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INTERNSHIP REPORT

BANKING IN PAKISTAN
Monetary policy and banking system play an important role in the
development of all economic fields of the country because necessary finances for
completion of economic plans are provided by them. therefore an organize banking
system and the financial institutions plays an active role in this matter.
The stable an organize banking policy is much effective to improve the level of saving
and consequently the level of investment. The monitory policy is adopted and controlled
by the bank but its success depends upon the cooperation of commercial banks.
availability of the credit is a big problem for LDCs. The shortage of supply of capital can
be improved better and organized banking system because the banks can increasing the
saving through launching the various attractive schemes in various productive sectors
banks also produce credit money and through this way resources are supplied to
productive sectors of the country.

KINDS OF BANKS:
In Pakistan following types of banks are operating in the business circle
like economics.

COMMERCIAL BANKS:
These banks are set up on commercial basis. Therefore, their primary
objective is to earn profit And maximize it is far as possible. For this they received cash
deposits from the people in different accounts. They give loans to different business
enterprises and thereby create credit money.
The State Bank of Pakistan is the central bank of Pakistan, Commercial Banks, financial
institutions and cooperative banks are the other components of the banking system.

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AGRICULTURAL BANK
These banks are provide long term and short term credit facilities to
landlords and tenant farmers.

INDUSTRIAL BANK
These banks are medium and long term loans to industrialists to set up
new industries for the extension of industries already in operation.

MORTGAGE BANKS
These banks provides the loans to the people against their moveable and
immoveable property.

EXCHANGE BANKS
These banks deal in foreign exchange. They provide credit to importers and
exporters by discounting foreign bills of exchange.

SAVING BANKS
These banks are set up to induce the people to accumulate their small
saving in these banks.

CENTRAL BANKS
Each country in the world has its own central bank. This bank does not
deal with public directly. This means that it neither receives cash deposits from the people
nor its give them loans. Therefore it is not a profit making institution.

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Askari Bank was incorporated on October 09, 1991 as a Public


Limited Company and is listed on the Karachi, Lahore and Islamabad Stock Exchange. It
started its operations from April 01, 1992. The bank was declared as “Best Bank in
Pakistan” in 2001 in Global Finance. The bank’s registered office/Head Office is situated
in AWT Plaza, The Mall, P.O.Box No. 1084, Rawalpindi, (Pakistan).
Askari Bank Limited has expanded into a nation wide presence of over a 100
branches, comprising commercial and Islamic banking branches, connected online and
supported by a network of Automated Teller Machines (ATMs). It also enjoys an
offshore banking unit in Bahrain. Over the years, Askari Bank Limited has proven its
strength as a leading banking sector entity with ever increasing commitment to its
clients, through a strategic investment in electronic technology. It has A1+, the highest
possible credit rating, for short-term obligation, and AA+ for long-term rating. Beside
day-by-day banking solutions, Askari Bank Limited has a wide range of Corporate,
Consumer, and Islamic Banking products.

Askari Commercial Bank Limited was the first bank in Pakistan to offer Internet
banking Services and B2B e-commerce (Business to Business electronic Commerce)
solutions for merchants looking to purchase on credit. They believe that balanced growth
is the key to survive in the today’s global banking environment.

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Mission Statement: -
The mission statement of the bank is
“To be the leading private sector bank in
Pakistan with an international presence,
delivering quality services through
innovative technology and effective
resource management in a modern and
progressive organization culture of
meritocracy, maintaining high ethical and
professional standards, while providing
enhanced value to all their stakeholders,
and contributing to society”

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Core Values:

We understand that our commitment to satisfy customers’ needs must


be fulfilled within a professional and ethical framework. We subscribe to a culture of high
ethical standards, based on the development of right attitudes. We believe in our 'core
values' as the essential and enduring tenets of our organization - the very small set of
guiding principles that have a profound impact on how everyone in the organization
thinks and acts. They have an intrinsic value for us and bear significant importance to all
our employees. They are the few extremely powerful guiding principles; the soul of the
organization - the values that guide all our actions.

The intrinsic values, which are the corner stones of our corporate behavior, are:

• Commitment
• Integrity
• Fairness
• Team-work
• Service

Vision:
“To be the Bank of first choice”

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CORPORATE PHILOSOPHY:

I n s p i r i n g R e l a t i o n s h i p s

From knowing our customers requirements to understanding employee needs, from


utilizing modern technology to making responsible social contributions, from enhancing
stake-holders value to practising corporate ethics.... We are continuously and consistently
striving to address newer challenges with a single motivation: “the power to inspire
and be inspired”

OBJECTIVES:
Ζ Deliver solutions that meet customer’ financial needs.
Ζ Build and sustain a high performance culture.
Ζ Build trusted relationships with all stakeholders.
Ζ Build and manage the Banks’ portfolio of business to achieve strong and
sustainable shareholder return.
Ζ Create and leverage strategic assets and capabilities for competitive advantage.
Ζ To facilitate the bank with modern banking technique.
Ζ To accelerate commercial activities and capture large market share.

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Corporate Information

Lt. Gen. Imtiaz Hussain


(HIM) Chairman

Chairman
Lt. Gen. (R) Zarrar Executive

Azim Committee

President

Mr. Shaharyar Ahmad & Chief


Executive

Brig (R) Muhammad


Director
Shiraz Baig

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Brig (R) Asmat Ullah


Khan Niazi Director

Brig (R) Muhammad


Bashir Baz Director

Brig (R) Shaukat


Mahmood Chaudhari Director

Mr. Zafar Alam Khan


Sumbal Director

Mr. Kashif Mateen


Ansari Director

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Mr. Muhammad Najam


Ali Director

Mr. Muhammad Afzal Munif Director

(NIT
Mr. Tariq lqbal Khan Director Nominee)
Company
Mr. A.J.Mubbashar Secretary

Audit Committy

Brig (R) Asmat Ullah Khan Niazi Chairman


Brig (R) Muhammad Shiraz Baig Member
Mr. Kashif Mateen Ansari Member
Auditors

Chartered
A.F.Ferguson & Co.
Accountants
Legal Advisors

Rizvi, Isa, Afridi & Angell


Registrar & Share Transfer Office

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M/s THK Associates (Private) Limited,


Ground Floor, State Life Building # 3,
Dr. Ziauddin Ahmad Road, Karachi – 75530
P.O.Box No. 8533, Karachi.
Tel : (021) 5689021, 5686658, 5685681
Fax: (021) 5655595
Registered Office /Head Office

AWT Plaza, The Mall,


P.O.Box 1084, Rawalpindi.
Tel : (051) 9063000
Fax: (051) 9272455
Website: http://www.askaribank.com.pk/

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Executive Profiles
• Mr. Agha Ali Imam- Senior Executive Vice President
• M.R Mehkari - Senior Executive Vice President
• Suhail Ahmad Rizvi- Executive Vice President
• Mr. Nazimuddin A. Chaturbhai, Senior Executive Vice President
• Malik Asad Ali Noon, Executive Vice President
• Mr. Tahir Aziz, Executive Vice President
• Mr. Israr Ahmed, Executive Vice President
• Mr. Riaz Khan Bangash, Senior Vice President
• Mr. Nauman Bashir Khan, Senior Vice President
• Mr. Muhammad Ahmed Khan-Senior Vice President

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Branch Network.

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Product and services:

Personal Finance

Personal Finance is a parameter driven product for


catering to the needs of the general public belonging to
different segments. One can avail unlimited
opportunities through Askari Bank's Personal Finance.
With unmatched finance features in terms of loan
amount, payback period and most affordable monthly
installments, Askari Bank's Personal Finance makes sure
that one gets the most out of his/her loan. Once a good
credit history is established, the door to opportunity
opens much wider.

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Mortgage Finance

Askari "Mortgage Finance" offers the convenience of


owning a house of choice, while living in it at its rental
value. The installment plan has carefully designed to suit
both the budget & accommodation requirements. It has
been designed for enhancing financing facility initially
for employees of corporate companies for purchase/
construction/ renovation of house.

Business Finance

In pursuance of the National objectives to revive the


economy of the country, ACBL is providing loans to
small and medium size business enterprises under Askari
Bank's Business Finance Scheme. Our goal is to offer a
loan, which enables business community to receive the
financing required by them based on their cash flows.
Our valued customers can enjoy the convenience of
getting financing on attractive terms with the minimum
processing turnaround time.

Smart Cash
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This personal line of credit would be set up with a
specified credit limit upto Rs. 500,000/-

Auto Financing
Yet another of our products, Askar offers the most
convenient and affordable vehicle- financing scheme,
which provides our valuable customers an opportunity to
own a brand new vehicle of their choice. With minimum
down payment, lowest insurance rates and widest range
of available car makes and models, Askcar offers the
best value to our esteemed customers

ASKARI CARD
ASKCARD means freedom, comfort, convenience and
security, so that you can have retail transactions with complete peace of mind.
ASKCARD is your new shopping companion which enhances your quality of life by

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letting you do shopping, dine at restaurants, pay your utility bills, transfer funds,
withdraw and deposit cash through ATM anywhere, anytime.

TYPE OF CREDIT CARD.


There are three types of credit cards issued.

i. Silver card
ii. Gold card
iii. Local card

* Silver card has limit upto 2 lac.


* Gold card has limit upto 5-lac.

* Local card has limit upto 2 lac.

Silver and Gold card can be used internationally for shopping and also can be
used for internet shopping.
* Local card can be used in Pakistan.

Travelers Cheques
The range of our products and value added services enhances with
introduction of Rupee Travelers Cheques (RTCs) launched in March 2002. In spite of our
constraint on issuing higher denomination of RTCs against restrictions imposed by the
Central Bank of Pakistan we have been striving to attain our shares with sizeable
portfolio.

Value Plus Deposits

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The first liability product launched by this unit is showing a
remarkable acceptability in the market. The growth of this product is witnessed by its
share, which has presently reached at Rs. 1,079 Million even after lowering down the
profit rates due to sufficient liquidity in the market.

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FUNCTIONS OF ASKARI COMMERCIAL BANKS

1. Accepting Deposits
Cash in the hand of the people is unsafe because it can be lost. moreover, because some
people lack entrepreneurial talents and therefore do not make investment in any
enterprise, but they want income on the amount of money they have. Bank promises to
solve these problems of people.

Banks receives three types of deposits from the people.

 Current deposits
 Fixed Deposits.
 Saving Deposits.

Advancing Loans
Every bank has learn experience that depositors do not draw whole of their deposits at a
time. They only draw a part of it for day to day transactions. Therefore, a bank keeps a
part of total deposits as “cash reserve” to meet the cash demand of depositors and
advances the remaining part of deposits to businessmen on interest.

A bank gives loans entrepreneurs/businessmen in the following ways:

 By Opening a loan account.


 By means of overdraft.
 By discounting bills of exchange.

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 By purchasing bonds and securities.

Creation of the safest medium of exchange:


It is neither safe nor easy to make payment in the form of metallic coins or paper notes.
Therefore, payments are made by cheques these days.

Agency Services
A commercial bank performs many services as an agent of its clients or
depositors. It makes payments on order cheques issued by its depositors. It receives the
amount of money on crossed cheques issued in the favour of its clients and deposits the
amount in their accounts.

General Utility Services


A bank provides general utility services to its clients as well, for
example it keeps their precious documents, gold ornaments, bonds and shares etc. in safe
custody in its lockers.

Financing of Foreign Trade.


A commercial bank receives foreign exchange earned by exporters and
makes payment also in foreign exchange in foreign countries on behalf of importers. It
also advances loans.

Departments Of Askari Commerical Bank

 Accounts Department
 Cash Department
 Clearing Department

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 Credit Department

DEPOSIT & ACCOUNT OPENING

DEFINITION OF BANKERS
As defined in section 3(b) of negotiable instrument act 1881,
‘”bankers” means the person transacting the business of accepting for the purpose of
lending on investment of deposits of money from the public, repayable on demand or
otherwise, and withdraw able by cheque, draft, or otherwise, and include the post office
savings the bank.

DEFINATION OF THE CUSTOMER:


A customer is the person who maintains a regular bank
accounts without taking in to consideration the duration and frequency of operation of his
accounts it means that the person becomes a customer of the bank as soon as he open his
accounts deposit money in the same and the bank accepts the said deposit.

QUALIFICATION OF CUSTOMER:
He should not be a minor because a minor is not competent to
contrect.according to section (3) of the majority act 1875 a person is deemed to have
attained the age of majority when he has completed the age of (18) years.
He should be a person of sound mind
Section (12) of the contract act says that “the person is said to be of sound mind for
entering into contract if at the time when he makes it he is capable of understanding it
and of forming a rational judgement as to its effects upon his interest.
He should have not been debarred from entering in to any contract under the law.

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There is an offer by the customer and acceptance by the banker. The customer offer the
money to deposit and banker offers to accept it.

RIGHTS OF A CUSTOMER
A customer has the following universally accepted rights.

To draw cheques against his credit balance in the account.


To receive pass book or statement of his account.
To sue the bank for the cost, loss and damages, when his cheque is wrongfully
dishonoured by the banker.
To sue when the banker has not maintained the secrecy of his account, except when it is
done under compulsion of law in the interest of the bank or as the duty to public.

DUTIES OF THE CUSTOMER

Section (72) of negotiable instrument act 1881 lays down that the customer must present
the cheques for payment and collection with in the business hours of the bank.
To keep his cheque book under lock and key
To draw the cheques very carefully so that there is no room for any fraudulent additions
or alterations.
To see that the cheque issued by him presented to the bank for payment with in a
reasonable time.

OPENING OF ACCOUNT
The banking history is replete with various instances of fraud largely due
to incorrect opening of accounts. These fraud could have been avoided in if the branch
managers and other designated officers had taken due care and exercised required
precautions at the time of opening of accounts.

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At the time of opening of accounts, officers should tactfully obtain as much information
as possible about the integrate and character of the person, his correct name, address and

occupation. This infect will be the only opportunity when they will be able to talk to the
prospective customers in a friendly and frank atmosphere. This is the time when they
have a slight edge over the customer. He or she at this point of time is willing to divulge
as much information about his personal status and business etc to the bank manager. It is
therefore necessary that due care and proper procedure be followed for opening different
types of accounts for various types of customers.

Askari commercial bank limited has the following classifications of accounts,

A INDIVIDUALS ACCOUNTS
B PARTNERSHIP FIRM ACCOUNTS
C JOINT STOCK COMPANY ACCOUNTS
D AGENCY ACCOUNTS
E CLUBS, SOCIETIES & ASSOCIATIONS ACCOUNTS
F EXECUTORS AND ADMINISTRATORS ACCOUNTS
G TRUSTS
H LOCAL BODIES ETC.
I PROPERITORSHIP
J JOINT ACCOUNTS
K OTHER MISC ACCOUNTS

When a customer open an account under the law he enters into a contractual relationship
with the bank.

At the time of opening the account, intended customer must have the following
characteristics:

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A He must have reached the age of majority

In term of section 3 of the Indian majority act 1875 (as adopted in Pakistan) a person is a
major if he attain the age of 18 years. However, the age of majority shall be 21 years in
case of European nationals and also where guardian is appointed under the guardians and
wards act.
A person who is under the age specified herein above is considered a minor. in term of
section 11 of the contract act, a minor is declared incompetent to enter into a contract. As
such, any contract with a minor is a void. However , the banks generally allows the minor
to open accounts with a view to inculcate in them the habits of saving. Such account is
opened jointly with their guardian and are allowed to be operated by the guardian. The
guardian for the purpose will sign the account opening from and the specimen signature
card.
B He must be of sane mind
A person is said to be of sane or sound mind it he understands the terms and the
conditions of the contract and is capable enough to form rational judgement as the effects
of the contract upon his interest.
C He must not be insolvent and bankrupt.
At the time of opening the account, he should not be adjudicated as insolvent. Generally a
person is considered as insolvent if his liabilities exceeds the assets he is possessing.
D He must not be debarred under any law from entering into any contract.
It is the duty of the banker to make sure that all above criteria is satisfied before he allow
the opening of the account.
For general guidance of the officers, given below are the essential points that must not
escape their attention while opening the accounts.
WHO DEAL WITH OPENING OF ACCOUNT:

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As for as possible the account opening job should be handled by the branch manager
himself. Only in exceptional cases in main branches, the job may be assigned to other
officers.

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INFORMATION:
As much relevant information as possible must be elicited from the prospective customer
relating to his means, line and place of business etc.

FORMS TO BE FILLED IN CAREFULLY:


Each and every column of the account opening form should be neatly and correctly filled
in with necessary details.

INTRODUCTION OF ACCOUNT:
Account must be properly introduced. In this concern, the following precautions are to be
observed.

I As for as possible, the person introducing the account should attend the
personally with the prospective customer. This would serve the dual purpose.

A The branch manager shall have the opportunity of eliciting vital


information as to the standing, respectability and the means of the person he is
introducing.
B The identity of the customer must be properly established beyond any
doubt.

Iintroducing from person having doubtful dealing with the bank should be discretely
declined.
The staff member generally should not introduce the account. They will introduce
accounts only for those persons who are personally known to them and whose credentials
are absolutely clean.

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As for possible, the account opening form should be completed by the prospective
customer in presence of the introducer who is then aware of the particulars furnished and
can corroborate the same.
Specific information concerning the profession should be recorded in the account
opening form. The description private Service’ or ‘Businessman’ is insufficient.
Signature on the account opening form must be put by the customer will attest them
properly in presence of introducer.
No cheque book should be issued to the new accounts are properly introduced.
Account may be opened with cash or cheque. Initial deposits, it is incumbent upon the
Branch Manager to satisfy themselves additionally that title of account holder is genuine
for the cheque deposited. Prudent bankers avoid opening new accounts with cheque.
Letter of thanks should be sent to the introducer the day the account is opened. This
precaution would accomplish the purpose of intimating the introducer that the account
has been opened on strength of his introduction thereby inviting disclaimer if untrue.
A letter of thanks should be sent to the new account holder, preferably through registered
mail, to verify his address.
In the evening, the officer of the branch should visit the customer’s area to establish that
the address given by the customer is correct and the commands respect and honour in the
neighbourhood/vicinity he is living.
Number of the customer’s national identity card should be correctly recorded in the
account opening form and copy of it should be kept on record.
No account should be opened in the name of an undischarged insolvent.
TYPES OF ACCOUNTS
Let us now turn to procedure to be followed in case of each type of accounts.
INDIVIDUAL ACCOUNTS:
Such account may be classified as follows:
 Accounts of literate ladies and gentlmen.

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 Accounts of parade observing ladies.


 Joints accounts.
 Minor accounts.

1.In order to open the account for literate people an account opening form, signature card,
form “A”, and an ID copy are required with Rs. 2500 for opening account and he must
fulfil all customer characteristics.

2.In case of illiterate ladies and gents, the following precautions are observed in addition
to those provided in the above guideline.
a) Two photographs are to be obtained one to be pasted on account opening form and the
other specimen signature card.
b) Instead of signature left hand thumbs impression to be obtained on the specimen
signature card from gents and right hand thumb impression from the ladies.
c) Each time such customers should attend the bank personally and will put their thumb
impressions on the cheque before the passing officer.
d) Such customers should be advised not to issue cheque payable to third parties.
e) Cheque should be marked payment in person to ensure even if the cheque is presented
through clearing that particular cheque can only be paid in person

3.When account is opened by more than one person but the relationship between them is
neither of trustees nor partners it would be termed as joint account. Whenever such
accounts are open-end, definite instruction regarding operations on the account and
payments of balance in cased of death of any one of them should be obtained.

4.A person who is under the age as specified above is considered as minor, a minor is
declared incompetent to enter into a contract. However, the banks generally allow the

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minor to open accounts with a view to the condition of saving habits. Such account is
opened jointly with their guardian and is allowed to operate by the guardian.

ACCOUNTS OF PARTNERSHIP FIRMS


While opening accounts of the partnership firms, the partnership
deed from registered firms is required obtained in the addition to account opening form
and specimen signature card. The partnership letter is attached with the accounts opening
form, which must also be signed by all the partners of the firms whether registered or
unregistered.
In these accounts, the following points should be remembered.
1.All the partners must sign the account opening form.
2.The names of persons authorised to operate the account must be neatly and correctly
given in the account opening form.
3.For partnership concerns carrying on the business under impersonal name it is generally
described that the title of accounts should show name of the partners or managing
partner.
4.A cheque payable to the firm should not be accepted for credit to personal accounts of
the partners without the written authority of all the partners.
5.The maximum numbers of partners in general business 20 and the minimum is 2 for the
banking firms the maximum numbers of the partners is 10 in Pakistan however bank can
not be opened by the partnership concern
6.Since these are the business concern they will be allowed to open current accounts. No
saving s bank accounts be opened in partnership name.
Partnership account opening required following documents:
1) Account opening form (A.O.P)
2) A.O.P should be duly introduced
3) Copy of N.I.C Of all partners
4) Registration certificate (optional)

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5) Partnership deed
6) Rubber-stamp on letterhead of the firm

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7) Letter Head
8) Official capacity (It means that all the partners will sign and choose the singe for
operation of account with the bank. And in account opening form the name of the official
capacity is written in special instruction and recommended by all the partners).

ACCOUNTS JOINT STOCK COMPANIES


Joint stock companies include
 Private limited companies and
 Public limited companies
PRIVATE LIMITED COMPANIES
Private limited companies are those where the share capital is not offered to
the general public instead the offer is restricted to particular class of society or with in the
family members. Generally their share are not transferable. The minimum number of
shareholder is 2 and maximum, is 50 private limited company are not listed on stock
exchanges and therefore their shares are not publicly quoted.
PUBLIC LIMITED COMPANIES:
In this case, the promoters and general public contribute share capital.
Any Pakistani who is authorised to enter into contract can purchase share. Shares of these
companies are transferable and brought and sold freely in stock exchanges. The minimum
number of shareholder is 10 whereas there is no upper limit.
The following documents are required for joint stock companies account opening.
a). Copy of resolution
While opening the company’s account, the manager must ensure that board of directors of
the company is properly constituted and request for opening the account comes through
resolution of the board of directors. The resolution for account opening should bear
company seal and signed by the chairman of the meeting where such resolution is

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passed and counter-signed by the company’s secretary or authorised director must be


submitted to the bank before an account can be opened.
b) A.O.F. duly signed.
c) Memorandum of Association & Articles of Association.

d) Certificate of Incorporation.
e) Certificate of Commencement of Business (only required for public limited companies.
f) National identity cards of directors.
g) List of director with their shareholding.
h) Specimen signature card duly signed
ACOUNT OF PROPRIETOR:
1.A.O.F should be duly introduced
2.Copy of N.I.C of proprietor
3.Specimen signature card duly signed
4.Proprietorship declaration concerns on firm’s letterhead.s
ACCOUNTS OF CLUBS, SOCIETIES AND ASSOCIATION:
Clubs, societies and associations are non-profit and non-trading in nature. They have their
own rules and regulations and committees mention their affairs, which is called
Governing Bodies.
Documents that are required are:
i) Account opening form
ii) Specimen signature card
iii) Resolution to be passed by their governing bodies
iv) Certified copy of rules and regulations or Bye-law
v) Letter of registration
vi) Letter of undertaking to the effect that as and when change take place they will
inform the bank of such changes.

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DEPOSITS:
Deposit is the lifeblood of a commercial bank. Main function of a commercial bank is
to enhance the savings from the savers to the ultimate user of funds. The process of
collecting savings is called Deposit Moblization.

FORMS OF DEPOSITS:
Two broad forms of deposits with reference to time period are:

A) Demand deposit: These are payable on demand. They include current account,
sundry deposit (e.g. margin account) and deposit receipt. No profit is given on demand
deposits.

i) CURRENT ACCOUNT:
ii) This type of account is usually opened for businessman or such persons who
needs deposits and withdrawals facility without any restriction. Introduction is
necessary when opening a current account, the procedure has already been
explained else were in this book and account number is allotted and for
withdrawals cheque book is issued and a statement of account is provided so
that customer can reconcile his account with his own record.
No interest return is paid on such account is Pakistan, This account can be opened
with Rs. 500. Banks usually recover service/incidental charges on current account if

the required minimum balance is not maintained. Or when the maintenance of the
account becomes expenses e.g. For example too many transactions take place on
summing a large number of chequebooks and other stationary not consistent with the
average balance.

ii) CALL DEPOSIT RECEIPT:

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THE ISLAMIA UNIVERSITY OF BAHAWALPUR
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It is a contract for a specific deposit transaction and is used as a security for bidding etc.
It is non-transferable and is payable only to beneficiary or purchaser.

iii) SUNDRY DEPOSIT -MARGIN ACCOUNT,


At the time of issuance of LG / LC or acceptance the party is supposed to deposit is
kept in an account called sundry deposit. Margin account Similarly, at the time of
allotment of locker the locker holder is supposed to deposit a certain sum as security,
which is kept in sundry deposit account.

FEATURES OF MARGIN/SUNDRY DEPOSIT ACCOUNT.


Reduces risk/exposure.

Free of cost deposit enhances profitability

Respective accounts are opened.

DepositNon checkingMinimum Rate of has no approach


account- rather customer Payment
to thisofaccount.
Product Base.
As far as

Accounts Balance (Rs) Return p.a. % Return

FISDA
50,000 & 0.25% Monthly Daily
(financial institutional
special deposit
above
account)
ASDA (Askari
special deposit 50,000to 999,999 1.00% Monthly
Daily
account) 1000000& above 2.00% Monthly
Deposit Minimum Rate of Payment of Product Base.
Accounts Balance (Rs) Return p.a. % Return
Minimum Minimum
Value Plus monthly balance
Rs 10,000 2.00% Monthly
(saving account)

Notice deposits
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5,000 0.50% Maturity Daily
07 days THE ISLAMIA UNIVERSITY OF BAHAWALPUR
5,000 1.00%
30 days
INTERNSHIP REPORT

It relates to the liability L/C, L/C acceptance and is adjusted when liability is
redeemed/released.

B) TIME DEPOSIT: Payable on demand with certain maturity. Attracts profit with
respect to time.
 PLS Saving accounts

 maturates Askari FISDA (ASDA)


 Special notice time deposits are of two types: i account
 Askari Special Deposit Account.e. 7 & 30 days notice.

 All TDRS (term deposit receipt) of different, maximum one year.

SAVING ACCOUNT (INTEREST BASED SYSTEM)


As the name denotes savings accounts are basically meant for mobilizing
saving of people. In the interest based system a saving account could be opened with only
Rs. 2500 for new persons but regular customer’s saving account can be opened with Rs.
500 for single individual or for two or more individuals jointly, charitable institution,
provident or other funds of benevolent nature for local bodies, autonomous corporation,
companies, associations, educational institutions etc.

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CLOSING OF ACCOUNTS.

TDR
One month 5,000 1.00%
Two months 5,000 1.25% Maturity Daily
Three months 5,000 1.5%
Six months 5,000 2.00%
One year 5,000 2.50% Six monthly Daily

It is the prerogative of either party to the contact i.e. the banker or the customer whether
to keep the account with a particular bank or close the same without assigning the any
reasons. A customer generally uses this discretion.
• When the particular branch becomes out of the way or too far from his place of
business.
• The purpose for which the account was opened has been served.
• The bank branch is unable to give him certain credit facility that he requires.
In such a case the customer should surrender the unused chequebooks to the bank and
withdraw the balance lying to his credit after informing the bank formally.

Bank may also closed the account of the customer after notifying the banks intention
and giving him a reasonable time to make arrangement to have his cheques in circulation

presented for payment before the notice period expires. Closing of customers account
warrants a proper Notice determining the contractual relationship. Following are the
reasons by which bank can close the account of customer.

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THE ISLAMIA UNIVERSITY OF BAHAWALPUR
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a) By frequently drawing cheques much in excess of the balance in his account


which are return unpaid.
b) By introducing accounts of parties, which becomes undesirable in cause of time.
c) By frequently contravening the Rules for operation on the account.
d) By making himself aggravate during his visit to the banks branches and picking
quarrel with the staff unnecessarily.

LOCKERS:
ACBL also offers the facility of lockers of three type to it customer to offer
security.

Types Size Annual rent (Rs) or Refundable


deposit (Rs)
Small 6 inches x 2feet 1,000 15,000
Medium 12 inches x 2feet 1,500 20,000
Large 2 feet x 2feet 2,500 35,000
Key deposit is Rs 1,000 per locker.
In the case if customer lose the key of locker then breakage fee will be charged about Rs.
2,000 per locker plus actual charge of supplier of locker.

DOCUMENTS REQUIRED FOR LOCKER OPENING:


⌠ Locker opening form
⌠ Specimen signature card
⌠ Copy of NIC
Applicant should be account holder in the bank.

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CLEARING
Clearing is a system by which bank exchange cheques and other negotiable
instruments drawn one each other within specified area and securing the payment for
their clients through the clearing house. A clearinghouse is an organization where these
cheques are brought and the mutual claims of each bank on the other are offset ad
settlement is made by the payment of difference. The responsibility of operation for the
clearinghouse function lies with the state bank of Pakistan.
The function of clearing can be understood with the help of a simple example.
Every bank has its account with state bank of Pakistan. Suppose on of the account holder
of ACBL brings a cheques of habit bank of (Rs 7000/-). Now in state bank of Pakistan the
representatives of both banks will appear for clearing physical payment of cash is not
made, but our banks (ACBL) account would be reduced by RS. 7000 and increased by
Rs. 10,000 the reverse would be true for habit bank limited the clearing may be “for” or
“against” if our bank’s A/C in sbp contains a net debit balance then it would be for and if
credit balance then it would be “against” clearing.

COLLECTION OF CHEQUES;
These cheques may be drawn on UBL HBL, or MBPor other banks of
Pakistan. The clerk collects all the cheques of different banks and prepares schedule for
them. Representatives of all banks will receive the cheques related to their branch either
issued by its branch or other banks. If bank transfers funds in the same city, it is called
IBC “INWARD BILL OF COLLECTION” and if bank transfers funds to another city
when it is called OBC OUT WARD BILL OF COLLECTION. Bills are of 2 types
Clean and documentary clean bills include finance instruments and documentary includes
documents attached with goods.
.

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ADVANTAGES OF CLEARING:
 Systematic arrangement for collection and clearance of cheques.
 Speedy and economic collection and clearance of cheques.
 Clearance of cheques and other instruments of different branches of different
banks in a systematic manner without any flaw and mistake.
 The collection and clearance of Govt. bills, instruments, and cheques.
 The collection of Govt. revenue through cheques, pay order and drafts payable
through the State Bank of Pakistan and National Bank of Pakistan.
 It avoids the difficulties and cumbrances to be faced by the branches if they
collect the instruments directly from branch to branch.
 Confidence among the clearing members is produced.

CLEARING OUTWARD:
When the customer deposits cheques and other instruments of other banks
for collection, we send the cheques in outward. Clearing.

PROCEDURE:
cheques are received duly entered on pay-in-slip.
Counter foil is returned to customer after signatures.
Crossing stamp is fixed on the cheque.
Clearing stamp is fixed on the cheque and pay-in-slip.
Clearing stamp with next date is fixed on the cheque and pay-in-slip.
Endorsement stamp is fixed on the reverse of the instruments.

CLEARING HOUSE;

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THE ISLAMIA UNIVERSITY OF BAHAWALPUR
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In the clearinghouse the representatives of all the banks gather and
exchange their instruments. They enter the total amount of cheques delivered and

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THE ISLAMIA UNIVERSITY OF BAHAWALPUR
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received in their summary sheets. The total of schedule received tally with the total of
summary.
Clearing cheques received from other banks are sent to branches which will clear the
cheques and instruments to respective amounts. Some cheques are returned un paid with
the reasons mentioned in the cheques return memo.IBCA for net amount is sent to main
branch.
In the 2nd house clearing cheques are return and exchanged by the representative of the
banks. A summery is prepared for cheques received and delivered and net position is
ascertained. Amounts are settled through SBP accounts.
After cheques are returned, the main branch sends IBCAs for net amount to the branches.
Computer entries are made for (-) credits for returns and debits to main office A/C.

INWARD CLEARING:
In clearing house the cheques received from other banks are collected & sent to branches
for their payment.
Crossing stamps, clearing stamps and endorsement are checked.
Crossing stamp other than collecting bank is cancelled.
Cheques & instruments are posted to the debit of respective accounts.
Any instruments returned un-paid shall be returned in the second session of the
clearinghouse i.e. 2nd clearing.
Cheques & instruments if un-paid are returned along with return memo.
IBCA,s for net amount is sent to the main branch.
ENTRIES
FOR O/W CLEARING:

Dr. Suspense A/C clearing.


Cr. Customers A/Cs.

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FOR I/W CLEARING:


Dr. customers/Cs clearing(for return)
Cr. suspense A/C clearing (1/W clg)

TRANSFER DELIVERY:
This is the arrangement by which instruments of the branches of the same bank with in
the city are collected and cleared.
OUTWARD TRANSFER DELIVERY:
The system is just like outward clearing.
In outward clearing branch wise schedule are prepared.
The clearing instruments are presented to the branches through main branch of the city.
This is more effective & speedy process as compared to LBC because fate is received
next date.
PROCEDURE OF O/W TRANSFER DELIVERY:
The customers deposits cheques & instruments of the branches of ACBL at Lahore along
with pay-in-slip duly filled in.
Crossing stamp is fixed on the instruments.
Transfer delivery stamp is fixed for next date.
Endorsement stamp is fixed on reverse of the instrument.
Payee’s A/C is credited
Askari Commercial Bank Ltd

Badami Bagh Lahore.

INWARD TRANSFER DELIVERY:


Cheques drawn on the branch are received with the schedule. The
entries are made in the I/W. TD register and balanced with the summery of T.D.

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THE ISLAMIA UNIVERSITY OF BAHAWALPUR
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cheques are debited to respective account and cheques which are not passed returned with
the objection memo.
The IBCA is sent for the net amounts for cheques passed.

INTERNAL CLEARING:
When the customer deposits the cheques in the branch drawn on the account in the same
branch. The cheques are received along with the pay-in-slip. The amount is transfer from
the account where the cheque is deposited and credited to the account where it is transfer.

SPECIAL DELIVERY:
SBP conducts special clearing when clearance of special Government revenues is
required.
Government cheques. Pay order treasury cheques are cleared and paid.

Remittance department plays an important an important role in transfer of


funds; it includes DD, TT, MT, TC and pay order.
It is an instrument payable on demand for which value has been received issued by the
branch of the bank drawn i.e. the payable at some other place (Branch) of the same bank.

TRAVELLERS CHEQUES (TC):


TC (traveller’s cheques) is for all branches with no charges. We give the
money in cash/cheque/direct debit instructions to the banker and he gives in return the
slips of Rs.10,000, Rs. 25,000, Rs.50,000, Rs.100,000, Rs.500,000 which is required.
Now government has made some restriction against TC because people have stared it to

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THE ISLAMIA UNIVERSITY OF BAHAWALPUR
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use in place of money. There are no charges of any type such as postage, taxes,
commission charges.

TELEGRAPHIC/MAIL TRANSFER (TT/MT):


This is an instrument that is use to transfer the money from one branch to other
branch of same bank through bank. The person known as payee, for whom TT is made,
TT is only paid to him after seeing his ID card. TT has been made on following modes of
payments.
1. On cash.
1. On cheques.
2. Through debiting account no.
After issuing TT it is get registered in issuing register. Which required TT/MT no. payee
name and address, amount, account no.(if through account payment has been made),
cheque no.. Along TT/MT an advice also be send to other branch from where money will

be drawn, that advice is called telex message. On the basis of which the other branch will
pay the money after tallying serial no. and test no. of TT.
TT is made if the client has account in the bank if he has no account then he has to fill
the TTR (telegraphic transfer receipt) which is a voucher for the official record in bank.
Its form is of blue colour. In DD the person has to take care of DD which is issued to him.

Demand Draft (DD):


The demand draft (DD) is issued to the person who want to
draw money from another branch in any other city, then by showing that draft he can
easily draw money if he has account there. Demand Draft is issued by one branch of bank
payable to other branch of the other bank e.g. DD is issued by ACBL payable by MCB.
The person who pays the value and on whose behalf draft is issued is called purchaser.

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The Branch/Office which issues a draft on another branch or office is called the
drawing/issuing branch.
The Branch /Office on which draft is drawn is called the drawee branch. The person
entitled to receive the payment is called the payee.
DD also has been made on three modes of payments.
1. On cash.
2. On cheques.
3. Through debiting account no.

 ISSUANCE OF DD:
 Request shall be on the standard DD application form.
 Fill in all information such as name of beneficiary place where the DD is drawn,
amount, mode of payment cash/cheque /debit authority signature with name and
addresses.
 Check the application form.
 Charge commission as per schedule of charges.
 Get voucher from cash department. After the customer has made payment by cash
/cheque.
 Prepare the demand draft (Security Stationery)
 The issuance of DD is computerised and the amount is automatically protected
graphed during printing for avoidance of forgery.
 Entry is then made in DD issued register, in the DD issued register separate folio is
allotted for each draw branch and a serial control number is applied.
After issuance of DD, an advice is send to the branch from where client wants the
money to be drawn, which confirms the DD. In this aspect cantra is another concept,
which is followed in the branch where money is transferred. Payment of DD takes place
in two ways:

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THE ISLAMIA UNIVERSITY OF BAHAWALPUR
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1. If advice reach the other branch before the draft then that branch debit the H.O of
bank and credit client.
2. If draft reach first then bank open the temporary account called suspense account or
red account through which amount is debited for the satisfaction of client and credited
the H.O of bank when that branch receives the advice than it debit the H.O of bank
and credited the suspense account.
There are postage and commission charges.

CANCELLATION OF DD:

• Obtain application in writing along with original DD.

• Verify the signature of applicant. This signature should tally with signature on DD
application form.
• Mark cancellation in DD issued register.
• Payment from suspense account DD cancelled after recovery of cancellation cheques
as per current schedule of charges.
• Inform the drawee branch regarding cancellation and ask for IBCA.

• On receipt of IBCA adjust amount paid out of suspense account.

Lost/Stop Payment/Issuance Of Duplicate DD.

• Get application from purchaser and verify the signatures.


• Inform the drawee branch of the loss of DD and advise them to mark caution against
payment if presented.
• After necessary checking, the drawee branch will inform us about the status of DD-
whether it has been paid or is still outstanding.
• Write on the face of duplicate DD in red ink “Duplicate in lieu of original DD.
no.____ dated ____ reported lost”.

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THE ISLAMIA UNIVERSITY OF BAHAWALPUR
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• The duplicate DD will have the same control number.

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• The printed number and serial control number of DD issued shall be mentioned on the
application form.

• Signatures of two attorney holders with their attorney number should obtained on the
DD. The 2nd signing officer must check all the particulars before signing.
The postage rate is fixed Rs.25and commission rates are as following:

PAY ORDER:
Pay order is also called “banker’s cheque” drawn upon
the issuing branch/Office itself. It required account no. and other information
about client which mean cross payment is its restriction.
• Get the application form. Issues pay order after recovering charges.

• Do necessary vouchering. Make entry in PO issue register.

• All pay orders shall be crossed “payee’s account only”.


• It may be noted that IBCA is not involved because PO are payable in same
branch.

CANCELLATION OF PO:
• Application for cancellation. Surrender of original pay order. Recover cancellation
charges.
LOST AND DUPLICATE PAY ORDER.
Check the record to ensure that payment has not been effected. Get application for
issuing of duplicate PO. Recover charges. Issue duplicate pay order.
Pay slip:
The banks for settlement of its own payment issue pay slips. There is no excise
duty and no commission.

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“CrediT Department”

“The major source of bank’s income

Credit department is most important department of bank to earn her income by lending
money to other at different rates as compare to that deposit interest rate. Normally, bank
takes money from depositors at rate X and utilize those funds by advancing them at X+1
rate, so X- (X+1)=1 this 1 is the income of the bank. If we say that bank is body then
credit is blood of that body. It generates revenue for the bank so credit decisions are to be
carefully analyzed.

Different departments are working in SBP to monitor credit.


* BCD.................. Banking control Department.
* BSD.................... Banking supervision Department.
* BPRD ............... Banking policy and regulation department,

Commonly operations regulate credit size, sector and bank. Credit line is given to banks
finance the purchase of crops after every six months .

NATIONAL CREDIT PLAN:

Every year economic survey is made and with the help of this survey government
patronize certain sectors and also advise banks to give more loans in these sectors.
According to this year the agriculture sector is the target for financing.

CREDIT REGULATION 1992:

In 1992, certain regulation are made by SBP for credit advancement:

⌡ Bank cannot lend more than 10% of its reserves.


⌡ No bank can lend to its directors.

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THE ISLAMIA UNIVERSITY OF BAHAWALPUR
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⌡ No bank can finance its own shareholders.


⌡ If bank finance to other bank’s shareholder than it has to take permission from SBP.
⌡ Bank has to handle its suspense liabilities within 30 days.
⌡ Advances ratio should not exceed 65%.
Bank should check the current ratio of the customer.
PROCEDURE FOR TAKING LOANS:

For taking loan first credit line proposal (CLP) is made. In a CLP there are different types
of documents:

Application form

Credit information

Application form:
The customer requests the application form from the bank for the loan. Some documents
are also attached with the application, which are of two types:

• Permanent Information Memo


• Charge Document

• Permanent Information Memo:


These are the documents in which there are permanent information of customer and
his business.

Charge Document:
Charge document is made for the security purpose. These document are sign by
borrower. Purpose for sign is that if the borrower does not pay the loan in a certain
specific period of maturity then these documents can be shown in a court against him.

Credit Information:

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THE ISLAMIA UNIVERSITY OF BAHAWALPUR
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For the satisfaction purpose bank also take credit information about the party. Credit
information is taken from the Credit Information Bureau (CIB). This type of

information is taken when loan of huge amount is taken, above 5 million. Clearance
report is checked.

All these documents are arranged in a file. This file is called credit line proposal. Every
loan is sanctioned after the preparation of CLP.

DISCRETIONARY POWERS OF ADVANCES:

Up to certain limit each level can give orders of advancing loan but for the bigger
amount branches have to take permission from upper level of authorities.

Credit sanction advice move through these levels.

B o a r d o f d ir e c t o r s

E x e c u t iv e c r e d it
c o m m it t e e

H e a d o ffic e c r e d it
c o m m it t e e

A r e a o f f ic e c r e d it
c o m m it t e e

B r a n c h c r e d it
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c o m m it t e e OF BAHAWALPUR
THE ISLAMIA UNIVERSITY
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TYPES OF SECURITIES
Normally loans are of two kinds.
i. Clean loans.
ii. Documentary or secured loans.
In clean loan no tangible securities are taken from the customer. But in secured loans
tangible securities are
Different kinds of secure securities are
• Deposit with bank.
• Deposit with other banks.
• Government securities.
• Account receivable /notes receivable.
• Inventory.
• Moveable /immovable property
Fixed assets are hypothecating, Pledging or mortgaging. In these three cases tittles
charge and control varies among bank and the borrower

Type Title Charge Control


Borrowers Bank Borrowers
Hypothecation
Pledge Borrowers Bank Bank
Mortgage Joint Bank Bank

GOOD LENDING PRINCIPLES.


There are five good lending principles, which are kept in mind while considering a credit
decision.

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1. SAFETY
Lending must be safe enough and given to one who already has the ability in the form of
cash flows to show and for this purpose some liquidity security should be pledge.

2. SUITABILITY
Lending must fit into the plan and loans are given to a business a growing industry.
3. LIQUIDITY.
Business cycle should be complete in one year. The credit will be refunded in liquid form
and for debt security bank consider most liquid security.
4. DISPERSAL
Loans should be given in diverse sector and should not be concentrated just to one sector
to maintenance balance growth of economy.
5. REMUNERATION
Lending must be remunerative and ultimate goal is to maximize the profit.
RISK ANALYSIS
We know higher the risk higher the return but risk must be carefully evaluated.
There are five Cs, which should be considered.
1. CHARACTER
Normal and social character of an individual or organization should be good. He should
not be involved in any illegal and unethical business like smuggling or black- marketing.
2. CAPACITY
Borrower must have the capacity to take the loan and repay that loan.
3. CASH
There must be regular cash flows of business because liquidity is important for refund of
loan.
4. COLLATERAL
Transaction must be secured by collateral. The applicant should have such amount of
asset that can be used as security of credit he has taken from bank.

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5. CONDITIONS
Different conditions are important to minimize the risk of lending mostly these conditions
are two kinds.
These conditions relate to industry and country environment.

• Positive condition: Bank does not restrict the applicant to do something but it
demand for some paper to be signed.

• Negative condition: Bank restrict the applicant to invest this credit in pre-specified
business.

TYPES OF LENDING:
There are two types of advances:
A. Funded finance
B. Non-funded finance

A. FUNDED FINANCE
In a fund base loan cash are involved. In these loans cash transaction are made
directly. Fund based loans are further divided into five types:

1. Running finance

2. Cash finance

3. Term finance

4. Staff finance

5. Clean finance

6. Mortgage finance

7. Trade finance

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1. RUNNING FINANCE
This is also known as current finance or hypothecation. Per day mark-up is a
charge but customer is flexible to draw within the drawing power. Hypothecation of stock
is the prime security. In running finance amount is mentioned clearly. Mark-up is charges

on the amount that is drawn not on full amount. Previously this is known as
“overdraft”, in which customer can withdrawal his credit account in excess of credit in it.

2. CASH FINANCE
This is just like in running finance the only distinction in this case security is stock
pledged form and the security margin is also charged. Chequebook is not issued. Cash
flow must be regular one.
Bank issues delivery order if the borrower wants to draw stock equal to money
deposited by customer.

3. TERM FINANCE
Its time period is fixed. Amount and mark-up rate is mentioned. Mark-up is
charged on the full amount of loan because amount is withdrawal at once. Term finance is
secured by security. Credit should be given according to the security. It is more profitable
than running and cash finance because mark-up is charged on whole amount.
There are some cases when long term finance is also provided, these are:
* Existing plant is in running and expansion in it is needed
* To running plant for replacement of machinery
* To running plant for modernization

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4. STAFF FINCNE (PERSONNEL)


This facility is given to the staff of ACBL. The amount of loan depends upon the rank of
staff.
* OG iii to OG I the amount of loan is Rs,25,000
* Above OGI up to SVP Rs.50,000.
* And above SVP Rs.100, 000
Repayment period is 2 years and instalments are deducted from salary. Mark-up rate is
5% no security is needed it is against GP fund. The eligibility is 2 years or more service.
5. CLEAN FINANCE:
These are the special types of finance is given without the security. In the ACBL
these type of finance are given to the Army officers mostly. The amount of this finance is
Rs 25000. The bank should not be given more than Rs. 25000.
6. MORTGAGE FINANCE
This I also transacted through Retail Banking Division. as a security simply the mortgage
of property is demanded by the bank. this is for three purposes;
* Purchase of house
* Construction of house
* Renovation of house
This facility is for individuals. Repayment period is 15 years for construction and
purchase of house and for renovation 7 years subject to remaining service. The mark-up
is SBP discounting rate 4% plus with a floor rate 15%. Total service of the applicant
should be 3 years and minimum 2 years with the existing employer. no complicated
procedure only the recommendation of the employer is needed.

8. TRADE FINANCE:
There are two kinds of the trade finance.
1. Import related finance

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2. Export related finace

1). IMPORT RELATED FINANCE:


There are two types of import related finance:
⌡ Finance against trust receipt (FATR)
⌡ Finance against imported merchandise (FIM)
⌡ Payment against documents (PAD)

FATR:
In this type of finance cash is involved between borrower and bank only. This type of
loan is given on the basis of trust only. This type of finance is very risky, so the bank
charges high interest rates. FATR finance is given to selective persons. The can put signee
behind the bars without going to court after 180 days purchase good from exporter.
FIM:
Importer says that he has no money and wants to import goods. Bank then opens LC
and pledge all the imported goods. After arrival of goods bank allows him to take away
goods as he pays to the bank and charges mark-up to the remaining balance. It is like cash
financing.

PAD:
If the importer does not pay with in 3 days of arrival of good then bank converts LC into
funding facility and charges mark-up .

2). EXPORT RELATED FINANCE:


There are two types of export finance.

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1. FAFB (finance against foreign bills)

2. FAPC (finance against packing credit )


2a. Pre-shipment finance
2b. Post-shipment finance

1. FAFB:
This is provided in case of usance LC. The exporter discounts usance LC with bank and
bank after taking cushion (check) makes payment.

2. FAPC:
This type of finance is given for the packing purpose. It can be before shipment for
purchasing raw material and for packing of shipment and after shipment, for giving the
salary of labours and payment of raw material.

B. NON FUND BASED


It is the commitment and does not involve hard cash. It is normally an obligation of the
bank and in case of default of original borrower the bank stands responsible. In this type
of facility bank asks the applicant for cash margin and for mortgage of property. Because
even though no funds of bank involve but this facility is as risky as funded finance. But it
is very lucrative for bank because no funds of bank are involved but bank charges and
interest on the cash margin by head office generates revenues for bank.

TYPES OF NON_FUNDED FINANCE:

There are two types of non-funded finance.


1. Letter of credit (LC)
2. Letter of guarantee (LG)
1. Letter of credit:

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There are two types of LCs:

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Usance LC

Sight LC

Usance LC:
It is the LC in which the time period is involved. Time period is 60, 120, 160, days. Bank
makes the payment of LC when they received the documents, like transport receipt and
invoice.

Sight LC:
It is the LC, opposite to usance LC, in which payment to the exporter is made on the sight
of documents.

LETTER OF GUARANTEE.
Banks issue guarantees when contract is made between two parties. It requires no
prime security and only collateral security is taken. The amount of guarantee to be given
is calculated after valuation of assets of applicant, which he/she wants to give as
collateral. 70% of total property is taken as FORCED SALE value of the assets and after
taking 25 %security margin on forced sale value the guarantee is given for remaining
value. Normally 25%cash margin is also taken for guarantee. This margin may vary
according to the credibility of the applicant. No mark-up is charged but commission is
taken. The rates for commissions are:
* Up to 5million . 4% or minimum Rs 500.
* 5m-10m . 3%
* 10m-200m . 25%
* over200m .2%
* .125% is charged to Govt. and semi-Govt. Organizations

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This commission is charged quarterly.

TYPES OF GUARANTEE
Most of the guarantees are given in case of contracts. Guarantees are
allowed for the purchase of fertilizers and for travailing agencies to PIA.
Following are the major type of guarantees:

1. BID BOND
Banks give commitment for a bid. Normally 5 % contract amount is kept as bid security
to qualify bid. Now bank gives guarantee to beneficiary on behalf of applicant for this
amount. If bid is accepted then contractor asks the bank for ADP.

2. ADVANCE PAYMENT GUARANTEE (ADP)


Bank gives this guarantee to beneficiary to provide the contractor the advance payment
because he now has to start work.
3. PERFORMANCE BOND GUARANTEE
That the contractor will perform the task assigned with in the specified period of time.
4. SHIPPING GUARANTEE
This type of guarantee is very rare and given it at 100 % margin.

“FOREIGN EXCHANGE”
Foreign exchange is one of the important departments of ACBL. It deals with foreign
currency and foreign exchange. In a foreign exchange department ACBL deals with
Account opening, Withdrawal, deposits and remittance.

ACCOUNT OPENING:

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There is two type of account opening in foreign exchange.

1. Frozen or Old scheme accounts

2. Incremental or New scheme accounts.

FROZEN OR OLD SCHEME ACCOUNTS:

This type of accounts was frozen on 28, May 1998. In frozen accounts, account holders
can withdrawal their amounts only in Pakistani currency. Account holder cannot
withdrawal their amount in foreign currency.

INCREMENTAL OR NEW SCHEMEM ACCOUNTS:

A new scheme was introduced by SBP for foreign currency accounts. In this new
foreign currency account, account holder is allowed to open an account in foreign
currency. Deposit and its withdrawal both can be done in foreign currency. There will no

restoration on foreign remittance. Deposits of foreign currency are easily transfers for
investment purpose.

State bank of Pakistan does not charge forward coverage fee on new scheme accounts.
But the SBP charges forward coverage fee on the old account because Pakistani
government holds deposit in these accounts. In the ACBL foreign currency account
deposits are also reported in a local currency. Foreign currency deposits are also revalued
at the end of each month. Revaluation rate is announced at the end of each month.

TYPES OF SERVICES IN FOREIGN EXCHANGE:

ACBL provides two types of services in foreign exchange.

_ Trade Related services

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_ Travel Related services

TRADE RELATED SERVICES:

ACBL provides two types of trade related services.

1. Export related

2. Import related

 EXPORT RELATED TRADE SERVICES:


Export means transfer of goods and services from the home country to another country.
There are four methods of payment, that is used in a export trade services.

ϕ Cash against documents collection (CAD)


ϕ Foreign bill purchase
ϕ Consignment sale basis
ϕ Advance payment

CASH AGAINST DOCUMENTS COLLECTION (CAD):


In CAD there is no guarantee and liability of the bank. Bank of the exporter will send
shipping document to the advising bank. Then the importer’s bank transfers the
documents to the importer after the payment is received. After completing the assurance
that payment has been received than the exporter’s bank makes the payment to the
exporter.

FOREIGN BILL PURCHASED:


In this mode of purchase importer will send LC to the advising (importer) bank. After
receiving the LC the advising bank will give it to the exporter. After the shipping of

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goods, exporter will hand-over shipping documents to negotiating bank and they will
receive payment from the negotiating bank.

CONSIGNMENT SALE BASIS:


In this mode of payment, payment is received within 120 days. Importer will receive
the goods after paying the custom duty. The importer makes the payment when he
receives the sale proceeds and after the attestation of the sale proceeds receipt from
concerned embassy.

Advance payment:
Advance payment means payment of the goods before they are delivered to importer. In
the advance payment inward remittances are transferred from the foreign bank to the
exporters account.

 IMPORT RELATED TRADE SERVICES:


Import is receiving goods and services from the foreign country to home country.
Four modes of payment are used for imports:

1. Cash against documents (CAD)

2. Deferred payment

3. Advance payment

4. LC\ documentary credit

1. CASH AGAINST DOCUMENTS (CAD):


Bank of the exporter will send shipping document to the advising bank. Then the
importer’s bank transfers the documents to the importer after the payment is received.
After completing the assurance that payment has been received than the exporter’s bank
makes the payment to the exporter.

2. DEFERRED PAYMENT:

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In this mode of payment, the important thing is the mutual concern of exporter and
importer. In this case the seller shipping the good and the buyer makes the payment with
a mutual understanding.

3. ADVANCE PAYMENT:
In this mode of payment the seller receives advance payment of his goods. The buyer
can also take discount benefit for his advance payment. The seller takes the benefit
through investing advance in the preparation of goods.

4. LC\ DOCUMENTARY CREDIT:


LC means letter of credit. The opening bank on the behalf of the applicant writes
letter of credit in the favor of beneficiary. This letter of credit is written for a
specified amount against the submission of shipping documents. Applicant requests
for the LC through bank, which is called LC opening, bank. In this case beneficiary
is exporter and applicant is importer. Other parties of LC are:

Advising bank

Negotiating bank

Reimbursing bank

ADVISING BANK:

Advising bank is the bank of importer. Its duty is to transfer LC documents to the
exporter bank.

NEGOTIATING BANK:

Negotiating bank is the bank of exporter country bank. It makes the payment to the
exporter for his goods, which he exports to the importer.

REIMBURSING BANK:

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Reimbursing bank is the foreign bank. This is a bank, which has the Nostro Accounts
of the ACBL. The duty of this bank is to make the payment to the negotiating bank.

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HR Philosophy:

Askari Bank has a progressive and a dynamic human resource (HR) philosophy. The
Bank believes in transforming its human capital into a key source of competitive
advantage. The Bank believes that investment in human capital is critical for achieving
and sustaining growth.

Nature of Strategic Planning in Askari Bank

Askari Bank is trying to achieve Business Level Competitive Strategy, which will help
them in strengthening the business’s long-term competitive position in the market place.
The Bank is using Human Resource as a strategic weapon, which will help them in
achieving short term as well as long-term objectives.

Importance of Human Resource Division of Askari


Bank: -
“Our staff is our most valuable asset”
That’s why Staff is given on the job as well as site training in diverse areas of banking
and management. Fifty two in house courses were organized during 2001 in Askari Bank
for training the employees.

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The HR manager says that we are committed to provide a healthy


environment, culture, job satisfaction, opportunity and compensation that attracts and
retains outstanding individuals.

Askari Bank value a work place where:


• People are promoted on their merit rather than on their tenure.
• People treat each other with mutual respect and dignity.
• People truly feel that no matter how large we grow, each one of us can make a
difference.
• No discrimination among the male and female employees.

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HR Head’s Responsibilities;
Human Resource Division of Askari Bank was successful in implementing:
1. Staff Hospitalization Plan;

2. Staff Transport Finance Scheme;


3. Medical Leave of Absence Facility;
4. Privilege Leave of Absence Encashment;
5. Enhancement in Staff House Finance Limit;
6. Insurance of House Finance;
7. Increment in Salaries Up to 15%;
8. Rationalization of Pay Scales;
9. Performance Appraisal System;
10. House Rent Facility.

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JOB ANALYSIS AND DESIGN:


Job Analysis.
Provide information about jobs currently being done and the knowledge, skills, and
abilities that individuals need to perform the job adequately

Steps In Job Analysis.


1. Understand the purpose of job analysis.

Managers do the job analysis and assign responsibilities according to the caliber
and skill of the employee.

2. Understand the role of the job in the organization.

3. Benchmark positions.

4. Determine how to collect job analysis information

Managers collect the information through Observation, technical conference.

5. Seek clarification.

6. Develop draft.

7. Review draft with supervisor

JOB DISCRIPTION, JOB SPECIFICATION

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Job Description.
Service manager according to the skills capabilities personality communication skill

confidence level has designed Job description.

Job Specification.
Statements indicating the minimal acceptable qualifications incumbents must possess
to successfully perform the essential elements of their jobs. In which includes the
knowledge, skills, education, experience, certification, and abilities need to do the job
effectively.

Askari Bank mainly focuses on the communication and confidence level of the
candidate as skill can be updated.

Recruitment is the process of searching for prospective employees and stimulating them
to apply for jobs in the organization.

Objective:

Askari Bank believes that by bringing together our collective expertise, insight, and
professionalism, we will grow individually and succeed collectively.

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RECRUITMENT CRITERIA:

if you want to work for us, and have the right capabilities and experience, our
process will ensure that all candidates are provided with equal opportunities to secure a
position.

You are:

• Entry level fresh Induction:


At this level, fresh graduates are hired normally in officer cadre of the bank
ranging from OG–III to OG–I.

• Management Trainee Officers:


A special batch of qualified, energetic, high caliber and qualified young with good
academic records is also hired as Management Trainee Officers (MTOs) on
annual basis with an aim to nurture high-talented lot of future
executives/managers for the Bank.

• Hiring of experienced professionals:


At this level, experienced and skilled professionals are hired normally for Senior
Slots.

ROLE OF HRD IN RECRUITMENT PROCESS:

HRD of Askari Bank is responsible for designing the selection system and
managing its everyday operation.

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RECRUITMENT SOURCES:
Recruitment of employees, in general the sources of recruitment can be classified
into two types.

i) Internal Job Posting:


Filling a job opening from within the firm has the advantages of stimulating
preparation for possible transfer, or promotion and increasing the general level of morale.

ii) External Job Posting:


Askari Bank also goes to external sources for positions whose specification
cannot beam by present personnel. Askari Bank uses following outside sources.
• Advertising:
• Employment Agencies:
• Casual Applications:
• Leasing:

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THE HIRING PROCEDURE FOR NEW/FRESH EMPLOYEES.


RECRUITMENT PROCESS (FRESH/ BATCH PROGRAMS):

SELECTION

Our selection processes differ from position-to-position, and are designed to


effectively match an individual’s knowledge, skills, interests, and experiences to those
needed for a particular position.

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THE HIRING PROCESS:


In the hiring procedure, Askari Bank is following steps to discover significant
information about an applicant.

1) Call for application


2) Preliminary interview
3) Applications blank
4) Check of References
5) Psychological lest
6) Employment interview
7) Approval by the supervisor
8) Physical examinations
9) Induction or orientation

ASKARI BANK
INTERVIEW ASSESSMENT FORM

Job Title: ___________ Trade:


_____________ Department: ___________
Name: ___________ Age/DOB ______________App.
Source: ___________
Place of Domicile: ___________ Available to joining No:
_____________________

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Expected Salary Rs: ____________________________

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Name of the Interview: 1. (HRD Executive)


2. (Concerned Executive)
3. Supporting Executive)

(1) (2)
a) Appearance ABC a) Assignment
Knowledge ABC a) Potential ABC
b) Health ABC b)Experience Rating ABC b)
Behaviour ABC
c) Education ABC c) Professionalism
ABC c) Observation ABC
d) Experience ABC d) Verbal/Written
Expression ABC
e) Skill ABC
f) Confidence ABC
g) Intelligence ABC
Rating ABC Final Rating: Merit Rating:
1. Excellent: ________________
2. Good: ________________
3. Average: ________________

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4. Below Average: ________________


General Remarks:

_____________ _____________ _____________


HRD Executive Concerned Executive Supporting Executive

ORIENTATION AND PLACEMENT


Once employees are "on board" their personal growth and development overtime
become a major concern. Change is a fact of an organizational life and to cope it
effectively.

OBJECTIVES:
The following are the objectives of orientation program of Askari Bank:
1) To make the employees comfortable
2) To get along with the workers
3) To learn them new culture of the organization
ORIENTATION OF NEW EMPLOYEES

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After the selection of successful employees the first step in their introduction to
bank policies, practices and benefits is an orientation program.
The Orientation program in Askari Bank is completed in three phases.

FIRST PHASE:
The first phase is usually conducted by the staff personnel unit. Subjects covered
include products of the bank, employee benefits, salary schedules, safety, probationary
period, timed recording and absence, holidays equal employment opportunity programs,

packing and the grievance procedure.

SECOND PHASE:
The second phase of most organized induction program is performed by the
immediate supervisor. The inductee is introduced to fellow employees, given a tour of the
department, and informed about such details as locker and rest rooms, supply procedures,
hours of work overtime, call in procedures, rest and lunch periods, and lunching facilities.
THIRD PHASE:
The complete in action program will provide for phase three follow up some
week later. The interview, conducted by either the supervisor or a personnel specialist is
concerned with
1) Employee satisfaction with the job and organization.
2) Supervisor satisfaction with the employees.

PLACEMENT:
In Askari Bank Placement means

“Right person for a right job”


A lot of applicants’ abilities are matched with a specific job requirement and then that
person is placed on that position.

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TRAINING AND DEVELOPMENT


After the employee has been received, selected and inducted, he or she must next
be developed to better fit the job and the organization.
INVESTMENT IN THEIR ASSETS:
Askari Bank is a multinational organization in which importance has been given
to training.

The management considers the training as an "Investment in their Asset".


OBJECTIVE:

The objectives of training and development programs are to enhance and improve
the capabilities, efficiency, and productivity of an employee up to the desired standards
for current and future assignments and responsibilities.

We have our own specialized in-house training facilities in the shape of Training
Academies at Rawalpindi and Lahore.

AREAS OF TRAINNING:

The Training Academies of the Bank are equipped with modern state of the art
facilities and are responsible for imparting multi-functional high quality trainings to all
staff members in the following areas:

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s

•Business Development
» Customer Service
» Liabilities Management
» Asset Development
» Consumer Finance

•Commercial Banking
» General Banking
» Foreign Trade
» Credit Management

•Credit Administration
•Risk Management
•Consumer Banking
•Soft Skills
» Effective Communication Skills
» Negotiation Skills
» Team Building
» Selling Skill
» Customer Care etc.

The employees of Askari Bank are also sent to attend specialized courses by various
banking /non-banking training institutes.

TRAINING NEEDS ASSESSMENTS:


In Askari Bank there are three level of analysis for determining the needs training
can fulfill.
1. Organization analysis:
Focuses on identifying where within the organization training is needed.
2. Operation analysis:
Attempts to identify the content of training - what an employee must do to
perform competently.
3. Individual Analysis:

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Determines how well each employee is performing the tasks that make up his or
her job.
At this level, training needs may be defined in terms of a simple equation.
Desired performance - Actual Performance = Training need.
OPERATIVE TRAINING:
The development of operative calls for specific increased in skills and knowledge
to perform a particular job. In Askari Bank there is primarily two basic methods in use.
1) On The Job Training:
Since most jobs in Askari Bank can be learned in a relatively short period of time,
this method is most widely used.
The type of on the job training implemented in Askari Bank is:

Apprenticeship program which include both classroom instructions as well


as on the job training. This type of training is given to the new inductees and usually two
years long.
2) Off the Job Training:

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There are following methods used in Askari Bank for Off the Job training.
i) Staff Training Program:
ii) Special Courses:
iii) Selling and Technical skills training program:
iv) Opportunities For Improvement Of Educational And Technical Qualification:
EVALUATING TRAINING PROGRAMS:
To assess the utility or value of training, in Askari Bank management seek ensures
to four questions.
1. Did change occur?
2. Is the change due to training?
3. Is the change positively related to the achievement of organizational goals?
4. Will similar change occur with new participants in the same training programs?
MEASURES OF CHANGE:
In evaluating training programs, measures of change fall into four categories.
Reaction:
How do participants feel about the training program?
Learning:
To what extent have trainees learned what was taught?
Behavior:
What on the job changes in behavior occur because of attendance at the training
program?
Results:
Is what extent have cost related behavior outcomes or quality improvement, turn
over or accident reduction (productivity) resulted from the training.

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DEVELOPMENT:
We also focus on providing opportunities and facilitating our executives and officers for
developing their managerial and leadership skills through management development
programs for present and future responsibilities.

PERFORMANCE APPRAISEL
Definition:

It is a formal process and structured process through which management


measures, evaluates and assesses job related attitudes behavior and out comes.

Importance of performance appraisal in Askari Bank:

• It identifies employees current job i.e. what is he doing?


• It will help in identifying in weak and strength points.
• It will help an employee to improve his or her performance.
• Organization compensation and rewards are all based on performance appraisal.
• It motivates the individual to face constructive criticism when there is negative
performance appraisal.
• It also helps in assessing in training and development needs.
• It helps in documenting the HR policies.
• It helps in decision making of retention and termination.
• It is important for promotion, transfer and termination.

Method used in Askari Bank for performance appraisal:

A special document is used for performance appraisal in Askari Bank, which is


known as GDD (grade development document)

Following are the main things, which are included in document.

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• Assignments
• Job duties
• Achievements
• Audit objectives
• Complaints
These things are discussed in document with regard to performance of employee.

Performance appraisal is done on annually basis.

Some other methods of performance appraisal normally used in


Askari Bank:

• Written essay:
Here you write the employee weak and strong points, future potential and past
achievement and area for improvement.

• Critical incident method:


Here the appraisal based on those factors which are very effective and the events
where your performance was efficient

Problems with the appraisal:

There is no specific problem is faced in performance appraisal

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JOB EVALUTON
Definition:
It is a process by which the relative worth of various jobs is determined for pay purpose.
It checks the out the amount of employee’s pay or salary to the contribution made by this
job. The job is evaluated according to its importance.

JOB EVALUATION:
The process of job evaluation involves assessing the relative dollar-worth of each job
to the organization to set up internally equitable pay structures. If pay structures are
not equitable, employees will be dissatisfied and quite, or they will not see the
benefits of striving for promotions. To put dollar values on jobs, it is necessary to get
information about different jobs to determine which jobs deserve higher pay than
others.

Job Evaluation.

Askari Bank do job evaluations with the help of

• Manager Analysis
• Mystery shopping
• Quizzes/Snaps
• Exit interviews

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• Curiously calls

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• Training
• Attitude
• Relations with Customer and Employee
• Targets
Specifies the relative value of each job in the organization.

HEALTH, SAFETY & WELFARE


SAFETY AWARENESS:
The employees are given a physical environment that is comfortable and healthy. In
summer there is adequate air-conditioning and in winter there is central heating. Since
Askari Bank is handling with services and there is no potential danger in the nature of
its business, hence the only thing that the HR management needs to ensure a healthy
environment.

HEALTH AND SAFETY:


A monthly health and safety meeting held at Askari Bank. Chief Manager presides
this meeting and discuss any accident if happen in preceding month.
Measures in future to avoid these types of accidents.
Working hours = 48 hours per week.
Sick leave = 8 days

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Casual leave = 10 days

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FEATURES OF COMPENSATION SYSTEM AND SOCIAL SERVICES:

* Fixed salary
* Overtime is paid according to Government rules and regulations i.e. double on
holidays.
* Group Insurance scheme is practiced for the compensation of two objectives:
i) Accidents
ii) Injuries
* Employees old age benefit scheme.
* Gratuity scheme.
* Bonus is awarded (Minimum one bonus in a year)
* Monthly Medical Allowance
* Social Security services are obtained for employees.
HEALTH SERVICES:
Following are included in the health services of Askari Bank:

• Adequate facilities for emergency


• Pre-employment medical examinations
• Reasonable first aid to employees for non-occupational illness while on the job.
• Information and education services for the personal health of employees
• Advice and supervision, where necessary, to maintain proper company sanitation.

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COLLECTIVE BARGAINING
It is a process to determine the terms and conditions of employment and
regulating employment relationship, which utilizes the process of negotiation between
representative of management and employees intending to result in an agreement, which
may be applied across the group of employees.

Terms of Employment: -
The following are four categories of employment in Askari Bank Limited;
1. Regular Employment;
2. Probationer Employment;
3. Contractual Employment;
4. Temporary Employment; and
5. Casual Employment.

Regular Employment: -
These are the employees, which are after the final selection employed for a
regular period. These employees enjoy all the benefits such as annual gratuity fund,
Retirement benefit and after the retirement, pension etc. Usually managers and
supervisors fall in this category.

Probationer Employment: -
When an employee is selected for some post, he or she undergo for the probation
period of 6 months normally. However for the management cadre, it can be less than 6
months. When the probation period is completed, the employee signs a contract with

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personnel manager.
Contractual Terms: -
There are three major considerations;
 Employment is temporary in nature.
 The person should be of age 60 or above.
 Duration of employment contract is one year and renewable.
When the bank management feels that the person retiring from the job have enough
capabilities and potential to work more in the benefit of the organization, then sign this
type of agreement with the retired employee. Employee form the top to bottom can be
included in this type of employment terms.
Temporary Workers: -
Employees of cadre of workers and supervisors are hired for a period of 6-9 months
according to government rules on temporary terms of employment.
Casual Workers: -
It is concerned with the daily wages workers. When the company requires the workers
urgently, they employ the casual worker to fill the vacancies.
Apprenticeship Training: -
According to government regulation, Banks have to hire the apprentices against the
regular scheme.
Askari Bank is not bound to give regular jobs to the apprentice trainees.

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GRIEVANCES

DEFINITION:
Grievance is any dissatisfaction or feeling of injustice in connection with one’s
employment situation that is brought to the attention of management.

HANDLING CONFLICT SITUATION:


Obvious sources of conflict range from a difference of opinion, problematic working
conditions or unrealistic work expectations through discriminatory behavior, to poor
communication or non-compliance with organization norms or values.

Conflict can be covert and take the form of resentment or irritation. Such conflict is much
harder to detect and easier to ignore.

ADVANTAGES OF MANAGING CONFLICTS:

Advantages of managing conflict situations for the Askari Bank management are:

• Better motivated staff; staff energies are directed to work rather than emotions
• An organization or staff that presents a positive name to the outside world
• Improved team work
• Better personal development of individuals

DIFFERENT TYPES OF DISPUTES IN ORGANIZATION:

There are some signs of disaffection with organization such as strikes,


confrontation leading to lockouts and various forms of withdrawal of cooperation by staff
in furthermore of their claims. And other conflicts such as poor training, turnover, and

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absenteeism. To solve all disputes Askari Bank, management take action which are very
right and then all the employees are happy ad are more committed to their work.

ROLE OF HRD IN SOLVING PROBLEMS:

HRD performs following chief roles.

• Supportive behavior on manager's part.

• A work group problem solving.

• To design job techniques in such a way that gives satisfaction for individual and
opportunity for improving performance.
• Letting everyone to have his or her say.

DISCIPLINE
DEFINATION:

Discipline is condition where employees know that what is expected from


them and what will be the consequences of violation.

Purpose of discipline in Askari Bank:

Following are the main purposes of discipline in Askari Bank:

• To enforce rules and regulations

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• Smooth running of organization.

• To ensure efficiency of workers.


• To improve work relations.

CAREER DEVELOPMENT

Askari Bank values performances. We have introduced an objective system of


performance evaluation based on Management by Objectives and Behavioral
Competencies. The system allows for mid-year reviews and is 100% open to appraisees.

CAREER PLANNING:
It entails matching an individual’s skills and aspirations with opportunities that are or
may become available in the organization. This matching process requires that those in
charge of career planning know the skill requirements of the various jobs. This allows
them to guide individuals into jobs in which they will succeed and be satisfied.

CAREER DEVELOPMENT IN ASKARI BANK:

Askari Bank Limited is one of the most progressive institutions in the country today. -
Currently, Askari Bank is pursuing an ambitious expansion strategy, which envisions
opening a large number of branches throughout the country.

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Askari Bank, besides being the most rapidly expanding Bank in the market, is also the
choice of many career-focused individuals since it offers some of the following
benefits:

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• Stability of Career
• Tremendous Growth Opportunities
• Extensive Training & Development Program
• Motivating Work Environment
• Attractive Salary Packages
• Nurturing Culture

MANPOWER PLANNING
Askari Bank has a progressive and a dynamic human resource (HR) philosophy.
The Bank believes in transforming its human capital into a key source of competitive
advantage for that they believe in human resource planning.

BASIC PURPOSE:
In Askari Bank basic purpose for which HRD in relation to HRP serves are as
under:

1. Balancing the cost between utilization of plant &


manpower:
This theme involves comparing costs of these two resources in different
combinations and selecting the optimum.

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2. Determining recruitment needs:


It is an essential prerequisite to the process of recruitment. It means that HRD unexpected
shortages, wastage, blockages of unexpected shortages, wastage, blockages in promotion
flow and needless redundancies.

3. Determining training needs:


HRD plans fundamental training programmes for which it is necessary to assess not only
quantity but also quality in terms of the skills required by Askari Bank.

4. Management Development:
HRD provides succession of trained and experienced manager that is essential to
the effectiveness of the organization and this depends on accurate information about
present and future requirements in all management level in Askari Bank.

A system of HRP in Askari Bank:


A system of HRP in Askari Bank has some specific points on which Banking Act.
1. Defining or redefining organizational objectives.
2. Determining and implementing the basic requirement to sound planning.
3. Assessing future requirements to meet objectives.
4. Assessing current resources and availability of resources in the future.
5. Monitoring system and amending as indicated.
REASONS FOR HUMAN RESOURCE PLANNING
Following are specific reasons for which Askari Bank management is carrying on
systematic human resource planning.
1) Future Personnel Needs:
2) Coping with Change:
3) High-Talent Personnel:
4) Strategic Planning:
5) Equal Employment Opportunity:

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6) Foundation for Personnel Functions:


THE PLANNING PROCESS:
Planning for human resources is tied in with overall Askari Bank long range
planning. The process of planning in itself forces management to think through objectives
of firm and people problem relating to achieving those objectives through planning.

1) GOALS AND PLANS OF ORGANIZATION:


Human resource planning is a part of overall strategic planning for Askari Bank. A
personnel vice-president and his staff cannot make useful plans for period of one or three
or five years, unless they have data on possible corporate expansions new products, new
plants, new markets and so on.
IMPORTANT STEPS:
Important steps involved in overall planning for Askari Bank are:
1. To analyze and evaluate environmental influence.
a) Political trends and legislation which will have impact upon the business.
b) Social trends in leisure time, consumer tastes, work values and retirement.
c) Technological advances affecting enterprise.
2. To identify the values and aspirations of Askari Bank's directors and executive.
3. To identify and evaluate the internal strengths and weaknesses of the enterprise.
4. To create specific enterprise objectives and plans for achieving these objectives.
5. To evaluate progress toward implementation of plans and take corrective action
where necessary.
PLANNING PERIOD:
Askari Bank's planning period is from 3 years to 5 years. Period for three year is
short range and of five years is long-range period.

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2) CURRENT HUMAN RESOURCE SITUATION:


The second phase of the planning process for Askari Bank is the preparation of an
inventory of personnel presently within the organization. A skill inventory consists of up-
to date information regarding the qualifications of the selected categories of personnel.
IMPORTANT USES OF SKILL INVENTORY:
The skills inventory has several important uses.

1) After preparing human resource forecast, Askari Bank compare, the number, types
and skills specified by forecast with the present baseline or current position given
by skill inventories to ascertain what skills must be developed from present
personnel via training, up grading and special development efforts.
2. Other use is to identify talent within the organization for specific job opening.
3. An up to date skill inventory is valuable for the preparation of rosters of qualified
technical and managerial personnel.

COMPUTERIZED SYSTEM:
Askari Bank along with manually prepared Human Resource Data cards also use
computerized system to handle data. The computer can readily provide a printout of the
age distribution of all mangers by level, job, and department.

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TRANSFERS, PROMOTIONS AND SEPARATION


TRANSFERS:
The Headquarters of all employees as mentioned in the letter of appointment is
subject to change at the discretion of the Management in which event an employee will
be required to work anywhere in Pakistan as Headquarters with no extra remuneration
and /or allowance or compensation whatsoever in the salary structure. In case of a
transfer, an employee will be entitled to the following transfer benefits:
I) Air-conditioned Coach train fare or air passage as per entitlement for himself
and his immediate family to the place of transfer will be provided.

II) 14 days upcountry allowance (Boarding & Lodging allowance) as per entitlement
in the traveling scheme will be provided.
For single employees, reimbursement is at a flat rate. The amount allowed will be
specified in the transfer letter served by the Management.
In cases where the Management has initiated the move, it can at its discretion,
allow a higher ceiling/additional benefits.
Transfers are also being done within the city and outside the city. The purpose is
to provide employees a better chance to excel in their area at different locations and in
different bank branches. Job rotation is also being done. Traveling and transfer
allowances are also given so that employees get settled as soon as they join the duty.

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Promotion: -
Promotions are an integral part of the job. Every employee is looking forward
towards its career path. In Askari Bank the promotions are given on the basis of superior
performances. The promotion occurs both in the ranks and in the salary structure.
SEPARATION OF SERVICE:
a) An employee's service can be terminated on three months notice in case of a
manager or level above that and one month's notice in case of a junior Officer,
Senior Officer and Assistant Manager or pay in lieu thereof
b) If in the course of an employee's service, the employee suffers from any serious
ailment or permanent disability of any kind which in the opinion of the
management may or is likely to interfere with the due performance of duties, the
employee's service may be terminated at the discretion of the management by
giving notice as mentioned above, or payment in lieu thereof as the bank may
deem fit.

SALARY AND INCENTIVES


Salary: -
Askari Bank tries it best to keep the staff fully satisfied and provide them with
perfect career paths. The employees are paid well so that they can maintain reasonably
decent living and are motivated to work as bank’s employees.
The employee compensation at Askari Bank caters both

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“Direct financial payments”


“ Indirect financial payments”.
The pay scale is determined on the commendable factors and on the decision-making
ability for the managers and executives.
Allowances:
Which are given to employees other than the basic pay, are as follows:
 House Rent Allowance.
 Utilities Allowance
 Technical allowance.
 Traveling Allowance and Daily allowance.
Fringe Benefits: -
In Askari Bank, following benefits are offered to the employees.
 Medical Facility.
 Facilities at residence.
 Grants of incentives for improving qualification every year.
 Cash prizes.
 Increments (Annual increase in pay)
 Bonuses.
Indirect Compensations: -
Askari Bank offers three types of indirect compensation to its workers.
 Employee insurance scheme
 Providing funds
 Gratuity scheme.
department shall initiate the case to P & A.
Pay Plans and Incentives at Askari: -

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Establishing Pay Rates: -
For establishing the pay rates, first step is to conduct the salary surveys.

The Salary Surveys: -


For the purpose of conducting salary survey, Askari Bank is taking help of The
Ferguson firm, which conducts surveys and researches in the field of marketing and
finance. Moreover, the bank’s managers are well informed about the pay and salary
structure for the candidates to be hired in case of hiring. This external survey is
conducted once in two years. Complete documented information is being delivered to the
bank so that the pay scales do not vary from the market rates.
Job Evaluation: -
Evaluation of the job performance is done yearly. The purpose is to see and
identify the employees who have done their respective work well through out the year
considered and who have not been able to show good performances.
. Pay Plan at Askari: -
Pay plans at Askari are established on the basis of job rating. All jobs are ranked
from top to bottom, on the basis of commendable factors. Employee with higher rank gets
higher salaries and incentives. Askari Bank has its own criteria for establishing pay rates.

. HR manager believes that competency and skill based pay can increase
motivation and employee commitment. But more often employees are paid on the basis
of their jobs. Their pay is based on job or skills.

Skill Based Pay: -


Skill based pay is given to employees for the recognition of their knowledge,
decision making, problem solving abilities and competency of efficient and effective
working in their jobs.
Variable Pay: -

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Variable pay is a group incentive plan that ties pay to some measure of an
organization’s overall profitability. When the bank performs or the branch of the bank

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performs spectacularly in terms of profitability for a particular year, the whole branch is
given a variable pay.
Compensation Plan: -
Compensation plan for Askari employees involves following things;
 Basic Salary;
 Bonuses;
 Allowances;
 Reimbursements;
 Short term Incentives;
 Long term Incentives.
Basic salary involves fixed compensation paid regularly. Bonus is given two times in
a year to managers and professional employees, percentage of which lies from 80% to
100%. Allowances and reimbursements are short-term incentives.
Askari Bank has also several incentive plans, including individual performance
awards and bonuses, team awards.

Incentives for the Employees at Askari: -


Employees at Askari are paid basic salary as well as some sort of short and long-
term incentives. Individual incentive programs are launched at Askari to give income
over and above basic pay to individual employees who meet specific individual
performance standards.
Incentives for Managers and Executives: -
Managers and executives play a central role in influencing divisional and
corporate profitability. Askari Bank Limited puts considerable attention towards their
rewards. Most managers get short bonuses and long-term incentives in addition to salary.

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Askari Bank offers stock option to its managers as the long-term incentives. The
purpose of stock option is to motivate and reward management of the bank for long term
corporate growth, prosperity and shareholder value.
Bonus: -
Along with the basic salary, bonuses are given to managers two times in a year.
The percentage of bonus is 80% and sometimes 100% to their pay.
Allowances: -
House rent and Utility allowance are also given to managers. Managers are paid
42.5% and 10% of their incremental pay as house rent and utilities allowance
respectively. 10% of the salary is given to as medical facility, and for the general utilities
like telephone 10% of the salary is also being given to the utilities. So the overall salary
comes to a higher level including all these cash and other benefits.
Reimbursements: -
Reimbursements for medical, telephone and petrol expenses are also given to
managers and executives.
Incentives for middle and lower level Employees: -
Middle level employees and professionals are also paid bonus, allowances, and
reimbursements along with their basic pay. Lower level employees like peon, driver, and

technicians are paid dearness allowance, house rent allowance and medical
allowance along with their basic salary. The incremental stages for these employees are
+30, where as others have +25 stages in their jobs.
Ensuring Accuracy & Authorization: -
The following payments shall be made in the routine, with such additional
payments as the management may direct from time to time:

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Medical Reimbursement: -
Medical reimbursements are made to staff and executives of the bank according to
the bills presented by them. What to be done and how to reimburse the medical
expenditure is shown in the required action section.
Claims for Traveling allowance and Daily allowance: -(TA,DA)
Allowances are given to the employees for the traveling of the executives from
one city to another or abroad, all the expenditure is on the bank, daily expenditure can
also be recovered through claims.
Fuel and Lubricants: -
The bank also provides free traveling facilities to its employees by paying amount
against the consumption of fuel dependent upon their respective ranks. It is of two types;
1. Reimbursement to executives;
2. Official Expenditure.
Office Expenditure: -
 PTCL connections.
 Corporate connections
 Mobile phones and connections
 Reimbursements to executives.
Salary Disbursement: -
 Payments to regular staff
 Payments to contractual staff
 Arrears payments
 Bonus payments.
Insurance: -
Life insurance and car insurance are some of the benefits, which are also given to the
employees and more precisely to the managers and to the executives.

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BENEFITS AND SERVICES OF ASKARI BANK

LEAVE: ENTITLEMENTS & RULES


CONFIRMED EMPLOYEES
All confirmed employees are entitled to leave according to the rules and
regulations stated below:
i. CASUAL LEAVE
Ten days with pay in a calendar year, at the discretion of the Management.
Casual leave is meant to meet urgent and/or unforeseen circumstances. Prior
approval of the Management has to be obtained whenever possible, stating the reason for
leave.
a) Casual leave may be allowed to be availed at one time for a maximum of 3 days
and shall not normally be combined with any other leave, holidays and /or public
holidays.
b) Causal leave shall not be accumulated and carried forward beyond a calendar
year.
c) Casual leave may be allowed in continuation of Sick Leave in cases where the
Doctor recommends sick leave is exhausted and further leave.
ii. SICK LEAVE

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The entitlement is 14 calendar days in a year. Sick leave if not availed during a
calendar year may be carried forward but the total accumulation of Sick leave shall not
exceed 28 days at any time.

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a) Any application for sick Leave which exceeds 3 days should be supported by a
medical certificate from a registered practitioner.
b) The management may at its discretion have any employee examined by the bank
Doctor and the advice of the Doctor shall be final, for the purpose of granting
leave to the employee.
c) If sick Leave is availed on Thursday and also on the following Sunday, such leave
will be counted for four days and a medical Certificate should accompany the
leave application.
d) In case of prolonged illness, where the required leave exceeds the entitlement, the
adjustment of leave beyond entitlement may be made against C/L or P/L, or be
granted as a special sick Leave at the discretion of the Management.
iii. PRIVILEGE LEAVE
The P/L entitlement for all employees is as follow:
For the 1st completed year of service 3 weeks (21 Calendar days).
For 2nd to 5th completed year of service or part thereof 4 weeks (28 Calendar
days).
For 6th year onwards- 5 weeks (35 Calendar days)
a) An application for P/L shall be submitted to the Human Resource Division duly
recommended by the concerned Superior, a minimum of 14 days before
commencement of leave.
b) A minimum of 2 weeks P/L pertaining to one year has to be availed in order to
receive Leave fare Assistance for the year. According to the profit of the bank, the
Management could allow a maximum of 1 month’s basic salary as LFA subject to
approval. However, as minimum LFA, a fixed amount will be paid.
c) Leave will always be adjusted first against any remaining balance of a previous
year before being adjusted against the current year's entitlement.

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d) Prefix and suffix of weekly/gazette/other holidays to Privilege Leave will be


allowed and as such will not be counted as Privilege Leave. However, should any
holiday fall during the leave, it will be counted as Privilege Leave.
e) The management reserves the right to refuse any leave if the exigencies of
business so require.
iv. MATERNITY LEAVE
Maternity Leave will be allowed to the concerned employee for a period of 12
weeks (85 Calendar days) for each case.
Application for the period of leave should be submitted well in advance.
PROBATIONARY EMPLOYEES
During the probationary period of any employee there will be no entitlement to
any kind of leave, be it Casual Leave, Sick Leave, Privilege Leave or Maternity Leave.
Sick Leave if required, will be approved as a very special case only if supported by a
Medical Certificate from a registered medical practitioner.
Any other leave if availed, will be treated as without pay.
However, on confirmation if the employee so desires, the leave may be adjusted
against his entitlement and the deducted amount refunded.
LOAN POLICY
The bank guarantees loans for car and scooter/ motorcycle.
1. Application under the Loan Policy, which is duly recommended by the concerned
Division/Department Head, should be forwarded to Human Resource Division for
processing. Applications will be approved subject to availability of Funds at the
concerned Banks.
2. As per the Bank's Policy for financing loans, the vehicle should be jointly
registered in the name of the Bank and employee.
3. All employees will also have to take out a comprehensive insurance policy for the
vehicle in order to avoid monetary loss in case of accidents.

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These are normally given to employees involved in actual sales only.


CAR LOAN FACILITY
The bank has decided to adopt a policy for granting bank guaranteed loans for
purchase of a car to all assistant managers irrespective of whether they are involved in
sales.
In case a mileage is sanctioned the pick & drop facility presently enjoyed at the Head
Office and regional or zonal office will be withdrawn.
This fund will be an interest bearing fund and the rate of interest will be 12% per
annum.

TRAVELING SCHEME:
All official arrangements for employees whether at Karachi or upcountry will be
made after prior approval.
The concerned employee keeping in mind, the entitlement and the length of stay planned
may also take a traveling advance. For this purpose an advance form may be filled in,
recommended by the Division/Department Head and forwarded to Human Resource
Division for approval.

Breakup of Boarding Allowance:


Breakup 15%, Lunch and dinner 30%, each Misc. 25%.
a) 100% Boarding will be allowed in case if absence from the Headquarters for 12
hours or more.
b) 50% boarding will be allowed in case of absence from the Headquarters for 6 to
12 hours.

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FOREIGN TRAVEL
In case of foreign travel, rules and regulations of the State Bank of Pakistan will
apply. Claims can be made according to the Daily allowance prescribed for different
countries by our principals.
The concerned Division regarding any planned visit abroad by any employee
should inform the administration division and Human Resource Division. The bank will
make all official travel arrangements and a traveling advance may also be taken and
substantiated as mentioned above.
MATERNITY
90% of maternity bill will be reimbursed, up to a maximum expenses limit under
this head or one basic salary, which ever is HOSPITALIZATION
In those cases where admittance to hospital is required total hospitalization
expenses, which include Doctor's fees, X-Ray charges, Medicines, Laboratory charges
etc. will be reimbursed by the bank at its description against proper receipts. No payment
will be made for nursing charges, diet charges or any non-medical items.
INSURANCE PLAN
The bank has made arrangements to provide adequate 24 hour insurance coverage
of all its employees in case of death or permanent disability while at work or traveling or
at home.

i. PERSONAL ACCIDENT POLICY


In the case of death of an injured employee, the bank will pay the amount received from
the insurance bank to the employees’ nominated beneficiary.
The benefits of this plan with the limits of Compensation are as follows:
1. Death only 100% of sum insured

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GENERAL
The bank reserves the right to refer any person to the bank Doctor as and when
deemed necessary to scrutinize all medical bills and to reject payment of factious bills, if
any.
Any misuse of the medical scheme by an eligible employee would be liable to
strict disciplinary action.
Medical Expenses
Under this plan employees are covered for the medical expenses incurred on
account of hospitalization and treatment, resulting due to accidents only, for a maximum
period of 52 weeks after the date of the accident.
Under this policy it is necessary to report an accident to the insurance bank
immediately followed by the claim forms which are filled in to substantiate the claim. All
employees must therefore report any such accident immediately to their
Division/Department, with a copy to H.R.D. within 24 hours.
ii. GROUP LIFE INSURANCE POLICY
All confirmed employees are also covered under this policy. If an employee dies,
while insured under this policy, the insurance bank will subject to provisions of the
policy, immediately upon receipt of due proof in writhing of the death of the employee,
pay the amount for which the employee is insured, which will be paid by the bank on
receipt from the insurance bank to the nominated beneficiary. This is in addition to the
accident insurance.
2. Permanent disablement:
i) Permanent total loss 100% of sum insured of both eyes or of two limbs.
ii) Permanent total loss 75% of sum insured of one eye and of one limbs.
iii) Permanent total loss 50% of sum insured of one eye of one limb.
iv) Permanent total 10% of sum insured of the finger or thumb.

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HR AUDIT
DEFINATION:

HR Audit is related to examine that how HR Managers are performing their HR


responsibilities.

APPROACHES TO HR AUDIT:
There are five types of HR Audit that are
• Comparison Approach
• Outside Authority Approach
• Statistical Approach
• Compliance Approach
• MBO Approach
Askari Bank used comparison approach for audit purpose.
TOOLS FOR HR AUDIT:
The following are tools of HR Audit.

• Interviews
• Surveys/ Questionnaires
• Historical Analysis
• Grievance Audit
• Compensation Audit

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Askari Bank used each tool of HR Audit for audit purpose but mostly used that tool
which suits to the environment of their organization.

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SUGGESTIONS BY EMPLOYEES
Suggestions are always encouraged but no extra award or recognition is given to
the employees if the suggestion or a creative idea benefits the organization in terms of
reduced cost, increase in profit etc.
CONCLUSION
In this competitive environment, where Askari Bank is facing tough competition
with other multi national companies, HRD has been successful in retaining its employees
by offering a clearly defined reward and incentive system.

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BALANCE SHEET AS ON DEC.31 2006 2006 2005


ASSETS:
Cash and balances with treasury bank 8,762,866 6,678,026
Balances with other banks 4,847,899 2,650,166
Lending to financial institutions 2,324,839 5,770,842
Investments 17,239,157 22,104,425
Advances 69,938,041 44,777,538
Other assets 1,459,716 1,425,986
Operating fixed assets 2,595,023 1,979,919

107,167,541 85,386,902
LIABILITIES:
Bills payable 1,227,093 973,703
Borrowing from financial institution 13,781,555 15,903,055
Deposits and other accounts 83,381,795 61,656,607
Sub-ordinated loans 1,000,000
Liabilities against assets subject to finance lease 14,159 37,350
Other liabilities 1,282,981 962,592
Deferred Tax Liabilities 526,865 806,753

101,151,448 80,340,060
Net Assets 6,016,093 5,046,842
Represented by:
Head office capital accounts 1,255,848 1,141,680
Capital reserve 4,317,301 2,759,599
Un remitted profits
5,573,149 3,901,279
Surplus on revaluation of securities-net of tax 442,944 1,145,563
6,016,093 5,046,842
ASKARI COMMERCIAL BANK LIMITED

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PROFIT AND LOSS ACCOUNT


(Rupees in thousand)
Mark-up/return / interest earned 4,487,206 4,073,715
Mark-up/return / interest expensed 1,117,206 1,379,609
Net mark-up / interest income 3,370,000 2,694,106
Provision against non performing loans and advances 277,398 308,528
Provision for diminution in the value of investments 38,066 -
Bad debts written off directly 7 -
315,471 308,528
Net mark-up / interest income after provisions 3,054,529 2,385,578
NON MARK- UP/ INTEREST INCOME
Fee, commission and brokerage income 649,988 524,775
Dividend income 26,318 37,658
Income from dealing foreign currencies 180,992 112,808
Other income 776,230 278,512
Total non mark-up / interest income 1,633,528 953,753
4,688,057 3,339,331
NON MARK-UP / INTEREST INCOME
Administrative expense 1,845,179 1,436,304
Other provisions / write offs - -
Other charges 138 1,227
Total non mark-up / interest expense 1,845,317 1,437,531
2,842,740 1,901,800
Extra ordinary unusual items - -
PROFIT BEFORE TAXATION 2,842,740 1,901,800
Taxation – Current 876,089 873,639
Prior years - -
Deferred 43,611 (74,904)
919,700 798,735
Profit after Taxation 1,923,040 1,103,065
Inappropriate profit brought forward - -
Profit available for appropriation 1,923,040 1,103,065
APPROPRIATIONS:
Transfer to:
Statutory reserves 384,608 220,613
Capital reserves (reserves for the issue of bonus shares) 251,170 114,168
Revenues Reserves 1,036,092 539,948
Proposed cash dividend 251,170 228,336
1,923,040 1,103,065
Un-appropriated profit carried forward - -
Basic earning per share - (Rupees) 15.31 8.78
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FOR THE YEAR ENDED 31ST DECEMBER, 2006

TREND ANALYSIS
(Horizontal Analysis)

FINANCIAL SUMMARY

Trend Analysis, also called Horizontal Analysis of the financial statements is one
directional- upward or downward analysis and involves the computation of the
percentage relationship that each statement item bears to the same item in the base year

2002 2003 2004 2005 2006


Profitability (Rs in million)

Total Income 3840 5047 5704 5028 6121


Interest income 3213 4251 4858 4074 4487
Interest exp 2274 2902 3017 1380 1117
Fee, comm.
506 677 299 638 831
Exch.Income
Other income 122 119 247 317 802
Spread 939 1349 1841 2694 3370
Operating expenses 680 854 1093 1438 1845
Operating Profit 886 1291 1595 2210 3158
Non performing
134 283 351 308 315
assets
Profit b/f tax 752 1008 1244 1902 2843
Taxation 436 458 557 799 920
Profit after taxation 316 551 687 1103 1923

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The operating expenses of the bank has been increased with sharp margin, the ACBL is
newly born bank of only 14 years old and is growing rapidly so, we can say that the
reason behind the rapid increase of its operating expenses may be the expansion of
business. In order to get handsome profit the expenses are necessary as it is shown by the
fact that if the bank’s operating expenses have been increased then, there is also an
increase in the profit before income tax and profit after income tax.

SHAREHOLDER’S FUNDS

2002 2003 2004 2005 2006


Shareholder’s
(Rs in million)
Funds

Total share holders


2155 2579 4173 5047 6016
fund
Share capital 986 1036 1087 1142 1256
Reserves 1229 1521 1940 2760 4317
Surplus on ROA (60) 22 1146 1145 443

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TREND ANALYSIS

2002 2003 2004 2005 2006


Shareholder’s
%AGE
Funds

Total share holders


100 119.6 193.6 234.2 279.2
fund
Share capital 100 105.0 110.2 115.8 127.4
Reserves 100 123.7 157.8 224.6 351.2

The shareholder’s fund of the bank is continuously increasing, as the bank is running on
profit, therefore, the business take interest in this project and wish to participate in it. The
bank’s share capital and reserves are also increasing with the expansion of business.

LIABILITIES

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2002 2003 2004 2005 2006
Liabilities (Rs. in million)

Customers
30360 41200 51732 61657 83319
deposits
Refinance
2882 3222 3392 7329 9777
borrowings
Sub-ordinated
- - - - 1000
loans
Other liabilities 3058 3980 11016 11354 7055

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TREND ANALYSIS

2002 2003 2004 2005 2006

Liabilities PERCENTAGE

Customers
100 135.7 170.4 203.0 274.4
deposits
Refinance
100 111.7 117.7 254.3 340.0
borrowings
Other liabilities 100 130.1 360.2 371.3 230.7

New if we analyze the liability side of the bank we see that the bank’s deposits are going
on increasing since its birth which is a very healthy sign for the bank as the bank’s basic
business is to deal in money. The increase in deposits show that the people have interest
in the bank and deposit their fund in the bank without any hesitation. However it has not
been mentioned here that how many of the deposit are current and how many of them

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have fixed nature but we can say that it is a very important source of the bank to earn
profit. As the banks usually earn through interest or mark ups imposed on the deposits
they keep with themselves.

ASSETS

2002 2003 2004 2006 2007


Assets (Rs. in million)

Advances 17893 23292 30035 44778 69938


Investments 8651 11706 26737 22104 17239
Cash, short funds and
statutory deposits with 10056 13436 10061 15099 15936
SBP
Operating fixed assets 641 723 1663 1980 2595
Other assets 1213 1824 1817 1426 1460
Total assets 38454 50980 70313 85387 107168

Now we will discuss the assets side of the bank. The liquidity position is essentially
important for the bank, as it must have all the time sufficient funds to meet the demands
for the money that may be made on it. It is the protection against the risk that losses may
develop if banks are forced to sell or liquidate creditworthy assets in an adverse market.
The current liquidity position of the bank has improved as indicated by the percentages
shown in the table below.

TREND ANALYSIS

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2002 2003 2004 2005 2006


Assets (Rs. in million)

Advances 100 130.2 167.8 250.2 390.9


Investments 100 135.3 309.1 255.5 199.3
Cash, short funds and
statutory deposits with 100 133.6 100.0 150.1 158.4
SBP
Operating fixed assets 100 112.7 259.4 308.9 404.8
Other assets 100 150.3 149.8 117.5 120.4
Total assets 100 132.5 182.8 222.0 278.7

An upward trend in deposits accompanied by a upward trend in advances too, and mark
up revenues means in effective credit policies, efficient credit collection resulting in
healthy financial development.
The property plant and equipment is the kind of asset, which is required by the service
business only to increase its network therefore the ratio of the bank’s plant and
equipments as compared with the other important particulars of the assets is high. But
here one thing should be mentioned that it is the policy of the bank not to start the
business on the rented premises. The bank has mostly started business on its own
premises. The other assets of the bank are also showing a good amount that means that
bank is in position to earn money from every available source.

BUSINESS TRANSACTED

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2002 2003 2004 2005 2006


Business
(Rs. In billion)
Transacted

Imports 26.2 32.0 40.2 48.7 75.2


Exports 30.6 38.8 47.3 56.8 70.1
Guarantees 4.8 6.2 14.2 14.4 25.3

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TREND ANALYSIS

2002 2003 2004 2005 2006


Business
(PERCENTAGE)
Transacted

Imports 100 122.1 153.4 185.8 287.0


Exports 100 126.8 154.5 185.6 229.1
Guarantees 100 129.2 295.8 300.0 527.1

Now we will discuss the business transacted opt the bank in terms of import and exports
we see that imports and exports through ACBL are continuously on increase which is a
very health sign for the banking business as the banks earn major portion of their profit
through imports and exports. It shows the efficiency of the credit department. The
reasons for this improvement may be
• Careful scrutinizing of all the documents
• Intelligent corresponding with the customer
• True 7 C’s analysis of the customer such as his business and moral character
This improvement in imports and exports is extremely large if we compare it with the
figures of 2000.
COMMON SIZE ANALYSIS

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(VERTICAL ANALYSIS)

COMMON SIZE ANALYSIS

An analysis of percentage financial statements where all balance sheet items are divided
by total assets and all income statements items are divided by net sales or revenues.

In addition to other financial ratios over time, it is often useful to express balance sheet
items and income statement items as percentages. Common –size Analysis, also called
Vertical Analysis, or Component Percentage, or 100 percent Statements as each

statement is reduced to the total of 100 and each individual item is stated as a percentage
of the total of 100.

2002 2003 2004 2005 2006


Profitability (Vertical Analysis)

Total Income 100 100 100 100 100


Interest income 83.6 84.2 85.2 81.0 73.3
Interest exp 59.2 57.5 52.9 27.4 18.2
Fee, comm.
13.2 13.4 5.24 12.7 13.6
Exch.Income
Other income 3.18 3.94 4.33 6.30 13.1
Spread 24.4 26.7 32.3 53.6 55.0
Operating expenses 17.7 16.9 19.2 28.6 30.1
Operating Profit 23.1 25.6 27.9 43.9 51.6
Non performing assets 3.49 5.61 6.15 6.12 5.15
Profit b/f tax 19.6 19.9 21.8 37.8 46.4
Taxation 11.3 9.07 9.76 15.9 15.0
Profit after taxation 8.23 10.9 12.0 21.9 31.4

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INTERPRETATION
The most important component of any profit and loss account of a banking concern is its
mark up expenses it has to pay for servicing the depositors. The foregoing data shows

that the markup expenses absorb about 85% of the revenues (a favorable position). This
shows that the bank has been successful in
• Selling larger volumes of higher profit items.
• Increasing economy in procurement
• Adopting other effective and more profitable deposit raising policies at a lower
lost.

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The interest expense of the ACBL is 18.2% of the total revenue of the bank in 2004,
which is remarkable as the bank is earning about 85% of the revenue as interest income.
We have handsome margin between the interest income and the interest expense of the
bank. The data shows that the bank’s other income %age is not as much high rather it is
very low which shows that the bank does not rely on other sources for its profit but it
earns major portion of its income through its basic business.

The bank seems to have increased control over its operating expenses, i.e. non-mark up
expenses as these now absorb only 30% on average of the total revenues, that is a very
healthy sign for the bank. In the net shell, it would not be wrong to say that the bank has
improved its financial position and operating efficiency over the last years.
The profit after tax is showing about 31.4% of the total revenues of the bank although the
margin of profit is not too much high but it is shown from the data that the bank is going
on increasing its profit after tax over the year.

LIABILITIES AND OWNER’S EQUITY


(Vertical Analysis)

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2002 2003 2004 2005 2006


(Vertical Analysis)

Total share holders


5.29 4.82 5.69 5.65 5.38
fund
Share capital 2.42 1.93 1.48 1.28 1.12
Reserves 3.02 2.84 2.64 3.09 3.86
Customers deposits 74.6 76.9 70.5 69.0 74.5
Refinance
7.08 6.02 4.62 8.21 8.74
borrowings
Other liabilities 7.52 7.43 15.0 12.7 6.31
Total 100 100 100 100 100

INTERPRETATION

The liabilities and owner’s equity are side components of the bank showing the
relationship as compared with the total of the liabilities and owner’s equity. The bank’s
shareholders fund is showing percentage more than the share capital, which shows that
the bank own capital is lees than the shareholders capital. However it is also evident from

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the data that the %age is decreasing of the overall %age of the share capital over the last
two or three years. But it is also seen that the share capital %age as compared to the total
liabilities of the bank has also been decreased. So we can say that the same conditions are
prevailing regarding the share capital and the shareholders fund.

Among the assets of the bank the highest %age is of the customer deposits. The bank’s
management seems to have adopted a very effective marketing policy, as the deposits of
the bank constitute about 75% of the total assets of the bank. In the last year, this figure
stood at 69% of the total resource. This shows the high level of products and associated
services provided by the bank.

ASSETS
(Vertical Analysis)

2002 2003 2004 2005 2006


Assets (Vertical Analysis)

Advances 46.5 45.7 42.7 52.4 65.2


Investments 22.4 22.9 38.0 25.8 16.1
Cash, short funds and
statutory deposits with 26.1 26.3 14.3 17.6 14.8
SBP
Operating fixed assets 1.67 1.42 2.36 2.32 2.42
Other assets 3.15 3.57 2.58 1.67 1.36
Total assets 100 100 100 100 100

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INTERPRETATION
On one hand Advances have also increased from 52% in the previous year to 65% in the
current year which may indicate that the bank utilize the funds raised in the other
activities primarily lending to the financial institutions as it is the most secure source of
financing available in the economy.

Cash, short term funds and statutory deposits with SBP are also increasing. The property
plant and equipment of the bank is showing a little portion of the bank’s total assets.
In the last the bank is over all showing a good financial health and is going on healthy
tracks in near future it has no risk of bankruptcy. Although the bank is showing good
results but we can’t say that these are the best conditions prevailing in the bank as we are
unaware of the market conditions and can’t compare it with other banks.

RATIO ANALYSIS

 PROFITABILITY RATIOS
 LIQUIDITY RATIOS

PROFITABILITY RATIOS

The continued viability of any bank depends on its ability to earn an appropriate return on
its assets and capital. Good earning performance enables a bank to fund its operations,
remain competitive in the market and increase or decrease in market funds.

RETURN ON CAPITAL FUND

Formula = Net mark up Received


Capital Funds

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2006 = 3370000 = 60.47%


5573149
2005 = 2694106 = 69.06%
3901279
2004 = 1638357 = 54.13%
3026550

70
68
66
64
percentage
62
60
58
56
2003 2004 2006
year

INTERPRETATION

This ratio relates the net profits to the amount of capital funds that have been employed in
making that profit.

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The above given ratios suggest that the profitability of the bank has increased very in the
year 2003 indicating more profitable operations of the bank. While discussing the trend
analysis, we mentioned that the mark up charges have increased in some proportion but
the mark up earned by the bank resulting increase in the profit available on the capital
funds employed. This ratio showing a very good financial position of the bank.

RETURN ON INVESTMENT

Formula = Net income after taxes


Total Assets

2006 = 3370000 = 1.79%


5573149
2005 = 1103065 = 1.29%
85386902
2004 = 686994 = 0.98%
70313073

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1.5

percentage 1

0.5

0
2004 2005 2006
year

INTERPRETATION

This ratio indicates the profit earned by the bank on the resources employed. As far as
ACBL is concerned, we observe an increase in the utilization of the resources. It has
increased to 1.29 % in the year 2003 from 0.98 % in the year 2002, It has increased to
1.79 % in the year 2004 from 1.29 % in the year 2003, the reason behind the slight
increase in the increase of profit may be due to the efforts of the management.

RETURN ON RISK ASSETS

Formula = Net income after taxes


Total risk assets

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2006 = 1923040 = 2.75%


69938041
2005 = 1103065 = 2.46%
44777538
2004 = 550051 = 2.36%
23291367

2.8
2.7
2.6
percentag 2.5
e 2.4
2.3
2.2
2.1
2004 2005 2006
year

INTERPRETATION

This ratio, with some fluctuation in 2003 came up from 2.46% in 2003 to2.75 % in the
year 2004. It is indicating active utilization in the form of advances. The bank is finding it
difficult to keep the level of its expenses less in proportion to the advances it has
disbursed. Lending, no doubt is the core function of a banking concern. But the bank
should find out effective ways of credit provisions affecting less on profitability of the
operations. Non-mark up revenues should also be increased in the face of lower credit
disbursements resulting in more.

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RETURN ON DEPOSITS

Formula = Net income before taxes


Total Deposits

2004 = 2842740 = 3.41%


83318795
2005 = 1901800 = 3.08%
61657000
2006 = 1244022 = 2.47%
41200166

3
percentag
2
e
1

0
2004 2005 2006
year

INTERPRETATION
This ratio indicates to what extent deposits which represent funds mobilization on the
part of the bank contribute towards income generation. Although the other ratios
regarding the profitability are showing satisfactory position of the bank but still bank

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need to increase its utilization of resources in order to increase its profitability because
the banks have to pay heavy taxes on their profit.

OPERATING EXPENSES TO NET REVENUE

Formula = Operating Expenses


Net Revenue
(Rs. In million)

2006 = 1845 = 30.1%


6121
2005 = 1438 = 28.6%
5028
2004 = 1093 = 19.2%
5704

35
30
25
20
percentage
15
10
5
0
2004 2005 2006
year

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INTERPRETATION
This ratio signifies the proportion of the revenues that is used to cover the operating
expenses of the bank. The ratios calculated above gives a good picture of the bank’s
operations. This ratio is increasing from year 2002 to 2004 and giving a bright picture of
the profits for the bank. With respect to the banking expansions this ratio is showing a
very good picture as we know the expansions required lot of expansions, although the
operating expenses of the bank are increasing as we have seen in the trend ratio but their
proportion of increase is not alarming.

In short, the bank in an attempt to maintain at a good level of liquidity, has a low level of
profitability but there is a continuous push in the profits and there are chances that the
bank will reach at a point of high liquidity and profitability.

LIQUIDITY RATIOS

The liquidity position of a bank is like a reservoir. It may be adequate, although nearly
depleted, just before the start of the rainy season. Or it may be inadequate, although three
quarters full just before the summer drought.
Liquidity can be defined as:

“The bank’s ability not only to meet possible deposit withdrawals but also to provide for
the legitimate needs of the economy as well”

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ADVANCES TO DEPOSITS RATIO

Formula = Advances
Total Deposits

2006 = 69938041 = 83.9%


83318795
2005 = 44778000 = 58.6%
61657000
2004 = 30035484 = 72.62%
51731506

100
80
60
percentage
40
20
0
2004 2005 2006
year

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INTERPRETATION

It demonstrate the degree to which bank has already used up its available resources to
accommodate the credit needs of its customers.
This ratio, a comparison of funds generation and its funds mobilization, indicates the total
loans sanctioned by the bank in relation to total amount of money deposited with the
bank stands at 83.9% compared with the last year figure of 58.6%. This shows that the
bank has greater potential to advance additional loans. Total loan able funds roughly
measured by the deposits are sufficient to enable the bank to make additional loans
without recourse to more or less continuous borrowing. At present, the bank has got a
relatively small amount of advances as compared with its deposits raised. One reason for
fewer advances is the cautious and selective approach on the part of the management
while deciding upon credit proposals.s

DUE FROM BANKS TO TOTAL ASSETS

Formula = Due from banks


Total Assets

2006 = 2324839 = 2.17%


107167541
2005 = 5770842 = 6.75%
85386902
2004 = 3414470 = 4.86%
70313073

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8
7
6
5
percentage 4
3

2
1
0
2004 2005 2006
year

INTERPRETATION

It is an indication of ACBL’s funds management policies. The funds allocation to the


financial institutions has increased to a great extent despite the fact that still it holds a
small proportion relevant to the total resources raised by the bank. It is a positive
indicator in the sense that the financing to the banks are the most secure ways of lending.
Considering the economic conditions of the country, it seems to be the best alternative
available to the bank. In the current year this ratio has been reduced to the little extent.
Although it is declining but the situation might not be alarming.

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DUE FROM BANKS TO DUE TO BANKS

Formula = Due from banks


Due to Banks

2006 = 2324839 = 16.87%


13781555
2005 = 5770842 = 36.29%
15903055
2004 = 3414470 = 29.79%
11460394

40

30

percentage 20

10

0
2004 2005 2006
year

INTERPRETATION
It shows the relationship between what the bank owes from other banks and what is due
to it. An unfavorable condition has been observed in this ratio in the current year
showing the fact that the bank has to seek fewer funds from the financial institutions
owing to the strong liquid financial position. This ratio is going on increasing in last year
but decreasing in current year, which involves a slight risk. In the phase of economic

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instability, the bank’s management should be efficient to access the risk involved in
lending and they should control this ratio.
DUE TO BANKS TO TOTAL DEPOSITS

Formula = Due to banks


Total deposits

2006 = 13781555 = 16.54%


83318795
2005 = 15903055 = 25.79%
61656607
2004 = 11460394 = 22.15%
51732000

30
25
20
percentage 15
10
5
0
2004 2005 2006
year

INTERPRETATION

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This ratio is an indicative of the proportion of the lending from the financial institutions
in relation to the total funds raised by the bank in the form of deposits.
This ratio for ACBL is 16.54% in the year 2004. There has been a significant decline in
this ratio as previously the bank depended slightly more on the borrowings from financial
institutions. It shows that the bank is concentrating on raising funds from depositors and
trying to relies less on the borrowed funds.
• It is a favorable indication in the sense that the bank has large potential to ask for
borrowed funds in the phase of tight liquidity position.
• Further more, it shows the efficiency of the marketing department to have created
so much of deposits that the bank does not need to look at the financial
institutions for help in improving its liquid position.
• There is another favorable aspect of this declining tendency. The rate of interest
offered to the depositors is very low in comparison with the interest to be paid to
the financial institutions for their funds. A decline in this ratio means less mark up
burden on the bank resulting in less financial risk for the bank.

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“SWOT ANALYSIS”

STRENGTHS
 In the bank service quality standards are designed and monitored to ensure a
consistent and convenient customer experience.
 Products and services are as diverse as market segments. Bank has structured and
syndicated financing arrangements, working capital finance, financing of
international trade, consumer credit, small business loans, credit cards and ATM
cards.

 The human resource philosophy at Askari Bank focuses on multi-talent hiring,


professional grooming, requisite training and merit based reward system.
 Staff welfare has always been a priority. New initiatives like hospitalization plan,
home loan insurance have added new dimensions to the staff-care policy and
motivated them to out-perform competitors.
 Bank enjoys a strategic competitive advantage over all domestic players by virtue
of its leadership in technological innovations.
 Different cameras are located at different locations to monitor the working of staff
members and outside customers by branch manager.
 Bank has fully automated transaction-processing systems for back-office support.
 Bank's branch network is connected on-line real-time and customers have access
to off-site as well as on-site ATMs, all over Pakistan.
 Bank also is pioneer in e-commerce venture in Pakistan through a major retail
distributor.
 From a humble beginning with just 10 branches in 1993, today bank enjoys a
network of 36 outlets, spread across the country. A network of self-service ATMs
supports these outlets.

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 ATM card is available with the withdrawal amount about Rs. 25000 a day.
 Bank's total assets now exceed Rs.70.9 billion and bank has over 17 products and
services to match the individual needs of the customers.
 Bank has been honoured with the "The Best Bank in Pakistan" award by the
Global Finance Magazine.
 Bank was the first bank in Pakistan to offer Internet Banking services, b2b e-
commerce solutions for merchants looking to purchase on credit and E-bill
payment system.
 With a network of 187 correspondents spread over 95 countries world-wide, the
bank continued to reinforce its leadership position in trade finance, transacting
business of over Rs.70 billion, during this year.
 Bank is now actively involved in the acquisition of business and signed up over
300 merchants national wide which offer-shopping discount to the Bank's
Privilege Card members.
 Askari Master Card is accepted worldwide and at over 3000 locations in Pakistan.

WEAKNESSES
 Bank is providing credit facilities only to the urban areas not too much attention is
paid to the rural areas.
 As Pakistan is agriculture country but no special schemes for the agri- loans.
 Bank is not giving emphasis on the small-scale businesses. Which are large in
number in Pakistan.
 There is enormous difference between the bank-lending rate and return on
deposits..

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 The procedure and documentation while sanction loan is thorny. Which is a


barrier for advances.
 Bank gives targets to employees for deposits due to this reason they pay more
attention to fulfil these targets to save their jobs. This distracts their attention from
their duties.
 Reasonable care is not taken while opening new accounts one of the reason is
because employees want to introduce more and more depositors.
 No job security is there for the employees, and no union exits to secure them.
 The online credit card facility was not secured that is why recently bank has
closed its online credit card shopping scheme.
 Bank has not adequate number of branches as compared to its competitors like
MCB, UBL, ABL, NBP etc.
 Due to small number of branches at greater distance potential customers may go
to other more feasible options.
 A good number of facilities are only for the army persons, not for the general
public.
 As every person in the bank has his/her own computer in the branch but they are
not well equipped with the knowledge of using the computer efficiently.
 The return on deposits is very low.
 ACBL has only agency arrangements with the foreign banks, no branch exists
outside the Pakistan.
 While their main competitors have their own branch network outside the Pakistan.
 Bank has no grievance-handling department for the internal problems of the
employees.
 Due to lack of computer specialist at branch level it has to take assistance from
the head office.

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 To improve the services and to remove the problems of customer the bank has no
customer complaint department.

 Limited locker facility is there, which do not fulfil the requirements of customer
and charges of lockers are also very high.

OPPORTUNITIES
 Bank has a small branch network so it has got the opportunities to increase the
number of its branches.
 Bank has no foreign branches so it should open its branches outside the country
especially in U.K, U.S.A and in U.A.E.
 Facilities like financing of housing should also be offered to general public
especially in the urban areas, not only army officers.

 In agrarians cities like Rahim Yar Khan there is a potential for giving credit
facilities to farmers.
 At least on software and hardware technician should be appointed at each branch.
 Bank is not yet performing utility services for the utility companies like WAPDA
it can increase its operations also in this direction and so a new source of earning.
 To increase its advances bank should focus small scale industries and choose one
among them and then a special scheme of lending should be introduced for that
particular small scale industry.

TH REATS
 Law and order situation in Pakistan is faulty that is why people are not confident
to invest anywhere.
 The markets rates are now at extremely low levels, with very little chance of their
going up during the rest of the year. The low interest rate means low profits for
the banks.

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 Saving rate in Pakistan is very low i.e.15% as compared to 30% in China and
40% in Malaysia. This is a problem in Pakistan.
 As the banking procedures are complicated that is why general public takes
interest into other options of investments like in shares of companies and in Term
Finance Certificates.
 Responding to the SBP's prudential regulations management takes too much care
while granting loans.
 Now other banks are also imitating the modern banking concept of ACBL and
have started online facility and also have computerized their operations. So there
remain less competitive advantage areas for the bank.
 Now the world is a global village so competitors may rise from anywhere in the
world at anytime.
 To survive in the industry and to earn profits bank should not rely on its present
sources and facilities instead of this it should establish new ways of acquiring,
managing and sharing market information.
 In near future the world is going to be free trade zone so the concept of "survival
of the fittest" will be in action.
 After the 11 September incident and due to terrorist activities in Pakistan the
economy is moving very slow. It means less investment and as a result low loan
demands.
 High rate of taxes on banking companies.

 SBP have a heavy penalties on banks for violating the Prudential Regulation. So it
requires greater care while advancing.
 Increasing ATM trend among the banks also requires attention of the management
to this side.

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Recommendations and Suggestions: -


 To survive in the industry and to earn profits bank should not rely on its present
sources and facilities but also it should establish new ways of acquiring,
managing and sharing market information.

 To increase the computer specialist at branch level .


 To improve the services and to remove the problems of customer by making a
spread customer complaint department.
 To increase locker facility and decrease the charges of lockers.
 Law and order situation in Pakistan is faulty that is why people are not confident
to invest anywhere so we must control it.
 Job description must be clear so that it can define the job related duties and
responsibilities..

 To increase the number of branches.

 Bank should not gives targets to employees for deposits because it distracts their
attention from their duties.

 Keep the up to date information on their web sites.


 Bank should try to separate the working area and customers visit area.
 Instead of preferring the old employees of the other banks management should hire
new and well-educated talent. This will contribute to the long-term benefits of the
bank.
 Credit policy should cover both the rural and as well as urban areas.
 Credit facilities should be enhanced to small-scale businesses.
 The facilities currently availing by the army persons only, can be extended to
general public e.g. house building finance.

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 Employees who perform extraordinary and achieve more than their targets should
be given bonuses.

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 There should be separate marketing department in each branch. Although it will


increase the expenses but benefits will be greater than expenses.
 Returns on the term and fixed deposits should be increased to the level of
competitors.

CONCLUSION
Overall analysis of the bank leads to the conclusion that bank is performing at
satisfactory level. The bank is no doubt the best Modern Bank in Pakistan. And to keep
competitive advantage over its existing and potential competitors bank is trying to
introduce latest techniques on regular basis. The customers of the bank are increasing
every year and that is why not only the deposits of the bank are increasing but also
advances by the bank shows a steady growth during the last 5 years. As a result of
increasing advances and investment in higher yielding Treasury Bills. Equity base of the
bank is also increasing and in year 2000 it showed a positive growth of 20% over the
period of last 5 years. Total assets of the bank are also increasing continuously. Similarly
the earning per share is also increasing. During last year this ratio was highest in last 5
years.
During its short life of operation bank has achieved many awards not only with in
Pakistan but also from outside the Pakistan.
So we easily without any qualm can conclude that;

"Bank is going exactly on the way of development and progression"

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References: -

Web Sites: -

 www.askaribank.com
 www.sbp.org.net.pk
 www.pkeconomist.com
 www.google.com

Books

 Financial Statement Analysis


( Charles H. Gibson)
 HR & Personnel Manegement
( Werther )

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