Internship Report

Reasons to Choose Banking Sector

In the current era, Pakistan economy is in the boom. Foreign investment is moving towards the Pakistan. Bank sector is one of the sectors, in which foreign investor has been invested at large scale. Banking is the sector which is must at every industrial and developing area. In the last seven years, many of banks have been incorporated. Askari bank is one of the leading banks in Pakistan who had made the much progress in less time. It was incorporated in 1991 and just in sixteen years, it has been entered in the first class banking sector. Human resource department of the Askari bank limited is one the best department among others. In eight week, it is impossible to learn each and every thing which may be dealt in the branch. Before going to internship, I reviewed and analyzed many of banks for internship but I thought the Askari bank limited suitable. Since the college study, I am studying the banking management as a compulsory subject. And my specialization is finance in M.Com. I have interest in banking sector. That’s why due to all above mentioned reasons, I selected the banking sector and then I selected the Askari bank limited in the banking sector for my internship.

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Introduction
Askari Bank is consistently focused on building long term shareholders’ value, as the primary objective. The strength of its brand name, supported by strategic expansion and the depth of bank’s customer relationships, gives it a strong foundation on which to build and continue growing in the times ahead. The key elements of Askari Bank’s strategy have been to increase its market share, mobilize its resources, develop retail, agriculture and Islamic banking, introduce fresh initiatives for corporate and investment banking, capitalize on new business opportunities and implement various technology initiatives. Askari Bank’s primary focus remains on improved risk management which it considers to be one of the essentials for sustainable success in its business. Based on the risk management guidelines issued by the State Bank of Pakistan (SBP), a risk management strategy has been developed for assessing, and mitigating / controlling risks. Bank’s Retail Banking Group gathered further momentum during 2006 and further increased its share in both business volumes and earnings of the Bank. The Group was also benefited by a dedicated advertising campaign launched during 2005. While new products are being added, the distribution channels are also being increased and currently six customer service centers operate in major cities to serve retail banking customers. We believe that Askari Bank is well poised to increase its share of the retail banking market which still offers opportunities for growth. Agriculture Credit Division of the Bank, strategically headquartered in Lahore, continued to serve its customer base through various branches located in the small to medium sized cities of Punjab and a few in Sindh. Since its launch in 2004, the division has strengthened its operations and has devised various innovative agriculture credit products under the Askari Kissan Agri Finance Program, which gained quick market acceptance and penetration. After expanding its reach to most of the agricultural areas of Punjab, the Division is poised to expand agriculture Askari Bank co-founded the ATM switch, ‘One-Link’, the first ATM switch in Pakistan. This switch is now also linked to M-net, the second switch in the country. As a result, the Bank’s customers can now access their accounts through more than 1,100 online ATMs throughout Pakistan. By: MC05126 PUGC 2

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During the year, the Bank launched the first Mobile ATMs in the country. Using wireless GPRS technology, these ‘ATMs on wheels’ can be placed at strategic locations at peak times to serve the customer needs. The Bank’s ‘Data Warehouse’ has become operational and is being fine tuned for providing the management with accurate, up-to-date information enabling them to make timely and prudent decisions. Askari Bank’s progress in the field of Retail Banking was also recognized internationally as the Bank won The Asian Banker award for the 'Best Retail Bank in Pakistan' for 2004, after wining the same award for 2003. Your Bank is the first bank in Pakistan to have won these awards. The Bank won 'The Best Corporate / Institutional Internet Bank in Pakistan' and 'The Best Consumer Internet Bank in Pakistan' awards for 2004, from The Global Finance – an international magazine of high repute. The Bank has also won the 'Bank of First Choice' award for 2005 from the Consumer Association of Pakistan. Askari Bank recognizes its employees as the prime asset and key contributors to the performance of the Bank and places great emphasis on the attraction, development, and motivation of its employees. Operational success requires matching of operational strategies with that of quality human resource. Retention of high quality human resource and maintaining quality recruitment are the fundamentals to good organizational growth. During the year, the compensation package was substantially improved in order to enhance employees’ motivation and loyalty. Our human resource management objective remains to increase the contribution from the employees to the Bank’s value addition while maintaining high ethical and professional standards. For this purpose, various initiatives are being implemented, including improved training and career development, and stimulating employee initiative, innovation, commitment and work efficiency. We are also focusing on developing an organization culture which will enhance employee synergies for achieving excellence in all we do. Understudy report cover the products, field of activities of the organization. It further will provide the information to you about the ratios analysis of the bank and SWOT analysis. This report briefly covers the overall topics which may be the informative for any reader, especially investors. At the end recommendations are also provided to make the better then the current.

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Bank!!!
There are many definitions of the word “Bank” even the standard encyclopedia and law books find it difficult to state exactly what a Bank is. There have been many attempts by different writers to explain the exact significance of the term “Bank”. Here some of the definitions are quoted as follows. According to the Banking Companies Ordinance 1962” Section 5 (b) defines. “Banker means a person transacting the business of accepting, for the purpose of lending or investment, of deposits from the public, and withdrawal by cheques, drafts, order of otherwise, and include any post office saving banks” According to Gilbert “A bank is a dealer in capital or dealer in money. He is an intermediary party between the borrowers and lenders.”

Importance of Banking
We can take bank just like a heart in the economic structure and capital provided by it is like blood in it. Banks play very important role in the economic life of a nation. The growth of the economy is dependent upon the soundness of its banking system. Although banks do not create new wealth but borrow, exchange and consume. These make generation of wealth. In this way they become most effective partners in the development of that country. To encourage the habit of saving and to mobilize these savings is its basic purpose. Banks deposit surplus from the public and then advances these surpluses in the form of loans to the industrialists, agriculturists, businessmen and unemployed people under different schemes so that they set up their own business. Thus banks help in capital formation. If there are no banks, then there would be concentration of wealth in few hands and great portion of wealth of a country would be idle. In the fewer developing countries rate of saving is very low and due to this, rate of investment and rate of growth is also very low. We can take By: MC05126 PUGC 4

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bank just like a heart in the economic structure and capital provided by it is like blood in it. As long as the blood is in circulation, the organs will remain sound and healthy. If the blood is not provided is not provided to any organ then the organ would become useless. So if the finance is not provided to agriculture sector or to industrial sector, it will be destroyed. Loan facility provided by bank works as an incentive to the producer to increase production. Banks provide transfer of payment facility, which is cheaper, quicker and safe. Many difficulties in the international payment have been overcome and volume of transactions has been increased. These facilities are very much helpful for the development of trade and commerce.

Types of Bank
It is difficult to classify the Banks according to the functions, they perform. However main kinds of Banks are as: • • • • • • • • • • • • • • • Central Bank Commercial Bank Agricultural Bank Industrial Bank Co-operative Bank Saving Bank Exchange Bank Mortgage Bank Investment Bank Merchant Bank Consortium Bank School Bank Labor bank Scheduled Bank Non-Scheduled Bank

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Size of global banking industry
Worldwide assets of the largest 1,000 banks grew 15.5% in 2005 to reach a record $60.5 trillion. This follows a 19.3% increase in the previous year. EU banks held the largest share, 50% at the end of 2005, up from 38% a decade earlier. The growth in Europe’s share was mostly at the expense of Japanese banks whose share more than halved during this period from 33% to 13%. The share of US banks also rose, from 10% to 14%. Most of the remainder was from other Asian and European countries. The US had by far the most banks (7,540 at end-2005) and branches (75,000) in the world. The large number of banks in the US is an indicator of its geography and regulatory structure, resulting in a large number of small to medium sized institutions in its banking system. Japan had 129 banks and 12,000 branches. In 2004, Germany, France, and Italy had more than 30,000 branches each—more than double the 15,000 branches in the UK.

Evolution of Banking in Indo-Pak Sub Continent
The Indian society was quite familiar with the banking, right for the beginning. There is also sufficient evidence to show that during 5th century people were accustomed to use hounds as a credit investment. Loans were given to the people against personal and other securities such as ornaments, goods and other immovable properties.

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Banking in Pakistan
It was very difficult for Pakistan to build up its own Banking system immediately after independence without sufficient resources. Following the announcement of the partition plan in June 1947 there was a haste movement on the parts of banks to transfer their funds and accounts across the borders. The banks having their registered offices in Pakistan were transferred to India. In an effort to bring about the collapse of the new state by the persecuting an international policy of withdrawal, the Indian bank offices closed quickly. Those banks, which stayed, were considering the winding up of their business. By 30 th June 1948 the number of schedule banks in Pakistan declined from mere scratch. Today there are more than 7000 branches of commercial banks along with an established network of supplementary financial institutions. All this development in the banking sect is the result of untiring efforts of four decades.

Pakistan Economy

The strong growth momentum that the Pakistan economy ahs achieved in the last few years has been underpinned by dynamism in industry, agriculture and services. This dynamism has stimulated the emergence of a new investment cycle in the economy supported by strong credit growth. The country’s banking sector has risen to the challenge of catering to the needs of a more dynamic economy. Indeed, new growth opportunities I banking have attracted large flows of direct foreign investment in the sector, a phenomenon reflected in the acquisition of local banks by major international banks as well as in the entry of new foreign banks in the country.

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History of Banking in Pakistan
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Banking in Pakistan is not the overnight miracle. It has many phases to come in currently form. It is divided in the following major phases.

0---First Phase (1947 − 1974)
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Establishment of Commercial Banking System There were 19 non-Indian foreign banks in Pakistan at the time of independence with the status of small branch network, whose policies and operations were controlled by their head office abroad. These banks were solely engaged in export of crops from Pakistan. There were only two banks in Pakistan at the time of Partition, Habib Bank, which had transferred its head office from Bombay to Karachi after the announcement of the partition, and Australian Bank, which has been working in Pakistani territories prior to June 1947.The government of Pakistan, tried hard to eliminate the banking crises. The imperial bank of India closed down most of its offices in Pakistan, which had been working as the agent of Reserve Bank of India was not willing to purchase even token amounts of the government of Pakistan. Securities on the plea that these securities were not marketable. The Reserve Bank of India was hardly of any help. It refused to help the govt. of Pakistan with advance argument adhoc securities to enable them to make essential disbursements such as salaries and other obligations to add to the difficulties. The Indian govt. withheld Pakistan’s share of 750 million in cash balances held by her at the time of independence. The forgoing developments clearly brought home the urgency of assuming the control and currency in Pakistan and brought to the force the need to setup a central banking institution to take the place of reserve bank of India. Therefore it was agreed between the Govt. of India and Pakistan to authority of Pakistan from 30 th September 1947 to 30th June 1948. When it assumed full control of banking and currency in Pakistan the first important task before the SBP was to issue of currency notes and withdrawal of reserve bank of India, which had been in circulating in Pakistan so far.

Second Phase (1974-79)
Nationalization of Banks The banking reforms turned out to be a transitional and temporary step and hardly after 18 months, had the government nationalized the banking system. Thus through the Nationalization Bank Act 1974, SBP and all commercial banks incorporated in Pakistan and carrying on business in or outside the country were brought under the government ownership with effect

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from January 1974. The ownership and management of all Pakistan banks stood transferred and rested in the federal government. The shareholders were provided compensation in the form of federal government bonds redeemable at par any time with in a period of fifteen years. The amount of compensation was equal to the break up value of the shares in case of commercial banks. For the SBP shares the amount of compensation was estimated on the basis of average of the clearing quotations during the 6 working days preceding nationalization. The chairman, director and chief executive of various banks were removed from their offices other than those appointed by the federal government and the state bank. The central board of banks, managing committees and similar other bodies were dissolved. Causes of Nationalization • • • • The nationalization of banks may be justified on the following grounds: Large business and industrial houses dominate the lending policies of the commercial banks; this brought forward the problem of concentration of wealth. Commercial banking operations were guided by profit motives and as a result the backward regions and the small entrepreneurs were never been their favorite customers. The operation of banks, unlike after business, have direct implication on the entire national economy. For instance if the banks raise the cost of their credit, the cost of every thing may go up. • Unhealthy complications among banks can lead to financial and economic problems.

Results of Nationalization Although there are doubts about the positive results of the nationalization but we can say that the nationalization of banks provided efficient professional management to expand banking services in every nook and corner of the country. Banks laid full emphasis on their lending policies on priority sector and national building projects, which discouraged non-productive and unhealthy activities like speculation and hoarding, there was also a recorded increase in the number of foreign branches of Pakistani banks. The growth of Pakistani banking system was significant. The banking facilities expanded in the rural areas. The bank credit increased sharply especially in the public sector. A part from this

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expansion the banking system’s activity seeking to gain credit targets laid down by National Credit Consultative Counsel (NCCC).

Third Phase (1979-91)
Introduction of Islamic Banking In 1977 the Bhutto government was toppled. The material law government planned to reform the banking sector in a novel way. The overall policy was to Islamize the economy and the banking system, being based on interest was an important target of the new policy. The most preferred form of Islamic bank financing profit and loss sharing would receive banks to receive deposit without guaranteeing any return. The Islamic bank has to acquire a high degree of confidence of the saver to make him deposit his money with them. Not even the return of the principal amount if guaranteed. The Islamic bank cannot finance the project of an investor merely on the furnishing of collateral. The bank will have to be a partner in the project. This will require to careful security of the project and the assessment of risk involved because profits are the function of the amount of risk in the project. Honesty and trust from both sides of the market are more important to the system of Islamic Banking.

Fourth Phase (1991-2000)
Privatization and De-Regulation The government headed by Prime Minister Nawaz Sharif was not fully satisfied with the performance of nationalized. The areas, which were severely criticized, were the falling standard of banking services and common red-tapism. There were complaints about the services as delay in home remittances, dispatch of cheques, drafts, inefficient counter services, bad debts of the banks etc. were on sector application for privatization of other banks namely UBL and HBL were also invited but the bidding response was quite poor. The privatization of these banks is under consideration. Legislation was enacted to permit the establishment of new banks and the government approved 10 application from the private sector for the grant of commercial bank licenses by SBP, out of these 9 new banks have since

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been incorporated. Till March 1994 there were 20 domestic scheduled banks with 9825 branches and 21 foreign banks with 66 branches in operation in the country. Overall investment of the scheduled banks rose to 76.7%. At present there are 24 domestic scheduled with 8137 branches and 19 foreign banks with 71 branches are in operation in the country. Total assets of domestic scheduled banks amounting to Rs.1563.73 billion on 30th March 1996.

Banking in Pakistan Today

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History
Askari bank was incorporated in Pakistan on October 9, 1991, as a public limited company. It commenced operations on April 1, 1992, and is principally engaged in the business of banking, as defined in the banking companies’ ordinance, 1962. The bank is listed on the Karachi, Lahore and Islamabad Stock Exchanges and its share have consistently remained amongst the highest quoted in the banking sector in Pakistan. Askari Bank has expanded into a nation-wide presence of 121 branches, including six dedicated Islamic Banking Branches, and off-shore banking Unit in Bahrain. A shared network of over 1.300 on line ATMs covering all major cities in Pakistan supports the advisory channel for customer service. As at December 31, 2006, the bank had equity of Rs. 11.1 billion and total assets of Rs. 166.0 billion, with over 665,000 banking customers, serviced by its 4,585 employees.

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Askari Bank Limited---In Vehari

Vehari is a city in the Vehari District, Punjab, Pakistan. It is located about 100 kilometers from the regional metropolis of Multan and about 25 kilometers from the southernmost of the five rivers Sutlej in Punjab, "the land of the five rivers" (The word Punjab comes from both the Punjabi language and the Persian languages, with the Punjabi "punj" meaning "five" and the Farsi "aab" meaning "water"). Vehari is to the north of the Sutlej River. A headworks of canals is located on this river near Luddan on the Luddan-Vehari canal providing irrigation water to both banks of the river, which includes the upper fringes of the Cholistan Desert. The summer in Vehari is very hot, but the weather becomes much more pleasant between October and February. Light rainfall leaves the land generally arid and dusty, but the country's agricultural products include mangoes in the summer and guava and other citrus fruits in the winter. Vehari is considered the capital of cotton growing in this part of Pakistan, with dozens of cotton processing factories and cottonseed oil manufacturing plants, and sugarcane farming and processing is also common. Competition in banking sector at Vehari is increasing day by day. One reason may be the special attention of the government towards the development of the region. Second one we can say that SME sector is demanding the special attraction of banking sector. Askari bank is one of them who have paid special attention in SME sector.

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Objectives
• • • • • • • • • To achieve sustained growth and profitability in all areas of business. To build and sustain a high performance culture, with a continuous improvement focus. To develop a customer service oriented culture with special emphasis on customer care and convenience. To build an enabling environment, where employees are motivated to contribute to their full potential. To effectively manage and mitigate all kinds of risks inherent in the banking business. To maximize use of technology t ensure cost effective operations, efficient management information system,, enhanced delivery capability and high service standards. To manage the bank’s portfolio of business to achieve strong and sustainable shareholders returns and to continuously build shareholder value. To deliver timely solutions that best meet the customer’s financial needs. To explore new avenues for growth and profitability.

Strategic Planning
• • • • • • To comprehensively plan for the future to ensure sustained growth and profitability. To facilitate alignments of the vision, mission, corporate objectives and with the business goals and objectives. To provide strategic initiatives and solutions for projects, products, policies and procedures. To provide strategic solutions to mitigate weak areas and to counter threats to profits. To identify strategic initiatives and opportunities for profit. To create and leverage strategic assets and capabilities for competitive advantage.

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Values of Askari Bank Limited
Integrity is the most valued standard in whatever we do. We understand that our commitment to satisfy customers’ needs must be fulfilled within a professional and ethical framework. Bank subscribe to a culture of high ethical standards, based on the development of right attitudes. The intrinsic values, which are the corner stones of our corporate behavior, are: • • • • • Commitment Integrity Fairness Team-work Service

Growth in Profit

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Creating the new "Askari bank" identity
The management and board of directors of the bank decided to change the name of the bank from Askari Commercial Bank Limited to simply Askari Bank Limited. This was for multiple reasons - firstly, the bank was generally referred to as "Askari Bank". Secondly, in the current scenario, the word "commercial" has become redundant since all banks are commercial banks. The change of name presented an excellent opportunity for a fresh new look for the bank, which would be a reflection of the bank's desire to continue to evolve with and adapt to the changing environment and dynamic consumer needs.

Simplicity in Design
The typefaces used for the logo are simple yet elegant. Without being overly stylish, they make a solid statement about the bank, its approach to business while maintaining the most critical aspect of any logo's design: readability. This is loosely defined as the ability of any text to be readable and recognizable at first glance. The new "Askari bank" logo is distinctive and can be recognized instantly on sight. The use of all lower case letters and the use of "Askari" and "bank" as one word gives the logo a unique identity, enabling it to stand out from the crowd.

The new Colors
Change and evolution being the key driving elements of the new brand identity, the colours of the bank have been revisited completely. The new colours are blue and grey, with a touch of orange/yellow. Understanding this selection needs a basic study of colour psychology. Blue is the colour of peacefulness, loyalty, productivity and strength (or solidity). It is a colour that induces positive emotions in the human body and its effects on productivity, even human strength, have been documented. Body builders work in blue rooms to be able to lift heavier weights!

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The second colour used is a dark grey. This is the colour of elegance, respect, wisdom and balance. Darker shades of grey are said to be more representative of the properties of the colour black, which are modernity, power, sophistication and wealth. However, by being grey and not black, it avoids the connotations of death, fear, etc. The last two colours, orange and yellow, are used in a combination which is representative of a rising sun. The colours themselves, aside from the positive connotations of a rising sun, carry the joint properties of sunlight, joy, happiness, hope, wealth, energy, enthusiasm.

The stylized "AB"
Evolution, not revolution, is key in the development of a brand. The stylized AB, presented in 3D and in the new brand colours, is a solemn nod to the outgoing logo design, which has served the bank very well for the first 15 years of its existence. Retaining this icon maintains the recognition of the old logo, while also creating a positive link between the past, present and future of Askari bank.

Branches Network
Basically Askari bank limited has following types of branches: • • • Conventional Islamic Offshore Banking Unit

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Credit Rating

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Awards and Achievements
Over the years, we have received several awards for the quality of our banking service to individuals and corporate. These include:\ Commercial Bank of the Year Awards for 1994 & 1996 from the Asia money magazine Best Domestic Bank of Pakistan Award for 1995 from the Euro money magazine The Best Bank in Pakistan Awards for 2001 & 2002 from the Global Finance magazine Best Consumer Internet Bank in Pakistan Awards for 2002 to 2004from the Global Finance magazine

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Best Corporate / Institutional Internet Bank in Pakistan Award for 2004from the Global Finance magazine Best Retail Bank in Pakistan Awards for 2003 & 2004from the Asian Banker, Singapore Corporate Excellence Awards for 2002 to 2004from the Management Association of Pakistan (MAP) Bank of First Choice Award for 2004from the Consumer Association of Pakistan Best Corporate Report, for the Financial Sector 1st prizes for 2000 to 2004from the Institute of Chartered Accountants of Pakistan (ICAP) and the Institute of Cost & Management of Accountants of Pakistan (ICMAP) Best Presented Accounts Ranking prizes (2nd or 3rd) for 1997 to 2002 & 2004from the South Asian Federation of Accountants (SAFA), forth whole South Asian Region The Best Presented Annual Report 1st prizes for 1997 to 2005 from the National Council of Culture & Arts (NCCA). The Best Presented Annual Report The annual report of the bank for the year 2005 won the first prize for “the best annual report” for the financial sector, instituted jointly by the ICAP and ICMAP for the 6th consecutive year. The Best Presented Annual Report The annual report of the bank for the year 2005 also won the award under the category “banking sector subject to prudential regulations” by the SAFA, an apex body of the SAARC countries.

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Corporate Excellence “Corporate Excellence” award for 2005 from the Management Association of Pakistan. Bank of First Choice “Bank of First Choice” award for 2005 from Consumer Association of Pakistan. Others: Askari Bank has also proved its strength as a leading banking sector entity, by achieving the following 'firsts' in Pakistani banking: • • • • • First Bank to offer on-line real-time banking on a country-wide basis. First Bank with a nation-wide ATM network First Bank to offer internet banking services First Bank to offer e-commerce solutions First Bank to introduce mobile ATM

Hierarchy of the Bank

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Hierarchy Bank (Grade Wise)

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Management – Head Office
Shaharyar Ahmad President and CEO M.R. Mehkari, SEVP Group Head- Treasury & International Banking Agha Ali Imam, SEVP Group Head- Consumer Banking Services Mohammad Afir Mian, SEVP Group Head- Chief Risk Officer S. Suhail Rizvi, EVP Group Head- Operations Abdul Hafeez Butt, SEVP Country Head- Credit Israr Ahmad, EVP Country Head- Establishment Rehan Mir, EVP Country Head- Treasury Tahir Aziz- EVP Group Head- Corporate & Investment Banking Abdul Jamil Mubbashar, EVP Country Head- Risk Management Khalid Mohammad Khan, EVP Country Head- Compliance & Data Saleem Anwar- EVP CFO Rana Shahid Habib, EVP Country Head- Inspection & Audit Hashim Khan Hoti, EVP Country Head- Islamic Banking Services Vadiyya Asif Khan, EVP Country Head- Corporate Banking Mian Muhammad Sharif Credit Administration Shahid Ahmed Chief Economist & Country Head- Strategic Planning Farooq Abid Tung, EVP Country Head- Agricultural Credit Hassan Aziz Rana, SVP Country Head- Legal Affairs Muhammad Ehsan Qadir, SVP Country Head- Operations Muhammad Ahmad Khan, SVP Riaz Khan Bangash, SVP Nauman Bashir Khan, SVP Acting Country Head- International Acting Country Head- Human Resource Country Head- Electronic Technology.

Management –
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In the Country
Basically management of the Askari bank limited has been divided into the following categories. Head of each category control his/her own region. Branches under this head report to the own region head. Region reports to the high authority which is the head office. How ever in any special case, branch may be contacted directly through by the head office.

Branch Hierarchy (Vehari Branch – 0093)

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Department Askari Bank Limited

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There are various departments in the Askari bank limited. But the branch where I have worked as internee has not all departments due to geographical situation. As I have mentioned above that Vehari city is an agricultural area, so investment, export and import department are not here. Farmer sold there crops in local market. There is too much minimum industry. This is, do business locally. So Vehari branch has following departments. Let the departments explain briefly.

Operational / General Banking Departments
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This is the section which deals with the general public who make the transaction daily bases. It is further divided into the following departments.

Account Opening Department: This is the department who deal the new clients of the bank. Opening the account is the main duty of this department. Features: • • • • • • It opens the account of all type of clients. It deals in the lockers. It issues the RTC, TDR, CDR and NDR. It issues the Cheque Book. Any other relevant assigned duty by high authority. it issues the ATM Card and get the application for Credit Cards. Following are the persons who are responsible for the work in this department. • • • • Mr. Muhammad Aslam; who is the branch manager. Mr. Khubaib Shah; Operational Manager. Mr. M. Imarn; Incharge department. Mr. Liaqat

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Clearance Department
This department is for clearing locally.

Representations together twice in a day in national bank clearing house for clearance. These employees clear the instruments which have been presented by the clients in their banks for collection. Outward and inward clearing is also the responsibility of this department. It has the following features.

Features • It has the responsibility to clear all the instruments have been represented by the clients in the bank for collection. • • It has the duty to clear OBC and IBC. At the day end present the day summary to high authority, cash Incharge and remittance in charge. Following are the persons who are responsible for the work in this department. • • • Mr. Muhammad Islam; Branch Manager. Mr. Khubaib Shah; Manager Operations. Mr. Mian Furrukh; Incharge Department.

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Remittance Department
It is the department who works for the clearance of out side the city instruments presented by the clients or any bank’s branch from outside the city. Simply it remits the money and does other duties. Following are the features of this department. Features • • • • It remits the money. It clears the OBC and IBC instruments. prepare the Demand Draft, Pay order, Telex Telegram Any other relevant duty assigned by the high authority. Following are the persons who are responsible for the work in this department. • • • Mr. Muhammad Aslam; who is the branch manager. Mr. Khubaib Shah; Operational Manager. Mr. M. Atif; Incharge Department.

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Account Department
this is the department who is responsible for all account statements like as expenses, taxes etc. it prepare the reports on daily, weekly, monthly, quarterly, and annually basis. This department has the importance. It makes the correspondence with the head branches also. It has the following features. Features • It makes the account statements on daily, weekly, monthly, quarterly and annually basis. • • • It deals in the tax also. It makes the correspondence with head office and head branches also. In charge of this department also is the in charge of all labor type employees. Simply In charge of this department is also responsible for maintaining of branch and refreshment in the branch. Following are the persons who are responsible for the work in this department. • • • Mr. Muhammad Aslam; who is the branch manager. Mr. Khubaib Shah; Operational Manager. Mr. M. Atif; Incharge Account Department.

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Cash Department
This department simply is the backbone of any branch. It deals with the cash. Cash which is deposited by clients or withdraw by clients or deposited or withdraw walk-in-customer. This department is also collects the charges. It has the responsibility to balance the debit side with credit side at the end of the day. It has the following features. Features It deals in cash whether deposited or withdraw by clients or any other walk-in-customer. It collects the service charges rendered by the bank to the valuable clients or walk-incustomers. It must to balance the debit side with credit side at the end of the day. Bank retain up to six million with the branch, excess amount cash Incharge send to the head office. Following are the persons who are responsible for the work in this department. • • • • • Mr. Muhammad Aslam; who is the branch manager. Mr. Khubaib Shah; Operational Manager. Mr. Muhammad Zeeshan; Incharge Cash Department. Mr. Hafiz M. Shehbaz; Incharge Teller. Mr. M. Asif; Teller. 39

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Foreign Exchange Department
Department which deals with the foreign currency transactions. It has the importance in cross the boundary transactions. It has the following features. Features • • It deals in the foreign currency. It is directly under the supervision of the branch manager and branch is responsible directly to the treasury department or head branch. • Foreign amount currency is sent through SWIFT. Askari Bank Limited has the contact with American Express, America for cross the boundary transactions. Following are the persons who are responsible for the work in this department. • • • Mr. Muhammad Aslam; who is the branch manager. Mr. Mahmood; Incharge Credit Department. Mr. Muhammad Yasir; Assistant Incharge Department.

Credit Department / Section
We can say to it a section because it has further three departments who deal in the credit. Bank has two major functions. One is depositing and second one is advances. Credit section deals in the advances. It is further divided into three departments in the branch. By: MC05126 PUGC 40

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Agri-Credit Department
As I have mentioned earlier about the Vehari city in which Askari branch is situated where I have worked as internee. Vehari region basically is a agricultural area. Government and especially is concentrating their attentions in the Agri-reforms in this area. So, it should be clear now that this department who much has the importance. It deals in the advances of both type term and running finances. It advances to the farmers on low rate. It has the following features Features • • • • It deals in the Agri-advances. It provides the loans to the farmers on low rate. It deals in both, running and term financing. It is also under the supervision of branch manager directly.

Following are the persons who are responsible for the work in this department. • • • • Mr. Muhammad Aslam; who is the branch manager. Mr. Khubaib Shah; Operational Manager. Mr. Rao Sajid; Incharge Agri-Credit Department. Mr. M. Imran; Assistant Incharge Agri-Credit Department.

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General Credit Department
This department deals with the general public who want to borrow from the bank. Credit department of this branch of Askari bank limited provides short term and medium term advances. Simply it provides medium term financing. One can say that this is because of “99% SME lies in Vehari and its surroundings”. It has the following features. Features • • • It provides the medium and short term loans. It provides the advances to SME and for housing also. It issues the Letter of Guarantee.

Following are the persons who are responsible for the work in this department. • • • • Mr. Muhammad Aslam; who is the branch manager. Mr. Khubaib Shah; Operational Manager. Mr. Mahmood; Incharge Credit Department. Mr. M. Yasir; Assistant Incharge Department.

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CBSG Department
CBSG stands for consumer banking services group. In the branch it is under the supervision of branch manager otherwise it is directly under the regional branch. This department deals with consumer financing. It provides the loans to fulfillment the personal needs of the borrower. It has the following features. Features • • • It deals in the personal financing. It provides the loans to fulfillment the personal needs of the borrower. It provides the loans against salary.

Following are the persons who are responsible for the work in this department. • • Mr. Muhammad Aslam; who is the branch manager. Ms. Mahgul Magsi; Incharge Department.

Management Information System Department
Today is the era of online and internet banking. Conventional banking although has the importance but with the passage of time, importance of this type of banking is decreasing day by day as compare to the modern banking. Askari bank’s bases are also situated on modern line banking. It provides the online and internet banking facilities to the valuable clients. For this purpose, bank has MIS Department in each branch to avoid any type of problem. It has the following feature. By: MC05126 PUGC 43

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Features • • • • To maintain all computer and online banking equipments on modern lines. To check and control the flow of online banking. To initialize and end the day. It sends daily all online transaction record to the head office MIS / Data Base Department. Following are the persons who are responsible for the work in this department. • • Mr. Muhammad Aslam; who is the branch manager. Mr. Abdul Waheed; in charge Department.

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During 2006, Askari bank limited continued with its growth momentum and posted substantial earnings despite highly competitive business environment. Although monetary tightening helped in reducing inflationary pressures in the economy during fiscal 2006, aggregate demand remained high as indicated by the strong GDP growth, high growth in private sector credit, sluggish decline in core inflation and large external account deficit. The year and year growth in private sector credit remained strong, although down from the phenomenal growth witnessed last year. The slowdown in private sector credit was not broad based and was mainly due to net retirement by sugar and cotton spinning sectors. During the year, SBP announced debt swap option under long term finance export oriented projects (LTFEOP) to provide relief to the borrowers of textile sector who were monetary tightening. The increase in consumer credit also has an expansionary effected corporate finance, as the demand for automobile and consumer durables, particularly electronic remained high. In a highly competitive environment, Askari bank limited continually reviewed its policy pertaining to the sector exposures to derive optimum competitive advantage, maintain the risk profile and achieve greater customer satisfaction. On the operations side, during the year under review, Askari bank’s has taken various initiatives to improve the way of doing business. The significant ones include re-organization of management structure and technology initiatives. The primary objective of re-organization is to consolidate and align internal capacities to best serve each business segment. The technology initiatives are aimed to improve the services quality standards and strengthen control environment and to prepare the bank for the future challenges.

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Corporate Banking
This business is managed by a central corporate banking division based at head office Rawalpindi and supported by dedicated marketing and back office units in Karachi, Lahore and Rawalpindi. The division maintains a diverse portfolio and primarily offers structured financing solutions to cater for the business needs of its clients. During 2006, corporate banking further expanded its customer base and new relationships were established in telecommunications sector, fuel and energy, and fertilizer sectors in order to enhance focus on relationship management and services division. The corporate banking will continue to play a major role in loan syndications and structured financing transactions with the objective of providing a range of corporate banking solutions to its valued clients. quality, more dedicated and experienced staff is being assigned to this

Corporate Banking Division (CBD)
CBD is your long-term business partner that is geared to help you in meeting your business growth objectives. The business is managed by a team of professionals who understand your requirements and can firmly stand by your side. Dedicated relationship managers for each of our corporate clients ensure your satisfaction, which is our top priority. Our relationship oriented outlook focuses upon providing a complete array of tailored financing solutions, that are practical and cost effective, some of which include: By: MC05126 PUGC 46

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• • • • • • • • •

Working Capital Facilities Term Loans Structured Trade Finance Facilities Letters of Guarantee Letters of Credit Fund Transfers / Remittances Bill Discounting Export Financing Receivable Discounting

Investment Banking
The investment banking activity mainly covers, debt / capital markets, advisory services and trading (both equities and bonds). This division also offers advisory and loan syndication services. Equity market transactions are handled by capital market desk, based at Karachi, which futures, system. include and equity continuous portfolios funding banking segregated into trading, investment and Investment

participated in various debt and capital raising instruments during the year.

Investment Banking Division
IBD provides value-added, specialist services and products through a dedicated team of professionals, with world-class skills, to provide customized solutions to help our clients meet their strategic objectives. IBD is responsible for seamlessly originating, executing and distributing all forms of investment banking transactions ranging from syndicated loans to complex structured and project financing transactions. Some examples of products offered by IBD include: • Strategic Advisory 47

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• • • • • • • • • • •

Privatization Advisory M & A Advisory Balance Sheet Restructuring Syndications Project Finance Structured Finance Islamic Finance Private Placements of Debt and Equity Issuance and distribution of Term Finance Certificates, Sukuk Bonds, and Commercial Paper Underwritings Capital Market Hybrid Products

Consumer Banking Services
During 2006, the consumer banking services offered by the bank were reorganized by combining consumer financing business and credit business under one umbrella and were renamed as consumer banking service group. Consumer financing offers auto, mortgage, personal and business finance as the core products. This business grew by 28% during 2006. the bank’s debit card with the brand name of ASKCARD registered an increase of 25% in the number of cards issued. Also, RTC float increased by 55% during 2006.The group is organized on a hub and spokes basis and its hubs i.e. rawalpindi, Peshawar, Lahore, Karachi (2) and

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Quetta which are now supported by 73 spokes i.e., consumer banking units, operating form the branches in close proximity of the relevant CBCs.

Rupees Travelers Cheque
The range of our products and value added services enhances with introduction of Rupee Travelers Cheques (RTCs) launched in March 2002. In spite of our constraint on issuing higher denomination of RTCs against restrictions imposed by the Central Bank of Pakistan we have been striving to attain our shares with sizeable portfolio. Askari Commercial Bank Limited has always remained at forefront in introducing innovative and unique products in banking sector. Our financial instruments provide greater financial freedom and security in an unmatched way to our valued customers. Askari Bank offers you its "Rupee Traveler Cheques" eliminating all financial risks while traveling. So avoid risk of carrying cash through Askari Bank's Rupee Traveler Cheques. You’re Best Traveling Companion. Why Askari Bank's Traveler Cheques? • • • • • • • • • • • • Free Issuance. Free Encashment. Plus commission for the Customer at the time of encashment if retained for a specific period. Nationwide acceptability. Facility of encashment in cash to the purchaser. Facility of encashment through clearing. No purchasing limit. Valid until encashed. Easily Transferable. Account relationship not mandatory. Fastest refund procedure in case of loss/theft. Safe & Secure due to foreign printing with multiple security features. 49

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• •

Available in Rs. 10,000 Denomination at all branches of Askari Bank. No withholding tax on sale or encashment*.

Value plus Deposits
It is also known as VPCD “Value plus Current Deposit Account”. The first liability product launched by this unit is showing a remarkable acceptability in the market. The growth of this product is witnessed by its share, which has presently reached at Rs. 1,079 Million even after lowering down the profit rates due to sufficient liquidity in the market. Askari bank leads the way, yet again …… with the introduction of Askari bank’s value plus rupee deposit account, which promise greater financial freedom and security, in an unmatched way. Now one cay open Value Plus account while enjoying the flexibility of a normal checking account. Types of Value plus Account: • • • Value Plus Current Account Value Plus Saving Account Value plus Time Deposits.

Extra Features: • • • • • • • • Free insurance coverage. Free on-line fund transfer facility. Free internet banking facility. All other benefits of normal checking account. High monthly return on saving and time deposits. Partial liquidity offer on all time deposits. Facility for issuance of debit / supplementary cards. Askari bank’s unmatched service quality.

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Partial Liquidity Offer for Time Deposits:
Offering to public a truly exciting opportunity to make your investment break new grounds for public. All any one have to do is to invest a minimum deposit of Rs. 25,000 in a value plus time deposit for a choice tenure i.e. three, six months or one year. The investment will be held in blocks of Rs. 25,000 each. In case you wish to partially withdraw some amount from your investment, you have the flexibility of encashed the blocks that you want, without touching the remaining investment. The un-encashed blocks will continue at the same maturity and return ……… and yet you do not lose the share of profit on the encashed blocks. Upon maturity you have the freedom of either booking your time deposit for tenure of your choice, or let the bank roll it over automatically for a like period.

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

One of the quickest approval processes around
One can avail unlimited opportunities through Askari Bank’s Personal Finance. With unmatched financing features in terms of loan amount, payback period and most affordable monthly installments, Askari Bank’s Personal Finance makes sure that you get the most out of your loan. No matter what your need is, Askari Bank has more ways to serve you than ever before. Product Featuring: Borrower: By: MC05126 PUGC Resident Pakistani Nationals. 51

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Facility: Financing Limits:

Term Finance Maximum upto Rs. 500,000/. (Clean) Maximum upto Rs. 1 Million. (Secured) Tenor: Maximum upto 5 Years Repayment: Monthly Installments Markup Rates: Competitive Servicing: Available at all Askari Bank branches Balance Transfer Facility: Available Eligibility to Apply: Age: Income: Financing Limits: Employment: Between 21 to 65 years. Minimum gross monthly income of Rs. 10,000/- only. Maximum upto Rs. 500,000/. (Clean) a) Salaried: Minimum length of confirmed

service with present employer is 6 months with a total length of 1 year b) Self Charges/Fees: service. Minimum 1 year in business.

Employed: As per current schedule of charges.

When you are working towards your financial goals, how you borrow can be just as important as how you invest. The right borrowing options can improve your savings, your cash flow and your ability to take advantage of personal or business opportunities. So, choose the right options and call us now to enquire about your entitlement amount and exclusive service. At Askari bank we make every effort to serve our customers with care. Not restricted to new financing, under Personal Finance scheme, we offer extended facilities, which are: Balance Transfer Facility: • It gives the customer the opportunity to pay off his/her outstanding dues on their credit cards or other loans at a rate of interest much lower than what one pays on them. That not only frees up their credit limit, but cost of servicing the debt is greatly reduced.

Dream Life (Financing for Consumer Durables):
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Askari Bank Limited is the financial market player in delivering quality service to customers with highly professional standards. We have joined hands with various Electronic Companies for sale, of the domestic appliances against consumer financing. Under this scheme, Askari Bank is financing products of these companies, which would benefit those people who can only afford to buy home appliances on installments due to limited resources. In addition to this, we have also signed agreements with other top manufacturers of automobiles for financing of motorcycles to the general public at most competitive rates. Bank has established relationship with almost all top manufacturers and dealers of:

Mortgage Finance
Askari "Mortgage Finance" offers the convenience of owning a house of choice, while living in it at its rental value. The installment plan has carefully designed to suit both the budget & accommodation requirements. It has been designed for enhancing financing facility initially for employees of corporate companies for purchase/ construction/ renovation of house. Ever since the inception of life, shelter has been rated among the primary needs of mankind. Owning a home for oneself still remains an exclusive dream for many. Askari Bank has made the realization of your dream to have a house of your very own possible. Whether you plan to build a house, tailor made to your requirements or buy a constructed house, Askari mortgage finance enables you to pursue your goal without any problems.

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Product Featuring: Borrower: Financing Limits: Tenor: Repayment: Prime Security: Markup Rates: Servicing: Balance Transfer Facility: Balance Transfer Facility: Resident Pakistani Nationals. Maximum upto Rs. 30 Million. Maximum upto 20 years. Monthly Installments. Mortgage of property. Competitive Available at all Askari Bank Branches Available Available.

Eligibility to Apply: Age: Income: Between 21 to 65 years. a) Salaried: Minimum gross monthly income of Rs.20,000/- only and a permanent employee with atleast 2 years of b) Charges/Fees: service including present employer. SelfMinimum length of 1 years in

Employed: business. As per current schedule of charges.

Business Finance
In pursuance of the National objectives to revive the economy of the country, ACBL is providing loans to small and medium size business enterprises under Askari Bank's Business Finance Scheme. Our goal is to offer a loan, which enables business community to receive the financing required by them based on their cash flows. Our valued customers can enjoy the convenience of getting financing on attractive terms with the minimum processing turnaround time. You always wanted to put in that extra money into your business, which makes it grow... and grow!. Now you can stop worrying about your daily cash requirements, and start enjoying our unique Askari Business Finance facility.

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Available up to 60% of the assessed market value of your residential property, through equitable/token mortgage. Product Featuring: Borrower: Facility: Financing Limits: Primary Security: Resident Pakistani Nationals. Running Finance/Term Finance. Maximum upto Rs.1.0

Million

Maximum upto Rs.50.0 Million Residential & Commercial / Built up Properly &

Land. Mode of Financing: Running Finance: One year line of credit Repayment: (renewable). Running Finance: Monthly debt servicing on the

outstanding balance. Markup Rates: Competitive. Servicing: Available at all Askari Bank Branches. Balance TransferAvailable Facility: Eligibility to Apply: Age: 21 to 65 Years. Borrowers: Resident Pakistani Nationals. Business Requirements: Maximum up to Rs. 500,000/. (Clean) Employment: Minimum one year's business or professional Charge/Fees: experience in the present business As per current Schedule of charges

Enjoy the convenience of most attractive financing with minimum loan approval turnaround time. Don't wait act now, to enhance your financial resources

Smart Cash
This personal line of credit would be set up with a specified credit limit up to Rs. 500,000/Product Featuring: By: MC05126 PUGC 55

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Borrower: Facility: Financing Limits: Tenor: Repayment: Markup Rates: Servicing: Balance Transfer Facility: Eligibility to Apply:

Resident Pakistani Nationals Personal Line of Credit. Maximum upto Rs.

500,000/-(Clean)

Maximum upto Rs. 1 Million (Secured) One year (renewable). Monthly debt servicing on the outstanding balance. Competitive. Available at all Askari Bank Branches Available.

Age: Between 21 to 65 Years. Income: Minimum gross monthly income of Rs. 25,000/- only. Employment: a) Salaried: Minimum length of confirmed service with present employer is six months with a total length of one year service. b) Self Employed: Minimum 1 year in business. (Against security). Charges/Fees:As per current schedule of charges.

Auto Financing
Yet another of our products, “Askar” offers the most convenient and affordable vehicle- financing scheme, which provides our valuable customers an opportunity to own a brand new vehicle of their choice. With minimum down payment, lowest insurance rates and widest range of available car makes and models, Ask car offers the best value to our esteemed customers. Askari Bank offers you the most convenient and affordable vehicle financing scheme to help you own your favorite brand new car. Product Features: By: MC05126 PUGC 56

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Borrower: Facility: Financing Limits: Repayment: Markup Rates: Balloon Payment: Minimum Income: Charge / Fees: Auto Insurance: Financing Tenor

Resident Pakistani Nationals Term Financing Rs: 100,000/- to Rs: 3.0 Million Monthly Installments Competitive Available Salaried: Rs: 10,000/-, Self Employed Businessman: Rs: 25,000/As Per current Schedule of Charges Mandatory Up to 7 years

Askari Debit Card
Askari Bank is committed to provide you innovative and competitive solutions to your banking needs in a more efficient and personalized manner. Your Bank enjoys a strategic competitive advantage over all domestic players by virtue of its leadership, large network and technological advancement. In line with our tradition of innovation, Askari Bank takes pride in announcing launch of "Askari Debit Card"- Askari Bank's Debit Card. Askari Debit Card is tailored to your shopping needs and is another valuable financial solution reflecting our commitment to build lasting relationship with you. Askari Debit Card means freedom, comfort, convenience and security, so that you can have retail transactions with complete peace of mind. Askari Debit Card is your new shopping companion which enhances your quality of life by letting you do shopping, dine at restaurants, pay your utility bills, transfer funds, withdraw and deposit cash through ATM anywhere, anytime. • • • Profit / Markup Rates on Retail Products Rates of Profit Paid to Value Plus A/C Holders & on ABIC Commission being paid to customers on retention of RTC for a period of One Month, @ 0.1% of face value of RTC. Particulars Value Plus Saving Deposits Rs. 10,000/- to Rs. 24,999/Rs. 25,000/- & above By: MC05126 PUGC Profit Rates 2.50% 3% 57

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Value Plus Time Deposits Three months Six Months One Year Investment Certificates First Month Second Month Third Month Lending Product Rates Particulars Personal Finance Up to 3 Years Up to 5 Years Smart Cash 1 Year (Renewable) Business Finance 1 Year Mortgage Finance 20 years maximum Auto Financing

5% 5.50% 6% 4% 4.50% 5%

Markup Rates 18% 22% 22% 1 Year Kibor + 3% to be reviewed on yearly basis 1 Year Kibor + 3% to be reviewed on yearly basis. 13% to 15%

Credit Cards
Despite strong competition, the credit cards business, under the Master Card brand, maintained its growth in all areas of the business. Net card issuance increased by 59% during the year, cards in force (CIF) crossed 230K and its loan portfolio increased by 36%, while NPLs remained will within the industry norms. Askari Master Card’s rewards program continues to offer attractive features to our valued customers. Also, strategic alliances with leading services providers in the market benefit Askari Master Card customer with exclusive travel and leisure facilities.

Treasury and International Operations
International Division
International Division strives to place at the disposal of our branch network, efficient correspondent banking arrangements on global basis, thereby catering the needs of our client By: MC05126 PUGC 58

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Diaspora. In short, this is made possible through a variety of arrangements with various banks which, amongst other benefits, ensures placement of suitable Credit lines at our disposal by our counter-party banks to facilitate Foreign Trade and Treasury related activities. Today International Division boasts of multi-faceted correspondent banking relationships with over 200 Banks in 77 countries around the world thereby improving the capacity of our branches in serving their clients. Alongside, International Division is entrusted to arrange evaluation/approval of exposure limits favoring various local/overseas banks and Nonbanking Financial Institutions with whom our Treasury and branches deal on day-to-day basis. Within the context comes the Country exposure, which is managed and monitored at this division, whereas our liaison with State Bank of Pakistan, in respect of Foreign Trade related issues, helps us to provide timely directions and efficient advisory to our branch network. Optimum monitoring of business reciprocity with banks compliments our efforts to manage the business flows and ensure greater profitability and balanced distribution of business amongst our correspondents. In addition and as a part of the ongoing exercise of Know Your Customer (KYC) compliance with regard to our correspondents, International Division carries out regular Due Diligence exercises to ensure that our bank deals only with financial institutions that are able to meet the prescribed standards and criteria. The monetary tightening aimed at reducing inflationary pressures and fostering economic growth was reflected in the money market conditions throughout the year. In order to manage the money market liquidity, SBP used the combination of Overnight Money Market Operations (OMOs) and increased cash reserve requirement. During the year, discount rate was also increased by 50 bps. As a result the overnight rates remained under pressure during most of 2006. By: MC05126 PUGC 59

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Pak Rupee started the year at Rs. 59.81 to a US $ and depreciated to Rs. 60.89 towards the end of 2006. The depreciation of Pak Rupee against US $ was continues and was mainly attributable to deterioration in external account. During 2006, weight average yield of benchmark six months TBs increased by 57 bps (bills per share) to close at 8.81% p.a., while six months KIBOR increased by 161 bps from 8.80% to 10.41%. The intense money market competition placed the Treasury in a demanding position, to offer more innovation in undertaking arbitrage and derivative transactions to maintain, and increase, its share in the overall earnings of the bank. The treasuries operations are effectively structured to measure, manage and mitigate the risk elements associated with the treasury activities, through the use of IT system and enhanced human resource skills, so that the treasury can manage the risk better, and also provide advice and services to the branches and their customers. The bank increased its overall foreign trade business during 2006. the import business increased to Rs. 119.3 billion, i.e. growth of 11% over last year, while the exports increased by 6% over last year, to Rs. 97.3 billion. Standard settlement instructions for commercial payments through our major correspondents are appended below:

Offshore Banking Unit (OBU)
During the year, Askari bank’s offshore banking unit in Bahrain increased its share of contribution in the overall earnings of the bank. The OBU remains on a constant look out for opportunities on the international scene, which are both profitable and provide the bank with a strategic edge. OBU enhances the Askari bank’s capability in terms of offering a wider range of services to our customer, and also acts as a look-out for new business opportunities and relationships in the international markets.

Credit Department
Askari bank’s funded credit portfolio increased by 16% to close at Rs. 102.73 billion as compared to 23% last year as the bank remained watchful of the impact of growth of risk assets on capital adequacy. By: MC05126 PUGC 60

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A review of the securities held against credit limits reveal that the credit portfolio of the bank is well collateralized, with adequate exposure being covered by securities of liquie nature, such as deposit, trade documents, equity or debt instruments, guarantees from government or financial institutions, etc. during the year, bank’s non-performing advances increased to Rs. 3.6 billion, from Rs. 2.3 billion last year due to further downgrade of certain large exposures. Consequently NPLs as a percentage of gross advances increased from 2.7% to 3.6%. However, despite this increase, the percentage is well within the industry average. During 2006, askari bank made net provisions of Rs. 1,128 million. Also during the year, the method of making general provisions, on credit portfolio other than consumer portfolio, was standardized, as explained in audited finance statements. General provisions against consumer finance portfolio continue to be made in accordance with the guidelines provide in SBP Prudential Regulations of Consumer Finance. The cumulative provisions at the close of 2006 increased to Rs. 3.5 billion. These provisions provide 97% coverage to the total NPLs as compared to 102% last year.

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Agriculture Credit Financing
The role of agriculture in Pakistan economy is of pivotal nature. Due to diverse geographical and climatic conditions the country has tremendous potential for growth and development in agriculture. However, adequate and timely financial assistance to the farmers will improve production potential of agriculture sector in the country. The modern concept of agricultural credit envisages establishment of an efficient institutional credit system to serve as a package of credit, supplies and knowledge for the overall strength of the farmers who at present suffer from low productivity and financial insecurity. A successful credit evaluation system, therefore, should have the basic ingredients to provide adequate amount at the right time and in the right form to help farmers in making a productive use of loan funds. Askari bank’s agriculture credit schemes which were launched in June 2004, under the umbrella of Agriculture Credit Division continue to be an attractive product for meeting ON farm and OFF farm financial requirements of the farmers. The credit schemes were introduced under the title of “Askari Kissan Agri Finance Program (AKAFP)” with the objective of: • • • • • Providing financial assistance to small farmers. Ensuring adequate and timely availability of credit. Facilitating effective water management system. Encouraging and promoting mechanized farming. Providing means for better access to markets. 62

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• •

Promoting livestock development. Providing inputs finance for effective crop management.

AKAFP ---- Features
The Askari Kissan Agri Finance Program (AKAFP) has been designed to meet ON FARM / OFF FARM credit requirements of farmers on the most convenient, flexible, easy terms and conditions. The program features: • • • • • • • • • A broad array of credit lines designed to meet farming requirements. Repay and borrow at your convenience on revolving credit basis at lowest mark-up rates renewal able after three years. Convenient repayment terms based on cash flow abilities. Availability of leased Tractors / Transport without Land / Collateral. No Hidden Cost. Availability of interest free package for inputs and tractors etc. No Pre-adjustment penalties. Earn prompt payment Bonuses and reduce financial costs. Insurance cover of leased assets, animals, crops and life assurance of borrowers.

The bank is extending short, medium and long-term loans to the farmers for Crops, Dairy farming, Poultry, Fisheries, Forestry and Orchids. Loans are also provided for farm mechanization, transportation, marketing of agriculture produce, storage, land improvement and aabpashi. Askari bank’s Agri business philosophy is in line with SBP strategy for increasing the outreach and flow of agriculture credit coupled with product changes, delivery alternatives, and risk management, loan pricing and strategic presence. 63

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During the period under review, the growth and performance of the portfolio remained encouraging. The number of designated branches for agriculture credit increased from 12 to 46 and customer base by 90% as compared to last year. New dairy farming schemes were introduced for establishment of model dairy farms, milk collection centers, installation of milk cooling tanks and purchase of cattle etc. The bank proactively participated at various provincial and national forums for the development and capacity building for the agriculture sector. Askari bank is working as partner with National Reconstruction Bureau for implementation of e-passbook system with National Reconstruction Bureau and providing platform for integration of the system for the benefit of all stakeholders. The division remains proactively engaged in evolving policies and procedures for strengthening the credit framework for the benefit of all stakeholders, and is determined to make its full contribution towards ensuring that Pakistan is a food and fiver surplus country.

Kissan Ever Green Finance
Askari Bank has launched this program with the sole motive to provide dignity, prosperity and freedom to the tiller of the land. The program is designed to help small, medium and large farmers in meeting their short-term input requirements against one time sanction and automatically renewable upto 3 years subject to its stipulated utilization/periodical adjustment. The credit line is sanctioned in the light of available cash flows and input requirements i.e. Seeds, Fertilizer & Pesticides etc. Salient Features of the Program are given as: • • • Farmer opens a profit earning "Askari Ever Green Account" with the branch. A special cheque book is issued to the farmer. Revolving credit limit as "Ever Green Agri Finance" is available to the farmer against security i.e. mortgaged charge on Agri land through Zari Pass Book. Hassle free, automatic renewal upon adjustment of entire principal amount with markup once in a year. By: MC05126 PUGC 64

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The account is farmer friendly which benefits the farmers both ways. If the account is in credit, it earns profit; otherwise it provides instant finance, to the farmer for his agriculture needs.

• •

The mark-up is charged for the actual days the finance is utilized. Profit on credit balances will be paid on half yearly basis as declared by the bank on PLS savings accounts.

Kissan Tractor Finance
Traditional modes of cultivation via Bullocks, Camels, horses etc can no longer keep pace with the demands of present times due to manifold increase in the population. Power in the form of modern technology is therefore the need of the hour. To meet this emergent requirement, Askari Bank has launched an Askari Kissan Tractor Finance to bring power to the fields. Salient Features of the Program are: • • • This program has been designed to benefit the owner as well as non-owner farmers. The farmer will have privilege of availing non-funded facility at a reduced cost under this program on account of more equity participation. Although the facility is available for a period of five years. However, good farmer bonus will be available to the borrower in case the loan is repaid as per terms of sanction. • • Priority in delivery of tractor will be given by manufacturer as per arrangements with the bank. The farmer’s life & tractor will be insured against contingencies, which will provide comfort and piece of mind.

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Kissan Aabpashi Finance
Agriculture farming is impossible without adequate water. We can combat the prevalent water scarcity by harnessing more natural resources. Increased use of mechanical means thus provides a ready alternative. Keeping in view the scarcity of water, which is the lifeblood of arable lands, Askari Bank has started a program for farmers, to finance installation of Tube-Wells (electric, diesel and solar energy units) water management equipments and water channel development etc., which will help farmers to make optimum use of limited water resources. Salient Features of the Program are: • • • • To facilitate the farmer, to overcome the scarcity of water. To develop mechanical water resources, sprinkler and drip system etc. To avoid traditional / inefficient modes of irrigation and waste of available water. To manage natural / available resources through water management practices.

Kissan Live Stock Development Finance
In order to supplement the income of the farmer, Askari Bank has launched a program enabling the farmer to purchase Milk Animals, Goats, Sheep, Poultry and Fisheries without incurring extra expenditure because of availability at his farm. He will be able to get milk, meat and eggs etc., which normally do not form part of his diet. This program has the added advantage that besides fulfilling his own family’s consumption needs he will be able to market the surplus and earn additional income. This will further improve their cash flows to repay their other Loans / Revolving Credit on due date. Salient Features of the Program are: By: MC05126 PUGC 66

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• • •

The program will provide regular day to day income to the farmer to meet his own consumption and surplus to be marketed. This will revive / accelerate and supplement the income generating capacity. It will enhance the repayment capacity of the farmer.

Kissan Farm Mechanization Finance
Beside Power at the farm i.e. Tractor, the benefits / advantages of power are maximized with the use of Mechanical Support i.e. modern and improved equipments which essentially complement one another due to their cost effectiveness and time efficiency. Askari Bank has launched an Askari Kissan Farm Mechanization Finance for the assistance of the small farmers and provides finance for farm equipment, trailer, thresher, drills & motivators etc. Salient Features of the Program are: • • • Under this program the farmer will get benefit of use of modern agricultural tools, implements and equipments which are cost and time effective. Improves per acre yield of Agri crops and quality of agriculture produce to get good price in the market. Helps to match / compete with international standards for exportable agriculture produce.

Kissan Farm Transport Finance
A grave handicap that afflicts our farmers is their inability, due to lack of proper facilities, to take their produce to the market through efficient means of transportation. This adversely affects the freshness, By: MC05126 PUGC 67

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quality of the product and denies them the desirable Price-Fetching opportunity. Conversely, they lack mobility to acquire much needed inputs essential for their farming needs. One can safely conclude that if provided with appropriate and speedy transport, the farmer can benefit by enhancing his selling ability and thus increase his income / cash flow. it is pertinent to mention that a number of Banks, Leasing Companies and Private Agencies have geared their marketing efforts to concentrate on and have mainly captured the urban markets. There is no support provided to cater to the transport needs of deserving rural farmer’s community. Askari Bank true to its commitment has taken the lead to launch Askari Kissan Farm Transport Finance. Salient Features of the Program are: • • • • • To increase mobility and access of the farmer to the markets. To lower the burden / cost of transportation against hired transport. To create awareness of market movements in order to obtain maximum price of their produce. This will also supplement the income of the farmer which will ultimately enhance the repayment capacity of the borrower. Additional income can be generated if used for hired services to the fellow farmers.

Islamic Banking Services
Islamic Banking was launched under the brand 'Askari Islamic Banking', by opening 6 dedicated Islamic Banking branches in major cities of the country. Further expansion is planned with improved capabilities for offering products conforming to the Shariah principles. Askari Islamic Banking opens the doors for Halal banking solutions. Our objective is to put in place an efficient banking system supportive to economic justice and welfare of society in line with Shariah standards. A comprehensive range of Islamic Banking products and services is being offered, in order to meet customer's demand of Shariah Compliant Banking, in the following areas: • Islamic Corporate Banking 68

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• • • •

Islamic Investment Banking Islamic Trade Finance Islamic General Banking Islamic Consumer Banking

Islamic Banking products have been approved by the Bank's Shariah Advisor. As per Shariah requirements, funds and products of Islamic Banking are managed separately from the Conventional Banking side. All funds obtained, invested and shared in Halal modes & investments, under supervision of the Shariah Advisor. As every body knows that: "Knowledge without practice is sterile” Internship is the practical experience which is gained during the study. It is the part of our M.Com study. So at the end during summer vacation, it was required to do internship. I selected Askari Bank Limited, Vehari Branch, which is located in my residential city. I enjoyed much during the practical experience. It was almost impossible to work in all the departments within that limited time. But on my request, the staff of the branch provided me the opportunity to work in the different departments which was in the branch, for the sake of practical knowledge. I am especially thankful to branch manager, manager operation, all the staff and employees who cooperated wit me very much. On my first day of Internship, Manager handed me over the charge of Assistant to Accountant. All the work which I learned during eight week internship is explained here according to department in which I have worked as internee.

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Account Opening / Deposit Department
Customer is a person who has some sort of account, either deposit or current or some similar relation. A person becomes a customer when the bank agrees to open an account. It is contractual agreement between bank and customer after which both concerned parties indulge in a mutually beneficial business relationship. "Deposits are the blood of a Bank" Acceptance of deposits is the real source of income of a bank. Deposits department is the backbone of corporate banking. Deposit is often used to describe the money, which customers of all kinds leave with the banks. Deposits account can be defined as an account, which is opened to earn interest. The term deposit is highly misleading. It is not something deposited for safe keeping, like currency in a safe deposit box. Bank deposits are not like that. When one brings currency to a bank for "Deposit" the bank does not put the currency in a vault. It may put a small fraction of the currency in the vault as "Reserves" but it will lend most of deposits to some one else or buy an investment.

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Like all banks, deposit department has acknowledged its worth as the most important. Almost all the operations generate from the deposit department and with due course of time reflect back to the deposit department. In order to attract funds, bank has introduced various types of deposits schemes that may suit the needs and tastes of a large body of depositors. In this department, I gain the practical knowledge about opening account. This department deals with opening current and saving account for its customers and all matters regarding thereof.

Types of Customers
The customers opening current and saving accounts can be categorized as following. • • • • • • Individual Firm Company Trust Staff Others

Opening Accounts
In order to open an account, first of all the customers have to fill a form prescribed by the bank. The person is required to bring some reference or introduction for opening the account. In askari bank limited, Introducer should be the person who has any account with bank. There are various types of accounts which may be opened by any one like as trust, individual …etc. some accounts are specific for some specific categories like as Basic Banking Account for low level of income peoples. Following are the types of which I filled the accounts.

Types of Accounts
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Current Account • • • Current A/c is basically used to meet the daily transactions. No interest is paid on current accounts In case of current a/c customers can draw money at any time when customer needs it. There is no restriction that customer cannot draw money before such & such time so we can say there is no time limit. • • • • • • Limited company, partnership firm, club, society or association joint and sole proprietorship can open this account. Minimum balance acceptable by the bank to maintain the account is Rs.5000/-. There is no minimum balance requirement by the askari bank limited. PLS In case of saving accounts, account holder gets profit. In Bank askari bank limited saving a/c is used as current a/c, & there is no main difference between current & saving account except profit. Limited company, Partnership Company, joint & sole proprietorship can open this account. • • • • • Balance acceptable by the bank to open this account is Rs.2500. The profit is given to the customers at minimum balance during the month. Minimum balance requirement is Rs. 10000. If balance is below 10000 or no transaction has been made by the client within six months then some charges are deducted by the bank. 2½% zakat is deducted at 1st Ramazan

Basic Banking Account (BBA): • • • • • • It is special type of account. It is opened for low salary / income persons. It is opened by Rs. 1000. Two times by Cheque or cash, amount can be withdrawal or deposited. No zakat is deducted. It is just like as C.B. Account nature. 72

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• •

Evidence of profession is required. Infinite transactions can be made by ATM cards in this account but upto the specified amount by the SBP.

Foreign Currency Current Accounts In these accounts depositors can deposit a sum of money in any of the above-mentioned currencies. The depositor can also withdraw any amount subject to he availability of the amount. No profit is given on these accounts and no restriction as per the minimum balance required.

According to my practice in bank, when a customer wants to open an account, the bank officer gives him an application form. All information, which is necessary to be known by the bank, are requirements of the application form. Form also requires the essential documents to be attached by the customer.

Required Documents
• • • • • • • • • • • • • Basically following information is required to open an account: Title of Account Full Name of Applicant Occupation Address Telephone No. Currency of account Nature of Business Introducer’s Name, Address & Signatures Special instruction regarding the account Initial Amount of the Deposit Signature of the applicant Reference’s Signature and name 73

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Some important information regarding introducer e.g. the name and account number of the introducer is written on the form. Then in order to find out whether he is a true introducer or not, a letter is sent to him thanking him for this introduction so that anything wrong may come into notice. There are different requirements for different types of accounts and accountholders.

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Other Activities in This Department
Open the account is not only the job of account opening department. Beside this, there are lot of activities which performed this. That’s why it is said the backbone of the bank. In askari bank limited, account opening is the main functions and the functions which I am going to explain here are the secondary functions. In large branches, these activities are performed by other department except “ISSUANCE OF CHEQUE BOOK”.

Issuance of Cheque Book
During my period of internship, I observed that when an account is opened then a cheque is issued to the customer for drawing his money at per rules. Following procedure is adopting for the issuance of cheque. A cheque book contains; • • • • ten, twenty five, fifty or Hundred leaves.

The cheque book also carries a requisition slip for the issuance of the new cheque book. This slip is duly filled and singed by the customer. The signature of the customer is verified by the By: MC05126 PUGC 75

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bank and new cheque book is issued to the customer and serial numbers of the cheque are duly entered in the book of the bank. Along with the signature, person should also write his full name & address. Bank deduct the charges five rupees per leave from the customer’s account. The officer keeps and maintains the cheque book register Cheque book inventory and cheque books issued are recorded in this register. The account number for which the cheque book is issued and the number of leaves are also recorded. One cheque in each cheque book is pasted for issuance of new cheque book. If client fails to present this cheque then Rs. 200 fine along with five rupees per leave are deducted form the client’s account for issuance new cheque book

Rupees Traveler Cheque: Famously know as RTC, is the alternative for paper currency. It is against various standard lot size paper currencies like as one RTC is equal to Rs. 2500, 5000, 10000. Askari bank issues one RTC of Rs. 10000. It has serial number. In case of lost, encashment of RTC can be stopped. It is convenient to carry and save. Following are the feature and procedure which I learnt to issue it. • • • First fill the form then submit the cash to the cashier. It can be issued against cheque of this branch account. Send the RTC to the manager operations for sign. Profit is given on each RTC after two months if According to rule if it is not used.

Call Deposit Receipts: Used for government customer. It means it is used by the clients having transactions with the government. Normally government contractors used it. • Cash or cheque is deposited. 76

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• • • • • • •

It is in nature of current account. It is issued free and it has no limit. No profit is made on CDR. It can be issued to every one whether existing customer or walk-in-customer. Not necessary to open the account by walk-in-customer. It is refundable. One can say it is simply “PAGGRREE” (security). It is issued against two percent down payment of the contract amount. Initial deposit should be in cash for open such type of account

Term / Fixed Deposit
When customer places money with a banker for a fixed period a deposit is termed as fixed/term/time deposit. Some important features that I have done in practice are that: • • • No cheque-book is required. Time period varies from 3 months, 6 months to 1 year & up to 5 years. The profit rate varies according to the time period for which it is deposited. It is in standard lots. Minimum is Rs. 2500.

The term deposit is renewed automatically on the date of maturity at the SBP's applicable rolling rate of interest; the acknowledgement of receipt of money is taken on the letter of authority after its proper identification. If a deposit receipt is lost or stolen a duplicate receipt is issued after obtaining an indemnity. It is necessary to obtain a duplicate receipt if original is lost because it is so worded that banker undertakes to repay the amount on the presentation of duly discharged receipt. Deposits on joint names are payable to conditions agreed at the time of their acceptance. By: MC05126 PUGC 77

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On expiry the depositor presents the deposit receipt (advice) dully stamped and gets the money in cash or transfer to his account. It is legally, a depositor cannot demand the payment of his fixed deposit before the expiry of the stipulated period but generally to oblige the customer, banker allows them to withdraw their fixed deposit before maturity. In these cases customer are asked to forgo interest. Deposit receipts issued is called fixed deposit receipts.

Lockers
It is one of the facilities which is provided by the askari bank limited to its valuable clients. In askari bank limited, lockers are available in the following forms; • • • • • • • • • • • Small Locker (Rs up to 50000). Medium size locker (Rs. 1000000). Extra large size locker (Rs. 2500000). Locker can be issued to each person having account or not. Insurance is paid by bank. Two numbers are issued. One is the key and second is locker number. Licker issuance may be for cash or cheque. In case of cheque, customer should be of account holder of this branch and cheque should of this branch. Initial deposit for locker opening is as following; For small size, Rs 2200 (1100 for key and 1100 for locker). For medium size, Rs 3200 (1600 for key and 1600 for locker). For small size, Rs 5000 (2500 for key and 2500 for locker).

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Clearing Department
Second department toward I moved, was the clearance department. It is the department which is responsible for the clearance of the inward and outward instruments, presented for collection by the clients or third party. Clearing is the system by which banks exchange cheques and other negotiable instrument, drawn on each other, within the specified area, and secure payment for their clients through clearing house specified time by book entries i.e., State Bank of Pakistan.. Nearly all the banks provide a wide variety of services to their depositors. One valuable service provided is that of clearing. Clearing department also plays an important role in performing the activities of the bank. The basic function of clearing department is to provide services to customers in collection of their cheques of other banks, whether they are in city or outside the city. The customer can get the money in his account at Askari Bank Limited from the cheques drawn on another bank. The bank accepts the cheque in the clearing department & later on collects these cheques from the bank on which it is drawn through the clearing house By: MC05126 PUGC 79

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Every bank acts in two ways i.e. Paying Bank • • (The bank, which pays the cheques of his customers, presented by other banks.)

Collection Bank (The bank, which collects the fate of cheque on the behalf of customers, presented by other banks.)

Types of Clearing
Clearing department deals with the two type of the clearance. These are stated below: o Outward clearing o Inward clearing

O/C Procedure
Similarly cheque, which is drawn on other, bank and presented to askari bank limited, Vehari branch, Vehari are known as outward clearance for askari bank limited, Vehari branch. So outward clearing results in inflow of funds from paying bank into the clearing account maintained with clearing house increasing the balance in the clearing account. Rs. 500 or 16% of instrument amount, whichever is high, deducted from the OBC instrument amount. I have done following process in O/C • • • • • • Receive cheque on the counter and scrutinize it on the following lines Cheque is drawn on a bank that is a member of clearing-house It is deposited in an account that is being maintained in the branch It is in order as to the name of payee, date, amount in words and figure and correctly endorsed where required. Check the pay-in slip and counter foils are correctly filled in. Put the banks special crossing stamp & clearing stamp of the next day.

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• • • • • •

Detach cheque from pay-in slip Sort out cheque bank wise and branch wise. Input in system for each bank Prepare clearing schedule Attach the cheques with clearing schedule Handover the instruments to NIFT

Stamps • • • • Special Crossing Clearing stamp of next working day. A/C payee’s only Payee endorsement confirmed

Outward Return
Cheque returned will be treated as inward cheque. In the case of cheque is returned because of wrong presentation e.g., clearing stamp not affixed or wrong discharge given on the cheque etc. it should be re-lodged in the next day clearing after rectification of the mistake. If cheque is returned for any other reason then; • • • • Enter the cheque in cheque return register, mentioning the reason as appearing on the cheque return memo received from the paying bank Advice the customer about fate Return the cheque to the customer after getting sign on register Collect the cheque return charges as per S.O.C

Inward clearing

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Cheque drawn on askari bank limited and presented to other Banks or handed over to askari bank limited agent in clearing house. That is inward clearance for askari bank limited. So inward clearing results in outflow of funds to collecting bands reducing the balance in the clearing account. • • • • • • • • • • • • Receive instrument payable by us in inward clearing. Time is the essence of clearing, if not returned unpaid then it is presumed to be paid Check the total number of instrument matches with the clearing schedule and get signature on it. Scrutinize the cheque on following lines Signature verification Proper presentation The cheque is in order as to the name, date, amount in the words and figure Cheque is not damaged or torn nor post dated or stale, alteration, correction and cutting have been authenticated with full signature of the customer. Display customer account on the screen and observe Sufficient balance Stop payment instruction Cheque is from a series of cheques that has been issued to that particular customer.

Post Cheque • • • Cancel the cheque If limit account refer to the credit department PO, DD to respective department for processing and payment (enter in the DD Payable and Pay order payable register)

Inward return
Return may be of any reason. For example • • Clearing stamp not affixed Defect in cheques i.e., post dated cheque 82

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• •

Insufficient balance Once the decision is made to return the cheque so deliver to NIFT.

Collection
Clearing department deals with money transfer form on place to another. It uses various instruments for remittance purposes. These instruments are: • • OBC IBC

Outwards Bills for Collection (OBC): Outward Bill for collection, the cheques drawn on the bank that is out of city. These cheques are not collected through NIFT. The banks clear these by sending them to the relevant branch through mail. This service includes all activities involved in collecting their claims on customers of the other branches of same bank or of the other banks, located outside the clearinghouse area. Procedure • • • • • • • • • Receive instrument, this instrument It is in the name of the account holding customer Must not be post dated or stale Must have same amount in words and figure Affix special crossing stamp on the face of instrument Affix OBC stamp on the instrument, and on pay-in slip Entry in OBC register Write OBC# on the instrument Prepare outward bill for collection schedule

Inwards Bills for Collection (IBC): -

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The cheques drawn on the bank when comes from outstation, it is called inward bills for collection. Cheques are entered in inward bills for collection register. The date, signature, crossing etc. is checked and if all things are in order the amount is realized to the relevant bank. This cheques confirmed. Procedure • • • • • • • • Receive instrument through mail and scrutinize the instrument Must be drawn on a customer’s account Must not be mutilated Must not bear unauthenticated corrections Must not be post dated or stale Must bear regular endorsements, if any Must have the same amount in words and figure Entry in IBC register should have the stamp by the branch i.e. our branch endorsement is

Remittance Department

“When money is transferred from one place to another place or
from one country to another country to fulfill the requirements of the customers by the order of the customer, it is called remittance.” I worked in this department and realized that Bank remits money in different ways. Some of these ways are as under: • • Pay Order Demand Draft Pay Order

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IBC and OBC are also dealt by this and clearance department together. I spent apart of time of my internship duration in this department. I worked on IBC and OBC also. I have explained these two under the clearance department. Other mode of remittance the amount like as Telex Transfer, Mail Transfer etc., is not treated in the branch. The instruments on which I worked in this department are explained here.

Demand Draft
DD (Demand Draft) is a cheque issued by the bank drawn on the same bank’s outstation branch. The bank charge nominal commission on issuance of demand draft. If lost the holder must in personal request the bank in writing for the duplicate. The bank if satisfied can issue a duplicate demand draft after getting the indemnity. Parties It involves four parties: • • • • Beneficiary (in favor of DD is issued). Beneficiary bank. Applicant of DD Applicant’s bank

Process for Outward Demand Draft through Cash When DD is made at customers request on cash the process goes as under: • • • • • • • First customer comes to bank and fills the DD application form. Designated officer verifies the signature and particulars of Application. Designated officer then fills in the charges/commission on application form. Customer then deposits the money and gets the application stamped and signed by the cashier. In Cash department, entry is made in General Ledger Account. Cashier sends the application back to designated officer who makes the DD by debiting Transit. After Preparing DD two-attorney holder signs it. 85

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• • • •

Three copies of DD are prepared Original goes to customer Office copy retains with designated officer for reconciliation. One copy sent as an advice to drawee bank.

Process for Outward Demand Draft through Account • When an account holder of Bank through his cheque makes DD then first customer comes to bank and fills the DD application form. A cheque is also required of the minimum amount of the DD. • • • • • • • • • Designated officer verifies the signature and particulars of Application and verifies its validity with the cheque. Designated officer then fills in the charges/commission on application form. Designated officer after verification on particular of cheque such as balance, signature, date, figure in words and digits etc. debits customer and credits the transit account. In next step officer debits the transit and makes DD. After Preparing DD two-attorney holder signs it. Three copies of DD are prepared Original goes to customer Office copy retains with designated officer fro reconciliation. One copy sent as an advice to drawee bank.

Process for Inward Demand Draft When some other bank draws DD or branch on our branch process goes as under. • • • • • • First the Branch receives the Advice from the issuing branch by courier. Following particulars are verified. Name Date Attorney Holders Signature Amount in words and figures

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• • • •

Cutting etc. The designate officer after verification enters the particulars in DD register and makes the entry in system by giving credit to DD payable. In next part the officer through clearing receives the original instrument or non-account holder physically presents the instrument. Officer again verifies the particulars and if the DD is received through clearing then designated officer enters it in DD register and giver credit to customer by debiting DD payable.

• •

If the customer needs the amount in cash then it is verified that the instrument bears the NIC no of the beneficiary on it The instrument is marked as PAID and amount is paid to customer.

Charges of Demand Draft: • • • For Rs. 1___ 100,000 = .11% or minimum Rs. 55 only. (whichever is high) For Rs. 100,001___ 1,000,000 = .08% or minimum Rs. 225 only. (whichever is high) Over Rs. 1,000,000 = .06% or minimum Rs. 1100 only. (which ever is high)

Pay order
Pay order is also a cheque drawn on the bank but it is payable in the same city. The bank also charges nominal charges for its issuance. Transfer of money through Pay Order Pay order is also called as cashier order, manager's cheque, & banker's cheque, & cheque on services .Pay order is an instrument through which payment can be made from one bank to another bank within city. By: MC05126 PUGC 87

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First of all it is not necessary that the person who wants to issue pay order, should be the customer of the bank. So anybody either he is customer of the bank or not can issue pay order.

• •

It has the same procedure to issue as DD has. It the easiest and safe way to transfer the money locally without carrying.

Parties • • • • It involves three parties: Bank, who issue it. Drawer, who give application for pay order. Drawee (the person in which favor it is issued)

Charges • • Rs. 30 for issuance of pay order up to Rs. 1,000,000 at flat rate. Above Rs. 1,000,000, there are no charges.

Cash Department
Cash department of askari bank limited is given the complete responsibility of handling all receipts & disbursement of cash, as a result of transaction & near cash items such as traveler cheque etc (when they are issued against cash). It is the sensible department. No one can enter into the cash counter cabin without permission, even account opening officer for verification of anything else. I also worked with the cash in charge who sit behind the cash counter. It was allowed to move in the cash In charge officer freely but not go the cash counter cabin. So whatever I learnt learnt from the cash in charge. By: MC05126 PUGC 88

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Following are the major functions of the cash dealing department of askari bank limited. • • Cash receipts (or receive deposits) Encashment of valid instruments

Cash department of askari bank limited is a separate close part covered with glasses. No one other than cash department's employee is allowed to enter into that area. That’s why I did not work in this department but I have gained knowledge about it from teller of askari bank limited.

Cash Receipt
The depositor uses cheque deposit slip (or cash deposit slip) for depositing the amount. Information required All the details are required regarding date, account number, and amount in words & figures, title of account & signature of depositors. Procedure The cashier first verifies all the requirements of the cash deposit slip that whether these are fulfilled or not & verifies the amount written in words & figures. The deposit slip is stamped, cash is received & second copy is given to the depositor.

Encashment of a Cheque
Requirements to Encash a Cheque Following requirements are essential to encash a cheque. No Stop Payment Instruction No stop payment instruction is presented for the account. Instrument in Writing 89

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It must be in writing. However, there is no bar on writing material but the cheque written with lead pencil is not honored by the bank in practice because unauthorized alternations can also easily be made are difficult to detect so a cheque should be pen written.. Cheque must not be crossed The cheque, which could be presented to the drawee bank for encashment over the counter, should not be crossed whereas crossed cheques are deposited into account. The sum of money must be certain A cheque must contain an order to pay a certain sum of money only amount in figures and words must be same. Drawer’s Signature The document in order to be validly called a cheque must bear the drawer's (account holder) signature or that of his authorized person. At the time of opening an account a customer provides a banker with a specimen of his signatures, so the signature on the cheque must tally with that.

Sufficient Balance Sufficient balance should be present in the customer's (drawer's) account to encash cheque.

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Stop Payment Instructions If a customer lost his cheques book he would make stop payment instruction to cash department of askari bank limited stop payment instructions can be made in two ways. • • Verbal Written

The customer informs the cash department on telephone or face-to-face meeting to stop payment, but later a written instruction must be made on a prescribed form. If customer make stop payment instruction to the bank and bank make payment to some one else after lodgment of stop payment instruction in the computer, Bank would become liable for this fault.

Agri-Credit Department
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Vehari is an agricultural area. Majority of the population depend on the cultivation for living. Government of Punjab is providing the incentives to the farmers for the betterment of the agriculture sector. Askari bank limited is one of them who is paying the special attentions on the agriculture sector. During my internship I observed that major of the Askari bank limited agriculture products or services have been introduced by the top management itself. These products are not the copied of other banks. Head of agriculture finance division, M. Rafeeq, EVP of this division has been introduced very popular Agri-loaning types. I will say him the founder of modern Agri-bank products in the Pakistan. Following are the products are dealt in the Askari bank limited, Vehari branch. • • Askari Kissan Ever Green Finance. Askari Kissan Tractor Finance.

Askari Kissan Ever Green Finance
• • • • • It is in nature of running finance. It is sanctioned up to maximum fifty percent of the land or field’s cost price. No such type of requirement that loan must be used to specify subject. Simply purpose of loan borrowing isn’t mentioned. It is for multiple purposes used. Markup rate is applied to the amount which is withdrawn by the borrower from his account, not on whole amount.

Askari Kissan Tractor Finance
• • • • It is in nature of term finance. Amount of the loan is paid directly to the tractor dealer rather than the borrower. Markup is paid on the whole amount of loan. It is issued for tractor purchasing specifically. 92

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• • •

Borrower can not withdraw the amount from his account.

Down payment For five acre or above, five percent down payment. For less than five acre, thirty percent is down payment.

Mark up • • Current markup on Agri-term finance is thirteen percent. It varies from time to time. So, markup rate on finance is varying with the variation and borrower has to ay according to new markup percentage. Insurance • • • • • Of crops / fields, 2% of total loan as insurance is charged. Askari bank has the contract with the united insurance. On life following provisions are made. Less 55 years----------0.3% of total loan amount. 55 to 65 years---------0.5% of total loan amount. o Health certificate is required. Above 65 years-------one percent of total amount. o Health and medical certified is required. • Askari bank limited has the contract with the metropolitan insurance co.

Evaluation Survey: • • For less then .5 million, no evaluation of land is require4d. For above .5 million, evaluation is required which is made by the evaluation companies, approved by the PBA.

Procedure:
• Application is given to Agri-credit officer.

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• • • • • • • • • • •

ACO check documents and if found right and able to get the loan, further procedure is run. All documents along with application are forward to ACO. Application also mentioned type and limit of loan. Sometime limit is mentioned by ACO. These documents along with application are forward to regional manager, Lahore. RGM check it and if found correct then send to agriculture credit department (ACD). After completing procedure and requirements, ACD send it back to RGM. RGM send these documents to Agri-department, document forwarding branch. Agriculture credit department send it to RCAD, Multan. RCAD sanction the loan limit and send back to Agri-credit department, document sending branch. Now procedure is complete and loan is sanctioned. After all, documents are sent to RGM, Lahore for safe custody. Later, these documents can be required back by Agri-credit department for removal of any discrepancy or for any other purpose.

Required Documents: • • • • • • • • Fard-e-malkiat. Khusra gardawri Osat bay Four attested photo copies of NIC. Two attested pictures. Fard-e-malkiat and attest copies of NIC of two guarantors. Aks Shajra. NEC (non-encumbrance certificate).

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CBSG Department
CBSG stands for consumer banking services group. It is the department which is directly under the divisional office. In branch it is under the branch manager. It is in nature of personal finance. Lending is made to the salaried employees without any security, just on the salaries. Lending is made up to fifteen months salary. Following are the features of the financing under this department. Features: • • • • • It in nature of running finance. It works directly under the divisional office. In branch it is under the branch manager. It is provided to the salaried employees. Up to fifteen salaries, loan is sanctioned. Normal markup rate is charged.

Required Documents: • • • • Two attested copies of applicant’ NIC. Two attested copies of each two guarantor’ NIC. Evidence or voucher of salary. Fulfillment of application form.

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General Credit Department
Credit comes from the Latin word "creditus" which means, "to believe." Credit allows us to buy things, which might not be able to afford all at once by letting us pay over a period of time. But to obtain credit, creditor believes that bank is trustworthy and responsible. This is the department who provides the loans for the fulfillment of the needs. It sanctioned the business loans, house loans and SME loans also. I worked in this department for one week. As I have told earlier that Vehari is an agricultural area. Around about 85% to 90% lending is made in agriculture sector by the Askari bank limited, Vehari branch. In one week which I spent in this department, there was just one or two case in the process. However I tried lot of to learn about it.

Terminologies:
Guarantees When an application for advance cannot offer any tangible security, the banker may rely on personal guarantees to protect himself against loss on advances or overdraft to the applicant. Mortgage A mortgage is the transfer of an interest in specific immovable property for the purpose of security the payment of money advanced or to be advanced by; way of loan, and existing or future debt, or the performance of an engagement, which may rise to a pecuniary liability. The transfer is called a mortgagor, the transferee a mortgage. Pledge A formal contract whereby the borrower agrees to deposit goods/ documents with the creditor on the condition that those will be redelivered to the depositor if the debt is repaid or can be sold by the creditor if the borrower defaults. After recovery of dues

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from sale precedes the surplus if any is paid back to the borrower Possession passes to bank, ownership remains with borrower Hypothecation When moveable property/ goods are charged with the amount of debt but neither the ownership nor the possession is passed to the lender. It is said to be hypothecated. By virtue of letter of hypothecation bank can take possession of hypothecated goods in case of default of the borrower. Running Finance The finance type in which markup is charged on the amount which the borrower use. And on remaining amount which borrower has in the bank account, markup is not charged. Common users of this type of finance are; • • Term Finance The finance type in which markup is charged on the whole amount. It is irrelevant that whether borrower use the portion of the whole finance amount or whole finance amount. Agriculturists Seasonal businessmen----etc.

Common Required Documents:
The following documentation is made for loan. • • • • • • An application or request letter for loan by the customer CSA (credit sanction advice). Legal opinion of the legal advisor of the bank (for the title deeds) Consent letter from the regional office Vetting Certificate (includes consent No., Facility whether fund based or no-fund based, addresses etc.) Valuation of property any consultant or any panel of consultants approved by State Bank of Pakistan By: MC05126 PUGC 97

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• • • • • • • •

Original title deed or sale deed Affidavit Mortgage deed Mutation document made Verification of the property by the bank from the competent authority Hypothecation of stock certificate (Running is to be given against 75% margin of stock) Letter of hypothecation (duly signed by the party) Note/Promissory Note (Bank prepared itself, duly signed by the party, revenue stamps of Rs. 100 put on it)

Agreement of finance mark up (Contract with party for taking mark up on quarterly basis)

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Financial Ratios Analysis
Financial ratio analysis is the calculation and comparison of ratios which are derived from the information in a company's financial statements. The level and historical trends of these ratios can be used to make inferences about a company's financial condition, its operations and attractiveness as an investment. Ratio Analysis enables the business owner/manager to spot trends in a business and to compare its performance and condition with the average performance of similar businesses in the same industry. To do this compare your ratios with the average of businesses similar to yours and compare your own ratios for several successive years, watching especially for any unfavorable trends that may be starting.

Following are the ratios which I calculated and explained here.

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Specialized Analysis
Earning Asset to Total Asset
= Earning Asset / Total Assets * 100 Year Rs. in 000’ 147,344,027 * 100 166,033,588 Result Direction

2006 =

89%

2005 =

130,140,120 * 100 145,099,907

90%

Earning Asset to Total Asset

Comments This ratio shows the activities of the management towards the utilization of resources or assets for return. Although in year 2006, there is slightly decrease in

90% 90% 90% 89% 89% 89% 89% 89% 88%

2006

2005

the earning asset but still it is sufficient. It shows the effectiveness of the management as this ratio is showing the higher percentage. By: MC05126 PUGC 100

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Return on Earning Asset
= Net Profit After Tax / Earning Asset * 100 Year Rs. in 000’ 2,249,974 * 100 147,344,027 Result Direction

2006 =

1.53%

2005 =

2,021,996 130,140,120

1.56%

Comments This ratio shows the return on the earning assets. Simply we can say that this is the profitability type ratio. Here is a decreasing trend in the return on earning asset. It is not good. Due to economy situation, compare to current situation.

Return on Earning Asset

1.56% 1.55% 1.54% 1.53% 1.52% 1.51% 2006 2005

there may be some limits which interrupt but there should be higher return on earning assets as

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Net Margin to Earning Asset
= Net Margin / Earning Asset * 100 Year Rs. in 000’ 5,619,608 * 100 147,344,027 Result Direction

2006 =

3.8%

2005 =

4,502,324 130,140,120

3.5%

Comments This ratio shows the capacity to earn by the spread of markup income over the markup expenses. There is increasing trend in the current year as graphical presentation is showing. But still there is need of further improvement.

Net Margin to Earning Asset

3.80% 3.70% 3.60% 3.50% 3.40% 3.30% 2006 2005

Deposit Time Capital Ratio

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= Deposit / Equity Year Rs. in 000’ 131,839,283 11,053,230 Result Rs. Direction

2006 =

11.93

2005 =

118,794,690 8,813,483

13.48

Comments This ratio shows the contribution of deposits and capital towards the earning or assets of the financial institution. As it is seems that there is decreasing trend in the deposit time capital ratio but this is due to the contribution of higher capital.
13.5 13 12.5 12 11.5 11

Deposit Time Capital Ratio

2006

2005

One can say that company has small deposits to invest or utilize for earning. It will be preferable if there is an increasing trend in the deposits.

Loan to Deposit Ratio = Loans / Deposits Year By: MC05126 PUGC Result Direction Rs. 103

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2006 =

107,572,322 131,839,283

0.82

2005 =

96,149,137 118,794,690

0.81

Comments Higher of this ratio enable the bank to have more return with risky investment through the financial institution. There is a higher ratio of deposits as compare to loans. So bank can interact to the general pubic by a handsome markup and can earn large amount as earning. There is a margin of safety.
0.805 0.82 0.815 0.81

Loan to Deposit Ratio

2005

2006

a

General Analysis
Investors’ Analysis
Earning per Share = Net Profit / No. of Shares By: MC05126 PUGC 104

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Year

Result Rs. 2,249,974,000 200,433,239

Direction

Remarks Decrease in earning per share due to the economy condition and tuff competition

2006 =

11.23

in the market. It needs improvement.

2005 =

2,021,996,000 150,701,800

13.42

Graph

Earnig Per Share

13.5 13 12.5 12 11.5 11 10.5 10

2005

2006

Price Earning Ratio

= Market Price per Share / Earning per Share Year Result Direction Remarks

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Rs. There is a decreasing trend in this ratio. 2006 = 104.95 11.23 It is not sufficient. There is need of 9.35 improvement.

2005 =

126.80 13.42

9.45

Price Earning Ratio

9.45 9.4 9.35 9.3

2005

2006

Dividend Yield Ratio

= Dividend per Share / Market Price per Share Year Result Direction Remarks

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Rs. It shows the portion of current 2006 = 1 104.95 earning per common share. It is not .0095 sufficient as it is showing the decreasing trend. 1.50 126.80

2005 =

.012

Graph

Dividend Yield Ratio

0.012 0.01 0.008 0.006 0.004 0.002 0 2005 2006

Dividend Payout Ratio

= Dividend per Share / Earning per Share Year Result Direction Remarks

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Rs. It shows the ratio of dividend 2006 = 1 11.23 distributed among the shareholders. 0.089 It is low ac compare to last year. It may be due to high percentage of 1.50 13.42 retained earning. 0.11

2005 =

Graph
0.12 0.1 0.08 0.06 0.04 0.02 0

Dividend Payout Ratio

2005

2006

Percentage of Retained Earning

= 100 – Dividend Payout Ratio Year Result Direction Remarks

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There is an increasing trend in the ratio. Growing companies retained 2006 = 100 – 8.9% 91.11% high percentage of retained earning. Here increase may be due to expansion.

2005 =

100-11%

89%

Graph
91.50% 91.00% 90.50% 90.00% 89.50% 89.00% 88.50% 88.00% 87.50%

Percentage of Retaind Earning

2006

2005

Book Value per Share

= Total Equity / No. of Shares Year Result Direction Remarks

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Rs. It shows the value of per share. There 2006 = 11,053,230,000 200,433,300 is a decreasing trend in the book 55.15 value per share.

2005 =

8,813,483,000 150,701,800

58.48

Book Value Per Share

Graph
59 58 57 56 55 54 53 2005 2006

Overall Comments
This type of analysis is also called market analysis. It gives the bird’s eye view of over all performance of the organization like as price earning ratio dividend pay out ratio and earning per share etc. is the gauge of the investors. This years company’s over all performance needs further attention and improvement. Earning per share remains lower then the last year. This By: MC05126 PUGC 110

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may be due to high expenses ratio as compare to last years. Monetary policy also effect on the EPS.

Profitability Ratios
Return on Equity
= Net Profit After Tax / Equity * 100 Year in 000’ 111 Result Direction Remarks

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This ratio shows the return on the 2006 = 2,249,974 * 100 11,053,230 total equity. There is a decreasing 20.36% trend in the return on equity.

2005 =

2,021,996 * 100 8,813,483

22.94%

Return on Equity

Graph
23.00% 22.00% 21.00% 20.00% 19.00%

2006

2005

Return on Total Assets
= Net Profit After Tax / Total Assets * 100 Year in 000’ Result Direction Remarks

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This ratio shows the return on total 2006 = 2,249,974 166,033,588 assets (which has been utilized for 1.4% earning). There is increasing trend.

2005 =

2,021,996 * 100 145,099,907

1.39%

Graph

Return on Assets

1.40% 1.40% 1.39% 1.39%

2006

2005

Return on Investment

= Net Profit After Tax / Investment * 100 Year in 000’ Result Direction Remarks

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This ratio shows the return on what 2006 = 2,249,974 * 100 151,154,358 you have been investment. There is a 1.49% decreasing trend.

2005 =

2,021,996 * 100 133,332,982

1.52%

Return on Investment

Graph
1.52% 1.51% 1.50% 1.49% 1.48% 1.47% 2006 2005

Overall Comments
Profitability is the ability of the institution to generate earnings. Analysis of profit is of vital concern to stockholders since they derive revenue in the form of dividend and others. Increasing in the profit may increase the market price of share. Management use profit as a performance measure. Here the over all profitability of the bank remains lower then the previous year. It may be due to economy condition of the country and the monetary policy.

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From several years, competition environment has been increased in the country. Bank’s management needs further improvement towards the profitability.

Solvency Ratios
Debt Ratio
= Debt / Total Assets Year By: MC05126 PUGC Result Direction Remarks 115

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in 000’ 154,980,358 166,033,588

Rs. There is a slightly decreasing in the debt ratio. It shows the better 0.93 condition. Public can trust on the institution.

2006 =

2005 =

136,286,424 145,099,907

0.94

Graph

Debt Ratio

0.94 0.935 0.93 0.925

2005

2006

Equity Ratio

= Equity / Total Assets Year Result Direction Remarks

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in 000’ 11,053,230 166,033,588

Rs. This ratio shows the equity ratio in the total asset of an institution. There 0.067 is an increasing trend in the equity ratio. This may be due to the issuance of or bonus of shares. 0.061

2006 =

2005 =

8,813,483 145,099,907

Graph
0.068 0.066 0.064 0.062 0.06 0.058 2005

Equity Ratio

2006

Debt to Equity Ratio

= Debt / Equity Year Result Direction Remarks

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in 000’ 154,980,358 11,053,230

Rs. Ratio or equity is increasing as compare to company’s debt as it is 14.02 clear by this ratio.

2006 =

2005 =

136,286,424 8,813,483

15.46

Debt to Equity Ratio

Graph
15.5 15 14.5 14 13.5 13 2005 2006

Overall comments
This ratio shows the ability of the firm to meet the debt losses and shows the ratio of debt and equity in the assets towards the earning. Solvency ratios show the better picture. One can say solvency ratio is remaining same this year as the last year but with slight difference.

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Company’s debt to equity ratio has been decreased. It means bank has been increased equity ratio which is clear from the equity ratio. Debt ratio has been increased.

Cash Flow Ratios
Operating Cash per Share
= Operating Cash / No. of Shares

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Year in 000’ 8,356,023,000 200,433,300

Result Rs.

Direction

Remarks There is a decreasing trend the per share operating cash. This ratio shows

2006 =

41.69

the funds flow per share. It may be due to the bonus shares this year.

2005 =

12,269,472,000 150,701,800

81.42

Graph

Operating Cash Per Share

100 80 60 40 20 0 2005 2006

Operating Cash to Cash Dividend

= Operating Cash / Cash Dividend Year Result Direction Remarks

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in 000’ 8,356,026 223,246

Rs. This ratio shows the decreasing trend in 37.43 the operating cash to cash

2006 =

dividend.

2005 =

12,269,472 250,285

49.02

Graph
50 40 30 20 10 0

Operating Cash to Cash Dividend

2005

2006

Operating Cash to Total Debt

= Operating Cash / Total Debt Year Result Direction Remarks

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in 000’ 8,356,026 154,980,358

Rs. This ratio shows the bank’s ability to cover the total debt with the yearly .054 cash flow. There is a decreasing trend in the ratio.

2006 =

2005 =

12,269,472 136,286,424

.090

Operating Cash to Total Debt Graph
0.1 0.08 0.06 0.04 0.02 0 2005 2006

Overall Comments
These types of ratios indicate the flow of cash in an organization towards the arning. This ratio shows the organization’s ability to meet any liability in terms of cash. Or one can say that how much the organization has ability to need the others like as cash dividend, total debt….etc. this By: MC05126 PUGC 122

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years’ cash flow ratios shows the decreasing trend overall as you can see that operating cash per share cash flow has been decreased. Firms’ operating cash to cash dividend and total debt ability has also been decreased. This coming year, bank need more operating cash flows towards earning and to meet the deficiency so that investors and general public can interest in the bank’s policies

“In nutshell, banks ability to earn has been effected. Profitability ratio and cash flow has also
been affected. Solvency ratios show the better trend as the bank has been increased the equity ratio as compare to debt this ratio. This may also be one of the causes of company’s low profit as compare to last year. But other indicators indicate that bank is in growing progress. So in expansion it needs further capital. This low earning is temporarily basis.”

Trend Analysis

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Horizontal Analysis
Profit & Loss Account
Description 2003 2004 2005 2006 Speed Direction Trend

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Mark up Earned

100%

110.15 %

215.55 % 310.11%

309.22 % 505.75 %

69.74 % 135.25 % 36.20 % 41.43 % 42.80 % 25.33 % 34.66 %

Favorable

Mark up Expenses

100%

80.98 %

Unfavorable

Net Mark up Income

100%

125.09 %

169.96 % 162.78 % 180.44 % 150.34 % 183.31 %

208.59 % 224.30 % 228.41 % 175.98 % 203.97 %

Favorable

Total Non-Interest Income Total Non Interest Expenses Profit before Tax

100%

171.27 %

Favorable

100%

128.37 %

Unfavorable

100%

149.48 %

Favorable

Profit after Tax

100%

174.37 %

Favorable

Mark up Earned
2006 2005 2004 2003 0% 50% 100%
2006 2005 2004

150%

200%

Mark up Expenses 250% 300% 350%

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2003 0% 100% 200% 300% 400% 500% 600%

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Net Mark up Income
2006 2005 2004 2003 0% 50% 100% 150% 200% 250%

Total Non - Interest Income
2006 2005 2004 2003 0% 50% 100% 150% 200% 250%

Total Non - Interest Expenses
2006 2005 2004 2003 0% 50% 100% 150% 200% 250%

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Profit before Tax
2006 2005 2004 2003 0% 50% 100% 150% 200%

Profit after Tax
2006 2005 2004 2003 0% 50% 100% 150% 200% 250%

Balance Sheet
Description 2003 2004 2005 2006 Speed Direction Equity & Liabilities
100% 125.50 % 169.93 % 174.63 % 169.64 % 194.45 % 219.01 % 192.91 % 31.48 % 39.67 % 30.97 %

Trend

Favorable

Total Equity

100%

119.21 %

Favorable

Total Liability

100%

125.90 %

Unfavorable

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Deposits

100%

135.13 %

192.67 % 66.42%

213.87 % 94.10 %

37.94 % -1.97%

Favorable

Borrowings

100%

86.66 %

Favorable

Total Assets

100%

125.51 %

169.93 % 176.27 % 192.01 % 116.30%

194.45 % 145.48 % 221.49 % 129.50 %

31.48 % 15.16 % 40.50 % 9.83%

Favorable

Lending to Financial Institutions Advances

100%

40.29 %

Favorable

100%

156.19 %

Favorable

Investment

100%

78%

Favorable

Equity and Liabilities
2006 2005 2004 2003 0% 50% 100% 150% 200% 250%

Total Liabilities
2006 2005 2004

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2003 0% 50% 100% 150% 200% 250%

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Total Equity
2006 2005 2004 2003 0% 50% 100% 150% 200% 250%

Deposits
2006 2005 2004 2003 0% 50% 100% 150% 200% 250%

Borrowing
2006 2005 2004

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2003 0% 20% 40% 60% 80% 100% 120%

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Total Assets
2006 2005 2004 2003 0% 50% 100% 150% 200% 250%

Lending to Financial Institutions
2006 2005 2004 2003 0% 50% 100% 150% 200%

Advances
2006 2005 2004

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2003 0% 50% 100% 150% 200% 250%

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Investment
2006 2005 2004 2003 0% 20% 40% 60% 80% 100% 120% 140%

Vertical Analysis
Profit & Loss Account
Description 2003 2004 2005 2006 Speed Direction Mark up Earned Mark up Expenses
100% 33.87 % 100% 24.90 % 75.10 % 36.40 % 41.12 29.54% 17.68% 51.28% 100% 48.72% 100% 55.39 % 44.61 % 16.98 % 26.07 -3.07% -2.12% -7.15% 7.17%

Trend

Unfavorable

Net Mark up Income

66.13 %

Unfavorable

Total Income

Non-Interest

23.41 % 35.29

Favorable

Total Non Interest By: MC05126 PUGC

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Expenses Profit before Tax

% 46.68 %

% 83.35 % 42.86 % 23.03% 32.56%

% 26.57 % 17.86 % -3.07% -6.70%

Unfavorable

Profit after Tax

27.08 %

Unfavorable

2003
27.08% 33.87%

Mark up Expenses Net Mark up Income Total Non-Interest Income Total Non Interest Expenses Profit before Tax

46.68% 66.13%

35.29% 23.41%

Profit after Tax

2004
42.86% 24.90%

Mark up Expenses Net Mark up Income Total Non-Interest Income Total Non Interest Expenses Profit before Tax

75.10% 83.35%

36.40% 41.12%

Profit after Tax

2005
23.03% 48.72% 32.56%

Mark up Expenses Net Mark up Income Total Non-Interest Income Total Non Interest Expenses

29.54% 17.68%

Profit before Tax 51.28% Profit after Tax

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2006
17.86% 26.57% 55.39%

Mark up Expenses Net Mark up Income Total Non-Interest Income Total Non Interest Expenses

26.07% 16.98% 44.61%

Profit before Tax Profit after Tax

Balance Sheet
Description 2003 2004 2005 2006 Speed Direction Equity & Liabilities Total Equity Total Liability
100% 5.91% 94.09 % 100% 5.61% 94.39 % 77.75 % 12.86 % 7.2% 81.87% 100% 6.07% 93.93% 100% 6.66% 93.94 % 79.41 % 9.01% -3.20% 2.22% .25% -.25%

Trend

Favorable Favorable

Deposits

72.74 %

Favorable

Borrowings

18.62 %

Favorable

Total Assets Lending to Financial Institutions Advances By: MC05126 PUGC

100%

100%

100%

100%

Unfavorable
6.76% 52.44 2.17% 65.26 7.01% 59.25% 5.05% 59.73 -0.57% 2.43%

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%

% 16.09 % 17.72%

% 17.24 % -2.88%

Investment

25.89 %

Unfavorable

(Liabilities & Equities) 2003
Total Equity 18.62% 5.91% Total Liability Deposits 72.74% 94.09% Borrowings

(Liabilities & Equities) 2004
Total Equity 12.86% 5.61% Total Liability Deposits 77.75% 94.39% Borrowings

(Liabilities & Equities) 2005
Total Equity 7.20% 6.07% Total Liability 81.87% Deposits 93.93% Borrowings

(Liabilities & Equities) 2006
Total Equity 9.01% 6.66% Total Liability Deposits 93.94%

79.41%

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(Total Assets) 2005
17.72% 7.01% 16.09%

(Total Assets) 2004
2.17% Lending to Fin. Institutions Advances Lending to Fin. Institutions

(Total Assets) 2006
17.24% 5.05% Lending to Fin. Institutions Advances 59.25%

(Total Assets) 2003
Investment 6.76% Lending to Fin. Institutions Advances

Advances

Investment 65.26%25.89%

Investment 59.73% 52.44% Investment

SWOT Analysis, is a strategic planning tool used to evaluate the Strengths, Weaknesses, Opportunities, and Threats involved in a project or in a business venture. It involves specifying the objective of the business venture or project and identifying the internal and external factors that are favorable and unfavorable to achieving that objective.

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The internal and external situation analysis can produce a large amount of information, much of which may no be highly relevant. The SWOT analysis can serve as an interpretative filter to reduce the information to a manageable quantity of key issues. The SWOT analysis classifies the internal aspects of the company as strengths or weaknesses and the external situational factors as opportunities or threats. Strengths can serve as a foundation for building a competitive advantage, and weaknesses may hinder it. By understanding these four aspects of its situation, a firm can better leverage its strengths, correct its weaknesses, capitalize on golden opportunities, and deter potentially devastating threats.

Internal analysis
The internal analysis is a comprehensive evaluation of the internal environment’s potential strengths and weaknesses. Factor should be evaluated across the organization.

External analysis
An opportunity is the chance to introduce a new product or service that can generate superior return opportunities can arise when changes occur in the external environment. Many of these changes can be perceived as threats to the market position of existing products and may necessitate a change in product specification or the development of new products in order for the firm to remain competitive. Change in the external environment may be related to: • • • • Customers Competitors Market trends Social changes 136

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• • •

New technology Economic environment Political regulatory environment …. Etc

After working as internee for eight weeks in the Askari bank limited, Vehari branch, and analyzing the over ratios and other things, I have come across the following SWOT analysis of Askari bank limited

Strengths
Full day banking:
One can avail the benefit of the services provided at the bank till 5:00 pm. This is highly useful for those customers who find it difficult to leave their officers in the morning. It is also highly useful who deposits their amounts on daily basis at evening.

ATM Network:
Bank has the largest ATM network cross the country. The customers of Askari bank can withdraw the cash at anytime and at any place. Askari bank limited has one link 1300 ATMs across the country. Not only this, even one can deposit the cash with the help of ATM cards.

Customized Solutions:

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The management of the bank believes in customer focused banking rather than the products oriented banking. The products and services designed by the bank are specially tailored to the individual needs of its customers.

Customer oriented banking:
The priority banking centers of the bank offer an unmatched where the customer receives highly privileged services in a highly elegant environment. It gives the chance of experiencing new standards in banking. Designed specially for those who appreciate only the fines things in life, priority banking offers the very high levels of personalized banking to match customer’s unique status.

Electronic Banking:
The revolution in the banking in the form of electronic banking operations have opened avenues of excellent, efficient and quick services saving the time and costs of the customers and fortunately Askari bank is among those few banks who are already reaping the benefits of electronic transactions.

Phone banking:
Phone banking services is very attractive for those classes of customers who do not have time to personally come to the bank i.e. banking on the phone line thus saving the precious time of the customers. Not only this, even one can transfer electronically without coming to branch.

Ethical concern and public image:
The organization showing concern for the people, ethics and environment enjoy good public reputation and are able to reap the benefits in the long run. Askari bank management is quite sensitive to this issue.

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Weaknesses
In my opinion, these are the weaknesses that might be detrimental to the efficiency and profitability of the bank.

Dual recoding:
Although all the banking at Askari bank is computerized and online but still the bankers use the make their entries in the accounting register. This is not the tome consuming but expensively also.

Low job satisfaction:
Understanding and the effective management of the human resource is the most difficult challenge faced not only by the bank but by all the organizations. Even though the people have been sacrificed in the new organizational developments, it is becoming clear that the true lasting competitive advantage comes through human resource and how they are managed. Askari bank limited seems to not focusing on this highly critical

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issue as the hob satisfaction level of the employees working at Askari bank limited, was quite loss.

Lack of specialization:
The most and useful concept given by Adam Smith in 1776 seems to be missing in the bank. The employees are constantly rotated from one job to another job of totally different characteristic in the view of giving them the know-how of the working in all the departments. But this is not a very good tactics by the management. Otherwise the situation might be like this “jack of all and master in none”.

Centralization:
There is a high degree of centralization in the bank. Almost all the decisionmaking is in the hands of the upper management. But centralization is effective up to a certain level otherwise it becomes inefficient and at times costly too. I personally observed that delay occurred in the operations of the employees only due to the fact that they had not got any instructions from the head office.

Lack of staff training facilities:
Presently there is no specific training program arranged for the new recruiters. They have to learn based on their observations and also their mistakes. It takes a bit time for the fresh one to learn the banking. The result is the huge amount of blunders, mistakes etc. resulting in monetary and non-monetary losses for the bank. There is pressure not only on the new learner but also on the person placed upon with this responsibility.

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Internship Report

Opportunities
There are opportunities also exist for the Askari bank limited to capture the market not only from investor’s perspective point of view but also form general public’s point of view. Following are the main opportunities which Askari bank has in the market.

Deals in Bulk Business:
Askari bank has been incorporated in 1991. but now it is operating not only in general banking but also in some other large sectors such as; investment banking, agriculture banking, Islamic banking. It is the project of Army Welfare Trust. This trust is operating other big projects like as AIMS, Askari Leasing, Askari Cements, etc. so as it has a big hand to support at bank, has a greater opportunity to touch the sky.

Attraction to foreign investment:
Askari bank is the second in Asia who has strong check and balance in its branches. Bank has strong powerful internal audit system. That’s why bad debts of the bank are in

By: MC05126 PUGC

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very small amount. Due to this reason, Askari bank getting the trust of foreign investors and this lead to the foreign investment.

Strong potential for growth:
Askari bank has strong potential for growth. Organization is retained the earning in large percentage when it is going to expand it business or going to start new business. As the Askari bank has high retained earning and trust of people also, it has the opportunity to grow.

Overseas branches:
Today world has become a global village. Regions are going to boundary less. Askari bank has just one OBU. It has the opportunity to do the business across the boundary.

Branches in remote areas:
Rural areas have almost 60% percent employment which is higher than the urban ratio of employment. Askari bank has the branches in main cities only. It has the opportunity to go in the remote areas.

Islamic banking:
Islamic banking in Pakistan has been started since the decade of 1980. according to a newspaper, Islamic banking will get ten percent market share of the total banking in Pakistan at the start of next decade. All banks have started the Islamic banking. But yet there is no up to the mark progress. Askari bank has the opportunity in this sector.

Sharp increase in imports and exports:
Since the new 21st century, economic indicators of Pakistan are showing towards trend. Trust of investors has been developed on Pakistan. Industry of Pakistan is increasing. These all require the business across the boundary. Askari bank limited has the

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opportunity to take the market share in the imports and exports as it has strong worldwide network with the other banks.

Threats

Opportunities come with the threats. These threats may be from the competitor or general public or from anyone. Opportunities for Askari bank have also brought the threats. Askari bank is facing the following major threats from the market today.

Higher employee turnover:
Loyalty or employee satisfaction is this “if employee has the better opportunity, then also prefer to do work in the Askari bank limited”. but Askari bank is facing high employee turn over. This leads towards the high expensive for the bank. These employees also have the secrets of bank which my employee told to other bank managements. This thing is also harmful for the bank.

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High charges:
The schedule of charges indicates that the fees charged by the bank on the various services it provides are high then the normal. It may result in decrease in the number of its existing customers. Further more, this could be very alarming situation for the bank in case some of the competitors grasped the opportunity and lowered its rates. The result would be either the lost of market share or decrease In the charges resulting in lowering the bank’s income.

Less attractive rate of return:
Commercial banks face considerable competition in attracting deposits from individuals or small investors. In contrast, the govt. of Pakistan national saving scheme offers attractive rate or return on long term fixed accounts, which banks find difficult.

Mergers of banks:
Today banks are merging by mutually exclusively like as merger of prime bank with ABN. Arrival of new top banks of the world and merger of the banks is increasing the threats for the growing banks like as Askari Bank Limited.

Lack of innovative products:
Although Askari bank is leading to other banks in the Agriculture Banking, but still it has the minimum brand of products except agriculture sector. Day by day new brands by other banks is increasing the threats for newly growing banks.

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Concluding Remarks for Analysis
Askari bank limited has been incorporated in 1991. It has reached to sixteenth year in the current year. Having more than 11.1 billion equity and have supported hand of Army Welfare Trust. It has been grown rapidly. Today it stands in the “A” class banks category due to the successful strategies. It has been started many of mega projects like as Islamic banking, banking investment and OBU. I have worked as internee for eight weeks in this bank, Vehari branch. I have learnt lot of things which could be possible during eight week and which were operated in that branch. I have made analysis like as SWOT, Financial Ratios. Following are the points which cover the overall aspects of what I have been analyzed. Assets of Askari Bank Limited has been increased. And expenses of the bank have also been increased. Analysis shows that expenses increasing ratio is higher then the increasing trend of Assets and net margin of the bank. Earning per share has been decreased by Rs. 2.19 which is approximately less16% then the earning of the last year. One major thing is the dividend yield By: MC05126 PUGC 145

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ratio and dividend payout ratio. Dividend yield ratio has also been decreased. If an organization is going to expand its business or that organization is in the growing process or at initial stages, company retained more retained earning and pays less per share. This year askari bank is going t expand. It is establishing its branches not only cross country but also in the remote areas. This thing requires more capital. So, we can say due to this reason askari bank’s retained earning is high. Overall investor’s analysis is sufficient. High expense ratio has decreased the overall profit of the bank. It should be controlled to achieve the targets. Return on equity, assets and on investment is mix. We can say that it is approximately equal to the last year. Return on assets has been increased. It shows the efficient utilization of the assets towards the earning. Return on investment still remained the same as last year return on investment. In year 2006, bank has been increased the equity ratio in the total capital. It decreased the debt ratio. In the equity, debt ratio is 14.02 which were 15.46 in year 2005. it shows the trust of investors in the bank and bank management want to decrease the debt ratio of the bank which might be favorable for the bank. Effective internal audit is also one of the main causes of the trust of investors on the bank. Earning asset to total asset ratio is 89% which shows the efficient use of the resources towards the earning of the profit. It shows that management is using the earning resources efficiently. Return on earning assets is not much efficient but is sufficient as the bank is in growing process. Net margin has been increased from the last year. Net margin for the bank year 2006 is 3.8% which was 3.5% in the bank year 2005. Net margin is the net earning of the bank on the advances. Advances include both advances to the public and to the financial institutions. Net margin can be increased more than current if bank reduce the markup rate slightly. It is due to because bank’s markup rate of the bank on advances is high more than many of other banks. If bank reduce the markup rate then it can give the more advances to the public because due to low markup rate public will borrow from the askari bank limited. Deposit time capital ratio is 11.93 percent which is less then the last year. This ratio is favorable for the bank in both cases, in decreasing trend and in increasing trend also. But By: MC05126 PUGC 146

Internship Report

generally it is favorable when it shows the high result. Here this ratio is showing the decreasing trend. It is not favorable because deposit of the bank has been reduced by 11.5%. Although it is sufficient but should be more than the current. Loan to deposit ratio is sufficient. But it can be more if bank makes the efforts. I am saying it is because banks main earning is the difference between markup on advances and deposits. Bank is not introducing the new products. And it is not marketing the existing products efficiently than other banks are doing. Bank should introduce the new products. It is coxcomb that askari bank limited is leading the agriculture banking. Head of the Agriculture division has introduced the lot schemes and products for the farmers of the country. We can say that in this sector bank is taking the steps equal to government. Today era is the era of efficient HR. now almost every organization has the HR Department as every one knows the importance. Satisfied employees will create the satisfied customers and satisfied customers will satisfy the employees. So during my internship, I observed that employee was not satisfied from their job. One reason was the long working hours with the salary for officially hours. It is very coxcomb that askari bank limited has taken the initiative of increasing the salaries of employees. It has been increased the salaries of employees more than the market demand. It proves that HR Department of the bank is strong and efficient also. It has another edge that it has the back hand support of Army Welfare Trust which has many of other projects like as; askari leasing, askari cement etc. Overall bank’s progressive remained well. Banking is growing rapidly. Just in sixteen years of banking, it has been spread in various sectors like as investment, OBU, Islamic Banking. it has the lack of Islamic bank branches. It should increase the Islamic branches cross the country because today people prefers the Islamic banking. It has been contributed towards the economic growth. Due to which it has to face challenges from the competitors.

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Internship Report

Organization’s Dilemma
Askari bank has the supporting hand of Army Welfare Trust (AWT) as it is the project of AWT. Bank has made progress with rapidly growth but still it has some deficiencies. Askari bank’s ATMs network is limited and existing network is not working properly. As the Pakistani economy is growing up, competition in each sector especially is obviously will come. Askari bank according to me has not adopted the right policies in the current year as its overall progress is below then the last year. HR Department is not working properly. Employees are not satisfied. According to the current news, bank has taken the steps towards the solution of this dilemma as it has increased its employee’s salaries more then the market demand. It should increase the number of branches and should make the efforts towards the increasing of per unit profit. Debt to equity ratio is favorable but it should insert more investment whether through equity or debts. Major dilemmas of the bank are the HR solution and the strategies which should face the competitors. If bank solves these two quandaries, it will get again the best quality award and “bank of Pakistan”.

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Recommendations for Improvement
Askari Bank Limited is a well-known financial institution in the banking sector, it is said, nothing is perfect in the world, and there is always space for deficiencies. Deficiencies are point out for the correction. Following are recommendations for the management of Askari bank limited to overcome the deficiencies.

Enhance the network:
Although the bank has a network of nationwide branches but it should spread its branch network in the remote areas specially. Bank should spread its network across the boundary.

New product introduction:
Bank should introduce the new products and to market its products, it should accentuate to give advertisements on both print and electronic media.

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HR Department Role:
The quality of human resource lies at the center of every organization’s success and no doubt Askari bank Limited is fully aware of the importance of a satisfied and welltrained work force that gives completive advantage but the problem which I have observed is that employees of Vehari Branch don’t have enough training about their products. The state of the art training and development center at Askari Bank Limited should arrange workshops and seminars for employees at every level to empower them professionally.

Satisfy the Employees:
To reduce the high turn over of employee, salary package should be increased and extra benefits should be given to the employees as the bank timing has been increased. It is very coxcomb that Askari bank has increased its employees’ salaries more than demands of the market.

Markup Rate:
Today is the era of competition. Due to the new mergers and arrival of world class banks in Pakistan competitive environment is increasing. To compete the competitors, Askari bank should reduce its service charges and increase the rate of return to depositors and reduce the markup rate on advances.

Decision Making:
Askari bank should give the authority to lower level management or employees like as branch manager to make the decision at sight. It will reduce the cost and time and customer satisfaction level will increase.

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Conclusion

Askari bank has celebrated its 16th birthday in the summer. In these sixteen years, it has been grown rapidly. Over all progress of the bank remains good and appraisable. Investors even foreign have trust on the bank. It has strong internal audit department as it is the second bank in Asia who has strong check and balance / audit department. It is to be approved by the zero percent charges written off. It has been contributed towards the growth of economy especially in the agriculture sector. It has been won the 1st prize of Pakistan banker from the “Asian banker” magazine. Presentation of financial statements stood first since 1997 to 2005. Bank has been increased its employees salaries according to market trend. These all shows the overall effectiveness of the management By: MC05126 PUGC 151

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not only for earning of profit but in the welfare of employees and of customer’s satisfaction also. Investors can trust in the bank. Bank should increase the number of OBU branches and Islamic branches. it should give the authority to middle level management to make the decision at the spot to make the efficient services. It has only six Islamic branches till the start of year 2007. Overall behavior of the bank and its employees is very good. “According to the current trend and past data, it will grow rapidly and will stand soon at the Pakistan bank.”

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