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Letter of Internship
PREFACE
In order to be able to cope with the changing environment it is necessary to
have some practical experience. As the student of Commerce we have to pass through
a series of various managerial techniques. During this practical course we are
provided with an opportunity to learn that how the theoretical knowledge can be
implemented on practical grounds.
I worked there in Habib Bank Limited for six weeks & it gave me a great
practical knowledge about the operations of an organization. In the following pages I
have narrated my experience, observation & all the working activities which I
observed during my internship.
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Dedicated to
My loving Parents
&
Respectable Teachers
(Mudassar)
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Acknowledgements
First and foremost all the praise is for Allah, the merciful and Beneficent, who
blessed me with the knowledge, gave me the courage and allowed me to accomplish
this task. Through I did not conceal myself capable to do so.
In addition to internship advisor Sir --------, I am especially indebted to all my
teachers for instilling in me enough knowledge to be able to carry myself efficiently
during my internship and complete this report.
Secondly I am bound to thanks the whole staff of Habib Bank Limited, Jalal
Pur Bhattian for such a cooperation and good time. In particular I am grateful to;
for their inspiring guidance, remarkable suggestion and friendly discussion, which
helped me to learn and enabled me to complete this report.
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Executive Summary
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TABLE OF CONTENTS
1. Industry Introduction 07
2. An overview of organization 08
-- History of Organization 08
-- Nature Of Organization 08
a. Vision Statement 09
b. Mission Statement 09
-- Main Features 10
-- Competitors 15
3. Organizational Structure 16
-- Hierarchy Chart 17
-- Number of Employees 20
-- Main offices 20
-- Comments on organizational Structure 22
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WHAT IS BANK?
Banks are providing all types of banking services whichever permissible in the
country. These service are following.
Accepting deposits in saving, current and fixed accounts.
Borrowing funds and arranging finance from other banks.
Advancing and lending money to its clients.
Promoting the export of Pakistan & Making investment in other companies.
Sponsoring different scheme & transacting guarantee and indemnity business.
Financing of seasonal crops like cotton, heat, sugar cane etc.
Generating, undertaking, promoting etc of issuance of shares.
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HBL at present state has a long and rich history of deeds and sacrifices. All
this has been possible on the account of sustained efforts.
Perhaps the HABIB BANK LIMITED establish in 1941 at Bombay. But its
history starts in 1841 when a young boy name Ismail Habib reach Bombay for job.
After some time he got the job with a dealer in utensils and non ferrous metals. Ismail
Habib was very keen and intelligent and became partner of his boss. Later on he was
elected as a president of the market. Many years later he expended his business. He
engaged in private banking. So HBL has come a long way from its modest
beginnings in Bombay in 25 august, 1941 when it commenced business with a fixed
capital of 25000 rupees.
The first branch of HBL started functioning on 30th August, 1941 at Muhammad
Ali Road Bombay, where Quaid-e-Azam Muhammad Ali Jinnah first of all opened his
personal account.
In 1942, on the desire of Quaid-e-Azam, Habib family migrated to Pakistan and
later on shifted the Banks 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 exports of crops from Pakistan with only two
Pakistani Banks i.e. HBL and Australia bank. 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 definitely added to the difficulties of the
government 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 India Pakistan, the Indian Government withheld Pakistans share
of Rs 75 core in forward and subscribed heavily to the Government of Pakistan to the
tide over the crises, payment was made to the Government by the Bank at a very
nominal rate of interest, even before the actual issue of securities.
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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 Government 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 throughout Pakistan to provide finance and other facilities to the
business community. In association with HBL, the Government sponsored Pakistan
Finance Corporation Limited for financing of cotton. The Bank helped handsomely in
the construction of WARSAK DAM PROJECT, WAPDA and K.D.A.by provided
finance and other facilities. It was also the first in making available such new facilities
as Gift Cheque, Rupee Travelers Cheques, Credit Card System, short term and long
term schemes for small businessmen.
Besides this, HABIB BANK has been a pioneer in providing innovative banking
services such as first installation of mainframe computer in Pakistan followed by
ATM and more Internet banking facilities in all branches. The main strength of HBL
brand is its great services to all customers especially to the corporate customers and
its prominent head office building that has dominated Karachi's skyline for 35 years.
VISION STATEMENT
MISSION STATEMENT
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Features:
OBJECTIVES OF HBL
PRODUCTS OF HBL
1. LOAN PRODUCTS
House Finance:
HBL provides the facility of house finance:
Financing available for:
Purchase of house
Home improvement and renovation
Self Construction
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 are:
Lowest Down Payment
Lowest monthly rentals
Fixed repayment tenures of 36, 48 and 60 months.
Lowest Processing Charges
Insurance premium rates as low as 3%
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Life Style:
Habib Bank Lifestyle is an economical financing scheme for Household
Appliances and consumer Electronics.
Salient features of HBL LIFESTYLES:
Loans for salaried/self Employed individuals or business persons
Low Mark-ups leading to affordable monthly installments.
Financing from Rs: 10000 to Rs: 500000
Fixed tenures of 6, 12, 18, 24 and 36 months
Low Processing charges
Full credit life insurance
Free Doorstep Delivery of items
Available throughout Pakistan from over 330 designated Habib Bank
Branches
Personal Loans:
Maximum loan up to Rs: 1000000
Choice of 12, 24, 36, 48 and 60 months for payback
Lowest Mark-up
Quick processing
Full Credit Life insurance
Available from over 400 designated branches throughout Pakistan
Agricultural Loans:
It entails all kind of agricultural finance facility for the rural market such as.
Kissan Dost Agricultural Finance Scheme
Kissan Dost Tractor Finance Scheme
Kissan Dost Mechanization Support Scheme
Kissan Dost Farm Transport Scheme
Kissan Dost Live Stock Scheme etc.
2. SERVICES
Retail Banking
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The Retail Banking network, with 1450 branches, is the core strength of Habib
Bank. The network provides HBL with the largest diversified low cost deposit base of
any bank in Pakistan, and forms the basis for many of our other business lines:
corporate and investment banking and treasury activities. The network provides HBL
with the largest diversified low cost deposit base of any bank in Pakistan, and forms
the basis for many of our other business lines: corporate and investment banking and
treasury activities.
Commercial Banking:
Enterprises operating in the middle market contribute significantly to the
economy of a country. During FY-2000 HBLs management decided to address this
issue. On November 1, 2000 Commercial Banking came into being.
The objective of settling-up Commercial Banking was twofold:
First to stop the erosion of market share in the middle market;
Second, to regain the lost market share
Commercial Banking is making headway with improvement not only in terms of
the business figures but also in its ambiance. Renovation of is being carried out in
order to give a professional look to all the Commercial Banking Centers.
Corporate Banking:
The Corporate Banking Group serves large institutional customers who
require sophisticated products in an environment of intense competition. HBL
Corporate & Investment Banking Group is now recognized as a market leader and
regularly arranges and participates in most large structured finance deals.
International Operations:
HBLs ability to operate successfully in diversified markets and cultures is a
function of a long history in international banking when first international branch
was opened in 1951. The Bank's branches in financial centers continue to provide
efficient trade settlement and reimbursement services to the entire network and
business with other banks.
Collection of Cheques
HBL pays and collects cheques on behalf of their customers, and for this it
receives commission form their account holders.
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
interest on the securities is to be credited to his account in the Bank. Bank charges
commission for the collection of the dividends on behalf of account holders.
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HBL if authorized by the customers also makes purchase and sale of securities
on the behalf of its customers. Bank charges commission for the purchase or sale
made by its on behalf of the customers.
Transfer of Funds
HBL also transfers funds of the customers from one Bank to another Bank. If
the transfer is within one station, they dont charge any commission and even if they
charge, they charge on reduced rates.
Acts as an agent
HBL also acts as an agent, correspondent or representative of its customers at
home and abroad.
Locker Facility
HBL also provides locker facility to its customers where valuables of
customers can be kept.
Other Services
Amaan-Retirement Plan:
A pension plan that offers attractive investment returns.
Tabeer-Childern Education:
An insurance plan that enables parents to cover education and marriage costs.
HBL E-Bank
It provides services via a dedicated communication link on the internet. The E-
Banking services provide anytime, anywhere banking to all 5 million customers. This
service, designed to be user friendly, assures secured access and confidentiality.
SWIFT
The bank is a major SWIFT user in 70 domestic branches & 21 overseas
countries/ locations in the network. SWIFT services are being used for funds transfer,
remittances and trade related transactions, resulting in major improvement in payment
processing capability for enhanced customer services.
Business Volume
Business volume of HBL in last five years is a follows:
Sr.
Description 2007 2008 2009 2010 2011
#
Shareholder
s Equity &
1 63237429 66308587 84369798 96250771 109586988
Revaluation
Surplus
69199152 74980671 86377862 92469940
2 Total Assets 1139554205
1 5 1 3
Total 53129812 59709054 68275007 74737479
3 933631525
Deposits 7 5 9 9
Advances
38217273 45635550 45466249 45975001
4 (net of 457367656
4 7 9 2
provision)
Investments
17794225 12983344 21646753
5 (Net of 254909116 418604147
1 6 2
provision)
Customer Satisfaction
With a customer base of 5 million and a network of 1494 branches in Pakistan,
HBL is the largest Private Bank in the country. Its network means that it is
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geographically closer to our customer than any other bank. This gives us the insight
needed to provide a variety of Products that directly reflects the customers needs.
HBL provides that following products and services to meet its individual
customer requirements: -
Debit Card
Deposit Account
Phone Banking
Bank Assurance
Mutual Funds
2. Excellence: -
This is at the core of everything they do. The markets in which they operate
are becoming increasingly completive, giving their customers are abundance of
choice. Only through being the very best in term of service they offices, their
products and premises are widely acceptable.
3. Respect: -
HBL provides great respect of their employees. They motivate the employees
by providing friendly environment, better pay packages and awards etc.
4. Humility: -
HBL encourages a culture of mutual respect and treats both their team
members and customers with humility and care.
5. Team Work: -
Their team strives to become a cohesive and unified force, to offer the
customers a service beyond his expectations. The customer a service participative
and collective endeavors, a common set of goals and a spirit to share the glory and
the strength to face failures together.
6. Innovation
HBL focuses on the innovation of new products. It was the first in making
available such new facilities as Gift Cheques, Rupee Travelers Cheques, Credit
Card System, Short Term and Long Term Schemes for small businessmen, PC
based banking for corporate customers etc.
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Competitors:
1. United Bank Limited (UBL)
2. National Bank of Pakistan (NBP)
3. Bank of Punjab (BOP)
4. Bank Alfalah
5. Meezan Bank
6. MCB
7. Allied Bank Limited (ABL)
ORGANIZATION STRUCTURE
A well-developed and properly coordinate structure is an important
requirement for the success of any organization. It provides the basic framework
within which functions and procedures are performed. Any organization needs a
structure, which provides a framework for successful operations. The operation of an
organization involves a number of activities, which are related to decision making,
and communication of these decisions. These activities must be well coordinated so
that the goals of the organization are achieved successfully.
STRUCTURE OF HBL
At present the Bank operates through one central and many branches, all over
Pakistan. The president and Executives 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
Presidents supervise rest of the functional group. 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
Service. 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.
ACCORDING TO DUTIES:
A.
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According to Designation/Grade
According to Designation/Grade:
G.E, IOBG G.E, CPOD G.E, CPCS G.E, RBG G.E, CIBG G.E, ARM G.E,
AGA HEAD OF IT
HEAD OF HR HEAD OF FINANCE
VICE PRESIDENTS
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GRADE I OFFICERS
GRADE II OFFICERS
CLERICAL STAFF
NON-CLERICAL STAFF
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C B R
A R E
SSA
A LL
HN A
C T
H I
O
N
SS
H
I
P
Number of Employees
HBL Jalalpur Bhattian branch has 7 employees the contact numbers of some
employees is as follows,
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Head Office
Habib Bank Plaza
I.I.Chundrigar Road
Karachi-75650, Pakistan.
Phone: 021-32418000 (50 lines)
Fax: 021-39217511
Registered Office
th
4 Floor, Habib Bank Tower
Jinnah Avenue
Islamabad, Pakistan.
Phone: 051-2872203 & 051-2821183
Fax: 051-2872205
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Basically this department is the pillar of the whole banking system because
this is the department which initiates the relationship between the customer and the
bank. Here it is the responsibility of the officer that there is no element of fraud in
customer. Borrowing funds from different sources has become an essential feature of
todays business enterprises. But in the case of a bank borrowing funds from outside
parties is all more vital because the entire banking system is based on it. The
borrowed capital of a bank is much greater there own capital. Banks borrowing is
mostly in the form of deposits. These deposits are lent out to different parties. Such
deposits creation is done through opening of account in the bank.
Type of Account
The primary operation of bank is opening of account. Three types of account
normally used at Khushab branch:
1. SAVING ACCOUNTS
2. CURRENT OR DEMAND ACCOUNTS
3. FIXED ACCOUNTS
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Nature of Accounts:
The current and saving accounts can be opened under the following
nominations. The documents required of opening a new account is also depend on the
nature of account which is given below.
a) Individual Account
One person can open it. He has to fulfill all the requirements of the bank. It is also
called the personal account. Following are requirement for individual account.
Photocopy of NIC individual.
In case the CNIC does not contain a photograph, the bank obtains the
Photograph in addition to CNIC.
In case of a salaried person, attested copy of his service card, or any other
acceptable v\evidence of service.
In case of illiterate person, a passport size photograph of the new account
holder besides taking his right and left thumb impression on the specimen
signature card.
b) Joint Account
When two or more persons open an account in their names it is called joint
account in case of joint account it is mentioned that how many will operate this
account.
Attested photocopies of identity cards of all persons.
Authority letter for supervision of account one or all.
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c) Partnership Account
For partnership account along with the application from and signature card other
documents are also required including the following.
For partnership account along with the application from and signature card other
documents are also required including the following.
Attested photocopies of identity cards of all partners.
Attested copy of Partnership Deed duly signed by all partners of the firm.
Attested copy of Registration with Registrar of Firms. In case the partnership
is unregistered, this fact should be clearly mentioned on the Account Opening
form.
e) Company Account
For company account following documents is required:
Certified copies of:
Resolution of Board of Directors for opening of account specifying gate
person(s) authorized to operate the company account.
Memorandum and Article of Association
Certificate of Incorporations.
Certificate of Commencement of Business.
Attested photocopies of identity cards of all the directors.
f) Govt. Account:
For the Govt. account the following documents required for opening an account.
Attested photocopy of identity cards (CNIC) of the authorized persons.
Authority Letter to open & operate the A/C from concerned Govt. department.
g) Dormant/Inoperative Accounts
All depository accounts like Current/Saving/BBA etc., which are not operated
upon by the account holders for a period of one year, will be classified as dormant.
After passing one year in the dormant status, that is, no operation in the account for a
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continuous period of two years, the account shall be classified as inoperative. This
entails certain restrictions on the operation of such accounts, for reactivations, the
account holder must in person request for a change of status and will produce original
CNIC or passport of Pakistan Origin Card or National Identity Card for Overseas
Pakistani with photo copy of Branch /Bank attestation. All accounts which are
inoperative and have nil balances shall be closed by the bank.
ONLINE TRANSFER
Online inter branch funds transfer is a facility given to the customer through which
customer can transfer funds in the shape of cash or Cheque to any account of any
branch from any online branch of Habib Bank Ltd. For this purpose there is a form
used in the bank which is duly filled by the bank and signed be the customer. One
CNIC copy of the sender is also attached with the slip. The slip contains the following
information.
a) Applicants name.
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b) Applicants address.
c) Applicants CNIC number,.
d) Remote branch.
e) Remote account number.
f) Remote account title.
g) Cheque number. (If funds are transferred through cheque).
h) Amount in figure.
i) Amount in words.
j) Commission
What is Clearing
Clearing House
Outward Cleaerence
When the clients of the bank receives the cheque from other parties, which
are drawn on any other bank, the bank take these cheques and mark it for clearing,
this type of clearance is called outward clearance.
When bank received such types of cheques first of all officer crossed these cheques
and make them the property of the bank and issues acknowledgement of pay in slip to
the client by only single signature and enter in clearing and transfer delivery register.
After this all the cheques are sent to the main office and the party account is credited
with the head of clearing. Branch sent there check to NIFT for clearing and transfer
delivery cheques to their branches for transfer delivery.
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Second day if the cheques will honor then main office will send the advice of these
cheques. If any cheque dishonor then the cheque is returned with the slip.
Inward Clearance
When the clients of HBL endorse the cheques of HBL to a person who is not
the client of HBL then the person will submit these cheques in the bank where he has
the account and then that bank will send the cheques to the State Bank of Pakistan for
clearing where cheques are delivered to the representative of HBL. The representative
then sends these cheques to the branch on which cheques are drawn. If there is
sufficient balance in the account of a person who has issued these cheques then:
What is OBC?
When an instrument is drawn on bank, which is located outside the city, its proceeds
can be collected through a mechanism called Outward Bills for Collection (OBC).
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What is Remittance?
Remittance is transfer of funds from one place to another or from one person to
another.
A Remittance is an important service provided by banks to customers as well
as non-customers. Since it is not a free service it is a source of income for the bank.
Remitter
One who initiates, or requests for a remittance. The remitter comes to the
issuing or originating branch, asks for a remittance to be made, and deposits the
money to be remitted. The bank charges him a commission for this service. He may or
may not be the branchs customer.
Remitter
A Remitter is also called the beneficiary, or the payee. The person in whose
name the remittance is also the one who receive the payment.
Issuing Bank
The bank that sends or affects the remittance, through demand drafts,
telegraphic transfers, or Mail Transfers.
Paying Bank
Paying Bank also knows as the drawee branch. The branch on which the
instrument is drawn. It has to make the payment (usually located in a different city
country).
Modes of Remittance:
Habib Bank Ltd, like other commercial Banks undertakes to remit or transfer
money from one place to any part of the country and outside the country. The money
is remitted by means of:
1. Demand Draft (DD)
2. Mail Transfers (MT)
3. Telegraphic Transfers (TT)
4. Pay Order
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Explanation:
If any person wants to make payment from one city to another city then he can
make payment through demand draft. Bank charges a commission for performing this
kind of service according to bank rate schedule, which is revised after 6 months.
Demand draft may be issued or paid. There are two ways to issue.
Demand Draft: -
1. Issue of DD against cash payment
2. Issue of DD against Debit of the account.
2. Mail Transfer:
In mail transfer money is transferred through mail. One branch of the bank sends
advice to the branch of the same bank to credit the amount of payee. In this type the
payee must have the bank account.
3. Telegraphic Transfer: -
Generally a mail transfer advice reaches the Drawee branch the next day, when
courier arrangements exist. However, when it is sent through post offices, it usually
takes 2 to 3 days to reach its destination. But sometimes an individual whether
customer or not, demands that his funds should be transferred from one place to
another though the quickest means. In such cases, transfer of funds message is passed
on through a telegram, ordinary or express, to the Drawee branch of the bank. A tested
message is sent to the Drawee branch followed by the confirmation copy. In case the
payment is immediately required by the payee, the tested message is given on the
telephone.
Besides normal charges as those recovered on issuance of demand draft, the bank
charges one additional expense i.e. Telephone Charges of amount Rs. 100 from the
customer.
Features:
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TT is not negotiable
The funds are not remitted through the branch situated within city.
TT instruction regarding payment is sent through codes called test code.
4. Pay Order:
Pay order is a negotiable instrument made by the bank, on account of a customer,
to pay on order the specified amount to the directed person (payee).
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Tabeer is a plan that provides parents with means to accumulate a fund over a
period of time which can be used to pay for a childs education or marriage. Plans are
available for both under & over 45 years of age.
Cash department:
The cash department is the most important department of the bank. It receives
cash from customers and then deposits it into the accounts of the customers and
maintained their balances.
The officers in this department are called casher and there were three chasher at the
counter. This department involves in two activates: -
SPECIAL CONSIDERATIONS:
When cheque is received for payment special care is taken about the following
things.
Amount in figure and words is same
Signature at the back of the cheque
Signature of the account holder
No cross or cutting in figures
Date of presented cheque
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If anything wrong then cheque is dishonored and a lip would be attached with the
cheque named as Reason for Dishonor.
Posting In Computer:
Then the officer posts the transaction entries in computerized ledger. After posting
these entries computer displays balance before and after posting. Computer operator
assigns the stamp POSTED on the voucher. He manually inspects the entries of
ledger and voucher. If both tallied he signs the ledger and put a mark of cancellation
on the voucher.
At the end of the day cashier is responsible to maintain the cash balance book. The
cashbook contains the date, opening balance, detail of cash payment and received in
figures Rs. And closing balance. The figures of receipt and payment cash are entered
into the cashbook and the closing balance of cash is drawn.
When cash is received in counter, it is entered in the Scroll Book and Receiving
Cashier Book. At the close of the day, there are balanced with each other.
When the cheque or any negotiable instrument is presented at counter for
payment, it is entered in the token book and token is issued to the customer. The token
clerk and the Cashier make entries in the paying book and payment is made to payee.
At the close of day, the Token Book and Paying Cashier Book are balanced.
The consolidated figure of receipt and payment of cash is entered into eh cash
balance book and drawn closing balance of cash.
Opening Balance + Receipts Payments = closing Balance.
This is very important department because cash is the most liquid asset and
mostly frauds are made in this department, therefore, extra care is taken in this
department and nobody is allowed to enter or leave the area freely. Mostly, cash area
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is grilled and its door is under supervision of the head of that department. All the
books maintained in this department are checked by an officer.
In spend three days in Credit department and remaining two days in Marketing
department.
CREDIT DEPARTMENT
Advances are the most important source of earning for the banks. HBL is also
giving full attention towards this aspect and it is also obvious from the growing
portfolio of advances and from very low delinquency rate. The receipt portfolio of this
institution is in a very much better shape than other financial institutions of Pakistan
and the redit goes to the management and the staff who are related to this department.
a) Running Finance:
Running finance is most popular sort of credit facility given to clients. This is
mostly obtained for the purpose of working capital requirements. Client can draw
money even daily from the account but not more than the limit. In running finance, it
is not necessary that security would be in the procession of bank, but all important
documents of stocks, property etc, are in its possession.
Standing instruction
Letter of arrangement
Letter of hypothecation of stock
Stock report monthly
Letter of continuity with promissory note
Agreement of finance
CIB statement
Personal Guarantee
Approval letter from HBL
Mortgage of building etc
Running Finance mostly given against the security of Hypothecation of stock or
mortgage of building.
AGRICULTURAL FINANCE:
Purpose of finance:
Four renowned companies of the country such as Noon Group, Pak Kuwait,
PSO and Angro Service have established a joint venture company in the name of the
Agrimall (Pvt) Lted to provide agro services under one roof through its Franchisees.
The Agrimall (Pvt) Ltd has approached our Bank to provide financial help to their
franchisees to establish and run these Agrimalls under their specialized management
throughout the country. HBL has launched a kissan Dost Agrimall Finance Scheme.
All facilities required by the Franchisees of the Agrimall (Pvt) Ltd will be provided
through this scheme. The farmers, who will be the clients of Franchisees, will also be
provided production loans through Banks Kissan Dost Agriculture Finance Scheme
(For purchase of inputs).
The documents for kissan dost agriculture schemes are differ from scheme to scheme.
Such types of schemes are providing farmers a real plate form to accelerate. Some
provisions related kissan Dost Agricultural Finance Scheme are:
Purpose
Provision of financial facility to farmers for purchase of inputs i.e seed, fertilizer,
pesticides, fungicides etc.
Facility Amount
Maximum of Rs: 500000 according to per acre limit of the crop. (different case to
case)
Security
Charge on Agriculture Land through Agriculture Pass Book.
One personal guarantee of reputable person.
Lease tractor (to be registered in the name of bank)
Tow written satisfactory market checking reports
Insurance
The borrower will have to arrange life assurance inder the Banks charge. Assets
insurance (i.e. tractor)
Mark-up
Average six months KIBOR +4.0% with floor of 16% per annum.
Repayment
10 qual half yearly installments (differ case to case)
MARKETING DEPARTMENT
The marketing department of the Habib Bank Ltd, Jalalpur Bhattian branch is
doing wonderful job. Because of competition in market there are many other Banks
existing in the market. So at that time Habib Bank Ltd. Also run a marketing
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campaign especially in business filed and salary persons. Habib Bank Ltd. Uses a
marketing strategy with different way and different scheme.
In 7th and 8th week of I worked almost on all seats randomly. I also collect
necessary data which can help me in preparation of this report.
Duties as an internee:-
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Financial Analysis:
Financial Statements:
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Horizontal Analysis: -
Comparison of two or more years financial data is known as horizontal analysis or
trend analysis.
The goal of horizontal analysis is to compare the figures of the current period with
that of the past period. It helps the company and its share holders to analyze their
performance and final out areas of improvement.
Balance Sheet
Horizontal Analysis/Trend Analysis
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Analysis: -
There is a rapid increase in the cash and balances with treasury banks.
There is a decrease in the balances with other banks in the year of 2010. But
after and before it shows increasing trend.
On the other hand, lending to financial institutions is weaving every year upto
2008 and after it shows increasing trend.
Other assets have also increased as compared to base year.
There is an overall increase in assets.
The Bank has paid all the tax liabilities. Now there is no outstanding tax of the
bank.
Though the assets have increased but the decrease in liabilities is more then
increase in assets after 2008.
The main reason of decrease in liabilities is deposit and other accounts.
There is a prominent increase in net assets.
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Analysis: -
There is a positive increase in net markup income.
Total non mark-up income & total no mark-up expenses, both have increasing
trends.
In fee, commission and brokerage income, there is increasing trend.
There is also an increasing trend in administrative expenses.
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Vertical Analysis: -
Technique for indentifying relationship between items in the same financial statement
by expressing all amounts as a percentage of the total amount taken as look is known
as vertical or common size analysis.
In a balance sheet, for example, cash and other assets are shown as a percentage of the
total assets and in the income statement cash expense is shown as a percentage of
sales revenue.
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Analysis: -
Mark up income is taken as a base for the vertical analysis of profit and loss
account.
In 2011,mark up income is higher as compared to previous years.
As compared to non-markup income, non mark up expenses are high in the
year 2011.
Fee, commission & brokerage remained very low/nominal throughout the
period.
Profit after taxation is 20% in 2007, but it is 23% in 2011 which shows an
increasing trend in profit.
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Analysis: -
In the year 2007, out of total assets of 100%, liabilities and equity are 91% and
9% respectively as detailed below:
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Ratio Analysis
Meaning and Definition of Ratio Analysis: -
Ratio analysis is a widely used tool of financial analysis. It is defined as The
systematic use of ratio to interpret the financial statements so that he strength and
weaknesses of a firm as well as its historical performance and current financial
condition can be determined. The term ratio refers to the numerical or
quantitative relationship between two variables.
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Current Ratio: -
This ratio is the rough indication of a firms ability to serve its current ability
to serve its current obligations generally, the higher the current ratio the greater
the cushion between current obligations and a firms ability to pay them.
CurrentAssets
CurrentRat io
CurrentLiabilities
650864855
1.069 : 1
For the year 2007: 608810966
700467019
1.064 : 1
For the year 2008: 657834717
805895371
1.075 : 1
For the year 2009: 749546679
873624106
1.089 : 1
For the year 2010: 801891587
1075577848
1.084 : 1
For the year 2011: 992035797
Average=1.0762:1
Interpretation
The current ratio is highest in 2010 however it shows increasing trend from
2007 to 2011. It decreases in again in 2011 because the Advances and Deferred tax
asset are low comparatively to 2010 and the current ratio is low in 2011 because
of the total current liability is high in 2011 as compare to 2010.
Working Capital: -
Working capital measures how many liquid assets a company have available to
build its business. It is a measure of both a companys efficiency and its short-
term financial health. Positive working capital means that the company is able to
pay off its short term liabilities. Negative working capital means that currently,
company is unable to meet its short term liabilities with its current assets.
Average=59315891 Rs
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Interpretation:
There is continuous increase in the working capital that bank is moving towards
sound position because the current assets are increasing in 2011 as compare to
2010 except Advances. So the company is able to pay off its short term liabilities.
Cash Ratio:
It indicates the extent to which the readily available funds can pay off the
current liabilities. Potential creditors use this ratio in determining whether or not
to make short-term loans.
Cash MarketableSecurities
Cash Ratio = CurrentLiabilities
55487664
0.0911 : 1
For the year 2007: 608810966
56533134
0.0859 : 1
For the year 2008: 657834717
79839836
0.1065 : 1
For the year 2009: 749546679
81640246
0.1018 : 1
For the year 2010: 80891587
103399623
0.1042 : 1
For the year 2011: 992035797
Average=0.0979:1
Interpretation
There are variations in cash ratio of the bank. In 2007 it is 0.0911 while in
2011 it is 0.1042 which shows bank is in a good position. It is highest in 2011
because the cash is more than that of 2010.
NetIncome InterestTax
InterestExpense
Time Interest Earned Ratio =
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Interpretation
There is increase in the time interest earned ratio of the bank every year because
the interest income is increasing rapidly as compared to its expenses, which shows
a good position.
Debt Ratio: -
The debt ratio shows the proportion of a banks assets which are financed
through debt. If the ratio is less than one most of the banks assets are financed
through equity. If the ratio is greater than one, most of the banks assets are
financed through debt. Companies with high debt ratios are said to be highly
leveraged and could be in danger if creditors start to demand repayment of debt.
TotalLiabi lities
Debt Ratio = TotalAsset s
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628754092
0.90 : 1
For the year 2007: 691991521
683498128
0.91 : 1
For the year 2008: 749806715
779408823
0.90 : 1
For the year 2009: 863778621
828448632
0.89 : 1
For the year 2010: 924699403
1029967217
0.90 : 1
For the year 2011: 1139554205
Average=0.906:1
Interpretation
Debt ratio for all five years is less than one. It shows that the HBLs
assets are financed through equity not debt. The bank decreasing its reliance on
debt.
Return on Assets: -
This is a measure of banks profitability. Its percentage shows how profitable a
companys assets are used in generating revenue.
NetIncome 100
Return on Assets: Avg .Totalasset s
10084037
100 1.56%
For the year 2007: 643026585
10864112
100 2.65%
For the year 2008: 409502934
13400749
100 1.66%
For the year 2009: 806792668
17034380
100 1.90%
For the year 2010: 894239012
22333022
100 2.16%
For the year 2011: 1032126804
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Average=1.98%
Interpretation
The return on assets increase year to year which show a good position of bank.
The net income and assets both increased but increase in income is more than
increase in assets. Also the companys assets are more utilized in generating
revenue in 2011 as compare to 2010.
Return on equity: -
Return on equity measures the rate of return on the ownership interest (Share
holders equity) of the common stock owners. In short, this ratio tells the owner
whether or not all the effort put into the business has been worthwhile.
NetIncome
100
Return on equity: Stockholde r ' sequity
10084037
100 16.73%
For the year 2007: 60239304
10864112
100 16%
For the year 2008: 66308587
13400749
100 15.8%
For the year 2009: 84369798
17034380
100 17.96%
For the year 2010: 96250771
22333022
100 20.37%
For the year 2011: 109586988
Average=17.37%
Interpretation
ROE go down only in 2009, however it increase in all other years,
which shows a good position of bank. In 2011 it reach 20% from 18% because net
income and stock holder equity both are increased in 2011 as compare to 2010,
but increase in net income is more than increase in equity.
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10084037
14.49 Rs
For the year 2007: 696000
10864112
11.83Rs
For the year 2008: 918353
13400749
14.70
For the year 2009: 911616 Rs
17034380
15.26 Rs
For the year 2010: 1116277
22333022
14.70 Rs
For the year 2011: 1109440
Average=14.19 Rs
Interpretation
HBL shows a good position in all years; however in 2009 and 2011 it
is same. However the return on initial investment in 2011 is low as compared to
2010. The initial investment return in 2010 is high while again in 2011 it go down
to 14.70.
628754092
10.43 : 1
For the year 2007: 60239304
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683498128
10.30 : 1
For the year 2008: 66308587
779408823
9.23 : 1
For the year 2009: 84369798
828448632
8.60 : 1
For the year 2010: 96250771
1029967217
9.39 : 1
For the year 2011: 109586988
Average=9.59:1
Interpretation
The debt to equity ratio is decreased from 2007 to 2010 but it increase
in 2011, because there is little risk as compare to 2010. It shows stable position of
bank.
41126666
0.65 : 1
For the Year 2007: 63237429
49339696
0.74 : 1
For the Year 2008: 66308587
75883250
0.68 : 1
For the Year 2009: 84369798
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51075297
0.53 : 1
For the Year 2010: 96250771
63976357
0.58 : 1
For the Year 2011: 109586988
Average=0.63:1
Interpretation
Fix asset/net worth ratio is increased every year which means that
fixed assets are more financed by equity. The fixed ratio in 2011 is low as
compare to 2007 to 2009 that is a good cushion for creditor in case of liquidity.
High in 2011 and the more good is in 2010. While from 2007 to 2009 indicates
that the capital is frozen in form of machinery, plant and the margin of operating
assets is narrow.
Return on Deposits: -
It measures the rate of return on the deposits of the bank. It shows how much
return, bank is offering on the deposits.
10084037
100 1.89%
For the Year 2007: 531298127
10864112
100 1.81%
For the Year 2008: 597090545
13400749
100 1.96%
For the Year 2009: 682750079
17034380
100 2.27%
For the Year 2010: 747374799
22333022
100 2.39%
For the Year 2011: 933631525
Average=2.06%
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Interpretation
ROD has increasing trend which shows that return based on deposit is
increased every year. The return is highest in 2011, which shows that bank is
offering more return due to competition.
19153957
0.51 : 1
For the Year 2007: 37260277
26525556
0.92 : 1
For the Year 2008: 28832126
33405813
0.58 : 1
For the Year 2009: 56764664
34330255
0.57 : 1
For the Year 2010: 59461765
42182220
0.58 : 1
For the Year 2011: 72116389
Average=0.63:1
Interpretation
This ratio is very less volatile, which shows that expenses are almost in
control. While that are too high in 2008. The total expenses move same with
interest expenses.
50481021
0.83 : 1
For the Year 2007: 60504185
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63376047
0.84 : 1
For the Year 2008: 74658742
76076347
0.87 : 1
For the Year 2009: 87235959
81325028
0.86 : 1
For the Year 2010: 94087459
98580423
0.86 : 1
For the Year 2011: 113363284
Average=0.752:1
Interpretation
It also shows increasing trend which indicate that interest earned
income is increasing every year as compared to previous years.
50481021 19153957
For the year 2007: 691991521 628754092
= 0.072-0.030 = 0.042 or 4.2%
63376047 26525556
For the Year 2008: 749806715 683498128
= 0.084-0.038 = 0.046 or 4.6%
76076347 33405813
For the Year 2009: 863778621 779408823
= 0.088-0.042=0.046 or 4.6%
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81325028 34330255
For the Year 2010: 924699403 828448632
= 0.08-0.04 = 0.04 or 4.0%
98580423 42182220
For the Year 2011: 1139554205 1029967217
= 0.08-0.04 = 0.04 or 4.0%
Average=0.04 or 4.00%
Interpretation
ESR is increased in 2008, in 2010 and 2011 it is decreased and remains
same, which reflect that it faces severe competition.
1004037
100 17%
For the Year 2007: 60504185
10864112
100 15%
For the Year 2008: 74658742
13400749
100 15%
For the Year 2009: 87235959
17034380
100 18.10%
For the Year 2010: 94087459
22333022
100 19.70%
For the Year 2011: 113363284
Average=19%
Interpretation
There is increase in ratio of net profit margin from 2009-2011 which
also shows a healthy option for HBL. The bank earns the most profit in 2011 that
is 19.70% it means the bank earn most profit from every dollar of sales and
operating revenue. It is because that total operating revenue is high in 2011.
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HBL is considered to be a very sound bank in the financial circles. The bank where
the 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 threats and
Avoiding its weaknesses.
Following is a list of SWOT of HBL
Strengths
A skill or capability that enables HBL to conceive and implement its strategies.
The Officers of HBL are considered as one of the most able professionals in
the banking world.
I observed that HBL employees 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. Every
information regarding the transactions in customers deposits has been computerized.
HBL is the larger commercial bank in Pakistan with the network of over 1490
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 service 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.
Customer enjoys the services at the residential localities.
Weaknesses
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 threat to bankruptcy.
Lack of customer feedback.
Low job satisfaction.
Poor ATMs Service
Inconsistency in efficiency and working atmosphere due to the largest network
of branches.
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Opportunities
Huge untapped market potential in consumer banking
Opportunity for developing value added services combined with corporate
banking relationships, cash management services to large medium sized corporate
clients.
Govt. is taking very bold stamps to promote 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.
Further reduction in intermediation costs possible, with improving
technology.
Due to efficient and veteran management group, HBL can also improve Ill
and expand its foreign operation successfully.
Threats
Conclusion
HBL is clearly the first choice of everyone who believes in qualitative
approach of banking 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.
Personal loan is a distinguished feature of HBL experiences 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 than in few years it will be the leading bank
in the country.
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RECOMMENDATIONS
Habib Bank Limited is a well known and successful financial institution in the
banking sector, it is said, nothing is perfect in the world, and there is always space for
deficiencies. I would like to suggest some recommendations for the deficiencies
which I have found during my internship.
Because some branches are still batch, it is strongly recommended that HBL
should go for computerization rather than manual work, which is very slow
and time consuming process in those branches. Its all branches should be
computerized.
Some of the schemes are not profit making where as the bank is an institution
that earns from them, so those unprofitable schemes should be finished.
Door to door marketing in this regard especially media and electronic
marketing should be promoted in order to acquire handsome share of banking
sector.
Bank branches must be beautified internally and externally by providing
appropriate interior decoration and there must be proper parking space in main
branches to avoid the parking problems.
In order to market its products, it should emphasis to give advertisements on
both print and electronic media.
There is shortage of staff and there must be some extra staff so that customer
dealing can be increased especially in customer service department.
HBL should attract the customers by giving them certain incentives and
beneficial schemes to the customers as other competitor banks are doing so.
Employees Training programs must be introduced on continuous basis so that
employees have understand with the latest developments especially with the
customers.
The bank has been proactive in adopting measures to monitor and control risks
associated with banking industry.
Customer problems should be taken in account quickly as I have seen during
my internship that they are not given proper attention
The entire customer treated equally.
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Limitations
There are certain difficulties that I had faced in preparing this report.
High Cost
The cost of preparing this report is high. The printing and binding of the report was
very expensive.
Sources
It is difficult to get information from different sources e.g from bank staff etc. due to a
lot of work in work, every employee was busy in his work and I had faced difficulty
in obtaining information from them.
Bibliography
http://en.wikipedia.org/wiki/Banking_in_Pakistan
http://en.wikipedia.org/wiki/HBL_Pakistan
http://www.hbl.com
Irfan Naseer (Operational & Credit Manager)
M. Farrukh (Assistant) Details regarding services offered by HBL
Shoaib Shahzad (Assistant) Requirements for services offered by HBL
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Glossary
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Annexes:
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