10. Provisions, Contingent Liabilities and Contingent Assets
10.1 In conformity with AS 29 - "Provisions, Contingent Liabilities and Contingent Assets” issued by the Institute of
Chartered Accountants of India, the Bank recognizes provisions only when it has a present obligation because
of a past event, and would result in a probable outflow of resources to settle the obligation and when a reliable
estimate of the amount of the obligation can be made.
10.2 No provision is recognized for
I. Any possible obligation that arises from past events and the existence of which will be confirmed only by
the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of
the Bank; or
II. Any present obligation that arises from past events but is not recognized because:
• It is not probable that an outflow of resources embodying economic benefits will be required to settle
the obligation; or
• A reliable estimate of the amount of obligation cannot be made.
Such obligations are recorded as Contingent Liabilities.
10.3 The Bank has made 100% provision for redemption against the accumulated reward points in respect of standard
credit card holders.
10.4 Contingent Assets are not recognized in the financial statements.
11. Impairment of Assets
Fixed assets are reviewed for impairment whenever events or changes in circumstances warrant that the carrying
amount of an asset may not be recoverable. Impairment to be recognized is measured by the amount by which the
carrying amount of the asset exceeds the fair value of the asset.
12. Share Issue Expenses
Share issue expenses are charged to the Share premium Account.
13. Earnings per Share
13.1 The Bank reports basic and diluted earnings per share in accordance with AS 20 - "Earnings per Share” issued
by the ICAI. Basic Earnings per Share are computed by dividing the Net Profit after Tax for the year attributable
to equity shareholders by the weighted average number of equity shares outstanding for the year.
13.2 Diluted Earnings per Share reflect the potential dilution that could occur if securities or other contracts to issue
equity shares were exercised or converted during the year. Diluted Earnings per Share are computed using the
weighted average number of equity shares and dilutive potential equity shares outstanding at year end.
In accordance with RBI guidelines vide circular no. RBI/2014-15/529 DBR. No. BP.BC.80/21.06.201/2014-15 dated 31st March 2015, average
weighted and unweighted amounts have been calculated taking simple daily average. The bank has considered 61 data points for the
quarter March 2025.
Bank's LCR was at 135.69% based on daily average of past three months (Q4 FY24-25). The position remained above the minimum
regulatory requirement of 100%. Average HQLA held during the quarter was Rs 33390.67 Cr which were mostly in the form of level 1
assets. The weighted average total net cash outflows were to the tune of Rs 24607.33 Cr.
Liquidity Management in the Bank is driven by RBI guidelines and Bank's ALM Policy. ALCO has been empowered by the Bank's Board
to formulate the funding strategies to ensure that the funding sources are well diversified and is consistent with the operational
requirements of the Bank. In addition to daily / monthly LCR reporting, Bank also prepares daily Structural Liquidity Statement to assess
the liquidity needs of the Bank on an ongoing basis.
c) Net Stable Funding Ratio (NSFR)
Net Stable Funding Ratio (NSFR) guidelines ensure reduction in funding risk over a longer time horizon by requiring banks
to fund their activities with sufficiently stable sources of funding in order to mitigate the risk of future funding stress. The
NSFR is defined as the amount of Available Stable Funding relative to the amount of Required Stable Funding.
Available Stable Funding (ASF)
NSFR= -—-- > 100%
Required Stable Funding (RSF)
Bank's NSFR comes to 141.71% as at the end of the quarter ended March 2025 and is above the minimum regulatory
requirement of 100%. The Available Stable Funding (ASF) as on 31.03.2025 stood at Rs. 124334.84 crores and amount for
Required Stable Funding (RSF) as on 31.12.2025 was Rs 87739.54 crores.
The Available Stable Funding (ASF) is primarily driven by the total regulatory Capital as per Basel III capital adequacy
guidelines stipulated by RBI and the deposits from retail customers, small business customers and non-financial corporate
customers.
Under the Required Stable Funding (RSF).the primary drivers are unencumbered performing loans with residual maturities
of one year or more.
For Classification measurement and valuation of Investments, new guidelines have been followed as per Board approved policy
mandated by Reserve Bank of India vide its Master Direction Classification. Valuation and Operation of Investment Portfolio of
Commercial Banks (Directions) 2023 issued on 12th September, 2023.
Thus, from 1st April 2024, investment portfolio (except investments in subsidiary, joint venture & associates) has been classified
in Held to Maturity (HTM), Available for sale (AFS) and Fair value through Profit & Loss (FVTPL) with Held for Trading (HFT) as
a separate investment sub category within FVTPL.
On transition to the framework on 1st April, 2024, the Bank has recognized a net gain of ' 26.31 crores (net of tax of ' 8.85
crores) which has been credited/effected to General Reserve.
In view of above, income/profit or loss from investments for the year ended March 31, 2025 is not comparable with that of the
previous periods.
f) Implementation of IFRS converged Indian Accounting Standards (Ind AS)
IND AS roadmap for scheduled commercial banks (excluding regional rural banks), insurers/insurance companies and
nonbanking financial companies (NBFCs) was issued by Union Ministry of Corporate Affairs (MCA) through press release
dated 18 January 2016. IND AS was applicable to the Bank in accordance with the MCA press release from financial year
2018-19 which was deferred to financial year 2019-20 vide RBI’s Press Release (2017-18/2642) dated 5 April 2018. RBI
has further deferred implementation of IND AS till further notice vide its Circular no DBR.BP.BC.No. 29/21.07.001/2018-19
dated 22.03.2019. The Bank accordingly, has appointed a Consultant to assist in implementation of the Ind AS. The Board
& is being apprised of the progress made from time to time. Further, Bank is submitting the Proforma Ind AS Financial
Statements to the RBI.
h) Disclosure on amortisation of expenditure on account of enhancement in of employees of banks
Bank has estimated the additional liability on account of revision in family pension for employees as per IBA Joint Note
dated November 11, 2020, amounting to '72.50 Crores. However, RBI vide their Circular RB1/2021- 22/105 DOR.ACC.
REC.57/21.04.018/2021-22 dated 4th October 2021, has permitted Banks to amortize the said additional liability over a
period of not exceeding 5 (five) years, beginning with financial year ending 31st March 2022, subject to a minimum of 1/5th
of the total amount being expensed every year. Bank has opted the said provision of RBI, charged an amount of ' 3.625
Crores and ' 14.50 crores to the Profit & Loss account for the quarter & Year ended 31st March 2025 respectively and the
balance unamortized expense of ' 14.50 Crores has been carried forward. Had the Bank charged the entire additional
liability to the profit & loss account, the consequential net profit for the year ended March 31, 2025 would have been '
2067.96 crores.
i) Disclosure of Letters of Comfort (LoCs) issued by banks ( CCB / Forex)
The Bank has not issued any letter of comfort on behalf of the customers or on its behalf in respect of trade credits during
the FY 2024-25.
Particular Basis of assumption:
Discount rate: Discount rate has been determined by reference to market yields on the balance sheet date on Government
Bonds of term consistent with estimated term of the obligations as per para 78 of AS-15(R).
Expected rate of return on plan assets: The expected return on plan assets is based on market expectations, at the
beginning of the period, for returns over the entire life of the related obligation.
Rate of escalation in salary: The estimates of future salary increases considered in actuarial valuations taking into account
inflation, seniority, promotion and other relevant factors mentioned in paras 83-91 of AS-15R.
Attrition rate: Attrition rate has been determined by reference to past and expected future experience and includes all
types of withdrawals other than death but including those due to disability.
*The above information is based on the information certified by the actuary except para XI above.
Hitherto, the Bank has been doing Investments in annuities for its pension payments with return on capital. However, from
this year, the Bank has opted for investments for pension payments with non-return on capital. Accordingly, the actuarial
valuation for pension liability for the year has reduced by Rs.112 crores. Consequently an amount of Rs.112 crores has been
credited to "Payment & Provision for Employees” during the year. Figures of previous year not comparable to that extent
c) Accounting Standard - 17 "Segment Reporting"
i) The Bank has recognized business segment as its primary reportable segment under AS-17 classified into treasury,
Corporate/ Wholesale banking, Retail banking and other banking Business. The necessary disclosure is given below:
e) Accounting Standard - 19 "Leases"
The properties taken on lease/rental basis are renewable / cancellable at the option of the Bank.
The lease entered into by the Bank are for agreed period with an option to terminate the leases even during the currency
of lease period by giving agreed calendar month's notice in writing.
Lease rent paid for operating leases are recognized as an expense in the Profit & Loss account in the year to which it
relates. The lease rent recognized during the year is ' 90.40 crores (previous year being ' 83.56 crores)
f) Accounting Standard - 20 "Earnings per Share
The Bank reports basic and diluted earnings per equity share in accordance with Accounting Standard 20 - "Earnings per
Share”. Basic Earnings per Share is computed by dividing net profit after tax by the weighted average number of equity
shares outstanding during the year.
g) Accounting Standard - 21 "Consolidated Financial Statements"
The Bank has a fully owned subsidiary company "JKB Financial Services Ltd.”. The investment towards the capital of
subsidiary company is ' 40.00 Crores (Previous Year ' 40.00 Crores). The consolidated financial statements are placed
accordingly in terms of AS 21.
h) Accounting Standard - 22 "Accounting for Taxes on Income"
a) Current Tax:
During the year, the Bank has debited to Profit & Loss Account '686.06 crore (Previous Year ' 588.79 crore)
on account of current tax including '53.29 crores tax provision for cases in litigations. The current tax has been
calculated in accordance with the provisions of Income Tax Act, 1961.
The Bank has exercised the option of lower tax permitted under Section 115BAA of the Income-tax Act, 1961 as
introduced by the Taxation Laws (Amendment) Act, 2019 from the financial year 2019-20 onwards.
b) Deferred Tax:
During the year, ' 165.18 crore has been debited to Profit & Loss Account (Previous Year debit ' 28.51 crore) on
account of deferred tax.
The major components of DTA and DTL are given below
16. Additional Disclosures
a) Payment to Micro, Small & Medium Enterprises under the Micro, Small & Medium Enterprises Development
Act, 2006
There have been no reported cases of delayed payments of the principal amount or interest due thereon to Micro,
Small & Medium Enterprises.
b) Office Accounts
Reconciliation/adjustment of inter-bank/inter-branch transactions, branch suspense, Government Transactions,
NOSTRO, System Suspense, Clearing, and Sundry Deposits is in progress on an ongoing basis. The impact, in the
opinion of the management of the un-reconciled entries, if any, on the financial statements would not be material.
c) Provision on accounts covered under the provisions of Insolvency and Bankruptcy Code (IBC):
In terms of RBI letter no. DBR,No.BO.15199/21.04.048/2016-17 dated June 23, 2017 and Letter no. DBR.
BP.1908/21.04.048/2017-18 dated August 28, 2017 for the accounts covered under the provisions of Insolvency and
Bankruptcy Code (IBC), the Bank is holding total provision of 126.55 crore (Aggregate provision of RBI List 1 and
List 2 accounts) against the balance outstanding of ' 126.55 crores as on March 31, 2025 in respect of NPA Borrowal
accounts referred in aforesaid circular.
d) Previous year figures have been regrouped/reclassified/Recasted, wherever necessary, to conform to current year
classification.
e) Miscellaneous Income:
During the year the following incomes earned (under the head Miscellaneous Income) were more than 1% of the Total
Income: -
g) Tax paid in advance/Tax deducted at source includes amount adjusted by Income Tax Department in respect of
various disputed demands. Based on the orders and interpretation of law, a provision of '53.29 crores has been
considered by the management in respect of the disputed demands.
h) Fixed Assets
a) Documentation formalities are pending in respect of certain immovable properties held by the bank valued at
Rs. 8.69 Crore (Previous year Rs. 8.90 crores). In respect of immovable properties valued at Rs. 45.67 Crore
(Previous year Rs. 47.24 crores ) as on 31.03.2025, the Bank holds agreement to sell along with the possession
of the properties
• Pursuant to the Accounting Standard-10 "Property, Plant and Equipment” applicable from 1st April 2017,
depreciation of Rs. 30.03 crores for the Financial Year 2024-25 (Previous year Rs. 30.09 crores) on revalued
portion of the fixed assets (being Premises & Land) has been transferred from the Revaluation Reserve to
General/ Revenue Reserve.
• In addition an amount of Rs. 0.19 crores has been transferred from Revaluation Reserve to Profit & Loss Account
against appropriation of devaluation of land.
• Further, Depreciation on Bank's property includes amortization in respect of leased properties amounting to '
0.76 Crores (previous year ' 0.76 crores).
i) Corporate Social Responsibility (CSR)
Pursuant to Section 135 of the Companies Act 2013, specified companies covered under section 135(1) of the
Companies Act 2013 are required to spend at least 2% of the average net profits made during the three immediately
preceding financial years in pursuance of their Corporate Social Responsibility Policy. Accordingly, the Bank was
required to spend an amount of ' 31.70 crores (Previous Year 18.91 crores) on CSR activities during FY 2024-25,
against which the Bank has spent an amount of '31.70 crores (Previous year ' 18.91 crores) including an amount
of ' 10.70 crore provided for in the books of accounts. Out of the total provisioned amount, 8.70 crore has been
earmarked for ongoing CSR projects.
j) Provision Coverage Ratio (PCR)
Provision coverage ratio as on March 31, 2025 is 90.28% (previous year 91.58%) without taking into account the
floating provision of Rs.190.48 Crores held by the Bank as on March 31, 2025 which is part of Tier-II Capital.
m) Central GST Commissionerate, Jammu has raised a demand of GST Liability amounting to Rs.8130.66 crore for the
period from 08.07.2017 to 31.03.2020 to be paid along with interest U/s 50(1) of the GST Act. An equivalent demand
of penalty has also been raised. The operations of impugned order vide which demand has been raised stands stayed
by Hon'ble High Court of Jammu & Kashmir and Ladakh. In the opinion of management this demand is not even
contingent as there is no probable outflow. Demand has been raised treating transfer price interest transactions
between Branches and Corporate Headquarters as taxable, which are not taxable and as such the demand has been
raised on futile grounds hence infructuous.
n) Proposed Dividend
The Board of Directors at its meeting held on May 04, 2025 proposed a dividend of ' 2.15 per share (previous year Rs.
2.15 per share), subject to approval of the members at the ensuing Annual General Meeting. Effect of the proposed
dividend has been reckoned in determining capital funds in the computation of capital adequacy ratios as at March
31, 2025.
17. Apart from the appropriation to Statutory Reserve from Net Profit of the year, the bank has further appropriated to
Statutory Reserve for the amounts directly transferred to General Reserve from Revaluation Reserve as well as from
transition in investments amounting to Rs. 7.56 crore & Rs. 12.82 crore (net of tax) respectively. Prior period appropriation
has also been accounted for on account of transfer from Revaluation to General Reserve which works out to be Rs. 7.57
crore.
18. There are no Pension dues from Government of UT of J&K as at 31.03.2025.
Amitava Chatterjee Rajesh Kumar Chhibber Anil Kumar Goel Umesh Chandra Pandey Anand Kumar Shahla Ayoub
Managing Director & CEO Director Director Director Director Director
DIN: 07082989 DIN: 08190084 DIN: 00672755 DIN: 01185085 DIN: 03041018 DIN: 09834993
Sankarasubramanian Krishnan Fayaz Ahmad Ganai Mohammad Shafi Mir
Director Chief Financial Officer Company Secretary
DIN: 07261965
In terms of our report of even date annexed
FOR GUPTA GUPTA & ASSOCIATES LLP FOR J C R & 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
Dated: 5th May, 2025
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