Professional Documents
Culture Documents
PART 1.......................................................................................................................................................8
INTRODUCTION.....................................................................................................................................8
1.1 History........................................................................................................................................8
1.2 Origin of Term Bank..............................................................................................................9
1.3 Banking in Pakistan.................................................................................................................10
1.4 SME (Small and Medium Enterprises) Introduction............................................................10
1.4.1 Formation of SME Bank Ltd..........................................................................................11
1.4.2 Small Business Finance Corporation..............................................................................11
1.4.3 Regional Business Finance Corporation........................................................................11
1.5 Introduction of Small and Medium Enterprises....................................................................12
1.6 According to State bank of Pakistan......................................................................................12
1.6.1 State Bank Prudential Regulations for SME Sector in Pakistan.......................................13
1.6.2 Capital and Ownership.........................................................................................................14
1.7 Vision........................................................................................................................................15
1.8 Mission Statement........................................................................................................................15
1.9 Corporate Objectives...................................................................................................................15
Part 2........................................................................................................................................................16
ORGANIZATIONAL STRUCTURE.....................................................................................................16
2.1 Board of Directors.......................................................................................................................16
2.2 Banks Management.....................................................................................................................17
2.3 Hierarchy......................................................................................................................................19
2.4 Hierarchical Positions of SME Bank..........................................................................................20
2.5 Management Profile....................................................................................................................20
2.5.1 Core Values of Management................................................................................................20
2.6 Functions of RMs and BMs.........................................................................................................21
2.6.1 Functions of Regional Managers.........................................................................................21
2.6.2 Functions of Branch Managers............................................................................................21
Part 3........................................................................................................................................................22
DEPARTMENTS.....................................................................................................................................22
3.1 Investigation Division..................................................................................................................22
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3.2 Audit and Inspection Division.....................................................................................................22
3.3 Marketing and Business Development Division........................................................................23
3.4 Risk Management Division.........................................................................................................23
3.5 Services Division..........................................................................................................................23
3.6 Finance Division...........................................................................................................................23
3.6.1 General Accounting Department(GAD)..............................................................................24
3.6.2 Finance Department.............................................................................................................24
3.6.3 Branch Accounting Department..........................................................................................24
3.6.4 Corporate Reporting............................................................................................................24
3.6.5 Management Accounting Department(MAD).....................................................................24
3.7 Human Resource Division...........................................................................................................25
3.7.1 Human Resource Assessment...............................................................................................25
3.8 Special Asset Management Division(SAM)................................................................................26
3.8.1 Small Loans Recovery Department.....................................................................................26
3.8.2 Project Loans Recovery Department..................................................................................26
3.8.3 SME Recovery Department.................................................................................................26
3.9 Branch Network...................................................................................................................26
Part 4........................................................................................................................................................28
SYSTEM FOR RECOVERY..................................................................................................................28
4.1 Policy................................................................................................................................................28
4.2 Recovery Strategy........................................................................................................................29
4.3 Recovery Support Policy.............................................................................................................29
Part 5........................................................................................................................................................30
Products & Services.................................................................................................................................30
5.1 Products and Services..................................................................................................................30
5.1.1 Lending Products..................................................................................................................30
5.1.2 Commercial Banking Products............................................................................................31
5.2 Market and Industry Information..............................................................................................32
Part 6........................................................................................................................................................34
Financial Analysis....................................................................................................................................34
6.1 Horizontal Analysis of Balance Sheet as at December 31,2016.............................................34
6.2 Horizontal Analysis of Income Statement for the year ended December 31,2016...............35
6.3 Vertical Analysis of Balance Sheet as at December 31,2016..................................................36
2
6.4 Vertical Analysis of Income Statement for the year ended December 31,2016....................38
6.5 Financial Ratios.......................................................................................................................39
6.5.1 Liquidity Ratios................................................................................................................39
6.5.2 Profitability ratios............................................................................................................39
6.5.3 Activity ratios...................................................................................................................40
6.5.4 Financial Leverage ratios................................................................................................40
6.6 Marketing Analysis....................................................................................................................41
PART 7.....................................................................................................................................................42
SITUATIONAL ANALYSIS...................................................................................................................42
7.1 SWOT Analysis............................................................................................................................42
7.1.1 Strengths................................................................................................................................42
7.1.2 Weaknesses............................................................................................................................43
7.1.3 Opportunities........................................................................................................................44
7.1.4 Threats...................................................................................................................................45
7.2 BCG MATRIX.............................................................................................................................46
PART 8.....................................................................................................................................................47
COMPETITORS OF SME BANK.........................................................................................................47
8.1 Zarai Taraqiati Bank Limited.....................................................................................................47
8.1.1 Corporate Vision...................................................................................................................47
8.1.2 Corporate Mission....................................................................................................................47
8.1.3 Brief ZTBL............................................................................................................................47
8.1.4 Corporate Objectives............................................................................................................48
8.2 Punjab Provincial Cooperative Bank.........................................................................................48
8.2.1 Establishment.......................................................................................................................49
8.2.2 Major Objectives..................................................................................................................49
8.2.3 Current Challenges...............................................................................................................49
8.2.4 Restructuring........................................................................................................................50
8.2.5 Market Positioning...............................................................................................................50
8.3 Industrial Development Bank.....................................................................................................51
PART 9.................................................................................................................................................52
EXPERIENCES % OBSERVATIONS..............................................................................................52
9.1 Working Experience....................................................................................................................52
9.2 Tasks Assigned there....................................................................................................................53
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9.2.1 Stock Reports........................................................................................................................53
9.2.2 Interviewing the new customer............................................................................................53
9.2.3 Filling the assessment form..................................................................................................53
9.2.4 Survey....................................................................................................................................53
9.2.5 Marketing activities of the Bank..........................................................................................54
9.3 Contribution that I made............................................................................................................54
9.4 Identification of a main mroblem...............................................................................................54
9.5 Findings........................................................................................................................................54
PART 10...................................................................................................................................................56
RECOMMENDATIONS & CONCLUSION.........................................................................................56
10.1 RECOMMENDATIONS...........................................................................................................56
10.2 CONCLUSION........................................................................................................................56
PART 11....................................................................................................................................................57
REFERENCES....................................................................................................................................57
11.1 References...................................................................................................................................58
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PART 1
INTRODUCTION
1.1 History
Banking in the modern sense of the word can be traced to medieval and early Renaissance Italy,
to the rich cities in the north like Frence, Venice and Genoa. The Bardi and Peruzzi families
dominated banking in 14th century Florence, establishing branches in many other parts of
Europe. Perhaps the most famous Italian bank was the Medici bank, set up by Giovanni Medici
in 1397. The earliest known state deposit bank, Banco di San Giorgio (Bank of St. George), was
founded in 1407 at Genoa, Italy.
Banks can be traced back to ancient times even before money when temples were used to store
commodities. During the 3rd century AD, banks in Persia and other territories in the Persian
Sassanid Empire issued letters of credit known as akks. Muslim traders are known to have used
the cheque or akk system since the time of Harun al-Rashid (9th century) of the Abbasid
Caliphate. In the 9th century, a Muslim businessman could cash an early form of the cheque in
China drawn on sources in Baghdad, a tradition that was significantly strengthened in the 13th
and 14th centuries, during the Mongol Empire. Fragments found in the Cairo Geniza indicate
that in the 12th century cheques remarkably similar to our own were in use, only smaller to save
costs on the paper. They contain a sum to be paid and then the order "May so and so pay the
bearer such and such an amount". The date and name of the issuer are also apparent.
The word bank was borrowed in Middle English from Middle French banque, from Old Italian
banca, from Old High German banc, bank "bench, counter". Benches were used as desks or
5
exchange counters during the Renaissance by Florentine bankers, who used to make their
transactions atop desks covered by green tablecloths.
The earliest evidence of money-changing activity is depicted on a silver Greek drachm coin from
ancient Hellenic colony Trapezus on the Black Sea, modern Trabzon, c. 350325 BC, presented
in the British Museum in London. The coin shows a banker's table (trapeza) laden with coins, a
pun on the name of the city. In fact, even today in Modern Greek the word Trapeza ()
means both a table and a bank.
It has not so far been decided as to how the word Bank originated. Some authors opine that this
word is derived from the words Bancus or Banque which mean a bench. Other authorities hold
the opinion that the word Bank is derived from the German word Back, which means joint
stock fund. It is therefore, not possible to decide as to which of the opinion is correct, for no
record is available to ascertain the validity of any of the opinions
A financial institution, deals with money and credit. It accepts Deposits from individuals,
firms and companies at a lower rate of interest and gives at higher rate of interest to those
who need them.
The partition plan was announced on June 3, 1947 and August 15, 1949 was fixed as the date on
which independence was to take effect. It was decided that the Reserve bank of India should
continue to function in the dominion of Pakistan until September 30, 1948 due to administrative
and technical difficulties involved in immediately establishing and operating a Central Bank.
At the time of partition, total number of banks in Pakistan were 38 out of these the commercial
banks in Pakistan were 2, which were Habib Bank Limited and Australia Bank of India. The total
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deposits in Pakistani banks stood at Rs.880 million whereas the advances were Rs.198 million.
The Governor General of Pakistan, Muhammad Ali Jinnah issued the order for the establishment
of State Bank of Pakistan on 1st of July 1948. In 1949, National Bank of Pakistan was
established. It started with six offices in former East Pakistan. There were 14 Pakistani scheduled
commercial banks operating in the country on December 1973. The Pakistan Banking Council
prepared banks amalgamation schemes in 1974 for amalgamation of smaller banks with the five
bigger banks of the country.
In early 90s after the failure of nationalization policy, Government went for privatization of
financial institution. In last ten to fifteen years banking sector in Pakistan has shown tremendous
growth. Due to its remarkable growth, banking sector of Pakistan has become very attractive for
foreign investors. Many investors have already invested and still many more to come.
SME Bank started his working for the provide loans to the small borrowers who have the ability
and experience in different sector but they not have resources for starting their own business so
the Government started SME Bank in 2002 after the merger of SBFC and RDFC for the
providing loans facility on easy terms and conditions and also these loans are provided to the
borrowers on low interest rate as compared to the market rate. Now I explain some back ground
of SBFC and RDFC.
1.4.1 Formation of SME Bank Ltd
The SME Bank was formed and incorporated as a public limited company under the Companies
Ordinance 1984. The Government of Pakistan is the major Shareholder of the bank. As part of
financial sector restructuring program of Government of Pakistan, Regional Development
Finance Corporation (RDFC) and Small Business Finance Corporation (SBFC) were
amalgamated into SME Bank Ltd. effective January 01, 2002. SME bank Ltd was established to
exclusively cater to the needs of the SME sector. It was created to address the needs of this niche
market with specialized financial products and services that will help stimulate SME
development and pro poor growth in the country.
7
1.4.2 Small Business Finance Corporation
SBFC provided loans to the borrowers on easy terms and conditions and these loans are
secured against personal guarantee. 98% of Self Employment Loans secured against
personal guarantees without collaterals.
Government directed and sponsored Self Employment Schemes for providing loans to the
small borrowers
Low interest rate on the loans as compare to the other financial institutions Working for
same purpose
Confidence of the Government institutions by the borrowers.
Second institutions which provide loans to the projects and industries of the
private sector were working as Regional Development Finance Corporation
(RDFC).
These loans were issued to the projects for industrialization in the less developed
areas for bringing them at par with developed one.
The objective was to establish industrial estates on regional basis like Bhimber,
Hattar and Gadoon for developing indigenous industrial sector.
Another motive was to raise the living standard in remote areas by providing
those sources and infrastructure.
These are two institutions which merged in 2002 and started their new business
with new entity of SME Bank.
Small and medium enterprises or SMEs, also called small and medium-sized enterprises and
small and medium-sized businesses or small and medium businesses or SMBs are companies
whose headcount or turnover falls below certain limits. The abbreviation SME occurs commonly
in the European Union (EU) and in international organizations, such as the World Bank, the
8
United Nations and the WTO. The term small and medium-sized businesses or SMBs has
become more standard in a few other countries. EU Member States traditionally had their own
definition of what constitutes an SME, for example the traditional definition in Germany had a
limit of 500 employees, while, for example, in Belgium it could have been 100. But now the EU
has started to standardize the concept. Its current definition categorizes companies with fewer
than 50 employees as "small", and those with fewer than 250 as "medium". By contrast, in the
United States, when small business is defined by the number of employees, it often refers to
those with less than 100 employees, while medium-sized business often refers to those with less
than 500 employees. However, the most widely used American definition of micro-business by
the number of employees is the same of that of EU: less than 10 employees. In most economies,
smaller enterprises are much greater in number. In the EU, SMEs comprise approximately 99%
of all firms and employ between them about 65 million people. In many sectors, SMEs are also
responsible for driving innovation and competition.
Small and Medium Enterprise (SME) means an entity, ideally not a public limited company,
which does not employ more than 250 persons (if it is manufacturing / service concern) and 50
persons (if it is trading concern) and also fulfills the following criteria of either a and c or b
and c as relevant:
a) A trading / service concern with total assets at cost excluding land and building upto
Rs 50 million.
b) A manufacturing concern with total assets at cost excluding land and building up to
Rs 100 million.
c) Any concern (trading, service or manufacturing) with net sales not exceeding Rs 300
million as per latest financial statements.
9
Keeping in view the important role of Small and Medium Enterprises (SMEs) in the economic
development of Pakistan and to facilitate and encourage the flow of bank credit to this sector, a
separate set of Prudential Regulations specifically for SME sector has been issued by State Bank
of Pakistan. This separate set of regulations, specifically tailored for SMEs, is aimed at
encouraging banks / DFIs to develop new financing techniques and innovative products which
can meet the financial requirements of SMEs and provide a viable and growing lending outlet for
banks / DFIs.
Banks / DFIs should recognize that success in SME lending requires much more extensive
involvement with the SMEs than the traditional lender-borrower relationship envisages. The
banks / DFIs are, thus, encouraged to work in close association with SMEs. The banks / DFIs
should assist and guide the SMEs to develop appropriate systems and effectively manage their
resources and risks. The banks / DFIs are encouraged to prepare a lending program (including
detailed eligibility criteria) for each specific sub-sector of SME in which they want to take
exposure in a significant manner. For this purpose, the banks / DFIs may conduct / arrange
surveys and research to determine the status and potential of specific SME sub- sectors. It is
expected that banks / DFIs would prepare comprehensive guidelines / manuals and put in place
suitable mechanism / structure, aided by proper MIS, to carry out the activities related to SME
financing in an effective way. This should, however, not stop banks / DFIs from lending to SMEs
before undertaking the steps mentioned above as the banks / DFIs may start soft lending
operations or test marketing campaigns, as they feel appropriate, to gain experience and
necessary know how. The factors mentioned above gain more importance and become critical for
the success of a bank / DFI in SME lending, as the exposure of the bank / DFI on SMEs becomes
a significant portion of its loan portfolio.
State Bank of Pakistan encourages banks / DFIs to lend to SMEs on the basis of assets
conversion cycle and future cash flows. A problem, which the banks / DFIs may encounter in this
respect, is the lack of adequate information. In order to overcome this problem, banks / DFIs
may also like to prepare general industry cash flows and then adjust those cash flows for the
specific borrowers keeping in view their conditions and other factors involved. As mentioned
above, presently most of the SMEs in Pakistan lack sophistication to have reliable and sufficient
data and financial information. In order to capture this data and information, banks / DFIs will
need to assist and guide their SME customers. The banks / DFIs may come up with the minimum
10
information requirements and standardized formats for this purpose as per their own discretion.
For better understanding and to facilitate their SME customers, banks/ DFIs are encouraged to
translate their loan application formats and brochures in Urdu and other regional languages.
Banks / DFIs should realize that delay in processing the cases might frustrate the SMEs. Banks /
DFIs are therefore encouraged to process the loan cases expeditiously and convey the decision to
the SME borrowers as early as possible. In order to encourage close coordination of the officials
of the banks / DFIs and SMEs, the banks / DFIs may require the concerned dealing officer to
regularly visit the borrower. For this purpose, at a minimum, the dealing officer may be required
to pay at least one quarterly visit and document the state of affairs of the SME. In addition, an
officer senior to the ones conducting these regular visits may also visit the SME at least once in a
year. State Bank of Pakistan will closely monitor the situation on an ongoing basis and work
proactively with banks / DFIs to make SME financing a success.
11
1.7 Vision
We will be the leading institution for providing financial assistance for the development and
support of Small and Medium Enterprises (SMEs) In Pakistan. We will respond to the needs of
Small and Medium Enterprises by developing a team of dedicated professionals, and specific
products, focused on the financing need and limitations of SME sector. We will through support
of the SME sector, contribute to the growth of local entrepreneurs, develop export markets and
provide employment opportunities in the country.
To enable SMEs to play a vital role in stimulating GDP growth, create job
opportunities and reduce poverty.
Part 2
ORGANIZATIONAL STRUCTURE
12
Mr. Ihsan-Ul-Haq-Khan
Mr. Badar-Ul-Arifeen
IHSAN-UL-HAQ KHAN
President and CEO of SME Bank Ltd
13
JUNAID MUHMAND SOHAIL ISHTIAQ KHAN
Head Business Development Head Human Reource &
Marketing Division Services Division
14
2.3 Hierarchy
15
President/CEO
The objective of the Management shall be to create supportive environment for optimum
utilization of Human Resources. Enhancing skills, abilities and knowledge of employees through
training and freedom of opinion.
16
Will suggest/forward his recommendations for allocation of recovery and
business targets for each branch through analyzing the branch portfolio and
potential of recovery teams/personnel.
Compliance of legal formalities under recovery policies, SBP prudential
regulations, land revenue act and other court cases in coordination with the
Recovery Division, Head Office.
Will be the Head of Regional Management Committee
Will report directly to the Divisional Heads and CEO Company
17
Part 3
DEPARTMENTS
18
3.2 Audit and Inspection Division
This department of SME deals in formulization of the policies and procedures related to
marketing. This department looks for creating new opportunities which would be profitable.
Recovery from outside is also responsibility of this department. Deal with issue of resource
mobilization and its effective coordination and marketing of Banks Products & services.
19
The basic purpose of this department is look at the demand and supply of money related to the
bank. Deal with financial matters of the bank. These are the Department which are working
under Finance Division.
1. General Accounting Department (GAD)
2. Finance Department (FD)
3. Management Accounting Department (MAD)
4. Branch Accounting Department
5. Corporate Reporting Department
6. Policies Compliance & Verification Department
20
3.7 Human Resource Division
It performs functions like promoting professionalism and competency levels. Creates an efficient
management structure and works under the standard operating procedures matching to company
goals. It focuses on value addition of individual employees and cost effectiveness. It is the
responsibility of HR department to define the clear job roles and responsibilities of the
management, placing the right person at the right job at the right time and the optimal utilization
of the resources.
3.7.1 Human Resource Assessment
SME Bank has a separate department HR department which basically deals with all the human
resource needs of the organization. The job of this HR department is to hire employees, appraise
the employees, do a performance analysis of the employees, give the employees their pays and
maintain the records of the employees in the organization. The department basically deals with
all the needs of the employees.. HR department aims to develop the minimum required internal
capacity of the organization to take up the process of change while aligning its strategic
objectives with the desired change process to perform a partnering role in achievement of the
organizations objectives. The overall direction of HR department has been towards nurturing the
strengths of the human capital to its maximum with a defining principal to help create a
progressive environment and sustain a thorough commitment of our staff towards focused
customer service. A frequent complaint is the mismatch of the output of our human resource
development institutions with the demand of SME. There are also only limited training options
for middle management. Low skills of work force, inadequate vocational training facilities yet
remain outside the scope of the reform agenda. For a healthy, growing business environment, it is
necessary to foster entrepreneurial culture in Pakistan which goes beyond the inclination to trade
in goods. This can be boosted by entrepreneurial skill development programs. The data of last
five years about the turnover of employees has shown that there is massive increase in
employees turnover, the number of employees in 2005 were 632 and now is 576 which shows a
great downfall and increase in the number of employee leaving the organization.
These are some of the intrinsic extrinsic benefits and factors that sme bank provides to its
employees are as follows:
21
Employees Motivational techniques
Handsome Salary Package
Career path
Employee Provident Fund
Gratuity Fund
Medical Insurance
Career Guidance
Bonuses
Promotions
Training and development
Staff Loan Facility
22
d) Audit Offices
Branches
Islamabad
Treasury
Karachi
Recovery Offices
Audit Offices
Lahore Karachi
23
Part 4
4.1 Policy
The Bank considered loan recovery operation as its full time professional/operational
responsibility.
Companys financial soundness and sustainability of future operations
shall depend on loan recovery.
Recovery of loans shall be assigned highest importance and
responsibility.
Loan recovery strategy and modalities shall fall in line with
borrowers category level of repayment difficulty and loan security
arrangement.
Loan recovery performance based criterion to be followed with
Regions, Branches and staff.
Loan recovery policies shall be reviewed and revised from time to
time under instructions of Government/SBP.
24
4.2 Recovery Strategy
25
Part 5
26
4 Term loan for working capital 1 Year KIBOR + 5.5%
p.a(adjusted annually)
5 Financing facility for storage of 6% (Revised by SBP from time
agricultural produce(SBP Line) to time)
SME Rozana Izafa Aur Mahana Munafa(Profit payable on monthly basis,calculated on daily
basis
Upto 9.999 million 4.00%
10.000 million to 49.999 million 4.50%
50000 million and above 4.75%
SNDR(Special Notice Deposit Receipt)
27
7 days short notice deposit 4.00%
30 days short notice deposit 4.00%
SME Fixed Term Deposits(Profit payable on matiurity)
1 Month 4.00%
2 Months 4.25%
3 Months 4,50%
1 Year 5.75%
2 Years 6,00%
3 Years 6.25%
28
increase the service provision by all types of stakeholders will become a fundamental issue when
SME support programs will be looking for delivery channels.
Part 6
Financial Analysis
29
6.1 Horizontal Analysis of Balance Sheet as at December 31,2016
Rupees in
000
Cash and balance with treasury banks 366783 100% 390011 106% 560802 153%
Balances with other banks 2835 100% 1739 61% 4226 149%
Liabilities
30
Bills payable 58298 100% 114107 247% 95443 163%
Deposits and other accounts 3443102 100% 4770201 138% 5228716 151%
Sub-ordinated loans __ __ __ __ __ __
Total liabilities + Owners Equity 5300352 100% 8616526 162% 9378215 176%
6.2 Horizontal Analysis of Income Statement for the year ended December
31,2016
Rupees in 000'
31
Mark-up/Return/Interest expense 542594 100% 436280 80% 441204 81%
Total mark-up + non mark-up 255618 100% 379778 148% 285402 111%
interest income
Total non-mark-up /Interest 633949 100% 654358 103% 742220 117%
expense
Loss before taxation 378331 100% 274570 72% 456818 120%
Rupees in 000
Assets
32
Lending to financial institutions 445000 4.75%
Liabilities
Sub-ordinated loans __ __
33
Total liabilities + Owners Equity 9378215 100%
6.4 Vertical Analysis of Income Statement for the year ended December
31,2016
Rupees in 000
34
Total non-mark-up /Interest 742220 120%
expense
Loss before taxation 456818 74%
35
6.5.3 Activity ratios
36
The ratio analysis is also an important component for financial analysis because most of the
investor invests after looking at the ratios; same is the case with the customer. You can easily
judge the position of the bank through looking at the change in earning per share every year,
which is at its peak in 2012 and at its worst in 2016. Investment is giving the worst return in
2016 and the best returns in 2012 which would be peak for SME bank.
37
PART 7
SITUATIONAL ANALYSIS
7.1 SWOT Analysis
SWOT analysis is a process to identify where we are strong and where we are vulnerable, where
we should defend and where we should attack. It tells us our strengths, our weaknesses, the
opportunities which prevail in the market and the threats which we may face from our
competitors and other from other potential factors. This analysis can be performed on a product,
on a service, a company or even on an individual.
Strengths
Weaknesses
Opportunities
Threats
7.1.1 Strengths
Responsible and competent people as branch manager who have the knowhow
of all the departments of bank.
Highly Trained and Experienced Employees
Positive Work Environment
Training and development facility
Motivation through both intrinsic and extrinsic factors
The satisfaction increase in the salaries of personnel.
The commitment of employees towards secrecy.
A good system of training new comers in the bank.
Automation and online business
Good and experienced staff right from the banks incorporation.
38
7.1.2 Weaknesses
Every loan case has to be approved from head office which takes 10 days for
completion
No proper check and balance
Many of the value assessments are made on the basis of assumptions instead
of realities
Centralization is an issue because decisions are taken at the top
Higher charges of some services as compared to other banks.
Long delays and queues for commercial banking customers
There is lack of proper advertising like sponsoring of any festival etc.
No frequent designing of new schemes for the deposits.
Lack of cooperation among the departments of bank
Rush of files, not easy to manage
Not even a single strategy for marketing
Not targeting new customer base, only relying on the existing ones
7.1.3 Opportunities
39
7.1.4 Threats
40
7.2 BCG MATRIX
CASH-COWS DOGS
41
PART 8
The new corporate structure redefines the bank's status as a public limited company registered
under companies Ordinance'1984 with an independent Board of Directors which aims at
ensuring good governance, autonomy, delivering high quality. ZTBL is a key R.F.I of Pakistan
42
providing affordable, rural and agriculture financial/non-financial services to the rural Pakistan,
comprising 68 % of the total population. The Bank through a country-wide network of 341
branches is serving around half a million clients annually and over one million accumulated
account holders with the average loan size of around Rs.89,000 serving 65%, 31% & 4 % of
subsistence, economic and large growers respectively. .
The total assets of the Bank stand at Rs.84 billion with authorized capital of Rs.25 billion as of
31.12.2005, with a nation-wide working strength comprises 5500 employees. The share of ZTBL
in total national institutional agricultural credit remains around 35%. .
ZTBL was incorporated as a Public Limited Company on 14th December, 2002 through repeal of
formal Agricultural Development Bank of Pakistan Ordinance of 1961. Thereby transforming the
bank as a corporate entity to serve as a R. F.I.
8.1.4 Corporate Objectives
Develop and operate as a financially and operationally sustainable R.F.I of the country.
Assist rural community, particularly the small farmers, in raising their productivity and
income levels through timely delivery of credit, advisory and ancillary services.
Build ZTBL's image as a proactive, client friendly, financially & operationally
sustainable with indigenous product deployment. .
Establish and provide backward and forward linkages to strengthen agri. value added
commodity chains. .
Engage in public - private and wholesale - retail partnership to deepen outreach and
reduce operating cost. .
8.2.1 Establishment
43
decades. It has proved as an effective system for socio-economic growth and
community development of the rural masses. This movement is very strong in
many countries like India, China, Malaysia, Europe, Japan, Philippines etc.
The Central Cooperative Banks (CCB) were established at each District / Tehsil
and Punjab Provincial Cooperative Bank Ltd. in 1924 as an Apex Bank to meet
funding requirements of cooperative societies and Central Cooperative Banks,
respectively. Punjab Provincial Cooperative Bank Ltd / Central Cooperative
Banks were engaged in all types of banking & credit business with societies and
individuals who were their members.
PPCBL was organized and being managed on the principal of voluntary and open
membership, democratic member control, member economic participation,
autonomy, independence, self-help and mutual cooperation.
44
Sustaining operating losses mainly due to high cost debt servicing to SBP
HR Development issues
8.2.4 Restructuring
Currently, an extensive restructuring exercise has been undertaken to make the PPCBL a
viable and self sustained Bank for rural masses. For this purpose, a 5-Years Restructuring
Plan was prepared and submitted to State Bank of Pakistan (copy attached). Reform
initiatives taken so far as under:
Audit & Inspection Cells at Zonal Offices Shifted to Head Office and reorganized in 4
Teams
Surplus staff lay off and induction of qualified professionals process initiated
45
8.3 Industrial Development Bank
IDBP is one of Pakistans oldest developments financing institution created with the primary
objective of extending term finance for investment in the manufacturing sector of the economy.
Over the years, however, the Bank has emerged as an institution fostering the growth and
development of SME sector stimulating industrial progress in the rural/less developed regions of
the country besides offering lucrative opportunities to the house-holds and institutions for the
investment in its deposit schemes. IDBP has also become an important component of the
financial sector of Pakistan and is playing an active role in money and capital market of the
country. For attaining its objectives, the Bank provides medium and long term finance in local
and foreign currencies for the creation of fixed assets to new industrial projects as well as for
expansion, balancing, modernization or replacement of existing projects. It extends technical,
financial and managerial advice to its clients in planning and execution of the industrial projects.
It also facilitates transfer of technologies from developed countries to industrial enterprises in
Pakistan.
IDBP is wholly owned by Government of Pakistan with 57% of its shares held by Federal
Government, 36% by State Bank of Pakistan and 7% by Provincial Governments and other
Public sector corporations. Its Board of Directors consisting of the representatives of private
sector is appointed by Ministry of Finance, Government of Pakistan. A unique feature of IDBP is
that besides Development Financing Institution it is also a scheduled bank and authorized dealer
of foreign exchange. Thus IDBP extends all kinds of merchant, investment and commercial
banking services to its clients which include provision of short term advances, trade financing,
lease financing, guarantees and under-writing. Thus IDBP operates a full-fledged Bank in
addition to its role as a development financing institution.
IDBP has the unique distinction of financing the first ever projects for a diversified list of
products. These include UHT pack milk, three wheelers, radio/wireless receiving sets, marble
processing, coal mining, granite, acetic yarn, PVC deep sea fishing etc. The projects
implemented through IDBPs financing generated over 100,000 new jobs and have an export
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potential of about Rs.8.00 billion per annum. The value addition by the completed project is
estimated at about Rs.15 billion per annum.
PART 9
EXPERIENCES % OBSERVATIONS
Legal issues
Documentation
Evaluation
Evaluation of Assets
Insurance management
1. Operations Department
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I started my learning experience from the Operations Department.
During my work in this department, I came to know day to day transactions of the bank which
are given as below:-
2. Credit Department
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9.2.3 Filling the assessment form
I was assigned to interview the client whose being finalized to issue the loan but his/her
personal information is still not enough. The form consists of six to seven pages. We need
to interview the person and fill the form accordingly.
9.2.4 Survey
I was also assigned the job to conduct a survey research that how many of the people are
aware of SME banks functions, how they react to this name, what people thinks about
loaning, how many are ready to get a loan etc. The responses were surprising that many
of the people were even not aware of SME bank.
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The lack of marketing strategies has decreasing their share day by day and they already dont
have many commercial customers. People may visit and people may encounter their services but
the condition is if they know that there is a bank named SME bank. So the main problem which I
identified there as a internee is lack of marketing activities.
9.5 Findings
SME bank in Pakistan over the years has been facing many difficulties due to negligence by
Government of Pakistan. Out of many problems, cumbersome procedure by Government
agencies, taxation and other charges promoting lack of documentation or incorrect
documentation done by SME bank, inconsistent government policies discouraging entrepreneurs
to develop long-term vision, lack of formal technical education, non-internalization of new
technologies, lack of basic infrastructure, finance, marketing etc. and most important of all, these
factors discouraged commercial banks and other loaning institutes to extend financing to SME
sector. Some of the other problems are described below:
Poor record keeping by SMEs, particularly the accounting information.
Lengthy and cumbersome application procedures, which discourage both
SMEs and Banks.
Poor operational performance.
The limited knowledge of financing options for the SMEs.
Stringent collateral requirements and other banking regulations.
Lack of skills in banks for identifying needs and structuring the delivery of
financial assistance to SMEs
Lack of marketing practicing in bank to promote their product
Approval from the head office takes weeks.
No promotion campaigns run by SME bank, like sponsorships etc.
There was lack of understanding between the credit and commercial
department.
Less focus on customer convenience because use to wait for the cash teller
to come and facilitate him.
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PART 10
10.1 RECOMMENDATIONS
SME bank should build marketing team in order to aware the customers about them.
SME bank should focus to improve their commercial activities because there is lot of
room for them to grab customers.
SME bank should focus on innovation and creative products, it should bring something
new and transform their existing products so that the customer gets attract of it.
SME bank should build some kind of cross functional teams in order to bridge the gap
between the departments
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SME bank should initiate some more motivational tools in order to maintain loyal
employees and should provide them career path
SME bank should try to increase the number of account holders through effective means.
X.2 CONCLUSION
SME bank is basically controlled by federal government and it follows the directions and
policies of the government. The basic function of SME bank is to provide loans to Small and
Medium enterprise. SME bank tries to provide a friendly environment to its customers and try to
win the trust of its customers. Talking about the current scenario, the financials of SME banks
shows it in losses but trying to recover. It also has some internal problems like conflicts between
departments. Most importantly it is not focusing on its marketing activities due to which its
customer base is week. Employees of the organization are not satisfied due to lack of job security
which reduces their motivational level. To be at the top SME should focus on its marketing
activities and should bring something innovative to change its current position in the mind of the
customer.
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PART 11
REFERENCES
11.1 References
http://en.wikipedia.org/wiki/Bank
http://www.google.com/
http://www.idbp.com.pk/idbp/intro.htm
http://www.pibas.com/
http://www.sbp.org.pk/stats/Balance/PunjabProCor
http://www.smebank.org/default.php
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