A bank is a financial institution that accepts deposits and channels those deposits into lending activities. Banks primarily provide financial services to customers while enriching investors. Government restrictions on financial activities by banks vary over time and location. Banks are important players in financial markets and offer services such as investment funds and loans. Bank plays very important role in the economy of the country. I have selected “Silk bank” for my Security and analysis project. Silk Bank is a newly developed bank, Bank include trading and sales, retail banking, commercial banking, and corporate finance Their new identity Silk Bank is a name with a meaning that endorses our values. The name takes its inspiration from ‘Silk’, a natural element known for its unique properties. Their inspiration also comes from silk route which has been a corridor for trade and commerce between Asia and rest of the world for centuries. Their ascending symbol marks their quest to move higher and their tag line “Yes we can” is a promise of unmatched service quality to their customer. Their Vision is to establish Silk Bank as the benchmark of excellence in the banking industry and be the bank choice of their target market. Silk bank stands for reliability, their institutional sponsors Nomura, IFC and Bank of Muscat provide them with strong financial backing and a frame work of good corporate governance, which will remain their guiding principle to cultivate trust and transparency with their customer, regulators and partners.

On September 15, 2001, under the supervision of the State Bank of Pakistan (SBP), the institution then known as the Prudential Bank was acquired by the management and associates of the Saudi Pak Industrial and Agricultural Investment Company (Pvt) Ltd (SAPICO) On March 31, 2008, a Consortium comprising of IFC, Bank Muscat, Nomura International and Sinthos Capital and led by senior bankers Shaukat Tarin and Sadeq Sayeed acquired an 86.55% stake in Silk bank for around $213 million or $0.47 per share (PKR 29.3 equivalent per share). Under the new leadership, the bank will continue to focus on SME & Consumer financing resulting in efforts of increased profitability. The Bank has been successful in restoring the public confidence and

strengthening its operations and it has helped it introduce a number of consumer services and products nationwide. It launched a Car financing scheme last month. The Bank also intends to launch a scheme to finance purchase of two-wheelers and plans to introduce marriage and educational loans are also in the pipeline. The Bank also plans to extend its branch network from existing twenty to twenty-eight for which the State Bank of Pakistan has already given an approval. While eight of the Bank's branches already facilitate on-line transactions, the Bank is in the process of implementing centralized on-line banking facility and by June next year expects to have full online operations with nationwide ATM facility at all its branches. The Bank will also install its own ATMs next year in selected branches nationwide and envisages initiating Islamic Banking Operations at one of its branches this year. Saudi Pak Commercial Bank has come a long way to restore the confidence of the depositors starting with the payment of profit to all eligible deposits for the entire period of the moratorium which lasted for full nine months last year. The move earned the Bank the confidence of the account holders as the new management decided to pay the profit — totaling Rs 93 million — although it was not obligatory because the commercial operations of the Bank remained suspended during the moratorium.

Location of the facilities of the business
The head office of the Silk Bank is located at I.I Chundrigarh Road in Karachi. Its other branches are located almost all over the countries which are as follows: Karcahi,Islamabad,Lahore,Faisalabad,Sialkot,Murree,Attock, Gujranwala,Peshawar,Qu etta,Hyderabad,surgodha,sukkar,Rawalpindi,D.I.khan, Gawadar, Bolan Pass.

Product Mix
There are many product which are offered by the silk bank which are as follows 1. Insurance Products 2. Technology products 3. Current Account 4. Saving Account 5. Term deposits

Insurance Product
Roshan Mustaqbil: Silk bank Roshan Mustaqbil Bank insurance is an education plan exclusively designed to cater there customer needs. The plan is underwritten by EFU Life Assurance Ltd. Roshan Mustaqbil is a flexible, tailor-made, complete financial planning package that facilitates to plan children’s future education requirements and guarantees a financially secure tomorrow even in case of any mishap. The plan offers a method of disciplined savings that helps accumulate a lump sum amount that can be utilized to pay for the higher education needs of the nominated child. Mehfooz Mustaqbil: Silk bank Mehfooz Har Pal Bank insurance is a simple yet comprehensive accident and hospitalization plan providing 24 hour worldwide coverage to the entire family. Mehfooz Har Pal guarantees financial well being by paying out cash on death, disablement or prolonged absence from work as a result of an accident or hospitalization due to an accident. The plan is underwritten by EFU Life Silk bank Sunehra Kal: Life is full of new challenges and a wise individual who desires the best from life agrees that financial planning is vital. would undoubtedly want to ensure that at every stage of life could respond timely to the changing circumstances and achieve all their customer goals – buying a car, a beautiful home and contentment of their customer family, financial security, funds for children’s education and marriage and of course a comfortable retirement. Silkbank Sunehra Kal Bancassurance is a savings and investment plan exclusively designed to cater all their customer needs. The plan is underwritten by EFU Life Assurance Ltd. Sunehra Kal is a comprehensive financial planning package that gives their customer the dual benefit of protection along with potentially higher returns over a long-term on your savings and investments. The most important benefit of Sunehra Kal is its flexibility to suit your needs. Sunehra Kal is an ideal, regular premium unit-linked plan, to turn all your dreams into reality.

Technology Products
Silk Bank Visa Debit card: Wherever, you go, your account goes with you. The Silk bank VISA Debit Card offers international acceptance and enables to draw cash, direct from the account anywhere, any time. With the Silk bank Visa Debit Card, their customer can be a privileged customer at over 53,000 retailers in Pakistan and over 27 million outlets internationally. Mobile Banking: Silkbank-Direct Internet Banking is accessible through GPRS enabled mobile phones. By registering for the Mobile Service you can avail the following facilities.
• • • •

Balance Inquiry Mini Statements Cheque Book Requests Account Statement Req

SMS Alerts: Silkbank SMS Alerts offer customers the ability to stay informed around the clock, anywhere, any time. Once enrolled for SMS Alerts, they will receive alerts on transactions they selected, from the following set of options: Banking Transactions:
• • •

All Transactions Transactions of Rs.50,000 & above Transactions of Rs.250,000 & above

Current Account:

Online Express: In Online Express the customer can enjoy a real time access to their current account across the bank’s fast growing network of 65 online branches in 25 cities of Pakistan With Silkbank Online Express there is a complete online banking solution, all under one roof. And that’s not all. Online Express account opens the doors of the world with the power of the Silkbank VISA Debit Card.

Saving Account:
Super Saver: Super saver account entertains with many different activities so the customer can enjoy high profit every month. Those activities are as follows:
• • • • • •

Highest returns VISA Debit Card Higher the deposit, higher the returns Profit calculated on Daily Product Basis Can be operated by Individuals or Companies Profit is payable monthly

PLS Saving: Through Silkbank Savings PLS account, Silk bank customer can avail the benefits of a Savings Account with the convenience of a Current Account. Some of the PlS saving facilities are as follows:
• • • • • •

Profit paid out twice a year Monthly Profit of 5% on all Tiers VISA Debit Card Profit calculated on minimum balance every month Can be operated by Individuals or Companies Minimum balance requirement is Rs.50,000

Foreign Currency Account: By investing in foreign currency account Silk Bank customer can earn remarkable profits twice a year.
• • • •

Profit calculated on the minimum balance during the month Profit credited after every 6 months Can be operated by Individual or Companies Minimum balance requirement as low as USD/GBP/EUR2,500

Term Deposit: Munafa He Munafa:
Silkbank Munafa He Munafa Term Deposit Account gives the highest profit on a monthly basis. Account can be opened in a Munafa He Munafa Term Deposit Account with a minimum balance of only Rs.100,000. Salana Munafa: Silkbank Salana Munafa Term Deposit Account gives the highest returns on the lowest investment some more facilities can be availed on salana munafa scheme which are as follows:
• • • •

Overdraft facility of up to 90% ATM/Debit Card with base account Online banking transitions, E-Statement and Internet Banking facilities Pay Order/Demand Draft facility with base account

7 Days Term Deposit: For the Silk Bank valued account holders, Silk bank Special Notice Deposit Account is also available for 7 and 30 days.

Board of Directors
Directors of Silk Bank: Mr. Munnawar Hamid, OBE Mr. Ahmed Bin Mohamed Bin Abdullah Al Abri Mr. Humayun Bashir Mr. Javed Hamid Mr. Sadeq Sayeed Mr. Yogo Ishida Mr. Arif Mahmood Ali Mr. Azmat Tarin Chairman Director Director Director Director Director Director President & CEO

Mr. Khawaja Arshad Ghafur

Director Designate

Management Of Silk bank:
Mr. Azmat Tarin President & CEO

Mr. Aneeq Khawar Ms. Kishwer Aziz Mr. Goharulayn Afzal Mr. Jamil A. Khan Mr. Talha Saeed Ms. Shafaq Rahid Ms. Sumbul Munir Mr. Syed Jawaid Akhtar Mr. Syed Liaquat Ali Mr. Zahid Aftab

Chief Operating Officer Director Investor Relation Group Head Marketing & Strategic Planning Group Head Compliance, Commercial & FI Group Head Retail Banking Head of Customer Satisfaction & Quality Head of Corporate& Investment Banking Head of Audit Head of Legal / Compliance & Company Secretary Head of Consumer Risk

Operating Performance of the Company
During last five years the operating performance of Saudi Pak Bank which is now named as Silk Bank are as follow: In 2005 Saudi Pak Bank issued 50% right share at par to increase its capital base from Rs 2.565 billion to Rs 3.847 billion. In 2009 Silk Bank had loss of (6,602,347) accumulated and Surplus on revaluation of assets (net of tax) 1,423,691. Basic/Loss per share (Rupee) (1.48) .In 2008 they had accumulated loss of (6,131,708). Surplus on revaluation of assets are 1,079,670.

Major Competitors of the company
Silk Bank has got following competitor in commercial banking.
1. 2. 3. 4. 5. 6. 7. 8. 9. 10.


11. 12. 13. 14. 15. 16. 17. 18. 19.


Markets the company serves
Saudi Pak Commercial Bank Limited which is now named as Silk bank (the Bank) is engaged in banking services. The Bank operates through 65 branches in Pakistan. It operates in four segments: corporate finance, trading and sales, retail banking and commercial banking. Corporate finance includes investment banking activities, such as mergers and acquisitions, underwriting, privatization, securitization, initial public offers (IPOs) and secondary private placements. Trading and sales segment undertakes the Bank’s treasury, money market and capital market activities. Retail banking provides services to small borrowers, such as consumers, small and medium enterprises (SMEs) and borrowers’ agriculture sector. It includes loans, deposits other transactions and balances with retail customers. Commercial banking includes loans, deposits other transactions and balances with corporate customers. The Bank conducts all its operations in Pakistan.

Gross Domestic Product
In fiscal year 2008, Pakistan GDP was $454.2 billion as per purchasing power parity, while Pakistani GDP as per official exchange rate was estimated to be $160.9 billion. Extensive research work shows that real growth rate in 2008 GDP of Pakistan was

about 4.7 percent. Pakistan GDP according to per capita income has been estimated to be approximately $2,600. Economical condition of Pakistan is underdeveloped as it suffers from internal crisis at several levels like economy, political disputes, low foreign investments and others. Every sector of Pakistan economy has made significant contributions to its GDP. Agricultural sector has contributed 20.4 percent to Pakistan gross domestic product. Industrial sector of Pakistan has accounted for 26.6 percent of 2008 GDP of Pakistan while 53 percent of Pakistani comes from services sector. In 2008 fiscal deficit surpassed Islamabad’s target of 4% of GDP. This was result of low tax collection and increased spending. Inflation is a great problem in economy of Pakistan. In 2007, inflation was 7.7%, which jumped up to20.8% during 2008. This was so because of increase in prices of oil and various other commodities across world in this period. As result of political and economic instability, value of Pakistani rupee has depreciated. However, government of Pakistan has talked of expanding Pakistan GDP to $38.15 billion in next five years. Pakistan gross domestic product was calculated to be approximately $94.80 billion during 2003-04. This amount had gone up to $132.95 billion by financial year 2008-09. Any improvement in conditions would be only possible if economy growth continues at a rate of seven per cent. Provided economic growth remained pegged to at least seven per cent growth per annum, Pakistan gross domestic product was expected to go up during financial year 2008-09. However, at present, Pakistan economy is showing trends of growth as was forecast by federal government and donor agencies. This will lead to growth in GDP of Pakistan, greater employment opportunities, increase in per capita income and poverty removal. Various measures were taken by federal government to maintain and speed up current trend of economic growth in economic condition of Pakistan. Industry and service sector will increase in recent years, as was confirmed by Dr Ashfaque Hasan Khan, finance minister of Pakistan. Agricultural sector will not remain behind as well. Pakistan GDP Growth Rate: Pakistan Gross Domestic Product (GDP) expanded 2.00% over the last 4 quarters. The Pakistan Gross Domestic Product is worth 168 billion dollars or 0.27% of the world economy, according to the World Bank. Pakistan's economy has suffered in the past from decades of internal political disputes, a fast growing population, mixed levels of foreign investment, and a costly, ongoing confrontation with neighboring India. However, IMF-approved government policies, bolstered by foreign investment and renewed access to global markets, have generated solid macroeconomic recovery during the last decade. Pakistan GDP Growth Rate chart, historical data, forecast and news.


Unemployment Rate
Employment rate is defined as the percentage of the working age population (ages 15 to 64 in most OECD countries) who are currently employed. According to the International Labor Organization, a person is considered employed if they have worked at least 1 hour in "gainful" employment. Pakistan unemployment rate: Pakistan unemployment rate stands at 5.20 percent of the labor force. The labor force is defined as the number of people employed plus the number unemployed but seeking work. The nonlabour force includes those who are not looking for work, those who are institutionalized and those serving in the military. Pakistan's economy has suffered in the past from decades of internal political disputes, a fast growing population, mixed levels of foreign investment, and a costly, ongoing confrontation with neighboring India. However, IMF-approved government policies, bolstered by foreign investment and renewed access to global markets, have generated solid macroeconomic recovery during the last decade. This page includes: Pakistan Unemployment Rate chart, historical data, forecast and news.

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Inflation Rate
In economics, the inflation rate is a measure of inflation, the rate of increase of a price index (for example, a consumer price index).It is the percentage rate of change in price level over time. The rate of decrease in the purchasing power of money is approximately equal. If P0 is the current average price level and P − 1 is the price level a year ago, the rate of inflation during the year might be measured as follows:

Pakistan inflation rate: Pakistan inflation rate stands at 10.52 percent year-over-year. Inflation rate refers to a general rise in prices measured against a standard level of purchasing power. The most well known measures of Inflation are the CPI which measures consumer prices, and the GDP deflator, which measures inflation in the whole of the domestic economy. Pakistan's economy has suffered in the past from decades of internal political disputes, a fast growing population, mixed levels of foreign investment, and a costly, ongoing confrontation with neighboring India. However, IMF-approved government policies, bolstered by foreign investment and renewed access to global markets, have generated solid macroeconomic recovery during the last decade. This page includes: Pakistan

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Inflation is the rise in the prices of goods and services in an economy over a period of time. When the general price level rises, each unit of the functional currency buys fewer goods and services; consequently, inflation is a decline in the real value of money — a loss of purchasing power in the internal medium of exchange, which is also the monetary unit of account in an economy. Inflation is a key indicator of a country and provides important insight on the state of the economy and the sound macroeconomic policies that govern it. A stable inflation not only gives a nurturing environment for economic growth, but also uplifts the poor and fixed income citizens who are the most vulnerable in society. Causes of inflation Inflation is the rise in the prices of goods and services in an economy over a period of time. When the general price level rises, each unit of the functional currency buys fewer goods and services; consequently, inflation is a decline in the real value of money — a loss of purchasing power in the internal medium of exchange, which is also the monetary unit of account in an economy. Inflation is a key indicator of a country and provides important insight on the state of the economy and the sound macroeconomic policies that govern it. A stable inflation not only gives a nurturing environment for economic growth, but also uplifts the poor and fixed income citizens who are the most vulnerable in society. It has been generally agreed by the economists that high rates of inflation and hyperinflation are caused by an excessive growth in the supply of money. Today, most economists favour a low steady rate of inflation. Low (as opposed to zero or negative) inflation may reduce the severity of economic recessions by enabling the labor market to adjust more quickly in a downturn, and reduce the risk that a liquidity trap prevents monetary policy from stabilising the economy. The task of keeping the rate of inflation low and stable is usually given to monetary authorities. Generally, these monetary
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authorities are the central banks that control the size of the money supply through the setting of interest rates, through open market operations, and through the setting of banking reserve requirements. There are many causes for inflation, depending on a number of factors. For example, inflation can happen when governments print an excess of money to deal with a crisis. When any extra money is created, it will increase some societal group’s buying power. As a result, prices end up rising at an extremely high speed to keep up with the currency surplus. All sectors in the economy try to buy more than the economy can produce. Shortages are then created and merchants lose business. To compensate, some merchants raise their prices. Others don’t offer discounts or sales. In the end, the price level rises. This is called demand-pull inflation, in which prices are forced upwards because of a high demand, and excessive monetary growth. For inflation to continue, the money supply must grow faster than the real GDP. Another common reason of inflation is a rise in production costs, which leads to an increase in the price of the final product. For example, if raw materials increase in price, this leads to the cost of production increasing, this in turn leads to the company increasing prices to maintain their profits, this kind of inflation is call cost-push inflation. Furthermore, rising labour costs can also lead to inflation, because workers demand wage increases, and companies usually chose to pass on those costs to their customers, this sort of inflation is called wage-push inflation. Inflation can also be caused by international lending and national debts. As nations borrow money, they have to deal with interests, which in the end cause prices to rise as a way of keeping up with their debts. A deep drop of the exchange rate can also result in inflation, as governments will have to deal with differences in the import/export level. Finally, inflation can also be caused by federal taxes put on consumer products. As the taxes rise, suppliers often pass on the burden to the consumer; the catch, however, is that once prices have increased, they rarely go back, even if the taxes are later reduced. Effects and measurement of inflation: The most immediate effects of inflation are the decreased purchasing power of the rupee and its depreciation. Depreciation is especially hard on retired people with fixed incomes, as spending power decreases each month. Those not on fixed incomes are more able to cope, because they can simply increase their income. Another destabilising effect of inflation is that some people choose to speculate heavily in an attempt to take advantage of the higher price level. Because some of the purchases are high-risk investments, spending is diverted from the normal channels and some structural unemployment may take place. Finally, inflation alters the distribution of income. Lenders are generally hurt more than borrowers during long inflationary periods, which mean that loans made earlier are repaid later in inflated rupees. Inflation weakens the function of money as storage of value, because each unit of money is
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worth less with the passing of time. The progressive loss of the value of money during a period of inflation makes the borrowers to be less willing to use the money as standard differed payments. To measure the price level, economists select a variety of goods and construct a price index such as the consumer price index (CPI). This is one measure of inflation. The CPI measures inflation as experienced by consumers in their day-to-day living expenses; it is the ratio of the value of a basket of goods in the current year to the value of that same basket of goods in an earlier year. By using the CPI, the inflation rate can be calculated. This is done by dividing the CPI by the beginning price level and then multiplying the result by 100. The GDP deflator is another very important measure of inflation as it measures the price changes in goods that are produced domestically. Pakistan publishes four different price indices, namely: the consumer price index (CPI), the wholesale price index (WPI), the sensitive price index (SPI) and the GDP deflator. The CPI is the main measure of price changes at the retail level. It indicates the cost of purchasing a representative fixed basket of goods and services consumed by private households. In Pakistan, the CPI covers the retail prices of 374 items in 35 major cities and reflects roughly the changes in the cost of living of urban areas. The WPI is designed for those items which are mostly consumable in daily life on the primary and secondary level; these prices are collected from wholesale markets as well as from mills at organised wholesale market level. It covers the wholesale price of 106 commodities prevailing in 18 major cities of Pakistan. The SPI shows the weekly change of price of 53 selected items of daily use consumed by those households whose monthly income in the base year 2000-01 ranged from Rs3000 to above Rs12000 per month. The SPI also informs about the actual position of supply: whether the commodity is available in market or not. If the commodity is not available, the reason for that is also recorded. It is based on the prices prevailing in 17 major cities and is computed for the basket of commodities being consumed by the households belonging to all income groups combined as in CPI. In most countries, the main focus for assessing inflationary trends is placed on the CPI, because it most closely represents the cost of living. In Pakistan, the main focus is also placed on the CPI as a measure of inflation as it is more representative with a wider coverage of 374 items in 71 markets of 35 cities around the country. Inflation has started veering its ugly head in many parts of the world, including Pakistan. Food inflation has emerged as the main contributor to inflationary pressures. (See Table) The inflation rates based on CPI, SPI and WPI for the year 2008-09 increased by 22.35 per cent, 26.33 per cent and 21.44 per cent respectively over the corresponding period of 2007-08. It increased by 10.27 per cent, 14.09 per cent and 13.70 per cent respectively in 2007-08 over the corresponding period of 2006-07. In 2006-07, the rate of inflation increased by 7.89 per cent, 11.13 per cent and 6.92 per cent respectively over the same period of 2005-06. An analysis of data for last three years for the same period indicates that CPI, SPI & WPI were higher as compared to last two years. (See Chart)
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The government is cautious about inflation and thus has taken various steps to release demand pressures on the one hand and enhance supplies of essential commodities on the other. To ease demand pressures, the State Bank of Pakistan (SBP) has continuously tightened the monetary policy over the last three years and more so in the current fiscal year, while to enhance supplies, the government has relaxed its import regime and allowed imports of several essential items so that there is a continuous flow in the supply of those important commodities. In addition, the government increased the imports of items like wheat, pulse and sugar to complement the efforts of the private sector. In order to provide relief to the common man, the government also increased the scale of operations of the Utility Stores Corporation (USC) which supplies essential commodities such as wheat flour, sugar, pulses and cooking oil/ ghee at less than the market prices.

Foreign Direct Investment
Foreign direct investment (FDI) refers to long term participation by country A into country B. It usually involves participation in management, joint-venture, transfer of technology and "know-how". There are two types of FDI: inward foreign direct investment and outward foreign direct investment, resulting in a net FDI inflow (positive or negative). Foreign direct investment (FDI) plays an extraordinary and growing role in global business. It can provide a firm with new markets and marketing channels, cheaper production facilities, access to new technology, products, skills and financing. For a host country or the foreign firm which receives the investment, it can provide a source of new technologies, capital, processes, products, organizational technologies and management skills, and as such can provide a strong impetus to economic development. 56.9% decrease in FDI Including Privatization Proceeds as compared to July-December 08.

Sector Wise FDI Inflows ($ Million)
Sector Oil & Gas Financial Business Textiles Trade Construction Power Chemical Transport 2000-01 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 Jul-Feb 10 80.7 268.2 186.8 202.4 193.8 312.7 545.1 634.8 775.0 398.7 (34.9) 3.6 207.4 242.1 269.4 329.2 930.3 1,864.9 707.4 86.5 4.6 18.5 26.1 35.4 39.3 47.0 59.4 30.1 36.9 15.6 13.2 34.2 39.1 35.6 52.1 118.0 172.1 175.9 166.6 48.9 12.5 12.8 17.6 32.0 42.7 89.5 157.1 89.0 93.4 72.1 39.9 36.4 32.8 (14.2) 73.4 320.6 193.4 70.3 130.6 115.8 20.3 10.6 86.1 15.3 51.0 62.9 46.1 79.3 74.3 77.2 45.2 21.4 87.4 8.8 10.6 18.4 30.2 74.2 93.2 76.4

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Communication (IT&Telecom) Others Total Privatisation Proceeds FDI Excluding Pvt. Proceeds

NA 140.9 322.4 322.4

12.8 66.2 484.7 127.4 357.3

24.3 90.4 798.0 176.0 622.0

221.9 170.1 949.4 198.8 750.6

517.6 274.0 1,523.9 363.0 1160.9

1,937.7 285.0 3,521.0 1,540.3 1980.7

1,898.7 1,107.2 5,139.6 266.4 4873.2

1,626.8 764.5 5,409.8 133.2 5,276.6

879.1 763.4 3,719.9 0.0 3,719.9

111.3 316.8 1,319.3 0.0 1,319.3

June 14 (Bloomberg) -- Overseas direct investment in Pakistan fell 19.8 percent in the first eleven months of the fiscal year ending June 30, according to the central bank. Investment in the July-May period declined to $3.33 billion from $4.15 billion a year earlier, Overseas investors sold $1.1 billion of Pakistani stocks in the 11-month period, compared with purchases of $87.2 million a year earlier, according to the data. Pakistan needs overseas investment to bolster an economy predicted to grow at the slowest pace in eight years. The economy may expand two percent this fiscal year, from 5.8 percent last year. Total foreign investment last year fell to $5.19 billion from $8.43 billion in the previous 12 months, missing the government’s target of $6.5 billion.
Foreign Investment inflows in Pakistan ($ Million) Year 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 Jul-Feb-10 Total Greenfield Investment 622 750 1,161 1,981 4,873.20 5,019.60 3,719.90 1,319.30 19,803.00 Privatisation Proceeds 176 199 363 1,540 266 133.2 2,805.20 Total FDI 798 949 1,524.00 3,521.00 5,139.60 5,152.80 3,179.90 1,319.30 22,068.60 Private Portfolio Investment 22 -28 153 351 1,820 19.3 -510.3 343.5 2,160.50

Money Supply
In economics, money supply or money stock is the total amount of money available in an economy at a particular point in time. There are several ways to define "money," but standard measures usually include currency in circulation and demand deposits. Money supply data are recorded and published, usually by the government or the central bank of the country. Public and private-sector analysts have long monitored
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changes in money supply because of its possible effects on the price level, inflation and the business cycle. Money Supply In Pakistan: Even though money supply is measured as currency and deposits in the banking system, new money is not created by increase in deposits; it is created only when a new loan is made out by the banking system. So there is contradiction number one. Money is measured as currency and deposits, but new money can only be created through making out a new loan. This contradiction is apparently resolved by arguing that since the freshly made loan immediately appears as a deposit in the borrowers account, deposits rather loans are used as a measure of money supply. In my view this is just a very clever way of masking the fact that entire money supply of Pakistan is one giant loan at an usurious rate of interest–historically ranging between 8-18%. The weighted average rate of interest on the outstanding domestic bank debt currently stands at around 13%. The statistics reveal that money supply growth exceeded its target levels for four consecutive years (2002-2005) due to easy monetary policy stance to support the growth process. Pakistan and the IMF projected to curtail Money Growth (M2) in the current fiscal year to 10.8 per cent from 15 per cent in 2007-08. The money supply growth is estimated to grow by 15 per cent in next fiscal year 2009-2010.
Portfolio Management Portfolio management is all about strengths, weaknesses, opportunities and threats in the choice of debt vs. equity, domestic vs. international, growth vs. safety, and many other tradeoffs encountered in the attempt to maximize return at a given appetite for risk. 239 loans, including private sector loans, amounting to $14.26 billion and 293 TA projects amounting to $137.94 million have been extended to Pakistan By end of this year, 11.5% of the portfolio (7 loans) was "at risk," which was an improvement from 17.2% (10 loans) in last year.

Overall economic indicators of Pakistan
Economic Indicators (2009-2010)
Indicators Exports (Billion $) 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 9.13 11.16 12.31 14.39 16.47 17.01 19.22 17.79 (July-Feb) 2009-10 1.53

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Imports (Billion $) Trade Balance (Billion $) FDI (Billion $) Foreign Investment (Million $) Workers Remittances (Billion $) Forex Reserves (Billion $) Exchange Rate (Rs. / US$ GDP Growth Inflation

10.34 1.2 484.7 475 2.39 6.43 61 3.60% 3.40%

12.22 1.06 798 820 4.24 10.72 57.7 5.10% 3.30%

15.59 3.28 949.4 922 3.872 12.33 57.92 6.40% 3.90%

20.6 6.21 1524 16677 4.17 12.61 59.66 8.40% 9.30%

28.58 12.11 3,521 3,872 4.6 13.14 60.16 6.60% 8%

30.54 -13.53 5,125 8,417 5.49 15.18 60.5 7.00% 7.90%

39.96 -20.74

34.82 -17.03

2.50 -0.964 1,319.30 1,024.10 5.79 14.85 84.40 2.00% 13.0%

5,152.80 3,719.90 5,193.00 2,665.0 6.5 10.83 71 5.80% 10.30% 7.81 12.23 2.10% 13.1%


State Bank of Pakistan (SBP) Federal Bureau of Statistics (FBS) Federal Board of Revenue (FBR)

In today's world, all countries have interactions with each other. No country, irrespective of ideological differences, stands isolated today. FDI is a strong and vibrant instrument for an accelerated socio-economic development. We must help develop conducive atmosphere in Pakistan and FDI is expected to follow. This challenge has to be met by all stakeholders in Pakistan. Sincere and sustained efforts will produce productive results.

Porter’s five factors model
The Porter's 5 Forces tool is a simple but powerful tool for understanding where power lies in a business situation. This is useful, because it helps you understand both the strength of your current competitive position, and the strength of a position you're looking to move into.

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With a clear understanding of where power lies, you can take fair advantage of a situation of strength improve a situation of weakness and avoid taking wrong steps. This makes it an important part of your planning toolkit. Conventionally, the tool is used to identify whether new products, services or businesses have the potential to be profitable. However it can be very illuminating when used to understand the balance of power in other situations too.

Application of Porters model on Banking Industry: The Porter "Five Forces" analysis is only approximately applicable to the banking industry. Certainly, banks do compete with each other, but they also must cooperate with one another in many respects. There is an underlying problem in that the major banks of the world are so similar that there is essentially nothing one of them can do that the others cannot easily duplicate. Because, contrary to some beliefs, bankers are perfectly normal human beings they do have individual abilities and interests that may have a perceptible influence on their institutions, but in the final analysis, all are essentially the same. Bargaining power of buyer is low where the products substitutes are not available and customers are large in number. In case of banks there are lots of other banks and banking intermediaries, having wide range of products, so power of buyer in banking sector is high. The bank cannot force any customer to buy the desired product because this directly affects its reputation, but can convince its customers by giving them special discount or rewards. If we look at Silk bank we will find that the competitors are also offering products due to which customer feel in power by saying that they can go to some other bank in case of dissatisfaction. Rivalry among existing firms: There is tough competition among various banks. As variety of public and private banks are already existing in the market, offering products on competitive prices. If we look at
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Islamic Banking products then, Meezan Bank, Habib Bank and many others are offering wide range of products in this sector. The tough competition among these banks gives rise to the challenges which the competitor banks have to face. The competition among various banks increases the switching of the customers form one bank’s product to the other bank. The tables on the following pages show the total number of branches of some of the banks working in Pakistan and the various products being offered by these Islamic banking branches as compared to the Silk bank.
Banks MCB RBS Meezan Bank Pakistan Ltd Bank Al Falah No. of Branches 900 75 120 223 1000 30 13

Habib Bank
Bank Islami Pakistan Ltd Emirates Global Islamic Bank

The bargaining power of customers: Retail customers, ordinary individuals, have no bargaining power whatever as a negotiator. A classic bit of banking wisdom is, "If you owe the bank $10,000, you have a problem. If you owe the bank $10,000,000, the bank has a problem. The disparity in size and power of the bank and the client is so great in most cases that the client has essentially no bargaining power. Even in the case of large corporate clients, the bargaining power of the client is limited. Any negotiation of terms and conditions of a banking deal will take the form of a win/win negotiation where both sides are attempting to develop a "deal" that is optimum for both participants. The client wants the money a loan represents, and the bank wants interest on the loan. The price of credit and the credit standing of the client are pretty much givens. The structure of the loan such as the term and the repayment must be structured in such a way that the client can meet the requirements in term of cash flows and the bank is assured of repayment. The price of the credit may be negotiated a few basis points in one direction or the other, but both parties know going into the negotiation approximately what the outcome will be.
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Bargaining power of suppliers A bank has three suppliers of its product, money: 1. 2. 3. Its depositors The credit market The central bank

Larger clients, corporations, government agencies, and wealthy individuals are offered packages of services in what is actually a form of "market orientation" in current management terminology. The bank is still the dominant party, even with very large clients, but the client can make the threat of going to another bank, and if he/she/it is large enough, the threat may have some significance. There is a distinct element of competition for the business of large accounts, but even here it would be very difficult for any entity to offer anything significant that its competitors could not duplicate almost instantly. This part of the business becomes very much one of personalities and individuals as opposed to "marketing initiatives." The credit market as a source of supply of the raw material, money, is open to all at all time if they are qualified participants. The source of supply can be argued to be infinite. The Central bank is effectively the resource of last resort. Apparently, at least for the moment, it will continue to supply liquidity to the banking system in virtually unlimited quantities at very reasonable cost. The threat of substitute products: For the most part there is no real threat of substitute products in the banking industry. It could be argued that a personal loan is a substitute for a mortgage, but in reality both are loans and the loan is taken out because the customer wants money. The same can be said of other bank products, and even institutions. A mortgage company is a substitute for a bank, but it is the same product offered by an alternative vendor. There is a good chance the mortgage company is owned by a bank holding company in any case. The only question is the origination of the loan. Bank transfers are more common in Europe than in United States banking practice. They serve approximately the same function as checks and some of the new Internet banking services is actually transfers, even in the states. There probably will be a continued evolution of products from paper to electronic in coming years. This is an area of potential competition, and probably innovation, but the final services, moving money from account A to account B will not change. The Threat of new entrants:
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The banking sector of any country has always chances of growth and competition so many new banks enter and leave the market. Mostly foreign banks step in the developing countries for expanding their branches, not only this mergers between foreign and local banks take place at large scale but Pakistan’s present economic condition and government instability has arose the feelings of awe and terror among most of the foreign banks to enter in the market. In future due to uncertainty and security problems in Pakistan investors will not be willing to invest here. Due to overall financial problems in the whole world new banks will not be entering in to the banking industry.

Product and services of banking industry: Banking industry of Pakistan entertains their costumer with various sorts of products and services among them the most important product and services are as follows:

• Consumer Banking Services • Islamic Banking Services • Corporate & Investment Banking • • Retail banking Investment banking

Demand and supply of Investment Banking: An investment bank is a financial institution that assists corporations and governments in raising capital by underwriting and acting as the agent in the issuance of securities. An investment bank also assists companies involved in mergers and acquisitions, divestitures, etc. Further to provide ancillary services such as market making and the trading of derivatives, fixed income instruments, foreign exchange commodity and equity securities.

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Investment banks in the private sector in Pakistan started emerging in 1989 with the listing of Crescent Investment Bank (CresBank). Since then over a dozen such banks have been listed. Over the years, these banks were performing well mainly due to various incentives available to them and the buoyant capital market as well as high demand of funds as a lot of new industrial units was being established. However, over the last two years the profitability of these banks has gone down substantially. The fast expansion of the investment banks sector was due to higher profit margins and the fact that these banks catered to the needs of the private sector — a niche that was previously left to the whims of the inefficient state owned financial institutions. Investment banks are subject to relaxed regulations i.e. lower reserve requirement, being allowed to invest all their reserve funds in Federal Investment Bonds — earning a relatively higher yield, lower tax rate applicable on them and comparatively lower initial paid-up capital requirement. The private investment banks, since their inception under revised government policy, have been playing a major role in the development of the capital market in the country. Being able to trade both on their own account as well as on their client's, lately, there has been a shift in their activities which are now focused on specialized services such as corporate finance, advisory services, underwriting and placement, etc., to match the growing demand for funds and new equity issues, and in the emergence of new financial products. These services have helped the investment banks in generating dependable and reliable source of fee-based income. According to financial experts, the investment banks do not suffer from liquidity crunch, it is mismatch between resource mobilized and the type of funds required for their operation. The shortage of long-term funds forces them to concentrate on short-term lending and getting actively involved in trading of already listed equities. The investment banks, in principle, differ from development financial institutions (DFIs) which often enjoy soft-term credit lines from multilateral donor agencies. Activities performed by investment banks include syndication of loans or bonds, issuing guarantees, fund management, long-term financing and corporate finance. Corporate finance includes placement of equities and debt instruments both domestic as well as offshore, underwriting - equity and debt instruments. Whereas, the commercial banks activities are concentrated on providing short-term finances mainly for working capital. During the1990-94 period, the investment banks were able to generate a lot of fee based income mainly from underwriting of public issues. Most of the scrips were oversubscribed and the underwriting commission was straight income. Similarly, because the prices of shares were constantly moving up, they also made good capital gains on their investment portfolios. The year 1991 saw major changes in government policies including opening of the market to foreign investors, privatization of public sector companies, deregulation of
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economy and allowing commercial banks in the private sector. Foreign exchange restrictions were liberalized and Pakistanis were permitted to maintain foreign currency accounts. All these policy measures were responsible for the accelerated economic activities specially in the capital market. During the1991-95 period, more than 200 new companies were listed with a total paid-up capital of over Rs, 85,685 million. With 1994 being the year of highest number of listings, the total paid-up capital amounted to over Rs.34,661 million. Demand and Supply of Islamic Banking: Islamic banking which used to be a myth in this part of the world several years ago is not only in vogue but is gaining rapid popularity these days. Not only a number of foreign and local banks are doing good business in Islamic banking but even the conventional banks have been tempted to open special Islamic banking counters. In fact it was Dubai Islamic Bank which took the lead as early as 1975. Thereafter, Islamic banking grew into a worldwide industry exceeding handling amounts exceeding $900 billion. In Pakistan, Meezan Bank has made rapid strides in this sector followed by Bank Islami. Almost all the banks engaged in Islamic banking are working under the umbrella of “shariah board” or “shariah committee” consisting of a panel of renowned religious scholars who are the guiding stars. A few of these banks have a single ‘shariah consultant’ or ‘shariah advisor.’ Most of these shariah scholars or advisors are engaged against hefty remunerations for their expert-advice and guidance on Islamic finance. According to a rough estimate, the numbers of the most outstanding experts are about 12, which is very meager as compared to their demand in the market. It is due to paucity of their numbers that they are serving on different ‘shariah boards’ and ‘shariah committees.’ Some of them are even advising their competitors. This system is working in Pakistan. In Malaysia, one such scholar cannot serve on more than one board or committee at a time. It would be in the fitness of things if this restriction is imposed in Pakistan also. The demand of Islamic banking can be realized by analyzing that there are many product have been introduced in this sector such as
• • • • •

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

The growing popularity of Islamic banking, mainly with Muslims and especially in Muslim countries has driven conventional banks like Citibank, HSBC, RBS, Standard Chartered,
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etc. to turn to open an Islamic banking unit. However, Islamic banks need to be careful in crossing their limits to attract affluent non-Muslim clients just for the sake of earning more and more profits. Lust for wealth should not blur their path. For them piety and not profit should be the key objective. Demand and Supply of Consumer Banking: Over the last 5 years, Pakistan witnessed a phenomenal growth of consumer banking. This unprecedented development has followed privatization of nationalized banks, banking reforms brought about by the State Bank of Pakistan and an increasingly marketing-oriented approach primarily aimed by banks at a large urban consumer base. Be they large or small bank, multinational or local, each one of them is geared towards making its mark in an already competitive environment that is the outcome of consumer banking. Multinational banks such as ABN AMRO, Citibank and Standard Chartered have the support of the knowledge base and funds of their foreign principals which made them first to introduce products, services and innovative technologies to their consumer base. Hot on the heels were the newly privatized banks, UBL, HBL and MCB which have embarked in consumer financing activities in not just big cities but smaller ones too, by virtue of their huge branch network. In doing so, they have generated huge volumes of business while at the same time driving down the prices of the products they offer. For instance, in 2002, HBL’s consumer banking portfolio was worth less than a billion rupees. By the end of 2004, it is worth Rs. 17 billion. Similarly, since 2003 when it was privatized, UBL has launched 12 to 14 new products and according to its Deputy Chief Executive M.A.Mannan, each one of them has been a market leader on month-to-month acquisition volume. And where the local banks such as Soneri, Askari and Union lack in technology, they make up by offering similar services at a much lower costs in our urban centers. Banks’ consumer finance portfolio has grown at a rapid pace over the last four years or so, and its share in overall credit of the banking system had risen to 13.8 percent by end fY07 from virtually negligible levels, before declining to 12.0 percent by the end of June fY08. While all categories of consumer finance have grown substantially since the inception of this product, the most significant increase has been observed in personal loans, which are generally obtained for meeting different types of consumption needs. The growing demand for, and interest in, consumer finance however, is not unique to Pakistan, and many of the emerging economies have seen a similar shift in their respective credit portfolios.
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While the foreign banks have played the pipers’ role when it comes to introducing new products, they have targeted the same segment which may be one of their limitations in this area. On the other hand, industry experts predict that the real growth will come from local giants such as the UBL, HBL and MCB which have the necessary experience and knowledge of customizing products to specific local preferences. Pricing of the Banking Product: All organizations must settle a price for the services they offer. The price for services is an important element of the marketing mix, being an important income source for the organization. The settlement of a correct price, both for the market and the competition, is a significant element for the sector of financial – banking services. Another important factor to take into consideration is the fact that the banks do not settle only the prices for individual services, but also coordinate their prices for service packages. As the competition in the financial – banking services has intensified, the settlement of correct prices has become an essential element for the marketing strategy. Nevertheless it is important to remind that the price is not a central element. There are other significant grounds, the price being only one of the elements of the marketing mix. The price of the banking services: For a bank the price is one of the elements of the marketing mix. The prices must always be in conformity with the other four Ps and they must not be considered as a purely financial problem, in which they are calculated by estimating the costs, to which a margin for profit will be added. The marketing evaluates the market, essentially, from the client’s point of view. Thus, the perception of the price by the client is more critic than the size of the development costs or of the profit that will be realized. Nowadays, the clients take into consideration the value perceived by them for services, the producers recover the costs afferent to the production and commercialization of the merchandise. The recovery of the costs creates the premises of the economic activity resumption. The evaluation of the cost of a service involves two problems The identification of the costs relevant for the company when the profit for a certain service is calculated; The identification of some methods for the allocation of the relevant costs on this service. Price strategies:
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As it has been mentioned before, the price is a very important part of the marketing mix. If a product is not given a correct price, this may affect the sales and may lead to the product’s failure. The price and sales of the product Is therefore related one to another. There are 6 main strategies to settle the price for a product. These are:

1. Cost plus profit – this is the most sensitive strategy to costs; the institution calculates how much the manufacturing of the product cost it, adds a margin for the profit and requires the clients this price; 2. The settlement of the prices for “taking the cream” –this strategy may be used for products that are very new and of high quality; it means the settlement of the price when the product is freshly introduced on the market to “take the cream” of the demand for that product, maximizing the profit to cover the research and development expenses, after which, later, in time, the price may be reduced to increase the demand; 3. The settlement of the price depending on the competition - This strategy takes into consideration the price the competition practices, thus the price will be similar to the one of the competition, but will allow the covering of the expenses and the profit margin; 4. The settlement of the price on the market – the price of a product is settled depending on the price of a similar product already existing on the market. The difference in comparison to the settlement of the price depending on the competition is that the settlement of the price on the market might not cover the production expenses of the product; 5. The settlement of the price depending on the value – this strategy is based on the evaluation of the clients’ perception vis-a-vis the value of the product answering the question “How much a client would pay for this product?”, this strategy is then the most oriented towards marketing. 6. The settlement of the price to penetrate – the bank will settle a low price for a product with the purpose to win fast a big quota of the market and thus to realize a fast and substantial penetration. Factors that influence the price calculation: There are many factors that influence to a smaller or bigger extent the price formation and that a company must take into account. As it was earlier presented, the financial product has distinct features, with a complex structure, being often represented by a packet of services, which implies difficulties in the determination of the price. For example, the rate paid by the consumer for the leasing of a car has several compounds: the value of the car, the corresponding interest, the value of the car insurance. The structure of the costs:
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The bank will wish to establish a price which will cover all the costs for developing and promoting of the service, obtaining a corresponding profit of the risk it takes, in a last instance, the price must reflect the following elements: The fix and variable costs of the provided service. The risk that must be covered. The future development (investments). The corresponding profit of the invested fund.

The Risk: The risk is an element of the financial institution costs which it has to take into consideration in determining the price. The risk appears in the moment the price of a service (for example a loan) must be acquitted no matter the performance of the financial institution, in case of the deposit of an amount of money, the depositor is sure that he may withdraw in any moment the full amount.

The Shareholders:
For the subscribed capital the shareholders receive compensation in the form of dividends or by the increase of the held shared a compensation that must be found in the final price. The Consumers: The consumers, their perceptions about the products and services and the level of the requests are found in the final price of the service. The consumers of the financial services perceive harder the value and the quality of what they bought, because of the lack of information, of some aspects less visible of the services and of the consequences in the future which some of them have. their request is less elastic than the one of the material goods, for which the relation quality- price and costs is easier to determine. There are categories of services, for example the insurance, that are sensible to the price variations, probably because of the legal obligations of paying some insurance (for example the car insurance, that is paid annually). The Competition:
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The prices of the competition may influence the price strategies of any bank. The clients will evaluate the price by comparing the products of many organizations. Any company must know the price and quality of the competition products and use the information in establishing their own prices when there are offered similar services, of close quality and value, the price must be comparable to the one practiced by the closest competition, otherwise the organization risks the loss of sales.

Internal factors
The Objective of the company The components of marketing mix The Price The shareholders

External Factors




The factors that influence the calculation Of the banking services price

The Competition

Legal restrictions

The approach of marketing regarding the price policy must start from the solvable request (how much is the client going to pay for the benefits he receives) and not from
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the traditional way of calculating the costs of production and adding of a “reasonable” margin for the sale costs and profit. The problem of the cost must be taken into account, by the simple motive that the prices too similar to the production, administration and commercialization price of the company’s service will lead to bankruptcy, and prices too high according to the costs will facilitate the taking over of the business by the competition. There were described three representative situations of the price, of the many which the multi-products financial service production providing organizations confront with and there were brought arguments that the factors that must be analyzed are similar, although the means of founding out of the optimal solution may be different. Because the material of the banking products prices is extremely elaborated we did not concentrate over the banking service prices, on the commissions and the expenses not only over the interests or exchange rates that, generally, represent the object of study of the macroeconomic conjunctures or of the market.

Life Cycle of the Product
Product is defined as "anything that is capable of satisfying customer needs”. This definition includes both physical products (e.g. cars, washing machines, DVD players) as well as services (e.g. insurance, banking, private health care). Businesses should manage their products carefully over time to ensure that they deliver products that continue to meet customer wants. The process of managing groups of brands and product lines is called portfolio planning. The stages through which individual products develop over time is called commonly known as the "Product Life Cycle". The classic product life cycle has four stages (illustrated in the diagram below): introduction; growth; maturity and decline.

Introduction Stage:
At the Introduction (or development) Stage market size and growth is slight. It is possible that substantial research and development costs have been incurred in getting the product to this stage. In addition, marketing costs may be high in order to test the market, undergo launch promotion and set up distribution channels. It is highly unlikely that companies will make profits on products at the Introduction Stage. Products at this stage have to be carefully monitored to ensure that they start to grow. Otherwise, the best option may be to withdraw or end the product.
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Growth Stage:
The Growth Stage is characterized by rapid growth in sales and profits. Profits arise due to an increase in output (economies of scale) and possibly better prices. At this stage, it is cheaper for businesses to invest in increasing their market share as well as enjoying the overall growth of the market. Accordingly, significant promotional resources are traditionally invested in products that are firmly in the Growth Stage.

Maturity Stage:
The Maturity Stage is, perhaps, the most common stage for all markets. it is in this stage that competition is most intense as companies fight to maintain their market share. Here, both marketing and finance become key activities. Marketing spend has to be monitored carefully, since any significant moves are likely to be copied by competitors. The Maturity Stage is the time when most profit is earned by the market as a whole. Any expenditure on research and development is likely to be restricted to product modification and improvement and perhaps to improve production efficiency and quality.

Decline Stage:
In the Decline Stage, the market is shrinking, reducing the overall amount of profit that can be shared amongst the remaining competitors. At this stage, great care has to be taken to manage the product carefully. It may be possible to take out some production cost, to transfer production to a cheaper facility, sell the product into other, cheaper markets. Care should be taken to control the amount of stocks of the product. Ultimately, depending on whether the product remains profitable, a company may decide to end the product.

Banking Product Life Cycle
Banks are like any other business in that they produce goods and services to customers. Like any other businesses, their products have life cycles. A couple that come to mind in various stage of their life cycle include: Checks or Demand Deposit Accounts (DDAs). Checks are in a decline phase of their life cycle. The use of checks is declining rapidly and being replaced by electronic bill pay and debit cards. Internet Banking and Electronic Bill pay are in their growth phase as more and more customers are using these services and using checks less and less.
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Debt cards or Check Cards are in their maturity phase as they are accepted by nearly everyone. Those are just three ideas but they are each related to one another.

Availability of technology
1). Technology has opened up new markets, new products, new services and efficient delivery channels for the banking industry. Online electronics banking, mobile banking and internet banking are just a few examples. 2). Information Technology has also provided banking industry with the wherewithal to deal with the challenges the new economy poses. Information technology has been the cornerstone of recent financial sector reforms aimed at increasing the speed and reliability of financial operations and of initiatives to strengthen the banking sector 3). The IT revolution has set the stage for unprecedented increase in financial activity across the globe. The progress of technology and the development of worldwide networks have significantly reduced the cost of global funds transfer. 4). It is information technology which enables banks in meeting such high expectations of the customers who are more demanding and are also more techno-savvy compared to their counterparts of the yester years. They demand instant, anytime and anywhere banking facilities. 5). IT has been providing solutions to banks to take care of their accounting and back office requirements. This has, however, now given way to large scale usage in services aimed at the customer of the banks. IT also facilitates the introduction of new delivery channels--in the form of Automated Teller Machines, Net Banking, Mobile Banking and the like. Further, IT deployment has assumed such high levels that it is no longer possible for banks to manage their IT implementations on a standalone basis with IT revolution, banks are increasingly interconnecting their computer systems not only across branches in a city but also to other geographic locations with high-speed network infrastructure, and setting up local area and wide area networks and connecting them to the Internet. As a result, information systems and networks are now exposed to a growing number. Globalization in banking is based on four important pillars viz. 1) trade in goods and services; 2) flow of capital and movement of human beings across boundaries; 3) harmonization of regulatory framework in different countries; and 4) developments in technology, particularly those in information technology.
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1) Majority of the Customers perceive that Technology in Banking Industry has a positive impact on the way the services are rendered to the customers. 57% of the Customers Strongly Agree that it is necessary for banks to implement IT in their operations. 60% of the Respondents Strongly Agree that Technology improves customer services in banks. 2) Nearly 87% of the Private Sector Banks have Respondent that Technology Implementation has resulted in Achieving Economies of Scale of Bank. 57% of the Public Sector Banks have agreed that the Technology has resulted in Achieving Economies of Scale of Bank. On other hand, 90% of the Foreign Banks have said that by Implementing Technology in the Bank, they are able to achieve Data Communication in Achieving Economies of Scale of Bank. 3) Nearly 89% of the Private Sector Banks have Respondent that Technology Implementation has resulted in Efficient Low Cost Data Communication. 78% of the Public Sector Banks have agreed that the Technology has resulted in Efficient Low Cost Data Communication. On other hand, 93% of the Foreign Banks have said that by Implementing Technology in the Bank, they are able to achieve Data Communication in Low Cost and Efficient way. 4) In case of Private Sector Bank, there is a strong association between the drive to implement Technology in the Banks and Impact on Profitability, Competitive Pressure, and Customer Needs.

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