Internship Report ZTBL Hailey College

INTERNSHIP REPORT
ZARAI TARAQIATI BANK LTD.
Submited to:
Sir, Fida Hussain Bukhari
Submitted by:
Adnan Ijaz
M08MBA071
Specialization in Finance
MBA Banking & Finance 2008-2010
Hailey College of Banking & Finance

University of Punjab
Internship Report on Zarai Taraqiati Bank Ltd. 2010
In the name of ALLAH the most

benificent, the most merciful
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ACKNOWLEDGEMENT
I have great sense of gratitude for the most Beneficent and Merciful Allah who
has always helped me in all matters of life .I tried but He rewarded me more than
the tried.
I have deep feelings for whole of my family, in general, and for my Father, my
Mother and my elder brother, in particular .They have always soothed me,
elevated me and their words and du’a has floated me in the deep seas of
troubles. All of my successes are due to the prayers of my family.
I am thankful to all of my teachers and my class fellows and friends whom

cheerfulness and guidance is an asset for me .I am especially thankful to the bank
staff who has given me opportunity to get precious practical knowledge and also
for their guidance during my internship. Without the help of all these I was not
able to complete this report.
Preface
This Internship report is the compulsion put in by Hailey College of Banking and Finance
for the award of master degree in business administration.
In order to accomplish the task of completion of the degree, I choose the renowned and
reputed organization that is the Zari Taraqiati Bank Ltd. I went through 6 weeks
internship training in the bank in order to perceive the true art and the practical picture
of banks’ working and to go through the process by which the organization is making
very good out of its limited resources. The report is based on the introduction of the
bank, products offered, financial analysis and assignments I handled during my
internship.
The report is divided into two main parts; the first part includes the introduction of
bank, its products and financial analysis while the second part is based on the
assignments I handled during my internship.
I am positive that the college will oblige me by giving its recommendation and consent
for the approval of the degree and the purpose for which I have gone through training
and report writing procedure will be served positively.
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Table of Contents
Part One______________________________________________________________________8
Ch. 1: Introduction of Zarai Tarqiati Bank Ltd.______________________________________8
Chapter 1_____________________________________________________________________9
History_____________________________________________________________________9
Credit Rating______________________________________________________________11
Corporate Vision__________________________________________________________12
Corporate Mission_________________________________________________________12
Corporate Objectives_________________________________________________________13
Transformation of ZTBL to R.F.I of the country and road to excellence.________________14
Branch Network_____________________________________________________________16
Management Hierarchy_______________________________________________________17
Board of Directors___________________________________________________________19
A Brief Resume of President_________________________________________________20
Kissan Support Services Ltd.___________________________________________________23
KSS Aim__________________________________________________________________23
KSS Operation____________________________________________________________23
Objectives________________________________________________________________23
Services/Activities so far undertaken by KSS_____________________________________24
Chapter 2____________________________________________________________________25
Products and Services________________________________________________________25
ZTBL Locker Facility________________________________________________________25
Products offered to Meet Finance Need of Farmers________________________________26
Types of Loans Advanced____________________________________________________26
Loan Schemes______________________________________________________________27
Supervised agriculture scheme:_______________________________________________27
Zarkhaiz (one window operation)_____________________________________________27
Sada Bahar Scheme________________________________________________________27
Tea financing scheme_______________________________________________________28
Crop maximization project___________________________________________________28
PER ACRE CREDIT LIMITS______________________________________________________30
Major Crops______________________________________________________________30
Minor Crops______________________________________________________________30
Growing Agro Forest Trees__________________________________________________31
Growing Orchards_________________________________________________________31
Mature Orchard/Fruits crops_________________________________________________32
Types of Security____________________________________________________________33
Immovable Property_______________________________________________________33
Moveable Property and Guarantees___________________________________________33
Personal Surety___________________________________________________________34
Debt Equity Ratio____________________________________________________________35
Repayment Periods__________________________________________________________36
Recovery Procedure__________________________________________________________36
A) Recovery Schedule_______________________________________________________36
b) Issuance of Notices______________________________________________________36
c) Legal Action____________________________________________________________36
d) Rescheduling of Loan Repayment Facility_____________________________________37
d) Down Payment for Rescheduling of Loans____________________________________37
Chapter 3____________________________________________________________________38
Horizontal Analysis of Balance Sheet____________________________________________38
Vertical Analysis of Balance Sheet______________________________________________39
Horizontal Analysis of Profit & Loss_____________________________________________40
Vertical Analysis of Profit & Loss_______________________________________________42
Interpetation of Horizontal and Vertical Analysis__________________________________44
Interpetation of Horizontal and Vertical Analysis of Balance Sheet____________________49
Cash and Balance with Treasury Banks__________________________________________49
Ratios_____________________________________________________________________52
Key Financial Trends of 2009___________________________________________________55
Credit Risk_________________________________________________________________57
Market Risk______________________________________________________________58
Liquidity_________________________________________________________________59
Profitability_______________________________________________________________60
Capitalization_____________________________________________________________61
Chapter 4____________________________________________________________________65
SWOT Analysis______________________________________________________________65
Strengths________________________________________________________________65
Weaknesses______________________________________________________________66
Opportunities_____________________________________________________________67
Threats__________________________________________________________________68
Part Two_____________________________________________________________________69
Ch. 5: Assignments I handled during my Internship._________________________________69
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Chapter 5____________________________________________________________________70
Organogram of Mian Channu Branch____________________________________________70
Redemption of loan__________________________________________________________71
Opening of Current Account___________________________________________________74
1: Acquiring Original CNIC___________________________________________________74
2: Filling Current Account Form_______________________________________________74
3: Filling of Know Your Customer Form_________________________________________75
4: Current Account Specimen Card____________________________________________76
5: Registering name in the Current Account Register (Issuance of A/C No.)____________76
6: Filling of Deposit Slip of starting amount______________________________________77
7: Signing by AMO and Manager______________________________________________77
8: Issuance of Cheque book__________________________________________________78
9: Opening account in the ledger of bank_______________________________________78
ZTBL Flood Relief Fund 2010_________________________________________________81
Writing of Vouchers__________________________________________________________83
1. Debit Voucher__________________________________________________________83
2. Credit Voucher__________________________________________________________83
3. Transfer Voucher________________________________________________________83
Sample of Debit/Credit Voucher________________________________________________84
Sample of Transfer Voucher___________________________________________________89
Daily Transaction Scroll_______________________________________________________90
Making Entries in the Ledgers__________________________________________________92
Disbursement and Recovery Entries_____________________________________________92
Revolving SBS Loan__________________________________________________________94
Opening and Closing Cash_____________________________________________________97
Key Register______________________________________________________________97
Safe Register:_____________________________________________________________97
Dispatch and Diary___________________________________________________________98
Recommendations___________________________________________________________98
Conclusion________________________________________________________________100
Part One
Ch. 1: Introduction of Zarai Tarqiati Bank Ltd.
Ch. 2: Products Offered
Ch. 3: Financial Analysis
Ch. 4: SWOT Analysis
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Chapter 1
The Zarai Taraqiati Bank Limited (ZTBL)

(formerly known as Agricultural
Development Bank of Pakistan) is the
largest public sector financial
development institution with a wide
network of 27 Zonal Offices, 9 Audit
Zones and 352 branches in Pakistan. The
bank serves around half a million clients
annually and has over one million
accumulated account holders.
History
Pakistan is an agricultural country and more than 60% of its population is working
related to agriculture. A development in the agricultural sector will no doubt result in
the development of the whole country. To keep With a view to meet this basic need the
Agricultural Development Finance Corporation was set-up in 1951, and was entrusted
with the task of providing financial facilities for the development and modernization of
agriculture, including: Forestry, Fishery, Animal Husbandry, Poultry, Dairy Farming.
Later on the Agricultural Development Bank of Pakistan was also established in
September 1957, under the Agricultural Development Bank Act. The Bank is to provide
credit in cash or in kind, warehousing and storage facilities to agriculturists, cooperative
societies and other bodies, of which the majority of members are agriculturists.
As the functions of the Agricultural Development Finance Corporation and Agricultural

Development Bank were similar and since both were working with capital provided by
the Government, they were merged into one organization known as Agricultural
Development Bank of Pakistan on February 18. 1961. The Agricultural Development
Bank of Pakistan was a banking company for the purpose of the Banking Companies
Ordinance and the State Bank of Pakistan Act.
On 14 December 2002 the Federal Government has converted the Agricultural

Development Bank of Pakistan (ADBP) into Zarai Taraqiati Bank Ltd (ZTBL) and the new
venture has started its operation with immediate effect. The new corporate structure
redefines the banks statue as a public limited company with an independent Board of
Directors promulgated under the presidential ordinance which, aims at ensuring good
governance, autonomy, delivering high quality, viable and timely financial services to a
greater number of clientele in the agricultural and rural segment of the country with
adequate returns to the stakeholder.
After this incorporation all the assets and liabilities of ADBP became the assets and
liabilities of ZTBL. This restructure was carried out with the aim to improve the working
and role of bank in the agricultural development.
The bank is completely owned by the government and it has head office in Islamabad.
Ownership Government
Type of Institution Specialized Bank
Established 1961
President & CEO Muhammad Zaka Ashraf
Equity 18.7 Billion (2009)
Headquarters Islamabad, Pakistan
Total Deposits PKR 8.8 billion (as Dec.31st, 2009)
Total Disbursement PKR 77.7 billion (as Dec.31st, 2009)
Homepage www.ztbl.com.pk
ZTBL is providing affordable, rural and agriculture financial services to the rural Pakistan,
comprising 68 % of the total population. The Bank through a country-wide network of
352 branches is serving around half a million clients annually and over one million
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accumulated account holders with the average loan size of around Rs.89,000.
Credit Rating
In August 2010, ZTBL continued to achieve AAA credit rating by JCR-VIS .
Year Entity Stand Alone Outlook

2010 AAA/ A-1+ B+/ B Stable
2009 AAA/ A-1+ B+/ B Stable
The credit rating of the bank is due to the reason that bank enjoys sovereign guarantee
of the federal government that covers its debt obligations to State Bank of Pakistan
(SBP) and ensures safety of deposits under the Banks’ (Nationalization) Act 1974. The
bank’s lending book is largely funded through SBP’s credit lines while contribution from
deposits remains nominal. ZTBL is actively exploring different options for resource
mobilization including bilateral/multilateral arrangements with financial institutions. In
case these efforts materialize; it would diversify the existing funding source of the bank,
thereby reducing reliance on the SBP.
Corporate Vision
Dedicated to serve the needs of the farming community, by delivering financial

products and technical services on a competitive and sustainable basis, in a
convenient, efficient and professional manner, leading to success of the Bank and
the farmers.
Corporate Mission
To play effective role in the promotion of economic growth, by enhancing the

availability of credit to the agriculture sector, through reliable access to
sustainable financing, special lending programs, technical assistance, and other
products & services, and to promote career development opportunities for
increasing professionalism and technical proficiencies of employees.
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Corporate Objectives
1. Develop and operate as a financially and operationally sustainable R.F.I of the country.
2. Assist rural community, particularly the small farmers, in raising their productivity and
income levels through timely delivery of credit, advisory and ancillary services.
3. Build ZTBL's image as a proactive, client friendly, financially & operationally

sustainable with indigenous product deployment.
4. Establish and provide backward and forward linkages to strengthen agri. value added
commodity chains.
5. Engage in public - private and wholesale - retail partnership to deepen outreach and
reduce operating cost.
6. To function as a rural commercial bank to mobilize rural capital formation and to

commercialize the agriculture sector by delivering the true value of credit to the client.
7. Provide a wide range of risk insurance products to its clients.
8. Open up its venues of operation to Domestic & International Banking Industry to avail
comparative advantages.
Transformation of ZTBL to R.F.I of the country and road to

excellence.
The conversion of ADBP into ZTBL had a conditionality of the Asian Development Bank
(ADB) loan framework as per which a restructuring exercise was initiated. The
restructuring process entailed ADB’s Rural Finance Sector Development Program
(RFSDP) with the objective to transform ZTBL into a sustainable Rural Finance
Institution. It also included the up-gradation of Information technology (IT)
infrastructure for which funds from ADB’s loan were to be utilized.
Healthy and well-functioning rural finance markets are directly related to achieving the
two key national policy objectives of accelerating rural/agriculture growth and reducing
poverty. The realization of these objectives depends on the simultaneity of
developments in rural finance and non-financial markets to foster the creation of
diverse sources of rural finance to build sustainable financial institutions, and stimulate
products and capital flows in the rural sector. For this, rural finance must be seen as an
integral part of equitable development within a framework of macroeconomic stability.
For the majority, access to affordable rural finance services is also important to enable
them to compete in the post-World Trade Organization scenario. Inability to compete
because of high financial costs could reduce income of the majority of farmers and rural
clients, particularly the small and subsistence clients. Lack of access to affordable rural
finance services will also prevent the clients from switching to non-farm activities.
The ZTBL restructuring plan covering the following;
 Governance: establish an environment that facilitates good governance and

accountability;
 Systems: modernize operations through use of technology, networking, and

communication tools;
 Business processes: streamline products and delivery systems so as to reduce

transaction costs, simplify operations, and increase outreach;
 Products and services: introduce products and services that are financially
economically viable;
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 Human resource development: improve standards and skills of management and

staff and strengthen training capacity; and
 Information Technology: establish new hardware and software platform to

support MIS, accounting system including forensic accounting, and risk
management functions.
The reforms shall establish ZTBL as a key R.F.I of the country. By expanding its private
sector role, the bank aims to establish network of high tech rural and agri. financial
services through intermediations under public private participation and whole-sale
-retail lending mechanism.
Branch Network
Head Office
Islamabad, Pakistan
Details of Regional Offices

Punjab Sindh Balochistan Khaber Gilgit
Pakhtunkhaw Balitistan
Islamabad Karachi D.I. Khan Abbottabad Gilgit
13 Branches 15 Branches 14 Branches 7 Branches 7 Branches
Multan Hyderabad Turbat Mingora

8 Branches 14 Branches 6 Branches 15 Branches
D.G.Khan Mirpur Khas Quetta Peshawar

Sahiwal Sukkur D.M. Jamali

15 Branches 15 Branches 7 Branches
Lahore Larkana
20 Branches 18 Branches
Gujranwala S.B. Nazirabad

18 Branches 14 Branches
Bahawalpur
13 Branches
Faisalabad
20 Branches
Sargodha
16 Branches
Vehari Muzafargarh R.Y. Khan Muzafar.Abad

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Management Hierarchy
The general direction and superintendence of the affairs of the bank are entrusted to a
12 members Board of Directors consisting of a chairman appointed by the Federal
Government, the Federal Government officers from the Ministries of Finance and Food
and Agriculture, four officers of the four Provincial Governments and one non official
nominated by each province. One member on this board represents the State Bank of
Pakistan also. However, at present the bank has 7 directors including chairman. The
bank also has a president appointed by the federal government and a company
secretary.
In ZTBL, the president supervises and directs the Chief Executive Officer who supervises
and directs the Head of Department, who then supervise and direct the officers under
them. The management hierarchy of bank is as follows;
Total Zones 27
Total Audit Zones 9
Total Branches 352

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Earlier the bank was functioning like a pure government institution and permission has
to be sought on every step for moving forward. Now the bank management board will
be fully empowered to run the affairs of the ZTBL.
More than 2,000 employees of the bank have opted for Voluntary Golden Hand Shake
Scheme, offered by the bank to its employees. Bank has established a task force for
improving the operational performance of the staff and it was monitoring the
disbursement, recovery operations and performance of field functionaries. The task
force comprised 10-15 officers and each officer will head a desk exclusively to monitor
3-4 regions. This task force will be responsible to evaluate performance of each MCO,
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Manager and Regional Manager on the achievement of bank’s policies regarding credit
and recovery periodically.
Board of Directors
Syed Qamar-Uz-Zaman Shah Mr. Muhammad Zaka
Chairman Board Ashraf
President/ CEO
Mrs. Nazrat Bashir Mr. Shafqat Hussain

Director Naghmi
Director
Mr. Muhammad Iftikhar Khan Mr. Tauqir Ahmad Faiq

Mohmand Director
Director
Dr. Khalid Ahmad Khokhar Mr. Imam Bux Sheikh

Director Director
Mr. Muazam Ali

Company Secretary
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A Brief Resume of President
Mr. Muhammad Zaka Ashraf
Present Portfolios
 President/Chief Executive Officer, Zarai Taraqiati Bank Ltd.
 Chairman & Chief Executive, Ashraf Group of Industries
 Chairman, Pakistan Sugar Mills Association (Punjab Zone) from October, 2006 (Second
Tenure)
 Chairman, Sugarcane Research & Development Company, Agriculture Department,
Government of Punjab
 President, Petarian Association, Lahore
 Patron-in-Chief Sindh Abadgar Welfare Association (Sindh)
Posts Held
 Advisor to Chief Minister Sindh from 1989 to 1990
 Member Executive Committee, Lahore Chamber of Commerce & Industry from October
2002 to September 2004
 Central Chairman All Pakistan Sugar Mills Association from October 2004 to October
2006
 Vice Chairman of The Federation of Pakistan Chambers of Commerce & Industry’s
Standing Committee on “Food & Agriculture” from January 2007 to December 2007
Academic Institutions
 Member Board of Governors of Sadiq Public School, Bahawalpur, from 1st January 1989
to 2008
Ms. Nazrat Bashir

Director
Ms. Nazrat Bashir belongs to District Management Group of Civil Services of Pakistan.
She is Masters in Economics from New York University, New York, USA and Master in
Psychology from Peshawar University, Peshawar.
She has extensively traveled abroad and has attended various international Seminars
and Conferences such as on Micro Finance, Anti Money Laundering, and Instruments of
Financial Markets etc. Domestically too she has attended various programmes in some
of very prestigious institutions of Pakistan.
She possesses 29 years of administrative experience in government service in economic

& financial policy and its implementation. At present, she is working as Additional
Finance Secretary, Internal Finance, Finance Division, GoP, Islamabad. She is a certified
Director on the Panel of Pakistan Institute of Corporate Governance (PICG). Besides
Zarai Taraqiati Bank Limited, she is on the Board of Directors of National Investment
Trust (NIT) and NBP.
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Mr. Shafqat Hussain Nagmi

Director
Mr. Shafqat Hussain Naghmi is a civil servant from DMG Group and currently posted as
an Additional Secretary I in Federal Ministry of Commerce, Islamabad. Previously he was
posted as Chief Operating Officer (COO) in Pakistan Cricket Board.
Tauqir Ahmad Faiq

Director
Tauqir Ahmad Faiq represents the Ministry of Food and Agriculture, Government of
Pakistan on ASF’s Board of Directors. An expert in District Management, Secretariat
Affairs, Development Project Management and International Cooperation with
combined experience of 34 years having held the office of Secretary at Government of
Punjab’s Zakat and Usher, and Social Welfare Departments; he is currently Additional
Secretary at the Ministry of Food and Agriculture, Government of Pakistan. Tauqir
Ahmad Faiq has served as Director General Lahore Development Authority Government
of Punjab and has also been member the Board of Revenue and Population Welfare
Department of Government of Punjab.
Kissan Support Services Ltd.
Subsidiary of ZTBL
Kissan Support Services Ltd. Is a subsidiary of ZTBL which is established with a capital
investment of 100 Million to help ZTBL in the achievement of its objective and also to
make availability of trained human capital to the bank.
KSS Aim
To provide support staff to ZTBL & under take its non core activities.
KSS Operation
Kissan support services operates under its Memorandum & Articles of Association.
Objectives
The main objective of KSS are following:
 To provide to the Bank all kinds of support staff and ancillary services
 To plan, organize and establish training facilities to impart training to the bank’s
staff
 Drip Irrigation System to assist the bank clients in marketing of their product and
provide storage facilities
 To assist the bank clients in marketing of their product and provide storage
facilities
 To provide welfare services to the employees of the Bank including education,
vocational training, sports and recreation facilities
 To invest any surplus money of the company not immediately required
 To carry on any business, which may seem to the company capable of being
conveniently carried on
 To liaison & establish contracts with agricultural research organizations for
development of efficient, effective and appropriate technologies
 To carry on business of providing consultancy, advisory and other agency services
and support services to Zarai Taraqiati Bank Limited
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 To provide to the Bank’s clients quality products and services for efficient and
improved farming
 Etc.
Services/Activities so far undertaken by KSS

 Security Services to ZTBL
 Recruitment/provision of staff
 janitorial Services provided to:
a. ZTBL Head office buildings
b. Ztbl Farms
c. Staff college
d. Printing stationery office
e. AV Unit
f. Old record office
g. Sports club
h. Warehouse
 Management of Sports Activities
 Management of Sports Activities
 Photocopy Services
 Day to day minor repair and maintenance of ZTBL HQ Buildings
Chapter 2
Products and Services
ZTBL Locker Facility
Zarai Taraqiati Bank Ltd. apart from its core functional activity marked with country
based agri-business, has started to serve its valued customers by offering lockers facility.
Initially, this facility is being offered at following 11 branches:-
S.No Name of Branch
1 Islamabad Branch
2 Main Branch Lahore
3 Peshawar Branch
4 Gujranwala Branch
5 Faisalabad Branch
6 Multan Branch
7 Sahiwal Branch
8 Sargodha Branch
9 Khan Pur Branch
10 Shafi Court Branch
11 Main Branch Gulshan-e-Johar
Following are the approved rates for rent of lockers and key deposits against which
lockers will be allocated:
Type Specification Rent Per Annum Rent after grace period Key Deposit
Small 6-1/2"x4- Rs.1,200/- Rs.1,500/- Rs. 5,000/-
1/2"x23"
Medium 13-1/2"x4- Rs.1,800/- Rs.2,250/- Rs. 10,000/-

1/2"x23"
Large 13-1/2"x8- Rs.2,500/- Rs.3,125/- Rs. 15,000/-

1/2"x23"
Life Time Locker Facility

On lump-sum payment of locker rent for ten years entitle the lessee to avail the locker
facility for life time, without key deposit.
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Products offered to Meet Finance Need of Farmers

Zarai Taraqiati Bank Limited (ZTBL) is a specialized bank providing agricultural credit in
rural areas of the country. Pakistan is an agricultural country and near about 60% of its
population is working directly or indirectly related to agriculture industry. But instead of
being an agricultural country Pakistan is still not gaining benefits from this sector which
it can gain. Some time we even does not able to fulfill our food requirement and
sometime we have bumper crop but does not have facilities to store them properly, in
this way we are wasting our resources. To gain benefit from agriculture sector it is
required to be modernized to increase the per acre production and also to build
warehouses to store. The main hindrance in the modernization of agriculture is the
unavailability of finance. The other financial institutions feel reluctant in giving finance
to farmers due to high level of risk in the production of this field. To facilitate farmers
and to help in modernization of agriculture sector the government has established this
bank which is contributing its part in achieving government objective from many
decades. ZTBL is offering a blend of products to fulfill the need of different types of
customers.
Types of Loans Advanced

1. Short Term Loans
Short term loans are loans for shorter period of less than a year. It includes, crop
production working capital loans recoverable in lump sum commencing after the
harvest/marketing of respective crops and within maximum period of 12 months.
2. Medium Term Loans

Medium term loans are for a period of more than a year but less than 5 years. In includes,
dairy farming and livestock etc. The installments of these loans are usually paid able in
quarterly or half yearly basis.
3. Long Term Loans

Long term loans are for a period of more than 5 years. These are development loans
which require large amount and also need some time to show its result in the shape of
better production. It includes loans for tractor, agricultural machinery, poultry farming,
godowns and orchard in yearly/half yearly installments within maximum period of 8
years.
Loan Schemes
ZTBL is offering the following loan schemes to the farmers.
Supervised agriculture scheme:

Under this scheme agriculture loans are given for short, medium and long term loans up
to Rs. 1.00 million per borrower/per case. The loans are sanctioned for In Fats, livestock,
orchard, tractor, agricultural machinery, tube well and irrigation facilities etc. under the
scheme besides provision of credit, information are provided to the farmers for planning
the farm, production, guidance for implementation of the scheme, marketing and
repayment of loans.
Zarkhaiz (one window operation)

For timely and conveniently provision of credit to purchase inputs, loans are provided to
the borrowers under One Window Operation being conducted twice a week during Rabi
and Kharif seasons. Applications processed on the same day whereas sanction payments
are made within three days at Branch. For Rabi Crops one window operation from
October to January and for Kharif Crops from April to September each year which is
extendable as per requirement of particular area.
Sada Bahar Scheme

For providing timely input loans for crops and working capital for poultry and fishery etc,
the Bank has launched a Sada Bahar Scheme. Assessment for inputs requirements for
the whole year is made at the time of first application. The amount so assessed is
treated as Revolving Limit provided it is within the security limit. The Managers are
authorized to sanction such loan limits up to Rs.O.500 million. Scheme’s main features
are as under:
 Revolving Credit Limit is fixed to cater production credit and ancillary

requirements of the farmers during one year period.
29
 The documentation once completed remains applicable for three years with
yearly cleanup/renewal without any further documents.
 The borrowers can draw the credit in lump sum or in installments according to
his requirement.
 Like-wise he can repay in lump sum or in installments during the year when his
cash position allows him.
 Pass Book containing transactions in his SBS Account is supplied to every
borrower free of cost.
Tea financing scheme

In order to increase the tea cultivation in District Mansehra, Swat, Mutta, Shangla par
and Dir in Malakand Division, tea financing scheme has been introduced which would
not only save the hard earned foreign exchange but would also help improve the socio-
economic condition of the inhabitants of the area. The salient futures of the scheme are
given as under:
 Maximum Credit Ceiling of Rs.60, 000/- per acre has been fixed.
 Farmers owing land up to five acres are eligible to avail loans.
 Credit will be given in 3 installments: first year Rs.30, 000/-, 2nd year
Rs.15,000/- 3rd year Rs.15,000/- provided the disbursed loan is used
properly.
 The credit would be repayable within 1 year with 6 years grace period with
prescribed markup of 9% per annum. Rebate of 1 % will be allowed in
mark-up on timely repayment and proper utilization of the loan.
Crop maximization project

Ministry of Food, Agriculture and Livestock (MINF AL), Government of Pakistan has
launched Crop Maximization Project in 109 villages in various districts throughout the
country to increase the productivity/yield of crops. Under the project MINFAL has to
provide funds of Rs, 299.893 million to ZTBL for disbursing loans to the project farmers
for purchase of inputs. Till the time funds of Rs.468 Million have since been received by
the Bank for the purpose. These funds are to be revolved for meeting input credit needs
in the project villages till 30th June, 2014 after which Bank will return the principal
amount to MINFAL. Accordingly Credit needs of the project farmers are being met by
respective ZTBL branches through Village Organizations formed for the purpose. Duly
the currency of the project Bank is authorized to charge 4% per annum mark-up on
loans to project growers to meet its operational cost, however in case of default Bank’s
normal rate of return i.e. 9% p will be applicable.
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PER ACRE CREDIT LIMITS

Major Crops
Wheat 16,000
Paddy (Rice) 19,000

Sugarcane 30,000
Cotton 21,000
Maize 20,000
Minor Crops
Overall Credit Limit Per Borrower Rs.1.000 Million
Sada Bahar Scheme under one window operation or otherwise Rs.0.500 Million
Potato 36000 Bajra 11000

Tobacco 29000 Jawar 11000
Mustard Mung 11000 Gram 12000
Tomato 19000 Guara 3000
Mash 3000 Caster Oil 6000

Lentil 11000 Barlay 9000
Groundnut 14000 Berceme 4900
Sunflower 15000 Janter 4000
Soyabean 12000 Garloc 26000
Canola 13000 Turmeric 25000
Rape Seed 11000 Ginger 30000
Til(Sesame) 12500 Lacern & Shaftal 4500
Suger beet 12000
Growing Agro Forest Trees

SNo. Trees 1st Year 2nd Year 3rd Year
1 Bamboo 34,000 8,000 3,000
Growing Orchards
S. No. Trees 1st Year 2nd Year 3rd Year 4th Year 5th Year
1 Mango 24,000 13,000 13,000 13,000 14,000
2 Citrus 21,000 12,000 11,000 13,000 13,000
3 Apple 23,000 12,000 12,000 12,,000 14,000
4 Banana 29,000 20,000 23,000 30,000 26,000
5 Jujuba 19,000 9,000 10,000 10,000 10,000
6 Guava 21,000 12,000 11,000 13,000 13,000
7 Coconut 29,000 6,000 6,000 7,000 8,000
8 Palm Oil 18,000 6,000 7,000 7,000 7,000
9 Dated 33,000 12,000 11,000 12,000 13,000
Mature Orchard/Fruits crops

Pear 24000 Dates 31000
Loquat 24000 Strawberry 25000
Plum 33000 Tea 60000
Apple 37000 Guava 24000
Papaya 22600 Pomegrante 33000
Almond 32000 Palm 22000
Coconut 21000 Olive Oil 13000
Lichi 32000 Walnut 23000
Cherry 33000 Persimen 15000
Mango 37000 Zizi Phus(Bher) 25000
Apricot 31000 Melon 16000
Banana 37000 Water Melon 16000
Peach 32000 Musk Melon 16000
Citrus 34000
33
Types of Security
Immovable Property
Agricultural Land
 Under Pass Book System 80%
 Outside Pass Book System 70%
 Under Alienability Certificate 66%
 Commercial/Industrial Land under Pass Book 80%
Outside Passbook System

 Urban Residential/Commercial Plots in all localities outside Pass Book 75%
 Alienability Certificate 66%
 Residential/Commercial Buildings 70%
 Lease hold rights of a leased land of CDA/KDA with 99 years lease 70%
Moveable Property and Guarantees

1. Unconditional Bank guarantee from scheduled Banks
Up to maximum amount of an un-conditional Bank guarantee after keeping
sufficient margin for un-paid mark-up, cost, charges and expenses.
2. Guarantee issued by Central or Provincial Government

Full amount of loan plus return and other charges.
3. Government securities
85% of face value or market value whichever is less.
4. Defense Savings & FEB Certificates

75% of value of certificates presented as security.
5. Fix Term Deposits Receipts

85% of face value of deposits receipts.
6. NIT Units
80% of the face value or market value whichever is less.
7. Life Insurance policies

85% of surrender value
8. Pledge of Potatoes/Seed Potatoes price or market value which ever is less

Up to 75% of Govt. support.
Personal Surety
Against a bond with two sureties under General Credit and one surety in Special
Schemes up to Rs.25,000/- or Up to 50% of appraised value of properties of
sureties.
35
Debt Equity Ratio

For Tubewell/Tractors/Implements/Attachments/Equipments
All kinds of 25% Within 5 years in annual/bi-annual

Tubewells/ installments commencing one year after
Turbines first disbursement
New Tractor No equity but Within 8 years in monthly/quarterly or
10% of the loan half yearly installments to be decided by
is to be needed Manager in consultation with borrower.
in PLS Account
Used Tractor, -do- Within 5 years in monthly/quarterly or
Equipments/ half yearly installments to be decided by
attachments/ the Manager in consultation with
implements borrower.
and used tractor
Except Tubewell/Tractors/Implements/ Attachments/Equipments
Production Loan upto Rs.0.100 Million NIL

Land holding upto 25 acres/loan amount upto Rs.0.2 Million 15%
Land holding beyond 25 acres to 50 acres/loan amount beyond Rs.0.2 25%
Million upto Rs.0.5 Million
Land holding beyond 50 acres/loan amount beyond Rs.0.5 Million upto 30%
Rs.1 Million.
Repayment Periods
S. No. Types of Loans Recovery Period
1 Short Term Crop production working capital loans recoverable in lump
Loans sum commencing after the harvest/marketing of respective
crops and within maximum period of 12 months.
2 Medium Term Dairy farming and livestock etc. In yearly/half
Loans yearly/monthly installments and within maximum period of
5 years.
3 Long Term Tractor, agricultural machinery, poultry farming, godowns
Loans and orchard iIn yearly/half yearly installments within
maximum period of 8 years and. above.
Recovery Procedure
A) Recovery Schedule
 Recovery schedule in each loan case as per terms of sanction of loan is fixed and
communicated to the borrowers after disbursement of loan.
 In case of default or failure in repayment of any installment on due date the
mark-up shall continue to be charged and last installment due to this may differ
from the amount of installments fixed at the time of disbursement.
b) Issuance of Notices
 Demand notice is issued before the due date of every installment.
 A Legal Notice is issued one month after the due date informing the borrower
that if the amount is not repaid within next one month, further legal action will
be taken to recover the dues.
c) Legal Action
 Legal action can be initiated against the defaulter if loan is not repaid even after
expiry of legal Notice period.
 Where the court in bank's favour has decreed a case, account is to be settled by
recovery of amount from the auction of the mortgaged property.
37
 The bank may purchase the mortgaged property if considered feasible to dispose
it off later on through auction or in any manner deemed fit for getting the best
price.
 The bank may dispose off the mortgaged properties of defaulters for satisfaction
of its dues with out intervention of courts under Financial Institutions (Recovery
of Finances) Ordinance 2001.Rescheduling of Loan Repayment Facility .
d) Rescheduling of Loan Repayment Facility

 ZTBL allows rescheduling of repayment of installments to its borrowers in order
to maintain credit discipline and to mitigate their genuine problems in real
hardship cases and in areas declared as calamity hit by the respective Provincial
Governments
 The Rescheduling facility is to be considered by bank on case to-case basis and is
to be allowed on borrower's request only.
 The relaxation in recovery period shall not be allowed beyond one year in any
case.
 The borrowers shall have to execute a supplementary loan agreement on Non
Judicial
 Stamp Paper of appropriate value to give legal cover to extended period.
 The borrowers shall have to pay the return for the extended period.
d) Down Payment for Rescheduling of Loans

Rescheduling Number Rate of down payment as against due
installments to be rescheduled
1st 10%
2nd 20%
3rd 30%
Chapter 3
Horizontal Analysis of Balance Sheet
Particulars 2008 2007 2006 2005 2004
ASSETS % % % % %
Cash & balances with treasury banks 8.695 31.983 -18.724 -0.532 100
Balances with other banks 973.720 707.497 426.058 428.274 100
Lendings to financial institutions - - - - -
Investments - net 77.413 166.845 97.724 349.899 100
Advances - net 28.689 12.842 13.212 -2.595 100
Operating fixed assets 16.981 -11.432 -16.375 -29.360 100
Other assets - net -8.284 1.860 -10.364 -14.614 100
21.936 11.267 1.813 -0.098 100
LIABILITIES
Bills payable 210.675 98.915 39.962 19.402 100
Borrowings 0.000 0.000 0.000 0.000 100
Deposits and other accounts 73.764 38.465 -7.681 -15.296 100
Sub-ordinated loans 0.000 0.000 0.000 0.000 100
Liabilities against assets subject to
finance lease - - - - -
Deferred tax liability - - - - -
Other liabilities 86.149 46.641 9.006 3.013 100
19.942 10.705 1.418 -0.086 100
NET ASSETS 32.729 14.307 3.948 -0.162 100
REPRESENTED BY
Share capital 5.500 0.000 0.000 0.000 100
Reserves 404.287 162.741 66.838 13.928 100
Unappropriated profit 278.696 112.925 17.022 -18.478 100
30.315 10.222 2.245 -0.998 100
Surplus on revaluation of assets - net
of tax 260.729 400.125 164.838 78.773 100
32.729 14.307 3.948 -0.162 100
Note: In this Horizontal Analysis the year 2004 is taken as a base year to calculate the
change in other financial years. All the columns are representing change with respect to
2004.
39
Vertical Analysis of Balance Sheet

Particulars 2008 2007 2006 2005 2004
ASSETS % % % % %
Cash & balances with treasury
banks 1.693 2.253 1.516 1.891 1.899
Balances with other banks 15.518 12.790 9.106 9.319 1.762
Lendings to financial institutions 0.000 0.000 0.000 0.000 0.000
Investments - net 4.940 8.143 6.594 15.290 3.395
Advances - net 68.324 65.655 71.987 63.121 64.739
Operating fixed assets 1.117 0.927 0.956 0.823 1.164
Other assets - net 8.408 10.233 9.841 9.554 11.178
100.000 100.000 100.000 100.000 100.000
LIABILITIES
Bills payable 0.722 0.501 0.385 0.333 0.279
Borrowings 60.320 65.353 71.338 72.412 72.350
Deposits and other accounts 6.385 5.512 4.012 3.736 4.407
Sub-ordinated loans 3.771 4.086 4.460 4.527 4.523
Liabilities against assets subject
to finance lease 0.000 0.000 0.000 0.000 0.000
Deferred tax liability 0.218 0.152 0.011 0.000 0.000
Other liabilities 28.584 24.396 19.796 18.989 18.418
100.000 100.000 100.000 100.000 100.000
NET ASSETS 100.000 100.000 100.000 100.000 100.000
REPRESENTED BY
Share capital 74.223 83.179 89.669 92.606 91.682
Reserves 6.438 3.966 2.715 1.914 1.664
Unappropriated profit 19.339 12.855 7.616 5.480 6.655
100.000 100.000 100.000 100.000 100.000
Surplus on revaluation of assets -
net of tax 2.847 4.584 2.669 1.876 1.048
100.000 100.000 100.000 100.000 100.000
Horizontal Analysis of Profit & Loss

Particulars 2008 % 2007 % 2006 % 2005 % 2004 %
Mark-up/return/interest earned 4.501 -13.362 -26.024 -15.825 0.000
Mark-up/return/interest expensed 11.279 9.002 -10.618 -87.507 0.000
Net mark-up/interest income 0.224 -27.473 -35.745 29.405 0.000
Provision against non-performing
loans and advances -43.546 -9.279 -48.118 38.920 0.000
Provision/(reversal) for diminution
in the value of investment 27.355 -168.737 913.026 -158.617 0.000
Write offs under Government
relief packages 0.000 4286.557 15739.293 0.000 0.000
Bad debts written off directly
-16.749 58.214 65.541 105.258 0.000
Net mark-up/interest income after
provisions 14.982 -101.980 -123.815 -36.551 0.000
NON MARK-UP/INTEREST
INCOME
Fee, commission and brokerage

income 82.822 -2.988 5.560 30.996 0.000
Dividend income 89.283 -64.283 7.133 7.133 0.000
Other income 514.594 509.536 486.610 -11.859 0.000
Total non mark-up/interest income 506.732 500.567 478.468 -12.217 0.000
144.932 57.249 35.344 -30.120 0.000
EXPENSES
Administrative expenses 85.474 55.459 13.261 7.184 0.000

Provision against other assets 12392.995 2574.166 54846.182 379.466 0.000
Provision for stolen fixed assets
Other charges
Total non mark-up/interest
expenses 98.750 58.105 73.490 6.965 0.000
241.700 55.455 -100.000 -107.828 0.000
PROFIT BEFORE TAXATION 241.700 52.854 -44.586 -107.828 0.000
Taxation - Current 175.783 25.485 -56.772 -92.363 0.000

- Prior years
- -
- Deferred
266600.000 2231120.000 189060.000 12240.000 0.000
175.638 49.299 -54.893 -92.483 0.000
41
PROFIT AFTER TAXATION 291.769 55.548 -36.775 -119.457 0.000

Unappropriated profit brought
forward 455.289 205.182 112.603 160.791 0.000
Profit available for appropriation 346.096 105.262 12.854 -26.348 0.000
Transfer to statutory reserve - - - - -
Transfer to contingency reserve - - - - -
Profit caried forward 346.096 105.262 12.854 -26.348 0.000
Basic earnings per share (Rupees) 235.049 33.028 -43.548 -117.742 0.000
Note: In this Horizontal Analysis the year 2004 is taken as a base year to calculate the
change in other financial years. All the columns are representing change with respect to
2004.
Vertical Analysis of Profit & Loss

Particulars 2008 % 2007 % 2006 % 2005 % 2004 %
Mark-up/return/interest earned 170.058 194.831 187.772 106.091 163.098
Mark-up/return/interest expensed 70.058 94.831 87.772 6.091 63.098
Net mark-up/interest income 100.000 100.000 100.000 100.000 100.000
Provision against non-performing
loans and advances 99.934 84.502 46.186 99.740 147.368
Provision/(reversal) for diminution
in the value of investment 0.066 -0.019 0.264 -0.012 0.043
Write offs under Government
relief packages 0.000 15.517 53.549 0.273 0.000
Bad debts written off directly 0.000 0.000 0.000 0.000 0.000
100.000 100.000 100.000 100.000 100.000
Net mark-up/interest income after
provisions 34.539 -0.926 -12.946 66.804 73.574
INCOME
Fee, commission and brokerage

income 0.076 0.041 0.046 0.377 0.252
Dividend income 0.197 0.038 0.117 0.771 0.631
Other income 99.727 99.922 99.837 98.853 98.451
Total non mark-up/interest income 100.000 100.000 100.000 100.000 100.000
EXPENSES 100.000 100.000 100.000 100.000 100.000
Administrative expenses 92.994 97.983 65.056 99.855 99.651

Provision against other assets 6.934 1.866 34.937 0.494 0.110
Provision for stolen fixed assets 0.053 0.000 0.000 0.000 0.000
Other charges 0.019 0.151 0.007 0.145 0.000
Total non mark-up/interest
expenses 100.000 100.000 100.000 100.000 100.000
45.070 31.938 0.000 -3.619 32.306
PROFIT BEFORE TAXATION 100.000 100.000 100.000 100.000 100.000
Taxation - Current 100.052 84.049 95.833 101.605 99.999

- Prior years 0.909 1.103 0.000 0.000 0.000
- Deferred -0.961 14.848 4.167 -1.605 0.001
100.052 84.049 95.833 101.605 99.999
43
PROFIT AFTER TAXATION 58.644 50.603 37.410 -17.641 66.776

Unappropriated profit brought
forward 41.356 49.397 62.590 117.641 33.224
Profit available for appropriation 100.000 100.000 100.000 100.000 100.000
Transfer to statutory reserve 0.000 0.000 0.000 0.000 13.355
Transfer to contingency reserve 0.000 0.000 0.000 4.096 0.000
Profit caried forward 100.000 100.000 100.000 100.000 100.000
Note:
The Financial statement for the year of 2009 is not available online. ZTBL is
government institute and it is not listed in any stock exchange. I have tried to get
copy of financial statement from the offices of bank but I failed to find any copy from
the branch where I have completed my internship then I have contacted zonal offices
and they also did not have any copy of the financial statement of year 2009. With the
reference of branch manager I have requested it from the Head Office but I came to
know that publication department has not published the financial statement for the
year 2009. The last financial statement which is available in the printed form is of
year 2007. The financial statement of year 2008 is also not available in printed form
however it is available on internet in the excel format which does not include director
and auditor report. This is the reason that the horizontal and vertical analysis is done
from 2004 to 2008.
However, the Key Financial Trends of year 2009 is included in the report which I have
obtained from the credit rating report published by Japan Credit Rating Agency on
August 2010. The internship report also includes a glimpse view of banks
performance from 1997 till 2009 which I have collected from the bank’s website,
other websites and newspapers.
Interpetation of Horizontal and Vertical Analysis

Markup/ Return/ Interest Earned
Markup/return/interest earned is the amount which the bank earns from its primary
function of lending money to its customers. Increase in this income shows that bank is
growing, the reason of this growth can be either the increase in customer base or in the
increase of rate of lending. When I compare the markup/return/interest earned by the
bank in the past 5 years it shows that the bank has improved its primary function in
recent years. The year from 2005 to 2007 shows a decline in this income which is a clear
sign that in that specific years the bank performance was not satisfactory, the reason of
this performance can be the political unrest in the country due to which sufficient
attention couldn’t be given to bank’s working or it can be result of large NPL’s.
In the notes related to markup/return/interest earned it shows that the bank is earning
a major part of its income from the loans given to customers, the bank has less focus of
investment. However, it is earning a handsome amount from the placement which it has
made with other banks.
Markup/Return/ Interest Expensed
Markup/Return/ Interest Expensed is the expense of bank on taking deposits and

borrowings from the SBP. This expense shows an increase as compared to previous
years which shows that bank’s cost of deposits and borrowings has been increased. This
increase can be due to two reasons, it can be due to increase in the amount of deposits
and borrowing or it can be due to increase in the rate the bank offered on deposits and
on borrowing from SBP.
In the notes it shows that bank is paying a large amount on borrowing from the SBP
rather than on the deposits. It can be due to two reasons that either bank has deposits
in the current account on which it has to pay no or less cost or it is due to less deposits.
From the amount of deposits in the balance sheet it is clear that the deposits of bank
are not of significant amount as compared to borrowing. I also know that bank is
working manly on the amount borrowed from SBP rather than on deposits collected
from the general public and institutes. An increase in markup/return/interest expensed
is not a bad sign if the markup/return/interest income is also increasing, however if the
increase in expense is more than the increase in the income than it will be a negative
sign. From the vertical analysis of Profit and Loss account it is clear that the income is
45
much more than the expense which shows that the bank has cushion to confront with
other expenses incurred due to secondary functions of the bank which is a positive sign.
Net Markup/Interest Income

It is the income which the bank is earning after paying the markup/return/interest
expensed. From the horizontal analysis of the profit and loss it is clear that there are
many ups and downs in this income which is result of decline in the
markup/return/interest income of the bank. But in the year 2008 it shows recovery and
it is increased as compared to previous two years of 2006 and 2007.
When I look net income in terms of amount in the profit and loss accounts of last five
years I find it positive and a handsome amount to bear the other expenses of the bank.
Because the horizontal analysis is showing result by taking 2004 as a base year that is
why in the year 2006 and 2007 it shows negative sign which means that in these two
years the net income of the bank has been decreases as compared to year 2004. But in
the year 2008 it again shows recovery.
Provision again Non-Performing Loans

This shows the cost bank is charging to it P&L account against those loans which may
become bad debts; almost all banks try to reduce this cost. This shows the customer
base of the bank to which bank is lending, the lesser the cost the better and trustworthy
client base the bank has.
Horizontal analysis of P&L A/C shows the decline in the recent years in this provision
which is a positive sign for the bank. Which shows that bank’s credit and recovery
departments has improved their workings.
Provision/ (reversal) against diminution in the value of investment

This shows any provision required to charge or reverse for the investment made by the
bank. An increase in the provision shows that the investments of the banks are declining
in value which will definitely result in loss and if the provision made before is reversed it
shows that the value of the investment is increasing.
The horizontal analysis of the P&L account shows that the provision created by the bank
is reduced in 2008 as compare to 2007 which is a positive sign. The reason of large
provision in 2007 can be due to uncertainty in the stock market etc.
Write offs under Government Relief Packages

ZTBL is a government bank due to which the government can ask it to give relief to
loanees of particular regions of category which also increase the cost for the bank. The
flood of 2010 is expected to increase this cost in this financial year too because a large
number of farmers have been effected with this flood and they are not in the situation
to return their borrowed amount to the bank. For the year 2008 there is not any
amount which is asked by the government to write off but in the year of 2007 and 2006
there is some amount which banks directly written off on the instructions of the
government.
Net markup/ Interest income after provisions

This is net income after charging provisions. An increase in this income is a positive sign
which can be due to two reasons that either the net markup/return/interest income has
increased or the provision required to be charged by the bank is reduced due to less
number of NPL’s loans. So, if the net markup/interest income after provision is
increasing it is a positive sign because the bank will have more amounts to pay its other
expenses like admin expenses etc. and it will result in more Gross Profit.
Non Markup/Interest Income

It is the income which the bank in earning from its secondary functions. An increase in
this income is also a positive sign it shows that the bank is also making its secondary
functions profitable. The secondary functions shows the amount earned from the
commission charged in the services offered by the bank, the dividend income etc.
But this income may also have a portion of income gained by the bank by the sale of
scrap or old machinery etc. It is not a positive sign if this income is larger part of total
non markup/interest income. Because, the bank will not have the scrap to sale in all
years and having larger part of this income of sale of scrap will definitely depicts that the
bank’s profitability can be affected in the coming years. However, if the bank has sold
old machinery and in the meanwhile new machinery is added in the assets of the bank
than it will be a positive sign because it will show that the bank is working on BMR
(Balancing, Modernizing and Restructuring) which will result in better performance.
The profit and loss account of the bank is showing an increase in the non
markup/interest income which is a positive sign. The vertical analysis of the profit and
loss shows that other income is the larger part in non markup/interest income and from
the notes it is clear that in the other income, the amount recovered which has been
written off previously is making a bigger portion. Recovering a previously written off
loan is a positive sign because it is causing an increase in the income of the bank.
47
Non Markup/Interest Expenses

It consist on the expenses bank payed for admin expenses and some other expenses.
But the admin expenses is usually a large part of this non markup/interest expenses and
also it is most important expenditure to have a look upen because it shows that whether
the bank is utilizing its human capital efficiently or not. A larger admin expenses is not a
negative sign if it is also increasing the income of the bank. However, if the percentage
change in the increase in the admin expenses is more than the percentage in the
increase in the income than it is a negative sign beacause is paying more to increase its
income. Almost all banks try to control this income so that to increase their income.
The ratio of Admin Expenses to Deposits is used to check the cost bank is facing on
collecting of deposits which is the main source of money bank required to lend to others
to make income. However, in ZTBL the bank relies on borrowing from SBP more than on
deposits so the efficiency of admin expenses can not be judge from the ratio of admin
expenses to deposits. So, it is difficult to say anything about the cost of admin expenses.
From the horizontal analysis it is clear that the admin expenses has been increased in
2008 but the profit of the bank is also increased so it is not a negative sign. By looking in
the notices of financial statement it is found that admin expenses consists on a number
of expenses, salaries of the staff no doubt a major a part of it but other expenses like
traveling expenses, motor vehical cost of repairing etc are also effecting this cost a lot.
Because I know that the MCO scheme has become a major part of the bank’s working so
increase in the cost of traveling, rapairing is not a surprise.
Profit before Taxation

The profit before taxation has been significantly increased in the recent years, the
financial statement for the 2009 is still not available on internet nor in print format but
some key facts which has been published by the bank for the 2009 shows that bank
continues making profit in year 2009 also. When I look in the previous year it found that
the profit before taxation is 2.5 times more than it was in 2004. However, the increase
in the profitiability is not constant there are ups and downs in it. Like in 2005 and 2006
the profit of the bank has been decresed as comapred to 2004 and in 2007 it again
started increasing and this continues till 2009 which have result of more than 2 Billion.
Taxation
Due to increase in the profit the tax has been also increased, it is almost doubled in the
last 5 years like the profit of the bank which has been also doubled. So, it not a negative
sign. By compare the increse in the profit before tax and the increase in tax, I come to
know that the increase in the tax is less than increase in profit which can be due to two
reason that whether the rate of tax is not increased as the income of the bank or the
bank is managing its tax efficiently.
Profit after Tax

The after tax profit of the bank continued to increase in the recent years which is a good
sign and also shows that bank has improved its working a lot than few years before. The
profit for the year 2008 is almost 300% more than the 2004 which show that the profit
of the bank is tripled in last five years. The same trend continued in 2009 in which the
bank also made a record profit.
49
Interpetation of Horizontal and Vertical Analysis of

Balance Sheet
Cash and Balance with Treasury Banks
It shows the amount placed with SBP in order to fulfill the requirement of banking
companies ordinance, 1962. There is a decline in the amount with respect to previous
year, the reason of it can be the decrease in the volume of deposits due to which the
bank is not required to maintain higher placement with SBP. However, the deposits also
show an increase in it, so the reason of this decrease in the cash and balances with
treasure bank is uncertain. One other can be this that the bank has placed higher
amount with SBP than required in the previous year and that is why in this year the bank
has withdrawal the money from its account with SBP.
Balances with other Banks

Horizontal analysis of Balance sheet shows significant increase in the placement with
other banks. It is not a good sign if the placement is in ideal state and is not generating
any revenue for the bank. However, from the notes of ZTBL it is clear that the bank has
placed amount with other banks in the accounts which are giving markup to the bank.
Placing money with other institutions is not a good thing for any bank when does on a
large scale because it cannot generate enough money to compensate the opportunity
cost the bank is bearing on not investing or advancing this money to its customers.
However, the case of ZTBL is different. It borrows money from SBP at fewer rates and
lends it to farmers. The rate it charges to farmers is less than the prevailing rate in the
market (currently 9%) so by depositing money with other financial institution it can earn
more than the rate it is offering to its clients. Because it is an institute developed just for
the improvement of agricultural sector so the bank’s main focus is on lending rather
than investing.
Investments-net
There are ups and downs in the amount of investment made by the bank in the previous
five years. From the notes to the account it is clear that bank usually invest in less risky
investment like Market Treasury Bills and Pakistan Investment Bonds. The less risky
investment will result in less gain on investment but here the return on investment is
not the main focus of the bank. The money the bank owns is largely consist on the
borrowed money from SBP, so the bank cannot use the borrowed money in a more risky
adventure.
Advances-net
The bank continues to increase the amount of advances to facilitate more and more
farmers every year. The data of 2009 shows a record increase in lending to farmers; the
bank has disbursed 77.7 Billion rupees in 2009 as compared to 70.7 Billion in 2008. The
percentage increase in the horizontal analysis also shows this continuous increase in the
trend of advancing.
Operating Fixed Assets

The assets of the bank are also increased in 2008 and in 2009 the president of the bank
also announced to increase it further by constructing new buildings. Increase in the fix
assets shows that the bank is optimistic about its future.
Borrowings
It is the amount which bank has borrowed from SBP. There is no change in this loan
from 2004 the reason is that neither SBP has given new loan to ZTBL nor ZTBL has
returned any principal amount of loan back to SBP due to which the amount of loan
borrowed remain unchanged. ZTBL and SBP is now negotiating on terms and conditions
of returning principal amount in 15 equal installments.
Deposits
Deposits are the backbone in any bank operations because the primary function of any
bank is to take deposit from depositors and then lend it again to other who needs it. But
as I have written before ZTBL does not rely on deposits more like any other bank.
However, in recent years the bank is trying to shift its dependence from SBP to other
resources and due to this it starts increasing its deposits by marketing. But the efforts in
this respect is still need improvements as the products offered by ZTBL is not as
attractive as offered by other commercial banks.
Share Capital
In 2008 the bank has issued bonus shares to increase its paid up capital. The reason of
this increase can be the requirement of SBP to maintain a minimum equity level.
Currently the paid up capital of the bank is 12.5 Billion.
Reserves
Reserves are made for the development of the organization or for the contingencies
which can affect in the future. There is continuous increase in the reserves of the bank
51
from last five years which is a good sign. These reserves also include the statutory
reserve requirement according to banking companies ordinance, 1962.
Surplus on Revaluation of Assets-Net of Tax
It is surplus amount which is the bank expect to get if it will sell these assets. The market
conditions never remain certain; the price of anything can rise or fall in matter of
second. This is the reason that organizations use to revalue their assets to record their
value according to prevailing market rates. The revaluation of fixed assets also helps
banks in raising their equity which result in more lending power of the bank.
Conclusion
Although the bank needs improvements in many fields, the overall performance of the
bank is satisfactory. The bank has made many efforts in the recent years and it is clearly
visible in the result of its financial statements. The reduction in NPL’s is also a positive
sign and will definitely result in good performance. Besides a government institution the
bank has made before tax profit of 4.9 Billion which is great achievement. If the process
of improvement continues than it can make more profit in the upcoming years and its
success will also result improvement in financing facilities to people of rural area.
Ratios 2008 % 2007 % 2006 % 2005 % 2004 %

Avg. Rate of lending 11.297 10.190 8.929 10.377 14.174
Avg. Rate of borrowing 6.156 6.150 5.177 0.727 5.766
Admin Expenses 83.322 87.643 95.770 98.778 78.062
Cost of funds 89.479 93.793 100.947 99.505 83.828
Spread -78.182 -83.603 -92.017 -89.128 -69.654
Ratios
Ratios 2008 % 2007 % 2006 % 2005 % 2004 %

Net markup to total income 84.239 65.875 71.387 138.212 142.862
Return on assets 2.542 1.106 0.491 -0.154 0.791
Return on Equity 15.418 7.238 3.171 -1.008 5.129
Breakup Value 12.605 11.546 10.849 10.592 10.726
Infection Ratio 16.697 23.686 28.201 36.180 -
Provision to classified
advances 60.426 55.227 48.630 50.457 -
Advances to deposits 1433.485 1631.690 2473.332 2448.135 -
The reason of negative spread is that the bank use to borrow from SBP rather than
getting deposits from the general public due to which the ratio of admin expenses
depicts a large cost than expected because this ratio is calculated by dividing admin
expenses with the deposits. In my opinion the admin expenses is required to be
calculated by adding borrowing also with the deposit. For example if we will calculate
this ratio by adding borrowing with deposits than the result for 2008 will be 7.975 rather
than 83.322 which is acceptable. By calculating all admin expenses with this formula the
result of spread will be like this.
Ratios 2008 % 2007 % 2006 % 2005 % 2004 %

Avg. Rate of lending 11.297 10.190 8.929 10.377 14.174
Avg. Rate of borrowing 6.156 6.150 5.177 0.727 5.766
Admin Expenses 7.975 6.817 5.099 4.846 4.482
Cost of funds 14.131 12.967 10.276 5.573 10.248
Spread -2.834 -2.777 -1.346 4.804 3.926
By calculating the admin expenses in this way the result of spread is still in negative but
not as much as it was before. However, all this shows that there is still problem the bank
is not utilizing its human capital as it needs to. The main reason behind this is the
53
working style of the bank, because it a government institute so the wastage of resources
is not a surprise thing. However, the bank is continually improving its working style and
also moving towards making high profit.
Ratio of net markup to total income shows that bank has improved its secondary
function as wel. But this improvement is not stable one when I look the ratios of
previous years, it shows ups and downs in it.
Return on assets
Return on assets is a ratio uses to gain information that how much assets of the
company producing profit, the more the result of this ratio the more efficently the bank
is utilizing its assets. More than 2 is considerd a good ratio and the result of ZTBL is also
showing good result, the ratio of 2009 is also more than 2 which is found in the report
published by Japan Credit Rating Agency.
Infection ratio
It is an important ratio which shows that how much advances of the bank is placed
under classified advances. In other words, it shows that how much loans given by the
bank is considered to become bad debts. The more this ratio is, the more the bank
needs to maintain the provisions against these loans and which will result in lesser
profitability. Usually, ideal situation is conisdered where this ratio is less than 5%, in this
situation the bank has a biger portion of customers which are trust worthey and have
credit worthiness.
The infection ratio of ZTBL is very high which can be considered a negative sign.
However, keeping in view the previous records it is clear that bank has improved it a lot
and all this improvement is giving sense that if bank continue working with the same
pace than in the next two to three years this ratio will decrease significantly and can
come under satisfactory level. The record of NPL’s is given in the Quick View of ZTBL’s
Performance.
Provision to Classified Advances

This ratio tells that how much provision the bank is maintaing against its classified
advances. The more this provision is, the more it can be assumed that the classified
advances of bank is in the category of loss. Maintaing provision is the requirement of

Prudential Regulations of State Bank of Pakistan, the more risky the loan is the more
provision the bank is required to maintain. The bank has to keep its classified advances
in the four categories, (1) Other Assets Especially Mentioned (2) Substandard (3)
Doubtful (4) Loss. Each category has its own requirement of provision, the higher the
category, the higher the provision required to maintain.
The ratio calculated from the financial statement of ZTBL shows a continuous increase, it
is a negative sign because the bank is maintaining larger provision which shows that a
large part of classified advances are in the category of loss. And it shows that bank is not
doing enough to recover these loans.
Advances to Depoists
Advances to deposit shows that how much part of deposit is used by bank to advance.
Usually this ratio remains with in range of 70 to 75 % because 25% of all bank deposits is
required to be kept in statutory reserve to maintain minimum liqudity requirement.
The ratio of ZTBL is presenting a different scenerio, it is more than 1400% for the year
2008 which an abnormal result. I have mentioned the reason of it many times before in
this report, the reason is that ZTBL is advancing a large part out of the loan it has
obtained from the SBP. The borrowing of the bank is much larger than the deposits it
has this is the reson that this ratio is showing such result.
55
Key Financial Trends of 2009

According to Japan Credit Rating Agency on August 2010
Note: The following is the extract from the report of Japan Credit Rating Agency
issued on August 2010 showing the new credit rating of ZTBL.
Balance sheet footing of the bank was higher at year-end 2009 at Rs. 113.6b. Net
advances increased to Rs. 83.6b (2008: Rs.69.b) representing a higher proportion of
total assets at 74% at year-end 2009. While various new loan products have been
launched been launched by the bank in 2009, Sada Bahar Scheme has remained the
flagship product of the bank. For all new borrowers of crop production loans, Awami
Zarai Scheme (AZS) has been launched by the bank; outstanding balance against this
scheme may also show increase over time. To ensure proper utilization of loan, the bank
has incorporated a wholly owned subsidiary to make arrangement for in-kind lending to
farmers.
The IT infrastructure of the bank has improved considerably over time. With the
implementation of various applications at branch-level to consolidate loan
disbursement & recovery data, monitoring of lending activities has improved, though
there may still be a need to further strengthen the loan recovery mechanism. Gross
infection has declined from16.7% in 2008 to 15.8% in 2009; however there is still need
for further strengthening the recovery mechanism. Net infection hovered at prior year’s
level at 11.5%. Net NPLs in relation to Tier-1 capital stood at almost 57% at year-end
2009. ZTBL has arranged crop loan insurance for wheat, cotton, sugarcane, rice and
maize. As the insurance coverage is enhanced, the risk of loss in case of calamities will
be reduced.
Growth in loan portfolio during 2009 absorbed some of the liquidity held by the bank.
Liquid assets to total borrowings and deposits declined to 27%. The bank has made
efforts to enhance its deposit base, though these continue to represent a small
proportion of the total resource base. The bank had outstanding borrowings of Rs. 54.5b
from SBP at year-end 2009. The terms of restructuring of SBP debt have yet to be
finalized, which would have significant implications for the risk profile of the institution.
The bank has so far not made any interest or principal payments against these credit
lines. While there is some cushion available to the bank in terms of markup differential
receivable from the GoP vis-à-vis interest payable to SBP, liquidity profile may be
significantly compromised if payment is required against the principal portion. One of
the proposals under consideration entailed debt to equity swap, which if finalized,
would support capitalization levels and facilitate in furthering the government’s
economic objective pursued through the bank.
57
Credit Risk
Gross advances of the bank considerably grow over 2009, with year-end outstanding
balance of Rs. 89.4b (2008: Rs. 77.8b). Loan disbursements of around Rs. 78b were
made by the bank in the outgoing year.
Loan disbursement target for fiscal year 2010 was Rs. 80b. ZTBL is used as an arm by the
Government, with disbursement target stipulated as part of the annual budget process.
For FY10, 22.7% of the loan disbursement target pertained to development loans, while
remaining was for production loans. All targets are allocated by SBP.
While various new loan products have been launched by the bank, Sada Bahar Scheme
has remained the flagship product of the bank. Loan products launched in 2009 include,
Green Tractor Scheme, Crop Productivity Scheme and Rural Development Scheme.
Green tractor scheme is specifically for the province of Punjab and entails subsidy of RS.
200,000 per unit for 10,000 tractors. Banazir tractor scheme is applicable to all areas of
Pakistan. On receiving complaints from borrowers regarding non-cooperative attitude of
tractor dealers, a tractor delivery system has been developed through KSSL in the
outgoing year.
Awami Zarai Scheme (AZS) has been launched by the bank for all new borrows of
production loans, pertaining to inputs required at the time of crop cultivation. As per
the scheme, agriculture inputs will be supplied by KSSL to farmers in lieu of cash.
Quantity of input needed for each crop on a per acre basis has been predetermined by
the bank. The farmers will be provided a specific quantity of inputs according to
cultivable land.
The purpose of AZS is to ensure proper utilization of loan proceeds. Crop productivity
scheme is specifically for financing of fertilizer. Rural development scheme has been
launched to provide assistance for dairy, poultry, sheep and goat farming in the rural
areas of AJ&K; especially earthquake affected areas.
The bank has also setup a pilot project for a model village in collaboration with ministry
of food & agri./ provincial agri. Departments. Crop loan insurance has been made
compulsory by SBP for wheat, cotton, sugarcane, rice and maize financing. To facilitate
loan insurance, the bank has to pay the premium for subsistence farmers, which is
subsequently reimbursed by GOP on a half yearly basis. ZTBL has arranged crop loan
insurance with Adamjee insurance company limited (AICL). Premium is charged @ 1.3%
of loan sanctioned.
The implementation of software applications has facilitated monitoring of lending

activities at branch level. The need for strengthening the collection mechanism however
remains, as may be ascertained form the portfolio quality indicators.
NPLs increased to Rs. 14.2b (2008: Rs. 13b) during 2009. During the out-going year, an
amount of Rs. 2.6b was charged off against provisions as per the prudential regulations,
with cumulative balance of charged off loans standing at Rs.34.98b at the end of
December 2009. This amount was lower than the balance of Rs. 36.30b at the end of
December 2008, on amount of recoveries of 4.29b made against charge off amount.
At year-end 2009, gross infection in the loan portfolio of the bank remained high at
15.8% (2008: 16.7%). The overall agriculture loan portfolio of the banking sector had
gross infection of 16.1% (2008:15.3%) at end-December 2009. Around 52 %( 2008: 47%)
of NPLs were classified as OAEM at year-end. On account of this,, provisioning coverage
against total NPLs Is low. Net infections (NPLs adjusted for specific provisioning only was
11.5% (2008:11.2%).
Minimum recovery target set by the bank entails 90.8% of current dues and 75% of past
dues. In 2009, recovery of 91% was achieved against current dues, while 72.4% recovery
was made against past dues. Recovery targets are monitored on a branch-wise basis; in
branches where overall recovery is less than 75% loan approval authority is retracted.
The bank held fixed income securities of Rs. 6.7b at December 2009, increasing form Rs.
4.5b at the end of the preceding year. Of these, only Rs. 283.65m was placed in COIs
whiles remaining comprised government paper, credit risk associated with which is
considered minimal. COIs are also placed with counterparties of sound risk profile. In
addition to the above, the bank has Rs. 100m invested in a wholly owned subsidiary.
Market Risk
Net investments of the bank increased to Rs. 7.2b (2008: Rs. 5.1b) at end- December
2009. Around 73% of net investments comprised short-term treasury bills. Price risk on
the same is considered low. Fixed-rate long term PIBs represented 14% of net
investments. These carry markup rates in the range of 12-13% and have maturities
between Aug-Dec’11. Recent increase in benchmark rate is expected to have reduced
the market value of fixed income instruments held in the portfolio. However, the bank
has both the intent & ability to hold these to maturity.
59
Investment in equities at cost was maintained at Rs. 100.6m, comprising exposure in

unlisted securities amounting to Rs. 10.5m. Investment in unlisted securities has been
fully provided for various reasons. Investment in listed equities of Rs 89.3m had a
market value of Rs 537m.
Liquidity
Total borrowings and deposits of the bank where higher at Rs. 63.2b (2008:Rs. 59.9b) at
year –end 2009 with increase in deposit to Rs. 8.75b (2008: Rs 5.43b). Borrowings were
maintained at Rs. 54.5b at year-end 2009.
Liquidity profile of the bank declined in relation to 2008, with liquid assets to total
borrowing and deposits reducing to 27 %( 2008:36%).
Depositors of the bank are primarily individuals. Proportion of current and saving
accounts in the deposit mix was maintained at 94%. Since deposits still comprise a small
proportion of funding mix; improvement in the deposits does not have a material
impact on the cost of funding for the bank.
The bank had outstanding borrowings to the tune of Rs. 54.5b from SBP at year-end
2009. These borrowings were obtained to provide finance to clients for agriculture. At
the time of reorganization of ADBP into ZTBL, these credit lines were restructured and a
moratorium was given to ZTBL according to which it had been allowed to repay SPB
debt in 15 years (in 30bi-annual installments) with a grace period of 3 years starting
from July 2003 and the last payment was supposed to be of Rs. 3.20b, representing the
subordinated loan. At the time of restructuring, the bank had proposed to cap the
markup on these borrowings at 2.3558 %( 12 month t-bill rate as at July 01, 2003) for
five years but the matter had not been acceded to by the SBP. Since then, various
restructuring proposals have been discussed by the bank with the ministry of Finance
and SBP, though an agreement on this issue has still to be achieved. The bank has not
made any principal repayment on the premise that the restructuring terms have not
been finalized. These loans are secured by way of federal government guarantee.
Presently, the bank is accruing interest expense on these at varying rates. Three credit
lines amounting to Rs. 1.577b carry interest rate of 4% p.a. while remaining thirty two
lines amounting to Rs. 48.597b are based on PLS subject to maximum share of profit to
SBP ranging from 4-10% p.a. markup on subordinated loan is being charged at weighed
average yield of t-bills of 12 months maturity. No return however has been actually paid
by the bank, with a total payable of Rs. 19.54b having been accrued by December 32,
2009. Any plan requiring immediate payment of the either the interest expense or
principal may place significant stress on the bank, as it does not have the required
liquidity. However, the bank also has markup differential of Rs. 17.74b receivable from
the government. This amount is not recognized on books. There are also other amounts
recoverable from the government in lieu of relief packages, with outstanding balance of
Rs. 956.27m at year-end 2009.
Profitability
Return on markup bearing assets declined to 9.8% on account of decline in high-yielding
lending to financial institutions. Nevertheless, interest income of the bank increased to
Rs. 8.7b (2008: Rs 8.5b) attributable to overall higher average markup bearing assets
during 2009. Net interest income of the bank also depicted an increase to Rs. 5.1b
(2008: Rs.4.98b). Cost of funding hovered at 6%, thus spreads declined to 4%. Cash
outlay has not been made by bank for payment of interest on borrowings, and interest
in only being accrued on books.
Non –interest income of the bank was higher at Rs. 38.2 m attributable to increase in
dividend income on investments. Other revenues primarily comprising recoveries on
charged off loan amounts was Rs. 4.3b (2008: Rs 4.8), taking total revenues, net of
financial charges, to Rs. 11.2b (2008: Rs. 10.4b).
Administrative expenses of the bank inclined to Rs. 5.2b (2008:Rs. 4.5b), in line with
inflationary trends in the economy. While salary expense experienced growth of 12%
staff strength of the bank was rationalized to 5,352(2008: 5,370).
In December 2005, the bank had introduced SR-2005, a retirement benefit scheme for
its employees. A significant proportion of employees switched to SR 2005 from their
existing pension scheme in 2005. The scheme was re-opened in 2009 and 1,097
Executives/officers of the bank opted for SR-2005, resulting in an expense of Rs. 677.8
to bank in 2009.
Incremental provisioning against non-performing loans declined to Rs. 563 (2008: Rs.
1.9b). The bank posted profit before tax of Rs. 4.6b (2008: Rs. 3.99b) for 2009.
Profit for 2009 was reduced to Rs. 1.8b (2008: Rs. 2.6) after adjustment of tax expense
of Rs. 2.8b (2009: Rs. 1.4b) which pertained to current and prior year.
Capitalization
As of December 31, 2009 equity of the bank was higher at Rs. 18.7b (2008: Rs. 16.9b),
exceeding the minimum capital requirement of Rs. 6b mandated by SBP. Capital
61
Adequacy Ratio of the bank was slightly lower at 21.7% (2008: 22.9%). Net NPLs to Tier
1 capital stood at 57% at end-December 2009. If the proposal of loan conversion into
equity materializes, it will provide considerable momentum to capitalization of the
institutions.
Quick View of ZTBL’s Performance till 2009
90
80 Disbursement (Billion) 77.7

70.7
70
60 55.9
52.5
50
39.4
40
33.7
30.2 29.1 29.7
30 27.6
24.4
22.4
20
11.7
10
0
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
80
73.8
70.8
70 Recovery (Billion)
63.2
60
52
50
42.1
40 38.9
36.9
32.1 33.5
30.1
30 25.8
20 18.7
15.1
10
0
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
63
10
9 8.8
8
Deposit (Billion)
6
5.5
5
4.3
4
3.1
2.9
3 2.6
2.3
2.1
2 1.8
1.5 1.6 1.6
1.4
1
0
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
10
8.4 Gross Profit (Billion)

8
6
5
4
4
2 1.8 1.8
1.2
0.8 0.6
0.2 0.3 0.2 0.1
0
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
-2
-4 -3.8
-6
80.0%
69.6%
70.0%
61.6% 60.8%
60.0%
52.9% 53.0% 52.5%

49.7% 49.1%
50.0% 48.8%
40.0%
33.3%
30.0% 27.7%
20.0% 19.1%
15.6%
10.0%
0.0%
NPL's As a Percentage of Total Outstanding
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
65
Chapter 4
SWOT Analysis
Strengths
 ZTBL has brand name in agricultural loaning.
 It is first and large financial institution established in Pakistan to promote

agricultural financing.
 The bank has more than 350 branches throughout Pakistan and has presence in
all the provinces of the country which enables it to capture and facilitate a large
number of customers.
 The bank enjoys sovereign guaranty of Federal Government that covers its debt
obligation to State Bank of Pakistan.
 The Bank has the most experienced and the least experienced staff, which is a
good combination of experienced heads and exuberance of youth.
 The bank has ability to launch successful products for agricultural industry due to
know how of the agricultural system of the country.
 Mobile Credit Officer is the unique concept which is helping in remaining more
near to its customers and also helps in recovery. Concept like these helps bank in
safeguarding itself in the risky adventure of financing to small farmers.
Weaknesses
 ZTBL have not introduced any Islamic product in financing. Islamic banking is
becoming popular in these days and to sustain and increase the number of
customers every bank is felling need to start offering Islamic Products. This ZTBL
requires noticing this changing trend.
 In spite of the presence of technology many jobs are done manually. Almost all
other bank’s operations have been computerized but ZTBL is still working on
manually written ledgers etc.
 Like other Government institutes the red tap dilemma also exists in ZTBL.
 The staff is not motivated because the promotion mechanism is based on

experience rather than on the performance of the employees. This is the reason
that usually employees stop giving their full efforts after knowing the reality that
their performance pays a less role in their success.
 The average loan disbursement amount is 85,000 to single person which is not a
big amount. Usually the loan obtained by the loanee can be used to meet
working capital requirement only it cannot be used to fulfill the dream of
modernizing of agriculture sector.
 There is a lack between the planning of head office and the reality of
environment because the staff at high level have little know how of the real
situation on the ground.
 The infrastructure of the bank is also based on old style; the bank is not
refurnishing its branches like the other banks have done in this decade.
 The situation at branch level is not good, there is lack of even furniture, fans etc.
67
Opportunities
 The bank started computerizing its operation which if completed will result in
increase of the bank performance. The impact of computerization can be seen
from the result of recovery of 2009 which is 89%. The computerized system helps
bank in reducing fraud.
 Due to increase in the government attention toward the agriculture sector it is

expected to see the role of the bank increasing in the near future. As a result of
different steps taken by the government regarding the betterment of the
agriculture, small borrowers are attracted to get the financing and to start
business. So, the ZTBL has an opportunity to attract the customers by giving them
more attracted schemes.
 They have wide area network in all over the Pakistan, so ZTBL can make it
possible the fast delivery of funds to rural areas.
 The flood of 2010 is challenge for the whole country. Because the most effected
people are farmers so the bank has a chance to increase its reputation by utilizing
its full resources to help them. It is also expected that the relief which the
government may provide to them will also be delivered through the bank in the
form of relaxation to the loanees.
Threats
 The biggest threat in the banking sector is the continuous downfall of the country
economy since the last few years.
 Sudden rise and fall in the trade and industry conditions and stock exchange
business of the country also adversely affect the growth of banking sector.
 The default ratio of customers who are availing the credit facilities from the ZTBL
can rise due to the economic recession in the country.
 Government type of working style is also a threat to the bank which requires to
be changed to keep the banking growing.
 Many commercial banks also started agriculture loaning scheme so it is expected

that in the future the farmers will have more choices to have finance from which
will definitely affect the customer base of the bank.
 Political unrest is also a threat for the bank because it is a government owned
bank and the change in government can result a change in the strategy of the
government which can affect the plan made by the bank.
 Natural Calamities is also a problem, the bigger part of the bank customers relies
on the environmental condition. Almost whole of the agriculture industry have
threat from the changing environment conditions. The example of 2010 flood is
still in front of us those who are affected are unable to pay their loans back.
69
Part Two
Ch. 5: Assignments I handled during my
Internship.
Chapter 5
Organogram of Mian Channu Branch
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71
Redemption of loan
On the payment of all the dues by the loanee (principal + interest), he can free his land
(or any other security provided) from any charge created by bank for the purpose of
loan. For this purpose he will have to present the following documents:
1. Application for redemption

2. Stamp Paper of rupee 20
3. Last receipt of amount paid
4. Cheque book (if issued)
When the loanee provides these documents to assistant officer (Or any officer
appointed for these sort of work), the assistant officer asks the peon to bring the Loan
Case File of the borrower. After the file is received by the assistant officer, he checks the
documents that whether all the documents are there in the file. Then he makes
required entries in the Passbook. These entries usually made on the page 28 and 30. The
example of entries is given below.
The following entries are made on page 28.

See page number 16 and
block number 3 for detail.
The entire loan including
interest has been paid by (Here page number 16
the loanee. shows the number and date
of last charge created
against the land of loanee
in the favor of bank)
The following entries are made on page 30.

See page number 18 and
block number 8 for detail.
ZTBL Mian Channu (Page number 18 is usually

the page where the detail
of land mortgaged has been
given, it include the area of
land, khatoni number etc)
After these entries the officer then sends the file to Manager for signature. On approval
from the Manager for the Redemption Application the assistant officer attaches all afore
said documents with in the file and record in the “File Movement Register” that file has
been moved from the record room for the redemption purpose.
Than the file is send to AMO (Assistant Manager Operation) for further process. The
loanee is given the date of next week to collect his “Passbook”. During this period AMO
checks the record of the loanee to confirm that the entire due amount with respect to
that particular loan has been paid and then he signs to give approval to assistant officer
to issue “Passbook” to the loanee. The AMD (Assistant Manager) and Manger both also
sign the notice issued in the name of Patwari and Tehsildar that the land can be
transferred to the loanee as the loan has been fully paid by him.
Then file again comes to the assistant officer, he checks the signature both in the notice
and Passbook and then stamped both. Now the Passbook is ready to issue. Before
issuing Passbook the officer record that passbook is issued to the loanee in the
“Dispatched Register”. On the issuance of Passbook to the loanee, the officer verifies
that the person receiving the documents is the original owner of the land which is
mortgaged with the bank. After getting the Passbook, the loanee goes to Patwari and
Tehsildar for the change of record back to his name.
The one thing which is interesting here is obtaining Stamp Paper from the borrower.
This is not a requirement but bank has made it practice so that if in the near future, it
finds that some amount is still due by the borrower than it can write on the stamp paper
whatever it wants and then can claim the due amount from the borrower. This is
precautionary measure adopted by bank because once the Passbook issued to the
borrower and the land again transferred to his name, the bank will be in no position to
recover any amount which is unexpectedly left due.
The redemption process in short can be described as the following:

 Submission of Application
 Acceptance of application by manager
 Record of file in the “File Movement Register”
 Entries made in the passbook
 File send to AMO for checking of loan status
 On approval from AMO, the Manger and Assistant manger signed the notice to
issue Passbook
73
 The passbook dispatched to loanee with notice to Tehsildar to transfer land back
to his name
 After the land is transferred to the loanee name, if he wishes he can withdraw
the amount from his current account and can close his account.
Usually the loanees do not redeem their land because they want to avoid the cost
and wastage of time when in the future they again have to gain loan from the bank.
So, they usually remain the land in the name of the bank even after they have paid
the whole loan amount. During my internship I have seen people who has paid loan
more than 10 years ago but they came to bank after such long time to redeem their
land and the reason behind their redeem was that they want to transfer it to
someone others name otherwise they may not come for redeem.
I have also seen one of the clients who has paid loan in 1985 but his land is still in the
name of the bank and they have not redeemed it. After the death of the client his
sons came to know that the land could not be transfer to their name because it is
still mortgaged against the loan which their father had paid in 1985. So, at that time
they reach bank for redemption because the bank always maintained record so their
file found from the record room after little efforts. All this shows the confidence the
people has on the bank and also shows that in practical life anything can happen.
Opening of Current Account

In the ZTBL, the current account usually opened only when the person comes there for a
loan. On the approval of loan, his sanctioned amount is usually credited to his current
account. The procedure of opening of Current Account is not very complicated. The
following are the main point in the opening of a new account:
1. Acquiring original CNIC

2. Filling the Current Account Form
3. Filling of Know Your Customer
4. Filling of Current Account Card
5. Registering name in the “Current Account Register”, (Issuance of A/C No.)
6. Filling of deposit slip of starting amount
7. Signing by AMO and Manager
8. Issuance of Cheque book
9. Opening account in the ledger of bank
1: Acquiring Original CNIC

It is mandatory to check the original CNIC of the person before opening of current
account. In the ZTBL it is routine to open account when manager sanctioned and signed
the amount of loan. Because at that stage it becomes essential to have an account in
the bank otherwise the amount of loan will not be paid.
The other documents required to attach with the forms are:
 2 recent pictures
 Copy of CNIC.
2: Filling Current Account Form

After obtaining original CNIC the form for current account is filled with the information
written on the CNIC. The form includes the following information:
 Type of account
 Branch Name
 Branch Code
 Name
75
 Father Name
 CNIC Number
 Address
 Occupation
 Nationality
 Contact number
 Date of birth
 Marital status
 Mother name
 Name, CNIC, Contact of MCO who knows the person personally
 Next of Kin (The person who will have right to operate the account in the event
of the account holder’s death or any other mishap)
 Starting amount
3: Filling of Know Your Customer Form

The Know Your Customer form is also attached with the current account opening
form and contains the following information:
 Name
 Account number
 CNIC number
 Address
 Purpose of opening of account
 Monthly income
 Source of income
 Type of customer (i.e. Walk in)
 Public figure
 Usual mode of transaction (i.e. in cash, cheque)
 Etc.
4: Current Account Specimen Card

Name: Account No.
Adress: Type of Account:
Name of Account Holder Name of Account Holder
This side is used to write the name of This side is used to obtain the signatures of
account holder both in Urdu and English. the account holder for verification of
cheques in the future if required.
Signing Authority:
One side is used to obtain the signature of account holder; I usually take 3 signature of
him in the right side of card. While the left side of card is used to write the account
holder name in both Urdu and English.
5: Registering name in the Current Account Register (Issuance

of A/C No.)
After filling the required forms the name of the new account holder is registered in the
Current Account Register. This register requires writing down the name of account
holder, his father name, Address and the starting amount.
These are the following blocks made in the register requires to fill.
Account Number: It Date of Opening of Opening Balance of Name:

is account number Account Account Father name:
issued to holder. It Address:
is a serial number,
so I used to write
the next number
when I have to open
an account. Adnan Ijaz
S/O Ijaz Naseem
Example: 1567 15-09-2010 1000 Mian Channu
77
When the account number is issued, it is also written in the Account Opening Form and
Know Your Customer Form.
6: Filling of Deposit Slip of starting amount

To open an account in the ledgers of bank the account holder requires to deposit an
initial amount. This amount in ZTBL is usually 1000; however it depends on the amount
of loan sanctioned like some loans required to deposit a larger amount with the bank
before issuance of loan from the bank. The example of such loan is of Tractor because I
have not be given chance to stay with an MCO, so I don’t know what exact amount is
required to deposit with the bank for any particular loan.
The Deposit Slip which I used to fill during my internship consist the following
information:
Zarai Taraqiati Bank Ltd. Zarai Taraqiati Bank Ltd.

Depositor’s Copy Bank Copy
Branch Name: Branch Name: Date:
Branch Code: Branch Code:
Date:
Name: Name: Account Number:
Account Number:
Particulars Amount Particulars Amount
Total Amount Total Amount
Rupees in words: Rupees in words:

Depositors Signatures: Depositors Signatures:
Signing Authority: Signing Authority:
7: Signing by AMO and Manager

Then the forms and deposit slip is signed by AMO (Assistant Manager Operation) and
Manger to verify that all the requirements of opening an account is met by the account
holder.
8: Issuance of Cheque book

Than on depositing of a nominal fee of rupee 30 the account holder has been issued a
cheque book. In the bank where I have completed my internship, the cheque book is
issued by the cashier when the person deposits his starting amount of account and the
amount of issuing of cheque book.
9: Opening account in the ledger of bank

Unlike other banks, ZTBL is still working on manually written ledger books. However, the
bank is also gradually computerizing its records. These ledger books are large books with
a number on front of it which helps in finding the record of any particular person. The
ZTBL Mian Channu branch where I have completed my internship has 52 ledgers at that
time with the current account holder of 11595 at the date of 15 September 2010. There
will absolutely many accounts which will not be alive.
When the depositor deposited the amount his name and other particulars is written
down in the ledger so that he can transact with the bank in the future. The ledger of
current account contains the following information.
Zarai Tarqiati Bank Ltd. Page no. 177
Branch name: Mian Channu Branch Code: 20226
Name: Signature:
Father:
Address:
Account no:
Cheque book:
Date Particulars Debit Credit Balance Signing
authority
15-09-2010 By cash 1000 1000
15-09-2010 Loan Paid 50000 51000
16-09-2010 To Cheque. (no.) 50000 1000
The above given table is the example of information usually written in the current
account of a customer. There are also many other column available in the ledger books
but they all are not used in the bank. There are some options which are not printed
there but it is a practice to write that information, like there is no column of signature
but without a signature no one can check the validity of a cheque. So, I have observed
79
that the signature and thumb impression is used to take in the right side of ledger book
where a lot of space is available. The other option which I have mentioned here but not
included in the ledger book is the cheque book number. It is also practice to write down
serial of cheque book in the space available. It makes it possible to confirm that the
cheque book which the customer is using to transact with the bank is associated with
that particular bank account or not.
Here I have also made few entries which show how a transaction is recorded in the
ledger book. Absolutely, the date is the first option than the particulars which shows
what exactly happen on that day. Like in the first entry the bank account has been
opened with an amount of 1000. So, I have written “by cash” in the particulars which
represents that the person has transacted in cash. Then I credited the amount which
shows that this money is given by the customer and in the balance column it has
increased the balance with the same amount of 1000. The next column is used by the
signing authority (AMO in my case) to confirm the transaction.
As I have written before that in ZTBL current account is usually opened only when the
bank has to disburse any loan to the customer. When I have joined the bank that was
the slack time for the bank because all the customers of bank are farmers that is why
they come to bank to get or give loan when they have to plant or harvest any crop. That
is why a number of bank customers are seasonal. They are usually a great rush from
April to June and then from November to December. Awami Zari Scheme was the only
scheme available to new borrower at the time I was there. In this scheme a part of
sanctioned amount is given to borrower to meet the wage and water expenses and the
rest amount is paid by supply order of fertilizer and pesticides. The amount which has to
pay in the form of cash is credited to the current account of customer from where he
can withdraw it. The 2nd entry in the sketch of ledger above shows the disbursement of
any of such loan, which has increased the balance to 51000.
When the customer draws a cheque on the bank the entry in the ledger will be like I
have shown above with the date of 16-09-2010. The account of the customer will be
debited and the balance will be reduced with the same amount.
A large number of ZTBL customers are illiterate so they can not fill their cheque by
themselves and due to this reason almost all the cheques are filled in the accounts by a
clerk. Before filling the cheque of anyone he assures the balance in the account and in
the same time he records entries so he will not have to reopen the ledger to make entry
after the deposit or withdrawal of amount by the customer. So there are some things
which I have learned from the seniors which they have developed to facilitate
themselves when the customer will come again in the future, these guidelines are
following:
 Write the ledger name and its page number on the front of new cheque book
 Write the account number on every cheque of new cheque book
 Take the Thumb Impression of every customer on the cheque
 For the man take left thumb impression and for women take right or both
 No cheque will be paid to anyone else than account holder if it is a loan account
 Fill the cheque in Urdu if the customer signs in Urdu or gives Thumb Impression
only
 Also fill the memorandum attached with in cheque book with each cheque to
record all the transaction for future reference of client and to the bank also.
All the cheques are required to be signed by respected authority before payment of
cash, like AMO (Assistant Manager Operation). Before his sign no cheques can be
passed, he also cheques the entries made by clerk in the ledgers before passing
cheques. In this way the entries originated by any person is double checked which
reduce the chances of any mistake.
Whenever a cheque of more than 25000 is come to cash it is required to write a voucher
of “With Holding Tax” with it so that the amount of tax can be deducted from the
payment. The vouching will be discussed later on.
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ZTBL Flood Relief Fund 2010

Heavy monsoon rains started to hit Pakistan from 22 July 2010, causing flash floods in
several parts of Khyber Pakhtunkhwa, Baluchistan, Punjab and Pakistan Administered
Kashmir. This flood have caused huge destruction, hundreds of villages have been swept
away.
Death toll has risen to more than 1500 people, at least 1.2 million homes have been
damaged and an estimated 17.2 million people have been affected by the floods. Floods
have caused widespread damage to public infrastructure, with roads submerged and
tens of bridges swept away, many hospitals and an estimated 7,173 schools are being
severely damaged. Power and communication lines are down in many areas. The
economic cost is also huge. Thousands acres of agricultural land has been flooded, at
least 3.2 million hectares of standing crops have been damaged and at least 200,000
livestock animals have been lost.
This is a snap shot of the situation after the flood and the damage final estimates are yet
to make. To help the victims of this flood ZTBL made Flood Relief Fund 2010 and the
head office asked all the branches to collect the fund for this flood relief fund. According
to circular issued by Head Office every branch make it sure to convince the borrower,
depositors and general public to contribute in this fund for this purpose the following
procedure is required to follow:
 From any loan of below 200,000 or any payment from the account of customer
below this limit should be deducted with amount of at least 100 rupee to
contribute in the flood relief fund. However, it is required to make sure that
avoid double deduction from any particular person’s payment. But if anyone
wants to contribute more than 100 or more than one time he can give at any
time.
 From any payment of more than 200,000 but less than 500,000 the rupee of 500
should be deducted to charge to flood relief fund keeping in view the double
deduction.
 From any payment of more than 500,000 the amount of 1000 should be
deducted.
The amount is deducted by filling a deposit slip with the name of the contributor to
deposit in the account of flood relief fund (A/C No.3043). For this purpose every MCO
(Mobile Credit Officer) is given a deposit slip book so that he can collect fund from the
people during his visit to the villages. And inside the bank, the accounts department
makes it sure to fill this deposit slip with every payment. The weekly report of these
funds collection is required to send to Regional Office. According to the weekly report of
last week of Ramdan, the Mian Channu branch where I did internship was in the first
position in the collection of fund in the whole zone of Vehari.
83
Writing of Vouchers
Vouchers are the important evidence of all the transactions takes place in the bank. In
the accounts department of ZTBL it is the back bone, every transaction of bank with
reference to cash required a voucher to be drawn against it.
The vouchers are of three types:

1. Debit Voucher (Receipt of Amount)
2. Credit Voucher (Payment)
3. Transfer Voucher
1. Debit Voucher
Debit Voucher is used when bank received any amount from anyone. The example is of
deposited amount by the depositors, the payment of loan by the loanee etc.
2. Credit Voucher
It is used for the payment of any amount by the bank to anyone. Like the cheque drawn
on bank, the expenses of bank itself etc.
3. Transfer Voucher
As the name shows it is used when the amount is required to transfer from one head to
another. The example is the transfer of utilities bills accepted by the bank to the
respected utilities provided company (Mepco, PTCL etc.). The transfer of return to the
income account of bank, it is also used when the loan is sanctioned so it is required to
transfer amount of loan to the loanee account.
Another use of transfer account is to correct mistakes in the ledger, for example if an
account is mistakenly debited in place of another account. So the transfer voucher can
be written to credit the first account and debit the second one to correct the mistake.
In the end of day all the vouchers written during the day is required to be write down in
the daily Scroll (which will be discussed later on) and then all the vouchers of day is
sewed and then sealed so that no new voucher can be placed or removed from the
record. These vouchers used to store in record room and they keep piling up there.
Every voucher has at least two copies, one for the customer and one for the bank
record. For easy recognition the vouchers are made of different colors.
 Debit Voucher (Have three copies and in white color)
 Credit Voucher (Have two copies and in blue color)
 Transfer Voucher (Have two copies and in yellow color)
Sample of Debit/Credit Voucher

Zarai Tarqiati Bank Ltd.
Branch-----------------
Name------------------
Parentage------------ Debit Cash Voucher
Village---------------- (Cash Receipt)
Branch Code
Tehsil-----------------
Date
Serial No. 154700

No. Particulars Loan Case G.L TR RO Effective Amount Contra Record
no./ A/c no./ Head Code Code Date Voucher/Contra no./CA
Advice no. Branch no. Code
Total
Amounts in words:---------------------------------------------
Enclose:-----------------------------------------------------------
Prepared by:-----------------------------------------------------
Checked by:------------------------------------------------------
Authorized Signature:---------------------------------------
85
The debit voucher for the deduction of With Holding Tax from the cash withdrawal of
more than 25,000 will be filled in the following way.
First the name or branch, its code and the date is required to write. Than the
information from whom this tax is collected, his name, father name, his village and city
name will be written. After that in the particulars it will be written “A/O of With Holding
Tax” and in the GL Head (General Ledger Head) the head number of “With Holding Tax”
(which is 3056 in the ZTBL) will be written. The amount will be written after calculating .
3% of withdrawal amount. In the total the same amount will be written again and then
this amount will be written down in words. In the last the signing authority will sign in.
In this voucher of W.H Tax only a few columns of the voucher is used, the other columns
can be used for other types of transactions. The explanation of each column is given
below:
1: Particular:
In particulars the reason of the transaction is written down. For example, Amount of
Recovery etc.
2: Loan Case no./ Account no./ Advice no.

If the voucher is of recovery than in this column the loan case number of the loanee
who has come to pay loan will be written. This column has 6 blocks to write, due to
shortage of space these block can’t be shown in the above sample of voucher.
Loan Case no./ Account no./ Advice

no.
3 9 6 7 0 0
3: G.L Head (General Ledger Head)

It is the General Ledger Head which is required to debit. These are standard heads used
in the entire branches of ZTBL. Like 3056 is the G.L Head for W.H Tax, it will be same
when any branch of ZTBL will collect this tax from his customer.
4: T.R Code
This code is rarely used for debit and that is why I don’t have complete information
about it. In the recovery voucher this column is used, when MCO collects the cash than I
used to write 14 and when loanee himself comes to pay loan I used to write 15 in that
place. So, it helps when the voucher is recorded in the computer room to understand
the type of transaction.
Like, in the credit voucher I was asked to write 01 code for all the expenses of the
branch and 02 for the expenses of the Zonal Branch. So, it helps computer to
understand the type of transaction. These codes can be different in different banks.
5: R.O Code
Originated/Respond code is used to show that whether a transaction is originated or
responded. For example in the W.H Tax example the word “O” will be written in this
column which will show that this debit voucher is originating this transaction. And when
this amount will be transferred to the respected head in that voucher the word “R” will
be written which will show that this voucher is responding to any transaction.
6: Effective Date
It is the date on which the amount is received. It can be different from the date on
which the voucher has been written down. For example, on 13 September an MCO is on
a tour to the villages which are under his circle; during his visit he collects recovery of
100,000 from someone. He will issue receipt to the loanee as evidence that MCO has
collected cash from him and on the next day (14 September) when he will come to the
bank that MCO will deposit cash as a recovery in the name of that loanee. Because the
cash has been collected by him a day before the voucher of recovery is written down so
the effective date on voucher will be 13 September while the date of Voucher in right
upper side column will be the date of 14 when the voucher is written.
Why the effective date required? The answer of this question can be understood from
the above example. The loanee has paid the MCO on 13 September, while the amount is
deposited by the MCO on 14 September. So, no interest is required to be charged for
the day of 14 September because the amount has been already collected a day before.
If the effective date will not be written than there will be discrepancy between the
amount collected by MCO and the amount calculated in the accounts in the time of
writing voucher because the amount calculated in the accounts department will include
the interest of one more day than collected by MCO.
7. Amount
This column used to write the amount, it is also divided into many blocks so that when
write any amount it will be easily readable later on. Like the first block in Rs. Column
from right side is for figure of hundred and the next block is of thousands.
87
Amount
Rs. Ps.
11 000 -
2 09 000 -
Total 2 20 000 -
8. Contra Voucher/Contra Branch No.

This column is used when we are responding to some other voucher or branch. During
my internship I have used it once time. One of the customer of a bank has received
tractor in the Benzir Tractor Scheme but the company failed to deliver the tractor on the
agreed upon date. And it is a contract between the bank and the company that when
company will not deliver the tractor on the agreed date, it will be charged with the
penalty of 150 rupee per day. So, the bank had a claim on the company of rupee 25,000
due to late delivery to the customer. The company has transferred this amount to the
bank account, so definitely the bank has a voucher written against it. Now this penalty is
in the bank account which it has to transfer to the customer who has faced difficulty due
to late delivery. So, when I transferred the amount from bank account to the customer’s
account I was actually responding to the first voucher created with which the amount
was transferred from company to the bank account. So, I was asked to write the
voucher number of that first voucher in the column of contra voucher of new voucher
with which I am transferring amount to customer’s account so that in future when any
one need to find out that from which reason the account of the customer is credited, he
can easily find the contra voucher number from the voucher written to transfer amount
to the customer account. And when he will open the contra voucher number, he will
find that the amount was transferred by the company as penalty to the bank account.
So, in short it is used when we are responding to any other voucher or branch. The Exact
view of contra voucher/contra Branch No. and Record no./CA Code are the following.
These two head come under the main head of Sundry/Suspense & Central A/C only
which is not displayed in the voucher sample due to shortage of space.
Sundry/Suspense & Central A/c only

Contra Voucher/Contra Branch No. Record no./CA Code
3 9 6 7 0 0 0 1
9. Record No./CA Code.

Record number is the number of the entry in any contra voucher to which we are
responding. A voucher can have many transactions written on it as you can see that
there are number of rows available in the voucher to write on. So, giving contra voucher
number is not the only thing we need to write to give exact reference, we also need to
give reference of Record no. of that particular transaction in that voucher. And CA code
is used when we are responding to any Contra Branch No.
10. Rupees in Words

Rupees in words are compulsory to fill so that to avoid any mistake in writing amount in
numbers and also to avoid any misconception in future.
11. Encl (Enclose)

Enclose is number of receipt if any attached with the voucher. Like if I want to write a
credit voucher to pay some employee who has bought stationary for the office use so I
will attach the receipt of the stationary he has bought from the shop with the voucher
and I will write (1) in the enclose so whenever anyone will see the voucher he will know
that there is a receipt attached with the voucher.
12. Signatures
There are three spaces available to sign in the voucher. These spaces are for the person:
 One who has prepared it

 One who has checked it
 And signing authority who passes this transaction
But I have not seen anyone signing the first two places, the only signature place is used
is of signing authority because it is compulsory. Both Debit and Credit vouchers have
same columns and lines to write on. But the transfer voucher is different from these
two, it has the same columns and lines but it is divided into two parts. Upper side is for
the debiting an account and in the down side is for crediting an account. Because when
we use to transfer amount from one account to another account than there should be
one account which is required to debit and the other account should be credited to
complete the whole entry. The sample of Transfer Voucher has been given in the next
page.
89

Branch-----------------
Name------------------
Parentage------------ Transfer Voucher
Village----------------
Branch Code
Tehsil-----------------
Date
Serial No. 154700

Total
Total
Amounts in words:---------------------------------------------
Enclose:-----------------------------------------------------------
Prepared by:-----------------------------------------------------
Checked by:------------------------------------------------------
Authorized Signature:---------------------------------------
Sample of Transfer Voucher
91
Daily Transaction Scroll

Daily transaction scroll is written by operations officer every day in a bank. It is the
record of all the cash inflows, outflows and transferred on a particular day. Both cashier
and operation officer writes his own scroll at the end of day when they have to close the
cash. The closing balance in both these scrolls must be same otherwise there are some
transactions which have not been recorded correctly either by the cashier or the
operation officer.
If I will divide the page of scroll than the following are the important columns and part
of it:

Daily Transaction Scroll Branch Code
Name of Branch---------------------------
Date
Sheet Number
The above are the sketch of columns used in the upper side of scroll page. Sheet
number is used when there are more vouchers to write and they cannot be written on a
single sheet so the next sheet is required to use in such situation the number of sheet
should be written so that they can be arranged in a proper way.
S V G D C D Credit
r. o .L e r e
u H b e b
c e it d it
h a it
e d
r
N
o
.
1 1 1 0
5 1 0
4 0
7
0
0
2 701 500
3 568900 5 000
4 768200 4 000 4 000
Total 11 500 5 000 4 000 4 000
The above view is of the rest of the page where all the vouchers are recorded. The sheet
is divided into two sections the left side part is used to write the debit and credit
vouchers and their amounts, while the right side is used to write the debit and credit of
transfer vouchers.
The above is the example of writing of different vouchers. The first two vouchers are
debit vouchers that are why I have written the amount (11,000 and 500) in the debit
column. The 2nd voucher name is not written completely which is an ease which can be
used if the same serial is going on and only the last number is changing. The third
voucher is a credit voucher and its amount (5,000) is written in the credit side in front of
it. The fourth voucher is representing a transfer voucher so its effect will be shown in
the right side of the sheet. In both Debit and Credit column of the right side of sheet is
filled with the same amount because in transfer voucher one account will be going to be
debit and the other will be credit so the net effect will be zero.
In the end all the amounts of all the vouchers are totaled in their respective columns.
Like in this example the debit vouchers total amount is 11,500 and the total of credit
vouchers is 5,000. The debit and credit side of transfer vouchers side will always be the
same, which are 4,000 in the example. After getting this total the next step is to
calculate and write the closing balance.
1. Opening Balance 400,000

2. Debit Balance 11,500
3. Total Balance (1 + 2) 411,500
4. Credit Balance 5,000
5. Closing Balance (3 – 4) 406,500
To calculate the closing balance first step is to write the Opening Balance which is
absolutely the Closing Balance of last day. Here in the example I have assumed it
400,000. After it the debit balance will be written in the 2 nd row and in the 4 th row both
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1st and 2nd row will be added to get the total balance. Now the credit balance will be
written and to get the closing balance the credit balance is required to deduct from the
total balance of 3rd row.
To close the cash, this closing balance should match the closing balance in the books of
cashier. When comparing with the cash scroll of cashier the Total Balance, Credit
Balance and then Closing Balance all should be similar otherwise there will be
something which is skipped during writing even by the Officer or by the cashier.
When closing cash, in the end of this scroll sheet the number of total debit, credit and
transfer vouchers is required to be written so that nothing can be added or erased from
the above scroll by any one.
Number of Debit Credit Transfer Total

Vouchers 2 1 1 4
As you can find that in the above given example of scroll, there are two debits, one
credit and one transfer vouchers have been written so the same number is written in
the ending column of scroll sheet.
Making Entries in the Ledgers

In ZTBL the record of current accounts and loans are manually maintained. There are
many records which have been computerized but still the hand written ledgers are used.
Making entries in the Ledgers requires simple concept of debit and credit. However the
understanding of banking practices are required so that to follow the exact way of
recording any transaction because usually the column written on the ledger books are
not used for the purposes for which they are made. The employee usually has
established their own way of writing transactions in the ledgers the way in which they
feel easy. I have found many columns unused in the ledgers of Sada Bahar Loan Scheme
or they have been used to write other information which is different from the heading
of columns.
Disbursement and Recovery Entries

When a loan is sanctioned and ready to disburse it is recorded in the respected ledgers.
I am here taking example of SBS (Sada Bahar Scheme) which is a revolving finance
scheme. Every loanee has a unique Loan Case Number which is the base of all the record
of his loan. When a loan of SBS is sanctioned its amount is not transferred to the current
account of the loanee like it is used to transfer in the AZS (Awami Zari Scheme). In SBS
the Loan Case Number is used for all types of transactions, when a loan is sanctioned it
is recorded in the SBS ledger with the name of loanee and Loan Case Number is used as
an account number from which he can operate.
The information which is required to write in the ledger sheet when a new loan has
been passed and ready to disburse are following:
 Loan Case Number

 Name
 Parentage
 Address
 CNIC
 Maximum limit
 Date of maturity
 Cheque book number
After entering the above information the loan can be disbursed to the loanee when he
desires. Because almost all the customers of ZTBL are low earning farmers and they
require immediate cash to meet their expenses so they draw a cheque on the bank on
the same time when their loan is entered in the ledger book. In SBS farmer can
withdraw the amount till he has reached maximum limit and the return will only be paid
on the amount which he has taken out as a loan.
The entries of disbursement can be easily explained by taking an example that the loan
has be sanctioned and it is recorded in the ledger now loanee want to withdraw the
total sanctioned amount of 50,000. The entry of this transaction will be in the following
way at 01-01-2010:
Principal Return Total

Date Particulars Outstan
ding
Debit Credit Balance Debit Credit Balance
01-1-10 To Cheque 50,000 50,000 50,000
No.
31-4-10 To Return 1,480 1,480 51,480
01-5-10 Recovery 18,520 31,480 1,480 Nil 31,480
After four month a computerized outstanding balance report of all the loans is given to
each branch, it is called “OBL (Outstanding Balance Ledger)”. The bank also adds return
95
to the principal amount of each loan case, like it is shown in the date of 31-04-10. (The
interest rate on SBS is 9%)
Now suppose that loanee has reached bank on 01-05-10 and he wants to pay 20,000.
The entry is shown in the date of 01-05-10. It is rule in the bank that when the bank
recovers any amount from the loanee than first return amount will be reduced and then
the principal will reduced. Here in this example, the loanee wants to pay 20,000, so first
interest will be deducted which is 1480. To pay return we will credit it with 1480 and
then the principal will be credited with the remaining amount (20,000-1480=18,520) as
shown in the above diagram. Due to this payment the principal is also reduced to 31,480
and because the total return has been deducted that is why the total outstanding
amount is also 31,480.
(It is routine in the bank to check the total outstanding amount in the ledger with OBL
before receiving any recovery. This is a precaution because the handwritten and
manually calculated ledgers can have mistakes so checking it with OBL make it sure that
they are not receiving less amount from the customer.)
Revolving SBS Loan

Now suppose a situation where loanee wants to pay his entire outstanding loan and
then wants to withdraw it again. This usually happens when the MCO want to achieve
his recovery target or the time period of one year is completed from the date on which
the loanee has withdrawn the amount. It is compulsion for every loanee to return his
entire loan at least once in a year, if he will not pay his loan within one year, he will be
treated as defaulter and he can withdraw only 90% of sanctioned amount from his
running SBS finance.
But in SBS the default situation is rarely occurs because when the limit of one year is
near to end, the loanee can revolve his loan by paying only interest of the loan. This can
be explained by continuing the last example, on 01-05-10 the loanee has paid 20,000
and his remaining outstanding balance is now 31.480. Now suppose he comes again on
01-06-10 and wants to revolve his loan, on that day the following entries will be made in
his loan account:
Principal Return Total

Date Particulars Outstan
ding
Debit Credit Balance Debit Credit Balance
01-1-10 To Cheque 50,000 50,000 50,000

No.
31-4-10 To Return 1,480 1,480 51,480
01-5-10 Recovery 18,520 31,480 1,480 Nil 31,480
01-6-10 To Return 31840 241 241 31,720
01-6-10 Recovery 31,840 Nil 241 Nil Nil (A/C
Closed)
01-6-10 To Cheque 50,000 50,000 50,000
No.
Because the loanee wants to pay the total outstanding amount, the first thing to do is to
calculate return on the last outstanding principal balance. Because the loanee has
already paid some part of principal on 01-05-10 due to which the principal has been
reduced from 50,000 to 31,480. Now the return will be calculated from 01-05-10 to 01-
06-10 (31 days) at last outstanding principal balance of 31,840.
(31,480 * 9/100 * 31/365) = 241
I have debited this return calculated and it has increased the total outstanding to
31,720. Now the next step is to obtain all the outstanding amount of principal and
interest so that the account can be closed and again revolved on that day. In the 2 nd
entry on the date 01-06-10 I have credited all the principal amount and the balance of
principal became Nil and the same I did with the return, I have credited the total
balance of return and its balance also became Nil. Because both principal and return
balance is now Nil that is why the total outstanding amount of loan is also Nil now and
the Account is closed on that situation.
Now the loanee wants to revolve his account so he will again draw a cheque on the
bank of any amount with in his sanctioned limit, in this example I have assumed he
again wants to get the total amount out of it. So, I have again debited the amount which
has increased the principal balance and then total outstanding balance to 50,000.
These are just entries in the ledgers absolutely the loanee will have to follow some
procedures to revolve his account. Usually MCO of the loanee asks to revolve the
account and then vouchers are written and entries are made in the ledgers and then
these vouchers and entries is passed by the AMO otherwise no payment or recovery is
made.
The vouchers need to written when revolving an SBS loan accounts are following:
97
 A debit recovery voucher of full outstanding amount including Principal and

Return.
Whenever an account is fully paid it is practice in the bank that write the return
collected on this account on the upper right corner of the voucher, it helps the
other employees in the end to transfer it to the Income Account of bank and also
to prepare weekly report on recovery.
 Another debit voucher of With Holding Tax will also be filled if the amount loanee
wants to again withdraw is more than 25,000
 A debit voucher of revolving fee (100 rupee for SBS)
 A credit voucher will be written in the end of the day against the cheque drawn
by the loanee
 A transfer voucher which is used to transfer the Return recovered on the loan to
the Income Account of the bank.
Actually in revolving an account the loanee pays only the interest amount, revolving fee
and W.H Tax if any. The principal is adjusted against the new disbursement of loan.
For example:
If 51,000 is total outstanding balance (50,000 principal + 1,000 returns) and loanee
wants to revolve the account, he will have to pay the total outstanding amount first and
then he can withdraw again the principal of 50,000.
Amount the loanee will pay -51,000

Revolving fee -100
Again disbursement of loan 50,000
W.H Tax on 50,000 -150
Balance -1,250
1250 is the amount which loanee will pay only and his loan will again be revolved to a
new maturity of one year. In this way revolve benefits the two parties, one is loanee
who has to pay a nominal amount and he obtains a new maturity date. The second one
is MCO who can show that he has recovered the loan which helps him in achieving his
recovery target.
Opening and Closing Cash

In the beginning of every day the cashier opens the cash in time. The cash remains
locked in the safe and it requires two keys two open. One key is always remains with the
cashier and the other key remains with the manager; however manager can further
gives it to someone else. In the branch where I have completed my internship, the AMO
has the second key.
Key Register:
It is a register which have information about the keys of the safe. Whenever a person
gives the key to someone else, he writes in the key register the name of person who has
received the key and that other person signs it. Usually the keys remain with the cashier
and another officer of the bank but when one of them is on leave it is required to give
responsibility of keys to someone else because during their absence the cash of bank
can’t remain closed.
If there is any mishap the person who has keys according to key register will be held
responsible. Thus the key register has significance matter; no one gives the key to
someone else without entering it in this register. When a key is given to someone else
the time of giving keys is also written in the register, it is precaution to make it clear that
on which time of day the key was with which person.
Safe Register:
Whenever the cash is placed inside or remove from the safe it is recorded in the safe
register. In the morning when cashier brings out cash from the safe he writes the date,
amount and denomination in which cash he has obtained. And same information is
required to enter when the cash is again placed in the safe in the evening. The person
who gets cash from the safe or puts it also signs it.
The cash is also written in denomination in which it is exist. Like if bank has 1 million
than this information is not enough the denomination in which this one million exist in
bank is also written. Like the bank may have this amount of 1 million in the following
denominations.
100 notes of 5,000 500,000
300 notes of 1,000 300,000
300 notes of 500 150,000
400 notes of 100 40,000
200 notes of 50 10,000
Total 1,000,000
99
Dispatch and Diary

Dispatching and receiving letter is the routine work in any bank. The letter which the
bank sends to others is dispatched while the letter which the bank received is called
diary. The bank maintains the proper record of every document which is dispatched or
received.
Recommendations
Implementation of Information Technology
The following are the problems which I have felt during my internship which is required
to be noticed to increase the pace of growth of the bank.
Although the bank is computerizing its operations but it is far behind other commercial
banks, it needs to speed up implementation of Information Technology so that to
perform its operations efficiently and effectively.
Information technology will help bank in finding and stopping malpractices and other
irregularities and this will result in much better performance.
Providing computers and software is not the only solution, the bank needs to train its
employees so they can use this new technology for the betterment of the organization.
The bank has many experienced employees but they have no or very little know how of
IT and many of them is not interested in learning it. So, training the new and young
employees is a better option because they have will to learn and also they are people
who will have to work for a long time with the bank. Investing in young employee is
better than training those who are near to their retirement.
Motivation of Human Capital

Human capital no doubt is a precious asset for any organization, without skilled and
motivated employees no organization can survive in this competitive environment. ZTBL
has mix of experience and young staffs which provide excellence blend of required skills
and enthusiasm for progress.
But I have found during my internship that the employee of ZTBL is not as much
motivated as other bank’s employees are. The reason behind this is the mechanism of
promotion, many of the permanent employees of the bank has not been promoted
since last 10 years and the same case is with the contracted workforce they have no
idea that when they will be permanent.
The promotion criteria like all other government institutions is based on the experience,
the more older the employee is the more he has a chance to be promoted irrespective
of this that how his previous performances was. But what I have heard from the
employee is that they have no idea that when and how they will be promoted, there are
no hard and fast rules made as it is available in other government institutions.
The bank’s Human Resource Department needs to focus on developing more trained
and motivated employee, the efforts they are putting in this regard is not satisfactory.
However, the bank starts training each and every employee which is a good thing but
with training the motivation in terms of promotion, bonuses etc. are also required.
Branch Infrastructure
Almost all the banks in Pakistan has refurnished their branches to provide better
services to its customers, the branches bank of today is completely different from the
branches of 10 years ago. That all is started when City Bank come in Pakistan with a new
idea of modernized decorated branches. After it all the banks has adopted this concept
and they build and refurnished their entire network of branches. But ZTBL is still working
on the old style; the branches have not the furniture, fans, rooms etc. according to their
requirements. The concept of air conditioning which has become an essential part in all
other banks is a thing about which the bank has not even think, there are even less fans
than required.
It is true that bank does not have a need to make their branches like all other banks but
it is required to provide at least the basic necessities to make the working of the
employee comfortable and also to facilitate its customers.
101
Conclusion
ZTBL is a specialized institute which provides financing facilities to the people of rural
areas and in this way it is contributing its part for the development of the country. Due
to a government owned organization the politicians and other higher authorities
sometime use it to give benefits to their families and friends and this also effects the
growth of the bank. However the bank has improved itself a lot, the profit of the year of
2008-9 and decline in Non Performing Loans are clear signs of improvements. The few
things on which the bank has to focus is implementation of information technology with
faster pace, improving branch infrastructure and working of its human capital to make
them motivated.

Internship Report ZTBL Hailey College

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Internship Report ZTBL Hailey College

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INTERNSHIP REPORT

ZARAI TARAQIATI BANK LTD.

Sir, Fida Hussain Bukhari

MBA Banking & Finance 2008-2010

Hailey College of Banking & Finance

In the name of ALLAH the most

I am thankful to all of my teachers and my class fellows and friends whom

The Zarai Taraqiati Bank Limited (ZTBL)

As the functions of the Agricultural Development Finance Corporation and Agricultural

On 14 December 2002 the Federal Government has converted the Agricultural

Year Entity Stand Alone Outlook

Dedicated to serve the needs of the farming community, by delivering financial

To play effective role in the promotion of economic growth, by enhancing the

3. Build ZTBL's image as a proactive, client friendly, financially & operationally

6. To function as a rural commercial bank to mobilize rural capital formation and to

7. Provide a wide range of risk insurance products to its clients.

Transformation of ZTBL to R.F.I of the country and road to

The ZTBL restructuring plan covering the following;

 Governance: establish an environment that facilitates good governance and

 Systems: modernize operations through use of technology, networking, and

 Business processes: streamline products and delivery systems so as to reduce

 Human resource development: improve standards and skills of management and

 Information Technology: establish new hardware and software platform to

Details of Regional Offices

Multan Hyderabad Turbat Mingora

D.G.Khan Mirpur Khas Quetta Peshawar

Sahiwal Sukkur D.M. Jamali

Gujranwala S.B. Nazirabad

Vehari Muzafargarh R.Y. Khan Muzafar.Abad

Total Audit Zones 9

Total Branches 352

Mrs. Nazrat Bashir Mr. Shafqat Hussain

Mr. Muhammad Iftikhar Khan Mr. Tauqir Ahmad Faiq

Dr. Khalid Ahmad Khokhar Mr. Imam Bux Sheikh

Mr. Muazam Ali

A Brief Resume of President

Mr. Muhammad Zaka Ashraf

Ms. Nazrat Bashir

She possesses 29 years of administrative experience in government service in economic

Mr. Shafqat Hussain Nagmi

Tauqir Ahmad Faiq

Kissan Support Services Ltd.

Services/Activities so far undertaken by KSS

Medium 13-1/2"x4- Rs.1,800/- Rs.2,250/- Rs. 10,000/-

Large 13-1/2"x8- Rs.2,500/- Rs.3,125/- Rs. 15,000/-

Life Time Locker Facility

Products offered to Meet Finance Need of Farmers

Types of Loans Advanced

2. Medium Term Loans

3. Long Term Loans

Supervised agriculture scheme:

Zarkhaiz (one window operation)

Sada Bahar Scheme

 Revolving Credit Limit is fixed to cater production credit and ancillary

Tea financing scheme

Crop maximization project

PER ACRE CREDIT LIMITS

Paddy (Rice) 19,000

Potato 36000 Bajra 11000

Mash 3000 Caster Oil 6000

Growing Agro Forest Trees

Mature Orchard/Fruits crops

Outside Passbook System