Submited to:

Sir, Fida Hussain Bukhari

Submitted by: Adnan Ijaz M08MBA071 Specialization in Finance

MBA Banking & Finance 2008-2010

Hailey College of Banking & Finance University of Punjab

Internship Report on Zarai Taraqiati Bank Ltd.


In the name of ALLAH the most benificent, the most merciful

Internship Report on Zarai Taraqiati Bank Ltd. 2010

I have great sense of gratitude for the most Beneficent and Merciful Allah who has always helped me in all matters of life .I tried but He rewarded me more than the tried. I have deep feelings for whole of my family, in general, and for my Father, my Mother and my elder brother, in particular .They have always soothed me, elevated me and their words and du’a has floated me in the deep seas of troubles. All of my successes are due to the prayers of my family. I am thankful to all of my teachers and my class fellows and friends whom cheerfulness and guidance is an asset for me .I am especially thankful to the bank staff who has given me opportunity to get precious practical knowledge and also for their guidance during my internship. Without the help of all these I was not able to complete this report.


products offered. 2010 Preface This Internship report is the compulsion put in by Hailey College of Banking and Finance for the award of master degree in business administration. In order to accomplish the task of completion of the degree. I went through 6 weeks internship training in the bank in order to perceive the true art and the practical picture of banks’ working and to go through the process by which the organization is making very good out of its limited resources. its products and financial analysis while the second part is based on the assignments I handled during my internship. I choose the renowned and reputed organization that is the Zari Taraqiati Bank Ltd. . financial analysis and assignments I handled during my internship. The report is divided into two main parts. The report is based on the introduction of the bank.Internship Report on Zarai Taraqiati Bank Ltd. I am positive that the college will oblige me by giving its recommendation and consent for the approval of the degree and the purpose for which I have gone through training and report writing procedure will be served positively. the first part includes the introduction of bank.

_____________________________________ 8 Chapter 1 ___________________________________________________________________ 9 History ___________________________________________________________________ 9 Credit Rating ____________________________________________________________ 11 Corporate Vision_________________________________________________________ 12 Corporate Mission _______________________________________________________ 12 Corporate Objectives _______________________________________________________ 13 Transformation of ZTBL to R.I of the country and road to excellence.F. 2010 Table of Contents Part One ____________________________________________________________________ 8 Ch.Internship Report on Zarai Taraqiati Bank Ltd. 1: Introduction of Zarai Tarqiati Bank Ltd. _________________________________________________ KSS Aim ________________________________________________________________ KSS Operation ___________________________________________________________ Objectives ______________________________________________________________ Services/Activities so far undertaken by KSS ___________________________________ 23 23 23 23 24 Chapter 2 __________________________________________________________________ 25 Products and Services ______________________________________________________ 25 ZTBL Locker Facility ______________________________________________________ 25 Products offered to Meet Finance Need of Farmers ______________________________ 26 Types of Loans Advanced __________________________________________________ 26 Loan Schemes _____________________________________________________________ Supervised agriculture scheme: _____________________________________________ Zarkhaiz (one window operation) ___________________________________________ Sada Bahar Scheme ______________________________________________________ Tea financing scheme _____________________________________________________ Crop maximization project _________________________________________________ PER ACRE CREDIT LIMITS ____________________________________________________ Major Crops ____________________________________________________________ Minor Crops ____________________________________________________________ Growing Agro Forest Trees_________________________________________________ Growing Orchards _______________________________________________________ Mature Orchard/Fruits crops _______________________________________________ 27 27 27 27 28 28 30 30 30 31 31 32 5 . ______________ 14 Branch Network ___________________________________________________________ 16 Management Hierarchy _____________________________________________________ 17 Board of Directors _________________________________________________________ 19 A Brief Resume of President _______________________________________________ 20 Kissan Support Services Ltd.

5: Assignments I handled during my Internship.Internship Report on Zarai Taraqiati Bank Ltd. _______________________________ 69 . 2010 33 33 33 34 Types of Security __________________________________________________________ Immovable Property _____________________________________________________ Moveable Property and Guarantees _________________________________________ Personal Surety _________________________________________________________ Debt Equity Ratio __________________________________________________________ 35 Repayment Periods ________________________________________________________ 36 Recovery Procedure ________________________________________________________ A) Recovery Schedule _____________________________________________________ b) Issuance of Notices ____________________________________________________ c) Legal Action __________________________________________________________ d) Rescheduling of Loan Repayment Facility ___________________________________ d) Down Payment for Rescheduling of Loans __________________________________ 36 36 36 36 37 37 Chapter 3 __________________________________________________________________ 38 Horizontal Analysis of Balance Sheet __________________________________________ 38 Vertical Analysis of Balance Sheet ____________________________________________ 39 Horizontal Analysis of Profit & Loss ___________________________________________ 40 Vertical Analysis of Profit & Loss ______________________________________________ 42 Interpetation of Horizontal and Vertical Analysis ________________________________ 44 Interpetation of Horizontal and Vertical Analysis of Balance Sheet __________________ 49 Cash and Balance with Treasury Banks _________________________________________ 49 Ratios ___________________________________________________________________ 52 Key Financial Trends of 2009 _________________________________________________ 55 Credit Risk _______________________________________________________________ Market Risk_____________________________________________________________ Liquidity _______________________________________________________________ Profitability _____________________________________________________________ Capitalization ___________________________________________________________ SWOT Analysis ____________________________________________________________ Strengths ______________________________________________________________ Weaknesses ____________________________________________________________ Opportunities ___________________________________________________________ Threats ________________________________________________________________ 57 58 59 60 60 65 65 66 67 68 Chapter 4 __________________________________________________________________ 65 Part Two ___________________________________________________________________ 69 Ch.

Internship Report on Zarai Taraqiati Bank Ltd. Debit Voucher_________________________________________________________ 2. Credit Voucher ________________________________________________________ 3. Transfer Voucher ______________________________________________________ 74 74 74 75 76 76 77 77 78 78 81 83 83 83 83 Sample of Debit/Credit Voucher ______________________________________________ 84 Sample of Transfer Voucher _________________________________________________ 89 Daily Transaction Scroll _____________________________________________________ 90 Making Entries in the Ledgers ________________________________________________ 92 Disbursement and Recovery Entries ___________________________________________ 92 Revolving SBS Loan ________________________________________________________ 94 Opening and Closing Cash ___________________________________________________ 97 Key Register ____________________________________________________________ 97 Safe Register: ___________________________________________________________ 97 Dispatch and Diary _________________________________________________________ 98 Recommendations _________________________________________________________ 98 Conclusion ______________________________________________________________ 100 7 . 2010 Chapter 5 __________________________________________________________________ 70 Organogram of Mian Channu Branch __________________________________________ 70 Redemption of loan ________________________________________________________ 71 Opening of Current Account _________________________________________________ 1: Acquiring Original CNIC _________________________________________________ 2: Filling Current Account Form _____________________________________________ 3: Filling of Know Your Customer Form _______________________________________ 4: Current Account Specimen Card __________________________________________ 5: Registering name in the Current Account Register (Issuance of A/C No.) ___________ 6: Filling of Deposit Slip of starting amount ____________________________________ 7: Signing by AMO and Manager ____________________________________________ 8: Issuance of Cheque book ________________________________________________ 9: Opening account in the ledger of bank _____________________________________ ZTBL Flood Relief Fund 2010 _______________________________________________ Writing of Vouchers ________________________________________________________ 1.

Internship Report on Zarai Taraqiati Bank Ltd. 3: Ch. 2: Ch. 4: Introduction of Zarai Tarqiati Bank Ltd. 1: Ch. 2010 Part One Ch. Products Offered Financial Analysis SWOT Analysis .

9 Audit Zones and 352 branches in Pakistan. Poultry. The Agricultural Development 9 . Animal Husbandry. of which the majority of members are agriculturists. warehousing and storage facilities to agriculturists. including: Forestry. under the Agricultural Development Bank Act. and was entrusted with the task of providing financial facilities for the development and modernization of agriculture. 2010 Chapter 1 The Zarai Taraqiati Bank Limited (ZTBL) (formerly known as Agricultural Development Bank of Pakistan) is the largest public sector financial development institution with a wide network of 27 Zonal Offices.Internship Report on Zarai Taraqiati Bank Ltd. 1961. they were merged into one organization known as Agricultural Development Bank of Pakistan on February 18. Fishery. Later on the Agricultural Development Bank of Pakistan was also established in September 1957. As the functions of the Agricultural Development Finance Corporation and Agricultural Development Bank were similar and since both were working with capital provided by the Government. cooperative societies and other bodies. Dairy Farming. History Pakistan is an agricultural country and more than 60% of its population is working related to agriculture. To keep With a view to meet this basic need the Agricultural Development Finance Corporation was set-up in 1951. A development in the agricultural sector will no doubt result in the development of the whole country. The Bank is to provide credit in cash or in kind. The bank serves around half a million clients annually and has over one million accumulated account holders.

autonomy. 2010 Bank of Pakistan was a banking company for the purpose of the Banking Companies Ordinance and the State Bank of Pakistan Act. delivering high quality. . aims at ensuring good ZTBL is providing affordable. After this incorporation all the assets and liabilities of ADBP became the assets and liabilities of ZTBL. Pakistan PKR 8. viable and timely financial services to a greater number of clientele in the agricultural and rural segment of the country with adequate returns to the stakeholder.7 Billion (2009) Ownership Type of Institution Established President & CEO Equity Headquarters Total Deposits Total Disbursement Homepage Government Specialized Bank 1961 Muhammad Zaka Ashraf 18. 2009) www.8 billion (as Dec.31st. comprising 68 % of the total population.Internship Report on Zarai Taraqiati Bank Ltd.89. On 14 December 2002 the Federal Government has converted the Agricultural Development Bank of Pakistan (ADBP) into Zarai Taraqiati Bank Ltd (ZTBL) and the new venture has started its operation with immediate effect. The bank is completely owned by the government and it has head office in Islamabad.ztbl.000. 2009) PKR 77.7 billion (as Dec. The Bank through a country-wide network of 352 branches is serving around half a million clients annually and over one million accumulated account holders with the average loan size of around Rs. This restructure was carried out with the aim to improve the working and role of bank in the agricultural development.31st. rural and agriculture financial services to the rural Pakistan. The new corporate structure redefines the banks statue as a public limited company with an independent Board of Directors promulgated under the presidential ordinance which.

11 . Year 2010 2009 Entity AAA/ A-1+ AAA/ A-1+ Stand Alone B+/ B B+/ B Outlook Stable Stable The credit rating of the bank is due to the reason that bank enjoys sovereign guarantee of the federal government that covers its debt obligations to State Bank of Pakistan (SBP) and ensures safety of deposits under the Banks’ (Nationalization) Act 1974. 2010 Credit Rating In August 2010. ZTBL continued to achieve AAA credit rating by JCR-VIS.Internship Report on Zarai Taraqiati Bank Ltd. The bank’s lending book is largely funded through SBP’s credit lines while contribution from deposits remains nominal. it would diversify the existing funding source of the bank. In case these efforts materialize. ZTBL is actively exploring different options for resource mobilization including bilateral/multilateral arrangements with financial institutions. thereby reducing reliance on the SBP.

Internship Report on Zarai Taraqiati Bank Ltd.


Corporate Vision
Dedicated to serve the needs of the farming community, by delivering financial products and technical services on a competitive and sustainable basis, in a convenient, efficient and professional manner, leading to success of the Bank and the farmers.

Corporate Mission

To play effective role in the promotion of economic growth, by enhancing the availability of credit to the agriculture sector, through reliable access to sustainable financing, special lending programs, technical assistance, and other products & services, and to promote career development opportunities for increasing professionalism and technical proficiencies of employees.

Internship Report on Zarai Taraqiati Bank Ltd. 2010

Corporate Objectives
1. Develop and operate as a financially and operationally sustainable R.F.I of the country. 2. Assist rural community, particularly the small farmers, in raising their productivity and income levels through timely delivery of credit, advisory and ancillary services. 3. Build ZTBL's image as a proactive, client friendly, financially & operationally sustainable with indigenous product deployment. 4. Establish and provide backward and forward linkages to strengthen agri. value added commodity chains. 5. Engage in public - private and wholesale - retail partnership to deepen outreach and reduce operating cost. 6. To function as a rural commercial bank to mobilize rural capital formation and to commercialize the agriculture sector by delivering the true value of credit to the client. 7. Provide a wide range of risk insurance products to its clients. 8. Open up its venues of operation to Domestic & International Banking Industry to avail comparative advantages.


Internship Report on Zarai Taraqiati Bank Ltd.


Transformation of ZTBL to R.F.I of the country and road to excellence.
The conversion of ADBP into ZTBL had a conditionality of the Asian Development Bank (ADB) loan framework as per which a restructuring exercise was initiated. The restructuring process entailed ADB’s Rural Finance Sector Development Program (RFSDP) with the objective to transform ZTBL into a sustainable Rural Finance Institution. It also included the up-gradation of Information technology (IT) infrastructure for which funds from ADB’s loan were to be utilized. Healthy and well-functioning rural finance markets are directly related to achieving the two key national policy objectives of accelerating rural/agriculture growth and reducing poverty. The realization of these objectives depends on the simultaneity of developments in rural finance and non-financial markets to foster the creation of diverse sources of rural finance to build sustainable financial institutions, and stimulate products and capital flows in the rural sector. For this, rural finance must be seen as an integral part of equitable development within a framework of macroeconomic stability. For the majority, access to affordable rural finance services is also important to enable them to compete in the post-World Trade Organization scenario. Inability to compete because of high financial costs could reduce income of the majority of farmers and rural clients, particularly the small and subsistence clients. Lack of access to affordable rural finance services will also prevent the clients from switching to non-farm activities. The ZTBL restructuring plan covering the following;  Governance: establish an environment that facilitates good governance and accountability;  Systems: modernize operations through use of technology, networking, and communication tools;  Business processes: streamline products and delivery systems so as to reduce transaction costs, simplify operations, and increase outreach;  Products and services: introduce products and services that are financially economically viable;  Human resource development: improve standards and skills of management and staff and strengthen training capacity; and  Information Technology: establish new hardware and software platform to support MIS, accounting system including forensic accounting, and risk

The reforms shall establish ZTBL as a key R.I of the country.F. financial services through intermediations under public private participation and whole-sale retail lending mechanism. the bank aims to establish network of high tech rural and agri. 2010 management functions. 15 . By expanding its private sector role.Internship Report on Zarai Taraqiati Bank Ltd.

G.Abad 10 Branches . Khan 7 Branches Muzafar. Khan 14 Branches Turbat 6 Branches Quetta 18 Branches D.B.Internship Report on Zarai Taraqiati Bank Ltd.M.I. Pakistan Details of Regional Offices Punjab Sindh Balochistan Khaber Pakhtunkhaw Abbottabad 7 Branches Mingora 15 Branches Peshawar 20 Branches Gilgit Balitistan Gilgit 7 Branches Islamabad 13 Branches Multan 8 Branches D.Khan 6 Branches Sahiwal 15 Branches Lahore 20 Branches Gujranwala 18 Branches Bahawalpur 13 Branches Faisalabad 20 Branches Sargodha 16 Branches Vehari 11 Branches Karachi 15 Branches Hyderabad 14 Branches Mirpur Khas 14 Branches Sukkur 15 Branches Larkana 18 Branches S.Y. 2010 Branch Network Head Office Islamabad. Nazirabad 14 Branches D. Jamali 7 Branches Total Zones Total Audit Zones Total Branches 27 9 352 Muzafargarh 11 Branches R.

Head Risk Management dep. In ZTBL. President CEO (Chief Executive Officer) Audit Dep.Internship Report on Zarai Taraqiati Bank Ltd. who then supervise and direct the officers under them. at present the bank has 7 directors including chairman. One member on this board represents the State Bank of Pakistan also. The management hierarchy of bank is as follows. 2010 Management Hierarchy The general direction and superintendence of the affairs of the bank are entrusted to a 12 members Board of Directors consisting of a chairman appointed by the Federal Government. However. the president supervises and directs the Chief Executive Officer who supervises and directs the Head of Department. four officers of the four Provincial Governments and one non official nominated by each province. Head Officers Officers Officers Officers 17 . the Federal Government officers from the Ministries of Finance and Food and Agriculture. The bank also has a president appointed by the federal government and a company secretary. Head Credit Dep. Head HRM Dep.

. This task force will be responsible to evaluate performance of each MCO.Internship Report on Zarai Taraqiati Bank Ltd. More than 2. Bank has established a task force for improving the operational performance of the staff and it was monitoring the disbursement. 2010 Earlier the bank was functioning like a pure government institution and permission has to be sought on every step for moving forward.000 employees of the bank have opted for Voluntary Golden Hand Shake Scheme. recovery operations and performance of field functionaries. offered by the bank to its employees. Now the bank management board will be fully empowered to run the affairs of the ZTBL. Manager and Regional Manager on the achievement of bank’s policies regarding credit and recovery periodically. The task force comprised 10-15 officers and each officer will head a desk exclusively to monitor 3-4 regions.

Muhammad Mohmand Director Iftikhar Khan Mr. 2010 Board of Directors Syed Qamar-Uz-Zaman Shah Chairman Board Mr. Khalid Ahmad Khokhar Director Mr. Imam Bux Sheikh Director Mr. Tauqir Ahmad Faiq Director Dr.Internship Report on Zarai Taraqiati Bank Ltd. Nazrat Bashir Director Mr. Muhammad Ashraf President/ CEO Zaka Mrs. Shafqat Naghmi Director Hussain Mr. Muazam Ali Company Secretary 19 .

Pakistan Sugar Mills Association (Punjab Zone) from October. from 1st January 1989 to 2008 . Agriculture Department.Internship Report on Zarai Taraqiati Bank Ltd. 2006 (Second Tenure)  Chairman. 2010 A Brief Resume of President Mr. Lahore  Patron-in-Chief Sindh Abadgar Welfare Association (Sindh) Posts Held  Advisor to Chief Minister Sindh from 1989 to 1990  Member Executive Committee. Government of Punjab  President. Zarai Taraqiati Bank Ltd. Bahawalpur. Lahore Chamber of Commerce & Industry from October 2002 to September 2004  Central Chairman All Pakistan Sugar Mills Association from October 2004 to October 2006  Vice Chairman of The Federation of Pakistan Chambers of Commerce & Industry’s Standing Committee on “Food & Agriculture” from January 2007 to December 2007 Academic Institutions  Member Board of Governors of Sadiq Public School. Muhammad Zaka Ashraf Present Portfolios  President/Chief Executive Officer. Ashraf Group of Industries  Chairman. Sugarcane Research & Development Company.  Chairman & Chief Executive. Petarian Association.

New York. Domestically too she has attended various programmes in some of very prestigious institutions of Pakistan. She has extensively traveled abroad and has attended various international Seminars and Conferences such as on Micro Finance. USA and Master in Psychology from Peshawar University. GoP. She is Masters in Economics from New York University. She is a certified Director on the Panel of Pakistan Institute of Corporate Governance (PICG). she is working as Additional Finance Secretary. she is on the Board of Directors of National Investment Trust (NIT) and NBP. Anti Money Laundering. Peshawar. 21 . Besides Zarai Taraqiati Bank Limited. Nazrat Bashir Director Ms.Internship Report on Zarai Taraqiati Bank Ltd. Finance Division. and Instruments of Financial Markets etc. Internal Finance. She possesses 29 years of administrative experience in government service in economic & financial policy and its implementation. At present. Islamabad. Nazrat Bashir belongs to District Management Group of Civil Services of Pakistan. 2010 Ms.

and Social Welfare Departments. Tauqir Ahmad Faiq Director Tauqir Ahmad Faiq represents the Ministry of Food and Agriculture. he is currently Additional Secretary at the Ministry of Food and Agriculture. .Internship Report on Zarai Taraqiati Bank Ltd. Islamabad. Development Project Management and International Cooperation with combined experience of 34 years having held the office of Secretary at Government of Punjab’s Zakat and Usher. 2010 Mr. Tauqir Ahmad Faiq has served as Director General Lahore Development Authority Government of Punjab and has also been member the Board of Revenue and Population Welfare Department of Government of Punjab. Shafqat Hussain Naghmi is a civil servant from DMG Group and currently posted as an Additional Secretary I in Federal Ministry of Commerce. Secretariat Affairs. Government of Pakistan. Government of Pakistan on ASF’s Board of Directors. Shafqat Hussain Nagmi Director Mr. Previously he was posted as Chief Operating Officer (COO) in Pakistan Cricket Board. An expert in District Management.

vocational training. Objectives The main objective of KSS are following:  To provide to the Bank all kinds of support staff and ancillary services  To plan. which may seem to the company capable of being conveniently carried on  To liaison & establish contracts with agricultural research organizations for development of efficient. 2010 Kissan Support Services Ltd. effective and appropriate technologies  To carry on business of providing consultancy. advisory and other agency services and support services to Zarai Taraqiati Bank Limited 23 . sports and recreation facilities  To invest any surplus money of the company not immediately required  To carry on any business. Is a subsidiary of ZTBL which is established with a capital investment of 100 Million to help ZTBL in the achievement of its objective and also to make availability of trained human capital to the bank.Internship Report on Zarai Taraqiati Bank Ltd. Subsidiary of ZTBL Kissan Support Services Ltd. KSS Operation Kissan support services operates under its Memorandum & Articles of Association. organize and establish training facilities to impart training to the bank’s staff  Drip Irrigation System to assist the bank clients in marketing of their product and provide storage facilities  To assist the bank clients in marketing of their product and provide storage facilities  To provide welfare services to the employees of the Bank including education. KSS Aim To provide support staff to ZTBL & under take its non core activities.

Sports club h. Warehouse  Management of Sports Activities  Management of Sports Activities  Photocopy Services  Day to day minor repair and maintenance of ZTBL HQ Buildings .Internship Report on Zarai Taraqiati Bank Ltd. Ztbl Farms c. Services/Activities so far undertaken by KSS  Security Services to ZTBL  Recruitment/provision of staff  janitorial Services provided to: a. ZTBL Head office buildings b. AV Unit f. Staff college d. Old record office g. 2010  To provide to the Bank’s clients quality products and services for efficient and improved farming  Etc. Printing stationery office e.

000/- Medium 13-1/2"x41/2"x23" Large 13-1/2"x81/2"x23" Life Time Locker Facility On lump-sum payment of locker rent for ten years entitle the lessee to avail the locker facility for life time. 2010 Chapter 2 Products and Services ZTBL Locker Facility Zarai Taraqiati Bank Ltd. apart from its core functional activity marked with country based agri-business.No 1 2 3 4 5 6 7 8 9 10 11 Name of Branch Islamabad Branch Main Branch Lahore Peshawar Branch Gujranwala Branch Faisalabad Branch Multan Branch Sahiwal Branch Sargodha Branch Khan Pur Branch Shafi Court Branch Main Branch Gulshan-e-Johar Following are the approved rates for rent of lockers and key deposits against which lockers will be allocated: Type Small Specification 6-1/2"x41/2"x23" Rent Per Annum Rent after grace period Key Deposit Rs.Internship Report on Zarai Taraqiati Bank Ltd. has started to serve its valued customers by offering lockers facility.2.000/Rs.3.1.125/Rs. 15.250/Rs.1. 5.200/Rs.2. 10.500/Rs.1.000/Rs. this facility is being offered at following 11 branches:S.800/Rs.500/Rs. without key deposit. 25 . Initially.

To facilitate farmers and to help in modernization of agriculture sector the government has established this bank which is contributing its part in achieving government objective from many decades. 2. poultry farming. But instead of being an agricultural country Pakistan is still not gaining benefits from this sector which it can gain. godowns and orchard in yearly/half yearly installments within maximum period of 8 years. Types of Loans Advanced 1. The other financial institutions feel reluctant in giving finance to farmers due to high level of risk in the production of this field. Pakistan is an agricultural country and near about 60% of its population is working directly or indirectly related to agriculture industry. agricultural machinery. The installments of these loans are usually paid able in quarterly or half yearly basis. In includes.Internship Report on Zarai Taraqiati Bank Ltd. It includes. The main hindrance in the modernization of agriculture is the unavailability of finance. Long Term Loans Long term loans are for a period of more than 5 years. 3. These are development loans which require large amount and also need some time to show its result in the shape of better production. Some time we even does not able to fulfill our food requirement and sometime we have bumper crop but does not have facilities to store them properly. . in this way we are wasting our resources. ZTBL is offering a blend of products to fulfill the need of different types of customers. It includes loans for tractor. crop production working capital loans recoverable in lump sum commencing after the harvest/marketing of respective crops and within maximum period of 12 months. Medium Term Loans Medium term loans are for a period of more than a year but less than 5 years. Short Term Loans Short term loans are loans for shorter period of less than a year. dairy farming and livestock etc. 2010 Products offered to Meet Finance Need of Farmers Zarai Taraqiati Bank Limited (ZTBL) is a specialized bank providing agricultural credit in rural areas of the country. To gain benefit from agriculture sector it is required to be modernized to increase the per acre production and also to build warehouses to store.

Assessment for inputs requirements for the whole year is made at the time of first application. Supervised agriculture scheme: Under this scheme agriculture loans are given for short.Internship Report on Zarai Taraqiati Bank Ltd. tractor. 2010 Loan Schemes ZTBL is offering the following loan schemes to the farmers. guidance for implementation of the scheme.O. information are provided to the farmers for planning the farm. Applications processed on the same day whereas sanction payments are made within three days at Branch. The Managers are authorized to sanction such loan limits up to Rs.00 million per borrower/per case. marketing and repayment of loans. medium and long term loans up to Rs. The loans are sanctioned for In Fats. agricultural machinery. loans are provided to the borrowers under One Window Operation being conducted twice a week during Rabi and Kharif seasons. tube well and irrigation facilities etc. 1. orchard.500 million. under the scheme besides provision of credit. production. For Rabi Crops one window operation from October to January and for Kharif Crops from April to September each year which is extendable as per requirement of particular area. Scheme’s main features are as under:  Revolving Credit Limit is fixed to cater production credit and ancillary requirements of the farmers during one year period. Zarkhaiz (one window operation) For timely and conveniently provision of credit to purchase inputs. livestock. 27 . The amount so assessed is treated as Revolving Limit provided it is within the security limit. Sada Bahar Scheme For providing timely input loans for crops and working capital for poultry and fishery etc. the Bank has launched a Sada Bahar Scheme.

Internship Report on Zarai Taraqiati Bank Ltd.


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

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

Crop maximization project
Ministry of Food, Agriculture and Livestock (MINF AL), Government of Pakistan has launched Crop Maximization Project in 109 villages in various districts throughout the country to increase the productivity/yield of crops. Under the project MINFAL has to provide funds of Rs, 299.893 million to ZTBL for disbursing loans to the project farmers

Internship Report on Zarai Taraqiati Bank Ltd. 2010 for purchase of inputs. Till the time funds of Rs.468 Million have since been received by the Bank for the purpose. These funds are to be revolved for meeting input credit needs in the project villages till 30th June, 2014 after which Bank will return the principal amount to MINFAL. Accordingly Credit needs of the project farmers are being met by respective ZTBL branches through Village Organizations formed for the purpose. Duly the currency of the project Bank is authorized to charge 4% per annum mark-up on loans to project growers to meet its operational cost, however in case of default Bank’s normal rate of return i.e. 9% p will be applicable.


Internship Report on Zarai Taraqiati Bank Ltd.


Major Crops
Wheat Paddy (Rice) Sugarcane Cotton Maize 16,000 19,000 30,000 21,000 20,000

Minor Crops
Overall Credit Limit Per Borrower Sada Bahar Scheme under one window operation or otherwise Rs.1.000 Million Rs.0.500 Million

Potato Tobacco Mustard Mung Tomato Mash Lentil Groundnut Sunflower Soyabean Canola Rape Seed Til(Sesame) Suger beet

36000 29000 11000 19000 3000 11000 14000 15000 12000 13000 11000 12500 12000

Bajra Jawar Gram Guara Caster Oil Barlay Berceme Janter Garloc Turmeric Ginger Lacern & Shaftal

11000 11000 12000 3000 6000 9000 4900 4000 26000 25000 30000 4500

000 20.000 13.000 2nd Year 8.000 4th Year 13. No.000 10.000 7.000 2nd Year 13.000 6.Internship Report on Zarai Taraqiati Bank Ltd.000 12..000 6.000 10.000 9.000 13.000 33.000 19.000 5th Year 14.000 26.000 23.000 11.000 21.000 12.000 7.000 23.000 7.000 12.000 31 .000 3rd Year 3.000 12.000 13.000 12.000 10.000 6.000 29.000 21.000 8.000 11. 1 Trees Bamboo 1st Year 34.000 18.000 Growing Orchards S.000 11.000 3rd Year 13.000 12.000 7.000 13.000 29.000 14.000 13.000 12. 1 2 3 4 5 6 7 8 9 Trees Mango Citrus Apple Banana Jujuba Guava Coconut Palm Oil Dated 1st Year 24.000 30. 2010 Growing Agro Forest Trees SNo.

Internship Report on Zarai Taraqiati Bank Ltd. 2010 Mature Orchard/Fruits crops Pear Loquat Plum Apple Papaya Almond Coconut Lichi Cherry Mango Apricot Banana Peach Citrus 24000 24000 33000 37000 22600 32000 21000 32000 33000 37000 31000 37000 32000 34000 Dates Strawberry Tea Guava Pomegrante Palm Olive Oil Walnut Persimen Zizi Phus(Bher) Melon Water Melon Musk Melon 31000 25000 60000 24000 33000 22000 13000 23000 15000 25000 16000 16000 16000 .

Government securities 85% of face value or market value whichever is less.Internship Report on Zarai Taraqiati Bank Ltd. 2. 4. Guarantee issued by Central or Provincial Government Full amount of loan plus return and other charges. Unconditional Bank guarantee from scheduled Banks Up to maximum amount of an un-conditional Bank guarantee after keeping sufficient margin for un-paid mark-up. cost. charges and expenses. 3. 2010 Types of Security Immovable Property Agricultural Land     Under Pass Book System 80% Outside Pass Book System 70% Under Alienability Certificate 66% Commercial/Industrial Land under Pass Book 80% Outside Passbook System     Urban Residential/Commercial Plots in all localities outside Pass Book 75% Alienability Certificate 66% Residential/Commercial Buildings 70% Lease hold rights of a leased land of CDA/KDA with 99 years lease 70% Moveable Property and Guarantees 1. Defense Savings & FEB Certificates 75% of value of certificates presented as security. 33 .

. 6.000/. support.Internship Report on Zarai Taraqiati Bank Ltd. NIT Units 80% of the face value or market value whichever is less.25. Personal Surety Against a bond with two sureties under General Credit and one surety in Special Schemes up to Rs. 7. Life Insurance policies 85% of surrender value 8. Fix Term Deposits Receipts 85% of face value of deposits receipts.or Up to 50% of appraised value of properties of sureties. 2010 5. Pledge of Potatoes/Seed Potatoes price or market value which ever is less Up to 75% of Govt.

0.1 Million.0. Used Tractor. 2010 Debt Equity Ratio For Tubewell/Tractors/Implements/Attachments/Equipments All kinds of Tubewells/ Turbines New Tractor 25% Within 5 years in annual/bi-annual installments commencing one year after first disbursement Within 8 years in monthly/quarterly or half yearly installments to be decided by Manager in consultation with borrower.5 Million Land holding beyond 50 acres/loan amount beyond Rs. Equipments/ attachments/ implements and used tractor No equity but 10% of the loan is to be needed in PLS Account -do- Except Tubewell/Tractors/Implements/ Attachments/Equipments Production Loan upto Rs. Within 5 years in monthly/quarterly or half yearly installments to be decided by the Manager in consultation with borrower. Million Land holding upto 25 acres/loan amount upto Rs.5 Million upto Rs. NIL 15% 25% 30% 35 .2 Million upto Rs.2 Million Land holding beyond 25 acres to 50 acres/loan amount beyond Rs.Internship Report on Zarai Taraqiati Bank Ltd.

godowns and orchard iIn yearly/half yearly installments within maximum period of 8 years and. account is to be settled by recovery of amount from the auction of the mortgaged property. No. In yearly/half yearly/monthly installments and within maximum period of 5 years. Dairy farming and livestock etc. above. c) Legal Action  Legal action can be initiated against the defaulter if loan is not repaid even after expiry of legal Notice period.Internship Report on Zarai Taraqiati Bank Ltd. Recovery Procedure A) Recovery Schedule  Recovery schedule in each loan case as per terms of sanction of loan is fixed and communicated to the borrowers after disbursement of loan. further legal action will be taken to recover the dues. b) Issuance of Notices  Demand notice is issued before the due date of every installment. agricultural machinery.  In case of default or failure in repayment of any installment on due date the mark-up shall continue to be charged and last installment due to this may differ from the amount of installments fixed at the time of disbursement.  The bank may purchase the mortgaged property if considered feasible to dispose it off later on through auction or in any manner deemed fit for getting the best price. poultry farming.  A Legal Notice is issued one month after the due date informing the borrower that if the amount is not repaid within next one month. Tractor. 1 2 3 Types of Loans Recovery Period Short Term Loans Medium Term Loans Long Term Loans Crop production working capital loans recoverable in lump sum commencing after the harvest/marketing of respective crops and within maximum period of 12 months. .  Where the court in bank's favour has decreed a case. 2010 Repayment Periods S.

d) Rescheduling of Loan Repayment Facility  ZTBL allows rescheduling of repayment of installments to its borrowers in order to maintain credit discipline and to mitigate their genuine problems in real hardship cases and in areas declared as calamity hit by the respective Provincial Governments  The Rescheduling facility is to be considered by bank on case to-case basis and is to be allowed on borrower's request only.  The borrowers shall have to pay the return for the extended period. d) Down Payment for Rescheduling of Loans Rescheduling Number 1st 2nd 3rd Rate of down payment as against due installments to be rescheduled 10% 20% 30% 37 .Internship Report on Zarai Taraqiati Bank Ltd. 2010  The bank may dispose off the mortgaged properties of defaulters for satisfaction of its dues with out intervention of courts under Financial Institutions (Recovery of Finances) Ordinance 2001.Rescheduling of Loan Repayment Facility .  The relaxation in recovery period shall not be allowed beyond one year in any case.  The borrowers shall have to execute a supplementary loan agreement on Non Judicial  Stamp Paper of appropriate value to give legal cover to extended period.

149 19.998 78.Internship Report on Zarai Taraqiati Bank Ltd.432 1.729 0.000 73.741 112.360 -14.497 166.936 2007 % 31.500 404.000 3.000 -7.000 13.022 2.729 32.000 Operating fixed assets Other assets .845 12.222 400.764 0.729 98.307 39.013 -0.696 30.058 97.315 260.402 0.086 -0.773 -0.689 16.981 -8.532 428.842 -11.098 2004 % 100 100 100 100 100 100 100 LIABILITIES Bills payable Borrowings Deposits and other accounts Sub-ordinated loans Liabilities against assets subject to finance lease Deferred tax liability Other liabilities 210.274 349.899 -2.000 -15.465 0.478 -0.284 21.006 1.675 0.413 28.720 77.000 9. .813 2005 % -0.287 278.000 162.162 100 100 100 100 100 100 100 NET ASSETS REPRESENTED BY Share capital Reserves Unappropriated profit Surplus on revaluation of assets .695 973.925 10.595 -29.705 14.838 17. All the columns are representing change with respect to 2004.928 -18.000 46.948 19.942 32.125 14.212 -16.948 0.681 0.614 of tax 5.983 707.724 426.641 10.307 0.267 2006 % -18.375 Advances .860 11.418 3.162 100 100 100 100 100 100 Note: In this Horizontal Analysis the year 2004 is taken as a base year to calculate the change in other financial years.838 3.724 13.962 0.000 86.245 164.296 0. 2010 Chapter 3 Horizontal Analysis of Balance Sheet Particulars ASSETS Cash & balances with treasury banks Balances with other banks Lendings to financial institutions Investments .net 2008 % 8.915 0.000 38.364 1.

000 100.594 68.841 100.693 2.722 60.218 0.000 15.339 12.000 Operating fixed assets Other assets .438 3.000 1.385 71.012 4.353 5.320 6.152 0.847 4.000 100.927 0.338 4.000 0.739 0.000 18.516 15.715 19.669 100.178 100.527 0.000 100.121 64.418 100.407 4.000 100.000 0.000 100.408 10.669 6.000 100.523 0.086 0.000 100.324 65.000 0.914 Advances .000 2.000 39 .000 0.223 83.518 12.000 100.987 1.000 100.000 0.000 74.655 100.412 3.253 1.584 24.480 6.989 18.891 1.179 89.350 4.682 1.000 0.396 19.000 100.000 100.876 1.655 71.966 2.000 LIABILITIES Bills payable Borrowings Deposits and other accounts Sub-ordinated loans Liabilities against assets subject to finance lease Deferred tax liability Other liabilities NET ASSETS REPRESENTED BY Share capital Reserves Unappropriated profit Surplus on revaluation of assets net of tax 0.823 1.117 0.333 72.790 9.279 72.233 9.956 8.000 2008 % 2007 % 2006 % 2005 % 2004 % 1.000 100.Internship Report on Zarai Taraqiati Bank Ltd.000 100.164 9.000 92.385 3.106 0.000 4.584 2.664 5.143 6.460 0.319 1.616 100.940 8.501 65.000 100.771 0.000 100.000 0.048 100.736 4.000 100.000 0.899 9.512 4.606 91. 2010 Vertical Analysis of Balance Sheet Particulars ASSETS Cash & balances with treasury banks Balances with other banks Lendings to financial institutions Investments .000 0.000 100.290 3.855 7.395 63.796 100.554 11.011 28.762 0.

541 -123.750 241.000 -16.737 4286.466 0.473 -9.483 0.988 -64.000 266600.000 0.000 175.299 -54.732 144.828 -92.000 82.000 0.490 -100.783 58.293 65.Prior years .965 -107.893 -92.474 12392.485 73.000 0.283 509.854 25.610 478. 2010 Horizontal Analysis of Profit & Loss Particulars Mark-up/return/interest earned Mark-up/return/interest expensed Net mark-up/interest income Provision against non-performing loans and advances Provision/(reversal) for diminution in the value of investment Write offs under Government relief packages Bad debts written off directly Net mark-up/interest income after provisions NON MARK-UP/INTEREST INCOME Fee.586 -56.982 2007 % -13.000 0.355 0.279 -168.745 -48.000 189060.344 30.455 52.551 2004 % 0.120 0.Current .000 0.501 11.825 -87.Internship Report on Zarai Taraqiati Bank Ltd.932 -2.000 105.133 486.000 0.405 38.772 6.594 506.700 241.617 0.618 -35.Deferred 85.279 0.920 -158.859 -12. commission and brokerage income Dividend income Other income Total non mark-up/interest income NON MARK-UP/INTEREST EXPENSES Administrative expenses Provision against other assets Provision for stolen fixed assets Other charges Total non mark-up/interest expenses PROFIT BEFORE TAXATION Taxation .133 -11.560 7.000 0.000 0.557 58.546 27.980 2006 % -26.249 5.459 2574.749 14.000 0.000 98.000 2231120.024 -10.000 .638 49.828 -107.105 55.258 -36.468 35.118 913.000 0.700 175.224 -43.182 7.822 89.000 -44.217 -30.000 0.214 -101.000 0.000 2008 % 4.002 -27.000 0.815 2005 % -15.000 0.184 379.000 0.000 0.026 15739.362 9.996 7.507 29.567 57.995 55.536 500.261 54846.000 12240.283 514.166 13.363 0.

41 .262 33.000 0.791 -26. All the columns are representing change with respect to 2004.262 105. 2010 PROFIT AFTER TAXATION Unappropriated profit brought forward Profit available for appropriation Transfer to statutory reserve Transfer to contingency reserve 291.854 -43.028 -36.548 -119.Internship Report on Zarai Taraqiati Bank Ltd.182 105.348 -26.548 205.000 Profit caried forward Basic earnings per share (Rupees) Note: In this Horizontal Analysis the year 2004 is taken as a base year to calculate the change in other financial years.775 112.603 12.348 -117.000 0.000 0.742 0.854 12.289 346.096 235.096 346.769 455.457 160.049 55.000 0.

938 100.937 0.000 100.000 73.853 100.909 -0.000 0.000 100.145 100.377 0.000 0.994 6.605 0.603 100.631 98.804 2004 % 163.000 100.000 -3.539 2007 % 194.410 100.019 100.641 100.740 -0.000 0.117 99.771 98.772 100.000 0.000 0.776 .091 100.000 100.186 0.066 0.831 100.053 0.Current .000 95.052 58.000 0.038 99.103 14.000 100.046 0.605 101.946 2005 % 106.855 0.605 -17.494 0.549 0.961 100.273 0.058 100.000 100.000 0.000 0.000 100.651 0.000 99.000 0.306 100.999 66.264 53.049 50.091 6.000 0.001 99.848 84.837 100.000 99.000 34.049 1.012 0.517 0.000 45.252 0.000 -0.Prior years .000 99.727 100.983 1.000 99.000 -12.831 94. commission and brokerage income Dividend income Other income Total non mark-up/interest income NON MARK-UP/INTEREST EXPENSES Administrative expenses Provision against other assets Provision for stolen fixed assets Other charges Total non mark-up/interest expenses PROFIT BEFORE TAXATION Taxation .000 97.000 46.000 66.772 87.Internship Report on Zarai Taraqiati Bank Ltd.019 15.000 0.000 4.000 -1. 2010 Vertical Analysis of Profit & Loss Particulars Mark-up/return/interest earned Mark-up/return/interest expensed Net mark-up/interest income Provision against non-performing loans and advances Provision/(reversal) for diminution in the value of investment Write offs under Government relief packages Bad debts written off directly Net mark-up/interest income after provisions NON MARK-UP/INTEREST INCOME Fee.110 0.000 84.934 0.000 0.833 37.644 100.000 31.076 0.926 2006 % 187.833 0.619 100.007 100.043 0.866 0.000 101.151 100.000 65.056 34.070 100.000 99.502 -0.000 147.934 0.999 0.098 63.058 70.922 100.052 0.197 99.000 100.000 84.000 92.000 32.000 100.098 100.574 0.167 95.451 100.368 0.041 0.Deferred PROFIT AFTER TAXATION 2008 % 170.

000 0.000 4.000 0. the Key Financial Trends of year 2009 is included in the report which I have obtained from the credit rating report published by Japan Credit Rating Agency on August 2010. The last financial statement which is available in the printed form is of year 2007.Internship Report on Zarai Taraqiati Bank Ltd.000 0.000 Note: The Financial statement for the year of 2009 is not available online.397 100.000 49.590 100.355 0. However.641 100.000 0.000 0.000 100.000 13.000 100.000 62.000 0.096 100. 2010 Unappropriated profit brought forward Profit available for appropriation Transfer to statutory reserve Transfer to contingency reserve Profit caried forward 41. With the reference of branch manager I have requested it from the Head Office but I came to know that publication department has not published the financial statement for the year 2009. The internship report also includes a glimpse view of banks performance from 1997 till 2009 which I have collected from the bank’s website. other websites and newspapers. This is the reason that the horizontal and vertical analysis is done from 2004 to 2008.224 100. The financial statement of year 2008 is also not available in printed form however it is available on internet in the excel format which does not include director and auditor report.356 100. I have tried to get copy of financial statement from the offices of bank but I failed to find any copy from the branch where I have completed my internship then I have contacted zonal offices and they also did not have any copy of the financial statement of year 2009. ZTBL is government institute and it is not listed in any stock exchange.000 117.000 100.000 100. 43 .000 33.000 0.

2010 Interpetation of Horizontal and Vertical Analysis Markup/ Return/ Interest Earned Markup/return/interest earned is the amount which the bank earns from its primary function of lending money to its customers. the bank has less focus of investment. This expense shows an increase as compared to previous years which shows that bank’s cost of deposits and borrowings has been increased. When I compare the markup/return/interest earned by the bank in the past 5 years it shows that the bank has improved its primary function in recent years. the reason of this performance can be the political unrest in the country due to which sufficient attention couldn’t be given to bank’s working or it can be result of large NPL’s. From the amount of deposits in the balance sheet it is clear that the deposits of bank are not of significant amount as compared to borrowing. It can be due to two reasons that either bank has deposits in the current account on which it has to pay no or less cost or it is due to less deposits. This increase can be due to two reasons. I also know that bank is working manly on the amount borrowed from SBP rather than on deposits collected from the general public and institutes. From the vertical analysis of Profit and Loss account it is clear that the income is .Internship Report on Zarai Taraqiati Bank Ltd. Markup/Return/ Interest Expensed Markup/Return/ Interest Expensed is the expense of bank on taking deposits and borrowings from the SBP. In the notes it shows that bank is paying a large amount on borrowing from the SBP rather than on the deposits. Increase in this income shows that bank is growing. it is earning a handsome amount from the placement which it has made with other banks. The year from 2005 to 2007 shows a decline in this income which is a clear sign that in that specific years the bank performance was not satisfactory. However. it can be due to increase in the amount of deposits and borrowing or it can be due to increase in the rate the bank offered on deposits and on borrowing from SBP. however if the increase in expense is more than the increase in the income than it will be a negative sign. the reason of this growth can be either the increase in customer base or in the increase of rate of lending. An increase in markup/return/interest expensed is not a bad sign if the markup/return/interest income is also increasing. In the notes related to markup/return/interest earned it shows that the bank is earning a major part of its income from the loans given to customers.

When I look net income in terms of amount in the profit and loss accounts of last five years I find it positive and a handsome amount to bear the other expenses of the bank. Provision again Non-Performing Loans This shows the cost bank is charging to it P&L account against those loans which may become bad debts. This shows the customer base of the bank to which bank is lending. The horizontal analysis of the P&L account shows that the provision created by the bank is reduced in 2008 as compare to 2007 which is a positive sign. the lesser the cost the better and trustworthy client base the bank has. Provision/ (reversal) against diminution in the value of investment This shows any provision required to charge or reverse for the investment made by the bank. 2010 much more than the expense which shows that the bank has cushion to confront with other expenses incurred due to secondary functions of the bank which is a positive sign. Net Markup/Interest Income It is the income which the bank is earning after paying the markup/return/interest expensed. Horizontal analysis of P&L A/C shows the decline in the recent years in this provision which is a positive sign for the bank. Write offs under Government Relief Packages 45 . Because the horizontal analysis is showing result by taking 2004 as a base year that is why in the year 2006 and 2007 it shows negative sign which means that in these two years the net income of the bank has been decreases as compared to year 2004. almost all banks try to reduce this cost. From the horizontal analysis of the profit and loss it is clear that there are many ups and downs in this income which is result of decline in the markup/return/interest income of the bank. The reason of large provision in 2007 can be due to uncertainty in the stock market etc.Internship Report on Zarai Taraqiati Bank Ltd. An increase in the provision shows that the investments of the banks are declining in value which will definitely result in loss and if the provision made before is reversed it shows that the value of the investment is increasing. Which shows that bank’s credit and recovery departments has improved their workings. But in the year 2008 it shows recovery and it is increased as compared to previous two years of 2006 and 2007. But in the year 2008 it again shows recovery.

However. An increase in this income is also a positive sign it shows that the bank is also making its secondary functions profitable. and it will result in more Gross Profit. So. Net markup/ Interest income after provisions This is net income after charging provisions.Internship Report on Zarai Taraqiati Bank Ltd. Recovering a previously written off loan is a positive sign because it is causing an increase in the income of the bank. Because. But this income may also have a portion of income gained by the bank by the sale of scrap or old machinery etc. Non Markup/Interest Income It is the income which the bank in earning from its secondary functions. The profit and loss account of the bank is showing an increase in the non markup/interest income which is a positive sign. 2010 ZTBL is a government bank due to which the government can ask it to give relief to loanees of particular regions of category which also increase the cost for the bank. It is not a positive sign if this income is larger part of total non markup/interest income. the bank will not have the scrap to sale in all years and having larger part of this income of sale of scrap will definitely depicts that the bank’s profitability can be affected in the coming years. . the dividend income etc. The flood of 2010 is expected to increase this cost in this financial year too because a large number of farmers have been effected with this flood and they are not in the situation to return their borrowed amount to the bank. The vertical analysis of the profit and loss shows that other income is the larger part in non markup/interest income and from the notes it is clear that in the other income. if the net markup/interest income after provision is increasing it is a positive sign because the bank will have more amounts to pay its other expenses like admin expenses etc. An increase in this income is a positive sign which can be due to two reasons that either the net markup/return/interest income has increased or the provision required to be charged by the bank is reduced due to less number of NPL’s loans. The secondary functions shows the amount earned from the commission charged in the services offered by the bank. For the year 2008 there is not any amount which is asked by the government to write off but in the year of 2007 and 2006 there is some amount which banks directly written off on the instructions of the government. Modernizing and Restructuring) which will result in better performance. if the bank has sold old machinery and in the meanwhile new machinery is added in the assets of the bank than it will be a positive sign because it will show that the bank is working on BMR (Balancing. the amount recovered which has been written off previously is making a bigger portion.

From the horizontal analysis it is clear that the admin expenses has been increased in 2008 but the profit of the bank is also increased so it is not a negative sign. motor vehical cost of repairing etc are also effecting this cost a lot. the increase in the profitiability is not constant there are ups and downs in it. if the percentage change in the increase in the admin expenses is more than the percentage in the increase in the income than it is a negative sign beacause is paying more to increase its income. So. So. it is almost doubled in the last 5 years like the profit of the bank which has been also doubled. it not a negative sign. However. Because I know that the MCO scheme has become a major part of the bank’s working so increase in the cost of traveling. But the admin expenses is usually a large part of this non markup/interest expenses and also it is most important expenditure to have a look upen because it shows that whether the bank is utilizing its human capital efficiently or not. rapairing is not a surprise. Profit before Taxation The profit before taxation has been significantly increased in the recent years. Taxation Due to increase in the profit the tax has been also increased. When I look in the previous year it found that the profit before taxation is 2. I come to know that the increase in the tax is less than increase in profit which can be due to two 47 .Internship Report on Zarai Taraqiati Bank Ltd. it is difficult to say anything about the cost of admin expenses. salaries of the staff no doubt a major a part of it but other expenses like traveling expenses.5 times more than it was in 2004. The ratio of Admin Expenses to Deposits is used to check the cost bank is facing on collecting of deposits which is the main source of money bank required to lend to others to make income. However. However. in ZTBL the bank relies on borrowing from SBP more than on deposits so the efficiency of admin expenses can not be judge from the ratio of admin expenses to deposits. By compare the increse in the profit before tax and the increase in tax. Like in 2005 and 2006 the profit of the bank has been decresed as comapred to 2004 and in 2007 it again started increasing and this continues till 2009 which have result of more than 2 Billion. 2010 Non Markup/Interest Expenses It consist on the expenses bank payed for admin expenses and some other expenses. the financial statement for the 2009 is still not available on internet nor in print format but some key facts which has been published by the bank for the 2009 shows that bank continues making profit in year 2009 also. Almost all banks try to control this income so that to increase their income. A larger admin expenses is not a negative sign if it is also increasing the income of the bank. By looking in the notices of financial statement it is found that admin expenses consists on a number of expenses.

The profit for the year 2008 is almost 300% more than the 2004 which show that the profit of the bank is tripled in last five years. The same trend continued in 2009 in which the bank also made a record profit. Profit after Tax The after tax profit of the bank continued to increase in the recent years which is a good sign and also shows that bank has improved its working a lot than few years before.Internship Report on Zarai Taraqiati Bank Ltd. . 2010 reason that whether the rate of tax is not increased as the income of the bank or the bank is managing its tax efficiently.

so the bank cannot use the borrowed money in a more risky adventure. From the notes to the account it is clear that bank usually invest in less risky investment like Market Treasury Bills and Pakistan Investment Bonds. Balances with other Banks Horizontal analysis of Balance sheet shows significant increase in the placement with other banks. the deposits also show an increase in it.Internship Report on Zarai Taraqiati Bank Ltd. the case of ZTBL is different. The less risky investment will result in less gain on investment but here the return on investment is not the main focus of the bank. However. Because it is an institute developed just for the improvement of agricultural sector so the bank’s main focus is on lending rather than investing. 1962. the reason of it can be the decrease in the volume of deposits due to which the bank is not required to maintain higher placement with SBP. One other can be this that the bank has placed higher amount with SBP than required in the previous year and that is why in this year the bank has withdrawal the money from its account with SBP. However. The money the bank owns is largely consist on the borrowed money from SBP. There is a decline in the amount with respect to previous year. Investments-net There are ups and downs in the amount of investment made by the bank in the previous five years. It is not a good sign if the placement is in ideal state and is not generating any revenue for the bank. 2010 Interpetation of Horizontal and Vertical Analysis of Balance Sheet Cash and Balance with Treasury Banks It shows the amount placed with SBP in order to fulfill the requirement of banking companies ordinance. 49 . The rate it charges to farmers is less than the prevailing rate in the market (currently 9%) so by depositing money with other financial institution it can earn more than the rate it is offering to its clients. However. Placing money with other institutions is not a good thing for any bank when does on a large scale because it cannot generate enough money to compensate the opportunity cost the bank is bearing on not investing or advancing this money to its customers. from the notes of ZTBL it is clear that the bank has placed amount with other banks in the accounts which are giving markup to the bank. It borrows money from SBP at fewer rates and lends it to farmers. so the reason of this decrease in the cash and balances with treasure bank is uncertain.

However. Reserves Reserves are made for the development of the organization or for the contingencies which can affect in the future. But the efforts in this respect is still need improvements as the products offered by ZTBL is not as attractive as offered by other commercial banks. These reserves also include the statutory reserve requirement according to banking companies ordinance. Borrowings It is the amount which bank has borrowed from SBP.7 Billion in 2008. Deposits Deposits are the backbone in any bank operations because the primary function of any bank is to take deposit from depositors and then lend it again to other who needs it. 2010 Advances-net The bank continues to increase the amount of advances to facilitate more and more farmers every year. Operating Fixed Assets The assets of the bank are also increased in 2008 and in 2009 the president of the bank also announced to increase it further by constructing new buildings. There is no change in this loan from 2004 the reason is that neither SBP has given new loan to ZTBL nor ZTBL has returned any principal amount of loan back to SBP due to which the amount of loan borrowed remain unchanged. in recent years the bank is trying to shift its dependence from SBP to other resources and due to this it starts increasing its deposits by marketing.5 Billion. Increase in the fix assets shows that the bank is optimistic about its future. The data of 2009 shows a record increase in lending to farmers. The percentage increase in the horizontal analysis also shows this continuous increase in the trend of advancing. 1962. The reason of this increase can be the requirement of SBP to maintain a minimum equity level. Currently the paid up capital of the bank is 12. ZTBL and SBP is now negotiating on terms and conditions of returning principal amount in 15 equal installments. . the bank has disbursed 77. Share Capital In 2008 the bank has issued bonus shares to increase its paid up capital. There is continuous increase in the reserves of the bank from last five years which is a good sign. But as I have written before ZTBL does not rely on deposits more like any other bank.Internship Report on Zarai Taraqiati Bank Ltd.7 Billion rupees in 2009 as compared to 70.

The reduction in NPL’s is also a positive sign and will definitely result in good performance. 51 .Internship Report on Zarai Taraqiati Bank Ltd. If the process of improvement continues than it can make more profit in the upcoming years and its success will also result improvement in financing facilities to people of rural area. Besides a government institution the bank has made before tax profit of 4. This is the reason that organizations use to revalue their assets to record their value according to prevailing market rates. the overall performance of the bank is satisfactory. The market conditions never remain certain. the price of anything can rise or fall in matter of second. 2010 Surplus on Revaluation of Assets-Net of Tax It is surplus amount which is the bank expect to get if it will sell these assets. The bank has made many efforts in the recent years and it is clearly visible in the result of its financial statements. The revaluation of fixed assets also helps banks in raising their equity which result in more lending power of the bank. Conclusion Although the bank needs improvements in many fields.9 Billion which is great achievement.

174 5.727 4.654 The reason of negative spread is that the bank use to borrow from SBP rather than getting deposits from the general public due to which the ratio of admin expenses depicts a large cost than expected because this ratio is calculated by dividing admin expenses with the deposits.128 2004 % 14.156 83.778 99.377 0.297 6.062 83.947 -92.846 5.929 5.975 14.377 0.276 -1.791 5.804 2004 % 14.727 98.322 89.766 78.926 Ratios Net markup to total income Return on assets Return on Equity Breakup Value Infection Ratio Provision to classified advances Advances to deposits 2008 % 84.690 2006 % 71.008 10.573 4.592 36.491 3.418 12.171 10.248 3. Ratios Avg.485 2007 % 65.099 10.479 -78.177 95.546 23.177 5.482 10.457 2448. Rate of lending Avg.174 5.777 2006 % 8.150 6. Rate of lending Avg.726 - By calculating the admin expenses in this way the result of spread is still in negative but not as much as it was before.505 -89.156 7. all this shows that there is still problem the bank .834 2007 % 10.106 7.817 12. In my opinion the admin expenses is required to be calculated by adding borrowing also with the deposit.322 which is acceptable.017 2005 % 10.201 48.766 4.686 55.975 rather than 83.793 -83.967 -2.190 6.150 87.129 10.929 5.603 2006 % 8.875 1.332 2005 % 138.643 93.426 1433.239 2.849 28.135 2004 % 142.297 6.180 50. 2010 Ratios Ratios Avg. Rate of borrowing Admin Expenses Cost of funds Spread 2008 % 11.154 -1.630 2473.212 -0.828 -69.346 2005 % 10. However. For example if we will calculate this ratio by adding borrowing with deposits than the result for 2008 will be 7.227 1631.697 60.131 -2. Rate of borrowing Admin Expenses Cost of funds Spread 2008 % 11.387 0. By calculating all admin expenses with this formula the result of spread will be like this.770 100.238 11.542 15.182 2007 % 10.190 6.862 0.605 16.Internship Report on Zarai Taraqiati Bank Ltd.

However. In other words. Infection ratio It is an important ratio which shows that how much advances of the bank is placed under classified advances. However. ideal situation is conisdered where this ratio is less than 5%. Ratio of net markup to total income shows that bank has improved its secondary function as wel. More than 2 is considerd a good ratio and the result of ZTBL is also showing good result. because it a government institute so the wastage of resources is not a surprise thing. Provision to Classified Advances 53 . the more the bank needs to maintain the provisions against these loans and which will result in lesser profitability. The more this ratio is. The main reason behind this is the working style of the bank. it shows ups and downs in it. The record of NPL’s is given in the Quick View of ZTBL’s Performance. the bank is continually improving its working style and also moving towards making high profit. But this improvement is not stable one when I look the ratios of previous years. keeping in view the previous records it is clear that bank has improved it a lot and all this improvement is giving sense that if bank continue working with the same pace than in the next two to three years this ratio will decrease significantly and can come under satisfactory level. Usually. the ratio of 2009 is also more than 2 which is found in the report published by Japan Credit Rating Agency. in this situation the bank has a biger portion of customers which are trust worthey and have credit worthiness. Return on assets Return on assets is a ratio uses to gain information that how much assets of the company producing profit. the more the result of this ratio the more efficently the bank is utilizing its assets.Internship Report on Zarai Taraqiati Bank Ltd. it shows that how much loans given by the bank is considered to become bad debts. 2010 is not utilizing its human capital as it needs to. The infection ratio of ZTBL is very high which can be considered a negative sign.

Usually this ratio remains with in range of 70 to 75 % because 25% of all bank deposits is required to be kept in statutory reserve to maintain minimum liqudity requirement. The more this provision is. (1) Other Assets Especially Mentioned (2) Substandard (3) Doubtful (4) Loss. Maintaing provision is the requirement of Prudential Regulations of State Bank of Pakistan. The borrowing of the bank is much larger than the deposits it has this is the reson that this ratio is showing such result. it is more than 1400% for the year 2008 which an abnormal result. it is a negative sign because the bank is maintaining larger provision which shows that a large part of classified advances are in the category of loss. the more risky the loan is the more provision the bank is required to maintain. I have mentioned the reason of it many times before in this report.Internship Report on Zarai Taraqiati Bank Ltd. The ratio calculated from the financial statement of ZTBL shows a continuous increase. Advances to Depoists Advances to deposit shows that how much part of deposit is used by bank to advance. The bank has to keep its classified advances in the four categories. the higher the category. the more it can be assumed that the classified advances of bank is in the category of loss. Each category has its own requirement of provision. . the reason is that ZTBL is advancing a large part out of the loan it has obtained from the SBP. And it shows that bank is not doing enough to recover these loans. The ratio of ZTBL is presenting a different scenerio. the higher the provision required to maintain. 2010 This ratio tells that how much provision the bank is maintaing against its classified advances.

2010 Key Financial Trends of 2009 According to Japan Credit Rating Agency on August 2010 Note: The following is the extract from the report of Japan Credit Rating Agency issued on August 2010 showing the new credit rating of ZTBL. 113. 83. With the implementation of various applications at branch-level to consolidate loan 55 . While various new loan products have been launched been launched by the bank in 2009.6b.b) representing a higher proportion of total assets at 74% at year-end 2009. outstanding balance against this scheme may also show increase over time. Net advances increased to Rs. For all new borrowers of crop production loans.69. The IT infrastructure of the bank has improved considerably over time. To ensure proper utilization of loan. the bank has incorporated a wholly owned subsidiary to make arrangement for in-kind lending to farmers. Balance sheet footing of the bank was higher at year-end 2009 at Rs.Internship Report on Zarai Taraqiati Bank Ltd.6b (2008: Rs. Sada Bahar Scheme has remained the flagship product of the bank. Awami Zarai Scheme (AZS) has been launched by the bank.

would support capitalization levels and facilitate in furthering the government’s economic objective pursued through the bank. The bank has so far not made any interest or principal payments against these credit lines. however there is still need for further strengthening the recovery mechanism. The terms of restructuring of SBP debt have yet to be finalized. Growth in loan portfolio during 2009 absorbed some of the liquidity held by the bank. Gross infection has declined from16. As the insurance coverage is enhanced. though these continue to represent a small proportion of the total resource base. the risk of loss in case of calamities will be reduced. rice and maize. 2010 disbursement & recovery data. which if finalized. The bank had outstanding borrowings of Rs. ZTBL has arranged crop loan insurance for wheat. While there is some cushion available to the bank in terms of markup differential receivable from the GoP vis-à-vis interest payable to SBP.Internship Report on Zarai Taraqiati Bank Ltd. liquidity profile may be significantly compromised if payment is required against the principal portion.8% in 2009. One of the proposals under consideration entailed debt to equity swap. which would have significant implications for the risk profile of the institution. monitoring of lending activities has improved. Liquid assets to total borrowings and deposits declined to 27%.5b from SBP at year-end 2009. sugarcane. 54.7% in 2008 to 15. The bank has made efforts to enhance its deposit base. though there may still be a need to further strengthen the loan recovery mechanism.5%. cotton. . Net infection hovered at prior year’s level at 11. Net NPLs in relation to Tier-1 capital stood at almost 57% at year-end 2009.

sugarcane. Crop Productivity Scheme and Rural Development Scheme. Crop productivity scheme is specifically for financing of fertilizer. 22. agriculture inputs will be supplied by KSSL to farmers in lieu of cash. Loan disbursement target for fiscal year 2010 was Rs. cotton. Premium is charged @ 1. with disbursement target stipulated as part of the annual budget process.3% of loan sanctioned. The farmers will be provided a specific quantity of inputs according to cultivable land. As per the scheme. 80b. while remaining was for production loans. While various new loan products have been launched by the bank. To facilitate loan insurance. ZTBL has arranged crop loan insurance with Adamjee insurance company limited (AICL). especially earthquake affected areas.7% of the loan disbursement target pertained to development loans. Sada Bahar Scheme has remained the flagship product of the bank.4b (2008: Rs. On receiving complaints from borrowers regarding non-cooperative attitude of tractor dealers. Loan products launched in 2009 include. Loan disbursements of around Rs.8b). All targets are allocated by SBP. 200. Rural development scheme has been launched to provide assistance for dairy.000 per unit for 10. 78b were made by the bank in the outgoing year. with year-end outstanding balance of Rs. 2010 Credit Risk Gross advances of the bank considerably grow over 2009. 57 . The purpose of AZS is to ensure proper utilization of loan proceeds.000 tractors. Awami Zarai Scheme (AZS) has been launched by the bank for all new borrows of production loans. a tractor delivery system has been developed through KSSL in the outgoing year. sheep and goat farming in the rural areas of AJ&K. 77. Green tractor scheme is specifically for the province of Punjab and entails subsidy of RS. which is subsequently reimbursed by GOP on a half yearly basis. Green Tractor Scheme. The bank has also setup a pilot project for a model village in collaboration with ministry of food & agri.Internship Report on Zarai Taraqiati Bank Ltd. the bank has to pay the premium for subsistence farmers. poultry. For FY10. rice and maize financing./ provincial agri. Banazir tractor scheme is applicable to all areas of Pakistan. pertaining to inputs required at the time of crop cultivation. 89. Quantity of input needed for each crop on a per acre basis has been predetermined by the bank. ZTBL is used as an arm by the Government. Departments. Crop loan insurance has been made compulsory by SBP for wheat.

This amount was lower than the balance of Rs. with cumulative balance of charged off loans standing at Rs. 2. Recent increase in benchmark rate is expected to have reduced the market value of fixed income instruments held in the portfolio.30b at the end of December 2008.5% (2008:11. . increasing form Rs. COIs are also placed with counterparties of sound risk profile. 4. These carry markup rates in the range of 12-13% and have maturities between Aug-Dec’11. an amount of Rs.7b at December 2009.2b (2008: Rs.98b at the end of December 2009. provisioning coverage against total NPLs Is low.6b was charged off against provisions as per the prudential regulations. on amount of recoveries of 4.29b made against charge off amount. 2010 The implementation of software applications has facilitated monitoring of lending activities at branch level.2%). At year-end 2009. in branches where overall recovery is less than 75% loan approval authority is retracted. In 2009.1% (2008:15.8% (2008: 16. NPLs increased to Rs. Around 52 %( 2008: 47%) of NPLs were classified as OAEM at year-end. 283. The bank held fixed income securities of Rs.3%) at end-December 2009. During the out-going year. 14.7%). On account of this. only Rs. Market Risk Net investments of the bank increased to Rs. The overall agriculture loan portfolio of the banking sector had gross infection of 16. while 72. 36.December 2009. Minimum recovery target set by the bank entails 90. However. 100m invested in a wholly owned subsidiary.1b) at end. the bank has both the intent & ability to hold these to maturity. 13b) during 2009. Recovery targets are monitored on a branch-wise basis. 7.65m was placed in COIs whiles remaining comprised government paper.34. credit risk associated with which is considered minimal.5b at the end of the preceding year. gross infection in the loan portfolio of the bank remained high at 15. Net infections (NPLs adjusted for specific provisioning only was 11. the bank has Rs. In addition to the above.. Price risk on the same is considered low. as may be ascertained form the portfolio quality indicators.8% of current dues and 75% of past dues. recovery of 91% was achieved against current dues. Around 73% of net investments comprised short-term treasury bills. Of these. 6.4% recovery was made against past dues.2b (2008: Rs. 5.Internship Report on Zarai Taraqiati Bank Ltd. The need for strengthening the collection mechanism however remains. Fixed-rate long term PIBs represented 14% of net investments.

improvement in the deposits does not have a material impact on the cost of funding for the bank.2b (2008:Rs. Borrowings were maintained at Rs. though an agreement on this issue has still to be achieved. Three credit lines amounting to Rs.597b are based on PLS subject to maximum share of profit to SBP ranging from 4-10% p. 8. Investment in listed equities of Rs 89.3m had a market value of Rs 537m. various restructuring proposals have been discussed by the bank with the ministry of Finance and SBP. Liquidity profile of the bank declined in relation to 2008. 100. Investment in unlisted securities has been fully provided for various reasons.5b from SBP at year-end 2009. The bank has not made any principal repayment on the premise that the restructuring terms have not been finalized.Internship Report on Zarai Taraqiati Bank Ltd. 54. At the time of restructuring. Since deposits still comprise a small proportion of funding mix.9b) at year –end 2009 with increase in deposit to Rs. Proportion of current and saving accounts in the deposit mix was maintained at 94%. At the time of reorganization of ADBP into ZTBL.a. Any plan requiring immediate payment of the either the interest expense or 59 .54b having been accrued by December 32. these credit lines were restructured and a moratorium was given to ZTBL according to which it had been allowed to repay SPB debt in 15 years (in 30bi-annual installments) with a grace period of 3 years starting from July 2003 and the last payment was supposed to be of Rs. These loans are secured by way of federal government guarantee. 54.6m. Liquidity Total borrowings and deposits of the bank where higher at Rs.3558 %( 12 month t-bill rate as at July 01. 1. The bank had outstanding borrowings to the tune of Rs. These borrowings were obtained to provide finance to clients for agriculture. comprising exposure in unlisted securities amounting to Rs. 19.577b carry interest rate of 4% p. No return however has been actually paid by the bank. while remaining thirty two lines amounting to Rs. 59. 2003) for five years but the matter had not been acceded to by the SBP. representing the subordinated loan. markup on subordinated loan is being charged at weighed average yield of t-bills of 12 months maturity.43b).75b (2008: Rs 5. Since then. 2009.a. Presently. 10.5b at year-end 2009. with liquid assets to total borrowing and deposits reducing to 27 %( 2008:36%). 2010 Investment in equities at cost was maintained at Rs. the bank had proposed to cap the markup on these borrowings at 2. 63. the bank is accruing interest expense on these at varying rates. Depositors of the bank are primarily individuals. 3. 48.5m.20b. with a total payable of Rs.

6) after adjustment of tax expense of Rs. the bank had introduced SR-2005. 38. thus spreads declined to 4%. A significant proportion of employees switched to SR 2005 from their existing pension scheme in 2005. resulting in an expense of Rs. interest income of the bank increased to Rs.352(2008: 5. 2010 principal may place significant stress on the bank. 2. 4. Other revenues primarily comprising recoveries on charged off loan amounts was Rs. 3.3b (2008: Rs 4. In December 2005. with outstanding balance of Rs.5b).2b (2008: Rs. There are also other amounts recoverable from the government in lieu of relief packages. 956.5b) attributable to overall higher average markup bearing assets during 2009. 18. Cash outlay has not been made by bank for payment of interest on borrowings.4b) which pertained to current and prior year. a retirement benefit scheme for its employees. Profit for 2009 was reduced to Rs.097 Executives/officers of the bank opted for SR-2005. taking total revenues.74b receivable from the government.6b (2008: Rs. 1.2b (2008:Rs.7b (2008: Rs 8.9b). 5. Cost of funding hovered at 6%. the bank also has markup differential of Rs.8b (2009: Rs. 1. Profitability Return on markup bearing assets declined to 9.1b (2008: Rs. 6b mandated by SBP.370).8). Capital . 677.7b (2008: Rs. Capitalization As of December 31. net of financial charges. Administrative expenses of the bank inclined to Rs. in line with inflationary trends in the economy.9b). 2. Non –interest income of the bank was higher at Rs. 10.4b). However. 16. 17.2 m attributable to increase in dividend income on investments.98b).4. Incremental provisioning against non-performing loans declined to Rs. 8.8b (2008: Rs.8 to bank in 2009. 4. as it does not have the required liquidity. While salary expense experienced growth of 12% staff strength of the bank was rationalized to 5. The scheme was re-opened in 2009 and 1. Nevertheless.Internship Report on Zarai Taraqiati Bank Ltd. 1. exceeding the minimum capital requirement of Rs. to Rs. and interest in only being accrued on books. 5. Net interest income of the bank also depicted an increase to Rs.8% on account of decline in high-yielding lending to financial institutions. 4. 2009 equity of the bank was higher at Rs. This amount is not recognized on books.99b) for 2009. 11. 563 (2008: Rs.27m at year-end 2009. The bank posted profit before tax of Rs.

61 . 2010 Adequacy Ratio of the bank was slightly lower at 21. Net NPLs to Tier 1 capital stood at 57% at end-December 2009.9%). If the proposal of loan conversion into equity materializes.Internship Report on Zarai Taraqiati Bank Ltd. it will provide considerable momentum to capitalization of the institutions.7% (2008: 22.

2 2009 .1 30 20 10 0 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 15.4 24.7 39.5 55.6 29.9 77.8 32.5 36.9 38.1 73.Internship Report on Zarai Taraqiati Bank Ltd.7 Disbursement (Billion) 80 70.8 Recovery (Billion) 52 63.1 33.2 30 20 10 0 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 11.9 42.7 70.8 70 60 50 40 30.4 27.7 25.4 33.7 52.7 22.1 29. 2010 Quick View of ZTBL’s Performance till 2009 90 80 70 60 50 40 30.1 18.

6 2.Internship Report on Zarai Taraqiati Bank Ltd.8 1.8 Deposit (Billion) 10 8.5 1. 2010 10 9 8 7 6 5 4 3.4 8 6 4 4 2 0.6 Gross Profit (Billion) 5 -3.9 4.8 0.1 2 1 0 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 1.8 1.2 0.5 8.3 5.3 0.8 63 .2 0.1 3 2.2 0 1997 -2 -4 -6 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 1.6 2.4 1.3 2.1 1.8 0.6 1.

6% 61.7% 49.0% 52.1% 70.0% 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 NPL's As a Percentage of Total Outstanding .0% 0.6% 60.1% 15.6% 20.0% 27.0% 10.9% 53.0% 69.Internship Report on Zarai Taraqiati Bank Ltd.8% 60.0% 40.0% 48.0% 52.8% 49. 2010 80.7% 19.5% 50.3% 30.0% 33.

Concept like these helps bank in safeguarding itself in the risky adventure of financing to small farmers. 2010 Chapter 4 SWOT Analysis Strengths  ZTBL has brand name in agricultural loaning.  The bank enjoys sovereign guaranty of Federal Government that covers its debt obligation to State Bank of Pakistan.  The bank has more than 350 branches throughout Pakistan and has presence in all the provinces of the country which enables it to capture and facilitate a large number of customers.  The Bank has the most experienced and the least experienced staff. 65 .  Mobile Credit Officer is the unique concept which is helping in remaining more near to its customers and also helps in recovery.  The bank has ability to launch successful products for agricultural industry due to know how of the agricultural system of the country.  It is first and large financial institution established in Pakistan to promote agricultural financing. which is a good combination of experienced heads and exuberance of youth.Internship Report on Zarai Taraqiati Bank Ltd.

there is lack of even furniture.  The infrastructure of the bank is also based on old style.  The average loan disbursement amount is 85.  The staff is not motivated because the promotion mechanism is based on experience rather than on the performance of the employees. This ZTBL requires noticing this changing trend.000 to single person which is not a big amount.  The situation at branch level is not good. Almost all other bank’s operations have been computerized but ZTBL is still working on manually written ledgers etc.  Like other Government institutes the red tap dilemma also exists in ZTBL. the bank is not refurnishing its branches like the other banks have done in this decade.  In spite of the presence of technology many jobs are done manually. 2010 Weaknesses  ZTBL have not introduced any Islamic product in financing.Internship Report on Zarai Taraqiati Bank Ltd. .  There is a lack between the planning of head office and the reality of environment because the staff at high level have little know how of the real situation on the ground. Islamic banking is becoming popular in these days and to sustain and increase the number of customers every bank is felling need to start offering Islamic Products. Usually the loan obtained by the loanee can be used to meet working capital requirement only it cannot be used to fulfill the dream of modernizing of agriculture sector. This is the reason that usually employees stop giving their full efforts after knowing the reality that their performance pays a less role in their success. fans etc.

So. The impact of computerization can be seen from the result of recovery of 2009 which is 89%.    67 . the ZTBL has an opportunity to attract the customers by giving them more attracted schemes. Due to increase in the government attention toward the agriculture sector it is expected to see the role of the bank increasing in the near future. They have wide area network in all over the Pakistan. 2010 Opportunities  The bank started computerizing its operation which if completed will result in increase of the bank performance. It is also expected that the relief which the government may provide to them will also be delivered through the bank in the form of relaxation to the loanees.Internship Report on Zarai Taraqiati Bank Ltd. The flood of 2010 is challenge for the whole country. The computerized system helps bank in reducing fraud. small borrowers are attracted to get the financing and to start business. Because the most effected people are farmers so the bank has a chance to increase its reputation by utilizing its full resources to help them. so ZTBL can make it possible the fast delivery of funds to rural areas. As a result of different steps taken by the government regarding the betterment of the agriculture.

Government type of working style is also a threat to the bank which requires to be changed to keep the banking growing. Natural Calamities is also a problem. Almost whole of the agriculture industry have threat from the changing environment conditions. Political unrest is also a threat for the bank because it is a government owned bank and the change in government can result a change in the strategy of the government which can affect the plan made by the bank.       . the bigger part of the bank customers relies on the environmental condition. The default ratio of customers who are availing the credit facilities from the ZTBL can rise due to the economic recession in the country. Sudden rise and fall in the trade and industry conditions and stock exchange business of the country also adversely affect the growth of banking sector. 2010 Threats  The biggest threat in the banking sector is the continuous downfall of the country economy since the last few years.Internship Report on Zarai Taraqiati Bank Ltd. The example of 2010 flood is still in front of us those who are affected are unable to pay their loans back. Many commercial banks also started agriculture loaning scheme so it is expected that in the future the farmers will have more choices to have finance from which will definitely affect the customer base of the bank.

69 .Internship Report on Zarai Taraqiati Bank Ltd. 5: Assignments I handled during my Internship. 2010 Part Two Ch.

Internship Report on Zarai Taraqiati Bank Ltd. 2010 Chapter 5 Organogram of Mian Channu Branch Manager AMD (Assistant Manager Desk) AMO (Assistant Manager Operations) Assistant Officer MCO (Mobile Credit Officer) MCO (Mobile Credit Officer) Accountant Cashier .

For this purpose he will have to present the following documents: 1. ZTBL Mian Channu (Page number 18 is usually the page where the detail of land mortgaged has been given. it include the area of land. These entries usually made on the page 28 and 30. After the file is received by the assistant officer. khatoni number etc) 71 . shows the number and date of last charge created against the land of loanee in the favor of bank) The following entries are made on page 30. 3. he checks the documents that whether all the documents are there in the file. 4. The example of entries is given below. 2010 Redemption of loan On the payment of all the dues by the loanee (principal + interest). See page number 18 and block number 8 for detail. the assistant officer asks the peon to bring the Loan Case File of the borrower. See page number 16 and block number 3 for detail. The following entries are made on page 28.Internship Report on Zarai Taraqiati Bank Ltd. 2. The entire loan including interest has been paid by (Here page number 16 the loanee. Then he makes required entries in the Passbook. he can free his land (or any other security provided) from any charge created by bank for the purpose of loan. Application for redemption Stamp Paper of rupee 20 Last receipt of amount paid Cheque book (if issued) When the loanee provides these documents to assistant officer (Or any officer appointed for these sort of work).

The loanee is given the date of next week to collect his “Passbook”.Internship Report on Zarai Taraqiati Bank Ltd. it finds that some amount is still due by the borrower than it can write on the stamp paper whatever it wants and then can claim the due amount from the borrower. After getting the Passbook. The AMD (Assistant Manager) and Manger both also sign the notice issued in the name of Patwari and Tehsildar that the land can be transferred to the loanee as the loan has been fully paid by him. the loanee goes to Patwari and Tehsildar for the change of record back to his name. This is not a requirement but bank has made it practice so that if in the near future. The one thing which is interesting here is obtaining Stamp Paper from the borrower. This is precautionary measure adopted by bank because once the Passbook issued to the borrower and the land again transferred to his name. The redemption process in short can be described as the following:       Submission of Application Acceptance of application by manager Record of file in the “File Movement Register” Entries made in the passbook File send to AMO for checking of loan status On approval from AMO. he checks the signature both in the notice and Passbook and then stamped both. During this period AMO checks the record of the loanee to confirm that the entire due amount with respect to that particular loan has been paid and then he signs to give approval to assistant officer to issue “Passbook” to the loanee. On approval from the Manager for the Redemption Application the assistant officer attaches all afore said documents with in the file and record in the “File Movement Register” that file has been moved from the record room for the redemption purpose. 2010 After these entries the officer then sends the file to Manager for signature. Before issuing Passbook the officer record that passbook is issued to the loanee in the “Dispatched Register”. Than the file is send to AMO (Assistant Manager Operation) for further process. On the issuance of Passbook to the loanee. the Manger and Assistant manger signed the notice to issue Passbook . Now the Passbook is ready to issue. the officer verifies that the person receiving the documents is the original owner of the land which is mortgaged with the bank. Then file again comes to the assistant officer. the bank will be in no position to recover any amount which is unexpectedly left due.

2010  The passbook dispatched to loanee with notice to Tehsildar to transfer land back to his name  After the land is transferred to the loanee name. if he wishes he can withdraw the amount from his current account and can close his account. So. After the death of the client his sons came to know that the land could not be transfer to their name because it is still mortgaged against the loan which their father had paid in 1985. they usually remain the land in the name of the bank even after they have paid the whole loan amount. So. All this shows the confidence the people has on the bank and also shows that in practical life anything can happen. During my internship I have seen people who has paid loan more than 10 years ago but they came to bank after such long time to redeem their land and the reason behind their redeem was that they want to transfer it to someone others name otherwise they may not come for redeem.Internship Report on Zarai Taraqiati Bank Ltd. Usually the loanees do not redeem their land because they want to avoid the cost and wastage of time when in the future they again have to gain loan from the bank. at that time they reach bank for redemption because the bank always maintained record so their file found from the record room after little efforts. 73 . I have also seen one of the clients who has paid loan in 1985 but his land is still in the name of the bank and they have not redeemed it.

In the ZTBL it is routine to open account when manager sanctioned and signed the amount of loan. 5. 2010 Opening of Current Account In the ZTBL. The following are the main point in the opening of a new account: 1. the current account usually opened only when the person comes there for a loan. 8.Internship Report on Zarai Taraqiati Bank Ltd. The procedure of opening of Current Account is not very complicated. his sanctioned amount is usually credited to his current account. Acquiring original CNIC Filling the Current Account Form Filling of Know Your Customer Filling of Current Account Card Registering name in the “Current Account Register”. (Issuance of A/C No. 9. Because at that stage it becomes essential to have an account in the bank otherwise the amount of loan will not be paid. The other documents required to attach with the forms are:  2 recent pictures  Copy of CNIC. 7. 6.) Filling of deposit slip of starting amount Signing by AMO and Manager Issuance of Cheque book Opening account in the ledger of bank 1: Acquiring Original CNIC It is mandatory to check the original CNIC of the person before opening of current account. 2. 2: Filling Current Account Form After obtaining original CNIC the form for current account is filled with the information written on the CNIC. 4. The form includes the following information:     Type of account Branch Name Branch Code Name . On the approval of loan. 3.

Walk in) Public figure Usual mode of transaction (i. 2010            Father Name CNIC Number Address Occupation Nationality Contact number Date of birth Marital status Mother name Name.e.e. cheque) Etc.Internship Report on Zarai Taraqiati Bank Ltd. CNIC. in cash. Contact of MCO who knows the person personally Next of Kin (The person who will have right to operate the account in the event of the account holder’s death or any other mishap)  Starting amount 3: Filling of Know Your Customer Form The Know Your Customer form is also attached with the current account opening form and contains the following information:            Name Account number CNIC number Address Purpose of opening of account Monthly income Source of income Type of customer (i. 75 .

Signing Authority: One side is used to obtain the signature of account holder. It Address: is a serial number. This register requires writing down the name of account holder. Address and the starting amount. I usually take 3 signature of him in the right side of card. 2010 4: Current Account Specimen Card Name: Adress: Name of Account Holder Account No. the account holder for verification of cheques in the future if required. Type of Account: Name of Account Holder This side is used to write the name of This side is used to obtain the signatures of account holder both in Urdu and English. While the left side of card is used to write the account holder name in both Urdu and English.Internship Report on Zarai Taraqiati Bank Ltd. 5: Registering name in the Current Account Register (Issuance of A/C No. These are the following blocks made in the register requires to fill. Account Number: It Date of Opening of Opening Balance of Name: is account number Account Account Father name: issued to holder. his father name.) After filling the required forms the name of the new account holder is registered in the Current Account Register. Adnan Ijaz S/O Ijaz Naseem Example: 1567 15-09-2010 1000 Mian Channu . so I used to write the next number when I have to open an account.

This amount in ZTBL is usually 1000. 2010 When the account number is issued. so I don’t know what exact amount is required to deposit with the bank for any particular loan. however it depends on the amount of loan sanctioned like some loans required to deposit a larger amount with the bank before issuance of loan from the bank. 6: Filling of Deposit Slip of starting amount To open an account in the ledgers of bank the account holder requires to deposit an initial amount. The Deposit Slip which I used to fill during my internship consist the following information: Zarai Taraqiati Bank Ltd. The example of such loan is of Tractor because I have not be given chance to stay with an MCO.Internship Report on Zarai Taraqiati Bank Ltd. Depositor’s Copy Branch Name: Branch Code: Date: Name: Account Number: Particulars Amount Branch Name: Branch Code: Name: Zarai Taraqiati Bank Ltd. Bank Copy Date: Account Number: Particulars Amount Total Amount Rupees in words: Depositors Signatures: Signing Authority: Total Amount Rupees in words: Depositors Signatures: Signing Authority: 7: Signing by AMO and Manager Then the forms and deposit slip is signed by AMO (Assistant Manager Operation) and Manger to verify that all the requirements of opening an account is met by the account holder. it is also written in the Account Opening Form and Know Your Customer Form. 77 .

ZTBL is still working on manually written ledger books. The ZTBL Mian Channu branch where I have completed my internship has 52 ledgers at that time with the current account holder of 11595 at the date of 15 September 2010. the bank is also gradually computerizing its records. The ledger of current account contains the following information. These ledger books are large books with a number on front of it which helps in finding the record of any particular person. the cheque book is issued by the cashier when the person deposits his starting amount of account and the amount of issuing of cheque book. Branch name: Mian Channu Page no. Zarai Tarqiati Bank Ltd. However.) Debit Credit 1000 50000 Balance 1000 51000 1000 Signing authority 50000 The above given table is the example of information usually written in the current account of a customer. 9: Opening account in the ledger of bank Unlike other banks. (no. 177 Branch Code: 20226 Name: Father: Address: Account no: Cheque book: Date 15-09-2010 15-09-2010 16-09-2010 Signature: Particulars By cash Loan Paid To Cheque. There are some options which are not printed there but it is a practice to write that information. There will absolutely many accounts which will not be alive. In the bank where I have completed my internship. When the depositor deposited the amount his name and other particulars is written down in the ledger so that he can transact with the bank in the future. like there is no column of signature . There are also many other column available in the ledger books but they all are not used in the bank. 2010 8: Issuance of Cheque book Than on depositing of a nominal fee of rupee 30 the account holder has been issued a cheque book.Internship Report on Zarai Taraqiati Bank Ltd.

When the customer draws a cheque on the bank the entry in the ledger will be like I have shown above with the date of 16-09-2010. So there are some things 79 . 2010 but without a signature no one can check the validity of a cheque. The account of the customer will be debited and the balance will be reduced with the same amount. The other option which I have mentioned here but not included in the ledger book is the cheque book number. The next column is used by the signing authority (AMO in my case) to confirm the transaction. Here I have also made few entries which show how a transaction is recorded in the ledger book. So. So. Like in the first entry the bank account has been opened with an amount of 1000. The 2nd entry in the sketch of ledger above shows the disbursement of any of such loan. That is why a number of bank customers are seasonal. When I have joined the bank that was the slack time for the bank because all the customers of bank are farmers that is why they come to bank to get or give loan when they have to plant or harvest any crop. As I have written before that in ZTBL current account is usually opened only when the bank has to disburse any loan to the customer. A large number of ZTBL customers are illiterate so they can not fill their cheque by themselves and due to this reason almost all the cheques are filled in the accounts by a clerk. Absolutely. The amount which has to pay in the form of cash is credited to the current account of customer from where he can withdraw it. which has increased the balance to 51000.Internship Report on Zarai Taraqiati Bank Ltd. In this scheme a part of sanctioned amount is given to borrower to meet the wage and water expenses and the rest amount is paid by supply order of fertilizer and pesticides. Awami Zari Scheme was the only scheme available to new borrower at the time I was there. Then I credited the amount which shows that this money is given by the customer and in the balance column it has increased the balance with the same amount of 1000. It makes it possible to confirm that the cheque book which the customer is using to transact with the bank is associated with that particular bank account or not. the date is the first option than the particulars which shows what exactly happen on that day. It is also practice to write down serial of cheque book in the space available. I have written “by cash” in the particulars which represents that the person has transacted in cash. They are usually a great rush from April to June and then from November to December. I have observed that the signature and thumb impression is used to take in the right side of ledger book where a lot of space is available. Before filling the cheque of anyone he assures the balance in the account and in the same time he records entries so he will not have to reopen the ledger to make entry after the deposit or withdrawal of amount by the customer.

Whenever a cheque of more than 25000 is come to cash it is required to write a voucher of “With Holding Tax” with it so that the amount of tax can be deducted from the payment. The vouching will be discussed later on. he also cheques the entries made by clerk in the ledgers before passing cheques. 2010 which I have learned from the seniors which they have developed to facilitate themselves when the customer will come again in the future. Before his sign no cheques can be passed.Internship Report on Zarai Taraqiati Bank Ltd. In this way the entries originated by any person is double checked which reduce the chances of any mistake. . like AMO (Assistant Manager Operation). these guidelines are following:       Write the ledger name and its page number on the front of new cheque book Write the account number on every cheque of new cheque book Take the Thumb Impression of every customer on the cheque For the man take left thumb impression and for women take right or both No cheque will be paid to anyone else than account holder if it is a loan account Fill the cheque in Urdu if the customer signs in Urdu or gives Thumb Impression only  Also fill the memorandum attached with in cheque book with each cheque to record all the transaction for future reference of client and to the bank also. All the cheques are required to be signed by respected authority before payment of cash.

many hospitals and an estimated 7.2 million homes have been damaged and an estimated 17. Baluchistan. Punjab and Pakistan Administered Kashmir. it is required to make sure that avoid double deduction from any particular person’s payment.000 the amount of 1000 should be deducted.173 schools are being severely damaged. Thousands acres of agricultural land has been flooded.000 the rupee of 500 should be deducted to charge to flood relief fund keeping in view the double deduction.000 but less than 500.000 or any payment from the account of customer below this limit should be deducted with amount of at least 100 rupee to contribute in the flood relief fund.  From any payment of more than 500.2 million people have been affected by the floods. with roads submerged and tens of bridges swept away. The amount is deducted by filling a deposit slip with the name of the contributor to deposit in the account of flood relief fund (A/C No. at least 1. depositors and general public to contribute in this fund for this purpose the following procedure is required to follow:  From any loan of below 200.  From any payment of more than 200. Power and communication lines are down in many areas. at least 3. Death toll has risen to more than 1500 people. To help the victims of this flood ZTBL made Flood Relief Fund 2010 and the head office asked all the branches to collect the fund for this flood relief fund. According to circular issued by Head Office every branch make it sure to convince the borrower. However.3043). hundreds of villages have been swept away. For this purpose every MCO (Mobile Credit Officer) is given a deposit slip book so that he can collect fund from the 81 . This is a snap shot of the situation after the flood and the damage final estimates are yet to make.000 livestock animals have been lost. causing flash floods in several parts of Khyber Pakhtunkhwa.Internship Report on Zarai Taraqiati Bank Ltd. This flood have caused huge destruction. The economic cost is also huge.2 million hectares of standing crops have been damaged and at least 200. Floods have caused widespread damage to public infrastructure. 2010 ZTBL Flood Relief Fund 2010 Heavy monsoon rains started to hit Pakistan from 22 July 2010. But if anyone wants to contribute more than 100 or more than one time he can give at any time.

The weekly report of these funds collection is required to send to Regional Office. 2010 people during his visit to the villages. And inside the bank. the accounts department makes it sure to fill this deposit slip with every payment. the Mian Channu branch where I did internship was in the first position in the collection of fund in the whole zone of Vehari. According to the weekly report of last week of Ramdan. .Internship Report on Zarai Taraqiati Bank Ltd.

it is also used when the loan is sanctioned so it is required to transfer amount of loan to the loanee account. So the transfer voucher can be written to credit the first account and debit the second one to correct the mistake.  Debit Voucher (Have three copies and in white color)  Credit Voucher (Have two copies and in blue color)  Transfer Voucher (Have two copies and in yellow color) 83 . Transfer Voucher As the name shows it is used when the amount is required to transfer from one head to another. The vouchers are of three types: 1. Credit Voucher It is used for the payment of any amount by the bank to anyone. Like the cheque drawn on bank. In the accounts department of ZTBL it is the back bone. For easy recognition the vouchers are made of different colors.). PTCL etc. These vouchers used to store in record room and they keep piling up there. The transfer of return to the income account of bank. the payment of loan by the loanee etc. Debit Voucher (Receipt of Amount) 2. 3. one for the customer and one for the bank record. Debit Voucher Debit Voucher is used when bank received any amount from anyone. Another use of transfer account is to correct mistakes in the ledger. In the end of day all the vouchers written during the day is required to be write down in the daily Scroll (which will be discussed later on) and then all the vouchers of day is sewed and then sealed so that no new voucher can be placed or removed from the record. 2010 Writing of Vouchers Vouchers are the important evidence of all the transactions takes place in the bank. the expenses of bank itself etc. The example is the transfer of utilities bills accepted by the bank to the respected utilities provided company (Mepco. Every voucher has at least two copies. Credit Voucher (Payment) 3.Internship Report on Zarai Taraqiati Bank Ltd. Transfer Voucher 1. every transaction of bank with reference to cash required a voucher to be drawn against it. 2. The example is of deposited amount by the depositors. for example if an account is mistakenly debited in place of another account.

/ Advice no. 2010 Sample of Debit/Credit Voucher Zarai Tarqiati Bank Ltd. Branch----------------Name-----------------Parentage-----------Village---------------Tehsil----------------Debit Cash Voucher (Cash Receipt) Branch Code Date Serial No./CA Code Total Amounts in words:--------------------------------------------Enclose:----------------------------------------------------------Prepared by:----------------------------------------------------Checked by:-----------------------------------------------------Authorized Signature:--------------------------------------- . Record no.Internship Report on Zarai Taraqiati Bank Ltd. 154700 No. Particulars Loan Case no.L Head TR Code RO Code Effective Date Amount Contra Voucher/Contra Branch no./ A/c no. G.

Internship Report on Zarai Taraqiati Bank Ltd.000 will be filled in the following way./ Account no.L Head (General Ledger Head) It is the General Ledger Head which is required to debit. 3 9 6 7 0 0 3: G. his name. In this voucher of W. After that in the particulars it will be written “A/O of With Holding Tax” and in the GL Head (General Ledger Head) the head number of “With Holding Tax” (which is 3056 in the ZTBL) will be written. In the total the same amount will be written again and then this amount will be written down in words. The amount will be written after calculating . For example. 2010 The debit voucher for the deduction of With Holding Tax from the cash withdrawal of more than 25. Like 3056 is the G./ Account no. 4: T. First the name or branch. So.R Code This code is rarely used for debit and that is why I don’t have complete information about it. Loan Case no. 85 . Amount of Recovery etc.3% of withdrawal amount. This column has 6 blocks to write. it helps when the voucher is recorded in the computer room to understand the type of transaction. father name. 2: Loan Case no. In the last the signing authority will sign in.H Tax only a few columns of the voucher is used. These are standard heads used in the entire branches of ZTBL. If the voucher is of recovery than in this column the loan case number of the loanee who has come to pay loan will be written. its code and the date is required to write.H Tax. it will be same when any branch of ZTBL will collect this tax from his customer. Than the information from whom this tax is collected.L Head for W. his village and city name will be written. the other columns can be used for other types of transactions./ Advice no. In the recovery voucher this column is used./ Advice no. when MCO collects the cash than I used to write 14 and when loanee himself comes to pay loan I used to write 15 in that place. The explanation of each column is given below: 1: Particular: In particulars the reason of the transaction is written down. due to shortage of space these block can’t be shown in the above sample of voucher.

7. no interest is required to be charged for the day of 14 September because the amount has been already collected a day before. The loanee has paid the MCO on 13 September. while the amount is deposited by the MCO on 14 September. Amount This column used to write the amount. Because the cash has been collected by him a day before the voucher of recovery is written down so the effective date on voucher will be 13 September while the date of Voucher in right upper side column will be the date of 14 when the voucher is written. it is also divided into many blocks so that when write any amount it will be easily readable later on. 5: R. If the effective date will not be written than there will be discrepancy between the amount collected by MCO and the amount calculated in the accounts in the time of writing voucher because the amount calculated in the accounts department will include the interest of one more day than collected by MCO. during his visit he collects recovery of 100. . 2010 Like. Why the effective date required? The answer of this question can be understood from the above example.Internship Report on Zarai Taraqiati Bank Ltd. on 13 September an MCO is on a tour to the villages which are under his circle. For example in the W. Column from right side is for figure of hundred and the next block is of thousands. So. Like the first block in Rs. These codes can be different in different banks. For example. And when this amount will be transferred to the respected head in that voucher the word “R” will be written which will show that this voucher is responding to any transaction. He will issue receipt to the loanee as evidence that MCO has collected cash from him and on the next day (14 September) when he will come to the bank that MCO will deposit cash as a recovery in the name of that loanee. It can be different from the date on which the voucher has been written down.O Code Originated/Respond code is used to show that whether a transaction is originated or responded. 6: Effective Date It is the date on which the amount is received.000 from someone. it helps computer to understand the type of transaction.H Tax example the word “O” will be written in this column which will show that this debit voucher is originating this transaction. So. in the credit voucher I was asked to write 01 code for all the expenses of the branch and 02 for the expenses of the Zonal Branch.

Record no. 2010 Amount Rs. So. These two head come under the main head of Sundry/Suspense & Central A/C only which is not displayed in the voucher sample due to shortage of space. 11 000 2 09 000 Ps. One of the customer of a bank has received tractor in the Benzir Tractor Scheme but the company failed to deliver the tractor on the agreed upon date. This column is used when we are responding to some other voucher or branch. he will find that the amount was transferred by the company as penalty to the bank account. it will be charged with the penalty of 150 rupee per day. So. So. During my internship I have used it once time. And it is a contract between the bank and the company that when company will not deliver the tractor on the agreed date.000 due to late delivery to the customer.Internship Report on Zarai Taraqiati Bank Ltd. the bank had a claim on the company of rupee 25./CA Code 3 9 6 7 0 0 0 1 87 . in short it is used when we are responding to any other voucher or branch./CA Code are the following. Sundry/Suspense & Central A/c only Contra Voucher/Contra Branch No. when I transferred the amount from bank account to the customer’s account I was actually responding to the first voucher created with which the amount was transferred from company to the bank account. so definitely the bank has a voucher written against it. And when he will open the contra voucher number. - Total 2 20 000 - 8. Contra Voucher/Contra Branch No. and Record no. he can easily find the contra voucher number from the voucher written to transfer amount to the customer account. The company has transferred this amount to the bank account. The Exact view of contra voucher/contra Branch No. Now this penalty is in the bank account which it has to transfer to the customer who has faced difficulty due to late delivery. I was asked to write the voucher number of that first voucher in the column of contra voucher of new voucher with which I am transferring amount to customer’s account so that in future when any one need to find out that from which reason the account of the customer is credited. So.

10. Because when we use to transfer amount from one account to another account than there should be one account which is required to debit and the other account should be credited to complete the whole entry. the only signature place is used is of signing authority because it is compulsory. Record number is the number of the entry in any contra voucher to which we are responding. Like if I want to write a credit voucher to pay some employee who has bought stationary for the office use so I will attach the receipt of the stationary he has bought from the shop with the voucher and I will write (1) in the enclose so whenever anyone will see the voucher he will know that there is a receipt attached with the voucher. of that particular transaction in that voucher. 11. So. But the transfer voucher is different from these two.Internship Report on Zarai Taraqiati Bank Ltd. Upper side is for the debiting an account and in the down side is for crediting an account. it has the same columns and lines but it is divided into two parts. The sample of Transfer Voucher has been given in the next page./CA Code. Both Debit and Credit vouchers have same columns and lines to write on. And CA code is used when we are responding to any Contra Branch No. Record No. giving contra voucher number is not the only thing we need to write to give exact reference. 12. 2010 9. . Encl (Enclose) Enclose is number of receipt if any attached with the voucher. Signatures There are three spaces available to sign in the voucher. Rupees in Words Rupees in words are compulsory to fill so that to avoid any mistake in writing amount in numbers and also to avoid any misconception in future. we also need to give reference of Record no. These spaces are for the person:  One who has prepared it  One who has checked it  And signing authority who passes this transaction But I have not seen anyone signing the first two places. A voucher can have many transactions written on it as you can see that there are number of rows available in the voucher to write on.

/ A/c no. G.L Head TR Code RO Code Effective Date Amount Contra Voucher/Contra Branch no./ A/c no./CA Code Total No. Particulars Loan Case no. Record no.L Head TR Code RO Code Effective Date Amount Contra Voucher/Contra Branch no./CA Code Total Amounts in words:--------------------------------------------Enclose:----------------------------------------------------------Prepared by:----------------------------------------------------Checked by:-----------------------------------------------------Authorized Signature:--------------------------------------- 89 .Internship Report on Zarai Taraqiati Bank Ltd. 2010 Sample of Transfer Voucher Zarai Tarqiati Bank Ltd./ Advice no./ Advice no. Branch----------------Name-----------------Parentage-----------Village---------------Tehsil----------------Transfer Voucher Branch Code Date Serial No. Particulars Loan Case no. Record no. G. 154700 No.

2010 Daily Transaction Scroll Daily transaction scroll is written by operations officer every day in a bank. It is the record of all the cash inflows. Sheet number is used when there are more vouchers to write and they cannot be written on a single sheet so the next sheet is required to use in such situation the number of sheet should be written so that they can be arranged in a proper way. Both cashier and operation officer writes his own scroll at the end of day when they have to close the cash. The first two vouchers are debit vouchers that are why I have written the amount (11. while the right side is used to write the debit and credit of transfer vouchers. The sheet is divided into two sections the left side part is used to write the debit and credit vouchers and their amounts.000 and 500) in the debit column. 1 2 3 4 Voucher G. The 2nd voucher name is not written completely which is an ease which can be . The closing balance in both these scrolls must be same otherwise there are some transactions which have not been recorded correctly either by the cashier or the operation officer. Head 154700 701 568900 768200 Total Debit 11 000 500 5 000 4 000 11 500 5 000 4 000 4 000 4 000 Credit Debit Credit The above view is of the rest of the page where all the vouchers are recorded. The above is the example of writing of different vouchers.Internship Report on Zarai Taraqiati Bank Ltd. outflows and transferred on a particular day. If I will divide the page of scroll than the following are the important columns and part of it: Zarai Tarqiati Bank Ltd. Daily Transaction Scroll Name of Branch--------------------------Date Branch Code Sheet Number The above are the sketch of columns used in the upper side of scroll page.L No. Sr .

credit and transfer vouchers is required to be written so that nothing can be added or erased from the above scroll by any one. Credit Balance 5. which are 4. In both Debit and Credit column of the right side of sheet is filled with the same amount because in transfer voucher one account will be going to be debit and the other will be credit so the net effect will be zero.500 To calculate the closing balance first step is to write the Opening Balance which is absolutely the Closing Balance of last day. After it the debit balance will be written in the 2 nd row and in the 4th row both 1st and 2nd row will be added to get the total balance. 1. this closing balance should match the closing balance in the books of cashier.000 in the example. Like in this example the debit vouchers total amount is 11.000. there are two debits. Total Balance (1 + 2) 4. 2010 used if the same serial is going on and only the last number is changing. Opening Balance 2. When closing cash. 91 . Closing Balance (3 – 4) 400. To close the cash.000) is written in the credit side in front of it.Internship Report on Zarai Taraqiati Bank Ltd. The fourth voucher is representing a transfer voucher so its effect will be shown in the right side of the sheet. After getting this total the next step is to calculate and write the closing balance. Number Vouchers of Debit 2 Credit 1 Transfer 1 Total 4 As you can find that in the above given example of scroll. Here in the example I have assumed it 400.500 and the total of credit vouchers is 5. Debit Balance 3.000 406.500 5. Now the credit balance will be written and to get the closing balance the credit balance is required to deduct from the total balance of 3rd row. one credit and one transfer vouchers have been written so the same number is written in the ending column of scroll sheet. Credit Balance and then Closing Balance all should be similar otherwise there will be something which is skipped during writing even by the Officer or by the cashier. The third voucher is a credit voucher and its amount (5. in the end of this scroll sheet the number of total debit.000. The debit and credit side of transfer vouchers side will always be the same.500 411.000 11. In the end all the amounts of all the vouchers are totaled in their respective columns. When comparing with the cash scroll of cashier the Total Balance.

I have found many columns unused in the ledgers of Sada Bahar Loan Scheme or they have been used to write other information which is different from the heading of columns. 2010 Making Entries in the Ledgers In ZTBL the record of current accounts and loans are manually maintained. The information which is required to write in the ledger sheet when a new loan has been passed and ready to disburse are following:         Loan Case Number Name Parentage Address CNIC Maximum limit Date of maturity Cheque book number After entering the above information the loan can be disbursed to the loanee when he desires. I am here taking example of SBS (Sada Bahar Scheme) which is a revolving finance scheme. However the understanding of banking practices are required so that to follow the exact way of recording any transaction because usually the column written on the ledger books are not used for the purposes for which they are made. When a loan of SBS is sanctioned its amount is not transferred to the current account of the loanee like it is used to transfer in the AZS (Awami Zari Scheme). Making entries in the Ledgers requires simple concept of debit and credit.Internship Report on Zarai Taraqiati Bank Ltd. In SBS the Loan Case Number is used for all types of transactions. Disbursement and Recovery Entries When a loan is sanctioned and ready to disburse it is recorded in the respected ledgers. Because almost all the customers of ZTBL are low earning farmers and they . when a loan is sanctioned it is recorded in the SBS ledger with the name of loanee and Loan Case Number is used as an account number from which he can operate. The employee usually has established their own way of writing transactions in the ledgers the way in which they feel easy. There are many records which have been computerized but still the hand written ledgers are used. Every loanee has a unique Loan Case Number which is the base of all the record of his loan.

000-1480=18.000.520 31.480 18. like it is shown in the date of 31-04-10.480 Date 01-1-10 31-4-10 01-5-10 Particulars To Cheque No.Internship Report on Zarai Taraqiati Bank Ltd. The entry is shown in the date of 01-05-10. This is a precaution because the handwritten and manually calculated ledgers can have mistakes so checking it with OBL make it sure that they are not receiving less amount from the customer. Here in this example. In SBS farmer can withdraw the amount till he has reached maximum limit and the return will only be paid on the amount which he has taken out as a loan. To Return Recovery Debit 50.480 Return Total Credit Balance Outstan ding 50.480 1.000. the loanee wants to pay 20.480. It is rule in the bank that when the bank recovers any amount from the loanee than first return amount will be reduced and then the principal will reduced.) 93 . 2010 require immediate cash to meet their expenses so they draw a cheque on the bank on the same time when their loan is entered in the ledger book. The bank also adds return to the principal amount of each loan case. it is called “OBL (Outstanding Balance Ledger)”. To pay return we will credit it with 1480 and then the principal will be credited with the remaining amount (20.000. The entry of this transaction will be in the following way at 01-01-2010: Principal Credit Balance Debit 50.000 After four month a computerized outstanding balance report of all the loans is given to each branch. (The interest rate on SBS is 9%) Now suppose that loanee has reached bank on 01-05-10 and he wants to pay 20. (It is routine in the bank to check the total outstanding amount in the ledger with OBL before receiving any recovery.520) as shown in the above diagram.000 1.480 Nil 51. The entries of disbursement can be easily explained by taking an example that the loan has be sanctioned and it is recorded in the ledger now loanee want to withdraw the total sanctioned amount of 50.480 31. so first interest will be deducted which is 1480.000 1.480 and because the total return has been deducted that is why the total outstanding amount is also 31. Due to this payment the principal is also reduced to 31.

on 01-05-10 the loanee has paid 20.480 31840 Nil 50. if he will not pay his loan within one year. the first thing to do is to calculate return on the last outstanding principal balance. It is compulsion for every loanee to return his entire loan at least once in a year.000 No. Now suppose he comes again on 01-06-10 and wants to revolve his loan. 2010 Revolving SBS Loan Now suppose a situation where loanee wants to pay his entire outstanding loan and then wants to withdraw it again.480 241 241 Return Total Credit Balance Outstan ding 50.480 31. Because the loanee has already paid some part of principal on 01-05-10 due to which the principal has been reduced from 50.520 31.000 1.480 * 9/100 * 31/365) = 241 .840.480 18. Because the loanee wants to pay the total outstanding amount. To Return Recovery To Return Recovery To Cheque 50.480. This can be explained by continuing the last example.840 31.480. the loanee can revolve his loan by paying only interest of the loan.000 to 31.000 1. Now the return will be calculated from 01-05-10 to 0106-10 (31 days) at last outstanding principal balance of 31. (31.000 No.000 and his remaining outstanding balance is now 31.480 31. on that day the following entries will be made in his loan account: Principal Credit Balance Debit 50.Internship Report on Zarai Taraqiati Bank Ltd.480 Nil 241 Nil 51.720 Nil (A/C Closed) 50. he will be treated as defaulter and he can withdraw only 90% of sanctioned amount from his running SBS finance. This usually happens when the MCO want to achieve his recovery target or the time period of one year is completed from the date on which the loanee has withdrawn the amount.000 1.000 Date 01-1-10 31-4-10 01-5-10 01-6-10 01-6-10 01-6-10 Particulars Debit To Cheque 50. But in SBS the default situation is rarely occurs because when the limit of one year is near to end.

So. Whenever an account is fully paid it is practice in the bank that write the return collected on this account on the upper right corner of the voucher. it helps the other employees in the end to transfer it to the Income Account of bank and also to prepare weekly report on recovery. In the 2 nd entry on the date 01-06-10 I have credited all the principal amount and the balance of principal became Nil and the same I did with the return. Now the next step is to obtain all the outstanding amount of principal and interest so that the account can be closed and again revolved on that day. 2010 I have debited this return calculated and it has increased the total outstanding to 31. Usually MCO of the loanee asks to revolve the account and then vouchers are written and entries are made in the ledgers and then these vouchers and entries is passed by the AMO otherwise no payment or recovery is made. These are just entries in the ledgers absolutely the loanee will have to follow some procedures to revolve his account. Because both principal and return balance is now Nil that is why the total outstanding amount of loan is also Nil now and the Account is closed on that situation.720. I have again debited the amount which has increased the principal balance and then total outstanding balance to 50. The vouchers need to written when revolving an SBS loan accounts are following:  A debit recovery voucher of full outstanding amount including Principal and Return.Internship Report on Zarai Taraqiati Bank Ltd. 95 . I have credited the total balance of return and its balance also became Nil.  Another debit voucher of With Holding Tax will also be filled if the amount loanee wants to again withdraw is more than 25. in this example I have assumed he again wants to get the total amount out of it. Now the loanee wants to revolve his account so he will again draw a cheque on the bank of any amount with in his sanctioned limit.000.000  A debit voucher of revolving fee (100 rupee for SBS)  A credit voucher will be written in the end of the day against the cheque drawn by the loanee  A transfer voucher which is used to transfer the Return recovered on the loan to the Income Account of the bank.

250 1250 is the amount which loanee will pay only and his loan will again be revolved to a new maturity of one year. he will have to pay the total outstanding amount first and then he can withdraw again the principal of 50. Amount the loanee will pay Revolving fee Again disbursement of loan W. In this way revolve benefits the two parties.000 -150 -1.000 is total outstanding balance (50. .000 returns) and loanee wants to revolve the account. The principal is adjusted against the new disbursement of loan. revolving fee and W.000 -100 50.H Tax if any. one is loanee who has to pay a nominal amount and he obtains a new maturity date.Internship Report on Zarai Taraqiati Bank Ltd. 2010 Actually in revolving an account the loanee pays only the interest amount.000 Balance -51.000. For example: If 51. The second one is MCO who can show that he has recovered the loan which helps him in achieving his recovery target.H Tax on 50.000 principal + 1.

In the branch where I have completed my internship.000 300 notes of 1. If there is any mishap the person who has keys according to key register will be held responsible. One key is always remains with the cashier and the other key remains with the manager. Thus the key register has significance matter. When a key is given to someone else the time of giving keys is also written in the register. Like the bank may have this amount of 1 million in the following denominations. Safe Register: Whenever the cash is placed inside or remove from the safe it is recorded in the safe register. The person who gets cash from the safe or puts it also signs it. 2010 Opening and Closing Cash In the beginning of every day the cashier opens the cash in time.Internship Report on Zarai Taraqiati Bank Ltd. Whenever a person gives the key to someone else. the AMO has the second key.000 500. 100 notes of 5.000. And same information is required to enter when the cash is again placed in the safe in the evening.000 300.000 300 notes of 500 150. The cash is also written in denomination in which it is exist. In the morning when cashier brings out cash from the safe he writes the date. Key Register: It is a register which have information about the keys of the safe. Usually the keys remain with the cashier and another officer of the bank but when one of them is on leave it is required to give responsibility of keys to someone else because during their absence the cash of bank can’t remain closed. amount and denomination in which cash he has obtained. he writes in the key register the name of person who has received the key and that other person signs it. it is precaution to make it clear that on which time of day the key was with which person.000 97 . however manager can further gives it to someone else.000 400 notes of 100 40. no one gives the key to someone else without entering it in this register. Like if bank has 1 million than this information is not enough the denomination in which this one million exist in bank is also written.000 200 notes of 50 10.000 Total 1. The cash remains locked in the safe and it requires two keys two open.

Motivation of Human Capital Human capital no doubt is a precious asset for any organization. 2010 Dispatch and Diary Dispatching and receiving letter is the routine work in any bank. without skilled and motivated employees no organization can survive in this competitive environment. So. The bank maintains the proper record of every document which is dispatched or received. it needs to speed up implementation of Information Technology so that to perform its operations efficiently and effectively. The letter which the bank sends to others is dispatched while the letter which the bank received is called diary. Information technology will help bank in finding and stopping malpractices and other irregularities and this will result in much better performance. Providing computers and software is not the only solution. ZTBL has mix of experience and young staffs which provide excellence blend of required skills and enthusiasm for progress. But I have found during my internship that the employee of ZTBL is not as much motivated as other bank’s employees are. many of the permanent employees of the bank has not been promoted . Recommendations Implementation of Information Technology The following are the problems which I have felt during my internship which is required to be noticed to increase the pace of growth of the bank. training the new and young employees is a better option because they have will to learn and also they are people who will have to work for a long time with the bank. The bank has many experienced employees but they have no or very little know how of IT and many of them is not interested in learning it. Investing in young employee is better than training those who are near to their retirement. Although the bank is computerizing its operations but it is far behind other commercial banks.Internship Report on Zarai Taraqiati Bank Ltd. the bank needs to train its employees so they can use this new technology for the betterment of the organization. The reason behind this is the mechanism of promotion.

2010 since last 10 years and the same case is with the contracted workforce they have no idea that when they will be permanent. Branch Infrastructure Almost all the banks in Pakistan has refurnished their branches to provide better services to its customers. there are even less fans than required. the branches bank of today is completely different from the branches of 10 years ago. the branches have not the furniture. fans. the efforts they are putting in this regard is not satisfactory. The bank’s Human Resource Department needs to focus on developing more trained and motivated employee. The promotion criteria like all other government institutions is based on the experience. After it all the banks has adopted this concept and they build and refurnished their entire network of branches. the bank starts training each and every employee which is a good thing but with training the motivation in terms of promotion. according to their requirements. bonuses etc. But ZTBL is still working on the old style. That all is started when City Bank come in Pakistan with a new idea of modernized decorated branches. there are no hard and fast rules made as it is available in other government institutions. The concept of air conditioning which has become an essential part in all other banks is a thing about which the bank has not even think. However. rooms etc. the more older the employee is the more he has a chance to be promoted irrespective of this that how his previous performances was. It is true that bank does not have a need to make their branches like all other banks but it is required to provide at least the basic necessities to make the working of the employee comfortable and also to facilitate its customers.Internship Report on Zarai Taraqiati Bank Ltd. are also required. But what I have heard from the employee is that they have no idea that when and how they will be promoted. 99 .

However the bank has improved itself a lot.Internship Report on Zarai Taraqiati Bank Ltd. the profit of the year of 2008-9 and decline in Non Performing Loans are clear signs of improvements. The few things on which the bank has to focus is implementation of information technology with faster pace. . Due to a government owned organization the politicians and other higher authorities sometime use it to give benefits to their families and friends and this also effects the growth of the bank. 2010 Conclusion ZTBL is a specialized institute which provides financing facilities to the people of rural areas and in this way it is contributing its part for the development of the country. improving branch infrastructure and working of its human capital to make them motivated.

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