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Internship Report Silk Bank

Internship Report on
Silk Bank

Submitted to
Internship Coordinator

Submitted by
Mehreen Aslam

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.

Internship Report Silk Bank


At the outset, I feel obliged to express my profound gratitude to the Branch

Manager of the Silkbank G-9, who has throughout my internship provided
me with endless help, valuable guidance and encouragement. Her
experience, expertise, flexibility and ability to open new vistas of knowledge
have contributed much in our educational pursuit.

I am deeply indebted to my chosen bank i.e Silkbank and their customers

who participated in the study. I am especially thankful to all the staff for
agreeing to provide the required data and give me priceless knowledge.

I owe my greatest gratitude to my parents for their continuous support,

assistance, guidance, love and patience without which I could not have
completed this internship and report in such a short span of time.

Internship Report Silk Bank

Executive Summary…………………………………...……………………………………2


Silk Bank………………………………………………...…………………………………5

Employees Hierarchy………………………………………..…………………………….6

Branch Introduction……….…………………………..……………………………………7

What I Did? ………………………………………….…………………………………….7

Services of Silk Bank……………………………...……………………………………….10

Salient Features………………………………..…………………………………………...11


Application of Learned Concepts………………………………………..………………...17

Financial Analysis……………………………………………………..………………… 18

SWOT Analysis…………………………………..……..…………………………………21

PEST Analysis……………………………………………………….……………….……23

Suggestions &Recommendation…………………..………………………...………….…24


Internship Report Silk Bank

Silk Bank
Silk bank maintains its position as Pakistan's premier
bank determined to set higher standards of
achievements. It is the major business partner for the
Government of Pakistan with special emphasis on
fostering Pakistan's economic growth through
aggressive and balanced lending policies,
technologically oriented products and services
offered through its large network of branches locally,
internationally and representative offices.
Banks new identity Silkbank – is a name with a
meaning that endorses our values. The name takes its
inspiration from ‘Silk’, a natural element known for its
unique properties. 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

Internship Report Silk Bank

Employees Hierarchy














Internship Report Silk Bank

Branch Introduction

I did internship in (Silk bank), G-9 Branch, Islamabad. This branch was founded in July
1962. From last many years this branch is not only achieving its targets of deposits and
advances rather it remains above the targets. According to the financial record of last year
this branch was earning more than 20% of total profit of the region.
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. This branch is performing its
functions in traditional style and now it has been converted into an online branch.

What I Did…?

After joining the bank for internship initially it was so difficult for me to get the attention
of the employees, every body was terribly engaged in there own activities, no body was
having time to accommodate me. 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. 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. 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.
They provided me their time and information, which helped me to enhance my
knowledge, and they also shared their experiences with me, which I believe that it would
be helpful in my practical life. First two weeks I worked in operation department, 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, with individual customer and how loans can be recovered from the customers.

Internship Report Silk Bank

During the internship session I got the chance to perform on different activities, which
are listed below, and short explanation is also given.

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. Different color-coded application forms are
available for each type of account. Along with the form a card for specimen signature is
also supplied to customer. Manager has every right not to accept this contract if he is not
satisfied by the details provided by the customer. In case the contract is acceptable to
both, now it is ready to open the account formally.

Account Types
Though in theory they’re many types of accounts but commonly account operators can be
classified in one of the following categories, each have different documentation

 Single
 Joint
 Partnership
 Private Limited

Credit Department
The earning of a commercial bank is chiefly derived from interest charges on loans and
discounts it. Now loans are recognized as advances or finances. The advances are made
through the deposits that are kept in the bank by the customers. The bank pays profit on
the deposited amount and receives mark up on the advances made of different amounts.
Silk bank introduced the mark up based advancing in Jan1, 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

Internship Report Silk Bank

Foreign Exchange
To promote flow of foreign exchange in the country, the Government of Pakistan started
a new scheme of opening of bank accounts in foreign currency. 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). This has increased the flow of foreign
currency especially from the Pakistani foreign residents, who used to send money to their
families at home. The State Bank of Pakistan was given special rights to control and
monitor the performance of the “Authorized Dealers” in foreign exchange accounts.

Authorized Dealer is a person or an institution, which can deal with the foreign
exchange. The authority is given by SBP to all those scheduled Banks who have adequate
trained staff and facilities. These scheduled banks are given license to deal in foreign
currency transactions.

Remittance Department
Remittance department provides services to the customer of the bank. The main function
of this department is transfer of funds.


The instruments that are handled in the Remittance department are as follow:

• Demand Draft.

• Mail transfer.

• Telegraphic transfer.

• Pay order.

• Pay slip.

• OBC (outward bill for collections).

• IBC (inward bill for collections).

Internship Report Silk Bank

Clearing Department
There is no legal obligation on a banker to collect cheques drawn upon other banks for a
customer. However it is function of almost every modern bank of the collection of
cheques and bills on behalf of the customer.

Clearing department services are provided in order to make arrangements for the
economic collection of the cheques, DD and other negotiable instruments. A large part of
this work is carried on through the clearinghouse.
After joining the bank in internship I got the practical exposure of all the above-described
activities. The mechanism is not too simple to understand easily but still lots of
complexities have been solved.


Services are he outputs of the firm, which are in intangible form.

If you are looking for a safe, speedy and reliable way to transfer money, you can now
purchase Silk bank’s Demand Drafts at very reasonable rates. Any person whether an
account holder of the bank or not, can purchase a Demand Draft from a bank branch.

The SWIFT system (Society for Worldwide Inter bank Financial Telecommunication)
has been introduced for speedy services in the area of home remittances. The system has
built-in features of computerized test keys, which eliminates the manual application of
tests that often cause delay in the payment of home remittances.

Using the Silk bank network of branches, you can safely and speedily transfer money for
our business and personal needs.

Silk bank is committed to offering its business customers the widest range of options in
the area of money transfer. If you are a commercial enterprise then our Letter of Credit
service is just what you are looking for.

Internship Report Silk Bank

Traveler’s cheques are negotiable instruments, and there is no restriction on the period of
validity of the cheques. Rupee traveler’s cheque is available at all 700 branches of Silk
bank this can be encashed in all 400 branches of Silk bank. There is no limit on purchase
of this cheque. It is one of the safest ways for carrying money.

Silk bank provides another reason to transfer your money using our facilities. Silk bank
pay orders are a secure and easy way to move your money from one place to another.
And, as usual, Silk bank charges for this service are extremely competitive.

Move your money safely and quickly using Silk bank Mail Transfer service. And Silk
bank also offers the most competitive rates in the market. They charges Rs 50/- exchange
rate and RS 75/- postage charges on issuing mail transfer.

To facilitate its customers in the area of Home Remittances, 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.

• Profit is paid on half yearly basis on monthly balances.

• The rates of profit vary according to the slabs of deposit. On Deposits of Rs.2
million to 2,000 million, the rate fluctuates from 1.4 to 1.75

• It is a checking account and there is no limit of withdrawals.

Internship Report Silk Bank

SILK BANK is involved in the following:

• 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, which
would result in better returns offered to account holders


Silk bank dedicated team of professionals truly understands the needs of professionals,
agriculturists, large and small business and other segments of the economy. They are the
customer’s best resource in making Silk bank’s products and services work for them.


There are two types of trade finance.


Silk bank provides Agricultural Finance to solidify faith, commitment and pride of
farmers who produce some of the best agricultural products in the World.

a. Agricultural Finance Services:

“I Feed the World” program, a new product, is introduced by Silk bank with the aim to
help farmers maximize the per acre production with minimum of required input. Select
farms will be made role models for other farms and farmers to follow, thus helping
farmers across Pakistan to increase production.

b. 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

• Provide farmers an integrated package of credit with supplies of essential inputs,

technical knowledge, and supervision of farming.

Internship Report Silk Bank

c. Agricultural Credit (Medium Term):

• Production and development

• Watercourse improvement

• Wells

• Farm power

• Development loans for tea plantation

• Fencing

Cash department performs the following functions


The money, which either comes or goes out from the bank, its record should be kept.
Cash department performs this function. The deposits of all customers of the bank are
controlled by means of ledger accounts. Every customer has its own ledger account and
has separate ledger cards.


It is a banker’s primary contract to repay money received for this customer’s account
usually by honoring his cheques.

The Requisites of Cheque

There is no prescribed form of words or design of a Cheque, but in order to fulfill the
requirements mentioned in Section 6 above the Cheque must have the following.

a) It should be in writing

b) The unconditional order

c) Drawn on specific banker only

Internship Report Silk Bank

d) Payment on Demand

e) Sum Certain in money

f) Payable to a specific person

g) Signed by the drawer

Parties to Cheque

The normal Cheque is one in which there is a drawer, a drawee banker and a payee, or no
payee but bearer.

a) The Drawer

b) The Drawee

c) The Payee

A clearinghouse is an association of commercial banks set up in given locality for the
purpose of interchange and settlement of credit claims. The function of clearinghouse is
performed by the central bank of a country by tradition or by law. In Pakistan, the
clearing system is operated by the SBP. If SBP has no office at a place, then Silk bank, as
a representative of SBP act as a clearinghouse.

After the World War II, a rapid growth in banking institutions has taken place. The use of
cheques in making payments has also widely increased. The collection as settlement of
mutual obligations in the form of cheques is now a big task for all the commercial bank.
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. The total
assets and total liabilities of the bank remain unchanged.

In practice, the person receiving a Cheque as rarely a depositor of the cheque at the same
bank as the drawer. He deposits the cheque with his bank other than of payer for the
collection of the amount. Now the bank in which the cheque has been deposited becomes
a creditor of the drawer’s bank. The depositor bank will pay his amount of the cheque by
transferring it from cash reserves if there are no offsetting transactions. The banks on
which the cheques are drawn become in debt to the bank in which the cheques are
deposited. At the same time, the creditors’ banks receive large amounts of cheques drawn
on other banks giving claims of payment by them.

The easy, safe and most efficient way is to offset the reciprocal claims against the other
and receive only the net amount owned by them. This facility of net inter bank payment
is provided by the clearinghouse.

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 meeting is held in the office of the bank that officially performs the
duties of clearinghouse. The representatives of the commercial banks deliver the cheques
payable at other local banks and receive the cheques drawn on their bank. The cheques
are then sorted according to the bank on which they are drawn. A summary sheet is
prepared which shows the names of the banks, the total number of cheques delivered and
received by them. Totals are also made of all the cheques presented by or to each bank.
The difference between the total represents the amount to be paid by a particular bank
and the amount to be received by it. Each bank then receives the net amount due to it or
pays the net amount owed by it.

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.

Principles of Advances

There are four principles, which must be duly observed while advancing money to the

• Safety

• Liquidity

• Dispersal

• Remuneration

Forms of Loans
In addition to purchase and discounting of bills, bankers in Pakistan generally lend in the
form of cash finance, overdrafts and loans. Silk bank provides advances to different
people in different ways as the case demand.

Internship Report Silk Bank

a) Cash Finance

This is a very common form of borrowing by commercial and industrial concerns and is
made available either against pledge or hypothecation of goods, produce or merchandise.
In cash finance a borrower is allowed to borrow money from the banker up to a certain
limit, either at once or as and when required. The borrower prefers this form of lending
due to the facility of paying markup/services charges only on the amount he actually

If the borrower does not utilize the full limit, the banker has to lose return on the un-
utilized amount. In order to offset this loss, 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. When a borrower requires temporary
accommodation his banker allows withdrawals on his account in excess of the balance,
which the borrowing customer has in credit, and an overdraft thus occurs. This
accommodation is generally allowed against collateral securities. 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, the accommodation is
called a “Clean Overdraft”. The borrowing customer is in an advantageous position in an
overdraft, because he has to pay service charges only on the balance outstanding against
him. 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, while an overdraft is a temporary accommodation occasionally resorted to.


It controls the following activities:

a) A/C opening.

b) Issuance of cheque book.

a) Current a/c

b) Saving a/c

c) Cheque cancellation

d) Cash

Internship Report Silk Bank

Types of Accounts

Following are the main types of accounts

1) Individual Account

2) Joint Account

3) Accounts of Special Types

 Partnership account

 Joint stock company account

 Accounts of clubs, societies and associations

 Agents account

 Trust account

 Executors and administrators accounts

 Pak rupee non-resident accounts

 Foreign currency account

Application of Learned Concepts

After getting entered into practical life this is a common complaint that practically things
are quite different from theoretical learning, 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. In management and marketing style of
the employees there were somehow differences exist.
While doing internship I got lot of experience and I got the chance to apply my
knowledge practically, which helped me in getting interest in learning new concepts.
After doing this practice I feel that I can even compare my practical knowledge in further

Internship Report Silk Bank

Financial Analysis
Liquidity Ratios:
Ratios 2003 2004 2005 2006
a 0.809 0.870
o 0.484 0.780
Ratio 0.377 0.503 0.382 0.363

Net W.C -29385417 -106408508 -91049316 -68179014

Ratio 0.484 0.780 0.809 0.870

If we look at the liquidity ratios we can see that the bank has improved its liquidity
position from 2003 to 2006. There is a continuous improvement in Silk bank’s liquidity
position in 2003 the liquidity position was alarming and it was even less than 0.5.
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.

Internship Report Silk Bank

Leverage Ratios:
Ratios 2003 2004 2005 2006

Debt Ratio 0.941 0.922 0.869 0.870

Ratio 16.002 11.943 6.620 6.750
Times Int
E 2.659 2.930
o 2.080 2.348
Debt to
N.W 16.002 11.943 6.620 6.750

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, 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. Still management need to change its capital structure and higher portion of

Internship Report Silk Bank

equity may result in better results, as it is present in times interest earned ratio which is
showing that increase in the equity is putting healthy effect in returns.

Profitability Ratios:
Ratios 2003 2004 2005 2006

R.O.Assets 0.9% 1.2% 1.64% 2.7%

R.O.Equi 15.2% 14.7% 16.7% 20.8%

R.O.Inv 6.0% 17.7% 19.7% 23.2%

Assets 3.7% 3.8% 5.3% 6.3%

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, bank has got gradually and
continuous increase in its income which is increasing its return on assets, equity and
investment. Still return on assets is showing that bank is not utilizing its assets properly

Internship Report Silk Bank

and its efficiency is to be increased. Return on equity is satisfactory and showing that
bank is having very less portion of equity.

 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


 Internet access (

 Pension & salaries payments

Internship Report Silk Bank

 Online city branch

 Lack of good delegation

 Inadequate, 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

 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

 Establishment of new private financial institutions & expansion
 Govt. sponsored schemes
 Political pressure
 Reducing branch network

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

 Privatization policy and deregulation.

 Impact of subsidized credit affecting and Silkbank’s.

 Employment practices, Unions, Associations.

 Political Interference and harassment.

 Incidents of high taxation on banking industry.

 Constraints in mobilization of public savings because of inflation.

 Staff cost.

Internship Report Silk Bank

 Operating cost.

 Bad debts

Social & Cultural:

 Inadequate human resources.

 Cultural strain to savings.

 Defaulter’s lobby.

 Declining education and work ethics.

 Inadequate accountability.

 Adequate empowerment.

 Inadequate communication infrastructure.

 Inadequate computer facilities.

 Inadequate IT training.

Suggestions and Recommendations

Based on the SWOT and PEST analysis of the Silkbank, it is observed that the Bank like
the other public sector industries has not been showing up to mark performance. There is
a long list of weaknesses that is given on the previous page. Most of them are going along
since long time and that all efforts made to remove them have not succeeded. On the
basis of SWOT analysis of the Bank the following suggestions and recommendations are

∗ 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

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

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.
∗ By closing unprofitable branches.
∗ By introducing a merit based selection criteria.
∗ Promotions made conditional with qualifications.

Internship Report Silk Bank

The economy of the country is booming and with the investment favorable policies and
their smooth implementation, the role of banks in today’s economy have become an
important one.
The banking industry is also reaping the fruits of this economic boom by growing rapidly
over the past few years. There are a number of mergers happening in the economy with
foreign investments coming into the banking sector.
It has been only one year since the establishment of Silkbank, and since its establishment
it has aimed to become the leading bank of Pakistan by that provides outstanding services
to its customers.
The bank has seen phenomenal growth in the past year by opening more branches in the
country, increasing the deposit base, while also increasing the assets and profits of the
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. Also the products that
Silkbank provides cater to sector of the economy.
The top management of the bank is always developing strategies that cope with
unexpected challenges to deliver products and services more efficiently
Furthermore, as the bank is growing, the number of employees at Silkbank are increasing,
which shows that Silkbank is being considered as an employer, that provides its
employees with a challenging environment to work in, where they can harness their full
potential and shows confidence as an employer by the employees of the bank.
Lastly to become the leading bank of Pakistan, 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, while introducing
new ones to the industry.