A Case Study of Jammu & Kashmir Bank was undertaken. Main objectives of the present study were to ascertain the financial health of the Bank and its contribution to the economy of the State of Jammu and Kashmir. A comparative study of Jammu and Kashmir Bank (a lead private bank) and Punjab National Bank (a public sector bank) was also carried out on the variables of financial health.. The study was based on secondary data drawn from annual reports of the Bank for 5 years (2008-2012). The results were formulated using parameters such as capital adequacy ratio, asset quality, management capability, earnings and liquidity ratio using latest statistical technique“CAMEL”. A finding of the study reveals that the financial health of the Jammu & Kashmir Bank was strong on the parameters of CAMEL. The J&K Bank contribution to the development of agriculture, micro, small and medium enterprises, handloom and handicrafts was found significant. Results of the comparative study show that the Jammu and Kashmir Bank was found higher on the variables of quality assets, the growth rate of business , liquidity ratio, earnings per employee, cost effectiveness as compared to Punjab National Bank . However, the study reveals that both the banks were found financially viable as they maintained minimum standard of capital adequacy ratio fixed by Reserve Bank of India over the period of time.