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This Internship report is aimed at studying and analyzing Habib Bank Limited (HBL)
in general and its branch office at Link Road Abbottabad in particular. The main
purpose of internship is to prepare and submit a report as a partial fulfillment for the
award of M.com degree from Government College of Management Sciences
1.2 Background of Study:
Pakistans economy by the Grace of God is growing with an appreciable rate. Sound
banking system for this growing economy is the need of the day, which must meet the
financial needs of the growing agriculture, industrial and commercial/services sector.
Habib Bank Limited has played a pivotal role in the development of Pakistan. HBL
has adopted a customer-oriented approach, in order to provide quality products
according to customer needs and stands as a role model for the other banks. In this
report I have tried to cover all the aspects of HBL banking operations.
1.3 Purpose of study:
Basic purpose of working in this organization was to fulfill the requirement of my
course i.e. because its a compulsory part of it. Secondly, it was the banking sector
that attracts me and I was keen to gain some knowledge about this sector. Moreover, I
studied about the functioning of this particular branch, so I got some idea about the
corporate and commercial branches. I worked with the intentions to point out the
strengths and weaknesses of the bank in accordance with foreign banks. Besides this,
some other purpose are associated which includes:

To give a comprehensive review of HBL.

To analyze HBLs organizational, financial and other aspects.

To identify the areas of the bank where there is some room for improvement.

To present some feasible solutions for the problems pertaining to HBL

To apply the knowledge gained in practical field.

1.4 Scope of Work:

I was provided with the opportunity to work in all the departments, so I got an
overview of each of them. Banking has a very broad scope. In only eight weeks of
internship, it is very difficult to understand each and every aspects of bank . Due to
the barriers of limited time and space, the scope of work is usually confined. However
this study of HBL will help the management to identify their weaknesses and threats
and over come them by using their strength and capitalizing on the opportunities. This
internship report will be source of financial data for all those who are interested in
financial statement analysis of HBL.
1.5 Methodology of the Report
This study involves two types of data for report writing.
1.5.1 Primary Sources
Interviews and discussion with staff members
Personal observations
1.5.2 Secondary Sources
Previous Internship Reports
Annual reports of HBL
Newspapers, Brochures & Manuals
1.6 Limitations of the Report
As mentioned earlier, eight weeks of time is very limited for a complete observation
of an institution like HBL. Moreover some of the data was confidential and was not
made available to me. Sometimes due to the busy schedule of the bank, complete
information regarding different activities was not provided in time. Latest annual
report for fiscal year 2011-2012 was not available for analysis.

2.1 Evolution of Banking
Consensus on the organization of word Bank has not yet reached. According to some
authors this word is derived from the words Bancus or Banque that mean a bench. The
explanation of this origin is attributed to the fact that the jews in Lambard transacted
the business of money exchange on benches in the market place, and when the
business failed, public destroyed the Banco. Incidentally the word bankrupt is said to
have been evolved from this practice. The opponents of this opinion argue that if it
was so, then how is it that the Italian money changers were never called Banchierei in
the middle ages ?
Others authorities hold the opinion that the word Bank is derived from the German
word Back was Italianized into Bank. It is therefore, not possible to decide as to
which of the opinion is correct, for no record is available to ascertain the validity of
any of the opinion .

2.1.1 Early Growth

This history of banking is traced to as early as 2000 B.C. The priests in Greece used
to keep money and valuables of the people in temples. The origin of banking is also
traced to early goldsmiths. They used to keep strong safes for storing the money and
valuables of the people. The goldsmiths used to issue receipts for the money and other
valuable assets deposited with them. These receipts could be used for settlement of
transactions because people had confidence in the integrity and solvency of
goldsmiths. When it was found that these receipts were fully accepted in payment of
debts; then the receipts were drawn in such a way that it entitled any holder to claim
the specified amount of money from goldsmiths. A depositor who is to make the
payments may now get the money in cash from goldsmiths or pay over the receipt to
the creditor. These receipts were the earlier bank notes. The second stage in the
development of banking thus was the issue of bank notes.

2.2 Banking in Pakistan

I observed during my internship was that I came to known the historical
background of Banking & Financial sector and its improvement and growth
since the formation of Pakistan.
At the time of partition there were only 631 bank branches in area which came
under Pakistani control. But due to blood shed and violence at large scale,
most of the branches were closed. At that time Bank of India was acting as
central bank for both countries and same currency notes were used in both
territories. But Reserve Bank of India was biased and Set down Pakistan on
many occasions such as the issue of funds transfer etc.
Thus some drastic steps were taken in government sector for the improvement
of overall position. The private sector also responded positively. Some of the
steps taken by the government in this regard were as under:

Inauguration of State Bank of Pakistan (SBP) on 1st July, 1948.

Setting up of National Bank of Pakistan in November.

Banking Companies Ordinance 1962 for protection and guidance to


Establishment of specialized banks, such as ADBP (1952);


HBFC (Nov, 1952)

P1CIC (Oct, 1957)

IDBP (Aug. 1961)

NDFC (Jan, 1973)

In 1990 the government decided to denationalize all the nationalized institutes.

For this purpose, amendments were made to Nationalization Act 1974 and two

nationalized banks were privatized. Along with this a permission to open

banks in private sector was also granted.
The- privatized banks are;

HBL taken up by a private group in April, 1991

ABL taken up by its own employees in September, 1991.

UBL taken up by UAE party in 2002.

December 29, 2003 HBL was taken by AKFED

2.3 Introduction of HBL

HBL was the first commercial bank established in 1947. HBL is one of the
largest commercial bank of Pakistan. It accounts for a substantial share (20%)
of the total commercial banking market in Pakistan with a network of 1,705
domestic branches; 55 overseas branches in 26 countries spread over Europe,
the Middle East, Far East, Asia, Africa and the United States; 3 HBL wholly
owned Subsidiaries namely Habib Bank Financial Services (PVT) LTD.
Karachi, Habib Finance International LTD (Hong Kong) and Habib Finance
Australia Ltd. Sydney; 2 Joint Ventures namely Habib Nigeria Bank Ltd.
(40%) and Himalayan Bank Ltd. (20%) and 2 representative offices in Iran
and Egypt. HBL is currently rated AA+ (Long term) and A1+ (Short term)*. It
is the first Pakistani bank to raise Tier II Capital from external sources.
Business Operations
1. Banking Sector Overview
2. HBls Performance Overview
3. Products and Services

Personal Banking
Corporate Banking
Online Services
. Virtual Banking
Islamic Banking
4. HBLs Competitive Strategies

2.4 History of Banking In Pakistan

The partition plan was announced on June 3, 1947 and August 15, 1949 was fixed as
the date on which independence was to take effect. It was decided that the Reserve
bank of India should continue to function in the dominion of Pakistan until September
30, 1948 due to administrative and technical difficulties involved in immediately
establishing and operating a Central Bank.
At the time of partition, total number of banks in Pakistan were 38 out of these the
commercial banks in Pakistan were 2, which were Habib Bank Limited and Australia
Bank of India. The total deposits in Pakistani banks stood at Rs.880 million whereas
the advances were Rs.198 million. The Governor General of Pakistan, Muhammad Ali
Jinnah issued the order for the establishment of State Bank of Pakistan on 1st of July
In 1949, National Bank of Pakistan was established. It started with six offices in
former East Pakistan. There were 14 Pakistani scheduled commercial banks operating
in the country on December 1973. The Pakistan Banking Council prepared banks
amalgamation schemes in 1974 for amalgamation of smaller banks with the five
bigger banks of the country. These five banks are as under:

National Bank of Pakistan



Habib Bank Limited


United Bank Limited


Muslim Commercial Bank Limited


Allied Bank Limited

In early 90s after the failure of nationalization policy, Government went for
privatization of financial institution. In last ten to fifteen years banking sector in
Pakistan has shown tremendous growth. Due to its remarkable growth, banking sector
of Pakistan has become very attractive for foreign investors. Many investors have
already invested and still many more to come.
2.5 History Of HBL
Habib Bank Limited was established by Mr. Ismail Habib on August 25, 1942 on the
desire of Quaid-e-Azam Muhammad Ali Jinnah, father of the nation. It was
established with paid up capital of Rs. 2.5 million. It was the first Muslim bank of sub
continent. Quaid-e-Azam first of all opened his personal account.
The first branch of HBL started functioning on 30th August, 1942 at Muhammad Ali
Road Bombay, In 1942, on the desire of Quaid-e-Azam, Habib family migrated to
Pakistan and later on shifted the Bank's Head Office from Bombay to Karachi on 7 th
August, 1947 just one week prior to independence, to play its pivotal role in the
development of this newly born country.
At the time of independence, the areas which now constitute Pakistan were producing
only agricultural products raw material for indo-Pak subcontinent. Partially no
industries were there to process the raw material; therefore the raw material was
exported from Pakistan. There were 19 non-Indian foreign Banks which were engaged
in the export of crops from Pakistan with only two Pakistani Banks i.e. HBL and the
Australia Bank. The circumstances were completely un-certain. The confidence of the
people had been shaken by the un-friendly environment and till the time peace had not
been restored, people would naturally have been interested in other things. The nation
was quite young with extreme scarcity of resources and these definitely added to the
difficulties of the govt., to run its own Banking system immediately.

Following the announcement of the independence plan in June, 1947, the Hindus
residing in the territories now comprising Pakistan started transferring their assets to
India and vice versa. The Banks included those having their registered
Offices in Pakistan, transferred them to India in order to bring a total collapse of the
new state. It had been decided that the Reserve Bank of India would continue to
function in Pakistan so that the problem of demand and time liabilities, coinage,
currencies, exchange rate etc be settled between India and Pakistan and the Indian
Notes would continue to be legal tender in Pakistan till 30 th September, 1948. Again
due to certain differences between Indian Pakistan, the
India government withheld Pakistan's share of Rs.75 core in forward and subscribed
heavily to the government of Pakistan to the tide over the crises.
At a time when this newly born country was at whirlwind of crises, it was HBL which
fulfilled generously the financial needs of all its sectors, paid salaries to the
employees of all Govt. departments, helped in the establishment of State Bank of
Pakistan which the Quaid-e-Azam inaugurated on July 1 st, 1948. HBL after partition
opened its branches tFinanceoughout Pakistan to provide finance and other facilities
to the business community. In association with HBL, the Govt. sponsored Pakistan
Finance Corporation Limited for financing of cotton. The Bank helped handsomely in
the construction of WARSAK DAM PROJECT, WAPDA, & K.D.A. by provided
finance and other facilities.

2.6 A Birds Eye View


Important Event


Commenced operation.


Deposits reached 20 million rupees.


Moved operations from Bombay to Karachi on the Quaids Request.


First Banking Scheme Started for the Muslim Youth.


HBL head office transferred to Pakistan.


Silver Jubilee.


Bank was Nationalized.


Golden Jubilee


HBL was Reorganized.


HBL was Privatized.


Largest Private Commercial Bank in Pakistan with branch network of 1477

branches within Pakistan and 65 international branches in 26 Countries.


Declared best Bank.


Pakistans Largest Banking Network .

The Best Emerging Market Bank in Pakistan
HBL among Top 500 Global Financial Brands

2.7 HBL at A Glance










( in millions)





( in millions)




































































Operational & Financial Aspects

2.8 Mission Vision & Objectives:


To make our customers prosper, our staff excel and create value for shareholders


To be recognized as the leading financial institution of Pakistan and a dynamic

international bank in the emerging markets, providing our customers with a
premium set of innovative products and services, and granting superior value to
our stakeholders- shareholders, customers and employees.


Enabling people to advance with confidence and success

Our Brand

Our brand identity is the outward expression of what we stand for as an

organization. This is summarized in our vision, mission and is supported by our

Objectives Of HBL:
Following are some of the main objectives of HBL
To earn profit for the Bank itself and for its shareholders.
To promote and boost up business sector inside the country.
To provide employment opportunities to people.
To help in development and industrialization of the country.
To provide loan and advances to help out in self employment scheme

2.9 Symbol of HBl:


BISMILLAH _ _ _ _ _ _ _ _ _ _ Islamic Culture and Values

SWORD _ _ _ _ _ _ _ _ _ _ _ _Power
LION _ _ _ _ _ _ _ _ _ _ _ _ _ _As a symbol of strength

2.10 Core Value of HBL

Our values are the fundamental principles that define our culture and are
brought to life in our attitudes and behaviour. It is our values that make
us unique and unmistakable. Our values are defined below:


HBL encourages a culture of mutual respect and treats both their team members
and customers with humility and care.


For them integrity means a synergic approach towards abiding their core values.
United with the force of shared values and integrity, they form a network of a
well-integrated team.

At every level, from selection to advancement, they have designed a consistent

system of human resource practices, based on objective criteria tFinanceoughout all

the layers of the organization. HBL is therefore, able to achieve a specific level of
performance at every layer of the organization.


Their team strives to become a cohesive and unified force, to offer the customer, a
service beyond his expectations. This force is derived from participated and


collective endeavors, a common set of goals and a spirit to share the glory and the
strength to face failure together.

Culture of Innovation

Their aim is to proactively responsive to new ideas, and to respect and reward the
agents, leaders and creators of change
2.11 Corporate Banking
Only local bank with special focus on corporate Banking with a presence in all
major locations tFinanceough out the country, offering full range of Banking
products / services and one window interface tFinanceough designated
Relationship Managers. Our large equity base allows us to take longer per party
exposures to meet the needs of the largest corporate & our extensive local &
foreign network allows us to imperiously service our clients.
Corporate Manages well diversified portfolio, and include most of the top tier
names of the market . Corporate Banking offers tailor made products / solutions as
required by corporate customers which include:
Key Features Of Corporate Banking
Funded facilities, ranging from short to medium and long term lending
Trade related financing.
Foreign currency financing.
All sorts of non-funded facilities / services which include Cash receipts /
payments, Remittances, Collections, Guarantees, letter of credit etc ..
Customized products / solutions
2.12 AWARDS:
'HBL wins Best Emerging Market Banks award in Pakistan 2011'
'The Best Emerging Market Bank in Pakistan'


HBL among Top 500 Global Financial Brands

'Best Bank In Pakistan'
'Most Innovative Global Trade Finance'
'Buzziest Brands'

2.13 Role Of HBL In Banking Sector

The impressive growths in development, which HBL achieve, make this bank
undoubtedly the most dynamic and progressive. In a very short period of time it
became one of the leading bank overtaking several other older and its competitor
banks. The major contributions the bank has made are:

Record setting performance and commitment to serve the customers.

Personalized service and dynamic approach.

Catalyst of changes.

Professional management.

Modern banking policy.

Human resources development .

Small loans or micro credits.

Utility bills collection.

Credit cards.

Travelers cheques.

Diaries and calendars / received prizes too.

Promotion of sports.

2.14 Function of HBL

HBL is a commercial bank, which transacts the business of banking in according
with the provision of BCO, 1962. Section 7 of the Act authorizes banks to engage

in the prescribed form of business. In the light of this section HBLs functions can
be categorized as under:

Agency services.

General utility services.

Underwriting of loans raised by the government.

Providing specialized services to customers.

2.15 Computerization of HBL

HBL has ----------------------------- that are equipped with modern main frame
computers of various capacities. Every branch has a well established computer
The use of computers has enabled the bank to save the time and efforts raise
efficiency and deliver the goods in a timely manner. The has allowed the bank to
maintain its competitive edge in the market.

2.16 Online system

Theme of this service is Access any time, anywhere, and tFinanceough any device
which symbolizes comfort, convenience and easy accessibility. AC-online a web
based service that can be accessed tFinanceough multiple media link like:

PC via internet


Mobile phones with WAP or free SMS


Plain telephone

Following are some features:

Accounts statements and electronic data interchange

Graphical analysis

Alert service facility

2.17 Local Fund Transfer Facility (LFT)


The bank has recently employed local fund transfer service system, which can affect
money transfer with in minutes. Similarly the system used for local transfer of money
2.18 Fast Cash Facility
In the fast cash facility foreign fund transfer in the country in also money transfer
with in minutes.
2.19 Asset Product Division (APD)
Which is responsible for the development and management of retail credit schemes
and is presently offering several innovative credit products.
2.20 Investment Products Division (IPD)
It is responsible for developing and managing brands that serve the investment needs
of the consumer market and focus on deposit mobilization and provision of value
added services based on modern technology. This division continuously makes an
effort to provide value-added services and products to its clients.
2.21 Secure transfer of money
Public needs to transfer money from one city to another. The objective of HBL is to
ensure the safe and secure and efficient transfer
2.22 Corporate Banking
HBLs mission is to serve all corporate needs of its customers and ensure full
satisfaction tFinanceough products innovation, personalized banking tFinanceough
relationship banking, best customer services and key contracts.
2.23 HBL Investment Banking
HBL provide innovative and unique advice to its customer in meeting in an innovative
market. A healthy mixture of structuring, advisory and project finance business deals
in leading market firms.


2.24 Enhanced Managerial Activities

In Pakistan the concept of pf professional management had not yet developed. But
HBL was considered to the best pioneer in this regard that the band has employed
from very first day skillful and professional management which has ability to take
quick and corrective decision and has flexibility to cope up with changing business
and economic condition.
2.25 Flexible Business Style
HBL business approach is flexible which means that it changed it style according to
market need and was appealing to the customers. HBLs approach was dynamic and
personalized which made it distinguish from other banks of the era.
2.26 Dynamic Approach Regarding Services
HBL made people of Pakistan saving minded and familiar with banking and in this
regard its skilled management contributed very much. In this direction HBL
mobilezed saving and opening of accounts.
Following are the factors which contributed in the achievement of the purpose:

Knowledge of customers business

Market research

Visits to customers at there offices

Development of personalized relationship with business community

Fixation of seasonal business markets.

2.27 Better Working Condition

From the very first HBL has provided its employees a better working
environment, salary structure and facilities. It has created such relax environment
for its employees in the presence of which employees can polish their skills and


2.28 Including In Healthy Competition

When HBL entered in the banking field, a new ara of banking began and this era
was the phase of competition. Clients are attracted towards those banks which
used to provide better and quicker banking services. Keeping in view this
approach HBL made a lot of changes and adopted a modern strategy to provide
attractive services to the customers. The competition involved in by HBL was not
only legitimize but also vital for industry. It consists of a wide and increasing
range of services which were provided speedy, efficiently and with due courtesy.
2.29 Information Technology
Technology has played a pivotal role in enhancing customer expectations,
particularly with respect to speed and quality of service. We have fully automated
transaction processing system for bank-office support.
2.30 Branch Expansion Strategy:
The management decided to broaden the geographical coverage. Therefore
besides the cities, the bank spread out the branches into small towns and the far
flung less developed areas to full its social responsibility.
2.31 Role in the Field OF Sports
HBl is fully committed to the community services and sports and in this regard
bank participated and supported a number of events including national
championship specially in Cricket. From the HBL Shahid Afridi, Younus Khan,
Umer Gul, and Danish Kaneria some other players are playing in the International
2.32 International Operation
HBL took a basic decision to make it present felt internationally and to cater to the
needs of importers and exporters as well as its share in foreign trade and
international market.

2.33 Keeping Pace with 21st Century

HBL has stepped into 21st century with confidence. HBL stood firm to provide the
services, which the customers in the modern day expect from a bank. HBL is
equipped with the latest technologies and has professional experience to face the
future with determination and confidence. HBL has high aims and sense of
direction in order to serve the country with zeal, devotion and enthusiasm.
2.34 Islamic Banking Division
After the Supreme Court decision on Riba, HBL is undertaking groundwork to
implement Islamic banking. A division was created which in addition to conduct
research also works closely with the commission for transaction of financial system.

2.35 Controls and Management System

The control and management system of bank is necessary, since bank deals in money,
all services which deals in money or money transactions require induction of effective
and efficient internal control system to protect it in order to built high image of trust
and confidence amongst banks customers and public at large. The supervision is the
example of control and management.


3.1 Structure of HBL
At the present the Bank operates tFinanceough one central and 23 Regional Offices
and 1439 branches, all over Pakistan. The president and Executive Committee look
after the affairs of the Bank. Each Regional Head Quarter is headed by a Chief
Executive and assisted by General Manager Operations and General Manager Support
Services. The Regional Head Quarter controls the branches in their area.
Overseas operations consist of 65 main branches, two affiliates, two representative
offices and two subsidiaries.
President, from Head Office at Karachi controls the officers of the Bank with the help
of the senior management. Functional responsibilities of the Banks are broken into
seven groups known as

International Operations Group


Corporate Banking and Treasury Investment Group


Retail Banking and Operation Group


Assets Remedial and Administration Group


Assets Remedial Management Group


Credit Policy Group


Corporate Bank, Financial Institutions and Project Finance Group

In addition to the overall controlling authority, president also manages the

international Operations Group individually.
While the Senior Executive Vice President supervise rest of the financial
groups. Each Senior Executive Vice President is individually responsible
for the group which is assigned to him. At the level of provinces there are
Regional Head Quarters headed by Regional Chief Executives (RCE).

Each RCE is assisted by GM operations and GM Support Services.

Branches are also controlled by the RCEs. Circle Offices of the past
times have been removed to reduce Managerial Layers, which were
working under the control of Zonal Offices. This Happened as a result of
policy of beginning new changes in the organizational structure.

3.2 Analysis Of Organizational Structure

The purpose of an organizational structure is to help in creating an environment for

human performance. It is then, a management tool and not an end in its own.
Although the structure must define the task to be done, the rules so established must
also be designed in the light of abilities and motivation of the human recourse
available. By analyzing the organizational structure of HBL presence of the following
elements can be found in its structure.
3.3 Centralized Decision Making
By looking at the organizational structure of HBL would be found that the structure at
HBL is a critical one. All the decisions are made at the top management level and the
subordinates have to obey these decisions. This trend in the decision making shows a
pattern of rigidity in structure of HBL.
3.4 Downward Communication
Communication is the process by which information is exchanged and understood by
two or more people, usually with the interest to motivate or in influence the behavior
of others in the organization. Downward communication is the message and
information sent from top management to subordinates in a downward direction.
Managers can communicate downward to the employees tFinanceough speeches,
messages can communicate downward to the employees tFinanceough speeches
messages in company publications, information leaflets, tucked into pay envelops
material on bulletin boards, policy and procedures mandates. The same pattern is

followed at HBL. No doubt its a very traditional approach but it can create problems
because it ignores the receiver of the communication because the issuer of policies
and procedures does not ensure communication. In reality may the message
communicated downward are not understood perfectly.

3.5 Chain Of Command


Board of Director

Member Executive Board

Regional Chief

Zonal Chief

Branch Manager

Operations Manager

Bank Staff



3.6 Chain Of Command In Bank Branch:

BMTCS ur h a e d c e q u e C o l l e c t i o n , A / c O p e n i n g ,
ar&Cb n l e F a C r i , n g , F i x e d D e p o s i t s , R e m i t t a n c e e t c .
aAM g d a v a c
en rs a , g
OcHDe r a j j
pheO tpe cp
rMae a r ta t
tami io n
ones n
sat s

The chain of command is an unbroken line of authority that links all persons in an
organization and shows who reports to whom. By analyzing the organizational
structure it can be found that there is a scalar principle followed with in the Bank
because each and every person knows to whom can one report. The authority and
responsibility for different tasks and duties are different, as well as every one knows
the successive levels of management all the way to the top.
3.7Authorities and Responsibilites
The chain of command illustrates the authority structure of HBL. Authority is the
formal and lefitimate right of the manager to make decision, issue orders and allocates
resources to achieve organizational desired out comes. By the analyzing the chain of
command of HBL, one can come to the conclusion that, as there is scalar pattern
followed at the organizational setup of HBL therefore it is implied that everyone in his
position knows that what is ones authority and what is the responsibility and the
authority it allocated.
3.8 Delegation
Delegation is the process, which managers use to transfer the authority and
responsibility to position below in the hierarchy. Most organizations today encourage
managers to delegate authority to the lowest possible level to provide maximum
flexibility to meet customer needs and adapts to the environment. But at HBL no
such system prevails the managers try to keep as much of the authority as they can
and if some authority is delegated it is sure that it will be mis use


HBL Muhafiz Rupee Travellers Cheques

HBL Auto Finance


HBL Flexi Loans for salaried personnel

HBL LifeStyles Financing Scheme

HBL i-Card

HBL House Financing Loans

HBL Easy Access

HBL Fast Transfer

Haryali Agricultural Loans

HBL E-Bank

3.9.1 HBL Muhafiz Rupee Travellers Cheques

It was introduced in 1998. A cheques available in denomination of Rs
10,000, 25,000, 50,000 and 100,000 with the advantage of 100% free
purchase and encashment.
Distinct Properties Of Muhafiz

It can be issued from more than 700 branches all over Pakistan

Muhafiz, provides the facility of payment in all branches of


There is no commission and fee charge for purchase of Muhafiz


Keep alive the tradition of Serve you better charge nothing fo the
purchase and sale of Muhafiz.
3.9.2 HBL Auto Finance


Habib bank Auto Finance, a lease product, designed to offer you an

economical way for owing the car of your choice. Some characteristics

Lowest Down Payment

Lowest monthly rentals

Fixed repayment renures of 36,48 and 60 months.

Lowest processing charges

Insurance premium rates as low as 3%

World wide personal accidental insurance coverage of up to Rs


All locally assembled a new car can be financed tFinanceough

this scheme.

3.9.3 HBL Flexi Loans for salaried personnel

HBL had introduced a unique loan system for the middle income
serving people in various public sectors. It is basically meant for those
in service people who earn more than Rs. 5,000 per month. This loan
meets the petty requirement of the salaried class. Since the introduction
of this scheme Rs 6 billion is advanced tFinanceoughout the country.
The maximum limit of this loan is Rs. 3,000,000.
3.9.4 HBL LifeStyles Financing Scheme
Habib Bank Lifestyle is an economical financing scheme for
Household Appliances and consumer Electronics. Silent features of

Loan for salaried / self Employed individual or business


Low Mark-ups leading to affordable monthly installments.

Financing from Rs. 10,000 to Rs 500,000

Fixed tensures of 6,12,18,24 and 36 months

Low Processing charges

Full credit Life Insurance

Free Doorstep Delivery of Items

Avalilable tFinanceoughout Pakistan from over 330 designated

Habib Bank Branches

3.9.5 HBL i-Card

Offer a number of facilities such as cash withdrawal, Funds
transfer between accounts, Balance inquiry, Mini Statement, PIN
Change etc. Accepting at all 1LINK and MNET ATMs across the
3.9.6 HBL House Financing Loans
HBL provides the facility of house finance;
Financing available for:

Purchase of house


Home improvement renovation


Self Construction

Some characteristics of House Finance of HBL are:

Lowest mark-ups leading to affordable monthly installments


5 years fixed Rates / one year Floating Rate available.

Lowest processing charges

Finance tenures ranging from 3 to 20 years

Financing limit of up to Rs. 7.5 million (Rs. 3.0 million for Home
inprovemnet / Renovation)

Quick processing

3.9.7 HBL Easy Access

Online access to banking service at over two hundred branches in
3.9.8 HBL Fast Transfer
A unique solution for overseas Pakistanis to send money back home in a
swift and convenient manner
3.9.9 Haryali Agricultural Loans
It entails all kinds of agriculture finance facility for the rural market.
3.9.10HBL E-Bank
It provides services via a dedicated communication link on the internet.
The E-Banking service provide anything

anywhere banking to all 5

million customers. This service, designed to be user friendly, assures

secured access and confidentiality.
HBL also provides agency services to its customers. Some of which are as

3.10.1 Collection of Checques

HBL pays and collect cheques on behalf of their customers, and for this it
receives commission form their account holders.
3.10.2 Collection of dividends
The Bank provides a very useful service by acting as an agent for its
customers. It arranges the collection of dividends on shares and securities held
by its customers. The customer is simply to inform the issuer of the securities
that the interst on the secutities is to be credited to his account in the Bank.
Bank charges commission for the collection of the diviends on behalf of
account holders.
3.10.3 Purchase and sale of securities
HBL if authorized by the customers also make purchase and sale of securities
on the behalf of its customers. Bank charges commission for the purchase or
sale made by its on behalf on the customers.
3.10.4 Execution of standing instruction
HBL also executes the standing in case if it is ordered by the customers of the
Bank to do so. These instructions are usually given in writing to Bank. The
Bank debits and credits the accounts of its customer for the transactions
carried out by the individual or firm.
3.10.5 Transfer of funds
HBL, also transfers fund of the customers from one Bank to another Bank. If
the transfer is within one station, they don,t charge any commission and even
if they charge, they charge on reduced rates.
3.10.6 Acts as an agent
HBL also act as an agent, correspondent or representative of its customers at
home and abroad.


3.12.7 General utility services

HBL also performs a number of generally utility services to its customers
which are as follows
3.10.8 Foreign exchange Business
HBL transacts foreign exchange business by discounting foreign bills of
exchange and thus provides facilities for financing in foreign trade.
3.10.9 Acts as a referee
HBL provides useful services to its customers by acting as a referee for its
credit worthiness. The information is supplied in secrecy and is based on
financial standing of the customers.
Acceptance of Bills of exchange
HBL also undertakes acceptance business connection with bills of exchange
and thus enables its customers to obtain the desired credit.
3.10.10 Issuance of travelers cheques
HBL also issues travelers cheques. These cheques can be issued to anyone
whether an account holder or not and charges no commission on issuance of
such cheques. HBL has recently introduced Muhafiz rupee traveler cheques
with enhanced features.
3.10.11 Collection of Utility Bills
Electricity, telephone and other such bills can also be deposited with HBL.
3.10.12 Locker Facility
HBL also provides lockers facility to its customers where valuables of
customers can be kept.


The operational policies of HBL deal with the method of provison of better
services to its customer. TFinanceough the introduction of new schemes as
means of satisfaction for their customers, the operational policy of HBL can be
divided into two spears.
Domestic operations.
International operations.
3.12 Domestic Operations
HBL is quite successfully operating its domestic business , Facilities at the
door step across the length and breadth of the country also in conformity with
the government,s socio-economic objectives. The number of operating
domestic branches total 1350.
3.13International Operations
HBLs overseas branches are continuously rendering satisfactory services and
are also contributing to the channeling home remittances of Pakistan working
abroad. HBLs international network comprises of 60 offices in 26 countries,
Operating in USA, Europe, UK, Middle Ease, Asian pacific Region and
Africa. It is also the largest Banking in financial services provider in Pakistan.
HBL concentrates on markets and business they understood. TFinanceough a
global network, the Bank provide a comprehensive range

of financial

services, personal, commercial, trade services, cash management, treasury /

capital market services, and private Banking. HBL strives to provide high
quality product tFinanceough efficient delivery system and excellent customer
services. In this way, HBL will grow and achieve.




Software used by HBL

HBL is enjoying the competitive advantage of vast operational area. There are two
types of branches come under HBL network. One type is the online branches whereas
other type is batch branches (offline branches). So obviously HBL uses two types of
different software. All batch branches use SIMEX software whereas online branches
use MYSIS.


MISYS (online) perform two type of system

Cashier system

This system use only cash transaction like cash withdraw, deposited, Remittance,
Accounts opening, LFT etc.
Equation system
Clearing inward or out ward, special or intercity clearing, supervision


During my internship, I came to known about the following departments
functioning in my branch



Account opening department.


Cash department.


Credit department.


Lockers department.


Bill clearing department.


Foreign exchange department.


I.T department

3.15.1 Account opening department:

In this department customer open the account in the bank. This give facility to
the customer for opening new account with the bank that they allow him and
operate this account.
These require many document to open this account:

Copy of CNIC

Utility bill

Student card

Provisional receipt

Address of customer

Specimen Signature of the customer

Posting the account on the system


Cheque book issue to the customer

Secrecy of the customer Types of the Account


Individual account


joint account


. Business account


Current account


Saving account

Individual account:
Bank opens this account by individually. It involves single person only. Bank
opens this account for one person.
Joint account:
Bank opens this account by one or two person. The two people use
one account in the bank. Bank considers one account by two people. The two
people of joint account show one account according to the law.
Business account:
In this account, bank only business transaction. It is opened by
companies, institution, organization and partnership business. It is purpose of
deal with the businessmen.
Current account:
Bank opens current account to every person. Usually, some current
account have to pay interest by the customer but its rate is low other accounts.


Current account offers any facilities to the customer which is mentioned


Debit card

Cheque book to the customer

Automatic bill payments from account

Overdraft facility

Clearing services etc.

Reason for closing customer account:

Bank ay close this account due to some reason:

Death of a customer


Notice by a customer


Customer insanity

Death of a customer:
In the case death of the customer, bank may close the account and stop
all transaction related to the person. Bank stop further transaction such as
cheque issue, money transfer etc.
Notice by the customer:
Bank may close this account on the demand of the customer. Customer
gives application to the bank for closing this account.
Customers insanity:


Bank terminates this account due to mental of the customer. Bank stop
this transaction with this customer. It is all too easy for the customers needs
by the desires of others within a bank who interpret the customer needs
tFinanceough their own prism. His insanity of the customer, to the knowledge
of the bank, has the effect of revoking this authority, and the bank would not
be necessary in paying the acceptances. That the bank has not been officially
notified of the customer's insanity does not indicate
3.16 Cash Department
Cash department has vital role in the banking sector. All cash transaction
represent in this account such as cash received fro customer, import and export
transaction, bill payment etc. It involves cash payment and receipt transaction
in it.
These are following perform various function in this department:

Acceptance of deposit

Cheque payment

Collection of funds


Transfer of funds from one account to another

Verification of signature


Heading of prize bond

There are some functions of cash department in the bank:

Receipts and payments:


Cash will be received by the Receipts from the customers in the bank. In the
receipts, the name of the account holder, account number, name of the branch,
dates etc are involved. Customer must also make certain that the receipts are
signed by the person which deposit cash. In some cases, cash is received from
receipt department.
Deposit cash in customer account:
When the customer wants to deposit amount in his account .The account in
which the cash will be deposited. Then customer will receive amount and
credit the customers account that shows increase in customers bank accounts.
Cheque encashment procedure:

The cash is paid to the customer in the cash department such as:

Cheque is drawn on some branches

Cheque is not posted on date

It should be bearer cheque

Payment of cash:
After posting the cheque the operation manager cancelled the cheque and
returned back to cashier. The cashier enters the cheque in cash paid registered
and pays against the second signature of receiver on the back of the cheque.

3.17 credit Department

A simple but practical definition of credit is "the ability to buy with a promise
to pay," in other words, to obtain present value for a promise to pay in the
future. The word "credit" is derived from the Latin "credo. The banker knows
that he may be asked to expand credit. He first satisfies himself that the ability
is such as to defend assurance. This information is obtained from personal


knowledge of the borrower. Trade inquiries are directed to people selling

goods to and competitors of the borrower. If all this information is satisfactory,
the capital factor is studied in the borrower's financial statement which balance
sheet should be taken off at normal intervals. This ratio is often called the 2 to
1 ratio, but differs in business. In short, the distinguish between a safe risk and
an unsafe one that is the quality that marks the good banker.
This is including different latter issue in the credit department:
Establishment of letter of credit:
In case party enjoying regular limit, the L.C is established without adopting
the procedure mentioned above. However the amount of L.C should not
exceed the regular limit. The major non-fund based facilities that are
considered as a part of regular credit facilities are letter of Credit and Bank
Guarantee. Banks charge commission for the services rendered by them and
commitments on the pact of the bank these are allowed after making out a very
careful and detailed assessment of borrowers requirement.
3.17.1 Types of credit
These are many types of credit of habib bank which are given below:
Demand finance:

Packing credit

Demand finance to student

Loan to staff

Loans are offered to the staff in various categories


loan for purchasing vehicles


loan correspondent to months salary



mortgage loan

Running finance:
It include old name overdraft which are meet requirements to the customer.
For example:


Which are diifernt forms given below


share certificate




mortgage of property etc



Bank deals in money and they are merely mobilizing funds within the
economy. They borrow from one person and lend to another, the difference
between the rate of borrowing lending forms their spread or gross profit.
Therefore we can rightly state that deposits are the blood of the bank which
causes the body of an institution to get to work. These deposits are liability of
the bank so from point of view of bank we can refer to them as liabilities.

Demand draft is a written order drawn by a branch of a bank upon the

branch of same or any other bank to pay certain sum of money to or to the


order of specified person. It can be issued to the customers as well as non

customer against cash chaque and letter of instruction. Demand draft is
negotiable instruments that can be negotiating at any time before its
cancellation. Its Legal provisions are same as that of cheque.
Following parties are involved in demand draft:


issuing branch

Drawee branch


A demand draft may be issued against the written request of the customer












The DD application must be scrutinized by the counter clerk in respect of
following points.

There should be branch where payment is to be made.

Full name of payer should be mentioned.

Amount in words and figures must be same

The applicant on two places should sign application.


Telegraphic transfer means the transfer of funds from one branch to
another branch of the same bank or upon other bank under special


arrangements just like a telegram. Telegraphic transfer is not negotiable and

the funds are not payable to bearer. Minor cannot avail this facility. In
telegraphic transfer the bankers use secret codes. One code is with issuing
person and the second is with an other person. When they combine the codes
its become an amount that is called check. The payment is made after the
confirmation of the check.
Following parties are involved in TT


Drawing branch

Drawee branch


Following important things should be included in TT:

Full name of the beneficiary or account number should be mentioned

in the application form.

Instruction regarding mode of payment should be obtained.

A record in the remittance outward register should be maintained.

All the remittance must be controlled tFinanceough number or codes.

Pay order:
Pay order is an instrument tFinanceough which payment can be made
from one bank to another bank. Pay order is meant for bank own payment but
in practice they are also issued to customers.
Following parties are involved in pay order:



issuing branch



Mail transfer is not negotiable and the procedure of it is same with

the procedure of DD.When a customer request the bank to transfer his money
from this bank to any other bank of the branch of same bank in the city,
outside the city of outside the country the first thing he has to do is to fill an
application form. In which he states that I want to transfer the money from this
bank to that specific bank by mail. If the customer is the account holder of this
bank, the bank will debit his account and the concerned officer will fill forms
to make the mail transfer complete.
If the customer is not the account holder of the bank, then firstly he has
to deposit the money and then rest of the procedure will be adopted to transfer
his money.


FAPC (finance against packing credit):
It is a type of banks own source finance provided to clients engaged in export
trade. As the term packing indicates that the credit line is granted to an
exporter for the purpose of packing merchandise for shipment to an importer
abroad. An exporter should give documentary proof to the bank consist of L/C
in favor of exporter indicating the description of the merchandise, the purchase
price, date of delivery along with other terms.


FAFB(finance against foreign bills):

It is a post shipment finance facility which is provided by the banks
to its clients after providing the evidence of shipment, he contacts his bank to
request him to lodge the documents. He then provide the request letter with
sale contract to grant him finance & this department grant him finance (90%
value of commercial invoice).

Imports and exports department


Introduction and registration:

Imports and exports act 1950 have empowered the federal Govt to control
the import and export in Pakistan. Pakistan is developing country and like
other developing countries its imports exceeds than exports. To control this
situation the registration of import and export has been made obligatory under
the registration order 1993. The authority of registration has been given to
export promotion bureau. No importer and exporter who has no granted
registration shall indent, import and export of any good into or out of Pakistan.
The requirements for getting registration are as under:

Application form.

Photocopy of I.D card.


Copy of memorandum and article of association (in case of limited


Ownership deed of office.

Fee payment.

Certificate of incorporation.

Applicant should regular taxpayer.

The major exports from Pakistan are surgical goods, sports goods hand noted
goods, leather goods, textile goods, etc.
Export procedure:
All the exports work under the imports and exports act that is changed by the
state in every year. When the importer send the L.C to bank in respect to
import or when the L.C comes to the advising bank from the issuing bank
then the concerned officer allot the number to the L.C and get registered. The
concerned officer write down the name of issuing bank and the party name in
a register and intimate the party about L.C. the exporter after receiving the L.C
from bank will prepare the documents as per the L.C usually the following
documents have to be prepared by the exporter:

Bill of lading

Covering letter

E- Form

Bill of exchange

Packing list

Commercial invoice

Quota documents in case of quota country

Certificate of origin

Special custom invoice

The export form (E-FORM):

E-FORM means export form which is the first and foremost
requirement for the exports from Pakistan. It is control instrument by Govt of
Pakistan by which it monitors the receipts from exports and checks the goods
that are transferred without foreign exchange. all banks which are engaged
with the foreign exchange are required to print and maintained the E form that
is checked by the state bank of Pakistan. For export an e form is issued by the
bank on the request letter of a company. Two separate registers are maintained
by the bank one for his use and the other one are for the requirement of the
SBP. On issuance of E forms the banker lists it in the register and makes sign
from the exporters. Banks record the name of party, amount, the goods
description, port of destination, importer name port of loading etc.
The functional utility of E-FORM:
The export form has four copies. The exporters and banks use it.
Without it the exporter can not make export. These copies are used as:

Original copy is for SBP that is checked by the higher authority.

Duplicate copy is for the bank use that is upraised by the custom

Triplicate for the use to report of SBP at the time of payment received.

Quartiplacte is for the company used.


Usage of E- FORM:
E- FORM is an important document for export. It has its own
importance such as this form is used as a checker means it monitor that what
things are going abroad and in return what things we are getting. So it creates
a check and balance on the foreign exchange. It shows the total quantity and
quality of the goods that is sending to another country. An E Form shoe the
party worth that is very helpful for the party and the bank. Bank can create a
party limit for the credit on the behalf of it and a party can arrange a loan for
its future requirements from the bank. It shows the terms of payment by the
importer and the delivery terms by the both parties that is helpful in case of
any discrepancy during the contact.

Short shipment notice:

A shipment may be cancelled by the importer or exporter due to
many reasons. The cancellation of the export letter is called short shipment
notice. In this situation the company has to inform the bank. Company has to
give a written letter to the bank that he is not the export so please cancelled
their e form. On the other hand bank at the time of receiving the letter will
stop the e form and cancelled the all documents.
Imports regulation:

Import is being regulated by the ministry of commerce and the

government of Pakistan under the import and export act:
Categories of imports:
Imports are classified into the following categories:


Commercial sector imports

Industrial sector imports

Public sector imports

Registration of importers:
A person who wants to approach the bank for importing goods from
abroad, he should have to get himself registered with the export promotion
bureau under registration of imports and exports act. He must fulfill the
following conditions before getting himself registered:
Documentary letter of credit:
A documentary letter of credit is an instrument or document issued by the
bank on the behalf of a customer, authorizing a beneficiary to draw a draft and
drafts or sometimes the requirement of a draft, which will be honored, on
presentation by the bank if drawn accordance with the te3rm and condition
specified in the letter of credit.
It is the written undertaking by the bank (issuing bank) pay to the seller
(beneficiary) at the request or as per the instruction given by the opener
(applicant) pay at sight or at the future date, a stated sum of money against the
required documents. The documents include the commercial invoice,
certificate of origin, insurance policy or certificate and the documents of
transport relating to the mode sending goods. L/C is therefore is an
arrangement of security for the parties. The conditional guarantee is related to
the documents only and not on the underlying
goods or services.


Establishment of letter of credit


The person applying for the letter of credit must be registered with the EPB.
The opening bank verifies this registration or otherwise exemption. This is
mentioned in the I form. The importer also shows the valid certificate of an
organization membership. A category pass book is issued by the EPB for
registered importer specifying his category. This book is centralized by the
centralized banks in the city. It is not necessary for the bank to hold the
original copy of the pass book of all the importers. But some times the
importer gets L.C from more than one bank so the bank have to hold the photo
copy of this pass book. The applicant can get the application from any branch
of the Habib Bank Limited. However only some branches are authorized to
open L.C. That branches how are not authorized have to contact with the
authorized branches to open an L.C. The authorized branches in such case
require the certificate from the applicant branch that the required formalities
are fulfilled and the approval was obtained with required margin.
For establishment of letter of credit, the importer requests the opening bank
with the following documents:


Application and agreement form IB-8:

Credit application form is an agreement between the bank and the customer on
the basis of which the letter of credit is opened. This form contains the
undertaking of the importer that get the documents from the bank at the mark
up price. It contains the following information:


Terms of credit.

Description of goods.

Origin of goods.

Port of loading and discharge.

Last date of shipment.

Foreign bank charges.

Terms of shipment. (Partial shipment or transshipment)

Insurance cover note, policy no, and name of insurance company.

Forward booking.

Mode of transmission.

Import registration no.

Any other documents required.

Detailed documents.

2) Performa invoice/ purchase order:

A Performa invoice is quotation of seller containing the description and
the specification of the goods, price, and terms of the sale. Some times the
exporter has their agent in the country. The agent must be registered from the
3) Insurance cover note:
All the goods imported under the documentary credit must always be
insured. In accordance with our country import policy, insured must be issued

by a Pakistani insurance company or the foreign company operating in

Pakistan and such company must be approved by the bank. Insurance covered
based on the following:

It is issued in the name of issuing bank A/C importer.

The rider should cover against war.

The port of shipment and the port of destination.

Amount of premium prepaid.

Shipment period.

The description of goods should be the same as per the form.

4) Appendix B:
This Performa replaces the import license and is submitted along with L.C
application form duly filled in triplicate. It is conditional undertaking that the
imports goods are not banned, not smuggled. It is also an undertaking that if
the bank is unable to arrange the said currency the importer have to purchase it
from other banks or from any other place. It includes the details and
description of goods, codes, class, type, source of import, country of import,
Performa invoice no etc.

5) I FORM:
This form is used at the time of retirement of documents against L.C
established earlier for reporting to the transaction to SBP tFinanceough the bill
of entry deptt. It has four copies that is used as follows:


Original is for the use of SBP.

Duplicate for the authorized dealer to be used for processing exchange


Triplicate for the authorized dealer record.

Quartiplacte is for the submission in SBP in the case of import where

the documents are not retired.

Approval for establishment of letter of credit

After scrutiny of the documents, IB-8 along with attached documents is put
before the corporate head for approval. If the amount of application exceeds
the power of the corporate head the branch concerned prepared the
memorandum for the corporate banking head for obtaining his approval.
In case party enjoying regular limit, the L.C is established without adopting
the procedure mentioned above. However the amount of L.C should not
exceed the regular limit.


Types of letter of credit:

Revocable credit:
The letter of credit that can be cancel with the consent of

importer, without giving any prior information to the exporter.

2) Irrevocable letter of credit:

The letter of credit that can be cancelled by the mutual consent of the
both parties. Only one party cannot cancel it.


3) Irrevocable confirmed letter of credit:

When an issuing bank authorizes and or request to an other bank to
confirm his irrevocable credit and adds its confirmation. Such confirmation
constitutes a definite undertaking of such bank in addition to that of the
issuing bank. There are following other letter of credits:
Revolving Credit
1. Transferable Credit
2. Back to Back Credit
3. Green Clause Credit
4. Red Clause Credit
5. Clean Documentary Credit
6. Transit Credit
7. Stand by Credit
8. Sight Credit
The applicant:
The applicant of the letter of credit is called the importer or buyer. The buyer
requests to the bank to open a documentary letter of credit in favor of the
Opening bank (issuing bank or importer bank):
At the request of the importer an issuing bank issues a credit under the
instructions in the favor of the seller.
Advising bank:

An advising bank is a bank in the sellers country. The issuing bank forwards
the advice of the credit by mail or by any mode to the correspondent bank in
the exporter country as instructions of the opener.
Beneficiary (exporter):
The person or body receiving the letter of credit from the importer that is
opened in favor of him.

Confirming bank:
The bank that on the requests of the issuing bank adds confirmation to a
credit. It is definite undertaking of the confirming bank, in addition to the
issuing bank.
Negotiating bank:
It May or may not be the advising bank. An authorized bank that gives the
value to the draft for processing and payments.
Reimbursing bank:
Reimbursing bank is the bank, which on the behalf of the opening bank,
honors the Reimbursing claim lodged by the negotiating bank.

Modes of payment:

Sight letter of credit:

The seller submit all the documents with draft in the importer country
Complying with the all terms and conditions. The payments are made on the
presence of the documents.


Usance letter of credit:

Under these circumstances it is agreed that the payment will be made
after a specified period. So the payment is made after or on the expiry of that

Risks for importer and exporter:

Importers risks:

He does not know the seller.

He does not know that goods will be delivered in time.

He does not know how to check the goods.

Exporters risks:
He does not know the buyer.

He does not know the credit worthiness of the buyer.

He does not wait for payment.

He does not wait for exchange control.

Buyers and sellers obligations:

The sellers obligations:


Provision of goods as per contract.

License authorization and formalities.

Contract of carriage and insurance.

Delivery at time.

Transfer of risk.

Division of cost.

Notice to buyer.

Proof of delivery.

Good checking marking and packing.

Other obligations.

Buyers obligations:

Payment of price.

License authorization and formalities.

Contract of carriage and insurance.

Taking Delivery at time.

Transfer of risk.

Division of cost.

Notice to seller.

Proof of delivery.


Inspection of goods.

Possible problems in international trade:


Delay in delivery.

Financing, how and against what.

Currency restrictions.

Regulatory restrictions.

Documentation and mode of settlement.

ICC rules and INCO terms.



Right Now the responsibilities assigned to FINANCE department at

Corporate Center can be categorized under tFinanceee heads:

Staff matters / Basic FINANCE Functions

Expenses control

Security matters


Now Ill discuss these one by one:


The banking council of Pakistan was responsible for the recruitment,

selection and allocation of human resources. After the dissolution of the
Pakistan Banking Council, the Banking & Financial Services Commission of
Pakistan is responsible for these activities.
Staff requirements are met according to the changing needs of macro
environment scenario and particularly the arising needs of the bank itself. A
need analysis is conducted. After assessing the human resources requirements
and screening of the applications, most probably, the suspects are invited for a
written test.
Short listed candidates are called for an interview for personality and social
appraisal. Interviews are a mix of direct and indirect interviewing techniques
and information required.
The selected candidates are sent for training of six months training from
The training is tFinanceough the lectures regarding banking procedural
guidelines and other behavioral aspects. After the completion of training
employees are allocated to different offices. The effective management of
people in an organization requires an understanding of motivation, job design,
reward systems, and group influence.




Succession planning

Risk Management

Diversity in our workforce

Management information

Progressive compensation and benefits design and implementation

Employee communications and relations

Training needs analysis, program design and implementation

Performance evaluation

Work-life initiatives


The responsibility of providing administrative support for the lending
activities of the Bank, and day-to-day monitoring of credit-exposure, is vested
in the Credit Administration Department (CAD).
The main responsibilities under this department are:

Implementation of credit facility and their maintenance according to

terms of credit approved.

Ensure that standard loan documentation for each credit facility is

maintained and the correctness & completeness of such documentation
and also responsible for custody of all credit files.

Maintain the safe custody of all collateral as per banks standard

operating procedures; undertake periodic evaluation and inspection of


hypothecated/ pledged inventories in accordance with the terms of


Ensure compliance with

Institutional credit policies & procedures

Local regulatory requirements.

Prepare various portfolio composition reports and other documentation

for submission to GRMs & RMs.


Upon approval of credit proposal, the credit proposal and approval are handed
over to CAD. Now CAD determines the nature of documentation required and
on receipt of same ensures that all legal documents are obtained and are
legally enforceable. After all these activities it can release the facility for
The marketing department in HABIB BANK LIMITED is very
strong. It is the main source of gaining and maintains the customers that can
give a large profit to the bank. There are five relationship managers in Habib
bank and every person is responsible for the credit of his party.
HBL corporate center only deal with the following categories of business:

The organization that have minimum 250 million sales in a year.

The organization that have availed 80 million finance


Agri based industry.

HBL do not deal with the agriculture sector.


It is the responsibility of the relationship manager to provide or fulfill the

requirement of the customer by checking his financial and position. The
procedure of credit approval starts with the credit proposal. First of all the
customer request to the bank for credit and on the behalf of him the RM check
the memorandum. The
Memorandum includes:

The company information.

Purpose of credit.

Assessment of management.


Financial analysis.

Third party or other bank information.

Conclusion and recommendations.

Then the RM sends it to the authorities who accept or reject the proposal. If
they accept the proposal they announced a credit range for the party. At the
end RM sends the proposal to CAD deptt custody and check.



Relationship manager is authorized to provide the excess facility to
the customer than the credit line. It may be up to

10 percent of excess amount

12.5 million Whichever is less?
It is not more than 15 days if the customer wants to increase this facility he
has to contact with the head office.

fund based:

It is first type of credit facility. In this facility the bank actually provides fund
to customers.

non fund base:

Second type of credit facility that does not provides fun but only give the
guarantee. If the customer is unable to make the payment at maturity date then
bank will be responsible to make the payment.
1. 1.


Every body knows that knowledge does not increase without practice
.practice is an important mean to improve the knowledge. Therefore university
provides internship programmed of six to eight week in different organization
during M.Com so that we could able to apply in theoretical concepts to


I started internship on 5th may to 25th June in water works road branch of habib
Work done by me in HBL in different departments:
1. 1.

Account opening department.

2. 2.

Data punching department.

3. 3.

Public dealing department.


In this account department I gain the particle knowledge about opening. This
department deals with opening account and saving account for its customer
and all matters regarding there off. The customer opening account/saving
accounts can be categorized as following:












In order to open an account first of all the customer has to fill a form
prescribed by the bank. The person is required to bring some reference or
introduction for opening the account. Introducer may be a person who has an
account with HBL.

Some important information regarding introducer e.g. the name and

account number of the introducer is written on the space provided on the
specimen signature cards. Then in order to find out whether he is a true
introducer or not a letter is sent to him thanking him for this introduction, so
that any thing wrong may come into notice.
There are different requirement for different types of accounts and account
holders. An important thing is that the customer should have a corporate
customer. The corporate customer limit is 40 million and this branch always
deals the corporate customer.

General rules for opening an account:

One person can open only one account in the same branch with the

same category.

In the event of death of an account holder the credit balance will be

transfer to the heirs of the diseased individual account.

Services charges will be deducted periodically as prescribed from time

to time on the accounts that are under the limit of specific account.

Services charges are not applicable on that accounts that are prescribed
as exempted.

A distinctive number will be allotted to the each account.

The bank can close those accounts that are under the minimum limit of
the bank.

Any sum to be deposited in the account should be accompanied by

paying in slip showing the party account number and the name.


Account holder can only withdraw the sum of money by his own
account by cheque.

Cheque should be signed by the account holder by the specimen given

by the bank.

Post dated and defective cheque is not accepted.

If statement of account spoiled a new will be issued on cost.

Any change in the address should immediately communicate to the


The account holder wishing to close the account must surrender the
cheque book.

Account may be transfer from one branch to another same branch

without any charges etc.

Data punching

Data punching means feeding of data collected into the computer daily or
weekly. We punch data daily which include in the account. First, we enter
transaction of customer on the basis of buying and selling daily in the
customer account then we punch customer data one by one according to dates
and sequence. TFinanceough data punching, we can easily transfer the data
and money to another account and determine the account information. After
debt and credit amount, we punch data according to their account in the
computer so that we could check data easily. We make cash debit







vouchers,transfer vouchers,internal account vouchers ,cross branch vouchers.

We give detail in the system .these all

Public dealing


Public dealing means have good behavior with the public for increasing
efficiency and growth. Bank deals with the customer and provides information
of accounts and others which relates to the accounts. Bank guides that how to
open account and forms fill to open new account. Bank issues cheque to the
customer for opening new accounts. Bank asks to the customer about their
needs and requirements and fulfill on time.
Following are includes in public dealing: Accounts Opening, Check book
issuance, Standing instructions, Marking stock payments, Debit Credit card
issuance, Activation of dormant accounts, Making inoperative account into
operation, Recovering of multiple charges availing bank facilities, issuance of
bank account statements

Open new accounts to the customer.

Issuance cheque to the customer.

Provides information for opening new account to the customer.

Establish good behavior with the customer to increase our product and

To solve their problems which create open accounts etc.

1. Main problems in HBL

During my internship I found some major problems in HBL overall management.
There is noticeable communication gap between upper level management and
operational staff.
There is also over staffing in HBL moreover inefficient individuals are in
credit card department.
There is huge difference in approaches of experienced staff & young staff
Imported upper level management
Experienced staff is frustrated mainly because of two reasons
Salaries have not been revised from last 10 years
Experienced Habibians are neither satisfied by the privatization
of bank nor they were taken into confidence at that times


Rs. In 000
Balance Sheet



Cash & Balances with Treasury Banks

135,276,934 7

Balances with other Banks



Landings to Financial Institutions






595,295176 563700737

Operating Fixed Assets




Deferred Tax Asset


Other Assets



1,867003,38 171527137



Bills Payable

Borrowings From Financial Institutions



Deposits and other Accounts

721,069,137 0

Subordinated Loans





Liabilities against assets subject to finance

Other Liabilities
Deferred Tax Liability

Net Assets



Represented By:
Shareholder's Equity
Share Capital






Un appropriate Profit

4 4,121,103 36,325,458

Total equity attributable to the equity

holders of the Bank

8 1,811,716 71,235,347

Minority Interest



Surplus on revaluation of assets - net of tax





Cash Flow Statement



For the year ended December 31, 2014


Profit before taxation

25,057,281 19,485,741

Less: Dividend income and share of

profit of associated and
joint venture companies



Gain on sale of investments net





24,449,906 19,033,186
Adjustment for:
Depreciation/amortization/adjustments 1,666,058


Reversal against diminution in the

value of investments










Miscellaneous provisions






loans and advances-net of reversals
















34,326,435 30,916,740
Increase/decrease in operating assets
Government securities
Landings to financial institutions

(24,986,471) 840,914

Loans and advances

(10,274,430) (4,851,108)

Other assets-net



(29,400,994) (5,961,458)



Deposits and other accounts

67,616,677 81,053,273

Borrowings from financial institutions (10,691,316) 4,098,973

Bills payable



Other liabilities-net

(1,350,947) 4,083,696
55,307,960 89,496,068
60,233,401 114,451,350

Income tax paid-net




(10,137,565) (12,265,104)



50,095,836 102,186,246








associated and joint venture companies (35,957,034) (78,588,907)

Dividend income received



Fixed capital expenditure



Proceeds from sale of fixed assets





Effect of translation of net investment

in foreign branches
subsidiaries and joint ventures
Net cash flows from investing activities (36,225,716) (78,005,445)


Sub-ordinate Loans
Dividend Paid

(5,450,436) (4,173,059)

Net cash flows from (used in )financing


(5,450,436) (4,173,059)

Increase in cash and cash equivalents

during the year



Cash and cash equivalents at beginning

of the year

108,541,351 84,639,657

Effects of exchange rate changes on

cash and cash equivalents



109,087,500 89,079,758
Cash and cash equivalents at end of the

117,507,184 109,087,500


4.4 Ratio Analysis

Liquidity Ratios

In graphs 2014should be near origin. Round the figures upto 2 decimal

You need to provide complete working of the ratios. You are required to
carefully study the table regarding maturities of assets and liabilities. Where
you can easily find the current and long term part of assets and liabilities.
Assets and liabilities having upto 1 year maturity are considered as current
assets and current liabilities. This table is given in the annual report of the
selected bank. You need to re-calculate the current and long-term parts of
assets and liabilities according to this table.
The liquidity of a firm is measured by its ability to satisfy its short term
obligations as they come due.

These are includes:

Current Ratio:
Current ratio = current asset/current liabilities
2014 Rs. In 000

2013 Rs. In 000





The current ratio of 2014 and 2013 is quite acceptable.

It means that its current ratio is less liquid. There is small increase in
industrys ratio which can meet the short term obligations of 2014.
Acid Test Ratio:
Acid test ratio = current asset inventories prepaid
expanses/current liabilities.
2014 Rs. In 000

2013 Rs. In 000








The acid test ratio is slightly high in 2014 than 2013.
Debt Ratio:
Debt Ratio= Total liabilities/ total assets.
2014 Rs. In 000

2013 Rs. In 000



These values indicate that the firm has financed close to total of its
assets with debt. The higher this ratio, the greater the firms degree
of indebtedness and the more financial leverage it has.


[a1]= 2 5,057,281+ 3 4,090,368

Debt-Equity Ratio:

Debt-equity ratio = total liabilities / total share holder equity.

2014 Rs. In 000

2013 Rs. In 000



It is a ratio of amount invested by outsiders to the
amount invested by the owners of the business. This ratio indicates
the low margin of safety to the creditors.2013 and 2012 has high
ratio as compare to 2014. The firm would not be able to meet the
creditors claim because of low assets or shareholder equity.

Debt to Tangible Net worth Ratio:

Tangible Net worth Ratio:
Tangible net worth ratio =total assets- intangible asset-total
Debt to tangible net worth ratio= Total Debt / Tangible Net
worth Ratio.
working of Tangible net worth required

2014 Rs. In 000


2013 Rs. In 000



Total Capitalization Ratio:

Debt to total capital ratio =long term debt/ (long term debt
+shareholder equity).
2014 Rs. In 000

2013 Rs. In 000



This ratio is relating the long-term debt to the
permanent capital of the bank. It shows that the fixed assets
decrease than previous years which show a good sign. This ratio is
considered to be satisfactory.
Profitability Ratios
Profitability measures enable the analyst to evaluate the bank or
firms profits with respect to a given level of sales, a certain level
of assets or the owners investment. Without profits, a bank or firm
could not attract outside capital


Net Profit Margin:

Net profit margin = (Net income/ Net sale) * 100



Rs. In 000

Rs. In 000


16.45 %

Return on Assets:


Rs. In 000

Rs. In 000



Return on Asset = Profit before Tax / Total Assets *100

This ratio shows that the returns on assets are
decreasing as compare to previous years but overall profit with its
available assets is increasing.
DuPont Return on Assets:
DuPont return on assets = (Net income/sale)*(sale/total asset) *100



Rs. In 000

Rs. In 000




Operating Income Margin:

Operating income margin = (EBIT/ Net sale) *100

Return on Operating Assets:

Return on operating assets = (EBIT/operating asset)*100


Rs. In 000

Rs. In 000




5,057,281+ 3
This ratio indicates that banks growth is not good. It
can not cover all assets or expenses tFinanceough net profit before
tax easily. Its not able because its ratio is decreasing than previous

Return on Total Equity:

Return on total equity = (Net income/ total equity)*100




Rs. In 000

Rs. In 000



Return on equity indicates the net income by the total
equity of the owners. In the year of 2013, the total equity is
increasing than previous years and net income is also increasing. In
the year of 2014, the total equity is grater than net income. It means
that generally, the bank has high return, the better off are the

Gross Profit Margin:

Gross profit margin = (Gross Profit/ Net sales)*100


Rs. In 000

Rs. In 000



Activity Ratios

Activity ratios measure the speed with which various accounts are
converted into sales or cash such as inflows or outflows.
These include:
Total Assets Turnover

Total assets turnover = Net sales/ total asset



Rs. In 000

Rs. In 000



Fixed Assets Turnover:

Fixed assets turnover = Net sales/ fixed asset



Rs. In 000

Rs. In 000



Market Ratios

Market ratio relates a firms market value, as measured by its

current shares price to certain accounting values.
These include:
Dividend per share
Dividend per share =Total dividend/ no of share outstanding



Rs. In 000

Rs. In 000



Earning per Share:

Earning per share = Net income/ no of share outstanding.



Rs. In 000

Rs. In 000



This ratio is decreasing as compare to previous years.
In these ratios, net income is greater than no of shares outstanding.
Thats why, the earning per share is decreasing and growth rate as
well as. It shows low profitability between the shareholders.


HBL is considered to be a very sound bank in the financial circles. This is the bank
where customers can safely keep their money as long as they want.
In SWOT analysis the best strategies accomplish in organizations mission by:

Exploiting opportunities and strengths.

Neutralizing its tFinanceeats and
Avoiding its weaknesses.

Following is a list of SWOT of HBL

A skill or capability that enables HBL to conceive and implement its
The officers of HBL are considered as one of the most able professionals in
the banking world.
I observed that HBL employees (except annoyed ones) interact with their
clients as if they are their personal friends and discuss about their problems as
their own.
HBL has got a reliable and easy to use internal computer system. HBL
maintained its data properly.
HBL has very good security system.
HBL is the larger commercial bank in Pakistan with the network of over 1466
domestic and international branches.
Being the pioneer of banking in Pakistan, HBL is the oldest and is the richest
in experience.
HBL focuses on consumer banking by lucrative schemes, products and
services suiting best to the wants and demands of the customers.


HBL has opened all its branches at commercial areas so that the customers or
clients face no problems in reaching to the bank.
The band is always on the look to improve its services both to the domestic as
well as overseas customers.
Human resources development and introduction of new technology towards
modern banking.
24 hours cash access and safe payment products for high value transaction.
Having potential to encounter the competitive environment in the market.
Veteran and experience private management group also involved in other
interests like, textile and cement industry.
Customer enjoys the services at the residential localities.
HBL enjoys deep relations with all most all industries in Pakistan

There is week communication system in overall

HBL as well as inside

Highest number of branches effecting the proper maintenance and difficulty in
providing same working environment at the each branch
Poorer system of recovery of the system is a tFinanceeat to bankruptcy.
Lack of customer feedback.
Low job satisfaction.
Poor ATMs Service
Inconsistency in efficiency and working atmosphere due to the largest of
Sense of insecurity in the employees serving at low profitable branches due to
the downsizing.
Females feel uneasy in an environment among the male workers.
Victim of political, legal and socio-cultural pressures
.Lack of professionalism in the branch employees mostly.


Huge untapped market potential in consumer banking as well as Islamic
Opportunity for developing value added services combined with corporate
banking relationships, cash management services to large and medium sized
corporate clients.
Growing policies of government on business and commerce sector provide
HBL opportunities to take advantages of these policies to meet efficiently with
the business people to solve their problems with the instant cash and financing
Government is supporting very bold steps of bringing and promoting IT in
Pakistan. HBL has an opportunity to improve in technology.
Large international network which principally focuses on trade finance with
Pakistan can be utilized to tap trade activities in other markets. In addition,
services such as cross border / offshore financing for corporate customers can
be enhanced.
Customer feedback on different products and accounts has really improved the
bank performance and encourage the atmosphere for other future policies.
HBL also has an opportunity to expand its new technological advancement
more effectively like; phone-banking and internet banking facilities in order to
serve the customer more efficiently, specially
E-banking facility is also a new opportunity which is a flourishing business in
foreign countries and can also be here, if HBL takes the initiatives.
Further reduction in intermediation costs possible, with improving technology.
Due to efficient and veteran management group, HBL can also improve and
expand its foreign operation successfully.
Habib Bank Limited provides opportunity to utilize its skills and efficiencies
in leasing business.


Prevailing circumstances increases the difficulties the organizations achieving
high performance.
Consolidation in the banking sector resulting in increased competition.
Shortage of trained and specialized staff at lower executive and officer levels
The tFinanceeat of inconsistency and government policy regarding to business
and economics sectors, specially political and regional situation which makes
the environment uncertain.
Growing global technological advancement.
Strict regulation by government over credit facilities to the customers as well
as to meet the prudential.
Loss of confidence of overseas customers due to freezing of accounts.
Facing more competition by foreign banks in the market.
Foreign banks are flourishing in field of consumer financing.
Also the increasing operation of private banks.
Highly attractive and advance services by foreign banks to their customers.


HBL is clearly the first choice of everyone who believes in qualitative approach of
banking an environment of highly responsible people. Bank is enjoying a healthy
market share and taste of good status in terms of its operative features and customer
support. HBL is clearly the best bank operating in Pakistan. Corporate and
commercial functions are distinguished features of HBL experiencing a good
reputation and reasonable mark up with respect to prevailing market mark up with
assurance of satisfaction and support. HBL has more customers as compare to other
banks, if they given proper attention to every customer then in few years it will be the
leading bank of the country (asset point of view)
RAFIQ has become a creditable name in the textile industry of Faisalabad. In a bid to
prepare itself for the challenges / opportunities of the barrier free trade Textile Vision
2005, their planned spinning unit will help them reap the benefits with competitive
edge of cost effective, quality products. The company has already started exporting
quality yarn to various buyers in the region. We may improve net return on funded
facilities from the relationship by rationalizing the credit portfolio in accordance with
their financial requirements as proposed. In view of the above, we recommend the
proposal for approval.

6.2 Recommendations:
Being a finance student, your main focus should be on finance related issues based on
your training experience and ratio analysis
During my internship, I have realized that habib bank is vast system and spread its
networking all over the world and performing very well. It is difficult to give
suggestion about improving condition of habib bank.


So, I will few suggestions to habib bank which are given below:

Bank must introduce online system all over the world.

Bank has different schemes which should express to the required

customer so that
They are introduced reasonable shares in the market.

Bank should provide interest free loan to the scholar students for their


Habib bank should introduced computerize system in all branches.

TFinanceough it, bank can increase more efficiency in the work than without

Habib bank should create plan for opening a customer account with bank

where he could easily know about the procedure of filling forms or cheque of
new accounts. It saves a lot of times of banks and staff who perform it.

Habib bank should increase communication with customer so that they

could more establish public relation and expand its growth.

Habib bank must introduce marketing programs for the clients so that they

could easily know about the market development of bank because it is

problem for clients that he has no idea for usage of new marketing term.


Bank should have same behavior with the customer. Bank should not

adopt such a behavior which creates problems between the customer and
banker. For example, bank show good behavior with very close person and
bad behavior show with other person. It is not good position for the banking


HBL Corporate Profile 2011
HBL Annual Reports 2009and 2011 first Quarter
Articles & Documents
Banking sector reforms in Pakistan:
wiki.pediai.com/Q/ Evolution_of_banking