10. Provisions, Contingent Liabilities and
Contingent Assets
10.1 In conformity with AS 29 - "Provisions, Contingent
Liabilities and Contingent Assets” issued by the
Institute of Chartered Accountants of India, the Bank
recognizes provisions only when it has a present
obligation because of a past event, and would result
in a probable outflow of resources to settle the
obligation and when a reliable estimate of the amount
of the obligation can be made.
10.2 No provision is recognized for
I. Any possible obligation that arises from past
events and the existence of which will be
confirmed only by the occurrence or non¬
occurrence of one or more uncertain future
events not wholly within the control of the Bank;
or
II. Any present obligation that arises from past
events but is not recognized because:
• It is not probable that an outflow of resources
embodying economic benefits will be
required to settle the obligation; or
• A reliable estimate of the amount of
obligation cannot be made.
Such obligations are recorded as Contingent
Liabilities.
10.3 The Bank has made 100% provision for redemption
against the accumulated reward points in respect of
standard credit card holders.
10.4 Contingent Assets are not recognized in the financial
statements.
11. Impairment of Assets
Fixed assets are reviewed for impairment whenever events
or changes in circumstances warrant that the carrying
amount of an asset may not be recoverable. Impairment
to be recognized is measured by the amount by which the
carrying amount of the asset exceeds the fair value of the
asset.
12. Share Issue Expenses
Share issue expenses are charged to the Share premium
Account.
13. Earnings per Share
13.1 The Bank reports basic and diluted earnings per
share in accordance with AS 20 - "Earnings per
Share” issued by the ICAI. Basic Earnings per Share
are computed by dividing the Net Profit after Tax
for the year attributable to equity shareholders
by the weighted average number of equity shares
outstanding for the year.
13.2 Diluted Earnings per Share reflect the potential
dilution that could occur if securities or other
contracts to issue equity shares were exercised or
converted during the year. Diluted Earnings per Share
are computed using the weighted average number of
equity shares and dilutive potential equity shares
outstanding at year end.
ii) Liquidity Coverage Ratio (LCR)
Liquidity Coverage Ratio (LCR) guidelines were implemented by the Banks with an objective to maintain adequate level of
unencumbered High Quality Liquid Assets (HQLAs) that can be converted into cash to meet its liquidity needs for a time-
horizon up to 30 calendar days under a significantly severe liquidity stress scenario.
i ^ Stock High Quality Liquid Assets (HQLAs)
Total Net Cash Outflows over the next 30 calendar days
HQLA comprise of liquid assets that can be readily encashed or used as collateral to obtain cash in a range of stress scenarios.
There are two categories of assets included in the stock of HQLAs viz. Level 1 and Level 2 (Level 2A and Level 2B) assets. While
Level 1 assets are with 0% haircut Level 2A and Level 2B assets are with 15% and 50% haircuts respectively.
The Total Net Cash Outflows are the total expected cash outflows minus total expected cash inflows for the subsequent 30
calendar days.
In accordance with RBI guidelines vide circular no. RBI/2014-15/529 DBR. No. BP.BC.80/21.06.201/2014-15 dated 31st March
2015 average weighted and unweighted amounts have been calculated taking simple daily average. The bank has considered
71 data points for the quarter ended March 31, 2026.
Bank's LCR was reported at 116.80% based on daily average of past three months (Q4 FY25-26). The position remained above
the minimum regulatory requirement of 100%. Average HQLA held during the quarter was I 35184.79 Cr which were mostly
in the form of level 1 assets. The weighted average total net cash outflows were to the tune of I 30123.10 Cr.
Liquidity Management in the Bank is driven by RBI guidelines and Bank's ALM Policy. ALCO has been empowered by the
Bank's Board to formulate funding strategies to ensure that the funding sources are well diversified and is consistent with
the operational requirements of the Bank. In addition to daily/monthly LCR reporting Bank also prepares Structural Liquidity
Statement on ongoing basis to assess the liquidity needs of the Bank.
iii) Net Stable Funding Ratio (NSFR)
Net Stable Funding Ratio (NSFR) guidelines ensure reduction in funding risk over a longer time horizon by requiring banks to
fund their activities with sufficiently stable sources of funding in order to mitigate the risk of future funding stress. The NSFR
is defined as the amount of Available Stable Funding relative to the amount of Required Stable Funding.
Available Stable Funding (ASF)
NSFR = >100%
Required Stable Funding (RSF)
Bank’s NSFR stood at 124.51% at the end of the quarter ended March 31, 2026 and is above the minimum regulatory requirement
of 100%. The Available Stable Funding (ASF) as on 31.03.2026 stood at I 143518.60 crores and amount for Required Stable
Funding (RSF) as on 31.03.2026 stood at I 115264.38 crores.
The Available Stable Funding (ASF) is primarily driven by the total regulatory Capital as per Basel III capital adequacy guidelines
stipulated by RBI and the deposits from retail customers small business customers and non-financial corporate customers.
Under the Required Stable Funding (RSF) the primary drivers are unencumbered performing loans with residual maturities
of one year or more.
Quantitative disclosures:
The following tables contain unweighted and weighted values of NSFR components as on quarter ended March 31, 2026
December 31, 2025 September 30, 2025 and June 30, 2025.
a. The investment of the Bank (Sponsor) in its Associate i.e. Jammu & Kashmir Grameen Bank after amalgamation
of J&K Grameen Bank and Ellaquai Dehati Bank (EDB) with effect from 1st May 2025 vide the Ministry of Finance
(Department of Financial Services) Notification no. S.O. 1625(E) dated 5th April 2025 published in the Gazette of India
(CG-DL-E-07042025-262329) no. 1604 on 7th April 2025 stood at I 345.92 crores which represents 35% of the total Share
Capital of the new amalgamated entity i.e. Jammu & Kashmir Grameen Bank. This amount is after the Bank has paid to
State Bank of India I 139.62 crores at face value of I 10 per share for transfer of their shareholding in the erstwhile EDB.
b. Investments in Jammu and Kashmir Grameen Bank sponsored institution (Associate) has been subject to valuation by
an independent registered valuer. The impairment amounting to I 228.65 crores has been provided for by recognising
it as an expense in the Profit & Loss Account.
xi) In terms of RBI/DOR/2025-26/162DOR.MRG.REC.No. 81/00-00-001/2025-26 Reserve Bank of India (Commercial Banks-
Classification Valuation and Operation of Investment Portfolio) Directions2025 bank holds Investment Fluctuation Reserve
(IFR) of I 263.63 Crores.
xii) The total investment of the Bank in PNB Met-life India Insurance Company Ltd stood at I 70.18 Crores as on 31.03.2026
(Previous year I 61.08 Crores). The investment of J & K Bank was increased by I 9.10 Crores during the year pursuant to
rights issue undertaken by PNB MetLife Insurance Company Limited which completed capital infusion of I 300.00 Crores
during the Financial year 2025-26. In Compliance with RBI Master Directions Reserve Bank of India (Commercial Banks-
Classification Valuation and Operation of Investment Portfolio) Directions 2025 the investment stands categorized as
FVTPL (Non-HFT) and valuations are carried out in accordance with the mentioned directions
XIV) Sale and Transfers to/from Held to Maturity (HTM) Category
There is no shifting from Held to Maturity (HTM) to Available for Sale (AFS) category.
Direct sale of I 1240 crores (Face value) having book value/carrying value of I 1214.64 crores was made during the FY 2025-26 in
HTM Category in line with RBI Master Direction Classification. Valuation and Operation of Investment Portfolio of Commercial
Banks (Directions) 2023 issued on 12th September 2023 updated on November 28, 2025.
The value of sales and transfer of securities to/from HTM category (excluding the exempted transfer) did not exceed 5%
of book value of the investment in HTM category at the beginning of the year.
v) Divergence in asset classification and provisioning
No disclosure on divergence in asset classification and provisioning for NPAs is required with respect to RBI’s supervisory process
for the year ended March 31 2026 based on the conditions mentioned in RBI circular No. DBR.BP.BC.No.31/21.04.018/2018-19
dated 1st April 2019.
vi) Disclosure of transfer of Loan exposures
a. Details of loans transferred/acquired during the Quarter ended March 312026 in accordance with Reserve Bank of India
(Commercial Banks-Transfer and Distribution of Credit Risk) Directions 2025 and Reserve Bank of India (Commercial
Banks-Financial Statements: Presentation and Disclosures) Directions 2025.
vii) Unhedged foreign currency exposure
Policy Disclosure: Unhedged foreign currency exposure is governed by Policy titled policy on Hedging Foreign Currency
Exposures dated 26-11-2025 created by Forex Planning and Operations Department (FPOD) date of next review 28-11-2028.
In accordance with RBI circular no DBOD.BP>BC.85/21.06.200/2013-14 dated 15th January 2014 and circular no DBOD.
BP.BC.116/21.06.200/2013-14 dated 3rd June 2014 and In accordance with RBI circular no RBI/DOR/2025-26/157 dated
November 28 2025 and circular no DOR.CRE.REC.76/07-02-001/2025-26 dated November 28 2025 banks are required to
make an additional provision in respect of borrowers with Un-hedged Foreign Currency Exposures (UFCE) from April 1 2014
onwards. Accordingly our bank has made the necessary provisions.
iv) Disclosures on risk exposures in derivatives
a. Qualitative disclosures
The only derivatives traded by the Bank in the foreign exchange market are forward contracts. Forward contracts are
being used to hedge/cover the exposure in foreign exchange arising out of Merchant transactions and trading positions.
To cover the risks arising out of above derivatives various limits like AGL IGL and stop loss have been prescribed in the
trading policy of the bank which are monitored through VaR.
Outstanding forward exchange contracts held for trading are revalued at the exchange rates for appropriate maturity
rates as announced by FEDAI at the year-end exchange rates and the resultant gain/loss is taken to revenue.
viii) Disclosure on amortization of expenditure on account of enhancement in family pension of
employees of banks
Bank has estimated the additional liability on account of revision in family pension for employees as per IBA Joint Note
dated November 11 2020 amounting to I 72.50 Crores. However RBI vide their Circular RB1/2021-22/105 DOR.ACC.
REC.57/21.04.018/2021-22 dated 4th October 2021 has permitted Banks to amortise the said additional liability over a period
of not exceeding 5 (five) years beginning with financial year ending 31st March 2022 subject to a minimum of 1/5th of the
total amount being expensed every year. Bank has opted the said provision of RBI charged an amount of I 3.625 Crores and
I 14.50 crores to the Profit & Loss account for the quarter & Year ended 31st March 2026 respectively as such unamortised
expense balance now remains as zero as on 31st March 2026.
ix) Disclosure of Letters of Comfort (LoCs) issued by Banks
The Bank has not issued any letter of comfort on behalf of the customers or on its behalf in respect of trade credits during
the FY 2025-26.
15 Disclosure Requirements as per the Accounting Standards
a. Accounting Standard 5: Net Profit or Loss for the period Prior Period Items and Changes in
Accounting Policies
• During the year the bank has recognized prior period interest income of I 131.72 crore relating to earlier years under
the Ladli beti Scheme on account of receipt of value-dated interest from the government.
• To be more prudent the Bank has made additional provision of I 125.94 crore on its secured portion at the rate of
10% on its non-performing assets held in sub-standard D-1 & D-2 Category over and above the prescribed norms. The
additional provision on NPA's covered by ECGC CGTMSE CRGFTLIH and NCGTC is I 163.90 Crores.
b. Accounting Standard - 15 “Employee Benefits”
The bank has recognized in its books of accounts the liability arising out of employee benefits as the sum of the present value
of obligation as reduced by fair value of plan assets on the balance sheet date as under:
Basis of assumption:
Discount rate: Discount rate has been determined by reference to market yields on the balance sheet date on Government
Bonds of term consistent with estimated term of the obligations as per para 78 of AS-15(R).
Expected rate of return on plan assets: The expected return on plan assets is based on market expectations at the beginning
of the period for returns over the entire life of the related obligation.
Rate of escalation in salary: The estimates of future salary increases considered in actuarial valuations taking into account
inflation seniority promotion and other relevant factors mentioned in paras 83-91 of AS-15R.
Attrition rate: Attrition rate has been determined by reference to past and expected future experience and includes all types
of withdrawals other than death but including those due to disability.
Actuarial has factored the liability coming out of New Labour Code in respect of contract employees eligible for gratuity
amounting to I 0.534 crore as on 31.03.2026.
c. Accounting Standard - 17 “Segment Reporting”
i) The Bank has recognized business segment as its primary reportable segment under AS-17 classified into treasury Corporate/
Wholesale banking Retail banking and other banking Business. The necessary disclosure is given below:
e. Accounting Standard - 19 “Leases”
The properties taken on lease/rental basis are renewable/cancellable at the option of the Bank. The lease entered into by the
Bank are for agreed period with an option to terminate the leases even during the currency of lease period by giving agreed
calendar month's notice in writing.
Lease rent paid for operating leases are recognized as an expense in the Profit & Loss account in the year to which it relates.
The lease rent recognized during the year is I 97.00 Crores (previous year being I 90.52 Crores)
f. Accounting Standard - 20 "Earnings per Share”
The Bank reports basic and diluted earnings per equity share in accordance with Accounting Standard 20 - "Earnings per
Share”. Basic Earnings per Share is computed by dividing net profit after tax by the weighted average number of equity shares
outstanding during the year.
g. Accounting Standard - 21 "Consolidated Financial Statements”
The Bank has a fully owned subsidiary company "JKB Financial Services Ltd.”. The investment towards the capital of subsidiary
company is H 40.00 Crores (Previous Year H 40.00 Crores). The consolidated financial statements are placed accordingly in
terms of AS 21.
h. Accounting Standard - 22 "Accounting for Taxes on Income”
a) Current Tax
During the year the Bank has debited to Profit & Loss Account I 745.77 crore (Previous Year I 686.06 crore) on account of
current tax. The current tax has been calculated in accordance with the provisions of Income Tax Act 1961.
The Bank has exercised the option of lower tax permitted under Section 115BAA of the Income-tax Act 1961 as introduced by
the Taxation Laws (Amendment) Act 2019 from the financial year 2019-20 onwards.
b) Deferred Tax
Bank has recognized deferred tax asset (DTA)on the excess provision for bad and doubtful debts over and above under section
36(1) (viia) of the Income Tax Act 1961. It is to demonstrate that in future the write-off of bad and doubtful debts shall be against
such provisions in compliance with section 36(2)(v) read with section 36(1)(vii) of the Income Tax Act 1961.
The major components of DTA and DTL are given below
c) During the year Bank has transferred I 54.44 crores to Special Reserve created u/s 36 (1) (viii) of Income Tax Act 1961 and
consequential effect in Deferred Tax Liability amounts to I 13.70 crores has been created on this amount.
i. Accounting Standard - 23 "Accounting for Investments in Associates in CFS”
The Bank has a sponsored Bank "Jammu and Kashmir Grameen Bank”. The investment towards the capital of associate
concern is I 361.70 Crores (Previous Year I 217.97 Crores). The consolidated financial statements are placed accordingly in
terms of AS 23.
j. Accounting Standard - 28 "Impairment of Assets”
Majority of Fixed Assets of the Bank are considered as Corporate Assets and not cash generating assets and in the opinion
of Management there is no material impairment in these Fixed Assets. Regarding other Fixed Assets generating cash there
is no material impairment. As such no provision is required as per AS-28.
16 Additional Disclosures
a. Payment to Micro Small & Medium Enterprises under the Micro Small & Medium Enterprises
Development Act 2006
The Bank has initiated the process of capturing the data relating to enterprises which have been providing goods and services
to the entities falling within the purview of Micro Small and Medium Enterprises Development Act 2006 in the accounting
system. Pending the system augmentation the disclosure in respect of the amount payable to such Micro and Small Enterprises
as at March 31 2026 has not been made in the financial statements. In the opinion of the management of Bank the impact of
interest if any that may be payable in accordance with provisions of the Act is not expected to be material.
b. Office Accounts
Reconciliation/adjustment of inter-bank/inter-branch transactions branch suspense Government Transactions NOSTRO
System Suspense Clearing and Sundry Deposits is in progress on an ongoing basis. The impact in the opinion of the management
of the un-reconciled entries if any on the financial statements would not be material.
c. Provision on accounts covered under the provisions of Insolvency and Bankruptcy Code (sale):
In terms of RBI letter no. DBRNo.BO.15199/21.04.048/2016-17 dated June 23 2017 and Letter no. DBR.BP.1906/21.04.048/2017-
18 dated June 23 2017 and August 28 2017 respectively for the accounts covered under the provisions of Insolvency and
Bankruptcy Code (IBC) the Bank has made a total provision of 126.41 crore covering 100% of the total outstanding as on
March 31 2026.
d. Previous year figures have been regrouped/reclassified/Recasted wherever necessary to conform to current year
classification.
e. Miscellaneous Income:
During the year the following incomes earned (under the head Miscellaneous Income) were more than 1% of the Total Income: -
• During the current financial year the Bank has revalued immovable properties based on the average valuation of
reports obtained from two independent external valuers. The appreciation on account of revaluation amounts to
I 320.92 crores and devaluation amounts to I 6.04 crores. However an amount of I 4.07 crores has been debited to the
Revaluation Reserve on account of reversal of revaluation pertaining to the Fixed Assets. As such the net revaluation
surplus amounting to I 310.81 crores has been credited to the Revaluation Reserve. Further an amount of I 0.40 crores
on account of revaluation has been credited to the profit and loss account as it was earlier charged to the profit and
loss account and an amount of I 93 crores has been debited from the profit and loss account on account of decrease in
value of fixed assets.
• Pursuant to the Accounting Standard-10 "Property plant and equipment "applicable from 1st April 2017 depreciation of
I 30.12 crores for the Financial Year 2025-26 on account of revalued portion of the Fixed Assets (being Premises & Land)
has been transferred from the Revaluation Reserve to General/Revenue Reserve. However an amount of I 1.25 crores
has been transferred from General Reserve to Revaluation Reserve on account of reversal of revaluation pertaining to
two Fixed Assets. As such a net depreciation of I 28.87 crores (previous year I 30.03 crores) has been transferred from
Revaluation Reserve to General Reserve for FY 2025-26.
• Bank's property includes amortization in respect of leased properties amounting to I 0.76 crores (previous year I 0.76
crores)
• Since the bank has not proposed any dividend as such in align with section 15(1) of the Banking Regulation Act 1949 the
bank has not written off the entire amount of Intangible Assets. The Intangible Assets have been subject to depreciation
in accordance with its policy @ 33.33% on straight-line method.
h. Corporate Social Responsibility
Pursuant to Section 135 of the Companies Act 2013 specified companies covered under section 135(1) of the Companies Act
2013 are required to spend at least 2% of the average net profits made during the three immediately preceding financial
years in pursuance of their Corporate Social Responsibility Policy. Accordingly the amount required to be spent by the Bank
on CSR during the year was I 45.66 crores (previous year I 31.70 crores). The details of CSR activities carried out in line with
the CSR Policy of the Bank are given below:
Amount spent towards CSR during the year and recognized as expense in the profit and loss account on CSR related activities
is I 45.66 crore (previous year I 31.70 crore) including the amount of I 24.35 crore pertaining to ongoing projects provided in
the books of accounts. Out of I 24.35 crore an amount of I 1.05 crore was spent towards ongoing projects till 24th April 2026
and the remaining amount of I 23.30 crore was transferred to J&K Bank's "Unspent CSR JK Bank FY2025-26” on 24th April
2026 to be utilised towards on-going project(s)/program(s) in line with the provisions of the Companies (Corporate Social
Responsibility Policy) Amendment Rules 2021.
k. Central GST Commissionerate Jammu has raised a demand of GST Liability amounting to I 200.20 crores in addition to
previous year figure of I 8130.66 crores for the period 2019-20 to 2023-24 u/s 74(1) of CGST act-2017 and UTGST/JKGST Act
-2017 read with section 20 of IGST Act-2017 to be paid along with interest U/s 50(1) of the CGST Act- 2017 and UTGST/JKGST
Act -2017 read with section 20 of IGST Act-2017. An equivalent demand of penalty has also been raised.
The Bank is taking legal measures by filing a Writ Petition before the Hon'ble High Court of J&K and Ladakh in line with earlier
such cases to effectively contest the demand as the Hon'ble High Court previously granted a stay in a similar matter and
Bank expects positive outcome. Demand has been raised treating transfer price interest transactions between Branches and
Corporate Headquarters as taxable which are not taxable and as such the demand has been raised on futile grounds hence
infructuous..
17 Consequent to the final comments of the Comptroller & Auditor General of India (C&AG) for the financial year ended
31st March 2025 the Bank has affected a prior period appropriation of I 23.94 Crores by transferring the said amount from
General Reserve to Statutory Reserve to take care of the prior period appropriation of I 95.76 crore from Revaluation
Reserve to General Reserve pertaining to the financial years 2017-18 to 2022-23.
18 Under the Ladli Beti Scheme which is a flagship scheme of Govt. of UT of J&K to provide financial security to the girl child
from lower income backgrounds a recurring monthly contribution is made by the government into the beneficiaries'
accounts. The bank has been crediting the interest to beneficiaries' accounts on a value dated basis by corresponding
debit as an Interest expense. The bank has recovered prior period interest from government for the period 01.04.2016 to
31.03.2025 amounting to I 131.72 crores in addition to interim amount of I 18.28 crores out of the total recoverable amount
of I 64.36 crores for the current year. The bank has booked the balance amount of I 46.08 crores against this expense as
Recoverable from Government.
19 There are no Pension dues from Government of UT of J&K as at 31.03.2026.
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