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Table of Contents

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

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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.

1.2 Origin of Term Bank

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

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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.

1.3 Banking in Pakistan

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.

1.4 SME (Small and Medium Enterprises) Introduction

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.

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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.

1.4.3 Regional Business Finance Corporation

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.

1.5 Introduction of Small and Medium Enterprises

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

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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.

1.6 According to State bank of Pakistan

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.

1.6.1 State Bank Prudential Regulations for SME Sector in Pakistan

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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

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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.

1.6.2 Capital and Ownership


Paid up capital has been increased to Rs.200,000,000/- by issue of 73,502,453 and 40,000,000
additional share of Rs.10 each to Government of Pakistan without right issue in 2004 and 2005
respectively and issue of 50,000,000 bonus share of Rs.10 each. Proceeds against issue of
additional share in 2004 were paid by GOP to SBP against Banks loan balances due to SBP. The
pattern of Share holdings of the bank as on 31.12.2007 is as under:

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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.

1.8 Mission Statement


To support and develop the SME sector by providing necessary financial and technical assistance on a
sustainable basis. To enable the SME sector to contribute to economic development through value
addition & export

1.9 Corporate Objectives


The objectives of the SME Bank are as follow:-

To support, develop and promote Small & Medium Enterprises (SMEs) by


providing them the necessary technical and financial assistance.

To concentrate on value addition and export oriented SMEs.

To enable SMEs to play a vital role in stimulating GDP growth, create job
opportunities and reduce poverty.

Part 2

ORGANIZATIONAL STRUCTURE

2.1 Board of Directors

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Mr. Ihsan-Ul-Haq-Khan

President and CEO, SME Bank Ltd

Mr. Badar-Ul-Arifeen

Deputy Secretary(IF), Finance Division

Mr. Muhammad Alamgir Chaudhry

Chief Executive Officer,SMEDA

Mr. Muhammad Adnan Jalil

Chief Executive Office, Al-Jabran Enterprises

Mr. Zarar Haider

Joint-Secretary, Ministry of Industries

2.2 Banks Management

IHSAN-UL-HAQ KHAN
President and CEO of SME Bank Ltd

TARIQ MEHMOOD MALIK MUHAMMAD ANWAR ALI


Head Credit Division Head LMD

DILSHAD ALI AHMED RAJA MUHAMMAD ALTAF


Head SAM Division Head Operations Division

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JUNAID MUHMAND SOHAIL ISHTIAQ KHAN
Head Business Development Head Human Reource &
Marketing Division Services Division

SAJJAD AHMED WARRAICH ABDUL RAZZAQ


Company Secretary Head Risk Management
. Division

MUHAMMAD MUBEEN MUFTI MUHAMMAD AYUB KHAN


Head IT Division Head Credit Administration
. Division

MUZAMMAL MUMTAZ SYED OSHAID AKHTAR


Head President Secretariat Head Treasury Division
PSO

KISHWAR MALIK MANZOOR AHMED JAN


Head Compliance Division KHAN
. Head LAW Division

MIAN TAHIR BASHIR FAKHRA JABEEN


Chief Financial Officer Head Vigilance
. Department

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2.3 Hierarchy

2.4 Hierarchical Positions of SME Bank


The Bank has following grade positions to support its employees growth and business
Operations:-

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President/CEO

I. Senior Executive Vice President.


II. Executive Vice President.
III. Senior Vice President.
IV. Vice President.
V. Assistant Vice President.
VI. Officer Grade-I
VII. Officer Grade-II
VIII. Officer Grade-III
IX. Clerical (Senior Assistant, Senior Supervisor and Cashier).
X. Non-Clerical (Messenger, Drivers, Chowkidar and Sweepers)

2.5 Management Profile

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.

2.5.1 Core Values of Management


Team Based Approach.
Employees Respect & Dignity.
High Integrity and Moral Standard.
Quest for Quality.
SME Friendly Approach.
Good Governess.

2.6 Functions of RMs and BMs


2.6.1 Functions of Regional Managers
Financial, Administrative and operational control of Region and Branches
Ensuring implementation of time-to-time Company Head Office instructions
intact human resource and recovery support & remission polices etc. in
appropriate manners with optimum utilization of Men and Material Resources.

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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

2.6.2 Functions of Branch Managers

Financial, Administrative and operational control of the Branch


Will suggest/forward his recommendations through RM Office for allocation
of recovery and business operation targets for the branch, to be based on 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 under
supervision/coordination of Regional Office/Recovery Division, Head Office.
Achievement of quarterly/ yearly recovery and business operations targets.
Improvement in pace and quality of reporting and communicating data to
Regions/Head Office.
Maintain high level of mutual trust, teamwork, integrity and confidentiality.
Ensuring clean / neat office premises and good working conditions.
Will be a member of Regional Management Committee
Will report directly to the Regional Office

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Part 3

DEPARTMENTS

3.1 Investigation Division


To deal with cases of complaints, fraud and forgeries and conduct inquires into disciplinary
cases.

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3.2 Audit and Inspection Division

Formulation of policies and procedures

Ensuring operations within rule & regulations.

Early warning signals and avoiding fraud and forgeries.

Transparency and fairness in procedures.

Corrective measures and improvement in policies.

Corruption free working environment.

Coordination with outside quarters in Audit & Inspection.

3.3 Marketing and Business Development 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.

3.4 Risk Management Division


This department looks deeply before lending the credit that what type of risk is involved in this and how
can we minimize it. It deals with the functions presently carried out by risk Management Department
and credit Administration Department.

3.5 Services Division


The basic purpose of this department is that it deals with procurement of all types of equipments
and provision general services and Administrative issues related to the Bank.

3.6 Finance Division

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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

3.6.1 General Accounting Department(GAD)


It handles different functions like payment verifications and the inter branch reconciliation.
Statutory accounts are also maintained by this department.
3.6.2 Finance Department
Finance department looks at where to invest and how to invest. It looks at the potential of
project. Finance department deals treasury division and take decision how and what to invest in
money capital market and when to take borrowing from money capital market. It performs
functions like liquidity position statement, Classification of deposits position and summary of
investment. It maintain statements like fund flow statement and treasury statement.
3.6.3 Branch Accounting Department
The accounting department of branch is responsible to look at and to perform all accounting
functions of the bank. It submits report to SBP daily, weekly and monthly.

3.6.4 Corporate Reporting


It is involved in preparation and submission to SBP monthly CIB report and various other
returns as defined in SBP. It is also responsible for the maintenance of records and
recording of transactions relating defunct RDFC loan portfolio and coordinating with
Recovery Division in this respect and the preparation of various internal reports, as
required by the management
3.6.5 Management Accounting Department(MAD)
The responsibility of management department is to analyze the performance and progress
of the bank periodically. Performance analysis, Capital budget utilization, monthly
management accounts and deposit analysis is done by this department.

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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:

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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

3.8 Special Asset Management Division(SAM)


There are three Department working under Special Assets Management Division which are
Small Loans Recovery Department (SLRD) Project Loans Recovery Department (PLRD) and
SME Recovery Department.
3.8.1 Small Loans Recovery Department
This department has the responsibility to recover the loans from small SMES. In this department
recovered old loans of Small Business Finance Corporations is recovering from the borrowers
and guarantors. These loans of less than Rs.500,000/- which are coming under this department.
3.8.2 Project Loans Recovery Department
This department recover the loan which are given to big SMEs like these loans are the loans
which were given to the projects in different sectors by the Regional Development Finance
Corporation are recovered in this department these loans are in millions.
3.8.3 SME Recovery Department
In SME Recovery Department the loans provided by the SME Bank after its working is
recovered by this department. All types of loans which provided by this bank is recovering by
this department officials.

3.9 Branch Network


The branch network consists of the following offices:
a) Business Operations
b) Recovery Offices
c) Camp Offices

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d) Audit Offices

Branches

Islamabad

Rawalpindi Peshawar Quetta Sialkot

Faisalabad Gujranwala Karachi(Main) Karachi(Orangi)

Karachi(F.B Area) Lahore(Main) Lahore(City) Lahore(Faisal Town)

Treasury

Karachi

Recovery Offices

Rawalpindi Lahore Abbottabad Karachi(East) Sukkur

Audit Offices

Lahore Karachi

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Part 4

SYSTEM FOR RECOVERY

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.
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4.2 Recovery Strategy

Allocation of quarterly targets for regions/branches.


Holding of RM conference & meetings with BMs.
Recovery Monitoring weekly & quarterly.
Regions & Branches grouped into homogenous categories on the basis of
portfolio size.
Promoting healthy competition through weekly appreciations & quarterly
certificates/yearly shields.
Offering lucrative cash/bonus incentives to regions/branches for achieving
recovery target levels.
Up to 30% cross the board for early settlement incentive based and upto 50%
remission in mark-up shall be provided to borrowers on hardship grounds.
Special loan relief packages shall be offered to borrowers.

4.3 Recovery Support Policy


Human & material resources to regions & branches.
Hiring of additional vehicles for mobility of recovery teams.
Police and Tehsildars assistance for revenue proceedings.
Professional lawyers to look after banking court cases.

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Part 5

Products & Services

5.1 Products and Services


This commercial bank provided these two types of products to the borrowers and the other
institutions which need financing or financial assistance from the bank or they need services of
this bank.
1. Lending Products
2. Banking Products

5.1.1 Lending Products

Sr. No. Subject Rate

1 Medium Term Running Finance 1 Year KIBOR + 6.5%


Facility p.a(adjusted annually)
2 Running Finance Facility 1 Year KIBOR + 6.5% p.a

3 Term loan for fixed assets 1 Year KIBOR + 5.5%


p.a(adjusted annually)

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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)

5.1.2 Commercial Banking Products

Expected Rates of Return/Rack Rates on deposits

Effective January 1st 2017

Deposit Products Rack Rates

Current Accounts 0.0%

PLS Saving Accounts(Profit Payment bi-annually, calculated on average 3.75%


balance during the month).

SME Assan Account


Current 0.0%
Savings 3.75%

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)

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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%

Mahana Amdan Account(Profit payable on 1st working day of each month)


1 Year 4.75%
2 Years 5.00%

Qatra Qatra Darya: Daily Product Account


Upto Rs. 1,000,000 4.00%
Rs. 1,000,001 & above 4.50%
Qatra Qatra Darya: Savings Accounts 3.75%
Qatra Qatra Darya: Current Accounts Nil

Rates for various deposit schemes(Islamabad Branch only)


Standard Deposit Account(SDA) 4.00%
Daily Deposit Account(DDA) 4,00%

SME Rozana Izafa Aur Mahana Munafa


SME Bank Staff Accounts(on daily basis with no minimum balance 5.50%
requirements)

5.2 Market and Industry Information


Access to market and industry information is one of the keys to develop successful business
strategies. Frequently, business and trade associations are able to provide their members with
such services. By associating with like institutions in foreign countries, they are also able to
establish links and obtain information on foreign markets. Over half of our SME (54 percent)
belong to a business or industry association. Their perceived role is limited to lobbing and
negotiation with the government. Yet very few SME (12 percent) perceive their associations to
be a source of information on new developments in their fields of business operation. How to

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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

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6.1 Horizontal Analysis of Balance Sheet as at December 31,2016

Rupees in
000

Items 2014 Percentage 2015 Percentag 2016 Percentage


e
Assets

Cash and balance with treasury banks 366783 100% 390011 106% 560802 153%

Balances with other banks 2835 100% 1739 61% 4226 149%

Lending to financial institutions 215000 100% 885000 411% 445000 206%

Investments 1446493 100% 4117491 284% 4869535 336%

Advances 2928737 100% 2751710 83% 2771720 94%

Operating fixed assets 131490 100% 120283 91% 101859 77%

Deffered tax assets-net __ __ __ __ 256177 100%

Other assets 209014 100% 350292 167% 368896 176%

Total assets 5300352 100% 8616526 161% 9378215 176%

Liabilities

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Bills payable 58298 100% 114107 247% 95443 163%

Borrowings 776168 100% 2888685 372% 3460326 445%

Deposits and other accounts 3443102 100% 4770201 138% 5228716 151%

Sub-ordinated loans __ __ __ __ __ __

Liability against assets subject to __ __ __ __ __ __


finance lease
Deffered tax liabilities-net __ __ __ __ __ __

Other liabilities 433418 100% 487217 112% 573082 132%

Total liabilities 4610986 100% 8260210 179% 9357567 202%

Owners Equity 689366 100% 356316 51% 20648 3%

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'

Items 2014 Percentage 2015 Percentag 2016 Percentage


e
Mark-up/Return/Interest earned 788780 100% 705267 89% 615070 77%

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Mark-up/Return/Interest expense 542594 100% 436280 80% 441204 81%

Net mark-up/Interest income 246184 100% 268987 109% 173866 70%

Reversal of provision for 78096 100% 82867 106% 64266 82%


dimination in the value of
investments
Net mark-up/Interest income after 168090 100% 331854 197% 238132 141%
provisions
Total non-mark-up interest income 87528 100% 47934 54% 42270 48%

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%

Taxation 8742 100% 7587 87% 257576 2946%

Loss after taxation 387073 100% 282157 72% 199242 52%

6.3 Vertical Analysis of Balance Sheet as at December 31,2016

Rupees in 000

Items 2016 Percentage

Assets

Cash and balance with treasury banks 560802 5.98%

Balances with other banks 4226 0.05%

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Lending to financial institutions 445000 4.75%

Investments 4869535 51.42%

Advances 2771720 29.56%

Operating fixed assets 101859 1.09%

Deffered tax assets-net 256177 2.73%

Other assets 368896 3.93%

Total assets 9378215 100%

Liabilities

Bills payable 95443 1.02%

Borrowings 3460326 36.90%

Deposits and other accounts 5228716 55.75%

Sub-ordinated loans __ __

Liability against assets subject to finance lease __ __

Deffered tax liabilities-net __ __

Other liabilities 573082 6.11%

Total liabilities 99.78%

Owners Equity 20648 0.22%

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Total liabilities + Owners Equity 9378215 100%

6.4 Vertical Analysis of Income Statement for the year ended December
31,2016

Rupees in 000

Items 2016 Percentage

Mark-up/Return/Interest earned 615070 78%

Mark-up/Return/Interest expense 441204 81%

Net mark-up/Interest income 173866 28%

Reversal of provision for 64266 10%


dimination in the value of
investments
Net mark-up/Interest income 238132 39%
after provisions
Total non-mark-up interest 42270 7%
income
Total mark-up + non mark-up 285402 46%
interest income

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Total non-mark-up /Interest 742220 120%
expense
Loss before taxation 456818 74%

Taxation 257576 42%

Loss after taxation 199242 32%

6.5 Financial Ratios


6.5.1 Liquidity Ratios

Current ratio 1.02

Quick ratio 1.02

Net working capital to sales ratio 0.36

6.5.2 Profitability ratios

Gross profit margin 0.28

Operating profit margin -0.74

Net profit margin -0.32

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6.5.3 Activity ratios

Total asset turnover 0.06

Fixed asset turnover 1.66

Return on Equity 29.8

6.5.4 Financial Leverage ratios

Total debt to assets ratio 0.99

Long term debt to assets ratio 0.06

Total debt to equity ratio 453.20

Times-interest coverage ratio 0.38

Fixed charge coverage ratio 0.38

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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.

6.6 Marketing Analysis


In my point of view this is the weakest part of the bank. Currently they are not focusing on
the marketing strategies; basically the bank has both functions commercial and loaning. But
the whole focus is on the loaning function, they are totally neglecting the commercial one.
They dont have any kind of marketing or advertising campaign and they are not advertising
through any kind of media.

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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.

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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

A great room for the bank to build themselves in commercial banking


Opportunity to build a marketing team to increase their customer base
The role of relationship managers may increase its market share.
Should conduct campus interviews to hire fresh blood which they really need
Build a marketing and advertising campaign.
Encash their competitive edge which is loaning.
A good job recruitment policy of hiring business graduates.
Can offer bundle services to their customer.
Should change their method of dealing with new customers.
Should launch their own ATM machines at every branch.

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7.1.4 Threats

Political and Global instability


Change in the government would change policies for them
Pakistan is a developing country and our debt burdened economy is a major
threat for the banking business.
The upcoming new technology in the market.
The increasing number of competition can harm them.
The adoption of online system and developing of web sites by other banks can
create a threat to the bank.
The employee turnover can create a serious problem for the bank.
Delay in launching ATM card.
Lack of promotion and advertisement fewer deposits and advances schemes.

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7.2 BCG MATRIX

(Lending Facilities) (Commercial Banking Facilities)

STARS QUESTION MARKS

CASH-COWS DOGS

41
PART 8

COMPETITORS OF SME BANK

8.1 Zarai Taraqiati Bank Limited

8.1.1 Corporate Vision


Dedicated to serve the needs of the farming community, by delivering financial products
and technical services on a competitive and sustainable basis, in a convenient, efficient
and professional manner, leading to success of the Bank and the farmers.

8.1.2 Corporate Mission


To play effective role in the promotion of economic growth, by enhancing the availability
of credit to the agriculture sector, through reliable access to sustainable financing, special lending
programs, technical assistance, and other products & services, and to promote career
development opportunities for increasing professionalism and technical proficiencies of
employees,

8.1.3 Brief ZTBL


Zarai Taraqiati Bank Limited (ZTBL) erstwhile Agricultural Development Bank of Pakistan
(ADBP) is the premier financial institution geared towards the development of agriculture sector
through provision of financial services and technical knowhow. The restructuring of former
ADBP is being carried out with the aim to uplift the agriculture and rural sector by raising farm
productivity, streamlining the institutional credit and increasing income generating capacity of
the farming community. ZTBL was incorporated as a Public Limited Company on 14th
December, 2002 through repeal of ADB Ordinance of 1961. .

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. .

To function as a rural commercial bank to mobilize rural capital formation and to


commercialize the agri. sector by delivering the true value of credit to the client. Provide
a wide range of risk insurance products to its clients.
Open up its venues of operation to Domestic & International Banking Industry to avail
comparative advantages.

8.2 Punjab Provincial Cooperative Bank

8.2.1 Establishment

Cooperation is an International Movement of enriched history spread over

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.

Initially, Cooperative Banking was organized in the Indo-Pak Subcontinent in


three tiers: Primary Societies were at the base, Central Bank / Banking Union
were at the secondary level; and Provincial Bank / Apex Society was at the top.

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.

The PPCBL gained the status of Scheduled Bank in 1955.

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.

8.2.2 Major Objectives

Promote growth of the Cooperative movement.

Carry on banking and credit business to facilitate working of the member


Cooperative Societies.

Inspect, supervise and assess credit requirements of member societies.

8.2.3 Current Challenges

Liquidity problems due to withdrawal of credit line by SBP

Rightsizing of Board of Directors

Weak system and procedures

Lack of I.T. infrastructure

Recovery of overdue loans

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:

Organizational Structure revamped

A full time Managing Director / COO appointed

Board of Directors right-sized (now consists of 7 members instead of 40)

Credit, Audit, Operations and Risk Management Manuals prepared

Audit & Inspection Cells at Zonal Offices Shifted to Head Office and reorganized in 4
Teams

Automation of systems & procedures initiated

Surplus staff lay off and induction of qualified professionals process initiated

8.2.5 Market Positioning

Strong clientele base earned over 85-years.

Deep rooted penetration / bearing in agriculture community.

Extensive Branch Network at grass root level.

Catering to financial requirements of around 0.3 million small farmers of members


societies and individual borrowers in a year.

Lending products launched without large scale publicityimmediately responded by the


target group.

Allocated funds often fall short in meeting demands of the borrowers.

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

46
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

9.1 Working Experience


During the six weeks of my internship I was placed in couple of departments but mainly I was
assigned in the credit department. This department basically deals with all the following issues of
the client before and after issuing the loan.

Visiting the Potential projects

Legal issues

Documentation

Evaluation

Risk management and evaluation

Evaluation of Assets

Site visit to confirm

Relation building with client

Insurance management

1. Operations Department

47
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:-

1. Recording of transactions( Daily basis)


2. Clearing of cheques(Inward & Outward)
3. Daily reporting
4. Preparation of pay orders/Demad Drafts
5. Keen observations on how PIBAS works

2. Credit Department

Credit Department being the speciality of SME Bank Ltd was a


very interesting and informative department. I got to learn about different credit facilities
provided by SME Bank Ltd to its valued customers, which are given as below:-

1. Running Finance Facility


2. Medium Term Running Finance Facility
3. Term Loan for Working Capital
4. Term Loan for Fixed Assets

9.2 Tasks Assigned there


In the credit department we were not only confined to the work of credit we were performing
several tasks there. Following are the tasks we perform there.

9.2.1 Stock Reports


I was assigned to make the stock report of the clients which summarizes that what is the
value of the stock client has. On the basis of this stock reports they further renew their
loan tenure.

9.2.2 Interviewing the new customer


I was assigned the job to interview the new customer, asses that what is value of the collateral
he/she and finally on the basis of the collateral what is amount of loan to be issued. After this all
assessment the other functions of the bank comes into account.

48
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.

9.2.5 Marketing activities of the Bank


After the survey was conducted, the manager assigned me another job to go shop to shop
in the commercial area and tell people about SME bank, its functions etc. This tasks was
a vast experience for me because I was interacting with different people daily and was
trying to convince those people who doesnt even allows to sit. But that was quite
challenging and interesting task for me to do.

9.3 Contribution that I made


The marketing activities that I perform through going shop to shop and distributing cards,
broachers and pamphlets made me introduce SME bank to more than 150 shops, SME bank was
not having any kind of marketing department or marketing activity before. After doing this I
suggested them to make some marketing team in order to increase the number of credit
customers and account holders.

9.4 Identification of a main mroblem


In my point of view the main problem and the weakest part of the banking strategy of this
specific branch is marketing. The reason behind fewer customers is marketing. SME bank does
not have any marketing strategy which they implement to grab the customers. Many of us even
dont know that a bank exist named SME bank. The main reason behind all this is lack of
marketing or advertising campaign and they are not advertising through any kind of media. The
specific branch in which I have done internship doesnt have any marketing team or even a
single guy who may inform others about the bank or even just pass on some advertising material.

49
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.

50
PART 10

RECOMMENDATIONS & CONCLUSION

10.1 RECOMMENDATIONS

Following are the recommendations that I would like to recommend,


SME bank should adapt according to the need and change in technology and should adopt
the new technology like other Multinational banks are using.
SME bank should provide proper and up to date training to their employees in order to
cope with changes in business world.

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

51
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.

52
PART 11
REFERENCES

11.1 References

Written notes during the internship

Staff of SME Bank

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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