FINANCIAL ANALYSIS OF J&K BANK

PROJECT REPORT
Submitted by

HYDER ALI
(Reg. No: 08RWC08094)

DEPARTMENT OF BUSINESS MANAGEMENT

In partial fulfillment of the requirement for the award of the degree of

BACHELOR OF BUSINESS MANAGEMENT

Under the guidance of

MR. MITHSLESHWAR PRASAD

T.JOHN COLLEGE
(AFFILIATED TO UNIVERSITY, BANGALORE)

DECLARATION
I, HYDER ALI , hereby declare that the research work entitled
FINANCIAL ANALYSIS OF j & K bank is a bonafide effort of the
requirement for the award of the, BACHELOR OF BUSINESS
MANAGEMENT OF T.JOHN COLLEGE, affiliated to BANGALORE
University, during the year 2008-2011. This work has not been placed by
anybody in any University.

Place: BANGALORE

HYDER ALI

Date: ---------------------

(Reg No:08RWCO8094)

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PROJECT ACKNOWLEDGEMENT
This project report has been made possible through the direct or indirect co-operation of
various people to whom I which to express my deep sincere thanks
I would like to express my sincere thanks to MR MITHLESHWAR PRASAD my
internal guide for her Co-operation during the course of the project work.
I also wish to extend my sincere thanks to MR. SHAKEEL REHMAN [Executive].
Finally I express my sincere thanks to my beloved parents, my friends, my partner and
my others family members for their co-operation to finish this project work successfully.

HYDER ALI
(08RWC08094)

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CONTENTS
CHAPTER
NO.

TITLE

INTRODUCTION

RESEARCH DESIGN

COMPANY PROFILE

ANALYSIS AND
INTERPRETATION

SUMMARY OF FINDINGSAND
CONCLUSION

RECOMMEDNATION AND AND

SUGGESTION

BIBLIOGRAPHY

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PAGE NO.

ANNEXURES

CHAPTER 1
INTRODUCTION

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CHAPTER 1
INTRODUCTION TO INDIAN FINANCIAL SYSTEM
Finance is one of the major elements, which activates the overall growth of
economy. Finance is the lifeblood of economic activity. A well knit financial system
directly contributes to the growth of the economy.

GROWTH
The growth of finance is well understood by analyzing and studying the different
phases.
First stage: Corporate finance or business finances were considered as a subject of
economics. However, in the 20th century the scope of this subject was increased. This was
because of increased growth of industry and commerce. The requirement of money to
achieve the corporate goal was aimed.
Lot of mergers, acquisition, amalgamations, and joint ventures dominated the
industrial environment. Thus the requirement for finance enormously increased.
The financial policy of corporations published in 1920 analyzed the previous financial
policy and also dealt in new patterns of financial operations which were adopted
subsequently for operations in the companies and in the academic field. By 1930
common stock became the center of interest in corporate financial activity and
investment banker became a significant figure.
Financial analysis of the corporations assumed importance and analysts could
compare the companies performance with other identical companies subsequently
financial analysts introduced the forms of cash inflow and outflow to help the process
of decision making.
SECOND STAGE: During this stage (1950) radical changes were seen in financial
managements. Innovative techniques of financial management were introduced. The
introduction of computer for financial analysis made the analysts job simple and accurate.
The article published by modillion and miller in 1958 and 1961 added one more
dimensions to financial management. They highlighted impact of debt in capital structure.
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GOALS

General goals
Goals of finance
Specific goals
SPECIFIC GOALS

1.

PROFIT MAXIMISATION:
Earning profits by a corporate or a company is a social obligation. Profit is the

only means through which the efficiency of an organization can be measured.

As the business units are exploiting the resources of the country namely, land
labor, capital and other resources, it has an obligation to make use of these resources to
achieve profits.
Profit maximization achieved by organizations is regarded as a primary measure of
its success. The survival of the firm depends upon its ability to earn profits.
Companies do earn the profits to pay dividends to shareholders, to meet the
obligation of creditors, to offer fair amount of wages and salaries by maintaining high
quality of products.

2.

WEALTH MAXIMISATION:
The concept of wealth maximization refers to the gradual growth of the value of

assets of the firm in terms of the benefits it produces any financial action can be fudged in
terms of the benefits it produces less cost of action.

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The wealth maximization attained by a company is reflected in the market value of

shares. It is nothing but the process of creating wealth of an organization. This maximizes
the wealth of shareholders.
Wealth maximization guides the management in framing consistent strong
dividend policy to react maximum returns to the equity holders.
Although it cares more for economic welfare of the shareholders, it cannot forget
the others who directly or indirectly contribute effectively for the over all development of
the company, namely, lenders or creditors, workers or employees, public or society and
management.

GENERAL GOALS
1.

Balanced assets structure

2.

Liquidity

3.

Judicious planning of funds

4.

Efficiency

5.

Financial discipline

FUNCTIONS OF FINANCE
Anticipating financial needs:
The functions of finance involve three important decisions, viz; investment
decisions financing decisions and dividend decisions all these decisions directly
contribute to corporate goal of wealth maximization.

1. INVESTMENT DECISION:
Investment decisions is referred to the activity of dividing the pattern of
investment it covers both short term as well as long term investment, in other words
capital assets and the current assets. It is a long-range financial division and deals with
allocation of capital it has to show how the funds can be invested in assets, which should
yield maximum return to the business concern.
This is a risky decision where the finance manager has to take maximum care in
selecting the areas of investment. As the future is uncertain the Returns expected must
cover both risks as well as the uncertainties.
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2. FINANCING DECISION:
It is another important decision where a business concern has to take maximum care
in financing different proposals. The appropriate mix of finance with debt to equity
directly contributes to the profitability of a business unit.
The instrument that is to be selected must aim at maximizing the returns to the investors
and to protect the interest of creditors.
The finance manager has an alternative of mobilizing the funds through. (a) Equity
(b) equity plus debt (c) equity plus debt plus preference shares, and (d) equity plus debt
plus preference share plus public deposits with term loans..
Each opportunity must be evaluated with its benefits. Hence he should be intelligent
and tactful in dividing the ratio between debts to equity.

3.

DIVIDEND DECISIONS:
The ultimate objective of a business concern is to fulfill the desires of equity shares
namely (a) high percentage of dividend and (b) maximum shares to share holders in the
form of capital gain.
In addition to there he has to plan for (c) how much cash dividend should be paid to
share holders (d) how much profit is to be flown back by capitalization? And even about
retained earnings hence sound decision on dividend should be taken.

CURRENT ASSET MANAGEMENTS:

The finance manager should also manage current assets to have liquidity in the
business involvement of funds in current assets reduces the profitability of the firm which
means the reduction in dividend. However, he should also equally look after the current
financial needs of the firm to maintain optimum production. Through which he must
achieve efficiency and increase the operating cycle to meet the short-term obligation.

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Indian Financial System

Commercial banks,
development banks,
NBFC

Financial
institutions
Financial
services
Financial system

Financial
instruments
Financial
instruments

Shares, debentures,
preference shares,
public deposits

Terms loans, leasing,

hire purchase, cash
credit, and overdraft

Capital markets,
money markets

Financial
markets

INTRODUCTION:
The financial system is the important institutional and functional vehicle for
economic transformation. Finance is abridging between the present and the future
Mobilization of savings, or their efficient effective and equitable allocation for
investments.
The objectives of the system with respect to growth, sect oral priorities,
distributional stress, have influenced the functioning and development of India.
Financial system provides the intermediation between savers and investors and
promoters farter economic development.

MEANING AND DEFINITION OF I.F.S :

The term financial system is a set of inter related activities services working to
gather to achieve some pre-determined purpose or goal it includes different markets, the
institutions, instruments, services and mechanisms which influence the generation of
savings investment capital formations and growth.

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According to Van Horne The financial system as the purpose of financial markets
to allocate savings efficiently in an economy to ultimate users either for investment in real
assets or for consumption.
FINANCIAL SYSTEM

Financial
institutions

Regulatory Inter

non inter others

Financial
markets

Financial
instruments

primary

Financial
services

secondary

-Mediaries -me diaries

Organized

Banking

unorganized

Nonbanking

Primary

Short

medium

-Term

-Term

Secondary

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long
-Term

Capital market

Money market

ROLE OF FINANCIAL SYSTEM:

The financial sector plays crucial role in the functioning of the economy because it
allows a more efficient transfer of resources from savers to investors and facilitates the
use of funds by households, Businesses, traders, and government. Balanced financial
structure will improve the ability of domestic financial system.
Financial system provides payment services and mobilizes savings and allocated credit.
A financial system contribution to the economy depends upon the quantity and
quality of its services and the efficiency with which it provides them. Without an efficient
financial system, leading can be costly and risky

STRUCTURE OF FINANCIAL SYSTEM:

The financial system consists of many institutions instruments and market. The
financial system of any country consists of specialized and non-specialized financial
institutions.
Financial instrument range from the common coins, currency notes and cheques to
the more exotic future and swaps of higher finance markets from stock market to capital
markets.
The Indian financial system is broadly classified into two broad groups:

Organized sector
Unorganized sector
The financial system is also divided into users of financial services and providers.
(a)

Central banks

(b)

Banks

(c)

Financial institutions

(d)

Money and capital markets

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1. ORGANIZED SECTOR:
It comprises of an impressive network of banks, other financial and investment
institutions and a range of financial instruments, which together functions in fairly
developed capital and money market. Short-term funds are mainly provided by the
commercial and co-operative banking structure. Indian banks have also diversified. Into
areas such as merchant banking, mutual funds, leasing and factoring.
The organized financial system comprises the following sub system:
Banking system
Co-operative system
Development banking system
a.

Public sector

b.

Private sector

Money market and

Financial companies institutions.

1.

UNORGANIZED SECTOR:
The unorganized financial system comprises of relatively less controlled
moneylenders. Indigenous bankers. Lending pawnbrokers, land lords trades etc.
This part of the financial system is not directly amenable to control by the reserve bank.
There are a host of financial companies, investment companies, chit funds etc that
are also not regulated by RBI or the government in a systematic manner.
However they are also governed by rules, regulations, and are, therefore with in the orbit
of the monetary authorities.

OBJECTIVES OF THE FINANCIAL SYSTEM

1.

Spending up economic growth

2.

Rapid industrialization

3.

Support to agriculture

4.

Support to trade

5.

Rural development

6.

Support to industries

7.

Entrepreneurship development

8.

Project finance.

9.

Refinance re-discount
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10.

Development of backward areas

11.

Housing education, health

12.

Infrastructure

13.

Liquidity

TECHNIQUES

(TOOLS

OR

METHODS)

OF

ANALYSIS

AND

INTERPRETATION OF FINANCIAL STATEMENTS.

The following methods are generally used for the purpose of analyzing and interpreting
the financial statements, and thus a financial analyst can adopt one or more of the
following tools of financial analysis.
They are;
1. Comparative Statement Analysis
2. Common-size Statement Analysis
3. Trend Analysis
4. Ratio Analysis
5. Cash Flow Statement
6. Fund Flow Statement
Each of the above tools can be explained as follows.

1. Comparative Statement Analysis.

In this technique, the statements are prepared to examine and compare the assets and
liabilities, incomes and expenses of the current year. These statements exhibit the
magnitude and direction of changes in the operating results and financial status of an
organization. It provides columns to indicate the changes in absolute terms and also in
percentage terms.

2. Common-size Statement Analysis.

In this technique, statements are prepared to examine the changes that have taken place
year after year in relation to total assets, total liabilities and net sales i.e. each of assets is
expressed as a percentage of total liabilities. Again in the Profit and Loss Account each
item is expressed as a percentage of sales.

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Trend Analysis
It helps in identifying the direction in which the organization is moving. It involves the
ascertainment of arithmetical relationship of each item of several years within the same
item of the base year. Normally first year is taken as base year.

3. Ratio Analysis.
Ratio refers to an expression of the quantitative relationship between two numerical terms.
In accounting ratios, the relationship is establishes between two items or figures of the
financial statements.
Ratio analysis is a technique of calculating numbers of accounting ratios from the data
found in financial statement, comparison of these ratios with the ratios of the previous
year or with the ratios of other concerns engages in similar lines of activities or with the
standard ratio and drawing inferences about the performance of the organization.
Ratios can be expressed in three ways,

As a ratio

As a percentage, and

In number of times.

5. Cash Flow Analysis

It refers to the analysis of changes in the financial position (between two accounting
period) of a firm in terms of cash. Cash Flow statement explains the changes in cash
position between two accounting periods. The term cash in Cash Flow Analysis refers to
the inflow and outflow of cash.

6. Funds Flow Statement.

Funds Flow Analysis is a new contribution to the science of accounting and has become
an important tool of financial analysis. Funds Flow Analysis refers to analysis of changes
in funds, which represent working capital. It is carried out by preparing a Funds Flow
Statement.

1.2 THEORATICAL BACK GROUND OF THE STUDY

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HISTORY OF BANK
Banks play a very useful and dynamic role in the economic life of a modern
society. The word Bank has been originally derived from the Italian word Banco
meaning a bench in the olden days, money lenders used to exhibit the coins of different
countries on a separate bench and the business of exchanging the coins was carried of
through these money lenders, especially in Greece, Italy and England.
Whenever their moneylenders were not in a position to convert the currency of one
country into the currency of another, people virtually broke up their benches.
Hence, the word Bankrupt came into existence.
For the past three decades India banking systems has several outstanding achievements to
tits credit. Indian banking has reached even to the remote corners of the country this is
one of the main reason of India growth process.

GROWTH OF BANK
The first bank in India though conservative was established in 1786. From 1786 till
today, the journey of Indian banking system can be segregated into three distinct phases.
Early phase from 1786to 1969 of Indian banks
Nationalization of Indian banks and up to 1991 prior to Indian banking sector
Reforms
New phase of Indian banking system with the advent of Indian financial and
Banking sector reforms after 1991.

PHASE 1
The general bank of India was setup in the year 1786 next came bank of Hindustan
and Bengal bank. The east India Company established bank of Bengal (1843). Bank of
Bombay (1840) and bank of madras (1843) as independe3nts units and called it
presidency banks.
These three banks were amalgamated in 1920 and imperial bank of India was
established. Reserve bank of India came in 1935.
During the first phase the growth was very slow and banks also experienced periodic
failures between 1913 and 1948 there were approximately 1100 banks mostly small.
During those days public has laser confidence in the banks. As an aftermath deposit
mobilization was slow.
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PHASE 2
Government took major steps in this Indian banking sector reform after
independence. Second phase of nationalization Indian banking sector reform was carried
out in 1980 with seven more banks. This step brought 80% of the banking segment in
India under government ownership.
Following are the steps taken by the government of India to regulate baking
institution in the country.

1949: Enactment of banking regulation act

1955: Nationalization of State bank of India

1959: Nationalization of & BI subsidiaries

1961: Insurance cover extended to deposits

1969: Nationalization of 14 major banks

1971: Creation of Credit Guarantee Corporation

1975: Creation of Regional Rural Banks

1980: Nationalization of seven banks with deposits over 200 crores.

After the nationalization of banks the branches of the public sector banks of India

sore to approximately 800% in deposits and advances took a huge jump by 11000%.

PHASE 3
This phase has introduced many more products and facilities in the banking sector in
its reforms measure in 1991, under the chairmanship of M Narasimha a committee was set
up by his name which worked for the country is flooded with foreign banks and their
ATM stations.
Efforts are being put to give a satisfactory service to customers, phone banking and
net banking is introduced, the entire system became more convenient and swift time is
given more importance than money

1.2.1 BANKING SYSTEM BANKS IN INDIA

PUBLIC SECTOR BANKS IN INDIA

Allahabad bank
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Andra bank

Bank of Baroda

Bank of India

Bank of Maharashtra.

Canara bank

Central bank of India

Corporation bank

Dena bank

Indian overseas bank

Punjab national bank

Vijaya bank

Syndicate Bank

UCO bank

Union bank of India

PRIVATE SECTOR BANKS IN INDIA

Private banking in Indian was practiced since the beginning of banking
system in India. The first private bank in India to beset up in private sector banks in India
was inducing bank. It is one of the fastest growing bank private sector banks in India.
IDBI ranks the 10th largest development bank in the world as private banks In India
and has promoted a world-class institution in India.
The first private bank in India to receive an in principal approval from the reserve
bank of India was housing development Finance Corporation limited.
List of private banks in India

Bank of Punjab

Bank of Rajasthan

Catholic Syrian bank

Centurion bank

City union bank

Federal bank
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HDFC bank

ICICI bank

IDBI bank

ING vysya bank

Jammu and Kashmir bank

South India bank

UTI bank

Co-operative banks in India

The co-operative banks in India started functioning almost 100 years ago. The cooperative bank is an important constituent of the Indian financial system. They play an
important role even today in rural financing even in the urban areas also has increased
phenomenally in recent year
Co-operative banks in India are registered under the co-operative societies Act. The
co-operative bank is also regulated by the RBI. Banking regulations act 1949 and banking
laws Act 1965 govern them.
Co-operative banks in India finance rural areas under:

Forming

Cattle

Milk

Hatchery

Personal finance.

Co-operative banks in India finance urban areas under:

Self employment

Industries

Small scale units

Home finance

Consumer finance

Personal finance

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Regional rural banks in India

Rural banking in India started since the establishment of banking sector in India
rural banks in India penetrated every corner of the country and extended a helping hand in
the growth process of the country.
SBI has 30 regional rural banks in India known as RRB the rural banks of SBI is
spread in13 states extending from Kashmir to Karnataka and himachal pradesh to north
east. The total number of SBI regional rural bank in India, branches is 2349 (16%) 14475
rural banks in the country of which 2126 (91%) is located in remote rural areas.

NABARD
National bank for agriculture and rural development (NABARD) a development
bank in the sector of regional rural banks India it provides and regulated credit and gives
service for the promotion and development of rural sectors mainly agriculture, small scale
industries, cottage and village industries, handicrafts. It helps in securing rural prosperity
and its connected matters.

United bank of India

United bank of India (UBI) also plays an important role in regional rural banks. It
has expanded its branch network in a big way to actively participate in the development of
the rural and semi-urban areas in conformity with the objectives of nationalization.

Syndicate bank
Syndicate bank was firmly rooted in rural India as rural banking and has a clear
vision of future India by understanding the grass root realities. Its progress has been
abreast of the phase of progressive banking in India especially in rural banks.

Foreign banks in India

Foreign bank in India always brought an explanation about the prompt services to
customers after the set up foreign banks in India, the banking sector in India also become
competitive and accretive.
New rules announced by the reserve bank of India for the foreign banks in India in
this budget has put up great hopes among foreign banks which allows them to grow
unfettered.
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List of foreign bank in India

ABN AMRO bank

Abu Dhabi Commercial bank

Bank of Ceylon

BMP Paribas bank

Citi Bank

China trust commercial bank

Deutsche bank

HSBC

JP Morgan Chase bank

Standard chartered bank

Scotia bank

1.2.2 Introduction to the title of the study

Private Banks are banks that are not incorporated. Either an individual or a general
partner(s) with limited partners owns a non-incorporated bank. In any such case, the
creditors can look to both the entirety of [The Bank] assets as well as the entirety of the
sot proprietors / general partners assets.
Historically private banking has been viewed as very exclusive, only catering for
high net worth individuals with liquidity over 11 million, although it is now possible to
open some private bank accounts with as little as $ 50,000 an institutions private banking
division will provide various services such as wealth management, saving, inheritance and
tax planning for their clients.
The word private also alludes to bank secrecy and minimizing taxes via careful
allocation of assets.
As off shore bank account may be used for the purpose Mary parker Follett (1968 1933), who wrote on the topic in the early HINDUSTAN century, defined management
as the art of getting things done through people one can also think of management
functionally, as the action on measuring a quantity on a regular bares and of adjusting

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some initial plan; or as the actions taken to reach ones intended goal. This applies even in
situations where planning does not take place. Form this perspective

Management consists of five functions:1. Planning

2. Organizing
3. Leading
4. Co-coordinating
5. Controlling
Some people however find this definition; while useful, far too narrow the phrase
management is what managers do occurs widely, suggesting the difficulty of defining
management, the shifting nature of definitions and the connection of managerial practices
with the occurrence of a managerial class.
Private Banks thus should follow all the principles of management to manager the
private banks accurately.
The private banks should adopt the functions of management such as Planning,
organizing, leading, co-coordinating and controlling of bank to have the proper growth in
the bank
1.3 RESERVE BANK OF INDIA

Origin of the RBI

Strategic efforts were made to establish as central bank in our country. the earliest
attempt may be traced back to 1773, when warren Hastings the governor of Bengal (later
governor governor general) let the need for a central bank in the country and
recommended that a general bank in Bengal and Bihar the report of the chamber in
commission in 1913 also raised the issue of the founding of a central bank in the country.
In 1921 the imperial bank of India was set up by the amalgamation of three
presidency banks, which performed a few central banking functions, through primarily it
remained as a commercial bank.
Specifically the imperial bank served as a banker to the government and in some
capacity as the bankers, bank till the establishment of the RBI in 1935

Objective of the reserve bank of India:

1.

To regulate the issue of bank notes and the keeping of reserve with a view to

securing monitory stability in India and generally to operate the currency and credit
system of the country to its advantage.
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2.

The reserve bank of India has been to remain free from political influence and be in

successful operation for maintaining financial stability and credit.

3.

The fundamental object of the RBI is to discharge purely central banking functions

in the Indian money market.

4.

A significance object of the RBI has also been to assist the planned process of

development of the Indian economy.

Function:
The reserve bank of India performs all the typical functions of a good central bank.
It carries out a variety of developmental and promotional functions attuned to the course
of economic planning in the country.
1.

Issuing currency notes, i.e. to act as a currency authority

2.

Serving as banker to the government.

3.

Acting as a banker bank and supervisor

4.

Monetary regulation and control

5.

Exchange management and control

6.

Collection of data and their publication

7.

Miscellaneous development and promotional functions and activities

8.

Agricultural finance

9.

Industrial finance

10.

Export finance

Role of central bank:

The central bank performs the following developmental and promotional functions
in the developing countries.
1.

Traditional functions.

2.

Economic growth.

3.

Internal stability.

4.

Development of banking system.

5.

Branch expansion.
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6.

Development of financial institutions.

7.

Training facilities

8.

Development of banking habits

9.

Proper interest rate structure

10. Other promotional roles.

Regulatory functions of RBI:

The various aspects of the supervisory / regulatory function exercised by the RBI are
as follows.
1.

Licensing of bank

2.

Approval of capital, reserves and liquid assets of banks

3.

Branch licensing policy

4.

Inspection of banks

5.

Control over management

6.

Control over methods

7.

Audit

8.

Credit information services

9.

Control over amalgamation and liquidation

10.

Deposit insurance

11.

Training and banking education

1.4 FINANCIAL INSTITUTION

Introduction:
In the post independence era, to finance development especially in the industrial
sector, the government set up the industrial finance corporation of Indian in 1948. Since
their a number of development finance institutions have been promoted by the
government RBI and the development finance institutions to the diversified and multi
dimensional needs of economic growth with the growth of the economy and the
development financial institutions there is a large number of financial institution more
than 100. As many as 48000 financial institutions are in operations in India.

Institutions:

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The various financial institutions, which trade in these stock and capital market, are
all Indian financial institution like IFC, ICICI and IDBI and various SFCs for which the
apex institution is the IDBI. These are also called as investment institutions.
The major functions of financial institutions
1.

Promoting the overall earnings of the economy be deeding and widening the

financial structure
2.

Disturbing the existing saving in more efficient manner so that those is greater need

from the social and economic point of view get priority in allotment.
3.

Creating credit and deposited money and facilitating the transactions of trade.

Productive and distributive in further once of the economy.

Industrial development bank of India (IDBI):
IDBI was established in January 1964 as a whole subsidiary of the RBI, but was
made an autonomous institute in February 1976. It is the foremost national level
development financing institution in India.
It performs 3 major functions namely coordinating, financing and promotional.

Objective of IDBI
1. To serve as an apex institution for term finance.
2. To co-ordinate the working of institutions engaged in financing promoting or
developing industries.
3. To plan, promote and develop industries to fill gap in the industrial structure in
the country.
4. To provide technical and administrative assistance.
5. To undertake market and investment research.
6. To act as lender of last resort and to finance project that are in conformity with
national priorities.

Industrial Finance Corporation of India (IFCI)

The IFCI was the first development bank established in India in 1948. It has been
converted into a public limited with effect from 1st July 1993. Its main objective is to
make medium and long-term credit industrial concerns in the private, public, joint and co-

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operative sectors in India. It is subsidiary of the IDBI, which holds 50% of shares capital
and bank, insurance companies and co-operative banks hold the remaining 50%.
Augments is its resources by borrowing from the government of India, RBI, IDBI, UTI,
LIC and by issuing its bonds and debentures in the markets, and by borrowing in foreign
currency from the World Bank and other foreign organization.

IFCs functions:
IFC as a financier:
1. It grants loans and advances both in rupee and foreign currencies to individual concerns
which are payable with in a period of 25 years.
2. It subscribes to the issue of shares, Bands and debentures by industrial concerns.
3. It also provides financial support to other financial concerns.
4. It under writes the issue of shares, bonds and debentures, which must be disposed by
the IFC with in seven years of their acquisition.

INDUSTRIAL CREDIT AND INVESTMENT CORPORATION OF INDIA

(ICICI)
The ICICI was established in January 1995 as a public limited company. It is private
sector development bank in India. The World Bank plays a key role in formation.

ICICIs objectives:
1.

To finance the foreign exchange component of industrial projects.

2.

To provide assistance in the creation, expansion

3.

To encourage and promote industrial development and investment

4.

To expand capital market in the country.

ICICIs function:
I

Financial assistance:

1. Project finance assistance for project finance is by way of rupee and finance currency
loans, under writing and direct subscription to share and debentures guarantees
2. Merchant banking: the ICICI also renders merchant banks services.
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3. Commercial banking: it has set up ICICI banking corporation as bank since 1994.

II

Promotional assistance:

a)

It provides project finance assistance on concessional term to industries in backward

areas
b)

The ICICI provides assistances to new projects and to expansion / diversification

projects. It renders assistance for modernization/ rehabilitation/ balancing equipment

projects.
c)

It has promoted a new company for providing share registry and transfer services to

investors.
d)

It has promoted a mutual fund

Small industries development bank of India (SIDBI)

The SIDBI was established in April 1990 as a co holly owned subsidiary of the
IDBI. The small industries development funds (SIDF) and national equity fund (NEF)
were taken over by it. These funds and its share capital its other sources of funds comprise
loans from the IDBI, short term and long term funds from the RBI loans from the
government of India.

Functions of SIDBI
a) It is the principle financial institutional for the promotional financing and
development of small scale industries.
b) It co-ordinates the functioning of existing institutions engaged in similar activities.
c) It renders assistance to small industries through refinance of loans.
d) It initiates steps for technological up gradation and modernization of existing units
e) It promotes employment oriented industries, especially in semi urban areas,
create more employment

State financial corporation (SFCs)

SFCs are the state level development bank for the development of small and
medium scale industries in 18 states of India. They aim at bringing about balanced
regional development by wider dispersal of industries, Greater investment and generating
larger employment opportunities. They borrow funds from the government, RBI, IDBI
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banks and by way of bonds/ debentures, by accepting depending and scale of investment
in share and debentures of industrial concerns.

SFCs functions:
1.

They provide financial assistance to industries by way to term loans, direct

subscription to equity / debentures, discounting of bills of exchange and guarantees.

2.

They provide term loan of small and medium scale industries for an acquisition of

fixed assets like land, building, machinery and equipment.

3.

They provide loans for setting up new industrial units as well as for expansion and

modernization of the existing units.

4.

They also promote the development of medium and small scale industries in

backward company.

National bank for agriculture and rural development (NABARD)

NABARD was established for the promotion of agricultural, small scale, cottage and
village industries and other economic activities in rural areas.

NABARD Function:

Credit disbursement, developmental and regulatory credit facilities given to

commercial banks, state co-operative banks and land development banks.

Short term finance schemes are open to provide working capital facilities.

It supplies required credit facilities to actively implement government, sponsored

programs of SC/ST Development Corporation.

NABARD refinances women development, corporations offering group loans to

rural women, encouraging group enterprises and ancillarisation of tiny units

Promotional and development activities of NABARD

1. Great to training and production center.
2. Grant to artisan guide.
3. Assistance to rural entrepreneurship development programs
4. Refinancing schemes of self help group through banks.
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1.5 Nationalization of banks

The progressive nationalization of bank has increased the role of public sector bank
in our country. On July 19, 1961, the government of India through an ordinance
nationalized 14 major commercial banks in the country with deposits exceeding Rs 50
crores each. Again an April 15, 1980, 6 more commercial banks (now five because in
September 1993) were nationalized. The state bank of India and its seven subsidiaries has
already been nationalized. The regional rural banks from their very inception are in the
public sector 90percent of the country commercial banking system is now in the public
sector.
OBJECTIVES OF INDIAN NATIONALIZATION BANK
According to the banking companies act 1970, the aim of nationalization of banks
in India is to control the height of the economy and to meet progressively and serve her.
The needs of development of the economy in conformity with national policy and
objectives
1.

To mobilize, saving of people to the largest possible extent and to utilize them for

productive purposes.
2.

To ensure that the operations of the banking system are guided by larger social

purpose and are subject to close public regulation

3.

To ensure that the legitimate credit needs of private sector. Industry and trade, h\big

and small, are met.

4.

Small scale industrialists and self employed professional groups are met

5.

To activity porter the growth of the new and progressive entrepreneurs and create

fresh opportunities for lithest neglected and backward areas in different prate of the
country.

ACHIEVEMENTS OF NATIONALIZED BANKS

The commercial banking system in India has proved and progressed appreciably
after bank nationalization in 1969 various achievements of banks in the post
nationalization period are discussed as follows.

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A. Developments of banking industry: 1. Development role of banks, after the nationalization a public sector banks have given
up their traditional approach of maximizing profits for the shareholders and have adopted
the development role in the interest of the country.

1. Branch expansion
There has been a spectacular expansion of bank branches after nationalization of
major commercial banks in 1969 the lead bank scheme has played an important role in the
bank expansion programmed.

2. Coverage of rural areas

The main trust of branch expansion policy in the post nationalization period has
been on increasing the banking facilities in the rural areas. There had been a significant
increase in the rural branches of banks since 1969 the number of branches in rural areas
having population up to 10,000 has increased from 1832 in June 1969 to 37213 in June
1994.
3. Reductions of regional imbalances:
Another highlight of the branch expansion policy since the nationalization of banks
has been to expand banking facilities in the deficit and unbanked areas and to reduce the
regional imbalances systematic efforts are being made to increase banking facilities in the
rural and semi urban areas of the deficit districts of the country
4. Expansion of bank deposits:
Since nationalization of banks there has been a significant increase in the deposit of
commercial bank during the 18 year of pre-nationalization period. The deposit in the
scheduled banks increased from Rs 908 corer in 1951 to Rs 4646 corer in 1969. During
the 18 years of post nationalization period, the deposits increased from Rs 4646 corer in
the 1969 to Rs 107345 core in 1987.
6.

Credit expansion:
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The expansion of bank credit has also been more spectacular in the post bank
nationalization period over the period of 18year before the bank nationalization, total
advance of schedule banks increased from Rs 547 corer in 1951 to Rs 3,599 core in 1969.

B. Financing of priority sectors

1. Lesser importance to big industries:In the pre nationalization days, large and medium industries and wholesale trade
account for about 78% of the total bank credit while agriculture accounted for only 22%
of the total bank credit. The share of agriculture, small industries and other priority
sectors, food procurement agencies exports has increased.
2. Advance to priority sectors:
One of the main objective of nationalization of banks was to extend credit facilities
to the borrowers the so for neglected sector of the economy.
a) Agricultural credit increased from Rs 162 corer in June 1969 to Rs 23328 corer in
march 1995
b) Direct finance to agriculture which was only is 40 corer in June 1969, has gone up to
Rs 20562 corer in march 1995
c) Bank credit to small scale industries has also increased from Rs 251 crore to 20562 in
March 1995.

3. Agricultural finance
After nationalization the commercial banks have been giving special attention to
the financial needs of agriculturist and to rural areas. This is clear from the various
measures taken by the public sector banks.
1. Larger and growing proportion of credit is being extended to the agriculture.
2. To take note of various imbalance in the agriculture development and to measure to
correct them.
3. To give a big push to agricultural development in terms of investment management.

4.

Bank credit for small scale industries:

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The government as an important productive sector of the economy, which deserves

special finance assistance by the commercial banks, has recognized small-scale industries
sector. The following are the important banks credit facilities given in the small-scale
industries:1. Small-scale industries sector has been treated as a priority sector for bank loans.
2. Short period and term loans are provided to the small scale industries at concessional
rate of interest.
3. Special cells have been setup in the banks to provide guidance to the borrowers from
small scale sector.

5. Hire purchase financing:A banker is often approached to finance a fire purchase transaction banks in India
either finance the dealer directly or through the financing intermediaries, which are either
finance company or forms.

C. Changing role of commercial banking or innovative banking:The development of banking system in India since independences, particularly after
the bank nationalization in 1969 important innovation in banking which have been
introduced recently are discussed below.

1.

Social Banking

After nationalization, the commercial banks in India have adopted a new policy
orientation to meet the socio economic obligations of the country the social orientation are
given below
a) Allocation of credit in accordance with the requirement of the planned economic
development of the country
b) Alignment of credit policy with the over all object of the government
c) Reduction of regional disparities the spread of banking to a achieve the balanced
development of the country.
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2.

Participatory approach:In 1970 the reserve bank of India (RBI) introduced participatory certificated (pcs)

with the objective of greater mobilization of funds less recourse to RBI and developing
the availability of financial instruments the pcs schemes has now been replaced by two
types of inter bank participations (IBP) one on the risk sharing basis and the other without
it. Their purpose is to even but short-term liquidity with in the banking system.
3. Consortium approach
Consortium approach to lending was introduced by the RBI in 1974 according to
this approach more that one bank would finance a single borrower requiring larger credit
limit this approach
A) Enable banks to spread risk of lending
B) Breaks the monopoly of big banks to have larger spread risk of accounts.
C) Enables banks to share experience and expertise.
D) Introduces uniformity in approaches to lending.

4. Credit card facility:

Commercial banks introduced the credit card facility in the early 1980 this facility
has become increasingly popular among the banks as well as the public credit cart a
convenient medium of exchange which enables its holder to purchase goods.

5. Diversification
Since mid 1980 the commercial banks in India have diversified into many areas,
such as merchant banking mutual funds venture capital equipment learning housing
finance hire purchase credit either on their own or through setting up of specialized
subsidiaries.
6. Consolidation phase:Since 1980 banks have also entered the phase consolidation increased
sophistication and greater product consolidation with moderate and selective expansion
are the key words in banking operation a part from social function the banks would now
pay greater attention.
I.

Improvement in financial viability.

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II.

Selective modernization and computerization.

III.

Better consumer service.

IV.

Better managerial culture

V.

Adequate profitability

7. Merchant banking
Commercial banks have entered into merchant bank business they have set up
merchant banking divisions and are under writing issues. Some of the banks have set up
separate subsidiaries and offer wide range of merchant banking services. At the end of
1991, 8 commercial banks have started their equipment learning and merchant banking
subsidiaries.
8. Mutual funds
Mutual funds (or unit trusts) are either open ended or close-ended financial
intermediaries, which obtain their resources by selling units or shares. They enable small
investors to obtain high return low risk combination from their indirect holding of equities
and other assets, on the investment side mutual funds may specialize in using their funds
in different areas

9.

Hire purchase credit

Hire purchase means purchase of goods on the basis of installment hire purchase

credit or installment credit refers to term loan provided for the purpose of consumer
goods, services and some times producer goods are loans are repaid in installment during
the specified period.

10. Venture capital

Venture capital fund (VCF) is new types of financial intermediary, which has
emerged in India in late 1980s century capital funds are mutual funds or institutional
investors, which provides risk capital venture capital is a high risk return business.
In India the following VCF are operating
1.

Technology development and Information Company of India ltd.

2.

Risk capital and technology finance corporation (RCTFC)

3.

Credit capital venture funds India ltd (LCUF)

4.

Venture capital funds set up by IDBI and UTI

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5.

Commercial banks.

11.

Customer services

A number of measures have been taken to improve the quality of customer services
offered by the banks to depositors and borrowers important among them are given below:
i)

About 1400 branches have been July computerized till June 1996.

ii) Banks are making an attempt to evaluate services rendered in terms of the
expectation & requirements of the customers and to redress customer complaints.

CHAPTER 2
RESEARCH METHODOLOGY

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CHAPTER 2
RESEARCH METHODOLOGY
2.1 Statement of the problem
Commercial banking in India has witnessed radical changes since 1921. since
independence i.e. 1947 to 1991 banking environment in India was in conservative frame
work not much progress in term of competition however after the introduction of new
economic policy foreign banks, private banks, financial institution started entering in to
commercial banking activities so the efficiency level of the commercial banks must be
improved stay in the market therefore each institution has to value their performance to
know the actual position of finance and suitable steps have to be initiated to carry out the
banking operations it is in the project, which has been under taken to study the real
management of Jammu and Kashmir bank is undertaken for a details research

2.2 Objective of the study

1.

To estimate the earning capacity of the bank

2.

Based on current analysis trying to forecasts future trends

3.

To determine the long term liquidity of the funds as well as solvency

4.

To ascertain the debt capacity of the bank

5.

Finding the overall financial position and financial performance

To extend knowledge about the particular topic by finding details of various questions
involved in the computation of the project

2.3 NEED OF THE STUDY

To have a clear picture of the performance and profitability of the banking business
it is necessary to know the various opportunities provided by the banking business the
result of the study helps the j and k bank to format future strategies, taking into
consideration the current and previous years performance and to provide a base for further
development and achievement of the goal of the project

SCOPE OF THE STUDY

The scope of the study covers evaluating the financial performance by analyzing the financial
statement of JAMMU AND KASHMIR. Focus is laid on various aspect of financial
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statement for better understanding of financial performance. The study aims at analyzing the
financial statement of Jammu and Kashmir bank over last five years. The study covers
operational jurisdiction of Jammu and Kashmir banks.

2.4 Research design

Research design simply means a search of facility answers to question and solution
to problems it is a prospective investigation and a systematic and logical study of an issue
or problem through scientific method research is a systematic and objective analysis and
recording of generalization principles resulting in prediction and possessing ultimate
central of events.

2.4.1 Descriptive research design

Descriptive research design is the study of fact finding investigation with adequate
interpretation it is more specific than an exploratory study as it has focus or particular
aspects of dimensions of the problem studied
Descriptive research design has been adopted this study all the data has been
collected and analyzed.

2.5 Sampling techniques:

Since the research is conducted in one single organization all aspects of the
functions of the business is covered however to clarify the doubts of the researchers an
unstructured questionnaire was administered at random with top official of the banks.

2.6 SOURCES OF DATA

Data collection is a key is marking research the design of the data collection
method in the back bone of research design normally using secondary data.

The Secondary Data

The secondary data are the data which the investigation borrowers from other /
researchers who have collected if for various extra purpose. Therefore it may not be
totally reliable it is less expensive and involves time and labor that the collection of

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Primary data. Secondary data was collected through the annual reports catalogues and
other published sources.

2.7 Review of previous literature

With a view of literature survey, a detailed survey conducted and previous research
projects were studied accordingly it was noticed that, no other research work was carried
of on the same topic by other persons hence it is a original study based on the original
facts.

2.8 Limitations of the study

1.

The finding of the study is more applicable only to business concern in which the

research is made.
2.

Based on the current findings generalization cannot be made

3.

The study is based on the data given by the officials and the reports of the company

the confidentiality of some facts and figures also a limitation.

2.9 Scheme of the report

CHAPTER I INTRODUCTION
This chapter consists of a brief introduction of the topic as well as the importance of
the topic in the present day scenario it contain short theoretical background to the topic as
the related issue that or involved connected to the main theme of the study

CHAPTER II CONSIST OF RESEARCH METHODOLOGY

This chapter outlines the statement of problem, scope of the study, objective need, sources
of data, research design, sampling technique, limitation of the study

CHAPTER III CONSIST OF PROFILE OF THE JAMMU AND

KASHMIR
This highlights on overall profile of the bank & its development, history of the bank and
present status of the bank.

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CHAPTER IV CONSISTS OF ANALYSIS AND INTERPRETATION

This chapter provides information regarding the technique used for analysis supported by
a descriptive interpretation, which simplifies the figures into clear words.

CHAPTER V FINDINGS, SUGGESTIONS AND CONCLUSION

It includes the findings, suggestion and conclusion

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CHAPTER 3
PROFILE OF JAMMU AND
KASHMIR BANK

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CHAPTER 3
PROFILE OF JAMMU AND KASHMIR BANK
HISTORY OF JAMMU AND KASHMIR BANK
Introduction:
Jammu and Kashmir bank was established in the year 1938 in Kashmir and its
corporate head quarters is in Srinagar one at Jammu and Kashmir and one at Delhi and
one at Mumbai

Branches:
View to exploring new business opportunities are increasingly reach to new market
the bank has been opening new branches selectively at centre offering highest business
potential the bank is having a network of 517 branches spread across the country, head
office is in Kashmir located at M.A road Srinagar, while other branches are in Anantnag
(Kashmir), Budgan district, Kargil district, Baramullaa district and many more branches
across the state including Jammu .In Delhi there are more than 20 branches and 5
branches are in Karnataka one in OTC ROAD, MYSORE ROAD, INFANTRY ROAD,
INDIRA NAGAR AND MANGLORE.

UNIQUE CHARATERISTICS
Private sector bank despite government holding 53% of equity
Operational exclusivity a virtual monopoly in J & K; and functional distinctiveness
government owned private bank
Sole banker and lender of last resort to the government of J & K
Only private sector bank designated as agent of RBI for banking business
Carries out banking business of the central government
Collects taxes pertaining to central board of direct taxes in J & K

FINANCIAL SERVICES PORTFOLIO

ONE STOP FOR ALL FINANCIAL NEEDS

Insurance joint venture with met life international distributor

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Life insurance products of met life (India) pvt ltd

Non life insurance product of Bajaj Allianz general insurance co ltd.

Offering UTI and Kodak mutual fund

Providing depository services

Offering stock broking services

Collection agent for utility services provided by state and private sector

3.2 Growth, performance of Jammu and Kashmir bank

The Jammu and Kashmir bank is on the path the discover its uniqueness the sui
generis nature of the bank spans structural distinctiveness being banker to the state
government operational exclusively a virtual monopoly in J & K and functional
distinctiveness being a government owned private sector bank all there aspect accord
unparallel financial and non financial advantages to the bank that need to be garnered.

CAPITAL AND RESERVE

The capital and reserves of the bank increased by Rs 1799.47 crores to Rs 2008.73
crore in the year 2007. After that it started increasing year by year like 2308.92 crores,
2622.86 crores, during 2008, 2009 and remain constant in 2010.

Profit
The bank ported a net profit of Rs 176.84 crore for the financial year 2005 06
against a figure of Rs 274.49 crore in 2006 07 registering increase of 98%, and it was
increasing again year after year like Rs 360.01 crore, Rs 409.84 crore, Rs 512.38 crore in
the year 2007-08, 2008-09, and 2009-10 respectively.

Income
The total income of the bank stood at Rs 1839.43 crore for the year under report
against the previous year figure of Rs 164.37 crore the interest income (corer income) and
other income (other than trading) showing perceptible increase

Net Interest Income (NII)

The bank maintained consistent growth in net interest income (NII) during each of the
quarters of 2006 07 NII from core banking operations increased to Rs 663.72 crore for the
period ended 31st march 2007 recording a growth of 11.32 up from Rs 596.24 crore in
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previous years the main drivers for the improvement in NII include the business expansion as
well as reduction in the cost of the deposited. In the year 2009-10, it was increased to
Rs1000.26 crore that means up to 8.13% growth.

Capital adequacy ratio

The Capital Adequacy Ratio (CAR) under the Basel I norms stood at 16.04 % as on
Dec 31, 2009 out of which Tier I capital amounted to 12.91 %. The CAR under the Basel
II norms was at 18.08 % as on the same date with Tier I capital amounting to 14.54 %.
The increase in the Tier-II capital is on account of raising NCDs aggregating to Rs.600
Crores during quarter under review.

Dividend
Keeping in view over all performance of the bank the directors is pleased to
recommend payment of 169% dividend (free of tax) for the year ended 31st march 2009
subject to approved of shareholders.

Business performance
The year saw a paradigm shift in the balance show management of the bank with
located focus on increased and bread baring of the credit portfolio during the year under
report the bank achieved all time high business turnover of Rs 37987.75 crore up from Rs
33162.11 crore of the previous year recording a growth of 14.49% the bank maintained its
growth momentum in all the important areas of its business operation

Deposits
Banks aggregate deposits are recorded an appreciable increase of Rs 23484.64 crore
to Rs 37237.16 crore at the end of financial year 2009 10 from the previous year figure
of Rs 33004.10 crore the deposit mix has also shown favorable improvement thereby
reducing the average cost of deposits.

Advances
The focus on credit growth helped the bank to record an impressive growth of
159.20% during the year the total advance of the bank increased to Rs 23057.23 crore
against Rs 20930.41 crore of the previous year the bank continued its & spot light on
priority sector reflecting both its social commitment as also growing expertise and
confidence with the sector as a viable commercial proposition.
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Foreign exchange
During the year under report the foreign exchange business recorded on impressive
growth of 39% to Rs 828422 crore as against Rs 596467 crore of the previous year the
contribution of this segment to the banks crore Indian has been to the previous year the
export turnover of the bank increased from Rs 221.51 crore to Rs 2412.90 crore
registering an increase

Investment portfolio
The investment portfolio stood at Rs 10736.33 crore at the end of the financial year.
The repositioning of the investment portfolio
Completely in line with the strategic balance sheet management stance taken by the bank
to shield itself from the interest rate risk shocks in light of the hardening interest rate
scenario

Information technology
The Bank is continuing its effort to make every single process technology driven.
Towards this end, computerization and networking of all distribution channels and offices has
gathered momentum. During 2008-09, 103 business units were rolled over to Finacle (CBS)
bringing the total number of branches on Finacle to 330. Out of the total
branch network of 575 units, 510 are computerized and out of these 456 are networked. The
number of ATMs has gone up to 246 as at end March 2009.
t

A system driven approach to stakeholder delight

The Bank has developed a robust Management Information System (MIS) hosting the
complete credit portfolio database of the Bank. In addition to the regulatory returns, the MIS
is doubling as a real-time DSS tool providing information about parametric distribution,
maturity profiling and NPA tracking of the portfolio, among others. To instill customercentric approach in marketing of products and services, the Bank is installing a Customer
Relationship Management (CRM) solution for profiling of customers, understanding their
needs, recommending solutions and resolving their queries.
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Non performing assets

In line with recovery policy the bank continued its focus keeping the level of nonperforming assets at minimal level maintaining the best asset quality in its books the net
NPA was reduced from 1.41% in 2004 05 to 0.92% in 05-06 coverage ratio works out to
63.64% as against 48% of the previous year

Productivity

The average deposit pert ranch have increased to Rs 45.69 crore from Rs 43.29 crore

of the previous year

The average deposit per employee stood at Rs 343.49 lakhs as against the previous

year figure of Rs 314.93 lakhs

The average advances per branch and per employee stood at Rs 2818 lakhs and Rs

212 lakhs respectively.

The per branch and per employee business has increased to Rs 7386.72 lakhs and Rs

555.33 lakh respectively.

Depository participation
The bank as a depository participant of national securities depository limited
(NSDL) and central depository services (INDIA LIMITED (CSDC) continued to achieve
phenomenal growth in the said service during the year the number of depository
Account as on 31st march 2007 stood at 24910 the value of securities where bank
is custodian has increased to Rs 710247.75 lakhs depository related services like online
stock trading activity is being provided to clients at DP center of bank in association with
IL&Fs invest smart ltd mum bar

Insurance business
During the year under review the bank as a corporate agent further in lensified the
marketing of the insurance products of MetLife India insurance co pvt ltd and aliens
general insurance co limited in the areas which were hitter to not covered by other
competitors in the business bank has sold 10102 life policies of met life India and
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collected unrealized premium amount of Rs 1656.51 lakhs during the year in the case of
non life business the bank has shown a better performance and collected aggregate
premium amount of Rs 2367.44 lakhs for 105443 policies the banks insurance business
has thus recorded a business growth of 29.65% & 34.59% in life and non life segments.

Regional rural banks

The performance of two sponsored RRBs has improved considerably during 2008- 09.
The Jammu Rural Bank has registered an operating profit of Rs. 16.75 crore during 2008-09
against Rs. 12.60 crore as on ending March 2008 recording an impressive annual
growth of 33%. The deposits of the Bank have increased by Rs.95.86 crore from Rs. 724.41
crore as on ending. March 2008 to Rs. 820.27 crore as on ending March 2009 recording a
growth rate of 13.23%. Advances have increased by Rs.26.21 crore from Rs. 228.10 crore as
on ending March 2008 to Rs. 254.31 crore as on ending. March 2009 with a growth rate of
11.49%. Kamraz Rural Bank has turned around after six years by registering an operating
profit of Rs. 1.14 crore during 2008-09. Deposits of the Bank have increased by Rs 23.48
crore from Rs. 327.79 crore as on ending March 2008 to Rs. 351.27 crore as on ending March
2009 recording growth of 7.16%. Advances have increased by Rs. 12.82 crore from Rs.
118.63 crore as on ending March 2008 to Rs. 131.45 crore as on ending March 2009 with a
growth rate of 10.80%.

Rating of bank debt instruments

The credit rating information services of India ltd. (CRISIL) one of the leading
credit rating agency of the country re affirmed P1+ rating to the banks certificate of
deposit programmed indicating the highest degree of safety for timely payment of
principal and interest

Lead bank responsibility

J & K bank is the only private sector bank entrusted with the responsibility of
convening state level bankers committee in the state of J & K the bank continued to
discharge its lead bank responsibility in & out of 14 districts of J & K state satisfactorily

Vision

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To catalyze economic transformation and capitalize on growth their vision is to

engender and catalyze economic transformation of Jammu and Kashmir and capitalize
from the growth induced financial prosperity thus engineered the bank aspires to make J
& K the most prosperous state in the country by helping create new financial architecture
for the J & K economy at the center of which will be the J & K bank

Mission
Their mission is two fold: to provide the people of J & K international quality financial
service and solutions and to be a super specialist bank in the rest of the country the two
together will make us the most profitable bank in the country.

BANKING AND DEVELOPMENT OF J & K:

CONTOURS OF CHANGE

1.

There is no denying that the credit ratio is low and as things stand there are a limited

number of bankable projects the reason for this is that there is a mis match between what
the entrepreneurs in J & K need and what the banks are willing or to put it more
accurately capable of lending

2.

To over come this mis match, three things have to be focused on:

New financial products and processes have to be developed

a) Quality of financial intermediation has to change
b) Rural finance strategy has to be developed
3. What is needed in J & K is a set of well thought out innovative lending methodologies
some of the principal characteristics of micro lending area
a) Production cycle oriented, working capital loans
b) Lending based on character, rather than collateral
c) Sequential loans, starting small and increasing in size
d) Group loan mechanism as a collateral substitute
e) Quick cash flow analysis of business and house hold especially for individual loans
f) Frequent repayment schedules to facilitate monitoring of borrower
g) Turnover and not asset lending

4. J & K bank will focus on strengthening and improving financial retail capacity for rural
financial services and help to introduce new products and services for rural finance, once
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the policy environment is favorable and a number of solvent and capable financial
intermediaries exist.

5. For J & K bank, which wants to catalyst development in the state, the biggest challenge
is to change the quality of financial intermediation this has to which the financial sector is
accessible to the smaller market participants.

6. To get a sense of the market for credit in J & K if they were to look at the share of
credit of all financial institution in J & K they share of the state is a measly 0.3 percent of
the total credit disbursed in the country. The share of the state

SDP in total GDP is

about 0.70 percent

7. looked at from the other point, J & K accounts for about 1 percent of India population
and yet it absorbs only 0.3 percent of the total credit of the country

8. The paradox of credit deployment in J & K which is also on opportunity is that the
share of professional and other service in total credit is about 28 percent that for trade is
22 % personal loans is 19 percent and industry is 18 percent the share of the main
productive and income generating sector horticulture and agriculture is under 5 percent
These products will improve the capital use of the bank manifold, as it will allow the bank
to turn around the capital many times over for the period of an atypical term loan. It is this
lending strategy that the bank is gearing towards in the years to come.

OPERATIONAL ASPECTS:
Risk management and asset quality
Risk management function has been identified as one of the core competence areas
and bank has constituted an integrated risk management committee (IRMC) of the board
for effective enterprise wide risk management and to define and review the overall risk
philosophy and risk appetite of the bank
The credit portfolio is managed through target market definition appropriate credit
approval processes on going post disbursement monitoring and remedial management
procedures

Product and services

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The biggest change in the financial sector in the 90s has been the productisation of
finance banking is now about services and solutions.
J&K bank provides a range of traditional commercial banking product and services
to India Leading Corporation and growth oriented middle market business
The key commercial banking product and services to corporate customers include (i)
credit products and structured finance (TCF) (ii) cash management, (iii) trade and
commodity finance and (iv) investment banking, local debt syndication and securitization
The possibility of introducing commodity futures and options for the major
commodities of J&K apples walnut and saffron is being explored. The bank will optimize
the growth opportunities arising out or retail banking, small, and medium enterprises.

Human resources
To work out a revised compensation package across all levels the bank has hired an
international HR consultant it is expected that one part of the restructuring will be to
introduce a variable element in the compensation package.
The bank has endeavored to bone the developmental aspect of the human resource
onto the center stage of HRD thought and action. This has become all the more significant
with the adoption of high end IT by the banking industry as a whole during the year 2005
06 a total of 3310 employees of the bank were provided training in various field of
banking as also on personal development and customer satisfactions
These draining were provided at various training colleges of repute within India and
abroad brides the banks own training colleges of repute within India and abroad brides the
banks own training college career management is being linked to job system in tune with
corporate goals of the bank.

INTRODUCTION TO THE J & K BANK:

Jammu and Kashmir bank was incorporated on 1st October, 1938 and commenced business in
July, 1939. From a small beginning the bank has grown to become a giant with a network of
520 branches spread over the length and breadth of the country.
The J & K Bank is the first state owned bank of the country and 53% of equity is
held by the government of Jammu and Kashmir. The bank has a consistent track record of
growth and profitability. It has a unique distinction of being banker to the Jammu and
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9

Kashmir state government and has also been appointed by RBI as its agency in J & K,
responsible for carrying general banking business of the Central government and collection of
taxes pertaining to the Central Board of Direct Taxes.
J & K Bank has over the past few years been reporting sustained excellent
performance in all the vital areas of business and achieving record-breaking levels in profit
generation. However what I feel is more reassuring is that bank is quietly working on a much
larger objective of setting a strong foundation that will serve as a launching pad to support the
aggressive growth plans in the future. J & K Bank has today acquired significant financial
strengths on key bench marks that will give it great confidence in the journey forward.
Today the bank has a status of value driven organization and is always working
towards building trust with shareholders, employees, customers, borrowers, regulators and
other diverse stakeholders. It has adopted a strategy directed to developing a sound
foundation of relationship and trust aimed at achieving excellence which of course comes
from the womb of good corporate governance. Good governance is a source of competitive
advantage and a critical input for achieving excellence in all pursuits. J & K Bank considers
good corporate governance as the sine qua non of a good banking system and has adopted a
policy based on all four pillars of good governance transparency, disclosures, accountability
and value, enabling it to practice trusteeship, transparency, fairness and control, leading to
stakeholders delight, enhanced shareholder value and ethical corporate citizenship. It also
ensures that bank is managed by an independent and highly qualified Board following best
globally accepted practices, transparent disclosure and empowerment of shareholders, besides
ensuring to meet shareholder aspirations and societal expectations following the principals of
management executive freedom to drive the bank forward without undue restraints but within
the framework of effective accountability. The excellence achieved by the bank in its
operations stemming from the roots of voluntary good governance has not gone unrecognized
and bank has recently bagged three very prestigious award for following fair business
practices and commitment to social obligations.

HISTORICAL BACK GROUND OF J & K BANK: Before independence

moneylenders use to perform entire banking in the Jammu and Kashmir state that too on
exorbitant interest rates. Punjab National Bank, Imperial Bank of India and Grind lays bank
were the banks that use to take deposits but no lending due to their statutory limitations.
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Money lenders mostly known as Munimji conducted financial transactions in the entire state
of Jammu and Kashmir. Under this scenario banks could not ameliorate the financial and
social position of the people of the state. To overcome this critical situation, the then
Maharaja of the state conceived an idea of setting up of a state bank in the state.
After a prolonged exercise and deliberations the assignment for establishment of
The Jammu and Kashmir Bank limited was given to the late Sir Sorabji N Pochkhanawala,
the then Managing Director of the Central Bank of India. Mr. Pochkhanawala formulated a
scheme on 24-09-1930, suggesting establishment of a semi state bank with participation in
capital by state and the public under the control of state government. Thus the bank was
formally incorporated on the 1st of October 1938 and commenced business from 4th of July
1939 at its registered office Residency road Srinagar, Kashmir.
The Jammu and Kashmir bank Limited has been the first of its nature and
composition as a state owned bank in the country. The state government besides contributing
half of the issued capital also appointed it as its bankers for general banking and treasury
business. In its formative years, the bank had to encounter several serious problems
particularly around the time of independence when out of its total of ten branches; two
branches of Muzaffarabad and Mirpur fell to the other side of the line of control (now
Pakistan Administered Kashmir) along with cash and other assets in 1947. However the State
government came to its rescue with the assistance of Rs.6.00 Lacs to meet the claims,
however the bank fastly over came its difficulties and kept growing. Following the extension
of Central Laws to the state of Jammu and Kashmir, the bank was defined as a government
company as per the provisions of Indian Companies Act 1956. The bank had its first full time
chairman in 1971, following social central measures in banks. The year 1971 was a turning
point for the bank on conferment of scheduled bank status and witnessed remarkable progress
in all the vital fields of operations. The bank was declared as A class bank by Reserve Bank
of India in1976. In recognition of dominant role and exalted performance, Reserve bank of
India as its agent for performing the general banking business of the central government
especially in maintaining currency chests and collection of taxes.

INNOVATIVE PRODUCTS:

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To maximize value to its customers, the innovation in products and improving the
quality and speed of services is the hallmark of Banks business strategy. In keeping with this
objective, the bank has launched several unique and innovative deposit products, which
includes Mehendi Deposit Scheme, Recurring plus Deposit Account, Flexi Deposit
Scheme, etc. These schemes have flexibility of depositing variable monthly installments as
per the convenience of the depositor. In synchronization with the Banks new strategy focus
on increasing lending and financial deepening of economy in J & K state, a host of new

products customized and tailored to the requirements of customers were designed and
launched. Some of these products are:
All purpose Agri-Term Loan.
JKBank Term Loan for B.Ed/M.Ed Courses.
Housing Loan for Leh.
Tax Saver Term Deposit Scheme.
Smart Saver.
Naunihalon Ka Naya Savera.
Used-car Loan
Value Added Current Accounts.
JK Bank Dastkar Finance Scheme
JK Bank Khatamband Scheme
JK Bank Roshni Finance Scheme
JK Bank Commercial Premises Finance
JK Bank Giri Finance Scheme

DIVERSIFICATION OF BUSINESS:
The Bank diversified its business activities into insurance, both life and nonlife. The bank not only became the strategic partner of MetLife Insurance India (P) Limited,
but also has been acting as corporate agent of the said company for distribution of their life
insurance products through network of its branches. The Bank also entered into a tie-up with
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2

Bajaj Allianz General Insurance Company for distribution of their non-life insurance
products. In view of Banks deep branch network and loyal customer base particularly in
Jammu and Kashmir, the Bank has been able to distribute insurance products in deep rural
and far flung areas and has made penetration in the new areas thereby adding to its noninterest and fee based income.

CORPORATE SOCIAL RESPONSIBILITY:

The Corporate Social Responsibility (CSR) of J&K Bank seeks to recognize
obligations towards society and aims to integrate the CSR ideals into its mission for
optimizing both business and social performance. It stresses on promoting work life
balance, give attention to social and environmental concerns and host of factors that
facilitate business pursuits and accomplishment of economic goals. The CSR is not
just recognized as promulgating the Banks own values and principals of
philanthropy but also the values and principals of all those who have a stake in it or
are affected by its operations. By supporting social cause aligned to the mission, the
CSR strategy differentiates the Banks brand and enhances its reputation. The Bank
besides playing its role in economic development of the state and country contributes
significantly towards the social cause. The Bank has established its credentials for the
poor and needy by donating generously for various philanthropic activities aimed at
ameliorating their sufferings. Be it victims of natural calamity, like fire, flood,
snowstorm or tsunami and disabled or patients with serious ailment who lack reliable
means of survival. In order to enable socially and economically weaker classes to live
a healthy life a healthy life the bank shall endeavor to give financial support to the
needy and poor patients, afflicted with dreaded diseases like Cancer, cardiac failure,
kidney failure etc. for their treatment/surgery. The bank assists the government in the
preservation of historical/religious monuments, development of tourist sites, national
properties, museums, libraries, protection of environment/ecology, etc

and

sponsoring seminars and awareness camps, art and literary works, social service
camps, etc. The Bank has been playing a vital role in the promotion of tourism and it
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is in this backdrop that the bank has been shouldering the responsibility of registering
yatris for the Shree Amarnathji Yatra through its extensive network of branches
spread across the country. Apart from above activities the bank has been
constructing/developing the public utility service like public parks, bus stands,
drinking water posts, lavatories, rain shelters, etc. The glimpses of some programmes
of the bank launched for this purpose are as under:
Poverty Alleviation Programmed (To educate and provide the underprivileged
sections financial services through intervention and community participation)
Environment Excellence Programmed (To preserve and promote green and pollution
free environment).
Education For All Programmed (To promote education among the employees and the
deprived sections of the society).

Directors responsibility statement

The board of directors hereby confirms that:
1.

In the preparation of the annual account, the applicable accounting standard have

been followed along with proper explanation relating to material departure

2.

We have selected such a accounting policies and applied them consistently and

made judgment 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 or loss of the company for that period

3.

We have taken proper and sufficient care for the maintenance of adequate

accounting records accordance with the provisions of this act for safeguarding the assist of
the company and for presenting and debuting frond and other irregularities
4.

We have prepared the annual accounts on a going concern basis

BOARD OF DIRECTOR
Mr. Mushtaq Ahmad

Chairman & CEO

Mr. M.S. Verma

Director on the Board

Mr. G.P. Gupta

Director on the Board

Mr.Sudhanshu Pandey,IAS

Director on the board

Mr. G.M. Dug

Director on the board

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4

Mr.B. L Dogra

Director on the board

Mr.Umar khurshid tramboo

Director on the board

Mr. Narendra jhadav

Director on the board

Mr. AK Mehta

Director on the board

Mr. Abdul Majid Mir

Director on the board

Executive Committee
1 Mushtaq Ahmad Chairman & CEO
2 A. K. Mehta Executive Director & COO
3 Abdul Majid Mir Executive Director & CFO
4 Ajit Singh, Executive President
5Tafazal Hussain President
6Sahibzada Gh Mohi-u-din President
7Kuldeep Kumar Sharma President
8 Parvez Ahmed President & Secretary
9 Ghulam Ahmad Regoo President
10 Abdul Rashid President

Vice Presidents
Mr.Mohammad Amin Mir
Mr.Suman Durswal
Mr.Shamsher Singh Nathyal
Mr.Madan Lal Gupta
Mr.Nazir Ahmed Parimoo
Mr.Mohammd Amin Narchoor
Mr.Raja Abdul Latif
Mr.Mohamad Afzal Khan
Mr.Bashir Ahmed Lone
Mr.Om Prakash Sharma
Mr.Fazal-e-Mehboob Gani
Mr.Javeed Mustafa Rafiqi
Mr.Vagish Chander
Mr.Shafat Ahmad Banday
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Mr.Meera Jamwal
Mr.Roop Krishan Sha
Mr.Surjeet Singh Sehgal
Mr.Abdul Rouf Bhat
Mr.Abdul Rashid
Mr.Mohammad Syed Wani
Mr.Surender Krishan Bhat
Mr.Nayeem-ullah
Mr.Khursheed Ahmad Pandit
Mr.Syed Abdul Hamid
Mr.Mohammad Altaf Bhat
Mr.Mohammad Sidiq Wani
Mr.Pushap Kumar Tickoo
Mr.Rajesh Kumar Chibber

3.3 Present Status of Jammu And Kashmir Bank

New Initiatives
The bank works on the philosophy of maximizing value to all the stake holders and
understands and anticipates their needs and offers products and services to them at
competitive prices keeping this in view the bank lender took following major initiatives
during the year under report

Brand strategy
The new brand strategy aims to provide a visible improvement in work culture
banking ambience and provide an exceptional and positive customer experience the brand
strategy initiatives in the year ahead are based on in-depth research and analysis and a
series of discussion the consultant have held with the stake holders of the bank over the
previous year

Mutual fund distribution

JK bank signed MOU with kotak mahindra & UTI asset management companies

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6

As a initiative to bring in world class products / services to its customers the

bank entered into strategy partnership with kotak mahindra asset management company
ltd (KMAMC) & UTI asset management company for distribution of their mutual fund
products the bank is also prepared to enter into strategic tie-ups with other asset mgt
companies of report for distribution of mutual fund products.
This would enable the bank to create value for the customer besides craving noninterest income for the bank.

Customer service
The bank has always endeavored to provide better quality service as to the customer
with wider choice of products and services constant value addition was made to various
ranges of products and services to maintain a balance between relationship and
convenience banking.
The concept of the customer advisory forum has been successfully implemented in
all the branches of our bank, which supplements the feedback received from customer
during customer meets

Community service
The bank has always been at forefront when it comes to social and community
causes. Be it victims of natural disasters like fire earth quake or patient with serious
ailments with no means to hide over the unfortunate circumstances the bank has been
there for providing g support and lending a helping hand
The bank created a relief fund The J&K bank earth quake relief fund for helping
the needy victims of the massive earth quake and provided them succor

Awards of excellence
The bank was awarded Asian banking award 2005 for its
Development project financing programmed in recognition of contributing signification
to the development of tourism industry of the J&K state.
The bank has won the Asian banking award for the second consecutive year

Infrastructure: Global standards

The fastest growing bank with 517 branches across the country
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 98% of the business is computerized

Anywhere banking, tele-banking and swift facilities available
Internet banking, sms and mobile banking provided
ATM connected globally to all master cards networked ATMs
Mobile ATM service available first of its kind in northern India
J and K bank global access debit cards: cirrus and maestro enabled
Own credit card
Live on RIGS system of RBI

PERFORMANCE OF THE BANK:

Previous Annual Reports the Bank continued to make strides in its business
operations. The Bank achieved a all time high business turnover of Rs. 22686 crore during
the year under report against the last year figure of Rs. 19335 crore recording a steady
growth of 17.33%. The core segments of Banks business viz. Deposits, Advances,
Foreign Exchange and Treasury Operations recorded an impressive growth. The
outstanding performance recorded by the Bank in its operations boosted the price of
Banks share in the stock market to all time high of Rs. 139 despite subdued equity
market.
PROFIT:
The Bank posted a net profit of Rs. 512.38 crore for the financial year 2009-10
recording an impressive increase of 256.57 over the last years net profit of Rs. 259.80
crore.
INCOME:
The total income of the Bank at Rs. 1714.56 crore for the year under report
recorded a growth of 6.44% over the previous year figures of Rs. 1610.86 crore. The per
branch and per employee income has increased to Rs. 437.39 lakhs and Rs. 24.11 lakhs
respectively.
DIVIDEND:
In view of the sustained excellent financial results, Directors are pleased to
recommend payment of 169% dividend (free of tax) for the year ended 31st March 2009
subject to approval of shareholders and Reserve Bank of India.
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8

CHAIRMANS STATEMTENT
The Jammu and Kashmir bank is on the path to discover its uniqueness. During the
last financial year the management of the bank has set in motion a multi pronged process
to build on exclusive business model based on their unique features.
It is now a well accepted fact that the next three to five years will be the most
challenging phase for the Indian banking sector
With the commercial banking sector expect to migrate to the Basel II regime in
less than six months from now, the banking sector in India is heading towards
consolidation by 2009 the banking landscape of the country will change dramatically
giving foreign banks a level playing field with an estimated capital infusion of Rs 42000
crore by march 2010 consolidation will be the preferred alternative for banks to shore up
their capital base
Mergers and acquisitions may also take place in the near future for compliance with
minimum net worth requirement or norms on diversified ownership
In this the banks that will have an edge over all the other are the ones which have a
geographical space to themselves which they dominate equally important will be the
ownership structure on the both accounts J&K bank stand sin a category of its own.
In many ways for J&K lending in the state cuts like high powered money and
triggers off a vitreous cycle of advances and low cost deposits.
The understanding has to drive the business model of J&K and be the under pinning
for its developmental role in the state being a small bank with a large part of its portfolio
in consortium leading outside the state, asset re-pricing to improve margins is not an
exercisable option
The credit appetite and absorption in J&K is limited and so is the average ticket size
of advances this means that the bank business model walks on two legs low volume high
margin lending in J&K and a high volume low margin business in rest of the county.
According the bank is looking at a leather chain in Chennai, Kanpur, Agra and
Kolkatta similarly spices branches in south and carter branches from these branches are
dispensed with however since most of such business are community business these
branches get centered around not just sectors but also communities through this route the
bank is positioning itself as a super specialist bank/
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9

The greatest achievement of the bank during the course of last year has been to
become a financially stronger bank. The direct indication of this is that the NPA coverage
ratio, which was 48 percent has been increased to 64 percent in the course of one year to
do this the provisioning levels have been liked by almost 200 percent. This increase in the
allowance for probable losses and poor quality of assets has made the bank stronger as a
result of the high level of provisioning the banks net NPA is less than 1 percent for the
first time
An important aspect of the bank has been its ownership the foreign institutional
investors have now become the largest share holders of the bank after the government of
Jammu and Kashmir last year the holding was 20 percent and by march 31st 2006 this
level rose to 32 percent the quality of investment is the best in the breed J&K bank is
competing with the high quality bank across the globe.
Finally an important land mark with respect to transparency of account was achieved
in 2005 06 it was for the first time in the long history of the bank that there is no
auditors qualification in this years banks balance sheet this is an indication of the
managements commitment have complete transparency in doing business and reporting it.
Haseeb A Drabu
Chairman & CEO

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CHAPTER 4
ANALYSIS AND INTERPRETATION

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1

CHAPTER 4
ANALYSIS AND INTERPRETATION
BALANCE SHEET OF JAMMU AND KASHMIR BANK AS ON 31ST MARCH
Balance Sheet

--------- in Rs. Cr. --------Mar '06

Mar '07

Mar '08

Mar '09

Mar '10

12 mths

12 mths

12 mths

12 mths

12 mths

48.49

48.49

48.49

48.49

48.49

48.49

48.49

48.49

48.49

48.49

0.00

0.00

28.10

0.00

0.00

0.00

0.00

0.00

0.00

0.00

0.00

0.00

0.00

0.00

0.00

1,750.98

1,960.24

2232.33

2574.37

0.00

0.00

0.00

0.00

0.00

1,799.47
23,484.64
263.93
23,748.57

2,008.73
25,194.29
620.19
25,814.48

2,308.92
28,593.26
751.79
29,345.05

2,622.86
33004.10
996.63
34,000.73

3010.46
37237.16
1100.21
38337.37

900.94

823.31

1102.01

1069.67

1198.97

26448.98
Mar '06
12 mths

28646.52
Mar '07
12 mths

32755.98
Mar '08
12 mths

37693.26
Mar '09
12 mths

42546.80
Mar '10
12 mths

937.88

1,854.77

3219.97

2302.95

2744.73

1,349.53

1,758.99

1217.27

2971.81

1869.51

Capital and Liabilities:

Total Share
Capital
Equity Share
Capital
Equity share
warrants
Share Application
Money
Preference Share
Capital
Reserves
Revaluation
Reserves
Net Worth
Deposits
Borrowings
Total Debt
Other Liabilities
& Provisions
Total Liabilities

Assets
Cash & Balances
with RBI
Balance with
Banks, Money at
Call

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2

2961.97

Advances
Investments
Fixed Assets
Other Assets
Total Assets

Contingent
Liabilities
Book Value (Rs)

14,483.11
9,002.34
194.72
481.41
26,448.99

17,079.94
7,392.19
183.44
377.19
28,646.53

18882.61
8757.66
192.00
486.47
32,755.98

20930.41
10736.33
199.41
552.34
37,663.25

23057.23
13956.25
204.13
714.95
42546.80

3434.08

1844.39

7959.21

6578.22

8291.77

371.20

414.36

470.49

541.04

621.00

TO STUDY THE GROWTH OF JAMMU AND KASHMIR BANK

Table 1 : Table showing the details of Equity Capital
Particulars

Mar.

Mar.

Mar.

Mar.

Mar.

Equity
Trend (%)
Increase in

06
48.49
100.6
0

07
48.49
100.6

08
48.49
100.6
0

09
48.49
100.6
0

10
48.49
100.6
0

trend

GRAPH SHOWING THE DETAIL OF EQUITY CAPITAL

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Inference & Interpretation:

From the above analysis it is cleared that the share capital of bank was 100% in the
year 2004 and then it was slightly increased by .1 % in 2005. And as we can see that in the
year 2006 , 2007 , 2008 it has been constant at 100.6 % which means an increase of .6% .
Therefore from the above analysis we can interpret that the share capital has been
increasing in a slower rate.
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4

Table 2: Table showing the details of Reserve and Surplus

Particulars

Mar.

Mar.

Mar.

Mar.

Mar.

Reserve

06
1750.98

07
1960.24

08
2232.33

09
2574.37

10
2574.37

100
1

111.95
11.95

127.49
27.49

147.02
47.02

147.02
47.02

and
Surplus
Trend %
Increase
in Trend

GRAPH SHOWING THE DETAILS OF RESERVE AND SURPLUS

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5

Inference & Interpretation:

From the above data it is cleared that the reserves and surplus was 100% in the year
2006 and it has continuously increased by 11.95 %, 27.49%, 47.02%, 47.02% in the year
2007, 2008, 2009, 2010 respectively. Therefore it is interpreted that the company is
earning good amount of surplus and reserves as we can see that it has been increasing year
after year at an increasing rate.
Table 3 : Table showing the details of Deposits
Particular
Deposits
Trend %
Increase

Mar.
06
23484.64
100
1

Mar.

Mar.

Mar.

Mar.

07
25194.29
107.28

08
28593.26
121.75

09
33004.10
140.53

10
37237.16
158.56

7.28

21.75

40.53

58.56

in Trend
GRAPH SHOWING THE DETAIL OF DEPOSITS

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6

Page6
7

Inference & Interpretation:

From the above data it is cleared that the deposits were 100%in the year 2006 and it
has continuously increased by 7.28%, 21.75%, 40.53%, 58.56%, in the year 2007, 2008,
2009, 2010 respectively. Therefore the deposits of the bank have been increasing every
year which is a good advantage for the bank as the goodwill of the bank will also increase
drastically.

Table 4: Table showing the details of Borrowings

Particular

Mar.

Mar.

Mar.

Mar.

Mar.

Borrowing
Trend %
Increase
in

06
263.93
100
1

07
620.19
234.94
134.94

08
751.09
284.58
184.58

09
996.63
377.61
277.61

10
1100.21
416.86
316.86

trend

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8

GRAPH SHOWING THE DETAILS OF BORROWING

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9

Inference & Interpretation:

From the above data it is observed that the growth is 100 % in the year 2006 in the
year 2007 it was increased to 134.98% & it increased to 184.58 % in 2008 but it again
increased to 277.61 % in the year 2009 & 316.86% in 2010.

Table 5: Table showing the details of Liabilities and Provision

Particular

Mar.

Mar.

Mar.

Mar.

Mar.

Liabilities

06
900.94

07
823.31

08
1102.01

09
1069.67

10
1198.97

100
1

91.38
8.52

122.32
22.32

118.73
18.73

133.08
33.08

and
provision
Trend %
Increase in
trend
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0

GRAPH SHOWING THE DETAILS OF LIABILITIES AND PROVISIONS

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1

Inference & Interpretation:

From the above table & graph we can observe that the growth rate of liabilities and
provision of bank was 100% in the year 2006, but then decreased by 8.52% in the year
2007. As we can also see that it again started to increase slightly by 22.32% in the year
2008, but it was again decreased to 18.73% in the year 2009, and continued to increase by
33.08% in year 2010. Therefore we can interpret that the liabilities and provisions of the
bank has been very unstable as it has been changing frequently.
Table 6: Table showing the details of Cash and Bank balance with RBI
Particular

Mar.

Mar.

Mar.

Mar.

Mar.

Cash and

06
937.88

07
1854.77

08
3219.97

09
2302.95

10
2302.95

100
1

197.76
97.76

343.32
243.32

245.55
145.55

245.55
145.55

bank
balance
with RBI
Trend %
Increase

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2

in trend

GRAPH SHOWING DETAILS OF CASH & BANK BALANCE

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3

Inference & Interpretation :

From the above table & graph it is noticed that the growth rate of Cash and Bank balance
with RBI was 100% in the year 2006 and was increased to 97.76% in the year 2007, and
was 243.32% increased in the year 2008.. But it was increased in the year 2009 to 145.55
% and it was again increased to 192.65% in the year 2010. Therefore we can interpret
that the liquid asset i.e. cash and bank balance with RBI has very uncertain as it
drastically fluctuated in the year 2007.
Table 7: Table showing the details of Investment
Particular

Mar.

Investment
Trend %
Inc / Dec

06
9002.34
100
1

Mar.

Mar.

Mar.

Mar.

07
7392.19
82.11
17.89

08
8757.66
97.28
2.72

09
10736.33
119.26
19.26

10
13956.25
155.03
55.03

in trend

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4

GRAPH SHOWING THE DETAILS OF INVESTMENT

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5

Inference & Interpretations:

From the above table it is cleared that the investment of bank was 100% in the year
2006. In 2007 it was decreased by 17.89% and thereby again decreased by 2.72 % in the
year 2008, but it increased by 19.26 % in 2009 and then it increased by 55.03 % in the
year 2010. Therefore we can interpret that the investments of the bank have been
increasing in the year 2009 & 2010 as compared to the previous years.
Table 8: Table showing the details of Advance

Particulars

Mar.

Advance
Trend%
Increase

06
14483.11
100
1

Mar.

Mar.

Mar.

Mar.

07
17079.94
117.93
17.93

08
18882.61
130.38
30.38

09
20930.41
144.52
44.52

10
23057.23
159.20
59.20

in trend

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GRAPH SHOWING THE DETAILS OF ADVANCES

Inference and Interpretation:

From the above graph it is analyzed that the growth is 100% in the year 2006 and
it was increased by 8.31%, 23.85%, 42.40%, 60.86% in the year 2007, 2008, 2009, and
2010 respectively. Therefore we can interpret with the help of the trend change and the

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graph analysis that advances of the bank have been increasing year after year which is
highly beneficial for the bank.

Table 9 : Table showing the details of Total Assets

Particulars

Mar.

Mar.

Mar.

Mar.

Mar.

Total

06
26448.99

07
28646.53

08
32755.98

09
37663.25

10
42546.80

Assets
Trend %
Increase

100
1

108.31
8.31

123.85
23.85

142.40
42.40

160.86
60.86

AP
H

in trend
SHOWING THE DETAILS OF TOTAL ASSETS

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Inference and Interpretation:

From the above table it is analyzed that the growth is 100% in the year 2006, and it
was increased to 108%, 123%, 142%, 160% in the year 2007, 2008, 2009 and 2010
respectively. Therefore the banks fixed assets have always been increasing at an
increasing rate year after year which shows the overall progress of the bank and increase
in the fixed assets of the bank. The bank has shown tremendous increase in the year 2010
as compared to year 2006.

Table 10: Table showing the details of Interest Earned

Particular

Mar.

Mar.

Mar.

Mar.

Mar.

06

07

08

09

10

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Interest

1706.25

1899.33

2434.23

2988.12

3056.87

Earned
Trend %
Increase

100
1

111.31
11.31

142.67
42.67

175.13
75.13

179.16
79.16

in trend

GRAPH SHOWING THE DETAILS OF INTEREST EARNED

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Inference and Interpretation:

From the above table it is observed that the growth rate of interest earned was 100%
in the year 2006 and in the year 2007 it was increased to 111% and thereby it continuously
increased to 142%, 175%, 1179% during the year 2008, 2009 and 2010 respectively.
Therefore with the above data we can interpret that the interest earned by the bank has
shown a tremendous growth year after year continuously.

Table12: Table showing the details of Interest Expended

Particulars

Mar.

Mar.

Mar.

Mar.

Mar.

Interest

06
1042.53

07
1131.48

08
1623.79

09
1987.86

10
1937.27

Expended
Trend (%)
Increase

100
1

108.53
8.53

155.75
55.75

190.68
90.68

185.82
85.82

in Trend
GRAPH SHOWING THE DETAILS OF INTEREST EXPENDED

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Inference and Interpretation:

From the above graph it is analyzed that the growth rate of interest expended was
100% in the year 2006.And was increased to 108%,155%,190% in the year
2007,2008,2009 then slightly decrease in 2010 was 185%. Therefore we can interpret that
the interest expended has been increasing at a very high rate till 2009.

Table 11: Table showing the details of Other Income

Particular

Mar.

Mar.

Mar.

Mar.

Mar.

Other income
Trend %
Increase
/

06
110.85
100
1

07
160.21
144.52
44.52

08
245.01
221.02
121.02

09
261.48
235.88
135.88

10
416.24
375.49
275.49

Decrease

in

trend

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GRAPH SHOWING THE DETAILS OF OTHER INCOME

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Inference and Interpretation:

From the above table it is noticed that the growth rate of other income was 100% in
the year 2006. Then it increased by 44 % making it to 144 % in 2007. But in the year 2008
it went up to 121 % marking a sudden high in the other sources of income. In the year 2009
it was increasing again to 135 % and then in the year 2010 it was 275%. Therefore we can
interpret that the other income of the bank has been going up highly in 2008, 2009 and 2010
respectively.
Table12: Table showing the details of Operating Expenses
Particulars

Mar.

Mar.

Mar.

Mar.

Mar.

Operating

06
345.25

07
372.44

08
403.61

09
470.88

10
577.37

116.90
16.90

136.38
36.38

167.23
67.23

Expenses
Trend(%)
Increase in trend

100
1

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107.88
7.88

GRAPH SHOWING THE DETAILS OF OPERATING

Inference and Interpretation:

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5

EXPENSES

From the table it is cleared that the operating expenses was 100% in the year 2006,
and then it increased to 107% in 2007. In the year 2008 it slightly increased to 116%. But
in the year 2009 it was increased to 136%. In the year 2010 it was increased to 167%.
Therefore we can interpret that operating expenses has been increasing year after year at a
good increasing rate which means the bank has been spending a lot on its operating
related activities.
Table 13:Table showing the details of Net Profit for the year
Particulars

Mar.

Mar.

Mar.

Mar.

Mar.

Net profit for the

06
176.84

07
274.49

08
360.01

09
409.84

10
512.38

year
Trend (%)

100

155.22

203.58

231.76

289.74

Increase in Trend

55.22

103.58

131.76

189.74

GRAPH SHOWING THE DETAILS OF NET PROFIT FOR THE YEAR

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Inference and Interpretation:

From the above table we can observe that net profit was 100% in the year 2006 and
it was increasing in the year 2007 to 155 % . But later in 2008 the bank had a huge
increase in its net profit and it went up to 203% which means the bank had huge profits as
compared to previous years. In 2009 and 2010 there was an increase in the net profit to
231 % to 289 %. Therefore we can interpret that the bank has been incurring huge profits
as compared to 2006 and 2007.
Table 14 : Table showing the details of Gross NPA
Particulars

Mar.

Mar.

Mar.

Mar.

Mar.

Gross NPA
Trend (%)
Increase in

06
370.19
100
1

07
501.83
135.56
35.56

08
485.23
131.07
31.07

09
559.27
151.07
51.07

10
462.31
124.88
24.88

trend
GRAPH SHOWING THE DETAIL OF GROSS NPA

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Inference & Interpretation:

From the above analysis it is cleared that the Gross Non-Performing Asset of the
bank was 100% in the year 2006 and then it was increased to135 % which means 35 %
increase in 2007. And as we can see that in the year 2008 there was an increase of 131 %
as compared to 2006 which makes it to 131 % from 100 %. Therefore from the above
analysis we can interpret that the Gross NPA has been having increasing Gross Non
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Performing asset which means that the bank has been utilizing its non performing assets
in an effective and efficient manner.

Table 15 : Table showing the details of Net NPA

Particulars

Mar.

Mar.

Mar.

Mar.

Mar.

Net NPA
Trend (%)
Increase in

06
133.87
100
1

07
193.57
144.59
44.59

08
203.55
152.05
52.05

09
287.51
214.76
114.76

10
64.33
48.05
51.95

trend

GRAPH SHOWING THE DETAIL OF NET NPA

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Inference & Interpretation:

From the above analysis it is cleared that the Net Non-Performing Asset of the bank
was 100% in the year 2006 and then it was increased of 44 % as compared to 2006
making it to 144 % in 2007 . And as we can see that in the year 2008 there was an
increase of 52 % as compared to 2006 which makes it to 152 % from 100 %.then there
was drastic decrease in 2010 was 51.95%.
Therefore from the above analysis we can interpret that the Net NPA has been decreased,
in 2010 which means that the bank is able to utilize its non performing assets in properly.
RATIO ANALYSIS:

18. EARNING PER SHARE

This ratio indicates the earning available to the equity shareholders on a per share basis.
So this ratio is another method of evaluating the profitability of the shareholders.

Net Profit after tax and Dividend

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Earnings Per Share =

Number of Equity shares

Earning per share is useful in analyzing the best possible capital structure of the firm, with
the ultimate objective of maximizing the wealth of the shareholders. It can be used in
determining the market price of the equity shares of the company and in ascertaining the
companys capacity to pay dividend to its equity shareholders.

Earning per Share:

2006 = 36.48
2007 = 56.62
2008 = 74.26
2009 = 84.54
2010 = 105.69

18. GRAPH SHOWING THE DETAILS OF EARNING PER SHARE

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Inference and Interpretation:

The Earning per Share of the Jammu and Kashmir Bank Limited was Rs36.74 in
the year 2005-2006, Rs56.62 in the year 2006-2007, and further increased to Rs. 74.26 in
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the year 2007-2008, it further increased to Rs.84.54, 105.69 in 2008-2009, 2009-2010

respectively. That is to say, the equity shareholders of the bank got Rs. 36.48 for every
share held by them in the year 2005-2006. In the year 2006-2007 & 2007-2008, the equity
share holders of the Jammu and Kashmir Bank earning Rs 56.62 and Rs 74.26 for the
share held by them. In the year 2008-2009 and 2009-2010, the share holders of the Jammu
and Kashmir Bank earning Rs 84.54 and Rs 105.69 for the share held by them.
The Earning Per Share of the Jammu and Kashmir Bank Limited shows a growing
trend every year, which indicates that there is more cash dividend and bonus shares and
also a rise in the market price of the shares within the bank for the last three years.
RETURN ON TOTAL ASSETS
This ratio is calculated to measure the profit after tax against the amount invested in total
assets to ascertain whether assets are being utilized properly or not. It is calculated as
under:
Net Profit after tax
Return on Assets =

* 100
Total Asset

Return on assets is an indicator of how a profitable a company is before leverage, and is

compared with the companies in the same industry. Since the figure for total assets of the
company depends on the carrying value of the assets, some caution is required for
companies whose carrying value may not correspond to the actual market value. Return
on assets is a common figure used for comparing performance of financial institutions
(Such as banks), because the majority of their assets will have a carrying value that is
close to their actual market value. Return on assets is not useful for comparisons between
industries because of factors of scale and peculiar capital requirements.

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Return on Assets :
2006 = 0.67 %
2007 = 0.96 %
2008 = 1.10 %
2009 = 1.09 %
2010 = 1.20 %

19.

GRAPH SHOWING THE DETAILS OF RETURN ON ASSETS

Inference and Interpretation:

The Return on Assets of the Jammu and Kashmir Bank Limited was 0.67 % in the
year 2005-2006, 0.96 % in the year 2006-2007, and further increased to 1.10% in the year
2007-2008. That is to say, the return on asset for the bank has been increasing year after
year. The increase also indicates the proper use of assets effectively which shows the
profitable position of the bank as it has been increasing in the last three years.
As we can see from the graph the return on assets has been showing a growing trend
which is very profitable for the banks development as it help them to compare with the
growth of other competitor banks.

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CHAPTER 5
SUMMARY OF FINDINGS
SUGGESTIONS AND
CONCLUSION

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CHAPTER 5
SUMMARY OF FINDINGS, SUGGESTIONS
AND CONCLUSION
SUMMARY OF FINDINGS
The bank continued to create shareholder value as a result of which earnings per share
during 2006.07 increased to Rs.56.62 from Rs. 36.48 in 2005 06 while the book value
per share increased from Rs. 414.30 as on March 2007 to Rs. 470.59 as on March 2008.
The Gross NPA of the bank has been increasing year after year which means that the
bank has been utilizing its Non performing assets properly and in a efficient manner.
The Net NPA of the bank has been increasing year after year although there was an
increase in the year 2007 by 44 % then decrease in 2010 by 51 % which means that the
bank has been efficient in its use of Net Non Performing assets.
As we can see that the earning per share of the bank has been increasing year after year
which states that the share holders have been gaining a lot from the bank.
Return on Total Assets of the bank have also seen improvement as we can see from the
graph which states that the bank has been efficient in utilizing their resources available to
them and the use of the assets have been effective.
The equity share raised by the bank in the year 2005, but was constant in the year 2006
and then it again increased in 2007, 2008, 2009 and 2010.
The liquidity position of the bank has been quite satisfactory in all the years it has been
increasing year after year
The interest paid on the deposit is nominal which shows that the deposit of the bank is
increasing year after year
The borrowing is increasing year after year
The other liabilities and provisions was highly increased in the year 2006 but it again
fell in the year 2007, after that it started increasing in the year 2008, 2009 & 2010.
The cash and bank balance with the RBI is fluctuation
The investment of the bank indicates that the bank in investing more funds in securities
avoiding surplus of the cash
The advances of the bank are increasing year after year, which shows that bank
charging nominal; interest rate on advance
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 The fixed assets are increasing year after the year, which shows that the bank is
investing more funds in the purchasing of the fixed assets

The interest of the bank was increased year after the year
The income of the bank was fluctuated in the year 2005
The operating expense of the bank was increasing year by year
Net profit of the bank is increasing year after year which shows as positive trend
Net profit / advances ratio indicates that the net profit of the bank in the year 2009 10
was increased.
Net spread / advance ratio indicate that the net spread of the bank was increased.
Interest cost / advances ratio indicated that the interest cost is decreasing year by year
Interest income / advance were increasing year after year.
Total income of the bank is constant year by year.
Other expenses / advance of the bank is favorable
Total expenditure / advances are decreasing year after year
The other income / advances is fluctuated in the year 2006 and increased in the year
2007, 2008, 2009 and 2010 as well respectively.
RECOMMENDATION:
New equity share of the bank can be increased and the same amount can be utilized for
the purpose of the expansion
It is advisable for the bank to improve further liquidity
The bank can reduce the interest on the deposits to reduce the overall cost of capital
The higher liabilities must be reduced to increase more efficiency
The bank is advised to invest on higher liquid securities namely money markets and
instruments
In addition to the advances bank can concentrate on fee bared equity
Introducing high-level technology can reduce the expenses of the bank
Bank is advised to increase more number of branches to cater the requirements of the
large group of customer
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 The debt / equity composition of the bank can be reduced

Bank is advised to undertake some activities like personal banking retail banking and
other related services.

Recovery of the bank performance may improve by giving special incentive to recover
department.
Consistency in the income should be maintained.
Network of the bank should further increased by creating more and more reserves
The cash balance must be maintained according to the norms of RBI
The investments on securities must be increased to increase the profitability of the
bank.
The borrowing should be reduced year after year
The fixed assets of the bank should be satisfied year after year.

CONCLUSION
As per this study tried to find out the management of private banks with special reference
to Jammu and Kashmir bank
On the whole I conclude that the management of the bank is performing better and
the liquidity position of the bank has been satisfactory in all the years and the interest paid
on deposits is nominal and it is increasing year after year and borrowings should be
reduced and cash balance must be maintained according to the norms of RBI.
The functioning of the management is improving year by year with the help of
advanced technology and the bank is maintaining the customer satisfaction to the
maximum extent by paying good interest to the customer and by providing various
facilities to the needy people in the society.

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BIBLIOGRAPHY:

Books
Theory and Practical Banking

Author name
:

Dr. P.N reddy and Prof HR

Appannaiah

Financial Markets and Services

E Gordan and Dr Natarajan

Theory and Practice of Banking

Dr. S. N. Maheshwari and Dr R.R

Paul

Indian Financial System

Vasant desai

Financial Institutions and Markets

LM Bhole

News papers

Economic times

Times of India

Magazines

India today

Greater Kashmir

Websites

www.jkbank.net
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www.google.com

www.wikipedia.com

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