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Table of Content
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CONTENT Title Page Group members
Dedication Acknowledgement Consumer Banking History Of consumer Banking Introduction Consumer Banking Frame Work Allied Bank & Consumer Banking Credit Cards Allied Visa Gold Credit Card Allied Visa Platinum Credit Card Debit Card Commercial Banking Commercial Banking & Allied Bank Allied ATM Network Other Services Profit Rates Internet Banking Online Banking Allied Bank & Corporate Banking Investment Banking Financial Institutions Cash Management Observation & Findings Recommendations & Suggestions
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Dedicated to my teacher who given wisdom and knowledge to complete this task.
We are extremely thankful to all the people who helped & supported us to prepare this project on time, it’s really great encouragement to us to make this project with bundle of information & without their endeavor support this couldn’t possible.
HISTORY OF CONSUMER BANKING
Any bank you walk into to deposit your paycheck is a consumer bank. The term refers to the fact that the bank has a physical location or branch, and to the fact that it serves individual customers. Serving individuals instead of businesses can also be called retail banking The consumer bank is actually a relatively new phenomenon in the history of banking. Most banks were initially built to serve businesses and countries. They weren’t examples
of a consumer bank, since they didn’t normally provide services to individuals, unless you were extremely wealthy and your deposits financed some aspects of the bank’s business endeavors. It wasn’t until about the mid 1800s that banks started seeing the value of offering accounts and safe depositing places for the average person. For a long time, fear of the consumer bank existed for people because there was no guarantee that if the bank collapsed you’d ever see your money again. This is no longer the case for most consumer bank types of today. Most in the Pakistan carry insurance on your deposits, from the State Bank of Pakistan.
WHAT IS CONSUMER?
“Consumer is a broad label that refers to any individuals or households that use goods and services generated within the economy. The concept of a consumer is used in different contexts, so that the usage and significance of the term may vary.”
“Consumer banking is comprised of the financial services, such as checking and savings accounts, mortgages, home equity lines of credit, personal loans, and credit cards, offered by financial institutions.” So a consumer bank is any bank that performs the following functions: • • • accepts deposits, offers services like making private loans to individuals, and allows you person-to-person contact at a specific location, called a branch.
Essentially any bank you walk into to deposit your paycheck is a consumer bank. The term refers to the fact that the bank has a physical location or branch, and to the fact that it serves individual customers. Serving individuals instead of businesses can also be called retail banking The Check Clearing for the 21st Century Act (Check 21) has fostered innovation and efficiency in the consumer payment by permitting electronic checks. State and federal also laws prevent individuals from engaging in fraudulent or deceptive banking practices, such as bounced checks, and protects consumers from illegal acts, such as ID theft and phishing e-mail fraud.
Consumer finance has to do with the lending process that occurs between the consumer and a lender. In some instances, the lender may be a bank or financial institution. At other times, the lender may be a business that offers in house credit in exchange for the business of the consumer. Consumer finance can include just about any type of lending activity that result in the extension of credit to a consumer. Most people have received financial assistance in obtaining desirable products through the use of consumer finance methods. In retail banking, the lender extends secured and unsecured loans to consumers who wish to • • • purchase automobiles, homes, Or engage in other activities that require substantial financing, such as remodeling a home.
Generally, consumer lending of this type caries some degree of competition, since the consumer with a solid credit rating can often shop around and secure superior interest rates and terms for the loan agreement By understanding and accepting the terms and conditions associated with any lending situation, the consumer is pledging that the ability to repay within terms is present, and that the consumer has every intention of complying with each component or section of the loan agreement. To this end, it is in the best interests of the individual consumer to seek out the most desirable arrangements for any type of consumer finance, taking care to avoid any situation that will place an undue amount of stress on the resources in the possession of the consumer Consumer financing started way back in 1990,s with the advent of credit cards issuance to a selected group of the society by some large banks. But it could not work well because of some very evident reasons i.e. high rate of interest, lack of credit environment and skepticism of certain banks. Prior to that banks were not discouraged to participate in this field and banks were not exited about consumer financing due to absence of a legal covering to ensure the protection of assets and a lack of liquidity: In 2002 SBP permitted all the banks to invest in consumer financing schemes because of surplus liquidity, copious flow of remittances, declining interest rates and capital flight. Now almost about 25 banks are providing auto finance, home loans and consumer durable loans. Keeping in view the risk constraint, the banks are focusing more on short term financing instead of long term investment like home loans. According to a report, between 1st July to dec 25th 2004, Total private sector disbursement Consumer financing: Rs 39 billion Auto finance Rs 22.1 billion Home loans Rs 8.6 billion Credit cards Rs 3.5 billion Rs 224 billion 15.9% of total 56.6% of 39 bln 22% of 39 bln 8.9% of 39 bln
The main consumer banking products offered by the bank are as follows:
Personal finance (term finance) Running financing facility (smart cash) Consumer durables leasing Mortgage finance Auto car financing Business finance Balance transfer facility (BTF) Credit cards
LIABILITY PRODUCTS 10
Prepaid card Debit card/atm Traveler’s cheques Deposits Cash management services Internet banking services Electronic bill payment service Phone banking services Investment certificate Remittances etc
Consumer financing is provided to the consumer to improve their standard of living & to enhance their consumption, so that they could fulfill their requirements & dreams of life is called consumer finance. Consumer financing provides individuals the necessary financing for personal purchases ranging from buying a car, shopping purchase to buying a house .most people don’t normally get access of capital through equity markets so they would normally get access to debt finance through the established financial institutions including banks, credit union insurance companies etc .this debt is usually in the form of a credit card or loan. Consumer finance induces demand & consumption that are necessary for any industry to develop & propagate to an ideal limit. it also establishes the employment on strong base & invites fresh investment in industrial sectors especially those that are producing consumer durables. Why banking came into consumer financing?
Liquidity with the banks was the main reason .how this liquidity increased with the banks is a long story to talk about. • • • • • • • Unstable govt. of Pakistan. Constantly changing policies of the govt. Afghan crisis. Terrorism sectarianism ðnicity in Pakistan. Experience of atomic explosion in mat 1998. Incident of 9/11. Domestic borrowing of govt. All above-mentioned points stopped the investors to invest in different industries & mage projects .foreigners were also hesitating in investing in Pakistan. That’s why liquidity increased with the banks .to find the convenient way of using this liquidity to generate profit banks found a new horizon known as consumer finance. Perhaps consumer finance is much more profitable and salient feature of any present bank .Now, it is quite hard to find any bank without consumer finance.
WHAT ARE THE BENEFITS OF GETTING FINANCE?
A loan gives you the money you need to pay for something big like a house, a car, college tuition, or major home repairs when you don’t have the cash to cover the purchase. While small purchases can be paid for in advance with a credit card. Most people could not afford to do these things without finance.
POSITIVE IMPACTS OF CONSUMER FINANCING ON THE ECONOMY:
Consumer finance opened new horizons of employment, which will increase per capita income. Unemployment rate will decrease .when people have more income to spend; demand will increase of different products. Economy will flourish and there will be prosperity in the country.
HOW CAN WE IMPROVE CONSUMER FIANCÉ?
• If consumer finance has to pick up as a truly helpful mechanism for activating domestic demand, it must be ensured that it remains within the consumer, capacity to repay the loans in time, & they feel confident about borrowing again and again. While promoting consumer finance, the banks should keep in mind one thing that in regarding of consumer finance, they should provide the financing which is easily accessible not only to a specific band of people but also to a common man. 12
There should be established institutions and practices that could make assessment of consumer’s repayment risks. Risk assessment of employed individuals is not a crucial problem as in the case of self-employed. Because employers could help in providing the basis of establishing the employee repayment capacity. The factor that further limits extending consumer finance along a sound line is the continuing inadequacies of our legal systems that make it really afflicted for borrowers to collateralize their encumbered assets for the satisfaction of lending bankers. There should be established such laws according to which borrowers could collateralize their unencumbered assets for getting the loans.
By establishing the critical balance between savings, investment & borrowers debt servicing ability we can control inflation, maintaining the critical balance between savings, investment & borrower’s repayment ability is possible, in this prices remain stable affording business to sustain their profitability, in this condition debt servicing burden remains affordable for both consumers and manufacturers.
CONSUMER BANKING FRAMEWORK:
Even as the dynamics and pace of global banking business shift in the throes of Unprecedented change, retail revenues for banks continue to expand. Retail banking also delivers a higher return on equity than other banking segments. With banks seeking to thrive on business volumes, consumer banking has proven to be the key to acquire a vast customer base with the potential to grow exponentially. In this scenario, what really builds a lasting competitive advantage for banks is their ability to continuously innovate, achieve differentiation through a wider showcase of offerings and respond quickly to dynamic business challenges. The need for a robust technology framework with the feature-richness to support full-fledged consumer banking, is undeniable. Finacle universal banking solution is fully equipped with a robust consumer banking framework to configure and customize a slew of retail offerings. These include savings and operative accounts, terms deposits, retail loans, mortgages, bill payment options and Shariah-compliant products, coupled with widespread channel availability and smart pricing options.
Consumer Banking Framework
Savings & Operative Accounts
Subscription Management Multi Currency Multiple Billing modes
Overdrafts Multi Currency Accounts
Notice Certificate of Deposits Master & Placement Top Up deposits
Top Up Loans
& Consumer Banking
BANKING IN ALLIED BANK
Allied Bank Limited was the first bank to be established in Pakistan. It started out in Lahore by the name Australasia Bank before independence in 1942; was renamed Allied Bank of Pakistan Limited in 1974 and then Allied Bank Limited in 2005. Today, with its existence of over 60 years, the Bank has built itself a foundation with a strong equity, assets and deposit base. It offers universal banking services, while placing major emphasis on consumer banking. The Bank also has the largest network of over 700 online branches in Pakistan and offers various technology-based products and services to its diverse clientele.
Mission and vision of Allied bank is as follows:
To become a dynamic and efficient bank providing integrated solutions and the first choice of bank for all customers.
• • • • • To provide value-added services to our customers To provide high-tech innovative solutions to meet customer requirements To create sustainable value through growth, efficiency and diversity for all stakeholders To provide a challenging work environment, and reward dedicated team members To play a proactive role in contributing towards the society
Consumer banking basically includes: 1) Credit Cards 2) Home Loans 3) Personal Loans 4) Car Financing 5) Commercial & Corporate Banking While Allied bank is offers only credit card, debit cards, commercial & corporate banking.
In line with the Bank’s aim to provide a host of products and services to its customers, substantial ground work has been done to establish a strong consumer banking business. Furthermore, to achieve this objective, professionals from across the industry have been recruited into areas of product development, sales, credit policy, research, consumer analytics, call centers and service quality departments. The consumer portfolio, comprising the debit card, credit cards, auto loans, personal loans and mortgages will be established phase by phase. However, we are confident that our strengths, together with our largest network of online branches, a superior technology
platform, a big customer base and the Consumer Personal Banking Group (CPBG), will take the Bank’s profitability to new heights. Welcome to the world of privileges, benefits and savings with your Allied Visa Credit Card. In order to cater to your growing financial needs we are proud to introduce Allied Visa Credit Card with The Lowest Service Charge ever! So now you can save money where it counts and spend lavishly at your favorite places with greater flexibility, convenience and most important-Affordability With your Allied Visa Credit Card you can enjoy a variety of state-of-the-art features and unmatched value by spending at over 49,000 merchants across Pakistan and 27 million merchant outlets worldwide! And what more, you can also use your credit card at over 1 million ATMs internationally!
ALLIED VISA GOLD CREDIT CARD
With your Allied Visa Gold Credit Card every Pakistani can now enjoy the benefits of a Gold Card internationally with unmatched savings greater flexibility, convenience and security
1. BUY NOW, PAY LATER With your Allied Visa Gold Credit Card, your free credit period allows you to pay for your purchases up to 50 days after the date of purchase. So now you can buy all the things you want - whenever you want - at your own convenience 2. FLEXIBLE REPAYMENT
When paying your credit card bill, your Allied Visa Gold Credit Card gives you the option to either pay the entire amount according to your statement or a minimum of 5% of your total outstanding balance. 3. CASH ADVANCE FACILITY As an Allied Visa Gold Credit Card member, you are entitled up to 75% of your available credit limit in cash. Just go to your nearest ATM with the VISA or PLUS sign and avail the facility of withdrawing cash 24 hours a day 4. ALLIED EASY INSTALLMENTS (AEI) The Allied Easy Installments (AEI) plan provides you with the facility to pay your outstanding card balance in equal and affordable monthly installments spread over 3, 6, 12, 18, 24, 30 or 36 months. So now you can easily afford anything from everyday household appliances to exotic vacations abroad. 5. SUPPLEMENTARY CARDS Want to share the benefits of your Allied Visa Gold Credit Card with others? Now you can! Treat up to two people with supplementary credit cards and pass on the many privileges of your Allied Visa Gold Credit Card to your chosen friends and family members. 6. BALANCE TRANSFER FACILITY In case you have outstanding balances on other cards, consolidate these onto your Allied Visa Gold Credit Card with the lowest BTF rate and save more on your outstanding payments than ever before. 7. CREDIT PROTECTION PLUS With Credit Protection Plus, your Allied Visa Gold Credit Card provides payment cover against: Death, due to accident or sickness Permanent and Total Disability, due to sickness or accident Temporary Total Disability, due to sickness or accident Terminal Illness 8. ZERO LOSS LIABILITY The Allied Visa Gold Credit Card’s Zero Loss Liability feature protects you from paying for any unauthorized transactions on your Card in the event that it is lost or stolen. Please notify Allied Phone Banking immediately on 0800-22522 (within Pakistan) or on 92215301094 (outside Pakistan) in case your Card is lost or stolen. 20
9. 24-HOUR ALLIED PHONE BANKING For any information and queries about your Allied Visa Gold Card, call Allied Phone Banking on 0800-22522. If you are calling from outside the country, please dial 92215301094 10. FREE CIP LOUNGE ACCESS As an Allied Visa Gold Credit Cardholder, you are eligible to avail the free lounge facility at Quaid-e-Azam International Airport, Karachi and enjoy a variety of complimentary features. Relax while you watch leading television channels or select something to read from an updated library of newspapers and periodicals. Also feel free to plug in your laptop and mobile phone into the charging facilities provided or browse the internet or send and receive faxes while you wait. You can also treat yourself to a wide assortment of high quality snacks, beverages and fresh fruits.
VISA PLATINUM CREDIT CARD
With your Allied Visa Platinum Credit Card you can enjoy exceptional benefits and a host of local and international benefits like never before!
1. VISA PLATINUM GOLF Fancy a game of golf? With your Allied Visa Platinum Credit Card, you can enjoy golf at its best with complimentary tee-offs, discounted green fees and access to some of the world’s most celebrated golf clubs 2. PLATINUM LIFE PLATINUM 21
Life is a unique platform that showcases exclusive programs and events specially designed for Visa Platinum Credit Cardholders. With your Allied Visa Platinum Credit Card, you are eligible to join this exclusive platform and avail many exciting services like Platinum Club, Platinum Dining, Platinum Golf, Experiential Travel and much more. So get ready to enjoy the luxury of Platinum Life with the Allied Visa Platinum Credit Card. 3. VISA PLATINUM CLUB As a member of the Visa Platinum Club, you are part of an internationally reputed rewards program that provides an unmatched quality of services and custom. The Visa Platinum Club rewards you with exclusive perks such as complimentary room upgrades at five-star hotels, spa treatments, attractive retail discounts, special rates on car rentals, professional golf coaching and much more. Furthermore, unlike other card reward programs, being part of the Visa Platinum Club means that you can start enjoying these privileges immediately without having to earn or accumulate reward points on your credit cardized luxuries to all Allied Visa Platinum Credit Cardholders. 4. VISA PLATINUM DINING Your Allied Visa Platinum Credit Card can turn any meal into a dining experience to remember. The Visa Platinum Dining Service offers special dining privileges at over 200 restaurants throughout the Asia-Pacific region. Through this program, you can avail special features such as priority reservations, complimentary meals at selected restaurants, and much more 5. VISA EXPERIENTIAL TRAVEL Your Allied Visa Platinum Credit Card now takes you further than ever before. With the Visa Experiential Travel Program, choose the package of your choice as you travel the world and enjoy exotic travel adventures catered especially to your taste. 6. PRIORITY PASS AIRPORT LOUNGE PROGRAM Traveling with your Allied Visa Platinum Credit Card means that you can now avail the optional facility of the Priority Pass Airport Lounge Program in your overall Visa Platinum product offering . Today, with over 500 exclusive VIP airport lounge locations around the world, the Priority Pass Service is the largest independent airport VIP lounge program in the world and you can now avail this facility regardless of your airline or class of ticket. Simply locate a lounge and present your Priority Pass membership card to gain entry, and relax in style as you wait for your flight 22
To avail this facility, please call Allied Phone banking on 0800-22522 . 7. VISA PLATINUM WEBSITES The Visa Platinum websites have been designed to ensure that Visa Platinum Cardholders around the Asia-Pacific region are up-to-date with the latest product offerings and benefits. The sites also include additional features like: The latest information on Visa Platinum regional programs, such as the Visa Platinum Club, Visa Platinum Dining, Visa Platinum Golf, Holidays and Visa Platinum Experiential Travel Facilities. Online applications such as Concierge Online A directory of toll-free numbers for reaching the VPCC from all key global destinations
8. FREE TRAVEL ACCIDENT
Next time you travel, purchase tickets on your Allied Visa Platinum Credit Card and go on your journey with the added security of Travel Accident Insurance - Absolutely Free! You can get an amount of up to Rs. 12,000,000 and are not only insured against death but also against permanent total disability caused while traveling 9. FREE TRAVEL INCONVENIENCE INSURANCE You can also avail the complimentary facility of Travel Inconvenience Insurance throughout the world, which will enable you to get coverage for any damage caused by flight delay, baggage loss and baggage delay. 10. CONCIERGE SERVICE No matter whether you are at home or overseas, with your Allied Visa Platinum Credit Card, you can now enjoy round the clock travel and entertainment support with your very own personal Concierge Service. Also enjoy peace of mind with 24-hour emergency services such as card replacement, cash disbursement and medical assistance through a dedicated network of global toll-free numbers.
Information, reservations, referrals, etc., are all available free of cost and any additional goods or services purchased by you will automatically be billed directly to your Allied Visa Platinum Credit Card. Types of Concierge Services that can be availed internationally are: Travel Assistance Car Rental & Limousine Service Sports & Entertainment Assistance Pre-Trip Assistance Business Services Assistance Flower & Gift Assistance
11. CONCIERGE ONLINE This facility provides an alternative to the conventional telephony Concierge Service. With a simple click of the mouse, you can easily request for trip planning assistance, hotel reservations, flight reservations, car rentals, restaurant reservations and performance ticket bookings - all from the comfort of your home. 12. VISA PLATINUM CUSTOMER CENTER (VPCC) The Visa Platinum Customer Center (VPCC) is a one-stop shop to handle all your needs. Staffed by highly trained professionals who provide a wide range of travel and entertainment Concierge Services, emergency lost/stolen card services, telephone translation services, etc., throughout the Asia-Pacific region, the VPCC is operational 24 hours a day, and is easily accessible by Cardholders via a comprehensive network of international toll-free numbers. 13. THE LOWEST SERVICE CHARGE Your Allied Visa Platinum Credit Card helps you save money where it counts. It carries the lowest service charge in the market; lower than any other existing credit card today. So use your Allied Visa Platinum Credit Card at your favorite places and enjoy savings like never before. 14. BUY NOW, PAY LATER With your Allied Visa Platinum Credit Card, your free credit period allows you to pay for your purchases up to 50 days after the date of purchase. So now you can buy all the things you want - whenever you want - at your own convenience! 15. FLEXIBLE REPAYMENT
When paying your credit card bill, your Allied Visa Platinum Credit Card gives you the option to either pay the entire amount according to your statement or a minimum of 5% of your total outstanding balance 16. SUPPLEMENTARY CARDS Want to share the benefits of your Card with others? Now you can! Treat up to two people with supplementary credit cards and pass on the many privileges of your Allied Visa Platinum Credit Card to your chosen friends and family members. 17. BALANCE TRANSFER FACILITY In case you have outstanding balances on other cards, consolidate these onto your Allied Visa Platinum Credit Card with the lowest BTF rate and save more on your outstanding payments than ever before 18. CASH ADVANCE FACILITY As an Allied Visa Platinum Credit Card member, you are entitled up to 75% of your available credit limit in cash. Just go to your nearest ATM with VISA or PLUS sign and avail the facility of withdrawing cash 24-hours a day 19. ALLIED EASY INSTALLMENTS (AEI) The Allied Easy Installments (AEI) plan provides you with the facility to pay your outstanding card balance in equal and affordable monthly installments spread over 3, 6, 12, 18, 24, 30 or 36 months. So now you can easily afford anything from everyday household appliances to exotic vacations abroad 20. CREDIT PROTECTION PLUS With Credit Protection Plus, your Allied Visa Platinum Credit Card provides payment cover against Death, due to accident or sickness Permanent and Total Disability, due to sickness or accident Temporary Total Disability, due to sickness or accident 21. ZERO LOSS LIABILITY As an Allied Visa Platinum Credit Cardholder, you are eligible to avail the free lounge facility at Quaid-e-Azam International Airport, Karachi and enjoy a variety of complimentary features
Relax while you watch leading television channels or select something to read from an updated library of newspapers and periodicals. Also feel free to plug in your laptop and mobile phone into the charging facilities provided or browse the internet or send and receive faxes while you wait. You can also treat yourself to a wide assortment of high quality snacks, beverages and fresh fruits.
ALLIED CASH DEBIT CARD
Allied bank also offers allied cash debit card along with its credit cards allied debit cards includes:
1) Allied cash debit card 2) Allied shop visa debit card
1. GET CASH You are always on the move, now your bank account is too. You can use your Allied Cash/ Shop Visa Debit Card to withdraw cash directly from your bank account from over 3,500 ATMs in Pakistan - including Allied Bank's largest network of ATMs - and over 1 million ATMs worldwide
2. SHOP ANYWHERE Use the Visa power of your Allied Cash/ Shop Visa Debit Card to shop at over 49,000 retailers in Pakistan and over 27 million retailers internationally Dine Out Go to all your favorite restaurants and order whatever you want without having to worry about how much cash you have in your pocket - thanks to your Allied Cash/ Shop Visa Debit Card. 3. ENJOY TRAVELING Imagine traveling without carrying cash. With your Allied Cash/ Shop Visa Debit Card, you can buy your plane tickets and do all your shopping abroad without worrying about spending too much or running out of cash.
4. GET GROCERIES Go groceries shopping with your Allied Cash/Shop Visa Debit Card and you will never have to worry about having enough cash in your pocket when you're standing in line at the cash counter Have Fun Whether you feel like taking the family to see a movie at the cinema or treating some friends to a night of bowling, you can do it all and more with your Allied Cash /Shop Visa Debit Card. 5. FUEL UP Now you can fuel up your car without emptying your wallet. Pay for all your fuel purchases with your Allied Cash/Shop Visa Debit Card. 6. STAY ALERT Now, be more secure and keep better track of your spending. With your Allied Cash/Shop Visa Debit Card, you can get SMS alerts when you make transactions on your Card. You can also access the details of your transactions via internet banking at www.abl.com.pk
Please follow the instructions stated below so that you are able to use your Card at any merchant outlet or Visa ATMs. a) Kindly sign the signature panel on the back of your Card in permanent ink as soon as you receive it. b) To activate your Card, please call Allied Phone Banking c) Enter the PIN provided to you in order to use the Card at ATMs.
PROTECT YOUR CARD
• • Do not bend your Card. Do not leave your Card near a television or any other electrical or electronic gadget, which has a continuous magnetic field.
Do not expose your Card to direct sunlight. Please notify the Bank immediately of any irregularities. • Avoid scratching or damaging the magnetic strip. This strip is sensitively encoded and requires special care. • Do not disclose your Card Account Number or Personal Identification Number (PIN) to anyone. Destroy your PIN mailer once you have seen your PIN.
A commercial bank is a type of financial intermediary and a type of bank. Commercial banking is also known as business banking. It is a bank that provides
• • •
checking accounts, savings accounts, and money market accounts and that accepts time deposits.
Commercial bank is the term used for a normal bank to distinguish it from an investment bank. Commercial banking can also refer to a bank or a division of a bank that mostly deals with deposits and loans from corporations or large businesses, as opposed to normal individual members of the public (retail banking).
HISTORY OF COMMERCIAL BANKING
After the Great Depression, the U.S. Congress required that banks engage only in banking activities, whereas investment banks were limited to capital market activities. As the two no longer have to be under separate ownership under U.S. law, some use the term "commercial bank" to refer to a bank or a division of a bank primarily dealing with deposits and loans from corporations or large businesses. In some other jurisdictions, the strict separation of investment and commercial banking never applied. Commercial banking may also be seen as distinct from retail banking, which involves the provision of financial services direct to consumers. Many banks offer both commercial and retail banking services.
THE ROLE OF COMMERCIAL BANKS
Commercial banks engage in the following activities:
• • • • •
• • •
processing of payments by way of telegraphic transfer, EFTPOS, internet banking, or other means issuing bank drafts and bank cheques accepting money on term deposit lending money by overdraft, installment loan, or other means providing documentary and standby letter of credit, guarantees, performance bonds, securities underwriting commitments and other forms of off balance sheet exposures safekeeping of documents and other items in safe deposit boxes sale, distribution or brokerage, with or without advice, of insurance, unit trusts and similar financial products as a “financial supermarket” traditionally, large commercial banks also underwrite bonds, and make markets in currency, interest rates, and credit-related securities, but today large commercial banks usually have an investment bank arm that is involved in the mentioned activities.
TYPES OF LOANS GRANTED BY COMMERCIAL BANKS
Secured loan Mortgage loan Unsecured loan
SECURED LOAN A secured loan is a loan in which the borrower pledges some asset (e.g., a car or property) as collateral (i.e., security) for the loan. MORTGAGE LOAN A mortgage loan is a very common type of debt instrument, used to purchase real estate. Under this arrangement, the money is used to purchase the property. Commercial banks, however, are given security - a lien on the title to the house - until the mortgage is paid off in full. If the borrower defaults on the loan, the bank would have the legal right to repossess the house and sell it, to recover sums owing to it. In the past, commercial banks have not been greatly interested in real estate loans and have placed only a relatively small percentage of their assets in mortgages. As their name implies, such financial institutions secured their earning primarily from commercial and consumer loans and left the major task of home financing to others. However, due to changes in banking laws and policies, commercial banks are increasingly active in home financing. Changes in banking laws now allow commercial banks to make home mortgage loans on a more liberal basis than ever before. In acquiring mortgages on real estate, these institutions follow two main practices. First, some of the banks maintain active and wellorganized departments whose primary function is to compete actively for real estate loans. In areas lacking specialized real estate financial institutions, these banks become the source for residential and farm mortgage loans. Second, the banks acquire mortgages by simply purchasing them from mortgage bankers or dealers. In addition, dealer service companies, which were originally used to obtain car loans for permanent lenders such as commercial banks, wanted to broaden their activity beyond their local area. In recent years, however, such companies have concentrated on acquiring mobile home loans in volume for both commercial banks and savings and loan associations. Service companies obtain these loans from retail dealers, usually on a
nonrecourse basis. Almost all bank/service company agreements contain a credit insurance policy that protects the lender if the consumer defaults. UNSECURED LOAN Unsecured loans are monetary loans that are not secured against the borrowers assets (i.e., no collateral is involved). These may be available from financial institutions under many different guises or marketing packages:
• • • • •
bank overdrafts corporate bonds credit card debt credit facilities or lines of credit personal loans
& COMMERCIAL BANKING
The Commercial & Retail Banking Group (CRBG) offers a variety of asset and liabilitybased retail products to its customers. The Group’s main focus has been on introducing various financing and investment products for its valuable clientele, and contributing to the steady growth of the financial industry • • • • • • • • • • Internet Banking Online Banking Profit Rates ATM Network Unclaimed Deposits Deposit Account SME Agriculture Other Services Corporate Leasing
CRBG consists of 4 geographic groups and is further divided across 27 regions in Pakistan. Each region is responsible for providing a quality service to its own customerbase. In recent years, the Group has been working to find alternate ways to bank for customers, and has installed more ATMs to its already strong and largest ATM network. During 2007, CRBG also saw a phenomenal growth of 28 percent in liabilities. The Group launched effective campaigns and showed 13 percent growth in Current Accounts & Saving Accounts (CASA). Besides an addition of senior level resources to the team, more Management Trainee Officers were also hired into the Group to bring in more quality and skill. CRBG is consistent in lifting the Bank’s brand image by emphasizing on good customer services and developing commercial assets and a cost effective deposit base.
Allied Bank offers the deposit Account facility to its customers with the many attractive features. Following are the types of deposit accounts offered by Allied bank : • • PLS Account Current Account
• • • • • • • • • •
Allied Basic Banking Account Foreign Currency Deposit Monthly Profit Plus Rewarding Term Deposit Behtar Munafa Account Behtar Munafa Term Deposit Allied Munafa Account Allied Bachat Scheme Allied e-Savers Accounts Allied Business Account
The Commercial and Retail Banking Group (CRBG) caters to the needs of commercial entities and small and medium enterprises. A dedicated team of Relationship Managers first identifies the specific needs of each customer segment, then designs and delivers a facility package, which is in conjunction with those needs, and provides customers the full support and opportunity to take advantage of the various business prospects available in the market.
The Bank, under the Agricultural Financing Scheme, as decided by the State Bank Of Pakistan, extends short, medium and long term, farm and non-farm credits. The farm credits are extended for production (inputs) and development purposes. Non-farm credits are allowed for livestock (goats, sheep, cattle), poultry and factories including social forestry and fisheries (inland and marine, excluding deep sea fishing). 37
Details are as follows:
FARM LOANS PRODUCTION LOANS 1.Inputs like seeds, fertilizers, pesticides, weedicides, herbicides, labour charges, water charges, vegetables, floriculture, etc. 2. Working capital finance to meet various farming expenses. DEVELOPMENT LOANS • Improvement of agricultural land, orchards, etc. • Construction of Godowns • Tractors, Machinery & other equipments • Tube wells • Farm Transportation, etc NON-FARM LOANS • • • • Livestock Poultry Fisheries Forestry 38
AGRICULTURE REVOLVING CREDIT SCHEME • • Loan Tenure: 3 Years (Clean up once a year) One time documentation for 3 years. Loan limit will be based on the Indicative per Acre limit prescribed by SBP
DEVELOPMENT LOANS/FINANCES (TERM LOANS) • • Loan Tenure: up to 5 years Repayment: Monthly/Quarterly/Bi-Annual
CRITERIA SELECTION SHOULD: • • • • • • • be a Pakistani & have a CNIC. preferably be an account holder with ABL. have a permanent residence and be a self-cultivator. not be a defaulter of any other Financial Institution/Clear ECIB. be reputable in the business have ‘Repayment Capacity’ be able to produce proper securities
AMOUNT OF FINANCE • • • • Value of agricultural land/Pass Book 80% of PIU or 50% of last 3 years’ average Sale Price or Market Value 50% of Residential/Commercial property in municipal limit. 90% of DSCs/SSCs/TDR/SNDR
INSURANCE • • Insurance facility is available for all Farm and Non Farm Loans except orchards. Insurance premium amount of subsistence holding farmers availing loans for following 5 major crops will be reimbursed by the Government of Pakistan
1. 2. 3. 4. 5.
Wheat Rice / Paddy Cotton Sugar Cane Maize
Allied Bank started lease operations when it integrated with Ibrahim Leasing Limited. Facilities include leases for machinery, commercial vehicles and equipments. The Bank provides lease facilities to corporate and commercial clients in all industrial enterprises for balancing, modernization, replacement and expansion schemes. Leasing is a popular mode of financing because of its distinctive features like tax shield, preserve working capital, easy documentation and less processing time. Lease applications are processed at all Bank branches in Pakistan.
ALLIED ATM NETWORK
Allied Bank has a vast network of over 522 ATMs installed in over 130 cities, which continues to grow at a rapid pace.
BRANCHES & ATMS
Online Banking facilities are available to customers maintaining accounts at all online branches across the country. The following facilities are available: • • • • Cash Deposit for immediate credit to a remote branch. Remote Cheque Encashment from any online branch. Instant Funds Transfer between any 2 online branches. Remote Balance Inquiry and Statement of Account.
Additionally, account holders of all online branches can obtain the Allied Cash+Shop Visa Debit Card for use at ATMs as well as at POS terminals
Allied ATM network
Additionally, Allied Bank is a member of the ‘1-LINK ATM sharing switch’ comprising of over 2,000 ATMs nationwide, therefore, giving its Allied Cash+Shop Visa Debit Card holders access to even more ATMs across the country. The "1-Link Switch" has the following Bank members: • • • • • • • • • • • • • • ABN Amro Bank KASB Bank Meezan Bank Limited National Bank of Pakistan NIB Bank Limited PICIC Commercial Bank Limited Soneri Bank Limited Standard Chartered Bank Pakistan Limited Union Bank Limited United Bank Limited MyBank Limited Tameer Micro Finance Bank Limtied Habib Bank Limited Limited Al Baraka Islamic Bank Allied Bank Limited
• • • • • • • • • •
Askari Commercial Bank Limited Atlas Bank Limited Bank AL Habib Limited Bank Alfalah Limited Bankislami Pakistan Limited Crescent Commercial Bank Limited Dubai Islamic Bank Pakistan Limited Emirates Global Islamic Bank Limted Faysal Bank Limited First Dawood Islamic Bank Limited
All ATMs connected with the"1-Link Switch" will show its Logo.
M NET NETWORK
The Allied Cash+Shop Visa Debit Card can also be used at M Net ATMs, for cash withdrawal. The "M Net Switch" has the following Bank members: • • • • • • • • • • JS Bank (American Express Bank) Bank of Khyber Bank of Punjab Citibank First Women Bank Limited Habib Metropolitan Bank HSBC Bank Muslim Commercial Bank Saudi Pak Commercial Bank Prime Commercial Bank
Bank: City: Branch: Address:
þÿ þÿ þÿ
ORIX POS NETWORK
City: Merchandiser: Address:
All unclaimed deposits are surrendered to the State Bank of Pakistan. The customers’ may access relevant information from the following addresses:
ATTENTION VALUED CUSTOMERS UNCLAIMED DEPOSITS/INSTRUMENTS
In accordance with the Banking Companies Ordinance, 1962, Section 31, the Bank is liable to surrender to S.B.P, all unclaimed deposits and instruments which have not been operated/collected by the account holders/beneficiaries for last 10 years. All such customers/beneficiaries are requested to contact the concerned brance to re-
activate their accounts/collect the instruments, failing which, the bank will be compelled to classify the same "UNCLAIMED" and surrender to SBP.
STATE BANK REVISED INSTRUCTION ON UNCLAIMED DEPOSITS PUBLIC NOTICE AS PER SECTION 31 OF BANKING COMPANIES ORDINANCE 1962
A debt in Pakistan Rupee is owing by a banking company by reason of a deposit, not being a deposit in the name of a minor or a government or a court of law, at a branch of the banking company in Pakistan in respect of which no transaction has taken place and no statement of account has been requested or acknowledged by the creditor during the last ten years period are considered as unclaimed deposits. These include demand deposit, time deposit, pay order, demand draft, etc. As per instructions of the State Bank of Pakistan, all un-claimed deposits are surrendered to the SBP. The customers’ may access this information at the following addresses: 1. Allied Bank website, respective branches of the Bank and Finance Group, Central Office, Karachi. 2. Website of State Bank of Pakistan 3. Field Offices of SBP Banking Services Corporation in Karachi, Lahore, Peshawar, Quetta, Islamabad, Rawalpindi, Faisalabad, Multan, Sialkot, Bahawalpur, Gujranwala, Hyderabad, Sukkur, D.I.Khan and Muzaffarabad. All the claimants can apply for refund in the bank branch where deposit/instrument account was opened/payable. In cases where such branches have been closed /shifted, the nearest branch of the same bank should be contacted. It may please be noted that after completion of one-year from the date of making the list public, all unclaimed deposits/instruments will cease to be claimable and will be transferred to the government.
Other services of Allied Bank are: 1. Utility bill 2. lockers 3. hajj services
1. UTILITY BILL
Customers can pay their utility bills (e.g. electricity, gas, telephone) at any of the Bank’s branches. For further convenience, bills are collected on all working days during normal banking hours and also at certain times during the evening. Bills can be paid with cash or cheque, plus customers can even drop crossed cheques in drop-boxes available at all branches. Furthermore, customers can also pay their bills using any of the Bank’s ATMs or via Internet Banking for SSGC and SNGP bills.
Allied Bank Lockers are available, at an annual fee, in four different sizes - small, medium, large and extra large. Locker holders are not required to have an account with the Bank.
Annual Locker Rent (Current)
Maximum Loss Coverage / Limit
1. 2. 3. 4.
Small Medium Large Extra Large
3. HAJJ SERVICES
The Hajj Service is available to all pilgrims. The forms and other related services are provided by the Bank. Hajj applications are available with all branches during Hajj season, immediately after the Hajj policy is announced by the Government of Pakistan.
Banking is now at your fingertips! Allied Direct Internet Banking offers you the convenience to manage and control your banking and finances - when you want, where you want! It's Simple, Convenient, Secure and Faster. So, just get clicking!
Some of the advantages of Allied Direct Internet Banking are: (A) Simple and Convenient Easier navigation and help provided at every step so you can make full use of this service. With Allied Direct convenience is just a click away. (B) Secure and Faster Encrypted with latest tools and technologies, Allied Direct is the choice for secure and fast Internet Banking. (C) 24x7 Access You now have access to your account 24 hours a day, 7 days a week. You can transfer funds or pay bills, even when it's a holiday. To use Allied Direct Internet Banking, you should be a registered Allied Bank Account holder with a valid ATM. Card. If you do not have an account, please visit any of our nearest branches and open your account and obtain an ATM Card. Our friendly branch staff will help you open your account quickly.
Allied Online Banking is a unique service being offering from Allied Bank. Through this service, your account in Allied Bank is available to you from any of our branches countrywide. No matter where you are in the country and whichever branch your account is maintained at, you can have your cheque cashed at any of our 757 online branches located in 250 cities. You can also use the service, from any branch, to deposit cash for instant credit into your account or any other account in Allied Bank. Similarly, the account-to-account Funds Transfer facility is also available for instant remittance. Your cheque drawn from a remote branch for credit into a beneficiary’s account or encashment of a specified amount, can also be presented by a third person at any branch. What’s more, making a Balance Inquiry and getting an Account Statement are additional services available to Account holders from remote branches. Allied Online provides a secure, efficient and convenient facility for making payments to beneficiary accounts from any of our branches countrywide. Corporate customers requiring fund collection or a disbursement facility can use it for cash management services.
& CORPORATE BANKING
• • • Corporate Banking Investment Banking Financial Institutions & Cash Management
CORPORATE INVESTMENT BANKING
The Corporate Investment Banking Group (CIBG) holds the Bank’s loan portfolio and enjoys a leading position in corporate lending in the country. It offers a wide range of financial services to medium and large sized public and private sector entities. These services include, providing and arranging tenured financing, corporate advisory, underwriting, cash management, trade products, corporate finance products and customer services on all bank related matters. The Bank has played a key role in the country’s economic growth by providing a vast amount of funds to large industrial and corporate sectors of the economy. And because it has played a big part in major investment and corporate banking transactions, Allied Bank is considered one of the top investment banks in the country today.
(Corporate Investment Banking Group) Corporate Banking Project Finance Long Term Financing Short Term Financing Trade Finance Investment Banking - Project Finance - Syndication - Advisory Financial Institution - Cash Management - Home Remittances
ABL-IBG is the most Preferred Investment Banking Outfit because of…
• • • • • • • Timely Completion of Mandates Highly talented and experienced analysts An employee focused work culture Flexible delivery models to satisfy client specific requirements A cost effective, one window solution for customers Its ability to rapidly adapt to changing industrial & client specific processes. The dedicated ‘Transaction Manager Model’ ensuring high quality service at all times 53
ABL’s Investment Banking team won its first major award in November 2006, for “The Corporate Finance House of the Year, 2005-2006” by the CFA Association of Pakistan, the local body of the CFA Institute, USA.
For its consistently superior performance, ABL’s Investment Banking team was once again awarded “The Corporate Finance House of the Year, 2006-2007” award by the CFA Association of Pakistan, the local body of the CFA Institute, USA. This award was given to ABL based on its highest value and number of Investment Banking and Advisory Transactions concluded during the period July 2006 – December 2007.
ABL’s Investment Banking Unit has also received international recognition by “The Banker” magazine UK, which has honored ABL with the “The Banker Deal of the Year 2008 – Pakistan” award for its successful Rs.13 Billion balance sheet restructuring of Maple Leaf Cement Factory Limited (the largest financing arranged for a cement factory in Pakistan).
CBG offers a wide range of financial services to medium and large sized public and private sector entities. CBG has expertise in providing exemplary customized and personalized service to its Corporate Customers under the Relationship Management concept, which is basically catering to all the customer needs through ‘One Window’ operations. CBG has strategically placed its presence in all major corporate hubs of the country namely Karachi, Lahore, Islamabad, Multan and Faisalabad.
It presently enjoys a leading position in corporate lending in the country and has played a key role in economic development of the country by providing large facilities, long term, short term, working capital etc in all the key sectors of the economy. Despite being a late entrant in Corporate Banking, CBG has not only able to position itself as one of the prime banks for the existing clientele but also created and cemented new relationships with several top tier names in the market.
ABL – IBG was established in 2005 and focuses on the Investment Banking market. It has the highest number of Successful Arrangement and Participation in Key Privatization & Acquisition Financing Transactions achieved by any Investment Banking Group in Pakistan.
It has already penetrated the investment banking market by taking the lead in a number of major transactions and arranging funding of more than US$ 6 billion to date. 55
• • •
ABL – IBG is reputable for building business on the basis of strong corporate relationships and showing a clear understanding of Structured Finance. The team consists of dedicated and young professionals with extensive experience, who provide various Advisory & Arrangement Services to Corporate Clients. ABL-IBG has played an active role in Debt Origination and Distribution through innovative and tailor made solutions for its target customer base. It is also well known for having successfully completed mandates in a timely manner, and is regarded as one of the most active Investment Banking entities in the country today.
IBG – Range of Services
ABL’s Financial Institutions team shows a strong commitment to product and business development. Our client portfolio includes top domestic names, important regional players, top global financial institutions, covers banks, NBFIs, leasing companies, modarabas, microfinance, the insurance sector and specialist money transfer companies. ABL's dedicated team of Financial Institution professionals brings a wealth of local and international expertise to all facets of this complex industry, and can serve as your single point of contact for a comprehensive set of products and services, including: 56
• • • • • • • • • • • • •
Inbound trade services International remittances with immediate processing capability Payment and collection solutions Confirmation Advising Negotiation Guarantees Payments Trade finance L/C Issuance Reimbursement Bilateral Key Exchange Arrangements Discounting
As our institutional customers face continuing challenges, they look to ABL for comprehensive transactional banking solutions, greater operational efficiency and broad geographic coverage. Please contact us to explore the ABL value proposition on +92-21-5301048 or e-mail firstname.lastname@example.org
ABL’s cash management team offers a full range of transactional banking services, from collections to cross-border payments, from customized services to comprehensive industry expertise. Having the largest real-time online branch network in Pakistan, combined with a host of value-added services, ABL is uniquely positioned to meet the demanding requirements of global corporates, public sector enterprises and top-tier domestic companies. With its collaborative approach to building and implementing solutions, ABL is committed to giving its customers the best service possible. For more information about our services, please contact us at your convenience. We look forward to hearing from you. Email: email@example.com
Allied Bank has rolled out its state-of-the-art ‘e-Remittance’ services to facilitate international remittances sent to Pakistan Pakistanis.by overseas 57
ABL has been significantly important in originating home remittances to Pakistan, and is continuously working to develop innovative ideas for maximizing its reach to all Pakistanis living abroad. We have identified several strategic partners in the main overseas markets, and will be providing a fully automated, end-to-end solution for nonresident Pakistanis. ABL’s real-time online branch network – one of the largest networks in Pakistan, consists of over 760 branches in 350 cities, and provides domestic distribution of remittances to customers receiving money in Pakistan. A host of top international banks, exchange houses and funds transfer companies from across the world, including the Middle East, Europe, Asia-Pacific and North America, have been involved to make this a quality service. By implementing a fully automated, straight-through processing facility, we are in a position to activate an innovative set of remittance products. A host of options is available to non-resident Pakistanis under this service, including direct credit to account, cash payment over the counter and issuance of the Allied Express cheque, a payment instrument that can be honored across the entire ABL network of branches. Please contact us to explore the ABL home remittances value proposition on +92-21-5301048 or firstname.lastname@example.org
OBSERVATION & FINDING
• • • • • •
Banking image among the general population is not good Product features are not well defined to the customers Selection criteria for any product not carrying any rationale Interest rate is not fixed Lot of ambiguity regarding pay back system Behavior of recovery team with customers is very harsh
RECOMMENDATION & SUGGESTION
• Banks should focus more towards the education of customer regarding their products • Sales team training on own & competitors features of each product
• Train sales & recovery department on human skills to improve their behavior with the customers, which will help banking industry to improve their image • Customer complete understanding needed before taking consent sign on document • Consent document should be translated in Urdu as majority of customer don’t understand the technical verbiage in used in these documents • Banks needs to focus to improve their image among the general population
• Training at branch level must be provided to the employees because this is a need of current affair & time when employees of bank attain skills from Staff Colleges the risk factor automatically decreased and further fraud/forgers chances come on minimize level and this is successful stage it is mostly depend on the skills of employees.
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