Appraisal on housing loan

IslamicUniversityof ScienceandTechnology
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ISLAMIC UNIVERSITY OF SCIENCE AND
TECHNOLOGY
AWANTIPORA
SCHOOL OF BUSINESS STUDIES
Project Report on
APPRAISAL ON HOUSING LOAN
In partial fulfilment of the requirements
for the award of degree of
MASTER OF BUSINESS ADMINISTRATION (MBA)
BY
SAIFULLAH YAQOOB
Roll No. MBA-16-53
SCHOOL OF BUSINESS STUDIES
ISLAMIC UNIVERSITY OF SCIENCE AND TECHNOLOGY
AWANTIPORA, J&K

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THE JAMMU AND KASHMIR BANK
www.jkbank.com
Branch Unit: Zakir Nagar, New Delhi 110025
Dated: 02/10/2018.
TO WHOMSOEVER IT MAY CONCERN
This is to certify that Saifullah Yaqoob, pursuing his MBA Degree from Islamic
University Of Science and Technology, has undergone Summer
Training/Internship Project with our Bank from 17-08-2018 to 30-09-2018.
During the period, he was associated with the study of Housing Loan Scheme
and on completion of the training he submitted a report on the project titled
“APPRAISAL ON HOUSING LOAN.”
His work is exemplary and he has been successful in putting academic
knowledge into practical field. He was found committed to the challenge and
has completed the project successfully.
We take this opportunity to wish him good luck for all his future endeavors.
Thanking You.
Branch Head,
B/U: Zakir Nagar, New Delhi. 110025

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ACKNOWLEDGEMENT
First and foremost, I bow in reverence to Allah Almighty, who
bestowedupon me goodhealth,patienceandcourage,andwhose mercy, compassion
and countless blessings have guided me at every step of my life and enabled me the
very right step forward in my academic pursuit towards excellence, reflected in
completion ofthis researchwork.This project workhas been immensely benefited me
from the genuine and wholehearted assistance of many fine people. This is the time
to show my gratitude to all those people who spared their precious time and energy
in helping me to complete this project work successfully. I wish to express my
appreciation to all those with whom I worked and whose thoughts and insights
contributed to the completion of this project.
I am sincerelythankful to J&K Bank Ltd. for giving me the opportunity to
work as an Intern in their esteemed organization.
It is a privilege for me to express my profound and sincere gratitude to my
parents especially my father Mr. Mohammad Yaqoob for their constant guidance
and valuable support and inspiration throughout the course of the work, without
which it would have been arduous for me to pursue the project.
I wouldalso like to thank my Project Supervisor Mr. Umer Mahajan(Senior
Credit Incharge ), J&K Bank, Zakir Nagar, New Delhi and my immediate family
members and friends for their timely support and assistance in the successful
completion of this project.

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PREFACE
In this era of globalization and liberalization of the
economy, business practice has evolved and in the process of
getting modified, the change in the policies and procedure of the
government, in this context, business education has also
changed in its strive for excellence to meet the global standard.
Giving this a due consideration, the practical training
schedule has been inducted in the curriculum of business
studies as the same gives a practical exposure to the actual
condition, relevant to the field.
For this purpose, I got an opportunity to undergo a
practical training session of 45 days at J&K BANK, Zakir Nagar,
New Delhi. 110025.
This training period was a highly worthful experience for
me.
Place: Zakir Nagar.
Dated: 02.10.2018.

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EXECUTIVE SUMMARY
TITLE: APPRAISAL ON HOUSING LOAN
ORGANISATION: Jammu And Kashmir Bank Ltd.
BRANCH: Zakir Nagar, New Delhi. 110025
SUPERVISOR: Mr. Umer Mahajan
STUDENT NAME: Mr. Saifullah Yaqoob
PROJECT DURATION: 45 days

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TABLE OF CONTENTS
S.
No.
Title
Page
No.
1 Introduction: A Brief History Of Banking
2 Introduction About Banking Sector
3 Appraisal Of Housing Loan And Its Comparison With Other
Major Banks
4 Research Methodology
5 Data Analysis And Interpretation
6 Conclusion
7 Recommendations
8 Annexure
9 Bibliography

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INTRODUCTION: A BRIEF HISTORY OF BANKING
In the recent era, the story of "the Banks" commences with the development of
the modern banking system in Middle Ages Europe. At that time, disposable wealth
was usually held in the form of gold or silver bullion. For safety, such assets were
kept in the custody of the local goldsmith, he usually being the only individual who
had a vault on his premises. The gold smith would issue a receipt for the deposit and,
to undertake financial transactions, the buyer would withdraw his gold and give it to
the seller, who would then deposit it again, frequently with the same goldsmith. As
this was a time-consuming process, it became common practice for people to simply
exchange smiths' receipts when conducting financial transactions. As time passed, the
goldsmiths began to issue receipts for specific values of gold, making buying and
selling easier still. The smiths' receipts thus became the first banknotes. The
goldsmiths, now fledgling bankers, noticed that at any one time only a small
proportion of the gold held with them was being withdrawn. So they hit upon the idea
of issuing more of the receipt notes themselves, notes that did not refer to any actual
deposited wealth. By giving these receipts to people seeking capital, in the form of
loans, the goldsmiths could use the money deposited with them by others to make
money for themselves. It was found that, for every unit of gold held by the goldsmith,
ten times the sum could be safely issued as notes without anyone usually becoming
any the wiser. If a goldsmith held, say, 100 pounds of other people's gold in his vaults,
he could issue banknotes to the value of 1000 pounds. As long as no more than 10
percent of the holders of those notes wanted their gold at any one time, no one would
realize the fraud being perpetrated. This practice, known as "fractional reserve
lending," continues to this day and is actually the backbone of the modern banking
industry. Banks typically loan ten times their actual financial holdings, meaning 90%
of the money they lend does not now, never has, and never will exist. Loans issued by
the goldsmiths had to be paid back to them with interest, meaning non-existent money
slowly became converted to tangible assets in the form of goods and labor. Should the
loan be defaulted upon, the banker had the right to seize the defaulter's property. As
time passed, therefore, the goldsmiths became wealthier and wealthier. They had
devised a scheme to create money out of thin air and then convert this money into real
goods, labor, or property. A loan of money at 12% interest recouped not merely 12%
for the banker, but 112%, as it does to this day. As the industrial era began, so the

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potential for furthering this scheme increased exponentially .The goldsmiths were
now fully-fledged bankers, and their ability to create money out of thin air and
then convert it into tangible assets enabled them to begin to control whole industries
to the point where the worlds of banking and industry became, to all intents and
purposes, seamless entities. As the twentieth century dawned, the banking families hit
upon a new means to consolidate and increase their gains. They discovered that by
periodically restricting the money supply crashes within the emergent stock
exchanges of the world could easily be engineered. The most notable example of this
was the famous Wall Street Crash of 1929. What the history books usually fail to
record is that, in a crash, wealth is not actually destroyed, but merely transferred. The
"Crash of '29" allowed the most Powerful of the banking and industrial families to
absorb the weaker elements, generating even greater levels of centralized control.
As the technological revolution Progressed, so the buying up of TV stations
and newspapers allowed the creation and control of the mass media. This served to
ensure that only a portrayal of events that suited the interests of the elite banking
families would get to public attention -invariably one that all but denied their very
existence.

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EVOLUTION
With the exception of the extremely wealthy, very few people buy their homes
in all-cash transactions. Most of us need a mortgage, or some form of credit, to make
such a large purchase. In fact, many people use credit in the form of credit cards to
pay for everyday items. The world as we know it wouldn't run smoothly without
credit and banks to issue it. In this article we'll, explore the birth of these two now-
flourishing industries.
Introduction to Banking and saving Divine deposits
Banks have been around since the first currencies were minted, perhaps even
before that, in some form or another. Currency, particularly the use of coins, grew out
of taxation. In the early days of ancient empires, a tax of on healthy pig per year
might be reasonable, but as empires expanded, this type of payment became less
desirable. Additionally, empires began to need a way to pay for foreign goods and
services, with something that could be exchanged more easily. Coins of varying sizes
and metals served in the place of fragile, impermanent paper bills.
Flipping a Coin:
These coins, however, needed to be kept in a safe place. Ancient homes didn't
have the benefit of a steel safe, therefore, most wealthy people held accounts at their
temples. Numerous people, like priests or temple workers whom one hoped were both
devout and honest, always occupied the temples, adding a sense of security. There are
records from Greece, Rome, Egypt and Ancient Babylon that suggest temples loaned
money out, in addition to keeping it safe. The fact that most temples were also the
financial centers of their cities is the major reason that they were ransacked during
wars.
Coins could be hoarded more easily than other commodities, such as 300-
pound pigs, so there emerged a class of wealthy merchants that took to lending these
coins, with interest, to people in need. Temples generally handled large loans, as well
as loans to various sovereigns, and these new moneylenders took up the rest.
The First Bank:
The Romans, great builders and administrators in their own right, took
banking out of the temples and formalized it within distinct buildings. During this
time moneylenders still profited, as loan sharks do today, but most legitimate

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commerce, and almost all-governmental spending, involved the use of an institutional
bank. Julius Caesar, in one of the edicts changing Roman law after his takeover, gives
the first example of allowing bankers to confiscate land in lieu of loan payments. This
was a monumental shift of power in the relationship of creditor and debtor, as landed
noblemen were untouchable through most of history, passing debts off to descendants
until either the creditor's or debtor’s lineage died out.
The Roman Empire eventually crumbled, but some of its banking institutions
lived on in the form of the papal bankers that emerged in the Holy Roman Empire and
with the Knights of the Temple during the Crusades. Small-time moneylenders that
competed with the church were often denounced for usury.
Visa Royal:
Eventually, the various monarchs that reigned over Europe noted the strengths
of banking institutions. As banks existed by the grace, and occasionally explicit
charters and contracts, of the ruling sovereign, the royal powers began to take loans to
make up for hard times at the royal treasury, often on the king's terms. This easy
finance led kings into unnecessary extravagances, costly wars and an arms race with
neighboring kingdoms that lead to crushing debt. In 1557, Phillip II of Spain managed
to burden his kingdom with so much debt, as the result of several pointless wars, that
he caused the world's first national bankruptcy, as well as the second, third and fourth,
in rapid succession. This occurred because 40% of the country's gross national
product (GNP) was going toward servicing the debt. The trend of turning a blind eye
to the creditworthiness of big customers Continues to haunt banks up into this day and
age.
Adam Smith and Modern Banking:
Banking was already well established in the British Empire when Adam Smith
came along in 1776 with his "invisible hand" theory. Empowered by his views of a
self-regulated economy, moneylenders and bankers managed to limit the state's
involvement in the banking sector and the economy as a whole. This free
market capitalism and competitive banking found fertile ground in the New World,
where the United States of America was getting ready to emerge.
In the beginning, Smith's ideas did not benefit the American banking industry.
The average life for an American bank was five years, after which most bank notes

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from the defaulted banks became worthless. These state-chartered banks could, after
all, only issue bank notes against gold and silver coins they had in reserve. A bank
robbery meant a lot more before, than it does now, in the age of deposit insurance and
the Federal Deposit Insurance Corporation - FDIC. Compounding these risks was the
cyclical cash crunch in America.
Alexander Hamilton, the secretary of the Treasury, established a national bank
that would accept member bank notes at par, thus floating banks through difficult
times. This national bank, after a few stops, starts, cancellations and resurrections,
created a uniform national currency and set up a system by which national banks
backed their notes by purchasing Treasury securities, thus creating a liquid market.
Through the imposition of taxes on the relatively lawless state banks the national
banks pushed out the competition.
The damage had been done already, however, as average Americans had
already grown to distrust banks and bankers in general. This feeling would lead the
state of Texas to outlaw bankers, Law that stood until 1904.

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INTRODUCTIONABOUT BANKING SECTOR
In modern age, Banking constitutes the fundamental basis of economic
growth. The term bank is being used since long time but there is no clear conception
regarding its beginning. According to one viewpoint, in good old days, Italian
moneylenders were known as Bane chi or Banacheri, because these people kept
special type of table to transact their business, called Banchi. Origin of the word bank
belongs to the word Banchi or to the Greek word Banque. Both these words refer to
some kind of banking. According to another viewpoint, bank originated from the
German word (ital) Banque meaning Joint Fund.
Casa De San Giorgio was the first bank established in 1148. The First Public
bank of Venice was established in 1157.
As per Banking Regulation Act, 1949, “Banking” means:
“Accepting for the purpose of lending or investment of deposit of money from the
public, repayable on demand or otherwise and withdraw able by cheque, draft, order
or otherwise”
In simple words, bank refers to an institution that deals in money. This
institution accepts deposits from the people and gives loans to those who are in need.
Besides dealing in money, banks these days perform various other functions such as
credit creation, agency job and general service. Bank, therefore, is such an institution,
which accepts deposits from the people, gives loans, creates credit and undertakes
agency work.

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HISTORY OF BANKING IN INDIA
Without a sound and effective banking system in India, it cannot have a
healthy economy. The banking system of India should not only be hassle free but it
should be able to meet new challenges posed by the technology and any other external
and internal factors. For the past three decades, India's banking system has had several
outstanding achievements to its credit. The most striking is its extensive reach. It is no
longer confined to only metropolitan or cosmopolitan areas in India. In fact, Indian
banking system has reached even to the remote corners of the country. This is one
of the main reasons of India's growth process. The government's regular policy for
Indian bank since 1969 has paid rich dividends with the nationalization of 14 major
private banks of India. Not long ago, an account holder had to wait for hours at the
bank counters for getting a draft or for withdrawing his own money. Today, he has a
choice. Gone are days when the most efficient bank transferred money from one
branch to other in two days. Now it is as simple as instant messaging or dialing for a
pizza. Money has become the order of the day. The first bank in India, though
conservative, was established in 1786. From 1786 till today, the journey of Indian
Banking System can be segregated into three distinct phases. They are as mentioned
below:
Phase 1: Early phase from 1786 to 1969 of Indian Banks
Phase 2: Nationalization of Indian Banks and up to 1991 prior to Indian
banking sector Reforms.
Phase 3: New phase of Indian Banking System with the advent of Indian
Financial &Banking Sector Reforms after 1991.
Phase I
The General Bank of India was set up in the year 1786. Next came Bank of
Hindustan and Bengal Bank. The East India Company established Bank of Bengal
(1809), Bank of Bombay (1840) and Bank of Madras (1843) as Independent units and
called it Presidency Banks. These three banks were amalgamated in 1920 and
Imperial Bank of India was established which started as private shareholders bank,
mostly for Europeans shareholders. In 1865, Allahabad Bank was established and first
time exclusively by Indian, Punjab National Bank Ltd. was set up in 1894 with
headquarters at Lahore. Between 1906 and 1913, Bank of India, Central Bank of

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India, Bank of Baroda, Canara Bank, Indian Bank, and Bank of Mysore were set up.
Reserve Bank of India came in 1935.During the first phase, the growth was very slow
and banks also experienced periodic failures between 1913 and 1948. There were
approximately 1100 banks, mostly small. To streamline the functioning and activities
of commercial banks, the Government of India came up with The Banking Companies
Act, 1949 which was later changed to Banking Regulation Act 1949 as per amending
Act of 1965 (Act No. 23 of 1965). Reserve Bank of India was vested with
extensive powers for the supervision of banking in India as the Central Banking
Authority. During those day’s public had lesser confidence in the banks. As a result
deposit mobilization was a low. However, the savings bank facility provided by the
postal department was comparatively safer. Moreover, funds were largely given to
traders.
Phase II
Government took major steps in Indian Banking Sector Reform after
independence. In the1960’s a major portion of nationalization was carried out with
nationalization of seven banks forming subsidiaries of State Bank of India on 19th
July 1960. It was the effort of the then Prime Minister of India, Mrs. Indira Gandhi.
Fourteen major commercial banks in the country were nationalized. Second phase of
nationalization under Indian Banking Sector Reform was carried out in
1980’swith seven more banks. This step brought 80% of the banking segment in India
under Government ownership. The following are the steps taken by the Government
of India to Regulate Banking
Institutions in the Country:
• 1949: Enactment of Banking Regulation Act.
• 1955: Nationalization of State Bank of India.
 1960: Nationalization of SBI subsidiaries.
• 1961: Insurance cover extended to deposits.
• 1969: Nationalization of 14 major banks.
• 1971: Creation of Credit Guarantee Corporation.
• 1975: Creation of regional rural banks.
• 1980: Nationalization of seven banks with deposits over Rs. 200 corers.

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After the nationalization of banks, the branches of the public sector banks in India
experiencedarise of approximately 800% in deposits and advances took a huge jump
by 11,000%. Banking in the sunshine of Government ownership gave the public
implicit faith and immense confidence about the sustainability of these institutions.
Phase III
DEVELOPMENT BANKS
1) Industrial Finance Corporation of India (IFCI)
2) Industrial Development Bank of India (IDBI)
3) Industrial Credit & Investment Corporation of India (ICICI)
4) Industrial Investment Bank of India (IIBI)
5) Small Industries Development Bank of India (SIDBI)
6) National Bank for Agriculture & Rural Development (NABARD)
7) Export-Import Bank of India(EXIM)

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BANK
A bank is a commercial or state institution that provides financial services,
including issuing money in form of coins, banknotes or debit cards, receiving deposits
of money, lending money and processing transactions. A commercial bank accepts
deposits from customers and in turn makes loans based on those deposits. Some banks
(called Banks of issue) issue banknotes as legal tender. Many banks offer ancillary
financial services to make additional profit; for most banks also rent safe deposit
boxes in their branches. Despite common assumptions, banks do not create money;
banks merely change debt from one form (loans) to another (banknotes).
Currently in most jurisdictions commercial banks are regulated and require
permission to operate. Bank regulatory authorities that provide rights to conduct the
most fundamental banking services such as accepting deposits and making loans grant
operational authority. A commercial bank is usually defined as an institution that
accepts both deposits and makes loans; there are also financial institutions that
provide selected banking services without meeting the legal definition of a bank.
Banks have influenced economies and politics for centuries. The primary purpose of a
bank was to provide loans to trading companies. Banks provide funds to allow
businesses to purchase inventory, and collected those funds back with interest when
the goods were sold. For centuries, the banking industry only dealt with businesses,
not consumers. Commercial lending today is a very intense activity, with banks
carefully analyzing the financial condition of its business clients to determine the
level of risk in each loan transaction. Banking services have expanded to include
services directed at individuals and risks in these much smaller transactions are
pooled.

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BANKS IN INDIA
In India the banks are being segregated in different groups. Each group has its
own benefits and limitations in operating in India. Each has its own dedicated target
market. Few of them only work in rural sector while others in both rural as well as
urban. Many, even, are only catering in cities. Some are of Indian origin and some are
foreign players.
Major Banks in India
ABN-AMRO Bank
Abu Dhabi Commercial Bank
American Express Bank
Andhra Bank
Allahabad Bank
Bank of Baroda
Bank of India
Bank of Maharashtra
Bank of Punjab
Bank of Rajasthan
Bank of Ceylon
BNP Paribas Bank
Canara Bank
Catholic Syrian Bank
Central Bank of India
Centurion Bank
China Trust Commercial Bank
Citi Bank
City Union Bank
Corporation Bank
Dena Bank
Deutsche Bank
Development Credit Bank
Dhanalakshmi Bank
Federal Bank
Indian Overseas Bank
Indus Ind Bank
ING Vysya Bank
Jammu & Kashmir Bank
JPMorgan Chase Bank
Karnataka Bank
KarurVysya Bank
Laxmi Vilas Bank
Oriental Bank of Commerce
Punjab National Bank
Punjab & Sind Bank
Scotia Bank
South Indian Bank
Standard Chartered Bank
State Bank of India (SBI)
State Bank of Bikaner & Jaipur
State Bank of Hyderabad
State Bank of Indore
State Bank of Mysore
State Bank of Saurashtra
State Bank of Travancore
Syndicate Bank
Taib Bank
UCO Bank
Union Bank of India

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HDFC Bank
HSBC ICICI Bank
IDBI Bank
Indian Bank
United Bank of India
United Bank Of India
United Western Bank
UTI Bank
Vijaya Bank
FOREIGN BANKS IN INDIA
Foreign banks have brought latest technology and latest banking practices in
India. They have helped in making Indian Banking system more competitive and
efficient. Government has come up with a road map for expansion of foreign banks in
India
The road map has two phases. During the first phase between March 2005 and March
2009, foreign banks may establish a presence by way of setting up a Wholly Owned
Subsidiary (WOS) or conversion of existing branches into a WOS. The second phase
commenced in April 2009 after a review of the experience gained after due
consultation
With all the stakeholders in the banking sector, the review would examine issues
concerning extension of national treatment to WOS, dilution of stake and permitting
mergers/acquisitions of any private sector banks in India by a foreign bank.
Major foreign banks in India are:
ABN-AMRO Bank
Abu Dhabi Commercial Bank Ltd
American Express Bank Ltd
BNP Paribas
Citibank
DBS Bank Ltd
Deutsche Bank
HSBC Ltd
Standard Chartered Bank

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RESERVE BANK OF INDIA
The Reserve Bank of India (RBI) is the central bank of India, and was
established on April 1, 1935 in accordance with the provisions of the Reserve Bank of
India Act, 1934. The Central Office is located at Mumbai since RBI’s inception.
Though originally privately owned, since nationalization in 1949, RBI is fully owned
by the Government of India. RBI is governed by a central board (board headed by a
governor) appointed by the Central Government of India. The current governor of
RBI is Dr. D. Subbarao; RBI has 22 regional offices across India.
Main Functions :-
Monetary Authority: - Formulates implements and monitors the monetary policy.
Objective: Maintaining price stability and ensuring adequate flow of credit to
productive sectors.
Regulator and supervisor of the financial system: - Prescribes broad parameters of
banking operations within which the country's banking and financial system
functions.
Objective: Maintain public confidence in the system, protect depositors' interest and
provide cost-effective banking services to the public.
Manager of Exchange Control: Manages the foreign exchange under Foreign
Exchange Management Act, FEMA 1999.
Objective: To facilitate external trade and payment and promote orderly development
and maintenance of foreign exchange market in India.
Issuer of currency: Issues and exchanges or destroys currency and coins not fit for
circulation.
Objective: - To give the public adequate quantity of supplies of currency notes and
coins of good quality.
CHART SHOWING INDIAN BANKING SYSTEM
Central Bank & Monetary Authority “RBI” Apex Banking Institutions:-

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IDBI
NABARD EXIM
BANK
HB
National
Housing
Bank
TYPES OF BANKS
ACCORDING TO
OWNERSHIP
ACCORDING TO
LAW
ACCORDING TO
FUNCTION
PUBLIC
SECTOR
BANKS
PRIVATE
SECTOR
BANKS
CO-OPERATIVE
BANKS
NON-SCHEDULED
BANKS
SCHEDULED
BANKS
BANKING
INSTITUTIONS
APEX BANKING INSTITUTION
Commercial Banks
Regional Rural
Banks
Co-operation Bank
Public sector banks Private Sector Banks
State Co-operative Bank
Central Distt. Co-
operative Bank
Primary Credit Societies
State Banks Nationalized
Banks
Subsidiary
Companies
Indian
Banks
Foreign
Banks
State Bank of India Subsidiary banks
Old Banks
s
New Banks Local Banks

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SCHEDULED BANKS IN INDIA
(PUBLIC SECTOR)
Scheduled Banks are those banks, which are included in the second schedule
of the Reserve Bank Act, 1934. In terms of Section 42(5) of the Reserve Bank of
India Act, a bank should fulfill the following conditions:
It must have a paid up capital & reserve of an aggregate value of not less than Rs. 5
lacks.
It must satisfy RBI that its affairs are not conducted in a manner detrimental to the
depositors. It must be a state co-operative bank of a company under companies Act,
1956 or an institution notified by Central Government in this behalf or a corporation
or a company incorporated under law in force in a place in or outside India. The
scheduled banks enjoy certain privileges like approaching RBI for financial
assistance; refinance etc. and correspondingly, they have certain obligations like
maintaining certain cash reserves as prescribed by the RBI, submission of returns etc.
The scheduled commercials Banks in India comprises of state bank of India and its
eight association, the other nineteen nationalized foreign banks, private sector banks
co-operative banks and regional rural banks. As at the end of 30th June, 1999, there
were 300 scheduled banks in India having a total networking of 64,918 branches
among them. Non-scheduled banks are those joint stock banks, which are not included
in the second schedule of RBI Act on account of the failure to comply with the
minimum requirements for being scheduled. As on 30th Jun 1997, there are only, 3
non scheduled commercial banks operating in the country with a total of 9 branches:
State Bank of India
State Bank of Bikaner and Jaipur
State Bank of Hyderabad
State Bank of Indore
State Bank of Mysore
State Bank of Patiala
State Bank of Saurashtra
State Bank of Travancore
Andhra Bank

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Allahabad Bank
Bank of Baroda
Bank of India
Bank of Maharashtra
Canara Bank
Central Bank of India
Corporation Bank
Dena Bank
Indian Overseas Bank
Indian Bank
Oriental Bank of Commerce
Punjab National Bank
Punjab and Sind Bank
Syndicate Bank

IslamicUniversityof Science and Technology
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HISTORICAL BACK GROUND OF THE J&K BANK LTD
Entire banking in the state of Jammu and Kashmir was performed by
traditional lenders till 1920-30 and that too at exorbitant interest rates. At the same
time some banks functioned on a very limited scale, such as Punjab National Bank
Limited, Grind-lay’s Bank and Imperial Bank of India. The role of these banks was
reduced to the acceptance of deposits, as they could not grant loans and advances to
the people of the state owing to the statutory limitations. Under this scenario banks
could not ameliorate the financial and social position of the people of the state. To
overcome this critical situation the then Maharaja of the state conceived an idea of
setting up of a state bank in the state. After a prolonged exercise and deliberations the
assignment for establishment of “The Jammu and Kashmir Bank Limited” was given
to the late Sir Sorabji N Pochkhanwala, the then Managing Director of the Central
Bank of India. Mr. Pochkhawala formulated a scheme on 24-09-1930, suggesting
establishment of a semi state Bank with participation in capital by state and the public
under the control of state Government. Thus the bank was formally incorporated on
the 1st of October 1938 and commenced business from 4th of July 1939 at its
Registered Office, Residency Road, Srinagar, Kashmir. The Jammu & Kashmir Bank
Limited has been the first of its nature and composition as a State owned bank in the
country. The state Govt. besides contributing half of the issued capital also appointed
it as its bankers for general banking and treasury business. In its formative years,
the bank had to encounter several serious problems, particularly around the time of
independence, when out of its total often branches two branches of Muzaffarabad and
Mirpur fell on the other side of the line of control along with cash and other assets; in
1947. However the State Govt. came to its rescue with the assistance of Rs.6.00 lacs
to meet the claims thereafter, the bank stead fastly overcame its difficulties and kept
growing. Following the extension of Central laws to the state of Jammu & Kashmir,
the bank was defined as a govt. company as per the provisions of Indian Companies
Act 1956.The bank had its first full time chairman in 1971, following social Central
measures in banks .The year 1971 was a turning point for the bank on conferment of
scheduled bank status and witnessed remarkable progress in all the vital fields of
operations .The bank was declared as "A" Class Bank by Reserve Bank of India in
1976. In recognition of dominant role and exalted performance, Reserve bank of India
appointed the bank as its agent for performing the general banking business of the
Central Govt. especially in maintaining currency chests and collection of taxes.

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INTRODUCTION ABOUT THE J&K BANK
The Jammu & Kashmir Bank is today one of the fastest growing banks
in India with a network of more than 800 branches/offices spread across the country
offering world class banking products/services to its customers. Today, the Bank has a
status of value driven organization and is always working towards building trust with
Shareholders, Employees, Customers, Borrowers, Regulators and other diverse
Stakeholders, for which it has adopted a strategy directed to developing a sound
foundation of relationship and trust aimed at achieving excellence, which of course,
comes from the womb of good Corporate Governance. Good Governance is a source
of competitive advantage and a critical input for achieving excellence in all pursuits.
J&K Bank considers good Corporate Governance as the sine qua non of a good
banking system and has adopted a policy based on all the four pillars of good
governance; Transparency, Disclosures, Accountability and Value, enabling it to
practice Trusteeship, Transparency, Fairness and Control, leading to stakeholders
delight, enhanced shareholder value and ethical corporate citizenship. It also ensures
that bank is managed by an independent and highly qualified Board following best
globally accepted practices, transparent disclosures and empowerment of
shareholders, besides ensuring to meet share-holders aspirations and societal
expectations following the principles of management's executive freedom to drive the
bank forward without undue restraints but within the framework of effective
accountability.
Profile
 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
 53 per cent owned by the Government of J&K.
 Rated "P1+" by Standard and Poor- CRISIL connoting highest degree of
safety.
 Four decades of uninterrupted profitability and dividends.

25
Unique Characteristics: One of a kind
 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.

26
VISION OF THE BANK
The Bank's vision is: -“To catalyze economic transformation and capitalize
on growth”.
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. The Bank is committed to achieve healthy
growth in profitability and simultaneously to remain consistent with the Bank's risk
appetite and at the same time ensuring the highest levels of ethical standards,
professional integrity and regulatory compliance.
MISSION OF THE BANK
The company’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 it the most profitable bank in the country.
Performance at a Glance (Financial Year 2014-15)
 The aggregate business of the bank stood at Rs. 110342.01 crore at the end of
the financial year 2014-15.
 The bank achieved deposit figure of Rs. 66756.19 crore as on 31st march,
2015. CASA deposits of the bank at Rs. 27476.39 crore constituted 41.79% of
the total deposits of the bank. Cost of deposits for current financial year stood
at 6072%.
 The net advances of the bank stood at Rs. 44585.82 crore as on 31st March,
2015.
 Yield on advances for the current financial year stood at 11.52%.
 Priority sector advances (Gross) stood at Rs.17124 crore as on 31st March,
2015.
 The bank effected cumulative cash recovery, up-gradation of NPA’s and
technical write-off of Rs. 545.14 crore during financial year 2014-15.
 Investment portfolio of the bank stood at Rs. 25124.30 crore as on 31st March,
2015.

27
 The bank earned an income of Rs. 33.42 crore from the insurance business. In
life insurance, the bank mobilized business of Rs. 199.61 crore and in non-life
segment, business of R. 122.35 crore was mobilized during the year.
 The interest income of the bank recorded a growth of R.294.13 crore and
increased from Rs. 6767.00 crore in the year 2013-14 to Rs. 7061.13 crore in
the year 2014-15. Interest expenses increased from Rs. 4082.52 crore to Rs.
4410.22 crore during the year. The Net Interest Income (NII) stood at Rs.
2650.91 crore for the financial year 2014-15.
 The cost to income ratio (operating expenses to net operating income) stood at
43.42% in the financial year 2014-15.
 The Gross Profit for the financial year 2014-15 stood at Rs. 1835.83 crore.
 The bank registered a Net Profit of Rs. 508.60 crore for the financial year
2014-15.
 During the financial year 2014-15, 40 new branches were established, thereby
taking the number of branches to 817 as on 31-03-2015, spread over 20 states
and one union territory.
 During the financial year 2014-15, 85 ATMs were commissioned thereby
taking the number of ATMs to 885 as on 31-03-2015.
 In continuance of the early trends of cash dividends, the Board of Directors
have recommended dividend @ 210% (Rs. 2.10 per equity share) for approval
by the shareholders at this Annual General Meeting.
 The net worth of the bank increase to Rs. 6110.05 crore on 31st March, 2015
from 5723.61 crore on 31st March, 2014.
 Capital Adequacy Ratio (CAR) under Basel III stood at 12.57% as on 31st
March, 2015 well above RBI stipulated norm of 9%. The Tier I component of
CRAR is 11.26% as on 31st March, 2015.
 Earnings per share and book value per share for the financial year 2014-15
stood at Rs. 10.49 and Rs. 100.54 respectively.

28
 The gross NPA of the bank as on 21.03.2015 stood at Rs. 156.99 crore which
accounts for 13.37% of gross advances. The net NPAs stood at Rs. 105.23
crore which accounts for 9.38% of net advances.
 The business per branch as on 31st March, 2015 stood at Rs.17.41 crore as
against Rs. 16.74 crore as on corresponding date of the previous year,
recording a growth of 4%.
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. Now, it is
our Endeavor to go beyond the letter of the Corporate Governance codes and apply it
innovatively in a more meaningful manner thereby making it relevant to the
organization that is operating in a specific environment, which is different from the
generic Anglo-Saxon one. 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. We, as 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

29
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. Of our directors to make J&K Bank an engine of social
transformation. As an eminent corporate jurist (Chancellor William T. Allen) from
US says, “A corporate director has civic responsibility. The people, who accept this
responsibility, do it conscientiously and well deserve our respect as they are serving a
nation. But those who as directors are passive and view their role as mere advisers,
are pliable and pleasant but do not insist on a real monitor’s role, do small service to
anyone and deserve little respect”. Our directors belong to the former category.
CORPORATE HEADQUARTERS
RECOGNITION AND AWARDS
The Bank recently won the prestigious Asian Banking Award – 2005 for its
‘Development Project Financing Program', contributing significantly to the
development of tourism industry of the J&K State. The award was presented by the
Under Secretary Finance, Philippines, at a glittering Gala Dinner award function held

30
at Manila, Philippines on June 17, 2005.The annual Asian banking awards recognize
and honor Asian banks for outstanding, innovative and world-class products and
programs implemented during the previous year. It is the most respected and premier
banking awards program in Asia Pacific region. It is worth mentioning that the Bank
has won the Asian Banking Award consecutively for the second year. Last year, the
Bank won the award for Customer Convenience Programs and was also given runners
up certificate for its project ‘Motivating Employees for Better Performance under
‘operational efficiency program' category. The Bank was ranked fifth among the top
ten Asian banks and 762nd among top 1000 World banks. A renowned business
journal "Business Today” ranked JK Bank among 25 top investor friendly companies
in India, the only bank in the whole Indian Banking industry, which has been ranked
in the magazine among first 10 Investor Friendly Companies. The Bank for the
second consecutive year was ranked Best Private Sector Bank in Financial
Express/Ernest and Young combined Survey for the year 2002-03 released recently.
Bank was awarded ‘Shiromani Award’ for outstanding achievements in the field of
banking and commitment to national progress and human welfare during the year
under report. The Bank has figured among 24 Indian companies in Forbes Global-
100 best ‘under a billion Asia's Rising Companies', listed by Forbes magazine in its
issue dated November 01, 2006. The publication has commended J&K Bank for
representing economic dynamism' in the region, sustained growth in all spheres and
an excellent track record of rewarding its shareholders.
The bank was ranked as No 1 bank in Best Old Private Sector Bank category
in the survey conducted across the banking industry in terms of “Profitability” the
bank stands 3rd in the overall banking industry while as Ist in the category of Old
private sector banks.
The award is the recognition of the Bank’s strong fundamentals and dynamic
growth model.
The bank bagged the prestigious Best Enterprise award from Europe Business
Assembly (EBA) in London. The Socrates committee of EBA also awarded the
Chairman and CEO- Mr. Mushatq Ahmad with manager of the year medal and a
special statue.

31
Products & Services
Saving Bank Deposits
 Deluxe Saving Account
 General Saving Account
 Deluxe Salary Account
 General Salary Account
Term Deposits
 Millennium Deposits Scheme
 Flexi Deposits Scheme
 Fixed Deposits Scheme
 Child Care Scheme
 Cash certificates
 Super Earner Deposits Scheme
 Recurring Deposits Scheme
 Recurring Plus Account
 Smart Saver Scheme
 Depositors Pension Scheme
Current Accounts
 Platinum Current Account
 Gold Current Account
 Premium Plus
 Current Account
 Basic Current Account
Specialized Finance Schemes
 All Purpose Agri Term Loan
 Roshni Finance Scheme
 Khatamband Craftsmen Finance

32
 Zafran Finance
 Apple Finance
Loans
 Housing Loan Scheme
 Education Loan Scheme
 Car Loan Scheme
 Car Loan for used Cars
 Commercial Vehicle Finance
 Commercial Vehicle Finance (Used Vehicles)
Other Services
 Anywhere Banking
 Internet Banking
 SMS Banking
 ATM Services
 Debit and Credit Cards
 Merchant Acquiring
Depository Services
 Demat Account
 Other Services
Third Party Services
 Mutual Funds
 Insurance Services - Life &Non-Life
 Remittance Services

33
BANKS NEW IDENTITY
The new identity of the J&K Bank is a visual representation of the Bank’s
philosophy and business strategy. The three colored squares represent the three
regions of the state viz, Jammu, Kashmir and Ladakh. The counter-form created by
the interaction of the squares is a falcon with outstretched wings – a symbol of power,
speed 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.
Blue signifies expanding frontiers
Green signifies consolidating capabilities
Red signifies sustaining growth.
CSR INITIATIVES
 Rising to the occasion, J&K bank was the first organization to provide relief to
the people affected by devasting floods that hit the state in the financial year
2014-15. Notably, the bank contributed Rs. 5.00 crores towards J&K Flood
Relief Fund for being partners in providing succor to the people of the state in
rebuilding their sheltered dwellings.
 Shorty, after the floods the Bank donated 500 tents to the food hit families.
The Bank also facilitated distribution of medicines and food packets among
the flood hit people at various locations of the state. The major CSR activity
was undertaken under reactive project called, “HUM HAIN SAATH SAATH”
 Increased the number of sponsored special students (mentally challenged) of
Voluntary Medicare Society’s Shafakat School from 10 to 25.

34
 Enhanced the Cancer Society of Kashmir’s Annual Revolving Fund from 1.50
lacs to ` 5.00 lacs in view of the alarming increase in cancer diagnosis in the
state. Besides, an amount of 10 lacs was donated to the society for the
purchase of Hospital Furniture and other related items.
 Gifted several computers, sewing machines, knitting machines, musical
instruments, interlock machine, electric irons and a gas connection to
differently disabled persons, helping the vulnerable sections of society.
 Sponsored the education of 16 most deserving students of HELP Foundation, a
non-governmental organization pursuing the welfare of poor, orphans and
underprivileged children to widen educational opportunities for the
underprivileged.
 Sponsored various state-level sports tournaments including tournaments
organized for physically challenged persons; paid entry fee of three local
athletes for participation in sports activities at Estonia, Europe.
 Financed a project to revive the legacy of Kashmir DalgatePottery; the first
phase has successfully culminated while the work on the second phase of the
project is being continued with commitment.
 Policy
 With the objective of promoting the philanthropic activities, other social and
environmental issues, the bank has a CSR policy in place embodying the
broader principles for providing donations. The donations are made within the
prescribed limit of 1% of the published profit for the previous year. It focuses
on economic, social, cultural and geographical backwardness of the area.
Future, Growth & prospectus
 The Bank will continue its efforts to make every single process technology
driven. All business units will be migrated to CBS platform and more
importantly, 0-Data Loss system (3 Way DC/ DR) will be setup by March
2012. Other future IT initiatives include introduction of mobile banking, back-
up solution upgrade tape library for DC/ DR, setting up of call centre,
enhanced IT security through oracle audit vault and video surveillance for 50
new business units.

35
Customer Services
The Bank understands the philosophy of improving customer delight through
continuous and ceaseless efforts. We seek to meet the highest standards of customer
delight and providing time efficient, responsible and helpful services. We
continuously strive for strengthening and cultivating customer relationships at each
point of interaction. Besides, providing latest tech-savvy and customer friendly
services and products to our customers, human resources of the Bank are being
consistently motivated to ensure customer convenience of optimal standards.
Promoting Compliance
The policy standards and systems adopted by the Bank are in conformity with
the regulatory guidelines and strict adherence is ensured through a well-defined
structure of roles and responsibilities for enterprise-wide compliance.
Key Features
 The bank provides financial assistance for the benefit of Handicapped
persons/orphans/ poor patients suffering from serious ailments.
 Provides direct assistance or through Prime Minister's Relief Fund or Chief
Minister's Relief Fund or any other national level or state level calamity relief
fund to needy who have suffered due to natural disaster and calamities.
 Helps in rehabilitation of handicapped children/ persons belonging to
depressed classes of society.
 Provides for procurement of devices / apertures for kidney transplantation;
cardiac interventions; cancer patients; AIDS HIV and other dreaded diseases,
philanthropic support for people belonging to economically deprived sections
of the society.
 Provides financial support to orphanages.
 Provides scholarships to meritorious students of depressed sections of the
society at various levels with focus on the needy.
 Provides technical and financial support for the Heritage Preservation through
sponsorship of awareness seminars, organizing social service camps,
sponsoring Art & Literary works and preservation and development of

36
important Historical, religious, tourist sites, museums, libraries, archives,
scientific organizations and National properties.
 Provides financial assistance for protection of Environment/ecology.
 Constructs and develops the public utility services like bus stands,
development of parks, construction of drinking water posts, lavatories,
conveniences etc.
 The donations are directly made to depressed class of society including
physically challenged person or through a Non Governmental Organization
engaged in the ameliorating of the suffering of this class of society.
 To ensure transparency in selection of deserving beneficiaries followed by
disbursement of proceeds to the donees, the following precautionary measures
are also ensured.
I. The applicant should not be an employee of any Institution, semi-
Government, quasi- Government or Government organization entitled
to Medical Aid benefits.
II. The applicant is not a professional beggar.
 The applicant is not a dependent family member of Bank's own staff
 The Bank's CSR is rooted in its Corporate Governance philosophy, which in
turn is woven around Bank's commitment to ethical practices in the conduct of
its business, while striving in the constant quest to grow with profits and
enhance shareholders value and align interests of the shareholders,
stakeholders and society through adoption of best international practices and
standards. 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.
 The Bank donated Rs.one lakh to Maharaja Ranjit Singh Trust, New Delhi, for
the upliftment of downtrodden sections of the society. The Bank gave
donation to the Foundation for inter-community Relations Delhi for upliftment
of society. A financial assistance to the tune of Rs.1.00 lakh for the welfare of
Gujjarswas given to GurjarDesh Charitable Trust, Jammu. The Bank donated

37
sewing machines to destitute widows through Bhartiya Dalit Sahitya
Academy, Jammu. Showing its eagerness for the upliftment of women, the
Bank donated embroidery machines to Women's Welfare Society, Kachhama,
Kupwara. The Bank also gave donation to NGO Friends Association for
Ladies and Orphans Welfare (FAOW), Srinagar.
 Devastating fire in village Batpora (Wathora), Kashmir rendered hundreds of
people homeless and two persons lost their lives. The Bank organized a relief
camp and distributed 50 Kgs of rice and Rs. 5,000 to each of the affected
family. Similarly, another relief camp was organized for the fire victims at
Seer, Anantnag (South Kashmir), where blankets, eatables and domestic
utensils were distributed among the sufferers. A camp was also organized by
the Bank at Lasipora, Pahalgam, where cash was distributed among the fire
victims.
 With a view to help Kargil war sufferers of Drass area in Ladakh region in
their rehabilitation, the Bank organized a relief camp. Blankets and eatables
were distributed among the people covering about 1500 families settled in 17
villages in and around Drass, who had migrated to Sankoo, Saliskote and other
far flung areas of Kargil. Stationery items were distributed among the school
going children

38
THE BANKING AND THE TRADING BOOKS
The ‘banking book’ groups and records all commercial banking activities. It
includes all lending and borrowing, usually both for traditional commercial activities,
and overlaps with investment banking operations. The ‘trading book’ groups all
market transactions tradable in the market. The major difference between these two
segments is that the ‘buy and hold’ philosophy prevails for the banking book,
contrasting with the trading philosophy of capital markets. Accounting rules differ for
the banking portfolio and the trading portfolio. Accounting rules use accrual
accounting of revenues and costs, and rely on book values for assets and liabilities.
Trading relies on market values (mark-to-market) of transactions and Profit and Loss
(P&L), which are variations of the mark-to-market value of transactions between two
dates. The rationale for separating these ‘portfolios’ results from such major
characteristics.
The Banking Book
The banking portfolio follows traditional accounting rules of accrued interest
income and costs. Customers are mainly non-financial corporations or individuals,
although inter-banking transactions occur between professional financial institutions.
The banking portfolio generates liquidity and interest rate risks. All assets and
liabilities generate accrued revenues and costs, of which a large fraction is interest
rate-driven. Any maturity mismatch between assets and liabilities results in excesses
or deficits of funds. Mismatch also exists between interest references, ‘fixed’ or
‘variable, and results from customers’ demand and the bank’s business policy. In
general, both mismatches exist in the ‘banking book’ balance sheet. For instance,
there are excess funds when collection of deposits and savings is important or a deficit
of funds whenever the lending activity uses up more resources than the deposits from
customers. Financial transactions (on the capital markets) serve to manage such
mismatches between commercial assets and liabilities through either investment of
excess funds or long-term debt by banks.
Asset–Liability Management (ALM) applies to the banking portfolio and
focuses on interest rate and liquidity risks. The asset side of the banking portfolio also
generates credit risk. The liability side contributes to interest rate risk, but does not

39
generate credit risk, since the lenders or depositors are at risk with the bank. There is
no market risk for the banking book.
The Trading Portfolio
The market transactions are not subject to the same management rules. The
turnover of tradable positions is faster than that of the banking portfolio. Earnings are
P&L equal to changes of the mark-to-market values of traded instruments.
Customers include corporations (corporate counterparties) or other financial
players belonging to the banking industry (professional counterparties). The market
portfolio generates market risk, defined broadly as the risk of adverse changes in
market values over a liquidation period. It is also subject to market liquidity risk, the
risk that the volume of transactions narrows so much that trades trigger price
movements. The trading portfolio extends across geographical borders, just as capital
markets do, whereas traditional commercial banking is more ‘local’. Many market
transactions use non-tradable instruments, or derivatives such as swaps and options
traded over-the-counter. Such transactions might have a very long maturity. They
trigger credit risk, the risk of a loss if the counterparty fails.
Off-balance Sheet Transactions
Off-balance sheet transactions are contingencies given and received. For
banking transactions, contingencies include guarantees given to customers or to third
parties, committed credit lines not yet drawn by customers, or backup lines of credit.
Those are contractual commitments, which customers use at their initiative. A
guarantee is the commitment of the bank to fulfill the obligations of the customer,
contingent on some event such as failure to face payment obligations. For received
contingencies, the beneficiary is the bank.
‘Given contingencies’ generate revenues, as either upfront and/or periodic
fees, or interest spreads calculated as percentages of outstanding balances. They do
not generate ‘immediate’ exposures since there is no outflow of funds at origination,
but they do trigger credit risk because of the possible future usage of contingencies
given. The outflows occur conditionally on what happens to the counterparty. If a
borrower draws on a credit line previously unused, the resulting loan moves up on the
balance sheet. ‘Off-balance sheet’ lines turn into ‘on-balance sheet’ exposures when
exercised.

40
Derivatives are ‘off-balance sheet’ market transactions. They include swaps,
futures contracts, foreign exchange contracts and options. As other contingencies,
they are obligations to make contractual payments conditional upon occurrence of a
specified event.
Received contingencies create symmetrical obligations for counterparties who sold
them to the bank.
Capital Adequacy Ratio (CAR):-
The basic objectives of capital adequacy measures are soundness and stability of
banking system and level playing by reducing the source of competitive inequalities
in the system. The basic approach of capital adequacy ratio is derived from Basel
committee framework by computing unimpaired capital vis-à-vis risk weighted assets
(RWA), and the level of risk weights are decided on the basis of probabilities of
counterparty failures. Under BIS norms, Capital adequacy is the ratio of capital to risk
weighted assets. Capital is of two types; core capital i.e., capital which is wholly
visible in the published accounts, defined as tier I capital and tier II capital which
fulfills some, but all characteristic features of core capital.
The basic characteristic features of Tier I (core) capital are as under:
1. Fully paid
2. Permanent
3. Readily available for absorption of losses
4. No fixed change/ obligation
5. Subordinate to all other creditors.

41
PROFORMA FOR CALCULATION OF TIER I AND TIER II CAPITAL
TIER I CAPITAL
Particulars Amount Amount
I. Paid up capital
II. Disclosedreserve:
Statutory reserves
Capital reserves
P&L (credit Bal.)
Surplus from P&L appropriation a/c
Reserve fund/General reserves
Securities premium a/c
Total
Less: equity investment in subsidiaries
Less: goodwill & intangible assets
Less: current & accumulated losses orP&L a/c
(Debit bal.)
Tier I capital
+++
+++
+++
+++
+++
+++
+++
+++
+++
+++
+++
+++
+++
+++
+++
+++
+++

42
TIER II CAPITAL
Particulars Amount
(rs.)
Discount
rate
(%)
Amount of
capital
(rs.)
1. Undisclosed reserves
2. General provision & loan loss
reserves (either actual
amount or 1.25% of RWA,
whichever, is least)
3. Hybrid debt
4. Revaluation reserve
5. Subordinate debt:
Maturity time:-
Less than 1 year
1 year but less than 2 years
2 years but less than 3 years
+++
+++
+++
+++
+++
+++
+++
+++
+++
---
55%
100%
80%
60%
40%
20%
+++
+++
+++
45%
0%
20%
40%
60%
80%

43
THE BASEL COMMITTEE ON BANKING SUPERVISION
At the end of 1974, the Central Bank Governor of the Group of Ten countries
formed a committee of banking supervisory authority. As this Committee usually
meets at the Bank of International Settlement (BIS) in Basel, Switzerland, this
committee came to be known as the Basel committee. The committee’s members
came from Belgium, Canada, France, Germany, Italy, Japan, Luxembourg, the
Netherlands, Spain, Sweden, Switzerland, United Kingdom’s and United states.
Countries are represented by their central banks and also by the authority with formal
responsibility for the prudential supervision of banking business where this is not the
central bank.
The Basel committee does not possess any formal supra-national supervisory
authority, and its conclusions do not, and were never intended to, have legal force.
Rather, it formulates broad supervisory standards and guidelines and recommends the
statements of best practice in the expectation that individual authorities will take steps
to implement them through detailed national arrangements – statutory or otherwise –
which are best suited to their own national system (NEDfi Databank Quarterly, 2004).
In this way, the Committee encourages convergence towards common approaches and
common standards without attempting detailed harmonization of ember countries’
supervisory techniques.
The Committee report to the central bank Governor of the group of ten
countries and seeks the Governors’ endorsement for its major initiatives. In addition,
however, since the Committee contains representatives from institutions, which are
not central banks, the decision involves the commitment of many national authorities
outside the central banking fraternity. These decisions cover a very wide range of
financial issues.
One important objective of the committee’s work has been to close gaps in
international supervisory coverage in pursuit of two basic principles – that no foreign
banking establishment should escape supervision and the supervision should be
adequate. To achieve, this, the committee has issued a long series of documents since
1975.
BASEL I
In 1988, the BASEL committee decided to introduce a capital measurement
system (BASEL I) commonly referred to as the Basel Capital Accord. Since 1988,

44
this framework has been progressively introduced not only in member countries but
also in virtually all other countries with active international banks. Towards the end of
1992, this system provided for the implementation of a credit risk measurement
framework with minimum capital standard of 8%.
The basic achievement of Basel I have been to define bank capital and the so
called bank capital ratio. Basel I is a ratio of capital to risk weighted assets. The
numerator, Capital, is divided into Tier 1 (equity capital plus disclosed reserves minus
goodwill) and Tier 2 (asset revaluation reserves, undisclosed reserves, general loan
loss reserves, hybrid capital instrument and subordinated term debt). Tier 1 capital
ought to constitute 50% of the total capital base. Subordinated debt (with a minimum
fixed term to maturity of 5 years, available in the event of liquidation, but not
available to participate in the losses of the bank which is still continuing its activities)
is limited to maximum of 50% of Tier 1.
The denominator of the Basel I formula is the sum of risk-adjusted assets plus
off-balance sheet items adjusted to risk. There are five credit risk weights: 0%, 10%,
20%, 50% and 100% and equivalent credit conversion factors for off balance sheet
items. Some of the risk weights are rather ‘arbitrary’ (for example, 0% for
government or central bank claims, 20% for Organization for Economic Cooperation
and Development (OECD) inter-bank claims, 50% for residential mortgages, 100%
for all commercial and consumer loans). The weights represent a compromise
between differing views, and are not ‘stated truths’ about the risk profile of the asset
portfolio, but rather the result of bargaining on the basis of historical data available at
the time on loan performance and judgments about the level of risk of certain parts of
counterpart, guarantor or collateral. The risk weights have created opportunities for
regulatory arbitrage.
Increasingly there is no strong theory for the ‘target’ ratio 8% of the capital
(Tier 1 plus Tier 2) to risk-adjusted assets plus off-balance sheet items. The 8% figure
has been derived based on the median value in existing good practice at the time
(US/UK 1986 Accord): the UK and the USA bank around 7.5%, Switzerland 10% and
France and Japan 3% etc. Basel I was a simple ratio, despite the rather ‘arbitrary’
nature of the definition of Tier 2 capital, the risk weights and the 8% target ratio. It is
a standard broadly accepted by the industry and by the authorities in both developed
and developing countries.

45
BASEL II (Revised International Capital Framework)
Central bank Governors and the heads of bank supervisory authorities in the
Group of Ten (G10) countries endorsed the publication of “International
Convergence of Capital Measurement and Capital Standards: a Revised Framework”,
the new capital adequacy framework commonly known as Basel II. The Committee
intends that the revised framework would be implemented by the end of the year
2006.
In principle, the new approach (Basel II) is not intended to raise or lower the
overall level of regulatory capital currently held by banks, but make it more risk
sensitive. The spirit of the new Accord is to encourage the use of internal systems for
measuring risks and allocating capital. The new Accord also wishes to align
regulatory capital more closely with economic capital. The proposed capital
framework consists of three pillars-
Pillar 1 - Minimum capital requirements
Pillar 2 - Supervisory review process
Pillar 3 - Market discipline

46
APPRAISAL OF HOUSING LOAN AND ITS COMPARISON
WITH OTHER MAJOR BANKS
APPRAISAL OF HOUSING LOAN
S. No. Title J&K Bank Housing Finance Scheme for
Individuals.
A Pre Sanction Stage
A1 Nature of Facility
Term Loan.
A2 Purpose/ Types of Constructions eligible for finance.
 Residential houses/flats to be constructed/ purchased by the individuals.
 Residential houses/flats to be constructed by public agencies like HUDCO,
Housing Boards, Local Bodies, Co-operative Societies, Builders or Employers
etc. for individuals.
Note: In case of unfinished flats or houses, cost of completion/finishing of
house/flats shall be considered as part of total project cost.
 Residential house /flat to be constructed/purchased by a person who is already
owning a house in the town/village where he resides acquired by availing
housing loan from any bank / FI or otherwise and intends to buy/construct a
second house in the same or other town/village for the purpose of self-
occupation.
 Residential house /flat to be constructed/purchased by a person who intends to
purchase/construct a house and proposes to let it out on rental basis on account
of his posting outside the headquarters or because he has been provided
accommodation by his employer.
 Residential house / flat to be purchased by a person who is presently residing
as a tenant in that house / flat.
 For purchase of a plot only, provided a declaration is obtained from the
borrower that he will construct a house on the said plot, with the help of bank
finance or otherwise, within a period of 2 years. Advance is not permitted
against plots purchased on power of attorney basis
 Supplementary finance in the shape of additional loan may be granted within
the overall ceiling for carrying out alterations/ additions/repairs to the

47
houses/flats already financed.
 Finance for repairs & renovation of houses/flats already constructed with own
resources or with housing loan whether liquidated or outstanding
 Housing loan can be sanctioned for purchase/construction of 2nd house.
 Loan can be sanctioned for acquiring third and subsequent house too but such
loans shall not be sanctioned under this scheme and are to be dealt as
Exposure to Commercial Real Estate (CRE).
A3 Eligibility
Individuals having perpetual source of income, who belong to any of the following
categories:
a) Permanent Employees of State / Central Government, Government / Semi-
Government Undertakings & Autonomous Bodies.
b) Employees of Reputed Companies with a minimum of 3 years of service
c) Professionals, Self Employed Individuals / Businessmen with a minimum 3
years standing in the current profession.
d) Persons engaged in agricultural and allied activities.
e) Retired Employees of State / Central Government, Public Sector Undertaking.
Non-Resident Indians are also eligible for financing under the scheme.
Sanctioning authorities to satisfy themselves about the income earned by the
Non-Resident and take necessary safeguards for extending finance and regular
repayment of such loans.
f) Others:
In Case of repairs/renovation/alteration/additions to an ancestral property in the
name of either father or mother, who is dependent on son / daughter, loan can
be granted to the parent(s) by making the son / daughter as co borrower and his
/her income can be taken for computation of quantum of loan. However, in all
such cases mortgage of house shall be mandatory and all the legal heirs of the
father/mother should stand as guarantors to the amount of housing loan.
A4 Age of borrower
Minimum age: 18 years as on the date of sanction
Maximum age: 70 years. I.e. the age by which the loan should be fully repaid,
subject to availability of sufficient, regular and continuous source of income for
servicing the loan repayment.

48
In case quantum of loan is computed by adding the income of spouse / children,
the age of the youngest borrower / co-borrower can be considered for fixing the
tenor of loan subject to the condition that his / her contribution towards the
EMI is more than 50%
However, post disbursement, age can be relaxed up to 75 years on interest reset
dates in floating interest rate loans on the request of borrower to reduce EMIs
(EMIs can only be reduced to the level of first EMI).
A5 Maximum Quantum of Finance
Actual loan amount will be determined taking into consideration such factors as
applicant’s income and repaying capacity, age, assets and liabilities, cost of the
proposed house/flat etc. To enhance loan eligibility following options may be
added:
1) Income of spouse and / or children living with applicant, provided:
a) They have a steady income by way of salary and his/ her salary account is
maintained with Bank (preferably J&K Bank) or have a steady income by
way of engagement in any business activity, to be ascertained by the loan
apprising officer and concerned sanctioning authority after due diligence.
b) They are made co-borrowers i.e. loan to be sanctioned in joint names.
c) They (optional for spouse) are the joint owners of the land/flat/house.
d) Only residual income of spouse / son / daughter i.e. income net of all
deductions including deductions towards servicing of already availed loans
(if any) to be considered.
e) The income proof documents of spouse / children as applicable / stipulated
under scheme shall be obtained to verify their income
2) Expected rent accruals (less taxes, cess, etc.) if the house / flat being
purchased is proposed to be rented out.
3) Depreciation, subject to some conditions.
4) Regular income from all sources.
Accordingly the loan amount shall be assessed as under:
i. Loan for fresh construction/purchase of house/flat: Cost of construction /
House / Flat less by stipulated margin.
ii. For State/Central Govt Pensioners: 36 times of the net monthly pension
subject to the condition that loan sanctioned shall be fully repaid by the

49
time pensioner attains the age of 70 years and total deductions do not
exceed 50% of their monthly income.
i) Loan for carrying out repairs / renovations / additions / alterations:
(a) For carrying out repairs / renovations to the house / flat: Maximum
Rs.25.00 lakhs
(b) For carrying out addition / alteration to house / flat which is not acquired
by bank finance or where loan has been liquidated / adjusted: No cap on
maximum loan amount subject to the condition that the addition /
alteration is done after obtaining valid permission from competent
authority / Municipality (BOCA)
ii. Purchase of land: Housing loan facility can be sanctioned for purchase of
land/plot to be used for construction of house. The finance for purchase of
land/plot shall form part of housing loan within the overall entitlement
under the scheme and shall be restricted to the extent of maximum Rs.
50.00 Lakh or 60% of the cost of plot of land whichever is less, provided
the area of proposed land shall not be more than 5440 Sq ft or 1 Kanal.
Loan amount for purchase of plot shall be within the overall ceiling of
housing loan eligibility and in no case should surpass 60% of total loan
eligibility.
vi. Loan for construction of house for borrowers who have already availed
housing loan for purchase of land (plot): Loan Limit in such cases shall be
fixed after considering the cost of construction (of house / flat) less by the
stipulated margin. However, it shall be ensured that EMI for the loan for
construction of house flat together with the EMI towards loan already
availed for purchase land / plot and any other credit facility does not
exceed the stipulated deductions.
Gross deductions inclusive of loan EMI/s (existing as well as proposed) should
not exceed:
a) 60% of gross income: For individuals having income from all sources /
taxable income up to Rs. 10.00 lakh p.a.
b) 65% of gross income: For individuals having income from all sources above
Rs. 10.00 lakh up to Rs. 30.00 lakh p.a.
c) 75% of gross income: For individuals having income from all sources above

50
Rs. 30.00 lakh p.a.
Note: Estimated income tax / TDS, PF contribution, Premia towards insurance
and other compulsory deductions shall be included for computing gross
deductions.
A6 Proof of Income /Income Calculation
For salaried individuals / Pensioners:
 Income Proof: ITR/ Last Pay Certificate showing all deductions or Form 16
along with recent salary certificate. Pay certificates should also have
information about the age of the applicant, date of joining & date of retirement.
Net salary as per pay slip shall be compared with salary account statement of
borrower and any variations shall be inquired into. Deductions towards
additional PF/installments towards Recurring Deposits shall not be reckoned as
deductions.
For others:
 A Document establishing experience in business / occupation like:
Registration Certificate (in the case of a registered concern), Certificate/License
issued by the Municipal Authorities under Shop & Establishment Act, Sales and
Income Tax Returns, CST/VAT Certificate, Certificate/Registration document
issued by Sales Tax/Service Tax/Professional Tax authorities, License issued by the
Registering authority like Certificate of Practice issued by Institute of Chartered
Accountants of India, Institute of Cost Accountants of India, Institute of Company
Secretaries of India, Indian Medical Council, Food and Drug Control Authorities,
Bank Account (Current / Cash Credit / SOD ) Certificate* depicting date of account
opening.
*For J&K Bank customers, certificate to be issued by the Branch Head of Loan
apprising branch.
Income can be assessed by taking average of last two years income as revealed
from Income Tax Returns. Audited/Certified Balance sheet/Profit & loss
A/C etc.
 Income Proof: - Any of the following for last 2 years, in order of priority:
 ITR supported by balance sheet & P/L Statement.
 Audited accounts.
 Income certificate from Tehsildar / CA and Statement of Account (10% of

51
average credit turnover through the account for the last three years or income as
certified by Tehsildar / CA, whichever is lower to be taken as annual income).
 10% of sales as declared in annual VAT / Sales Tax Returns.
A7 Margin
For Construction / purchase:
Loan up to 30 Lakh 10%
Loan above Rs. 30 Lakh to Rs. 75 Lakh 20%
Loan above Rs. 75 Lakh 25%
For Purchase of Land / Plot: Borrowers’ contribution (margin) shall not be less
than 40% of the cost of land / plot
*Cost of plot of land as per sale deed in case of purchased land and Forced sale
value of land in case of owned land, can be taken as part of margin contribution by
the borrower subject to obtaining of valuation report from the approved valuer on
panel of bank or sale deed as the case may be.
** Stamp duty, registration and other documentation charges shall not be included
in the cost of the housing property to be financed so that the effectiveness of LTV
norms is not diluted. In case of already built houses/flats LTV is the ratio of the fair
market value of an asset to the value of the loan granted for purchase of the asset
and is calculated by dividing the loan amount by the fair market value of the
property. Loan-to-value tells the lender if potential losses due to nonpayment of the
loan can be recouped by selling the asset. Cost of land is also to be included in the
fair value of property if the land is mortgaged to the bank.
For Supplementary/ repairs/renovation/additions/alterations:
For Loans up to Rs. 5.00 Lakh NIL
For Loans above Rs. 5.00 Lakh to Rs. 10.00 Lakh 10%
For Loans above 10.00 lakh 15%
A8 Moratorium Period
 Maximum 9 months from the date of first disbursement in case of loans
sanctioned for construction of house/flat (12 Months for J&K State)
 Maximum 3 months in case of loans sanctioned for repairs/renovations/
additions etc.

52
 Maximum 3 months in case of loans sanctioned for outright purchase of
fully built up house / flat/apartment/land for housing purpose.
 Till the date of possession as mentioned in the agreement or maximum 3
years, in case of under construction builder/ society flat
A9 Door to Door Tenor
The tenure of the loan including moratorium period could range from 1 to 30 years
for salaried / professionals and 1 to 20 years for other customers subject to number
of remaining years of service in case of employees or till the borrower attains the
age of 70 years.
However, tenor can be increased to by 5 years in already disbursed housing loans
where borrower has opted for increase in tenor of loan to keep the EMI unchanged
due to increase in interest rates for floating interest rate loans. In case of employees
increase in tenor is subject to availability of remaining service period.
A10 LTV
Subject to minimum margin contribution from the applicant (as given above)
housing loans can be sanctioned with following LTV ratio, and for enabling bank to
calculate the risk weights reporting shall be done as per the following table:
Category of loan LTV ratio (%) Risk Weight (%)
Up to ` 30 lakh ≤ 80 35
> 80 and ≤ 90 50
Above `30 lakh and up to ` 75 lakh ≤ 75 35
> 75 and ≤ 80 50
Above ` 75 lakh ≤ 75 75
A11 Repayment
Principle along with interest shall be repaid in Equated Monthly Installments
(EMIs) after moratorium which shall be re-fixed with every increase/decrease
in interest rate during the tenor of loan in case of floating interest rate loan. The
loan can also be repaid in Flexi EMI plans (multiple repayment options) such as
– Step up, Step down, Bullet and Ballooning EMI plans.
The repayment period, flexi EMI Plan and the EMIs calculated for repayment
shall be decided on the merits of each case on a realistic basis after taking into
account the repaying capacity of the borrower.
Highlights of the Flexi EMI Loans:
The Flexi EMI Plans appended below at 1 & 2 shall only be allowed in Housing

53
loans of Rs. 50 Lakh and above granted to salaried individuals and professionals
aged less than 35 years who are stable in their careers or jobs and who have
better job prospects and definite chances of salary hikes in the future
considering to their educational background, type of job, etc
1. Step up: Also called, as interest only loans are special types of loans where the
payment liability is very low in the initial years. The borrower is required to pay
only the interest part for a fixed duration. The outstanding principal remains the
same. After the completion of the “Interest Only Period”, regular payments start,
where both the interest component and the amortized principal is paid. The
maximum Interest only period to be allowed shall be 5 years for applicants aged
up to 30 years and 35 minus applicant’s age for applicants aged above 30 years
to 35 years.
2. Ballooning: This plan allows you to pay small installments during the tenure of
your loan in return for a lump sum repayment towards the end of your tenure.
Balloon Payments are a great way to reduce the monthly installments. If the
applicant expects to receive a large sum of money on a future date (gratuity,
provident fund etc) he can be given an option to close his loan by paying the
outstanding loan amount once he receives that money. In Balloon Payments, the
loan amount corresponding to the balloon payments is not amortized. So the
monthly outgo reduces to a large extent and makes a customer to qualify for a
bigger amount even if his /her current monthly income is less. Ballooning to be
allowed to those applicants only who desire to close the loan at the age of
retirement (maximum 60 years) and maximum of 5% of loan amount shall be
allowed to be repaid as balloon payment.
3. Step down: This plan allows the customer to start repaying loan with a higher
EMI (higher than the stipulated EMI) and lower it year after year. Meaning he
can repay faster and save up on finance costs.
4. Bullet: This plan allows the customer to prepay his loan in parts at periodic
intervals. These periodic payments will help lower your future installments
considerably. Moreover, no charges will be levied on your prepayments.
Repayment period of loans sanctioned for purchase of plot of land for
housing purpose shall be the same as for fresh construction.
For pensioner’s repayment period shall be 10 years or till the

54
pensioners attains the age of 70 years whichever is later.
However, borrower may be given option to choose for increase in
repayment period by maximum 5 years in order to keep the EMI
unchanged due to increase in interest rates for floating interest rate
loans. However, In case of employees such increase in tenor shall
commensurate with their remaining service period.
Interest during moratorium has to be serviced by the borrower as and when
charged in the account and B/U to ensure that the same is serviced timely.
A12 Interest Rate (Floating) with a reset clause of 1 (one) year.
For first/second housing loan
Limit Rate
Up to ` 100.00 Lakh 1 year MCLR
Above ` 100.00 Lakh to ` 300.00 lakh 1 year MCLR + 20 bps
Above ` 300.00 Lakh 1 year MCLR + 35 bps
However to limit / prevent housing loan facility to be used to fuel speculation in
housing sector, the borrowers who intend to avail 2nd housing loan after
having sold the first house before the expiry of five years from the end of the
year in which house was purchased / possession obtained, whichever is later,
shall be charged a premium of 100bps over and above the prescribed rate of
interest. In this regard, Business units shall obtain a declaration from the
prospective borrower/s in addition to due diligence measures through CIBIL
& CRILIC.
A13 Processing Charges
0.25% of the loan amount with minimum of Rs. 500 and maximum of Rs
10000/- plus applicable service tax. However, 50% waiver in processing
charges shall be provided to women borrowers (both for sole/joint borrower).
In case of takeover from other banks/FIs, no processing charges will be levied.
B/U to mention the loan processing charges on the sanction letter issued to
borrower
A14 Prepayment Penalty
Note: No Pre-payment penalty to be charged on housing loans granted on
floating interest rate basis.
A15 CIBIL Report / CIBIL Score
As part of the due diligence and to have proper appraisal, operative levels

55
must check the credit Information Report (CIR) of the borrower along
with the score from the CIBIL before sanctioning the loan.
As per policy in vogue Loan proposals having following ‘CIBIL Transunion
Score’ shall be referred to next higher Authority for sanction/Rejection.
300 to 599:- For consumers with more than 6 months credit history with CIBIL.
1 to 2: For consumers having less than 6 months credit history with CIBIL
A16 CERSAI Search
The operative levels must ensure that the property proposed to be purchased
is free from any encumbrance by verifying records of the property from
CERSAI
A17 No Demand Certificate
No Demand Certificate is not to be obtained from individual borrowers in rural
& semi-urban areas.
No Demand Certificate is also not to be obtained from permanent employees of
State / Central Government, State / Central Government Undertakings &
Autonomous bodies drawing salary through our Bank and where letter of
undertaking from employer is available.
ENOC from select branches (branches in proximity of i) Apprising Branch ii)
Residence of the Applicant iii) Applicant’s place of work) is to be obtained
from all applicants. However, Branch Heads shall have the discretion of waving
off the eNOC requirement after satisfying themselves.
All the Borrower/s shall, however, submit an affidavit to the effect that he/she is
not a defaulter, guarantor of a defaulter/s with any branch of our bank or with
any other bank and also no Housing Loan Facility, is outstanding at any branch
of our bank.
If the applicant states that, housing loan availed is outstanding at any branch of our
bank then the borrower be advised to avail loan from the branch which has
sanctioned the previous facility (Housing Loan that is still outstanding) in his
favour. If for certain reasons the applicant wants to avail second / subsequent Loan
for purchase / construction of house from the branch other than which sanctioned
previous facility (Housing Loan that is still outstanding), permission to this effect
to be sought from next sanctioning level.

56
A18 Security
Purchase/Construction:
Primary:
Purchase/Construction:
 Equitable/ Registered Mortgage of house property/flat to be constructed/
purchased. (House property to include land underneath & appurtenant thereto in
case independent house only).
 The title of the property must be clear, marketable and free from encumbrance.
 Where mortgage of house /flat cannot be created immediately and / or
possession of house / flat is not given in situations like house/flat or under
construction house / flat or to be constructed house/ flat is being purchased/
from the Housing Board/ Co-operative Society / Development Authority/
Construction Company/ Builder and title/conveyance deed is executed in
favour of purchaser only after completion of full or partial construction after
purchaser making full payment of the cost of house/flat, a tripartite agreement
shall be executed amongst the 1) Housing Board/ Development authority / Co-
operative Society/ Construction Company/ Builder, 2) The Borrower and 3)
The Bank wherein the Housing Board/ Development Authority / Co-operative
Society/ Construction Company/ Builder undertakes that the title to house/ flat
shall be transferred to the Borrower immediately on receipt of entire sale
consideration and the Bank’s lien shall also be marked in their/ his records,
thereafter to be followed by execution of mortgage deed in favour of the Bank
once the project has been completed and Sale Deed (Deed of
apartment/Conveyance Deed in case of Flats) has been executed. Charge to be
registered in favor of the Bank with the concerned authorities. Besides
tripartite agreement an affidavit cum undertaking from the Housing Board/
Development Authority / Co-operative Society/ Construction Company/
Builder to the effect that the construction shall be as per the sanctioned plan &
building bye laws, to be obtained.
Repairs/Additions/Alterations/Extension of existing houses:
 Equitable/ Registered Mortgage of house property/flat to be repaired /
renovated. (House property to include land underneath & appurtenant thereto
in case independent house only).

57
The mortgage of the existing house property shall not be insisted for loans up
to Rs.5.00 Lakh (Rs.10.00 Lakh in case of Employees of J & K State Govt )
granted for the purpose of repairs/additions/ alterations /extension of existing
houses. These loan cases shall be secured by third party guarantee of two persons
or Assignment of Life Insurance Policies, Govt. Securities, IVP’s, NSC’s KVP’s
or such other security as is deemed appropriate by the Sanctioning Authority.
However, negative lien over the existing house property for which the facility is
granted shall be obtained along with an irrevocable power of attorney executed by
the borrower authorizing the Bank to sell the house in case of default.
(The above concession / relaxation is not applicable for loans to pensioners
and where all the borrowers are not the owner of land/house/flat), however
in such cases guarantee of spouse / Legal Heir(s) who is / are entitled for
family pension, is to be obtained in addition to the mortgage).
Collateral:
 No collateral security /3rd party guarantee is required in all cases except in
case of following:
a) Pensioners- guarantee of spouse / Legal Heir(s), who is / are entitled for family
pension, is to be obtained
b) NRIs- 3rd party guarantee of two resident Indians of sufficient means to cover
the liability apart from the other securities shall be obtained.
c) Loans up to Rs.5.00 lacs (Rs.10.00 lacs in case of employees of J & K State
Govt) to be granted for the purpose of repairs/ additions/alterations /extension
of existing houses, where the mortgage of the house property is not taken as
security.
Note: In all the above cases, Post –dated cheques for EMIs and one undated
cheque with blank amount field to be obtained from borrowers other than
Government Employees/Pensioners drawing salary through our branches.
The cheques shall be drawn in the name of “The Jammu & Kashmir Bank
Limited A/c no XXXX of Mr./Ms. YYYYYYY” All cheques shall be account
payee and kept in safe custody. Procedure for obtaining Post- Dated Cheques
shall be followed as mention in para ***** below.

58
A19 Pre-Sanction Documents
A. Documentation for Borrower/s (For all applicants)
Personal Documents:
 Duly filled in application form signed by applicant (s).
 Two Latest passport size photographs of applicant (s).
 Identity & Residence Proof: As per KYC norms
 Age proof. The documents which could be submitted for the same are
Passport,, Date of birth certificate from Municipality or equivalent body,
School leaving certificate or any other document to the satisfaction of the Bank
 Address Proof of Office (For Business men/ Professionals & Self Employed
Individuals only): Recent Utility bill / Lease deed / Excise or Sales Tax
Receipt/Shops & Establishment Act Registration, etc.
 A photocopy of Registration Certificate of establishment under Shops and
Establishments Act/Factories Act (wherever applicable)
 Certificate of Practice (for professionals only)
 Signature identification from present bankers (for non-customers only).
Financial Documents:
i. Salaried Customers: Last Pay Certificate showing all deductions. Pay
certificate shall also have information about the DOB of the applicant, date of
joining & date of retirement.
ii. Business men/Professionals & Self Employed Individuals: Last 3 years
Income Tax Returns (self and business) & last 3 years Profit /Loss and Balance
Sheet Certified/Audited by Chartered Accountant as per statutory requirements.
iii. Bank account Statement of prospective borrower(s) for last six months. In case
of salaried employees, statement of account shall be of that account in which
their salary is being credited. In other cases it shall be of the account declaration
of which has been made in the income tax returns. This is to facilitate
ascertaining general conduct of the account including his/her other borrowings.
iv. Letter of Confirmation, wherever available.
v. Details of all obligations and loans taken, outstanding balance, EMI liability of
all current loans and repayment record of all previous loans to be submitted by
applicant/s.
vi. Income proof of spouse (if spouse income is to be clubbed).

59
B. Documentation for Guarantor/s
Two photographs
Proof of identification
Proof of residence.
Proof of business address( If applicable)
Income Proof.
Personal Statement of Assets and Liabilities
Signature identification from present bankers (for non-customers only).
Valuation Documents:
For Construction of house on a plot of land already owned by the
Applicant: Detailed cost estimate from Banks’ panel/approved Chartered
Engineers/Architects.
For Purchase of Flat/ house/ plot of Land: Detailed cost estimate/ Valuation
Report /Fair market value of Land from Bank empanelled /approved Chartered
Engineers/Architects.
For Repairs/Renovation/Addition/Alteration of house: Detailed cost estimate
from Bank empanelled /approved Chartered Engineers/Architects is to be
submitted in both cases.
A20 Sanctioning Powers.
The sanctioning powers per house per party shall be as follows:
S. No Level Amount
1 Chairman Above Rs. 400 Lakh
2 EP/ED Up to Rs. 400 Lakh
President / Senior President Up to Rs. 300 Lakh
3 Zonal Heads Up to Rs. 200.00 Lakh
4 Cluster Heads &Branch Heads of VVL Category
Branches
Up to Rs.100 .00 Lakh.
5 Branch Heads of VL & A+ Category Branches Up to Rs. 50.00 Lakh
6 Branch Heads of L, M, A & B Category Branches Up to Rs. 40.00 Lakh
7 Branch Heads of S, C &D Category Branches Up to Rs. 30.00 Lakh
8 Branch Heads of E Category Branches: Up to Rs. 15.00 Lakh
A21 Number of housing loans per borrower
The number of housing loans to be sanctioned to a single borrower under J&K
Bank Housing Finance Scheme for Individuals at any point of time should not
exceed 2 subject to maximum eligibility limit.

60
A22 Risk Scorer Application (RSA)
All the applicants shall be rated through the Risk Scorer Application as per the
rating policy in vogue.
A23 Issuing Sanction Letter
B/U to issue sanction letter to the borrower on its letter head mentioning all the
terms & conditions of the sanction viz. amount of loan, tenor of loan, moratorium
period, repayment period, no. & amount of EMIs, interest rate fixed / floating,
processing charges, prepayment charges if any and all other conditions. Copy of
sanction letter dully acknowledged by borrower & guarantor(s) shall be kept on
record.
The sanctioning authority may not insist on furnishing revenue papers/ title
documents at the pre-sanctioning stage. However the loan shall be disbursed only
after the title verification report, search report and no encumbrance certificate is
obtained from the designated authority.
The Sanction letter shall specify all terms and conditions including the following:
“Loan shall be disbursed subject to clear and marketable title of the house / flat /
land proposed to be purchased and fulfillment of other terms and conditions.”
The sanction letter for purchase of plot/land shall also carry the following
condition:
“The construction of house should commence within 2 years from the date of
availment of housing loan for purchase of plot / land.”
“Customer is eligible to avail another Home Loan for construction of house on the
plot financed by the J&K Bank with the benefit of running both the loans
concurrently”

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