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SUBMITTED BY
Nadia Saddique
MBA-VII
SUPERVISED BY
Asif Ali Naqvi
Department of UIMS
Arid Agricultural University Rawalpindi
ACKNOWLEDGEMENT
All praises are for almighty Allah for guiding me in hardships and all respects for Holy Prophet
(PBUH) for showing me the light of truth and honesty. I am thankful to Sadia Ureeb under his
guidelines I was able to complete this Internship Report and she always helped us during the
extensive work of the project. I am also thankful to the respondents who gave me their precious
time for the interviews.
Nadia Saddique
Executive Summary
Banking is one of the most sensitive businesses all over the world. Banks play very important
role in the economy of every country all over the world and Pakistan is no exemption. This
report is about one of the leading Agriculture Bank of the Pakistan known as Zarai Taraqiati
Bank Limited. ZTBL is playing its one of the most important role in the development of the
Agriculture Sector of the Pakistan. On 14th December 2002, under the ordinance of the
Agricultural Development of the Pakistan 1961, ZTBL was incorporated as Public Limited
Company. This Bank severs its venerated customers in the form of different customized
products. It is providing both type of severs financial and non-financials mostly to its clients of
the rural areas of the Pakistan, which comprises of 68% of the Pakistans total population. The
Bank has country-wide network in the form of 349 branches and is severing round about half of
the million clients annually and over accumulated account holders with the average loan size of
around Rs.89, 000 serving 65%, 31% & 4% of subsistence, economic and large growers
respectively.
operational activities tried to serve the forming community through the country for their medium
and long-term development credit needs.
Organization
First the head office of the ZTBL was located in Karachi and was shifted to Islamabad later
during 1973. Presently there are 9 division and 33 departments in the head office. It has 49
regional offices and 343 branch offices apart from 8 audit directorates in the field, two staff
colleges at Islamabad and Karachi. To cater for loan requirement of the forming community at
their door steps over 1408 Mobile Credit Officers have been deployed in the field, each covering
25 villages in an average.
Board of Directors:
Syed Qamar-Uz-Zaman Shah
Chairman Board
Mr. Muhammad Zaka Ashraf
President/ CEO
Mr. Yawar Zia
Director
Mr. Qamar Zaman Chaudhry
Vision Statement
Emerge as a Leader in provision of agriculture credit by promoting and sustaining productivity
through a market/agribusiness focus. To bridge yield gaps of all agriculture commodities and to
ensure that the welfare of farming population is radically improved and the environment is
protected from harmful human interventions.
Mission Statement
To become a leader in guiding entrepreneurs & farmers implement an agribusiness and
marketing led approach that brings strong commercial orientation in production catering
domestic and international markets. As a specialized agriculture development bank, deliver
pragmatic technology and optimal solutions to farm communities and rural areas across all agroecological zones with sensitivity to economic growth and equity. Develop close partnership and
linkages with all its clients to dramatically transform, restructure and revamp the agriculture
scene and enhance its outreach by investing wisely and judiciously in new approaches, ideas and
means of mass communication.
Corporate Objectives
The prime objective of ZTBL incorporated under the companies ordinance 1984 is to provide
Srural and agriculture sector and mitigates poverty. The credit facilities in rural areas shall be
provided in cash or kind at a market based a mark-up rate that ensures operational and financial
sustainability of the bank.
The ZTBL is to Develop and operate as a financially and operationally sustainable R.F.I of the
country. To assist rural community, particularly the small farmers, in raising their productivity
and income levels through timely delivery of credit, advisory and ancillary services. Build
ZTBL's image as a proactive, client friendly, financially & operationally sustainable with
indigenous product deployment.
Establish and provide backward and forward linkages to strengthen agri. value added commodity
chains. Engage in public - private and wholesale - retail partnership to deepen outreach and
reduce operating cost. It functions as a rural commercial bank to mobilize rural capital formation
and to commercialize the agri. sector by delivering the true value of credit to the client. Provide a
wide range of risk insurance products to its clients. Open up it venues of operation to Domestic
& International Banking Industry to avail comparative advantages.
Nature of Business
Zarai Tarqiati Bank is to provide credit facilities to the farmers, including hiring and renting of
any thing which it may advance way of loan and the provision for ware hosing facilities of such
terms and subject to such conditions as may be prescribed by its rule to agriculturists for the
purpose of agriculture and to persons engaged in cottage industries in rural areas and provide
sustainable rural financing services, particularly to small farmers.
Types of loans
Banks provides loans through various products/schemes for short, medium and long term
depending on the cash flow of the borrowers.
The bank gives special focus and importance to fulfill the genuine and real needs of the small
farmers in terms of production loans (seed, fertilizers, pesticides, POL, labor charges etc) as well
as for working capital purpose. These loans are provided to the needy farmers in cash and kind
under various schemes like Sada Bahar, Awami Zarai, General Credit and One Window
Operations Zarakhazi Schemes.
The bank also provides Development loans to farming community like tractors, allied agriequipments/implements, besides loans for poultry and livestock, fisheries, orchards, plantation,
and irrigation schemes etc.
Security
The bank provides loans under Agri-Pass Book System as well as other collateral acceptable to
the bank. Simplification of loan documents is in order to facilitate the farmers, the Bank has
simplified the loan documentation to be applicable for three years of the loan period. The main
loan documents which are presently being used in the branches of the bank are as under loan
application
form
IB-7
Revised
loan
Agreement-cum-Guarantee
Charge
Creation
The amount of allowances and advances are transferred through a transfer voucher. Different
types of the vouchers are used in ZTBL such as debit voucher, credit voucher and transfer
voucher. The credit and debit voucher are in the branches of the ZTBL, while transfer voucher is
used in the ZTBL Head Office.
Day 2: 20-7-2010, Munir hussain OG 3
ZTBL consists of staff training school, which facilitates the refresher courses in training program
to the existing employees of the ZTBL. Training school preplan the training schedule for the
upcoming year, which is approved by the higher authorities and send letter to different training
zonal offices for training purpose.
Employees coming form the different branches are entertained through lecture on banking sector
and are given techniques to improve skills required in this current world of competitive
environment. ZTBL hire the trainer of the program both internally as well as internally.
Lecture Fee
These trainers charge the lecture fee, which is disbursed by the HO Account Department. The
entry is passed in the GL Head (General Leger Head) as debit the speaker fee and credit the
ZTBL. Above transaction is done, while using the excel format as mentioned bellow:
S. No. PP No. Account No Speaker Amount
Amount of the lecture is given to the speakers with respect to the grade vice. Minimum amount
is Rs400 for grade 16 to 18, and maximum amount is Rs600 for 19 grade officer.
It is required for the external speaker to open account into the ZTBL for error free transaction.
This transaction usually takes two days to take place.
Leave In Cashment
When leave of the employee is not approved by the bank then that leave is changed into cash.
The criteria for this mentioned by the SBP, which stats that it is only possible when there is 180
days balance of the employee, below this it would not work. This transaction takes place as
follow
Employee Credit
Bank credit
Arrear of Salaries
Arrears are the result of increment, promotion of the employees or other differences of the actual
salary and paid salary. These arrears are handled by the payroll unit
Functions
Budget and fund management department of ZTBL mainly develops the policies, procedures and
standards for the budget planning and analysis. It coordinate and cooperate with administrative
and government in order to resolve budget issues. It automates budget process and preserves the
data and obtains approval from Board of Directors for annual budget. It gather the data of
various departments and analysis that for their performance. Further it consists of four units as
described bellow.
Budget Planning Unit
Budget Analysis Unit
Treasury Unit
Fund Reconciliation Unit
Treasury Unit
Treasury Unit is engaged in the arrangement of the fund for the different purposes to the
branches and maintains their records. It manages Banks accounts with SBP and commercial
banks such as MCB, HBL, and UBL and so on. It checks out the appropriate balances in the
branches if there are excess balances then its calls for and if there is less balances then it transfer
the funds and also declare the deposit rates for the depositors. It performs the role of coordinator
while performing the role of coordination with SBP, commercial, Internal and External auditors
on the matters of treasury. It deals the matters of investment of surplus funds provided by the
branches.
Functions
It reformulates and redesigns system of data capturing, its consolidation and subsequent
reporting keeping in mind regulatory requirements. It ensures the implementation of updated
reporting requirements, which are update time by time. It analysis the financial results and repots
it to concerned authority and arrange compliance with external and internal auditors. Further
more it performs the job suggested by the regulatory authority.
Reporting process
There are mainly five steps in reporting process, which are defined bellow:
Data Capturing
This is the step in which data is gathered from various sources such as field offices, deportments
such as CAD and ISD and from financial reports such as Accounts, D/R Series etc.
Consolidation
In this step the gathered data is consolidated in to single hole, because this data is collected from
various sources.
Data verification
In this step collected data is verified weather the collected data is valid and true or not, because
the collected data is not all ways reliable. It needs very careful examination due to possible errors
and mistakes, which are later rectified for report generation purpose.
Report generation
On the basis of analyzed and verified data is injected in the form of reports which is provided by
SBP.
Submission
In this last step the complete formed reports are submitted to the regulatory authorities such as
SBP. The main sources of submission are courier and online.
Personal Experience
My internship was started on 6th of July at Staff Collage of the ZTBL Islamabad. Firstly we met
with Sir Mahmood Karim Qureshi Sahib, he is the Senior Vice President of BD & MD
department. We were the under supervision of SVP BD & MD department. He warmly
welcomed in the ZTBL Head Office and gave us the Brief introduction of the ZTBL and purpose
of the organization. After meeting with SVP of BD & MD department I moved to the ZTBL
Islamabad Branch, to the operation branch as Schedule given in the internship letter issued by
ZTBL Head Office. I spend my first two weeks of Internship at ZTBL Islamabad Branch at
operational Branch. As I wanted to the get information and knowledge about work which is
going on grass root level, where the basic work is performing.
During internship period (6 weeks) in ZTBL (Training Department), I learned a lot of knowledge
from the experts and highly qualified persons. It was necessary to fulfill the practical
requirements of the degree of master of business administration.
Team Members
Mr. Haider Ali Jan Arbab
(Vice President)
(Grade - 1)
(Assistant Vice President)
(Assistant Vice President)
Team Members
Mr. A.D Abid
(Vice President)
(Grade - 1)
(Grade - 1)
(Grade - 1)
(Junior Manager)
BUDGET DEPARTMENT
Team Members
Mr. A.D Abid
(Vice President)
(Grade - 2)
(Grade - 2)
(Grade -3)
Mr. Amjad
(Senior Assistant)
Team Members
Mr. Rana Mujahid Ali
(Vice President)
(Vice President)
(Grade - 1)
(Grade - 1)
Team Members
Mr. Khalid Mehmood
(Vice President)
(Grade - 1)
BUSINESS OPERATIONS
a) SWOT ANALYSIS
Strengths
It provides the loan at cheaper interest rate as compare to the other Banks.
In Pakistan, majority of the farmers is poor thats why farmers are required to get loan
from the bank so ZTBL has a very vast market to operate in.
ZTBL gets most of the funds from different developmental institutions including
Government, ADP, and SBP etc. so in case of bad debts the bank wont have to suffer a
lot.
It is affiliated with different research institutions and it has all sort of agricultural
machines and technology so it can easily achieve its aim which is the development of
agriculture in Pakistan.
ZTBL has a staff college for the training of its employees in Islamabad, through proper
training more efficient team of employees can be made which shall be beneficial in tough
banking competition.
One of the core competency of the bank is its MCOs because ZTBL is the only bank
which has a team of highly experienced and properly trained MCOs who can easily
disburse loan and can achieve recovery target quickly hence risk of bad debts is reduced.
Through different computer softwares data is kept and maintained. Some of these
softwares are CFOCS, DMS, MIS, and HRIS etc.
ZTBL has no competitors in the market, some banks started lending facility for agri
business but due to lack of efficient team of MCOs those banks had to suffer heavy loss.
The farmers have a trust on ZTBL because of its operations and the behavior of mobile
credit officers.
Audit zone performing its job in a better way to rectify the errors and fraud cases.
Weaknesses
Sometimes the lending is done on political basis. Due to the influence of political leaders
the recovery system is affected which leads to bad debts.
The bank has no treasury department due to which funds are not being properly utilized
and the bank is missing a great opportunity to earn profit.
There is exuberance of old, non technical and uneducated employees in ZTBL. These
employees are promoted to senior level management on the basis of seniority due to
which performance is affected.
Some cases of nepotism are often seen in the bank when loans are given by the branch
managers to their relatives and fake data is maintained.
Most of the employees even seniors managers are computer illiterate. They can even
check their emails properly. So IT implementation seems to be failed in the bank due to
rigid attitude of employees because they are not adaptable to change.
Opportunities
By utilizing the efficient team of MCOs the bank can have heavy amount of deposits.
The bank can set up its treasury department in Karachi for proper utilization of the funds
and for maximum profit earning.
The bank can reduce its expenses by laying-off non performing employees.
The bank has a good reputation in the market and its employees are highly trained for
agri business development planning so it can also operate in Middle East because the
Arabs are now focusing on agriculture.
ZTBL can become a leading commercial bank by slightly changing its culture. It is
already equipped with highly experienced bank officers.
Threats
As the economy situation is very bad and the country is facing liquidity crunch thats why
ZTBL may have to face difficulty in getting funds.
In order to overcome the liquidity problem the bank has started operating in commercial
banking market but due to inefficient commercial banking practices ZTBL may have to
face a severe situation.
The climate of the earth is rapidly changing due to which heavy rains and floods are often
anticipated. This is an alarming situation for ZTBL to operate in the market being an agri
lender.
The bank has a very small profit margin because it gets funds from SBP at 6% and
provides funds to the farmers at 8% only.
b) SWOT ANALYSIS
Organizational Structures
Grades of Bank
SEVP
EVP
SVP
VP
AVP
OG-1
OG -2
OG -3
Assistants
Nonclerical
staff
Clerical
Staff
Ratio Analysis
Current Ratio
Formula: Total current assets/Total current liabilities
(Values are in %)
Ratio
2006
2007
2008
Current Ratio
0.86
0.99
0.96
Current ratio has improved last year as the traditional value of the current ratio is 2. In 2008 the
current ratio of ZTBL was 0.99 last year in 2007 it decreased to 0.96 but the difference is very
low as compare to last year. The analysis of current assets showed that almost 50% of current
assets comprise cash. This is a healthy sign for the ZTBL.
2006
2007
2008
2009
0.34
0.29
0.20
0.18
The debt to equity ratio of the ZTBL is decreasing since last years as in 2006 D/E ratio is was
0.34 and in 2009 it is 0.18. The reason is that the company is mainly financed by equity, which is
evident from low Debt/Equity ratio. The debt is being paid over the period of time. Hence the
company apparently not properly utilizes this source of finance.
2006
2007
2008
2009
Total
Debt to Total0.17
0.17
0.13
0.10
Asset Ratio
The trend in above given table shows that the Total Debt to Total Asset Ratio decreases
continuously, as in 2006 it was 0.17 and in 2009 it is 0.10. The reason is that the company is
equity based and low financial leverage, accordingly there is very low Debt/Total assets ratio.
This trend is continuing over the past five years.
Ratio
Interest
2006
2007
2008
2009
Coverage10.16
13.69
36.7
65.42
Ratio
The interest coverage ratio of ZTBL increases as we move from 2006 to 2009. The company has
very high interest coverage ratio. This is mainly due to low debts and increase in the profits over
the years. It is evident from the previous five years data.
2006
2007
2008
2009
0.51
0.51
0.52
The Total Assets Turnover Ratio of ZTBL in 2007 is 0.51 and in 2009 is 0.52. There is slit
difference it suggests that the assets turns over ratio over the period remain static especially
during last two years.
Ratio
2006
2007
2008
2009
0.29
0.29
0.34
0.39
The Net Profit Margin of the ZTBL increases as we move from 2006 to 2009 which suggests that
there is decrease in expenses and expansions.
ROA
Formula: Net Income/Total Asset
Ratio
2006
2007
2008
2009
ROA
0.13
0.15
0.18
0.20
The ROA of ZTBL in 2006 is 0.13 and in 2009 is 0.20, which increases as we move from 2006
to 2009. The return on Assets ratio has increased over the period of time, which indicates that
assets are effectively managed and utilized. We saw a trend of 2 to 4 percent increase in each
year.
ROE
Formula: Net Income/Equity
Ratio
2006
2007
2008
2009
ROE
0.26
0.26
0.28
0.34
ROE of ZTBL in 2006 is 0.26 and in 2009 it is 0.34. It is due to increase in net profit. We have
observed an increase of 5 to 8 percent in return on equity in previous year from 2006 to 2009.
Ratio
2006
2007
2008
2009
2.61
3.56
4.53
5.72
The Earning per Share of ZTBL increased in 2006, which is 2.61 and in 2009 it is 5.72. As a
result of proper utilization of resources and decrease in costs, the net profit of the company has
been increased over the years. The second reason is that the company enhances its infrastructure
at a low cost. All these arrangements results in increase of earning per share.
Payout Ratio:
Formula: Dividend per share/Earning per share
Ratio
2006
2007
2008
2009
Payout Ratio
0.86
0.67
0.77
0.87
The Pay out Ratio of ZTBL in 2006 is 0.86 and in 2009 it is 0.87. The dividend payout ratio has
increased tremendously. This shows that less percentage of funds is re-invested during the year.
The company is being operated in highly technological area should make comprehensive
planning for sustainability in post deregulation era of interest sector in Pakistan. If we observe
the recent year trend, all the described items on top have a positive sign showing future growth
and compact current position. If we look at profit after tax we see that it improves significantly
over the years due to reduction in cost and increase in assets. This is a good sign for the
organization to expand the business. The organization also expanded its Assets significantly
showing the worth of the organization. Interest coverage ratio of the organization is increased
due to reduction in debt to equity ratio. Debt to equity ratio depict that company is more equity
financed and financial charges are reduced. However in my opinion company should utilize
optimal financial structure and enhance debt side of financing to reduce more fixed cost of the
company profit.
Liquidity ratios:
Liquidity reflects the ability of company to meet its short term obligations using assets that are
most readily converted into the cash. Assets that may be converted into cash in a short period of
time are referred as liquid assets that are listed in financial assets as current assets. Current assets
are often referred as a working capital because these assets represent resources needed for the
day to day operations of the companys long term, capital investments. Current assets are used to
satisfy short term obligations. The amount by which current assets exceed current liabilities is
referred as the net working capital.
CONSLUSION:
During my internship here in ZTBL, I found that ZTBL has high level of professionalism and
challenging environment and its culture is friendly. ZTBL seems Top Agriculture Financing in
the future as indicated by the financial indicators. It keeps energy and potential to serve the
deserving clients in all over the world. The bank has set itself a vision to be a world-class bank.
This can only be achieved with dedication and a passion to excel in every activity. I really admire
ZTBLs policy makers for designing investor friendly and customer oriented products. The bank
is really working well and contributing a valuable part in the economy of Pakistan through tax,
giving loan to government, giving loans to the businesses for their survival and expansion,
generating a well skilled human resource and employment etc. During this internship, I really
learned Professionalism, leadership skills, communication skills, problem solving skills, situation
analysis skills and how to become a good mentor etc.
With an integrated network of over 27 zonal offices and 342 branches in Pakistan