India Ratings and Research (Ind-Ra) has affirmed Jammu and Kashmir Bank (JK Bank) long-term issuer rating and Rs 6 billion lower Tier II notes at 'AA' with a stable outlook.

The rating agency said, "JK Bank's ratings are driven by a continued moderate possibility of support from the government of India (GoI), through the J&K state government, if required. This factors in the bank's central role in sustaining the economy of the politically important state of Jammu and Kashmir (J&K)."

Ind-Ra opined, "The additions to NPAs in FY16 could be higher than expected for most other banks, but lower than observed for JK Bank in FY15. Further, the bank is expected to take lower exposures to large corporates unlike observed in the past. Asset quality also remains susceptible to potential political and economic volatility in J&K and the nation-wide economic slowdown."

Shares of the bank gained Rs 1.2, or 1.24%, to trade at Rs 97.80. The total volume of shares traded was 7,018 at the BSE (10.23 a.m., Wednesday).