74% of the total
achievement by all banks in the State.
Under SMEs sector out of the total disbursement of Rs. 585.45 Crore (77% achievement) against
an annual target of Rs.759.30 Crore for all participating banks, J&K Bank alone has disbursed
Rs.346.01 Crore against the target of Rs.302.34 Crore thereby achieving a financial target of
114%, which constitutes 59% of the total achievement by all banks in the State.
Similarly, under Micro Credit sector, out of the total disbursement of Rs.292.55 Crore (84%
achievement) against the annual target of Rs.349.52 Crore for all banks, J&K Bank alone has
disbursed Rs.205.29 Crore, thereby achieving 194% of its annual ACP target of Rs.105.68 Crore,
which constitutes 70% of the total achievement by all banks in the State.
Taking serious note of the absence of heads of some important government departments and
expressing concern over less credit disbursement to priority sector by banks barring J&K Bank,
S S Kapoor, Chief Secretary, J&K Government assured the banks of all possible help from the
government.

Suggestions:
Jammu and Kashmir bank has initiated various measures for financial inclusion right from the
inception. Be it the introduction of kashmir Deposit Scheme or financing agriculture sector or
establishing training institute for rural unemployed, J&K Bank sould always the front runner in
implementing innovative banking schemes meant for the economic development of the people
belonging to weaker sections, farmers, rural artisans etc. In the context of the present need to
provide banking facilities to a vast majority of the population, Jammu and Kashmir Banks should
continue to implement various programmes in reaching the unreached to achieve the objective of
greater financial inclusion.

REFRENCES:
a. http://en.wikipedia.org/wiki/Jammu_&_Kashmir_Bank

b. http://www.jkbank.net/

c. 3.http://www.jkbank.net/investoroverview.php