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Culture Documents
An Internship Report On "Habib Bank Limited"
An Internship Report On "Habib Bank Limited"
Submitted By:
M.Sajid Iqbal
Roll No. 115
MBA (G1) 4th Semester
Session (2011-2015)
Submitted To:
MR. Nazik Hussain
(Incharge Internship & Placement)
Department of management science
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Acknowledgement
All the praises and gratitudes are for almighty Allah, who is entire source of all knowledge
and wisdom endowed to mankind. After Allah unbound praises and thanks are also for his
dearest prophet, Hazrat Muhammad (PBUH), who is forever a torch of guidance and
knowledge for humanity as a whole.
I would dedicate my this effort to my beloved parents for their undying love and care with
unconditional support throughout my life. Without their guidance, I wouldnt be able to
achieve anything in my life. I would like to thank, especially to my university management
who arranged internship and provided a chance to gain practical knowledge and also for their
timely guidelines through email or MDBs. I highly thank the staff members of Habib bank
Limited, Model Town A Branch (1655) Bahawalpur, who really cooperated with me and
provided me complete guidance and give me their precious time. They tell me everything
related to banking. I am really impressed with their hospitality. They behave like a colleague
and always invited me on their parties and gatherings. Their sympathetic behavior is printed
deep on the pages of my memory.
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Dedicate to
beloved
undying
love
unconditional
parents
and
support
for
their
care
with
throughout
be
able
anything in my life.
Page 4
to
achieve
My
Parents
Table of Contents
The Bank
07
Executive Summary
08
Introduction
11
15
18
18
Values of HBL
19
Page 5
20
22
24
27
28
Management
31
Competitors
of
Habib
Bank
Limited
23
Departments of Habib Bank Limited
34
Deposit Department
35
37
39
Advance Department
43
Marketing
47
Clearing Department
49
50
Computer Department
51
53
56
Financial Highlights
58
Page 6
Financial Performance
Value of Investments in Employee Retirement Benefits Fund
60
62
Domestic Network
63
64
Conclusion
66
The Bank
The term BANK is derived from its Italian origin BANKO which means Bench that is
where people used to meet and solve their financial matters. The term bank is being used for
a long time yet it has no precise definition. The basic reason is that the banks perform not just
one but many types of functions. Originally the banks were supposed to make short term
loans to the traders only. The banks now not only make short term loans to the formers,
traders, industrialist etc. But also invest in a wide variety of long term earning assets. The
commercial banks also undertake and execute trust, deal in stock, shares and debentures,
issue guaranties and indemnities underwrite and sell new securities, and deal in foreign
exchange etc.
However some of the definitions of bank from different authors are as follows.
According to Dr. Hart
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Executive Summery
Every student of Master Administration at Islamia University of Bahawalpur has an essential
requirement to do six week internship in any of the well reputed organization. The purpose
of the Report in hand is together relevant information to compile internship report on
Habib Bank Limited. To observe, analyze and interpret the relevant data competently and in a
useful manner.
Habib Bank Group is a leader in Pakistans services industry with an extensive and vibrant
network of 1498 domestic branches the largest in Pakistan and 55 international branches to
meet customer needs. Perhaps the HABIB BANK LIMITED was established in 1941 at
Bombay. But its history starts in 1841 when a young boy, named Ismail Habib reached
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Bombay for a job search. After some time he got the job with a dealer in utensils and non
ferrous metals. Ismail Habib was very keen and intelligent and became partner of his boss.
Later on he was elected as a president of the market. For many years, he continued to expand
his business and was engaged in private banking. So HBL has come a long way from its
modest beginning in Bombay in 25 august, 1941 when it commenced business with a fixed
capital of 25000 rupees.
Impressed by its initial performance, Quaid-e-Azam Muhammad Ali Jinah asked the bank to
move its operation to Karachi after the partition, HBL establish itself in the Quaids city in
1943 and became a symbol of prestige and progress for the people of Pakistan. During the
early days of newly born state, the government of Pakistan was facing the great problem of
fund shortage. HBL, despite of experiencing shortage of funds in its initial time, Put its
survival at stake by helping the government with funds as HBL had established its operations
in Pakistan in 1947 and moved its head office to Karachi. HBLs first international branch
was established in Colombo, Sri Lanka in 1951 and Habib Bank Plaza was built in 1972 to
commemorate the banks 25th Anniversary. HBL now has the largest Corporate Banking
portfolio in the country with an active Investment Banking arm. Now there are 1773+
braches inside the Pakistan and about 70 Branches overseas providing financial services to its
worthy customers. It encompasses product offerings and services in corporate banking to
Retail Banking and, in recent years, Consumer Banking as well. Satisfying customers are the
only way to stay competitive in today's Market
customers wants and what the HBL can provide must be optimized in order to maximize
HBLs long-term profits. HBL is expanding its presence in principal international markets
including the UK, UAE, South and Central Asia, Africa and the Far East. With a domestic
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market share of over 40%, HBL was nationalized in 1974 and it continued to dominate the
commercial banking sector with a major market share in inward foreign remittances (55%)
and loans to small industries, traders and farmers. International operations were expanded to
include the USA, Singapore, Oman, Belgium, Seychelles and Maldives and the Netherlands.
Habib Bank is working for the last 50 years and become the largest commercial bank in the
country. It has the Authorized capital of RS 5000 Million with a paid up capital and reserves
of RS 858 Million and its deposits are more than Rs. 213 billion in approximately 10.7
Million accounts. It has the advances of 131 Million. Habib Bank has innovated a numbers
of financial schemes like term deposits, Special notice term deposits, A.T.M. etc. As
governments are hoping to be liberal and their policies are innovative and liberal the scope of
banking is increasing and Habib Bank has always been one step ahead in the growth and
participating very much in the economic growth of Pakistan. Habib bank HEAD QUARTER
is situated in KARACHI that building has highest number of stories in Pakistan.
Habib bank has basically 9 Regions all over the country to control the entire activity of Habib
bank operation is countrywide.
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Introduction
HBL is now a Banking tycoon in our country. HBL, which is engaged domestically and
overseas in Commercial, Retail Banking and related services, enjoys 20% of the market
Share in Pakistan. Today HBL is truly the bank of the people providing its customers with
convenience and satisfaction all around the world. Habib Bank Plaza, the tallest building in
Pakistan, is the proud symbol of HBL leadership. In Pakistans corporate ground HBL is
currently rated AA and A1+.
Habib Bank Limited was established by Mr.Ismail Habib (Late) on August 25, 1941 at
Bombay. It was the first Muslim Bank of the sub-continent. It was established with a Paid up
capital of Rs. 25000.
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No of Brunches
HBL
667
6,160
NBP
579
5,660
UBL
497
5,670
MCB
506
1,640
ABL
145
570
No of Brunches
HBL
1926
153,431
NBP
1448
128,679
UBL
1684
87,482
MCB
1288
50,013
ABL
750
33,757
Registered office
Internship Report on HBL
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Head office
Habib Bank Plaza I.I. Chundrigar Road
Karachi 75650 Pakistan.
Phone: 2418000 [50 Lines]
Fax: 021-921751
Board of Directors
Sultan Ali Allana
Chairman
Nauman K. Dar
Moez Jamal
Director
R. Zakir Mahmood
Director
Director
Sajid Zahid
Director
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Director
Scope of Report
As an internee in Habib Bank Limited the main focus of my research report was on general
banking practices in one of the branches of HBL. These operations include Financing,
Clearing, Advances, remittances, deposits and Account Opening.
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The study will benefit the finance students in particular and banking students in general
because the financial analysis section of this report comprehensively encompasses all of
financial aspects of this corporate banking giant. Furthermore, HBL Bahawalpur Branch,
Bahawalpur may also benefit from the recommendations made at the end of the report.
Research Methodology
The report is based on my six weeks internship program in HBL. The methodology reported
for collection of data is primary as well as secondary data. The biggest source of
information is my personal observation while working with staff and having discussion
with them. Formally arranged interviews and discussions also helped me in this regards.
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1969 HBL opened first of 3 branches and an OBU in Bahrain. However, HBs branch in Aden
is nationalized.
1971 HBL opened an OBU in Singapore and a branch in New York.
1972 HBL opened the first of 11 branches in Oman. HBL constructed Habib Bank Plaza in
Karachi to commemorate the banks 25th Anniversary.
1974 The government of Pakistan nationalized HBL and HBL merged with Habib Bank.
1975 HBL opened a branch in Belgium. HBL also merged with Standard Bank, a Pakistani
bank.
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1976 HBL opened a branch in the Seychelles, the first of two branches in Bangladesh, and a
branch in the Maldives.
1979 HBL opened a branch in the Netherlands.
1980 HBL opened a branch in Paris and another in Hong Kong.
1981 HBL established Nigeria Habib Bank with 40% ownership. HBL also opened a
representative office in Teheran.
1982 HBL opened a branch in Khartoum.
1983 HBL opened branch in the Karachi EPZ and a branch in Istanbul.
1984 HBL established Habib American Bank in New York with a branch each in Manhattan
and Queens, and a US International Banking Facility. HBL also opened a branch in
California.
1987 HBL opened in Australia.
1991 The Habib Group established a separate private bank, the Bank AL Habib, after private
banking was re-established in Pakistan. HBL opened a branch in the Fiji Islands, and
took over the Pakistani branches of failed bank, BCCI.
1992 In Nepal HBL acquired 20% of Himalayan Bank.
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1990s HBL established Habib Finance (Australia), and Habib Finance International Limited,
Hong Kong.
2000 HBL established Habib Canadian Bank.
2002 On June 13, 2002 Pakistan's Privatization Commission announced that the Government
of Pakistan had granted the Aga Khan Fund for Economic Development (AKFED), a
subsidiary of the Aga Khan Development Network, rights to 51% of the shareholding in
HBL, against an investment of PKR 22.409 billion (USD 389 million).
HBL's UK operation came close to being shut down due to regulatory issues with the
Financial Services Authority. The issue was resolved by converting the operations to a
subsidiary. Then Habib Bank Limited and Allied Bank of Pakistan merged their
operations (Habib contributed its 6 branches and Allied its 4), into a new bank, called
Habib-Allied International Bank, in which Habib Bank has a 90.5 percent shareholding,
while Allied Bank has 9.5 percent. Simultaneously with the transfer of business to the
new bank, both allied and Habib Bank close down all independent operations in the
UK.
2003 HBL received permission to open a branch in Afghanistan.
2004 On February 26, the Government of Pakistan handed over management control of
Habib Bank to AKFED. The Board of Directors was reconstituted to have four AKFED
nominees, including the Chairman and the President/CEO and three Government of
Pakistan nominees
2006 HBL sold the operations that it had established in Fiji in 1991 to Bank of South Pacific.
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Values of HBL
Humility
We encourage a culture off mutual respect and treat both our team members and customers
with humility and care.
Integrity
For us, integrity means a synergic approach towards abiding our core values. United with the
force of shared values and integrity, we form a network of a well-integrated team.
Meritocracy
At every level,, from selection to advancement, we have designed a consistent system of
human resource practices, based on objective criteria throughout all the layers of the
organization. We are therefore, able to achieve a specific level of performance at every layer
of the organization.
Team Work
Our team strives to become a cohesive and unified force, to offer you, the customer, a level of
service beyond your expectations. This force is derived from participative and collective
endeavors, a common set of goals and a spirit to share the glory and the strength to face
failures together.
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Culture of Innovation
We aim to be proactively responsive to new ideas and to respect and reward the agents,
leaders and creators of change.
Services
Retail Banking
The Retail Banking network, with 1425 branches, is the core strength of Habib Bank. The
network provides HBL with the largest diversified low cost deposit base of any bank in
Pakistan, and forms the basis for many of our other business lines: corporate and investment
banking and treasury activities. The network provides HBL with the largest diversified low
cost deposit base of any bank in Pakistan, and forms the basis for many of our other business
lines: corporate and investment banking and treasury activities.
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Commercial Banking
Enterprises operating in the middle market contribute significantly to the economy of a
country. During FY-2000 HBLs management decided to address this issue. On November 1,
2000 Commercial Banking came into being. The objective of stetting-up Commercial
Banking was twofold:
Commercial Banking is making headway with improvement not only in terms of the business
figures but also in its ambiance. Renovation of is being carried out in order to give a
professional look to all the Commercial Banking Centers.
Corporate Banking
The Corporate Banking Group serves large institutional customers who require sophisticated
products in an environment of intense competition. HBL Corporate & Investment Banking
Group is now recognized as a market leader and regularly arranges and participates in most
large structured finance deals.
International Operations
HBLs ability to operate successfully in diversified markets and cultures is a function of a
long history in international banking when first international branch was opened in 1951.
The Banks branches in financial centers continue to provide efficient trade settlement and
reimbursement services to the entire network and business with other banks.
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SWOT Analysis
Strengths
Branches in 26 countries
20% share of HBL in financial market
Large Balance sheet size
Decentralized authority
Weaknesses
Opportunities
Internship Report on HBL
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Threats
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Security mattress
HBL is an organization that provides opportunities for its staff to have a
challenging and rewarding long-term career. To this end the Human Resource Group
(HRG) encourages and motivates its employees to excel in the responsibility that
they have in the organizations. Believes that creativity and innovation comes from
talent, knowledge and experience and it is HBLs endeavor to provide and main tain an
environment which not only nou rishes these strengths but also provides opportunities
for the staff to have a career which has multidimensional growth opportunities. In doing so,
HRG has been restructuring and redesigning the overall structure o f t h e organization,
which includes rationalization, cutting down the decision layers, improvement in staff
training and hiring professionals and MBAs at entry-level management. The overall direction
of HRM has been towards nurturing the strengths of the human capital to its maximum with a
defining principal to help create a progressive environment and sustain a thorough
commitment of our staff towards focused customer service. HRG therefore recognizes the
need to proactively invest in staff training and develop courses on a regular basis. Under the
umbrella of its Management and Organization Development Division (MODD) its
Management Development Institute (MDI) with its three fully equipped chapters at Karachi,
Lahore & Islamabad regularly conducts and outsource technical and personal development
courses for its all level of staff enabling them to meet the challenges of the ever-changing
business requirements and customer needs. During 2008, 529 courses, workshops, skill
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development clinics and seminars in the disciplines of Service & Attitude, Market Research
& Selling, Management & Communication, Credit & Fina nce, I.T. & e-Banking,
Treasury & Trade Finance, Global/ Domest ic Banking Operations and on other
diverse subjects were conducted by In / Ex-House professionally skilled, qualified and
certified faculty and industry experts for 10233 people of senior/middle line management &
staff carving 1334 days training days. There is no budget limit for Training and Education at
Habib Bank.HR Group aims to maintain and further improve the service-oriented culture and
to make employment not only satisfying but also enjoyable.
Educational Background
Skills and Competencies
Abilities and Attitude
Experience
Interpersonal / Communication skills
Management Trainee
Cash Officer
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Management Associates
Internship
Experienced Professionals
We recruit experienced professionals in all areas of the bank and encourage the creation and
pursuit of innovative ideas. Our dynamic work environment offers diverse opportunities to
stimulate ongoing employee needs and supports career enhancement opportunities.
Selection Process
The diagram below represents the process on which we base our selection. This gives an
overview to potential candidates as to the steps involved in becoming a part of the HBL team.
To earn profit for the Bank itself and for its shareholders.
To promote and boost up business sector inside the country.
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Like other business organization the core desire of Habib Bank is to maximize the profit
through saving & loaning money to the life of the common people. The Objectives of the
Habib Bank is given below:
the society.
Operating Goal: In compliance with the very nature of the organization, the objective
in mind the bank aims at excelling quality and diversified services. To fulfill its
mission Habib Bank has its main objectives as followings: To provide banking
services to people. To earn profit. Act as a media of exchange. To contribute to gross
domestic product (GDP). Maintain a satisfactory deposit mix. To promote and boost
up business sector inside the country. To help to grow entrepreneurship. Increase loan
portfolio diversification and geographical coverage. To mitigate unemployment
problem. Provide finance specialized services to the export. To help to boost
economic development. To help in development and industrialization of the country.
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attention of the market vouchers to identify business opportunities, see the shifting patterns of
the buyers, evaluate such changes in competitors positioning strategies and guide the choice
of which buyers to target and then classify them according to their respective segments.
Identification of external macro factors that influence buyers and thus change the size and
composition of market overtime involves initially building customer profiles. These
influences include:
Economic Trends
Along with higher borrowing power, a banking market requires better consumer market in
volume. The concerned borrowing power depends on:
Consumer income
Saving rates
Consumption patrons
Rates of interest
Budget deficit
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Exchange rates
Cost of living
Inflation
Socio-Cultural Environment
A society is shaped by stated and/or understood beliefs, norms and values. People in a society
consciously and unconsciously interact with:
Themselves
Others
Organization
Society
Nature
Following are the main factors. Which arise because of change in socio-cultural
environment?
Technological Factors
Advancement in technological forces has played a very vital role in shaping the lives of
people. The rate of technology change and its adoption has significantly affected the rate of
growth of economy around the globe and same is the case with Pakistan banking industry in
general and people in HBL in particular. With each passing day, new technology is generating
deep rooted affects which could be pragmatic in long run. These step up techniques involved
in on line banking. In brief PEST analysis evaluates the overall banking industry and
provides us the information about the external macro condition.
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Management
Management is a unique process consisting of activities of planning, organizing, leading
and controlling performed to determine and achieve stated objectives with the use of
human being and other resources . Management is the process of reaching organizational goals
by working with and through people and other organizational resources.
Strategic Management
There are three levels of strategies
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Growth strategy
HBL has adopted growth strategy by expanding its operations. HBL actually have different
products and services for both individuals and business customers. HBL product and services
for individual customers are credit cards, debit cards, and deposit accounts. HBL product and
service for business customer are commercial banking, cash management and asset
management.
Related Diversification
HBL has also adopted related diversification strategy, because at first function
of HBL was only accepting deposit and advancing loans but now HBL has many related
functions like flexi loans, ATM and credit cards.
To establish sound relationships with top industrial groups and various multinationals.
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Bank-AL-Habib Limited
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1. Deposit department
Bank deals in money and they are merely mobilizing funds within the economy. They borrow
from one person and lend to another, the difference between the rate of borrowing lending
forms their spread or gross profit. Therefore we can rightly state that deposits are the blood of
the bank which causes the body of an institution to get to work. These deposits are liability of
the bank so from point of view of bank we can refer to them as liabilities.
Types of account
Current account
In this type of accounts the client is allowed to deposit or withdraw money as and when he
likes. He may, thus, deposits or withdraws money several times in a day if he likes. There is
also no restriction of amount to be deposited or withdrawn. However, there is requirement of
minimum balance maintenance of Rs.5000/-. Usually this type of account is opened by the
businessmen. No profit is paid by the bank and no service charges are deducted by the bank
on current deposits account.
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Features
Account can be OPENED with Minimum Balance Rs.1000/- with no maximum limit.
Checking balance at any time during banking hours.
No profit is paid.
Statement of Account dispatched on request letter.
There is no restriction for withdrawals of amount and number of cheque.
Account can be OPENED with Minimum Balance Rs.1000/- or prescribed limit that
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Profit is Paid/Credited in Account on half yearly basis in case of six monthly PLS
saving accounts.
Statement of Account dispatched on half yearly basis after posting of profit.
There is no restriction for withdrawals of amount and numbers of cheque.
Fixed deposits
Fixed deposits are those which can be withdrawn only after the maturity period .
In this type of deposits the Bank allows high rates of interest depending on the
time period of deposits. The shorter the period of deposits, the less will be the interest and
vice versa.
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whether he is a true introducer or not a letter is sent to him thanking him for this introduction,
so that anything wrong may come into notice. There are different requirement for different
types of accounts and account holders. An important thing is that the customer should have a
corporate customer. The corporate customer limit is 40 million and this branch always deals
the corporate customer.
companies).
Certified true copy of rules and regulations or By-Laws (in case of association etc.).
Certified true copy of the resolution of the Board of Directors/Managing
Committee/Governing Body regarding conduct of the account.
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3. Remittance Department
Remittance is a major function of the bank. It is the transfer of money from one place to
another place without directly involving cash. As it is the function of the Bank to the money
to any place where there is a Bank. It is the most easiest and safe way to send money to any
place. Bank charges menial amount as a commission for the remittance. Here in the Habib
Bank Limited Chubara Road Layyah Branch there is also remittance Department. By
providing this service to the customers the national bank earns a lot of income in Exchange.
There are two types of bills remittance:
I)
Remittance Inward
II)
Remittance Outward
I.
Remittance Inward
Cheques and Drafts received for payment and clearance or drawn on us from customer of
other banks on behalf of their customers is called Remittance Inward.
II.
Remittance Outward
All instruments issued by us, which are drawn on other branch of the same bank or
instruments deposited for collection from other bank locally or out of city are called
Remittance Outward
There are mostly four methods to remit the money. They are
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Applicant
Issuing branch
Drawee branch
Beneficiary
A demand draft may be issued against the written request of the customer before issuing it
must be seen that the demand draft is in order.
The DD application must be scrutinized by the counter clerk in respect of following points.
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Applicant
issuing branch
Payee
Telegraphic Transfer.(TT)
It is a good safe and fast method of transferring money from one place to another. The advice
is sent through the telegram and the bank to which the advice is made reconfirms that
whether the advice is made or not. After the confirmation the money is paid to the payee.
Telegraphic Transfer could be made by giving the name and the telephone number of the
payee but account number is considered good and sage. The amount exceeding Rs.15000 is
coded in order to keep security.
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Applicant
Drawing branch
Drawee branch
Beneficiary
application form.
Instruction regarding mode of payment should be obtained.
A record in the remittance outward register should be maintained.
All the remittance must be controlled through number or codes.
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4. Advances Department
This department has been working under the supervision of knowledge experienced & well
qualified banker. Mr. Nadeem, who has been serving this bank for the last 22 years. This
department has been playing one of the primary functions of the bank because a bank is the
organizations that accept deposits & give advances. Advances department is one of the most
sensitive and important departments of the bank. The major portion of the profit is earned
through this department. The job of this department is to make proposals about the loans. The
Credit Management Division of Head Office directly controls all the advances. As we known
bank is a profit seeking institution. It attracts surplus balances from the customers at low rate
of interest and makes advances at a higher rate of interest to the individuals and business
firms. Credit extensions are the most important activity of all financial institutions, because it
is the main source of earning. However, at the same time, it is a very risky task and the risk
cannot be completely eliminated but could be minimized largely with certain techniques. Any
individual or company, who wants loan from HBL, first of all has to undergo the filling of a
prescribed form, which provides the following information to the banker.
Advances are investments of bank to earn profit. After restructuring of Habib Bank Limited,
Head office gives loan targets to each branch that must be achieved for its survival. The
manager is responsible to achieve these targets in the given period. The amount is collected
partially with an agreement containing the markup or interest rate, which is to be paid the
interest, or markup is applied on a time limit after that it can be increased with the given
conditions applied.
There are basically two types of loans.
Fund base
Non-fund base
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Fund base
In fund base the cash is involved.
Non-fund base
While is non fund base cash is not involved.
These are following types of advances those are given by the BANK.
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payment of the principal amount and markup. The procedure is almost same as for the cash
finance and the loan is given to those parties which are able to prove its genuineness and
satisfies the bank. The bank also pledges the genuine security of the party which normally
more valuable than the amount of loan. To get this type of loan prior permission of the zonal
office is necessary.
Machinery loan
Certain loans are given for the purchase of machinery. These loans are called Local
Machinery Manufacturing Loan (LMM LOAN). The bank finances for the machinery, which
is manufactured in Pakistan. Like other loans after the proper verification and proper
documentation.
With the prior approval from the zonal office, these loans are given. The bank pledges some
genuine property as a security. Personal security is also required in the getting of this loan.
The loan is to repay in certain installments which includes the mark-up also. Normally these
loans are for the period of five years and first six or three months are exempted from the
installments as the ease or as the terms and conditions may be. The rate of the interest to be
paid by the party is 8% per annum.
International Development Agency Loans.
These loans are given for the purchase of foreign machinery, stocks, etc.
Though these loans are not in practice but there is a provision for this loan. The cause of in
practicing of the loan may be the unawareness of the people about the provision.
The rate of interest on these loans is 11% per annum.
These finances are provided by the World Bank.
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Principles of Advances
There are five principles, which must be duly observed while advancing money to the
borrowers.
Safety
Liquidity
Dispersal
Remuneration
Suitability
Demand finance
House Finance
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5. Marketing Department
Function of Market Department
The function of the marketing department of a HBL is to advertise about the bank and reach
more possible customer who would open accounts with the HBL. They usually start up the
campaign or a promotional scheme explaining a benefit that come along with the process of
account opening with the bank. Such a campaign usually results in the increase in the
customers base and increased the profit for the HBL.
Another important function of HBL is to use of the segmentation strategy, in it the HBL
divide the market into distinct group of buyers with different needs how might require It is
very important strategy which is applied by the operation marketing department in the HBL,
the Main focus of this selecting strategy is to spreading the market into different groups,
where the persons have comparable needs as well as wants for services and products.
The marketing department in HABIB BANK LIMITED is very strong. It is the main source
of gaining and maintains the customers that can give a large profit to the bank. There are five
relationship managers in Habib bank and every person is responsible for the credit of his
party. There are three market of HBL.
Money Market
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Capital Market
Spot Transactions
Outright Transactions
Swap Transactions
Customer dealing
HBL corporate center only deal with the following categories of business:
6. Clearing Department
The major function of clearing department is to receive the cheques, which are drawn on
some other banks. The customer can get the money in his account at Habib Bank Limited
Page 49
through a cheque drawn on another bank. The bank accepts these cheques and collects the
amount from that bank on which cheques are drawn through the Clearing House. Bank
charges some commission for this function.
Every bank performs both as a paying as well as collecting functions on behalf of its
customer. It is however an important function of crossed cheques. A large part of this work is
carried out through the bankers clearing house. A clearing house is a place where
representatives of all the banks of a city get together and settle the receipts and payments of
cheques drawn on each other bank. As the collecting banker runs the certain risks in receipt
of their ownership, the law has provided certain protections to the banks. The basic function
of clearing dept. arises when HBL account holder deposits cheque of another back to collect
its payment on his behalf or HBL account holder gives a cheque to any other party
concerning to any other bank. Usually a cheque is sent through clearing is credited to the
depositor account day after tomorrow.
In this regard there are two types of clearings.
Inward Clearing
Outward Clearing
Inward Clearing
Inward clearing means all those cheques which are issued by account holders too their parties
and now these cheques are presented for payment (in term of amount of cheque credit to
presenter account).
Outward Clearing
Similarly when outside parties issue some cheque to our account holders, they deposit these
cheques in cheque Receipts Department. Afterward these cheques, as relating to other banks
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operating in country, are sent to clearing department or further process. Clearing dept. sends
these cheques to respective banks and after realization of cheque, funds are credited to the
account of respective customer. In this regard there are two types of clearing
8. Computer Department
Through this department bank has make its way to enter in twenty-first century. This
department is playing a very important role in making the banking procedures fasters and
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helping the bank for providing the new services to its customers. This division provided the
bank with online branches system to make the whole procedure fool proof.
Types of Branches:
There are three types of branches in all over the Pakistan.
Online Branches
The branches, which are directly, linked with the central computer AS-400 through wide area
networking through fiber optic cables. These branches have dumb terminal directly linked
with central computer. Yet only forty-four branches all over the Pakistan are online. Out of
forty-four, seventeen are located in Karachi, seven are located in Lahore, and two are located
in Islamabad and two in Multan and two in other regional offices.
Batch Branches;
The branches where all transactions are carried out with the computer based system but these
branches are not connected to the central computer with wide area networking. Batch
branches are using three types of system, Branch Back Office (BBO) based on FoxPro,
Branch Automated System (BAS) based on UNIX Branch Integrated System (BIS) based on
FoxPro, in Karachi mostly branches facing this problem. Now-a-days efforts are under way
to convert all branches into Electronic Banking System (EBS) which is used by online
branches as this system doesn't require a person to remaining sitting till the branch closed its
operation but the system automatically close itself when the branch time is over. The database
in head office is also on this system.
Manual Branches:
The branches where all transactions are carried out manually and records are maintained on
registers. All branches in Pakistan report to their regional office regarding their daily
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transactions. In RHO through online terminal data goes to head office central computer.
Except for branches those are online as they transfer their daily data directly through their
own terminal. As day-to-day, activities of all branches are recorded in a central computer.
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Application form.
Photocopy of I.D card.
Copy of memorandum and article of association (in case of limited company).
Ownership deed of office.
Fee payment.
Certificate of incorporation.
Applicant should regular taxpayer.
The most important exports from Pakistan are sports goods, surgical goods, hand noted
goods, textile goods, leather goods etc.
Export procedure:
The imports and exports act regularly changed by the government in each year under which
all the exports works. When the importer send the L.C to bank in respect to import or when
the L.C comes to the advising bank from the issuing bank then the concerned officer allot the
number to the L.C and get registered. The concerned officer write down the name of issuing
bank and the party name in a register and intimate the party about L.C. the exporter after
receiving the L.C from bank will prepare the documents as per the L.C usually the following
documents have to be prepared by the exporter:
Bill of lading
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Covering letter
E- Form
Bill of exchange
Packing list
Commercial invoice
Quota documents in case of quota country
Certificate of origin
Special custom invoice
Imports
Imports regulation
Government of Pakistan and ministry of commerce controlled the import under the import
and export act:
Categories of imports
Imports are classified into the following categories:
Registration of importers
Any individual should have to get himself listed with the export promotion bureau under the
act of import and export registration no of imports and exports act if he desires to approach
the bank for importing goods from overseas. He needs to complete the following conditions
before getting himself registered:
Nic number
National tax number
Member of registered association
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Business activities and procedures has set by the Sales operation department which provides
help to HBL perform its functions effectively and efficiently The sales operation department
of Habib Bank Limited is organized to assess condition of the various branches. The sales
operation department entirely regulates the operations which are performed by the HBL.
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demand of the market, study the psychology of customer, preparing the sales budget and
searching the new markets is the duty of the sales department of HBL.
Sales Methodology
Sales policy is the accepting customization and proposal of the sales procedure exclusively
for the product being sold to the target customers and the degree of sales complexity; In sales
procedure there are numerous means to categorize suspects, gain their attention, raise their
interest, build their desire, move them to action and close the sales: Sales policy is the sales
technique which is used in the selling of products by the HBL.
The HBL practices the various methods for their sales. The HBL delivers the improved sales
to their customers so that customer should be satisfied with their goods and should remain
loyal to them permanently, The HBL use this sales policy to accomplish their desire outcome.
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Financial Highlights
Financial position
2012
2011
Rupees in Million
1,214,964
933,632
1,610,309
1,139,554
499,818
457,368
920,709
5 11,913
131,810
108,351
Total Deposits
Total Assets - Net
Advances - Net
Liquid Assets
Shareholders Equity & Revaluation Surplus
Profit & loss
Total Income*
73,720
Total Expenditure
31,784
Provision for non-performing loans & 7,045
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71,181
30,114
6,745
Variance
Percentage
30.13
41.31
9 .28
79.86
21.65
3.57
5.55
4.45
Others
Pre-Tax Profit
Profit after Taxation
Earnings per share (Rs/Share)
Financial ratios
Non-Interest Income to Total Income*
Operating Expenses to Total Income*
Total Assets Growth Rate
Non-Performing Loans to Gross Loans
Provision against NPL's to NPL
Capital Adequacy Ratio
34,891
22,356
18.36
Percentage
21.65
42.13
41.31
10.30
81.74
15.81
48.25
59.43
41.14
48.99
75.78
5 4.83
1.63
2 .16
20.40
21.70
Rupees in Million
271,090
226,536
544,192
608,265
1,540
1,506
13,978
13,661
34,321
2 2,333
18.30
20.77
41.26
23.24
11.23
81.50
15.62
*Total Income is the sum of Net Interest Income and Non-interest Income
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1.66
0.10
19.67
(10.53)
2.26
2.32
Financial Performance
The financials of the Group are summarized below
Description
Profit after tax
Un-appropriated profit bought forward
Profit attributable to equity holders of the Bank
Transferred from surplus on revaluation of FA- net of tax
Total appropriations
Un-appropriated Profit carried forward
Basic and Diluted Earnings after tax-Rupees per Share
2012
2011
Rupees in million
22,356
22,333
56,981
47,468
22,256
22,190
248
22,504
79,485
263
22,453
69,921
(2,209)
(2,120)
(4,408)
(6,512)
(1,102)
(1,002)
(4,243)
(11,962)
67,523
18.36
(3,306)
(12,940)
56,981
18.30
growth of 11%. Retail deposits contributed significantly in increasing the deposits base of
HBL. The strong performance by Retail banking helped HBL to cross Rupee One Trillion in
domestic deposits, making HBL the first banking company to have achieved this milestone in
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the history of Pakistan. The CASA stood at 67% as on December 31, 2012 as against 69% in
the corresponding period last year. The Capital Adequacy Ratio (CAR) improved further and
stood at 15.81% as on 31 December 2012 as against 15.62% as on December 31, 2011.The
investment stood at Rs. 797billion while advances at Rs. 500 billion as on December 31,2012
as against Rs.419 billion and Rs. 457 billion respectively in the previous year.
Net Interest Income of HBL increased by 2% to Rs. 57.76 billion as compared to previous
year. The non- interest income was up by 8% from Rs. 14.78 billion for the year ended 31
December 2011 to Rs. 15.96 billion for the year ended December 31, 2012.
The profit before tax stood at Rs. 34.9 billion for the year ended December 31, 2012
indicating an increase of 1.7% over previous year while after tax profit at Rs.22.4 billion was
maintained at last year level. The earnings per share before and after tax was Rs. 28.78 and
Rs. 18.36 respectively for the year ended December 31, 2012 as against Rs. 28.31 and Rs.
18.30 respectively in the corresponding period last year.
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The following is the value of investments of provident, gratuity, pension and benevolent
funds maintained by the Bank, based on the latest audited financial statements.
Particulars
Employees Provident Fund
Employees Pension Fund
Employees Gratuity Fund
Employees Benevolent Fund Executive and Officers
Employees Benevolent Fund Clerical and Non-Clerical
Rupees in Million
8,224
3,620
1,146
997
354
Domestic Network
Name of Region
Number of Branches
Karachi South
66
Karachi North
76
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Hyderabad
55
Sukkur
48
Quetta
37
Multan
95
Bahawalpur
54
Sahiwal
76
Faisalabad
93
Lahore
95
Sialkot
71
Gujranwala
65
Gujrat
66
Sargodha
74
Jhelum
74
Islamabad
116
Mardan
88
Peshawar
100
Mirpur A.K
51
Islamic Banking
33
Commercial
19
12
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HBL should immediately take brave steps towards the welfare of experienced
Habibians. In this regard HBL has set best example
The management should try to decrease job insecurity among the employees.
Training program should be started for internees and newly appointed employees.
The bank charges high service charges as compared to the other banks, so these
should be lowered down.
Surveys must be conducted regarding customer satisfaction level and all employees of
this dept. should look forward to getting feedback whenever possible.
Adding of value added features that offer competitive advantage is also a means
of avoiding customer dissatisfaction.
It is strongly recommended that HBL should automate its branches and develop a
powerful computer network for on-line banking.
Govt. should take keen interest to recover its bad debts, which can improve its
financial position.
Along with the officers, the training must also be given to the clerical staff. Because
of HBL are running on manual system and the training of its staff directly improving
their efficiency of work? Working conditions must be improved for employees. Upper
management should take decisions for promotion of employees on the basis of
professional justice. Internal politics and lobbies should be minimized.
There is also a need of proper recruitment and selection program. New young talent
should be introduced to inject the new ideas.
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HBL major fault is that wasnt keeping its pace with ongoing changing in banking
industry unlike other bank. Now this bank combining all it power and trying to
approach other banks.
Latest reorganizing efforts are necessary to make it cost effective also making its
facility accordingly to modern banking. These must continue.
Bank management has to put its all efforts to change the prevailing culture of the bank
and to put the foundation stone of business oriented culture in which employees give
important to the bank and its consumers.
To attract the customer in the future HBL have to make extensive efforts to facilities
of retail and consumer banking. Plus the technologies in the banking, which will be
necessary for future banking is another week area, need to be stressed.
The outlook and interior layout of the branches is another thing, which needs to be
improved.
The procedure of taking services from the bank must be made easier and straight
forward not involving long difficult procedure for simple task.
To remain in the market bank need to be vigilant in the eyes of customer. One-way is
through promotion efforts, so that people aware about he services of the banking and
any addition, which the bank as made in the portfolio of its services.
Conclusion
HBL is clearly the first choice of everyone who believes in qualitative approach of banking
an environment of highly responsible people. Bank is enjoying a healthy market share and
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taste of good status in terms of its operative features and customer support. HBL is clearly the
best bank operating in Pakistan. Corporate and commercial functions are distinguished
features of HBL experiencing a good reputation and reasonable mark up with respect to
prevailing market mark up with assurance of satisfaction and support. HBL has more
customers as compare to other banks, if they given proper attention to every customer then in
few years it will be the leading bank of the country (asset point of view)
Being a nationalized Bank, it has been facing the problem of pursuing the policies of the
govt. whether or not they are profitable for the Bank. The Bank had to undertake many
compulsory advances schemes which resulted in a situation where the Bank had to incur huge
losses. The yellow Cab Scheme and the Karobar Scheme are prime examples for that.
Moreover, the bank has to undertake many such services and functions which are not much
beneficial for the bank in monetary terms, but the bank has to perform those functions since
no other bank is ready to perform those functions, such as dealing the salaried accounts,
pension payment services etc.
HBL has revamped its structure in the recent past, and many revolutionary changes have been
brought in, but still the overall image of the bank is not very satisfactory. Especially, in the
field of Information Technology, the bank is lagging behind. However, recently the Bank has
contracted with a company of international repute to incorporate the latest, state of the art
computer infrastructure into the Bank, namely The Core Banking Application (CBA), which
would be the most advanced banking technology in the country.
Customer service has been another prime problem of the bank. The bank employees dont get
the enough room for dealing the customers the way the private banks deal. The reasons are
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very obvious, that the clientage and the customer base of the bank is so vast that it hardly can
give the same level of service to all its customers, given the problems and regulatory
problems faced by the bank are there.
Given the strengths and the commitment level of the employees, HBL can easily out-class its
competitor banks, if some of the problems are removed, by working sincerely for the
achievement of the goals, such as bringing the branches to online mode, incorporating
computerized system, uplift of the branches appearance etc.
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