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M14BBA038
Abdul Basit
M14BBA015
Muhammad Waqar
M14BBA032
EXECUTIVE SUMMARY
THE PURPOSE OF STUDY WAS TO KNOW ABOUT SUMMIT BANK LIMITED AND TO
ANALYZE THE FINANCIAL STATEMENT.
Summit Bank
Page 1
In this report the Summit Banks history, mission, vision and services as well as management is
mentioned. After this the analysis of financial statements is conducted which shows where the
Banks is standing.
Banking sector of Pakistan has been transformed within a short period of 5 years from a
sluggish and Government dominated sectors to a much more agile, competitive and profitable
industry. Speed and sequencing of banking sector transformation and its role in promoting
economic growth is now a leading story of a sector success. Within Pakistan SBP offers a story
of what effective leadership of regulator and change management and corporate governance can
achieve and offer. Outside Pakistan it is serving to offer rich lessons in what difference
governance of regulator can make and how bank restructuring and privatization can change the
landscape of the industry.
Summit Bank Limited started operations in August 2006 and became a profitable entity within
one year. AHBL had started off with a high capital base and is positioned to take advantage of
the business synergies and complementary afforded to it by its sponsoring group. The bank has a
quality management team, a first class technology platform, and commitment to global practices.
Its business strategy is based on the block-building principle wherein profitable niches are
tapped progressively.
Summit Bank made heavy investments towards enhancing its capabilities in the area of
automation and technology. It is well positioned to meet client needs; with improved competitive
advantage.
Trade finance department working these departments was a great learning exposure for us. When
we conduct financial and trend analysis of Summit Bank we found that its financial position is
improving year by year. Comparative study with other banks shows that it is somewhat better
then other banks. We concluded that Summit Bank is performing very well.
Contents
Introduction of report
04
07
09
Summit Bank
Page 2
Board of Directors
12
Field of activities
20
Financial analysis
51
55
58
Recommendation
59
Conclusion
61
Reference
62
INTRODUCTION
The report is about Summit Bank its products, field of activities and its financial analysis. In the
report, SWOT analysis is conducted so that we may able to give an authenticated approach to
problems and Dilemmas faced by the Branch. When we conduct comparative analysis of
operations, products offered and funds used, we found it far better as compared to other banks
working in Lahore.
Management style is somewhat participative and its culture is friendly and cooperative.
We learnt a lot of different fields, and organizational behavior in real world phenomenon which
gave us practical knowledge of what we have studied theoretical.
Summit Bank
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WHAT IS A BANK?
A bank is a financial institution that offers the widest range of financial services. These financial
institutions play a vital role throughout the worlds economic system. Caircross defines bank as:
A financial intermediary and a dealer to create credit bank or banker is a dealer in credit or more
properly a dealer in money. It is an intermediate party between the borrower and the lender. It
borrows from one party and lends to another.
The system of common settlement of receipts and payments have been derived from the school
of thought of the ancient Romans temple banking, to develop trade and trading relations with
each other nations. Banks are of different types. The term Commercial Banking is a throwback
of commercial loan theory. The theory holds that the bank assets (except for cash) should consist
exclusively of commercial loans that are short-term loan to businesses to financing the
production and transportation of goods.
Among the services provided by the commercial banks, two services are very important;
Accepting deposit
Lending loans
Summit Bank
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Other functions include safekeeping of valuables, financial advising, cash management, offering
trust service, selling insurance policies, retirement plans and offering security brokerage services,
etc.
The banking structure of Pakistan consists of State Bank of Pakistan, Commercial Banks,
Exchange Banks, Cooperative Banks, Saving Banks and specialized Credit Institution.
Banking means the accepting, for the purpose of lending or investment, of deposits of money
from public, repayable on demand or otherwise, and withdrawal by cheques, drafts, order or
otherwise.
Role as a Guarantor
Standing behind their customs to pay off customer debts when those customers are unable to pay
(such as by issuing letters of credit to support international trade and to back customer issues of
commercial paper), which makes it both easier and cheaper for a banks customers to obtain
credit elsewhere in the financial marketplace.
Summit Bank
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Summit Bank
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Real Time Online branches across the country. In line with the managements vision of making
this bank a front runner amongst its peer banks, this merger has brought synergies and access to a
wider range of markets and customers.
By acquiring one of the best IT platforms of the world, offering web and SMS based banking to
the customers besides providing superior MIS to the Management; the Bank is committed to be
recognized as a preferred supplier of financial services to the markets it serves. To achieve these
goals, the Bank will strengthen itself in the financial service industry, leverage optimal mix of
technology to attain operating cost efficiencies, achieve product and service differentiation, while
at the same time growing its footprint through further expansion of its branch network across the
country, because we are committed to you.
Summit Bank
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Summit Bank
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Summit Bank
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in the whole network of the bank. The management at Summit Bank has been divided into 3
major parts. I-e, Board of Directors, the Top management, and the group of middle managers,
supervisors and the employees.
Summit Bank
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Husain Lawai
President and CEO
Mohammad Zahir Esmail
Chief Operating Officer
Syed Mohammad Anwar Lutfullah
Group Head Operations, Information Technology, Consumer, Branchless Banking & Corporate
Communications
Ahsan Raza Durrani
Group Head Corporate and Investment Banking, Financial Institution and Capital Market
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Gulrays Khan
Group Head Compliance & Co-ordination and Control
Syed Asif Ali
Group Head Enterprise Risk Management
Mr. Akhtar Ali Khan
Group Head SAM & Legal
Mr. Gulrez Yazdani
Group Head Wealth Management Division
Muhammad Amin Bhoori
Chief Financial Officer & Company Secretary
Pervez Mobin
Head of Human Resource Management
Faisal Shaikha
Head of Treasury
Aziz Morris
Head of Internal Audit
Aziz Abbas
Head of Business Promotion and Development
Mohammad Mursleen Rao
Head of Corporate-North
Organizational Structure
Board of
Directors
Chief
Executive
Officer
Executive
Incharge
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Credit card
Credit
Audit
Internation
al Banking
Marketing
Finance
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same time enhance the shareholders value. Despite the high growth level, they continued to
ensure the high customer satisfaction and service quality levels are maintained and they are
appreciative of the trust and confidence that their customers place in them. Management firmly
believe that the success of the Bank lies in expanding there way of financial services and
seamlessly delivering innovative solutions to meet customers requirements across all the
platforms. Accordingly, they work closely with their customers in order to understand their
business needs and to address them with high quality tailored financial products so that they are
viewed as a strategic partner in the business growth. Management is pleased and encouraged to
receive a very favorable response to their endeavors from their respective customers. In all,
management believes that the economic outlook for the coming year is bright with the right mix
of products and services and their committed workforce; they can deliver yet another superior
performance next year. Bank will continue to build infrastructure, leverage the cutting edge
technology in plan introduce products and services, manage risk efficiently and effectively and
generate alternative revenue streams. Management has ambitious plans for the coming year and
they are all ready to make it happen to the benefit of their stake holders Banks focus and energy
for the coming year evolve around customer base and look to expand network of branches
throughout the country.
Summit Bank
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CORPORATE BANKING
CONSUMER BANKING
CONSUMER FINANCE
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Summit Bank is committed to the personal welfare and professional development of all its team
members. It realizes that proper training of human resource is essential, not only for a more
productive and satisfied work force but also for a homogeneous corporate culture.
The bank continues to follow its strategy of hiring batches of young and energetic management
trainees who are sent to a Training and Development Center for training in all areas of banking.
The Training and Development Center is a state of the art facility with an impressive faculty. At
the same time short courses are continually conducted for other team members to only enhance
their skill levels but also increase their performance potential.
Lately, Surroor investments Ltd (SIL) have taken over Summit Bank and the board of directors
of the bank has been changed.SIL has 60 percent shares of Summit bank limited.
In addition; SIL has also signed share purchase agreements with the principal sponsors of My
Bank Ltd. And Atlas Bank Ltd, respectively, and made down payment in each case. Acquisition
of My Bank has been completed on August,18 2010 and after merging with Atlas Bank it will
have a branches over 160 and total assets of about Rs.100 billion. The name of the new bank is
Summit Bank Limited.
Summit Bank
Subordinated
Debt
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Outlook
Instrument
JCR-VIS
A-
A-2
A- (SO)
FIELD OF ACTIVITIES
ACCOUNT OPENING DEPARTMENT
The department that is responsible for opening and closing an account assumes immense
significance and holds a central place in the basic banking operations.
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Daily Product
Basic banking
Other________
Customer relation
Individual
Joint
Pakistani Rupee
U.S. dollar
Pound sterling
Euro
JPY
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In case of a business concern there are two more things that are to be provided by the
business.
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Recording in Computer:
After opening of account, all information regarding the account is entered into the computer.
Currently, a program named hplus is being used for this purpose. Record of all the transactions
regarding the account of a customer is kept updated in the computer.
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Summit Bank
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Issuance Requisition
This requisition is used by the staff to order for any thing (e.g. stationary) they need. They write
the type and quantity of the stationary they need, get it signed by the Manager Operations, give it
to the person in-charge of issuance of stationary who on receipt of this requisition (duly signed)
issues the stationary.
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giving the mandate shall be fully authorized to embark upon all possible transactions with regard
to this account unless and until otherwise specified.
Receipts of cash
Encashment of cheques
Cash receipt section
The depositor uses depositor slip/vouchers for depositing the amount. Client fills these vouchers,
fulfilling all requirements.
Encashment of Cheques
Cheques encashment is made in four steps
Receiving of cheques
Verification of signatures
Computer terminal process
Payment of cash
CLEARING DEPARTMENT
One of the basic economic functions of banks is to receive deposits and to honor cheques drawn
upon them. So, cheques are a most commonly used instrument for making payments by account
holders.
Now the question arises that how these cheques & other negotiable instruments drawn on one
bank are deposited in other banks and money is transferred from one bank to another. Clearing
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House has provided this facility. Clearing house facilitates different banks to get their cheques
drawn upon other banks to be cleared
.Cheques lodged in clearing constitute two types of clearing
Outward Clearing
Inward Clearing
Outward Clearing
When cheques and other negotiable instruments drawn upon other banks like MCB,ABN-AMRO
of the same city (as Lahore) are presented in Summit Bank Limited to deposit them in the
respective payees accounts, these instruments are lodged in outward clearing of summit Bank
limited.
When the cheques are presented in Summit Bank to be deposited in their respective payees
accounts, different stamps are put on cheques before their lodgment in outward clearing.
Clearing Stamp
After the cheques have been crossed specially, clearing stamp is put on the cheques and other
instruments, with the following days date, as these cheques would have to be presented in their
concerned drawee banks on the subsequent day.
Endorsement Stamp
It means anything written or printed upon the back of an instrument. So, at the end, the cheques
are endorsed in full (endorsed specially) by putting the stamp with words describing Payees
account Credited in Summit Bank Limited.
.After putting these three stamps on cheques & other negotiable instruments, they are sent to
NIFT (National Institutional Facilitation Authority) with Add List. NIFT after segregating the
cheques of different banks delivers them to their concerned banks, which constitute the inward
clearing for those (drawee) banks.
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Inward Clearing
Cheques and other negotiable instruments (PO, DD etc.) drawn on Summit Bank Limited,
Lahore, sent by other banks, constitutes the inward clearing of Summit Bank. After having all the
stamps and dates of cheques confirmed, the concerned drawers accounts are debited (in Summit
Bank Limited) and main branchs account is credited by the total amount.
Collection
When cheques and other negotiable instruments drawn upon other banks outside the city
(Lahore) are presented in Summit Bank Limited, Branch, Lahore to deposit in payees accounts,
then instead of clearing, these instruments are lodged in collection and constitute outward bills
for collection. Cheques of cities, where Summit Bank Limited branch exists (e.g. Islamabad,
Faisalabad etc.) are sent to that branch where these cheques are lodged in is outward clearing.
Otherwise, they are directly sent to the drawee bank. Postage & other charges are deducted on
account of payee according to Schedule of Charges.
Accounts
It is probably the only department in the entire bank where there is almost no direct customer
dealing. Two types of accounts are there which are as follows:
Inter-Branch Accounts
Like other banks, Summit Bank Limited has a network of branches all over the country. These
branches in different cities are interlinked with each other through their correspondent accounts
in other branches. So, all payments from one branch to another branch (in the same city or
another) are made by debiting and crediting these inter-branch accounts.
Inter-Bank Accounts
Like inter-branch accounts of a bank, different banks have correspondent accounts with each
other. Main branches of banks in a city maintain these inter-bank accounts. So, money is
transferred from one branch of a bank to another banks branch through these inter-bank and
inter-branch accounts.
The accounts department deals with various routine activities for the bank. The main activities
performed by it are
Budgeting
Reporting
Maintenance & depreciation of fixed assets
Miscellaneous functions
Budgeting
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Accounts department of bank, for a year makes budget of branch. Fiscal year of bank starts from
January 01 and ends on December 31. The accounts department starts preparing budget from
October for the next year.
Procedure
The budget is based on forecasting through past performance First of all, the bank reviews what
are its sources of funds and where it can utilize these funds?
The main sources of the bank are deposits, borrowing from other banks, borrowing from SBP,
banks paid-up capital, its reserve fund, profit generated by the bank.
The budget is submitted to the head office for recommendation and modification. Monthly
budget meeting is held by branch managers to analyze the monthly performance. Budget and
actual performances are employed and variance is computed for analysis.
The management will then drive the reasons for the variance and take remedial measures to
achieve the targets.
Reporting
The accounts department, in the form of reports, clubs the details of various departments
together. Each and every minute detail is provided in weekly, monthly and annual reports. The
reports are submitted to head office, SBP and to the government.
The accounts department prepares many reports, of which the most common are
Statement of Affairs
Income & Expenditure
Foreign Currency Report
Outstand Receipt Report
Miscellaneous Functions
The accounts department also performs some other miscellaneous functions like
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Reconciliation Statements
Closing Entries
Foreign Exchange Forward Transaction
Reconciliation statements
The bank prepares reconciliation statement with head office and SBP
Head Office
Reconciliation with head office is done in reconciliation department. The branches send their
reports to the head office. They check the posting of all the entries if outstanding, which has not
been posted by branch or head office. The reconciliation is carried out in the head office and
accounts department handles quarries.
Closing Entries
Accounts department also passes the closing entries on monthly, 6 monthly and yearly bases to
calculate the profit and analyze the overall performance for a certain period.
Statements
The predominant functions performed by the accounts department can be categorized into two
broad categories.
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the day end all the vouchers passed by various officers working in different departments are
given to Accounts Department. Furthermore the I.T. department also prepares a report which
constitutes of the computer print outs of all the transactions / entries which have been fed into the
computer system of the branch that day.
Report Generation
The exact number of reports generated by the accounts department on a daily, weekly, monthly,
bi-yearly and yearly basis is somewhere in the bracket of 500. It is neither necessary nor possible
to get acquainted by all of these reports in a short period of time. Some of the common reports
are
From these statements, five reports carry extreme importance. The five reports are
Statement of affairs
Daily exchange position report
Fixed assets statement
Month review of performance.
The Local Remittances Department
Besides cheques (the primary notes of exchange in a bank), banks also handle Promissory Note,
Bills of Exchange, Bank Drafts, Pay Orders, Traveler Cheques, Pay Slips, Call Deposit Receipts;
as negotiable instruments.
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Making of a PO:
When a person requires a Pay Order (made by Summit Bank Limited, Lahore), he is asked to
complete the prescribed application form in which the amount of pay order is to be stated.
Certain amount of commission and advance tax is charged on issuance of pay order. After having
the total amount deposited in the bank (in cash or through cheques, incase of account holder),
pay order is issued in favor of the payee.
Like cheques, when pay orders issued by Bank, are presented in other banks to get them
deposited in the payees accounts, they constitute the outward clearing for those banks and
inward clearing for Summit Bank Limited, Branch Lahore.
Making of a DD:
Suppose a customer requests his Summit Bank Limited, Multan Road Branch Lahore to provide
him a DD made on his account for a particular city like Islamabad.
Then, after having the total amount to be deposited with application form, demand drafts issued
in favor of the specified person in Islamabad (supposed) and is drawn on Summit Bank Limited,
Islamabad Branch. So, when this demand draft is presented by payee in any bank, it constitutes
the inward clearing of Summit Bank Limited, Islamabad Branch.
Cancellation of PO & DD
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After issuance of Pay Order, Demand Draft by Summit Bank Limited, Branch, Lahore, if any
one of these has to be cancelled by the customer, it is returned in the bank. Then, after deducting
the cancellation charges of Rs.100, the remaining (net) amount is paid to the customer through
Cash Payment Voucher.
TRADE FINANCE
Trade deals with entry / departure of goods into / from one country to another country.
International trade basically is a consequence of an agreement between buyer and a seller
separated by geographical boundaries.
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To ensure secured transfer of goods to the right buyer and a right seller, the services of the
Financial Institutions are of great importance. In this relation the banks have proved to be not
only dealers but also the leaders.
Trade finance
The term Trade Finance encompasses all banking transactions that are embarked upon in relation
to exports and imports. Now-a-days banks have become a compulsory assistant to almost all the
International Trade transactions. When trade is taking place between the representatives of two
countries (exporter and importer), the exporter involves his bank (the Advising Bank) in the
transaction, as he wants to feel secure regarding timely payment of his remuneration in the
required currency. On the other hand the importer involves his bank (the Issuing Bank), in order
to get a sense of security regarding timely supply of the required product, in the required manner.
The Trade Finance Department has two predominant dimensions namely Exports and Imports.
Thus there are two processes that take place in international trade i.e. the buying process (the
importer purchases the products from the exporter) and the selling process (the exporter sells
the goods to the importer).
Imports Department
Exports Department
The exporter and the importer might decide to carry on trade without the
IMPORTS DEPARTMENT
In the common words, import means bringing commodities into a country from outside by sea or
air. Stated differently, whenever there is a need of any commodity in a country and if that
commodity is not available the need for import arises.
Requirements to be fulfilled
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When a person wants to import, he must have to register his name and his companys name. The
registration was previously granted by chief controller imports and exports but now the Export
Promotion Bureau of Pakistan performs this task. For Import Registration, the following basic
documents are required:
The fulfillment of these requirements will give the registration to the importer and after that he
can open an L/C with any bank and can import anything.
Various Shapes OF the Letter Of Credit (L / C) There are various types of L/Cs used in trade.
The main kinds are as follows:
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It is the L/C that can be amended or cancelled only with the agreement of issuing bank,
confirming bank and seller. This L/C gives more security to exporter as compared to revocable
L/C. In Pakistan, all banks including Bank Alfalah Limited-IBD are permitted to open
irrevocable L/Cs only.
Sight L/C
If the beneficiary of a credit is to obtain the payment immediately on presentation of stipulated
documents, it is sight credit. In this form of credit, the exporter draws a sight or demand draft
payable at the counters of the advising bank or the bank specified in the letter of credit. The draft
is paid on presentation if all the other terms of the credit have been complied with.
In this form of letter of credit the beneficiary or exporter gets the credit from advising bank
immediately after completing all the requirements. Banks usually deal in this type of letter of
credit more because there is lesser risk for both the exporter and the bank. Bank gets payment
from importer before giving him the possession of documents. In other words, we can say in this
type of L/C when importer sights the document he makes the payment to the issuing bank.
Usance L/C
When a credit is to be paid upon the maturity of a bill of exchange drawn under the terms of the
credit, it is called an Acceptance Credit or Usance Credit or Terms credit. In this type of letter of
credit the payment will be made on maturity of a bill of exchange. This maturity or tenor of this
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type of letter of credit varies e.g. 30, 60, 90, 120 days. Exporter does not get payment on the
receipt of documents rather he gets the acceptance on bill exchange by importer that payment
will be made on maturity.
Common Shipping terms used while opening Letter Of Credit (L/C)
CIF & C I
When goods are shipped on CIF and C I (Commission and Interest) basis, it means the price
quoted includes cost, freight, insurance, commission and interest.
F O B (Freight on Board)
When freight of goods shipped, is not realized in advance by shipping company, it is then to be
paid by the importer on delivery of goods at the port of destination.
Performa Invoice:
The foremost document required by the bank for establishment of an L/C is the Performa Invoice
(signed by both the importer & exporter). The exporter issues it. It comprises all the terms and a
condition that has to be mentioned on L/C. Performa Invoice constitutes the basis of the whole
transaction.
Indent:
When the importer and exporter dont have direct relations and are connected to each other
through an intermediary, called Indenter, then he (indenter) issues an indent form containing all
terms and conditions (like Performa Invoice).
Annexure B:
This is a form in triplicate and must be filled by the importer. The HS (Harmonized Code) or ITC
(International Trade Control) code of the imported goods must be mentioned. Every commodity
has a different universally applicable code. The banker must check before opening the L/C that
the HS code given by the importer is correct.
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Form I:
This form is also a part of the SBPs efforts to check all transactions in which foreign exchange
is involved. The form I also contains all the information about the transaction along with the
importers import registration number.
Insurance:
It is necessary for the importer to get the consignment insured and provide proof of having done
so.
Promissory Note
It is an unconditional written promise signed by the maker, to pay on demand or at afixed or
determinable future time, a certain sum of money to the specified person or to the bearer of the
instrument. Therefore, to make the payment (by importer) secure, bank obtains a promissory
note signed by the importer, along with the above stated documents.
L/C Margin:
It is a certain percentage of the value of L/C that is retained by the bank as security.
Type of Credit:
The heading of a credit indicates the type of credit and its purpose. For this purpose, every bank
has prescribed its own letter of credit forms.
Value of Credit:
The fixed amount to which the bank is liable is specially mentioned in the letter of credit.
Specifications of Documents:
The documents required are specially mentioned in the credit.
Description of Goods:
A brief description of goods that are required by the importer is given.
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Collection of Charges:
The buyer and seller should have been decided as to which party would bear the expenses
because of interest/ markup and other bank charges. The credit specifies the party that would
bear the charges.
Validity Period:
This is a very important clause and because every credit indicates an expiry date or the validity
period. This period is so fixed to provide sufficient time to complete the transaction.
Reimbursement Clause:
This clause indicates the method for obtaining the reimbursement by the foreign negotiating
bank. It will be discussed elaborately in later part.
Shipping Marks:
If the importer wants that the goods should be identifiable with some special packing marks, it
should be so specified in the credit. This clause is not found in all the credits.
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Description of the goods, detail of quantity, unit price, total price and currency of credit
Instructions about the advice of credit, whether it should be sent by airmail, by courier or
telecommunicated
Form of credit: whether revocable or irrevocable, confirmed or unconfirmed. Due to
permission of irrevocable credit only, it is prescribed on form
The name and address of the beneficiary
Type of credit: whether sight, Usance etc
Validity period of credit and last dates for shipment and negotiation
Port of shipment and port of destination and whether trans-shipment and/or partshipment are allowed
Types and number of sets of documents required to be submitted by the exporter
Shipping terms in the contract of sale, e.g., FOB, C&F or CIF etc.
The application form must possess a legal stamp worth Rs. 100. Form without this
adhesive stamp is not accepted. This legal stamp is usually pasted on the application form
before giving it to the applicant.
Advising Bank:
The bank that advises the L/C i.e., the bank that physically delivers the L/C to the exporter on the
behalf of the issuing bank. It is a correspondent bank of the issuing bank situated in the
beneficiarys country or it can also be a branch of issuing bank.
Negotiating Bank:
The negotiating bank receives the documents and delivers to exporter. When the exporter
completes all the documents, after making shipment, the negotiating bank sends them to the
issuing bank.
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Reimbursement Bank:
According to ICC Rules, Reimbursement against foreign currency has to be made through the
country originating that currency. Therefore, for dollar transactions, reimbursement has to be
made (received) through the banks situated in USA. When issuing bank dont have any branch in
USA (for dollar payments), Summit Bank has Nostro Account, that bank is known as
Reimbursement Bank or Drawee Bank. It is a correspondent bank of issuing bank and makes
payment by debiting the nostro account.
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Bill of exchange
A Bill of Exchange is an instrument in writing containing an unconditional order, signed by the
maker, directing a certain person to pay a certain sum of money on demand or at future
determinable period, to a certain person or to the bearer of the instrument. It is drawn by the
exporter through negotiating bank (drawer) and is an order for the importer or issuing bank
(Drawee; Summit Bank) to pay a specified amount. In case of sight bill (for sight L/C), it has to
be paid immediately.
Commercial Invoice
Commercial Invoice prepared by the exporter signifies the name and address of importer, invoice
price, invoice number and all the specifications of goods being imported.
Packing List
It is prepared by the exporter to show that the consignment is in accordance with the order of
importer.
Shipment Advice
Shipment Advice is issued for the insurance company to provide every information and
specifications regarding shipment.
Certificate of Origin
This document is a certification for the origin of goods. It certifies that the goods being imported
(or exported) have the origin of a specific country.
Phytosanitary Certificate
The exporter in case of commodities, like medicinal herbs, sends this certificate. It certifies that
the use of goods is not harmful.
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Bill of Lading is a document issued by the shipping company that stipulates the quantity of
commodity, weight, port of shipment & discharge, date of shipment and other specifications
Covering Schedule
Along with the above stated documents, the negotiating bank sends its Covering Schedule on
which the instructions regarding the whole transaction are prescribed. It also mentions the
number of each document sent by the exporter.
Scrutiny of documents
After receiving all the documents, next and the most important step is to scrutinize the
documents. For this purpose, a list called Check List of Import Documents is prepared. All the
documents must be in accordance with the requirements of L/C. In case of any deviation the
documents can be rejected and payment can be stopped. Negotiating bank must be intimated
about any discrepancy found, with in 7 days.
Retirement of Documents
The whole transaction of foreign trade in which an L/C is involved, completes with the
retirement of documents.
The documents that are first lodged in PAD are retired when the importer pays the total amount
(payable). This amount includes the PAD plus the mark-up charged on PAD and other charges
(mentioned on cost memo). Upon receipt of payment, when the documents are retired, they are
given to the importer and he gets the consignment cleared from custom authorities (by
submitting the Bill of Entry).
This completes the whole transaction of Foreign Trade, carried out through a Letter of Credit.
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Letter Of Credit
In simple terms a letter of credits is defined as a banks written undertaking given to the exporter
for payment of a certain sum of money on behalf of the importer, provided the exporter tenders
to the bank, or its overseas agents, the specified documents within a specified period in
accordance with the terms of the undertaking. Documentary credits as they are called, L/Cs have
been discussed in detail in the imports section.
Contract
A contract is defined as an agreement, certain and performable, made by competent parties, with
their free consent for the lawful object, and lawful consideration, and if not expressly declared
void.
Another way to define contract is that it is a Mutual understanding between the buyer and the
seller without the involvement of the L/C. involvement of a letter of credit. In this situation, trade
is carried out based on a mutual contract between them.
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of the L/C, advising him that his reached Summit Bank Limited, NGT Branch, Lahore and he
should collect it immediately.
As mentioned earlier, an E-form is necessary for exports out of the country. It is a part of
exchange control mechanism of the State Bank of Pakistan. When an exporter receives an L/C,
the next job is to get an E-form from the bank. After filling in the complete information about the
goods to be exported, the exporter brings the E-form to the bank for verification. The bank
verifies the contents in accordance with the documents and not by physical checking. The E-form
is a quadruplicate and contains the following information.
The Commodity
The quantity
The price
The port of shipment
The port of destination
Terms of shipment
Export registration number
After getting the E-form verified from bank, the exporter starts preparing for his shipment. As
the banks only deal in documents, so in order to receive the payment for his good to be exported,
the exporter has to send certain documents to the L/C issuing bank via negotiating bank. These
documents have already been discussed in import section.
A very important step in the export process is to scrutinize the documents, before sending them
to the issuing bank. It requires utmost care and attention of the bank officer. When the documents
are presented in the bank, they are always scrutinized and they must be in accordance with the
requirements stipulated on the L/C. Any deviation could result in rejecting the documents by the
importer, hence causing loss to the exporter or even to the bank if the documents are to be
negotiated
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FINANCIAL ANALYSIS
1. Return on equity =Net income/ shareholders equity
Return on Equity
Years
Ratio
2012
-83.98%
2013
-27.90%
Capital Adequacy
Years
Ratio
2012
5.35%
2013
7.77%
Return on Assets
Years
Ratio
2012
-4.18%
2013
-4.51%
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Years
Ratio
2012
( 5.58)
2013
(1.53)
PEST ANALYSIS
Political Factors
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Economic Factors
Social Factors
Population trend
Culture
Religious factor
Joint family system
Low standard of living
Costless value of life
Literacy level
No concept about insurance
Technological Factors
Complications in policies
Online service
Using new software's
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SWOT ANALYSIS
Strengths
Weaknesses
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Opportunities
By expanding their network Summit Bank can capture the corporate customers.
It can enhance its market share by introducing new offers like car financing and short
and long terms loans for agricultural sector.
Threats
Big competition in the market
In Home Financing Union Bank or to some extent NBP are threats.
The launch of any new bank could be a threat for summit bank
RECOMMENDATION
ATM Machine is not working in the bank. ATM is need of the era.
There must be training before the employees start working in bank.
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CONCLUSION
REFRENCES
Annual report
Annual report 2013 of Summit Bank Limited (formerly Arif Habib Bank)
Websites
www.summitbank.com.pk
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