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CONTENTS
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CHAPTER ONE
ZTBL INTRODUCTION 1.1 BACKGROUND OF THE BANK AGRICULTURAL DEVELOPMENT BANK OF PAKISTAN (ADBP) CONVERSION OF ADBP INTO ZTBL NATIONAL OPERATION ORGANIZATION MANAGEMENT CORPORATE VISION AIM Aim of the Bank MISSION STATEMENT NATURE OF BUSINESS IMPORTANCE OF AGRICULTURE IN THE ECONOMY ZTBL ROLE IN POVERTY ALLEVIATION PROGRAM Credit Program for Women Micro Credit Scheme CONTEMPORARY BUSINESS CONDITIONS BOARD OF DIRECTOR 1.2 1.3 1.4 1.5 1.6 1.7 1.8 1.8.1 1.9 1.10 1.11 1.12 1.12.1 1.12.2 1.13 1.14
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3 3 3 4 5 5 5 6 6 6 6 7 7 7 8 8 8 9
CHAPTER TWO
DEPARTMENTS 2.1 PERSONAL POLICY DEPARTMEN 2.1.1 AIM 2.1.2 OBJECTIVES 2.1.3 STATEMENT OF FUNCTIONS 2.1.4 TRAINING POLICIES 2.1.5 TRAINING IN STAFF COLLEGES 2.1.6 RECRUITMENT POLICY 2.1.7 PROMOTIONAL POLICY POLICY 2.1.8 PLACEMENT 2.1.9 HEALTH POLICY 2.2 CENTRAL INFORMATION DEPARTMENT 2.2.1 AIM 2.2.2 OBJECTIVES 2.2.3 FUNCTIONS 2.3 CREDIT OPERATIONS DEPARTMENT 2.3.1 AIM 15 2.3.2 OPERATIONAL OBJECTIVES 2.3.3 FUNCTIONS 2.3.4 TERMS OF LOAN (AS PER ADBP RULES 1961 2.3.5 GENERAL CREDIT DISBURSEMENT 2.3.6 LOAN TO SMALL FARMERS 2.4 CORPORATE FINANCE DEPARTMENT 2.4.1 THE AIM OF CFD 2.4.2 OBJECTIVE 2.4.3 FUNCTIONS 2.4.4 WING WISE FUNCTION 2.5 CENTRAL ACCOUNT DEPARTMENT 2.5.1 AIM 2.5.2 OPERATIONAL OBJECTIVES 2.5.3 STATEMENT OF FUNCTIONS 2.5.4 WING WISE FUNCTION OF THE DEPARTMENT
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10 10 10 10 10 11 12 12 13 13 13 14 14 14 14 15 15 15 16 16 17 17 17 18 18 18 19 20 20 20 21 21
CHAPTER THREE
3.1PERFORMANCE OF ZTBL 3.2RESTRUCTURING OF ZARAI TARAQIATI BANK LIMITED 3.2.1 HUMAN RESOURCE DEVELOPMENT
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24 28 29
CHAPTER FOUR
SWOT ANALYSIS OF THE ZTBL 4.1 STRENGTHS 4.2 WEAKNESSES 4.3 OPERATUNITIES 4.4 THREATS
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31 31 32 33 33
CHAPTER FIVE
RECOMMENDAITON & CONCLUSION
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EXECUTIVE SUMMARY
ZTBL is one of the largest financial institutions which provide credit facilities to the farmer for the agriculture purpose throughout the Pakistan. The ZTBL is a single largest institution in the Rs. 5000 million country catering to be viable credit needs of the agriculturist and disbursing over per annum for the development and modernization of agriculture. The new status of Zarai Taraqiati Bank as a limited company will go a long way in exploring the new dimensions in agriculture and rural financing for poverty alleviation and development of agriculture sector through good governance delivering high quality, viable and timely financial services to greater number of clients. The operation of the Zarai Taraqiati bank Limited are external to whole Pakistan and also apply to the business of the bank transacted outside. The bank has 49 regional offices and 343 branches throughout Pakistan including (FATA) and (FANA) and Azad Jammu and Kashmir. This project report mainly consists on five chapter in which the brief introduction of ZTBL, back ground of the bank. The performance and the restructuring of ZTBL, personal analysis and observation, SWOT Analysis and Recommendation. In the first chapter of there is brief introduction of ZTBL in which the background of the bank, the conversion of ADBP into ZTBL which have been made to improve the performance of the bank. ZTBL has 49 regions and 343 branches which spread through out the Pakistan. The head office of the bank is in Islamabad in which 9 division and 33 department are working. Mr. Istaqbal Mehdi is a president of the bank. The role of ZTBL in the poverty alleviation, as well as the importance of agriculture and contemporary business conditions have briefly described.
In the second chapter there is a brief explanation of the departments, their aims objects and function in which I have worked these are personnel policy department, central information department, credit operation department, department. The third chapter consists on the performance of ZTBL, in which the disbursement and recovery from 1995 to 2002 have been mentioned, the budget of 2002-2003, the import and export of agriculture items, data of institutional agricultural credit 2001-2002. The restructuring of ZTBL, which aimed at uplifting the agriculture and rural sector by rising from productivity, streaming the institutional credit and performance of the bank, and the steps are taken in the restructuring process are given. The fourth chapter consists of SWOT analysis of the overall organizational setup. The fifth and last chapter consists of recommendation and conclusion on the basis of above study. The whole information given in this report based on thoroughly study during the internship at ZTBL head office. corporate finance department and central account
The ordinance is supplemented by board operational rules framed by the federal government. These rules spell out the conditions for the supply of loans, security of lending and recovery of dues. The rules further supplemented by sets of regulations drawn by the board of directors of the bank. The ADBP had than become the single largest institution in the country catering to be viable credit need of the agriculturists and in disbursing over Rs. 5000 million per annum for the development and modernization of agriculture.
enhanced farm productivity, streamling institutional credit & increase outreach in term of small farmers and women folk.
1.5 ORGANIZATION
The head office of the bank was located in Karachi and was shifted to Islamabad during 1973. Presently there are 9 division and 33 departments in the head office. The field organization is spread over 49 regional offices and 343 branch offices apart from 8 audit directorates in the field, two staff colleges at Islamabad and Karachi. Number of MCOs (Mobile Credit Officers) are 1496, total officers are 4515 and total staff is 3150. Account department at Karachi and legal cell at Lahore.
1.6 MANAGEMENT
During the last 42 years, the bank has been managed by 23 chairmans as the chief executive.
1.8 AIM
1.8.1 Aim of the Bank
Technology for Agriculture Objectives of ZTBL: The main objective ZTBL are as follows: Sound loaning Substantial increase in loaning Emphasis on small farmers Broad technology spread Substantial increase in recovery.
scheme. Poverty reduction is to be achieved through identifying poor living below poverty lien and giving them micro credit loans to generate household income without collateral. ZTBL has five mission statement which are as follow: a. b. c. d. e. To develop agriculture sector of the country so that it plays its role in the turn round of the economy. To develop water resources so as to bring more land under cultivation. To increase yield per area of cotton, wheat and rice. To develop orchards, livestock fisheries and poultry to bring a correlation between protein food and the population growth. To grow tea, canola, sunflower and the palm oil seeds for substitution of high value imports.
OF
AGRICULTURE
IN
THE
Agriculture is the main stay of our economy. It accounts for 26% of the GDP and employ about 44% of the countrys labor force. This sector is the largest source of foreign exchange earning over 75% besides providing input for textiles, sugar, and vegetable ghee industries of the country. More than 67.5% of the population is directly or indirectly dependent for 7
their livelihood on agriculture. Average size of land holding is 3.8 hectors and 93% the total farms upto 25 acres.
1.12 ZTBL
ROLE
IN
POVERTY
ALLEVIATION
PROGRAM
ZTBL is extensively contributing in the poverty alleviation program. In order to support the governments program for poverty alleviation, ZTBL is contributing its huge efforts by providing loans to rural poor under the following credit programs.
1.12.1
The bank started lending to women since 1987 under IFAB assisted Gujranwala Agriculture Development Project. The aim of the program is to access of credit to women at their doorstep enabling them to under take income as well as loan under micro credit scheme.
1.12.2
Under the micro credit scheme, credit facilities are provided to the neglected sectors of the society. Minimum credit limit under the program is Rs. 5000 while the maximum limit is 25000. The scheme is operative through all 343 branches of the bank, assisted by 1353 mobile credit officers. The Zarai Taraqiati Bank Limited (ZTBL) which provides most formal loans in Pakistanis rural areas, lends to large holders for more than small holders, although the impact of credit scheme more cost effective.
Rana Wajid Ali President HBC (Member) Zaker Mehmood Khushaly Bank Member Ghalib Nistar Private (Nestle) Syed Yawar Ali Bukhari Company Secretary Vacant
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CHAPTER 2 DEPARTMENTS
This section which consists of the over view of the department, their aims and objects their functions and working environment. There are 9 division and 33 departments at ZTBL Head Office, from them I have practically worked at 5 departments which are explained below. i. ii. iii. iv. v. Personnel policy department. Credit operation department Central information department Corporate finance department Central account department.
2.1.2 OBJECTIVES
The objective of the personnel policy department is to select right employee for the right job, compensation, performance evaluation, promotion, separation, training, retirement policy and services regulation etc.
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Oversea Pakistan & Jammu and Kashmir are eligible. There is quota for orphan & disable. The medical examination is necessary.
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2.2.1 AIM
To provide essential statistical data comes from the branches or region to the management for the decision making relating to any department.
2.2.2 OBJECTIVES
1. 2. To get the necessary statistical data through the modern techniques efficiently. To provide new or modern data need of the bank along with improvement in concept, design and requirement.
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3.
To enhance and strength the external and internal capabilities of the central information department.
2.2.3 FUNCTIONS
1. To keep or maintain the past or present statistical data on disbursement or recovery of the bank at branch, region, province and country level. 2. 3. 4. 5. To provide or prepare management information for weekly review meetings. To provide all the necessary information needed by all the divisions of the bank. To collect, Stronger and more certain and spread data on lending and recovery operations under the special schemes of the bank. To provide all needed information to outside agencies regarding to bank operation including federal ministries. State Bank of Pakistan, World Bank, Federal Bureau of Statistics, Provincial Bureau of Statistics, Provincial Government etc. 6. 7. 8. 9. 10. To provide essential data to the government or various committees made by government on Bankers performance for presentation. To make and spread out regional performance indicators on monthly basis. To collect the data books/general/reports from other institutions within Pakistan and outside for discuss macro economic factors. Together, maintain time series data on prices of major item of agricultural inputs and out puts and its publication. Collect and spread out inter-country data on various dimension of agricultural development.
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2.3.3 FUNCTIONS
1. 2. Condemnation for delayed repayments beyond the powers of regional managers. Deal with hypothecation already sanctioned to the registered growers for sugarcane, oil seed and cotton crops under guarantee of the processors of the crops. 3. 4. Enlistments of principle manufacture /supplier if tractors. Pursue the claim of the borrowers with manufacture or suppliers of tractors for compensation of late delivery and delivery of defective tractors. 5. Circulation of tractors prices of various makers for the information of the branches. 17
6. 7. 8.
Formulate and review the procedure for booking and disbursement of tractors loan. Prepare agenda paper on all matters related to credit operation department for board of directors. Compile data / information supplied by the branch regarding Automated Performance Applied System (APAS) and submit consolidate statement to the credit policy department for onward submission to state bank of Pakistan.
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2.4.2 OBJECTIVE
The main object of the corporate finance department is arrangement of resources for the bank's operation.
2.4.3 FUNCTIONS
1. 2. 3. 4. 5. 6. To arrange government guarantee for loans sanctioned by the State Bank of Pakistan. To arrange adequate resources for bankers operations i.e. credit disbursement, capital and operational expenditure. To ensure maintenance of adequate liquidity in all the units of the organization in accordance with the requirement. To reconcile bank account with the State bank of Pakistan and other commercial bank. To provide funds to needy branches and receive cash back from the branches have surplus them through telephonic transfers. To make / prepare withdrawal applications watch reimbursement position and account of receipt to pursue settlements of withdraw in respect of foreign loan. 7. 8. 9. 10. To prepare monthly progress of utilization of foreign loans. To plan, design and launch deposit mobilization. To prepare circulars to region-wise and branch wise deposit target. Other miscellaneous assignment of senior management of the bank, ministry of finance and state bank of Pakistan.
* * *
Internet Resource wing External Resource wing Remittances and cash management wing
The daily operations of these three wings are controlled by Joint Director or Deputy Director who are the incharge of the wings. To help the J.D or D.D there are assistant of them as (EAD) extra Assistant Director and (A.D) Assistant Director. Internal Resource Wing The duties and responsibilities of this wing is to manage all the resources given to them from the government or customer. The other main responsibility of this wing is to maintain or kept the day to day record of these funds in order to meet the customer need in coming day. The other duty is the collection and policy related to the resources collected from the internal sources.
External Resources Wing The duties and responsibility of this department is the collection, allocation, and also properly organize and monitoring of these funds. The external resources are collected from foreign donor agencies. These are: 1. 2. 3. 4. 5. 6. World Bank Oversea Economic Corporation Fund (OECF) International fund for Agricultural Development International Bank for Restructuring and Development (IBRD) Asian Development Bank (ADB) International Monitoring Funds (IMF)
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The funds are provided by these foreign agencies for the different types of projects and the external resource wing is responsible for proper allocation of these funds to the different task. Remittances and Cash Management Wing The duties and responsibilities of this department is the cash collection from the branches all over the Pakistan. The branches have to report in this department and this wing is to prepare the reports from given information and provided to the management. The branches have to report to this department with regards of daily operation and in response of these information this department forecast the situation about how much fund is need to the particular branch for the operation.
2.5.1 AIM
The aim of this department is to prepare or formulate the accounting policies and procedure in order to show the true financial position of the bank.
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Central Account and Reconciliation Wing Control the operation of inter-branch transaction. Checking of inter-branch transaction statement. Reconciliation of central accounts.
Policy and Coordination Wing Issuances of procedural instruction relevant to accounts and financial accounts. To deal with all policy matters pertaining to account system of interest based and Islamic Banking. Top act as coordination wing for accounting policy and procedures relating to department of finance division. Permission to release the amount of decrease account holder to the legal heirs. Maintenance of loan balancing record and persuasion thereof. Up-dating of specimen signature booklet. Circulation and adoption of safety measure in respect of loss security documents. To deal with excise / Taxation matters related to bank.
Prudential Regulation Wing Supply of monthly and quarterly position of recovery of classified loans to SBP, after receipt from MIS division. Issuances of instruction to branches for revisal of income / provision in budget under prudential regulation. To prepare balance sheet and profit and loss account of the bank. On Tuesday the data is collected from the regional offices in the form of soft copy and the compile it in two days and the profit and loss account. the balance sheet is prepared and send it to the SBP on Wednesday.
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Supply of monthly and quarterly position of recovery of classified loan to SBP after receipt from MIS division Receive of progress made by the bank regarding recovery of classified and suggest ways and means of improve banks performance.
Tax Wing To issue necessary instruction to the branches to keep the record of with holding case dedicated from the bank and submission thereof to head office. For claiming adjustment against the final liability of the bank. Collection of tax payment documentary evidence from the branches for submission, to tax department along with the income tax return. Issuance of instruction regarding tax deduction at the time of issuance demand drafts, cheque and pay order etc. To coordinate with tax consultant and income tax authorities. To issue necessary instruction regarding sales tax, excise duty etc.
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Table-1 Disbursement and Recovery from 1995-2003 (Billion Rupees) Year 1995-96 1996-97 1997-98 1998-99 1999-2000 2000-2001 2002-2003 (Target) Disbursement 10.34 11.69 22.36 30.18 24.42 27.61 35.00 Recovery 12.78 15.14 32.74 25.85 30.13 NA 39.00
Table-2 The performance of agriculture sector from 1995-96 to 2001-2002 Year 1995-96 1996-97 1997-98 1998-99 1999-2000 2000-2001 2001-2002 Percent growth 11.7 0.1 3.8 2.0 6.1 -2.6 1.4 Major corps 6.0 4.3 8.3 -0.2 15.1 -9.8 -0.5 Minor crops 4.9 0.9 3.3 4.2 -9.1 0.1 1.0
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Budget 2002-2003 28
(Rs. Billion) Resources Internal resources External resources Bank borrowing Privatization proceeds 741.958 563.033 198.063 (-)31.138 12.000 Expenditure Current expenditure Development expenditure .741.958 607.958 134.000
Foreign trade 2001-2002 (Agricultural Items) (Rs. Billion) Export Commodity Quality (000 tones) Cotton 1957 fabrics (million Sq. M) Cotton yarn 544 Rice 1645 Fish & fish 85 preparation Fruits & 429 vegetable Wheat 602 Raw cotton 35 Other export Total Value 69.411 Import Commodity Quality (000 tones) Edible oil 1185 Wheal 57.9 27.1 7.74 6.332 4.158 1.493 386.166 560.291 Tea Sugar Fertilizer Insecticides 267 99 86 1187 31 Value 23.787 3.056 9.593 1.485 10.851 5.265 1.873 0.995 577.483 634.388
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Institutional Agricultural Credit 2001-2002 (Rs. Million) Institution Production Development Total Share(%) Zarai Taraqiati 22010.843 7097.172 29108.015 55 Bank Commercial Banks 15752.00 Domestic private 184.00 Banks Provincial 5080.00 1734.00 404.00 194.00 9429.172 17484.00 588.00 5274.00 33.3 1.1 10.1
52456.015 100
OF
ZARAI
TARAQIATI
The new status of Zarai Taraqiati Bank as Limited Company will go a long way in exploring the new dimensions in agriculture and rural financing for poverty alleviation and development of agriculture sector through good governance, delivering high quality, viable and timely financial services to greater number of clients. The restructuring is aimed at uplifting the agriculture and rural sector by raising farm productivity, streamling the institutional credit and increasing income generating capacity of the farming community. The main aspect of the restructuring plan is aimed at alleviating the poor performance of the bank which had not aided the agricultural and rural sector to the optimum level. The restructuring exercise which started last year has turn around the institution to assets the declining recovery to avert of any possible default
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and to redesign institutional architecture for facilitating provision of more agriculture credit boost the agriculture produce. Zarai Taraqiati Bank (ZTBL) has announced voluntary Golden Hand Shake Scheme for its regular employees of less than the age of 59 years and with services of 10 years or more as on 05-09-2003. The scheme is a part of restructuring exercise being carried out in ZTBL which strengthening the financial health of the ZTBL and to make it a commercially viable institution.
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The first benefits of restructuring of ZTBL has been that it has now announced a 3% reduction as incentive to farmers who pay their two consecutive loan installments in time. This incentive has been possible due to enhanced financial viability of ZTBL, through the restructuring. The bank has reduced the mark up rate from 14% to 11% in accordance with the governments policy to provide maximum benefits to farmers and to inculcate timely repayment behavior. In this regard ZTBL has to play an enhanced role to develop the agricultural sector of the country keeping in view the challenges facing their sector in the wake of new global developments.
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4.1 STRENGTHS
1. Pakistan is basically an agricultural country, and ZTBL is
one of the large institution which provide the credit to the farmer for agriculture purpose. 2. 3. 4. 5. 6. 7. 8. Professional and experienced team is available in all the New technologies are introducing by ZTBL for the There is expensive machinery and technology available So many fringe benefits is given to the employee of the The substantial loan is given by the bank to their The bank provide its services almost whole the Pakistan. ZTBL has a proper training institute for their MCO (Mobile department at Head Office. agriculture purpose. at Head Office. bank or all the facilities are available for them. employee for any purpose.
Credit Officers) in order to make then updated with the changing policies and programs of the bank. 9. The information is flow systematically as branches to the regions and regions provide information to the head office. 33
Through the restructuring process the over staff have All the branches and regions are interrelated with head The head office Audit Department also checks the whole
highly decrease by Golden Hand Shake scheme. office through the computerized system. payment process. So proper system of check and balance for the payment is there. 13. Performance of all the branches are controlled and evaluated on the basis of monthly operations reports (MRO) received and checked by the branches development and control department. 14. 15. 16. 17. 18. 19. No competitor in the field of loaning to agriculture sector. For the proper training and development to the staff, the One window operation are announced time to time to Data are properly maintained. Government launches different scheme or packages to Playing a greater role in the poverty alleviation program.
staff colleges are available at Karachi and Islamabad. facilitate the farmer.
4.2 WEAKNESSES
1. The recovery system is very much low. 2. There is expensive technological machinery like in hard ware and networking department but no is there to use properly. 3. There is still much over staff at the head office. 4. Non-payment attitude and default culture. 5. There is nothing much work to do for upper and lower staff. 6. Political base loaning.
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7. Old staff, unqualified and un-skill persons are also working over there. 8. No proper efforts for the promotion and advertising for the latest agricultural technology is order to motivate farmers to use these technologies. 9. They are not concentrating on small farmers. 10. The loan is not properly utilized for the agriculture purpose. 11. The rule and regulation are not strictly followed like late coming etc. 12. Seniority based promotion. 13. There is no any new recruitment since 1996 because of overstaff so there is lack of new talent. 14. The accountability system is in very bad condition.
4.3 OPERATUNITIES
1. Present government is more emphasizing on the accountability. So this is a golden change for ZTBL for Recoveries of the political loaning. 2. Present government has also introduce micro credit scheme which enhance the operations and profit ability of the bank. 3. This is a time to reduce the over staff and new recruitment should be done.
4.4 THREATS
1. Interference in the posting and transferring by those
personalities whom are related with the operation of the bank. 2. Large no of un-viable branches. 3. Delay in the finalization of the cases field in the banking tribunals/special banking courts. 35
4. Recovery of the loan depends upon the crops the farmer have maintained, flood and drought made causes destruction of the crops which will make the farmer defaulters. 5. Due to shortage of water the agricultural land is going to be expired in Pakistan. 6. Also the rate of the agricultural crops are decreasing season by season.
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13. To over come the losses of the bank and to properly and efficiently utilize the assets of the bank.
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