1. We have audited the accompanying standalone financial
statements of Jammu & Kashmir Bank Limited ('the
Bank') which comprise the standalone Balance Sheet
as at 31st March 2025, the standalone Profit & Loss
Account and the standalone Statement of Cash Flow for
the year then ended & notes to the financial statements
including a summary of significant accounting policies
and other explanatory information in which are included
the Returns of 63 branches/offices audited by us and 981
branches audited by Statutory Branch Auditors for the
year ended on that date. The Branches/offices audited
by us and those audited by other auditors have been
selected by the Comptroller & Auditor General of India in
accordance with the guidelines issued to the Bank by the
Reserve Bank of India.
In our opinion and to the best of our information and
according to the explanations given to us, the aforesaid
standalone financial statements give the information
required by the Banking Regulation Act, 1949 as well
as the Companies Act, 2013 ('the Act') in the manner so
required for banking Companies and are in conformity
with accounting principles generally accepted in India
and give a true and fair view of the state of affairs of
the Bank as at 31st March 2025, and its profit and its cash
flows for the year ended on that date.
Basis for Opinion
2. We conducted our audit in accordance with the Standards
on Auditing (SAs) specified under section 143(10) of
the Companies Act, 2013. Our responsibilities under
those Standards are further described in the Auditor's
Responsibilities for the Audit of the standalone Financial
Statements section of our report. We are independent of
the Bank in accordance with the Code of Ethics issued by
the Institute of Chartered Accountants of India together
with the ethical requirements that are relevant to our
audit of the financial statements under the provisions of
the Act and the Rules thereunder, and we have fulfilled
our other ethical responsibilities in accordance with
these requirements and the Code of Ethics. We believe
that the audit evidence we have obtained is sufficient
and appropriate to provide a basis for our opinion.
Key Audit Matters
3. Key audit matters are those matters that, in our
professional judgment, were of most significance in our
audit of the standalone financial statements the year
ended March 31,2025. These matters were addressed
in the context of our audit of the standalone financial
statements as a whole, and in forming our opinion
thereon, and we do not provide a separate opinion
on these matters. We have determined the matters
prescribed below to be the key audit matters to be
communicated in our report.
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Sr.
No.
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Key Audit Matters
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How the matter was addressed in our audit
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i.
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Classification of Advances, Income Recognition, Identification of
and provisioning for non-performing Advances (Refer Schedule
9 read with Note 3 of Schedule 17 to the financial statements):
Advances include Bills purchased and discounted, Cash credits,
Overdrafts, Loans repayable on demand and Term loans. These
are further categorised as secured by Tangible assets (including
advances against Book Debts), covered by Bank/Government
Guarantees and Unsecured advances.
Advances constitute 61.48 % of the Bank’s total assets. They are,
inter alia, governed by income recognition, asset classification
and provisioning (IRAC) norms and other circulars and directives
issued by the RBI from time to time which provides guidelines
related to classification of Advances into performing and non¬
performing Advances (NPA), classification of advances and
provisioning thereof is made as per RBI guidelines. The Bank
classifies these Advances based on IRAC norms as per its
accounting policy No. 3.
Identification of performing and non-performing Advances
involves establishment of proper mechanism. The Bank accounts
for all the transactions related to Advances in its Information
Technology System (IT System) viz. Core Banking Solution (CBS)
which identifies whether the advances are performing or non¬
performing.
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Our audit approach towards advances with reference to the
Income Recognition and asset classification (IRAC) norms and
other related circulars/directives issued by the RBI and also
internal policies and procedures of the Bank includes the testing
of controls on sample basis
a. The accuracy of the data input in the system for income
recognition, classification into performing and non¬
performing Advances and provisioning in accordance with
the IRAC norms in respect of the branches audited by us;
b. Existence and effectiveness of monitoring mechanisms
by way of various internal audits as per the policies and
procedures of the Bank;
c. Examination of advances including stressed advances on
a sample basis with respect to compliance with the RBI
Master Directions/ Guidelines;
d. We have examined the efficacy of various internal controls
over advances to determine the nature, timing and extent
of the substantive procedures and compliance with the
observations of the various audits conducted as per the
monitoring mechanism of the Bank and RBI SPARC,IRAR
and RMP.
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Sr.
No.
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Key Audit Matters
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How the matter was addressed in our audit
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The bank is in the continuous process to upgrade existing &
implement new IT applications in various areas of its business
operations, including income recognition and asset classification
in terms of RBI guidelines. These applications require detailed
testing, verifications and User Acceptance Testing (UAT)
before final implementation. The financial impact pending
such implementation is not likely to be material as per the
management.
The carrying value of these advances (net of provisions) may be
materially misstated if, either individually or in aggregate, the
IRAC norms are not properly followed.
Considering the nature of the transactions, regulatory
requirements, existing business environment, estimation/
judgement involved in valuation of securities and calculation
of provisions, it is a matter of high importance for the intended
users of the Standalone Financial Statements. Considering these
aspects, we have determined this as a Key Audit Matter.
Accordingly, our audit was focused on income recognition, asset
classification and provisioning pertaining to advances due to the
materiality of the balances.
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e. In carrying out substantive procedures at the branches
audited by us, we have examined large advances/ stressed
advances while other advances have been examined on
a sample basis including review of valuation reports of
independent valuers provided by the Bank's management.
f. We assessed and evaluated the process of identification of
NPAs and corresponding reversal of income and creation
of provision;
g. Reliance is also placed on Audit Reports of other Statutory
Branch Auditors.
h. Bank has laid down detailed Standard Operating Procedure
to ensure control over processes. We have relied on these
Standard Operating Procedures and have conducted our
testing based on these Standard Operating Procedures.
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ii.
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Classification and Valuation of Investments, Identification of and
provisioning for Non-Performing Investments (Schedule 8 read
with Note 2 of Schedule 17 to the financial statements):
Investments include investments made by the Bank in various
Government Securities, other approved securities, Shares,
Debentures & Bonds, subsidiaries & sponsored Institutions, and
other approved securities.
Investments constitute 24.32 % of the Bank's total assets. These
are governed by the circulars and directives of the RBI. These
directions of RBI, inter-alia, cover valuation of investments,
classification of investments, identification of non-performing
investments, the corresponding non-recognition of income and
provision thereof.
Considering the complexities and extent of judgement involved
in the valuation, volume of transactions, investments on hand
and degree of regulatory focus, this has been determined as a
Key Audit Matter.
Accordingly, our audit was focused on valuation of investments,
classification, identification of non-performing investments and
provisioning related to investments.
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Our audit approach towards Investments with reference to the
RBI Master directions included the understanding of internal
controls and substantive audit procedures in relation to valuation,
classification, identification of non-performing investments
(NPIs), provisioning/depreciation related to Investments. In
particular;
a. We understood and evaluated the Bank's internal control
system to comply with relevant RBI guidelines regarding
valuation, classification, identification of NPIs, provisioning/
depreciation related to investments;
b. For the selected sample of investments in hand, we tested
accuracy and compliance with the RBI Master directions
by re-performing valuation for each category of security.
Samples were selected after ensuring that all the categories
of investments (based on nature of security) were covered
in the sample;
c. We assessed and evaluated the process of identification of
NPIs and corresponding reversal of income and creation of
provision;
d. We carried out substantive audit procedures to recompute
independently the provision to be maintained and
depreciation to be provided in accordance with RBI
guidelines.
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iii.
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Assessment of Provisions and Contingent liabilities in respect of
certain litigations on Taxes, various claims filed by other parties
not acknowledged as debt (Schedule 12 read with Note 15(k)(i) of
Schedule 18 to the financial statements):
There is high level of judgement required in estimating the level
of provisioning. The Bank's assessment is supported by the facts
of matter, their own judgement, past experience, and advice from
legal and independent tax consultants wherever considered
necessary. Accordingly, unexpected adverse outcomes may
significantly impact the Bank's reported profit and state of
affairs presented in the Balance Sheet.
We determined the above area as a Key Audit Matter in view of
associated uncertainty relating to the outcome of these matters
which requires application of judgement in interpretation
of law. Accordingly, our audit was focused on analysing the
facts of subject matter under consideration and judgements/
interpretation of law involved.
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Our audit approach involved:
a. Understanding the current status of the litigations/ tax
assessments including the status upto the date of auditor's
report;
b. Examining recent orders and/or communication received
from various tax authorities/judicial forums and follow up
action thereon;
c. Review and analysis of evaluation of the contentions of
the Bank through discussions, collection of details of the
subject matter under consideration, the likely outcome and
consequent potential outflows on those issues; and
d. Verification of disclosures related to significant litigations
and taxation matters.
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Sr.
No.
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Key Audit Matters
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How the matter was addressed in our audit
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iv.
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Information Technology ("IT") Systems and Controls impacting
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Our protocols pertaining to this issue comprised of the following
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Financial Reporting
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measures:
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The Bank’s IT environment comprises a multitude of autonomous
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Technology specialist assisted in the evaluation of the controls
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and interdependent IT System that are utilized to process and
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governing the Bank's IT systems by gaining knowledge of the
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record a substantial volume of transactions in the course of
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IT infrastructure, IT environment, and IT systems. We assessed
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business operators.
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and examined the pertinent IT general controls on the critical
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Consequently, the Bank's financial reporting process is highly
critical and reliant on these information technology systems.
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IT Systems and IT dependencies that were determined to be
significant for our examination of the Bank's standalone financial
statement and financial reporting process. Important general
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Appropriate IT general controls and IT application controls are
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controls in information technology have been evaluated for the
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necessary to ensure that such IT systems can process the data
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critical IT systems in the following domains:
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in a consistent, comprehensive and accurate manner as required
for dependable financial reporting.
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programme change management encompassing the transfer
of programme modifications to the production environment in
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We have identified specific critical IT Systems that significantly
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accordance with established protocols.
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influence the financial reporting process and associated control
testing. These systems are considered a critical audit matter
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While also ensuring the appropriate segregation of environment.
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due to several factors, including the Bank's extensive use of
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Programme development encompassing the establishment of
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automation, the complex nature on its IT architecture, and the
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controls pertaining to the development or implementation of
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influence it has on the financial records and financial reporting
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IT applications and the associated infrastructure, upon which
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process.
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financial reporting is dependent.
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IT operations, encompassing tasks such as backup and recovery,
monitoring and job scheduling.
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In addition, we assessed the operational efficiency and design of
critical IT dependencies that are integral to the critical business
process. This encompassed the testing of interfaces, automated
controls, accounting procedures, calculations, segregation of
duties, and system generated reports, where applicable.
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We established communication with individuals responsible
for governance and management and when required we
implemented alternative audit procedures and/or tested a
combination of compensating controls or remedied controls.
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Information Other than the Standalone Financial
Statements and Auditor's Report Thereon
5. The Bank's Board of Directors is responsible for the
other information. The other information comprises the
Corporate Governance Report, but does not include the
standalone financial statements and our auditor's report
thereon.
Our opinion on the standalone financial statements does
not cover the other information and we do not express
any form of assurance or conclusion thereon.
In connection with our audit of the standalone financial
statements, our responsibility is to read the other
information and, in doing so, consider whether the other
information is materially inconsistent with the standalone
financial statements or our knowledge obtained in the
audit or otherwise appears to be materially misstated.
If, based on the work we have performed, we conclude
that there is a material misstatement of this other
information, we are required to report that fact. We have
nothing to report in this regard.
Responsibilities of Management and Those Charged with
Governance for the Standalone Financial Statements
6. The Bank's Board of Directors is responsible for the
matters stated in section 134(5) of the Companies Act,
2013 with respect to the preparation of these standalone
financial statements that give a true and fair view of the
financial position, financial performance and cash flows
of the Bank in accordance with the accounting principles
generally accepted in India, including the Accounting
Standards specified under section 133 of the Act, and
provisions of Section 29 of the Banking Regulation Act,
1949 and circulars and guidelines issued by the Reserve
Bank of India ('RBI') from time to time. This responsibility
also includes maintenance of adequate accounting
records in accordance with the provisions of the Act
for safeguarding of the assets of the Bank and for
preventing and detecting frauds and other irregularities;
selection and application of appropriate accounting
policies; making judgments and estimates that are
reasonable and prudent; and design, implementation and
maintenance of adequate internal financial controls, that
were operating effectively for ensuring the accuracy and
completeness of the accounting records, relevant to the
preparation and presentation of the standalone financial
statements that give a true and fair view and are free
from material misstatement, whether due to fraud or
error.
In preparing the standalone financial statements, Bank's Board
of Directors is responsible for assessing the Bank's ability to
continue as a going concern, disclosing, as applicable, matters
related to going concern and using the going concern basis of
accounting unless Bank's Board of Directors either intends to
liquidate the Bank or to cease operations, or has no realistic
alternative but to do so.
Auditor's Responsibilities for the audit of the Financial
Statements
7. Our objectives are to obtain reasonable assurance
about whether the financial statements as a whole
are free from material misstatement, whether due
to fraud or error, and to issue an auditor's report that
includes our opinion. Reasonable assurance is a high
level of assurance, but is not a guarantee that an audit
conducted in accordance with SAs will always detect a
material misstatement when it exists. Misstatements can
arise from fraud or error and are considered material if,
individually or in the aggregate, they could reasonably
be expected to influence the economic decisions of users
taken on the basis of these financial statements.
As part of an audit in accordance with SAs, we exercise
professional judgment and maintain professional
scepticism throughout the audit. We also:
• Identify and assess the risks of material
misstatement of the financial statements, whether
due to fraud or error, design and perform audit
procedures responsive to those risks, and obtain
audit evidence that is sufficient and appropriate
to provide a basis for our opinion. The risk of not
detecting a material misstatement resulting from
fraud is higher than for one resulting from error,
as fraud may involve collusion, forgery, intentional
omissions, misrepresentations, or the override of
internal control.
• Obtain an understanding of internal control relevant
to the audit in order to design audit procedures that
are appropriate in the circumstances. Under section
143(3) (i) of the Companies Act, 2013, we are also
responsible for expressing our opinion on whether
the Bank has adequate internal financial controls
system in place and the operating effectiveness of
such controls.
• Evaluate the appropriateness of accounting
policies used and the reasonableness of accounting
estimates and related disclosures made by
management.
• Conclude on the appropriateness of management's
use of the going concern basis of accounting and,
based on the audit evidence obtained, whether a
material uncertainty exists related to events or
conditions that may cast significant doubt on the
Bank's ability to continue as a going concern. If we
conclude that a material uncertainty exists, we are
required to draw attention in our auditor's report to
the related disclosures in the financial statements
or, if such disclosures are inadequate, to modify our
opinion. Our conclusions are based on the audit
evidence obtained up to the date of our auditor's
report. However, future events or conditions may
cause the Bank to cease to continue as a going
concern.
• Evaluate the overall presentation, structure and
content of the financial statements, including the
disclosures, and whether the financial statements
represent the underlying transactions and events in
a manner that achieves fair presentation.
Materiality is the magnitude of the misstatements in
the standalone financial statements that, individually
or aggregate, makes it probable that the economic
decisions of a reasonably knowledgeable user of the
financial statements may be influenced. We consider
quantitative materiality and qualitative factors in (i)
planning of the scope of our audit work and evaluating
the results of our work; and (ii) to evaluate the effect of
any identified misstatement in the financial statements.
We communicate with those charged with governance
regarding, among other matters, the planned scope
and timing of the audit and significant audit findings,
including any significant deficiencies in internal control
that we identify during our audit.
We also provide those charged with governance with
a statement that we have complied with relevant
ethical requirements regarding independence, and to
communicate with them all relationships and other
matters that may reasonably be thought to bear on our
independence, and where applicable, related safeguards.
From the matters communicated with those charged
with governance, we determine those matters that
were of most significance in the audit of the financial
statements of the current period and are therefore
the key audit matters. We describe these matters in
our auditor's report unless law or regulation precludes
public disclosure about the matter or when, in extremely
rare circumstances, we determine that a matter should
not be communicated in our report because the
adverse consequences of doing so would reasonably be
expected to outweigh the public interest benefits of such
communication.
Other Matters
8. We did not audit the financial statements / information
of 981 branches and processing centres included in the
standalone financial statements of the Bank whose
financial statements / financial information reflect total
assets of Rs. 105993.15 crores as at 31st March 2025
and total revenue of Rs. 9249.57 for the year ended
on that date, as considered in the standalone financial
statements. These branches and processing centres
cover 92.99% of advances, 92.09% % of deposits and
90.20 % of non-performing assets as at 31st March 2025
and 67.65 % of revenue for the year ended 31st March
2025. The financial statements / information of these
branches has been audited by the branch auditors whose
reports have been furnished to us, and our opinion in so
far as it relates to the amounts and disclosures included
in respect of branches, is based solely on the report of
such branch auditors.
9. The standalone financial statements of the Bank for
the year ended March 31, 2024 were jointly audited by
Gupta Gupta and Associates LLP; Lunawat & Co and JCR
& Co LLP who vide their report dated May 04, 2024,
expressed an unmodified opinion on those standalone
financial statements.
10. The annual financial results include the results for the
quarter ended 31st March 2025 being the balancing
figure between the audited figures in respect of the full
financial year and the published unaudited year to date
figures up to the third quarter of the current financial
year which were subjected to limited review by us.
Our opinion is not modified in respect of these matters.
Report on Other Legal and Regulatory Requirements
11. The Balance Sheet and the Profit and Loss Account
have been drawn up in accordance with the provisions
of Section 29 of the Banking Regulation Act, 1949 and
Section 133 of the Companies Act, 2013.
12. The Comptroller and Auditor General of India has issued
directions indicating the areas to be examined in terms
of sub-section (5) of section 143 of the Companies Act,
2013, the compliance of which is set out in "Annexure-A”
to this Report.
13. As required by sub-section (3) of section 30 of the
Banking Regulation Act, 1949, we report that:
(a) we have obtained all the information and
explanations which, to the best of our knowledge
and belief, were necessary for the purpose of our
audit and have found them to be satisfactory;
(b) the transactions of the Bank , which have come
to our notice, have been within the powers of the
Bank;
(c) the returns received from the offices; and branches
of the Bank have been found adequate for the
purposes of our audit;
(d) the profit and loss account shows a true balance of
profit for the year then ended.
14. Further, as required by section 143(3) of the Act, we
report that:
a) we have sought and obtained all the information and
explanations which to the best of our knowledge
and belief were necessary for the purpose of our
audit;
b) in our opinion, proper books of account as required
by law have been kept by the Bank so far as it
appears from our examination of those books and
proper returns adequate for the purposes of our
audit have been received from branches not visited
by us;
c) the reports on the accounts of the branch offices
of the bank audited under section 143(8) of the
Act by branch auditors of the Bank have been sent
to us and have been properly dealt with by us in
preparing this report;
d) the Balance Sheet, the Statement of Profit and Loss
and the Statement of Cash Flows dealt with in this
report are in agreement with the books of account
and with the returns received from the branches
not visited by us.
e) in our opinion, the aforesaid standalone financial
statements comply with the Accounting Standards
specified under Section 133 of the Act, to the extent
they are not inconsistent with the accounting
policies prescribed by RBI;
f) As per Notification No. GSR 463(E) dated
05.06.2015 Section 164(2) of Companies Act, 2013
is not applicable to Jammu & Kashmir Bank Limited
being a Government Company.
g) with respect to the adequacy of the internal
financial controls over financial reporting with
reference to the standalone financial statements of
the Bank and the operating effectiveness of such
controls, refer to our separate Report in "Annexure
B”;
h) as per the Notification No. GSR 463(E) dated
05.06.2015 Section 197 of Companies Act, 2013
is not applicable to The Jammu & Kashmir Bank
Limited, being a Government Company.
i) with respect to the other matters to be included in
the Auditor's Report in accordance with Rule 11 of
the Companies (Audit and Auditors) Rules, 2014, in
our opinion and to the best of our information and
according to the explanations given to us:
i) the Bank has disclosed the impact of pending
litigations on its financial position in its
financial statements - in Schedule 12., to the
financial statements;
ii) the Bank has made Nil provision, as required
under the applicable law or accounting
standards, for material foreseeable losses, if
any, on long term contracts including derivative
contracts.
iii) There has been no delay in transferring
amounts, required to be transferred, to the
Investor Education and Protection Fund by the
Bank;
iv) (a) The management has represented
that, to the best of its knowledge and
belief, other than as disclosed in the
notes to the accounts, no funds have
been advanced or loaned or invested
(either from borrowed funds or share
premium or any other sources or kind
of funds) by the Bank to or in any other
person(s) or entity(ies), including foreign
entities ("Intermediaries”), with the
understanding, whether recorded in
writing or otherwise, that the Intermediary
shall, whether, directly or indirectly lend
or invest in other persons or entities
identified in any manner whatsoever by
or on behalf of the company ("Ultimate
Beneficiaries”) or provide any guarantee,
security or the like on behalf of the
Ultimate Beneficiaries;
b) The management has represented, that,
to the best of its knowledge and belief,
other than as disclosed in the notes to the
accounts, no funds have been received by
the Bank from any person(s) or entity(ies),
including foreign entities ("Funding
Pa rties”), with the understanding, whether
recorded in writing or otherwise, that the
Bank shall, whether, directly or indirectly,
lend or invest in other persons or entities
identified in any manner whatsoever
by or on behalf of the Funding Party
("Ultimate Beneficiaries”) or provide any
guarantee, security or the like on behalf
of the Ultimate Beneficiaries; and
c) Based on such audit procedures that were
considered reasonable and appropriate
by us in the circumstances, nothing has
come to our notice that has caused us to
believe that the representations under
sub clause (a) and (b) contain any material
misstatement.
v) the dividend declared and paid during the year
by the bank is in compliance with section 123 of
the Companies Act 2013.
vi) the bank has used such accounting software
for maintaining its books of account which
has a feature of recording audit trail (edit
log) facility and the same has been operated
throughout the year for all transactions
recorded in the software and the audit trail
feature has not been tampered with and the
audit trail has been preserved by the company
as per the statutory requirements for record
retention.
For Gupta Gupta & Associates LLP. For JCR & Co. LLP For Dhar Tiku & Co
Chartered Accountants Chartered Accountants Chartered Accountants
FRN: 001728N/N500321 FRN:105270W/W100846 FRN: 003423N
(CA. Akshay Magotra) (CA Rakesh Kaushik) (CA S.K.Shah)
Partner Partner Partner
M.No. 559146 M.No 089562 M.No.532394
UDIN: 25559146BMJPEK7838 UDIN:25089562BMNTIS8681 UDIN:25532394BMJOFV9910
Place: Srinagar
Date: 05/05/2025
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