Professional Documents
Culture Documents
Habib Bank Limited
Habib Bank Limited
ON
ASMA YASIN
A REPORT SUBMITED IN PARTIAL FULFILLMENT OF THE
REQUIREMENT FOR THE DEGREE OF
MASTER IN BUSINESS ADMINISTRATION (MBA)
EXECUTIVE SUMMARY
My department requires this report. The purpose of report is to write down all the major
activities that I performed in that particular branch during my internship training. It
Comprises of:
Formal part
Introduction of the organization
SWOT Analysis
PEST Analysis and Environmental Scanning
Products and services
Deposit department
Remittance department
Export Refinance Scheme (Part 1, Part 11)
Import and export department
HRM department
Credit and administrative department
Financial Analysis of the client
Work done by me
Suggestions and recommendations
CONTENTS
Sr. No.
Title
1. Executive summary
2. Contents
3. Acknowledgement
4. Introduction
5. Products of HBL
6. SWOT and PEST Analysis
7. Span of management
8. Departmentalization
9. Financial Analysis of the Client
10. Suggestions
Acknowledgment
All praises belong to almighty Allah who the supreme authority knows the ultimate relation
underlying all sorts of phenomenon going on in this universe & whose blessing & exaltation
flourished my thought & thrived my ambitions to have the cherished fruit of my modest
efforts my humblest thanks to the Holy Prophet Hazrat Muhammad (PBUH) who is forever a
torch of guidance & knowledge for humanity as a whole.
We deem it our utmost pleasure to avail this opportunity to express gratitude &
deep sense of obligation to my revered teachers and HBLs relationship manager Mr.
Zaiuddin and Mr.Waseem Bhati for their valuable and dexterous guidance, untiring help,
compassionate attitude, kind behavior, moral support and enlightened supervision during this
whole project.
Finally, I would like to extend hurtful thanks to my adoring parents and friends for their day
and night prayers sacrifices and encouragement, moral and financial support throughout the
course of our study.
May all of them live long and enjoy a happy life!
INTRODUCTION OF HBL:
HABIB BANK GROUP is a leader in Pakistans services industry. An extensive
network of 1425 domestic branches the largest in Pakistan and 55 international branches to
meet customer needs. Perhaps the HABIB BANK LIMITED establish in 1941 at Bombay.
But its history starts in 1841 when a young boy name Ismail Habib reach Bombay for job.
After some time he got the job with a dealer in utensils and non ferrous metals.Ismail Habib
was very keen and intelligent and became partner of his boss. Later on he was elected as a
president of the market. Many years later he expended his business. He engaged in private
banking. So HBL has come a long way from its modest beginnings in Bombay in 25 august,
1941 when it commenced business with a fixed capital of 25000 rupees.
Impressed by its initial performance, Quaid-e-Azam Muhammad Ali Jinah asked the
bank to move its operation to Karachi after the creation of Pakistan, HBL establish itself in
the Quaids city in 1943 and became a symbol of pride and progress for the people of
Pakistan. During the early days of newly born state, government of Pakistan faces the great
problem of fund shortage. This time HBL again helped the governance of Pakistan and came
to rescue to provide Pakistan with assistance of no t less than 8 crore.
Besides this, HABIB BANK has been a pioneer in providing innovative banking
services such as first installation of mainframe computer in Pakistan followed by ATM and
more Internet banking facilities in all branches. The main strength of HBL brand is its great
services to all customers especially to the corporate customers and its prominent head office
building that has dominated Karachis skyline for 35 years.
Mission statement
To be recognized as the leading financial institution of
Pakistan and a dynamic international bank in the emerging markets,
providing our customers with a premium set of innovative products
and services, and granting superior value to our stakeholders
shareholders, customers and employees .
Values of HBL
Humility:
We encourage a culture of 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.
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.
Culture of Innovation:
we aim to be proactively responsive to new ideas, and to respect and reward the
agents, leaders and creators of change.
change.
SERVICES:
o Retail Banking
The Retail Banking network, with 1425 branches, is the core strength of
Habib Bank. The network provides HBL with the largest diversified low cost deposit base of
any bank in Pakistan, and forms the basis for many of our other business lines: corporate and
investment banking and treasury activities. The network provides HBL with the largest
diversified low cost deposit base of any bank in Pakistan, and forms the basis for many of our
other business lines: corporate and investment banking and treasury activities.
o Commercial Banking:
Enterprises operating in the middle market contribute significantly to the
economy of a country. During FY-2000 HBLs management decided to address this issue. On
November 1, 2000 Commercial Banking came into being.
The objective of setting-up Commercial Banking was two-fold:
First to stop the erosion of market share in the middle market;
Second, to regain the lost market share
Commercial Banking is making headway with improvement not only in terms of the business
figures but also in its ambiance. Renovation of is being carried out in order to give a
professional look to all the Commercial Banking Centers.
o Corporate Banking:
The Corporate Banking Group serves large institutional customers who
require sophisticated products in an environment of intense competition. HBL Corporate &
Investment Banking Group is now recognized as a market leader and regularly arranges and
participates in most large structured finance deals.
o International Operations:
HBLs ability to operate successfully in diversified markets and cultures is
a function of a long history in international banking when first international branch was
opened in 1951. The Banks branches in financial centers continue to provide efficient trade
settlement and reimbursement services to the entire network and business with other banks.
SWOT ANALYSIS
STRENGTHS:
Goodwill & historical background
Professional and well trained staff
Largest customer base
HBL is Pakistan's largest commercial bank
HBL has a domestic network of 1,425 branches with an international network of 48
branches in 26 countries
20% share of HBL in financial market
Large Balance sheet size
Decentralized authority
WEAKNESSES:
Unfavorable union activities and management conflicts
Checking System is at intra-department level
Weak marketing policies
Nepotism & Favorism
Infected portfolio still exists as bad debts
Centralized management in particular areas
OPPORTUNITIES:
Opportunities for growth and expansion in cash management.
Faster market growth represents opportunity to grow and diversify
Restoration of investors confidence and pick up in private sector investment flows.
Large deposit base and funds flow can help to avail related market opportunities
THREATS:
Adverse & unstable government policies
Political instability
Advance technology
Competition from other banks
ECONOMIC TRENDS
A banking market requires better consumer market in volume along with higher
borrowing power. The available borrowing power depends on:
Consumer income
Saving rates
Consumption patrons
Rates of interest
Budget deficit
Exchange rates
Cost of living
Inflation
SOCIO-CULTURAL ENVIRONMENT
A society is shaped by beliefs, norms and values. People in a society consciously and
unconsciously interact with:
Themselves
Others
Organization
Society
Nature
Following are the main factors. Which arise because of change in socio-cultural
environment?
Consciousness about services
Concern for environment
TECHNOLOGICAL FACTORS
Forces of technological advancement have played the most dramatic role in
shaping the lives of people. The rate of change of technology has greatly affected the rate of
growth of economy. New technology is creating deep rooted affects which could be observed
in long run. The improvement techniques involved in on line banking. In brief PEST analysis
affects the overall banking companies and provides us the information about the external
macro condition.
GROUP EXECUTIVE
AVP
FINCON
Officer
AGM Marketing
VP
AVP/RMs
Manager HR/Admn.
AGM Operations
Officer
AVP
Manager Tarde
Officer
RMs
Mgr.Cash & Rem
Officer
IT Incharge
Officer
O/I Teasury-Officer
DEPOSIT DEPARTMENT
Bank deals in money and they are merely mobilizing funds within the economy. They borrow
from one person and lend to another, the difference between the rate of borrowing lending
forms their spread or gross profit. Therefore we can rightly state that deposits are the blood
of the bank which causes the body of an institution to get to work. These deposits are liability
of the bank so from point of view of bank we can refer to them as liabilities.
TYPES OF ACCOUNT:
1)
CURRENT ACCOUNT:
In this type of accounts the client is allowed to deposit or withdraw money as and
when he likes. He may, thus, deposits or withdraws money several times in a day if he likes.
There is also no restriction of amount to be deposited or withdrawn. However, there is
requirement of minimum balance maintenance of Rs.5000/-. Usually this type of account is
opened by the businessmen. No profit is paid by the bank and no service charges are
deducted by the bank on current deposits account.
Eligibility:
Features:
Account can be OPENED with Minimum Balance Rs.1000/- with no maximum limit.
Checking balance at any time during banking hours.
No profit is paid.
Statement of Account dispatched on request letter.
There is no restriction for withdrawals of amount and number of cheque.
This type of account is for those persons who want to make small savings'. This type
of account is opened with a minimum deposit of Rs. 1000/- or the amount prescribed from
time to time. The profit is paid on these accounts on the minimum balance during a month for
the whole of that month. Zakat & other taxes are deducted as per rules of the government.
The requirements for this account is duly filled prescribed A/C opening FORM, Photo Copy
of National Identity Card (Resident Pakistani), two Passport size photographs with
Signatures/Thumb Impression (Resident Pakistani), Photo copy of Passport with Page
bearing Resident Visa of the Country where Pakistani Residing, two Passport size
photographs and signatures on A/C Opening Form for Non-Resident Pakistani with
Signatures/Thumb Impression etc.
Features:
Account can be OPENED with Minimum Balance Rs.1000/- or prescribed limit that
is announced time to time with no maximum limit.
Profit is payable at monthly subject to adjustment on deceleration of actual profit rate
declared every half year.
Profit is calculated on monthly products
Zakat will be deducted on valuation dates of account.
Profit is Paid/Credited in Account on half yearly basis in case of six monthly PLS
saving accounts.
Statement of Account dispatched on half yearly basis after posting of profit.
There is no restriction for withdrawals of amount and numbers of cheque.
Features:
TD can be purchased with minimum of Rs.1000/- with no maximum limit.
Profit is payable at yearly rate declared every half year.
Profit is Paid/Credited in Account on half yearly basis.
The holder of term deposit receipt must keep the receipt under lock any loss of receipt
must inform the bank because without it the bank will not pay the amount.
A blind person can easily open an account in the bank like other persons but it is
preferred that he should open a joint account with a normal person. If he wants to open the
account individually, there should be an authorized person with him who checked the
signature and the amount filled by blind person. The banker can not fill the amount and check
the signature. The one thing that is provided extra by the blind person is two photographs
duly attested by an authorized person.
Defense account.
Non Pakistanis account.
SWIFT
Society for worldwide inter bank financial telecommunication.[SWIFT]
Only for banks
Telecommunication not transition
Head office in Belgium
Run by different country members
Lease lining by head office
Start in pak 1995-96
Awareness seminars start in 1997
Work through coding &decoding
Swift provide to members an id &password for connect
Charges from customers depend on message size
Min changes is 120
Changes for one LC is 1400
Code not more than three degits (ID and Passward code)
Authentic mode, people satisfied
Less chances of fraud
Work as E Mail
Version 2 relate to bank to bank information
Version 4 relate to bank to bank Document
Version 7 relate to bank to bank LC
In HBL use in domestic
---------- 70 branches
In overseas branches
---------- 21
REMITTANCES
DEMAND DRAFT:
Demand draft is a written order drawn by a branch of a bank upon the branch of same
or any other bank to pay certain sum of money to or to the order of specified person. It can be
issued to the customers as well as non customer against cash cheque and letter of instruction.
Demand draft is negotiable instruments that can be negotiating at any time before its
cancellation. Its Legal provisions are same as that of cheque.
Following parties are involved in demand draft:
Applicant
issuing branch
drawee branch
Beneficiary
A demand draft may be issued against the written request of the customer before issuing it
must be seen that the demand draft is in order.
The DD application must be scrutinized by the counter clerk in respect of following points.
There should be branch where payment is to be made.
Full name of payer should be mentioned.
Amount in words and figures must be same
TELEGRAPHIC TRANSFER:
Telegraphic transfer means the transfer of funds from one branch to another
branch of the same bank or upon other bank under special arrangements just like a
telegram. Telegraphic transfer is not negotiable and the funds are not payable to bearer.
Minor cannot avail this facility. In telegraphic transfer the bankers use secret codes. One
code is with issuing person and the second is with an other person. When they combine
the codes its become an amount that is called check. The payment is made after the
confirmation of the check.
Following parties are involved in TT
Applicant
Drawing branch
Drawee branch
Beneficiary
Following important things should be included in TT:
Full name of the beneficiary or account number should be mentioned in the
application form.
Instruction regarding mode of payment should be obtained.
A record in the remittance outward register should be maintained.
All the remittance must be controlled through number or codes.
PAY ORDER:
Pay order is an instrument through which payment can be made from one bank to
another bank. Pay order is meant for bank own payment but in practice they are also issued to
customers.
MAIL TRANSFER:
Mail transfer is not negotiable and the procedure of it is same with the procedure of
DD.When a customer request the bank to transfer his money from this bank to any other
bank of the branch of same bank in the city, outside the city of outside the country the first
thing he has to do is to fill an application form. In which he states that I want to transfer the
money from this bank to that specific bank by mail. If the customer is the account holder of
this bank, the bank will debit his account and the concerned officer will fill forms to make
the mail transfer complete.
If the customer is not the account holder of the bank, then firstly he has to deposit the
money and then rest of the procedure will be adopted to transfer his money.
Features:
Risk:
If the exporter has been / will be defaulted the laps of funds of authorized dealers.
Cheating or misuse of funds, SBP may cause to impose not any penalty but also
termination of bank employee or change of management or authorized dealers
reputation may destroy.
Part
Preshipment
Party request letter
L/C sales contract
Undertaking
DP note
Form D
Proof of purchase
of raw material
Part II
Post shipment
Party request
L/C sales contract
Under taking
DP note
Form D
Commercial invoice
Bill of Lading
Form E
EE
statement
total realization
& negotiation
SBP financed
Form E & not
availed SBP finance
EF
statement
it include
total
realization
but on which
Form E SBP
finance
availed not
include.
Part I:
This means after making a shipment the exporter prepare all relevant shipping
documents and evidence of shipment. The exporter contact his bank w.r.t to lodge the
documents and send a one set of shipping documents to export finances department to allow
him post shipment part I under SBP scheme.
Required documents at the time of finance allow to party
D/Pnote
Under taking on non judicial stamp paper
L/C
Party request letter
Form D
Commercial invoice
Penalties:
Provide proof of shipment against relevant sales contract or L/C on which finance
obtain
Substituted the old L/C or contract with new one after assurance that against new
L/C.
Restrictions/prohibitions
Evidence of shipment submit to SBP within 180 days or within time period fixed by
SBP
In case of substitution against new L/C or sales contract make sure that the exporter
has not availed pre or post shipment finance through any other bank.
Non shipment
180 days *1000000* 0.37/1000=66600
Short shipment
Finance amount
1000000
Shipment
800000
Short shipment amount =200000
180 days *200000*0.37/1000=13320
Part II:
The authorized dealers provide this finance facility to exporters against their EE
statement. From the export earning during of one fiscal year the SBP sanction a limit of 50%
for the availment of the ERF part II. In the EE statement all foreign bills realized and
negotiated during a period of 01-07-04 to 30-06-05 are included in this statement.
Documents required at the time of sanction of finance
D/P note
Under taking on non judicial paper
Party request letter
It is entitled to the exclusive possession of the property until the debt is charged.
Hypothecation:
When the property in the goods is charged as security of loan from the bank but the
ownership & possess
Export procedure:
All the exports work under the imports and exports act that is changed by the state in
every year. When the importer send the L.C to bank in respect to import or when the L.C
comes to the advising bank from the issuing bank then the concerned officer allot the number
to the L.C and get registered. The concerned officer write down the name of issuing bank and
the party name in a register and intimate the party about L.C. the exporter after receiving the
L.C from bank will prepare the documents as per the L.C usually the following documents
have to be prepared by the exporter:
Bill of lading
Covering letter
E- Form
Bill of exchange
Packing list
Commercial invoice
Quota documents in case of quota country
Certificate of origin
Special custom invoice
E-FORM means export form which is the first and foremost requirement for the
exports from Pakistan. It is control instrument by Govt of Pakistan by which it monitors the
receipts from exports and checks the goods that are transferred without foreign exchange. all
banks which are engaged with the foreign exchange are required to print and maintained the
E form that is checked by the state bank of Pakistan. For export an e form is issued by the
bank on the request letter of a company. Two separate registers are maintained by the bank
one for his use and the other one are for the requirement of the SBP. On issuance of E forms
the banker lists it in the register and makes sign from the exporters. Banks record the name of
party, amount, the goods description, port of destination, importer name port of loading etc.
Usage of E- FORM:
E- FORM is an important document for export. It has its own importance such as this
form is used as a checker means it monitor that what things are going abroad and in return
what things we are getting. So it creates a check and balance on the foreign exchange. It
shows the total quantity and quality of the goods that is sending to another country. An E
Form shoe the party worth that is very helpful for the party and the bank. Bank can create a
party limit for the credit on the behalf of it and a party can arrange a loan for its future
requirements from the bank. It shows the terms of payment by the importer and the delivery
terms by the both parties that is helpful in case of any discrepancy during the contact.
IMPORTS
Imports regulation:
Import is being regulated by the ministry of commerce and the government of
Pakistan under the import and export act:
Categories of imports:
Imports are classified into the following categories:
Commercial sector imports
Industrial sector imports
Public sector imports
Registration of importers:
A person who wants to approach the bank for importing goods from abroad, he
should have to get himself registered with the export promotion bureau under registration
of imports and exports act. He must fulfill the following conditions before getting himself
registered:
NIC NUMBER
contact with the authorized branches to open an L.C. The authorized branches in such case
require the certificate from the applicant branch that the required formalities are fulfilled and
the approval was obtained with required margin.
For establishment of letter of credit, the importer requests the opening bank with the
following documents:
Forward booking.
Mode of transmission.
Import registration no.
Any other documents required.
Detailed documents.
Shipment period.
The description of goods should be the same as per the form.
4) Appendix B:
This Performa replaces the import license and is submitted along with L.C
application form duly filled in triplicate. It is conditional undertaking that the imports goods
are not banned, not smuggled. It is also an undertaking that if the bank is unable to arrange
the said currency the importer have to purchase it from other banks or from any other place.
It includes the details and description of goods, codes, class, type, source of import, country
of import, Performa invoice no etc.
5) I FORM:
This form is used at the time of retirement of documents against L.C established
earlier for reporting to the transaction to SBP through the bill of entry deptt. It has four
copies that is used as follows:
Original is for the use of SBP.
Duplicate for the authorized dealer to be used for processing exchange control.
Triplicate for the authorized dealer record.
Quartiplacte is for the submission in SBP in the case of import where the
documents are not retired.
the corporate head the branch concerned prepared the memorandum for the corporate
banking head for obtaining his approval.
In case party enjoying regular limit, the L.C is established without adopting the procedure
mentioned above. However the amount of L.C should not exceed the regular limit.
Parties to a credit:
The applicant:
The applicant of the letter of credit is called the importer or buyer. The buyer requests
to the bank to open a documentary letter of credit in favor of the seller.
Opening bank (issuing bank or importer bank):
At the request of the importer an issuing bank issues a credit under the instructions in
the favor of the seller.
Advising bank:
An advising bank is a bank in the sellers country. The issuing bank forwards the
advice of the credit by mail or by any mode to the correspondent bank in the exporter country
as instructions of the opener.
Beneficiary (exporter):
The person or body receiving the letter of credit from the importer that is opened in
favor of him.
Confirming bank:
The bank that on the requests of the issuing bank adds confirmation to a credit. It is
definite undertaking of the confirming bank, in addition to the issuing bank.
Negotiating bank:
It May or may not be the advising bank. An authorized bank that gives the value to
the draft for processing and payment.
Reimbursing bank:
Reimbursing bank is the bank, which on the behalf of the opening bank, honors the
Reimbursing claim lodged by the negotiating bank.
Modes of payment:
Sight letter of credit:
The seller submit all the documents with draft in the importer country
Complying with the all terms and conditions. The payments are made on the presence of
the documents.
Exporters risks:
He does not know the buyer.
He does not know the credit worthiness of the buyer.
Buyers obligations:
Payment of price.
License authorization and formalities.
Contract of carriage and insurance.
Taking Delivery at time.
Transfer of risk.
Division of cost.
Notice to seller.
Proof of delivery.
Inspection of goods.
Background:
The banking council of Pakistan was responsible for the recruitment, selection and
allocation of human resources. After the dissolution of the Pakistan Banking Council, the
Banking & Financial Services Commission of Pakistan is responsible for these activities.
Procedure:
Staff requirements are met according to the changing needs of macro environment
scenario and particularly the arising needs of the bank itself. A need analysis is conducted.
After assessing the human resources requirements and screening of the applications, most
probably, the suspects are invited for a written test.
Short listed candidates are called for an interview for personality and social appraisal.
Interviews are a mix of direct and indirect interviewing techniques and information required.
The selected candidates are sent for training of six months training from MDIs.
The training is through the lectures regarding banking procedural guidelines and other
behavioral aspects. After the completion of training employees are allocated to different
offices. The effective management of people in an organization requires an understanding of
motivation, job design, reward systems, and group influence.
Recruiting
Retention
Succession planning
Risk Management
Diversity in our workforce
Management information
Progressive compensation and benefits design and implementation
Employee communications and relations
Training needs analysis, program design and implementation
Performance evaluation
Work-life initiatives
FUNCTIONAL RESPONSIBILITIES:
The main responsibilities under this department are:
Implementation of credit facility and their maintenance according to terms of credit
approved.
Ensure that standard loan documentation for each credit facility is maintained and the
correctness & completeness of such documentation and also responsible for custody
of all credit files.
Maintain the safe custody of all collateral as per banks standard operating
procedures; undertake periodic evaluation and inspection of hypothecated/ pledged
inventories in accordance with the terms of credit.
Ensure compliance with
o Institutional credit policies & procedures
o Local regulatory requirements.
Prepare various portfolio composition reports and other documentation for
submission to GRMs & RMs.
MARKETING DEPARTMENT
The marketing department in HABIB BANK LIMITED is very strong. It is the main
source of gaining and maintains the customers that can give a large profit to the bank. There
are five relationship managers in Habib bank and every person is responsible for the credit of
his party.
CUSTOMER DEALING:
HBL corporate center only deal with the following categories of business:
Then the RM sends it to the authorities who accept or reject the proposal. If they accept the
proposal they announced a credit range for the party. At the end RM sends the proposal to
CAD deptt custody and check.
regarding there off. The customer opening account/saving accounts can be categorized as
following:
1) individual
2) firm
3) company
4) trust
5) staff
6) others
OPENING AN ACOOUNT:
In order to open an account first of all the customer has to fill a form prescribed by
the bank. The person is required to bring some reference or introduction for opening the
account. Introducer may be a person who has an account with HBL.
Some important information regarding introducer e.g. the name and account number
of the introducer is written on the space provided on the specimen signature cards. Then in
order to find out whether he is a true introducer or not a letter is sent to him thanking him for
this introduction, so that any thing wrong may come into notice.
There are different requirement for different types of accounts and account holders.
An important thing is that the customer should have a corporate customer. The corporate
customer limit is 40 million and this branch always deals the corporate customer.
General rules for opening an account:
One person can open only one account in the same branch with the same category.
In the event of death of an account holder the credit balance will be transfer to the
heirs of the diseased individual account.
Services charges will be deducted periodically as prescribed from time to time on the
accounts that are under the limit of specific account.
Services charges are not applicable on that accounts that are prescribed as exempted.
A distinctive number will be allotted to the each account.
The bank can close those accounts that are under the minimum limit of the bank.
Any sum to be deposited in the account should be accompanied by paying in slip
showing the party account number and the name.
Account holder can only withdraw the sum of money by his own account by cheque.
Cheque should be signed by the account holder by the specimen given by the bank.
Post dated and defective cheque is not accepted.
If statement of account spoiled a new will be issued on cost.
Any change in the address should immediately communicate to the bank.
The account holder wishing to close the account must surrender the cheque book.
Account may be transfer from one branch to another same branch without any
charges etc.
DEPOSIT DEPARTMENT
Deposit are the blood of a Bank
I worked in this deptt for one week and learned that the acceptance of deposit is the
real source of income of a bank. Deposit Department is the backbone of commercial banking.
Deposit is often used to describe the money which customers of all kinds leave with the
bank. Deposit account can be defined as an account, which is opened to earn interest.
The term deposit is highly misleading. It is not something deposited for safe deposit box.
Bank deposit is not like that; when one brings currency to the bank for deposit the bank does
not put the currency in the vault. It may put small fraction of the currency in the vault as
Reserve but it will lend most of deposits to someone else.
The entire banking system is based upon borrowing. Like all banks, deposit department has
acknowledged its worth as the most important. Almost all the operations generated from the
deposit department and with due course of time reflect back to the deposit department. In
order to attract funds bank has introduced various types of deposit schemes that may suit the
need and tastes of a large number of depositors.
Demand deposits
ii)
Saving deposits
iii)
Time deposits
The procedure undertaken upon receiving deposits from the customer is as follows:
1) Examining the deposit slip to ensure that the name and the account numbers are clearly
indicated.
2) Counting the cash/cheque and agree the total with the amount on the deposit slip.
3) After that the pay-in-slip is validated for cash transaction/ transfer/ clearing transfer as
appropriate before the counterfoil a handed over the customer.
4) Cheque assigned by the director, partners, employees of a company, drawn in favor of
themselves and credited in their account in the bank are to be scrutinized
WITHDRAWALS:
An amount can be withdrawn by the cheque. The withdrawals can be made only at
branch where the account is maintained. All cash withdrawals will be made under account
holders full signature. One or two bank officers have to verify the signature.
In current account the bank does not offer any interest. We can deposit and withdraw
any amount during the banking hours.
REMITTANCES DEPARTMENT:
I work in this department for one week; this department deals in transfer of money
from one place to another or country by:
1) Demand draft
2) Mail transfer
3) Telegraphic transfer
In this department internees are advised to observe the working of transfer of money from
one place to another place or country by the above mode of transferring money. During my
stay in this department I observed that how demands draft be issued.
MEMORANDUM
RAFIQ SPINNING MILLS PRIVATE LIMITED
1. PURPOSE
This memorandum is being submitted for renewal of existing working capital facilities,
which are as under:
1. Cash finance
2. Running Finance
3. Letter of Credit
LC Commission:
LC commission on the proposed facility will be as per latest schedule of charges.
KARACHI
FAISALABAD
LAHORE
FAISALABAD
FAISALABAD
FAISALABAD
FAISALABAD
MAJOR SUPPLIERS:
ITTIFAQ CORPORATION
SEVEN SEAS INDUSTRIES
ALAMIN COTTON FACTORTY
REHMAN COTTON GINNERS
INDUS GINNERS
YASIR SHAHZAD COTTON GINNERS
SADIQABAD
SADIQABAD
BUREWALA
BAHAWLNAGUR
RAJUNPUR
INDUSTRY ANALYSIS:
Refer to HOK industry report.
5. MANAGEMENT :
Mr. Muhammad Anwar is the Chief Executive and Chairman of the Company, having more
than 20 years of experience in the line of business beginning with the waste recovery unit. He
is responsible for the procurement of raw material for all the group companies.
Mr. Muhammad Siddiq is younger brother of Mr. Anwar is looking after Sales and
marketing of the Company. It is pertinent to mention that directors of the company have no
impressive educational back ground, yet they have rich experience of their line of business in
their credit.
6.
FINANCIAL ANALYSIS:
Amount in PKR Million
Particulars
Audited
(9-Months)
Sales
Operating profit
Gross-Margin
Net-Margin
568
27.182
12.4%
1.7%
985
15.214
7%
0.4%
Audited
691
24.786
9.1
0.5%
Interest coverage
1.7x
1.3x
1.3x
1.5x
1.2x
INCOME STATEMENT:
Sales:
Sales of the company have been improving over the years and increased to PKR 985M
IN FY-04 from 568M in year 03 owing to increased & focused marketing efforts,
establishment of new local markets backed by enhanced production. While For the nine
months audited financials of year 05 sales stand at 737.774 M. Yarn.16 single, 20 single, 24
single, 40 single are the different qualities of yarn being produced by the company with
prices ranging from 3200 per bag to 5600 per bag.
Gross profit Margin:
Gross profit margin increased from 7% to 9.1% in year 2005 due to decrease in cost of
goods sold while cost of goods sold decreased mainly due to substantial drop in prices of
cotton in year 2005 in addition to this, Lower power & fuel consumption cost is one of the
reasons supporting cost efficiency and effectiveness, consequently leading to higher gross
profit margin in year 2005.
Operating profit:
Operating profit increased from 15.214M (1.5%) in year 04 to 24.786M (3.4%) in year
05 mainly due to carry forward impact of lower COGS happened due to lower cotton prices
during the year under review.
Net margin:
The profitability shown in the financials is tax tailored, actually their net margins fall
between 5 to 6 %. There is no significant improvement in net margin, in terms of percentage
because of high financials cost during the year, as the same has improved to 0.5% from
previous 0.4%.
Debt Service Coverage Ratio:
Debt service coverage ratio stands at 1.5x & 1.2x in year 04 and 05, the main reason
for relatively lower Debt to service coverage is lower profitability shown in books which are
more often tax-tailored.
BALANCE SHEET:
particulars
Current ratio
1.1x
0.8x
1.1x
Quick ratio
0.4x
0.2x
0.4x
1.8x
2.7x
Days Inventory
30
60
136
Days payable
Net Worth
172
176
180
LIQUIDITY:
The current assets increased from 198.582M In 04 to 383.891M in 05, this increase
in current assets is mainly associated with substantial rise in cash & marketable securities and
inventory. Cash and marketable securities were built to accommodate banks for their June
closing figures. In addition to this the amount of cash also includes PKR 74M lying in
escrow account of Bank Alfalah as sponsors equity because the company is under process of
expansion for which they have also gone for consortium finance from BAL & ABL.
Sufficient stock at lower prices is inevitable for profitability in textile industry; prices of
cotton went down in early 2005 which prompted the buyers to stock cotton in order to
maximize gains.
Receivables have been nominal over the years, which highlight companys policy of sales on
cash basis. Receivables stand at 7.566M in year 05 as compared to 16.361M.
The current liabilities increased from 244.565M in 04 to 342..120M in 05, this increase is
mainly due to increase in short term debt (Exposure of Working capital lines from banks) and
this factor is very much obvious due to increase in companys operations. More precisely, the
short term borrowings were raised by PKR 100M, during the year under review, and the
same has been invested in inventory which increased by PKR 100m fully complying the
matching principle requirement.
Projections
The company has projected its total sales to be around 1034M by 30 thJune
2006.These projections are supported by the fact that their sales by the end of 31stDec
2005(from July01, 2005 to Dec31, 2005) were 503.479M. This year company has also routed
export business of 12M to Korea. Net fixed assets are projected to grow around 614M since
company is intending to undertake the expansion project (New Ring Spinning) in the year
under projection. On the source side the long term liabilities are projected to be around
434M, the company wants to finance the proposed project thru Directors loan (222M),in
addition to this the company has also gone for the syndication( Long term senior Debt of
PKR 210M) with BAL & ABL.
Gross operating funds generated are projected to be around 33.747 M. Total Non-Operating
needs in year 06 will be 366 M due to increase in proposed CAPEX, on the other hand the
Non-operating source side will increase by 289M to finance Non-operating need.
7. CRITICAL SUCCESS AND RISK FACTORS
Critical Success Factors :
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