First of all I am thankful to Almighty Allah who gave me knowledge and power to make me able to complete my internship successfully

. I am also thankful to Department of Administrative Sciences Quaid-IAzam University Islamabad who provide me this opportunity to have an experience in a reputed organization and groom myself for the future professional responsibilities. I shall also like to wish to acknowledge and show my deep gratitude to our respective teacher, Ms. Mehnaz Khan, for her consistence, advice and support given during the writing up of this report. I offer my heartiest tribute and cordial gratitude to present my thanks to Mr. Shoukat Hayat Babar Operation Manger of ACBL Multan Branch and Mr. Ateeq ur Rehman Credit Incharge of ACBL Multan for their kind support and cooperation in this project. To Mr. Farooq Bosan, I owe more than what I can mention….her inspiring guidance, remarkable suggestions, constant encouragement, keen interest, constructive criticism, and friendly discussion enabled me to complete this report efficiently. Without her support and proper guidance, it would be almost impossible to accomplish this task successfully.       Table Of Contents Page No. Acknowledgements 1 List of Tables 3 List of Acronyms 4 Executive Summary 5 Section 1 INTRODUCTION TO ACBL 7 Awards & Achievements 9

The Mission 10 Core Values 11 Corporate Philosophy 11 Code of Business Principles 11 Section 2 REVIEW 12 Credit Department 13 Deposit Department 27 Remittance Department 30 Foreign Exchange Department 39 Section 3 ANALYSIS 46 Financial Analysis 47 SWOT Analysis 49 Strength 49 Weaknesses 49 Opportunity 49 Threat 50 Section 4 FINDINGS AND RECOMMENDATION 51 Findings 52 Recommendation 56 List of Person Interviewed 57 Reference 58 List of Tables

  1. Organizational Hierarchy 2. Charges of Online Transaction 3. Charges of Letter of Credit 4. Financial Performance 5. Name of Major Withdrawal of Deposits 6. Name of Major Withdrawal of Advances 7. Name of Person Interviewed   LIST OF CHARTS 1. ORGANOGRAM                            

      List of Acronyms       AWT Army Welfare Trust PACRA Pakistan Credit Rating Agency CLP Credit Line Proposal EF Export Finance FAPC Finance Against Packing Credit FCEF Foreign Currency Export Finance FIM Finance Against Imported Merchandize FCIF Foreign Currency Import Finance LC Letter of Credit FS Financial Statements RF Running Finance CF Cash Finance CD Call Deposits TF Term Finance DO Delivery Order CSA Credit Sanction Advice DP Drawing Power SS Specimen Signature

They are giving the best education and are offering for specialization. . financial management. marketing management and computer application to business. An important programmed is six to eight weeks internship with any recognized institution.AOF Account Opening Form ASDA Askari Special Deposit Account FISDA Financial Institution Special Deposits Account DD Demand Draft TT Telegraphic Transfer PO Pay Order OBC Outward Bills for Collections IBCA Inter Branch Credit Advice IBC Inward Bills for Collections SBP State Bank of Pakistan EPB Export Promotion Bureau FBP Foreign Bills Purchased FDBC Foreign Documents Bills for Collection ATM Auto Teller Machine         EXECUTIVE SUMMARY     The Department of Administrative Sciences was established in 1975 and offers Masters degree in Business and Public Administration.

and get good working experience. in Multan major imports is Oil Seeds which is also done on seasonal Basis. During my internship I found that Askari Commercial Bank is a best bank in Multan because most of the Exports and Imports in Multan are done through this bank. Every internee is rotated among the bank’s departments and so was I. The profit rates on Askari deposit schemes are quite low when compared with other banks especially with the National Saving Centers. So its export is done on seasonal basis. He gave me small introduction of the bank and introduced me to the staff of the bank. This report is about my internship that I have undergone at Askari Commercial Bank Limited Multan Branch from 26th June 2003 to 10th August. In today every customers is the rational customer he knows the value of money and wants a best return on his money. Online Banking etc.I decided to take up Askari Commercial Bank Limited for my internship because its competing bank nowadays and gives a good training to the internees. This rotation is done in order to have general concept regarding bank’s functions. Because Multan is a Agricultural City. Shoukat Hussain Babar. So the only thing through which ACBL can increase their deposits are profit rates. In the season of cotton and Mango export Askari Commercial Bank get its target easily but difficult for it to get its target in the off season. because the customers only want maximum profit on their investment. Same with the case of imports. I have learned more about the Bills and Foreign Trade department and have given below the caption of activities I was involved in during the period of six weeks. During my internship I am able to learn practical aspect of business. . Multan is one of the cotton growing cities of Pakistan. but now all the banks are offering these services through their own network or through third party contracting. So in order to learn more this was my choice. In this rotation the stay in department is usually a week. Earlier Askari Commercial were able to attract customer due to their ancillary services like ATM Cards. Low profit rates are one of the major reasons for not meeting the deposit targets. 03. operations and policies. so our plus points are no more our advantages. Most of the businesses in Multan are directly or indirectly linked to cotton that is also the case with Askari Commercial Bank’s clients. On the very first day of my internship I reported to Human Resource Manager / Operation Manager Mr. and its major export is Cotton and Mango. Credit Cards.

6. Askari General. Cement Industry. AWT has its units as under: 1. 5. . Askari Commercial Bank. Askari Associates. Textile Mills. AWT offers the “AWT Saving Scheme” to the army officials only. 7. Askari Leasing. Rawalpindi. Private Business.SECTION 1 INTRODUCTION TO ASKARI COMMERCIAL BANK INTRODUCTION TO BANK 1: Askari Commercial Bank Limited (ACBL) works as a Unit of Army Welfare Trust was established for the Welfare of Army Officials. 2. 4. The office of Army Welfare Trust is situated at AWT Plaza. 3.

while the long-term rating stands at AA. The bank obtained business commencement certificate on February 26. The safety and security of depositor’s funds. In 2001 this branch gets the trophy of highest profit for the year 2001. This created its own challenges and opportunities. First Pakistani Bank to offer on-line real time banking on a countrywide basis.Incorporated in Pakistan on October 09. ACBL have been declared “The Best Bank in Pakistan” by the Global Finance magazine for the years 2001 & 2002. Askari Bank is principally engaged in the business of banking as defined in the Banking Companies Ordinance. Askari Commercial Bank limited continues to scale new heights in all areas of its operations. In a short span of time this branch increase their business remarkably. ACBL have received prizes from the South Asian Federation of Accountants for “The Best Presented Annual Accounts” for the financial sector. for the services sector. with over 250000 banking customers. 1996 and 1997. For the past four years. The Bank is listed on the Karachi.313 billion. and has since expanded into a nation-wide presence of 51 branches. Askari Bank is the only bank with its operational Head Office in the twin cities of Rawalpindi-Islamabad. ACBL have received several awards for the quality of our banking service to individuals and corporate. supported by a network of online ATMs. First Bank to offer Internet Banking services IV. Also. Askari Bank won the prestigious “Best Presented Annual Accounts” awards for 2000 and 2001 from the Institute of Chartered Accountants of Pakistan and the Institute of Cost and Management Accountants of Pakistan. Over the years. First Bank to offer E-Commerce solutions The Vision 3: . Now recently this branch gets the trophy of highest imports for the month of July 2003 as compare to all the branches of Askari Commercial Bank working in Pakistan. ACBL received Euro money and Asia money awards. 2002 the Bank had total assets of PKR 70. While capturing the largest market share amongst the new banks. Askari Commercial Bank is scheduled Commercial Bank and is principally engaged in the business of banking as defined in the Banking Companies Ordinance 1962. 1994. I. This branch has highest deposits and advances as compare to other banks working in Multan. high productivity and optimum use of technology are the hallmarks of its corporate strength. as public limited company. ACBL have been given the “Best Consumer Internet Bank” award for Pakistan by the same magazine for the year 2002. 1962. First Bank with a nation-wide ATM network III. Askari has A1+ rating for short-term obligations – the highest possible for the category. Askari Bank has proved its strength as a leading banking sector entity. Askari has provided good value to its shareholders. in 1994. by achieving the following firsts in Pakistani banking. and forced us to evolve an outward-looking strategy in terms of our market emphasis. as at December 31. Lahore and Islamabad Stock Exchanges and the initial public offering was over subscribed by 16 times. so to get the export market of cotton ACBL open its branch in Multan in December. Multan is a cotton city. 1991. where most other banks have their operational Head Offices. 1992 and started operations form April 1. we developed a geographically diversified assets base instead of a concentration and heavy reliance on business in the major commercial centers of Karachi and Lahore. in the ASSRC region. As a result. which have relatively limited opportunities as compared to Karachi and Lahore. Awards & Achievements 2 Over the years. 1992. II. Share price of ACBL has remained approximately 12% higher than the average share price of quoted banks during the last four years.

are: Commitment Integrity Fairness Team-work and Service Corporate philosophy 6 Inspiring Relationships . maintaining high ethical and professional standards. while providing enhanced value to all our stakeholders.“To be the Bank of First Choice in the Region” The Mission 4 “To be the leading private sector bank in Pakistan with an international presence. delivering quality service through innovative technology and effective human resource management in a modern and progressive organizational culture of meritocracy. Core Values 5 The intrinsic values. which are corner stones of our corporate behavior. and contributing to society”.

from enhancing stake-holders value to practicing corporate ethics… We are continuously and consistently striving to address newer challenges with a single motivation: “the power to inspire and be inspired” Code Of Business Principles 7 Our Code Of Business Principles is to: Deliver solutions that meet customers’ financial needs. and Create and leverage strategic assets and capabilities for competitive advantage SECTION 2 REVIEW . Build and manage the Bank’s portfolio of business to achieve strong and sustainable shareholders returns. Build and sustain a high performance culture. from utilizing modern technology to making responsible social contributions. Build trusted relationships with all stakeholders.From knowing our customer requirements to understanding employee needs.

Bank borrows money at a lesser rate of interest and lends to the borrower at higher rate of interest. healthy and profitable credit portfolio depends on the quality of judgment exercised by the officer and the depth of their risk associated with the nature of the borrowers business. CREDIT MANAGEMENT CYCLE: Credit Management is composed of six steps: 1. But this is not to say that. Disbursement 6. Documentation 5. The banker is supposed to make a judicious judgment. PROCESSING OF LOAN PROPOSAL: Managing a safe. And the difference between these two is the profit of the bank. Proposal 2. Lending or financing is one of the basic functions of banks of all categories. bank gives this service for nothing. Some borrow to fulfill their working capital needs. Processing 3.CREDIT DEPARTMENT To give credit is to finance directly or indirectly the expenditure of others against future payment. It is very much necessary that the banker should have a complete confidence in the integrity and ability of the customer to use the money to his advantage and repay it within a reasonable period. Then after collecting information if the customer deems it beneficial he makes a loan request. Review PROPOSAL: The first step in the Credit Management is receiving a credit request. through which they gain major part of their profits. The customer presents his idea to the banker and wants the information on bank’s facilities. A bank accepts deposits of money and repays cash to its depositors on demand. Information must be collected and confirmed by investigation and negotiation during processing of the proposal. Credit department deals with all the activities related to giving credit to customers. which should be based on a critical study of advance proposals. which is a lending proposal for the bank each borrower has a purpose for borrowing. others wants to finance any project. Decision 4. . This bank customer relationship should be mutually beneficial.

Finance for movement of Goods / Crops within the country. 5. 4. 11. Different Advance Facilities are offered according purpose of borrowing. visiting the collateral securities etc. Fixed Investment for Industry (Project Financing). analysis of financial statement. Construction of Residential. 3. Working Capital need for Trade and industry. Industrial and Agricultural 8. Purchase of Agricultural Machinery. 6. Because without these safeguards. Development of Agricultural Land. a series of investigative exercise is undertaken. the CLP is the end result of a series of internal and external investigation exercises following the identification of a potential customer. Import Trade Financing.In respect of fresh (ending proposal. visiting the business place. But other facilities however may be used for a variety of purposes and it may not be possible to assess the risk as accurately. knowing business prospects of a customer. This evaluation stage include knowing the purpose of borrowing. KNOWING THE BUSINESS PROSPECTS OF THE BORROWER: . 7. the proposal should not be given due consideration. for example. The possible purpose may be as follows: 2. Export Financing / Packing Credit. 10. risk involved in extending them would not remain the same as envisaged at the time of extending he facility. Some facilities may be used for specific purposes because of their very nature and therefore. therefore. important that in all cases facilities is extended only after understanding precisely the use to which they will be put. and monitoring systems devised to ensure that their use is confined to disclose purposes only. It is. risk involved in extending them can be accurately identified. EVALUATION: To assess the risk and estimate the potential of a particular business. PURPOSE OF BORROWING: The borrower must disclose factual purpose for seeking financial accommodation from bank without such. Buildings. 1. Purchase of Industrial or Commercial Vehicles. beginning with the first call on the customer. an LC Facility can be used only for imports and depending on the items being imported. 9. risk can be assessed reasonably and accurately.

3. the concerned officer must look at these trends to identity both short term as well as long term prospects of the business of the borrower in the market place and the economy as a whole. However. So reliable experts competent to assess particular type of asset must carry out valuation. income statements disclose how the business has been conducted and determines factors behind a rise or decline in the net worth. Product life cycles are characterized by an initial period of rapid sales growth followed by the period of decline in growth rate signifying weakening of demand. An additional problem with collateral securities are that there is many security types whose valuation remains subjective because of the fact that there are no verifiable market prices quoted for them.Fortunes of business enterprises fluctuate with changing trends in their respective business and industrial sectors. forced by any one or all of the following: 1. the quality of company earnings and its financial strengths and weaknesses. But during recession in an industry some companies suffer more then other because of their particular circumstances such as flaws in sourcing of materials. As far as cash and other liquid securities are concerned. Banker must also check whether there are any existing charges on the asset because is that case the institution which has registered the charge first will have prior claim on the proceeds on the event of borrower’s liquidation. FINANCIAL ANALYSIS: The purpose of analysis of Financial Statement (FS) is to examine past and current financial data so that a company’s performance and financial position can be evaluated and future risk and potentials can be estimated. sales and receivable management and more often financial management. in respect of real estate. there is a gradual impact of the natural life cycle of industries and their products. Thus while preparing CLP. 2. After that a surveyor examines those fixed assets and estimates their value. Financial Statements among other things include balance sheet and income statement. which need special examination. Technological changes. Apart form showing the profitability of a business. which result in unusual growth or slump in sales. Besides showing the ability of the business to service the loans on the strength of its financial structure. Innovation or the development of better / cost effective substitute. there is not difficulty in disposing them of because their merits are selfevident. sales and receivable management. the concerned officer visits the security and examines the suitability of the security for the facility required by the borrower. When any asset of the customer is taken into charge with the bank. 4. Aside from fluctuating market conditions caused by temporary imbalances in demand and supply. Market saturation due to increased competition. Balance sheet represents assets and liabilities of the business at a given data. there are some important aspects. which render older models obsolete. It should be remembered that not every surveyor is competent to value every type of asset. . All businesses grow in spite of individual weaknesses and shortcomings. VALUATION OF COLLATERAL SECURITIES: Valuation of collateral securities is an area which is fraught with dangers because there can be errors of judgment or deliberate over estimation for ulterior purposes. The analysis can yield valuable information about trends and relationship. It also helps in evolving secured basis for extending financial support. structural weaknesses in manufacturing process or distribution arrangements. Changes in import / export tariff which affect pricing structure. He must also satisfy himself about capacity of the borrower to survive these shocks as and when they surface before recommending establishment of a lending relationship. either slowly or rapidly.

The negotiation phase is very important for creating a safe credit portfolio. It is issued for fixed time period. to have first hand knowledge about certain things and then confirm them. funds are directly involved. FUND BASED LOAN: In this type of loan. RUNNING FINANCE: (R/F) It is popularly known as overdraft. The information collected in this phase may include the type of advance.NEGOTIATION: While processing a loan proposal. the mode of creating charge over securities. In majority of the cases this finance is allowed against pledge of stock. The merchandise is released for the use of the importer . The amount of Finance is disbursed in lump sum. The amount of finance is credited to borrowers CD account and he/she utilizes it for business purposes. The amount of finance is credited to borrowers personal account by debiting the Term Finance Account. Repayment in monthly installments is not required. Adjustments are linked with delivery of goods kept under bank’s pledge. The repayment of Term Finance is usually in installments and with other documents a letter of installments is taken from the borrower at the time of disbursement. Monthly repayment amount is calculated by dividing the principal amount by time period plus mark-up. It is created in current account adjustment from time to time finally on expiry date. By that letter. Goods are released on the Delivery Order (DO) by the bank to the Go down Officer. Goods are pledge when the payment is done on delivery order of the bank. Repayment is not made by monthly installments. TERM FINANCE: (T/F) Term finance is offered to client for investment in any project or business. The lending bank mostly pledges the imported goods. It is allowed to the borrower under a presanctioned limit. a banker has to do a detailed negotiation with the customer. The amount of finance is credited to borrowers personal account by debiting the Term Finance Account. The borrower can draw cheque on his account maximally up to the amount of limit sanctioned to him. CASH FINANCE: (C/F) It is also offered for the working capital requirement of the customer. insurance. Goods released are equivalent in value to the repayment amount and remaining goods are stills kept in pledge with bank for further recovery. FINANCE AGAINST IMPORTED MERCHANDISE: This type of finance is offered to the importer to finance their needs for meeting the cost including freight. the borrower binds him to pay the installments at regular intervals. It is the type of loan in which client is given cash in lump sum it is offered against the pledge of moveable property or stock of borrower. Partial transactions are not allowed in the Term Finance account. and customs and excise duty payable on the imported merchandise. It is offered for working capital requirement of the customer. the source of repayment and period for which the facility is needed. The amount outstanding against the borrower is mark-up will be changed on the basis of the amount outstanding. This facility is issued on revolving basis repayment should be completed by the maturity date. This facility is normally issued against hypothecation of immovable property. A current account is opened and the conduct of this account is kept under review for a period of three to six months.

(3) SHIPPING GUARANTEE: Bank issues guarantee in favor of the shipping company to enable the importer to obtain delivery of the goods without production of the Bill of Lading.(borrower) upon repayment of the bank’s finance and charges either fully or partially. The viability of the project itself and its cash generating capacity ensure to a large extent the safety of bank funds. MODES OF CREATING CHARGE OVER SECURITIES: Primarily bankers rely on the character. LETTER OF CREDIT: Letter of Credit issued by the bank can broadly be classified as under: - Sight letter of credit. by the customer. Under these guarantees. (2) PERFORMANCE GUARANTEE: The bank guarantees the due fulfillment of a contract or other work as specified in the guarantee. But the banker cannot afford to take any risk and hence the reliance is placed on the tangible assets of the borrower. In case of default by the borrower in repaying the loan the banker’s interest if safeguarded if he possesses change . the bank is called upon to pay in the event of a breach of terms on the part of the customer. capacity and capital of the borrower in ensuring the safety of his funds. NON-FUND BASED FACILITIES: These are those types of facilities in which funds are not directly involved. (1) FINANCIAL GUARANTEE: Bank guarantees the fulfillment of a financial commitment on behalf of the customer. Usance letter of credit. Documents negotiated and received against sight are held as security till their retirement. Drafts drawn under usance are for a tenure specified in the L/C and are payable by the customer on due date. Credit line proposal must clearly state the type of letter of credit the branch is intended to issue. The sight L/Cs call for the draft to be drawn ‘at sight’. The amount of guarantee is usually up to the extent of the value of the contract. LETTER OF GUARANTEE: Guarantees issued by the bank can be classified under two broad categories. on production of the Delivery Order issued by the banker in favor of the borrower.

Modes of creating such charges are as follows: 1. as a banker’s lien is an implied pledge and the banker has the right to sell the securities under lien after giving a reasonable notice to the borrower in case of his default. the ownership of the property under the lien remains with the borrower. upon a contract that they shall. Lien 2. Hypothecation: An agreement to give a charge to goods or documents of title without conferring possession is called hypothecation. which contains the terms and conditions of the hypothecation agreement. Hypothecation 4.g. This is not the case with banker’s lien.or right over the tangible assets of the borrower. Loans with such rights conferred upon the bankers are called secured advances. charges are created on the tangible assets in several ways depending upon the nature of assets. though the creditor does not have any right to sell it. when the purpose is accomplished be returned or otherwise. The mortgage does not transfer the ownership of the property and the actual possession of the property is also not transferred. Pledge: The bailment of goods as security for payment of a debt or performance of a promise is called pledge. The security is granted by the borrower to the lender by a letter of hypothecation. Bailment is the delivery of goods by one person to another for some purpose. . He now cannot sell the property without the consent of the mortgagee. In secured advances. existing or future debt. The transferor is called a mortgagor and the transferee a mortgagee. pledge remains with the borrower. Mortgage: A mortgage is the transfer of an interest in specific immovable property for the purpose of securing the payment of money advanced or to be advanced by way of loan. The goods are charged as security for a loan form the bank but ownership and possession remains with the borrower. In ordinary lien. The relationship of a customer and a banker is this case is that of a pledger (customer) and a pledgee (banker). Mortgage Lien: Lien has been defined as the right of a person to retain the property of the borrower until a debt due from him (borrower) is repaid. disposed off according to the direction of the person delivering them. although its actual or constructive possession is with the creditor. The ownership of the goods. although its actual or the lien remains with the borrower. He (mortgagor) transfers only some of his rights as an owner e. Pledge 3. while the possession is with the banker. The principal amount and the interest of which the payment is secured are called the mortgaged amount and instrument (if any) by which transfer is affected is called the mortgage deed.

because there are many restrictions on monetary and credit expansion by the State Bank of Pakistan and it is no longer within the power of banks to distribute it freely. Credit office must learn to make the best use of the bank’s available deposits by deploying them in the most productive advances. Bankers obtain collateral securities from borrowers for recovering credit if market conditions make it impossible for the borrower to repay. . It is. Period of Financing: The period for which the finance is issued is called the maturity period. In order to prevent a possible loss of stock by fire. the banker seeks periodical stock reports from the borrower confirming full description and value of the stock hypothecated. therefore. and the borrower is asked to get his stock insured. For this. important that the CLP must mention the scenario for repayment and identify the sources of repayment after negotiation with the borrower. Repayment of the Credit: (Identify the source of repayment) The banker’s most important single consideration should be on time repayment of the credit extended t a borrower from the normal business operations of the borrower. then it will be a permanent limit. If the borrowers intentions are doubtful. 3 months. not as a protection against borrower’s dishonesty. better not lend at all because auctioning borrowers collateral is not your business. the two major considerations for recommending fresh credit facilities are the business anticipated from the borrower in relation to the funded facilities and projected earnings from facility utilization by the borrower. is unfit for consideration. dacoity. If the facility of advance is allowed up to 3 months then it will be considered as temporary accommodation and if it exceeds to 6 months t 1 year. including title. In case of renewal of existing facilities the consideration is the business received in the past and earnings and that promised by the borrower for the following year. To make a prudent decision it is required that decision should be made only after comparing the benefits available from several competing proposals and agree to finance the proposal which offers a risk-reward combination closest to the standard set out in the Bank’s Credit Policy. about which repayment from normal business operations of the borrower is uncertain. Any proposal. Making a Lending Decision: Bank credit decision for any proposal has to be very rational one. the likely market demand scenarios must be estimated. even though it is supported by good securities. The hypothecated stock is liable to be inspected by bank’s authorized person. banker must ask himself the question “Why should we lend to this customer in particular? Why not the next one?” Consideration for Lending Decision: Usually. amount.As physical possession of goods remains with the borrower. period and profit / interest rate being paid on such deposits is important in order to ascertain the profitability of the overall relationship. Availability of collateral securities although essential should never be considered for extending credit. Besides these. Second source of repayment is the general cash flow of the borrowers business arising out of operations other than the sale of specific goods. First source of the repayment is the revenue generated by the business of the borrower. there could be other supplementary considerations such as deposits of the borrower. The creditor (Banker) has the right to take possession of the hypothecated goods as and when required. It may be for a month two months. Third and the least derivable source of repayment is encashment of collateral securities. theft. 6 months and for a maximum period of 1 year. Before recommending facilities for any customer.

2. 6. 4.DOCUMENTATION: Document shall include any matter written. overwriting or erosion in the documents. There should be no cutti9ng. But for making a profitable and safe decision. The banks resorting to the court of law would only be benefited if the documents are properly executed and they are valid and enforceable at law. Placed in Safe. the credit officer prepares CLP. • Kind of Security. The parties should sign according to their usual specimen signatures. initials of the parties are not enough. Properly diaries. it is very essential to have proper documentation before the loan is disbursed to the borrower. Once the CLP is prepared. utmost care should be taken in execution of the documents. figures or marks or by more than one of those means which is intended to be used for the purpose of recording that matter. Rights and liabilities of the parties involved in the credit transaction are mainly established from the contents of the documents executed by the parties.The entire information will help the decision maker in reaching a conclusion about the relative importance of the customer for the bank. . the information on which the decision is based should be gathered carefully and checked that the figures are correct. b. • Mode of Charge. Then Branch Credit Committee further screens out risky proposal. Each page of the document is requi9red to be signed by the executing person. Therefore. The documents must be properly stamped with full value. In this way a profitable portfolio is maintained. Documents must be completed in all respects. Blank and undated documents sometimes pose serious problems for the bank. • Nature of Facility. Obtaining the proper documents. alteration. legally valid and enforceable. The Credit Officer first uses his judgment and recommends potential proposals. first Branch Credit Committee approves it and then it is forwarded to Head Office. So. the bank may lose its claim. 5. must authenticate the cuttings. 3. If there is any defect in execution of the documents. which is used for approval of the proposal. After receiving the proposal and processing it by analyzing it’s all risk-return characteristics. expressed or described upon any substance by means of letters. The type of document to be obtained mainly depends on the following aspects: • Type of Borrower. Nothing is better proof than the documents themselves for the banker in pleading for his claim. CLP is the input of the decision stage. from where the final decision is made. is a prerequisite for the disbursement of an advance by bank. Documents when executed should be: a. The banker must take care of the following: 1. The executing person under his full signature if any.

• Date of maturity. 4. maintaining and balancing the documents is also an important activity of the Credit Department. • Nature of the business. 5. . These documents are counted. are obtained. Documents where required must be duly registered. 2. Committee holds a meeting and takes decision whether to give loan or not. The concerned Credit Officer in the branches prepares proposal (CLP). Disbursement: Procedure of Loan Disbursement: 1. These account numbers are previously fed into the computer if the system is online. Different documents are of different values. A separate ledger is maintained for these blank documents for accounting purpose.7. • Purpose of facility. Credit line proposal include the following information: • Date of opening. Maintaining and Balancing the Documents: Among other activities. • Type of facility. This decision is taken by keeping in view all the risks associated with that borrower. it is also known as Credit Sanction Advice (CSA). • Source of repayment. 8. These documents carry a substantial value and create a great problem if any dislocation occurs. Documents should not be punched or torn out. The purpose of making CLP is to record the required information on it and having approval of the Branch Credit Committee and Head Office on it. which are legally valid and enforceable at law. 3. Proper documents. There is a Branch Credit Committee in each Branch. After a short time period. the total value of actual documents is matched with the balance in the ledger. New account with a new account number is opened. • Securities. stamped and properly placed in the strong room of the branch.

This exercise of monitoring alerts the amulets or account manager to the need for appropriate corrective action starting with a detailed discussion with the borrower to understand the borrower’s point of view on the areas high lighted by the analysis of the account. The Drawing Power (DP) is issued to each borrower. After a fix time period. Drawing Power depends on the amount of loan and the period of financing. For instance. After all other requirements are fulfilled. Account Monitoring Loan Status Review: Account monitoring system is an evaluation technique intended to provable a basis for reviewing over all condition of an existing borrower. These questions are answered for this purpose. Credit Account and the borrowers account. 10. This project is started in DHA Karachi Phase-VIII. 9. The borrower draws cheques of what maximum value? Is post dated cheques drawn by the borrower frequently or not? Is there a default on interest or mark-up payment? OTHER FINANCING ACTIVITIES: Instead of giving loan to the general public Credit Department of Askari Commercial Bank performs various activities to facilitate the general people and Armed Forces. It will help in identifying symptoms of possible problems in the areas of financial or business management and indicate the need for corrective action to prevent the account form becoming slow moving or eventually delinquent. Three Bed Apartments . the credit account has a credit balance equal to the amount of loan. on each installment date. Now the borrower can draw the amount from his account according to his allotted Drawing Power (DP). There are two accounts maintained for each borrower. 8. which are as follows: CREEK CITY: (A project of DHA Karachi) DHA (Defence Housing Authority) of Karachi has recently announced his new scheme in the name of Creek City. Recently ACBL performs various financing activities. 7. the loan is actually transferred to the borrower by debiting the credit account and crediting the customer account. In this project Four types of Apartments will be constructed. different things about the current status of the account are checked. Loan repayment installments are deducted by debiting the customer account and crediting the credit account.6. what is limit of the account? What drawing power was allotted to the borrower? What is the outstanding balance? Since when the account is inactive? What is the Net Asset Value? Account Conduct Review: This section includes monitoring the account conduct. In the start. Account Status Review: In this section. borrower has to repay the principal and mark-up.

Following are features of this financing scheme: Featuring: Loan amounts from Rs.are finance by ACBL. 5000/.are nonrefundable. and for both pent house Rs. Main function of a commercial bank is to channelize saving from the savers to the ultimate users of funds. 90% of the amount out of Rs 150000/. 30000 to Rs. According to this financing Scheme only Armed forces can avail. Two board categories of deposits with reference to time period are: .e 3 weeks Funds may be obtained at any ACBL branch Some restriction are apply on getting the loan. Conditions of financing is that the person must be the the account holder of the bank whether that person is salaried class.Four Bed Apartments Pent House with Swimming Pool Pent House without Swimming Pool The balloting amount of three and four bed apartments are Rs. Repayment period from 1 to 3 years Fixed monthly repayment Low markup rate i. out of which Rs. The process of collecting saving is called Deposit Mobilization. DEPOSITS DEPARTMENT Deposit is the functional unit of a Commercial Bank. Askari Commercial Bank takes no security against this financing. No bank can run its operations without deposits.5% on the financed amount. This amount is repay in the period between 1 to 5 years and the markup rate is 8. Askari Bank’s Personal Finance: 8 Askari Bank recently started a new financing project that is Askari Bank’s Personal Finance. except they accept the promissory note against financed amount. 200000/.155000/-. business class or army officer. 300000 are available. Your age is between 21 yrs to 57 yrs You have a verifiable minimum gross monthly income of Rs 15000/- Minimum length of confirmed service with present employer is at least six months with a total length of at least one-year service.e 12% No pre-payment penalties Shortest Processing time i. 205000/-.and Rs.

Current Account: . Statement of PLS accounts are normally provided once in every six month as on June 30 and December 31. The amount of initial deposit should be mentioned on AOF. PLS SB Accounts can be opened with initial cash deposit of not less than Rs. companies. 9. These accounts may also be opened by charitable institutions or got provident fund and other funds of benevolent nature by local bodies. The rate of return on PLS account vary with minimum balance. 4.999. societies and educational institutions.10000. or jointly in the names of two or more persons. TYPE OF ACCOUNTS: PLS Saving Bank Account: Saving deposits were introduction to inculcate and encourage the of saving among people of small means in order to achieves of Islamisation of the banking system in the country. 2. The PLS Saving Account may be opened in the name of an individual. No service charges shall be levied on PLS saving account as per SBP prudential regulations.Demand Deposit: These are payable on demand. Deposits received under this scheme are invested in non-interest bearing advances and other avenue so as to eliminate the element of interest. They include current account.5% is deducted from the PLS SB account holders on the 1st Ramazan-ul-Mubarik. The profit is paid on half yearly basis announced by the Head officer after June 30 and December 31. Profit on PLS SB deposit is calculated on minimum monthly balanced standing from 6th of the month till the end of the month. A minimum balance of Rs. Not more than one account may be opened in any one name except in cases where such accounts are opened in the name of parent of guardian for more than one child. 3. Time Deposit: Payable on demand with certain maturity. Balanced below a certain limit that is announced by the government every year is exempted form Zakat.10. 6.999. margin account) and call deposit receipt. sundry deposit (e. 7. associations. 8.g. The rate of return is 1% on minimum balance of up to Rs. A withholding tax at the rate of 10% on profit is also recovered from the account holders irrespective of the amount of profit. 2% on Rs. autonomous corporations. Attracts profit with respect to time. Points to Remember: 1.500 (or as per bank policy announced from time to time) will have to be maintained for qualifying for sharing profit/loss. No profit is given on demand deposits.9. the government authorized the banks to accept Saving Deposit on profit and loss sharing basis. 5.000–24. Zakat at the rate of 2.

000. Cheques are used for withdrawals from these accounts. Profit on this account is paid on maturity. PLS Term Deposit: Fixed or term deposits are the major source of funds of a commercial bank. It is an open account for which there is no fixed period for deposit. REMITTANCE DEPARTMENT .5. 5. religious bodies.5. Points to Remember: 1. They are not payable on demand like the current deposit.000 is to be maintained in PLS Term Deposit. 6. by the customer on all working days of the bank. The depositor can only withdraw them after the specified period of time. 2. The persons or firms trust. Loans and credits may be sanctioned to the credit worthy current account holders with ease. 1 Year.50% on 3 Months. A minimum balance of Rs. which have surplus funds keep the money in fixed deposits with bank.25% on 2 Months. 1. Bank does not pay any interest on these deposits.A current account is a running account. 1. There is no restriction on making deposits in an d withdrawals from this account. PLS Term deposit are grouped into the following categories: 1 Month. 4. 2 Months. Term deposits.5% on 1 Year.will have to be maintained. The amount of initial deposit should be mentioned on AOF. are deposits kept with a bank for a certain period of time. which is continuously in operation. Because the deposited amount remains fixed during the period the profit is calculated on that fixed amount. 4. 2% on 6 Months. 3. 2. 2. 5. Points to Remember: 1. 6. Rate of interest is 1% on 1 Month. as they can be withdrawn without notice. The customer deposits without the current deposits without previous notice to the bank. as the name implies.---------. The rate of interest on fixed deposits is higher than that of saving deposits and it varies with time of deposit. Current account can be opened with an initial deposit of not less then Rs. Minimum balanced of Rs. 3 Months. 6 Months. 3. The holder of Term Deposit cannot issue cheque for the withdrawal of the amount.

• The entry is made in the DD issuing register. transfer of funds message is passed through telephone or telegram. • The bank charges such as commission. Telegraphic Transfer (TT): It is the quickest way of transfer of funds from one place (Branch) to other place (Branch) of the same bank. he fills in relevant information and signs it. • Then the officer of remittance department signs it and operation manager counter signs it. issued by the branch of the bank drawn i. • The officer checks the information form. • DD advises are printed and mailed to the respective branch. a mail transfer advice reaches the drawer branch the next day through courier services. If he fills the tax exemption form. If two banks are involved then the DD is sent to other bank but in other case it is handed over to the applicant. a customer demands that his funds should be transferred through the quickest means.e. Issuance Procedure: • A demand draft application is given to the customer. • An entry is made on the DD payable register and the vouchers are made. . payable at some other place (branch) of the same bank. DD is given to the customer. Generally.The need of remittance is commonly felt is commercial life particularly and in everyday life generally. • The DD credit advice is received through mail. DD payable is Nil. The numbers are checked and signatures are verified. excise duty is charged as per effective schedule of charges. Also customer is able to meet its day to day financial requirements. But sometimes. By providing this service to the customer. • Vouchers are given for posting and the entry that was made in the register is closed i. tax is not charged.e. • DD credit is attached with the vouchers and given for posting to the computer. • When DD is received the test numbers are checked and the payment is made. • In case of cash deposit. bank earns a lot of income. • Vouchers are prepared and posted. the cashier counts the amount and signs the DD application and enters it in the register. Payment Procedure: • The bank receives DD. In such cases. The main function of the remittance department is to transmit money from one place to another. Demand Draft: It is an instrument payable on demand for which value has been received.

Issuance Procedure: • The standard form is given to the customer. He fills in the details and signs it. Pay order issued from on e branch can only be payable from the same branch. tax and telex as per effective schedule and signs it. • If he fills the tax exemption form then no tax is deducted. • When commission bill is received.3% are applied. It is also called confirmed cheque. There are 3 copies. the charges such as commission. TT receipt is strictly nonnegotiable. Issuance Procedure: • The request of issuing TT is taken on the standard printed form. Pay Order: It is an instrument issued for payment in same city. In Askari Commercial Bank online system is used. • The Head of Remittance Department checks it. • The entry is made in the TT payable register.This mode of transfer was used before online. Payment Procedure: • When a TT arrives. . • The entry is made in the TT issuing register. one to the Head Office and one is kept for record. it is attached to the TT office copy in the file. stamped and handed over to the applicant as a receipt. the original one is faxed to the Branch. • If there is no account then the TT received needs revenue stamp and then payment is made. the test numbers are checked and the signatures are verified. Online system is very effective for this purpose now-a-days. because bank issues this on it own guarantee. It is normally referred to as banker’s cheque. • Bank charges (or commission) as per the schedule of charges and the withholding tax of 0. • Then a TT is made on white slip. • The cash amount of the pay order is received. • A cash memo is signed. • The concerned officer checks the form. • The customer fills the form properly and signs it.

• A voucher is prepared and posted. Payment Procedure: On presentation of the pay order receipt. No Excise Duty No Commission Issuance: • A credit voucher is sent from the account department to the remittance department.• Then the pay order receipt is filled accordingly. • A voucher is also made and posted at the computer. • Counter foil is also filled. • It is signed by authorized Officer. • It is entered in the pay slip register. • PO entry is made in the PO issue register. Pay Slip: It is an instrument issued by the bank for the settlement of its own payment. • PO is posted at the computer. two authorized officers of the branch sign the receipt. It is used for payment by the bank to anyone (may be employees) in this case only one bank is involved. • Pay Slip book is taken out and filled according to the credit voucher. Payment Procedure: . • Then the amount is credited to the account of the customer or pain in cash. • The order is then handed over to the applicant after obtaining his signature on the PO Form. • An entry is made in the pay order issue register. • Pay Slip is then handed over to the customer. He is the issuer as well as the payer. • Then the authorized officer signs it after checking the pay order.

• Then payment is made and it is posted in the computer. Procedure: • The OBC of other branches will be the IBC of this branch. • At the end of the day. • After that when the pay slip is received by the bank for payment. after that entries are made. an IBCA is prepared and mailed to the branch from where the cheque was received. • Commission charges are deducted from the account. which are received by the bank from other branches out of the city for local clearing are called Inward Bills for Collection. • They are entered in the OBC Register and OBC numbers are given to them. The IBC numbers are allotted to them. • The OBC numbers are checked from the OBC register. two vouchers are prepared and posted. it is again transferred in the register. • The office copy is filled and original schedule is mailed. • The cheques are entered in the IBC register. • The OBC forwarding schedules are prepared for different branches. are called Outward Bills for Collection. • The respective cheques are attached with the schedule. Procedure: • The cheques that are of other cities are separated. • After realization. So an OBC forwarding schedule is received by mail. Outward Bills for Collection: The bills. Inward Bills for Collection: The bills.• Pay Slip is just like a cheque and bank is liable to pay against pay slip. • On clearing. ON LINE TRANSACTION: . • The cheques are lodged for clearing. the respective banks send back the OBCs alongwith the IBCA (Inter Branch Credit Advice). which are received by the bank and sent to other cities (branches) for the local clearing in that city.

Since clearing does not involve any cash etc and all the transaction take place through book entries. 50/- Rs. There are certain requirements. The primary account number is the regular account number as maintained with the bank of the person and the bank on which the card is issued gives the secondary account number. 25001 . In this case the accounts and their details in the other branches of ACBL can be displayed on computer which is connected through server to the computer at the other end. Advantages of Clearing: 1.and in case of faulty card means when the card is inserted in machine and on the screen the caption faulty card is written then no charges are taken by the bank for the issuance of new card. This branch has issued almost three thousand five hundred cards. the number of transactions can be unlimited. the charges are Rs. Commission is charged on providing this service this is beneficial as it takes very little time in the transference of funds. 500/- Rs. In case of replacement. Following charges are deducted in online transaction: Table 1 Amounts Charges Up to . CLEARING: Meaning of clearing: The word clearing has been derived from the word “Clear” and is defined as “a system by which banks exchange cheques and other negotiable instruments draw on each other within a specified area and thereby secure payment for their client through the clearing house at specified time” in an efficient way.100/- Rs. 25000/- Rs.are taken and a new card is issued by the Head Office. 200001 .100/.Askari Bank has provided the facility of on line transaction. which are to be fulfilled. If someone gets to know the PIN of the ATM of a certain person he can operate that easily so the PIN should not be disclosed to anyone.100/. This beneficial because if a person wants to draw some amount he can easily do it after banking hours. . The person can change the PIN from time to time so that there is no chance of fraud in his account. 2000001 Above Rs. buy the person before he can have ATM card. 250/- Rs.Rs.Rs. 500001 . In case the card of a person is damaged or the person loses his card. 2000000/- Rs. then charges of Rs. 200000/- Rs.750/- ATM: Automated Teller Machine (ATM) is facility provided by the Askari Commercial Bank Limited Multan Branch.Rs. There is a need of primary account number and then the secondary account number. This facility is available all the branches of Askari Bank except Bhai Pheru Branch.Rs. Apart from this there is Personal Identification Number (PIN) without which ATM cannot be operated. 500000/- Rs.

1. its total being amounts Rs. ACBL has to receive Rs.15. more and more people are inclined and attracted towards banking. The cheque delivered to the representatives of other banks for clearing are called outward Rs. If on the other hand the total amount of cheques and other negotiable instruments draw on a certain bank by other bank is more than the total amount receivable by it from other banks. Clearing House: It is a place where representatives of all scheduled banks sit together and interchange their claims against each other with the help of controlling staff of State Bank of Pakistan and where there is no branch of State Bank of Pakistan the designated branch of National Bank of Pakistan acts as controlling member instead of State Bank of MCB so difference is Rs. 5.000/-.respectively. 4.1.30. embezzlements and pilferage are totally eliminated. Procedure of Settlement: Presume that ACBL got the cheques which are drawn on HBL. cost and labor are saved.000/.and Rs.000/. Rs. .to NBP so difference is Rs.25.000/.P.000/. As major payments are made through clearing.20.B. NBP and MCB for amounts Rs.000/.2.000/.15. ACBL has t receive Rs. Rs.95.000/.from NBP and to pay HBL so difference is Rs.75. GRAND TOTAL: 35000-45000-15000 = -25000 i.000/.15.75.000/-. then this bank’s account will be debited on that day. A lot of time.000/-.25000 debit. Working of clearing house: All the bank which are the member of clearing house maintain accounts with State Bank of Pakistan by debit and credit to which the clearing settlements are made. No cash is needed as such the risks of and debit Rs.000/.000/. it means that this amount is to be credited to ACBL A/C with S. Since it provides an extra service to the customers of banks without any service charger or costs.35.30. on the other hand the cheques drawn on ACBL are from HBL. its total being Rs. 1.debit which means the house is against ACBL for Rs.30.respectively.debit is Rs. 3. the banks can manage cash payment at the counters with a minimum amount of cash in vaults.000/-.000/.95. a bank delivers cheques and other negotiable instruments worth more than the total amount of Cheque received by it that banks accounts with State Bank of Pakistan will be credited with the differential amount. NBP and MCB of Rs.000/. 3. If on a particular day. ACBL has to receive from MCB Rs.50. whereas cheques received from the representatives of other banks for payment are called inward clearing.debit.25. 50. it means that this amount is to be debited from ACBL account. If we separately show it them.and to pay Rs.000/. The difference between Rs.debit.from HBL and to pay Rs. 15.45.e.

The title of account on the paying-in-slip is that of payee or endorsee (with the exception of bearer cheque). it should be properly authenticated 7. The schedules are arranged bank-wise . The particulars of the instruments and the and the pay-in-slip or credit vouchers are entered in the Outward Clearing Register. If order instrument. suitably endorsed and last endorsee’s account being credited 8. the credit voucher are separated form the instrument and are released to respective departments against instrument and are released to respective departments against acknowledgement in the register 4. 2.25.Hence ACBL A/C with State Bank of Pakistan will be debited with Rs. There should be no material alteration if so. If an instrument is in order then out bank’s special crossing stamp is affixed across the face of the instrument. This called as “Debit and Credit Rule”. where a bearer cheque does not required any discharge and also an instrument in favor of a bank need not be discharged. Instruments is not mutilated 6. Signature of the drawer appears on the face of instrument 5. The amount of the instrument is same as mentioned on the paying-in-slip and counterfoil 10. The register is balanced. Clearing stamps is affixed on the face of the instruments. The name of the branch appears on its face where it is drawn on 2.000/. The instrument is suitably discharged. Then the following steps are to be taken:- 1. Outward Clearing At The Branch: The following points are to be taken into condsideration while an instrument is accepted at the counter to be presented in outward clearing: 1. The instrument along with paying-in-slip is retained while the counterfoil is given to the customer duly signed. Endorsement is in accordance with the crossings if any 9.and the contra will be other banks accounts respectively. It should not be stale or post dated or without date 3. paying-in-slip and counterfoil (The stamp is affixed in such a manner that half appears on paying-in-slip and half on counterfoil). Serial number is given to each voucher 3. Amount in words and figures does not differ 4.

The entry is made in the Inward Clearing Register (serial number. 4. amount of the instrument is written). 5. The schedules and house pages are signed by the officer incharge with branch stamp 8. The instruments along with duplicate and house page are sent to the Main Office Inward Clearing Of The Branch: 1. The house page is prepared from schedules in triplicate 7. This department deals with the following:- • Import • Export • Foreign Currency Accounts • Foreign Remittance • Submission of Monthly Reports to SBP IMPORT: The international trade transaction. instrument number. the regulating body of imports was controller of Import and Export. account number. in which one country buys goods from other country. The instruments are detached and sort out department wise 3.5. The grand total of the house page is taken and agreed with that of the outward clearing register 9. . The instruments are sent to the respective departments against acknowledgement in the Inward Clearing Register. Foreign Exchange Departments of all banks are restricted to word under the rules and regulations of government. is called import. But this function has been shifted to Export Promotion Bureau. two copies of which are attached with the relevant instrument and the third is kept as office copy 6. Previously. The particulars of the instruments are compared with the list 2. The instruments are scrutinized in each respect before honoring the same FOREIGN EXCHANGE DEPARTMENT Foreign Exchange Department works like the general bank departments with the difference that it deals in foreign currency. The schedules are prepared in triplicate. The import trade in Pakistan is governed by import and export Act of 1950.

on which the draft is drawn is called negotiating bank or paying bank. Account party: The buyer or the importer on whose account and request the letter of credit is opened is known as account party or opener. (II) that it will pay or accept draft drawn upon it up to a stated amount with a specified time. The import licenses issued by the Import Trade Controller are required to be registered with the State Bank of Pakistan. they sign a contract. the importer then negotiates with the exporter. (III) the payment will only be made to the exporter if he compliers with the terms of credit. Import licenses are a type of artificial restraint on the import trade of a country. provided drafts do not exceed a specified amount. 1. 4. Parties to a letter of credit: There are four parties involved in letter of credit. A letter of credit is a commitment on the part of buyers bank to pay or accept draft drawn upon it. A letter of credit thus is a (I) written undertaking by an importer’s bank to exporter’s bank. To acquire import license. Thus contract includes all information of terms and condition of sale. Negotiating bank: The paying bank in the exporter’s country. A letter of credit is issued by the importer’s bank. which deals in foreign trade transactions to issue a letter of credit in favor of the exporter.Import License and Registration: The individuals and firms who desire to import goods from the foreign countries are required to obtain import license. 2. When they reach to an agreement on all terms of sale. import license etc. Issuing bank: The bank which issues or opens a letter of credit at the request of importer is called issuing bank. brief description of goods. Contract of sale: After getting the license. documents to be presented. The information. Opening of letter of credit: The main steps involved in the opening of the letter of creditor as follows: Application for letter of credit: The importer will request his own bank or any other bank. the importer has to submit applications to the licensing authority. He will prepare an application on the prescribed form available from the bank. which are supplied in the application are based on the contract of sale and include only the important feature of contract. Letter of credit: Foreign trade payment problems are mainly solved by a letter of credit. such as value of merchandise. Exporter or seller: The seller or the party in whose favor L/C is drawn is the exporter. The importers can only get their merchandize cleared from the custom authorities if they have the import license duly issued in their names. . He is also called beneficiary. port of unloading. port of shipment. If guarantees payment to the exporter up to specified amount of money provided the terms and conditions laid down the L/C are fulfilled. 3.

the amount available covers the letter of credit applied for. the advising bank will inform the exporter about opening a letter of credit. Scrutiny of application: Before issuing a letter of credit. Issue of the letter of credit: The importer bank after being fully satisfied will issue a letter of credit in favor of the exporter. the importer discharges his obligations to the accepting bank on or before the maturity date of acceptance. In case of a time draft. Liability of the issuing bank: On receipt of documents and the bill. Shipment of goods: When the exporter receives L/C. the importer’s bank pays the amount on the same day charging the importing customer’s account. Role of negotiating bank: The negotiating bank after receiving all the documents and the bill from the exporter will scrutinize them whether these conform with the terms of letter of credit. Cash margin: The bank asks the importer to deposit cash or securities with the bank. Payment to the exporter: The exporter can obtain payment from the negotiating bank by discounting the draft (L/C) immediately after shipping the goods and obtaining shipping documents. In such a case. possesses the import license issued by import control. If the documents on the face appear to be in order. In case any defect is found in the documents and the draft is honored by the issuing bank the importer can claim damages on the issuing bank. The proper margin of cash or securities to be deposited is decided by the bank depending upon the credit worthiness of the importer. he examines it to ensure that it conforms to the terms of contract of sales. Charges of Letter of Credit: Table 2 Cash LC’s First Quarter or Part Thereof Each Sub-sequent Quarter or Part thereof Minimum . The L/C may be sent directly to the exporter or the advising bank in the exporter’s county. the issuing bank will examine them. market demand of goods. Authorities. If the documents of title accompanying the bill are in order. collateral offered to cover the credit etc. In case of sight draft. not to see whether goods conform to the contract of sale. the payment would be released by the bank. The issuing bank is only accountable for the completeness of documents. He then shifts the goods and presents all required documents along with the bill to negotiating bank. the bank will scrutinize whether the importer is of good financial standing.  Payment by importer to the bank: First the importer pays all his obligations the bank then bank releases the documents. The accepting bank will then release all the shipping documents to the importer. these will be sent to the importers bank for payment.

15% Or subject to negotiation and approval from Credit Division EXPORT: The international trade transaction in which one country sells its goods to other country is called Export. Exporter should bring other documents like certificates of Origin. Form-E should be filled correctly and then bank authenticates the E-Form. 25M Commission 0. Two types of rates are used in evaluating the amount: 1. Usance rate: It is the rate payment of which is to be made at a future date. 90. The procedure of export is same. Lodgment: Lodgment means making the payment to exporter by bank against the purchase of bill. Shipping Company issues Bill of Lading or Airway Bill. payment of which is to be received within 12 days from the date of lodgment. described here.20%     Cost in excess of Rs 25 M Commission 0. Bank gets the documents from the exporter and enter it in a FBP Register in this register first of all FBP number is given. Exporter goes to the custom authorities for custom clearance. The steps involved in import are described earlier from the importer’s point of view. It restricts the export of some goods and reinforces export of other.20% 0. packing list etc. 15M Commission 0. normally within 30.25% Cost above Rs. importer and the name of bank which was open the LC. Realization: .40% 0. The activities. 5M Commission 0. The controlling body of export in Pakistan is Export Promotion Bureau. as it can be described from exporters point of view.30% Rs. or 180 days. Bank scrutinizes the documents. bank purchases the export bill and makes payment for the value of goods in Pak Rupee to the Exporter. FOREIGN BILL PURCHASED (FBP): Following requirements must be fulfilled before the purchase of Foreign Export Bills. the enter the name of exporter.Cost to Rs. After fulfilling these requirements. 60. Bank issues the Form-E. 1000/- Cost over Rs. 150. OD Buying rate/At sight rate: It is the rate of export bill.25% 0. 15M to Rs. it gives different incentives to the businessmen for enhancing the exports and reducing the Balance of payment deficit. 120. 2. Exporter should be account holder of the bank.35% 0.5M to Rs. commercial invoice. which are different.

of Form-E. Reporting of Form-E: Every Exporter is required to submit a declaration to custom authorities for goods exported. Reporting of Form-M: Every foreign bank deducts some charges form the value of goods. At the end of the month of realization of the amount. In accordance with instructions of SBP. It includes the list of Serial No. In FBP bank paid the amount of goods export to the exporter before the maturity of bill and get some charges. Code No. which is certified by authorized dealer. SUBMISSION OF MONTHLY RETURNS: It includes reporting of Form-M and Form-E to SBP. Standard Chartered Bank. FOREIGN DOCUMENTS BILLS FOR COLLECTION: (FDBC) This is another activities which is performed by the export department of ACBL Multan Branch. Euro. amount and purposes of every Form-M. This declaration is submitted on prescribed Form-E in quadruplicate.Realization means receiving the payment from the foreign bank for the export of goods. amount. Japanese Yen. Serial No.  SECTION 3  ANALYSIS . There is a prescribed Performa used for the reporting of Form-E. in FDBC parties deposits the export documents to the bank for the collection of bill. foreign currency accounts are opened in these currencies: US Dollar. 1. Form-E is reported to SBP at the end of the month. of country and commodity. Bank performs this function for the convenience of exporter. Bank gets the credit advice from the treasury office which is situated in Karachi. It is for miscellaneous purposes like foreign bank charges or foreign agent commission. For opening of account a Form is provided to the person/party. Japanese Yen and Euro with nominated branches. Procedure of opening foreign currency accounts is same as other accounts. Pond. ABN Amro. currency. Form-M is used to declare this outflow of foreign currency. American Express. No Zakat is deducted on these accounts. Askari Commercial Bank has its agency arrangements in those countries. these incentives reinforce and motivate the people to invest in foreign currency accounts rather to keep foreign currency idle. no wealth tax deduction will be there. Four copies of Form-E are maintained. where its own branches are not established. in which the amount is realized. In this function bank performs as a intermediary party. Funds are transferred abroad by Foreign Telegraphic Transfer Swift MT-100 is used for this transfer. Form-M is reported. It includes the reporting period. introduction of the new account holder or by the Officer of the Bank. Its agency arrangements with Citi Bank. no income tax deductions. FOREIGN CURRENCY ACCOUNTS: A depositor can open account in US Dollar. Pond. Foreign remittance: Bank also operates in Foreign Currency accounts. Whereas.

2 17.6 4. The report show that the ACBL increase its Profitability for last five years. Following are the financial analysis obtains from the annual report of ACBL.3 14.5 20 3. FINANCAIL ANALYSIS 9 ACBL achieve the best annual reports of services organization award in 2002.3 26. Table 3 Rs.2 47. plants & equipments Other Assets Total Assets 501 1130 28731 536 1546 31027 641 1213 38454 723 1824 50980 Rs in Billion 1663 1835 70313 Imports BUSINESS TRANSACTED Exports Guarantees 11.8 6. In Million 1998 Total Income Interest Income Interest Expenditure 4035 3475 2511 1999 3889 3350 2486 2000 3840 3213 2274 2001 5047 4251 2902 2002 5704 4655 3017 Fee. short term funds and statutory ASSETS deposits with SBP 1937 986 951 23417 2194 1184 9708 13888 2046 986 1060 24358 3145 1477 13056 8679 2155 986 1229 30360 2882 3058 17893 8651 2579 1036 1521 41200 3222 3980 23292 11706 4173 1087 1939 51732 3392 11016 30035 26759 3504 7210 10056 13436 10020 Property.8 5.2 .5 22.2 30. Comm.8 32 38. & Exchange Income PROFITABILITY Other Income Spread Operating Expenses Profit before Income Tax Income tax on profit profit after taxation 509 51 965 569 854 495 359 472 67 864 589 712 430 282 506 122 939 680 752 436 316 677 119 1349 854 1008 458 551 802 247 1638 1093 1244 557 687 Total Shareholders' funds SHAREHOLDERS' FUNDS Share Capital Reserves Customer Deposits LIABILITIES Refinance borrowings Other Liabilities Loans and advances Investments Cash.2 Percentage 40.

The productivity of the bank is very good. of Branches 996 27 1001 28 1147 29 1281 36 1456 46  SWOT ANALYSIS SWOT (Strength.Return on average shareholders' funds (after tax) 19.06 24.5 0. Due to this problem. Selection process is not on merit due to which competent persons cannot be selected. Bank should boost the product development and increase the range of facilities offered for customers. Weaknesses: ACBL has lesser number of branches as compared to many other branches.6 19. plants & equipments to average shareholders' funds Capital adequacy ratio 1.9 20.5 1.1 27 16. The bank has also started ATM facility in most of its branches.2 20.5 10.85 5. which was established by Army Welfare Trust.9 6.3 12 SHARE INFORMATION Earning per share Net Assets per share 3. of employee No.32 38. Weaknesses. Bank is not introducing new products and new saying schemes.9 15 58.2 20 56. Opportunities & Threats) analysis of ACBL is described below: Strength: ACBL has got a well-developed on-line system in most of its branches.5 11.95 30.5 53.75 3 21.4 20 41.3 Return on average assets (after tax) RATIOS Rate of cash dividends Advances to deposits Property.2 30. army officers can not avail the benefits of their own bank.78 Rupees 49. ACBL have strength that most of the imports & exports which are done in Multan are handle by ACBL Multan.9 17.38 OTHER INFORMATION No.64 2.3 14.9 1.2 15 23. Bank is providing a high quality service to its customers.6 0.1 20 58. The human resource department is not performing the function of selection and recruitment very effectively.98 27 13. . 24-hour banking is new trend in Pakistan and ACBL has also taken apart in this trend. One distinctive feature of the bank is that it is the only bank working for the welfare of army officers. Remittance Department is working very efficiently in transferring the funds of people due to this system.

Threats: ACBL has many competitors. The profit rates on ACBL deposit schemes are quite low when compared with other banks especially with the National Saving Centers. So. Bank should lend to very sound parties and increase its payment rate. Stock exchange is very volatile and takes immediate effect. in the time of crises. which would decrease deposits. Opportunities: Govt. This chance of war may cause army officer and their families to increase the frequency of withdrawals. conservative investors return to saving deposits. which are continuously increasing its products and marketing aggressively. ACBL has an opportunity to improve in technology. It may cause its customers to shift to competitors. • Deposit Decreased • Advances Decreased • Import Decreased Reasons For Decreasing Deposits The major reasons for decreasing deposits are Low Profits Rates as compare to other banks: Low profit rates are one of the major reasons for meeting the deposit targets. Pakistan India relations often create a war danger. . Some other banks have competent taskforce.Bank is weak in its credit management. ACBL is surrounded by many competitors. is taking very bold steps to promote IT in Pakistan. Because human resource is the most valuable resource. It has an opportunity to do aggressive marketing to increase its business. In todays every customers is the rational customer he knows the value of money and wants a best return on his money. which is also a threat for ACBL. Which effect the whole business of ACBL Multan  SECTION 4FINDINGS AND RECOMMENDATIon  FINDINGS Following are the problem face by the ACBL Multan Branch since last quarter. In Multan Imports & Exports business are done on seasonal basis.

Now in the stock exchange that are not only day by day but also giving handsome profits in the shape of either in dividend or the stock trading.Earlier ACBL was able to attract customer due to their ancillary services like ATM Cards.0% profit rate (quite low as compared to other banks). Due to the increase in foreign remittances there are ample opportunities for good deposits but a knowledgeable customer always invest in the stock exchange that are not only growing day by day but are also giving handsome profits in the shape of dividends and stock trading. Awais account number 01165007017 deposited 50 million in ACBL on which he was getting 3. Online Banking etc. i. like national saving schemes and investment bank. 2003 to 310. are using their limits to the full as they have to buy and stock the cotton for whole year for further processing later in the month came. The left behind deposit is invested in that financial institution which provides him handsome return/profit. So ACBL will be able to achieve the targets later in the year. APBUMA and HQ2 corps are the main accounts that shifted to other banks due to our low profit rates. So the only thing through which they can increase their deposits are their profit rates.  Under lien deposit have been withdrawn: High rates on advances against lien deposits have been one of the major reasons for deposit withdrawals. On of ACBL customers Mr. Hussain Mills. Later he was given loan against that deposit by making the account under lien at 7.e October – January. June 2003. Major Withdrawals Table 4 Account # Account Title Withdrawal during the period 01-04-2003 to 3006-2003 0110006592 HQ2 CORPS 23 M 0116507017 M. Fatima Enterprises etc. Credit Cards. so ACBL plus points are no more their advantages. but now all the banks are offering these services through their own network or through third party contracting.5% markup. That is also the case in Oil Seeds business (other major business sector in Multan). They totally withdraw approximately 40 M during the 2nd quarter. AWAIS 21 M 0110058739 APBUMA 17 M Reasons for Decreasing Advances: Seasonal Business: Multan is one of the cotton growing cities of Pakistan. because the customers only want maximum profit on their investment. 1.  High Rates of Markup: . During this period all ACBL major clients that include Fazal Cloth Mills. Most of the businesses in Multan are directly or indirectly linked to cotton that is also the case with ACBL clients. Ahmed Fine. but he got a good offer from other bank that bank not only gave him the good deposit rate of 5% but also offer him the loan against deposit at lower rate them Askari Bank. Most of ACBL clients are from textile sector which borrow for 4 months as so. They usually borrow during the period of April to July and their borrowing is to full extent in the month of July. Due to this dual advantage he shifted his deposits to that bank and his account decrease a net withdrawal of 21 million during a period of 1st April.

005. 2.000 SHUJUABAD OIL FIM $ FCF FE-25 $ 2. Our big groups borrow from other banks at money market rates and pay to us when they want their stock and later they pay to that bank at quite a low rate. The rates on these money market transactions are lowest in the market and ranges between 1. This is money market transaction.000 . 13. which they would have to pay us. Their payments and repayments are done in full. which is charged to clients.708 AHMEDFINE (Pvt). Askari Bank has not started these transactions.2% to 1. FAPC $ FCF PART I FE-25 $2. many customer are running their business to other banks which are offering them low rates as compared to us .785.820 FAZAL CLOTH MILLS LTD. but now the banks due to high liquidity have started to offer the money market transaction rates (with slight increase) to their customer which are highly liquid companies for short term period i. who have adjusted their TF in advances due to high rates.000. some of the parties to whom TF was given are adjusting their TF in advances as they are able to get TF at better rates as compared to ACBL. Non Introductory of Money Market Transaction: When the banks have more liquidity and they have more deposits with them than they can lend to customer or float in the stock market then they lend them to other banks for short period of time usually of 30 to 90 days.e.) Ltd. FAPC $ FCF PART I FE-25 $ 3.000. Prepayment of TF due to Non competitive Markup Rate: Due to high markup rates. Due to that ACBL have not only lost the profit but also the other business from the client. Ltd. Major withdrawal: Table 5 Customer Name Facility Withdrawal during the period 01-01-2003 to 30-06-2003 FATIMA ENTERPRISES FIM $ FCF FE-25 $7.025 FATIMA ENTERPRISES CASH FINANCE Rs. Due to high markup rates.658. 30 to 90 days. One of the example is that of Ahmed Fine (Pvt.5%. so ACBL are loosing their customers.Another reason of shortfall/low lien advances is the high rate of markup.

which have less work for internees. The number of employees are very low due to this problem the distribution of work is also not right. They should try to tell as much to the internees as possible. So that they can learn how they have to work in an organization when they get the job. ACBL major clients are Khawaja Bashir and Sons. 450 million. So the ACBL Multan Branch have need of good. Some person has more burden of work while some have less burden. which is available. they mostly import the in the period between July and March. For this purpose they should either make a schedule for the internees or the rotation time period be reduced in those department. The attitude of the one employee can cause tension in the whole environment so it is suggested that they should work as a team and co-operate with each other as well as with internees for better working environment. Shujabad Oil etc. So most of import business is done in the last 2 quarters of the year. In any organization we have to work like a group as a whole. The another important problem ACBL Multan Branch face is the number of employees working in the bank. Askari Commercial Banks do good progress in Multan. honest. All the employees have not a computer system. skilled young employees who can increase the efficiency of the bank. First of all. ACBL major clients doing the import business are Oil seeds Companies. But the most problem they face is insufficient number of computer. in order to make the working environment of the bank better some recommendations are given. Even if they get job in any other organization they know how working in the organization goes on. RECORDING OF SOURCES REFERENCES . most of them are P II so the working efficiency of the computer is very low.Reasons for shortfall of Imports: Seasonal Business: The reason of decreasing imports is also seasonal business done in Multan. So the overall working efficiency of the bank is not good. It is also recommended that all the employees must have computer system so that they can work effectively. During the month of July ACBL Multan Branch are going to open the LC amounting to Rs. because they need raw material between the above-mentioned period for producing the Oil. So it is recommended that the branch need P IV computer. Because during the internship the internees come her to learn and know about the working of the organization. There is little number of computers available in the branch the computer. RECOMMENDATIONS: As such there is no need of any improvement as Askari Commercial Bank is one of the leading bank of the country and upholds it’s name but still I have a few suggestions in my mind which I think my duty to mention.

• Reference # 1-7 & 9 from Annual Report of ACBL 2002 • Website of ACBL • Reference # 8 from Broachers of Askari Bank Personal Finance Scheme • Schedule of Bank Charges Report .

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