Internship Report

Silk Bank

Internship Report on Silk Bank

Submitted to

Internship Coordinator
Submitted by

Mehreen Aslam
BBA 01-111062-081


Internship Report

Silk Bank

Silk bank is the Public sector financial institution. The Silk bank was established on 1949, to serve as an agent to the SBP. Silk bank head office is in Karachi. It has 1249 regional branches and 18 overseas branches. Silk bank is a 52% share owned by the Government of Pakistan (GOP). Silk bank's total assets stood at PKR820 billion on mid of 2009. This included total earning assets of about PKR268 billion with gross loan portfolio of PKR140 billion. The bank also has an investment portfolio of PKR171 billion, which comprises treasury securities, corporate bonds, shares and other securities. This report is based on internship in Silk bank branch name. It is a famous and reputed bank of Pakistan. Silk bank maintains first position in banking sector in Pakistan. This report is based on the activities, which are performed in this bank. This report contains Banking services, competitive analysis, SWOT analysis, bank tariffs and exchange rates of Silk bank. There are also stated the activities which I performed during my internship in the branch. In this report I also discuss the industry analysis of banking system in Pakistan. During the internship I was observed the jobs task of the employees and at the we find him a lot of problems at the management level. So I Have mentioned all the problems from which the branch has been suffered have given the suggestion that can they solve branch problems? There are also mentioned the way of investment, rates of investment, and all types of financing and loans facilities the Silk bank provides. The problems in this branch are also discussed. This report also intimates about the daily reserves, which are required by the branch to meet the need of its daily transactions.


valuable guidance and encouragement. 3 . love and patience without which I could not have completed this internship and report in such a short span of time.e Silkbank and their customers who participated in the study. I am deeply indebted to my chosen bank i. I feel obliged to express my profound gratitude to the Branch Manager of the Silkbank G-9. Her experience. assistance. I owe my greatest gratitude to my parents for their continuous support. who has throughout my internship provided me with endless help. I am especially thankful to all the staff for agreeing to provide the required data and give me priceless knowledge. flexibility and ability to open new vistas of knowledge have contributed much in our educational pursuit. expertise.Internship Report Silk Bank ACKNOWLEDGMENT At the outset. guidance.

11 Departmentation……………………………………..……………………………………..………………..……23 Suggestions &Recommendation…………………...…………………………..……………………………...Internship Report Silk Bank TABLE OF CONTENTS Executive Summary………………………………….……………….……………………………………2 Acknowledgement……………………………………….26 4 ..…………..10 Salient Features………………………………....…………………………………………..……..……………………….……………………………………...……………………………………7 What I Did? ………………………………………….17 Financial Analysis……………………………………………………..6 Branch Introduction……….………………………………………..7 Services of Silk Bank…………………………….…………………………………21 PEST Analysis……………………………………………………….....13 Application of Learned Concepts……………………………………….……………………………….3 Silk Bank……………………………………………….……………….…….…24 Conclusion………………………………………………………….………………… 18 SWOT Analysis…………………………………...…………………………………5 Employees Hierarchy………………………………………..

internationally and representative offices. a natural element known for its unique properties.Internship Report Silk Bank Silk Bank Silk bank maintains its position as Pakistan's premier bank determined to set higher standards of achievements. services technologically oriented products offered through its large network of branches locally. 5 . Inspiration also comes from the Silk route which has been a corridor for trade and commerce between Asia and the rest of the world for centuries. It is the major business partner for the Government of Pakistan with special emphasis on fostering aggressive Pakistan's and economic balanced growth lending and through policies. Banks new identity Silkbank – is a name with a meaning that endorses our values. The name takes its inspiration from ‘Silk’.


They provided me their time and information. According to the financial record of last year this branch was earning more than 20% of total profit of the region. with individual customer and how loans can be recovered from the customers. This branch is performing its functions in traditional style and now it has been converted into an online branch. This was a crucial time for me to get the attention of Silk bank’s management and to make them realize that their valuable information is so much necessary for the up gradation of my knowledge and for the completion of the task which I was assigned by the institution. G-9 Branch. Every year the targets of this branch are increasing by 20 to 25 percent but still there is a potential in the market to meet these additional targets. for next two weeks I worked in credit department and for rest of the time I worked with Business Manager where I learned lot of things including how to deal with corporate customers. First two weeks I worked in operation department. But very soon I succeeded in making relationship with the top influence people and with the help of these people I started permeated in the system. no body was having time to accommodate me. and they also shared their experiences with me. What I Did…? After joining the bank for internship initially it was so difficult for me to get the attention of the employees. 7 . This was my first step towards the completion of my task and with the passage of time they realized that they could also utilize my efforts in a productive way to minimize their burden. From last many years this branch is not only achieving its targets of deposits and advances rather it remains above the targets. This branch was founded in July 1962. which I believe that it would be helpful in my practical life.Internship Report Silk Bank Branch Introduction I did internship in (Silk bank). every body was terribly engaged in there own activities. which helped me to enhance my knowledge. Islamabad.

1985 when the Islamization of the economy was influence under this system of advancing the bank is entitled to receive a constant sum of money on the amount that is outstanding on the account of the party. which are listed below. The advances are made through the deposits that are kept in the bank by the customers. Along with the form a card for specimen signature is also supplied to customer. The bank pays profit on the deposited amount and receives mark up on the advances made of different amounts. now it is ready to open the account formally. Manager has every right not to accept this contract if he is not satisfied by the details provided by the customer. and short explanation is also given. Different color-coded application forms are available for each type of account.Internship Report Silk Bank During the internship session I got the chance to perform on different activities. Account Types Though in theory they’re many types of accounts but commonly account operators can be classified in one of the following categories. 8 . Silk bank introduced the mark up based advancing in Jan1. each have different documentation requirements:  Single  Joint  Partnership  Private Limited Credit Department The earning of a commercial bank is chiefly derived from interest charges on loans and discounts it. In case the contract is acceptable to both. Now loans are recognized as advances or finances. Account Opening Department To open an account the customer have to meet the general banking manager with an introducer (the person who is going go introduce that person in the bank) and get an application form used for account opening.

who used to send money to their families at home.Internship Report Silk Bank Foreign Exchange To promote flow of foreign exchange in the country. Mail transfer. The authority is given by SBP to all those scheduled Banks who have adequate trained staff and facilities. Pay slip. IBC (inward bill for collections). Authorized Dealer is a person or an institution. 9 . INSTRUMENTS OF BILLS AND REMITTANCE DEPARTMENT The instruments that are handled in the Remittance department are as follow: • • • • • • • Demand Draft. Remittance Department Remittance department provides services to the customer of the bank. The State Bank of Pakistan was given special rights to control and monitor the performance of the “Authorized Dealers” in foreign exchange accounts. which can deal with the foreign exchange. Telegraphic transfer. OBC (outward bill for collections). These scheduled banks are given license to deal in foreign currency transactions. Pay order. This has increased the flow of foreign currency especially from the Pakistani foreign residents. The main function of this department is transfer of funds. These accounts were entitled to receive profit percentage in shape of the currency in which the account was kept (Dollar account shall be paid profit in dollars). the Government of Pakistan started a new scheme of opening of bank accounts in foreign currency.

LETTERS OF CREDIT Silk bank is committed to offering its business customers the widest range of options in the area of money transfer. which eliminates the manual application of tests that often cause delay in the payment of home remittances. you can safely and speedily transfer money for our business and personal needs.Internship Report Silk Bank Clearing Department There is no legal obligation on a banker to collect cheques drawn upon other banks for a customer. The system has built-in features of computerized test keys. DD and other negotiable instruments. Any person whether an account holder of the bank or not. However it is function of almost every modern bank of the collection of cheques and bills on behalf of the customer. SERVICES OF SILK BANK: Services are he outputs of the firm. A large part of this work is carried on through the clearinghouse. The mechanism is not too simple to understand easily but still lots of complexities have been solved. 10 . you can now purchase Silk bank’s Demand Drafts at very reasonable rates. which are in intangible form. can purchase a Demand Draft from a bank branch. SWIFT SYSTEM The SWIFT system (Society for Worldwide Inter bank Financial Telecommunication) has been introduced for speedy services in the area of home remittances. speedy and reliable way to transfer money. After joining the bank in internship I got the practical exposure of all the above-described activities. If you are a commercial enterprise then our Letter of Credit service is just what you are looking for. Using the Silk bank network of branches. DEMAND DRAFTS If you are looking for a safe. Clearing department services are provided in order to make arrangements for the economic collection of the cheques.

75 It is a checking account and there is no limit of withdrawals. the rate fluctuates from 1. And Silk bank also offers the most competitive rates in the market. • 11 . Silk bank pay orders are a secure and easy way to move your money from one place to another.2 million to 2. There is no limit on purchase of this cheque.Internship Report Silk Bank TRAVELER'S CHEQUES Traveler’s cheques are negotiable instruments. On Deposits of Rs. It is one of the safest ways for carrying money.000 million. They charges Rs 50/. as usual. Rupee traveler’s cheque is available at all 700 branches of Silk bank this can be encashed in all 400 branches of Silk bank. Profit is paid on half yearly basis on monthly balances. and there is no restriction on the period of validity of the rate and RS 75/. PAY ORDER Silk bank provides another reason to transfer your money using our facilities. The rates of profit vary according to the slabs of deposit. FOREIGN REMITTANCES: To facilitate its customers in the area of Home Remittances.postage charges on issuing mail transfer. Silk bank has taken a number of measures to: • • Increase home remittances through the banking system Meet the SBP directives/instructions for timely and prompt delivery of remittances to the beneficiaries Salient Features: • • • Rs 2-million are required to open an account and there is no maximum limit. Silk bank charges for this service are extremely competitive.4 to 1. And. MAIL TRANSFERS Move your money safely and quickly using Silk bank Mail Transfer service.

large and small business and other segments of the economy. • 12 . and supervision of farming. agriculturists. TRADE FINANCE OTHER BUSINESS LOANS There are two types of trade finance. Agricultural Credit: The agricultural financing strategy of Silk bank is aimed at three main objectives:• • Providing reliable infrastructure for agricultural customers Help farmers utilize funds efficiently to further develop and achieve better production Provide farmers an integrated package of credit with supplies of essential inputs.Internship Report SILK BANK is involved in the following: • • Silk Bank Investment into the capital market Introduction of capital market accounts (under process) Silk bank’s involvement in capital markets is expected to increase its earnings. is introduced by Silk bank with the aim to help farmers maximize the per acre production with minimum of required input. technical knowledge. Select farms will be made role models for other farms and farmers to follow. thus helping farmers across Pakistan to increase production. Agricultural Finance Services: “I Feed the World” program. AGRICULTURAL FINANCE Silk bank provides Agricultural Finance to solidify faith. which would result in better returns offered to account holders COMMERCIAL FINANCE Silk bank dedicated team of professionals truly understands the needs of professionals. They are the customer’s best resource in making Silk bank’s products and services work for them. commitment and pride of farmers who produce some of the best agricultural products in the World. b. a. a new product.

but in order to fulfill the requirements mentioned in Section 6 above the Cheque must have the following. The Requisites of Cheque There is no prescribed form of words or design of a Cheque. Payments It is a banker’s primary contract to repay money received for this customer’s account usually by honoring his cheques. Every customer has its own ledger account and has separate ledger cards. The deposits of all customers of the bank are controlled by means of ledger accounts. Cash department performs this function. its record should be kept. a) b) c) It should be in writing The unconditional order Drawn on specific banker only 13 . Agricultural Credit (Medium Term): • • • • • • Production and development Watercourse improvement Wells Farm power Development loans for tea plantation Fencing DEPARTMENTATION CASH DEPARTMENT Cash department performs the following functions Receipt The money. which either comes or goes out from the bank.Internship Report Silk Bank c.

the creditors’ banks receive large amounts of cheques drawn on other banks giving claims of payment by them. safe and most efficient way is to offset the reciprocal claims against the other and receive only the net amount owned by them. The function of clearinghouse is performed by the central bank of a country by tradition or by law. This facility of net inter bank payment is provided by the clearinghouse. a rapid growth in banking institutions has taken place. the clearing system is operated by the SBP. The use of cheques in making payments has also widely increased. then Silk bank. as a representative of SBP act as a clearinghouse. He deposits the cheque with his bank other than of payer for the collection of the amount. 14 . In practice. The easy. In Pakistan. or no payee but bearer. The total assets and total liabilities of the bank remain unchanged. Now the bank in which the cheque has been deposited becomes a creditor of the drawer’s bank. If SBP has no office at a place.Internship Report d) e) f) g) Payment on Demand Sum Certain in money Payable to a specific person Signed by the drawer Silk Bank Parties to Cheque The normal Cheque is one in which there is a drawer. the person receiving a Cheque as rarely a depositor of the cheque at the same bank as the drawer. When Cheque is drawn on one bank and the holder (payee) deposits the same in his account at the bank of the drawer. the mutual obligation are settled by the internal bank administration and there arises no inter bank debits from the use of cheques. At the same time. After the World War II. The depositor bank will pay his amount of the cheque by transferring it from cash reserves if there are no offsetting transactions. a drawee banker and a payee. The collection as settlement of mutual obligations in the form of cheques is now a big task for all the commercial bank. a) b) c) The Drawer The Drawee The Payee CLEARANCE DEPARTMENT A clearinghouse is an association of commercial banks set up in given locality for the purpose of interchange and settlement of credit claims. The banks on which the cheques are drawn become in debt to the bank in which the cheques are deposited.

The job of this department is to make proposals about the loans. The difference between the total represents the amount to be paid by a particular bank and the amount to be received by it. ADVANCES DEPARTMENT Advances department is one of the most sensitive and important departments of the bank. overdrafts and loans. The representatives of the commercial banks deliver the cheques payable at other local banks and receive the cheques drawn on their bank. Principles of Advances There are four principles. bankers in Pakistan generally lend in the form of cash finance. Totals are also made of all the cheques presented by or to each bank. • • • • Safety Liquidity Dispersal Remuneration Forms of Loans In addition to purchase and discounting of bills. The cheques are then sorted according to the bank on which they are drawn. because it is the main source of earning. The Credit Management Division of Head Office directly controls all the advances. Silk bank provides advances to different people in different ways as the case demand. The meeting is held in the office of the bank that officially performs the duties of clearinghouse. However. Credit extensions are the most important activity of all financial institutions. A summary sheet is prepared which shows the names of the banks. it is a very risky task and the risk cannot be completely eliminated but could be minimized largely with certain techniques. 15 . which must be duly observed while advancing money to the borrowers. 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. As we known bank is a profit seeking institution. Each bank then receives the net amount due to it or pays the net amount owed by it.Internship Report Silk Bank The representatives of the local commercial banks meet at a fixed time on all the business days of the week. the total number of cheques delivered and received by them. at the same time. The major portion of the profit is earned through this department.

Internship Report a) Cash Finance Silk Bank This is a very common form of borrowing by commercial and industrial concerns and is made available either against pledge or hypothecation of goods. In order to offset this loss. If the borrower does not utilize the full limit. In cash finance a borrower is allowed to borrow money from the banker up to a certain limit. The main difference between a cash finance and overdraft lies in the fact that cash finance is a bank finance used for long term by commercial and industrial concern on regular basis. Issuance of cheque book. DEPOSIT DEPARTMENT It controls the following activities: a) b) a) b) c) d) A/C opening. and an overdraft thus occurs. the banker has to lose return on the unutilized amount. the banker may provide for a suitable clause in the cash finance agreement. according to which the borrower has to pay markup/service charges on at least on self or one quarter of the amount of cash finance limit allowed to him even when he does not utilize that amount. b) Overdraft/Running Finance This is the most common form of bank lending. which the borrowing customer has in credit. The borrowing customer is in an advantageous position in an overdraft. the accommodation is called a “Clean Overdraft”. When a borrower requires temporary accommodation his banker allows withdrawals on his account in excess of the balance. while an overdraft is a temporary accommodation occasionally resorted to. either at once or as and when required. produce or merchandise. When it is against collateral securities it is called “Secured Overdraft” and when the borrowing customer cannot offer any collateral security except his personal security. because he has to pay service charges only on the balance outstanding against him. The borrower prefers this form of lending due to the facility of paying markup/services charges only on the amount he actually utilizes. This accommodation is generally allowed against collateral securities. Current a/c Saving a/c Cheque cancellation Cash 16 .

While doing internship I got lot of experience and I got the chance to apply my knowledge practically.Internship Report Types of Accounts Following are the main types of accounts 1) 2) 3) Individual Account Joint Account Accounts of Special Types  Partnership account  Joint stock company account  Accounts of clubs. In management and marketing style of the employees there were somehow differences exist. which helped me in getting interest in learning new concepts. societies and associations  Agents account  Trust account  Executors and administrators accounts  Pak rupee non-resident accounts  Foreign currency account Silk Bank Application of Learned Concepts After getting entered into practical life this is a common complaint that practically things are quite different from theoretical learning. 17 . but I did not face such big difference because the concepts I got from the course of “Money and Banking” and “Business Institutions” were so much close to the real world. After doing this practice I feel that I can even compare my practical knowledge in further studies.

809 0.870 -29385417 -106408508 -91049316 0.382 0. There is a continuous improvement in Silk bank’s liquidity position in 2003 the liquidity position was alarming and it was even less than 0.484 0.809 Description: If we look at the liquidity ratios we can see that the bank has improved its liquidity position from 2003 to 2006.780 0.5.484 0.870 2006 0.C Quick Ratio 2003 2004 2005 0.Internship Report Silk Bank Financial Analysis Liquidity Ratios: Ratios Current R a ti o Cash Ratio Net W. Although in banks it is difficult to keep these ratios up because banks mainly depend upon short-term liabilities but still Silk bank’s improvement is appreciated.377 0.503 0. 18 .363 -68179014 0.780 0.

922 11.348 11.750 2.W 0.870 6.620 6.750 Description: If we look at the Debt ratio and Debt/Equity ratio it is clearly understandable that the bank has greater portion of debts in its capital structure.943 0.659 0.943 6. Still management need to change its capital structure and higher portion of 19 .930 2.002 0.869 6.080 16.002 2.Internship Report Silk Bank Leverage Ratios: Ratios 2003 2004 2005 2006 Debt Ratio Debt/Equi Ratio Times Int E a r R a ti o Debt to Tangible N. but as compare to 2003 in 2006 the condition is better and the bank has gradually increased its equity portion as compare to the debt.620 2.941 16.

64% 16. equity and investment.0% 3.7% 3.7% 20.8% 23.2% 6. Still return on assets is showing that bank is not utilizing its assets properly 20 .Assets R.2% 14.2% 6.3% Description: As we have seen in other ratios of leverage and liquidity the company’s financial position is much better in later years as compare to the year 2003.8% 2005 1.7% 5.O.O.Op Assets 2003 0.7% 17.O.Internship Report Silk Bank equity may result in better results.7% 2004 1.3% 2006 2.9% 15.Inv R.Equi R.7% 19.O. as it is present in times interest earned ratio which is showing that increase in the equity is putting healthy effect in returns. bank has got gradually and continuous increase in its income which is increasing its return on assets. Profitability Ratios: Ratios R.

Internship Report Silk Bank and its efficiency is to be Pension & salaries payments 21 .silkbank. SWOT ANALYSIS Strengths:              Public confidence Sound financial strength Highest profitability Vast operational network Role in economic development Utility bills collections Corporate branches Evening banking Efficient home remittance Recognition of hard work of staff SWIFT Internet access (www. Return on equity is satisfactory and showing that bank is having very less portion of equity.

Internship Report Silk Bank  Online city branch Weaknesses:          Lack of good delegation Inadequate. sponsored schemes  Political pressure  Reducing branch network 22 . poorly placed network technology Complex MIS Deep rooted bureaucratic approval Lack of long term & short term plans Less share in import & export business Poor resource utilization Need better service policy Frequent change in senior management Opportunities:  New style management  Introduction of new products and services  Introduction of new technology & electronic banking  Capital management & equity financing  Secondary market operations  New deposit scheme Threats:  Establishment of new private financial institutions & expansion  Govt.

Incidents of high taxation on banking industry. Economical:   Constraints in mobilization of public savings because of inflation. Employment practices. Staff cost. Impact of subsidized credit affecting and Silkbank’s. 23 .Internship Report Silk Bank  New products form private Pakistan Establishment of new private financial institutions & expansion  New products form private Pakistani & foreign banks  Non-banking institutions  Inability to change  Inability to change  Stakeholders interests PEST ANALYSIS Political:      Privatization policy and deregulation. Political Interference and harassment. Unions. Associations.

Bad debts Social & Cultural:       Inadequate human resources. Inadequate IT training. Defaulter’s lobby. Inadequate accountability. Suggestions and Recommendations Based on the SWOT and PEST analysis of the Silkbank. Most of them are going along since long time and that all efforts made to remove them have not succeeded. ∗ Bank should try to get rid of the political influence to be able to compete in the industry with prudent and strong policies.Internship Report Silk Bank   Operating cost. Technological:    Inadequate communication infrastructure. Adequate empowerment. There is a long list of weaknesses that is given on the previous page. it is observed that the Bank like the other public sector industries has not been showing up to mark performance. Declining education and work ethics. 24 . On the basis of SWOT analysis of the Bank the following suggestions and recommendations are given. Cultural strain to savings. Inadequate computer facilities.

but is still in practice due the absence of prudentially regulated system to protect them and the Bank. Better and comprehensive long-term and short-term planning should be made to forecast the future needs. All branches of the Bank should be computerized for increasing the effectiveness and efficiency of its employees. There is a possibility of establishing a task force to ascertain the effectiveness of the policies being implemented. There is a lack of promotional element in the planning and budgetary decisions of the Bank that has to think seriously. The management do considers the policy matter that is not helping the Bank. Redefining of rules. The behavior of the employee. The Bank should develop a comprehensive recruitment policy to make only the competent ones to be on the job. 25 . There is a still a vast pool of incompetent employees that has to right sized. especially on the counter has to be strictly monitored and checked. The still existed bureaucratic approval system has to be demolished. which have to be made possible to escape from the threats and weaknesses and the risks in environment that surrounds the Bank. Efforts of great importance to be made for the over the counter services of general banking making it more simple and faster to get a better response of the customers. All advances should be made by getting the maximum security and should focus on productive work. like the current situation. Efforts should be continued to keep the powers of employees union to the minimum. These and many other that can make a good set of recommendations. regulations and policies should be made implemented at all costs.Internship Report Silk Bank ∗ ∗ ∗ ∗ ∗ ∗ ∗ ∗ ∗ ∗ ∗ ∗ ∗ ∗ The undue reliance on the public sector be minimized and ventures of private sectors should be taken as well. Promotions must not be delayed and should be made on time to further increase the commitment and efficiency of the employees.

Internship Report Silk Bank Efforts have been made with serious concern to give Silkbank a status that it has to maintain by having practices of: ∗ ∗ ∗ ∗ Right sizing of the employees. Promotions made conditional with qualifications. 26 . By closing unprofitable branches. By introducing a merit based selection criteria.

and since its establishment it has aimed to become the leading bank of Pakistan by that provides outstanding services to its customers. It has been only one year since the establishment of Silkbank. 27 . There are a number of mergers happening in the economy with foreign investments coming into the banking sector. Silkbank has to benchmark its services to its major competitors in the industry or the market leader in the industry and provide a continuous mean of improvement in its existing products and services. that provides its employees with a challenging environment to work in. The bank has seen phenomenal growth in the past year by opening more branches in the country. Also the products that Silkbank provides cater to sector of the economy. which shows that Silkbank is being considered as an employer. where they can harness their full potential and shows confidence as an employer by the employees of the bank. increasing the deposit base.Internship Report Silk Bank Conclusion The economy of the country is booming and with the investment favorable policies and their smooth implementation. while also increasing the assets and profits of the bank. the number of employees at Silkbank are increasing. The top management of the bank is always developing strategies that cope with unexpected challenges to deliver products and services more efficiently Furthermore. the role of banks in today’s economy have become an important one. while introducing new ones to the industry. The banking industry is also reaping the fruits of this economic boom by growing rapidly over the past few years. Lastly to become the leading bank of Pakistan. as the bank is growing. The services that Silkbank provides have a great market penetration not only because of their features but also the profit and markup rates that they charge.