6.

Objectives of Studying the Organization

My prime objective of studying the Askari Bank is to get actual experience and find position of the Bank in the Banking market. The other objectives of studying the Askari Bank are as follows: To obtain information about the organization, its working and scope of operations. To know about the functions of Askari Bank Limited. To get practical knowledge about general / operations Banking and consumer Banking. To observe the sustainable relationship with customers. How to meet expectations through Market-based solutions and products. How much reward for entrepreneurial efforts. How Askari Bank creates values for all stakeholders. To see practice integrity, honesty and hard work. To see an organization maintaining the trust of stakeholders. To observe the objectives of Askari Bank to capture the deposits of the Govt. (Armed forces) as well as public. How the Askari Bank provides different types of loans to the industrial sector to increase their business activity. Analyzing the role of Human Resource Department in Askari Bank.

 Analyzing the role of Finance Department in the development of Banking sector. To identify the role of financing and performance appraisal. To get information about opening of accounts. To identify the way of financial assistance of people How to deal with the change of industry condition and finance department. To suggest the ways for strengths and how to improve the Banking sector for future.

7.

Overview of the organization

Here, the Banking sector is defined in its complete shape that how it works. This chart depicts the complete picture of the organization that how many functions are performed with and through Banking sector and by which department. The partition of this sub-continent area emergence of Pakistan as an independent state were attended with serious dislocations in economic life. The Banking was badly shaken and close to collapse. There were 3,496 branches of Indian scheduled Banks in the sub-continent in March-1947, out of these area to from Pakistan had 631 branches 126 were located in former East Pakistan and 487 in the west Pakistan. When the partition plan was announced on 3rd June 1947 the non-Muslim, who monopolized Banking business, started shifting their head offices and capital to places, which were to form part of India. By the 14th August 1947 most of the Head Offices and Capital had been shifted. Simultaneously, the non-Muslim staff began leaving Pakistan the gravity of the situation can be judged that is 409-branches were abruptly closed. Out of this total number of 195-branches 23 branches were of Pakistani Banks, 153 of Indian Banks and 19 of nonIndian foreign Banks, also known as exchange Banks. Pakistani Banks, branches were mostly newly born and weak transacting very normal business. Indian Banks were functioning only in name pending winding up their business. The non-Indian foreign Banks were engaged almost totally in foreign exchange transitions and had little interest in the welfare of newly born state of Pakistan. At the time independence the only Pakistani Banks were HBL set of in 1941 and Australasian Bank Limited setup in 1942. The MCB was setup 1947. The imperial Bank of Indian functioned both for Indian and Pakistan till November 1949, when it was replaced by the NBL the reserve Bank of India performed central Banking functions both

for India and Pakistan until the establishment of the state Bank of Pakistan on 1st July 1948.

7.1

Brief History of Askari Bank Limited

An important player in Pakistans financial services industry, Askari Bank is now leading the way to the most modern and dynamic Banking in the country. Incorporated in October 1991, Askari Bank commenced its operations in April 1992, and has since expanded into a nation wide presence of 155 branches, including 15 dedicated Islamic Banking branches connected online and supported by a shared network of over 2,670 online ATMs covering all major cities in Pakistan supports the delivery channels for customer service. Askari Bank also has an wholesale Banking Unit in Bahrain. ASKARI BANK is the leading private sector Bank in Pakistan, delivering quality service through innovative technology. In the success story of ASKARI BANK, one of the most important factors, apart from its dynamic management and prudent approach, is the QUALITY of its SERVICES, which gives it a great edge over its competitors. ASKARI BANK has always strived to facilitate its customers by introducing various high quality hi-tech services for the first time in Pakistan. We are proud of our pioneering role in providing the most modern and technologically advanced services to our customers. Knowing our customers and their needs is the key to our business success. Our products and services are as diverse as our market segments. Technology has played a pivotal role in meeting customer expectations, particularly with respect to the speed and quality of services. We have fully automated transaction-processing systems for back-office support. Our branch network is connected on-line real-time and our customers have access to off-site as well as on-site ATMs, all over Pakistan. This includes not just establishing and maintaining technology infrastructure for providing operational support to all units of the Bank, but also encompasses introducing latest state-of-the-art technology-driven products

and service delivery systems, such as ATM networking, Internet Banking, Mobile ATM, Credit Cards, Debit Card, Prepaid Card, utility bills payment through ATMs & Internet which have brought about cost-effectiveness, timesaving and safety. Askari Bank has also achieved another milestone with the launch of Askari Bank Zari Credit Card. This is the first ever credit card offered to the farmers in Pakistan with complete product features and service benefits. It aims to meet farmers production and development needs and to supplement cash flows, whenever required. It is also a matter of satisfaction that ASKARI BANK has been the first Bank to introduce PTCL and WAPDA utility bills payment electronically through ATM and Internet on an Online-Real-Time Basis. For the first time in Pakistan, we have introduced Mobile ATMs to provide Banking facilities at the doorsteps of our customers. Askari Banks mobile ATMs first in the Banking history of Pakistan, now four in number, continue to serve customer needs. Our Phone Banking and Internet Banking Facility allows our customers, to access their accounts from anywhere in the world, and effect transactions. Bank has established its Data Warehouse and Customer Care Centre, a dedicated customer call center to provide one window service to our valued customers in terms of their telephonic enquires. Askari Bank remains focused on using technology for improving customer service standards and expanding the range of products being offered and other technology based solutions.

7.1.1 Achievements of Askari Bank Limited

Since its inauguration, Askari Commercial Bank Limited engaged in share the development of the country. Its basic mission is to be the leading private sector Bank in Pakistan. During its very few years of life, AKBL has a high regard for its Best Banking. No Bank achieved such fame in a short time period. In this age of tough competition, AKBL plays a role of responsible corporate citizen.

THE BEST BANK IN PAKISTAN

Askari Commercial Bank honored with this award by the Prestigious Global Finance Magazine in the year 2001. It has been selected by the above magazine as the BEST CONSUMER INTERNET BANK IN PAKISTAN for the year 2002.

BEST DOMESTIC BANK

Askari Commercial Bank won the Euro money award in 1995.

COMMERCIAL BANK OF THE YEAR

Askari Commercial Bank Ltd. awarded as the Commercial Bank of the year for the year 1994 and 1996 by the Asia money.

SHOR TERM RATING A1+

PACRA awarded Askari Commercial Bank as A1+, the highest possible credit rating for short term obligations.

LONG TERM RATING AA

Askari Commercial Banks long term rating stands at AA asserted by the PACRA.

BEST PRESENTED ANNUAL ACCOUNTS

AKBL won the prestigious award from the Institution of Chartered Accountants in Pakistan, and the Institute of Cost and Management Accountants, Pakistan, for the services sector, for 2000.

OTHER PRIZES
AKBL also received prizes during last four years from the South Asian Federation of Accountants (SAFA) for the Best Presented Annual Accounts for the financial sector, in the SAARC region.

Entity Ratings
Askari Bank has the following Entity Ratings from the Pakistan Credit Rating Agency Limited (PACRA): Short Term Long Term A1+ AA+

Definitions by PACRA
A1+: Obligations supported by the highest capacity for timely repayment. AA+: Very high credit quality. 'AA' ratings denote a very low expectation of credit risk. They commitments. indicate This very strong capacity capacity is not for timely to payment of financial foreseeable events. significantly

A plus (+) appended to a rating denotes relative status within major rating categories.

7.1.2 Brief introduction of the Sahiwal Branch

Askari Bank Limited Sahiwal was inaugurated on December 31, 2001. It is located on High Street Jinnah Road Sahiwal. The location is connected to all the main trade centers in Sahiwal. It is a prosperous branch streaming towards great achievements. At the time of its establishment the factored that were considered are as follows

Sahiwal is zone covering a large population. Agriculture based area constituting growers and gainers Educational Institution

The total strength of staff in AKBL Sahiwal is 33. They are dedicated their work. The branch is progressing rapidly. Under the dynamic leadership of Vice President Mr. Adnan Asghar and Operational Manager Mr. Muhammad Shafique Now, AKBL sahiwal branch has the importance of backbone for Askari Bank. It has high volume of deposits and has led to huge profits. So, I have been much lucky that I got an opportunity for working in concerned branch for six weeks from 05-10-2009 to 20-11-2009, and confronted with enough exposure and opportunities to learn.

7.2

Nature of organization

It is a service organization. Along with the social activities Askari Bank has also been a good Banking institution to be compared with other commercial Banks. It is providing the modern services of Banking such as: Deposit Banking Financing & Credit Remittance facilities Government Treasury business and chest transactions Government Receipts and Payments Sale and Purchase of Government Securities, Bonds and other certificates Foreign Exchange Business Safe custody and Safe deposits Collection of Utility bills Investment Advice and other related services

7.3

Organization Business Volume

Business volume of Askari Bank in terms of revenue, deposits, advances, investment, etc for the last five years (from 2004 to 2008) is as under: Description
Tot al As s et s Depos i t s Advances Inves t m ent S harehol der equit y P rofi t pre t ax P rofi t aft er t ax Earni ng per s hare
Return on investment

2004 (In 000)

107,167,541 83,318,795 69,938,041 17,239,157 1,255,848 2,842,740 1,923,040 1.0 1.4%

2005 (In 000)

145,099,907 118,794,690 85,976,895 25,708,194 1,507,018 2,859,081 2,021,996 8.9 2.0%

2006 (In 000)

166,033,588 131,839,283 99,179,372 28,625,915 2,004,333 3,346,855 2,249,974 11.2 2.4%

2007 (In 000)

182,171,885 143,036,707 100,780,162 39,431,005 3,006,499 2,299,785 2,681,012 13.4 3.4%

2008 (In 000)

206,191,138 167,676,572 128,818,242 35,677,755 4,058,774 461,382 386,225 15.3 4.3%

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Total Assets
The total assets of the bank include cash and balances with treasury, balances with other banks, investments, advances, operating assets and other assets. The total assets of the bank are gradually increasing from 2004 to 2008.

Deposits
Deposits of the bank are directly linked with the prosperity of the bank. A bank can only survive in the market if its deposits are increasing day by day. It has become very essential for the banks to increase its deposits to compete with its competitors. ACBL is also focusing on enhancement of its deposits. As a result their deposits are increasing from 2004 to 2008.

Advances
The management of ACBL adopted the policy of sanctioning

loans/advances to earn interest on these advances. The advances also increased with the increase deposits from the year 2004 to 2008.

Share Holders Equity

Share holders equity of ACBL increased to support the bank. This enhancement continued from 2004 to 2008.

Profit after Tax

The profit of ACBL also increased as the management succeeded to enhance the deposits of the bank. The efforts and efficiency of the management of the bank resulted in increase in profit from 2004 to 2008.

Earning per Share

Earning per share of ACBL continuously increased from 2004 to 2008 due to efforts and efficiency of the management of the bank.

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7.4

Number of employees

In Askari Bank, total 6808 employees are working are working. In Askari Bank Limited every branch has a Brach Manger, MIS person, Operational staff and field staff. Cadre wise break up of employees working in Askari Bank Limited is as under:

Sr. No. 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13.

DESIGNATION President Senior Executive Vice President Executive Vice President Senior Vice President Vice President Assistant Vice President Managers Assistant Managers OG-I OG-II OG-III Drivers Peons Total

No. of Posts 01 05 09 19 28 35 155 72 974 1673 2672 428 737 6808

7.4.1 Number of employees working in Askari Bank Limited, Sahiwal

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Twenty nine employees are working in Askari Bank Limited, Sahiwal Branch. The names and their cadre are mentioned below:

NAMES AND DESIGNATIONS OF OFFICERS

Sr. No. 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 NAME Mr. Adnan Asghar Mr. Muhammad Shafique Mr. Muhammad Saeed Arshad Mr. Saeed Ahmed Malik Mr. Nouman Sarwar Mr. Fakhar Yasin Mr. Mudassar Waqas Mr. Sharjeel Anwer Ms. Sobia Irfan Butt Mr. Abdul Rehman Mr. Adeel Khurram Mr. Tahir Latif Mr. Sh. Mehmood Mr. Umer Hayyat Mrs. Saira Raza Zaidi Mr. Kashif Yaqoob Mr. Sohail Khalid Ghulam Abdullah Ms. Qurat-ul-Ain Ms. Shahida Rani DESIGNATION Branch Manager Manager Operations Incharge Credits Incharge General Banking Incharge Cash Department CD SB Misc CD SB Misc Clearing Incharge Incharge Accounts Incharge Account Opening Officer Cash Department Officer Cash Department Officer Cash Department Relationship Manager Incharge Foreign Trade Officer IT Development Officer Inchareg Agri Credit Voucher Sorter PABX Operator

7.5

Product Line of Organization

7.5.1 Corporate Banking

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The Corporate Banking Division (CBD) was streamlined on the basis of clear criteria under which the categorization of existing Banking relationships was identified and accordingly relationship management was consolidated from various branches into three regional corporate centers.

Products
Loan syndications (arranger/co-arranger and lead manager) Structured finance Equity financing Working capital financing Corporate finance advisory services Debt swaps Balance sheet restructuring

7.5.2 Consumer Financing

During 2007, the consumer services offered by the Bank were reorganized by combining the consumer financing and credit card businesses under one umbrella and were renamed as the Consumer Banking Services Group (CBSG). The reorganization is aimed to bring in business synergies and to enable a more active sale of different products within the same market segment

Products
Platinum, Gold, Silver, Awami Credit Cards Zarai Credit Card Balance Transfer Facility Flexible Credit Plan AskCard (Debit / ATM card) AskPower (Prepaid Card) Askari Bank's Mortgage Finance (Home Loans) Askari Bank's Business Finance (Business Loans) 14

Askari Bank's Personal Finance Smart Cash (running finance facility for consumers) I-Net Banking (internet Banking solutions) Askcar (auto loans) Askari Touch 'N' Pay (on-line utility bill payment services) Cash Management Services Rupee Traveler Cheques

The detail of few of these product is given as under:

7.5.3 Personal Finance

Personal Finance is a parameter driven product for catering to the needs of the general public belonging to different segments. One can avail unlimited opportunities through Askari Bank's Personal Finance. With unmatched finance features in terms of loan amount, payback period and most affordable monthly installments, Askari Bank's Personal Finance makes sure that one gets the most out of his/her loan. Once a good credit history is established, the door to opportunity opens much wider.

7.5.4 Business Finance:

In pursuance of the National objectives to revive the economy of the country, AKBL is providing loans to small and medium size business enterprises under Askari Bank's Business Finance Scheme. Our goal is to offer a loan, which enables business community to receive the financing required by them based on their cash flows. Our valued customers can enjoy the convenience of getting financing on attractive terms with the minimum processing turnaround time

ATM Network:

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Askari Bank Ltd took the initiative to sign a strategic partnership with ABN Amro Bank, Habib Bank, Soneri Bank for ATM sharing arrangements, the first of its kind in Pakistan. The countrywide network of automated tellers machines (ATMs), carrying the brand name of ASKCASH, is further enhanced and as of date the Bank is operating 16 ATMs. Being the first inter-Bank ATM switch in Pakistan, with ABN Amro, Soneri Bank and Habib Bank, AKBL customers now have access to about 90 ATMs throughout the country. These achievements undoubtedly are the result of its consistent hard-work and honest efforts to be the best.

7.5.5 Treasury and International Operations

The State Bank of Pakistan in line with a tighter monetary policy during the year discreased the discount rate from 14% to 13% and CRR, SLR requirement in Pak Rupees 5% and 9% respectively. To give incentives to the Banking sector to mobilize long term deposits, the State Bank waive the requirement of CRR on deposits of one year and above.

Products
Foreign Trade Services (Imports and Exports) Import and Export Financing Foreign Currency Travelers Cheque Foreign Remittances (Demand Draft/Telegraphic Transfer) inward and outward Sale and Purchase of foreign currency cash Handling of securities Offshore Banking services

7.5.6 Advances and Credit Quality

Askari Bank's funded credit portfolio increased by 28% in 2008 to close at Rs. 128.818 Billion as compared to an increase of 2% in 2007 as the Bank remained watchful of the impact of growth of risk assets on its capital adequacy.

Products

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Running Finance Cash Finance Term Finance Ask Card Staff Finance Finance Against Foreign Bills (FAFB) Finance Against Packing Credits (FAPC) Payment Against Documents Finance Against Trust Reciept Finance Against Imported Merchandise Letters of Credit (local/international) Letter of Guarantees

7.5.7 Agriculture Credit

In its fourth year of launching the Bank's Agriculture Credit Finance programme continued to receive an overwhelming response from the farming community. The positive outlook was the reflection of credit quality, expertise, and impressive performance in outreach and lending volumes. The customer base increased by 70% and overall portfolio size by 50% as compared to last year.

Products
Askari Kissan Evergreen Finance. Askari Kissan Tractor Finance. Askari Kissan Transport Finance. Askari Kissan Livestock Development Finance. Askari Kissan Farm Mechanization Finance. Askari Kissan Aabpashi Finance. Green House & Tunnel Finance. Farm Storage Finance.

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Model Dairy Finance. Gold Fish Finance. White Pearl Finance. Murghban Finance. Samar Bahisht Finance. Gulban Finance. Asan Mali Sahulat Zarai Credit Card.

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8.1 MANAGEMENT HIERARCHY

PRESIDENT

SENIOR EXECUTIVE VICE PRESIDENT EXECUTIVE VICE PRESIDENT SENIOR VICE PRESIDENT

VICE PRESIDENT ASSISTANT VICE PRESIDENT

OFFICERS GRAD I, II, III

PEONS

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ORGANIZATIONAL STRUCTURE

BOARD OF DIRECTORS

PRESIDENT

Country Heads

Regional Managers

Area Manager

Area Manager

Branch Manager

Branch Manager

Branch Manager

Branch Manager

Branch Manager

Branch Manager

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8.2

Structure of Askari Bank Limited, Sahiwal Branch

BRANCH MANAGER

OPERATIONS MANAGER

Foreign Exchange Department

Finance Department

General Banking

Accounts Department

Computer Department

Import

Export FCA

TDR COR

Bill Remittance

Clearing Zone

Cash
Operations

Account Opening Department

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8.2.1 Comments on the organizational structure

The organizational structure of Askari Bank Limited, Sahiwal portrays that the tasks are assigned to different sections with the main thirst to let them know to whom they report to. The hierarchy of the Askari Bank Limited, Sahiwal reflects the

organizations objectives and the strategies chosen. The structure of Askari Bank Limited, Sahiwal consists of Span of Administration Unity of Command Objective Setting Authority & Responsibility

Span of administration
The number of subordinates in an administration to be handled efficiently and effectively is called span of administration. It reflects the overall objectives of the organization. The hierarchy of Askari Bank Limited, Sahiwal is both flat and tall span of administration. Manager is responsible to the top position. While the Operations Manager being the head of all concerned departments is responsible to the Manager.

Unity of Command
Measures are taken to ensure unity of commend and this phenomenon generally prevails all over the Bank. Generally there are no conflicts regarding unity of command in Sahiwal Branch. However sometimes problems arise when a manager passes order or information directly down the line without intimating the concerned department in-charge.

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Objective setting
Management by objective approach has been adopted to define and set the objective of each and every individual in the organization. Askari Bank Limited, Sahiwal as adopted the management by objective as a tool for performance management and appraisal. During the assigning objectives it is ensured that these objectives are in line with the organization policy and are not harming the specific interest of the organization.

Authority and responsibility

The Operations Manager is responsible for day to day branch activities. The Manager is responsible for business development and overall compliance of branch functions with the policy of the Bank.

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8.3 Functions & Responsibilities of Various Departments

The Bank has following departments: Account Opening department ATM Department Account Department Credit Department Remittance Department Foreign Trade Department Cash Department IT Department

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8.3.1 Account Opening Department

Borrowing funds from different sources has become an essential feature of today's business enterprises. But in the case of a Bank borrowing funds from outside parties is all the more vital because the entire Banking system is based on it. The borrowed capital of a Bank is much greater their own capital. Banks borrowing is mostly in the form of deposits. These deposits are lent out to different parties. Such deposit creation is done through opening an account in the Bank. In AKBL Sahiwal Mr. Abdul Rehman is operating the account opening department along with performing some auxiliary functions of Check Book Issuing and receiving IBCs (incoming Bank Cheque for Collection).

Types of Account
In AKBL, there are the following types of accounts: Current account. Saving Account. Askari Special Deposit Account. Unique Account Term Deposit. Mahan Bachat Certificate Value Plus CD Value Plus SB

Current Account
In current account there is no interest on it. It is for only transaction purposes. They are paid on demand. When a Banker accepts a demand deposit, he incurs the obligation of the paying all cheques drawn against him to the extended of the balance in the account. As there is no profit paid on this account it is also called chequing account because cheques can be drawn on it. Current account is mostly opened for business. 25

Saving Account
The purpose of this account is to induce the habit of saving individuals in the neighborhood. The profit is on the basis of 5% per 6 month. The minimum deposit for opening the account is Rs.2500/Though individuals open such accounts for saving purpose, persons belonging to Armed forces and different military institutions are free to use this account on current basis.

Askari Special Deposit Account

ASDA account is an interest bearing current account interest is paid. The payment of return is monthly, where as the rate of return with aspect to the amount of minimum deposit clear from deposit schedules in following table). It is also chequing account because cheques can be drawn on it. It is necessary for this account that the client must maintain a minimum balance of Rs. 50,000 at the end of the month. Thats why it is similar to current account. It is mostly opened by Business but individuals too open this account. Amount in Rs. 50,000 499,999 500,000 4.99 million 5 million 20 million Interest Rate 5.0 % 5.0 % 5.0 %

Askari Bachat Certificate

ABCs are long term fixed deposit for 3 and 5 years. Theses are not term deposits because payment of return is on monthly basis rather than on maturity of deposits. The minimum balance requirement is Rs. 25000/- and maximum balance requirement is Rs. 1.0 Million. If ABC is for 3-years, the rate of return for 3-years is 7.0 % if ABCs is for 5-years the rate of return is 8.0 %. Because in such account the balance is kept for either '3' or '5' years within the Bank no cheque is drawn on it. Thats why it is not a chequing account. Return is made monthly.

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Term Deposit
A term deposit is a deposit that is made for a certain periods of time at the end of the specific period. the customer is allowed to with draw the principle amount . AKBLs Term deposits are of types clear in the deposit scheme in the table). One of them is "Askari" Advantage one month. The rate of return on this account is 4.0 %. The term deposit account vary one month to 5 years and the min balance requirement is Rs.5000/for all following accounts (as clear from Deposit Scheme in the table ). Period One month 2nd 3rd th 6 month One year 2 year 3 year 5 Years and Above Interest Rate 5% 5.50 % 5.75 % 6.00 % 6.50 % 7.0 % 8.0 % 9.0 %

The amount of profit is given to depositors in three ways: By cash By sending a Bank Draft to depositors Home address or Officers or whichever is specified as mailing Address. The amount is credited in any one of the checking Accounts of the depositor.

Value Plus CD Account

Following are the salient features of Askari Value Plus Current Account: Initial deposit of Current Value Plus Account is Rs. 25000/-

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Free issuance of debit card at the time of account opening. Free On-Line funds transfer facility. Free internet Banking facility. Free accidental insurance. Free travel insurance. Free accidental insurance coverage for all Askari debit card holders. Free ATM cash withdrawal insurance against snatching or armed hold up, for all Askari debit card holders at all Askari ATMs.

Account Opening Procedure

For the checking accounts (C/A, ASDA , SAVING) , there are different types of account holders are required for all these types of account holders. The operation /procedure requirement that is needed for " Individual Account " differ greatly from " Joint account " proprietorship "Partner ship , "Limited Company" and "Club society or Association " as explained below. Individual Account When a single man or women opens an account in his/her own name and has the right to operate it is called individual Account.

Documentation Required
For literate person copy of National Identity Card is required as a primary requirement. For illiterate person and Veiled Women, along with the copy of National Identity Card requirement he or she must come in person for opening the account.

Operation
The person place a "Check Mark " in the type of account and type of operation required He/She fills in part-I of the form , a fix his /her either two or four similar signature (or thumb expression in the signature space and get it introduced and signed by a

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person who already has an account with the Bank and write his account no in the specific rows in a specific space. The person fills in "next of Kin " position where he/she father, mother, husband/wife or any other relative's name, his /her address, phone no and affix his/her signature to certify this requirement. This requirement is needed because in his/her absence Bank can have correspondence with the specific person. The person put her /his signature (" or thumb expression) on the signature Specimen Card (SS CARD) similar in the area on the form. One the back of S.S card mailing address, telephone no, Person to contact and introducer space is filled in. All these requirement are necessary for future The person deposits the initial amount for opening account on to the cash counter. The person put his signature on form -A (check book requisition) on two places in "authorized signature" and fills in the "Title of Account space by writing his name. If the person put his signature in Urdu or any language other than English, he signed a "Vernacular form" where under take that affixed signature are original and his own signature and two postal size photos are needed. The next day is the opening of account.

Joint Account
When two or more persons, neither partners, nor trustees, open an in their name is called joint Account. Husband and wife or two persons of same sex can open joint account.

Documentation
For joint account copy of National Identity Card of all the persons is obtained other things remaining same as in individuals account.

Operation
The person checks the type of amount and type of operation required in the respective box on the form. The persons fill in the Part-I and part-II in the form.

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Signatures of both persons are obtained on the form in the area specified for signature and S.S Card. In the title of account space names of all the persons are mentioned. Accounts holder specified in the form that they will operate the form singly or jointly.

Proprietorship Accounts
When an owner of a firm operating singly, opens an account in his firm name, this account is called a proprietorship Account the proper himself liable for all his acts.

Documentation
For this kind of account, an application for opening the account on the firm letter -pad (having the firm name) is required along with the N-I-C- Card of proprietor.

Operation
All operation remains the same except that the firm name is written in the "Title of the Account area and signature of the proprietor are affixed in the S.S. Card and the area specified for signatures on the form.

Partnership Account
The account is opened in the firm name and all partner designate one two persons to act on behalf of the partner ship firmer all acts on behalf of firm. The partners in the partnership firm are liable for the acts of the firm jointly and severely. Every partner has in a firm has an implied authority bind his co. partners by drawing and enclosed cheques.

Documentation
Copy of N.I.C card of all partners Application to open the account on the firm letter pad. Partner ship deed in case registered partnership firm.

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Letter showing the implied Authority of one or more partners to act on behalf of the firm. Name, address of all partners is written on the pad.

Operation
All other requirement remain same except that the form is dully signed by all partners cards are signed by all those partners who will act on behalf of the firm and along filling part-I , Part-Iv is also filled.

Limited Company Account

This account is for limited companies. In order to facilitate their transaction with outside parties, Bank provides many facilities.

Documentation
Memorandum of Association. Articles of the Association Resolution of the Board of Director. Certificate of Incorporation. Certificate of commencement of business N-I-C

Operation
The persons authorized in the Resolution of the Board of Directors put their signatures on S.S Cards. Next of kin "requirement "is not need in case of a Limited Company. After completing each and every formality, introducer signature is verified by S.S card and is stamped "Verified" customer signatures are admitted by stamping "Admitting" near signature and again signatures on S.S card are admitted in the same way. The same process of verification and admission of the signatures is repeated on Form-A and next of Kin area.

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After completing each and every formality, Accountant is open in the computer by writing name, address, A/C Number etc

Modus Operandi for Opening of Accounts

For opening of account either Current, Saving or ASDA the following technique is adopted. When the customer comes to open an account the first thing is to ensure about the type of account. The Bank requires the following information about the customer: 1 Personal information 2 Introduction of existing A/C holder 3 Amount to be deposited After satisfying regarding the above information the authorized officer hands over the Account Opening Form to fill up in his presence. This Form contains the following information relating to the customer: Account No. Nature of the Account Name Fathers/husbands name N.I.C. No NTN(optional) Address Nature of profession Telephone Telex/fax Nationality Mailing address Currency of account Operation of account

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Next of kin

It is the responsibility of the officer to check all the particulars carefully to ensure that there is no error here.

Specimen Signature Card

Along with the Account Opening Form, the officer staples the S.S.Card. This card contains the following information: On the Face of the Card;

On the Back of the Card;

Account No. Title of Account Name Signatures Operation of A/C

Address Tel no. Person to contact Introducer This card after fully completed is placed in the cardex in the numerical sequence, which is kept locked when not in use after business. Afterwards this card is scanned in the system.

Letter of Thanks
At the start of the 2nd day, AKBL issues letter of thanks to "Account opener" for the trust the have on AKBL.

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Statement of Accounts:
Customers are normally been provided statement of their accounts once in every 6 months as on June 30th and December 31s.

Opening of Account through UNIBANK:

For opening of A/C through UNIBANK, account computerization Form is used and all required and relevant information and codes thereof is fed into the computer system including applicable flags of Zakat

Issuance of Cheque Book

Cheque books are issued only for checking account such as current Account, saving Account and ASDA Account. They are not issued for other fixed and term deposits because of their Long term Accounts nature.

Issuance Procedure
Signatures on cheque book requisition are verified by matching with signatures on SS. Cheque book leaves number, account number, account holders name are mentioned in the cheque- book is made by mentioning the and the total of sum of excise duty and provincial tax. The name of A/c holder and date of cheque book issuance is written on cheque book requisition the account-opening officer puts his initials on requisition leave. A/c number is stamped over the leaves of cheque book and finally authorized person affix his signature over the debit voucher and he voucher is attached from the cheque book and is handed over to the customer. 34

Receiving Inward Cheques

Another responsibility and function of account Opening Department is to receive Inward cheques for collection of other Banks as well as of AKBL . Then these cheques are sent to clearing official who clears these checks at SBP from other Banks.

Account closing
Account is closed on the written request of the customer. The account holder with draws the all amount by writing a cheque. But to surrender the cheque book yet if some leaves are yet to be write to the Bank as a necessary requirements for closing the account.

Procedure
1. The customer for individuals account write an application to the manager of the Bank an a simple paper about the closing of his account with the Bank (In case of proprietor ship partnership and limited company account the application should be written an firm or company letter head) 2. The individual or in case of other type- proprietor firm and company surrender the cheque book to the Bank. 3. The cheque book is then torn from one side and is attached with the application. 4. In case of Ltd. Company account resolution of the board of directors is also obtained to attach it with the application. 5. The account opening form of the account holder is taken from the account-opening file, and the application, cheque book, and resolution of board of directors in case of limited company account are attached with the form. 6. Lastly, it is written in Red Ink on the form that account closed and Date of account closing.

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Everyday Posting
Following transaction of cheque book is posted:Dr_____________ party A/c 60(for 10 leaves)

Cr______________ Income Account (Cheque Book Charges) 60 ATM Cards Department This department deals in issuing ATM-Card, term deposits and Askari Bachat Certificate. Mr. Abdul Rehman deals this department.

ATM Card
ATM Cards are only issue to Account Holder Issuing Procedure 1. The person, first open the account within the blank. 2. Then he fills the ATM application form in which name of account holder, Fathers name account number and N.I.Card number are mentioned. 3. A copy of N.I. card is also attached with the application form.

4. After completing this process, the application package is sent to head office 5. AKBL head office takes a period of 3-4 weeks for preparing and processing of ATM cards. First, list of card holder is issued and then after 15 days cards are send to AKBLs issuing branch. The card and list are not sent simultaneously in order to avoid any mishandling. 6. AKBL takes Rs. 400/- per year as charges for a card

36

Askari Bachat Certificate

The ABC application form is filed and signed. All the requirements are properly fulfilled. The details are written. The credit voucher is made against the cash that the customer deposits to the Bank. The certificate is filled according to the specification. The certificate is then handed over the customer. The entry is made in the ABC register. The application is then posted in the file.

Term Deposit
Any person can open a term deposit. he needs not have an account in the Bank.

Procedure
The customer comes to the Bank and specifies the number of days for which he wants to Deposit hid money in term deposit. The credit voucher is made for the amount of cash to be deposited. The presence of account is not necessary. The term deposit form is then filled by the officer. The date of opening, the period, the name of the customer, the signature etc is all written on the form. The term deposit Receipt is filed according. All the requirements are carried out, the signature of the customer and the authorized officer, the stamp of the Bank etc. The term deposit Receipt is then given to the customer. The number of the term deposit form and term deposit is noted receipt is then given to the customer. The number of the term deposit form and term deposit receipt is noted in the term deposit Register. After completion of the form, it is posted in the term deposit file.

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A 0.2% tax on the provincial amount is taken while issuing the receipt. A credit voucher made and the amount is credited to the tax on TD.

8.3.2 Foreign Trade Department

Foreign trade department deals in: Foreign currency account Exports Imports

Foreign Currency Account

Mainly this account deals in individual, personal and companies account.

Criteria for opening Foreign Currency Account

There are not hard and fast rules for becoming the Foreign Currency Account holder. Bank wants only introduction of the Client and very little about the background. I.D card is also not necessary, if someone has; well and good, otherwise no restriction will be there for him.

Features of Foreign Currency Account

There will be legal protection for the account holders. According to foreign exchange rules and regulation every citizen of Pakistan, either within the Pakistan or outside the Pakistan, can open the foreign currency account. Resident firms and Resident Companies including investment Banks can open Foreign Currency Accounts.

38

All foreign nationals and foreign Companies in Pakistan or abroad can open Foreign Currency Accounts. Opening of Foreign Currency Accounts in the joint names of residents/non-residents is permissible. Foreign Currency can be deposited by: Remittance received from abroad Foreign Currency Notes There will be no restriction and questioning to him about the currency, which he wants to deposit that from where he got that money. No Zakat will be deducted on these accounts; no Income Tax deduction, no Wealth Tax deduction will be there. These incentives reinforce and motivated the people to invest in foreign currency accounts rather to keep the foreign currency idle. Foreign currency accounts can easily be transferred from one person to another, one place to another, with in the AKBL Branches or in other Bank. The account holder can transfer the funds freely, in any currency to any part of the world. Foreign currency Accounts can be used for payment of purchases at Duty Free shops.

Facilities
This account provides following facilities: 1) 2) 3) Out ward remittances In ward remittances receiving To make remittances procedure flexible

Export
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Mainly export deals in: Negotiation of documents Sending the documents for collection Pre-shipment financing Post-shipment financing Remittance against agent commission Forward covered booking Handling the documents for negotiation according to the UCP 600 (uniform custom and practices) Handling the documents for collection according to URR (uniform rules for collection). Submission of monthly returns to SBP regarding the export on prescribed reporting forms.

Import
Opening the letter of credit Scrutinize the documents receive from flowing Bank under letter of credit Account to UCP 600 and extending the credit facility to the importer informs FIM (finance against imported merchandise) FATR (finance against trust receipt). Arrange forward cover booking regarding import payments Also arrange forward cover booking for letter of credit open other then AKBL

40

 Submission of monthly returns to SBP regarding the import prescribed reporting forms.

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8.3.3. Credit Department

Credit department works on the basis of following rules, which are provided by State Bank of Pakistan.

Limit of Banks exposure to a single person

1. The total outstanding financing facilities by a Banking company to any single person shall not at any point of time exceed 30 percent of the Banks unimpaired capital and reserves subject to the condition that the maximum outstanding fund based financing facilities do not exceed 20% of the unimpaired capital and reserves. In the case of branches foreign Banks operating in Pakistan, the maximum 2. exposure limit of 30% shall be calculated on the basis of their assigned capital maintained under section 13 (3) of the Banking companies ordinance, 1962 free of all losses and provision, provided that maximum exposure on the basis of fund-based facilities shall be 20% the capital maintained under section 13 (3) of the Banking companies ordinance, 1962, or Rs. 12 million which ever is higher. 3. No Banking company shall (a) (b) Make any loans or advance against the security of its own shares; or Grant unsecured loans or advances to, or make loans and advances on the guarantee of, (i) (ii) (iii) Any of its director; Any of the family members of any of its directors; Any firm or private company in which the Banking

42

company or any of the persons referred to in (i) or (n) is interested as director, proprietor or partner; or (iv) Its chief executive and its shareholders holding 5(five) percent or more of the share capital of the Bank. Including their spouses, parents, and children or firms and companies in which they are interested as partners, directors or shareholders holding 5 (five) percent or more of the share capital of that concern; (c) Make loans or advances to any of its directors or to individuals, firms or companies in which it or any of its directors is interested as partner, director or guarantor, as the case may by, its chief executive and its shareholders holding 5 (five) percent or more of the share capital of the Bank, including their spouses, parents, and children or to firms and companies in which they are interested as partners. Directors or shareholders holding 5(five) percent or more of the share capital of that concern without the approval of the majority of the directors of that Banking company excluding the director concerned. 4. The term person shall include any individual association or body of individuals, firm, or company whether incorporated or not and any other juridical person. 5. For the purposes of pars 1 & 2 above accommodation shall mean and include (a) Any form of loans and advances or credit facilities including bills purchased and discounted: (b) Any loans and advances or bills purchased or discounted extended to another person on the guarantee of the person; (c) Subscription to or investment in shares, participation term certificates, term finance certificates or any other commercial

43

paper by whatever name called (at book value) issued or guaranteed by the persons; (d) Any financing obligation undertaken on behalf other person under a letter of credit including a stand-by letter of credit, or similar instrument; (e) (f) Loan repayment guarantees issued on behalf of the person; Any obligation undertaken on behalf of the person under any other guarantees; (g) (h) Acceptance/endorsements made on account; and Any other liability assumed on behalf of the client to advance funds pursuant to a contractual commitment. (i) In arriving at exposure per person weight age of 50% shall be given to: (a) (b) (j) (a) (b) documentary credits opened by Banks; and Guarantees/bonds other than repayment guarantees.

in arriving at per party exposure, 90% of deposits of the party with the Bank under lien and Face value of FIBs lodged by the party as collateral shall be deducted.

BUT SHALL NOT INCLUDE (i) Loans and advances given to the federal or provincial governments or any of their agencies under the commodity operations programme of the government.

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(j)

Loans and advances (including bills purchased and discounted) given to federal / provincial government or guaranteed by the federal government.

(k)

Pre-shipment/post-shipment credit provided to finance exports of goods covered by letters of credit / firm contracts.

(l) (m)

Letters of credit established for the import of plant and machinery. Obligations under letters of credit and letters of guarantee to the extent of the cash margin retained by the Bank.

(n)

Letters of credit, which do not create any obligation on the part of the Bank to make payments on account of imports.

(o)

The single person limit does not apply to facilities provided to Banks.

Limit on Banks exposure against contingent liabilities

1. Contingent liabilities of a Bank shall not exceed at any point of time 10

time of its paid up capital and general reserves (free of losses). In case of branches of foreign Banks operating in Pakistan, capital will mean capital maintained under section 13(3) of the Banking companies ordinance, 1962. Following shall not constitute contingent liabilities for the purpose of this regulation: (a) (b) (c) Bills for collection Forward foreign exchange contracts. Obligations under letters of credit and letter of guarantee to

the extent of cash margin retained by the Bank, and; (d) Letters of credit/guarantee issued on behalf of the

federal/provincial government and established through state Bank of Pakistan provided payment is guaranteed.

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2.

A guarantee which does not appear in the books maintained in Pakistan by

a foreign Bank and if invoked does not require the said Bank in Pakistan to honor the same, shall not be counted towards determining exposure for the purpose of this regulation. 3. Claims other than those related to provision of facilities (fund based or

non-fund based) to Banks constituents may also be excluded or the purpose of this regulation.

Limit on Banks exposure against unsecured advances

No Bank shall provide financing, facility in any for of sum exceeding Rs. 100,000/(Rupees one hundred thousand only) to any one individual or person with out obtaining realizable securities of the value not below the outstanding amount. Financial facilities granted without securities including those granted against personal guarantees shall deemed as clean for the purpose of credit regulation. Provided further that: (a) At the time of granting a clean facility, Banks shall obtain a written declaration to the effect that the borrower in his own name or in the name of his family members, has not availed of such facilities from other Banks so as to exceed the prescribed limit of Rs. 100,000/- in aggregate. (b) No clean facility shall be granted to frustrate the objective of credit restrictions in force for the time being. (c) The purpose for which a clean facility is sanctioned shall be expressly stated in the sanction letter. Clean facilities granted to finance the export of commodities eligible under export of commodities eligible under export finance scheme shall be exempt from the per party limit on clean facilities. financing covered by export credit guarantee insurance scheme may also be excluded from per party limit of Rs. 100,000/- on clean facilities.

46

The aggregate exposure of a Bank against all its clean facilities shall not, at any point of time, exceed the amount of the Banks capital and general reserves (free of losses). Any violation or circumvention of the above regulation shall render the Bank liable for penalties under the Banking companies ordinance. 1962. Advances given to employees of a Bank in accordance with their entitlement shall be exempt from the application of the regulation III.

Financing facilities against shares

1No Bank shall provide unsecured credit to finance subscription towards floatation of share capital of public limited companies. 2No Bank shall allow financing facilities whether fund based or non-fund based against the shares of companies not listed on the stock exchange. 3Facilities against the shares of listed companies shall be subject to the following minimum margins. a) Where the market value does not exceed the preceding 12 months 20% market about. b) Where market value exceeds the preceding 12 months average market 40% market value. c) Where the market value exceeds twice the preceding 12 months 50% average market value. 4. While the Banks are free to set higher margin requirements keeping in view other factors, the margin of 40, or 50 percent as prescribed above shall apply only. a) Where the market value exceeds the preceding 12 months average value but does not exceed twice the preceding 12 months average market value.

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b)

Where the market value exceeds twice the preceding 12 months average market value. Now coming towards the facilities which the Askari Bank Sahiwal provides to its customers, these are: i. Running Finance Cash Finance Term Finance Ask Card Staff Finance Finance Against Foreign Bills (FAFB) Finance Against Packing Credits (FAPC) Payment Against Documents Finance Against Trust Reciept Finance Against Imported Merchandise Letters of Credit (local/international) Letter of Guarantees

ii. iii. iv. v. vi. vii. viii. ix. x. xi. xii.

Running Finance
Temporary/ Regular: Depending on weather R/F is allowed to continue beyond Seven days from the date of sanction. Clean: where the over drawing is allowed only against a Demand Promissory Note signed by the account holder. Security: in case of R/F clean the Promissory Note act as security for the extension of Credit. Secured: where the facility is secured additionally against deposits/tangible assets

Cash Finance
Advance is guaranteed on a short term base against security Pledge or Hypothecation) of inventory.

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The inventory pledged/ hypothecated operates as a security for the advances. It is important that a pledge/ hypothecation agreement with regard to the pledge/hypothecated goods should be executed with the customer. Additional security may also be obtained depending upon the risk element.

Term Finance
Loan repayable with the fixed repayment programme these may be clean but they are generally secured and are further classified into Clean and Secured.

Term Finance (ASKCAR)

This is a term finance provided under the ASKCAR Scheme of the Bank for the purchase of Car and is repayable in monthly installments.

Staff Finance
Facility is allowed to staff members under different schemes of the Bank and categorized accordingly.

Finance against Foreign Bills (FAFB)

A loan advance against Foreign Bill Payable and a campaign by Documents of title to goods at a Sight and Usance The loan is advance against a security of the Foreign Bill. The Bank has documents of title to goods which operates an additional security. The loan is adjusted on receipt of proceeds from the drawee Bank. If however the bill the is not honoured by the drawee, the Bank can have recourse against the customer to whom the loan is extended.

Finance against Packing Credit

Credit granted to the exporter to facilitate purchase of raw material for the purpose of manufacturing and exporting finish goods. Credit is ordinarily granted after evidence of letter of credit or firm contract in favour of borrower. The loan is advance against the

49

security of inventory purchase by the borrower. It is important that hypothecation agreement with respect to such inventory be executed by the customer.

Payments against Documents (PAD)

The Bank being the issuing Bank on the customer behalf of L/C, pays the advising Bank, and debits the PAD Account till its payment by the customer.

Finance against Trust Receipt

Documents of title to the goods imported through the L/C may be handled over to the customer against the trust receipt to be signed by the latter signified that the customer holds the goods in trust for the Bank. The objective being that the customer shall discharge the from the sale proceeds of the goods.

Finance Against Imported Merchandise

Documents of the title received under the L/C issued by the Bank are handeled over the clearance to an approved clearing agent who after clearance and until repayment of loan hold them as a agent of Bank. Goods are realesd against payment by the borrower. The imported goods comprise securities for the loan advanced. The Bank can have recourse to these goods if the customer fails in the discharge of its obligation.

Government Securities
An advance against approved government securities.

Letter of Credits
Letter of credits issued by the Bank can broadly be classified as under Sight Letter of Credits Usance Letter of Credits

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The sight Letter of Credits call for the draft to be drawn at sight. Document negotiated and received against sight are held as security till their retirement. Drafts drawn under usnace are for a tenor specified in the L/C are payable by the customer on due date.Credit line proposal must clearly state the type of credit the branch is intended to issue.

Letter of Guarantee
Guarantees issued by the Banks can be classified under two broad categories. Financial guarantees where the Bank guarantees the fulfillment of financial commitments on behalf of the customer Performance Guarantees where the Bank guarantees the performance of a contract or other work as specified in the guarantee. These categories can be further subdivided into following types of guarantees.

I.

Financial guarantee:-.Bid Bonds which are issued lieu of deposit of earnest money while biding for a tender. Under these guarantees, the Bank is called unpon to pay in the event of a breach of terms on the part of the customer.

II.

Performance Guarantees:
-. Under these guarantees, the Bank guarantees due fulfillment of a contract undertaking by the customer. The amount of the guarantee is usually up to the extent of the value of the contract.

III.

Shipping Guarantees:
-. Under which the Bank issues guarantees in favour of the shipping company to enable the importer to obtain delivery of the goods with out production of bill of lading

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52

8.3.4 IT Department
Mr Kashif Yaqoob is the IT incharge in the branch, after closing the all working of the day and after balancing the cash registered with computer. Mr Kashif run the end of day at the time of end of day all programmed are run and reports printed The following reports are printed at the time of day end. Statement of affair (assets and liability report) General Ledger (110) Daily transaction reports Transfer Reports ATM transaction reports. At the morning time Mr Kashif Yaqoob starts the system and initialized the system date in which the working has to done. Then he uploads the balances from head offices

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8.3.5 Human Resource Department

Hierarchy of HRD
Hierarchy of HUMAN RESOURCES

President

Country Head Head of Human Resource

Senior Human Resources Manager Recruitment

Human Resources HRIS

Human Resources Manager Compliance

Human Resources Executive Risk management

Human Resources Manager Establishment

Training & Development Manager

Payroll Services Manager

Recruitment Officers

Administrative Assistant

Payroll Services Officer

Compliance Officers

Establishment Division officers

HRIS Officers Risk Management Officers

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Human resource planning and forecasting Human Resource Planning

Human Resource Planning (HRP) is the process-including forecasting, developing implementing, and controlling by which a firm ensures that it has the right number of people and right kind of people, at the right place, at the right time, doing this for which they are economically most suitable. HRP is a forward looking function and an organizational tool to identify skill and competency gaps and subsequently develop plans for development of deficient skills and competencies in human resources to remain competitive. HRP ensures benefits to the organizations by creating a reservoir of talent, preparing people for future cost cutting and succession planning besides creating a back up in case of diversification and expansion HRP is a planning of Askari Bank is to move from its current manpower position to its desired manpower position

HRP Process
The organization human resource plans is a shared task between top management line managers and HR department 1. Top management is involved in HRP process because ultimately, it approves various plans of the organization as a whole. 2. Functional managers under whom people work. 3. The responsibilities of HR department in regard to HRP process have been described as follows: 3.1. To assists, counsel and pressurize the operating management to plan and establish objectives;

55

3.2. To collect and summaries data in total organizational terms and to ensure consistency with tong-term objectives and other elements of the total elements of the total business plan; 3.3. To monitor and measure performance against the plan and keep the top management informed about it 3.4. To provide research necessary for effective manpower and organizational planning 4. Forecasting future manpower requirements, either in terms of mathematical projection of trends in the economy and developments in the industry or of judgmental estimates based upon specific future plans of the company. 5. Inventorying present manpower resources and analyzing the degree to which these resources are employed optimally; 6. Anticipating manpower problems by projecting present resources into the future and comparing them with the forecast of the requirements, to determine their adequacy, both quantitatively and qualitatively and 7. Planning the necessary programmers of recruitment, selection, training deployment, utilization, transfer, promotion, development. Motivation and compensation so that future manpower requirements will be met.

Forecasting HR requirements
What is certain is the uncertainty of the future. As time passes, the working environment changes internally as well externally. Internal changes in the organizational environment include product mix and capacity utilization, acquisition the external environment include government regulations, consumerism, and competence levels of employees, among a host of other factors.

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Forecasting The Overall Human Resource Requirements

The existing job design and analysis may thoroughly be reviewed keeping in view the future capabilities, knowledge and skills of present employees. Further the jobs should be redesigned and reanalyzed keeping in view the organizational and unit wise plans and programmes, future work quantum, future activity or task analysis, future human resources and based on future organizational plans, Job analysis and forecasting. One on the important aspects of demand forecasting is the forecasting of the quality of human resources (skill, knowledge values, capabilities etc.) in addition to quantity of human resources

Requirements of HR forecasting
1. Reduces HR costs 2. Increase Organizational Flexibility 3. Ensures a close linkage to the Macro Business forecasting process 4. Ensures that organizational requirements take precedence over issues of resource constraint and scarcity

Methods to forecast HR needs

Work study technique is a method of forecasting human resource needs. It is a decision Making tool. It is been used in estimating personnel needs from a group of experts, usually managers. The HR experts act as intermediaries, summaries the various responses and report the findings back to experts survey again after they get this feedback. Summaries and surveys repeated until the experts opinions begin to agree. This agreement reached is the forecasting of the human resource needs.

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8.3.6 Remittances Department

Remittance department provides services to the customer of the Bank. The main function of this department is transfer of funds. INSTRUMENTS OF BILLS & REMITTANCE DEPARTMENT The instruments that are handled in the B & R department are as follows: Demand Draft. Telegraphic Transfer. Mail transfer. Pay order. Pay slip. OBC. IBC.

Demand Draft
A demand draft is an instrument, which is drawn by one Bank upon another Bank for a specific sum of money payable on demand. It is made by the Bank and given to the purchaser against cash or cheque. If two Banks are involved, then one Banks sends a DD to another Bank. But in customer - Bank case the customer sends his DD to the receiver.

Issuance Procedure
A demand draft application (Annexure--) to given to the customer, he fills in a relevant information and signs it. The Officer in charge then checks the information form.

58

 The charges such as commission, excise duty, postage is charged as per effective schedule of charges. Tax is exempted if he is taxpayer & knows his No. In case of cash deposit the cashier counts he amounts & signs the DD application and enters it in the register. The cash received equals the amount of remittance & the cheques there on. Then the officer of the bills & remittance department signs it and operation manager counter signs it. The entry is made in the DD issuing register. It is given to the customer. Vouchers are passed. Customer Account --------------------------------------Dr DD issue during the day --------------------------------Cr Commission charges. Cr

The vouchers and the DD form given for posting at the computer. The DD advises are printed at the computer and mailed to the respective branch. NOTE On the contra, when a DD is received i.e. a customer comes to us with the DD, the procedure is as follows. The DD credit advice is received through mail. The Nos are checked & signatures are verified. An entry is made on the DD payable register, and the vouchers are made.

59

MO Account DD payable

Dr Cr

The DD credit is attached with the vouchers and given for the posting at the computer. When DD is received, the test Nos are checked, and the payment is made. The vouchers are given for posting. And the entry that was made in register is closed. i.e. DD payable is Nil.

Telegraphic Transfer
A telegraphic transfer is a fastest & safest way to transfer money. The message is fixed.

Issuance
The request for maintenance through T.T is taken on the standard printed form. The customer fills it & signs it. The Head & remittance department checks it, the charges such as commission, tax, telex as per effective schedule and signs it. Then a neat T.T is made on the white slip. There are 3 copies. The original faxed to the Branch, one to the Head Office and one is kept as record. The entry is made in the TT issuing register. The following vouchers are posted. Commission Charges Fax charges W.H. Tax. Cr Cr Cr

60

 When commission bill is received, it is attached to the T.T office copy in the file.

Payments
When a T.T arrives, the test numbers are checked and the signatures are verified. The entry is done in the T.T pay able register. The following vouchers are prepared & given for posting. Head Office T.T Pay able T.T Payable. Party A./C. Dr Cr Dr Cr

If there is no a/c then the T.T receipt needs revenue stamps and then the payment is made. The T.T receipt is strictly non negotiable.

Pay Order
It is a cheque drawn by a Bank on itself. Pay order is an instrument in which the parties are involved the purchase, the Bank and the receiver. It can he purchased by any customer. It is usually made by govt. Bodies. A single Bank is included in this case.

Issuance
The standard form is given to the customer; he fills in the detail and signs it. The concerned staff checks the form. Charges as per effective schedule are applied. The cash of the pay order is received.

61

 A cost memo is signed, stamped and handed over to the applicant as a receipt. Then the pay order receipt is filled accordingly. Counter foil is also filled. An entry is made in the pay order issued register. Then the authorized office after checking the pay order signs it. The pay order is then handed over to the application after obtaining his signature on the P.O form. A voucher is also made and posted at the computer Cr bills payable account P.O issued.

Payment
On representation of the pay two authorized officers of the branch sign order receipt the receipt. The P.O entry is made in the P.O issued register. Then the amount is credited to the account of the customer or paid in cash. The P.O is posted at the computer. Customer Account -------------------------Dr Payable A/C P.O issued.------------------------------Cr

Pay Slip
It is an instrument used by the Bank s for its payment. The slips are issued to the employees of the Banks their bills & invoices. The bills are transferred payments. In this case only one Bank is involved .He is the issuer as well as the payer.

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Procedure prescribed for P.O for issuance and payment is followed for payment is followed for pay slips with the following expectations. 1. Pay slips are the issued by the Bank for the settlements of this own payment. 2. No excise duty is applicable on P.S.

Issuance
A credit voucher is sent from the accounts dept. to the b debt. According to the b debt. The P.S books is taken out & filled according to the credit voucher. It is entered in the P.S./P.O register. It is signed by, an authorized officer, Operational Manager Mr. Zubair Sheikh. The pay slips is handed to the customer. A voucher made and posted payment. The P.S. is received on the counter, clearing or transfer. On receiving the P.S. if it is transferred in the P.S. register. The payment is made and the P.O. is posted at the computer. Dr. Bills payable P.S. issued. If Askari branch is in that city, the OBC forwarding schedule in sent to that Askari Branch. Otherwise it is addressed to the particular Branch to whom the cheque belongs.

Outward Bills for Collection

The bills, which are sent to their cities Banks for the local clearing in that city, are called outward bills for collection. 63

Procedure
The cheques that are Banks in other cities are separated. They are entered in the OBC register, the number is written on the stamps. The OBC forwarding schedules / (Annexure) are prepared for the different branches. The respective cheques are attached with the schedule. Two authorized officers sign the schedule. The office copy is filled and the original schedule is mailed. On clearance the respective Banks send back the OBCS along with IBCA. Inter branch credit advice. The OBC no are checked for the OBC register and the received any entry is made. Charges i.e. commission charges and postages charges are deducted from the A/C. Vouchers of following entries are made. Party A/C Commission Charges Postage charges Dr Cr Cr

At the end of the day the contra vouchers are. OBC collection OBC lodged OBC collection OBC lodged Cr 64 Cr Dr Dr

Inward Bills for Collection

The bills are received from other Banks out of city for the local clearing are called inward bill for collection.

Procedure
The OBC of the other branches will be the IBCs of this branch. So an OBC forwarding schedule is received by mail. The cheques are entered in the IBC register. The IBC numbers are allotted to them. The cheques are lodged for clearing. After realization, an IBCA is prepared and mailed to the branch. At the end of the day two contra vouchers are made & posted. OTHER FUNCTIONS

Balancing the Register

At the end of the day, all the registers are balanced with the computer balances. The heads and checked are as follows. DD payable IBC collection. OBC lodged. OBC Collection. TT payable.

65

 IBC lodged. Bills payable. P.S. issued. Bills payable P.O. issued. If the payables are not cleared for a lot of days, a reminder is sent to the respective branches.

9.1

Structure of the Accounts/Finance Department

Branch Manager

Operations Manager

Incharge Accounts

66

Record Keeper

9.2

Functions of Accounts Department

Accounts department is a department which deals and checks all the activity of all the department .It also deals in expression of finance of the Bank. Salary payment is also one function of the Bank.

Checking Banks Daily Activity

Accounts department deals and checks the entire working of the Branch; all the vouchers that have been posted at the computer are scrutinized in accounts department. The End of Day i.e. computer print is also received from the computer. The next day the activity is separated some statements from the End of Day. Then next day activity separated some statements from the End of Day. The vouchers are sorted out head wise. The vouchers are matched with the entries in the statements. Any abnormality if occurs, is immediately dealt with. All the vouchers and instruction are checked individually are checked individually against the computer printouts. After checking they are signed by Ms. Sobia Irfan Butt and Mr. Malik Saeed Ahmed.

Other Activities
Preparation of daily Bank positions statement Payment of salaries Preparation of the statements

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 Depreciation calculation

9.3

The Role of Financial Manager

When I think of a financial manger, accountant quickly comes to minds. The role of accountant and financial manager are similar in several ways an often time they work closely together on various projects. The chief financial officer is one of the most important positions in any organization. While it might be known under a variety of names- budget officer, comptroller, controller, vice-president for financial affairs, or some other described as staff, and since all organizations depend on the resources available to them, the person who fills this top financial position in an agency is extremely important to the organization as a whole. In government, both at the federal and state level, the position of chief financial officer is usually filled by someone who has been trained in the skills of public administration, said in another fashion, when selecting a chief financial officer, the head of an agency chooses not among those individuals who have been involved in operations engineering, marketing, or other operational areas on an organization where a specific knowledge of the product or service is required. Instead, the selection of a financial manger is usually made from among those candidates for the position who have received academic training in the various areas.

68

Financial manger has many responsibilities and much may be expected from them. A variety of skills are requires of them and these vary depending on the need of the organization.

9.3.1 The Financial Manager as supervisor of the budget process

This traditional role gives the financial manager major responsibilities in budgetary preparation. He is more than the assembler of estimates, as often was the case in the past. Today, the financial manager must put together the agencys budget and also guide the process in terms of its real needs. The chief elected officer (depending on the organization) must approve the agencys plan and action in the final analysis. But the financial manger must put the budget in shape to win the required approval. He or she should know what the appropriate legislative committees are willing to accept and also manager the budgets presentation, no easy task at any time.

9.3.2 The Financial Manager as Forecaster of future needs- - - and as provider of ways of meeting them
Those in the public service are well aware that the source of future funds is ordinarily the legislature. But this does not mean that there are no other sources of needs monies. Funds can often be moved from one appropriation to another, or are available at times from other agencies. The financial manger should be aware of program needs as they occur and also aware of ways of satisfying them. He must estimate all sources of income, including any potential borrowing authority (such as the issuance of bounds). Thus, at all times, the financial manger must be well informed of the organizations financial status and health - - as well as the condition of the money markets and other matters relating to fiscal stability.

9.3.3 The Financial Manger as overseer of expenditures

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Historically, the financial manger is the Keeper of the budget. This means being well aware of the ways that money is used. The task is not so much to give approval to everything that is spent as much as to be assured that spending is generally carried out in accordance with the stipulations approves by legislators and political executives. The cavalier fashion in which may program administrators may have used the funds made available to them suggests the Chain of command has mot always worked in the fashion intended. Someone must be alert to what is really happening. That person is the financial manger. Good judgment requires avoiding telling operational officials what to do, while ensuring that the whishes of those who voted the funds available to the agency are respects. There are many ways in which an agency can get into trouble financially and is always in which an agency can get into trouble financially and it is always part of the financial mangers job to see that these are avoided

9.3.4 The Financial Manager as Guardian of Assets

An agency has many assets including properties, buildings, and

equipment. They all have value. The financial manager and associates are responsible for protecting these assets. This responsibility, has in recent years, in addition to other duties, put them in the business of finding ways of protecting the agencys investments, also, because the way things are done often becomes bureaucratic - - and as a result costs money the financial manger has gotten into the management analysis business and increasingly uses computers and other sophisticated equipment. This calls for specialists, of course, who logically come within the financial mangers purview and complement other assignment. They also assist in the traditional task of financial management.

9.3.5 The Financial Manager as contracting Officer

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The fact that so many of the transactions of the modern organizations involve contributions from the outside means that large sums of money are needed in the life of the organizational system. This reaffirms the requirement that the modern financial manger be by those people with the procurement process. Again, the major work needs to be done considered as part of the financial managers domain. For all these purposes, the financial manager must have skills

considerably removed from the budget officer of old. He or she is, of course, the advisor to the chief elected / executive officer. But more than that, the financial manager and staff are advisors as needed to those on the line. The financial manger is also a trainer. Those who are at the operational levels face. It is the financial managers responsibility to convey these problems to others in the organization.

9.3.6 Accounting system of the organization

Accounting system of organization are consisting the following items. Accounts department working on the debt and credit entry, when they receive the amount shows us in the debt account and when they give the amount shows us in the credit accounts.

9.4

Use of Electronic data in the decision making

First of all we must know about the electronic Banking. It is also known as virtual Banking and on line Banking or E-Banking but the use of electronic data in decision making provides us a lot of benefits. With the use of electronic data Askari Bank Limited, Sahiwal making following decisions in the area of cost reduction expansion of market, eliminating of paper work, quick provision of services and expanding the customers. The system that ASKARI BANK LIMITED, Sahiwal of Pakistan is using right now is called Accounting & Reporting system,

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ASKARI BANK LIMITED is using the eight steps for decision making. These steps are very helpful for electronic decision making. Those are these. 1- Identifying the problem 2- Making alternatives 3- Making criteria for alternatives 4- Weight to alternatives 5- Analysis of alternatives 6- Selection of alternatives 7- Implementation of alternatives 8- Evaluation of alternatives

9.5

Sources of Funds

Sources of funds reveal the organization needs for funds when required and for what purpose these funds are needed. These are the main elements to carrying out the operations of business. It involves the analysis of capital use by the Bank i.e debt and equity financing.

9.5.1 Debt Financing

2004 Years 1131100 Total debt Values are in thousands 2005 890500 2006 1340400 2007 1200400 2008 4070800

Askari Bank during the financial year 2008 got debt Rs.4070800 in thousands and Rs.1200400 in thousands. This is 239% higher than 2007 and also increasing year to year from 2004.This shows that Bank has increased its debt financing for the last five years to overcome its accounts payable. 9.5.2

Equity Financing

The basic purpose of financing is to get funds from different ways depending upon capital structure mentioned by the top management during a period of time. But to finance with lower interest rate and invest higher return is the business of Banks.

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2004 Years 1255848 Total equity Values are in thousands.

2005 1507018

2006 2004333

2007 3006499

2008 4058774

From following figures Banks equity level is going high from year to year 2007 and 2008 is at boom position amongst preceding years. This shows that top management wants to financing at equity level than debt financing.

9.6

Generation of Funds

Askari Bank offers different products to generate funds. Deposits are the main head of generation of funds. The Banks receive from public and invest it for the sake of return. Banks receive fees, commission on services offering; get interest of investments and dividend etc.
2004 Years 3213 Interest income 3840 Total income 316 Net profit Values are in thousands 2005 4251 5047 551 2006 4858 5704 687 2007 4074 5028 1103 2008 4487 6121 1923

All these figures show upward trend of Bank according to total income and net profit. Bank has gain much income through interest factor than by providing services. So it also shows that rate of return on financing is going higher from year to year. Again 2007 and 2008 are at boom position.

9.7

Allocations of Funds

The most important functions of the Bank are to allocate funds and make a portfolio of funds to profitability. Askari Bank allocates resources from different ways i.e Fixed assets and Reserves
2004 Years 2595023 Property, Plant, Eqp 281700 Deprecation 2313323 Property, Plant, Eqp Values are in thousands 2005 3192862 335100 2857762 2006 3810331 385500 3424831 2007 5128428 342300 4786128 2008 8266458 396300 7870158

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Fixed assets are immoveable assets of the organization. Financial year ended on December 31, 2008 shows that property, plant and equipment are Rs.8266458 in thousands before deprecation and after deprecation Rs.7870158 in thousands. The investment in fixed assets is gradually increasing from 2004 to 2008. It is also a comparative figure to show a bright future of the Bank.

10.

Critical analysis

Now moving towards the critical analysis of ASKARI BANK LIMITED SAHIWAL. Criticism is bad if it is to be done in a wrong way to discourage the working capabilities am going to do the analysis as a part of my assignment and to give my humble suggestions regarding some problems which I think if overcome, it will make the excellent ASKARI`S working exceptionally good.

10.1 Software Problem

The software being used by Askari Bank Limited is UNI BANK. At the time when Askari had acquired this software it was the best software for Banking sector, but the technology changes very rapidly. Some of the competitors such as UNITED BANK LIMITED acquires more updated and user friendly software. However the management told me that they are going to replace the existing software in span of time with new one which will be not only more user friendly but also overcomes the flaws of existing software

10.2 Delay At The Cash Counter

The effort of every management is to improve the services of their organization as there is always certain room available in services. Though the services of the Bank are excellent but I think that there is one place where certain improvement may be made i-e at cash counter. In Sahiwal branch, the cash officer are just dealing in cash payment and

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receipts and have no concern with instrument presented for payments and receipts, while they deliver the instrument being presented to an other employee who after verifying the instrument pass the entry in system and ask the cash officer to make payments or deliver receipts of deposit to the clients. Hence some Banks are using TELLERS instead of cash officers who are not only deals in cash payments\receipts but also check the validity of presented instruments and in such way the clients feel more relieve. The management told me that gradually they are giving proper TELLERS training to existing cash officers.

10.3 No Centralized Data

Centralized economic and financial data on different industries should be available online in order to check trends in different industries.

10.4 Over Employed Branch

Going towards another alarming thing, this branch is over employed. It is beyond my thoughts why the extra employees are being hired when earlier employees are working good with full devotion and are satisfied with their work load.

10.5 Weak Marketing Strategies

Weak marketing strategies are also serving as a hindrance in the way of success of Askari in this competitive world when marketing becomes a necessity for all organizations Askari Bank is not focusing on its marketing strategies, although it has many unique and excellent products to offer. Now Askari Bank is making an effort to overcome this thing and is going to establish its marketing department.

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11.

Financial Analysis of Organization

ASKARI BANK LIMITED

BALANCE SHEET
(Rupees in million) ASSETS

2004 17893 8651 10056 641 1213 38454 30360 2882 ---3058 36300 2154 2155 986 1229 (60)

2005 23292 11706 13436 723 1824 50980 41200 3222 ---3980 48402 2578 2579 1036 1521 22

2006 30035 26737 10061 1663 1817 70313 51732 3392 ---11016 66140 4173 4173 1087 1940 1146

2007 44778 22104 15099 1980 1426 85387 61657 7329 ---11354 80340 5047 5047 1142 2760 1145

2008 69938 17239 15936 2595 1460 107168 83319 9777 1000 7055 101151 6017 6016 1256 4317 443

Advances Investments Cash, short funds and statutory deposits with SBP Operating fixed assets Other assets Total assets
LIABILITIES

Customers deposits Refinance borrowings Sub-ordinated loans Other liabilities

Total Liabilities NET ASSETS SHARE HOLDERS FUNDS

Total share holders fund Share capital Reserves Surplus on ROA

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ASKARI BANK LIMITED

INCOME STATEMENT
2004 Profitability Total Income Interest income Interest exp Fee, comm. Exch. Income Other income Spread Operating expenses Operating Profit Non performing assets Profit b/f tax Taxation Profit after taxation 3840 3213 2274 506 122 939 680 886 134 752 436 316 2005 2006 2007 (Rupees in million) 5047 5704 5028 4251 4858 4074 2902 3017 1380 677 299 638 119 247 317 1349 1841 2694 854 1093 1438 1291 1595 2210 283 351 308 1008 1244 1902 458 557 799 551 687 1103 2008 6121 4487 1117 831 802 3370 1845 3158 315 2843 920 1923

11.3 Ratio Analysis:-

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To evaluate a firms financial condition and performance, the analyst needs to perform check ups on various aspects of a firms financial health. It involves methods of calculating and interpreting financial ratios to analyze monitor the firms performance.

Ratio
A ratio is a simple mathematical expression of the relationship of one item to another

Importance of Ratios
Ratios are particularly important in understanding financial statements, because they permit us to compare information from one financial statement with information from another financial statement

SOME IMPORTANT RATIOS

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Series
1

Ratios
ROA

Formula
Net profit after tax Total assets

2004
.295%

2005
.379%

2006
.183%

2007
1.47%

2008
1.35%

ROE

Net profit after tax Share holders equity

25.16%

36.6%

37.95%

40.79%

55.14%

Rate of lending

Mark up / Return income Investments+advances+lend ing to financial institution

11.83%

11.52%

10.88%

9.79%

9.24%

4 5 6 7 8 9 10 11 12 13 14 15

Rate of deposits Admin cost of deposits Avg cost of funds Spread Advances to deposits Classified Advances to total advances Provisions to classified advances CRR Mark up income to total income Debt Equity Ratio Debt Ratio Gross Profit Margin

Mark up /Return expense Borrowings+Deposits Admin cost *100 Deposits Rate of deposits+ Admin cost Rate of lending Avg cost of funds Advances * 100 Deposits NPLs*100 Gross Advances Provision aginst classified advances/NPLs Cash and balances with treasury Bank*100 /deposits Net markup income Total income Total Liabilities Share Holer Equity Total Liabilities Total Assets Gross Profit Net Sales

6.12% 4.0% 10.2% 1.25% 79.85% 12.26% 57.82% 10.54% .65 times 3.68 94.4% .59

5.9% 3.7% 9.8% 1.55% 74.23% 11.42% 45.37% 10.27% .52 times 2.64 93.9% .48

5.7% 3.5% 9.3% 1.58% 76.82% 8.35% 32.72% 9.55% .57 times 3.20 93.3% .52

5.3% 3.3% 8.7% 1.09% 70.45% 6.33% 56.75% 9.33% .35 times 1.34 93.2% .41

4.65% 2.5% 7.25% 1.99% 75.22% 3.6% 3.08% 11.28% .68 times 1.61 94% .58

Return on Assets

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1.6 1.4 1.2 1 0.8 0.6 0.4 0.2 0 2004 2005 2006 2007 2008

Rate of Return

This ratio shows that how efficiently management use assets of the Bank according to the condition. Return on assets during 2005 is higher than 2004 but during the 2006 the Return on assets were increased. Its value is higher during 2007 than 2008 as much investment was made in assets during 2008.

Return on Equity
60 50 40 30 20 10 0 2004 2005 2006 2007 2008 Return on Equity

It is a relationship between net profit and share holders equity. Its value gradually increased from 2004 to 2008 as profit was also increased. Year 2008 is considered as golden year as return on capital is concerned. So that Bank has only need to repeat its year 2008 again to show its stability in market. But overall all figures shows about the bright future of the Bank. .

Rate of Lending

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12 10 8 6 4 2 0 2004 2005 2006 2007 2008 Rate of Lending

Rate of lending is the relationship of mark up income and investment, advances and lending to financial institutions. It value is decreasing from 2004 to 2008 which shows the prosperity of the Bank.

Rate of Deposits
7 6 5 4 3 2 1 0 2004 2005 2006 2007 2008 Rate of Deposits

Rate of deposits shows relationship between Mark up / Return expense to borrowings and deposits of the Bank. Rate of deposits of Askari Bank are decreasing from 2004 to 2008 as borrowings and deposits of the Bank are increasing year to year.

Admin Cost of Deposits

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4 3.5 3 2.5 2 1.5 1 0.5 0 2004 2005 2006 2007 2008

Adm in Cost of Deposits

This ratio shows the cost of deposits of the Bank that how much expenses are occurred on deposits. The Admin cost of deposits of Askari Bank is decreasing from 2004 to 2008 which shows the efficiency of the management.

Avg. Cost of Funds

12 10 8 6 4 2 0 2004 2005 2006 2007 2008 Avg. Cost of funds

Average cost of funds is the sum of rate of deposits and Admin cost. The management of Askari Bank is using effective policies due to which the average cost of funds decreased which is plus point for the Bank to compete with the other Banks in the market.

Spread

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2 1.5 1 0.5 0 2004 2005 2006 2007 2008 Spread

Spread is the difference of rate of lending and average cost of funds. It is shows a mixed trend but during 2008 its value is at highest level as compare to the previous years.

Advances to Deposits
80 78 76 74 72 70 68 66 64 2004 2005 2006 2007 2008

Advances to deposits

This ratio shows a relationship between advances and deposits. This ratio is showing a mixed trend but during 2004 its value was at highest as compare to next four years. Its value is greater during 2008 as compare to 2007 which shows that much portion of advances was given as advances.

Classified Advances to Advances

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14 12 10 8 6 4 2 0 2004 2005 2006 2007 2008 Classified advances to advances

This relates NPL to gross advances. Its value is decreasing from year to year i.e from 2004 to 2008 as management adopted the policy to decrease the classified advances.

Provision to Classified Advances

60 50 40 30 20 10 0 2004 2005 2006 2007 2008 Provision to classified advances

Provision to classified advances is showing a mixed trend but during 2008 its value is lowest as the management decided not to provide much advances as the management wants to increase its efficiency and profit.

Cash Rate of Return

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12 10 8 6 4 2 0 2004 2005 2006 2007 2008 CRR

Cash rate of return is a relationship of cash and balances with treasury to deposits. This ratio is showing a mixed trend. Its value is highest during 2008 as the cash and balances with treasury have been increased in 2008.

Mark up income to total income

0.7 0.6 0.5 0.4 0.3 0.2 0.1 0 2004 2005 2006 2007 2008 Mark up incom e to total incom e

This ratio shows the relationship between mark up income and total income. There is a mixed trend in this ratio. During the year 2008, its value is highest as mark up income has been increased during 2008.

Debt to Equity Ratio

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4 3.5 3 2.5 2 1.5 1 0.5 0 2004 2005 2006 2007 2008

Debt Equity Ratio

This ratio relates total liabilities and share holder equity. It is showing a mix trend. During the year 2004, its value was highest as the bank had not much assets.

Debt Ratio
94.5 94 93.5 93 92.5 92 2004 2005 2006 2007 2008 Debt Ratio

Debt ratio shows a mixed trend but at the final year it climbs than last three years which shows management planning about future aspects that Bank wants to do business at debt criteria.

Gross Profit Margin

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0.6 0.5 0.4 0.3 0.2 0.1 0 2004 2005 2006 2007 2008 Gross Profit Margin

Gross Profit Margin is the relationship of gross profit and net sales. There is a mixed trend in this ratio. The value of gross profit increased during 2008 therefore the value of Gross Profit Margin was also increased.

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FOR THE YEAR ENDED 31st DECEMBER, 2008

TREND ANALYSIS

(Horizontal Analysis)
Trend Analysis, is also called Horizontal Analysis of the financial statements is one directional- upward or downward analysis and involves the computation of the percentage relationship that each statement item bears to the same item in the base year 2004 Profitability Total Income Interest income Interest exp Fee, comm. Exch. Income Other income Spread Operating expenses Operating Profit Non performing assets Profit b/f tax Taxation Profit after taxation 3840 3213 2274 506 122 939 680 886 134 752 436 316 2005 2006 2007 (Rupees in million) 5047 5704 5028 4251 4858 4074 2902 3017 1380 677 299 638 119 247 317 1349 1841 2694 854 1093 1438 1291 1595 2210 283 351 308 1008 1244 1902 458 557 799 551 687 1103 2008 6121 4487 1117 831 802 3370 1845 3158 315 2843 920 1923

The operating expenses of the bank have been increased with sharp margin, the ACBL is newly born bank of only 14 years old and is growing rapidly so, we can say that the reason behind the rapid increase of its operating expenses may be the expansion of business. In order to get handsome profit the expenses are necessary as it is shown by the fact that if the banks operating expenses have been increased then, there is also an increase in the profit before income tax and profit after income tax. SHAREHOLDERS FUNDS
2004 2005 2006 2007 2008

Shareholders Funds Total share holders fund Share capital Reserves 2155 986 1229

(Rupees in million) 2579 1036 1521 4173 1087 1940 5047 1142 2760 6016 1256 4317

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Surplus on ROA TREND ANALYSIS

(60)

22

1146

1145

443

2004

2005

2006

2007

2008

Shareholders Funds Total share holders fund Share capital Reserves

100 100 100

Percentage 119.6 193.6 105.0 110.2 123.7 157.8

234.2 115.8 224.6

279.2 127.4 351.2

The shareholders fund of the bank is continuously increasing, as the bank is running on profit. Therefore, the business takes interest in this project and wishes to participate in it. The banks share capital and reserves are also increasing with the expansion of business.

LIABILITIES
2004 2005 2006 2007 2008

Liabilities Customers deposits Refinance borrowings Sub-ordinated loans Other liabilities

30360 2882 ---3058

(Rupees in million) 41200 51732 61657 3222 3392 7329 ---------3980 11016 11354

83319 9777 1000 7055

TREND ANALYSIS
2004 2005 2006 2007 2008

Liabilities Customers deposits Refinance borrowings Other liabilities

100 100 100

135.7 111.7 130.1

Percentage 170.4 117.7 360.2

203.0 254.3 371.3

274.4 340.0 230.7

New if we analyze the liability side of the bank we see that the banks deposits are going on increasing since its birth which is a very healthy sign for the bank as the banks basic business is to deal in money. The increase in deposits show that the people have interest in the bank and deposit their fund in the bank without any hesitation. However it has not been mentioned here that how many of the deposit are current and how many of them have fixed nature but we can say that it is a very important source of the bank to earn

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profit. As the banks usually earn through interest or mark ups imposed on the deposits they keep with themselves. ASSETS
2004 2005 2006 2007 2008

Assets Advances Investments Cash, short funds and statutory deposits with SBP Operating fixed assets Other assets Total assets

17893 8651 10056 641 1213 38454

(Rupees in million) 23292 30035 44778 11706 26737 22104 13436 723 1824 50980 10061 1663 1817 70313 15099 1980 1426 85387

69938 17239 15936 2595 1460 107168

Now we will discuss the assets side of the bank. The liquidity position is essentially important for the bank, as it must have all the time sufficient funds to meet the demands for the money that may be made on it. It is the protection against the risk that losses may develop if banks are forced to sell or liquidate creditworthy assets in an adverse market. The current liquidity position of the bank has improved as indicated by the percentages shown in the table below. TREND ANALYSIS
2004 2005 2006 2007 2008

Assets Advances Investments Cash, short funds and statutory deposits with SBP Operating fixed assets Other assets Total assets

100 100 100 100 100 100

Percentage 130.2 167.8 135.3 309.1 133.6 112.7 150.3 132.5 100.00 259.4 149.8 182.8

250.2 255.5 150.1 308.9 117.5 222.0

390.9 199.3 158.4 404.8 120.4 278.7

An upward trend in deposits accompanied by a upward trend in advances too, and mark up revenues means in effective credit policies, efficient credit collection resulting in healthy financial development. The property plant and equipment is the kind of asset, which is required by the service business only to increase its network therefore the 90

ratio of the banks plant and equipments as compared with the other important particulars of the assets is high. But here one thing should be mentioned that it is the policy of the bank not to start the business on the rented premises. The bank has mostly started business on its own premises. The other assets of the bank are also showing a good amount that means that bank is in position to earn money from every available source. BUSINESS TRANSACTED
2004 2005 2006 2007 2008

Business Transacted Imports Exports Guarantees TREND ANALYSIS Business Transacted Imports Exports Guarantees

26.2 30.6 4.8

(Rupees in million) 32.0 40.2 48.7 38.8 47.3 56.8 6.2 14.2 14.4

75.2 70.1 25.3

2004

2005

2006

2007

2008

100 100 100

Percentage 122.1 153.4 126.8 154.5 129.2 295.8

185.8 185.6 300.0

287.0 229.1 527.1

Now we will discuss the business transacted opt the bank in terms of import and exports we see that imports and exports through ACBL are continuously on increase which is a very health sign for the banking business as the banks earn major portion of their profit through imports and exports. It shows the efficiency of the credit department. reasons for this improvement may be Careful scrutinizing of all the documents Intelligent corresponding with the customer True 7 Cs analysis of the customer such as his business and moral character. This improvement in imports and exports is extremely large if we compare it with the figures of 2000. The

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(VERTICAL ANALYSIS)
COMMON SIZE ANALYSIS An analysis of percentage financial statements where all balance sheet items are divided by total assets and all income statements items are divided by net sales or revenues. In addition to other financial ratios over time, it is often useful to express balance sheet items and income statement items as percentages. Common size Analysis, also called Vertical Analysis, or Component Percentage, or 100 percent Statements as each statement is reduced to the total of 100 and each individual item is stated as a percentage of the total of 100. 2004 Profitability Total Income Interest income Interest exp Fee, comm. Exch. Income Other income Spread Operating expenses Operating Profit Non performing assets Profit b/f tax Taxation Profit after taxation 100 83.6 59.2 13.2 3.18 3 24.4 17.7 23.1 3.49 19.6 11.3 8.23 2005 2006 2007 (Vertical Analysis) 100 100 100 84.2 85.2 81.0 57.5 52.9 27.4 13.4 5.24 12.7 3.94 4.33 6.30 26.7 32.3 53.6 16.9 19.2 28.6 25.6 27.9 43.9 5.61 6.15 6.12 19.9 21.8 37.8 9.07 9.76 15.9 10.9 12.0 21.9 2008 100 73.3 18.2 13.6 13.1 55.0 30.1 51.6 5.15 46.4 15.0 31.4

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INTERPRETATION The most important component of any profit and loss account of a banking concern is its mark up expenses it has to pay for servicing the depositors. The foregoing data shows that the markup expenses absorb about 85% of the revenues (a favorable position). This shows that the bank has been successful in Selling larger volumes of higher profit items. Increasing economy in procurement Adopting other effective and more profitable deposit raising policies at a lower lost. The interest expense of the ACBL is 18.2% of the total revenue of the bank in 2004, which is remarkable as the bank is earning about 85% of the revenue as interest income. We have handsome margin between the interest income and the interest expense of the bank. The data shows that the banks other income %age is not as much high rather it is very low which shows that the bank does not rely on other sources for its profit but it earns major portion of its income through its basic business. The bank seems to have increased control over its operating expenses, i.e. non-mark up expenses as these now absorb only 30% on average of the total revenues, that is a very healthy sign for the bank. In the net shell, it would not be wrong to say that the bank has improved its financial position and operating efficiency over the last years. The profit after tax is showing about 31.4% of the total revenues of the bank although the margin of profit is not too much high but it is shown from the data that the bank is going on increasing its profit after tax over the year. LIABILITIES AND OWNERS EQUITY (Vertical Analysis) 2004 Total share holders fund Share capital Reserves Customers deposits Refinance borrowings Other liabilities 5.29 2.42 3.02 74.6 7.08 7.52 93 2005 2006 2007 (Vertical Analysis) 4.82 5.69 5.65 1.93 1.48 1.28 2.84 2.64 3.09 76.9 70.5 69.0 6.02 4.62 8.21 7.43 15.0 12.7 2008 5.38 1.12 3.86 74.5 8.74 6.31

Total

100

100

100

100

100

INTERPRETATION The liabilities and owners equity are side components of the bank showing the relationship as compared with the total of the liabilities and owners equity. The banks shareholders fund is showing percentage more than the share capital, which shows that the bank own capital is lees than the shareholders capital. However it is also evident from the data that the %age is decreasing of the overall %age of the share capital over the last two or three years. But it is also seen that the share capital %age as compared to the total liabilities of the bank has also been decreased. So we can say that the same conditions are prevailing regarding the share capital and the shareholders fund. Among the assets of the bank the highest %age is of the customer deposits. The banks management seems to have adopted a very effective marketing policy, as the deposits of the bank constitute about 75% of the total assets of the bank. In the last year, this figure stood at 69% of the total resource. This shows the high level of products and associated services provided by the bank.

ASSETS (Vertical Analysis)

2004 2005 2006 2007 2008

Assets Advances Investments Cash, short funds and statutory deposits with SBP Operating fixed assets Other assets Total assets

46.5 22.4 26.1 1.67 3.15 100

(Vertical Analysis) 45.7 42.7 52.4 22.9 38.0 25.8 26.3 1.42 3.57 100 14.3 2.36 2.58 100 17.6 2.32 1.67 100

65.2 16.1 14.8 2.42 1.36 100

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INTERPRETATION On one hand Advances have also increased from 52% in the previous year to 65% in the current year which may indicate that the bank utilize the funds raised in the other activities primarily lending to the financial institutions as it is the most secure source of financing available in the economy. Cash, short term funds and statutory deposits with SBP are also increasing. The property plant and equipment of the bank is showing a little portion of the banks total assets. In the last the bank is over all showing a good financial health and is going on healthy tracks in near future it has no risk of bankruptcy. Although the bank is showing good results but we cant say that these are the best conditions prevailing in the bank as we are unaware of the market conditions and cant compare it with other banks.

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11.8

Organizational analysis with reference to the industries

Askari Bank is facing a strong competition by its major competitors; Faysal Bank and Bank AL-Falah. Business of these Banks is also growing with very high pace.

So Askari Bank has been performing very well in the presence of unstable
political and economic situation but this uncertainty is a continuous threat for the Bank.

Bank is facing intense competition from other private commercial and foreign
Banks. Although it is ahead of many Banks but Banks like Alfalah are a constant threat to Askari Bank. All Banks are facing immense competition as well as challenges to provide better customer services and to serve their customers for derivative Banking products and services. Mostly Banks have threat of mergers and acquisitions due to capital less then RS 1billion. Daily basis circular is a threat for baking to run their business. The restriction of 200 hundred branches for all Banks to exist in market is also a great threat. Frauds are also a great threat, like recently a great fraud happened with The Bank of Punjab.

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11.9

Future Prospects of the organization

In the future prospects of Askari Bank Limited, Sahiwal are very well, with the passage of time it is introducing the new method in Banking sectors they are transforming the data into the electronic format and now they are using the E-Banking. They are enhancing the branches and using the decentralized formation of decision making and introducing the new marketing strategies for their business. Askari Bank Limited, Sahiwal will use the different types of data and new vast information for future purpose and will introduce the new ways of the marketing expansion. The Askari Bank Limited, Sahiwal use the online Banking systems and new e-Banking systems according to the marketing circumstances and adopted new latest technology for Banking purpose.

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12.

SWOT Analysis

12.1 Weaknesses
Perfection is only the claim of Allah Almighty. No other being living or dead can say this for itself. Similarly, Askari Bank Sahiwal also has some shortcomings that need to be mentioned:

12.1.1 Problems of Employees

Some of the employees working in Askari Bank were burdened with over work. Sometimes they have to perform additional duties due to which their own work suffers and they have to sit late night to dispose off their work. There is uneven distribution of

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work and promotions are not very timely. Bank has no grievance-handling department for the internal problems of the employees.

12.1.2 Credit Facilities

Bank is providing credit facilities only to the urban areas not too much attention is paid to the rural areas. There is enormous difference between the bank-lending rate and return on deposits. The procedure and documentation while sanction loan is thorny which is a barrier for advances.

12.1.3

Agri Loans

Pakistan is an agriculture country but no special schemes are launched for the agri- loans.

12.1.4

Small Scale Business

Pakistan is a developing country therefore most of the people are doing small scale business. Bank is not giving emphasis on the small-scale businesses which are large in number in Pakistan.

12.1.5

Deposit Targets to employees

Bank gives targets to employees for deposits due to this reason they pay more attention to fulfill these targets to save their jobs. This distracts their attention from their duties. Reasonable care is not taken while opening new accounts one of the reason is because employees want to introduce more and more depositors to achieve their deposit target.

12.1.6

Employees Union

There is no job security for the employees specially working on contract basis and no union exits to secure them.

12.1.7

Network of ACBL

Bank has not adequate number of branches as compared to its competitors like MCB, UBL, ABL, NBP etc. Due to small number of branches at greater distance potential 99

customers may go to other more feasible options. ACBL has only agency arrangements with the foreign banks, no branch exists outside the Pakistan while their main competitors have their own branch network outside the Pakistan.

12.1.8
public.

Facilities for Army Persons

A good number of facilities are only for the army persons, not for the general

12.1.9

Lake of Computer Knowledge

As every person in the bank has his/her own computer in the branch but they are not well equipped with the knowledge of using the computer efficiently.

12.1.10

Problem of Lockers

Limited locker facility is available which do not fulfill the requirements of customers and charges of lockers are also very high.

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12.2 Opportunities
Askari Bank has grown up its business with a very high pace and it has got tremendous popularity, even with in a very short span of time. There are many opportunities for the Bank and by availing that it can stand amongst the top Banks.

12.2.1 Information Technology

All the opportunities of the 21st century are to be availed in the information technology. Information technology is the future. Therefore AKBL Sahiwal should emphasize much on IT, especially the E-Banking. Bank can design a universal account like other foreign Banks to enhance online facilities.

12.2.2 Growth in Deposits

AKBL has introduced a number of financial schemes including special royal accounts. These accounts have their unique features (discussed earlier). During the last three years, AKBL Sahiwal branch`s deposits have been increasing @ 50%, which is a very healthy sign. Therefore, with the commencement of new schemes there can even be a greater increase in its deposits. Now they are focusing to have much more low cost deposits.

12.2.3 Diversified Investment

Another opportunity that is going to be availed by this branch is now it is trying to make investment in diversified sectors because it has to suffer an previous years as most of the investment is made in textile sector and the textile sector collapsed. Now its manager is going to make investments in diversified sector.

12.2.4 Askari Bank Limited Financing

Another opportunity which is planned to be availed by this branch is financing to the ASKARI BANK LIMITED sector such as: Power looms

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Shop owners Goldsmiths Cutlery Others like; Green field projects. In order to institutionalize the decision making process and to provide guidance to staff well defined policies can be formulated and implement.

There is a huge potential for housing finance in Pakistan which has a shortage of 1.5 million housing units. The central Bank should work with law ministry to bring suitable changes in foreclosure laws so that AKBL Sahiwal could play its due role in developing this important industry which will boost economic activity in the country.

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12.

Conclusion

One of the most important aims of the student life is to express him her correctly and adequately. This was believed in my mind when I first decided to go to Askari Bank Limited to complete my internship programme. The company has been growing both in size and profit for past few years and has a good credibility and repute in the market. The employee turnover is very high which they have to cut down as they are losing a number of good trained employees due to its poor policy. The year 2010 is expected to offer increased competition in the secured assets business as more Banks are in the market. With their focused strategy and product development initiatives planned for the year, Askari Bank is strongly positioned to meet these challenges. The Bank has very well repute in the market overall Bank is going well and doing a good business but there are few problems for that I have tried to give few recommendations that might help company to improve. So finally this internship has helped me a lot in gaining practical knowledge of job that will help me in the real job once I complete my MBA.

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13.

Recommendations

I spent six weeks of my internship in Askari Bank Sahiwal Branch. During these six weeks, I felt myself to be a part of Askari Bank. Even, this was my second experience of working in a Banking organization, but I learned a lot from this experience. Based on my experience & observation regarding the operations and policies of Askari Bank, I have tried to stipulate some recommendations for further improvement.

13.1 Enhanced Computer Network

The Bank should emphasize much on computer technology. Like other Banks, AKBL should enhance its on-line services. Bank, also should concentrate on E-Banking and use of ATM. Moreover, Bank should also emphasize on enhancing its website information.

13.2

Expansion in Branch Network

Askari Bank business has grown with a tremendous pace. There have been considerable profits just with in a short span of time. Therefore, due to the expanding business requirements, AKBL should expand its branch network to capture other business markets.

13.3 Adoption of Advertising

Banks should launch advertising campaigns through out the year to promote the habit saving in the people. Bank should open more branches in the remote areas of the country to get deposits and idle resources. Bank should provide all those facilities to the small cities branches, which it provides to the big cities branches

13.4 Training Facilities and Seminars

Human resource constitutes the most valuable asset for an organization. To improve the professional skills and quality, AKBL has started comprehensive training program that is

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really a commendable step taken by AKBL. Bank, apart from this program, conduct some training programs for existing employees to improve their proficiency. Also, Askari Bank should arrange some seminars to make its visions and objectives, clear to every one.

13.5 Equal Status of Branches

One major & alarming drawback that I observed in Sahiwal Branch, is the inferiority complex faced by some employees. Sahiwal Branch, for being situated in business and commercial hub, has its unusual importance and has foreign trade business. But I observed some employees to be the victim of complex. So, to avoid such discrepancies, seminars should conduct to signify the importance of each branch.

13.6 Expansion and Recruitment in Sahiwal Branch

AKBL Sahiwal Branch has huge business volume, whereas the staff is not enough to meet these requirements. I found that some employees were burdened with overwork, even some clients complaint for the slow service. Therefore, more staff should be recruited. Also, there should be an expansion in the area of branch to meet the requirements of growing business transaction.

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References
Mr. Muhammad Shafique (Operations Manager, Askari Bank

Limited, Sahiwal) Mr. Saeed Ahmed Malik (Incharge General Banking, Askari

Bank Limited, Sahiwal) Mr. Sharjeel Anwar (Clearing Incharge, Askari Bank Limited,

Sahiwal) Mr Nadeem Akram (Principle, vocational Training Center

Sahiwal) Mr. Azhar Iqbal Shad (Principle, Govt. College of

Technology, Sahiwal) Official Website of Askari Bank Limited

www. askariBank.com.pk

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Annexes

Annexure 1 Annexure 2 Annexure 3 Annexure 4 Annexure 5 Annexure 6 Annexure 7 Annexure 8 Annexure 9 Annexure10

Deposit Slip Account Opening form Specimen Signature Card Credit Card Slip Remittance Application Form Memorandum for Return of cheque Debit Voucher Credit Voucher Organogram of organization Organogram of Branch

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