The Bank of Punjab

PREFACE

The field of banking has always been a source of inspiration for me during my entire academic
career. To work in a bank, to acquaint with its working mechanism was always a point of interest
for me and God gave me a golden opportunity to complete my internship at BOP, one of the
leading bank in Pakistan and well known in world due to its appearance in the international
markets. I had a general idea about the banking, but once I practically started the internship in
banking field I observed much about banking, I realized the importance and significance of
commercial banking for the development of economy. To adjust myself in such a large
commercial organization was not an easy task, but by the grace of Almighty Allah aids my
internship in a befitting manner and I learned a lot about the overall banking arena. This
expanded my vision about the banking sector, which in turn enabled me to make an appraisal of
the economic situation of our country.
This report is a thorough essence of my rigorous studies which I undergone
through in a period of two months in a commercial bank. I have exclusively
studied and observed the operations/ functioning of the bank and tried my best to
abreast myself with all the dimensions of the banks. The purpose of this report is
to evaluate the performance of BOP in diversified avenues and give concrete
recommendation for further improvement. Although the bank is functioning
satisfactory, but the path to ultimate success is still full of threats and hurdles. It was a great
experience to work there and contribute handsomely in the processor appraising its pros and cons
and feeling to be a significant part of the bank. I am thankful to all those who helped me in one-
way or the other and guided me the preparation and compilation of this report in a presentable
fashion

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TABLE OF CONTENT

Topics Page no

Acknowledgement 3

History of banking 4

Function of commercial banks 5

Vision & Mission Statement 8

History of BOP 8

Division & dpartment 13

Regional network 15

Administration human resource division 13

Operation division 17

Business development division 18

Finance division 20

Recovery division 21

Customer services 22

Deposit section 23

Account opening section 25

Clearing department 26

Remittances department 27

Advances department 30

Human resource department 39

Ratio analysis 40

Swot analysis 44

Recommendations 47

ACKNOWLEDGEMENT

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The Bank of Punjab

First of all, I thank my all respected teachers for providing me comprehensive

knowledge about Business Administration Courses and also for providing me the
opportunity to complete my internship program in BOP to enhance my practical
knowledge about banking sector of Pakistan. I am also indebted to the followings
because without their help, I would not be able to achieve this practical knowledge.

JAMPUR BRANCH RAJANPUR 1259

Mr. SALEEM QURAISHI Manager

Mr. SHOUKAT BHUTTA Customer service manager

Mr. YASIR GHANI Retail banking officer

Mr. ZEESHAN JAVEED Cash officer

Mr. ZAIN FAROOQI Cash officer

WAQAS AHMAD KHAN

HISTORY OF BANKING

“Bank is a pipeline through which currency moves into and out of circulation.”

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Bank accepts deposits and repays cash to its customers on their demand. The Bank borrows
money at a lesser rate of interest and lends it to the borrowers at a higher rate. It is thus a profit-
lending concern. Bank cannot lend all the money that has been deposited with it. It has to keep a
certain portion of the total deposits in cash with them in order to meet the cash requirements of
the individuals and business concern.

Banking History

Word Bank is said to be derived from the words Banc us or Banque or Bank. The history
of banking is traced to as early as 2000 BC. The priests in Greece used to keep money and
valuables of the people in temples. These priests thus acted as financial agents. 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 persons who had surplus money found it safe and convenient to
deposit their valuables with them. The first stage in the development of modern banking, thus,
was the accepting of deposits of cash from those persons who had surplus money with them.

The goldsmiths used to issue receipts for the money deposited with them. These receipts began
to pass from hand to hand in settlement of transactions because people had confidence in the
integrity and solvency of goldsmiths. When it was found that these receipts were drawn in such a
way that it entitles 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
development of banking thus was the issue of bank notes.

The goldsmiths soon discovered that all the people who had deposited money with them did not
come to withdraw their funds in cash. They found that only a few persons presented the receipt
for encashment during a given period of time. They also found that most of the money deposited
with was lying idle. At the same time, they found that they were being constantly requested for
loan on good security. They thought it profitable to lend at least some of the money deposited
with them to the needy persons. This proved quite a profitable business for the goldsmiths. They
instead of charging interest from the depositors began to give them interest on the money
deposited with them. This was the third stage, in the development of banking.

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By experience the banks came to know that they could keep a small proportion of the total
deposits for meeting the demands of customers for cash and the rest they could easily lend. They
allowed the depositors to draw over and above the money actually standing to their credit. In
Economics terminology we can say that they allowed the overdraft facilities to their depositors.
This was the fourth stage, in development of banking.

When every bank issues receipts and most of them allowed the overdraft facilities, there was
then too much confusion in the banking system. The banks in order to earn profits could not keep
adequate reserves for meeting the demands of the customers for cash. The failures on the part of
the bankers to return money caused widespread distress among the peoples.

In order to create confidence among the people, steps were taken to regulate the banking
organization. A conference was held in Nuremberg in 1548. It was decided that a bank should be
set up by the state, which should streamline the banking organization and technique. The first
central bank was formed in Geneva in 1578. Bank of England was established in 1694. The
responsibility of issuing of notes is now entrusted to a central bank of each country.

FUNCTIONS OF A COMMERCIAL BANK

In general terms the functions of a commercial bank can be classified under the following main
heads.
1. ACCEPTING DEPOSITS

Some people have an excess money and they want to deposits it to some honest man or an
institution which can give them some profit. So the first function of commercial bank is to
receive deposit there are three types of deposits.

1.1 Demand Deposits or Current Deposits

Some people deposit their excess money in the current accounts and they can withdraw their
money deposited in this account at any time during the banking hours, so bank is not ready to
give interest on it.

1.2 Fixed Deposits

These deposits are fixed for a particular period. Commercial banks also pay an interest on these

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accounts. An important thing related to it is the varying interest rates for the different period
deposits. Interest rate increases with the increase in the fixed deposit period.

1.3 Saving Deposits

To create the habit of savings, bank accepts the saving deposits and pays an interest on these
deposits. And this rate of interest is greater than the demand deposits.

2. ADVANCING LOANS

Bank also advances the loans to the merchants and charges the interest. It is the major source of
its income. It also issues the loan for short term, medium term and for long term. And bank
receives the higher interest from the borrower for the long term loans offered.

3. DISCOUNTING OF BILL

Commercial banks also discount the bills and facilitate the business; for example one
businessman purchases anything from another person and promises to pay after one month. The
seller will write a bill to the buyer and there will be an order that after one month the buyer will
pay the amount to the seller. Buyer will sign on the bill. In other words buyer will accept the
responsibility of that amount. If seller is in need of money, he will take it to the bank and will
receive the money by discounting the bills. The commercial bank also may rediscount it from the
central bank.

4. CHEAP MEDIUM OF EXCHANGE

By issuing cheques and drafts bank provides cheap, medium of exchange.

5. TRANSFER OF MONEY

The commercial bank is very helpful in transferring the money from one place to another by
issuing the drafts. This is very popular concept in the modern world and widely used in the
business community.
6. CUSTODIAN OF PRECIOUS ARTICLES

Banks also provide lockers for the safety of precious articles. So now everyone can secure his
precious metals like gold, silver, etc., and bank charges a very nominal charge for this facility.

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7. AGENCY SERVICES

Commercial Banks also perform the duty of an agent. It collects and pays on the behalf of the
customers.

8. INVESTMENT

On behalf of the customers all the banks also make an investment in different companies and
industries. And banks receive nominal charge from the customers.

9. CREATION OF CREDIT

It also creates and extends the volume of credit.

10. FACILITATING TRADE ACTIVITIES

It also provides the finance to the foreign trade. Letter of credits are issued by the commercial
banks for the foreign payments.

11. PURCHASE AND SALE OF SECURITIES

The commercial bank purchases and sells the securities, for itself and sometimes on the behalf of
the costumes.

12. ACTING AS A TRUSTEE

If a client directs his bank to act as a trustee in the administration of a business, the bank
performs this responsibility.

Vision & Mission Statements

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Vision statement

"To be a customer focused bank with service excellence"

Mission statement

To exceed the expectations of our stakeholders by leveraging our relationship with the
Government of Punjab and delivering a complete range of professional solutions with a
focus on programme driven products & services in the Agriculture and Middle Tier
Markets through a motivated team.

History
The Bank of Punjab started functioning with the inauguration of its first branch of 7Egerton
Road, Lahore on November 15, 1989. The architect of the bank Mr. Nawaz Sharif then, the
Chief Minister of Punjab, performed the inauguration.
In Pakistan, over long periods of time the gap in saving and investment and balance of trade
deficit has posed serious threat to the target levels of growth The ailments related to the
budgetary deficit and public debt, both foreign and domestic are in addition. Interestingly even
such adverse circumstances growth of real sector during the preceding year registered a
favorable change, which speaks of hidden potential and strength of economy

Fortunately, the banking sector of the country has the well organized and properly
institutionalized system, which is the major vehicle not only for mobilization of resources to
finance trade, agriculture, and industry but also for the effective conduct of monetary policy.

The emergence of new bank on the national scene in the early 1990s has done two important
services to the nation.

• The saving base of the economy has effectively enlarged and hence the investment
opportunities have increased.

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• The services of the banks in the fact of severe competition have improved considerably so
that now consumer are left with extensive choice to do or undo their business relations with
these banks keeping in view quality of their services.
The Bank of Punjab is working as a scheduled commercial bank with its network of 243
branches at all major business centers in the country. The Bank provides all types of banking
services such as Deposit in Local Currency, Client Deposit in Foreign Currency, Remittances,
and Advances to Business, Trade, Industry and Agriculture. The Bank of Punjab has indeed
entered a new era of science to the nation under experience and professional hands of its
management. The Bank of Punjab plays a vital role in the national economy through
mobilization of hitherto untapped local resources, promoting savings and providing funds for
investments. Attractive rates of profit on all types of deposits, opening of Foreign Currency
Accounts and handling of Foreign Exchange business such as Imports, Exports and Remittances,
Financing, Trade and Industry for working capital requirements and money market operations
are some facilities being provided by the Bank. The lending policy of Bank is not only cautious
and constructive but also based on principles of prudent lending with maximum emphasis on
security. As agriculture is considered as backbone of our economy the Bank of Punjab has
introduced "Kissan Dost Agriculture Finance Scheme" to small farmers.

The Bank of Punjab has the privilege to discharge its responsibilities towards national progress
and prosperity. Within the couple of years of its scheduling, the bank has not only carved out for
itself prominent niche in the mainstream banking of the country but in certain areas it has the
distinction of taking the lead. In the short span of time the Bank has been able to evolve a distinct
corporate culture of its owned-based policies, which are realistic and are on highly professional
footings.

Scope of the Bank.

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Being a commercial Bank, The Bank of Punjab performs all such functions as are attributed to
commercial banking institution both in the area of resource mobilization, loans, and investment.
The Bank is thus providing all type of advances to business, trade, and industry on seasonal and
annual basis, and is ensuring, through the prudent policy, the safety and protection of its loan
portfolios, as the resources base of the bank expands, project financing will also be brought into
its fold.

Management of the Bank.

At the level of Decision-making and implementation, senior management of the bank is drawn
from highly accomplished bankers with rich experience in the banking profession both domestic
and international.

The entire responsibilities of policy formulation and management have been placed, under the
law, with the Board of Director. Furthermore it will be heartening to know that Mr. Nawaz
Sharif, during his chief Minister ship of the province of Punjab issued special instructions to the
political and executives echelons not to interfere in The Bank of Punjab, thereby ousting the
possibility any pressure which may be put on the management of the bank in respect of
recruitment of staff or provision of credit. These instructions have become an essential part of the
culture of the bank.

Emblem & Objectives

EMBLEM.
The sun rising over the five wavy lines symbolizes the dawn of new era of progress and
prosperity for the land of five rivers and hence for Pakistan. Furthermore the main objectives of
the inclusion of cotton flowers and the spikes of wheat in the emblem is firstly to represent the
fact that the economy of the Punjab stands on its agriculture produces especially cotton and
wheat and secondly to highlight the emphasis which the bank is to place on development of agro-
based industry.

OBJECTIVES.

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The Bank of Punjab being a commercial bank performs all those function as are attributed to
such banking institutions both in the areas of resources mobilization and investment. It is
providing funds for commerce, trade, industry, and agriculture but its main emphasis is on
accelerated development of agro-based industry. So the main objective of the bank is to
channelize the resources into sectors, which have suffered from neglect. Other objectives
included.

1. To provide speedier services to the common man.

2. To provide the highest rate of return to the shareholders by achieving good profitable growth.
3. To enter into financing contracts and to mobilize resources in local and now in foreign
currencies consistent with the objects of the bank.
YEAR 2003 & FUTURE OUTLOOK

The newly elected Government has pledged to continue economic reforms and policies of the
previous regime resulting in the Government’s enhanced ability to engineer its economic future,
which reinforces the confidence that has emerged during 2002. The success and growth,
however, largely depends on the degree to which the Government can deliver on its political
agenda and how smoothly the transition of power can work towards bringing about a greater
degree of optimism amongst investors and the business community.

Although The Bank of Punjab are optimistic about the future outlook for Pakistan and are
confident that expected GDP growth target will be achieved yet the geopolitical situation
particularly with reference to Iraq the year 2003 appears to be far more challenging where the
factors beyond our control may adversely affect our economy. Moreover, the prevailing money
market scenario with extremely low interest rates and stagnant private sector credit is a serious
deterrent to the banking sector growth. This situation will force the banks to shift their focus
from conventional banking approach to retail based consumer finance products and service and
the banks taking lead in this shift process will be least affected by the prevailing unfavorable
interest rate scenario.

The mission to transform The Bank of Punjab into a modernized business oriented
institution is sailing smoothly and in this direction by now computerization of 156 branches has
been completed successfully while the remaining 87 branches will also be computerized before

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the 2003 year end. Moreover, during 2003 we will also introduce ATM facility at our selected
branches for which your bank has joined MCB switch and the agreement has been signed. In
addition to offering ATM facility we have aggressively embarked on providing real time inter-
branch banking services within 2003.

SUBSIDIARIES AND SPONSORSHIP

The bank is one of the sponsors of Trust Management Services Pvt. Limited besides being a co-
sponsor of Trust Modaraba a Modaraba company incorporated in Pakistan under the Modaraba
companies and Modaraba (Floatation and control) Ordinance, 1980. Authorized Modaraba Fund
and paid up Fund of the said unit in Rs. 500 million and Rs. 150 million respectively.

The Bank is one of the sponsors of Trust Leasing Corporation Limited a public limited company
established under the Companies Ordinances, 1984. Authorized paid up capital of the company
is Rs. 250 million and Rs. 100 million respectively.

First Punjab Modaraba Services (Pvt) Ltd. established in Pakistan under Companies Ordinance.
1984 and register under Moderate Companies and Modaraba (Flotation and Control) Ordinance,
1980 is wholly owned subsidiary of the bank. Authorized fund of this Modaraba is Rs. 500
million where as paid up fund is Rs 200 million.

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DIVISION & DEPARTMENT

DEPARTMENTS
DIVISION

♦ ADMINISTRATION ♦ ORGANIZATION & METHODS

♦ OPERATIONS ♦ INFORMATIONAL & TECHNOLOGY
♦ BUSINESS DEVELOPMENT ♦ OFFICERS TRAINING INSTITUTE
♦ CREDIT ♦ SHARES
♦ INTERNATIONAL ♦ LAW
♦ FINANCE ♦ STATIONERY
♦ RECOVERY ♦ PLANNING RESERCH & PUBLICATION
♦ AUDIT & INSPECTION
♦ TREASURY

HEADED BY: - HEADED BY: -

GENERAL MANAGER CHIEF MANAGER

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HEADED BY: - HEADED BY: -

GENERAL MANAGER CHIEF MANAGER

REGIONAL CHIEFS

BRANCH NETWORK

REGIONAL NET-WORK

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FAISALABAD LAHORE
Total
Branches 34

Total
Branches 64

GUJRANWALA MULTAN

Total Branches 43 Total Branches 60

KARCHI / QUETTA RAWALPINDI

Total Branches 05

ADMINISTRATION AND HUMAN RESOURCE DIVISION

G.M

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Admin& Officer’s Training

Establishment Institute

This division deals with the problems relates to the staff administration. The main function of
this department is to arrange a comprehensive training program for recruited staff. Others
function includes:

♦ Recruitment
♦ Staff remuneration
♦ Placing the staff
♦ Providing and defining the opportunities for career development and growth
♦ Devising and implementing services rules.
♦ Promotion and demotion
♦ Suspension and termination
♦ Transportation
♦ Security, health and benefits.

Operations
Division
G.M

Computer Dept.
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Stationary Dept.

Engg. & Maintenance

O & M Department

This Division is concerned with the operational working in general banking, which is concerned
with the routine working of the bank. Any problem or ambiguity arise in any branch working are
rectified and suggested for correction by this division. This Division usually takes technical
procedures involved the decisions like commissions. And also.

♦ The maintenance of the existing building owned by the bank.

♦ Opening new branches and their maintenance.
♦ It also deals with the stationery problems of the bank.

Business Development
Division

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Marketing PRP
The Bank of Punjab

GM

It is the other name of the marketing division. It promotes the bank cause i.e. deposits and
work for the over all development of the bank. Deposits are the lifeblood of any bank.
Without deposits bank cannot perform any function of banking. This division fixes the
deposits target of every branch by keeping and eye over the potential customers in the area. It
gives motivation to branches to achieve their targets through different campaigns and
schemes like cash prizes and special increments. It publishes a bulletin in which those
branches are encouraged who achieves their monthly targets. The main function is to develop
and attract the customers and depositors. It also manages:

♦ Advertising policy
♦ Sales promotion.
♦ Schemes offered by the bank.

International Division

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G.M

International wing

Forex Money
Market

Investment

Engg. &
Maintenance

This division is providing important services to the bank regarding the matters of International
Trade, Import, Export Letters of Credit, Travelers cheque etc.

♦ It develops “ Correspondent Relationship” with others on commission basis and this helps to
deal with the clients having import export business.
♦ It handles treasury operations.
♦ The Marketing and Spot Inspection cell, which were introduced by the bank, are showing
positive results in terms of achieving foreign currency deposit targets and other foreign
related business.

Finance Division
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G.M

Balance Sheet Results

Monitoring

SBP Affairs, and

Compliance.

Shares Dept.

Company Affairs

It controls the routine financial matters. The permission of special expenditure incurred in the
branches, and other such cases. The daily position and HO Extracts are daily sent to this division
by all the branches. This division not only estimates the profit and loss of every branch but also
prepare overall income statement and balance sheet of the complete bank. It also keeps record of
total deposits of the bank and then their classification in the form of loans into different sectors
of economy. The basic functions are:

♦ Monitoring the fiscal and financial policies of the bank.

♦ Deals in exploring means for investing surplus bank funds.
♦ Maintenance and investment of Gratuity and Pension Funds of the employees.

Recovery
G.M
Division

Law Department

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The recovery division, which was established in 1994 to assist in regularizing the difficult
loan accounts, has rendered valuable services in this respect. To effect recoveries in an
efficient manner, a policy has been framed in accordance with the guidelines issued by
the State Bank of Pakistan Moreover, recovery cells at regional levels have been set up to
assist the head office. This division looks after the matters of recovery of loans with the
assistance of legal advisors.

Audit and Inspection

G.M
Division

Audit of Rectification
Branches and Persuasion

This department ensures appropriate system of checks and balances. It checks all the
irregularities, errors and forgeries if any, under the rules and regulations formed by the
Government of Punjab. For this purpose it doesn’t only keep and eye on the branches in
their vicinity but also conduct surprise and comprehensive audits of the branches. This
strategy has improved working at the branch level. It not only points out the
discrepancies but also tries to solve it. Surprise audit maintain a good check on the over
all working of the branch especially of the side of finance.

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SERVICES PROVIDED TO CUSTOMERS

The following are the services being provided to the claims.

♦ Acceptance of deposits
♦ Granting of loans
♦ Transaction Foreign Exchange Services
♦ Remittance – Collection
♦ SPEDFAX- instant Fund Transfer Service
♦ Lockers facility
♦ Utility Services
The Bank of Punjab attaches specials importance to the fee earning business and business base
remuneration. As part of diversification of the banks utility services, the collection of bills of
INSTAPHONE (mobile phone network) was added to existing collection arrangements for
WAPDA, SUI GAS, WASA, PTCL, and PAKTEL. By using bank’s extensive branch network,
effort have been to made to maximize the exploitation of this source in view of its rich potential
of yielding business and deposit direct earning of commission.

DEPOSIT SECTION
In modern times very few business enterprises are carried out solely with the capital of the
owners. Borrowing funds from different sources has becomes an essential feature of today
business enterprise. But in the case of a entire banking system is based on it. The borrowed
capital of the bank is much greater then their own capital. Banks borrowing is mostly in the form
of deposits.
These deposits are lent out to different parties. The larger the difference between the rate at
which the deposits are borrowed and the rate at which they is lent out the greater of the profit

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margin of the bank. Furthermore, the larger the deposit the larger will be the funds available for
employment; larger the funds lent out the greater will be the profit of the bank.

To receive the deposit is the basic function of all commercial banks. The bank does not receive
these deposits for save keeping purpose only, but they accept deposits as debts. When banks
receive deposit from a customer, the relationship of a debtor and creditor is established where by
the customer become the creditor and the bank a debtor. When the bank receives amount of
deposit as a debtor, it becomes the owner of it. It may, therefore use it as deems appropriate. But
there is an implicit agreement that the amount owned would be paid back by the bank to the
depositor after a specified period.

NATURE OF DEPOSITS

♦ CURRENT DEPOSITS
♦ PROFIT & LOSS SHARING ACCOUNT
♦ SHORT NOTIC TERM DEPOSITS
♦ CALL DEPOSIT
♦ TERM DEPOSIT RECEIPTS (TDR).

CURRENT DEPOSITS:

In this type of account the client to allowed to deposit or withdraw money as and when he likes.
Because of their nature, these deposits are treated as the current liabilities of the bank. There is
not profit on such deposits. Usually this type of account is opened by the business.

PROFIT & LOSS SHARING ACCOUNT.

This type of accounts is one step towards the Islamization of banking system in Pakistan. There
are two types of PLS Accounts.

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♦ PLS Saving Account

♦ PLS-TDR (Profit & Loss Sharing Term Deposit Receipts).
PLS saving accounts can be opened with the minimum sum of Rs. 100 and PLS-TDR account
can be opened for a sum of Rs. 1000 or above. Profit is paid on both types of the PLS account on
half yearly basis.

Under PLS saving account the depositor undertakes to share profit or loss on the deposits earned
or sustained by the bank. Secondly the bank is at the liberty to invest the funds of the deposits in
any avenue, it deems fit. The PLS deposits are invested in non-interested channels.

SHORT NOTICE TERM DEPOSITS (SNTD)

This kind of deposit is for a short period. The depositor may withdraw his deposit at any time by
giving seven days notice to the bank. This type of deposit facilitates the depositor to withdrawn
his amount with interest of the deposited period.

CALL DEPOSIT
Call deposits are the sorts of deposits, which are deposited with the banker against any tender.
This is without interest deposit. This may be with interest provided the depositor has agreed to
keep this amount with the bank for some fixed period.
TERM DEPOSIT RECEIPTS (TDR)
This type of deposit is same as the SNTD. The difference is that SNTD is for short period (7- 30
days) while TDR is for long period (1 month up to 5 years).

ACCOUNT OPENING SECTION

Account opening is the first step towards establishing a relationship between the customer and
the bank. The Bank of Punjab is offering basically two types of account:
♦ CURRENT DEPOSIT ACCOUNT

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♦ PROFIT & LOSS SHARING ACCOUNT

The necessary condition for a customer, who wants to open an account with the bank, is
introduction, which is preferably by the bank officers or any account holder of the bank. The
different categories of accounts that are available are as under.

♦ INDIVIDUAL account
♦ Joint Account
♦ Partnership Account
♦ Limited Company Account
♦ Clubs, Society, Association, or Trust Account
♦ SNTD
♦ TDR
♦ Foreign Currency Deposit

CLEARING DEPARTMENT

Clearing is the most important department of the bank performing various function.
Clearing House:
A clearinghouse is an organization of the member banks, working under SBP and which is for
the purposes of setting inter banks claim resulting from transmission of funds from one bank to
another. The branch cheque/instruments are credited into the account of the customer. The
clearing can be:

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♦ Outward
♦ Inward
Outward Clearing
The instrument collected or stored bank wise and a schedules is prepared separately for
each bank mentioning the total number of instruments and the amount of the instruments. Then
these are recorded in a register called “OUTWARD CLEARING REGISTER” then a main
schedule is prepared showing the total number of cheque and their aggregate amount being
presented in the clearing.
The cheque/instruments are handed over the clearing branch. Central clearing branch
issue CREDIT ADVICE to the branch for passing credit to its customer immediately. The branch
on receiving credit advice debits the clearing account and credit the respective customer
accounts.

Inward Clearing
On receiving cheque/instruments from central clearing branch, the in charge checks the number
and amount of cheque received in clearing must tally with the main schedule received from
central clearing branch.
These cheque/instrument are entered in “INWARD CLEARING REGISTER” for the
cheque/instrument passed in clearing is a credit advice for the aggregate amount of cheque
passed in clearing is prepared, drawn on central clearing branch.

Reserves at State Bank of Pakistan.

Deposit held by bank at SBP serves as check clearing and collection balances. Rather than
physically transferring funds between banks, check clearing and collection can be done by
simply debiting or crediting a bank’s account at SBP.

REMITTANCE DEPARTMENT

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Remittance is a major function of the bank. It is the transfer of money from one place to another
place. The need for remittance is commonly felt in commercial life particularly and in everyday
life generally.

By proving this service to the customers the Bank of Punjab earns a lot of income in the form of
service charges.

The Bank of Punjab deals with the following type of remittances: -

 Demand Draft (DD)

 Mail Transfer (MT)
 Telegraphic Transfer (TT)
 Pay Order
Now we discuss all these in detail: -

DEMAND DRAFT (DD):

Demand draft is a written order given by the one branch of a bank on behalf of customer to
another branch of the same bank to a certain amount to the certain person.

Procedure for Prepare Demand Draft.

1. A draft voucher is filled which contains the following information

Name of the parties involved
Date
Amount to be sent
Account number (if DD is crossed)
2. A credit voucher is filled in order to get the excise duty and exchange commission.
3. The sender deposits the total amount of the two vouchers i.e. the debit and credit
vouchers.
4.Then the cashier sends the cash receipt voucher to the accounts department and the account
records the amount paid in his cash scroll.

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5.Accountant gives the DD leaf along with the DD voucher to his assistant who records the
sender’s name, amount and receiver’s name. After writing all the information in the DD register
he gives it to the officer along with the DD for authentication.

6.After authentication the DD is handed over to the sender and bank sends the advice to the
concerned branch. So when the party presents the DD in the concerned branch its payment could
be made.

Parties involved in the Demand Draft

The following parties are involved in demand draft;

1. Purchaser or Sender
The purchaser is the person who sends the money to a particular person payable at a certain
branch.

2. Issuing or Drawing Branch

The branch from where the demand draft is issued to another branch of the same bank.

3. Drawer Branch
Branch in which the draft has drawn and called upon to pay the amount.

4. Payee
The person who is entitled to receive the amount after presenting the demand draft in the drawer
branch.

MAIL TRANSFER (MT):

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It is the transfer of money from one branch to another branch of the same bank through mail
service. In mail transfer there is no need of advice as the amount is directly credited to the
receiver’s account.

Procedure

1. First a voucher is filled in whish the sender writes the amount to be sent, name, account
number of the receiving person with the branch name and date.
2. A credit voucher is filled in order to deduct exchange, postage charges according to the
amount of the mail transfer.
3. The sender deposits the total amount in the cash department.
4. The cash officer gives the vouchers to the officer after affixing received cash stamp and
writing the amount in red ink.
5. Then the officer writes the amount paid in the cash scroll and gives the MT to his
assistant.
6. MT leaf is filled according to the information provided in credit voucher. He also writes
the same information in the MT register. Then he gives the MT leaf and MT register to the
officer for authentication.
TELEGRAPHIC TRANSFER (TT):

This is the most urgent method of remitting the money from one place to another
place. This method is used when the sender desires to send urgently, in this case
the sender request the manager of the branch to issue TT.

Procedure;

For sending the TT the manager and officer apply a test. In the test the manager and officer uses
a coding technique. They write their own code numbers, which is allotted, to them as the bank
branch code. After making all the conformation the concerned branch makes the payment to the
receiver. If the sender wants to convey the same message through telephone then he has to pay
the charges of telephone along with the TT charges. First the person deposit the TT amount
along with the charges through the credit voucher then his TT sent to the relevant branch.

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Pay Order (PO):

A pay order is a written order issued by the bank on its own branch, drawn upon and
payable by itself to pay a specified sum of money to the person. The purpose of a pay order is to
transfer the fund from one place to another. It is usually not issued in favor of the parties of other
cities. Usually the pay order is issued for the local transfer of money from one person to another
or from the person to any other department. It is used for different purposes. The purpose may be
the repairs of the branch or renovation of the branch.

Procedure.

The procedure of a pay order varies with the nature of the purpose. If the work is of huge amount
then first the manager writes a letter to the Zonal Chief in order to get sanction of the work. Then
the advertisement of the work is given in the newspaper in order to invite the contractors. But if
the work is small then the branch manager has discretionary power to select the party whose rate
is lowest. After finishing the work the contractor submits the bill of work on his stamp pad. Then
the bank issues a pay order, against the pay order the contactor gets the amount from the issuing
branch.

ADVANCES / CREDIT DEPARTMENT

“Major source of bank’s Income”

It is the loan function, which produces the major person of bank’s income, and as such it is the
major areas of professional banker’s concern and attention.

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Principles while advancing

Basically there are five principles that must be duly observed while advancing money to
borrowers.

♦ Safety
♦ Liquidity
♦ Disposal
♦ Remuneration
♦ Suitability
Forms of Lending

Many there are two types of advances:

♦ Short-term (maturity within one year)

♦ Long term (maturity with the period of more than one year)

However they are further classified as:

♦ Running Finance
♦ Demand Finance
♦ Cash Finance
♦ Letter of Guarantee

Running Finance

This form of finance was previously known as “overdraft”. When a customer requires the
temporary accommodation, his bank allows withdrawal his account in excess of credit balance,
which the customer has in its account, a running finance occurs. The accommodation is thus
allowed collateral security. When it is against collateral securities, it is called a “Secured
Running Finance” and when the customer cannot offer any collateral security except his personal
security, accommodation is called a “Clean Running Finance.” The customer is in advantageous

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position in running finance because he has to pay the mark-up only the balance outstanding
against him on daily product basis.

Demand Finance

This is common form of financing to commercial and industrial concerns and is mad available
either against pledge or hypothecation of goods produce or merchandise. In Demand Finance the
party is financed up to a certain limit either at once or as and when required. The party due to
facility of paying mark-up only on the amount it actually utilizes prefers this form of financing.

♦ Ordinary Shares
♦ Preferred Shares
♦ Quoted or Unquoted
♦ Registered
♦ Bearer
♦ Inscribed

Advances Against Immovable Property (Mortgage).

A mortgage is the transfer of and interest in specific immovable property for the purpose of
securing the payment of the money, advanced or to be advanced. By way of loan, and existing
debts or the performances of the engagement this may rise the pecuniary liability.

The transfer is called the ‘mortgager’ and the transferee the ‘mortgagee’ the principal money and
interest of which payment is secured for the time being and instrument by which the transfer is
effected, is called the letter of the mortgage deed.

Availability of adequate flows of credit for industry and agriculture are a sine qua non for the
growth and development of an economy. This acquires added importance when agriculture is the
mainstay of the economy as also the sector where the bulk of the poor are concentrated. Growth
and productivity in Pakistan's agriculture has slowed down in recent years and is, therefore, of
serious concern given its importance for the economic prosperity of the country. Apart from
various other weaknesses in the infrastructural support of the agricultural sector, inadequacy and

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lack of efficacy of credit, flows to support agriculture related activities has been a major
constraining factor.

Agriculture is the largest sector of the economy. It contributes 25 percent to GDP, provides raw
materials to 80 percent of industry and employment to over 50 percent of the population. This is
a sector that has the shortest gestation period for investments and, therefore, a remarkable
capacity to bring about a turn around in the economy. This important sector in Pakistan is
suffering from a number of maladies and is consequently witnessing stagnation in productivity.

Due to policy and administrative exigencies, the savings in the agriculture sector remain low
and, therefore, the sector has perpetually remained capital starved. The pricing of input and
output in agriculture over the years has forced the majority of farmers in Pakistan to plough back
their incomes into agriculture and non-institutional credit, and has more often than not served to
sap their potential earnings. Needless to say, that shortage of savings and lack of availability of
capital is one of the major reasons for poverty in the country. The agricultural and rural sectors in
Pakistan in general and in Punjab in particular are, therefore, suffering from severe under-
development. Under a desirable development model, Punjab can:

♦ Increase agricultural production to meet the country's requirement of essential foods items
and industrial raw materials.
♦ Develop agro-based industry in the rural sector for economic value addition;
♦ Generate additional employment opportunities in rural as well as adjacent small towns/cities;
♦ Control massive migration to the urban centers that in turn is causing a number of social,
administrative (i.e. law and order) and economic problems for the urban areas.
♦ Elevate poverty and improve the income generating capacity of the agri-based population.
Never before in the history of Pakistan, has the development of the agricultural and food
sectors been as critical as at this juncture and appropriate short and long term measures are
necessary for its revival, sustenance and stability. Supply of credit by Financial Institutions for
meeting the specific needs of agriculture and rural sectors are essential components for
improvement in both short and long-term development of the country. This has assumed even
greater importance in the present situation of declining water availability. Per acre, production is

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plummeting. The per acre yield of most of the crops is stagnant rather diminishing. The most
important factors responsible for this downward trend in productivity are: -

FACTORS RESPONSIBLE FOR LOW YIELD PER ACRE:

♦ Imbalanced fertilizer use

♦ Lack, availability of certified, and good quality seeds

♦ Improper control of pests and weeds

SCARCITY AND INEFFICIENT USE OF WATER:

Natural and mechanical water resources.

NON-USE OF MECHANIZED FARMING PRACTICES:

♦ LACK OF EDUCATION AND RESOURCES, MOTIVATION TO USE ADVANCED

TOOLS FOR AGRICULTURE:
♦ HIGH COST, LOW OUT PUT, UNSKILLED LABOUR INTENSIVE
♦ NON-AVAILABILITY OF CREDIT AND FINANCIAL ASSISTANCE TO THE
AGRICULTURE SECTOR
The importance of availability of credit to the agriculture sector has always been recognized by
Government and given Top Priority. Specialized institutions have been in place for a number of
years. However, these institutions have failed to realize the full potential from the sector and at
times contributed to its further deterioration. It is therefore of paramount importance that The
Bank of Punjab through well thought out policies ensures that it does not repeat the follies of the
past.
A number of institutions are in the field yearning to obtain results. We in The Bank of Punjab
will support the role of the Government in providing much needed support to the agriculture
sector but with a difference. The difference being that instead of subsidizing the needs we will be
active participants in economically viable projects thereby safeguarding the investments of the
Bank

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A precondition to lending by the Bank will be an undertaking from the customers/borrowers not
to borrow from any other source whatsoever. This is important to ensure against any multiple
borrowing and more importantly to restrain the borrower from falling into a debt trap.

The Bank of Punjab has been at the forefront in contributing to the Agriculture Sector at a
limited scale and has initiated schemes in harmony with the State Bank of Pakistan
approved/eligible programmes for the assistance/help of the agriculture farmers.

Presently, the Bank is financing farmers in some specific areas only. The State Bank of Pakistan
has expanded the scope of its scheme and included a number of items eligible for credit under
Agri-finance Schemes.

In terms of the importance, priority and current needs. We have short listed the items from the
State Bank of Pakistan's list provided under cover of its Circular letter No.
ACD/1044/1050/PD/P-08/2001 dated 26.04.2001.

The list of eligible items for Agri-Credit is mainly divided in two sectors; i.e.

♦ Farm Credit. And

♦ Non-Farm Credit

Farm Credit is further bifurcated into:

♦ Short-Term
♦ Medium-Term
♦ Long-Term Credit.
The priority items, which are recommended for inclusion in our schemes, are given here under;

EXISTING: (Kissan Dost Agriculture Finance Scheme)

Product /purpose of Finance) Seeds, Fertilizers, Pesticides, Herbicides, Weedicides. All types of
labor and water charges are already embodied in our package financing, i.e., 8000 Per Acres (no
change)

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PROPOSED

(Product /purpose of Finance)

1. Orchard and Nursery 2. Manual Sprayers

3. Sericulture 4. Apiculture

EXISTING: Tractors

(Product/purpose of Finance)

PROPOSED:

(Product & Purpose of Finance)

Tube-Well

Installation of Tube-Well, water management, equipment, modules & culvert, lining of

channels etc. Solar energy plants and pumps for irrigation, equipment for sprinkle/trickle/drip
irrigation system.

Mechanization Support

Agri-implements, Equipment, i.e. trailers and thrashers, power tillers, power & boom sprayers,
ploughs and cultivators, ridggers / drills, rotavators, diggers, saw machines for crates making,
press machines for wheat straw and dry fodders.

Farm Transport

Lease finance for purchase of Motor Cycles and small Vans for Milk and other agri products
transportation to local market.

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Islah-e-Arazi

Precision land leveling & reclamation, soil improvement, embankment, land formation and land
improvement, laser leveling etc.

For the time being, we do not propose to extending Non-Farm Credit, i.e. for big Dairy Farms,
Poultry Farm but will accommodate existing borrowers and established small individual farmers
by financing livestock. (Goat, sheep, cattle & fattening animals) on a limited scale to revive,
accelerate and supplement the income generating capacity of the small farmers

CASH DEPARTMENT

This is sensitive department of the branch. No other person is allowed to enter in the premises of
cash department. As obvious from name that this department deals in cash deposits and
payments. Cash department is performing its functions/duties manually. For payments and
receipts, it has to maintain certain sheets, books of accounts and various ledgers, which are as
under:

1. Cash received voucher sheet

2. Cash paid voucher sheet

3. Token register

4. Transaction ledger

5. Pay-In-Slip record
6. Cheque book record
7. Cash balance book

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PROCEDURE FOR CASH PAYMENTS

The instrument against which payment is made that is the cheque. Normally the cheques come
for payment in the branch are, cheques received at counter for payment and other cheques are
Clearing or Transfer Cheque. No payment is made against any other monetary instruments.

Special Considerations
When cheque is received for payment special care is taken about the signature of the account
holder, date, no cross or cutting in figures, signature at the back of the cheque presented for
payment. If any thing is found wrong then cheque is dishonored and is given to customer for
rectification. If the cheque is found valid in all respect then Token Clerk assigns token to the
cheque at the back. The same Token is given to the customer as a proof. The next step is
forwarding cheque to the accountant for the verification of the signature with specimen card
signature. If signature are not according to specimen card then the cheque is returned to customer
and token is taken back. In token register a note is written that cheque returned unpaid. If
signature are similar with the specimen card than cheque amount is posted in Ledger
Card/Transaction Ledger. Special care is given to the balance of the account either favorable or
unfavorable.

Overdraft Facility

If the balance in the account is less than the cheque drawn, then bank may extend O/D facility to
its customer but now-a-days this facility is not provided.

Withdraw Limits

If the cheque is up to or less than 10,000 then officer can sanction and in case of greater,

than he has to get approved from his superiors. Finally, after all verifications
of the cheque it is given to the cashier, then payment is made to holder of
the cheque. At the same time cashier maintains the Cash Receive Voucher
Sheet. The cashier performs all these duties manually.

PROCEDURE FOR CASH RECEIVED

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For depositing any amount in the account Pay-In-slip is used that is filled by the customer. The
pay-in-slip is consisted on date, A/C no., and particular about the amount to be deposited in the
account. The depositor signs the part of the paying slips, which are retained by the bank to show
acceptance about the entries, made in pay-in-slip. The pay-in-slip serves as a voucher to
Card/Transaction Ledger is only updated with pay in slip. The cashier checks necessary details
provided in the pay-in-slip and count the cash to be deposited and tally with the figures written in
pay in slip and in his hand/counter. If any mistake is found then first that mistake/error is
removed. If there is no one, than cashier fill in Cash Voucher Received Record Sheet and assigns
a voucher no. To both the transactions made in the sheet and to pay-in-slip. This voucher sheet
starts with one and continues for the whole day and next day again started from one. If all is done
well, than accountant authenticates the two by signing on the two documents posting stamps on
the slip. One part of the slip is given to depositor, and other part is given to clerk for further
posting in Ledgers.

The Cashier, at the end of the day has to maintain and balance the cashbook. The cashbook
contains the opening balance, details of payments and receipts. The Manager of the bank signs
the consolidated figures and written in cashbook as closing balance, which will the opening next
day.

Human Resources Department

 Transfers & Postings

 Scrutinizing bills (Hospital Bill)
 Staff Deceased cases & its Correspondence
 Retired employees Cases & its correspondence
 All staff legal cases & Court at Multan & Lahore.
 Retrenchment cases
 Complaints and its correspondence
 Fraud & Forgery cases
 Mandatory Leaves and its observance.
 Staff leaves and other related staff matters
 Goals of all Staff

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 Monthly Statement of Staff

 Disciplinary Action Cases
RATIO ANALYSIS

The relationship of one item to another expressed in simple mathematical form is

known as a ratio. A single ratio in itself is meaningless because it does not furnish
a complete picture. A ratio becomes meaning full when compared with some
standard. So we have taken ratios and percentage of the BOP based in its record of
the past financial and operating performance. On the following pages, I make the
analysis of the financial statements of BOP by using related items for the last five
years.
Profitability vs. Investment

Return on Assets Net profit after taxes / Total assets

Return on Deposits Net profit after taxes / Deposits
Return on Equity Net profit after taxes / Equity

No of Years 2008 2007 2006 2005 2006

.
Return on Assets .96% . 95% . 15% . 61%
70%

1.24 .
Return on Deposits 1.19% . 39% 2.8%
% 92%

12.01 9.88 7.2 1.54

Return on Equity 6.7%
% % % %

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Remarks.

The return on assets shows a increasing trend, which is good sign for the BOP. Return on
deposits is also not stable; in starting years it increases and then decreases and knows again
increase. This is due to an increase in deposits and less increase in profit. The ROE ratio of five
years of BOP indicates that the profitability of the bank with equity is increasing day by day.
This looks to be very positive sign.
Profitability Ratios.

Gross Profit Margin Gross profit / Income

Operating Profit Margin Operating profit / Income
Net Profit Margin Net profit / Income

200 200 200 200

No of Years 2004
8 7 6 5

Gross Profit Margin 57% 52% 45% 37% 27%

Operating Profit Margin 18% 16% 8% 5% 6%

Net Profit Margin 11% 9% 7% 1% 5%

Remarks.
The net profit margin of five years indicates that the income of the BOP after paying its non-
productive expenses is increasing year by year, which is a very good sign for the bank. As I see
the operating profit of the bank shows a increasing trend in ratio. This shows that the earning
capacity of the bank is increasing year by year.

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Earning Per Share

Earning Per Share Profit after Tax / No of Shares

200 200 200 200

No of Years 2004
8 7 6 5

Earning Per Share 2.83 2.41 1.85 .33 1.59

Comments
Earning of BOP shows the increasing trend. This shows that the earning capacity of a single
share is increasing and shareholders are earning increase every year. This is very good sign for
BOP. This ratio should be as high as possible because it has a great importance for an investor to
invest in the Bank of Punjab.

Regulatory Ratios:

Advances to Deposits Ratio Advances / Deposits

Cash to deposits Ratio Cash / Deposits

200 200 200 200

No of Years 2004
8 7 6 5

Advances to Deposits Ratio 28% 30% 36% 36% 33%

Cash to deposits Ratio 12% 23% 9% 13% 42%

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Remarks.
Advances to deposits ratio of The Bank of Punjab shows that the portion of loan in total deposit
of the bank is not stable, 1st three year from 1998 to 2001 increase then decrease. It means that
the credit (advances) circulation of the bank has fallen from 36% to 28% during the last five
years, which is a not good sign. And the cash to deposits ratio is also decrease from 42% to 12%.

Capital adequacy Ratios:

Equity to Asset Ratio Total Equity / Total Assets

Equity to Deposit Ratio Total Equity / Deposits

20 20 20 20 20
No of Years
08 07 06 05 04
Equity to Asset 10 11 10
8% 9%
Ratio % % %

Equity to 10 13 13 12
3%
Deposit Ratio % % % %

Remarks.
This ratios is showing increasing trend, in 2002 it decreased. This means that deposit of the
banks are decreased in 2002 and assets are also decreased in 2002, which is not good for the
Bank of Punjab.

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Efficiency Ratios:

Deposits to total liabilities Ratio Deposits/Total Liabilities

Investment to Total Assets Ratio Investments / Total Assets

20 20 20 20 20
No of Years
08 07 06 05 04
Deposits to total 91 85 95 92 94
liabilities Ratio % % % % %

Investment to Total 28 24 27 27 34
Assets Ratio % % % % %

SWOT ANLYSIS
SWOT analysis is an acronym that stands for strengths, weakness, opportunities, and threats
SWOT analysis is careful evaluation of an organization’s internal strengths and weakness as well
as its environment opportunities and threats.
“SWOT analysis is a situational which includes strengths, weaknesses, opportunities and threats
that affect
organizational performance.”
“The overall evaluation of a company strengths, weaknesses, opportunities and threats is called
SWOT
analysis.”
In SWOT analysis the best strategies accomplish an organization’s mission by:
1. Exploiting an organizations opportunities and strength.

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2. Neutralizing it threats.
3. Avoiding or correcting its weakness.
SWOT analysis is one of the most important steps in formulating strategy using the organization
mission as a context; managers assess internal strengths distinctive competencies and weakness
and external opportunities and threats. The goal is to then develop good strategies and exploit
opportunities and strengths neutralize threats and avoid weaknesses.

STRENGTH
 The Bank officers of BOP are considered as one of the most able professionals in the
banking
world (some belong to BCCI). However, they have added some local flavour in accordance with
their targeted segmented. In my observation that they interact with their clients as if they are
their personal friends and discuss about their problems as their own.
 As a result of the compassionate and personalized services of the officers, the clients’
perception
for BOP is very high. They have trust and feel themselves to be secure while dealing with BOP.
 BOP has opened all its branches at commercial areas so that the customers or clients face
no
problems in reaching to the bank. For example, Khanewal Road Branch is being situated in
business and commercial hub of Multan as big volume in trade.
 BOP has got a reliable and easy to use internal computer system. Every information
regarding the
transactions in customers’ deposits has been computerized. Data are properly maintained.
 Good security system
 Not excellent but good facilities are given to employees

WEAKNESSES
 Lack of proper internal controls is one of the major weakness of BOP. It is also pointed by
the
auditor in his review.

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 BOP has formulized a lot of products and services for its customers, even more than other
commercial banks, but any advertisement on electronic media has not been seen.
 I observed during my internship that some of the employees were burdened with over
work. So I
think that the work should be distributed according to their post and capabilities.
 Biased selection of employees.

OPPORTUNITIES
 Satisfy dynamic consumer needs, BOP has made significant in roads in its entire service
spectrum.
A lot of products have been introduced especially in Retail Banking (Agriculture side) and
people are increasingly becoming loyal to the bank and because of feasible transactions.
Optimum pricing and branding strategies of the bank are helping to make customer feel secure
and convenient.
 All the opportunities of the 21st century are to be availed in the information technology.
Information
technology is the future of this dynamic world. Therefore BOP should emphasize much on IT,
especially on E-Banking. Bank can design a universal account like other foreign banks, to
enhance online facilities.
 BOP has introduced a number of financial schemes including special ‘Deposit Accounts’.
These
accounts have their unique features. During the last three years, BOP deposits have been
increasing @ 40%, which is a very healthy sign. Therefore, with the commencement of new
schemes there can even be a greater increase in its deposits

THREATS
 Despite the difficult circumstances that confronted the banking sector in particular and the
country
in general, BOP has been still highly profitable. But, the facts can’t be denied and there might be
an
adverse impact of such situation.

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 BOP is facing a strong competition by its competitors, Business of all these Banks are
growing at
very high pace.

Weaknesses and their Recommendations (Financial &Administrative Aspects)

Internal Controls
To me the major and the most important flaw in the BOP is lack of internal controls and inter
communication between different branches of the bank. As far as financial aspect is concerned
there is no proper system is configured that’s why there is always a risk of big frauds with in the
bank. I during my internship also pointed out that point but no one bothered. To me the bank
should install some proper resource planning and controlling systems like other banks do i.e.,
oracle financials etc.

Professional Training
BOP staff lacks professionalism. They lack the necessary training to do the job efficiently and
properly. Although staff colleges are in all major cities of the Punjab but they are not performing
well. For this purpose these staff colleges should be reorganized and their syllabus should be
made in such a way which can help the employee understand the ever-changing global economic
scenario.
Banking council of Pakistan should also initiate some programs to equip the staff with much
needed
professional training.

Delegation of Authority

Employees of the bank should be given a task and authority and they should be asked for their
responsibility. The sense responsibility in employees mind is one of the most important factors in
the success of any organization.

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Performance Appraisal
During Internship I felt that there is no or very less appraisal of any ones cool performance. The
manager should strictly monitor the performance of every staff member. All of them should be
awarded according to their performance and result in the shape of bonuses to motivated and
incite them to work more efficiently.

To Over Come Problem of Space and Furniture

In the critical analysis this, problem is discussed. To overcome this problem it is suggested that a
special section should be made inside the branch. Which should only handle the treasury
function, salaries and pensions of federal personnel or the bank should do these functions in the
evening time. Also management should purchase more furniture and arrange them in such a way
which provides maximum space and convenient especially in deposit department and there
should also be convenient sitting place for customers.

Transfer
Transfer is not properly carried out. Some of the employees are continually serving at the same
post. They are simply rotated at the same branch. Therefore it is recommended that evenly
rotation of every employee should take place after every three years in different braches of the
bank.

Changes in Policies
There should not be any abrupt policies change by the upper management, as this practice hurts
the customer
confidences in the bank. Government should make long-term policies

Need of Qualified Staff

Required, qualified staff should be provided to branch in order to improve the functioning of the
branch.
Especially a telephone operator should be appointed.

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Utility Bill Charges

Bank gets Rs. 2 to 3 to processes a utility bill, and it is very tire, tough and hard job despite this
working resulting in a loss to then Rs 3 to5 per transaction. These charges should be increased to
RS 10 per bill to enable the branch to cover their handling costs and make some profit.

Link with the Head Quarter

100 major branches of BOP should established a direct link with the, head quarter in Lahore,
through Internet or Intranet. This will make the functions and decision making of the
management easier and convenient. Though management has a plan to connect all branches via
WIMAX technology. Which would really bring a great future aspects.

Credit Card
BOP should start its operation in credit card. These cards are very helpful for the ordinary
customer in general and the business people in particular. To make it mores secure and to
eliminate the misuse of it, the management is required to keep proper security against the card.

Clean Loans
Clean loan or clean overdraft is the credit facility extended to the customers to the customers
without any security. These types of small term loans should not be extended to anybody,
because sometime these loans are provided to blue-eyed people of the management and they
become a part of bad debts.

Cash Financing
In this mode of financing the amount of credit not utilized by the borrower is remained tax-free.
It is recommended that a small amount of interest should be charged on this amount as well
because the bank gas kept-aside the amount for that borrower and can not advance it anywhere.

Decreasing Administrative Expenses

Bank should decrease their administrative expenses. This was Rs 2.25 billion in the year 2007.
That can be done by lying off the surplus pool of employee with golden hand shakes scheme.

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The branches that are not much used could also be closed. That will give positive results in the
future.

Should be Aggressive in Credit Policy

As mentioned earlier, BOP is very conservative in advances and loans policy. It reduces the
investment opportunities. Also loans should be given to the small businessmen and the other
businesses on large scale like in agriculture sector at the low mark-up rate. It should adopt
flexible credit policy while giving credit to the agriculture sector.

Technological Advancement
I would like to suggest that at least all the main branches of BOP should be fully computerized in
order to expedite the dealing process among bankers and their customers. Every department
should be provided a computer with adequate training (especially Advances, Deposits and
Foreign Exchange departments). Daily records should be entered directly into these computers,
(instead entering the overall daily transactions after the banking hours). It will not only reduce
transaction time, will increase accuracy but will also be efficient as well.
Not only it will be economical but will also reduce the extra burden of work of the bank. It will
also help in
reducing the use of excessive paper work.

Staff Relationship
Good relationship among staff member leads to the peak performances in any organization. I
observed that the staff relationship was normal other wise but some time I noticed that there
exists little conformity among the staff members. Another syndrome from which the staff
suffered was that all of them considered themselves more important than others. Some of the
officers used to say that if I am absent for a day the bank would stop working. So this sort of
attitude is not good because it mars bank image and juniors’ willingness learn and work hard and
in the end will hurt the whole team.

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Improper Distribution of Work

Proper distribution of work leads to success in every organization. Proper distribution of work
prevents the employee from over and under work situation. So for a smooth running of an
organization proper distribution of work is the hint to be followed.
During my internship I observed that there was no proper distribution of work in the bank. I saw
that some of the employee worked like ants other sat idle staring here and there. So this created a
lot of over work situation for while relaxation for other.

Favouritism and Nepotism

In the Main branch during my internship I saw that when some of the employees are transfer to
other places, due to their relation with influential people and with top management they can
cancel their transfer in few weeks, when they are unsatisfied at that place.
So I suggest that in the organization there should be no favouritism, nepotism and politics and
their transfer and promotion should be made on merit and according to the rules and regulations
of the bank and provided favourable environment to the employee to show their performances.

Inter Departmental Transfer

I watched during my internship that, there employees who have worked on one seat for many a
year. It can have negative effects motivation of employee who is hard working and intelligent.
Take the example of advances section. In advance section if the employee is transfer after sixth
month or seven month, how can he be able to show his performances and how can he be able to
know the bank customer in a short period of time.

Marketing Policy
The branch should adopt various marketing strategy and promotion strategy to promote the bank
and its
product.
The most important in my opinion is personal marketing; it is the most effective of all when you
think in term of branch level. But on the whole organization level, they should arrange the
seminar with in the bank and outside the bank. They should introduce various prizing schemes

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just like Allied Bank. Karamad Scheme, Bank Al-Fallah (monthly income earning scheme) and
various others.
They should do more advertising through newspaper and media and through channel of personal
contacts.

Complaints of Customer
There should be an information desk to provide the information and to receive the complaints of
the customer
in the bank.
There is no complaint box available in the branch and not any person appointed to hear the
complaints.
Every person cannot go to the manager for the complaint because most of the people are hesitant.
So I suggest management to install a compliant box in the branch, and recruit a special person for
that guidance of the customer when they are unable to manage some difficulties in banking
matters.

Organizational Commitment
It is suggested that employees working on daily wages basis should be given some benefits,
which the other employees are getting. Their salaries must increase according to efficiency,
performance and service this will increase there commitment to the organization.

Credit Monitoring
The credit department of the bank should carry out vigilant credit monitoring. They should
ensure the proper
payment of instalments and the mark-up by the borrower.
The staff members who have done all the paper work of the loan extension should perform the
monitoring, as
he/she will be having more information about the borrower.

Extended Banking Hours

The banking hours may be extended up to six, as being practiced by UBL opposite to it. Some of
the business community due to law and order situation are now reluctant to keep the fund in their
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premises and would want to depart with it. Therefore, Main Branch may extend the night
banking to cater to demand of this business community. The branch could also be opened to
cater the requirements of this business community
38

Housing and House Hold Goods Loans

Bank should initiate these loans because most of bank’s customers are middle class and they
cannot afford to
buy house or household goods at once by their own.

Avoiding Bad Debts

Great care should be taking while extending the loan. Loans should be awarded against
reasonable securities,
where market value should be equal to the loan granted.
Policies should be crafted in a way to ensure that no loan is extended on political pressure. SBP
regulation for loan approval should be strictly followed. According to which the current ration of
borrower’s business must be 1:1 and the debt to equity ratio should be 60:40, means the liquidity
position of business should be healthy.

RECOMMENDATIONS FOR STUDENTS

In this section some recommendations for those students who are planning for an internship at
BOP particularly and in any other bank generally. The most important of all is the difference
between what we learn from the books i.e. the theory and what actually is done i.e. in practice.
This difference is described in detail below:

Working in different departments

During my internship I observed that other internees in the bank use to stick with one department
only. An internee with specialization in Finance was of the view that he should be in Finance
department same was the case with other specialized Internees. But I would suggest that one
must work in every department for some time to gain a hand on experience of all the
departments. As in real working environment employee have to coordinate with other
departments, so he/she must know what the other departments operations are and how they work.
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Relationship between Theory and Practice:

This part of report is the essence of the internship, as this will help other students to better
understand the working environment of the bank by finding the relationship between what is
written in the books and what is actually going on in fields. The theory written in the books in
cases is not implemented as it is. In some cases theory is implemented with a little modification
but in other cases theory has nothing to do with practice. In accounting, banks don’t prepare
worksheet, but part of worksheet is prepared like trial balance, but little differences, theory and
practice has substantial relationship. The securities for the loans are handled in the same way as
theory says like mortgage, pledge, hypothecation, advances against insurance policies or
liquidation procedure is the same. The difference is there in the case of loans. Theory talks about
four or five terms of loans that is cash finance, overdraft, loans etc., but in practice there are
some more terms used like running finance, demand finance etc. All other concepts of
remittances, bills, foreign exchange deposits, letters of credit are in accordance with theory
almost. So for a internee it is more important to learn new things which he/she has never heard
about in his/her course book.
To me, Theory gives you the direction to understand the processes and the terminologies going
across the World using best business practices in a broader view covering each and every aspect
of possible business scenarios. On the contrary practical life is specific, enclosed in a jar. In
practical professionalism and firm’s environment is each and every thing. Professional life only
builds on the knowledge based on books even though it may only use 1% of the theoretical
knowledge.

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