Internship Report ZTBL, Hailey College

INTERNSHIP REPORT
ZARAI TARAQIATI BANK LTD.
Submited to:
Sir, Fida Hussain Bukhari
Submitted by:
Adnan Ijaz
M08MBA071
Specialization in Finance
MBA Banking & Finance 2008-2010
Hailey College of Banking &

Finance
University of Punjab
Internship Report on Zarai 2010
Taraqiati Bank Ltd.
In the name of ALLAH the

most benificent, the most
merciful
Internship Report on Zarai Taraqiati Bank Ltd. 2010
ACKNOWLEDGEMENT
I have great sense of gratitude for the most Beneficent and

Merciful Allah who has always helped me in all matters of life .I
tried but He rewarded me more than the tried.
I have deep feelings for whole of my family, in general, and for

my Father, my Mother and my elder brother, in particular .They
have always soothed me, elevated me and their words and du’a
has floated me in the deep seas of troubles. All of my successes
are due to the prayers of my family.
I am thankful to all of my teachers and my class fellows and

friends whom cheerfulness and guidance is an asset for me .I am
especially thankful to the bank staff who has given me
opportunity to get precious practical knowledge and also for their
guidance during my internship. Without the help of all these I was
not able to complete this report.
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Taraqiati Bank Ltd.
Preface
This Internship report is the compulsion put in by Hailey College of
Banking and Finance for the award of master degree in business
administration.
In order to accomplish the task of completion of the degree, I choose

the renowned and reputed organization that is the Zari Taraqiati Bank
Ltd. I went through 6 weeks internship training in the bank in order to
perceive the true art and the practical picture of banks’ working and to
go through the process by which the organization is making very good
out of its limited resources. The report is based on the introduction of
the bank, products offered, financial analysis and assignments I
handled during my internship.
The report is divided into two main parts; the first part includes the
introduction of bank, its products and financial analysis while the
second part is based on the assignments I handled during my
internship.
I am positive that the college will oblige me by giving its

recommendation and consent for the approval of the degree and the
purpose for which I have gone through training and report writing
procedure will be served positively.
Table of Contents
Part One___________________________________________________________________8
Ch. 1:____________________________Introduction of Zarai Tarqiati Bank Ltd.
8
Chapter 1__________________________________________________________________9
History___________________________________________________________________9
Credit Rating__________________________________________________________11
Corporate Vision_______________________________________________________12
Corporate Mission______________________________________________________12
Corporate Objectives__________________________________________________13
Transformation of ZTBL to R.F.I of the country and road to excellence._14
Branch Network_______________________________________________________16
Management Hierarchy_______________________________________________17
Board of Directors_____________________________________________________19
A Brief Resume of President____________________________________________20
Kissan Support Services Ltd._________________________________________23
KSS Aim_______________________________________________________________23
KSS Operation_________________________________________________________23
Objectives_____________________________________________________________23
Services/Activities so far undertaken by KSS___________________________24
Chapter 2________________________________________________________________25
Products and Services________________________________________________25
ZTBL Locker Facility___________________________________________________25
Products offered to Meet Finance Need of Farmers________________26
Types of Loans Advanced______________________________________________26
Loan Schemes_________________________________________________________27
Supervised agriculture scheme:________________________________________27
Zarkhaiz (one window operation)______________________________________27
Sada Bahar Scheme___________________________________________________27
Tea financing scheme__________________________________________________28
Crop maximization project_____________________________________________28
PER ACRE CREDIT LIMITS_____________________________________________30
Major Crops____________________________________________________________30
Minor Crops____________________________________________________________30
Growing Agro Forest Trees_____________________________________________31
Growing Orchards_____________________________________________________31
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Taraqiati Bank Ltd.
Mature Orchard/Fruits crops___________________________________________32

Types of Security______________________________________________________33
Immovable Property___________________________________________________33
Moveable Property and Guarantees____________________________________33
Personal Surety________________________________________________________34
Debt Equity Ratio______________________________________________________35
Repayment Periods___________________________________________________36
Recovery Procedure___________________________________________________36
A) Recovery Schedule__________________________________________________36
b) Issuance of Notices_________________________________________________36
c) Legal Action_________________________________________________________36
d) Rescheduling of Loan Repayment Facility___________________________37
d) Down Payment for Rescheduling of Loans___________________________37
Chapter 3________________________________________________________________38
Horizontal Analysis of Balance Sheet________________________________38
Vertical Analysis of Balance Sheet___________________________________39
Horizontal Analysis of Profit & Loss__________________________________40
Vertical Analysis of Profit & Loss_____________________________________42
Interpetation of Horizontal and Vertical Analysis___________________44
Interpetation of Horizontal and Vertical Analysis of Balance Sheet
_________________________________________________________________________49
Cash and Balance with Treasury Banks______________________________49
Ratios__________________________________________________________________52
Key Financial Trends of 2009_________________________________________55
Credit Risk_____________________________________________________________57
Market Risk____________________________________________________________58
Liquidity_______________________________________________________________59
Profitability____________________________________________________________60
Capitalization__________________________________________________________61
Chapter 4________________________________________________________________65
SWOT Analysis_________________________________________________________65
Strengths______________________________________________________________65
Weaknesses___________________________________________________________66
Opportunities__________________________________________________________67
Threats________________________________________________________________68
Part Two_________________________________________________________________69
Ch. 5:_____________________Assignments I handled during my Internship.

69
Chapter 5________________________________________________________________70
Organogram of Mian Channu Branch________________________________70
Redemption of loan___________________________________________________71
Opening of Current Account__________________________________________74
1: Acquiring Original CNIC______________________________________________74
2: Filling Current Account Form________________________________________74
3: Filling of Know Your Customer Form_________________________________75
4: Current Account Specimen Card_____________________________________76
5: Registering name in the Current Account Register (Issuance of A/C
No.)___________________________________________________________________76
6: Filling of Deposit Slip of starting amount_____________________________77
7: Signing by AMO and Manager_______________________________________77
8: Issuance of Cheque book____________________________________________78
9: Opening account in the ledger of bank______________________________78
ZTBL Flood Relief Fund 2010___________________________________________81
Writing of Vouchers___________________________________________________83
1. Debit Voucher_______________________________________________________83
2. Credit Voucher______________________________________________________83
3. Transfer Voucher____________________________________________________83
Sample of Debit/Credit Voucher______________________________________84
Sample of Transfer Voucher__________________________________________89
Daily Transaction Scroll_______________________________________________90
Making Entries in the Ledgers________________________________________92
Disbursement and Recovery Entries_________________________________92
Revolving SBS Loan___________________________________________________94
Opening and Closing Cash____________________________________________97
Key Register___________________________________________________________97
Safe Register:_________________________________________________________97
Dispatch and Diary____________________________________________________98
Recommendations_____________________________________________________98
Conclusion____________________________________________________________100
Conclusion
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Taraqiati Bank Ltd.
Part One
Ch. 1:Introduction of Zarai Tarqiati
Bank Ltd.
Ch. 2:Products Offered
Ch. 3:Financial Analysis
Ch. 4:SWOT Analysis
Chapter 1
The Zarai Taraqiati Bank

Limited (ZTBL) (formerly known
as Agricultural Development
Bank of Pakistan) is the largest
public sector financial
development institution with a
wide network of 27 Zonal Offices,
9 Audit Zones and 352 branches
in Pakistan. The bank serves
around half a million clients
annually and has over one million
accumulated account holders.
History
Pakistan is an agricultural country and more than 60% of its population
is working related to agriculture. A development in the agricultural
sector will no doubt result in the development of the whole country. To
keep With a view to meet this basic need the Agricultural Development
Finance Corporation was set-up in 1951, and was entrusted with the
task of providing financial facilities for the development and
modernization of agriculture, including: Forestry, Fishery, Animal
Husbandry, Poultry, Dairy Farming.
Later on the Agricultural Development Bank of Pakistan was also
established in September 1957, under the Agricultural Development
Bank Act. The Bank is to provide credit in cash or in kind, warehousing
and storage facilities to agriculturists, cooperative societies and other
bodies, of which the majority of members are agriculturists.
9
Taraqiati Bank Ltd.
As the functions of the Agricultural Development Finance Corporation

and Agricultural Development Bank were similar and since both were
working with capital provided by the Government, they were merged
into one organization known as Agricultural Development Bank of
Pakistan on February 18. 1961. The Agricultural Development Bank of
Pakistan was a banking company for the purpose of the Banking
Companies Ordinance and the State Bank of Pakistan Act.
On 14 December 2002 the Federal Government has converted the

Agricultural Development Bank of Pakistan (ADBP) into Zarai Taraqiati
Bank Ltd (ZTBL) and the new venture has started its operation with
immediate effect. The new corporate structure redefines the banks
statue as a public limited company with an independent Board of
Directors promulgated under the presidential ordinance which, aims at
ensuring good governance, autonomy, delivering high quality, viable
and timely financial services to a greater number of clientele in the
agricultural and rural segment of the country with adequate returns to
the stakeholder.
After this incorporation all the assets and liabilities of ADBP became
the assets and liabilities of ZTBL. This restructure was carried out with
the aim to improve the working and role of bank in the agricultural
development.
The bank is completely owned by the government and it has head
office in Islamabad.
Ownership Government
Type of Institution Specialized Bank
Established 1961
President & CEO Muhammad Zaka Ashraf
Equity 18.7 Billion (2009)
Headquarters Islamabad, Pakistan
Total Deposits PKR 8.8 billion (as Dec.31st, 2009)
Total Disbursement PKR 77.7 billion (as Dec.31st, 2009)
Homepage www.ztbl.com.pk
ZTBL is providing affordable, rural and agriculture financial services to

the rural Pakistan, comprising 68 % of the total population. The Bank
through a country-wide network of 352 branches is serving around half
a million clients annually and over one million accumulated account
holders with the average loan size of around Rs.89,000.
Credit Rating
In August 2010, ZTBL continued to achieve AAA credit rating by JCR-
VIS.
Yea Stand Outl
Entity
r Alone ook
201 AAA/ Stabl
B+/ B
0 A-1+ e
200 AAA/ Stabl
B+/ B
9 A-1+ e
The credit rating of the bank is due to the reason that bank enjoys
sovereign guarantee of the federal government that covers its debt
obligations to State Bank of Pakistan (SBP) and ensures safety of
deposits under the Banks’ (Nationalization) Act 1974. The bank’s
lending book is largely funded through SBP’s credit lines while
contribution from deposits remains nominal. ZTBL is actively exploring
different options for resource mobilization including
bilateral/multilateral arrangements with financial institutions. In case
these efforts materialize; it would diversify the existing funding source
of the bank, thereby reducing reliance on the SBP.
11
Taraqiati Bank Ltd.
Corporate Vision
Dedicated to serve the needs of the farming community, by

delivering financial products and technical services on a
competitive and sustainable basis, in a convenient, efficient and
professional manner, leading to success of the Bank and the
farmers.
Corporate Mission
To play effective role in the promotion of economic growth, by

enhancing the availability of credit to the agriculture sector,
through reliable access to sustainable financing, special lending
programs, technical assistance, and other products & services,
and to promote career development opportunities for increasing
professionalism and technical proficiencies of employees.
Corporate Objectives
1. Develop and operate as a financially and operationally sustainable R.F.I of the country.
2. Assist rural community, particularly the small farmers, in raising their productivity and
income levels through timely delivery of credit, advisory and ancillary services.
3. Build ZTBL's image as a proactive, client friendly, financially & operationally

sustainable with indigenous product deployment.
4. Establish and provide backward and forward linkages to strengthen agri. value added
commodity chains.
5. Engage in public - private and wholesale - retail partnership to deepen outreach and
reduce operating cost.
6. To function as a rural commercial bank to mobilize rural capital formation and to

commercialize the agriculture sector by delivering the true value of credit to the client.
7. Provide a wide range of risk insurance products to its clients.
8. Open up its venues of operation to Domestic & International Banking Industry to avail
comparative advantages.
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Taraqiati Bank Ltd.
Transformation of ZTBL to R.F.I of the

country and road to excellence.
The conversion of ADBP into ZTBL had a conditionality of the Asian
Development Bank (ADB) loan framework as per which a restructuring
exercise was initiated. The restructuring process entailed ADB’s Rural
Finance Sector Development Program (RFSDP) with the objective to
transform ZTBL into a sustainable Rural Finance Institution. It also
included the up-gradation of Information technology (IT) infrastructure
for which funds from ADB’s loan were to be utilized.
Healthy and well-functioning rural finance markets are directly related
to achieving the two key national policy objectives of accelerating
rural/agriculture growth and reducing poverty. The realization of these
objectives depends on the simultaneity of developments in rural
finance and non-financial markets to foster the creation of diverse
sources of rural finance to build sustainable financial institutions, and
stimulate products and capital flows in the rural sector. For this, rural
finance must be seen as an integral part of equitable development
within a framework of macroeconomic stability.
For the majority, access to affordable rural finance services is also
important to enable them to compete in the post-World Trade
Organization scenario. Inability to compete because of high financial
costs could reduce income of the majority of farmers and rural clients,
particularly the small and subsistence clients. Lack of access to
affordable rural finance services will also prevent the clients from
switching to non-farm activities.
The ZTBL restructuring plan covering the following;
• Governance: establish an environment that facilitates good
governance and accountability;
• Systems: modernize operations through use of technology,
networking, and communication tools;
• Business processes: streamline products and delivery systems
so as to reduce transaction costs, simplify operations, and
increase outreach;
• Products and services: introduce products and services that
are financially economically viable;
• Human resource development: improve standards and skills

of management and staff and strengthen training capacity; and
• Information Technology: establish new hardware and software
platform to support MIS, accounting system including forensic
accounting, and risk management functions.
The reforms shall establish ZTBL as a key R.F.I of the country. By

expanding its private sector role, the bank aims to establish network of
high tech rural and agri. financial services through intermediations
under public private participation and whole-sale -retail lending
mechanism.
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Taraqiati Bank Ltd.
Branch Head Office

Network Islamabad, Pakistan
Details of Regional Offices

Punjab Sindh Balochista Khaber Gilgit

n Pakhtunk Balitistan
haw
Islamabad Karachi D.I. Khan Abbottabad Gilgit
13 Branches 15 Branches 14 Branches 7 Branches 7 Branches
Multan Hyderabad Turbat Mingora

8 Branches 14 Branches 6 Branches 15 Branches
D.G.Khan Mirpur Quetta Peshawar

6 Branches Khas 18 Branches 20 Branches
14 Branches
Sahiwal Sukkur D.M. Jamali

15 Branches 15 Branches 7 Branches
Lahore Larkana
20 Branches 18 Branches
Gujranwala S.B.
18 Branches Nazirabad
14 Branches
Bahawalpur
13 Branches
Faisalabad
20 Branches
Sargodha
16 Branches
Total Zones 27
Vehari Muzafargar R.Y. Khan Total
Muzafar.Ab
Audit Zones 9
11 Branches h 7 Branches ad
11 Branches 10 Branches
Total Branches 352
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Taraqiati Bank Ltd.
Management Hierarchy
The general direction and superintendence of the affairs of the bank
are entrusted to a 12 members Board of Directors consisting of a
chairman appointed by the Federal Government, the Federal
Government officers from the Ministries of Finance and Food and
Agriculture, four officers of the four Provincial Governments and one
non official nominated by each province. One member on this board
represents the State Bank of Pakistan also. However, at present the
bank has 7 directors including chairman. The bank also has a president
appointed by the federal government and a company secretary.
In ZTBL, the president supervises and directs the Chief Executive

Officer who supervises and directs the Head of Department, who then
supervise and direct the officers under them. The management
hierarchy of bank is as follows;
Earlier the bank was functioning like a pure government institution and
permission has to be sought on every step for moving forward. Now
the bank management board will be fully empowered to run the affairs
of the ZTBL.
More than 2,000 employees of the bank have opted for Voluntary
Golden Hand Shake Scheme, offered by the bank to its employees.
Bank has established a task force for improving the operational
performance of the staff and it was monitoring the disbursement,
recovery operations and performance of field functionaries. The task
force comprised 10-15 officers and each officer will head a desk
exclusively to monitor 3-4 regions. This task force will be responsible to
evaluate performance of each MCO, Manager and Regional Manager on
the achievement of bank’s policies regarding credit and recovery
periodically.
Board of Directors
Syed Qamar-Uz-Zaman Mr. Muhammad
Shah Zaka Ashraf
Chairman Board President/ CEO
Mrs. Nazrat Bashir Mr. Shafqat

Director Hussain Naghmi
Director
Mr. Muhammad Iftikhar Mr. Tauqir Ahmad

Khan Mohmand Faiq
Director Director
Dr. Khalid Ahmad Khokhar Mr. Imam Bux

Director Sheikh
Director
Mr. Muazam Ali

Company Secretary
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Taraqiati Bank Ltd.
A Brief Resume of President
Mr. Muhammad Zaka Ashraf
Present Portfolios
• President/Chief Executive Officer, Zarai Taraqiati Bank Ltd.
• Chairman & Chief Executive, Ashraf Group of Industries
• Chairman, Pakistan Sugar Mills Association (Punjab Zone) from
October, 2006 (Second Tenure)
• Chairman, Sugarcane Research & Development Company, Agriculture
Department, Government of Punjab
• President, Petarian Association, Lahore
• Patron-in-Chief Sindh Abadgar Welfare Association (Sindh)
Posts Held
• Advisor to Chief Minister Sindh from 1989 to 1990
• Member Executive Committee, Lahore Chamber of Commerce &
Industry from October 2002 to September 2004
• Central Chairman All Pakistan Sugar Mills Association from October
2004 to October 2006
• Vice Chairman of The Federation of Pakistan Chambers of Commerce &
Industry’s Standing Committee on “Food & Agriculture” from January
2007 to December 2007
Academic Institutions
• Member Board of Governors of Sadiq Public School, Bahawalpur, from
1st January 1989 to 2008
Ms. Nazrat Bashir

Director
Ms. Nazrat Bashir belongs to District Management Group of Civil
Services of Pakistan. She is Masters in Economics from New York
University, New York, USA and Master in Psychology from Peshawar
University, Peshawar.
She has extensively traveled abroad and has attended various

international Seminars and Conferences such as on Micro Finance, Anti
Money Laundering, and Instruments of Financial Markets etc.
Domestically too she has attended various programmes in some of
very prestigious institutions of Pakistan.
She possesses 29 years of administrative experience in government

service in economic & financial policy and its implementation. At
present, she is working as Additional Finance Secretary, Internal
Finance, Finance Division, GoP, Islamabad. She is a certified Director
on the Panel of Pakistan Institute of Corporate Governance (PICG).
Besides Zarai Taraqiati Bank Limited, she is on the Board of Directors
of National Investment Trust (NIT) and NBP.
21
Taraqiati Bank Ltd.
Mr. Shafqat Hussain Nagmi

Director
Mr. Shafqat Hussain Naghmi is a civil servant from DMG Group and
currently posted as an Additional Secretary I in Federal Ministry of
Commerce, Islamabad. Previously he was posted as Chief Operating
Officer (COO) in Pakistan Cricket Board.
Tauqir Ahmad Faiq

Director
Tauqir Ahmad Faiq represents the Ministry of Food and Agriculture,

Government of Pakistan on ASF’s Board of Directors. An expert in
District Management, Secretariat Affairs, Development Project
Management and International Cooperation with combined experience
of 34 years having held the office of Secretary at Government of
Punjab’s Zakat and Usher, and Social Welfare Departments; he is
currently Additional Secretary at the Ministry of Food and Agriculture,
Government of Pakistan. Tauqir Ahmad Faiq has served as Director
General Lahore Development Authority Government of Punjab and has
also been member the Board of Revenue and Population Welfare

Department of Government of Punjab.
23
Taraqiati Bank Ltd.
Kissan Support
Services Ltd.
Subsidiary of ZTBL
Kissan Support Services Ltd. Is a subsidiary of ZTBL which is

established with a capital investment of 100 Million to help ZTBL in the
achievement of its objective and also to make availability of trained
human capital to the bank.
KSS Aim
To provide support staff to ZTBL & under take its non core activities.
KSS Operation
Kissan support services operates under its Memorandum & Articles of
Association.
Objectives
The main objective of KSS are following:
• To provide to the Bank all kinds of support staff and ancillary

services
• To plan, organize and establish training facilities to impart
training to the bank’s staff
• Drip Irrigation System to assist the bank clients in marketing of
their product and provide storage facilities
• To assist the bank clients in marketing of their product and
provide storage facilities
• To provide welfare services to the employees of the Bank
including education, vocational training, sports and recreation
facilities
• To invest any surplus money of the company not immediately
required
• To carry on any business, which may seem to the company

capable of being conveniently carried on
• To liaison & establish contracts with agricultural research
organizations for development of efficient, effective and
appropriate technologies
• To carry on business of providing consultancy, advisory and other
agency services and support services to Zarai Taraqiati Bank
Limited
• To provide to the Bank’s clients quality products and services for
efficient and improved farming
• Etc.
Services/Activities so far undertaken by KSS

• Security Services to ZTBL
• Recruitment/provision of staff
• janitorial Services provided to:
a. ZTBL Head office buildings
b. Ztbl Farms
c. Staff college
d. Printing stationery office
e. AV Unit
f. Old record office
g. Sports club
h. Warehouse
• Management of Sports Activities
• Management of Sports Activities
• Photocopy Services
• Day to day minor repair and maintenance of ZTBL HQ Buildings
25
Taraqiati Bank Ltd.
Chapter 2
Products and Services
ZTBL Locker Facility
Zarai Taraqiati Bank Ltd. apart from its core functional activity marked
with country based agri-business, has started to serve its valued
customers by offering lockers facility. Initially, this facility is being
offered at following 11 branches:-
S.No Name of Branch
1 Islamabad Branch
2 Main Branch Lahore
3 Peshawar Branch
4 Gujranwala Branch
5 Faisalabad Branch
6 Multan Branch
7 Sahiwal Branch
8 Sargodha Branch
9 Khan Pur Branch
10 Shafi Court Branch
11 Main Branch Gulshan-e-Johar
Following are the approved rates for rent of lockers and key deposits
against which lockers will be allocated:
Specificatio Rent Per Rent after grace Key
Type
n Annum period Deposit
Small 6-1/2"x4- Rs.1,200/- Rs.1,500/- Rs. 5,000/-
1/2"x23"
Mediu 13-1/2"x4- Rs.1,800/- Rs.2,250/- Rs.
m 1/2"x23" 10,000/-
Large 13-1/2"x8- Rs.2,500/- Rs.3,125/- Rs.
1/2"x23" 15,000/-
Life Time Locker Facility
On lump-sum payment of locker rent for ten years entitle the lessee to
avail the locker facility for life time, without key deposit.
Products offered to Meet Finance Need

of Farmers
Zarai Taraqiati Bank Limited (ZTBL) is a specialized bank providing
agricultural credit in rural areas of the country. Pakistan is an
agricultural country and near about 60% of its population is working
directly or indirectly related to agriculture industry. But instead of
being an agricultural country Pakistan is still not gaining benefits from
this sector which it can gain. Some time we even does not able to fulfill
our food requirement and sometime we have bumper crop but does
not have facilities to store them properly, in this way we are wasting
our resources. To gain benefit from agriculture sector it is required to
be modernized to increase the per acre production and also to build
warehouses to store. The main hindrance in the modernization of
agriculture is the unavailability of finance. The other financial
institutions feel reluctant in giving finance to farmers due to high level
of risk in the production of this field. To facilitate farmers and to help in
modernization of agriculture sector the government has established
this bank which is contributing its part in achieving government
objective from many decades. ZTBL is offering a blend of products to
fulfill the need of different types of customers.
Types of Loans Advanced

1. Short Term Loans
Short term loans are loans for shorter period of less than a year. It includes, crop
production working capital loans recoverable in lump sum commencing after the
harvest/marketing of respective crops and within maximum period of 12 months.
2. Medium Term Loans

Medium term loans are for a period of more than a year but less than 5 years. In includes,
dairy farming and livestock etc. The installments of these loans are usually paid able in
quarterly or half yearly basis.
3. Long Term Loans

Long term loans are for a period of more than 5 years. These are development loans
which require large amount and also need some time to show its result in the shape of
better production. It includes loans for tractor, agricultural machinery, poultry farming,
27
Taraqiati Bank Ltd.
godowns and orchard in yearly/half yearly installments within maximum period of 8

years.
Loan Schemes
ZTBL is offering the following loan schemes to the farmers.
Supervised agriculture scheme:

Under this scheme agriculture loans are given for short, medium and
long term loans up to Rs. 1.00 million per borrower/per case. The loans
are sanctioned for In Fats, livestock, orchard, tractor, agricultural
machinery, tube well and irrigation facilities etc. under the scheme
besides provision of credit, information are provided to the farmers for
planning the farm, production, guidance for implementation of the
scheme, marketing and repayment of loans.
Zarkhaiz (one window operation)

For timely and conveniently provision of credit to purchase inputs,
loans are provided to the borrowers under One Window Operation
being conducted twice a week during Rabi and Kharif seasons.
Applications processed on the same day whereas sanction payments
are made within three days at Branch. For Rabi Crops one window
operation from October to January and for Kharif Crops from April to
September each year which is extendable as per requirement of
particular area.
Sada Bahar Scheme

For providing timely input loans for crops and working capital for
poultry and fishery etc, the Bank has launched a Sada Bahar Scheme.
Assessment for inputs requirements for the whole year is made at the
time of first application. The amount so assessed is treated as
Revolving Limit provided it is within the security limit. The Managers
are authorized to sanction such loan limits up to Rs.O.500 million.

Scheme’s main features are as under:
• Revolving Credit Limit is fixed to cater production credit and
ancillary requirements of the farmers during one year period.
• The documentation once completed remains applicable for three
years with yearly cleanup/renewal without any further
documents.
• The borrowers can draw the credit in lump sum or in installments
according to his requirement.
• Like-wise he can repay in lump sum or in installments during the
year when his cash position allows him.
• Pass Book containing transactions in his SBS Account is supplied
to every borrower free of cost.
Tea financing scheme

In order to increase the tea cultivation in District Mansehra, Swat,
Mutta, Shangla par and Dir in Malakand Division, tea financing scheme
has been introduced which would not only save the hard earned
foreign exchange but would also help improve the socio-economic
condition of the inhabitants of the area. The salient futures of the
scheme are given as under:
• Maximum Credit Ceiling of Rs.60, 000/- per acre has been
fixed.
• Farmers owing land up to five acres are eligible to avail
loans.
• Credit will be given in 3 installments: first year Rs.30, 000/-,
2nd year Rs.15,000/- 3rd year Rs.15,000/- provided the
disbursed loan is used properly.
• The credit would be repayable within 1 year with 6 years
grace period with prescribed markup of 9% per annum.
Rebate of 1 % will be allowed in mark-up on timely
repayment and proper utilization of the loan.
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Taraqiati Bank Ltd.
Crop maximization project

Ministry of Food, Agriculture and Livestock (MINF AL), Government of
Pakistan has launched Crop Maximization Project in 109 villages in
various districts throughout the country to increase the
productivity/yield of crops. Under the project MINFAL has to provide
funds of Rs, 299.893 million to ZTBL for disbursing loans to the project
farmers for purchase of inputs. Till the time funds of Rs.468 Million
have since been received by the Bank for the purpose. These funds are
to be revolved for meeting input credit needs in the project villages till
30th June, 2014 after which Bank will return the principal amount to
MINFAL. Accordingly Credit needs of the project farmers are being met
by respective ZTBL branches through Village Organizations formed for
the purpose. Duly the currency of the project Bank is authorized to
charge 4% per annum mark-up on loans to project growers to meet its
operational cost, however in case of default Bank’s normal rate of
return i.e. 9% p will be applicable.
PER ACRE CREDIT LIMITS

Major Crops
Wheat 16,000
Paddy (Rice) 19,000

Sugarcane 30,000
Cotton 21,000
Maize 20,000
Minor Crops
Overall Credit Limit Per Borrower Rs.1.000
Million
Sada Bahar Scheme under one window operation or Rs.0.500
otherwise Million
Potato 36000 Bajra 11000

Tobacco 29000 Jawar 11000
Mustard Mung 11000 Gram 12000
Tomato 19000 Guara 3000
Mash 3000 Caster Oil 6000

Lentil 11000 Barlay 9000
Groundnut 14000 Berceme 4900
Sunflower 15000 Janter 4000
Soyabean 12000 Garloc 26000
Canola 13000 Turmeric 25000
Rape Seed 11000 Ginger 30000
Til(Sesame) 12500 Lacern & Shaftal 4500
Suger beet 12000
31
Taraqiati Bank Ltd.
Growing Agro Forest Trees

SNo. Trees 1st Year 2nd Year 3rd Year
1 Bamboo 34,000 8,000 3,000
Mature Orchard/Fruits
crops
Pear 24000 Dates 31000
Loquat 24000 Strawberry 25000
Growing Orchards
Plum 33000 Tea 60000
Apple 37000 Guava 24000
Papaya
S. 22600 2nd
1st Pomegrante
3rd 33000
Almond Trees 32000 Year Palm 4th Year 5th Year
22000
No. Year Year
Coconut
1 Mango 2100013,000
24,000 Olive
13,000 Oil 13,000 13000
14,000
Lichi
2 Citrus 3200012,000
21,000 Walnut
11,000 13,000 23000
13,000
Cherry
3 Apple 3300012,000
23,000 Persimen
12,000 12,,000 15000
14,000
Mango
4 Banana 3700020,000
29,000 Zizi Phus(Bher)
23,000 30,000 25000
26,000
Apricot
5 Jujuba 31000 9,000
19,000 Melon
10,000 10,000 16000
10,000
Banana
6 Guava 3700012,000
21,000 Water
11,000 Melon 13,000 16000
13,000
Peach Coconu 32000 Musk Melon 16000
7
Citrus t 29,000
34000 6,000 6,000 7,000 8,000
Palm
8 18,000 6,000 7,000 7,000 7,000
Oil
9 Dated 33,000 12,000 11,000 12,000 13,000
Types of Security
Immovable Property
Agricultural Land
• Under Pass Book System 80%
• Outside Pass Book System 70%
• Under Alienability Certificate 66%
• Commercial/Industrial Land under Pass Book 80%
Outside Passbook System

• Urban Residential/Commercial Plots in all localities outside Pass
Book 75%
• Alienability Certificate 66%
• Residential/Commercial Buildings 70%
• Lease hold rights of a leased land of CDA/KDA with 99 years lease
70%
Moveable Property and Guarantees

1. Unconditional Bank guarantee from scheduled Banks
Up to maximum amount of an un-conditional Bank guarantee
after keeping sufficient margin for un-paid mark-up, cost, charges
and expenses.
2. Guarantee issued by Central or Provincial Government

Full amount of loan plus return and other charges.
3. Government securities
85% of face value or market value whichever is less.
4. Defense Savings & FEB Certificates

75% of value of certificates presented as security.
5. Fix Term Deposits Receipts

33
Taraqiati Bank Ltd.
85% of face value of deposits receipts.
6. NIT Units
80% of the face value or market value whichever is less.
7. Life Insurance policies

85% of surrender value
8. Pledge of Potatoes/Seed Potatoes price or market

value which ever is less Up to 75% of Govt. support.
Personal Surety
Against a bond with two sureties under General Credit and one surety
in Special Schemes up to Rs.25,000/- or Up to 50% of appraised value
of properties of sureties.
Debt Equity Ratio

For
Tubewell/Tractors/Implements/Attachments/Equipment
s
All kinds of 25% Within 5 years in annual/bi-annual

Tubewells/ installments commencing one year
Turbines after first disbursement
New Tractor No equity Within 8 years in monthly/quarterly
but 10% or half yearly installments to be
of the decided by Manager in consultation
loan is to with borrower.
be
needed
in PLS
Account
Used Tractor, -do- Within 5 years in monthly/quarterly
Equipments/ or half yearly installments to be
attachments/ decided by the Manager in
implements consultation with borrower.
and used
tractor
Except Tubewell/Tractors/Implements/
Attachments/Equipments
Production Loan upto Rs.0.100 Million NIL

Land holding upto 25 acres/loan amount upto Rs.0.2 15%
Million
Land holding beyond 25 acres to 50 acres/loan amount 25%
beyond Rs.0.2 Million upto Rs.0.5 Million
Land holding beyond 50 acres/loan amount beyond Rs.0.5 30%
Million upto Rs.1 Million.
35
Taraqiati Bank Ltd.
Repayment Periods
S. Types of Recovery Period
No. Loans
1 Short Term Crop production working capital loans
Loans recoverable in lump sum commencing after the
harvest/marketing of respective crops and
within maximum period of 12 months.
2 Medium Dairy farming and livestock etc. In yearly/half
Term Loans yearly/monthly installments and within
maximum period of 5 years.
3 Long Term Tractor, agricultural machinery, poultry farming,
Loans godowns and orchard iIn yearly/half yearly
installments within maximum period of 8 years
and. above.
Recovery Procedure
A) Recovery Schedule
• Recovery schedule in each loan case as per terms of sanction of
loan is fixed and communicated to the borrowers after
disbursement of loan.
• In case of default or failure in repayment of any installment on
due date the mark-up shall continue to be charged and last
installment due to this may differ from the amount of
installments fixed at the time of disbursement.
b) Issuance of Notices
• Demand notice is issued before the due date of every
installment.
• A Legal Notice is issued one month after the due date informing
the borrower that if the amount is not repaid within next one
month, further legal action will be taken to recover the dues.
c) Legal Action
• Legal action can be initiated against the defaulter if loan is not
repaid even after expiry of legal Notice period.
• Where the court in bank's favour has decreed a case, account is
to be settled by recovery of amount from the auction of the
mortgaged property.
• The bank may purchase the mortgaged property if considered
feasible to dispose it off later on through auction or in any
manner deemed fit for getting the best price.
• The bank may dispose off the mortgaged properties of defaulters
for satisfaction of its dues with out intervention of courts under
Financial Institutions (Recovery of Finances) Ordinance
2001.Rescheduling of Loan Repayment Facility .
d) Rescheduling of Loan Repayment Facility
• ZTBL allows rescheduling of repayment of installments to its

borrowers in order to maintain credit discipline and to mitigate
their genuine problems in real hardship cases and in areas
declared as calamity hit by the respective Provincial
Governments
• The Rescheduling facility is to be considered by bank on case to-
case basis and is to be allowed on borrower's request only.
• The relaxation in recovery period shall not be allowed beyond one
year in any case.
• The borrowers shall have to execute a supplementary loan
agreement on Non Judicial
• Stamp Paper of appropriate value to give legal cover to extended
period.
• The borrowers shall have to pay the return for the extended
period.
d) Down Payment for Rescheduling of Loans

Rescheduling Number Rate of down payment as
against due installments to be
rescheduled
37
Taraqiati Bank Ltd.
1st 10%
2nd 20%
3rd 30%
Chapter 3
Horizontal Analysis of Balance Sheet
Particulars 2008 2007 2006 2005 2004
ASSETS % % % % %
Cash & balances with treasury 100
banks 8.695 31.983 -18.724 -0.532
707.49 426.05 100
Balances with other banks
973.720 7 8 428.274
Lendings to financial -
institutions - - - -
166.84 100
Investments - net
77.413 5 97.724 349.899
Advances - net 28.689 12.842 13.212 -2.595 100
Operating fixed assets 16.981 -11.432 -16.375 -29.360 100
Other assets - net -8.284 1.860 -10.364 -14.614 100
21.936 11.267 1.813 -0.098 100
LIABILITIES
Bills payable 210.675 98.915 39.962 19.402 100
Borrowings 0.000 0.000 0.000 0.000 100
Deposits and other accounts 73.764 38.465 -7.681 -15.296 100
Sub-ordinated loans 0.000 0.000 0.000 0.000 100
Liabilities against assets
subject to finance lease - - - - -
Deferred tax liability - - - - -
Other liabilities 86.149 46.641 9.006 3.013 100
19.942 10.705 1.418 -0.086 100
NET ASSETS 32.729 14.307 3.948 -0.162 100
REPRESENTED BY
Share capital 5.500 0.000 0.000 0.000 100
162.74 100
Reserves
404.287 1 66.838 13.928
112.92 100
Unappropriated profit
278.696 5 17.022 -18.478
30.315 10.222 2.245 -0.998 100
Surplus on revaluation of 400.12 164.83
assets - net of tax 260.729 5 8 78.773 100
32.729 14.307 3.948 -0.162 100
39
Taraqiati Bank Ltd.
Note: In this Horizontal Analysis the year 2004 is taken as a base

year to calculate the change in other financial years. All the columns
are representing change with respect to 2004.
Vertical Analysis of Balance Sheet

Particulars 2008 2007 2006 2005 2004
ASSETS % % % % %
Cash & balances with
treasury banks 1.693 2.253 1.516 1.891 1.899
12.79
Balances with other banks
15.518 0 9.106 9.319 1.762
Lendings to financial
institutions 0.000 0.000 0.000 0.000 0.000
Investments - net 4.940 8.143 6.594 15.290 3.395
65.65 71.98 64.73
Advances - net
68.324 5 7 63.121 9
Operating fixed assets 1.117 0.927 0.956 0.823 1.164
10.23 11.17
Other assets - net
8.408 3 9.841 9.554 8
100.00 100.0 100.0 100.00 100.0
0 00 00 0 00
LIABILITIES
Bills payable 0.722 0.501 0.385 0.333 0.279
65.35 71.33 72.35
Borrowings
60.320 3 8 72.412 0
Deposits and other
accounts 6.385 5.512 4.012 3.736 4.407
Sub-ordinated loans 3.771 4.086 4.460 4.527 4.523
Liabilities against assets
subject to finance lease 0.000 0.000 0.000 0.000 0.000
Deferred tax liability 0.218 0.152 0.011 0.000 0.000
24.39 19.79 18.41
Other liabilities
28.584 6 6 18.989 8
100.00 100.0 100.0 100.00 100.0
0 00 00 0 00
100.00 100.0 100.0 100.00 100.0
NET ASSETS
0 00 00 0 00
REPRESENTED BY
83.17 89.66 91.68
Share capital
74.223 9 9 92.606 2
Reserves 6.438 3.966 2.715 1.914 1.664
41
Taraqiati Bank Ltd.
12.85
19.339 5 7.616 5.480 6.655
100.00 100.0 100.0 100.00 100.0
0 00 00 0 00
Surplus on revaluation of
assets - net of tax 2.847 4.584 2.669 1.876 1.048
100.00 100.0 100.0 100.00 100.0
0 00 00 0 00
Horizontal Analysis of Profit & Loss

Particulars 2008 2006 2005 2004
% 2007 % % % %
Mark-up/return/interest
earned 4.501 -13.362 -26.024 -15.825 0.000
expensed 11.279 9.002 -10.618 -87.507 0.000
Net mark-up/interest
income 0.224 -27.473 -35.745 29.405 0.000
Provision against non-
performing loans and
advances -43.546 -9.279 -48.118 38.920 0.000
Provision/(reversal) for
diminution in the value of -
investment 27.355 -168.737 913.026 158.617 0.000
Write offs under 15739.29
Government relief packages 0.000 4286.557 3 0.000 0.000
Bad debts written off
directly
-16.749 58.214 65.541 105.258 0.000
income after provisions 14.982 -101.980 -123.815 -36.551 0.000
NON MARK-UP/INTEREST
INCOME
Fee, commission and

brokerage income 82.822 -2.988 5.560 30.996 0.000
Dividend income 89.283 -64.283 7.133 7.133 0.000
Other income 514.594 509.536 486.610 -11.859 0.000
Total non mark-up/interest
income 506.732 500.567 478.468 -12.217 0.000
144.932 57.249 35.344 -30.120 0.000
EXPENSES
Administrative expenses 85.474 55.459 13.261 7.184 0.000

Provision against other 12392.99 54846.18
assets 5 2574.166 2 379.466 0.000
Provision for stolen fixed
assets
Other charges
Total non mark-up/interest
expenses 98.750 58.105 73.490 6.965 0.000
-
241.700 55.455 -100.000 107.828 0.000
43
Taraqiati Bank Ltd.
PROFIT BEFORE -
TAXATION 241.700 52.854 -44.586 107.828 0.000
Taxation - Current 175.783 25.485 -56.772 -92.363 0.000

- Prior years
- -
- Deferred 266600.0 2231120. 189060.0 12240.0
00 000 00 00 0.000
175.638 49.299 -54.893 -92.483 0.000
PROFIT AFTER TAXATION -
291.769 55.548 -36.775 119.457 0.000
brought forward 455.289 205.182 112.603 160.791 0.000
Profit available for
appropriation 346.096 105.262 12.854 -26.348 0.000
Transfer to statutory
reserve - - - - -
Transfer to contingency
reserve - - - - -
Profit caried forward 346.096 105.262 12.854 -26.348 0.000
Basic earnings per share -

(Rupees) 235.049 33.028 -43.548 117.742 0.000
Note: In this Horizontal Analysis the year 2004 is taken as a base

year to calculate the change in other financial years. All the columns
are representing change with respect to 2004.
Vertical Analysis of Profit & Loss

Particulars 2008 2006 2005 2004
% 2007 % % % %
Mark-up/return/interest 163.09
earned 170.058 194.831 187.772 106.091 8
expensed 70.058 94.831 87.772 6.091 63.098
Net mark-up/interest 100.00
income 100.000 100.000 100.000 100.000 0
Provision against non-
performing loans and 147.36
advances 99.934 84.502 46.186 99.740 8
Provision/(reversal) for
diminution in the value of
investment 0.066 -0.019 0.264 -0.012 0.043
Write offs under
Government relief packages 0.000 15.517 53.549 0.273 0.000
Bad debts written off
directly 0.000 0.000 0.000 0.000 0.000
100.00
100.000 100.000 100.000 100.000 0
income after provisions 34.539 -0.926 -12.946 66.804 73.574
INCOME
Fee, commission and

brokerage income 0.076 0.041 0.046 0.377 0.252
Dividend income 0.197 0.038 0.117 0.771 0.631
Other income 99.727 99.922 99.837 98.853 98.451
Total non mark-up/interest 100.00
income 100.000 100.000 100.000 100.000 0
NON MARK-UP/INTEREST 100.00

EXPENSES 100.000 100.000 100.000 100.000 0
Administrative expenses 92.994 97.983 65.056 99.855 99.651

Provision against other
assets 6.934 1.866 34.937 0.494 0.110
Provision for stolen fixed
assets 0.053 0.000 0.000 0.000 0.000
Other charges 0.019 0.151 0.007 0.145 0.000
Total non mark-up/interest 100.00
expenses 100.000 100.000 100.000 100.000 0
45
Taraqiati Bank Ltd.
45.070 31.938 0.000 -3.619 32.306

PROFIT BEFORE 100.00
TAXATION 100.000 100.000 100.000 100.000 0
Taxation - Current 100.052 84.049 95.833 101.605 99.999

- Prior years 0.909 1.103 0.000 0.000 0.000
- Deferred -0.961 14.848 4.167 -1.605 0.001
100.052 84.049 95.833 101.605 99.999
PROFIT AFTER TAXATION 58.644 50.603 37.410 -17.641 66.776
brought forward 41.356 49.397 62.590 117.641 33.224
Profit available for 100.00
appropriation 100.000 100.000 100.000 100.000 0
Transfer to statutory
reserve 0.000 0.000 0.000 0.000 13.355
Transfer to contingency
reserve 0.000 0.000 0.000 4.096 0.000
100.00
Profit caried forward 100.000 100.000 100.000 100.000 0
Interpetation of Horizontal and Vertical

Analysis
Markup/
Note: Return/ Interest Earned
The Financial statement for the year of 2009 is not available online.
Markup/return/interest earned is the amount which the bank earns
ZTBL is government institute and it is not listed in any stock
from its primary function of lending money to its customers. Increase
exchange. I have tried to get copy of financial statement from the
in this income shows that bank is growing, the reason of this growth
offices of bank but I failed to find any copy from the branch where I
can be either the increase in customer base or in the increase of rate
have completed my internship then I have contacted zonal offices
of lending. When I compare the markup/return/interest earned by the
and they also did not have any copy of the financial statement of
bank in the past 5 years it shows that the bank has improved its
year 2009. With the reference of branch manager I have requested it
primary function in recent years. The year from 2005 to 2007 shows a
from the Head Office but I came to know that publication department
decline in this income which is a clear sign that in that specific years
has not published the financial statement for the year 2009. The last
the bank performance was not satisfactory, the reason of this
financial statement which is available in the printed form is of year
performance can be the political unrest in the country due to which
2007. The financial statement of year 2008 is also not available in
sufficient attention couldn’t be given to bank’s working or it can be
printed form however it is available on internet in the excel format
result of large NPL’s.
which does not include director and auditor report. This is the reason
that the horizontal and vertical analysis is done from 2004 to 2008.
In the notes related to markup/return/interest earned it shows that the
bank is earning a major part of its income from the loans given to
However, the Key Financial Trends of year 2009 is included in the
customers, the bank has less focus of investment. However, it is
report which I have obtained from the credit rating report published
earning a handsome amount from the placement which it has made
by Japan Credit Rating Agency on August 2010. The internship report
with other banks.
also includes a glimpse view of banks performance from 1997 till
2009 which I have collected from the bank’s website, other websites
Markup/Return/
and newspapers. Interest Expensed
Markup/Return/ Interest Expensed is the expense of bank on taking
deposits and borrowings from the SBP. This expense shows an increase
as compared to previous years which shows that bank’s cost of
deposits and borrowings has been increased. This increase can be due
to two reasons, it can be due to increase in the amount of deposits and
borrowing or it can be due to increase in the rate the bank offered on
deposits and on borrowing from SBP.
In the notes it shows that bank is paying a large amount on borrowing

from the SBP rather than on the deposits. It can be due to two reasons
that either bank has deposits in the current account on which it has to
pay no or less cost or it is due to less deposits. From the amount of
deposits in the balance sheet it is clear that the deposits of bank are
47
Taraqiati Bank Ltd.
not of significant amount as compared to borrowing. I also know that

bank is working manly on the amount borrowed from SBP rather than
on deposits collected from the general public and institutes. An
increase in markup/return/interest expensed is not a bad sign if the
markup/return/interest income is also increasing, however if the
increase in expense is more than the increase in the income than it will
be a negative sign. From the vertical analysis of Profit and Loss
account it is clear that the income is much more than the expense
which shows that the bank has cushion to confront with other
expenses incurred due to secondary functions of the bank which is a
positive sign.
Net Markup/Interest Income

It is the income which the bank is earning after paying the
markup/return/interest expensed. From the horizontal analysis of the
profit and loss it is clear that there are many ups and downs in this
income which is result of decline in the markup/return/interest income
of the bank. But in the year 2008 it shows recovery and it is increased
as compared to previous two years of 2006 and 2007.
When I look net income in terms of amount in the profit and loss
accounts of last five years I find it positive and a handsome amount to
bear the other expenses of the bank. Because the horizontal analysis is
showing result by taking 2004 as a base year that is why in the year
2006 and 2007 it shows negative sign which means that in these two
years the net income of the bank has been decreases as compared to
year 2004. But in the year 2008 it again shows recovery.
Provision again Non-Performing Loans

This shows the cost bank is charging to it P&L account against those
loans which may become bad debts; almost all banks try to reduce this
cost. This shows the customer base of the bank to which bank is
lending, the lesser the cost the better and trustworthy client base the
bank has.
Horizontal analysis of P&L A/C shows the decline in the recent years in
this provision which is a positive sign for the bank. Which shows that
bank’s credit and recovery departments has improved their workings.
Provision/ (reversal) against diminution in the

value of investment
This shows any provision required to charge or reverse for the
investment made by the bank. An increase in the provision shows that
the investments of the banks are declining in value which will definitely
result in loss and if the provision made before is reversed it shows that
the value of the investment is increasing.
The horizontal analysis of the P&L account shows that the provision
created by the bank is reduced in 2008 as compare to 2007 which is a
positive sign. The reason of large provision in 2007 can be due to
uncertainty in the stock market etc.
Write offs under Government Relief Packages

ZTBL is a government bank due to which the government can ask it to
give relief to loanees of particular regions of category which also
increase the cost for the bank. The flood of 2010 is expected to
increase this cost in this financial year too because a large number of
farmers have been effected with this flood and they are not in the
situation to return their borrowed amount to the bank. For the year
2008 there is not any amount which is asked by the government to
write off but in the year of 2007 and 2006 there is some amount which
banks directly written off on the instructions of the government.
Net markup/ Interest income after provisions

This is net income after charging provisions. An increase in this income
is a positive sign which can be due to two reasons that either the net
markup/return/interest income has increased or the provision required
to be charged by the bank is reduced due to less number of NPL’s
loans. So, if the net markup/interest income after provision is
increasing it is a positive sign because the bank will have more
amounts to pay its other expenses like admin expenses etc. and it will
result in more Gross Profit.
Non Markup/Interest Income

It is the income which the bank in earning from its secondary functions.
An increase in this income is also a positive sign it shows that the bank
is also making its secondary functions profitable. The secondary
functions shows the amount earned from the commission charged in
the services offered by the bank, the dividend income etc.
49
Taraqiati Bank Ltd.
But this income may also have a portion of income gained by the bank
by the sale of scrap or old machinery etc. It is not a positive sign if this
income is larger part of total non markup/interest income. Because,
the bank will not have the scrap to sale in all years and having larger
part of this income of sale of scrap will definitely depicts that the
bank’s profitability can be affected in the coming years. However, if
the bank has sold old machinery and in the meanwhile new machinery
is added in the assets of the bank than it will be a positive sign
because it will show that the bank is working on BMR (Balancing,
Modernizing and Restructuring) which will result in better performance.
The profit and loss account of the bank is showing an increase in the
non markup/interest income which is a positive sign. The vertical
analysis of the profit and loss shows that other income is the larger
part in non markup/interest income and from the notes it is clear that
in the other income, the amount recovered which has been written off
previously is making a bigger portion. Recovering a previously written
off loan is a positive sign because it is causing an increase in the
income of the bank.
Non Markup/Interest Expenses

It consist on the expenses bank payed for admin expenses and some
other expenses. But the admin expenses is usually a large part of this
non markup/interest expenses and also it is most important
expenditure to have a look upen because it shows that whether the
bank is utilizing its human capital efficiently or not. A larger admin
expenses is not a negative sign if it is also increasing the income of the
bank. However, if the percentage change in the increase in the admin
expenses is more than the percentage in the increase in the income
than it is a negative sign beacause is paying more to increase its
income. Almost all banks try to control this income so that to increase
their income.
The ratio of Admin Expenses to Deposits is used to check the cost bank
is facing on collecting of deposits which is the main source of money
bank required to lend to others to make income. However, in ZTBL the
bank relies on borrowing from SBP more than on deposits so the
efficiency of admin expenses can not be judge from the ratio of admin
expenses to deposits. So, it is difficult to say anything about the cost of
admin expenses.
From the horizontal analysis it is clear that the admin expenses has
been increased in 2008 but the profit of the bank is also increased so it
is not a negative sign. By looking in the notices of financial statement
it is found that admin expenses consists on a number of expenses,
salaries of the staff no doubt a major a part of it but other expenses
like traveling expenses, motor vehical cost of repairing etc are also
effecting this cost a lot. Because I know that the MCO scheme has
become a major part of the bank’s working so increase in the cost of
traveling, rapairing is not a surprise.
Profit before Taxation

The profit before taxation has been significantly increased in the
recent years, the financial statement for the 2009 is still not available
on internet nor in print format but some key facts which has been
published by the bank for the 2009 shows that bank continues making
profit in year 2009 also. When I look in the previous year it found that
the profit before taxation is 2.5 times more than it was in 2004.
However, the increase in the profitiability is not constant there are ups
and downs in it. Like in 2005 and 2006 the profit of the bank has been
decresed as comapred to 2004 and in 2007 it again started increasing
and this continues till 2009 which have result of more than 2 Billion.
Taxation
Due to increase in the profit the tax has been also increased, it is
almost doubled in the last 5 years like the profit of the bank which has
been also doubled. So, it not a negative sign. By compare the increse
in the profit before tax and the increase in tax, I come to know that the
increase in the tax is less than increase in profit which can be due to
two reason that whether the rate of tax is not increased as the income
of the bank or the bank is managing its tax efficiently.
Profit after Tax

The after tax profit of the bank continued to increase in the recent
years which is a good sign and also shows that bank has improved its
working a lot than few years before. The profit for the year 2008 is
almost 300% more than the 2004 which show that the profit of the
bank is tripled in last five years. The same trend continued in 2009 in
which the bank also made a record profit.
51
Taraqiati Bank Ltd.
Interpetation of Horizontal and Vertical

Analysis of Balance Sheet
Cash and Balance with Treasury Banks
It shows the amount placed with SBP in order to fulfill the requirement
of banking companies ordinance, 1962. There is a decline in the
amount with respect to previous year, the reason of it can be the
decrease in the volume of deposits due to which the bank is not
required to maintain higher placement with SBP. However, the deposits
also show an increase in it, so the reason of this decrease in the cash
and balances with treasure bank is uncertain. One other can be this
that the bank has placed higher amount with SBP than required in the
previous year and that is why in this year the bank has withdrawal the
money from its account with SBP.
Balances with other Banks

Horizontal analysis of Balance sheet shows significant increase in the
placement with other banks. It is not a good sign if the placement is in
ideal state and is not generating any revenue for the bank. However,
from the notes of ZTBL it is clear that the bank has placed amount with
other banks in the accounts which are giving markup to the bank.
Placing money with other institutions is not a good thing for any bank
when does on a large scale because it cannot generate enough money
to compensate the opportunity cost the bank is bearing on not
investing or advancing this money to its customers. However, the case
of ZTBL is different. It borrows money from SBP at fewer rates and
lends it to farmers. The rate it charges to farmers is less than the
prevailing rate in the market (currently 9%) so by depositing money
with other financial institution it can earn more than the rate it is
offering to its clients. Because it is an institute developed just for the
improvement of agricultural sector so the bank’s main focus is on
lending rather than investing.
Investments-net
There are ups and downs in the amount of investment made by the
bank in the previous five years. From the notes to the account it is
clear that bank usually invest in less risky investment like Market
Treasury Bills and Pakistan Investment Bonds. The less risky
investment will result in less gain on investment but here the return on
investment is not the main focus of the bank. The money the bank
owns is largely consist on the borrowed money from SBP, so the bank
cannot use the borrowed money in a more risky adventure.
Advances-net
The bank continues to increase the amount of advances to facilitate
more and more farmers every year. The data of 2009 shows a record
increase in lending to farmers; the bank has disbursed 77.7 Billion
rupees in 2009 as compared to 70.7 Billion in 2008. The percentage
increase in the horizontal analysis also shows this continuous increase
in the trend of advancing.
Operating Fixed Assets

The assets of the bank are also increased in 2008 and in 2009 the
president of the bank also announced to increase it further by
constructing new buildings. Increase in the fix assets shows that the
bank is optimistic about its future.
Borrowings
It is the amount which bank has borrowed from SBP. There is no
change in this loan from 2004 the reason is that neither SBP has given
new loan to ZTBL nor ZTBL has returned any principal amount of loan
back to SBP due to which the amount of loan borrowed remain
unchanged. ZTBL and SBP is now negotiating on terms and conditions
of returning principal amount in 15 equal installments.
Deposits
Deposits are the backbone in any bank operations because the primary
function of any bank is to take deposit from depositors and then lend it
again to other who needs it. But as I have written before ZTBL does not
rely on deposits more like any other bank. However, in recent years
the bank is trying to shift its dependence from SBP to other resources
and due to this it starts increasing its deposits by marketing. But the
efforts in this respect is still need improvements as the products
offered by ZTBL is not as attractive as offered by other commercial
banks.
Share Capital
53
Taraqiati Bank Ltd.
In 2008 the bank has issued bonus shares to increase its paid up
capital. The reason of this increase can be the requirement of SBP to
maintain a minimum equity level. Currently the paid up capital of the
bank is 12.5 Billion.
Reserves
Reserves are made for the development of the organization or for the
contingencies which can affect in the future. There is continuous
increase in the reserves of the bank from last five years which is a
good sign. These reserves also include the statutory reserve
requirement according to banking companies ordinance, 1962.
Surplus on Revaluation of Assets-Net of Tax
It is surplus amount which is the bank expect to get if it will sell these
assets. The market conditions never remain certain; the price of
anything can rise or fall in matter of second. This is the reason that
organizations use to revalue their assets to record their value
according to prevailing market rates. The revaluation of fixed assets
also helps banks in raising their equity which result in more lending
power of the bank.
Conclusion
Although the bank needs improvements in many fields, the overall
performance of the bank is satisfactory. The bank has made many
efforts in the recent years and it is clearly visible in the result of its
financial statements. The reduction in NPL’s is also a positive sign and
will definitely result in good performance. Besides a government
institution the bank has made before tax profit of 4.9 Billion which is
great achievement. If the process of improvement continues than it
can make more profit in the upcoming years and its success will also
result improvement in financing facilities to people of rural area.
Ratios 2008 % 2007 % 2006 % 2005 % 2004 %

Avg. Rate of lending 11.297 10.190 8.929 10.377 14.174
Avg. Rate of
borrowing 6.156 6.150 5.177 0.727 5.766
Admin Expenses 83.322 87.643 95.770 98.778 78.062
Cost of funds 89.479 93.793 100.947 99.505 83.828
Spread -78.182 -83.603 -92.017 -89.128 -69.654
Ratios
The reason of negative spread is that the bank use to borrow from SBP
rather than getting deposits from the general public due to which the
ratio of admin expenses depicts a large cost than expected because
this ratio is calculated by dividing admin expenses with the deposits. In
my opinion the admin expenses is required to be calculated by adding
borrowing also with the deposit. For example if we will calculate this
ratio by adding borrowing with deposits than the result for 2008 will be
7.975 rather than 83.322 which is acceptable. By calculating all admin
expenses with this formula the
result of spread will be like this.
Ratios 2008 % 2007 % 2006 % 2005 % 2004 %

Avg. Rate of lending 11.297 10.190 8.929 10.377 14.174
Avg. Rate of
borrowing 6.156 6.150 5.177 0.727 5.766
Admin Expenses 7.975 6.817 5.099 4.846 4.482
Cost of funds 14.131 12.967 10.276 5.573 10.248
Spread -2.834 -2.777 -1.346 4.804 3.926
Ratios 2008 % 2007 % 2006 % 2005 % 2004 %

Net markup to total
income 84.239 65.875 71.387 138.212 142.862
Return on assets 2.542 1.106 0.491 -0.154 0.791
Return on Equity 15.418 7.238 3.171 -1.008 5.129
Breakup Value 12.605 11.546 10.849 10.592 10.726
Infection Ratio 16.697 23.686 28.201 36.180 -
Provision to classified
advances 60.426 55.227 48.630 50.457 -
1433.48 1631.69 2473.33
Advances to deposits 5 0 2 2448.135 -
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Taraqiati Bank Ltd.
By calculating the admin expenses in this way the result of spread is

still in negative but not as much as it was before. However, all this
shows that there is still problem the bank is not utilizing its human
capital as it needs to. The main reason behind this is the working style
of the bank, because it a government institute so the wastage of
resources is not a surprise thing. However, the bank is continually
improving its working style and also moving towards making high
profit.
Ratio of net markup to total income shows that bank has improved its
secondary function as wel. But this improvement is not stable one
when I look the ratios of previous years, it shows ups and downs in it.
Return on assets
Return on assets is a ratio uses to gain information that how much
assets of the company producing profit, the more the result of this
ratio the more efficently the bank is utilizing its assets. More than 2 is
considerd a good ratio and the result of ZTBL is also showing good
result, the ratio of 2009 is also more than 2 which is found in the report
published by Japan Credit Rating Agency.
Infection ratio
It is an important ratio which shows that how much advances of the
bank is placed under classified advances. In other words, it shows that
how much loans given by the bank is considered to become bad debts.
The more this ratio is, the more the bank needs to maintain the
provisions against these loans and which will result in lesser
profitability. Usually, ideal situation is conisdered where this ratio is
less than 5%, in this situation the bank has a biger portion of
customers which are trust worthey and have credit worthiness.
The infection ratio of ZTBL is very high which can be considered a

negative sign. However, keeping in view the previous records it is clear
that bank has improved it a lot and all this improvement is giving
sense that if bank continue working with the same pace than in the
next two to three years this ratio will decrease significantly and can
come under satisfactory level. The record of NPL’s is given in the Quick
View of ZTBL’s Performance.
Provision to Classified Advances

This ratio tells that how much provision the bank is maintaing against
its classified advances. The more this provision is, the more it can be
assumed that the classified advances of bank is in the category of loss.
Maintaing provision is the requirement of Prudential Regulations of
State Bank of Pakistan, the more risky the loan is the more provision
the bank is required to maintain. The bank has to keep its classified
advances in the four categories, (1) Other Assets Especially Mentioned
(2) Substandard (3) Doubtful (4) Loss. Each category has its own
requirement of provision, the higher the category, the higher the
provision required to maintain.
The ratio calculated from the financial statement of ZTBL shows a

continuous increase, it is a negative sign because the bank is
maintaining larger provision which shows that a large part of classified
advances are in the category of loss. And it shows that bank is not
doing enough to recover these loans.
Advances to Depoists
Advances to deposit shows that how much part of deposit is used by
bank to advance. Usually this ratio remains with in range of 70 to 75 %
because 25% of all bank deposits is required to be kept in statutory
reserve to maintain minimum liqudity requirement.
The ratio of ZTBL is presenting a different scenerio, it is more than

1400% for the year 2008 which an abnormal result. I have mentioned
the reason of it many times before in this report, the reason is that
ZTBL is advancing a large part out of the loan it has obtained from the
SBP. The borrowing of the bank is much larger than the deposits it has
this is the reson that this ratio is showing such result.
57
Taraqiati Bank Ltd.
Key Financial Trends of 2009

According to Japan Credit Rating Agency on August 2010
Note: The following is the extract from the report of Japan

Credit Rating Agency issued on August 2010 showing the new
credit rating of ZTBL.
Balance sheet footing of the bank was higher at year-end 2009 at Rs.
113.6b. Net advances increased to Rs. 83.6b (2008: Rs.69.b)
representing a higher proportion of total assets at 74% at year-end
2009. While various new loan products have been launched been
launched by the bank in 2009, Sada Bahar Scheme has remained the
flagship product of the bank. For all new borrowers of crop production
loans, Awami Zarai Scheme (AZS) has been launched by the bank;
outstanding balance against this scheme may also show increase over
time. To ensure proper utilization of loan, the bank has incorporated a
wholly owned subsidiary to make arrangement for in-kind lending to

farmers.
The IT infrastructure of the bank has improved considerably over time.

With the implementation of various applications at branch-level to
consolidate loan disbursement & recovery data, monitoring of lending
activities has improved, though there may still be a need to further
strengthen the loan recovery mechanism. Gross infection has declined
from16.7% in 2008 to 15.8% in 2009; however there is still need for
further strengthening the recovery mechanism. Net infection hovered
at prior year’s level at 11.5%. Net NPLs in relation to Tier-1 capital
stood at almost 57% at year-end 2009. ZTBL has arranged crop loan
insurance for wheat, cotton, sugarcane, rice and maize. As the
insurance coverage is enhanced, the risk of loss in case of calamities
will be reduced.
Growth in loan portfolio during 2009 absorbed some of the liquidity

held by the bank. Liquid assets to total borrowings and deposits
declined to 27%. The bank has made efforts to enhance its deposit
base, though these continue to represent a small proportion of the
total resource base. The bank had outstanding borrowings of Rs. 54.5b
from SBP at year-end 2009. The terms of restructuring of SBP debt
have yet to be finalized, which would have significant implications for
the risk profile of the institution. The bank has so far not made any
interest or principal payments against these credit lines. While there is
some cushion available to the bank in terms of markup differential
receivable from the GoP vis-à-vis interest payable to SBP, liquidity
profile may be significantly compromised if payment is required
against the principal portion. One of the proposals under consideration
entailed debt to equity swap, which if finalized, would support
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Taraqiati Bank Ltd.
capitalization levels and facilitate in furthering the government’s

economic objective pursued through the bank.
Credit Risk
Gross advances of the bank considerably grow over 2009, with year-
end outstanding balance of Rs. 89.4b (2008: Rs. 77.8b). Loan
disbursements of around Rs. 78b were made by the bank in the
outgoing year.
Loan disbursement target for fiscal year 2010 was Rs. 80b. ZTBL is
used as an arm by the Government, with disbursement target
stipulated as part of the annual budget process. For FY10, 22.7% of the
loan disbursement target pertained to development loans, while
remaining was for production loans. All targets are allocated by SBP.
While various new loan products have been launched by the bank,
Sada Bahar Scheme has remained the flagship product of the bank.
Loan products launched in 2009 include, Green Tractor Scheme, Crop
Productivity Scheme and Rural Development Scheme.
Green tractor scheme is specifically for the province of Punjab and
entails subsidy of RS. 200,000 per unit for 10,000 tractors. Banazir
tractor scheme is applicable to all areas of Pakistan. On receiving
complaints from borrowers regarding non-cooperative attitude of
tractor dealers, a tractor delivery system has been developed through
KSSL in the outgoing year.
Awami Zarai Scheme (AZS) has been launched by the bank for all new
borrows of production loans, pertaining to inputs required at the time
of crop cultivation. As per the scheme, agriculture inputs will be
supplied by KSSL to farmers in lieu of cash. Quantity of input needed
for each crop on a per acre basis has been predetermined by the bank.
The farmers will be provided a specific quantity of inputs according to
cultivable land.
The purpose of AZS is to ensure proper utilization of loan proceeds.

Crop productivity scheme is specifically for financing of fertilizer. Rural
development scheme has been launched to provide assistance for
dairy, poultry, sheep and goat farming in the rural areas of AJ&K;
especially earthquake affected areas.
The bank has also setup a pilot project for a model village in
collaboration with ministry of food & agri./ provincial agri.
Departments. Crop loan insurance has been made compulsory by SBP
for wheat, cotton, sugarcane, rice and maize financing. To facilitate
loan insurance, the bank has to pay the premium for subsistence
farmers, which is subsequently reimbursed by GOP on a half yearly
basis. ZTBL has arranged crop loan insurance with Adamjee insurance
company limited (AICL). Premium is charged @ 1.3% of loan
sanctioned.
The implementation of software applications has facilitated monitoring

of lending activities at branch level. The need for strengthening the
collection mechanism however remains, as may be ascertained form
the portfolio quality indicators.
NPLs increased to Rs. 14.2b (2008: Rs. 13b) during 2009. During the
out-going year, an amount of Rs. 2.6b was charged off against
provisions as per the prudential regulations, with cumulative balance
of charged off loans standing at Rs.34.98b at the end of December
2009. This amount was lower than the balance of Rs. 36.30b at the end
of December 2008, on amount of recoveries of 4.29b made against
charge off amount.
At year-end 2009, gross infection in the loan portfolio of the bank

remained high at 15.8% (2008: 16.7%). The overall agriculture loan
portfolio of the banking sector had gross infection of 16.1%
(2008:15.3%) at end-December 2009. Around 52 %( 2008: 47%) of
NPLs were classified as OAEM at year-end. On account of this,,
provisioning coverage against total NPLs Is low. Net infections (NPLs
adjusted for specific provisioning only was 11.5% (2008:11.2%).
Minimum recovery target set by the bank entails 90.8% of current dues
and 75% of past dues. In 2009, recovery of 91% was achieved against
current dues, while 72.4% recovery was made against past dues.
Recovery targets are monitored on a branch-wise basis; in branches
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Taraqiati Bank Ltd.
where overall recovery is less than 75% loan approval authority is

retracted.
The bank held fixed income securities of Rs. 6.7b at December 2009,
increasing form Rs. 4.5b at the end of the preceding year. Of these,
only Rs. 283.65m was placed in COIs whiles remaining comprised
government paper, credit risk associated with which is considered
minimal. COIs are also placed with counterparties of sound risk profile.
In addition to the above, the bank has Rs. 100m invested in a wholly
owned subsidiary.
Market Risk
Net investments of the bank increased to Rs. 7.2b (2008: Rs. 5.1b) at
end- December 2009. Around 73% of net investments comprised short-
term treasury bills. Price risk on the same is considered low. Fixed-rate
long term PIBs represented 14% of net investments. These carry
markup rates in the range of 12-13% and have maturities between
Aug-Dec’11. Recent increase in benchmark rate is expected to have
reduced the market value of fixed income instruments held in the
portfolio. However, the bank has both the intent & ability to hold these
to maturity.
Investment in equities at cost was maintained at Rs. 100.6m,

comprising exposure in unlisted securities amounting to Rs. 10.5m.
Investment in unlisted securities has been fully provided for various
reasons. Investment in listed equities of Rs 89.3m had a market value
of Rs 537m.
Liquidity
Total borrowings and deposits of the bank where higher at Rs. 63.2b
(2008:Rs. 59.9b) at year –end 2009 with increase in deposit to Rs.
8.75b (2008: Rs 5.43b). Borrowings were maintained at Rs. 54.5b at
year-end 2009.
Liquidity profile of the bank declined in relation to 2008, with liquid

assets to total borrowing and deposits reducing to 27 %( 2008:36%).
Depositors of the bank are primarily individuals. Proportion of current

and saving accounts in the deposit mix was maintained at 94%. Since
deposits still comprise a small proportion of funding mix; improvement
in the deposits does not have a material impact on the cost of funding
for the bank.
The bank had outstanding borrowings to the tune of Rs. 54.5b from
SBP at year-end 2009. These borrowings were obtained to provide
finance to clients for agriculture. At the time of reorganization of ADBP
into ZTBL, these credit lines were restructured and a moratorium was
given to ZTBL according to which it had been allowed to repay SPB
debt in 15 years (in 30bi-annual installments) with a grace period of 3
years starting from July 2003 and the last payment was supposed to be
of Rs. 3.20b, representing the subordinated loan. At the time of
restructuring, the bank had proposed to cap the markup on these
borrowings at 2.3558 %( 12 month t-bill rate as at July 01, 2003) for
five years but the matter had not been acceded to by the SBP. Since
then, various restructuring proposals have been discussed by the bank
with the ministry of Finance and SBP, though an agreement on this
issue has still to be achieved. The bank has not made any principal
repayment on the premise that the restructuring terms have not been
finalized. These loans are secured by way of federal government
guarantee.
Presently, the bank is accruing interest expense on these at varying

rates. Three credit lines amounting to Rs. 1.577b carry interest rate of
4% p.a. while remaining thirty two lines amounting to Rs. 48.597b are
based on PLS subject to maximum share of profit to SBP ranging from
4-10% p.a. markup on subordinated loan is being charged at weighed
average yield of t-bills of 12 months maturity. No return however has
been actually paid by the bank, with a total payable of Rs. 19.54b
having been accrued by December 32, 2009. Any plan requiring
immediate payment of the either the interest expense or principal may
place significant stress on the bank, as it does not have the required
liquidity. However, the bank also has markup differential of Rs. 17.74b
receivable from the government. This amount is not recognized on
books. There are also other amounts recoverable from the government
in lieu of relief packages, with outstanding balance of Rs. 956.27m at
year-end 2009.
Profitability
Return on markup bearing assets declined to 9.8% on account of
decline in high-yielding lending to financial institutions. Nevertheless,
interest income of the bank increased to Rs. 8.7b (2008: Rs 8.5b)
attributable to overall higher average markup bearing assets during
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Taraqiati Bank Ltd.
2009. Net interest income of the bank also depicted an increase to Rs.
5.1b (2008: Rs.4.98b). Cost of funding hovered at 6%, thus spreads
declined to 4%. Cash outlay has not been made by bank for payment
of interest on borrowings, and interest in only being accrued on books.
Non –interest income of the bank was higher at Rs. 38.2 m attributable
to increase in dividend income on investments. Other revenues
primarily comprising recoveries on charged off loan amounts was Rs.
4.3b (2008: Rs 4.8), taking total revenues, net of financial charges, to
Rs. 11.2b (2008: Rs. 10.4b).
Administrative expenses of the bank inclined to Rs. 5.2b (2008:Rs.

4.5b), in line with inflationary trends in the economy. While salary
expense experienced growth of 12% staff strength of the bank was
rationalized to 5,352(2008: 5,370).
In December 2005, the bank had introduced SR-2005, a retirement

benefit scheme for its employees. A significant proportion of
employees switched to SR 2005 from their existing pension scheme in
2005. The scheme was re-opened in 2009 and 1,097
Executives/officers of the bank opted for SR-2005, resulting in an
expense of Rs. 677.8 to bank in 2009.
Incremental provisioning against non-performing loans declined to Rs.

563 (2008: Rs. 1.9b). The bank posted profit before tax of Rs. 4.6b
(2008: Rs. 3.99b) for 2009.
Profit for 2009 was reduced to Rs. 1.8b (2008: Rs. 2.6) after
adjustment of tax expense of Rs. 2.8b (2009: Rs. 1.4b) which pertained
to current and prior year.
Capitalization
As of December 31, 2009 equity of the bank was higher at Rs. 18.7b
(2008: Rs. 16.9b), exceeding the minimum capital requirement of Rs.
6b mandated by SBP. Capital Adequacy Ratio of the bank was slightly
lower at 21.7% (2008: 22.9%). Net NPLs to Tier 1 capital stood at 57%
at end-December 2009. If the proposal of loan conversion into equity
materializes, it will provide considerable momentum to capitalization of
the institutions.
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Taraqiati Bank Ltd.
Quick View of ZTBL’s Performance till

2009
67
Taraqiati Bank Ltd.
Chapter 4
SWOT Analysis
Strengths
• ZTBL has brand name in agricultural loaning.
• It is first and large financial institution established in Pakistan to

promote agricultural financing.
• The bank has more than 350 branches throughout Pakistan and
has presence in all the provinces of the country which enables it
to capture and facilitate a large number of customers.
• The bank enjoys sovereign guaranty of Federal Government that

covers its debt obligation to State Bank of Pakistan.
• The Bank has the most experienced and the least experienced
staff, which is a good combination of experienced heads and
exuberance of youth.
• The bank has ability to launch successful products for agricultural

industry due to know how of the agricultural system of the
country.
• Mobile Credit Officer is the unique concept which is helping in

remaining more near to its customers and also helps in recovery.
Concept like these helps bank in safeguarding itself in the risky
adventure of financing to small farmers.
Weaknesses
• ZTBL have not introduced any Islamic product in financing.
Islamic banking is becoming popular in these days and to sustain
and increase the number of customers every bank is felling need
to start offering Islamic Products. This ZTBL requires noticing this
changing trend.
• In spite of the presence of technology many jobs are done

manually. Almost all other bank’s operations have been
computerized but ZTBL is still working on manually written
ledgers etc.
• Like other Government institutes the red tap dilemma also exists
in ZTBL.
• The staff is not motivated because the promotion mechanism is

based on experience rather than on the performance of the
employees. This is the reason that usually employees stop giving
their full efforts after knowing the reality that their performance
pays a less role in their success.
• The average loan disbursement amount is 85,000 to single

person which is not a big amount. Usually the loan obtained by
the loanee can be used to meet working capital requirement only
it cannot be used to fulfill the dream of modernizing of agriculture
sector.
• There is a lack between the planning of head office and the

reality of environment because the staff at high level have little
know how of the real situation on the ground.
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Taraqiati Bank Ltd.
• The infrastructure of the bank is also based on old style; the bank
is not refurnishing its branches like the other banks have done in
this decade.
• The situation at branch level is not good, there is lack of even

furniture, fans etc.
Opportunities
• The bank started computerizing its operation which if completed
will result in increase of the bank performance. The impact of
computerization can be seen from the result of recovery of 2009
which is 89%. The computerized system helps bank in reducing
fraud.
• Due to increase in the government attention toward the

agriculture sector it is expected to see the role of the bank
increasing in the near future. As a result of different steps taken
by the government regarding the betterment of the agriculture,
small borrowers are attracted to get the financing and to start
business. So, the ZTBL has an opportunity to attract the
customers by giving them more attracted schemes.
• They have wide area network in all over the Pakistan, so ZTBL
can make it possible the fast delivery of funds to rural areas.
• The flood of 2010 is challenge for the whole country. Because the
most effected people are farmers so the bank has a chance to
increase its reputation by utilizing its full resources to help them.
It is also expected that the relief which the government may
provide to them will also be delivered through the bank in the
form of relaxation to the loanees.
Threats
• The biggest threat in the banking sector is the continuous
downfall of the country economy since the last few years.
• Sudden rise and fall in the trade and industry conditions and
stock exchange business of the country also adversely affect the
growth of banking sector.
• The default ratio of customers who are availing the credit

facilities from the ZTBL can rise due to the economic recession in
the country.
• Government type of working style is also a threat to the bank

which requires to be changed to keep the banking growing.
• Many commercial banks also started agriculture loaning scheme

so it is expected that in the future the farmers will have more
choices to have finance from which will definitely affect the
customer base of the bank.
• Political unrest is also a threat for the bank because it is a

government owned bank and the change in government can
result a change in the strategy of the government which can
affect the plan made by the bank.
• Natural Calamities is also a problem, the bigger part of the bank

customers relies on the environmental condition. Almost whole of
the agriculture industry have threat from the changing
environment conditions. The example of 2010 flood is still in front
of us those who are affected are unable to pay their loans back.
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Taraqiati Bank Ltd.
Part Two
Ch. 5:Assignments I handled
during my Internship.
Chapter 5
Organogram of Mian Channu Branch
73
Taraqiati Bank Ltd.
Redemption of loan
On the payment of all the dues by the loanee (principal + interest), he
can free his land (or any other security provided) from any charge
created by bank for the purpose of loan. For this purpose he will have
to present the following documents:
1. Application for redemption

2. Stamp Paper of rupee 20
3. Last receipt of amount paid
4. Cheque book (if issued)
When the loanee provides these documents to assistant officer (Or any
officer appointed for these sort of work), the assistant officer asks the
peon to bring the Loan Case File of the borrower. After the file is
received by the assistant officer, he checks the documents that
whether all the documents are there in the file. Then he makes
required entries in the Passbook. These entries usually made on the
page 28 and 30. The example of entries is given below.
The following entries are made on page 28.

See page number 16
and block number 3
The entire loan for detail.
including interest has
been paid by the (Here page number 16
loanee. shows the number
and date of last
charge created
against the land of
loanee in the favor of
bank)
The following entries are made on page 30.

See page number 18
and block number 8
for detail.
ZTBL Mian Channu
(Page number 18 is
usually the page
where the detail of
land mortgaged has
been given, it include
the area of land,
khatoni number etc)
After these entries the officer then sends the file to Manager for
signature. On approval from the Manager for the Redemption
Application the assistant officer attaches all afore said documents with
in the file and record in the “File Movement Register” that file has
been moved from the record room for the redemption purpose.
Than the file is send to AMO (Assistant Manager Operation) for further
process. The loanee is given the date of next week to collect his
“Passbook”. During this period AMO checks the record of the loanee to
confirm that the entire due amount with respect to that particular loan
has been paid and then he signs to give approval to assistant officer to
issue “Passbook” to the loanee. The AMD (Assistant Manager) and
Manger both also sign the notice issued in the name of Patwari and
Tehsildar that the land can be transferred to the loanee as the loan has
been fully paid by him.
Then file again comes to the assistant officer, he checks the signature
both in the notice and Passbook and then stamped both. Now the
Passbook is ready to issue. Before issuing Passbook the officer record
that passbook is issued to the loanee in the “Dispatched Register”. On
the issuance of Passbook to the loanee, the officer verifies that the
person receiving the documents is the original owner of the land which
is mortgaged with the bank. After getting the Passbook, the loanee
goes to Patwari and Tehsildar for the change of record back to his
name.
The one thing which is interesting here is obtaining Stamp Paper from
the borrower. This is not a requirement but bank has made it practice
so that if in the near future, it finds that some amount is still due by
the borrower than it can write on the stamp paper whatever it wants
and then can claim the due amount from the borrower. This is
precautionary measure adopted by bank because once the Passbook
issued to the borrower and the land again transferred to his name, the
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Taraqiati Bank Ltd.
bank will be in no position to recover any amount which is

unexpectedly left due.
The redemption process in short can be described as the

following:
• Submission of Application
• Acceptance of application by manager
• Record of file in the “File Movement Register”
• Entries made in the passbook
• File send to AMO for checking of loan status
• On approval from AMO, the Manger and Assistant manger signed
the notice to issue Passbook
• The passbook dispatched to loanee with notice to Tehsildar to
transfer land back to his name
• After the land is transferred to the loanee name, if he wishes he
can withdraw the amount from his current account and can close
his account.
Usually the loanees do not redeem their land because they want to
avoid the cost and wastage of time when in the future they again
have to gain loan from the bank. So, they usually remain the land in
the name of the bank even after they have paid the whole loan
amount. During my internship I have seen people who has paid loan
more than 10 years ago but they came to bank after such long time
to redeem their land and the reason behind their redeem was that
they want to transfer it to someone others name otherwise they
may not come for redeem.
I have also seen one of the clients who has paid loan in 1985 but his
land is still in the name of the bank and they have not redeemed it.
After the death of the client his sons came to know that the land
could not be transfer to their name because it is still mortgaged
against the loan which their father had paid in 1985. So, at that time
they reach bank for redemption because the bank always
maintained record so their file found from the record room after
little efforts. All this shows the confidence the people has on the
bank and also shows that in practical life anything can happen.
Opening of Current Account

In the ZTBL, the current account usually opened only when the person
comes there for a loan. On the approval of loan, his sanctioned amount
is usually credited to his current account. The procedure of opening of
Current Account is not very complicated. The following are the main
point in the opening of a new account:
1. Acquiring original CNIC

2. Filling the Current Account Form
3. Filling of Know Your Customer
4. Filling of Current Account Card
5. Registering name in the “Current Account Register”, (Issuance
of A/C No.)
6. Filling of deposit slip of starting amount
7. Signing by AMO and Manager
8. Issuance of Cheque book
9. Opening account in the ledger of bank
1: Acquiring Original CNIC

It is mandatory to check the original CNIC of the person before opening
of current account. In the ZTBL it is routine to open account when
manager sanctioned and signed the amount of loan. Because at that
stage it becomes essential to have an account in the bank otherwise
the amount of loan will not be paid.
The other documents required to attach with the forms are:
• 2 recent pictures
• Copy of CNIC.
2: Filling Current Account Form

After obtaining original CNIC the form for current account is filled with
the information written on the CNIC. The form includes the following
information:
• Type of account
• Branch Name
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Taraqiati Bank Ltd.
• Branch Code
• Name
• Father Name
• CNIC Number
• Address
• Occupation
• Nationality
• Contact number
• Date of birth
• Marital status
• Mother name
• Name, CNIC, Contact of MCO who knows the person personally
• Next of Kin (The person who will have right to operate the
account in the event of the account holder’s death or any other
mishap)
• Starting amount
3: Filling of Know Your Customer Form

The Know Your Customer form is also attached with the current
account opening form and contains the following information:
• Name
• Account number
• CNIC number
• Address
• Purpose of opening of account
• Monthly income
• Source of income
• Type of customer (i.e. Walk in)
• Public figure
• Usual mode of transaction (i.e. in cash, cheque)
• Etc.
4: Current Account Specimen Card

Name: Account No.
Adress: Type of Account:
Name of Account Holder Name of Account Holder
This side is used to write the name This side is used to obtain the
of account holder both in Urdu and signatures of the account holder
English. for verification of cheques in the
future if required.
Signing Authority:
One side is used to obtain the signature of account holder; I usually

take 3 signature of him in the right side of card. While the left side of
card is used to write the account holder name in both Urdu and
English.
5: Registering name in the Current Account

Register (Issuance of A/C No.)
After filling the required forms the name of the new account holder is
registered in the Current Account Register. This register requires
writing down the name of account holder, his father name, Address
and the starting amount.
These are the following blocks made in the register requires to fill.
Account Date of Opening Name:

Number: It is Opening of Balance of Father name:
account number Account Account Address:
issued to holder.
It is a serial
number, so I
used to write
the next Adnan Ijaz
number when I S/O Ijaz Naseem
have to open an Mian Channu
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Taraqiati Bank Ltd.
account. 15-09-2010 1000
Example: 1567
When the account number is issued, it is also written in the Account

Opening Form and Know Your Customer Form.
6: Filling of Deposit Slip of starting amount

To open an account in the ledgers of bank the account holder requires
to deposit an initial amount. This amount in ZTBL is usually 1000;
however it depends on the amount of loan sanctioned like some loans
required to deposit a larger amount with the bank before issuance of
loan from the bank. The example of such loan is of Tractor because I
have not be given chance to stay with an MCO, so I don’t know what
exact amount is required to deposit with the bank for any particular
loan.
The Deposit Slip which I used to fill during my internship consist the
following information:
Zarai Taraqiati Zarai Taraqiati Bank Ltd.

Bank Ltd. Bank Copy
Depositor’s Copy
Branch Name: Branch Name:
Branch Code: Date:
Date: Branch Code:
Name: Name: Account

Account Number: Number:
Particulars Amou Particulars Amount

nt
Total Total Amount

Amount
Rupees in words: Rupees in words:

Depositors Depositors Signatures:
Signatures: Signing Authority:
Signing Authority:
7: Signing by AMO and Manager

Then the forms and deposit slip is signed by AMO (Assistant Manager
Operation) and Manger to verify that all the requirements of opening
an account is met by the account holder.
8: Issuance of Cheque book

Than on depositing of a nominal fee of rupee 30 the account holder
has been issued a cheque book. In the bank where I have completed
my internship, the cheque book is issued by the cashier when the
person deposits his starting amount of account and the amount of
issuing of cheque book.
9: Opening account in the ledger of bank

Unlike other banks, ZTBL is still working on manually written ledger
books. However, the bank is also gradually computerizing its records.
These ledger books are large books with a number on front of it which
helps in finding the record of any particular person. The ZTBL Mian
Channu branch where I have completed my internship has 52 ledgers
at that time with the current account holder of 11595 at the date of 15
September 2010. There will absolutely many accounts which will not
be alive.
When the depositor deposited the amount his name and other
particulars is written down in the ledger so that he can transact with
the bank in the future. The ledger of current account contains the
following information.
Zarai Tarqiati Bank Ltd.

Page no. 177
Branch name: Mian Channu

Branch Code: 20226
Name:
Signature:
Father:
Address:
Account no:
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Taraqiati Bank Ltd.
Cheque book:
Date Particulars Debi Credit Balance Signing
t authorit
y
15-09-2010 By cash 1000 1000
15-09-2010 Loan Paid 50000 51000
16-09-2010 To Cheque. 5000 1000
(no.) 0
The above given table is the example of information usually written in

the current account of a customer. There are also many other column
available in the ledger books but they all are not used in the bank.
There are some options which are not printed there but it is a practice
to write that information, like there is no column of signature but
without a signature no one can check the validity of a cheque. So, I
have observed that the signature and thumb impression is used to
take in the right side of ledger book where a lot of space is available.
The other option which I have mentioned here but not included in the
ledger book is the cheque book number. It is also practice to write
down serial of cheque book in the space available. It makes it possible
to confirm that the cheque book which the customer is using to
transact with the bank is associated with that particular bank account
or not.
Here I have also made few entries which show how a transaction is
recorded in the ledger book. Absolutely, the date is the first option
than the particulars which shows what exactly happen on that day.
Like in the first entry the bank account has been opened with an
amount of 1000. So, I have written “by cash” in the particulars which
represents that the person has transacted in cash. Then I credited the
amount which shows that this money is given by the customer and in
the balance column it has increased the balance with the same amount
of 1000. The next column is used by the signing authority (AMO in my
case) to confirm the transaction.
As I have written before that in ZTBL current account is usually opened

only when the bank has to disburse any loan to the customer. When I
have joined the bank that was the slack time for the bank because all
the customers of bank are farmers that is why they come to bank to
get or give loan when they have to plant or harvest any crop. That is
why a number of bank customers are seasonal. They are usually a

great rush from April to June and then from November to December.
Awami Zari Scheme was the only scheme available to new borrower at
the time I was there. In this scheme a part of sanctioned amount is
given to borrower to meet the wage and water expenses and the rest
amount is paid by supply order of fertilizer and pesticides. The amount
which has to pay in the form of cash is credited to the current account
of customer from where he can withdraw it. The 2nd entry in the sketch
of ledger above shows the disbursement of any of such loan, which has
increased the balance to 51000.
When the customer draws a cheque on the bank the entry in the
ledger will be like I have shown above with the date of 16-09-2010. The
account of the customer will be debited and the balance will be
reduced with the same amount.
A large number of ZTBL customers are illiterate so they can not fill
their cheque by themselves and due to this reason almost all the
cheques are filled in the accounts by a clerk. Before filling the cheque
of anyone he assures the balance in the account and in the same time
he records entries so he will not have to reopen the ledger to make
entry after the deposit or withdrawal of amount by the customer. So
there are some things which I have learned from the seniors which
they have developed to facilitate themselves when the customer will
come again in the future, these guidelines are following:
• Write the ledger name and its page number on the front of new
cheque book
• Write the account number on every cheque of new cheque book
• Take the Thumb Impression of every customer on the cheque
• For the man take left thumb impression and for women take right
or both
• No cheque will be paid to anyone else than account holder if it is
a loan account
• Fill the cheque in Urdu if the customer signs in Urdu or gives
Thumb Impression only
• Also fill the memorandum attached with in cheque book with
each cheque to record all the transaction for future reference of
client and to the bank also.
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Taraqiati Bank Ltd.
All the cheques are required to be signed by respected authority

before payment of cash, like AMO (Assistant Manager Operation).
Before his sign no cheques can be passed, he also cheques the entries
made by clerk in the ledgers before passing cheques. In this way the
entries originated by any person is double checked which reduce the
chances of any mistake.
Whenever a cheque of more than 25000 is come to cash it is required

to write a voucher of “With Holding Tax” with it so that the amount of
tax can be deducted from the payment. The vouching will be
discussed later on.
ZTBL Flood Relief Fund 2010

Heavy monsoon rains started to hit Pakistan from 22 July 2010, causing
flash floods in several parts of Khyber Pakhtunkhwa, Baluchistan,
Punjab and Pakistan Administered Kashmir. This flood have caused
huge destruction, hundreds of villages have been swept away.
Death toll has risen to more than 1500 people, at least 1.2 million
homes have been damaged and an estimated 17.2 million people have
been affected by the floods. Floods have caused widespread damage
to public infrastructure, with roads submerged and tens of bridges
swept away, many hospitals and an estimated 7,173 schools are being
severely damaged. Power and communication lines are down in many
areas. The economic cost is also huge. Thousands acres of agricultural
land has been flooded, at least 3.2 million hectares of standing crops
have been damaged and at least 200,000 livestock animals have been
lost.
This is a snap shot of the situation after the flood and the damage final
estimates are yet to make. To help the victims of this flood ZTBL made
Flood Relief Fund 2010 and the head office asked all the branches to
collect the fund for this flood relief fund. According to circular issued by
Head Office every branch make it sure to convince the borrower,
depositors and general public to contribute in this fund for this purpose
the following procedure is required to follow:
• From any loan of below 200,000 or any payment from the

account of customer below this limit should be deducted with
amount of at least 100 rupee to contribute in the flood relief fund.
However, it is required to make sure that avoid double deduction
from any particular person’s payment. But if anyone wants to
contribute more than 100 or more than one time he can give at
any time.
• From any payment of more than 200,000 but less than 500,000
the rupee of 500 should be deducted to charge to flood relief
fund keeping in view the double deduction.
• From any payment of more than 500,000 the amount of 1000

should be deducted.
The amount is deducted by filling a deposit slip with the name of the
contributor to deposit in the account of flood relief fund (A/C No.3043).
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Taraqiati Bank Ltd.
For this purpose every MCO (Mobile Credit Officer) is given a deposit
slip book so that he can collect fund from the people during his visit to
the villages. And inside the bank, the accounts department makes it
sure to fill this deposit slip with every payment. The weekly report of
these funds collection is required to send to Regional Office. According
to the weekly report of last week of Ramdan, the Mian Channu branch
where I did internship was in the first position in the collection of fund
in the whole zone of Vehari.
Writing of Vouchers
Vouchers are the important evidence of all the transactions takes place
in the bank. In the accounts department of ZTBL it is the back bone,
every transaction of bank with reference to cash required a voucher to
be drawn against it.
The vouchers are of three types:

1. Debit Voucher (Receipt of Amount)
2. Credit Voucher (Payment)
3. Transfer Voucher
1. Debit Voucher
Debit Voucher is used when bank received any amount from anyone.
The example is of deposited amount by the depositors, the payment of
loan by the loanee etc.
2. Credit Voucher
It is used for the payment of any amount by the bank to anyone. Like
the cheque drawn on bank, the expenses of bank itself etc.
3. Transfer Voucher
As the name shows it is used when the amount is required to transfer
from one head to another. The example is the transfer of utilities bills
accepted by the bank to the respected utilities provided company
(Mepco, PTCL etc.). The transfer of return to the income account of
bank, it is also used when the loan is sanctioned so it is required to
transfer amount of loan to the loanee account.
Another use of transfer account is to correct mistakes in the ledger, for

example if an account is mistakenly debited in place of another
account. So the transfer voucher can be written to credit the first
account and debit the second one to correct the mistake.
In the end of day all the vouchers written during the day is required to
be write down in the daily Scroll (which will be discussed later on) and
then all the vouchers of day is sewed and then sealed so that no new
voucher can be placed or removed from the record. These vouchers
used to store in record room and they keep piling up there.
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Taraqiati Bank Ltd.
Every voucher has at least two copies, one for the customer and one
for the bank record. For easy recognition the vouchers are made of
different colors.
• Debit Voucher (Have three copies and in white color)
• Credit Voucher (Have two copies and in blue color)
• Transfer Voucher (Have two copies and in yellow color)
Sample of Debit/Credit Voucher

Zarai Tarqiati Bank Ltd. Branch
Code
Branch-----------------
Name------------------
Parentage------------ Debit Cash Date
Voucher
Village---------------- (Cash Serial No. 154700
Receipt)
Tehsil-----------------
No. Particulars Loan G.L TR RO Effecti Amou Contra Recor

Case no./ Hea Code Code ve nt Voucher/Co d
A/c no./ d Date ntra Branch no./CA
Advice no. Code
no.
Total
Amounts in words:---------------------------------------------
Enclose:-----------------------------------------------------------
Prepared by:-----------------------------------------------------
Checked by:------------------------------------------------------
Authorized Signature:---------------------------------------
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Taraqiati Bank Ltd.
The debit voucher for the deduction of With Holding Tax from the cash
withdrawal of more than 25,000 will be filled in the following way.
First the name or branch, its code and the date is required to write.
Than the information from whom this tax is collected, his name, father
name, his village and city name will be written. After that in the
particulars it will be written “A/O of With Holding Tax” and in the GL
Head (General Ledger Head) the head number of “With Holding Tax”
(which is 3056 in the ZTBL) will be written. The amount will be written
after calculating .3% of withdrawal amount. In the total the same
amount will be written again and then this amount will be written down
in words. In the last the signing authority will sign in.
In this voucher of W.H Tax only a few columns of the voucher is used,
the other columns can be used for other types of transactions. The
explanation of each column is given below:
1: Particular:
In particulars the reason of the transaction is written down. For
example, Amount of Recovery etc.
2: Loan Case no./ Account no./ Advice no.

If the voucher is of recovery than in this column the loan case number
of the loanee who has come to pay loan will be written. This column
has 6 blocks to write, due to shortage of space these block can’t be
shown in the above sample of voucher.
Loan Case no./ Account no./

Advice no.
3 9 6 7 0 0
3: G.L Head (General Ledger Head)

It is the General Ledger Head which is required to debit. These are
standard heads used in the entire branches of ZTBL. Like 3056 is the
G.L Head for W.H Tax, it will be same when any branch of ZTBL will
collect this tax from his customer.
4: T.R Code
This code is rarely used for debit and that is why I don’t have complete
information about it. In the recovery voucher this column is used, when
MCO collects the cash than I used to write 14 and when loanee himself
comes to pay loan I used to write 15 in that place. So, it helps when
the voucher is recorded in the computer room to understand the type
of transaction.
Like, in the credit voucher I was asked to write 01 code for all the
expenses of the branch and 02 for the expenses of the Zonal Branch.
So, it helps computer to understand the type of transaction. These
codes can be different in different banks.
5: R.O Code
Originated/Respond code is used to show that whether a transaction is
originated or responded. For example in the W.H Tax example the
word “O” will be written in this column which will show that this debit
voucher is originating this transaction. And when this amount will be
transferred to the respected head in that voucher the word “R” will be
written which will show that this voucher is responding to any
transaction.
6: Effective Date
It is the date on which the amount is received. It can be different from
the date on which the voucher has been written down. For example, on
13 September an MCO is on a tour to the villages which are under his
circle; during his visit he collects recovery of 100,000 from someone.
He will issue receipt to the loanee as evidence that MCO has collected
cash from him and on the next day (14 September) when he will come
to the bank that MCO will deposit cash as a recovery in the name of
that loanee. Because the cash has been collected by him a day before
the voucher of recovery is written down so the effective date on
voucher will be 13 September while the date of Voucher in right upper
side column will be the date of 14 when the voucher is written.
Why the effective date required? The answer of this question can be
understood from the above example. The loanee has paid the MCO on
13 September, while the amount is deposited by the MCO on 14
September. So, no interest is required to be charged for the day of 14
September because the amount has been already collected a day
before. If the effective date will not be written than there will be
discrepancy between the amount collected by MCO and the amount
calculated in the accounts in the time of writing voucher because the
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Taraqiati Bank Ltd.
amount calculated in the accounts department will include the interest

of one more day than collected by MCO.
7. Amount
This column used to write the amount, it is also divided into many
blocks so that when write any amount it will be easily readable later
on. Like the first block in Rs. Column from right side is for figure of
hundred and the next block is of thousands.
Amount
Rs. Ps.
1 00 -
1 0
2 0 00 -
9 0
Total 2 2 00 -
0 0
8. Contra Voucher/Contra Branch No.

This column is used when we are responding to some other voucher or
branch. During my internship I have used it once time. One of the
customer of a bank has received tractor in the Benzir Tractor Scheme
but the company failed to deliver the tractor on the agreed upon date.
And it is a contract between the bank and the company that when
company will not deliver the tractor on the agreed date, it will be
charged with the penalty of 150 rupee per day. So, the bank had a
claim on the company of rupee 25,000 due to late delivery to the
customer. The company has transferred this amount to the bank
account, so definitely the bank has a voucher written against it. Now
this penalty is in the bank account which it has to transfer to the
customer who has faced difficulty due to late delivery. So, when I
transferred the amount from bank account to the customer’s account I
was actually responding to the first voucher created with which the
amount was transferred from company to the bank account. So, I was
asked to write the voucher number of that first voucher in the column
of contra voucher of new voucher with which I am transferring amount

to customer’s account so that in future when any one need to find out
that from which reason the account of the customer is credited, he can
easily find the contra voucher number from the voucher written to
transfer amount to the customer account. And when he will open the
contra voucher number, he will find that the amount was transferred
by the company as penalty to the bank account.
So, in short it is used when we are responding to any other voucher or
branch. The Exact view of contra voucher/contra Branch No. and
Record no./CA Code are the following. These two head come under the
main head of Sundry/Suspense & Central A/C only which is not
displayed in the voucher sample due to shortage of space.
Sundry/Suspense & Central A/c only

Contra Voucher/Contra Branch Record no./CA
No. Code
3 9 6 7 0 0 0 1
9. Record No./CA Code.

Record number is the number of the entry in any contra voucher to
which we are responding. A voucher can have many transactions
written on it as you can see that there are number of rows available in
the voucher to write on. So, giving contra voucher number is not the
only thing we need to write to give exact reference, we also need to
give reference of Record no. of that particular transaction in that
voucher. And CA code is used when we are responding to any Contra
Branch No.
10. Rupees in Words

Rupees in words are compulsory to fill so that to avoid any mistake in
writing amount in numbers and also to avoid any misconception in
future.
11. Encl (Enclose)

Enclose is number of receipt if any attached with the voucher. Like if I
want to write a credit voucher to pay some employee who has bought
stationary for the office use so I will attach the receipt of the stationary
he has bought from the shop with the voucher and I will write (1) in the
enclose so whenever anyone will see the voucher he will know that
there is a receipt attached with the voucher.
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Taraqiati Bank Ltd.
12. Signatures
There are three spaces available to sign in the voucher. These spaces
are for the person:
• One who has prepared it

• One who has checked it
• And signing authority who passes this transaction
But I have not seen anyone signing the first two places, the only
signature place is used is of signing authority because it is compulsory.
Both Debit and Credit vouchers have same columns and lines to write
on. But the transfer voucher is different from these two, it has the
same columns and lines but it is divided into two parts. Upper side is
for the debiting an account and in the down side is for crediting an
account. Because when we use to transfer amount from one account to
another account than there should be one account which is required to
debit and the other account should be credited to complete the whole
entry. The sample of Transfer Voucher has been given in the next
page.
Zarai Tarqiati Bank Ltd. Branch

Code
Branch---
-------------- Date
Name------------------
Parentage------------ Transfer Serial No. 154700
Voucher
Village----------------
Tehsil-----------------
No. Par Loa G.L TR RO Eff Am Co Re

tic n He Co Co ect ou ntr cor
ula Cas ad de de ive nt a d
rs e Dat Vo no.
no. e uc /CA
/ her Co
A/c /Co de
no. ntr
/ a
Ad Bra
vic To nc
e tal h
No. Par Loa
no. G.L TR RO Eff Am Co
no. Re
tic n He Co Co ect ou ntr cor
ula Cas ad de de ive nt a d
rs e Dat Vo no.
no. e uc /CA
/ her Co
A/c /Co de
Amounts in words:---------------------------------------------
no. ntr
Enclose:-----------------------------------------------------------
/ a
Ad Bra
Prepared by:-----------------------------------------------------
vic To nc
e tal
Checked by:------------------------------------------------------ h
no. no.
Authorized Signature:---------------------------------------
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Taraqiati Bank Ltd.
Sample of Transfer Voucher

Daily Transaction Scroll

Daily transaction scroll is written by operations officer every day in a
bank. It is the record of all the cash inflows, outflows and transferred
on a particular day. Both cashier and operation officer writes his own
scroll at the end of day when they have to close the cash. The closing
balance in both these scrolls must be same otherwise there are some
transactions which have not been recorded correctly either by the
cashier or the operation officer.
If I will divide the page of scroll than the following are the important
columns and part of it:
Date
Zarai Tarqiati Bank Ltd.
Daily Transaction Scroll Branch
Code
Name of Branch--------------------------- Sheet Number
The above are the sketch of columns used in the upper side of scroll
page. Sheet number is used when there are more vouchers to write
and they cannot be written on a single sheet so the next sheet is
required to use in such situation the number of sheet should be written
so that they can be arranged in a proper way.
S Vouch G.L Debit Credit Debit Credit

r. er No. Hea
d
1 15470 1 00
0 1 0
2 701 50
0
3 56890 5 00
0 0
4 76820 4 00 4 00
0 0 0
Total 1 50 5 00 4 00 4 00
1 0 0 0 0
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Taraqiati Bank Ltd.
The above view is of the rest of the page where all the vouchers are
recorded. The sheet is divided into two sections the left side part is
used to write the debit and credit vouchers and their amounts, while
the right side is used to write the debit and credit of transfer vouchers.
The above is the example of writing of different vouchers. The first two
vouchers are debit vouchers that are why I have written the amount
(11,000 and 500) in the debit column. The 2nd voucher name is not
written completely which is an ease which can be used if the same
serial is going on and only the last number is changing. The third
voucher is a credit voucher and its amount (5,000) is written in the
credit side in front of it. The fourth voucher is representing a transfer
voucher so its effect will be shown in the right side of the sheet. In both
Debit and Credit column of the right side of sheet is filled with the
same amount because in transfer voucher one account will be going to
be debit and the other will be credit so the net effect will be zero.
In the end all the amounts of all the vouchers are totaled in their
respective columns. Like in this example the debit vouchers total
amount is 11,500 and the total of credit vouchers is 5,000. The debit
and credit side of transfer vouchers side will always be the same,
which are 4,000 in the example. After getting this total the next step is
to calculate and write the closing balance.
1. Opening Balance 400,000

2. Debit Balance 11,500
3. Total Balance (1 + 2) 411,500
4. Credit Balance 5,000
5. Closing Balance (3 – 406,500
4)
To calculate the closing balance first step is to write the Opening

Balance which is absolutely the Closing Balance of last day. Here in the
example I have assumed it 400,000. After it the debit balance will be
written in the 2nd row and in the 4th row both 1st and 2nd row will be
added to get the total balance. Now the credit balance will be written
and to get the closing balance the credit balance is required to deduct
from the total balance of 3rd row.
To close the cash, this closing balance should match the closing
balance in the books of cashier. When comparing with the cash scroll
of cashier the Total Balance, Credit Balance and then Closing Balance
all should be similar otherwise there will be something which is skipped

during writing even by the Officer or by the cashier.
When closing cash, in the end of this scroll sheet the number of total
debit, credit and transfer vouchers is required to be written so that
nothing can be added or erased from the above scroll by any one.
Number of Debit Credit Transfer Total

Vouchers 2 1 1 4
As you can find that in the above given example of scroll, there are two
debits, one credit and one transfer vouchers have been written so the
same number is written in the ending column of scroll sheet.
Making Entries in the Ledgers

In ZTBL the record of current accounts and loans are manually
maintained. There are many records which have been computerized
but still the hand written ledgers are used. Making entries in the
Ledgers requires simple concept of debit and credit. However the
understanding of banking practices are required so that to follow the
exact way of recording any transaction because usually the column
written on the ledger books are not used for the purposes for which
they are made. The employee usually has established their own way of
writing transactions in the ledgers the way in which they feel easy. I
have found many columns unused in the ledgers of Sada Bahar Loan
Scheme or they have been used to write other information which is
different from the heading of columns.
Disbursement and Recovery Entries

When a loan is sanctioned and ready to disburse it is recorded in the
respected ledgers. I am here taking example of SBS (Sada Bahar
Scheme) which is a revolving finance scheme. Every loanee has a
unique Loan Case Number which is the base of all the record of his
loan. When a loan of SBS is sanctioned its amount is not transferred to
the current account of the loanee like it is used to transfer in the AZS
(Awami Zari Scheme). In SBS the Loan Case Number is used for all
types of transactions, when a loan is sanctioned it is recorded in the
SBS ledger with the name of loanee and Loan Case Number is used as
an account number from which he can operate.
The information which is required to write in the ledger sheet when a
new loan has been passed and ready to disburse are following:
99
Taraqiati Bank Ltd.
• Loan Case Number

• Name
• Parentage
• Address
• CNIC
• Maximum limit
• Date of maturity
• Cheque book number
After entering the above information the loan can be disbursed to the
loanee when he desires. Because almost all the customers of ZTBL are
low earning farmers and they require immediate cash to meet their
expenses so they draw a cheque on the bank on the same time when
their loan is entered in the ledger book. In SBS farmer can withdraw
the amount till he has reached maximum limit and the return will only
be paid on the amount which he has taken out as a loan.
The entries of disbursement can be easily explained by taking an

example that the loan has be sanctioned and it is recorded in the
ledger now loanee want to withdraw the total sanctioned amount of
50,000. The entry of this transaction will be in the following way at 01-
01-2010:
Principal Return Total

Date Particul Debi Credi Balan Debi Cred Balan Outst
ars t t ce t it ce andin
g
01-1- To 50,00 50,00 50,000
10 Cheque 0 0
No.
31-4- To 1,48 1,480 51,480
10 Return 0
01-5- Recovery 18,52 31,48 1,48 Nil 31,480
10 0 0 0
After four month a computerized outstanding balance report of all the

loans is given to each branch, it is called “OBL (Outstanding Balance
Ledger)”. The bank also adds return to the principal amount of each
loan case, like it is shown in the date of 31-04-10. (The interest rate on
SBS is 9%)
Now suppose that loanee has reached bank on 01-05-10 and he wants
to pay 20,000. The entry is shown in the date of 01-05-10. It is rule in
the bank that when the bank recovers any amount from the loanee
than first return amount will be reduced and then the principal will
reduced. Here in this example, the loanee wants to pay 20,000, so first
interest will be deducted which is 1480. To pay return we will credit it
with 1480 and then the principal will be credited with the remaining
amount (20,000-1480=18,520) as shown in the above diagram. Due to
this payment the principal is also reduced to 31,480 and because the
total return has been deducted that is why the total outstanding
amount is also 31,480.
(It is routine in the bank to check the total outstanding amount in the
ledger with OBL before receiving any recovery. This is a precaution
because the handwritten and manually calculated ledgers can have
mistakes so checking it with OBL make it sure that they are not
receiving less amount from the customer.)
Revolving SBS Loan

Now suppose a situation where loanee wants to pay his entire
outstanding loan and then wants to withdraw it again. This usually
happens when the MCO want to achieve his recovery target or the time
period of one year is completed from the date on which the loanee has
withdrawn the amount. It is compulsion for every loanee to return his
entire loan at least once in a year, if he will not pay his loan within one
year, he will be treated as defaulter and he can withdraw only 90% of
sanctioned amount from his running SBS finance.
But in SBS the default situation is rarely occurs because when the limit
of one year is near to end, the loanee can revolve his loan by paying
only interest of the loan. This can be explained by continuing the last
example, on 01-05-10 the loanee has paid 20,000 and his remaining
outstanding balance is now 31.480. Now suppose he comes again on
01-06-10 and wants to revolve his loan, on that day the following
entries will be made in his loan account:
Principal Return Total

Date Particula Debi Credi Balan Debi Cred Balan Outst
101
Taraqiati Bank Ltd.
rs t t ce t it ce andin
g
01-1- To 50,00 50,00 50,000
10 Cheque 0 0
No.
31-4- To 1,48 1,480 51,480
10 Return 0
01-5- Recover 18,52 31,48 1,48 Nil 31,480
10 y 0 0 0
01-6- To 31840 241 241 31,720
10 Return
01-6- Recover 31,84 Nil 241 Nil Nil
10 y 0 (A/C
Closed
)
01-6- To 50,00 50,00 50,000
10 Cheque 0 0
No.
Because the loanee wants to pay the total outstanding amount, the
first thing to do is to calculate return on the last outstanding principal
balance. Because the loanee has already paid some part of principal on
01-05-10 due to which the principal has been reduced from 50,000 to
31,480. Now the return will be calculated from 01-05-10 to 01-06-10
(31 days) at last outstanding principal balance of 31,840.
(31,480 * 9/100 * 31/365) = 241
I have debited this return calculated and it has increased the total
outstanding to 31,720. Now the next step is to obtain all the
outstanding amount of principal and interest so that the account can
be closed and again revolved on that day. In the 2nd entry on the date
01-06-10 I have credited all the principal amount and the balance of
principal became Nil and the same I did with the return, I have credited
the total balance of return and its balance also became Nil. Because
both principal and return balance is now Nil that is why the total
outstanding amount of loan is also Nil now and the Account is closed
on that situation.
Now the loanee wants to revolve his account so he will again draw a
cheque on the bank of any amount with in his sanctioned limit, in this
example I have assumed he again wants to get the total amount out of
it. So, I have again debited the amount which has increased the
principal balance and then total outstanding balance to 50,000.
These are just entries in the ledgers absolutely the loanee will have to
follow some procedures to revolve his account. Usually MCO of the
loanee asks to revolve the account and then vouchers are written and
entries are made in the ledgers and then these vouchers and entries is
passed by the AMO otherwise no payment or recovery is made.
The vouchers need to written when revolving an SBS loan accounts are
following:
• A debit recovery voucher of full outstanding amount including

Principal and Return.
Whenever an account is fully paid it is practice in the bank that
write the return collected on this account on the upper right
corner of the voucher, it helps the other employees in the end to
transfer it to the Income Account of bank and also to prepare
weekly report on recovery.
• Another debit voucher of With Holding Tax will also be filled if the
amount loanee wants to again withdraw is more than 25,000
• A debit voucher of revolving fee (100 rupee for SBS)
• A credit voucher will be written in the end of the day against the
cheque drawn by the loanee
• A transfer voucher which is used to transfer the Return recovered
on the loan to the Income Account of the bank.
Actually in revolving an account the loanee pays only the interest
amount, revolving fee and W.H Tax if any. The principal is adjusted
against the new disbursement of loan.
For example:
If 51,000 is total outstanding balance (50,000 principal + 1,000
returns) and loanee wants to revolve the account, he will have to pay
the total outstanding amount first and then he can withdraw again the
principal of 50,000.
Amount the loanee -51,000

will pay
Revolving fee -100
Again disbursement 50,000
103
Taraqiati Bank Ltd.
of loan
W.H Tax on 50,000 -150
Balance -1,250
1250 is the amount which loanee will pay only and his loan will again
be revolved to a new maturity of one year. In this way revolve benefits
the two parties, one is loanee who has to pay a nominal amount and
he obtains a new maturity date. The second one is MCO who can show
that he has recovered the loan which helps him in achieving his
recovery target.
Opening and Closing Cash

In the beginning of every day the cashier opens the cash in time. The
cash remains locked in the safe and it requires two keys two open. One
key is always remains with the cashier and the other key remains with
the manager; however manager can further gives it to someone else.
In the branch where I have completed my internship, the AMO has the
second key.
Key Register:
It is a register which have information about the keys of the safe.
Whenever a person gives the key to someone else, he writes in the key
register the name of person who has received the key and that other
person signs it. Usually the keys remain with the cashier and another
officer of the bank but when one of them is on leave it is required to
give responsibility of keys to someone else because during their
absence the cash of bank can’t remain closed.
If there is any mishap the person who has keys according to key
register will be held responsible. Thus the key register has significance
matter; no one gives the key to someone else without entering it in
this register. When a key is given to someone else the time of giving
keys is also written in the register, it is precaution to make it clear that
on which time of day the key was with which person.
Safe Register:
Whenever the cash is placed inside or remove from the safe it is
recorded in the safe register. In the morning when cashier brings out
cash from the safe he writes the date, amount and denomination in
which cash he has obtained. And same information is required to enter
when the cash is again placed in the safe in the evening. The person
who gets cash from the safe or puts it also signs it.
The cash is also written in denomination in which it is exist. Like if bank
has 1 million than this information is not enough the denomination in
which this one million exist in bank is also written. Like the bank may
have this amount of 1 million in the following denominations.
100 notes of 5,000 500,00
0
300 notes of 1,000 300,00
0
105
Taraqiati Bank Ltd.
300 notes of 500 150,00

0
400 notes of 100 40,000
200 notes of 50 10,000
Total 1,000,0
00
Dispatch and Diary

Dispatching and receiving letter is the routine work in any bank. The
letter which the bank sends to others is dispatched while the letter
which the bank received is called diary. The bank maintains the proper
record of every document which is dispatched or received.
Recommendations
Implementation of Information Technology
The following are the problems which I have felt during my internship
which is required to be noticed to increase the pace of growth of the
bank.
Although the bank is computerizing its operations but it is far behind

other commercial banks, it needs to speed up implementation of
Information Technology so that to perform its operations efficiently and
effectively.
Information technology will help bank in finding and stopping

malpractices and other irregularities and this will result in much better
performance.
Providing computers and software is not the only solution, the bank
needs to train its employees so they can use this new technology for
the betterment of the organization. The bank has many experienced
employees but they have no or very little know how of IT and many of
them is not interested in learning it. So, training the new and young
employees is a better option because they have will to learn and also
they are people who will have to work for a long time with the bank.
Investing in young employee is better than training those who are near
to their retirement.
Motivation of Human Capital

Human capital no doubt is a precious asset for any organization,
without skilled and motivated employees no organization can survive
in this competitive environment. ZTBL has mix of experience and
young staffs which provide excellence blend of required skills and
enthusiasm for progress.
But I have found during my internship that the employee of ZTBL is not
as much motivated as other bank’s employees are. The reason behind
this is the mechanism of promotion, many of the permanent
employees of the bank has not been promoted since last 10 years and
the same case is with the contracted workforce they have no idea that
when they will be permanent.
The promotion criteria like all other government institutions is based

on the experience, the more older the employee is the more he has a
chance to be promoted irrespective of this that how his previous
performances was. But what I have heard from the employee is that
they have no idea that when and how they will be promoted, there are
no hard and fast rules made as it is available in other government
institutions.
The bank’s Human Resource Department needs to focus on developing

more trained and motivated employee, the efforts they are putting in
this regard is not satisfactory. However, the bank starts training each
and every employee which is a good thing but with training the
motivation in terms of promotion, bonuses etc. are also required.
Branch Infrastructure
Almost all the banks in Pakistan has refurnished their branches to
provide better services to its customers, the branches bank of today is
completely different from the branches of 10 years ago. That all is
started when City Bank come in Pakistan with a new idea of
modernized decorated branches. After it all the banks has adopted this
concept and they build and refurnished their entire network of
branches. But ZTBL is still working on the old style; the branches have
not the furniture, fans, rooms etc. according to their requirements. The
concept of air conditioning which has become an essential part in all
other banks is a thing about which the bank has not even think, there
are even less fans than required.
107
Taraqiati Bank Ltd.
It is true that bank does not have a need to make their branches like
all other banks but it is required to provide at least the basic
necessities to make the working of the employee comfortable and also
to facilitate its customers.
Conclusion
ZTBL is a specialized institute which provides financing facilities to the
people of rural areas and in this way it is contributing its part for the
development of the country. Due to a government owned organization
the politicians and other higher authorities sometime use it to give
benefits to their families and friends and this also effects the growth of
the bank. However the bank has improved itself a lot, the profit of the
year of 2008-9 and decline in Non Performing Loans are clear signs of
improvements. The few things on which the bank has to focus is
implementation of information technology with faster pace, improving
branch infrastructure and working of its human capital to make them
motivated.
109

Internship Report ZTBL, Hailey College

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Internship Report ZTBL, Hailey College

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INTERNSHIP REPORT

ZARAI TARAQIATI BANK LTD.

Sir, Fida Hussain Bukhari

Hailey College of Banking &

In the name of ALLAH the

I have great sense of gratitude for the most Beneficent and

I have deep feelings for whole of my family, in general, and for

I am thankful to all of my teachers and my class fellows and

In order to accomplish the task of completion of the degree, I choose

I am positive that the college will oblige me by giving its

Mature Orchard/Fruits crops___________________________________________32

Ch. 5:_____________________Assignments I handled during my Internship.

The Zarai Taraqiati Bank

As the functions of the Agricultural Development Finance Corporation

On 14 December 2002 the Federal Government has converted the

ZTBL is providing affordable, rural and agriculture financial services to

Dedicated to serve the needs of the farming community, by

To play effective role in the promotion of economic growth, by

3. Build ZTBL's image as a proactive, client friendly, financially & operationally

6. To function as a rural commercial bank to mobilize rural capital formation and to

7. Provide a wide range of risk insurance products to its clients.

Transformation of ZTBL to R.F.I of the

• Human resource development: improve standards and skills

The reforms shall establish ZTBL as a key R.F.I of the country. By

Branch Head Office

Details of Regional Offices

Punjab Sindh Balochista Khaber Gilgit

Multan Hyderabad Turbat Mingora

D.G.Khan Mirpur Quetta Peshawar

Sahiwal Sukkur D.M. Jamali

In ZTBL, the president supervises and directs the Chief Executive

Mrs. Nazrat Bashir Mr. Shafqat

Mr. Muhammad Iftikhar Mr. Tauqir Ahmad

Dr. Khalid Ahmad Khokhar Mr. Imam Bux

Mr. Muazam Ali

A Brief Resume of President

Mr. Muhammad Zaka Ashraf

Ms. Nazrat Bashir

She has extensively traveled abroad and has attended various

She possesses 29 years of administrative experience in government

Mr. Shafqat Hussain Nagmi

Tauqir Ahmad Faiq

Tauqir Ahmad Faiq represents the Ministry of Food and Agriculture,

also been member the Board of Revenue and Population Welfare

Kissan Support Services Ltd. Is a subsidiary of ZTBL which is

• To provide to the Bank all kinds of support staff and ancillary

• To carry on any business, which may seem to the company

Services/Activities so far undertaken by KSS

Products offered to Meet Finance Need

Types of Loans Advanced

2. Medium Term Loans

3. Long Term Loans

godowns and orchard in yearly/half yearly installments within maximum period of 8

Supervised agriculture scheme:

Zarkhaiz (one window operation)

Sada Bahar Scheme

are authorized to sanction such loan limits up to Rs.O.500 million.

Tea financing scheme

Crop maximization project

PER ACRE CREDIT LIMITS

Paddy (Rice) 19,000

Potato 36000 Bajra 11000

Mash 3000 Caster Oil 6000