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CMRIMS (Autonomous) The J&K Bank Ltd.

INTRODUCTION

Origin of the Word “Bank”

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CHAPTER 1

INDUSTRY PROFILE


Opinion is not uniform with regard to the origin of the word “bank”. According to

some authors the word “bank” is derived from the words “bancus” or ‘banquet’ that is

a bench. The early bankers, the Jews in Italy transacted their business on the benches

in the market place, when a banker failed; his bench was broken into pieces by the

people, which indicated the bankruptcy of the individual banker. But the explanation

was turned out on the ground that the Italian moneychangers as such were never

called bankers in the Middle Ages. Some others say that the word ‘bank’ originally

derived from the German word “pack” meaning a “joint stock fund”, which was

Italianated into “banco”, when the Germans were masters of the great part of Italy.

According to Professor Ramachandra Rao “whatever be the origin of the word bank,

it would trace the history of banking in Europe from the middle ages.”

Crowther defines, a bank “collects money from those who have it to spare or who are

saving it out incomes, and lends this money to those who require it”

The Indian companies Act 1949, defines banking as “ the accepting for the purpose

of Indian Companies lending or investment, of deposits of money from the public,

repayable on demand or otherwise, withdrawals by cheques, drafts, orders or

otherwise”.

As per Act term banking includes not only the above mentioned important activities

but also several activities such as collection of cheques, drafts and bills, remittance of

funds, acceptance of safe deposits etc. which is generally referred to as subsidiary

services.

The term bank in the modern times refers to an institution having the following

features:

1. It deals with money; it accepts deposits and advances loans.

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2. It also deals with money; it has the ability to create Credit i.e., the ability to

expand its liabilities, as a multiple of its reserves.

3. It is a commercial institution; it aims at earning profit.

Origin of Banks

A bank is a financial institution that accepts deposits and channels those deposits into

lending activities. Banks primarily provide financial services to customers while

enriching investors. The invention of banking preceded that of coinage. Banking

originated in Ancient Mesopotamia where the royal palaces and temples provided

secure places for the safe-keeping of grain and other commodities. Receipts came to

be used for transfers not only to the original depositors but also to third parties.

Eventually private houses in Mesopotamia also got involved in these banking

operations and laws regulating them were included in the code of Hammurabi.

In Egypt too the centralization of harvests in state warehouses also led to the

development of a system of banking. Written orders for the withdrawal of separate

lots of grain by owners whose crops had been deposited there for safety and

convenience, or which had been compulsorily deposited to the credit of the king, soon

became used as a more general method of payment of debts to other persons including

tax gatherers, priests and traders. Even after the introduction of coinage these

Egyptian grain banks served to reduce the need for precious metals which tended to

be reserved for foreign purchases, particularly in connection with military activities.

Precious metals, in weighed quantities, were a common form of money in ancient

times. The transition to quantities that could be counted rather than weighed came

gradually. On page 29 of A History of Money Glyn Davies points out that the words

“spend", "expenditure", and "pound" (as in the main British monetary unit) all comes

from the Latin "expender" meaning "to weigh". On page 74 the author points out that

the basic unit of weight in the Greek speaking world was the "drachma" or

“handful" of grain, but the precise weight taken to represent this varied considerably,

for example from less than 3 grams in Corinth to more than 6 grams in Aegina.

Throughout much of the ancient world the basic unit of money was the stater,

meaning literally "balancer" or "weigher". The talent is a monetary unit with which

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we are familiar with from the Parable of the Talents in the Bible. The talent was also a

Greek unit of weight, about 60 pounds.

Banking

Banking in one form or another, it was in existence even in ancient times. Authorities

on banking are divided in their option regarding the origin of the term bank. The

banking scenario of the country has undergone a radical transformation owing to

liberalization, globalization, automation and implementation of reforms. This has

prompted banks to redefine business strategies to survive and sustain competition.

Beginning of Issue and Deposits:

The money business performed by the earlier goldsmiths in England has been

considered as the beginning of the banking. The goldsmiths who received money for

sake custody against their signed receipts have given an undertaking to return the

money to the depositor or the bearer on demand. This development in course to time

gave rise to emergence of the issue and deposit banking. The goldsmiths having

accepted the money for safe custody issued receipts, which became bank notes. The

bank notes accepted in exchange of money and vice versa and enjoyed considerable

circulation. This marked of the beginning of the banking in England.

Evolution of Modern Banking

The growth of banking in England in the nineteenth century paved the way for the

establishment of the systemized banking system in the world. Banking institutions

were having past performed limited functions such as receiving deposits against bank

notes and the issuing notes in the country. As the time advanced, commerce industry

expanded and the scope of the banking also expanded. Banking institutions deal with

the large number of the services to the customers. They serve as custodian of stocks,

shares and valuables. They finance imports and exports. The documents relating to

imports and exports are passed through banks. They deal not only with bills of

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exchange, but also with bills of lading, railway receipts, warehouse, warrants and

receipts, marine insurance policies and so on.

Origin of Banking in India

India has a well developed banking system. Most of the banks in India were founded

by Indian entrepreneurs and visionaries in the pre-independence era to provide

financial assistance to traders, agriculturists and budding Indian industrialists. The

origin of banking in India can be traced back to the last decades of the 18th century.

The General Bank of India and the Bank of Hindustan, which started in 1786 were the

first banks in India. Both the banks are now defunct. The oldest bank in existence in

India at the moment is the State Bank of India. The State Bank of India came into

existence in 1806. At that time it was known as the Bank of Calcutta. SBI is presently

the largest commercial bank in the country.

Banking in India originated in the last decades of the 18th century. The first banks

were The General Bank of India which started in 1786, and the Bank of Hindustan,

both of which are now defunct. The oldest bank in existence in India is the State Bank

of India, which originated in the Bank of Calcutta in June 1806, which almost

immediately became the Bank of Bengal. This was one of the three presidency banks,

the other two being the Bank of Bombay and the Bank of Madras, all three of which

were established under charters from the British East India Company. For many years

the Presidency banks acted as quasi-central banks, as did their successors. The three

banks merged in 1921 to form the Imperial Bank of India, which, upon India's

independence, became the State Bank of India.

When the American Civil War stopped the supply of cotton to Lancashire from

the Confederate States, promoters opened banks to finance trading in Indian cotton.

With large exposure to speculative ventures, most of the banks opened in India during

that period failed. The depositors lost money and lost interest in keeping deposits with

banks. Subsequently, banking in India remained the exclusive domain of Europeans

for next several decades until the beginning of the 20th century.

Foreign banks too started to arrive, particularly in Calcutta, in the 1860s.

The Comptoire d'Escompte de Paris opened a branch in Calcutta in 1860, and another

in Bombay in 1862; branches in Madras and Pondicherry, then a French colony,

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followed. HSBC established itself in Bengal in 1869. Calcutta was the most active

trading port in India, mainly due to the trade of the British Empire, and so became a

banking centre.

The first entirely Indian joint stock bank was the Oudh Commercial Bank, established

in 1881 in Faizabad. It failed in 1958. The next was the Punjab National Bank,

established in Lahore in 1895, which has survived to the present and is now one of the

largest banks in India.

Around the turn of the 20th Century, the Indian economy was passing through a

relative period of stability. Around five decades had elapsed since the Indian Mutiny,

and the social, industrial and other infrastructure had improved. Indians had

established small banks, most of which served particular ethnic and religious

communities.

The presidency banks dominated banking in India but there were also some exchange

banks and a number of Indian joint stock banks. All these banks operated in different

segments of the economy. The exchange banks, mostly owned by Europeans,

concentrated on financing foreign trade. Indian joint stock banks were generally

undercapitalized and lacked the experience and maturity to compete with the

presidency and exchange banks. This segmentation let Lord Curzon to observe, "In

respect of banking it seems we are behind the times. We are like some old fashioned

sailing ship, divided by solid wooden bulkheads into separate and cumbersome

compartments."

The period between 1906 and 1911, saw the establishment of banks inspired by

the Swadeshi movement. The Swadeshi movement inspired local businessmen and

political figures to found banks of and for the Indian community. A number of banks

established then have survived to the present such as Bank of India, Corporation

Bank, Indian Bank, Bank of Baroda, Canara Bank and Central Bank of India.

The partition of India in 1947 adversely impacted the economies of Punjab and West

Bengal, paralyzing banking activities for months. India's independence marked the

end of a regime of the Laissez-faire for the Indian banking. The Government of

India initiated measures to play an active role in the economic life of the nation, and

the Industrial Policy Resolution adopted by the government in 1948 envisaged

a mixed economy. This resulted into greater involvement of the state in different

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segments of the economy including banking and finance. The major steps to regulate

banking included:

In 1948, the Reserve Bank of India, India's central banking authority, was

nationalized, and it became an institution owned by the Government of India.

In 1949, the Banking Regulation Act was enacted which empowered the Reserve

Bank of India (RBI) "to regulate, control, and inspect the banks in India."

The Banking Regulation Act also provided that no new bank or branch of an

existing bank could be opened without a license from the RBI, and no two banks

could have common directors.

However, despite these provisions, control and regulations, banks in India except

the State Bank of India continued to be owned and operated by private persons. This

changed with the nationalization of major banks in India on 19 July 1969

By the 1960s, the Indian banking industry had become an important tool to facilitate

the development of the Indian economy. At the same time, it had emerged as a large

employer, and a debate had ensued about the possibility to nationalize the banking

industry. Indira Gandhi, the-then Prime Minister of India expressed the intention of

the GOI in the annual conference of the All India Congress Meeting in a paper

entitled "Stray thoughts on Bank Nationalization." The paper was received with

positive enthusiasm. Thereafter, her move was swift and sudden, and the GOI issued

an ordinance and nationalized the 14 largest commercial banks with effect from the

midnight of July 19, 1969. Jayaprakash Narayan, a national leader of India, described

the step as a "masterstroke of political sagacity."Within two weeks of the issue of the

ordinance, the Parliament passed the Banking Companies (Acquisition and Transfer

of Undertaking) Bill, and it received the presidential approval on 9 August 1969.

The nationalized banks were credited by some; including Home minister P.

Chidambaram, to have helped the Indian economy withstand the global financial

crisis of 2007-2009.

In the early 1990s, the then Narsimha Rao government embarked on a policy

of liberalization, licensing a small number of private banks. These came to be known

as New Generation tech-savvy banks, and included Global Trust Bank which later

amalgamated with Oriental Bank of Commerce, Axis Bank(earlier as UTI

Bank), ICICI Bank and HDFC Bank. This move, along with the rapid growth in

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the economy of India, revitalized the banking sector in India, which has seen rapid

growth with strong contribution from all the three sectors of banks, namely,

government banks, private banks and foreign banks.

The next stage for the Indian banking has been setup with the proposed relaxation in

the norms for Foreign Direct Investment, where all Foreign Investors in banks may be

given voting rights which could exceed the present cap of 10%, at present it has gone

up to 74% with some restrictions.

The new policy shook the Banking sector in India completely. Bankers, till this time,

were used to the 4-6-4 method (Borrow at 4%; Lend at 6%;Go home at 4) of

functioning. The new wave ushered in a modern outlook and tech-savvy methods of

working for traditional banks. All this led to the retail boom in India. People not just

demanded more from their banks but also received more.

Currently (2007), banking in India is generally fairly mature in terms of supply,

product range and reach-even though reach in rural India still remains a challenge for

the private sector and foreign banks. In terms of quality of assets and capital

adequacy, Indian banks are considered to have clean, strong and transparent balance

sheets relative to other banks in comparable economies in its region. The Reserve

Bank of India is an autonomous body, with minimal pressure from the government.

The stated policy of the Bank on the Indian Rupee is to manage volatility but without

any fixed exchange rate-and this has mostly been true.

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9

CHAPTER 2

COMPANY PROFILE


INTRODUCTION

The J&K Bank is one of the fastest growing listed banks in the country with more

than 632 offices across the country and has recently become a billion Dollar

Company. The bank has a history of more than 6 decades of the operations and a track

record of dividend payment and profitability for last more than 4 decades. The bank

has been rated among top 1000 banks of the world and 100 banks of the Asian region,

ahead of most of its contemporaries. With an annual turnover of more than US$ 10

billion, J&K Bank is on its way to become the universal bank in Jammu & Kashmir, a

super specialist bank in India and world-class services bank within the global banking

space.

The bank has its headquarters in Srinagar city and has various departments &

branches in different parts of the country. All these are well established all over the

country. It is a Sole banker and lender of last resort to the Government of J & K. The

company has well past records and profitability over four decades. The bank is best in

its corporate social responsibility. It is the fastest growing bank and has changed lives

of many people.

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History

The idea of establishing ‘The Jammu & Kashmir Bank’ was conceived in the 1920 by

the then Maharaja of the state his highness Maharaja Hari Singh with the aim to

ameliorate the economic and social position of the people of the state. The scheme to

incorporate the bank was formulated by an imminent banker Sir Sorobiji N.

Pochkanwalla, the then Managing Director of the central Bank of India. The bank got

incorporated on 1st October 1938 commencing business on 4th July, 1939. 53% of the

equity is held by the Government of J&K. it is the first state owned bank of the

country having a consistent track record of growth and profitability. The bank has a

unique distinction of being the banker to J&K state government and has been

appointed by the RBI as its agency in J&K for carrying general banking business of

the central government and collection of taxes pertaining to central Board of Direct

taxes. Until 1955, the bank’s energies remained focused on consolidation with the

strength of offices confined to 13. From this small beginning the bank has spread to

every note and corner of the country with a network of 632 offices. The bank serving

as a beacon light with the goal of earning customer trust blended with a personal,

human touch in traversing on the path of prosperity with a well-defined corporate

mission. The bank keeping its promise and fulfilling its purpose provides a stepping

stone to the state economy with a particular emphasis on the developing trade,

commerce, industry and agriculture, areas that had been pushed in the background in

absence of a state bank. Today the bank is literally a leader with a well-diversified

range of products and services serving a wide range of client. In recognition of the

making contribution in the field of the banking, the bank had been ranked No. 2

among private sector banks. With the advent of the laissez-faire the banks all set to

face challenges posed by the fluid and changing global banking. According to the

extended Central laws of the state, Jammu & Kashmir Bank was defined as a govt.

Company as per the provision of Indian companies act 1956. In the year 1971, the

Bank received the status of scheduled bank. It was declared as "A" Class Bank by

RBI in 1976. Today the bank has more than 632 offices across the country and has

recently become a billion Dollar Company.

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Brand Identity

The new identity for J&K Bank is a visual representation of the Bank’s philosophy

and business strategy. The three colored squares represent the regions of Jammu,

Kashmir and Ladakh. The counter-form created by the interaction of the squares is a

falcon with outstretched wings – a symbol of power and empowerment. The synergy

between the three regions propels the bank towards new horizons. Green signifies

growth and renewal, blue conveys stability and unity, and red represents energy and

power. All these attributes are integrated and assimilated in the white counter-form.

Technology driven operations:

J & K Bank has Implemented Human Capital Management with the help of Wipro

InfoTech. The solution has helped streamlining the HR management of the bank, J &

K Bank has an employee force of more than 10,000. It will also enable the cutting

down of paper work to a major extent and reduction of manual work thereby lending

alacrity to HR processes, according to the company. Some of the modules

implemented by Wipro include talent acquisition manager and candidate gateway

(Recruitment), administer training, e-Development, e-Performance, e-Profile Manager

Desktop, e-Profile, profile management, global payroll for India, absence

management and approval workflow engine. As a result of this implementation all the

zones and branches are connected to the centralized HR system and a customized

claims management system has been deployed to facilitate the claims process, which

also includes an interface to Oracle's PeopleSoft Enterprise Payroll. In today's

competitive world it is important to streamline processes through an effective

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implementation of technology. In these difficult times, it is imperative to cut down

processes so as to increase efficiency.

J & k bank have re-engineered the HR processes. They have replaced the old manual

HR system to centralize the HR information thereby improving efficiencies in their

HR processes and Systems. Maintaining a progressive outlook, the J&K Bank is

keeping pace with the changing technology. The Bank continues to leverage

information technology as a strategic tool for its business operations. The IT strategy

emphasizes enhanced level of customer services through 24x7 availability, multi

channel banking, and cost efficiency through optimal use of electronic channels,

wider market reach and opportunities for cross selling. The initiatives already under

way have been given a further to accelerate growth with tech commitment.

The bank has issued over 2.5 lakh J&K Bank Global Access Debit Cards until March

end 2010. Bank has already launched credit card which is available at all offices of

the bank across the country. Tele banking facility is now available at 62 business

locations of Jammu and Kashmir Zones. Currently 98.4 % business of the bank is

computerized.

The number of offices brought under computerization programme has increased to

520 at the end of March 2010. The bank has an ambitious plan of achieving total

automation of operations by the year 2011.Anywhere banking facility was extended

too many new locations, thereby giving the customer the advantage of anywhere

banking at 300 offices at the end of 31st march 2010. The number of ATMs of the

Bank already installed or under process of installation has increased to 220 during the

year under report.

Philosophy

The bank’s philosophy is woven around its total commitment to the ethical practices

in the conduct of its business, while striving in the constant quest to grow with profits

and enhance shareholders value and align the interests of the stakeholders and society

through adoption of best international practices and standards. J & K Bank is

committed to the best and transparent corporate governance practices, which in turn

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provides best value to all its stakeholders through highly motivated personnel,

visionary leadership, respect for people and society.

Goals

Keep on creating wealth and focus on high earnings and growth.

To be partners in the economic and social transformation of the nation.

Become visible in the International market.

Make banking activity more simple and fast.

To engender and catalyze the economic transformation of Jammu and

Kashmir and capitalize from the growth induced financial prosperity.

Vision

“To catalyze economic transformation and capitalize on growth”. J & K Bank’s 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 Jammu and Kashmir the most prosperous state in the country, by

helping create a new financial architecture for the J&K Economy, at the center of

which will be the J&K Bank.

Mission and strategy:

J & K Bank’s 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 J & K Bank the most profitable Bank in the

country. The mission of the bank is to strive to be a financially strong, sound, growth

oriented and profitable bank with main focus towards providing convenient, reliable,

cost effective and personalized services to its customers.

To focus on high earnings growth with low volatility.

To increase visibility in market and enhance market share by exploiting new

markets in India’s expanding Baking and Financial services industry by

following a disciplined growth strategy.

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To maintain high quality asset and credit risk management.

Unique characteristics: one of a kind

Value

Private sector Bank despite government holding 53 per cent of equity.

Sole banker and lender of last resort to the Government of J & K.

Plan and non -plan funds, taxes and non-tax revenues routed through the bank.

Salaries of Government officials disbursed by the Bank.

Only private sector bank designated as agent of RBI for banking.

Carries out banking business of the Central Government.

Collects taxes pertaining to Central Board of Direct Taxes in J & K.

Staff & Work environment

As the people are the most important resource to achieve the growth and

enhance the corporate image of an organization, foremost importance is given

to development of human resources in the Bank to enable them to cope up

with the rapidly changing Banking needs. As the quality of human resources

indicates the ability of Bank to deliver value to its customers, foremost

attention is being given to development of skill, attitude and knowledge of the

staff. Emphasis has been on integrating HRM strategies with business

strategies. HRM strategies of the Bank include managing change, creating

commitment, infusing flexibility and improving teamwork.

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People Management

In a landmark move, the J&K Bank had announced an enviable package of

incentives and opportunities for its employees to groom an energized and

committed human resource for the Bank's ambitious expansion plans.

"The philosophy and approach of leadership towards people's issues is that the

employee oriented issues must include recruitment, development and learning,

work environment and communication, rewards and recognition, health and

well being, balancing work and personal life and last but not the least financial

security,

The crucial role played by the employees of the Bank in its exceptional

growth, the organization emphasizes that the employees are the drivers of the

human resource while the top management and the human resource team are

only the facilitators.

Transparency, people-oriented policies and a culture of knowledge-sharing is

the Bank's philosophy, and the management of the Bank is committed to

ensure a work place, a work culture and a work environment that fully engages

the intellectual and emotional commitment of its employees.

The employee-oriented measures would achieve a real competitive advantage

by nurturing the real assets of the Bank - its people. The set of incentives

include skill advancement programmes, pay enhancement, mass promotions,

an improved transfer policy, increase in variable and revamped performance

management system, regularization of all the adhoc employees, a new

generation organizational set up and designations and foreign tour on LFC.

Style of organization

The bank’s framework had been changed, as per the restructured organizational

framework, The General Managers have been designated as Presidents, DGMs as

Vice-Presidents, AGMs as Senior Executive Managers, Chief Mangers as

Executive Mangers, Scale-III as Senior Executive, Scale-II as Executive, Scale-I

as Associate Executive, Cashier-cum-Clerk as Banking Associates, Assistant

Cashier-cum-Clerks as Assistant Banking Associates and Peons as Banking

Attendants.

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Achievements, Recognition and Awards

J&K Bank was awarded Wisitex ICT Ratan in July 2010.

Bank has established MetLife office in Srinagar.

J&K Bank had handled registration of Amaranth Yatris.

J&K Bank recommended 220% dividend to shareholders .

J&K Bank was awarded Jamnalal Bajaj Uchit Vyavahar Puraskar in 2003.

J&K Bank also got ‘P1+’ rating.

J&K Bank also sliced lending rates, it also announced special package for

handicraft sector. 3.75% interest rate was cut in Agriculture sector which

boosted the sector.

Retirement Age was enhanced to 60 from 58.

Various campaigns have been launched like “I am listening” campaign.

Corporate social responsibility

The Corporate Social Responsibility (CSR) of the 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 Bank's own values and principles of philanthropy

but also the values and principles 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 Bank's brand and enhances its reputation. The Bank manages social

issues in the same manner as any other strategic business issues.

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.

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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,

the bank has been all through supporting them. The one and a half decades

long turmoil in the State of J&K has added to the agonies of people with

hundreds of children losing their parents to fend for themselves in this harsh

world.

The Bank realizing its responsibility of saving the life/ future of these

blooming children, adopt several of them by providing financial support either

through various orphanages where they are sheltered or directly to the orphans

by bearing their educational or other expenditure.

Heritage preservation is an important responsibility of every conscious

individual, institution or agency. The thrust areas to assist in this respect for

the Bank will be 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, 3rd cultural activities, social service camps, college or

university students clubs etc.

The Bank has been playing a vital role in the promotion of tourism and it is in

this backdrop that the Bank has been shouldering the responsibility of

registering yatris for the Shree Amaranth Yatra through its extensive network

of offices spread across the country. The Yatra is an annual religious function

of Hindu community, wherein devotees travel by foot to pay obeisance to

Holy Shiv Lingam at Shree Amaranth cave.

Apart from above activities the Bank has been constructing/developing the

public utility service like public parks, bus stands, drinking water posts,

lavatories, conveniences, rain shelters.

Managing CSR is not viewed as an extra cost or burden but is viewed not only

as making good business sense but also contributing to the long-term

prosperity of our Bank and ultimately its survival. Being a good neighbor and

showing that you care on the one hand and being a successful business on the

other, are flip sides of the same coin.

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The vision of bank is summed up in one word “growth”

The fastest growing bank with more than 632 offices across the country.

A listed Company on BSE and NSE with 53% equity held by J&K State

Government.

Incorporated in 1938 as a limited company.

Governed by the Companies Act and Banking Regulation Act of India.

Regulated by the Reserve Bank of India and SEBI.

Listed on the National Stock Exchange (NSE) and Bombay Stock Exchange

(BSE)

Rated "P1+" by Standard and Poor- CRISIL connoting highest degree of

safety.

Four decades of uninterrupted profitability and dividends.

Tele-banking facility available at 62 offices.

Net Profit up 25 % at Rs 512.38 crore for the financial year ended Mar, 2010

as compared to Rs 409.84 crore for the previous financial year.

The Business Turnover as on March 31, 2010 has increased by 12 % to Rs

60294 crore from Rs 53935 crore as on March 31, 2009.

24 hours and 365 days banking service through Automated teller machines

(ATMs) available at 210 locations connected with IST switch for single card

usage at all locations.

Performance of the Bank

Previous Annual Reports The Bank continued to make strides in its

business operations. The Bank achieved an all time high business turnover

of Rs. 60294 crore during the year under report against the last year figure

of Rs 53935 crore recording a steady growth of 12%. The core segments of

Bank’s 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 Bank’s share in

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the stock market to all time high of more than Rs. 1000 despite subdued

equity market in the last year.

Capital & Reserves

The Capital & Reserves of the Bank increased by Rs. 305 crore to Rs. 1242

crore during the year from Rs. 937 crore of the previous year registering an

impressive growth of 32.55%. The Statutory and other Reserves increased

by 34.46% to Rs. 1195.35 crore from Rs. 889 crore of the previous year.

Profit The Bank posted a net profit of Rs. 512.8

crore for the financial year 2009-10

recording an impressive increase of 25%

over the last year’s net profit of Rs. 409.00

crore.

Turnover The total income of the Bank at Rs. 60294

crore for the year under report recorded a

growth of 12% over the previous year

figures of Rs. 53935 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 Rs. 106.65 crore dividend @

220 % (Rs 22.00 per share) for the year

ending March 2010 as compared to Rs

81.97 crore @ 169 % (Rs 16.90 per share)

for the financial year ended Mar, 2009.

Foreign Exchange

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The Foreign Exchange business of the Bank continued its splendid growth.

During the year under report the Bank achieved Foreign Exchange business

turnover of Rs. 3666.37 crore against Rs. 2954.44 crore of the previous

year showing a remarkable growth of 24.10%. The contribution of this

segment to the Bank’s gross income has been to the tune of Rs. 27.54 crore

against Rs. 18.93 crore of the previous years. The export turnover of the

Bank increased from Rs. 1339.11 crore to Rs. 1782.45 crore registering a

growth of 33.10%. The Dealing Room and Treasury Operations recorded a

turnover of Rs. 40317.02 crore and generated a net earning of Rs. 5.46

crore against Rs. 3.30 crore of the previous year, thus registering an

emphatic increase of 65.45%.

Insurance Business

During the year under report the Bank formally commenced distribution of

insurance products of M/S Metlife Insurance India (P) Ltd. and Bajaj

Allianz General Insurance Co. Ltd. It is a matter of satisfaction that a good

beginning has been made in this area of business. Bank has been able to sell

3639 life policies of MetLife and collected annualized premium amount of

Rs. 410.64 lakhs in the first year. In the case of non-life business, the Bank

has been able to perform even better and collected aggregate premium

amount of Rs. 535.33 lakhs thereby surpassed the target of Rs. 450 lakhs

fixed for the year under report. This has yielded non-interest income of Rs.

170.84 lakhs resulting in net earnings of Rs. 58.05 lakhs to the Bank during

the year.

Lead Responsibility of the Bank

The Bank continued to discharge its Lead Bank Responsibility in 8 out of

14 districts of J&K State satisfactorily. Two State Level Bankers’

Committee meetings (SLBC) and two Subcommittee meetings of State

Level Bankers’ Committee were convened during the year 2008-09. The

21


block and district level meetings such as BLBC, DCC and DLRC were held

as per schedule in all the lead districts. The district credit plans were

prepared in time and their implementation monitored closely at the State

and district Levels.

Community Service

The Bank as a responsible corporate citizen continued its concern for poor and

needy. Be it fire victims, earthquake victims, disabled or patients with serious

ailments who have no means to fall back upon for their survival, the Bank

continued its support and help to them. The Bank continued to adopt orphans by

providing financial support to orphanage homes, and donating computer systems

to enable the socially / economically deprived children to acquire IT knowledge.

During the year a three days rehabilitation camp for physically disabled persons

was organized by the Bank in association with Bhagwan Mahaveer Viklang

Sahayata Samiti, Jaipur where 210 persons were provided with artificial limbs and

appropriate treatment to many more.

Rating of Bank’s Debt Instrument

The Credit Rating Information Services of India Ltd (CRSIL) one of the

leading credit rating agency of the country re-affirmed "P1+" rating to the

Bank’s Certificate of Deposit Programme, indicating the highest degree of

safety for timely payment of principal and interest.

22


BANKING PRODUCTS

There are over 300 products already in market, some of them are listed below:-

1. Deposit schemes

2. Term Deposit schemes

3. Value Added Schemes

4. Current Accounts holders schemes

5. Loans / Advances

6. Automobile Finance

7. Agricultural schemes

8. Services

9. Insurance

10. Finance schemes

11. Mutual funds

23


Some of them are described below:-

Deposit schemes

Knowing the human behavior with respect to wants and needs or rather making wants to

be felt as need is first challenge in marketing the bank schemes. The second challenge is

the resistance to change and / or new ideas, which becomes a tough barrier in the process

of marketing products / service of a bank. Therefore Banks,, tailor their various deposited

schemes and market them to either their / existing customer are the new segments of the

customer. Before selling the deposited schemes, it becomes necessary to identify the need

and aspirations of the customer to make the most ideal and acceptable to satisfy their

needs

From the marketing angle the different deposited schemes of the bank can grouped on the

basis of;

A. The mode of deposited,

B. The mode of repayment

C. Additional benefits

D. The end use of accumulated funds

E. The calculation and payment of interest

F. Need for liquidity, safety, growth etc.

The Jammu and Kashmir bank ltd. has always inclination to launch new deposited

schemes /Products depending upon the market condition and requirement of customers.

The schemes are tailored to suit every body’s requirements.

24


1. Saving bank deposit schemes:

A convenient and easy to operate that helps the customers to save both time and

money; this scheme suits the person who does not have a regular income. Any

deposited and any time withdrawal is the main feature of this scheme. Saving bank

account can e opened with a minimum initial deposit of Rs. 100 - Rs. 582.

The deposited scheme can be opened by:

A. A person is his / her name

B. More than one person in their joint names,

C. Minor through guardian or himself if above 10 of age.

D. A Illiterate persons

E. Blind persons.

F. Association, clubs, societies, trust etc.

Facilities

Anywhere banking facility.

ATM/Debit card.

Tele banking facility.

Cheque book facility.

2. Fixed deposit schemes

25


It is a term that pays interest at the end of each colander quarter. The fixed deposited

scheme is suited to the persons who wish to keep their invested money in fact and require

quarterly income to meet their requirements. It can open with a deposited of Rs. 100 and

above for different maturities ranging from 7 days to 10 years.

Salient features

Up to 90 per cent of the amount deposited with the Bank. (Conditions Apply)

Who can open this Account?

A person in his/her name. More than one person in their joint names. Minor through

guardian or himself if above 14 years of age. Blind Persons, Associations, Clubs,

Societies, Trusts etc.

Loan Facility

Ideal product for short-term investors. Interest accrued on quarterly basis, but

payable at maturity of the deposit.

Can be opened with Rs.100/= and above for different maturities ranging from 7

days to 10 years.

Loans / advances:

Like the deposit account is lifeblood or raw material for the bank, the advances / loans

are essentials to deploy those funds to earn revenue for the bank. In order to balance

liquidity and profitability properly, bank has to use its available (loan able) funds

judiciously keeping in mind the statutory requirements imposed by RBI.

1. Housing finance Loan

26


Quantum of loan

For Construction /Purchase 60 months net salary or 75.00 Lakhs whichever is

lower.

For repairs/renovation 20 months net salary, subject to a maximum of Rs.10.00

Lakhs.

For purchase of land: 20 months net salary/income subject to maximum of Rs.5

Lakhs within J&K and Rs10.00 Lakhs outside J&K.

Also as an incentive for small borrowers, the loans up to Rs. 1.5 Lakhs granted for

repairs/renovations of existing houses would now be secured by third party

guarantee of two persons or such other security as is deemed appropriate by the

Bank.

Eligibility

Employees of Govt., Semi-Govt. Dept., Civic Bodies, PSU's with minimum 5

years service.

Reputed Businessmen with minimum 5 years standing.

Professionals & Self employed like Doctors ,Engineers , CA's , Advocates with

minimum 5 years standing

Security

Mortgage of the house/property to be purchased/ constructed.

Third party guarantee of one person or Assignment of LIC policies, pledge of

govt. securities etc.

Negative lien on the property to be repaired/renovated without mortgaging the

same to the Bank.

Repayment

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For construction of new house 20 years including 9 months moratorium in equal

monthly installments.(Applicable to new loans and disbursements only)

For addition / Renovation 7 years including 2 months moratorium in equal

monthly Installments.

Margin

15% for construction/purchase of built house flat.

20% for renovation/purchase of land.

Processing charges

0.25% of loan amount

2. Educational loan scheme

Scale of Finance

Rs.10.00 Lakhs for studies in India.

Rs.20.00 Lakhs for studies abroad.

Courses Financed

Graduate / Courses in: BA, B.Com. B.Sc., etc. Medicine, Surgery, Engineering,

Hotel Management, Design, Architecture, Biochemistry, Agriculture, Veterinary

etc.

P.G Courses in: Business Management, Chartered or Cost Accounting, Company

Secretary Ship, Masters PhD.

Professional Courses: Engineering, Medical, Agriculture, Veterinary, Law,

Dental, Management, Computer etc. Computer Certificate Courses: of reputed

institutes accredited to Dept. of Electronics or institutes affiliated to university.

Courses like ICWA, CA, CFA etc. Courses Conducted by IIM, IIT, IISc, XLRI. NIFT

etc.

28


Services:

1. Credit Card:

Plastic money or credit cards have become very popular as bank’s product/ services and

have widely acceptance in Indian market. The credit card allows a holder to make

purchases ( up to his sanctions credit limit) without making purchases in lending shops/

markets to make payments of bills – electricity or telephone or a with\draw funds ( cash

up to pre decided limit ) as and when required. The bank launched its credit card, a long

awaited product in association with MasterCard. The J & K Bank Credit Card has three

specifications Gold, Silver and Blue. The product would not only facilitate bank’s

customers but would also be instrumental in giving fillip to the bank’s non interest

income.

2. Internet Banking:

The bank has internet banking service, which is available to the customers of the CBS

offices of the bank. To begin with, the internet banking facility is available for non –

financial transactions only and would be thrown open for financial transactions after RBI

approval, for which all formalities have been completed.

The bank added one more feather to its cap by introducing Mobile ATM service at

Srinagar. The service one of its kinds in the northern part of the country acts as another

delivery channel of services to our customers.

Features

20-50 day Credit Free Period

Revolving Credit Facility on paying of minimum payment due in the same billing

period.

Hassle free credit facility at competitive rate of interest.

Cash Withdrawal Facility up to 20% of total credit limit.

Loyalty programme

29


3. Automated Teller Machines (ATM)

These were introduced in UK in the form of cash dispensary by BARCLAYS BANK in

1968. The main objectives of the distribution facility were to save costs and staff and to

provide greater customer convenience ( i.e. Service outside normal banking hours.)

Support services

Technology application has remained the thrust area of the Bank for last many years with

an objective to offer state of the art world class banking facilities to its customers. The

Bank continued to leverage information technology as a strategic tool for its business

operations, to gain competitive edge in customer service as well as improving

productivity and efficiency. The Bank’s IT strategy emphasizes enhanced level of

customer services through 24x7 availability, multi-channel Banking and cost efficiency

through optimal use of electronic channels, wider market reach and opportunities for

cross-selling. The Bank’s focus is on harnessing technology for integrating diverse

products and services. Keeping this in view, the Bank continued to widen the scope of

multiple delivery channels such as ATM installations, Anywhere Banking, Internet

Banking and SMS Banking at more & more centers.

Anywhere Banking & Internet Banking

Corporate Internet Banking

Ecommerce facility for J&K Bank E - banking customers

E - Payment of Tax for J&K Bank E - banking customers

SMS Banking

ATM Services Debit Cards

Debit Cards

National Electronic Fund Transfer (NEFT)

30


All the above products are available to all the sections of the society, be it individuals, households, commercial enterprises, large corporations, manufacturers, retailers, etc. There are no restrictions to anybody provided proper documents are provided to the bank. These schemes are provide to weaker sections of society with some relaxation also in terms of interest rates or repayment period.

31


COMPETITOR

The major competitors in state of J & K are:-State Bank of India, Punjab National Bank,

Canara Bank, HDFC, and ICICI. SBI, Punjab National Bank and Canara Bank were from

the earlier phase but recent entering of HDFC and ICICI Banks has increased in

competition.

1. State Bank of India (SBI)

It is a large financial services group, operating in the banking industry. The bank is

engaged in providing trading services, international banking and traditional banking and

treasury operations. The Reserve Bank of India holds more than half of SBI's equity

capital. As of 31 March, 2010, SBI had a network of over 11,448 branches. In addition,

the seven associate banks of SBI have more than 4,900 branches. As of March 2010, the

bank had 84 foreign branches. The bank also increased its ATM network by 44% to 8,581

by the end of Fiscal year 2010.The bank also offers treasury services including

international banking, corporate banking, retail banking, NRI services, agricultural

banking, small and medium enterprise (SME) banking and other services. SBI conducts it

activities through two reportable segments, namely, Banking Operations and Treasury

Operations.SBI, along with its subsidiaries, is engaged in providing a wide range of

financial services including Life Insurance, Merchant Banking, Mutual Funds, Credit

Card and Factoring, Security trading and primary dealership in the Money Market. The

bank is headquartered in Mumbai, India.

The company reported revenues of (Rupee) INR 916,670.10 million during the fiscal year

ended March 2010, an increase of 28.21% over 2009. The operating profit of the

company was INR 290,405.50 million during the fiscal year 2010, an increase of 23.31%

over 2009. The net profit of the company was INR 109,552.80 million during the fiscal

year 2010, an increase of 22.26% over 2009.

32


2. Canara Bank (Canara Bank)

It is a banking service provider engaged in commercial and personal banking, and

financial services. The bank offers a range of products and services, including savings,

current, fixed, and recurring deposits, as well as term deposits and other deposit products,

and loans and advances, including personal loans, loans for traders, agricultural loans,

export finance, housing loans, and other loans. The bank also provides non-resident

banking services, rural and social banking services and international banking services.

Canara Bank has a network of 2,710 branches in India. Canara Bank provides IT-based

services, with 100% computerization of the branches. The bank provides a wide array of

services, such as, Networked ATMs, Anywhere Banking, Telebanking, Remote Access

Terminals Internet & Mobile Banking, Debit Card, etc. The bank is headquartered in

Bangalore, India and employs 45,260 people.

3. Bank of Baroda (BOB)

It is a leading financial institution in India. The bank is engaged in providing financial

products and services including personal banking, corporate banking, international

business, treasury banking and rural banking. It offers credit cards, debit card, deposits,

retail loans, lockers and other services through Personal banking segment. Business

banking comprises deposits, loans & advances, services and lockers. Corporate banking

includes cash management and remittances, muti-city cheques, appraisals and merchant

banking. International business includes correspondent banking, export finance, import

finance, international treasury and other solutions. Treasury banking comprises domestic

operations and forex operations. Rural banking includes retail loan, small businesses and

small scale industries. The bank operates internationally with its branches and associates

in 25 countries. The bank is headquartered at Vadodara, India.

The bank reported interest income of (Rupee) INR 155,475.61 million during the fiscal

year ended March 2010, an increase of 27.81% over 2009. The net interest income after

loan loss provision of the bank was INR 50,558.82 million during the fiscal year 2010, an

33


increase of 43.42% over 2009. The net profit of the bank was INR 23,840.79 million

during the fiscal year 2010, an increase of 53.97% over 2009.

4. ICICI Bank Limited

(ICICI Bank) is an India-based banking company. ICICI Bank provides banking

products and financial services in the areas of investment banking, venture capital, life

and non-life insurance, and asset management to corporate and retail clients. The bank

offers fixed deposits, savings accounts, recurring deposits, security deposits, child

education plans, salary accounts, EEFC accounts, and resident foreign currency

accounts; and consumer and commercial cards. It also provides home loans, commercial

business loans, automobile loans, two wheeler loans, personal loans, and credit cards. In

addition, the bank provides dematerialization services, NRI services and online services.

ICICI Bank operates through a wide network of 1,449 branches and 4,721 ATMs across

India.

The company reported revenues of (Rupee) INR 362,507.06 million during the fiscal year

ended March 2010, an increase of 6.32% over 2009. The operating profit of the company

was INR 97,634.54 million during the fiscal year 2010, an increase of 17.24% over 2009.

The net profit of the company was INR 35,769.50 million during the fiscal year 2010, an

increase of 5.26% over 2009.

34


35

CHAPTER 3

ORGANIZATION

STRUCTURE


ORGANIZATIONAL HIERARCHY

Chart no. 6.1

Organizational Hierarchy

36

ZONAL OFFICES

CLUSTER HEAD OFFICES

632- BRANCH OFFICES


Corporate governance

J&K Bank has been committed to all the basic tenets of good Corporate Governance well

before the Securities and Exchange Board of India and the Stock Exchanges pursuant to

Clause 49 of the Listing Agreement mandated these. In line with the vision, J&K Bank

wants to use Corporate Governance innovatively in a transitional economy like Jammu

and Kashmir. The Bank wants to use Corporate Governance as an instrument of

economic and social transformation. In due course, we would set our self- targets of

social and economic reporting as a part of annual disclosures. This will help us

conceptualize and contextualize the form and content of Corporate Governance in a

developing state. Given the fact that J & K Bank is and is seen as a great success of

“public-private partnership”, our Bank as a business is expected to play a role in social

transformation of the economy. This lends urgency to implementation of good

governance practices which go beyond the Corporate Governance code. Operating in an

environment that is emerging from a situation of civil strife, the issue of Corporate

Governance assumes a different and greater relevance. The prime corporation of Jammu

and Kashmir, have a vested interest in making the state a safe place for business. J&K

Bank has a key role to play in providing public and private services, financial

infrastructure and employment. As such, the efficiency and accountability of the

corporation is a matter of both private and public interest and governance, therefore,

comes at the top of the agenda. The fact that the bank is state owned but professionally

managed, having a large size of international investors, governance is critical. For us,

Corporate Governance is concerned with the systems of laws, regulations and practices,

which will promote enterprise, ensure accountability and trigger performance. The J&K

Bank, for one, stands for being more accountable, practice self-policing and make

financial transactions transparent and constitutional.

Board of Directors

37


The responsibility for good governance rests on the Corporate Board which has the

primary duty of ensuring that the principles Of Corporate Governance, both as imbibed in

law and regulations and those expected by stakeholders, are religiously and voluntarily

complied with and the stake holder’s interests are kept at utmost high level.

Name of The Board of Directors

1. Haseeb A Drabu Chairman & C.E.O

2. M.S.Verma Director

3. G.P.Gupta Director

4. B.B.Vyas Director

5. Abdul RaufFazili Executive Director

6. Mustaq Ahmad Executive Director

7. Mohd. Yaseen Mir Director

8. B.L.Dogra Director

9.Umar KhurshidTramboo Director

Composition

The Bank’s Board of Directors comprises a judicious mix of executive, non-executive

and independent Directors as per Corporate Governance requirements. Appreciating the

fact that Board Composition is key to Corporate Governance, the Board of Directors of

your Bank consists of eminent persons with considerable professional experience and

expertise in Banking, Finance, Economics, Industry, Law etc., combining their wide

ranging experiences to impart values and provide direction to Bank’s development. Your

Board is professional and an active Board which meets frequently during the year to chart

38


out policies and practices. The Assent strength of the Board is seven comprising of

Chairman, two Executive Directors and four Non-Executive Directors.

Committees of the board

The Board of Directors of your Company has constituted several Committees of Board to

take decisions on matters requiring special focus. The role and functions of the main

Committees of the Board is described hereunder:

AUDIT COMMITTEE

INTEGRATED RISK MANAGEMENT COMMITTEE

COMPENSATION COMMITTEE

SHAREHOLDERS / INVESTORS GRIEVANCE COMMITTEE

MONITORING OF LARGE VALUE FRAUDS COMMITTEE

SHARE TRANSFER COMMITTEE

39


Chart no.6.2

Organizational structure of Jammu and Kashmir bank :

40

BOARD OF DIRECTORS

CHAIRMAN

TWO EXECUTIVE DIRECTORS

PRESIDENT

VICE PRESIDENT

SENIOR EXECUTIVE MANAGERS

EXECUTIVE MANAGER


Chart no. 6.3

Organizational structure of the offices of the jammu and kashmir bank:

41

SENIOR EXECUTIVE

EXECUTIVE

ASSOCIATE EXECUTIVE

BANKING ASSOTIATES

ASSISTANT BANKING ASSOCIATES

BANKING ATTENDANTS


Chart no. 6.4

Work structure of the Jammu and Kashmir Bank:

The lowest working units of the Bank are branches also called as Business Units. The

next level of working is done in Cluster Head Offices which are set up district wise. After

that come Zonal Offices which are set up for some states & then at last comes the Head

Quarter called Corporate Office which spearheads the overall working of the bank.

42


DEPARTMENTS

43

CHAPTER 4

FUNCTION OF

DEPARTMENTS


There are three main departments of the bank :-

Marketing, Finance and Human Resources.

Under corporate headquarters there are other departmental offices all over India.

a) Strategy and business development

b) Finance and risk management

c) Inspection & Vigilance

d) Stationary

e) Customer care & Information

f) Law

g) Trainings

h) Credit

i) Offices

j) Security

k) Advertisement

l) Discipline

m) Taxation

n) Human resource department

o) Integrated risk management

p) Foreign exchange

q) Information technology and information systems

r) Advance and asset planning

s) Asset value management

The chairman cum managing director, who is nominated by the Jammu and Kashmir

Government, heads the organization. The board of Directors assist the chairman in

undertaking some important decisions. As on 31.03.2010 there were 9 members

functioning as board of directors.

Departments of the J & K Bank

44


The Bank J & K bank is a diverse and complex organization. The bank’s main

departments are described below:

a) Audit

b) Banking operations

c) Communications

d) Corporate services

e) Debt administration

f) Executive and legal services

g) Financial markets

h) Financial services

i) Monetary and financial services

j) Research

Audit – It is responsible for conducting independent and objective appraisals that

examine and evaluate bank operations.

Banking operations – There are three key players in the bank’s core functions which are

currency, financial systems and funds management.

Communications – communications helps the bank to meet its commitment to openness

and transparency and public relations.

Corporate services – Comprises the following services area: human Resources,

information Technology, marketing, knowledge and information, facilities and protective

services.

Debt administration - Ensures the delivery of cost – effective back – office operations

and provides policy advice

Executive and legal services – Supports the bank’s management by providing decision –

support functions to be executive and to the board of directors.

45


Financial markets – Functions include implementing monetary policy, managing the

federal government’s cash balances and foreign exchange reserves.

Financial services – Responsible for the accounting and financial reporting of the bank.

Monetary and Financial analysis – Monitors and carries out research on the financial

sector.

Research – Provides the bank is management with high – quality analysis of the

economy and related policy issues and new trends in the market.

Non-business offices:

The Jammu and Kashmir Bank has 4 non-business offices known as regional collection

centers all over India. Normal banking business does not take place here. They mainly

deal with clearance of cheques and drafts. As at certain centers, accumulation of cheques

or drafts become varies in number, thus the need of such offices has arisen. Non-business

offices are under the control of corporate headquarters. Taking into consideration the

increasing nature of foreign exchange business that is taking place in India, The Jammu

and Kashmir Bank has identified and authorized 28 offices at important places to deal

with foreign exchange transactions. Such places are Srinagar, Jammu, Ludhiana, Panipat,

New Delhi, Agra, Noida, Hyderabad, Bangalore, and Chennai. Etc.Co-operate

headquarter of Jammu and Kashmir has three main departments, Marketing, HRD and

finance department. Other departments like vigilance customer service cell etc are

forming a part of co-operate headquarter.

46


Marketing department

As far as central office is concerned marketing and research cell enjoys the key position

among the various departments. The main function of the department is that is formulates

the systems and procedures to be adopted by the bank for smooth running of bank affairs.

The department adopts the systems in consonance with RBI. It receives and studies the

guidelines from different quarters, revises them and circulates them to various ranches for

adoptions. Marketing department of Jammu and Kashmir bank performs various other

functions which are mentioned as below.

It acts as a liaison office between headquarters and other offices of Jammu and

Kashmir bank. It figures of the procedure and systems to be adopted for smooth

functioning. Marketing department acts as designer of new product and services

adopted by bank from time to time.

The department is also in charge of formulating the system and procedure to be

followed by the offices for acceptance of taxes. Payment of various kinds of fees

such as examination fee and other related items offered by universities etc are

taken by marketing department.

It is responsible for fixing service charges and is responsible for monitoring cost

on funds / deposits / services. It formulates rate of interest on deposits with the co-

operation of ALCO.

47


MARKETING STRATEGY USED BY J&K BANK LTD.

A company’s marketing environment consists of the factory and forces that affect the

company’s ability to develop and maintain successful transactions with its target

customers. In the present banking environments strategic marketing approach is needed,

the marketing strategy invariably includes:

1. Identifying customer’s financial needs and wants.

2. Developing appropriate banking services to meet these needs.

3. Pricing for the services so developed.

4. Advertising to promote the services to the existing as well as prospective

customers and the future financial markets.

The marketing strategies on these points developed by J&K Bank are as under.

1. Marketing officers as offices continuously determine the customer’s financial

needs and wants. They employ any suitable approach to get the feedback through

questionnaire, interviews or any other feasible method. They send the report on

consolidating findings with their observations / recommendations to M & R Cell,

corporate headquarters.

2. M & R Cell at central office analyses the feedback received from the marketing

officers for developing banking services / products to meet these needs. Pricing

and promotional aspects are taken into consideration.

3. Marketing research is undertaken by marketing officers at other organizational

Offices on continuous basis. Marketing is a responsibility of these people they

also involve marketing committees also for accomplishing the task. The data can

be collected by any of the methods found feasible by marketing officers.

48


Advertising and Publicity

Advertising and publicity have become backbone of any industrial activity. Advertising,

one of the key ingredients in national economic growth is a forceful tool in molding the

attitudes and behavior of people towards product, ideas and services. It not only presents

ideas, goods, services but also permanent people to respond positively to the advertised

message, in another way, advertising is a method form of non personnel presentation and

promotion of ideas and services. Being a paid form, it helps in introducing a new product

in the market and also helps company in sustaining the market share of the established

product. Advertising builds a positive image of the company to the sell the product or

service. Most often a new product sells because of the company background.

The Jammu and Kashmir bank limited uses advertising not only for image building but

also for molding public support for various kinds of its deposit as well as its loaning

schemes.

Continuous media campaign of the activities of the bank through advertising and

publicity will not only help the bank to sustain its image of being “the only Shining Star

of J & K” but will also improve it further. For advertising and publicity of bank’s image

and products, following things need to be kept in mind.

The bank utilizes the services of following media for advertising and publicity of its

products and services.

Print Media

Electronic media ( Radio & Television)

Innovative Outdoor media.

49


Print media

The print and publication media consists primarily of newspapers and magazines. Since,

these are read basically for news, entertainment and editorial contents, but they carry the

advertising message to a large audience. While newspapers are read for the global,

national and local events of the day, magazines are generally read for interesting stories

and articles and sometimes editorial content.

i) Newspaper is one medium that practically every educated person reads. Since

no medium comes closer to experiencing a sense of community that the daily

newspaper, the Bank easily use this vehicle for carrying its message about

products and services. The display of merchandise in the daily newspaper

advertisements represents a catalogue of the information of which customers

look for necessary guidance as they plan their shopping ach day.

Local newspapers are of immense use as advertising vehicles. As they reach to the length

and breadth of the state.

The bank needs to concentrate more on newspaper medium for most on its advertising,

for following reasons, newspaper reach a vast audience. Newspapers provide an intensive

coverage of certain geographical area. Advertising in newspapers attracts immediate

response.

The bank also generates a more lasting effect on the reader through newspaper

advertisement. Newspapers have daily and yearlong readership so the bank can place its

advertisements at any time during the year. More people than the buyer read newspapers.

ii) Magazine : is a major print medium. They are characterized by readership that

is joined by common life styles or special interest because of this selective

market, magazines is the most popular advertisers. Some of the weakness of

newspapers becomes the strengths of the magazines. If newspapers appeals to

all people in the particular community: the magazines appeals to a particular

people in all kinds of communities. The bank chooses the magazine, which

50


has a maximum number of copies in elicitation and also on its direction on the

target market for the product or service. Under the prevailing competition in

the banking industry the placement of advertisement is directly related to the

extent to which the competitors of the bank are using these magazines.

Electronic media:

It primarily consists of the radio and television, which have a more persuasive influence

than the print media does. Radio and television advertising have similarities as well as

differences.

a) Radio:

Is widely used by the people to listen to music and news, most radio are portable

and are found in most homes and automobiles. Radio listing tends to be an

individual rather than family activity. There are various types of programs that

radio stations specialize in the bank can take advantage of such programs for its

image building and advertising its products or services. Because of its low cost

and continuous availability radio should be favored medium for beaming the J &

K Bank’s products and services to the common masses. The advertising messages

can be easily repeated a number of times as not high cost. The bank devotes a few

percentage of its advertising budget towards the radio. The radio message must be

designed to grab the attention of the target audience merely through the sense of

hearing.

b) Television : has become the dominant media for advertising product. It is one of

the most and effective media for reaching mass audiences. It has the potential for

communicating action, sound, color, emotion, demonstration better than any other

non personal medium. The widespread use of color television has given advertising a

new dimension that gently enhances the visual effects of commercials. Television

commands undivided attention and program dedication of viewers and an eye –

catching commercial is easily noticed thus creating product awareness among TV

viewers. Television has power to reach a great number of people.TV has the unique

51


characteristics of the ability to demonstrate the operations and utility of the product.

This makes it the closest medium to personal selling. Even though TV is a very

expensive media in terms of commercials production and airtime, dollar for dollar

the cost per thousand viewers can be very low, given the advantage of sight, sound,

color,

action. Thus the Bank’s names can be established at a very low cost per viewer.

Keeping the high cost of TV advertising in view, the bank beams its product or

service on rare occasions. TV commercial is short lived. It is not possible to look at

the message.

Outdoor advertising:

Outdoor media or out home media is the goose laying the golden egg for the bank, if it is

explored to a full extent. They are cheap, effective, appealing and very spectacular.

Unlike indoor media, where advertisements move to people, mobile people move around

the outdoors. They are more direct and effective because of their visual’s appeal of great

record value. All the commercial outdoor media lend for variety and innovativeness and

that why new and formats emerge including illuminated hoardings, colorful posters, neon

signs of various colors and designs, animated displays, inflammable balloons, sky

writings pictures and car cards etc

One of the major advantages of outdoor advertising is that the message reaches the public

24 hours a day all year long, especially when the sign is illuminated. The message also

has a high frequency rate if it placed as strategic locations since people well see it a

number of times while traveling to work or shopping.

Another advantage is that the messages are useful to outside tourists. Since outdoor signs

are mobile in nature and offer a high level of geographical selectivity, the bank places its

advertising message at strategic locations to reach the maximum target audience.

52


Transit advertising: is also given due consideration as it delivers a message to

potential customers of the bank who use commercial and public transport

facilities such as buses, taxis etc.

Car cards : big corporate and business houses use these small card type

advertisements for propagation of their business activities and image building

purposes. The bank safely banks propagation of their business activities and

image building purposes. The bank safely banks on these cards for an adv

everlasting impact on the minds of the people about the banks image, its products

and services.

1. Exterior posters these also render a great service in disseminating information

about bank’s activities and services. These posters designed with a visual effect in

multicolor are placed on the outside of the buses, trucks and other means of transport.

2. Special directories, Use of bank calendars and dairies

Directories are valuable source of information for all types of products and

services. Yellow pages and business directories have most common reach. The

bank uses space of popular such directories for its advertising messages. The bank’s

wall calendars and dairies are always in great demand. Almost every home and

business establishment in the state is flooded with bank’s wall calendars. The bank

inserts information about its products and services in calendars and desired reach of

the advertising message is reached. Use of this medium costs nothing to the bank,

as the bank gather information about various deposits and loaning schemes of the

bank and they do not have to visit the offices / offices simply for getting about

these schemes. This definitely improves the customer services of the bank

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3. Advertising agency

Since the promotional processes is going to determine the success or failure of an

organization, the choice of the right advertising agency becomes a matter of prime

importance, the choice of the wrong agency can prove to be very costly.

Publicity:

Publicity is any form of commercially significant new about an organization, physical

good, a service, an idea or a person, published by a mass media that has been paid by a

sponsor to this respect, publicity is free promotion Publicity is very important element in

total promotional and marketing. It has far more credibility than advertising. Publicity has

several advantages over advertising.

54


HUMAN RESOURCE DEPARTMENT

Quality of human resources is the key to competitive strength and performance of an

organization. The bank accords high priority to development of its vital resource HRD –

at all levels. HRM is the process of recruiting, selecting, training, motivating and

maintaining employees of an organizations.HRM being an important activity in any kind

of organizations. With the increased and changing environmental conditions .Jammu and

Kashmir bank is also started giving more careful considerations to the man power aspect

of planning. Jammu and Kashmir believes a famous saying. “A happy employee is a more

productive employee”. Jammu and Kashmir bank as a separate organization and personal

department headed by executed of the scale of president. It realizes that an employee

whose performance is continuously improving is the most valuable asset to an

organization. Jammu and Kashmir attitude to the man power is investment rather cost. the

objective of personal department of Jammu and Kashmir bank Ltd., is to make the best

use of their employee in order to ensure both their personal satisfaction and maximum

returns of bank at the cost of they represent.

The organizational and personal department is reckoned as a primary area

having the way for the bank in its endeavor towards competitive excellence. The bank

has acquired a top slot in the banking industry with a distinction of satisfying of all the

service efficiency criteria norms lay down by the working group of restructuring of weak

public sector bank.

Recruitment and selection

Recruitment means attracting external candidates to fill the positions in the organization.

Selection means offering job to valid and reliable candidates from among those whom

applied for the job it is the first time when prospective employee come in contact with

organization. Like most of the bank Jammu and Kashmir Bank is also follows a common

method of recruiting followed by selection, first of all need for fresh candidates /

employee are identified.

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Next to it comes a type i.e., the type of job, which they are expected to perform. After

identifying the right type and right number of employees required bank approach banking

service recruitment board. The function of requirement and selection are performed by

banking service recruitment board. Competence is the only criteria for selection.

Advertisement for vacancies is published in newspapers with all necessary aspects of jobs

e.g. Level of pay, degree of job security, promotional possibility and the like.

After receiving application form applicants they are called for written test. The rest is

conducted by BSRB prepares a list of successful candidates who qualify the written tests.

These candidates are called then for interview, according to the number jobs for which

they are needed etc. as they mentioned as in the requisition set to them to the bank. All

this is applicable to recruitment and selection of clerk cadre and probationary officer.

Rest of the vacancies is filled through promotion within the department.

In case of recruitment and selection of peon, sweeper and guards, bank approaches

employment exchange. In requisition then number and type is mentioned and accordingly

successful candidates are send to the bank. In case of recruitment and selection of peon,

sweeper and guards, bank approaches employment exchange. In requisition then number

and type in mentioned and accordingly successful candidates are sending to the bank. All

government regulations are strongly adhered to regarding local preference, cast, creed,

and like, special weight age in given to SC/ST and backward classes. Relaxation in age is

given to the ward of ex servicemen of the bank.

Training and development programme

Training is the act of increasing knowledge and skills of the employee for doing a

particular job. Every new incumbent as well as old timers need a regular training because

of rapid changes in technological needs, complexities and growth at present day

enterprises , new educational process etc. the training involves assisting employs to use

more effectively his/her skills, talent and knowledge and expand these and helping him to

a course and say ‘ he is trained’. It is continuous process and is progressively more

searching. It should encourage the trainee to learn to make of their facilities.

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The establishment of their own training center at Srinagar and Jammu has proved a

watershed in grooming the staff members in IT related services. Officer in scale four and

above are identified for advance training programme facilities of reputed institutions like

Bankers Training College (BTC), Mumbai, National Institute of Bank Management

(NIBM), Pune and Noida, Administrative staff college of India (ASCI), Hyderabad and

RBI College of Agriculture Banking, Pune is also invited to interact with the participating

in advance programmers.

Performance appraisal, promotion and transfers

Performance appraisal and promotions go hand in hand. Appraisal is the basis for

determining who is permutable to higher position. It is the integral part of managing and

key to it. The branch head prepares appraisal reports of officers, after receiving

instructions from the head office or regional office. The head office prescribes the

creation fro appraisal. The branch head marks it as excellent, good or satisfactory in the

professionally coded language. It is also known as confidential report. The rating and

other details in the confidential report of the employee are taken into account while

considering his promotion. For higher official method of self appraisal is employed after

deciding for the number and type of vacant posts.

Promotion may be on the basis of seniority track or fast track. Fast track is followed only

in case of grade 2 and grade 3, in the fast track candidate is called for an interview. This

is done to avoid any frustration grew among competent employees. The other method is

seniority track each year prepares a list of Officers in its service showing their names in

the order of their seniority an all India basis containing such other particulars as the bank

may determine. A copy of such list is kept at every branch or office of the banks.

57


Car facility

The bank may grant to an officer confirmed in bank service loan for the purpose of car,

subject to some conditions. Car loan is granted up to grade 3.

Reimbursement of petrol up to a certain fixed limit per month is allowed. Bank car is

given to grade 4 and above officers other than those authorized by the board are allowed

the use of the bank car for personal use.

Free residency facility

All officers are entitled as of the right to be provided with free residential facilities by one

bank. The bank granted by the bank depends on the scale of the officer and place of his

posting.

In some big cities and metros the bank has its own apartments. In such cases employee is

allotted apartment and no separate rent is given.

Medical aid

An officer is eligible for reimbursement of medical expenses actually incurred by him in

respect of himself or his family, depending on the grade and pay scale. For this facility,

the employee needs to submit declaration every year.

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FINANCE DEPARTMENT

Finance is the science of funds management. The general areas of finance are business

finance, personal finance, and public finance. Finance includes saving money and often

includes lending money. The field of finance deals with the concepts of time, money, and

risk and how they are interrelated. It also deals with how money is spent and budgeted.

One aspect of finance is through individuals and business organizations, which deposit

money in a bank. The bank then lends the money out to other individuals or corporations

for consumption or investment, and charges interest on the loans.

Loans have become increasingly packaged for resale, meaning that an investor buys the

loan (debt) from a bank or directly from a corporation. Bonds are debt instruments sold to

investors for organizations such as companies, governments or charities. The investor can

then hold the debt and collect the interest or sell the debt on a secondary market. Banks

are the main facilitators of funding through the provision of credit, although private

equity, mutual funds, hedge funds, and other organizations have become important as

they invest in various forms of debt. Financial assets, known as investments, are

financially managed with careful attention to financial risk management to control

financial risk. Financial instruments allow many forms of securitized assets to be traded

on securities exchanges such as stock exchanges, including debt such as bonds as well as

equity in publicly traded corporations.

Central banks, such as the Federal Reserve System banks in the United States and Bank

of England in the United Kingdom, are strong players in public finance, acting as lenders

of last resort as well as strong influences on monetary and credit conditions in the

economy.

An entity whose income exceeds its expenditure can lend or invest the excess income. On

the other hand, an entity whose income is less than its expenditure can raise capital by

borrowing or selling equity claims, decreasing its expenses, or increasing its income. The

lender can find a borrower, a financial intermediary such as a bank, or buy notes or bonds

59


in the bond market. The lender receives interest, the borrower pays a higher interest than

the lender receives, and the financial intermediary earns the difference for arranging the

loan.

A bank aggregates the activities of many borrowers and lenders. A bank accepts deposits

from lenders, on which it pays interest. The bank then lends these deposits to borrowers.

Banks allow borrowers and lenders, of different sizes, to coordinate their activity.

Finance is used by individuals (personal finance), by governments (public finance), by

businesses (corporate finance) and by a wide variety of other organizations, including

schools and non-profit organizations. In general, the goals of each of the above activities

are achieved through the use of appropriate financial instruments and methodologies,

with consideration to their institutional setting.

Finance is one of the most important aspects of business management. Without proper

financial planning a new enterprise is unlikely to be successful. Managing money (a

liquid asset) is essential to ensure a secure future, both for an individual and for an

organization.

In corporate finance, a company's capital structure is the mix of financing methods it uses

to raise funds. One method is debt financing, which includes bank loans and bond sales.

Another method is equity financing - the sale of stock by a company to investors.

Possession of the stock gives the investor part ownership in that company, in proportion

to the number of shares the investor owns. In return for the stock, the company receives

cash, which it may use to expand its business or to reduce its debt.

The investors, in both bonds and stock, may be institutional investors - financial

institutions such as investment banks and pension funds - or private individuals, called

private investors or retail investors.

Personal finance

Questions in personal finance revolve around

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How much money will be needed by an individual (or by a family), and when?

Where will this money come from, and how?

How can people protect themselves against unforeseen personal events, as well as

those in the external economy?

How can family assets best be transferred across generations (bequests and

inheritance)?

How does tax policy (tax subsidies or penalties) affect personal financial

decisions?

How does credit affect an individual's financial standing?

How can one plan for a secure financial future in an environment of economic

instability?

Personal financial decisions may involve paying for education, financing durable goods

such as real estate and cars, buying insurance, e.g. health and property insurance,

investing and saving for retirement.

Personal financial decisions may also involve paying for a loan, or debt obligations.

Corporate finance

Managerial or corporate finance is the task of providing the funds for a corporation's

activities. For small business, this is referred to as SME finance (Small and Medium

Enterprises). It generally involves balancing risk and profitability, while attempting to

maximize an entity's wealth and the value of its stock.

Long term funds are provided by ownership equity and long-term credit, often in the

form of bonds. The balance between these elements forms the company's capital

structure. Short-term funding or working capital is mostly provided by banks extending a

line of credit.

Another business decision concerning finance is investment, or fund management. An

investment is an acquisition of an asset in the hope that it will maintain or increase its

61


value. In investment management – in choosing a portfolio – one has to decide what, how

much and when to invest. To do this, a company must:

Identify relevant objectives and constraints: institution or individual goals, time

horizon, risk aversion and tax considerations;

Identify the appropriate strategy: active v. passive – hedging strategy

Measure the portfolio performance

Financial management is duplicate with the financial function of the Accounting

profession. However, financial accounting is more concerned with the reporting of

historical financial information, while the financial decision is directed toward the future

of the firm.

The Finance Department of J & K Bank performs a lot of functions. Being a financial

institution it mostly deals with financing, so it has a lot if financial aspects. The Finance

Department is present in every Business Unit (branch) of the bank. It deals with finance

right from small branches to Corporate Head Office.

The branches are divided into different categories depending upon the volume of their

business. These categories are A, B & C categories. Branches having high volume of

business come under category A & the branches having low volumes of business come

under category C. The branches having average type of business come under category B.

there are even some loss making branches but the bank has not shut them due to

Corporate Social Responsibility factor.

The powers of category A branch managers are higher than the powers of category C

branch managers in respect of sanctioning finances to individuals or corporate. The

branch managers have powers of issuing more finances in case of mortgage than in case

of third party. In case of mortgage finances the value of underlying mortgage should be

more than 100% of the value of finance. Smaller amounts upto certain extent is provided

by branch manager under the powers vested in him. After that the next authority for

sanctioning the finances are cluster head offices, after that come zonal offices & the still

higher amounts are sanctioned in Corporate Head Quarters. Amounts upto five crore are

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sanctioned by various offices up to zonal level. But when the amount exceeds five Crores

it is referred to the Finance Department of the Corporate Head Quarters.

The overall Finance Department of the Corporate Head Quarters is first divided into

Retail Finance Department & Corporate Finance Department. Retail Finance Department

deals with the financing of retailers, big shop outlets, etc while as the Corporate Finance

Department deals with the financing of large corporate & manufacturing units.

Earlier the strategy of the Finance Department was to provide huge finances to big

corporate mainly outside Kashmir but now the strategy has changed & the small firms in

Kashmir are being provided with financial help so that the economy of Kashmir will

develop.

The Finance Department of Corporate Head Quarters has three sub-departments so that

the work is divided & done effectively & efficiently. These departments are:

Advances & Asset Planning Department

Follow-up Department

Supervision & Control Department

The work of the Advances & Asset Planning Department is to scrutinize the party & its

documents to check whether it is eligible for the sanction of finances or not. The

department scrutinizes the profile of the party, project report & estimated profits,

reliability of the project & estimated cash inflows & outflows.

After scrutinizing all these things this department decides whether the party is eligible for

finance & the amount up to which the bank can finance it.

Follow-up Department keeps an eye on the working of the establishments which are

financed by the bank. On the basis of the returns & other documents which the financed

establishment provides to the bank, it decides in which direction it is going & provides

warning signals if any. If any financed establishment or any other asset doesn’t provide

any return for the period of 90 days it is put in the category of nonperforming assets

(NPA). This department provides the information to Supervision & Control Department.

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Supervision & Control Department supervises the functioning of the financed

establishment. It takes note of the information & warning signals provided by the Follow-

up Department & then acts & also asks the financed establishment to act accordingly.

This department also conducts audits to check the working of the financed establishments

& also the various branches of the bank. A number of audits are conducted. These

include daily concurrent audits, monthly audits, quarterly audits, six monthly audits,

yearly audits & one yearly audit by RBI.

The bank also has its agents in Money Market to maintain the proper liquidity position so

that it meets any shortfall of cash at any point of time.

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OFFICE MANAGEMENT

Every game has its own rules and methods and when these are followed it becomes as

organized game. In the same manner the work to be done in an office cannot be left to a

group of individuals. With the rapidly mounting volume of office work being alone and

the equally rapid increase in the number of office workers required. J & K also realizes

the importance of effective office management. Management of an office is quite as

important job as the management of a factory or any other industrial enterprise. First, to

ensure that the work is done quickly. Second, to eliminate unnecessary work which

causes delays and increase expenses without justification. So office activities must be

properly arranged, which cause and increase expenses without justification.

Furnishing and layout

Office layout refers to the arrangement and placing of men, materials, furniture and

equipment within each section or department of the office in such a way that the

utilization of space is done in the best possible manner. In all the offices the office layout

is more or less same. The branch is furnished and all articles are maintained in good

condition and are adequately insured against fire and other risks. Items such are

computers are regularly and properly serviced and maintained in perfect working

condition. All the items of fixture and furniture are properly entered in the inventory

register and numbers given in the register are printed / embossed on the concerned items.

The cash safe and cashier’s cabin is kept separate for the purpose of security. Strong

room is generally underground. In most offices direct type of lightning is used. Electric

generators are placed on the flooring and also floor of the offices to reduce the sound of

footstep.

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Safety and security

All possible steps are in force with regard to safety and security. There is a proper

arrangement of word and watch of the premises. It is ensured that that the gun license is

in order. The guns and store of cartridges are periodically examined by the competent

persons to ensure their working conditions. So fire fighting equipments are also

maintained properly and tested periodically. There are multiple exits incase of fire.

Adequate insurance coverage is obtained on almost everything. Records are protected

from white ants. Almost all offices are guarded by police force of the state. Mo doubt

bank has employed its own – armed guards for the purpose of security.

Cash management

Cash is in joint custody of head cashier and manager. The keys of grill gate are in

the joint custody of head cashier and manager. Requisite cash is placed at the counter in a

cash box and surplus or excess cash s kept in reserve in the safe. Whenever any

withdrawal or deposit is made the cash held in the reserve. The same is recorded in the

cash reserve register. Which shows the running balance of the ash in the safe from time to

time? At the time of close of business the balance is shown in the cash reserve register

should agree with the cash tallied book. The cash reserve register is with the manager

during the day and overnight it is kept in the store room.

Office correspondence

Office correspondence is mainly through UPC, registered post and courier service. Other

mode of correspondence is fax machines, internet. All outward and inward mail is

entered in suitable registers. Every time two copies of circular are mailed to the offices.

Out of these original one is filed in the master file and other is communicated to

concerned employee. All letters are received are opened by or in the presence of

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authorized officials and are branded immediately with the data stamp. All these letters

cover cheques; bills etc are distributed to the officers.

Maintenance, preservation and destruction of records

Records means written papers, documents, statements, invoices vouchers,

correspondence, books of accounts, concerning an organization. Record management

refers to the activities designed to control the life cycle of a record from the creation to its

ultimate destination. The banking being a service industry has to deal with innumerable

customers, which involves a lot of paper work and as Such accumulation of record of

each transaction is evitable. The period of keeping records depends upon nature of the

record. The old / obsolete records create bottlenecks, obstruct workflow consume

valuable space and give an ugly look. Hence there is a need for having a system for

maintenance, preservation and destruction of old to bring about operational efficiency at

the offices and every branch has supplied with booklet regarding maintenance and

destruction of old records.

Maintenance of current records

A current means all running records that are to be kept forever. In branch keeping

is under the supervision of a senior clerk / officer, who is assigned the duty of

maintenance of proper records. The files are indexed chronologically. For closed /

completed files, its date of commencement, the description of the file and date of

completion is recorded on its cover. This is noted in the file index register.

Preservation of old records

All records are not required for current use but are required in future are included under

this category. In case completed / closed ledgers, sheets are taken out as usual from the

binders and got rebound with hard cloth binding. All items of records are kept free from

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dust. All the records which are required to be preserved are pasted with labels on the

thick side of the book vertically containing particulars as name of the branch, no. etc.

FUNCTIONS OF VARIOUS OTHER DEPARTMENTS

Investment department: this is one of the important departments of the Jammu and

Kashmir Bank. It is headed by a President and comprises of officers also. This

department is concerned with the management of cash to meet short term and long term

requirements. It controls and allocates the financial resources to different units to ensure

their optimum utilization. It also comprises of Economic and Planning Cell, Financial

Reporting Cell

Inspection and vigilance department

This department is prescribed by the executive manager inspection and executive

manager vigilance. It investigation and vigilance department checks the working of

different offices. The department comprises the following:-

Enquiry cell -conducts enquires regarding the charges leveled against the officials of the

bank

Revenue audit cell checks the revenue i.e., income and expenditure of the offices and

sees that if there is any revenue leakage

Customer service cell looks in to the complaints lodged by the customers against the

officials of the bank.

Disciplinary department This department is presided over by a executive manager.

Law department This department of the bank is over looked by three president. At Delhi

zone, corporate Headquarters, Srinagar and Jammu zone. It sues in the court of law

68


against the borrowers if they fail to pay back the amount that has been advanced to them.

It also represents J & K Bank in the court of law against any sues whatsoever.

Advanced department

Advances or granting loans is one of the main functions of any bank. A bank gives

money on credit to its customers and charges interest which accounts for a substantial

portion of its profit.

Computer policy and planning department

The main function of this department is to develop policies and plans and

computerization of offices of the bank. The computers engineers working in this

department also work for the customization of various applications purchased from the

market and also develop software for various departments of the bank

Foreign exchange department

It deals with the foreign business of the bank. It conveys the rates of foreign currencies to

the office of the bank.

Stationery department and Estates department

It looks for premises of offices for the bank. It also arranges furniture and fixture

for offices. It has to arrange and supply the required stationary items to the bank. The

department interacts with the various printing presses and other ailed supply agencies to

fulfill the needs of the bank.

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70

CHAPTER 5

SWOT ANALYSIS


SWOT ANALYSIS

Strengths

A listed Company of the state on BSE and NSE.

Fastest growing bank in India with 632 Offices spread across in the country.

Four decades of un–interrupted profitability and dividends.

Internet banking.

Tele banking, anywhere banking, sms and mobile banking.

98.4 % of the total business computerized.

Banker to the Government of Jammu and Kashmir State.

Company Owned property.

Social banking.

Weaknesses

Less coverage in east and south India.

Less public savings.

Improper working of ATM’s.

Lack of proper approach of Bankers towards the customers.

Lack of proper performance appraisal system.

Opportunities

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Continued emphasis on infrastructure facilities.

Increase business activities particularly in south and east India.

Taking up newly and big venture projects.

Making banking activity more simple and fast.

Innovative financial products.

Offshore banking.

Threats

Customer shift to newly established banks and other banks particularly outside J

& K state.

Better facilities in terms of technology, people and funds.

Economic liberalization allowed private banks to operate completely, thus forcing

a threat.

72


73

CHAPTER 6

SPECIAL TASK


Introduction

The bank takes proper care so that the confidential management related information is not

leaked out to public. During the internship period in the bank I felt that the bank

functions properly & is not having any problem. When I inquired various officials in the

bank in regard to any problem or dilemma faced by the management of the bank, the

bank officials replied there is no such problem at this point of time. Further I was told

that even if there is any problem or dilemma it is not in the rules of the bank to share it

with any outsider.

Taking the above points in consideration, I decided to throw light on the problem which

is not faced by the bank only but by all organizations in the Kashmir Valley. But my

concentration would be more on the bank than on any other organization.

Problem

Regular & long period shutdowns in Kashmir Valley

History

The starting point of these shutdowns dates back to 1930’s when the autocratic Maharaja

Hari Singh of that time signed some document giving accession of Kashmir to India

against the will of the public. In this regard the people of Kashmir assembled to protest

on 13th July 1931 but were brutally killed by army of the Maharaja. Since then 13 th July is

celebrated as Martyr’s Day in Kashmir.

Then in 1947 when India got its independence Kashmir was having threat of war from

Afghans & at that time Indian army was deployed on the borders of Kashmir to protect

against the attack from Afghans. This was just for protection & Indian PM of that time

Mr. Jawaharlal Nehru himself promised Kashmiris that after the period of threat is over

the people of Kashmir will be given choice to decide whether to join India, Pakistan or to

be separate as was decided by United Nations Organization. But that choice was never

provided to Kashmiris. Then in 1989 armed struggle against Indian forces started in

Kashmir due to which India sent more & more forces to Kashmir & took full control of

Kashmir. Even the army & CRPF were deployed in all the interior areas of Kashmir. Day

74


by day many draconian laws like Armed Forces Special Powers Act (AFSPA),

Prevention of Terrorism Act (POTA) and Public Safety Act (PSA) were enforced in

Kashmir which gave special powers to security forces. All these laws lead to Human

Rights violations in Kashmir. When armed struggle failed the pro freedom leaders chose

the non violent way of demanding freedom & revocation of draconian laws. Whenever

any wrong decision was taken by the State Government pro freedom leaders were giving

calls for strikes, civil curfews & march calls. Sometimes when situation goes out of

control of government, it imposes curfew. It is disclosed by survey that since 1990

Kashmir was shut down for four years that is, more than 1300 days.

Impact

Due to these shutdowns the business establishments have suffered great losses including

banks. The bank is not able to run its business due to these shut downs. It has affected the

bank mainly in the following ways:

The employees are not able to reach the respective offices.

The bank is not able to collect cash from parties.

Work is not done on time.

There is uncertainty about when the particular work will finish.

Sometimes the protesters destroy the property of the bank e.g. branches, ATM’s,

etc.

Bank is not able to sanction finance to eligible parties on time.

Since the shut downs affect the financed establishments also, it has impact on

profitability of the bank as many assets of the bank turn into non performing

assets due to long shut downs.

Sugession

The general solution which is at the hands of the political parties is the revocation of

draconian laws. Acts like AFSPA need to be amended so that there are no human rights

violations so that pro freedom leaders don’t get chances to call for shut downs.

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The solution in the hands of the management of the bank is to manage the higher

departments virtually i.e. introduce the concept of virtual organization whereby the

employees can take work to their homes & do it there. The bank is more than 95%

computerized now & is using Finacle & intranet facilities. The employees can do their

work well from their homes & upload the information to the server. But this can be done

to higher departments only & not branches because branches deal with public directly.

There is 10 am to 5 pm shift in bank, to overcome the effect of shutdowns the branches

can be thrown open in night shifts because both strikes by pro freedom leaders & curfews

by government come to an end by 7 pm in the evening.

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FINDINGS

77

CHAPTER 7

FINDINGS, SUGESSIONS

& CONCLUSION


J & k bank have re-engineered the HR processes. They have replaced the old manual HR

system to centralize the HR information, thus keeping a pace with technology.

Jammu and Kashmir bank is rated as one of the fastest growing bank in the country with

an increase in profit by 70 % having four decades of un-interrupted profitability and

dividends.

Only private sector bank designated as agent of RBI for banking.

More and bigger venture are coming up which are going to result in rise in profit.

Net Profit up 25 % at Rs 512.38 crore for the financial year ended Mar, 2010 as

compared to Rs 409.84 crore for the previous financial year.

The Business Turnover as on March 31, 2010 has increased by 12 % to Rs 60294 crore

from Rs 53935 crore as on March 31, 2009.

Other Income for the current year increased considerably by 70 % to Rs 416.23 crore as

compared to Rs 245.05 crore for the previous financial year, mostly driven by Treasury /

Trading income.

The Net NPA’s have further decreased to Rs 64.33 crore from 287.51 crore a year ago.

The Gross and Net NPA Ratios have come further down to 1.97 % and 0.28 %

respectively compared to 2.64 % and 1.37 % for the previous financial year.

The NPA Coverage Ratio at the end of year ended Mar, 2010 improved to 86.09 %

compared to 48.59 % a year ago, well above the RBI stipulated 70 %.

Investments Portfolio of the Bank as on Mar, 2010 at Rs 13956 crore increasing by 30 %

over last year’s Rs 10736 crore.

Low cost Demand and Savings Deposits of the Bank as on Mar, 2010 increased to Rs

15153 crore up by 20 % from Rs 12579 crore as on Mar, 2009 taking the CASA ratio up

to 40.69 % from 38.11 % a year ago.

Cost to Income ratio for the year ended Mar, 2010 has improved to 37.60 % from 37.81

% for the previous financial year.

EPS and Net Asset Value improved further to Rs 105.69 and Rs 621.00 for the financial

year ended Mar, 2010 from Rs 84.54 and Rs 541.04 for the previous financial year.

For the financial year ended Mar, 2010, the Board of Directors has recommended a

dividend of Rs 106.65 crore as compared to Rs 81.97 crore for the financial year ended

Mar, 2009.

78


Since it is aiming at making banking activities more simple and fast, it could result in

increase in customers coming from rural areas.

Marketing strategy used by bank is one of the best resulting in more publicity and

exposure of bank, thereby attracting customers.

The bank has recently launched electronic & mobile banking for its customers by which

the customers get SMS’s of their account balances & can also check statement of their

accounts through internet make transactions also.

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SUGGESTIONS

As per my study the bank should increase banking activities by creating more and more

branches to encourage more customers. This is evident, as the bank has decreased its

investments in fixed assets. So in order to diversify its business there is an urgent need to

increase its investments in fixed assets.

With a view to increasing its reach to the potential markets and extending banking

facilities to un–banked areas the bank should look for a good location, market and rival

competition.

Changing trends in the use of technology in the banking sector should be given utmost

priority.

Training’s should be imparted to the employees on on–going basis to enhance their

knowledge, efficiency, skills, and competencies.

Since it has 632 offices across the country, in spite of this it has less coverage in east and

south India. More branches should be opened in this area since east and south India has

good number of potential customer.

Board members should put more stress towards south India.

Maintaining the customer should be one of the basic aims and customer’s service should

be given more priority. Customized products can be launched for long term loyal and

profitable parties.

Function of ATM’s should be improved which result in convenience for banking

activities thereby improving customer satisfactions. This can be done by making the

ATM squad more vigilant.

Since India is one of the major tourist’s spots of the world more and more offices should

be given foreign remittance, which can result in flow of foreign currency.

The bank should also mobilize savings in the form of fixed deposits by increasing the rate

of interest; this will help the bank in making more funds which can be later utilized in the

expansion and modernization of the bank.

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CONCLUSION

The J&K Bank is one of the fastest growing listed banks in the country with more than

632 offices. The new identity has revolutionized J&K Bank and has representation of

the Bank’s philosophy and business strategy. J & k bank have re-engineered the HR

processes and moved a step ahead. It is highly ethical in nature as the bank’s

philosophy is woven around its total commitment to the ethical practices in the conduct

of its business. It is the only private sector bank designated as agent of RBI for bank.

The Jammu and Kashmir Bank has Four decades of uninterrupted profitability and

dividends.

Many competitors have failed to compete with the Bank due to its Quality service. It is

the only social bank of Kashmir.

At last it can be concluded that Jammu and Kashmir Bank is one of the leading banks

of India and its maintaining is profits are growing year by year, but management should

put more stress on customer satisfaction and providing much better facilities in term of

banking activities.

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