You are on page 1of 70

INTERNSHIP REPORT HABIB BANK LIMITED

THE B ANK
The term “BANK” is derived from an Italian
word “BANKO” which means “Bench” that
is where people were meet and solve their
financial matters.

The term bank is being used for a long time


yet it has no precise definition. The basic
reason is that the banks perform not just one
but many types of functions originally the
banks were supposed to make short term
l o a n s t o t h e t r a d e r s o n l y. T h e b a n k s n o w n o t
only make short term loans to the formers,
traders , industrialist etc. But also invest
in a wide variety of long term earning
assets.
The commercial banks also undertake and
execute trust, deal in stock, shares and
debentures, issue guaranties and indemnities
underwrite and sell new securities, and deal
in foreign exchange etc.
However some of the definitions of bank
f r o m d i ff e r e n t a u t h o r s a r e a s f o l l o w s .

1
INTERNSHIP REPORT HABIB BANK LIMITED

A c c o r d i n g t o D r. H a r t
“Banker or bank is a person or company carrying on
business of receiving money and collecting drafts for
the customers subject to the obligation of honouring
cheques drawn upon them from time to time by
customers to the extends of the amounts available on
their currents accounts”

In the words of G W Gilbert

“A banker is a dealer in capital or more properly a


d e a l e r i n m o n e y. H e i s a n i n t e r m e d i a t e p a r t y b e t w e e n
t h e b o r r o w e r a n d l e n d e r. H e b o r r o w s o n e p a r t y a n d
lends to the another”

2
INTERNSHIP REPORT HABIB BANK LIMITED

TYP ES O F BANKS

1. Central bank or state bank.

2. Commercial bank.

3. Exchange bank.

4. Industrial bank.

5. Agriculture bank.

6. Investment bank.

7. Saving bank.

CENTRAL BANK
Every country has its central bank
or state bank. Its major function is to carry out a
c o u n t r y ’s m o n e t a r y p o l i c y w i t h a n a i m t o s a f e g u a r d
i t s f i n a n c i a l a n d e c o n o m i c s t a b i l i t y. I t h a s t h e
monopoly of note issue. It is also the custodian of
money market. State bank is the Banks bank and
lender to the government.

COMMERCIAL BANK
Commercial banks are profit
earning concerns. They receive deposits and advance
loans to the borrows. They greatly help in financing
f o r i n t e r n a l a n d e x t e r n a l t r a d e o f t h e c o u n t r y.

3
INTERNSHIP REPORT HABIB BANK LIMITED

EXCHANGE BANK
The main function of the exchange
bank is to finance the foreign trade by the purchase
and sale of foreign currencies in the form of drafts,
bills of exchange, telegraphic transfers. They also
perform the function of commercial bank. Receiving
deposits and advancing loans.

INDUSTRIAL BANKS
Commercial bank cannot afford to
block their funds in long term investments. The
industrial banks receive long term deposits and
finance the industries by providing them long term
credits. In Pakistan the Industrial bank named as
Industrial Development Bank of Pakistan (I.D.B.P)
was established in 1961 for this purpose.

AGRICULTURAL BANK
Agricultural bank provides short
and long period loans for financing agriculture. The
agriculturists need short and long term loans for
meeting their day to day and long term requirements
for making permanent improvement in the land. In
Pakistan Agricultural Bank is named as Agricultural
Development bank of Pakistan (A.D.B.P) and it was
established in 1961

4
INTERNSHIP REPORT HABIB BANK LIMITED

INVESTMENT BANK
The main function of
investment bank the merchandising of shares and
other securities, managing and distributing the issue
of shares and other securities.

SAVING BANKS
These are the institutions which are
sponsored by the government for having facilities to
the people and small means. These bank collect small
saving of people and allow them to withdraw in small
amounts. Also another institution i.e. National
S a v i n g s i s w o r k i n g i n t h e s a m e c a p a c i t y.

5
INTERNSHIP REPORT HABIB BANK LIMITED

HABIB BANK LIMITED

The working of the Habib Bank Limited was


commenced on 25th August 1941 in Bombay and in
1948 it was established in Pakistan. It was the first
Muslim Bank in the Subcontinent,

Now there are 1773 branches inside


the Pakistan and about 66 Branches overseas
providing financial services to its worthy customers.

Habib Bank is working for the last 50 years and


b e c o m e t h e l a r g e s t c o m m e r c i a l b a n k i n t h e c o u n t r y. I t
has the Authorized capital of RS 5000 Million with a
paid up capital and reserves of RS 858 Million and its
deposits are more than RS 213 billion in
approximately 10.7 Million accounts. It has the
advances of 131 Million. Habib Bank has innovated
a numbers of financial schemes like term deposits,
S p e c i a l n o t i c e t e r m d e p o s i t s , A . T. M . e t c . A s
governments are hoping to be liberal and their
policies are innovative and liberal the scope of
banking is increasing and Habib Bank is on step ahead
if the growth and participating very much in the
economic growth of Pakistan.

6
INTERNSHIP REPORT HABIB BANK LIMITED

H a b i b b a n k H E A D Q U A RT E R i s s i t u a t e d i n K A R A C H I
that building has highest number of stories in
Pakistan.

Habib bank has basically 9 Regions all over the


country those control the entire activity of Habib
bank operation is countrywide.

7
INTERNSHIP REPORT HABIB BANK LIMITED

REGIONAL HEAD QUARTERS


ZONES BRANCHES

1 Lahore Region 13 313

2 Faisalabad Region 10 263

3 Islamabad Region 10 274

4 Multan Region 13 261

5 Karachi Region 15 204

6 Hyderabad Region 06 163

7 N.W.F.P. Region 10 261

8 Balochistan Region 02 46

9 Azad Kashmir Region 03 98

8
INTERNSHIP REPORT HABIB BANK LIMITED

MISSION OF H.B.L.

• To inherence the corporate culture in business society through quality


oriented banking services.

• To increase the profitability of our shareholders through investing in


financially sound and profit earning projects.

• To maintain and increase the reliability and quality services to our


accounts holders.

• To strengthen the status economy through financing the export under


control of state bank of pakistan.

• To provide funds for increasing environmentalism, cultural and


sociological thinking in society .

9
INTERNSHIP REPORT HABIB BANK LIMITED

Lahore Region

1. Lahore Zone

2. Sheikhupura zone

3. Gujranwala zone

4. Gujrat zone

5. Hafiz Abad zone

10
INTERNSHIP REPORT HABIB BANK LIMITED

DIVISION AT HEAD OFFICE KARACHI

1. Agriculture and small loan division .


2. Audit and inspection division
3. Cash and investment division
4. Computer service division
5. Customer service division
6. Corporate credit division
7. Engineering and Maintenance.
8. Finance division
9. General administration division
10. International division
11. Law division
12. Marketing and development division
13. O and M division
14. Planning development division.
15. Printing and stationary division.
16. Syndicated loans divisions.
17. Trade information division.
18. Training division.

11
INTERNSHIP REPORT HABIB BANK LIMITED

1 AGRICULTURE AND SMALL LOANS IVISION

Divisional Head
Small loans department

2 AUDIT AND INSPECTION DIVISION


Divisional Head Management Audit

Circle Audit circle audit implementation


A & B Karachi (Karachi B & c) Wing
Circle Chiefs Circle Chiefs inspection team

3. CASH & INVESTMENT DIVISION

Divisional Head (SVP)

Vice President.

4. COMPUTER DIVISION:

Divisional Head (AVP)

Lahore Hyderabad Quetta Peshawar Islamabad Faisalabad Multan

12
INTERNSHIP REPORT HABIB BANK LIMITED

5. CUSTERMER SERVICES DIVISION:

Divisional Head
SP & VP

Branch Opening Cell Haij Cell Deptt for T.J Cell


Overseas Pakistan

6. CORPURATED CREDIT DEVISION:

Divisional Head (SVP) (EVP) (AVP)

7. ENGINEERING AND MAINTENANCE DIVISION:

Divisional Head (EVP)

8. FINANCE DIVISON :

Divisional Head (SVP) (EVP)

13
INTERNSHIP REPORT HABIB BANK LIMITED

9. GENERAL ADMINISTRATION DIVISION:

Divisional Head
|

Purchase and Insurance security war Housing


Deptt.
Expenditure cell cell
Control deptt.

10. INTERNATIONAL DIVISION:

Division Head (SVP) (A.P)

11. LAW DIVISION:


Executive Incharge (AVP)
|
Divisional Head (SVP) (VP)
|

Litigation Non interest Recovery Zakat


Cell Banking deptt. Cell Cell

12. MARKITING AND DEVELOPMENT DIVISION:

Public relation Protocol/Travel Sports & Credit card


Department.
13. O & M DIVISION:
Divisional Head (SVP &VP)

14
INTERNSHIP REPORT HABIB BANK LIMITED

14. PERSONAL DEVISION:


INVESTGATION CENTERAL HOUSE Overseas
personnel
Department finance committee Cell

15. PRINTING AND STATIONARY DIVISION:

Divisional Head (SVP &VP)

16. SYNDICATED LOAN DIVISION:


Divisional Head (SVP & VP)

17. TRADE INFORMATION DIVISION:


DIVISIONAL HEAD (SVP &VP)
|

Centeral Main Deptt School Banking

18. TRANING DIVISION:


Divisional Head

Trg. Institute Trg. Institute Trg. Institute Trg. Instute


Lahore Islamabad Karachi Multan

15
INTERNSHIP REPORT HABIB BANK LIMITED

REGIONAL HEAD QUARTER


REGIONAL CHIEF EXECUTIVE
|

GM GM GM GM GM
Account Audit Finance M.I.S Dept. R&D

ZONE
|
Zonal Chief
|

Staff Manager Staff officer

BRANCH
Manager
|
Sub. Manager
|

Cashier Guard Assistant

16
INTERNSHIP REPORT HABIB BANK LIMITED

PRESIDENT
1. To implement the polices chalked out and decision made by the
board of directors
2. To look after the affairs of the whole origination
3. To maintain good relation with the big Clint of bank in the interest of
the origination
4. To promote the business activities of the bank
5. To find new areas for investment
6. To make liaison with the government and state bank

17
INTERNSHIP REPORT HABIB BANK LIMITED

BORD OF DIRECATORS
1. To make the policies in order to promote the business of bank.
2. To declare the profits on deposits.
3. To announce the rate of interest on advances and loans.
4. To make the policies for the welfare of bank employees.

18
INTERNSHIP REPORT HABIB BANK LIMITED

ZONAL CHIEF
1. To make visit at the branches in order to promote the business
activities and make the discussion at the spot under his discriminatory
powers.
2. To promote the business activities.
3. To make the relation with the industrialist business man Agriculturist
etc. for the promotion of banking activities.
4. To solve the union problems.
5. To approve loans for heavy industries i.e. big amount of loans.

19
INTERNSHIP REPORT HABIB BANK LIMITED

BRANCH MANAGER

1. To look after the affairs of the branch.


2. To meet the depositor and borrowers and solve their banking
problems.
3. To make try for increasing the profitability of the branch by capturing
low cost/cost free deposits and giving the secured advance to the
valued clients.
4. To reduce the expenses of the branch.
5. To make relation with the industrial business man agriculturist,
industrialist of the branch.
6. To sanction small amount of loans and judge whether the client is
genuine.
7. To solve the problem of the bankers working under him.

20
INTERNSHIP REPORT HABIB BANK LIMITED

HABIB BANK LIMITED


NOSHERA VIRKAN BRANCH

H.B.L branch is situated at NOSHERA VIRKAN which is the

center of cotton and grain business. According to its location majority of

its accounts holders are Cotton Broker , Traders and other business

concerns. This branch is working under the experience hand of Mr.

Mubashir Iqbal he is very hardworking and friendly to subordinates. He

is used to go to his subordinate himself quires and other matters however

a complete system of intercom is also installed in the branch in order to

make the coordination .As the working of the branch is organized so

different are made in order to make the working easier and error free.

The bank also issues creation form for the television license,

account opening , deposit slip etc are also available at this place. Cheque

books are also made by the persons at the counter.

21
INTERNSHIP REPORT HABIB BANK LIMITED

GENERAL BANKING

Account opening department

This department is under the supervision of Mr. Mubashir Iqbal


an ambitions young officer. Applications are received here and after the
scrutiny of all the requisites the account is opened. There are mainly two
types of accounts.

1-CERRENT DEPOSIT ACCOUNT. (CD)


2-PROFIT AND LOSS ACCOUNT. (PL)
3-CALL DEPOSITS
Now profit and loss (PL) is divided into four types:

1-Profit and Loss Saving Account (PLS).


2-Short Notice Term Deposits Account (SNTD)
3-Term Deposit Account.
4-Golden Investment Scheme.

Now Short Notice Term Deposit (SNTD) is further divided into two:

1-Ordinery Term Deposit Receipt (TDR).


2-Khas Term Deposit Receipt (Khas TDR).

22
INTERNSHIP REPORT HABIB BANK LIMITED

EXPLANATION:
1.CURRENT DEPOSIT:

There accounts are opened by Rs. 500. No profit or interest is


given on these accounts. These types of accounts are mostly maintained
by the businessmen who may draw money at any time. Zakat is also not
deducted on these accounts and no any notice is required for the
withdrawal of money.

23
INTERNSHIP REPORT HABIB BANK LIMITED

2-Profit and loss account:


A. PROFIT AND LOSS SAVING ACCOUNT(PLS)

This account may be opened by RS. 500. After every six months
profit/interest is given on this account and the rate of profit is declared
by the Head Office Habib Bank Limited. This year the management of
the Habib Bank has decided to give the profit of 8.10% on their saving
depositors . A 7days notice is required to draw the money exceeding RS.
15000, However bankers are used to give the relaxation of two, three
thousands to their customers. A cheque book containing 10 leaves is
given to the account holder which costs to him for RS 10 Mostly persons
on jobs maintain these types of accounts. Zakat is also deducted on these
accounts on the first of the Ramzan. A new tax i.e. with holding is also
levied on the profit of the saving account. The rate of the with holding
tax is 10%.

24
INTERNSHIP REPORT HABIB BANK LIMITED

B. SHORT NOTICE TERM DEPOSIT:

Short notice term deposit accounts are categorized into three


categories That are as under:

1. 7-Days notice.
2. 15-Days notice.
3. 30-Days notice.
These accounts are opened for 7, 15,or 30days. But these
can be encashed at any time. The rate of interest on these accounts is
lesser ordinary PLS. Saving account. If it is encashed before its maturity
the rate of profit is further reduced. With holding tax is also deducted on
the profit .

This year the rate of interest on SNTD offered by the Habib


bank is
From 7 to 29 days 6.00%
For 30 days and above 6.60%

25
INTERNSHIP REPORT HABIB BANK LIMITED

C. TERM DEPOSIT RECEIPT:

These accounts are opened for 1 month, 3 months, 6 months,


1year and so on. The rate of interest/profit goes on increasing as the time
/period of the deposit is increased. These accounts can also be encashed
at any time and ordinary PLS rate is given if these are encashed before
its maturity. With holding tax of 10% is also deducted on the profit of
TD RS. The of
Profit/interest announced this years are as under:
PERIOD RATE
01 month 8.60%
02 month 9.00%
03 month 9.40%
06 month 10.50%
01 year 11.00%
02 year 11.60%

26
INTERNSHIP REPORT HABIB BANK LIMITED

GOLDEN INVESTMENT SCHEME:


A Golden investment scheme is offered by the Habib Bank which
offers you a rate of 14.50% per annum and the time limit for the said
scheme is five years or seven and a half years or so . This scheme
doubles the amount after 5 years and in years the amount is three times.
But if the amount is drawn before its maturity no such profit is given on
this behalf.

27
INTERNSHIP REPORT HABIB BANK LIMITED

CALL DEPOSITS:

These are another type of accounts opened by the Government or


companies. Construction companies/organizations require some
percentage of total amount of the total contract to be deposited by the
contractors as a security. Like when applications for shares are called or
when some plots in a housing colony is to be allotted certain amount is
called as a security that the applicant is genuine, these accounts are
called call deposits. These accounts are refundable and no profit or
deduction is made on this account.

FOREIGN EXCHANGE ACCOUNT:


As the Pakistani currency accounts are opened the requirements
are same for the foreign currency accounts. All the transactions are made
in the foreign currency in which the account is opened.

28
INTERNSHIP REPORT HABIB BANK LIMITED

REMITTANCEDEPARTMENT:

As it is the function of the bank to remit the money to any place


where there is a bank. It is the most easiest and safest way to send
money to any place. Bank charges menial amount as a commission for
the remittance. Here in the Habib bank Branch there is also remittance
department. There are mostly four methods to remit the money. They
are:
1. Demand Draft (DD).
2. Mail transfer (MT).
3. Telegraphic Transfer.(TT)
4. Pay Order (PO)
Now these all are discussed here separately in detail:

29
INTERNSHIP REPORT HABIB BANK LIMITED

1. DEMAND DRAFT (DD).

It is the most commonly method used for the remittance of


money. It is very simple, firstly a form is to be filled in , in which all
details are specified that where and in which branch the draft is to be
sent then the money is deposited which is called draft and money can by
drawn after showing to the bank of the specified branch of the bank.
Only specified person can draw the money on that draft. Another method
to secure the payment of the draft could be the crossing of the draft
which means that it will only be deposited in the payee’s account.

To make it more secured and safe the bank has coded the amount
exceeding Rs.15000. Only the banker or the person knows the actual
amount of the draft. In return bank gets a commission which is its mode
of earning.
The bank’s commission rate is as under:

Rupees Min. amount %age


Up to 10,000 15 20%
10,001-100,000 20 15%
100,001 of above 150 07%

Now with holding tax is also levied, so bank also gets 20% with holding
tax on the sum an excise duty of RS. 1 per leaf.
Now if the draft is to be canceled or duplicate of the draft is to be needed
in case of misplacement Rs.20 is to be paid.

30
INTERNSHIP REPORT HABIB BANK LIMITED

2. MAIL TRANSFER (MT)


The money is transferred through mail. One branch of the bank sends
advice to the branch of the same bank to credit the account of payee. In
this type of transfer the payee must have the bank account . For example,
now a days PTV’s licensees are made all over the Pakistan. The cash is
deposited in the banks and after a week the bank mail transfers the
amount to the PTV’s Islamabad account. Bank also gets commission on
the mail transfers, the commission rate is:

Rupees Min amount %age


Up to 10,000 15 20%
10,001- 100,000 20 15%
100,000 or above 150 .075%

The bank also charges the postage expenses of Rs.12 on it.

31
INTERNSHIP REPORT HABIB BANK LIMITED

TELEGRAPHIC TRANSFERS (TT)

It is a good safe and fast method of transferring money from one place to
another. The advice is sent through the telegram and the bank to which
the advice is made reconfirms that whether the advice is made or not.
After the confirmation the money is paid to the payee. Telegraphic
Transfer could be made by giving the name and the telephone number of
the payee but account number is considered good and sage . The amount
exceeding Rs.15000 is coded in order to keep security.
Bank charge commission on TT’s and the rate is as under.
Rupees Min. amount %age
Up to 10,000 15 20%
10,001-100,000 20 15%
100,001 or above 150 .075%

The bank also charge the telegram expenses of Rs.20 TT

32
INTERNSHIP REPORT HABIB BANK LIMITED

PAY ORDER ( PO )
Pay order is less expensive method of transfer money. Normally
this method is used to transfer money inside the city. If it is used city
wide, it takes a long time.
The bank charge Rs.10 which is flat foe the pay order and an excise duty
of Rs.1 per leaf. With holding tax of 20% on the sum is also taken from
the party.
Now if the pay order is to be canceled or duplicate of the pay order is to
be needed is case of misplacement Rs.20 is to be paid.

33
INTERNSHIP REPORT HABIB BANK LIMITED

LOCKERS AND BILLS DEPARTMENT:

Lockers are also available at Habib bank limited NOSHERA VIRKAN.


The procedure to get a locker is same as of account opening and RS 600
is to be deposited as a security fee which is refundable. There are three
types of lockers available i.e. small, medium, and large. The bank
charges Rs.300 per annum for the small locker, RS 500 the medium and
Rs.800 per annum for the large size locker.
People get the lockers for the security of precious items which include
jewelry, bonds, documents etc. To ensure safety and security two key
system is used. Firstly the lock holder is verified and then in the
presence of banker the locker is opened with the help of the key which is
in the custody of lock holder and is closed with the banker’s key.
Without these two keys it couldn’t be opened or closed.
Bills here doesn’t mean the utility bills like electricity bills or gas bills,
but in the bills section those cheque are presented that are for the
outstation or in station of any branch of any bank.

34
INTERNSHIP REPORT HABIB BANK LIMITED

Now the procedure of collection is different for in both the cases, the
outstation cheques are called the OBC cheque. Which stands for outward
bills for collection or these are the collections inside the country or city
wide and the in station cheque are those which belongs to the Lahore,
may be from the Habib bank or any other bank.

Of the cheque is of Habib Bank, the cheque is sent to the HBL main
branch GUJRANWALA the HBL GUJRANWALA branch sent those
cheque to the branch where the cheque belongs. And after confirmation,
in return, sent the IBCO inter Branch Credit Order. After the reception of
the IBCO the HBL NOSHERA VIRKAN branch credit the account of
the customer.
Now if the cheque belongs to the GUJRANWALA but the bank is other
than
the Habib Bank i.e. UBL, MCB, NBP, etc, those cheque are sent to the
HBL main branch GUJRANWALA and from GUJRANWALA the
banker will go to
the collection cell which is located at main branch GUJRANWALA.

35
INTERNSHIP REPORT HABIB BANK LIMITED

Here all the representative from all the banks met and settled their inter
bank transaction after the confirmation from the respective bank. The
amount will be credited in the account of the Habib Bank at State Bank
and from their IBCO will be issued in the name of GUJRANWALA
main
branch and further main branch will issue the IBCO to the NOSHERA
VIRKAN branch.

Now for the outstation cheque the procedure is different. These cheque
are sent to the Habib Bank main branch of that city where the cheque
belongs. That main branch collects the money and sends a document
which is name as IBCO which stands for inter branch credit order to the
Habib bank NOSHERA VIRKAN Branch. Bank after the reception of
the IBCO credits the account of the person who presented these cheques
for collection. Now there are two types of outstation bills for collection,s
. These are as under.

36
INTERNSHIP REPORT HABIB BANK LIMITED

CLE AN

Clean OBC includes those instrument,s which do not need any


documentation to be attached with it for the purpose of collection. This
includes cheque draft etc. The bank charge commission on the clean
OBC as .20% of the amount of the cheque or a minimum of Rs, 10. An
additional amount of Rs, 30 for the Courier or Rs, 12 for the postage as
instructed by the customer credit order to the Habib Bank Chowk Azam
Branch and bank after the reception of the IBCO credits the account of
the person who presented those cheques for collection. Now there are
two types of Outstation Bills for Collection. These are as under.

CLEAN
Clean OBC includes those instruments which do not any
documentation.To be attached with it for the purpose of collections. This
includes cheque Drafts etc.

37
INTERNSHIP REPORT HABIB BANK LIMITED

DOCUMENTARY

Documentary includes those instruments which includes an additional


documentation attached with that instruments for the collection. The
bank charge commission on documentary OBC as 35% of the amount of
that instrument or a minimum amount of Rs 25 an additional Amount of
Rs 30 for the courier or Rs 12 for the postage as instructed by the
customer .
If the instrument is dishonored or returned handling charges of Rs. 25/=
per cheque or any instrument will be charged by the bank.

38
INTERNSHIP REPORT HABIB BANK LIMITED

TRANSIT DELIVERY AND CLEARING


DEPARTMENT.

This department deals in those cheque and draft,s which are drawn upon
the Habib Bank Branch.
The transit delivery section received those cheque and drafts which are
through any branch of Habib Bank after proper verification of the
genuine of the draft or cheques , this branch transfers the inter branch
credit order IBCO to the main branch which further transfers the IBCO
where the cheque or draft was presented the clearing section deals in
those cheque and drafts which are drawn on Habib Bank. From other
banks like UBL, MCB, NBP, etc.
The procedure is same that after proper verification the IBCO is transfer
to the main branch which sends the credit note to the State bank,
And State bank credits the account of that bank with the specified
amount the bank charge noting on those cheque which belongs to Habib
Bank but if the other bank is involved the bank will charge the
commission and courier charges.

39
INTERNSHIP REPORT HABIB BANK LIMITED

CURRENT DEPOSIT & PLS SAVING


DEPARTMENT

Current deposit and profit and losses department at Habib Bank branch
is working for the maintenance of the account holder’s record. This
department maintains all the record regarding the account of the account
holders, specimen signature card is with them and the verify the
signature of the account holders.

All cheque drawn of Habib Bank branch are sent to this department and
they properly judge and verify the validity of the cheque and after
verification they sent it to the cash department. Firstly that verify for the
signature then they see whether the cheque is within the due date, is
there a balance in the account of the account holder. After the
verification of all these pre-requisites the cheque is cleared. It is also the
function of this department to maintain the record of all transactions of
the day certain calculation of interest of profit is also made by them.
They also prepare the statement of account holders. All the records of
the account holders their transactions, their profit on PLS accounts
interest on SNIDS, TDRs etc. is maintain by this department.

40
INTERNSHIP REPORT HABIB BANK LIMITED

CASH SECION

Like all the banks there is cash counter is the Habib bank branch
working two or three bankers. They pay the cash to the cheque, which
are properly verified from the CD & PLS, Department. People cashier
returns a counterfoil of the deposit slip by stamping it with cash receipt
stamp.
Cashier also maintained a register in which all the transactions at the
cash counter is maintained. At the end of the day cash in hand must tally
with the balance in the register.

41
INTERNSHIP REPORT HABIB BANK LIMITED

TOKEN DEPARTMENT

All the cheque holders go to this department. They present the cheque to
the person at the department. He checks that whether the cheque belongs
to the same branch, the amount in words and figures is same, cheques is
not outdated, there signatures are there etc. Then he allots a number to
the cheques and a token is given to the cheque holder and the cheque is
sent to the CD & PLS Department. After the proper verification the cash
is paid to the cheque holder from the cash counter after taking token
from him.
Transfer book is a book in which all the transactions of the day is written
and the balance is tally with the cash book. The translator book is also
maintained by the said department.

42
INTERNSHIP REPORT HABIB BANK LIMITED

ADVANCES / LOANS SECTION

This dept. has been working under the supervision of


knowledgeable experienced & well qualified banker Mr. Saleem Mirza
who has been serving this bank for last 20 years.
This Dept. has boon playing one of the primary functions of the bank
because a bank is the organization that accept deposits & give advances.
There are basically two types of loans:
a) Fund base
b) Non fund base
a) in fund base the cash is involved.
b) While is non fund base cash is not involved.
These are following types of advances those are given by the
BANK.
1. Cash Finance (CF)
2. Running Finance (RF)
3. Machinery Loan.
4. International Development Agency Loan(IDA)
5. Transport Loan.
6. Staff Loan.

43
INTERNSHIP REPORT HABIB BANK LIMITED

1. CASH FINANCE (CF)

Cash Finance is the biggest loan given to the businessmen, industrialists,


its limit is in crores and bank do require security for this purpose. After
the proper investigation and documentation these finances are given and
genuine property is pledged as a matter of security.

These loans are taken for the purchase of stocks etc. The bank appoints
its staff of two or three persons at the place where that stock is lying.
Bank also keeps the record of the stock and current position too. A notice
is also written at the place that the stocks are pledged with the bank. To
get these types of loans prior permission from the zonal office of the
Habib bank is also required. The bank gets back its principal amount and
also markup for the loan. The rate of markup is Rs.0.52/1000 per day
and to calculate the markup for finance period as per formula is:

Amount of Amount of
Finance + One installment
MARK UP=------------------------------------ Rate of Mark-up

2
Mo. of Period of
Installment one installment

44
INTERNSHIP REPORT HABIB BANK LIMITED

Documents Require for the Loan.

1.Demand Promissory Note(DP Note)


This document is filled in by the party
that they promise to pay the amount whenever it is demanded.
2. Facility Letter:
This is the requisition of the finance facilities to the bank By
the party.
3. Balance Confirmation:
After the approval of the loan this letter is written by the Party
that such amount is in the account of the party.

4. Letter of pledge (IB26)


For the getting of the cash finance a letter of Pledge
is to be given to the bank that such property is to be pledged with the
bank as a security.
5. Letter of Guarantee(IB29)
A letter for the personal guarantee is also required in
which the guarantee from a sound person to the party is attached with
the application
6. Agreement for Financing(IB6)
This agreement for the short term medium term/long
term on the mark up basis. At most these are the documents required
in attaining of the loan.

45
INTERNSHIP REPORT HABIB BANK LIMITED

2. RUNNING FINANCE:

Running Finances are also given for the purchase of stock etc. But its
limit is not too much. Normally upto RS 15,00,000 is given as a
Running Finance and no staff is appointed. This is termed as
Hypothecation, which means that party is wholly liable for the stock
and payment of the principal amount and markup. The procedure is
almost same as for the cash finance and the loan is given to those
parties which are able to prove its genuineness and satisfies the bank.
The bank also pledges the genuine security of the party which
normally more valuable then the amount of loan. To get this type of
loan prior permission of the zonal office is necessary.

The rate of mark up is RS 0.52/1000 per day and to calculate the


mark up for the finance period as per formula is:
Amount of Amount of
Finance + one installment
Mark Up----------------------------- Rate of Mark up
2
No. of Period of
Installments One Installment.

46
INTERNSHIP REPORT HABIB BANK LIMITED

Document Required for the Loan:


1. Demand Promissory Note(DP Note)
The party that they promise to pay the amount whenever it is demanded
fills this document.
2. Facility Letter.
This is the requisition of the finances to the bank by the third party.
3. Balance Confirmation
After the approval of the loan the party writes this letter that such
amount is in the account of the party.
4. Letter Of Equitable Mortgage (IB24)
For the getting of the running finance a letter of equitable mortgage is to
be given to the bank that such property is to be mortgaged with the bank
as a security.
5. Letter Of Guarantee (IB29)
A letter for the personal guarantees is also required is which the
guarantees from a sound person to the party is attached with the
application.
6. Agreement for Finances (IB6)
This agreement for the snort term /medium term/long term on the mark
up basis. At most these are the documents required in attaining of the
loan.
Letter of Hypothecation (IB25)
This letter that for all types of stock the party is liable and bank not
needs to appoint any person.

47
INTERNSHIP REPORT HABIB BANK LIMITED

3. MACHINERY LOAN

Certain loans are given for the purchase of machinery. These loans
are called Local Machinery Manufacturing Loan (LMM LOAN). The
bank finances for the machinery, which is manufactured in Pakistan.
Like other loans after the proper verification and proper
documentation and
With the prior approval from the zonal office, these loans are given.
The bank pledges some genuine property as a security. Personal
security is also required in the getting of this loan. The loan is to
repay in certain installments which includes the mark-up also.
Normally these loans are for the period of five years and first six or
three months are exempted from the installments as the ease or as the
terms and conditions may be. The rate of the interest to be paid by the
party is 8% per annum.

48
INTERNSHIP REPORT HABIB BANK LIMITED

DOCUMENTS REQUIRED FOR THE


MACHINERY LOAN:
1.Demand Promissory Note(DP Note)
These documents filled in by the party that they promise to
pay the amount whenever it is demanded.
2.Facility Letter.
This is the requisition of the finance facilities to the bank
by the party.
3.Balance Confirmation.
After the approval of the loan the party writes this letter that
such amount is in the account of the party.
4.Letter Of Pledge.(IB26)
For the getting of the machinery loan a letter of Pledge is to
be given to the bank that such property is to be pledged with the bank
as a security.
5.Letter of Guarantee (IB29)
A letter for the personal guarantee is also required, in which
the guarantee from a sound person to the party is attached with the
Application
6. Agreement For Financing(IB6)
This agreement for the short term medium term/long term on
the
Mark up basis. at most these are the documents required in attaining
of the loan.

49
INTERNSHIP REPORT HABIB BANK LIMITED

INTERNATIONAL DEVELOPMENT
AGENCY LOANS.

These loans are given for the purchase of foreign machinery ,


stocks, etc.
Though these loans are not in practice but there is a provision for this
loan. The cause of in practicing of the loan may be the unawareness
of the people about the provision.
The rate of interest on these loans is 11% per annum.
These finances are provided by the World Bank.

50
INTERNSHIP REPORT HABIB BANK LIMITED

DOCUMENTS REQUIRED ON/AFTER THE


APPROVALOF LOAN.

1.In respect of the applicant.


a. Sole Proprietorship
b. Partnership Concern Copy of registered partnership deed.
c. Limited Company.
- Copy of the Memorandum and Article of Association.
- Copy of the certificate of Incorporation
- Copy of the certificate of Commencement of Business.
- Resolution of the Board of Directors authorizing the
management to obtain the loan from the Bank specifying the
purpose of the loan required for.

51
INTERNSHIP REPORT HABIB BANK LIMITED

MODERN BANKING
1- A.T.M.
2- MASTER CARD

1-AUTO TELLER MACHINE

Now a days banks are going to inter in the world of Computer &
technology, Each & every mark which was done by the men is being
done through computer

H.B.L. is innovators to introduce A.T.M. facility to its customer first


time in Pakistan A.T.M machine basically provide 24 hours cash service
To its customer you just have to enter your code & amount requirement
you could get it when ever you want in throughout 24 hours. A.T.M. card
facility can be given to all those who are the customer of the bank But
having certain average balance.

For getting A.T.M. card simple procedure is adopted.


-Filling of Application for A.T.M. card
-Attestified from two bankers.
-All kind of necessary related documents are also required.

52
INTERNSHIP REPORT HABIB BANK LIMITED

WITHDRAWL OF CASH

a- On daily bases RS 2000/-


b- On weekly bases Rs.9000/- can be drawn.
c- Normally on deposit of 25000/- the limit of with drawl on deposit and
RS 3000/- per 30 days
d- It is limited on the city only card of some city can’t be used in other
city.
e- There are total 20 A.T.M machines working in Pakistan,

Karachi 8
Lahore 4
Islamabad 3
Multan 1
Faisalabad 1
Peshawar 1
Quetta 1
A.j.k. 1

53
INTERNSHIP REPORT HABIB BANK LIMITED

TERMS & CONDITION

1) Individuals personal current and PLS saving account holder can


get A.T.M Card.
2) The HBAC shall allow the card holder access to the bank auto
cash terminal to
- Obtain cash up to previously arranged limit
- Request a new cheque book

3) The HBAC is not transferable and shall be used exclusively by the


card holder.
4) The cerd holder further undertakes to maintain sufficient funds to
meet with drawls and he/ she undertakes not to overdraw the
account unless over draft arrangements have previously been
agreed to by the bank.
5) In the event of the card holder at any time drawing amount in
excess of the credit balance the bank a will be entitled to create an
overdraft in his account and card holder agrees to repay.
6) The card holder irrevocably authorized the bank to debit his/her
A/C with the amount of withdraw.
7) The HBAC issued to the card holder shall remain at all times the
property of the bank and shall surrounded to the bank on demand.

54
INTERNSHIP REPORT HABIB BANK LIMITED

MASTER CARD
Master Card is another modern facility, which is given by H.B.L.
Master Card is having following benefits & privileges
1) H.B.L. master card is accepted at over 123 Million establishment’s
word wide.
2) Free air travel accident insurance is provided.
3) This is the card having a photograph & signature of the cardholder,
which gives the security against misused.
4) On this card cash withdrawal are available over 29000 outlets all
over the world.
5) H.B.L. give an essay to manage monthly statement to keep track of
your transaction.

55
INTERNSHIP REPORT HABIB BANK LIMITED

TERMS AND CONDITIONS


1) The card can be used to individuals on their request having current
/PLS saving Accounts.
2) The card must be signed by the card holder immediately upon
receipt
3) The card is not transferable & shall be used exclusively by the
card holder name.
4) All possible steps shall be taken to safe guard the card.
5) The cardholder irrevocably and unconditionally authorizes the
bank to debt his/her account with the amount of withdraw/
purchase effected through the use of his/her card.
6) While using the caed, the cardholder should sign the establishment
bills and charges slips with the same signature as that on the card.
7) The cardholder should promptly notify the bankin knitting of any
changes in detail of employment/ bussiness or any change in
address office/ Residence.
8) The joining fee, annual and other payments made by the card
holder to the bank shall be non refundable
9) The card remains the property of the bank at all times and has to
be returned by the cardholder on the bank’s demand.

56
INTERNSHIP REPORT HABIB BANK LIMITED

CURRENT ISSUE

World trend has been changing very rapidly and competition is


becoming more & more stiff. Our country is the tendency towards the
privatization now a days.

As we know H.B.L. is an Govt.


organization and one of those organization those
one suffering loses due to heavy operational &
management expenses H.B.L. is bearing of its
extra employee those are real cause of heavy
management expenses. These expenses are making
H.B.L weaker & weaker day by day. Now the Govt.
has decided to privatize this org also along
with other big organization.

If we technically examine the reason behind the down sizing then we

could see that H.B.L. is increasing 5% operational & management

expenses against the deposit while it 2% all over the world. In down

sizing employees of H.B.L regardless grade designation are offered a

golden shake hand scheme in which people are inviting to great benefits

against taking retirement from the job.

This Golden handshake scheme has following

main features.

57
INTERNSHIP REPORT HABIB BANK LIMITED

GOLDEN HANDSHAKE SCHEME


The employees may excise their
option during the period from
25th August 1997 to 10th Sep 1997.
This scheme is a one time offer . when that much
expenses will be incurred these will also add up
in loan those are given an normally 18% to 20%
when
They will become of 20% to 25% those will be
more expensive then that of any other bank which
has expenses less than the Habib Bank does.
So now-a-days H.B.L. has been passing through the downsizing process
president H.B.L. Mr.. Shasta Tarn has made several refers and it is one
of more significant reform.

58
INTERNSHIP REPORT HABIB BANK LIMITED

INCENTIVES
1)Three months basic pay for each completed
years of service.
2)An account equivalent to 10 years normal post
retirement medical facility will be paid in
lump sum to retiring employees.
3)Benevolent fund grant equipment to 10 years
will also be paid in lm sum in advance at the
time of settlement dues as a final payment.
4)The residential facilities for six (6) months
after retirement and sale of can if already
provided, furniture shall be allowed as a
special case to all those executives, who
accepts this scheme.

59
INTERNSHIP REPORT HABIB BANK LIMITED

BALANCE SHEET as At 31st December, 1998

1998 1998
(U.S $000) (Rs.000)
ASSETS

Cash 328,672 14,478,010


Balance with other Banks 372,820 16,422,727
Money at call and short notice 75,566 3,328,669
Investment net of provision 1,262,669 55,620,567
Loans and advances
(Less loan loss provision) 2,712,554 119,488,013
Operating fixed assets 122,282 5,386,508
Capital work in progress
civil works 8,022 353,373
Other assets 920,935 40,567,215
------------ ----------------
5,803,520 255,645,082

LIABILITIES

Deposits and other accounts 4,800,264 211,451,635


Borrowing from other Banks 431,816 19,021,509
Bills payable 100,334 4,419,732
Other liabilities 284,393 12,527,502
-------------- ---------------
5,616,807 247,420,378
--------------- ---------------
Net Assets 186,713 8,224,704
--------------- ---------------

60
INTERNSHIP REPORT HABIB BANK LIMITED

Cash Flow Statement For The Year Ended December 31, 1998
1998 1998
(U.S $000) (Rs.000)
CASH FLOW FROM OPERATING ACTIVITIES

Loss before taxation (71,150) (3,134,140)


Add: Dividend income ( 2,273) ( 100,134)
Profit on sale of fixed assets
Profit on sale of shares of Habib Credit
and Exchange
Bank Limited (currently Bank Alfalah Ltd) (27,650) (1,218,000)
----------- --------------
(101,462) (4,469,416)

Adjust for non-cash items


Depreciation 4,191 184,627
Provision for diminution in value of
investments 306 13,480
Provision against non-performing loans
and advances 8,289 365,131
Exchange gain on translation of assets
and liabilities of foreign branches 23,168 1,020,549
Provision for gratuity 9,848 433,800
Amortisation of deferred cost 6,581 289,909
------------ --------------
52,383 2,307,496
------------ --------------
(49,079) (2,161,920)

(Increase)/decrease in operating assets


Government securities 22,517 991,897
Loans and advances (43,067) (1,897,090)
Other assets (excluding taxation, voluntary
golden handshake scheme cost and amount
paid on behalf of Funds) (77,930) (3,432,816)
------------ --------------
(98,480) (4,338,009)

61
INTERNSHIP REPORT HABIB BANK LIMITED

Increase /(decrease) in operating liabilities


Deposits and other accounts 134,350 5,918,076
Bills payable 11,991 528,244
Other liabilities 51,715 2,278,036
---------- ------------
198,056 8,724,356
---------- ------------
50,497 2,224,427

Cash inflow/(outflow) before tax and other adjustments


Payment to employees on account of
voluntary golden handshake scheme cost (164,534) (7,247,705)
Payment of retirement benefits on behalf of
funds (63,308) (2,788,743)
Taxes paid (40,192) (1,770,415)
------------ --------------
Net cash outflow from operating activities (217,537) (9,582,4360)
------------ --------------

62
INTERNSHIP REPORT HABIB BANK LIMITED

CASH FLOW FROM INVESTING ACTIVITIES


Investments (excluding Government
Securities ) 21,443 944,575
Sale proceeds on disposal of subsidiary 9,535 420,000
Dividend income 2,273 100,134
Fixed capital expenditure (11,084) (488,250)
Sale proceeds of fixed assets 804 35,385
----------- -------------
Net cash inflow from investing activities 22,971 1,011,844
----------- -------------

63
INTERNSHIP REPORT HABIB BANK LIMITED

CASH FLOW FROM FINANCING ACTIVITIES

Borrowing from other banks, agents etc. 77,512 3,414,391


----------- -------------
(Decrease)/increase in cash and cash
equivalents for the year (117,054) (5,156,201)

Cash and cash equivalents at the beginning


of the year 894,112 39,385,607
------------ ------------
Cash and cash equivalents at the end of the
year 777,058 34,229,406
------------ -------------
Cash and cash equivalents at the end of the year
Cash 328,672 14,478,010
Balance with other banks 372,820 16,422,727
Money at call and short notice 75,566 3,328,699
------------ -------------
777,058 34,229,406
------------ -------------

64
INTERNSHIP REPORT HABIB BANK LIMITED

FIVE YEAR PROGRESS


1994 1995 1996 1997 1998

Paid-up-capital 2,478 2,478 2,478 2,478 2,478

Reserve funds 4,308 4,508 4,844 4,862 5,835

Total Assets 288,919 306,851 336,573 328,830 320,634

Total Deposits 166,834 178,647 194,661 213,595 211,383

Advances 102,811 105,502 119,256 121,909 119,758

Investment 57,024 64,874 63,148 60,929 55,445

Total Income 18,752 19,582 22,873 27,714 25,156

Total Expenses 17,986 18,916 22,164 31,121 28,282

65
INTERNSHIP REPORT HABIB BANK LIMITED

INTERPRETATION
1) Paid –up- capital remained same during the last four year no minor
change has been observes.
2) Reserves has remained same in 1996 & 1997 but these are increased
as compared to 1995 & 1996 the purpose may be was to retain more
funds in hand for the planning & development of the bank.
3) In total assets smooth change can be observed the reason may be the
increase of clients of banks because in only 1997 3 million clients
bank with H.B.L. within the country & overseas branches.
4) Total Deposit of the bank has increased in each previous year the
main reason of this increase is Bank’s foreign currency deposits in
Pakistan have increased.
5) Advances increased through all four years because banl has continued
its policy of supporting the priorities established by Govt. and
rendering services to all sectors of the economy with specific
emphasis.
6) THE investment slightly declaimed due to increased diversion of
bank’s resources for financing the requirement of priority sectors of
the economy.
7) Total Income & Total expenditure remained slightly unfavorable due
to increasingly competitive environment and structural problems of
public sector Financial institution continued to put sever strain on the
bank’s operation.

66
INTERNSHIP REPORT HABIB BANK LIMITED

STATUS OF
H.B.L. IN BANKING SECTOR OF PAKISTAN

Total Bank H.B.L.


Acquiring Acquiring

Total Schedule 8718 1773


=Domestic Branches

Total Assets 1540.69 362.33


(Billion) (Billion)

Advances 583.68 131.805


(Billion) (Billion)

Deposits 963.73 213.491


(Billion) (Billion)

Note:
On the bases of this Analysis H.B.L. is rated among the top 7 banks
in
Financial set up of Pakistan.

67
INTERNSHIP REPORT HABIB BANK LIMITED

SWOT ANALYSIS
STRENGTH
H.B.L. has very effective Network of branches all over the
country. Every 10th Pakistani is A/C holder of H.B.L. has made huge
investment in almost all the important economic sectors of Pakistan.
H.B.L. not only has made investment in industry but also in small scale
industry as well. H.B.L. has efficient & less bureaucratic set up H.B.L.
has introduced monthly income scheme that provides almost highest
interest rate .A.T.M. Was introduced in Pak. By H. B. L. master card
facilities is also available to the clients.

WEAKNESS

No consumer banking has offered by the H.B.L. to its


clients like phone banking evening banking etc.
- Bed Debt rate is very high no special effort has been made to recover
the bed amounts.
- No marketing set up or structure is there. Most of people do not know
how they have to promote their activities.

68
INTERNSHIP REPORT HABIB BANK LIMITED

OPPORTUNITIES

H.B.L. is oldest bank in the country people do rely on this


bank with some additional efforts bank can attract high deposit from
Pakistan and overseas.
Instead of emphasizing on big & long term projects bank should
concentrate on small scale investments heaving small maturity period.
Now-a-days H.B.L. has been investing almost 18% of its total
investment on cotton business, along with investment in cotton it should
invest in other cash crops, i.e. Rice, Sugar Cane, Tobacco, Wheat etc and
there related agro based industry.

THREATS
First threat that bank has to face is the Privatization, down
sizing & restructuring these changes could make drastic effects as well.
New incoming local & specialy foreign banks those are main
cause of stiff competition in the market
DFI’s are going very well in financial set up of Pakistan. So,
these are also effecting on the operations of bank. Along with other
threats the threat of corruption has vital importance.

69
INTERNSHIP REPORT HABIB BANK LIMITED

CONCLUSION
Habib Bank limited was rated among first 500 banks of the world but
now it is in among 1000 banks in the world, H.B.L. is not progressing
due to political influence, in efficient management & corruption. If these
draw backs have removed then bank will not only join its previous
position rather we hope it will be rated among world top ten banks.

70