Professional Documents
Culture Documents
ON
ASMA YASIN
A REPORT SUBMITED IN PARTIAL FULFILLMENT OF THE REQUIREMENT FOR THE DEGREE OF
EXECUTIVE SUMMARY
My department requires this report. The purpose of report is to write down all the major activities that I performed in that particular branch during my internship training. It Comprises of: Formal part Introduction of the organization SWOT Analysis PEST Analysis and Environmental Scanning Products and services Deposit department Remittance department Export Refinance Scheme (Part 1, Part 11) Import and export department HRM department Credit and administrative department Financial Analysis of the client Work done by me Suggestions and recommendations
CONTENTS
Sr. No.
Title
1. Executive summary 2. Contents 3. Acknowledgement 4. Introduction 5. Products of HBL 6. SWOT and PEST Analysis 7. Span of management 8. Departmentalization 9. Financial Analysis of the Client 10. Suggestions
Acknowledgment
All praises belong to almighty Allah who the supreme authority knows the ultimate relation underlying all sorts of phenomenon going on in this universe & whose blessing & exaltation flourished my thought & thrived my ambitions to have the cherished fruit of my modest efforts my humblest thanks to the Holy Prophet Hazrat Muhammad (PBUH) who is forever a torch of guidance & knowledge for humanity as a whole.
We deem it our utmost pleasure to avail this opportunity to express gratitude & deep sense of obligation to my revered teachers and HBLs relationship manager Mr. Zaiuddin and Mr.Waseem Bhati for their valuable and dexterous guidance, untiring help, compassionate attitude, kind behavior, moral support and enlightened supervision during this whole project.
Finally, I would like to extend hurtful thanks to my adoring parents and friends for their day and night prayers sacrifices and encouragement, moral and financial support throughout the course of our study.
INTRODUCTION OF HBL:
HABIB BANK GROUP is a leader in Pakistans services industry. An extensive network of 1425 domestic branches the largest in Pakistan and 55 international branches to meet customer needs. Perhaps the HABIB BANK LIMITED establish in 1941 at Bombay. But its history starts in 1841 when a young boy name Ismail Habib reach Bombay for job. After some time he got the job with a dealer in utensils and non ferrous metals.Ismail Habib was very keen and intelligent and became partner of his boss. Later on he was elected as a president of the market. Many years later he expended his business. He engaged in private
banking. So HBL has come a long way from its modest beginnings in Bombay in 25 august, 1941 when it commenced business with a fixed capital of 25000 rupees.
Impressed by its initial performance, Quaid-e-Azam Muhammad Ali Jinah asked the bank to move its operation to Karachi after the creation of Pakistan, HBL establish itself in the Quaids city in 1943 and became a symbol of pride and progress for the people of Pakistan. During the early days of newly born state, government of Pakistan faces the great problem of fund shortage. This time HBL again helped the governance of Pakistan and came to rescue to provide Pakistan with assistance of no t less than 8 crore.
Besides this, HABIB BANK has been a pioneer in providing innovative banking services such as first installation of mainframe computer in Pakistan followed by ATM and more Internet banking facilities in all branches. The main strength of HBL brand is its great services to all customers especially to the corporate customers and its prominent head office building that has dominated Karachis skyline for 35 years.
Mission statement
To b e re c o g n i z e d a s t h e le a d i n g fi n a nc i a l i ns t i t ut i o n o f P a k is t a n a nd a d y n a mi c i n t e r n a t i o na l b a n k i n t h e e me r g i n g ma rk e t s , p ro v id in g o u r c us to me rs w it h a p re miu m s e t o f in n o va t iv e p r o d uc ts a n d s e r v ic e s , a nd gr a nt in g s u p e r io r v a lu e to o u r s ta k e ho ld e rs s ha re h o ld e rs , c us t o me rs a n d e mp l o ye e s .
Values of HBL
Humility: We encourage a culture of mutual respect and treat both our team members and customers with humilit y and care. Integrity: For us, integrit y means a synergic approach towards abiding our core values. United with the force of shared values and integrit y, we form a network of a well-integrated team. Meritocracy: At every level, fro m select ion to advancement, we have designed a consistent system of human resource practices, based on object ive criteria throughout all the layers o f the organizat ion. We are, therefore, able to achieve a specific level o f performance at every layer of the organizat ion. Team Work: Our team strives to beco me a cohesive and unified force, to offer you, the customer, a level of service beyo nd your expectations. This force is derived from participative and co llect ive endeavors, a commo n set of goals and a spirit to share the glory and the strength to face failures together. Culture of Innovation: we aim to be proactively responsive to new ideas, and to respect and reward the agents, leaders and creators of change.
o HBL Muhafiz Rupee Travellers Cheques o HBL Auto Finance o HBL Flexi Loans for salaried personnel o HBL LifeStyles Financing Scheme o HBL i-Card o HBL House Financing Loans o HBL Easy Access o HBL Fast Transfer o Haryali Agricultural Loans o HBL E-Bank
SERVICES:
o Retail Banking
The Retail Banking network, with 1425 branches, is the core strength of Habib Bank. The network provides HBL with the largest diversified low cost deposit base of any bank in Pakistan, and forms the basis for many of our other business lines: corporate and investment banking and treasury activities. The network provides HBL with the largest diversified low cost deposit base of any bank in Pakistan, and forms the basis for many of our other business lines: corporate and investment banking and treasury activities.
o Commercial Banking:
Enterprises operating in the middle market contribute significantly to the economy of a country. During FY-2000 HBLs management decided to address this issue. On November 1, 2000 Commercial Banking came into being. The object ive o f setting-up Co mmercial Banking was two-fold: First to stop the erosion of market share in the middle market; Second, to regain the lost market share
Commercial Banking is making headway with improvement not only in terms of the business figures but also in its ambiance. Renovation of is being carried out in order to give a professional look to all the Commercial Banking Centers. o Corporate Banking:
The Corporate Banking Group serves large institutional customers who require sophisticated products in an environment of intense competition. HBL Corporate & Investment Banking Group is now recognized as a market leader and regularly arranges and participates in most large structured finance deals. o International Operations: HBLs ability to operate successfully in diversified markets and cultures is a function of a long history in international banking when first international branch was opened in 1951. The Banks branches in financial centers continue to provide effic ient trade settlement and reimbursement services to the entire network and business with other banks.
SWOT ANALYSIS
STRENGTHS:
Goodwill & historical background Professional and well trained staff Largest customer base HBL is Pakistan's largest commercial bank HBL has a domestic network of 1,425 branches with an international network of 48 branches in 26 countries 20% share of HBL in financial market Large Balance sheet size Decentralized authority
WEAKNESSES:
Unfavorable union activities and management conflicts Checking System is at intra-department level Weak marketing policies Nepotism & Favorism Infected portfolio still exists as bad debts Centralized management in particular areas
OPPORTUNITIES:
Opportunities for growth and expansion in cash management. Faster market growth represents opportunity to grow and diversify Restoration of investors confidence and pick up in private sector investment flows. Large deposit base and funds flow can help to avail related market opportunities
THREATS:
Adverse & unstable government policies Political instability Advance technology Competition from other banks
ECONOMIC TRENDS
A banking market requires better consumer market in volume along with higher borrowing power. The available borrowing power depends on: Consumer income Saving rates Consumption patrons Rates of interest Budget deficit Exchange rates Cost of living Inflation
SOCIO-CULTURAL ENVIRONMENT
A society is shaped by beliefs, norms and values. People in a society consciously and unconsciously interact with: Themselves Others Organization Society Nature Following are the main factors. Which arise because of change in socio-cultural environment? Consciousness about services Concern for environment Improved customer relation
TECHNOLOGICAL FACTORS
Forces of technological advancement have played the most dramatic role in shaping the lives of people. The rate of change of technology has greatly affected the rate of growth of economy. New technology is creating deep rooted affects which could be observed in long run. The improvement techniques involved in on line banking. In brief PEST analysis affects the overall banking companies and provides us the information about the external macro condition.
G.E, IOBG G.E, CPOD G.E, CPCS G.E, RBG G.E, CIBG G.E, ARM G.E, AGA HEAD OF IT HEAD OF HR HEAD OF FINANCE
VICE PRESIDENTS
GRADE I OFFICERS
GRADE II OFFICERS
CLERICAL STAFF
NON-CLERICAL STAFF
IOBG INTERNATIONAL AND OVERSEAS BANKING GROUP CPOD CORPORATE PLANNING AND ORGANIZATIONAL DEVELOPMENT CPCS CREDIT POLICY AND COMPANY SECRETARY RBG RETAIL BANKING GROUP CIBG CORPORATE AND INSTITUTIONAL BANKING GROUP ARM ASSETS REMEDIAL MANAGEMENT AGA AUDIT AND GENERAL INFORMATION
AVP
FINCON Officer
AGM Marketing VP
AVP/RMs
IT Incharge Officer
DEPOSIT DEPARTMENT
Bank deals in money and they are merely mobilizing funds within the economy. They borrow from one person and lend to another, the difference between the rate of borrowing lending forms their spread or gross profit. Therefore we can rightly state that deposits are the blood of the bank which causes the body of an institution to get to work. These deposits are liability of the bank so from point of view of bank we can refer to them as liabilities.
TYPES OF ACCOUNT:
1)
CURRENT ACCOUNT:
In this type of accounts the client is allowed to deposit or withdraw money as and when he likes. He may, thus, deposits or withdraws money several times in a day if he likes. There is also no restriction of amount to be deposited or withdrawn. However, there is requirement of minimum balance maintenance of Rs.5000/-. Usually this type of account is opened by the businessmen. No profit is paid by the bank and no service charges are deducted by the bank on current deposits account.
Eligibility: All Pakistanis Resident/Non-Resident, Individuals (Single-Jointly) Companies/Firms etc. can open and operate the Account but he should be a corporate customer.
i.
ii. Any Foreign National Individuals (Single-Jointly) having valid Resident Pakistan VISA/Work Permit can open and operate the Account.
Features:
Account can be OPENED with Minimum Balance Rs.1000/- with no maximum limit. Checking balance at any time during banking hours. No profit is paid. Statement of Account dispatched on request letter. There is no restriction for withdrawals of amount and number of cheque.
This type of account is for those persons who want to make small savings'. This type of account is opened with a minimum deposit of Rs. 1000/- or the amount prescribed from time to time. The profit is paid on these accounts on the minimum balance during a month for the whole of that month. Zakat & other taxes are deducted as per rules of the government. The requirements for this account is duly filled prescribed A/C opening FORM, Photo Copy of National Identity Card (Resident Pakistani), two Passport size photographs with Signatures/Thumb Impression (Resident Pakistani), Photo copy of Passport with Page bearing Resident Visa of the Country where Pakistani Residing, two Passport size photographs and signatures on A/C Opening Form for Non-Resident Pakistani with Signatures/Thumb Impression etc.
Features:
Account can be OPENED with Minimum Balance Rs.1000/- or prescribed limit that is announced time to time with no maximum limit. Profit is payable at monthly subject to adjustment on deceleration of actual profit rate declared every half year. Profit is calculated on monthly products Zakat will be deducted on valuation dates of account. Profit is Paid/Credited in Account on half yearly basis in case of six monthly PLS saving accounts. Statement of Account dispatched on half yearly basis after posting of profit. There is no restriction for withdrawals of amount and numbers of cheque.
Eligibility: All Pakistanis Resident/Non-Resident individuals, Firms/Companies, Govt/Semi Govt. Departments can purchase the TD. Any Foreign National having valid Resident Pakistan VISA can purchase TD.
Two Passport size photographs and signatures on A/C Opening Form for NonResident Pakistani with Signatures/Thumb Impression. Photo Copy of Passport with Page bearing Resident Visa of Pakistan (Foreign Nationals).
Features:
TD can be purchased with minimum of Rs.1000/- with no maximum limit. Profit is payable at yearly rate declared every half year. Profit is Paid/Credited in Account on half yearly basis. The holder of term deposit receipt must keep the receipt under lock any loss of receipt must inform the bank because without it the bank will not pay the amount.
All things will remain same, only one thing that is passport copy of the person will have to provide to the bank. The logic behind this is that the bank insures the entry and the exit date of the person in Pakistan. The person has to inform bank 15 days before entering in Pakistan and the bank also send this information to State Bank of Pakistan. After getting this information State Bank give instructions to bank about handling of not resident persons account.
Zakat treatment on all accounts Zakat will be deducted on all accounts except the followings: Fiqah Gafreia account. Non Muslims account. Trust account. Government account. Provident fund. Defense account. Non Pakistanis account .
SWIFT
Society for worldwide inter bank financial telecommunication.[SWIFT] Only for banks Telecommunication not transition Head office in Belgium Run by different country members Lease lining by head office Start in pak 1995-96 Awareness seminars start in 1997 Work through coding &decoding Swift provide to members an id &password for connect Charges from customers depend on message size Min changes is 120 Changes for one LC is 1400 Code not more than three degits (ID and Passward code) Authentic mode, people satisfied Less chances of fraud Work as E Mail Version 2 relate to bank to bank information Version 4 relate to bank to bank Document Version 7 relate to bank to bank LC In HBL use in domestic In overseas branches ---------- 70 branches ---------- 21
REMITTANCES
DEMAND DRAFT:
Demand draft is a written order drawn by a branch of a bank upon the branch of same or any other bank to pay certain sum of money to or to the order of specified person. It can be issued to the customers as well as non customer against cash cheque and letter of instruction. Demand draft is negotiable instruments that can be negotiating at any time before its cancellation. Its Legal provisions are same as that of cheque. Following parties are involved in demand draft: Applicant issuing branch drawee branch Beneficiary A demand draft may be issued against the written request of the customer before issuing it must be seen that the demand draft is in order. The DD application must be scrutinized by the counter clerk in respect of following points. There should be branch where payment is to be made. Full name of payer should be mentioned. Amount in words and figures must be same The applicant on two places should sign application.
TELEGRAPHIC TRANSFER:
Telegraphic transfer means the transfer of funds from one branch to another branch of the same bank or upon other bank under special arrangements just like a telegram. Telegraphic transfer is not negotiable and the funds are not payable to bearer.
Minor cannot avail this facility. In telegraphic transfer the bankers use secret codes. One code is with issuing person and the second is with an other person. When they combine the codes its become an amount that is called check. The payment is made after the confirmation of the check. Following parties are involved in TT Applicant Drawing branch Drawee branch Beneficiary Following important things should be included in TT: Full name of the beneficiary or account number should be mentioned in the application form. Instruction regarding mode of payment should be obtained. A record in the remittance outward register should be maintained. All the remittance must be controlled through number or codes.
PAY ORDER:
Pay order is an instrument through which payment can be made from one bank to another bank. Pay order is meant for bank own payment but in practice they are also issued to customers. Following parties are involved in pay order: Applicant issuing branch Payee
MAIL TRANSFER:
Mail transfer is not negotiable and the procedure of it is same with the procedure of DD.When a customer request the bank to transfer his money from this bank to any other bank of the branch of same bank in the city, outside the city of outside the country the first thing he has to do is to fill an application form. In which he states that I want to transfer the money from this bank to that specific bank by mail. If the customer is the account holder of this bank, the bank will debit his account and the concerned officer will fill forms to make the mail transfer complete. If the customer is not the account holder of the bank, then firstly he has to deposit the money and then rest of the procedure will be adopted to transfer his money.
Features:
Concessions rate of markup as compare to commercial banks rate of markups. Export refinance allow to exporters via authorized dealers. In case of default, the SBP recover its principal loan amount, markup & penalty through the bank to which exporter has submitted his refinance claim. Refinance allows against value added products i.e. garments, print, dyed cloths, bed sets. Proceeds repatriated through banking channels. Allow credit loan amount within 248 hrs. Misutilization of SBP funds has been prohibited, if any violation occurs SBP imposed penalty.
Risk:
If the exporter has been / will be defaulted the laps of funds of authorized dealers. Cheating or misuse of funds, SBP may cause to impose not any penalty but also termination of bank employee or change of management or authorized dealers reputation may destroy.
Part
Part II
Preshipment Party request letter L/C sales contract Undertaking DP note Form D Proof of purchase of raw material
Post shipment Party request L/C sales contract Under taking DP note Form D Commercial invoice Bill of Lading Form E
EE statement total realization & negotiation SBP financed Form E & not availed SBP finance
EF statement it include total realization but on which Form E SBP finance availed not include.
Part I:
This means after making a shipment the exporter prepare all relevant shipping documents and evidence of shipment. The exporter contact his bank w.r.t to lodge the documents and send a one set of shipping documents to export finances department to allow him post shipment part I under SBP scheme. Required documents at the time of finance allow to party D/Pnote Under taking on non judicial stamp paper L/C Party request letter Form D Commercial invoice
Penalties:
Non shipment 37 paisa/1000 per day Short shipment Delayed shipment Late submission of documents to SBP
Restrictions/prohibitions
Evidence of shipment submit to SBP within 180 days or within time period fixed by SBP In case of substitution against new L/C or sales contract make sure that the exporter has not availed pre or post shipment finance through any other bank.
How to calculate penalty? Non shipment 180 days *1000000* 0.37/1000=66600 Short shipment Finance amount 1000000 Shipment 800000 Short shipment amount =200000 180 days *200000*0.37/1000=13320 In case of post shipment only late repayment of finance penalty is involved.
Part II:
The authorized dealers provide this finance facility to exporters against their EE statement. From the export earning during of one fiscal year the SBP sanction a limit of 50% for the availment of the ERF part II. In the EE statement all foreign bills realized and negotiated during a period of 01-07-04 to 30-06-05 are included in this statement. Documents required at the time of sanction of finance D/P note Under taking on non judicial paper Party request letter
The major exports from Pakistan are surgical goods, sports goods hand noted goods, leather goods, textile goods, etc.
Export procedure:
All the exports work under the imports and exports act that is changed by the state in every year. When the importer send the L.C to bank in respect to import or when the L.C comes to the advising bank from the issuing bank then the concerned officer allot the number to the L.C and get registered. The concerned officer write down the name of issuing bank and the party name in a register and intimate the party about L.C. the exporter after receiving the L.C from bank will prepare the documents as per the L.C usually the following documents have to be prepared by the exporter: Bill of lading Covering letter E- Form Bill of exchange Packing list Commercial invoice Quota documents in case of quota country Certificate of origin Special custom invoice
Usage of E- FORM:
E- FORM is an important document for export. It has its own importance such as this form is used as a checker means it monitor that what things are going abroad and in return what things we are getting. So it creates a check and balance on the foreign exchange. It shows the total quantity and quality of the goods that is sending to another country. An E Form shoe the party worth that is very helpful for the party and the bank. Bank can create a party limit for the credit on the behalf of it and a party can arrange a loan for its future requirements from the bank. It shows the terms of payment by the importer and the delivery terms by the both parties that is helpful in case of any discrepancy during the contact.
IMPORTS
Imports regulation:
Import is being regulated by the ministry of commerce and the government of Pakistan under the import and export act:
Categories of imports:
Imports are classified into the following categories: Commercial sector imports Industrial sector imports Public sector imports
Registration of importers:
A person who wants to approach the bank for importing goods from abroad, he should have to get himself registered with the export promotion bureau under registration of imports and exports act. He must fulfill the following conditions before getting himself registered: NIC NUMBER NATIONAL TAX NUMBER MEMBER OF REGISTERED ASSOSITATION
the future date, a stated sum of money against the required documents. The documents include the commercial invoice, certificate of origin, insurance policy or certificate and the documents of transport relating to the mode sending goods. L/C is therefore is an arrangement of security for the parties. The conditional guarantee is related to the documents only and not on the underlying goods or services.
4) Appendix B:
This Performa replaces the import license and is submitted along with L.C application form duly filled in triplicate. It is conditional undertaking that the imports goods are not banned, not smuggled. It is also an undertaking that if the bank is unable to arrange the said currency the importer have to purchase it from other banks or from any other place. It includes the details and description of goods, codes, class, type, source of import, country of import, Performa invoice no etc.
5) I FORM:
This form is used at the time of retirement of documents against L.C established earlier for reporting to the transaction to SBP through the bill of entry deptt. It has four copies that is used as follows: Original is for the use of SBP. Duplicate for the authorized dealer to be used for processing exchange control. Triplicate for the authorized dealer record. Quartiplacte is for the submission in SBP in the case of import where the documents are not retired.
3) Irrevocable confirmed letter of credit: When an issuing bank authorizes and or request to an other bank to confirm his irrevocable credit and adds its confirmation. Such confirmation constitutes a definite undertaking of such bank in addition to that of the issuing bank. There are following other letter of credits:
1. Revolving Credit 2. Transferable Credit 3. Back to Back Credit 4. Green Clause Credit 5. Red Clause Credit 6. Clean Documentary Credit 7. Transit Credit 8. Stand by Credit 9. Sight Credit
Parties to a credit:
The applicant:
The applicant of the letter of credit is called the importer or buyer. The buyer requests to the bank to open a documentary letter of credit in favor of the seller.
Opening bank (issuing bank or importer bank): At the request of the importer an issuing bank issues a credit under the instructions in the favor of the seller.
Advising bank:
An advising bank is a bank in the sellers country. The issuing bank forwards the advice of the credit by mail or by any mode to the correspondent bank in the exporter country as instructions of the opener.
Beneficiary (exporter):
The person or body receiving the letter of credit from the importer that is opened in favor of him.
Confirming bank:
The bank that on the requests of the issuing bank adds confirmation to a credit. It is definite undertaking of the confirming bank, in addition to the issuing bank.
Negotiating bank:
It May or may not be the advising bank. An authorized bank that gives the value to the draft for processing and payment.
Reimbursing bank:
Reimbursing bank is the bank, which on the behalf of the opening bank, honors the Reimbursing claim lodged by the negotiating bank.
Modes of payment:
Sight letter of credit:
The seller submit all the documents with draft in the importer country Complying with the all terms and conditions. The payments are made on the presence of the documents.
Exporters risks:
He does not know the buyer. He does not know the credit worthiness of the buyer. He does not wait for payment. He does not wait for exchange control.
Buyers obligations:
Payment of price. License authorization and formalities. Contract of carriage and insurance. Taking Delivery at time. Transfer of risk. Division of cost. Notice to seller. Proof of delivery. Inspection of goods.
Background:
The banking council of Pakistan was responsible for the recruitment, selection and allocation of human resources. After the dissolution of the Pakistan Banking Council, the Banking & Financial Services Commission of Pakistan is responsible for these activities.
Procedure:
Staff requirements are met according to the changing needs of macro environment scenario and particularly the arising needs of the bank itself. A need analysis is conducted. After assessing the human resources requirements and screening of the applications, most probably, the suspects are invited for a written test. Short listed candidates are called for an interview for personality and social appraisal. Interviews are a mix of direct and indirect interviewing techniques and information required. The selected candidates are sent for training of six months training from MDIs. The training is through the lectures regarding banking procedural guidelines and other behavioral aspects. After the completion of training employees are allocated to different offices. The effective management of people in an organization requires an understanding of motivation, job design, reward systems, and group influence.
Recruit ing Retention Successio n planning Risk Management Diversit y in our workforce Management information Progressive co mpensation and benefits design and implementation Emplo yee communicat ions and relations Training needs analys is, program design and implementation Performance evaluat ion Work-life initiatives
FUNCTIONAL RESPONSIBILITIES:
The main responsibilit ies under this depart ment are: Implementation of credit facilit y and their maintenance according to terms of credit approved. Ensure that standard loan documentation for each credit facilit y is maintained and the correctness & co mpleteness of such documentation and also responsible for custody of all credit files. Maintain the safe custody of all co llateral as per banks standard operating procedures; undertake periodic evaluat ion and inspection of hypothecated/ pledged inventories in accordance with the terms of credit. Ensure compliance with o Inst itutional credit policies & procedures o Local regulatory requirements. Prepare various portfo lio composit ion reports and other documentation for submissio n to GRMs & RMs.
MARKETING DEPARTMENT
The marketing department in HABIB BANK LIMITED is very strong. It is the main source of gaining and maintains the customers that can give a large profit to the bank. There are five relationship managers in Habib bank and every person is responsible for the credit of his party.
CUSTOMER DEALING:
HBL corporate center only deal with the following categories of business:
The organization that have minimum 250 million sales in a year. The organization that have availed 80 million finance Agri based industry. HBL do not deal with the agriculture sector.
The company information. Purpose of credit. Assessment of management. Risks. Financial analysis. Third party or other bank information. Conclusion and recommendations.
Then the RM sends it to the authorities who accept or reject the proposal. If they accept the proposal they announced a credit range for the party. At the end RM sends the proposal to CAD deptt custody and check.
OPENING AN ACOOUNT:
In order to open an account first of all the customer has to fill a form prescribed by the bank. The person is required to bring some reference or introduction for opening the account. Introducer may be a person who has an account with HBL.
Some important information regarding introducer e.g. the name and account number of the introducer is written on the space provided on the specimen signature cards. Then in order to find out whether he is a true introducer or not a letter is sent to him thanking him for this introduction, so that any thing wrong may come into notice.
There are different requirement for different types of accounts and account holders. An important thing is that the customer should have a corporate customer. The corporate customer limit is 40 million and this branch always deals the corporate customer.
General rules for opening an account: One person can open only one account in the same branch with the same category. In the event of death of an account holder the credit balance will be transfer to the heirs of the diseased individual account. Services charges will be deducted periodically as prescribed from time to time on the accounts that are under the limit of specific account. Services charges are not applicable on that accounts that are prescribed as exempted. A distinctive number will be allotted to the each account. The bank can close those accounts that are under the minimum limit of the bank. Any sum to be deposited in the account should be accompanied by paying in slip showing the party account number and the name. Account holder can only withdraw the sum of money by his own account by cheque. Cheque should be signed by the account holder by the specimen given by the bank. Post dated and defective cheque is not accepted. If statement of account spoiled a new will be issued on cost. Any change in the address should immediately communicate to the bank. The account holder wishing to close the account must surrender the cheque book. Account may be transfer from one branch to another same branch without any charges etc.
DEPOSIT DEPARTMENT
Deposit are the blood of a Bank
I worked in this deptt for one week and learned that the acceptance of deposit is the real source of income of a bank. Deposit Department is the backbone of commercial banking. Deposit is often used to describe the money which customers of all kinds leave with the bank. Deposit account can be defined as an account, which is opened to earn interest. The term deposit is highly misleading. It is not something deposited for safe deposit box. Bank deposit is not like that; when one brings currency to the bank for deposit the bank does not put the currency in the vault. It may put small fraction of the currency in the vault as Reserve but it will lend most of deposits to someone else. The entire banking system is based upon borrowing. Like all banks, deposit department has acknowledged its worth as the most important. Almost all the operations generated from the deposit department and with due course of time reflect back to the deposit department. In order to attract funds bank has introduced various types of deposit schemes that may suit the need and tastes of a large number of depositors.
The procedure undertaken upon receiving deposits from the customer is as follows: 1) Examining the deposit slip to ensure that the name and the account numbers are clearly indicated. 2) Counting the cash/cheque and agree the total with the amount on the deposit slip. 3) After that the pay-in-slip is validated for cash transaction/ transfer/ clearing transfer as appropriate before the counterfoil a handed over the customer.
4) Cheque assigned by the director, partners, employees of a company, drawn in favor of themselves and credited in their account in the bank are to be scrutinized
WITHDRAWALS:
An amount can be withdrawn by the cheque. The withdrawals can be made only at branch where the account is maintained. All cash withdrawals will be made under account holders full signature. One or two bank officers have to verify the signature. In current account the bank does not offer any interest. We can deposit and withdraw any amount during the banking hours.
REMITTANCES DEPARTMENT:
I work in this department for one week; this department deals in transfer of money from one place to another or country by: 1) Demand draft 2) Mail transfer 3) Telegraphic transfer In this department internees are advised to observe the working of transfer of money from one place to another place or country by the above mode of transferring money. During my stay in this department I observed that how demands draft be issued.
The procedure is as follows: First a bank receives a request from the customer to issue a bank draft. The written request is either in a banks standard from or separate paper signed by the applicant with cash or cheque covering the amount of the draft and other charges of the bank. While issuing a bank draft it is necessary that they should be free from alternations. All the details must be written clearly in ink. After issuing a demand draft it is handed over to the applicant and it advice containing the particulars of the draft is sent to drawer branch with it is necessary information and payment of the draft is made on its presentation or according to the terms and condition of the mode of transfer.
1. MUHAMMAD ANWAR & BROTHERS COTTON FIBRE RECOVERY PLANT: The group started textile waste business 20 years ago and established cotton fiber recovery plant in Faisalabad. It is the parent company of the group. Annual production capacity of the plant is approx. 150,000 tons. The raw material is procured mainly from open market and a very negligible quantity is obtained from their two sister concerns
2. QUTUB TEXTILE MILLS (PVT) LIMITED: Qutub Textile Mills (Pvt) Limited is situated in Sheikhupura. The unit was established five years ago with 1600 rotors. Rafiq Spinning Mills( Pvt) Ltd is utilizing the production facilities of QTM under lease arrangements. . 3. RAFIQ SPINNING MILLS (PVT) LIMITED: After successful operation of the above two projects, the group established another unit on 11.11.1997 in the name of Rafiq Spinning Mills (Pvt) Limited, consisting of 3,000 open ended rotors. It started its commercial production in April 1998 and is showing profits continuously. The Company has undertaken expansion of the unit by installing 16,980 spindles. The company through their own sources has imported the machinery. Having a successful experience, now the company is once again going into expansion by setting up 15,480 spindles.
MEMORANDUM
RAFIQ SPINNING MILLS PRIVATE LIMITED 1. PURPOSE This memorandum is being submitted for renewal of existing working capital facilities, which are as under: 1. Cash finance 2. Running Finance 3. Letter of Credit PKR 150.0 Million PKR. 50 Million PKR. 10.0Million
2. CREDIT FACILITIES AND TRANSACTION STRUCTURE 1. Cash Finance (Pledge) for PKR 150.0M: The company has been availing regular facility of PKR. 150M for cotton Pledge, purpose being to purchase stock of cotton for full year requirements. Presently 16,980 spindles of the companys Ring Spinning Unit are operative. Considering the current years cotton prices the existing facility stands sufficient for the company; company has requested for renewal of the same. To cater Liquidity needs during temporary slump period, the facility for the pledge of yarn bags to the extent of 10% of over all limit will also be available, however, the facility will be subject to a margin of 25% for pledge of yarn. The pledged stocks will be stored in Go-downs/open compound at mill premises duly insured and under custody of our Macadam. The pledge shall be allowed at KCA rates maintaining Margin of 10% and shall be released against cash payment. Markup: Mark up will be charged at Base Rate plus 1.5%, Base rate is defined as the 6 months KIBOR where KIBOR is defined as the Average rate, Ask side, for the relevant tenor, as published on Reuters page KIBOR or as published by the Financial Markets Association of Pakistan in case the Reuters page is unavailable. 2. Running finance for PKR 50.0M: Running finance facility will be utilized to finance cost of work in process, Stores and Spares and other daily expenses. The facility will be secured through our Charge on Current as well as Fixed Assets of the Company including personal guarantees of directors. Mark up will be charged at 6 Months Kibor Plus 1.5%.
3. Inland Foreign Letter of Credit for PKR 10.0M: To meet stores, spares and imported cotton requirements, the company intends to avail L/C facility of PKR 10.0M. The facility shall be secured against our lien on import shipping documents in addition to our Charge on Fixed Assets of the Company.
LC Commission:
LC commission on the proposed facilit y will be as per latest schedule of charges.
MAJOR BUYERS: J. SONS TEXTILE J.K.SONS (PVT) LTD HIRA TEXTILE MILLS LTD JANNAT APPAREL (PVT) LTD SHARIFSONS AMTEX BABAR HOISERY KNITTING KARACHI FAISALABAD LAHORE FAISALABAD FAISALABAD FAISALABAD FAISALABAD
MAJOR SUPPLIERS: ITTIFAQ CORPORATION SEVEN SEAS INDUSTRIES ALAMIN COTTON FACTORTY REHMAN COTTON GINNERS INDUS GINNERS YASIR SHAHZAD COTTON GINNERS SADIQABAD SADIQABAD BUREWALA BAHAWLNAGUR RAJUNPUR
INDUSTRY ANALYSIS:
Refer to HOK industry report. 5. MANAGEMENT : Mr. Muhammad Anwar is the Chief Executive and Chairman of the Company, having more than 20 years of experience in the line of business beginning with the waste recovery unit. He is responsible for the procurement of raw material for all the group companies. Mr. Muhammad Siddiq is younger brother of Mr. Anwar is looking after Sales and marketing of the Company. It is pertinent to mention that directors of the company have no impressive educational back ground, yet they have rich experience of their line of business in their credit. 6.
FINANCIAL ANALYSIS:
Amount in PKR Million
Particulars
Sep 30, 2003 Sep 30, 2004 June 30, 2005 Audited Audited (9-Months) Audited
Sales Operating profit Gross-Margin Net-Margin Interest coverage Debt service coverage
INCOME STATEMENT:
Sales: Sales of the company have been improving over the years and increased to PKR 985M IN FY-04 from 568M in year 03 owing to increased & focused marketing efforts, establishment of new local markets backed by enhanced production. While For the nine months audited financials of year 05 sales stand at 737.774 M. Yarn.16 single, 20 single, 24 single, 40 single are the different qualities of yarn being produced by the company with prices ranging from 3200 per bag to 5600 per bag. Gross profit Margin: Gross profit margin increased from 7% to 9.1% in year 2005 due to decrease in cost of goods sold while cost of goods sold decreased mainly due to substantial drop in prices of cotton in year 2005 in addition to this, Lower power & fuel consumption cost is one of the reasons supporting cost efficiency and effectiveness, consequently leading to higher gross profit margin in year 2005.
Operating profit: Operating profit increased from 15.214M (1.5%) in year 04 to 24.786M (3.4%) in year 05 mainly due to carry forward impact of lower COGS happened due to lower cotton prices during the year under review. Net margin: The profitability shown in the financials is tax tailored, actually their net margins fall between 5 to 6 %. There is no significant improvement in net margin, in terms of percentage because of high financials cost during the year, as the same has improved to 0.5% from previous 0.4%.
Debt Service Coverage Ratio: Debt service coverage ratio stands at 1.5x & 1.2x in year 04 and 05, the main reason for relatively lower Debt to service coverage is lower profitability shown in books which are more often tax-tailored.
BALANCE SHEET:
particulars Sep 30,03 Sep 30, 04 June 30, 05 Audited Audited 9-Months Audited 1.1x 0.4x 1.0x 2 30 5 172 0.8x 0.2x 1.8x 6 60 3 176 1.1x 0.4x 2.7x 4 136 3 180
Current ratio Quick ratio Leverage( TL/NW) Days Receivable Days Inventory Days payable Net Worth
LIQUIDITY: The current assets increased from 198.582M In 04 to 383.891M in 05, this increase in current assets is mainly associated with substantial rise in cash & marketable securities and inventory. Cash and marketable securities were built to accommodate banks for their June closing figures. In addition to this the amount of cash also includes PKR 74M lying in escrow account of Bank Alfalah as sponsors equity because the company is under process of expansion for which they have also gone for consortium finance from BAL & ABL. Sufficient stock at lower prices is inevitable for profitability in textile industry; prices of cotton went down in early 2005 which prompted the buyers to stock cotton in order to maximize gains. Receivables have been nominal over the years, which highlight companys policy of sales on cash basis. Receivables stand at 7.566M in year 05 as compared to 16.361M. The current liabilities increased from 244.565M in 04 to 342..120M in 05, this increase is mainly due to increase in short term debt (Exposure of Working capital lines from banks) and this factor is very much obvious due to increase in companys operations. More precisely, the short term borrowings were raised by PKR 100M, during the year under review, and the
same has been invested in inventory which increased by PKR 100m fully complying the matching principle requirement.
LONG TERM LIABILITIES: Total Long term liabilities increased from 62 .513M in 04 to 139.797M in 2005, mainly due to increase in Directors Loan as the company is under process of expansion (new Ring spinning unit) and has made investment of its share through directors loan as authorised capital of the company has been matured. In addition to this company has also gone for syndication with BANK ALFALAH Ltd and ALLIED BANK LTD and cash invested by the sponsors through directors loan is lying in escrow accounts parked in these banks. LEVERAGE: The company has been low leveraged over the years with leverage standing at 1.8 x & 2..7x in year 04 & 05 respectively, Total Net Worth increased during the period 03-05 from 172M TO 180M due to increase in retained earnings over the period. Paid-up-capital stays same at 150M during the period 03-05. CASH FLOW: During the year 2005, gross operating funds generated were PKR 28.962M. The company generated net operating cash deficit of PKR 73.917M during the year. The operating needs increased by 93.683M owing to growth in sales, on the other side operating sources were reduced by 9.196 M because of companys policy of replacing costly market credit thus rendering increase in working capital requirements by 102..879 M. the inventory requirements increased by 99.771M which were financed thru increase in short t term borrowings by PKR. 99.548M and remaining through gross operating funds generated. CAPEX of PKR 12 .383 was made during the year, which was financed thru gross operating funds generated of PKR 28.962M.
Projections
The company has projected its total sales to be around 1034M by 30 thJune 2006.These projections are supported by the fact that their sales by the end of 31 stDec 2005(from July01, 2005 to Dec31, 2005) were 503.479M. This year company has also routed export business of 12M to Korea. Net fixed assets are projected to grow around 614M since company is intending to undertake the expansion project (New Ring Spinning) in the year under projection. On the source side the long term liabilities are projected to be around 434M, the company wants to finance the proposed project thru Directors loan (222M),in addition to this the company has also gone for the syndication( Long term senior Debt of PKR 210M) with BAL & ABL.
Gross operating funds generated are projected to be around 33.747 M. Total Non-Operating needs in year 06 will be 366 M due to increase in proposed CAPEX, on the other hand the Non-operating source side will increase by 289M to finance Non-operating need.
7. CRITICAL SUCCESS AND RISK FACTORS Critical Success Factors : 12345Lower Costs (economies of large scale). Access to required Working Capital Lines. Long experience of spinning. Efficiency of Operations. High Capacity Utilization.
Critical Risk Factors: 12345Recession in the Global Textile Industry. GOP Policies. Deterioration in Law & Order in the country. Margins depend to an extent on size & quality of Cotton Crops. Foreign Competition in wake of WTO. Mitigating Factors Mitigating factors to these risks include; 1. New spinning unit will enable the company to enjoy economies of large scale production, reduce costs, improve quality of their products and enhance their productive efficiency. 2. GOP policies are comparatively stable and a separate ministry for textile has been established with a leading Textile figure being in chair. 3. The company has always emphasized on sheer commitment for quality improvement to capture the market. 4. Regarding risks associated with size / quality of cotton crop, they have sufficient liquidity (due to availability of required credit lines) which allows procuring cotton at the right time and competitive prices. 5. Experienced technical and operational staff to ensure smooth operation of the Unit. 6. The company enjoys the edge of comparatively cheap raw material and labor force while maintaining strict quality measures at par with international standards. New spinning unit will enable the company to enjoy economies of large-scale production.
8. THIRD PARTY INFORMATION: The sponsors enjoy excellent relationship with banks and are highly regarded for their reputation of meeting their financial obligations on ti