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1.1 Background of the Study

This study is focused the Bank of Khyber Pakistan, which is the govt. bank, owned by the KPK Provincial Govt. The bank of Khyber become a schedule bank in the year 1994. The Head Office is situated at 24-The Mall, Peshawar Cantt. KPK Pakistan. This bank has been playing an important role for the development of different sectors in Pakistan and especially in KPK. It has a network of 29 branches, which are located in different locations of our country. Despite difficult economic conditions, like lack of suitable lending opportunities, volatility of interest rate and equity prices, the bank manages to show good results for every year. An opportunity was created to understand the practical banking operations during two months of internship in The Bank of Khyber. The Bank of Khyber is one of the banks, which has agreed to provide internships under a special program, which is being jointly conducted by the State Bank of Pakistan & IMS Peshawar. Being an internee, I was deputed to The Bank of Khyber, Ashraf Road Branch in Peshawar. This internship is also, one of the requirements of fulfilling a BBA(Hons) degree.


Purpose of the Study

Being a student of business administration, especially of finance, the purpose of conducting this study is to develop some insight into the working of banks, the bank of Khyber specially here. More thoroughly, after some what understanding the procedures of the Bank, the aim is to make a critical analysis of it and suggest recommendations.


Scope of the Study

The scope of this particular study confined to the Bank of Khyber Ashraf Road Branch. More specifically, the operation department of the above mentioned bank branch is the major emphasis of the study.


Methodology of the Report

The method of data collection are mostly based on personal observations and experiences of actually working at the Bank. Dealings with customers, along with general procedures involved were observed. Moreover, as the departments are always bustling with activity, there was not enough time to carry out formal interviews or surveys, the methods used for data collection are: Primary Data   Observations Discussions with Bank officers.

Secondary Data     Manuals Annual Reports Information Memorandum Internet.


Scheme of the Report

The entire report is organized in the following manner. Chapter one (already covered) gives the background of the study, the purpose of the study, the scope and methodology that is used to collect all the relevant data and the scheme of the report itself. Chapter two is about the organizational review i.e. the history of the bank of khyber, mission statement, organizational structure and chart etc.

Chapter three give the Ashraf road Branch overview where the Internship is conducted. Chapter four is about the various financial products and services offered by the Bank of Khyber. Chapter five emphasis on the department of specialization i.e. operation department and the various types of facilities given by it. Chapter six covers the financial analysis of the bank Chapter seven consists of the recommendations based on the findings from the study.

Separate project financing departments namely. long-term projects department and Micro Finance Unit has been set up for this purpose. through systematic long-term lending. one each at Islamabad. In 1994 it acquired the status of a scheduled bank that allowed it to open branches outside KPK. Advantages of scheduling have had a positive impact on the Bank after adjustments to State Bank of Pakistan (SBP) requirements during 1995. Several line of credit from international agencies have been arranged by BOK for meeting the funding requirements of development projects in KPK. and Muzzaffarabad. and it places great importance on their professional achievements. (Azad Jammu and Kashmir). 652. 750 million out of which Rs. BOK has 29 branches with 23 in KPK and 2 at Karachi. Quetta. BOK is distinguished by the fact that it is not only a schooled commercial bank but it also plays a role of a development agent.50 million has been contributed by DEG. .1 The Bank of Khyber Pakistan The Bank of Khyber (BOK) was established in 1991 under the act of the KPK assembly its objectives included promotion of savings and investment in the KPK. specially to small and medium size business. The bank has a paid up capital of Rs. become a member of the clearing house . The Bank has 630 well-qualified employees including 346 well-qualified officers. Lahore.5 million has been provided by the government of KPK. while the remaining Rs.CHAPTER – 2 ORGANIZATIONAL REVIEW 2. 97 .and engage in trade finance activity. a German Development Bank.

and is normally summarized and documented in a mission statement.Source: http://www. has a mission statement.htm. The bank of Khyber has certain objectives. is the purpose for which an organization exists and why should it compete in certain sectors and industries.2 Mission Statement Mission. Mission is a very broad statement of organizational direction. while maintaining a highly motivated staff”. the Bank of Khyber being an organization.3 Main Objectives of the BOK Objectives are the ends towards which activities are aimed. Within mission. in a supportive environment with a special focus on micro-business and to exploit the indigenous resources. In same 2. In fact these are the results to be achieved.bankofkhyber. sometimes stated as purpose. broadly stating. as follow: “To excel as a quality service provider. . the organization addresses itself to what it intends to accomplish both in the long and short run. which are as follows.

Muhammad Masood Khan Chairman Managing Director Director Director Director . Help under develop areas and create employment opportunities. to guide and assist the people of KPK serving overseas to effectively and profitably invest their foreign savings in the province as well as the other parts of Pakistan.4 Organizational Structure “Organizational structure” is the frame work that defines the boundaries of the formal organization and within which the organization operates”. e. Create a diversified and sound portfolio for utilization of idle funds and their investment in the existing and new ventures specially in the pioneering of high-tech agro based export oriented and engineering projects to ensure maximum returns. Attaullah khan Mr. The organizational structure of BOK is also aimed at achieving specific corporate objectives. To promote industrial. Board of Directors The existing board of directors comprises the following: Mr. specially in the rural areas of the province. Sahibzada Saeed Ahmed Mr. All the activities and functions of BOK are controlled by the Board of Directors. c. Participate and seek the share of the province in the capital market of Pakistan by way of subscription through locally pooled resources in the leading stock exchanges of the country and eventually paving the way for establishing a stock market in the province. b.a. Further. agricultural and socio economic processes through the active participation of private and public sector in the province. Bilal Mustafa – The bank of Khyber Mr. Mir Javed Hashmat Mr. 2. d. To mobilize private savings and public funds for diverting the same into productive channels and ensure their availability.

5 Organizational Chart The BOK is a centralized organization in which little authority is given to the lower levels of management. Long term projects Audit department Long term projects (LTP) handles the investment proposals of huge industrial and agricultural projects. these two are:     Banking operation division Personnel and establishment division There are also two other independent departments. Director Director Director 2. . Muhammad Asif Mr. The head office of BOK is divided into two divisions and each division has its own set of departments. Where as the audit department is responsible for having an internal control.Mr. Maqsood Ismail Mr. Amjid Pervez Source: The Bank of Khyber Annual Report 2010.

Organizational Chart THE BANK OF KHYBER Organization Board of Directors Managing Director Managing Committee Long Term Projects Resident Directors AUDIT Banking Operation Division Branch Operations Deptt.B. Credits Deptt. Personnel & Establishment Division Investment Computers M. Accounts & Treasury Deptt. 1998.D P & E Deptt. Branches 29 Source: The Bank of Khyber Information Memorandum. Monitoring & Recovery Deptt. Public Relation Deptt. . Foreign Exchange Deptt.

Test The candidate fulfilling other requirements are then called for written test. motivation and maintenance of employees”. dismissal. disciplinary action. HRM is a step-by-step process. the applicants are required to apply through a form.e. motivation and developing employees and retirement matters. demotion. a. training. training. General knowledge and Arithmetic. Recruitment in BoK Recruitment is the process of discovering potential candidates for actual or anticipated organizational vacancies. English.6 Human Resource Policies “Human Resource Management is the part of the organization that is concerned with the staffing. promotion. Salary administration. BOK has a personnel programme which constitutes administrative matters relating to personnel right from recruitment to selection. which is followed by many companies all over the world. Therefore it lays great emphasis on this aspect of management. Recruitment Procedures A candidate while coming to the services of BOK must be pass through a selection process.. improving performance. through this form the bank tries to get as much information about the candidate as possible. development. Application Forms When BOK advertise posts. This written test is taken in three major subjects i. . The personnel and establishment department of BOK performs all the above mentioned functions BOK is also aware of the growing importance of personnel and its role in an organization.2.

They receive pre entry training at Union Bank Academy Lahore as BOK does not have its own training academy probationary office receive a fixed salary. Physical Examination The selected candidate are required to bring a medical fitness certificate from any registered medical practitioner. Confirmation After the successful completion of the probation period the probation officers are confirmed and their services are secured. are then called for interview. the main purpose of the interview is to judge the personal qualities of the candidate. For confirmation they have to pass a test and fi they pass this test they are permanently recruited as office Grade-III. that they will not lack out secrecy to any one outside the bank. At the time of appointment they have to submit the following documents. TRAINING “A learning experience that seeks a relatively permanent change in an individual that will improve his or her ability to perform on the job”. the main purpose of the certificate is to make sure the physical fitness of the candidate at the time of appointment. Appointment The selected candidates receive their appointment letter through post at the address they have given in the form. c) Service agreement bond. B. Probation The selection candidates remain under probation for the period of one year. a) Bank secrecy bond.Interview The candidates who qualify the written test. b) Surety bond. Towards this main . They are appointed for the period of oneyear as probationary office.

IBP conducted three exams in the full service of a banker. meetings and refresher courses. TRAINING PROGRAM The institute of Bankers in Pakistan (IBP) arranges training programs for all the banks including the Bank of Khyber. conferences and training programs for one to two or more days. Off Job Training Off job training in BOK includes conferences. intitating a self-development process in order to accelerate organizational growth and to further improve the bank‟s level of expertise and efficiency. In grade II only the cash prize is offered. seminars.7 It enables the employees to work on different positions and get an overall picture of the bank‟s operations. After clearing Part-I. to upgrade their management skills. IBP also programs seminars. This mode to training is done to enable employees to upgrade their . the management of the BOK has on job training. part-I. On. a lower grade officer is given the option of their taking the cash prize or a promotion.The-Job Training On-the-job training is normally given by a senior employee or supervisor to the trainee in order to enhance and polish the skills of his or her. For improving the skills and knowledge of its employees. job rotation and off the job training. and partIII.objectives training courses have been organized. It is called DAIBP (Diploma Associates Institute of Bankers in Pakistan). If a banker clears all the papers in the first chance so he or she would get a cash prize. part-II. C. The bank provides the opportunity to take part in the courses and seminars conducted by the institute of Bankers Pakistan and other professional institutes. Job Rotation Job rotation is defined as “An alternative to job specialization that involves systematically moving employees from one job to another”.

. Promotion of officers to the post of Director and above are approved by the Board of directors on the recommendation of the MD. e. A proforma made by head office is sent to immediate superior for filling.knowledge to new developments in the banking profession and also to broaden their outlook. To keep the employees motivated the MD may promote and officer out of turn (who has not completed 3 years of services in the grade) up to 10% of those eligible for promotion. Junior offices and officers who pass DAIBP part-1& II have the option of promotion to the next higher grade or to get the cash award. BOK has defined perfect career paths for its employees and that staff gets accordingly in their grades by way of transferring from one position to the others. PROMOTION Main criteria for promotion are the performance and skills of the individual. Normally employees are promoted to the next grade after 3 years but promotion is totally based on 3 years performance of the employee. The performance of employees at the BOK is appraised on the basis of annual confidential reports. D. Performance Appraisal “A formal assessment of how well an employee is doing his or her job”. it is a systematic evaluation of the individual with respect to his performances on the job and his potential for development. Increments are decided on the basis of these appraisal reports according to the performance of the employees. These increments or appraisals play a very important role in the development and encouragement of the staff. Promotions up to the Joint Director are approved by the MD on the recommendations of the promotion committee. though seniority is also taken into consideration but it is secondary importance.8 Performance appraisal is evaluating the performance of employees for a given period of time.

The BOK allows the following benefits to its executives and managers only. Discipline. Utilities allowance.e.     G. transfers. ALLOWANCES AND FRINGE BENEFITS Allowances     Benefits “Things of value other than compensation that an organization provides to its workers”. regulations and procedures that are demand to be necessary for the effective function of the organization. Medical allowance DISCIPLINARY RULES Discipline is a force that prompts individuals or groups to observe rules. in ordinary conduct of affairs by the members is to maintain harmony and peace in organization willingly.       Absence from duty Misconduct Disobedience with any lawful and reasonable order of the supervisor i. Fraud and forgeries Damage or loss (bank property) Sleeping while on duty . Following are the examples of indiscipline. Residential telephone Entertainment allowance Bank car Residential facilities House Rent Conveyance/maintenance allowance.F.

If he fails to do so 3 months pay will be forfeited in case of officer and one month in case of clerical staff. Separation in BOK Any employee of the bank is separated from the service by three different ways. Compulsory retirement from the services with or without retirement benefits. Termination by way of punishment. Retirement Any employee will retire from the service either on the completion of 25 years continuous service or by attaining the age of 60 years. Recovery from salary of the whole or part of any particular loss caused to the bank by the employee. ii. Demotion to any lower grade. i. i. Resignation An employee can leave the service of the bank on his own disposal by tendering resignation in writing. Removal (Dismissal) from service. but he is required to give a prior notice of 3 months in case of officer and one month in case of clerical staff.        Reprimand With holding for a specified period confirmation on promotion of increment.  Striking Unauthorized use of bank property Any violation in these disciplinary rules the different types of penalties are given. H. . PENALTIES Any employee found guilty under any rule or any offense of misconduct is liable to one or more of the following penalties.

but this will require a proper inquiry of the case.Although the bank authorities accept resign but he has to give a genuine reason for the resignation iii. . By doing wrong any employee of the bank can be separated as a punishment from the service. Dismissal Any act of an employee against the discipline may lead the termination from the services.

he is a prudent and experienced banker. 3. Al the team members are very competent and highly committed with their jobs.CHAPTER – 3 The bank of khyber Ashraf Road Branch Overview 3. . “grouping activities and people into departments make it possible to expand organizations”. It performs all the functions of a commercial bank.1 Introduction Ashraf Road branch is one of the important branch of BOK. Muhammad Humayun khan. He manages all the activities of bank with good and effective manners with the help and support of the staff. The manager of this branch is Mr. form deposits to advances. Profit wise this branch is on the top and recently it has got a shield in this regard. and from remittances to safe custody service.2 Departmentation Departmentation is.

responsibility.Chart – 3. integrity. . occupation and the nature of business of the perspective customer. It also issues checkbooks to customers. This department performs the duty of opening accounts for customers. The bank officer tactfully obtains information about character. Account Opening Department The opening of an account is the establishment of banker-customer relationship. A person who wishes to open an account with the bank has to fill an account opening form obtained from any branch of BOK at the time of opening of account.1 The Bank of Khyber Ashraf Road Branch Peshawar Organization Chart Chief Manager Manager Operation Foreign Exchange Department General Banking (Operation) Department Credit Department Account Opening Department Cash Department Remittances Department Bills Department Clearing Department Source: Personal Observation.

This department is the showcase of the bank and conveys the first impressions about the bank‟s commitment to professionalism in its systems and procedures and to courteous and efficient customer service. purchase and discounting of bills on behalf of the customers. While collecting cheques and other instruments. banks have certain obligations to each other and to their customers. the banker – customer relationship in this case changes from the debtor – creditor relationship to the agent – principal relationship. costs less and eliminate the risks involved in physical transportation of money from one place to another. Remittance Department Funds transfer facility or remittance of funds is on of the key functions of the banks all over the world. 1. Pay orders (P/O). Both. 3. . Demand draft (DD) Mail transfer (MT) Telegraphic transfer (TT) Bills Department The Bills department deals with the collection. They have certain legal rights also and legal protection is available against fraudulent transactions under various sections of the Negotiable Instruments Act. 2. the bank‟s most valued relationships. The collection of cheques and other instruments has become a very important service that commercial banks render to their clients. This department performs the function of receipts and payments. BOK transfers money in the following ways. a bank acts as an agent of its customers and therefore. 4. The collection of bills usually involves two banks. Remittances through banking channels save time. 1881. the Collecting bank and the Paying bank. collecting as well as paying.Cash Department Cash department owes its important to the fact that it is a major point of contract between the bank and the customer.

Commercial banks earn commission and service charges through letter of credit and letter of guarantee. the credit management division of head office directly controls all the advances. The job of this department is to make proposals about the loans. While the state Bank collects with-holding tax for the supply of goods through letter of credit and .e. Foreign Exchange Department is the main source of income for the commercial banks as well as for the State bank. Foreign Exchange Department The foreign exchange means that the amount of any foreign currency that will available in a market at any given time against or in exchange for a particular country‟s currency. Then bank collects this instrument for its customer through clearing and similarly in case of payment the bank makes payment through clearing for the instruments (cheques or drafts) which are given by its customer for his obligation fulfillment to customer of some other bank. because it is the main source of earnings.Clearing Department BOK along with their daily business activity also provides the facility of collecting credit claims for customers i. rising or downward trend of position day to day and even at different times during the same day. The major portion of the profit is usually earned through this department. Credit Department The bank is profit seeking institution. The function of clearing house system is operated by the State Bank of Pakistan (SBP) if SBP has no office at a place then National Bank of Pakistan (NBP) as a representative of SBP acts as a clearing house. It attracts surplus balance from the customer at low rate of interest and makes advances at a higher rat eof interest to the individuals and business firms. This value of rate or exchange may show a stable. when a customers deposits a cheque or draft for collection which is of the some other bank. Credit extensions are the most important activity of all the financial institutions. Credit departments is one of the most sensitive and important department of the bank.

it promotes the import and export business. Foreign Exchange Department deals with foreign currency accounts (FC A/C). earns from stamps duties applicable to issuance bills of exchange in case of L/C. .govt. letter of credit (L/C) and letter of guarantee (L/G). It facilitate the local trade and foreign trade.

4. Similarly there are no restrictions on number of transactions during the day. 2 Types of saving deposit account.  Balance in current accounts are payable on demand. i. iv. Generally. Overdrafts is allowed on this account. iii. There will be no tax deducted on the funds that some one choose to keep in these accounts”. without any prior notice of withdrawal. ii. Profit and loss sharing (PLS saving) account. PLS 30 days Notice Deposits    Profit is paid bi-annually on minimum monthly balance (Jan-June & July-Dec) which is announced in July and January respectively.    All individuals including foreigners.2 Saving Deposit Account (Rupees) “The BOK rupee saving deposit account allows the facility of multiple withdrawals up to the credit balance.1 Current Deposit Account (Rupees) “The BOK Rupee current deposit account allows the facility of unlimited withdrawals up to the extent of the balance in account. while accruing profit on deposits”. Overdraft is not allowed on this account. No profit is paid on current accounts. . withdrawals from this account are allowed on demand i. Any amounts can be with drawn without prior notice. firms and corporate bodies are entitled to open and maintain current accounts. PLS 7 days Notice Deposits. Special deposit account (SDA).CHAPTER – 4 FINANCIAL PRODUCTS AND SERVICES 4.e.

e. Profit is accrued on a daily balance basis. The rates so announced unchanged during respective month. quarterly. There is no penalty for premature enchasement.4 Foreign Currency Account     All individuals including resident citizens. annually or at maturity. firms and corporate bodies can open and maintain foreign currency savings and current accounts. Pound sterling. However in case of an early enchasement the rate of the previous tender will be applied.5 Khyber Monthly Scheme (KMS) On KMS the BOK gives monthly interest on amount deposited with the bank.e. Foreign currency saving accounts are interest based. The option of partial liquidity is allowed i. deutsche mark (DM) and Japanese Yen (Y). . US dollar ($). Facility is presently available in four major currencies i. with drawl to a certain percentage from the fixed deposit without disturbing the remaining deposit is allowed”. Formalities for opening FC accounts are similar to those of rupee accounts. 4.3 Term Deposit Account (Rupee) “The BOK Rupee Term Deposit Account offers the dual benefit of attractive returns with high liquidity. Each fixed deposit account is considered as a separate contract. bi-annually. 4. Options to take profit monthly. Interest rates are fixed by bank every month within the parameters given by SBP. (L).4. This is a sort of fixed deposit and the customers will have to keep the deposits for the five years. Profit on fixed deposits is paid on the maturity of deposits.    Term or fixed deposits are accepted by BOK mature between one month to five years.


Security Deposit Receipts (SDR’S)

This is a receipt issued by the bank, at the instructions of the depositor, confirming that amount of the SDR is held by the bank to be paid whenever called upon to do so by the beneficiary named in the SDR.     A SDR is a non-negotiable instrument. SDR‟s are generally used to make advance payments or as earnest money, retention money or security deposits etc. No profit is paid on call deposits. A SDR can be repaid to a named beneficiary or the

purchaser/depositor upon proper identification.


Khyber Rupee Travellers Cheques

“They are generally issued for the convenience of persons travelling abroad, but some Pakistani banks issue them in Pakistan currency for use within the country as well. Before issuing, the bankers receive an amount equal to the face value of the cheques, and also charge a small commission. The travelers cheques are for fixed amount and are treated as order cheques payable only to the purchaser whose specimen signature appears on the travelers cheques itself. Foreign currency travelers cheques are issued and encashed in accordance with the provision of the exchange control regulation Act 1947”. “Khyber Rupee Travelers cheque (KRTC) is a negotiable instrument, which can also be used for remittance fund and as an alternate to cash”. KRTC is available in the denomination of Rs. 5,000, Rs. 10,000, and Rs. 50,000.

THE BANK OF KHYBER PAKISTAN HALF YEARLY PROFIT RATES ON PLS DEPOSITES Profit rates on various types of PLS deposits for half year ended June 30 2012. 01.01.2012 to 30.06.2012 Notice deposits 7 to 29 days 30 days Special deposits Special deposits account (SDA) Saving account PLS Saving account Term Deposits  Three months TDR  Six months TDR  One year TDR  Two year TDR  Three year TDR  Four year TDR  Five year TDR Khyber monthly scheme Khyber monthly scheme Regular Amdani scheme Regular Amdani scheme (5 years) Zabardast Amdani scheme Zabardast Amdani scheme Maala Maal Munafa scheme Maala Mall Munafa scheme 1.25% 1.50% 5.00% 5.00% 5.20% 6.30% 6.50% 8.30% 10.50% 12.00% 14.25% 5.50% 7.25% to 11.30% 10.60% 1st year 2nd year 10.00% 11.00% 11.25% 11.50%

1st year (senior citizen) 2nd year (senior citizen)

Be-Baha Mahana Amdani scheme     Three months Six months One year TDR 10.50% 11.00% 11.50%

Deposits from Banks/ Financial institutions Deposits 1.50%

Source; BOK website;


Consumer Financing
Fund Base Facilities

Fund base facilities are those which involve a cash disbursement at the time of allowing the facility. Running Finance This is a working capital finance facility available for one year and renewed subject to satisfactory utilization there of. Markup is charged on outstanding balance. Demand Finance It is a term loan disbursed in lumpsum and repayable in 2 years in the form of monthly or quarterly installments.

Bank (provider of guarantee) . Usually. there are four parties are involved in LCs. Exporter‟s bank LCs may be on sight or issuance‟s basis.2 Non-Fund Base Facilities The non fund base facilities are those in which the bank does not invest its own funds rather its commitment is involved against which the bank chargers a certain amount in shape of commission.Advance Against Salaries This facility is available to government and semi-government employees up to five gross salaries. Importer 2. the importer has to pay the amount upon payment of the value. Importer‟s bank 4. In the letter of guarantee three parties are involved i. In sight based LCs. Exporter 3. 1. In case of issuance LCs the exporter extends credit to the importer. Letter of Guarantee The bank provides assurance to the beneficiary of the guarantee about the satisfactory performance of a certain act by the applicant of the guarantee. The documents are handed over to the importer against his acceptance of the bill and assurance of payment on the maturity date of acceptance.e. 1. 4.8. Letter Off Credit Letter of credit is required in the settlement of international trade some times local transactions are also done through the letter of credit which are termed as inland LCs. These facilities are available in the form of letter of credit and letter of guarantee.

3. The banks at the request of applicant issues the guarantee and charges commission for its commitment from the applicant at the exposure is secured against some security. . Applicant of the guarantee (Bank‟s customer on whose behalf the bank issues a guarantee).2. Beneficiary (in whose favor the guarantee is issued).

Personal Accounts Accounts opened by individuals in their personal capacity are termed as personal or private accounts. may open their accounts. Completion of all relevant columns of the AOF.CHAPTER – 5 OPERATION DEPARTMENT 5. trusts. Determining the correct residential and permanent address. and limited liability companies as well as non-profit organizations like clubs. Any individual.1 ACCOUNT OPENING REQUIREMENTS AND DOCUMENTATION Account opening is the first step towards establishing Banker-Customer relationship. societies. There is no restriction as to number of accounts that an individual may have with the bank.      Identification of the new customer. Two or more individuals may open an account jointly. associations and NGO‟s etc. who has attained the age of majority and is of sound mind can open and maintain his/her account. Ascertaining the genuineness of the stated occupation business of the customer. partnership firms. . Proper completion of documentation. A personal account may be a PLS saving or current account in local currency or saving or current account in foreign currency. Similarly. business organizations such as sole proprietary concerns. The following requirements are necessary for opening an account.

and are otherwise satisfied with his/her past conduct or record with respect to financial dealings and bank relationships. Staff members themselves may introduce new accounts. photograph. vide his ruling on a complaint. new customers are introduced by the existing customers. . date of birth. banking conventions and SBP‟s prudential regulations (Regulation XI & XII). therefore obtain NIC‟s and photocopies of the new account holder as well as of the introducer and then return the originals after attesting the retained copies. or any other documents that certifies the customer‟s name. proper introduction is a mandatory requirement under SBP‟s BCD circular No. b) Generally. Introduction a) Whether introduced by a customer or banker. Inquires are necessary to avoid potential frauds and losses not only for our own bank but also to save other banks and general public and to claim legal protection in the case of any such happening. citizenship. 29 of 1968. have been adopted to fulfill above requirements. c) Account opening procedures at Bank of Khyber. driving license. and signature etc. therefore. banks are required to institute effective procedures to ensure true identity of their customers. directed the banks to retain a photocopy of the NIC with AOF of the person desiring to open an account as well as of the introducer. his/her occupation and permanent residence etc. provided they know the new customer. address.Verification of Identity a) Under recognized legal principles. e) The identity of an individual can also be established by obtaining a copy of their passport. b) Federal Ombudsman also. d) Authorized officers.

An account in the name of minor may opened jointly with a parent or guardian with the condition that account will be operated by the guardian. he/she properly identified by an authorized officer under his signature written across the rubber stamp reading “Signature Verified” affixed in close proximity to the introducer‟s signature. No overdraft is allowed in a minor‟s account. However. A copy of the letter retained in the Account File. under the manager‟s authorization.   Signatures of the account holders are taken on AOF and SS Card.Following Steps Are Taken To Ensure Proper Introduction a) Introductions from saving account holders for current accounts normally discouraged. b) Whether the introducer/referee accompanies the account holders to the branch or not. The account holder describes his occupation in definite and adequate terms.  Clear instructions are obtained regarding operations on the account and for repayment of the balance in the event of the death of any of the joint account holders and in case of single account holder. . The permanent (Corresponding) address of the client is required in this regard. an introduction from a savings account holder who is well know to the manager and whose account has been well conducted may be accepted. In case of employee the name and address of the employer is noted on AOF. Some Basic Information Regarding Account Opening Form & Procedures     The bank officer takes the interview of the customer to know his purpose of account opening. A letter of thanks sent to the introducer. The full name of the individual or the business is given as title to the account. identity and status.

Such a person will put his thumb impression in the cheque in the presence of bank officer. Similarly instructions regarding operation of account and payment of balance to the survivors are required in case of the death of one party or more. All the partners of the Partnership firm will sign the AOF & SS card and it is operated by any one or more partners. The signs of all the members of the Board of directors will be provided to the bank. b) A copy of NIC (National Identity Card). AOF & SS card are signed by all the parties. which nominates the persons authorized to operate upon the account. Special instructions are required for the operation of account at the time of opening the account. This account will be Photo account one photo is pasted on AOF and one is on SS Card. . An illiterate person can open account with banks. However.  Joint Accounts: Two are more persons may open an account jointly. they can‟t bind their husbands for any debts or borrowings obtained without their consent except necessities of life. The account of the company is opened on the resolution of the Board of Directors.    Sole proprietor ship account is the individual account in the name of business concern. DOCUMENTS REQUIRED FOR ACCOUNT OPENING FOR DIFFERENT PARTIES Individual/Joint Accounts a) Account opening form (AOF) and specimen Signature (SS) card.  The married women can open bank account with banks. Left thumb impression in case of male and right thumb in case of female account holders is obtained in place of specimen signatures on SS Card.

b) Copies of NIC ARE of the directors & authorized officials. c) Memorandum and articles of association. e) Certificate of incorporation original may be returned after inspection and a certified true copy retained. d) Certified true copy of the Resolution of the board of directors authorizing opening of the account. f) Certificate of commencement of Business (applicable only in case of public Ltd. e) Mandate form. Partnership a) AOF & SS cards b) Copies of NIC‟S c) Letter of partnership d) Partnership deed. b) Copy of the trust deed. b) A copy of NIC c) Letter / declaration of sale proprietor ship. c) A certified true copy of the certificate of registration of the public trust. d) A certified true copy of the resolution of the board of trustees for opening and operation of the trust account with the Bank.Sole Proprietorships a) AOF & SS cards. if applicable. Limited Companies a) AOF & SS cards. . Trusts a) AOF & SS cards. Companies) g) Copies of the latest audited balance sheet and profit and loss account.

a) AOF & SS cards. Customers. When a bank / branch instructs another bank/branch to effect a remittance or payment. authorizing opening and operation of the account. have a variety of options or modes available to them according to their needs. d) A list of members of the executive / managing committee. Types of Remittances Remittances can broadly be classified as Outward and Inward remittances. it is said to be effecting an Outward remittance. c) Certified true copy of the resolution by the society / association or club.2 Remittances Funds transfer facility or Remittance of Funds is one of the key functions of the banks all over the world. Clubs Etc. Associations. a) AOF & SS cards. . Remittances through banking channels save time cost less and eliminate the risks involved in physical transportation of money from one place to another. Any person who is of sound mind and can sign the application form as a contracting party may make a remittance. Municipal Corporations Etc.Societies. 5. While when a bank/branch is itself affecting a payment/disbursement at the instructions of another bank/branch. in order to remit money from one place to another. c) Mandate authorizing designated persons who would operate the account. b) Certified true copy of by laws/ rules and regulations. banks also get much-needed short term (cost free) liquid funds right from the receipt of value till final payment. Local Authorities. Besides earning commission. b) Certified true copy of the statute under which the body was created by governed.

It is an order to pay money Drawn by one office of a bank upon another office of the same bank or another bank. 85 A of the Negotiable Instruments Act. 5 of the same Act. The branch/office on which draft is drawn is called the drawee branch. when it is drawn upon an office or branch of another bank it is considered as a bill of exchange under Sec. Different modes and means of remittance are discussed below. When it is drawn upon another office of the same bank it is covered under Sec. c) Legal provisions as to crossings. . which issues a draft on another branch or office. Also called DDs‟ meaning local Demand Drafts and FDD‟s meaning Foreign Demand Drafts. collections and payment in due course are similar to those for cheques and other negotiable instruments. The person entitled to receive the payment is called the payee. The branch/office. endorsements. b) An order instrument payable on payee‟s identification or through credit into payee‟s bank account. However. is called the drawer/issuing is said to be handling an Inward remittance. DIFFERENT MODES & MEANS OF REMITTANCES Demand Draft A demand draft is basically a bill of exchange. Salient Features a) Demand draft is a negotiable instrument. Parties to a Draft Following are the parties to a banker‟s draft:     The person who pays the value and on whose behalf draft is issued is called the purchaser.

It is not negotiable and. Salient Features a) Mail Transfer is not negotiable. Salient Features a) TT‟s are affected through internal procedures of the bank and no instrument is given to the remitter.Telegraphic Transfer The transfer of funds from one branch of a bank to another branch of the same bank or to a correspondent bank/office for payment to the beneficiary through telex/fax or telegram is called a telegraphic transfer. Pay Order Pay order is also called bankers cheque. b) Like TT‟s. it is not handed over to the remitter. b) Telegraphic transfers are not negotiable. d) TT instructions are sent under a coded number known as Test Number. Payment can be made to the payee only upon identification or through a bank account. . e) Telegraphic transfers are not affected on the branches within the same city. unlike DD. It is also called TT. c) Funds remitted through TT‟s cannot be paid to order/bearer. Mail Transfer The transfer of funds from one branch to another branch/office of the same bank or a correspondent bank through mail or courier service is known as Mail Transfer (MT). the instrument should be crossed. therefore. funds remitted through MT‟s are not payable to the bearer/order. therefore. c) Mail transfer is internal instrument of the bank and. drawn upon the issuing branch/office itself.

“Not over Rs ---------. c) It is issued by. bills of exchange and cheques under the above mentioned Act is not available in case of pay-orders. For this purpose special test keys are provided to every branch and the HO also has. b) Protection available to collecting bankers in case of promissory notes. Basic Procedure In Case Of Issuance & Payment Of Different Remittances Instruments The remitting bank collects the actual amount of remittance plus the commission. pay order is also used to make the bank‟s own payments. In case of payment of TT & MT test is checked either it is agreed or not. 000 then test code is applied to it.“Payee‟s Account only” to avoid the possibility of dealing with instruments with forged endorsements. Application &Agreement of Test Cod When TT & MT is issued then on the advice the special test code is applied. d) Pay order is used as a substitute for demand draft within local/city limits.only” . If it is agreed then customer‟s A/C is credited or TTR is issued in case when the customer doesn‟t have the A/C with the bank. Cheque or by authority letter (given by the customer to debit my account for actual amount plus charges etc). e) Being a banker‟s cheque.   When the amount of DD exeedsRs10. these amounts may be collected by cash. postage charges and tax amount if the tax form is not attached with the application form. Main Characteristics a) It is not negotiable under The Negotiable Instruments Act. drawn upon and is payable at the same branch of the bank.

They have certain legal rights also and legal protection is available against fraudulent transactions under various sections of the Negotiable Instruments Act. 1881. The collection of bills usually involves two banks.3 COLLECTIONS The collection of cheques and other instruments has become a very important service that commercial banks render to their clients. 5. to the customer. Duties of a Collecting Bank  To act in Good Faith  To exercise due care and diligence and not be negligent  To act according to the instructions of the customer/principal  To follow the accepted norms and practices of banking  To abide by all the rules and regulations governing collections.  To account for the proceeds and charges/levies deducted from it. the Collecting bank and the Paying bank. the banker – customer relationship in this case changes from the debtor – creditor relationship to the agent – principal relationship. e. collecting as well as paying.  For the issuance &payment of any instrument an entry is passed in their respective register and the particulars are fed to the terminal and authenticated the transaction and proper vouchers are prepared.000 only. a bank acts as an agent of its customers and therefore. When DD. While collecting cheques and other instruments.g Not over RS 10. P/O &Pay slip is issued this statement is protect graphed or is written with red ink/ ballpoint on the instrument. . banks have certain obligations to each other and to their customers. Both.

Amount . which are drawn on other banks or BOK branches in other towns/cities or countries (outside clearing or transfer delivery arrangements). in order to claim proper discharge. The procedure for handling these bills is discussed below. are lodged in Outward Collections Register either as OBC‟s or FBC‟s. post-dated that is bearing a future date or stale that is bearing an old date that is no more legally valid or is outdated. which shows someone else as the payee. there should be an appropriate endorsement by the named payee in favor of our customer. Initial Scrutiny On receipt of bills for collection from the customers an initial scrutiny is conducted with the following consideration.Duties of Paying Bank The paying bank. In case a customer wants to deposit a cheque/instrument.  Should make the payment according to the apparent tenor of the instrument  Should act according to the instructions of the Collecting Bank  Payment should be in good faith  Should act expeditiously and without negligence  Payment should be in the normal course of business. Outward Clean Bills For Collection Cheques and other instruments. Date Cheques and other instruments should not be without a date. received for account of the bank‟s customers. Payee Payee should be a customer of the bank whose account is required to be credited with the proceeds of collection.

125 of the Negotiable Instruments Act allows a collecting banker to cross a cheque generally as well as especially for collection/clearing purposes. Full signatures of the drawer(s) should confirm any material alterations. Endorsements Order cheques should be properly endorsed if being collected for 2nd or subsequent payees. Material Alterations Date. in these parts. An uncrossed cheque is liable to be misused/appropriated. Payment of an instrument which bears special crossing of a bank can‟t be made to any one except the named bank or another bank who acts as a collecting agent of the first . a Special Crossing stamp of the bank is affixed on the face of the instrument.Currency and amount of the cheque/instrument should be mentioned both in words and figures and the amounts in words and figures should be the same. Drawer(s) Signatures The drawer(s) should properly sign the cheques/instruments. if instrument is found in order. Mutilations Cheques/instruments should not be mutilated to the extent that they can be misinterpreted or not be correctly read. drawer‟s signature. Sec. since it would be payable to the bearer. Procedure for Handling Outward Bills3 After scrutiny. payee‟s name. and amount are all material parts of a cheque. Where a cheque bears across its face an addition of the name of a banker. the cheque shall be deemed to be crossed specially to that banker. Crossings Cheques/instruments must be crossed before processing them for collection. with or without two transverse parallel lines.

Second payee‟s Account Will be credited on realization. the collecting bank has to give a certificate/discharge on the reverse side of the cheque/instrument to the effect that proceeds of the instruments will be credited to the payee‟s account.) . An officer authorized to authenticate who uses an appropriate computer option to authenticate the transaction should authenticate the entry. OBC reference number and date of lodgment for further reference. the computer generates an accounting entry (Vouchers are manually passed where the branch is not fully computerized. For The Bank of Khyber Manager Officer Another stamp known as „OBC STAMP‟ is also affixed on the face of the cheque/instrument. cheque or instrument is endorsed by the first payee in favor of another person discharge will be as under: First payee‟s endorsement Confirmed. bills are lodged for collection by being recorded in the OBC Register or by using an appropriate computer option. The Bank of Khyber OBC NO. In addition to the special „a bank which acts as a collecting agent for some other bank is also authorized to put its own special crossing. A specimen is given below. contents remain the same. Form or style of an OBC stamp may differ from bank to bank and even branch to branch. which indicates name of the collecting bank. ……………. DATED ……………… Lodgment After initial scrutiny and stamping. Upon authentication. however. For The Bank of Khyber Manager Officer In case. A stamp containing discharge is affixed as under: Payee‟s Account will be credited on realization.

proceeds are received by means of a credit advice (IBCA) or telephonic/fax message depending upon instructions contained in the collection schedule. courier charges are also recovered. Collection Schedules The next step after computer processing is to prepare collection schedules/orders addressed to the bank/branch. Normal postal charges/registered mail charges for bills sent for collection are in-built in the commission. Realisation If a collection is realized through one of our own branches. proceeds are received by means of a demand draft which is finally collected through clearing. When collection is realized or is returned by the drawee this entry is reversed since the liability of the collecting banker as well as the right to receive payment does not exist any more. collections are sent to the designated collecting agents or drawee banks/branches. as per the schedule of charges if fate of the instrument is asked for by telegram/telephone or fax etc. . Commission & Charges Commission on clean bills should be recovered strictly at the rate specified in the Bank‟s schedule of charges. Cheque returning charges should be recovered as per the schedule. Where collections are sent directly to the drawee banks/branches other than our own branches or correspondent banks with whom we have agency arrangements. If collections are send by courier service. Collecting agent‟s charges will be extra if the collecting bank is other than the Bank of Khyber. Dispatch of Items for Collection After completion of above procedure.The entry is made to record the fact that the bank has accepted the liability for collection of a certain bill and simultaneously has obtained the right to receive the payment as a collecting agent. which we have chosen as our collecting agent. in case the instruments are returned unpaid. as appropriate. Mail/telegram/trunk call/fax charges should also be recovered.

The returned instrument together-with objection memo is handed over to the customer or his/her authorized representative after getting acknowledgement on cheque return register.. the returned instrument may be send by registered mail or local express mail/courier service etc. all instruments are scrutinized on the following points:   Whether or not all instruments are apparently in order viz. If a customer is not available. and drawer‟s signatures etc? Whether or not instruments are drawn on our branch or banks/branches with whom we have arrangements through clearing or transfer delivery procedures? . the mistake is rectified immediately and collection is presented again by fastest available means such as courier service/urgent mail service etc.. amount. “endorsement requires bank‟s guarantee/confirmation” or “ OBC stamp or special crossing required” etc. a viz. Initial Scrutiny Immediately upon receipt.Bills Returned Unpaid If a cheque/ Instrument is returned unpaid by a drawee bank/branch due to any procedural mistake made by the collecting bank such as “banks discharge irregular/required”. genuineness. Inward Clean Bills For Collection Bank receives cheques. drafts and other instruments for collection from its own branches or from branches of other banks. Proper entry is made in the Cheque Return Register. which are not included in local clearinghouse arrangements. depending upon situation and circumstances in each case. the customer is immediately contacted and informed. If collection is returned due to lack of funds in the drawer‟s account or due to „stop payment‟ made by the drawer or difference in drawer‟s signature etc. These bills would be its outward bills for collection (OBC‟s) or bills purchased but they become inward bills for collection (IBC‟s) for it. date payee‟s name.

Instruments are segregated department-wise Cheques. PROCEDURE FOR HANDLING INWARD BILLS Recording Receipt     Mail Received stamp is affixed on all collection schedules received which indicates the date of receipt of each and every inward collection. MTR‟s and PO‟s are given t the Remittance department. IBC stamp is also affixed on the face of the instrument. TDR‟s. otherwise manual entries are passed. Only collecting branch is supposed to recover commission and other charges. only designated branches perform this last function. are handed over to the Deposits department while DD‟s TTR‟s. mentioning their Ref. otherwise they are returned to the concerned banks or branches with relevant objection.  Instruments. deducted from the bill amount. However. If the answer is „yes‟ only then instruments are processed further. etc. All inward collections are entered in the IBC Register and every collection is allotted a serial number called IBC Number.  Computer entry is made where a branch is computerized. If any instrument is drawn on some other Branch or other . commission at the prescribed rate for the issuance of draft plus courier charges and government levies like withholding tax and excise duty are recovered. and details of commission. if applicable. charges. which are drawn on other banks or branches. ad CDR‟s. in case collections are received direct from other Banks. However. or OBC No. Commission & Charges No commission or service charge is recovered from the collections received from bank own branches except withholding tax. taxes etc. are handed over to the clearing department. No. DD along with a covering letter is sent to the bank concerned.

Therefore. 5. Since each bank receive and sends cheques/instruments for collection to and from an number of banks. the process of settlement would clearly be very cumbersome and time consuming if every cheques/instrument had to be sent by the collection bank to each of the drawee banks or branch upon which different collection items are drawn and to individually pay the proceeds to each of the bank sending cheques/instrument in for collection. deposited by customers of the banks drawn on the customers of the drawee banks. it is processed in the transfer delivery or clearing respectively. Similarly. to be collected and credited to their accounts. .Bank in the city. to pay the proceeds.4 CLEARING As part of their daily business activity. Therefore. banks receive cheques/instruments from other banks. banks receive cheques and other financial instruments from their customers drawn on other banks. the banks act as Collecting Banks when they send cheques/instruments for collection and as paying Banks. Inward collections are generally routed through the Main Branch or some specially designated Branch. the banks have evolved what is called the Bankers Clearing arrangement. when they receive cheques/instruments for collection from other banks.

are returned back to the Clearing House and a credit is claimed and obtained there against. first meeting in the morning.  At the Clearing House accounts of all the banks are debited by the total amount of cheques/instruments drawn on their customer‟s accounts and credited with the amount of their customer‟s cheques/instruments drawn on other banks. The amounts of each cheques/instrument is debited or recovered from each drawee customers‟ account and credited to the Clearing House account. and are take back by each bank to its bank/branch. which works on the following general lines:   All the banks operating in a city who are members of the Clearing House maintain an account with the SBP‟s Clearing House. as per the list of cheques submitted by each bank.  Any cheques/instruments received by a bank that cannot be paid. offers a Clearing House or a centralized exchange facility.Working of the Clearing Process Under the clearing arrangements. against the amount credited by the Clearing House as Outward Clearing. also called Inward Clearing. at an appointed time. for the purpose of depositing their own customers . The SBP co- . the appropriate customers‟ accounts are credited and clearing House account is debited.  The cheques/instruments received. cheques/instruments to be collected from other banks and receiving cheques/instrument drawn on their account holders from the others banks. due to insufficient balance in its customer‟s account or for any other reason. Similarly. the Central Bank or the State Bank of Pakistan (SBP) in our country. Thus the Clearing System enables cheques to be paid or cleared centrally and settlement made for receivables and payables between the banks. Every day representatives of all the banks in every city meet the Clearing House.

The procedures and considerations that apply to Outward Clearing are discussed below: Initial Scrutiny While accepting cheques for collection/clearing.  Payee/beneficiary must be customer of the Bank. some other bank. are also handed over or received back form the member banks and adjustments made accordingly. In the second clearing. cheques which could not be paid due to any reason. First Clearing & Second Clearing The business of the Clearing House is normally conducted in two sessions called First Clearing‟ and „Second Clearing‟. usually National Bank of Pakistan (NBP) performs this function. the pay-in-slips and the cheques and other negotiable instruments are properly scrutinized with respect to following points. accompanied with objection memo. receipts/payments are adjusted arising out of cheques delivered and received against each other. called the Clearing Houses.ordinates clearing activity through its offices. Under this arrangement the cheques/instruments have to be presented by an authorized officer of a bank over the counters of the drawee/paying bank and the cash so received is credited to the customer‟s/beneficiaries accounts. Where SBP does not maintain its own office. set up in big cities and towns. During first clearing. . Where There are no Clearing Houses At places where there are no clearing houses or clearing arrangements. But the clearing house facility is available only for cheques/instruments drawn on banks situated within the same city/clearing house area. local cheques drawn on other banks are presented for clearance through and authorized representative under cash received/payment received discharge arrangement. Outward Clearing Cheques received by a bank from its customers to be collected from other banks are considered to be in the Outward Clearing arrangement.

cheques/instruments are scrutinized on the following points:     Endorsements (if any) must be regular. company or institution should not be accepted for credit to the account of a partner. The cheque is not post-dated. The first payee in favour of the depositor. company or institution. Title and account number should be mentioned. if collected for another account. Amount of the pay-in-slips tallies with that of the cheque. stale or undated. The cheque payable to a firm. There are no unauthorized alterations. the special crossing stamp of the bank and clearing stamp are affixed on the face of the cheque/instrument without spoiling material contents such as date. payee‟s name and drawer‟s signatures etc. account number and the title of account on the counterfoil are the same as on pay-in-slip. There are no previous special crossings. Stamping After conducting initial scrutiny and being satisfied in all respects. director.   Cheques/instruments crossed „Payee‟s Account only‟ should not be deposited or collected in any other account. . must have properly endorsed order cheque. The amount. The pay-in-slip bears the signature of the depositor at the specified place. given below is the specimen of the stamps. In addition to the above. amount.      Separate pay-in-slips should be filled out for local cheques drawn on our own Branches and on other Banks. agent/attorney or manager of the firm.

This schedule is prepared manually or generated on computer. in which case the discharge would be like „First payee‟s endorsement confirmed. in triplicate. If an instrument is being collected for the payee named on the instrument.. Which is referred to as the Banker‟s Discharge. For The Bank of Khyber _________ Branch OFFICER Segregation of Instrument and Forwarding Schedule All cheques are sorted out and segregated bank-wise and Branch-wise.THE BANK OF KHYBER Branch ____________ Date ______________ CLEARING The Clearing Stamp Banker’s Discharge The Bank of Khyber Ashraf Road Branch PESHAWAR Crossing Stamp According to the type of cheque/instrument. final payee‟s account credited „ etc. discharge would be simple as „payee‟s account credited‟. which gives the total number of cheques and the total amount receivable form a particular bank. A schedule or summary is prepared bank-wise. For The Bank of Khyber ______________Branch OFFICER First Payee‟s Endorsement Confirmed Second Payee‟s Account Credited For The Bank of Khyber _________Branch OFFICER OR All Endorsements Confirmed. . The Discharge stamps look something like this: Payee‟s Account Credited. second payee‟s account credited or „All endorsements confirmed. appropriate discharge or endorsement on the reverse side of the cheque/instrument has to affixed. Final Payee‟s Account Credited. In case of endorsements. there may be second or subsequent payees involved. depending upon the nature and type of the instrument.

are given to Remittances Department. Then through another appropriate option a new schedule is printed for the newly received items for the next day‟s clearing. properly dated and made out? If answers to the above questions are „yes‟ then instruments are segregated department-wise. an appropriate option is used to close the clearing process on the computer terminals. Pay Orders. Cheques and CDR‟s etc. INWARD CLEARING Procedure at Drawee Branches  The Drawee branches immediately scrutinize the cheques and other instruments received under inward clearing on the following points:    Whether all cheques/instruments are drawn on/payable at the receiving branch? Whether all cheques/instruments are genuine.Procedure at Clearing House  Bank-wise schedules together with the cheques are delivered to the representatives of drawee banks and master schedule is delivered to the In-charge of the Clearing House. Completing The Process After realization and accounting for returns. Dishonour or Returns  In case any cheque is not paid or honored then it is send back to the clients. are handed over to the deposits department while DD‟s.  In-charge of the Clearing House obtains acknowledgement from each drawee bank and passes a consolidated accounting entry for the total amount of outward clearing. .

The Collecting Bank is requested to issue a Pay Order in favor of the Bank for the amount of the cheques/instrument returned. appropriate computer entries are passed and it is ensured that the original cheques/instruments returned unpaid are delivered to the collecting bank in second clearing. due to any reason. The Branch concerned immediately contacts the collecting Bank/Branch and requests them not to release the funds against said collection item. Returns After Clearing Hours If a cheque or instrument is not returned in time (during second clearing) then it cannot be returned through the Clearing House. If there are any cheques/instruments to be returned unpaid. The cheque/instrument in question along with an objection memo is returned to the Collecting Bank through a special representative/staff member.  Appropriate accounting entries are passed for the Inward Clearing items. .

and the management‟s policy with reference to the accumulation of surplus. 1999. The safety and availability of his funds. the dividends. i. 6. depositors.e. Ratios are calculated for three (3) years i. stockholders. A depositor is interested in the solvency of the bank. The borrower is interested in knowing the extent of available funds and the use that is made of the bank‟s resources.e. “Rs. It shows that how much cash is available to cover the current liabilities. Financial Ratios CASH RATIO Cash ratio is the ratio of cash and its equivalents to current liabilities. The regulatory authorities desire to essure themselves that the banks are operating in accordance with the requirements of the law and are in sound financial conditions. .CHAPTER – 6 FINANCIAL ANALYSIS 6. regulatory authorities. the bank management etc.3 1. borrowers.2 ASSUMPTIONS 1. 2000 and 2001.1 Financial Analysis Financial analysis is the process of identifying the financial strengths and weaknesses of the firm by properly establishing relationships between the items of balance sheet and profit and loss account. Financial ratio that relates two accounting numbers and is obtained by dividing one number by the other. All the figures are taken in thousands i. 2. Stock holders are interested in the general financial condition of the bank and the earnings. In thousands “. 6. 3. The analysis of bank statements is undertaken by analyst.e. Figures are rounded off up to 2 decimal points.

375 x 100 = -1.554 x 100 = 0. Net Income(profit after tax) Total Assets 38.17% and in the year 2001. It measures the over all effectiveness of the available assets in generating profits.e.907 x 100 14 .95% = = 2.040 x 100 = 1.000 x 100 11.007 231. This shows that the bank has efficiently managed its assets portfolio to earn a reasonable return on total assets in the year 2001 as compare to 2000.737 = 6.34% 17 . RETURN ON ASSETS AFTER TAXES This ratio is used in evaluating whether management has earned a reasonable return on the assets under its control. The exact decrease is 4.042 .424 x 100 15.769 .792 .57%.228 .592 810 . There is a sufficient increase in the ratio.02% 15.Cash Ratio Ratio for 1999 = For 2000 For 2001 Analysis = Cash Current liabilitie s 818 . 2. This shows that bank has improved its liquidity in the year 2001 as compare to 2000. Return on assets after taxes = Ratio for 1999 = For 2000 For 2001 Analysis ROA ratio in 2001 is higher than that of 2000 i.407 The cash ratio for the year 2000 decreased as compare to 1999.35% = = 389 .29% 13.356 .200 .78% 5. the cash ratio increased. The exact increase is 2.146 .097 = =  157 .

1% 15.097 1.662 . TOTAL EXPENDITURE TO TOTAL INCOME RATIO = = 1. This shows that bank has poorly utilized its total assets to generate total income. While in the year 2001 it is 1. 4.6% 13.917 x 100 = 10.e.662 .200 . TOTAL INCOME TO TOTAL ASSETS RATIO It is a ratio of total income to total assets. Total income to total assets = Total Income x 100 Total Assets Total income = Mark up earned + non-mark up income Ratio for 1999 = For 2000 For 2001 Analysis There is a persistent decrease in this ratio in the previous two years.123 .19% 1.792 This ratio shows the relationship between total expenditure and total income i. This ratio tells us that how much total income is generated on available total assets. In the year 2000 the exact decrease is 0. how much expenditure is incurred to generate total income.2% as compare to 2000.288 .3.123 x 100 = 12.5% as compare to 1999.356 . Total expenditure to total income = Total expenditure Total income x 100 Total expenditure = Total operating cost + Mark-up expensed Total operating cost = Non-mark up expense + provision against nonperforming advances + reversal of provision for diminution in value of investments + bad debts written off directly.097 1.598 .877 . Ratio for 1999 = 1.861489 x 100 = 12.9% 17 .794 x 100 = 96.

662 .88% 1. this ratio is decreased by 11. 5.05% as compare to 2000. Debt to Equity Ratio This ratio shows the extent to which the firm is financed by debt.715 .For 2000 For 2001 Analysis = = 2.017 .38% 1.034 x 100 = 27.68% 1.123 519 .195 x 100 = 91.16% as compare to 2000.861. This shows that bank has managed efficiently its operation to earn total income with low total expenditure.050 x 100 = 16. The exact decrease in 2001 is 17.33% 1.489 1. Debt to equity ratio = Total debt (total liabilitie s) Total equity .861.877 .72% 1.254 x 100 = 16.412 x 100 = 108. Operating cost to total income = Ratio for 1999 = For 2000 For 2001 Analysis In the year 2001.917 This ratio is high in 2000 as compare to 2001 and 1999. Operating Cost to Total Income Ratio It shows the relationship between operating cost and total income. It tells us that how much operating cost is incurred in generating total income.917 6. = = Operating cost Total income x 100 277 .489 314 .877 . This shows that the bank is efficient in its operation in the year 2001 and it generates its total income with low operating cost.

Return on equity Ratio for 1999 For 2000 For 2001 Analysis The analysis shows that the return on equity has been improved in 2001.Ratio for 1999 = For 2000 For 2001 Analysis = = 12 . Operating Cost to Deposits Ratio This ratio reflects the relative extent to which operating cost is incurred on deposits.e.012 This analysis shows that bank is trying to reduce dependence on debt financing i.905 14 .780 = 16.491.21% .70% 975 . Return on Equity This ratio shows that how much profit is generated by shareholder‟s equity.67 times 975 . bank is trying to finance its assets more by equity.375 x 100 = – 35.98% in 2001.192 = 17. Operating cost to deposits = Operatin cost Deposits x 100 = 4.554 x 100 = 5.012 8.44% 708 . = = = = Pr ofit after taxe s x 100 Total equity 38 .905 157 . 7.909 . The exact figure of improvement is 58.43 times 446 .62 times 708 .28% 446 .031 231 .976 = 33.040 x 100 = 23.031 16 .253 .

498 .050 x 100 = 2.332 .311 1. 10.140 x 100 = 12.145 x 100 = 9.7. Interest expense to deposits = Interest expense Deposits x 100 Ratio for 1999 = For 2000 = For 2001 = Analysis 1.69% 10 .321.15% 12 . The exact decrease in this ratio is 2.92% 14 .307 .946 The interest expense to deposits ratio is decreasing in the previous two years. This shows that deposits of bank are increased in this period while the interest expense is decreased due to reduction in the profit rates on various accounts.99% decrease in the year 2001 is compare to 2000.378 x 100 = 12.23% in the year 2001 as compare to 2000.946 This analysis shows that operating cost to generate and operate the deposits was high in 2000 while it was low in 1999 and 2001.034 x 100 = 4.253 1.122 . There is 1.332 . Interest Expense to Deposits This ratio shows the relationship between interest expense and deposits. .Ratio for 1999 = For 2000 For 2001 Analysis 277 .654 x 100 = 2. It tells us about the interest expense paid on different types of deposits.311 = = 519 .82% 10 .30 .401.122 .253 314 . 9. Total Expenditure to Deposits It reflect the extent to which total expenditure is incurred on deposits.21% 12 .22% 14 .

715 .946 Total expenditure to deposits ratio first increased in the year 2000 and then decreased in the year 2001.04% 14 . In the year 2001 this ratio is 49.598 . Advances to deposits ratio = Advances x 100 Deposits Ratio for 1999 = For 2000 = For 2001 = Analysis 5.017 . This decrease is due to efficient control of cost by the bank‟s management. 11. .307 .Total expenditure to deposits = Total expenditur e Deposits x 100 For 1999 = For 2000 = For 2001 = Analysis 1. Advances to Deposits Ratio This ratio shows the relative extent to which deposits are lended in the form of advances.44% in 2001 as compare to 2000. This means that this year 49.311 5.14% 14 .311 2.125 x 100 = 55.04% deposits are lent in form of advances.122 .332 .794 x 100 = 15. The exact decrease is 4.04%.195 x 100 = 12. this ratio is increased the exact increase is 2.925 .22% in the year 2001 as compare to 2000.253 6.760 .332 .240 x 100 = 46.122 .412 x 100 = 16.253 1.51% 10 .946 In the year 2000 this ratio is decreased and in 2001.36% 12 .60% 12 .307 .680 x 100 = 49.746 .88% 10 .

200 For 2000 = For 2001 = Analysis Analysis shows that asset growth ratio is lower in 1999 and 2001. Interestearned x 100 Advances 1.097  12 .13% in 2001.228 . Interest earned on advances is high in 2000 because return on deposits of the Bank of Khyber with financial institutions is high.760 .792  15.728 . Asset Growth Ratio This ratio highlights the percentage increase or decrease in the volume of total assets over a period of time.356 . Assets growth ratio Current year' s total assets .599 x 100 = 24.356 .33% 13.007 x 100 = 12.049 . 15.007  13200 .049 .20% 15.356 .007 .96% 6. Interest earned to advance = Ratio for 1999 = For 2000 = For 2001 = Analysis The ratio of interest earned to advances in high is the year 2000 as compare to 1999 and 2001.217 x 100 = 21.previos year' s total assets = x 100 Previous year' s total assets 13.200 . Interest Earned to Advances Ratio This ratio reflects the relative extent to which interest is earned on advances.14% 5. The exact decrease is 4. There is a decreasing trend in this ratio in 2001.240 1.925 .242 .200 .200 Ratio for 1999 = x 100 = 9.746 .125 1.12.097 x 100 = 16.55% 12 .57% 5.097 17 .732 .680 13.140 x 100 = 30.

65% 10 .previous year's deposits x100 Previous year's deposits Ratio for 1999 = For 2000 = For 2001 = Analysis 10 .253 x 100 = 14.746 . Deposit growth ratio = Current year's deposits . 15.680 .125 6.12. Advances growth ratio = Current year' s advances .454 x 100 = x 100 = 4.03% 9.53% .307 .14.125  5.746.311 x 100 = 19.240 x 100 = .24% x 100 = 20.Previous year' s Advances x 100 previous year' s Advancdes Ratio for 1999 = For 2000 = For 2001 = 5.50% 5.760 .322.253 12.746.512 .946 .125 5.512 .322.122 .307 .311  9.307 .630 .760.311 14 .454 12 .194 5.322 .253  10 .240 .52% The deposits growth is higher in 2000 as compare to 1999 and 2001.240 5. There is 5. Deposit Growth Ratio This ratio reflects the percentage increase or decrease in the volume of deposits over a period of time.5.13% decrease in deposit growth ratio in 2001.630 . Advances Growth Ratio This ratio highlights the percentage increase or decrease in the volume of advances over a period of times.925 .

Due to better credit management and attracting new and maintaining the existing clients the advances growth ratio grew high in 2001. .Analysis Advances growth was low in the year 2000.

264 1.311 8.907 810.81 18.724 12.724 14.92 6.356.520 18.00 1.512 602.31 0.746.12 0.887 5.786 5.245 704.000 200.85 5.792 64.007 82.4 COMMON SIZE ANALYSIS THE BANK OF KHYBER BALANCE SHEETS AS AT DECEMBER 31.85 33.828 133.20 0.00 6.228.000 389.680 2.153.66 0.925. In thousands) 1999 2000 2001 818.6.310 2.07 5.708 30.86 80.200.16 43.628 10.332.97 0.63 2.641 110.000 4.70 5.932 708.858.297.975 940.905 13.397.001 17.09 0.946 28 1.615 1.125 5.769 13.48 5.28 3.792 Common Size Analysis 1999 2000 2001 6.503 926.37 36.64 37.01 5.760.240 6.424 697. Assets Cash and balances with treasury banks Balances with other banks Money at call and short notice Lemding to financial institutions Investments Advances Capital work in progress Other assets Operating fixed assets Deferred taxation Total Assets Liabilities and owner’s equity Bills payable Borrowing from financial institutions Deposits and other accounts Liabilities against assets subject to finance leases Other liabilities Provision for staff retirement gratuity Total equity Total liability and equity Regular (Rs.097 42.122.52 100 100 100 0.712.42 40.123.307.49 10.66 100 .635 11.72 0.894.70 0.09 0.000 4.031 15.200.87 0.236 446.010.798 1.012 17.34 0.148 865.438 114.345 975.356.58 7.54 4.02 6.46 81.59 78.421 1.689 907.90 100 0.28 10.37 100 0.06 5.107.000 460.667.041 88.091 15.53 0.568 1.87 6.43 5.20 2.228.278 8.253 2.23 3.16 26.

78 23.498.41 -3.507 400.95 13.378 1.156 20.65 20.04 4.041 -156.923 233.923 1.088 -179 -2.188 86 162.95 6.02 1.208 25.318 231.21 17.02 .194 -156.67 1.00 0.55 3.242.025 268.153 3.92 1.5 Common size analysis The Bank of Khyber Profit and loss accounts For the ended December 31.07 -9.318 13.23 4.762 327.62 2.971 79.01 -0.90 4.140 1.728.15 13.28 21.11 3.001 204. -9.21 0.02 0.000 3.193 43.916 61.08 12.599 1.554 1.50 81.35 86.300 48.651 Common Size Analysis (%) 1999 2000 2001 100 100 100 106. commission and brokerage income Dividend income Income from dealing in foreign currency Profit from investment securities Other income Non markup/interest expense Administrative expenses Provision against an other assets Other charges Profit/(loss) before taxation Taxation – current and deferred Profit/Loss after taxation Unappropriated (Loss)/profit brought forward Profit/(loss) available for appropriation Appropriations transfer to Statutory reserve Revenue reserve Un-apprepriated profit/(Loss) carried forward Regular (Rs.020 62.00 9.149 234.401.718 9.226 78.33 2.60 2.35 13.60 -0.02 14.732.351 39.711 31.6.51 0.89 1.454 77.557 53.16 -12.722 -68.performing advances Reversal of provision for diminution in Value of investments Bad debts written off directly Net markup/interest income/loss after provisions Non markup/interest income Fee.181 74. Markup/interest earned Markup/interest expensed Net markup/interest income Provision against non.79 2.452 -157.835 -151.45 0.06 6.48 0.320 23.51 2.212 1030 -155.831 44.510 260.081 309.319 208.43 0.217 1.21 .145 -78.766 38.08 5.030 44.181 .375 1.140 1.39 2.859 46.37 -9.08 -9.194 -76.91 3.55 0.09 0. -156.50 18.661 1.075 24.56 2.50 0-.999 50.000 1.458 -4.57 16.181 250.18 0.10 0.321.06 -6.10 -4.31 -0. In thousands) 1999 2000 2001 1.905 7.06 -9.

356.67 99.52 .332.760.887 5.000 4123.245 704.512 602.007 17.356.568 907.148 865.34 157.67 99.907 810.278 8.360.297.52 65.6 INDEX ANALYSIS THE BANK OF KHYBER BALANCE SHEETS AS AT DECEMBER 31.858.635 11.041 88.200.438 1.932 708.667.097 42.012 17.925.905 13.67 59. Assets Cash and balances with treasury banks Balances with other banks Money at call and short notice Lending to financial institutions Investments Advances Capital work in progress Others assets Operating fixed assets Deferred taxation Total assets Liabilities and owner’s equity Bills payable Borrowings from financial institutions Deposits and other accounts Liabilities against assets subject to finance leases Other liabilities Provision for staff retirement gratuity Total equity Total liabilities and equity Regular (Rs.228.000 460.712.641 110.792 64.54 130.746.397.23 111.240 6.000 4.345 975.975 940.424 697.689 114.85 62.792 1999 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 Index Analysis (%) 2000 2001 47.61 770.264 1. In thousands) 1999 2000 2001 818.503 926.253 2.628 10.708 3.946 28 1.92 116.59 99.421 1.35 143.02 0.615 1.05 67.77 119.828 113.33 119.894.520 18.228.12 156.000 200.40 1533.01 96.33 130.07 86.310 2.58 117.23 137.236 446.097 15.34 165.010.76 12.05 122.33 128.56 116.031 15.000 389.680 2.786 5.122.007 82.33 666.769 13.798 1.107.125 5.486 14.311 8.29 137.65 26.

020 62.923 1.06 402.6.859 46.44 139.498.140 1.153 3.718 9.15 12. In thousands) 1999 2000 2001 1.722 -68.999 50.25 80.156 20.075 24.74 100.140 1. Markup/interest earned Markup/interest expensed Net markup/interest income Provision against non-performing advances Reversal of provision for diminution in value of investments Bad debts written off directly Net markup/interest income/(Loss) after provisions Non markup/interest income Fee.507 400.000 1194 -76.300 48.905 7.242.041 -156.149 234.65 305.454 77.320 23.25 19.510 260.145 -78.194 -156.181 250.14 103.43 261.762 327.916 61.11 599.321.378 1.557 53. commission and brokerage income Dividend income Income from dealing in foreign currencies Profit from investment securities Other income Non markup/interest expense Administrative expenses Provision against on other asset Other charges Profit/(Loss) before taxation Taxation – current and deferred Profit/(Loss) after taxation Appropriated (Loss)/profit brought forward Profit/(Loss) available for appropriation Appropriation transfer to Statutory reserve Revenue reserve Un-appropriated profit/(Loss) carried forward Regular (Rs.835 -151.030 44.661 1.7 INDEX ANALYSIS THE BANK OF KHYBER PROFIT AND LOSS ACCOUNTS FOR THE YEAR ENDED DECEMBER 31.711 31.181 -156.971 79.319 208.42 106.217 1.001 204.212 1030 -155.31 114.90 101.728.27 187.31 149.226 78.732.78 .000 3.452 -157.193 43.41 8.651 1999 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 Index Analysis (%) 2000 2001 139.38 72.025 268.44 234.088 -179 -2.375 1.081 309.351 39.98 6.599 1.318 231.318 13.09 73.208 25.11 88.458 -4.401.554 1.15 113.59 599.831 44.188 86 162.766 38.923 233.181 74.58 244.97 17.

Rs. 602.153. 1. Balance with other banks. In “000”) 1400000 Balances with other banks 1200000 1000000 800000 600000 400000 200000 0 1999 2000 Years 697512 602264 1153708 2001 Interpretation There is increase in balances with other banks in the year 2001.56%.8 Graphical Representation of Financial Analysis 1.6.708 from Rs. 264. 264 in 2000. (Rs. The net increase is 91. . i.e.

Rs. The net increase is 20.786 in the year 2000. 6.35%. In “000”) 7000000 6000000 Adva nces 5760125 5746240 5000000 4000000 3000000 2000000 1000000 0 1999 2000 Years 2001 Interpretation There is increase in the advances in the year 2001.746. Rs. 2.e. i. i. Investments (Rs.240 in the year 2000.894. In “000”) 6000000 5000000 Investments 4858310 5712887 4000000 3000000 2000000 1000000 0 1999 2000 Years 2894786 2001 Interpretation There is increase in investments in a year 2001.2.e.925. The net increase is 97.53%. 3. 8000000 6925680 Advances (Rs. This increase is in advances is due to increase in loans. running finance are etc.712. cash credits.887 from Rs.680 from Rs. 5. 5. .

i. Borrowings from Financial Institutions (Rs. Deposits and Others Accounts (Rs. 5. The net increase is 14.332.e.486 from Rs.4. The net decrease is 44.61%. 940. i. Rs. Rs.667724 in the year 2000. The increase in deposits and other accounts is due to increase in the fixed deposits.14. 1.122.946 from 12. In “000”) Borrowings from Financial Institutions 1800000 1600000 1400000 1200000 1000000 800000 600000 400000 200000 0 1999 1397628 1667724 940486 2000 Years 2001 Interpretation There is decrease in borrowings from financial institutions in the years 2001.52%.e. savings deposits current accounts and call deposits.253 in the year 2000. . In “000”) 16000000 Deposits & Other Accounts 14122946 12332253 10307311 14000000 12000000 10000000 8000000 6000000 4000000 2000000 0 1999 2000 Years 2001 Interpretation There is increase in deposits and other accounts in the year 2001.

Interpretation There is decrease in markup/interest expensed in the year 2001. 1. 1.728. 1.145 from 1.498.49%.20%.e. Markup/interest expensed (Rs. In “000”) 7. 2000000 1800000 1600000 1400000 1200000 1000000 800000 600000 400000 200000 0 Markup/interest earned (Rs. i.e.6. The net decrease is 0. In “000”) 1732140 1728599 Ma rkup/interest earned 1242217 1999 2000 Years 2001 Interpretation There is decrease in the markup/interest earned in the year 2001. .140 in the year 2000.732.599 from Rs. The net decrease is 6. i.401. Rs.378 in the year 2000.

Rs. .999 in the year 2000. Commission & Brokerage Income (Rs.e. The net increase is 12. Comm & Brokerage Income 70000 60000 50000 40000 30000 20000 10000 0 Fee.212 in the year 2000.46%. Fee. i.145 from Rs.55%.300 from 44. Interpretation There is increase is the administrative expenses in the year 2001. Rs. 234. In “000”) 9.8. The net decrease is 1. 44. Administrative Expenses (Rs.e. In “000”) 61156 44999 44300 1999 2000 Years 2001 Interpretation There is decrease in the fee commission and brokerage income in the year 2001. i. 208.

375. –157. . i.10. In “000”) 300000 Profit/Loss after Taxation 250000 200000 150000 100000 50000 0 -50000 -100000 -150000 -200000 -157375 Years 38554 231041 1999 2000 2001 Interpretation There is sufficient increase in profit after taxes in the year 2001.041 while there is loss in they year 2000. i. Rs.e. Profit/(Loss) after Taxation (Rs. 231.e.

e. The given recommendation will help to cope the problems being faced by the bank and will enhance the efficiency and performance of the BOK. Staff at middle and lower level do not participate in decision making process.CHAPTER – 7 FINDINGS AND RECOMMENDATIONS The Bank of Khyber is a new emerging bank and it is trying to get the market share in the presence of national and foreign banks. Decentralization In the BOK the decision making process is centralized. 1. Decisions taken by top level are implemented on all the levels of organization. An entirely centralized decision making is not conducive for proper work environment because it reduces the interest and loyalty of the employees towards the organization. It will improve the working condition and employees will be more confident. but there always exists some room for improvement. there should be decentralization. It has played an important role in certain areas. It may result the best and prompt improvement of the overall bank‟s operations. Decisions are taken by top management. Due to this facts some authority and responsibility should be delegated at the branch level i. The following findings and recommendations are based on personal observations and analysis. . Due to this the communication cost increases and it causes delays in banking operations because of which ultimately customers suffer.

So for the benefit of customers and smooth working of bank. 3. They need proper attention and guidance. Customers satisfaction is the key to success. To fulfill the requirements of training of the new and existing employees the BoK should establish the training academy. Customer Care Counter “Customer is the king”. Space Shortage During my internship in the Ashraf Road branch I observed that there is shortage of space at branch. This thing also affect the speed and accuracy. This will enable the employees to receive training of the peculiar and specific working functioning of the BoK. 5. there should a customer care counter to guide and help the customers. For the increase in number of terminals and purchase of personal computers the branch may request to the head office. And the cash counter is so small that employees face difficulty while working there. there is shortage of terminals and personal computers. Increase in Number of Terminals The BoK Ashraf Road branch is a computerized branch but still. To over come this problem. .2. There is no proper and easy seating arrangement for the customers. the bank simply can shift to some other place. The provision of above facilities will improve the accuracy and speed and will enhance the efficient working. Training Academy The BoK does not have its own training academy. This thing greatly affects the operations and performance. The training to newly recruited employees is given in the training academies of other banks. it creates more problems for them when customers disturb and interrupt them while working. 4. Similar is the case for existing employees. The Ashraf Road branch is understaffed and employees are over loaded.

. 9. Promotional Activities BoK is a new bank as compared to others. In this age of competition the BoK should adopt the policy of marketing penetration through a heavy promotional and advertisement campaign. Branch Net Work The BoK has 29 branches all over Pakistan and Azad Kashmir. The branch network should be improved and number of branches should increase to reach and provide services to maximum number of customers. car financing. From marketing point of view every new organization must pay more attention to the promotional activities. For Sindh province there are two branches both located in Karachi and similarly one branch for whole Azad Kashmir and one for Islamabad. This branch network is too small to compete with other banks. 23 of the total branches are located in KPK. For this purpose both the print as well as electronic media should used. It provides few services and financial products to its customer. The BoK should start a heavy promational campaign to atract more and more customers. The bank should increase its product line and should introduce the Automated teller machines (ATM) facility in the Ashraf road Branch which is in process.6. And there is only one branch for the whole of Punjab province located in Lahore. 7. Proper Checking There is no proper checking and observation system on the entrance of Asraf Road branch. 8. For safety purposes there should scanning checking and should install special checking instruments in the main entrance. Product Line The product line of the BoK is narrow. credit and home financing scheme etc to attract new customers and retain the existing loyal customers. The BoK management does not care about this important issue. The BoK can distribute diaries.

calendars and brochures for promotion. 10. The customers need to be convinced. Recruitment should be strictly on merit basis with no other favor given to any candidates. Recruitment should be done in order to fill out these new vacancies. In branches the marketing task is given to branch manager who has no time to carry out the marketing activities. The Ashraf Road branch specifically faces the problem of employees shortage. Meritorious Recruitment In the BoK mostly recruitment are done through recommendation of the employees or connecting play an important role in recruitment decisions. 12. The BoK should establish a marketing department so that is could improve the image of the bank. In this manner. Marketing Department In to day world of tough competition an organization has to undergo an intensive marketing campaign to win customers. . The BoK does not have a marketing department. 11. This way the work load on employees will be reduced. Selection should be on the basis of test and interview as like in Muslims commercial bank Ltd (MCB) and other banks etc. this will ensure the entry of competent and worthy employees in to the bank. the bank will attract more and more customers. Shortage of Employees Shortage of employees increases the work load on existing employees and ultimately reduces the output and motivation level of employees. To overcome this problem job descriptions should be revised and grouped together in order to create new jobs. operations will be stream lined and employees will feel comfortable in performing their duties. And it should give ads on TV and news papers.

13. Scholarship Programs for Senior Employees Scholarship programs should be designed for senior employees and branch managers. After completion of higher education the employees will be in a better position to attain the strategic objectives of the bank and increase the over all business and profitability portfolio of the bank. The BoK should get into contract with top foreign universities. . Every year the bank should finance and send their senior managers for further education abroad.