The term “BANK” is derived from an Italian word “BANKO” which

means “Bench” that is where people were meet and solve their
financial matters.
The term bank is being used for a long time yet it has no precise
definition. The basic reason is that the banks perform not just one
but many types of functions originally the banks were supposed to
make short term loans to the traders only. The banks now not only
make short term loans to the formers, traders  , industrialist etc. But
also invest in a wide variety of long term earning assets.
The commercial banks also undertake and execute trust, deal in
stock, shares and debentures, issue guaranties and indemnities
underwrite and sell new securities, and deal in foreign exchange
etc.
However some of the definitions of bank from different authors are
as follows.
According to Dr. Hart

“Banker or bank is a person or company carrying on business of

receiving money and collecting drafts for the customers subject to
the obligation of honouring cheques drawn upon them from time to
time by customers to the extends of the amounts available on their
currents accounts”

History of Hbl

HBL established operations in Pakistan in 1947 and moved its head office to Karachi. Our first
international branch was established in Colombo, Sri Lanka in 1951 and Habib Bank Plaza was
built in 1972 to commemorate the bank’s 25th Anniversary.

With a domestic market share of over 40%, HBL was nationalized in 1974 and it continued to
dominate the commercial banking sector with a major market share in inward foreign
remittances (55%) and loans to small industries, traders and farmers. International operations
were expanded to include the USA, Singapore, Oman, Belgium, Seychelles and Maldives and the
Netherlands.

On December 29, 2003 Pakistan's Privatization Commission announced that the Government of
Pakistan had formally granted the Aga Khan Fund for Economic Development (AKFED) rights to
51% of the shareholding in HBL, against an investment of PKR 22.409 billion (USD 389 million).
On February 26, 2004, management control was handed over to AKFED. The Board of Directors
was reconstituted to have four AKFED nominees, including the Chairman and the President/CEO
and three Government of Pakistan nominees.
 At present the Bank operates through one central and 23 Regional Offices and 1439
branches, all over Pakistan. The president and Executives Committee look after the
affairs of the Bank. Each Regional Head Quarter is headed by a Chief Executive and
assisted by General Manager Operations and General Manager Support Services. The
Regional Head Quarter controls the branches in their area. Overseas operations consist
of 65 main branches, two affiliates, two representative offices and two subsidiaries
.President, from Head Office at Karachi controls the officers of the Bank with the help of
the senior management. Functional responsibilities of the Banks are broken into seven
groups known as 1) International Operations Group2) Corporate Banking and Treasury
Investment Group3) Retail Banking and Operation Group 4) Finance, Audit and
Administration Group5) Assets Remedial Management Group Credit Policy Group7)
Corporate Bank, Financial Institutions and Project Finance

MISSION OF H.B.L.

1. To inherence the corporate culture in business society through quality oriented

banking services.

2. To increase the profitability of our shareholders through investing in financially

sound and profit earning projects.
3. To maintain and increase the reliability and quality services to our accounts
holders.
4. To strengthen the status economy through financing the export under control of
state bank of pakistan.
5. To provide funds for increasing environmentalism, cultural and sociological
thinking in society .

OBJECTIVES OF HBL

1) To earn profit for the Bank itself and maximize its shareholder’s value.
2) To provide solutions for multiple requirements of clients of diverse
3) Financial nature.
4) To manage with the changing trends of the modern day financial market.
5) To be a diversified bank by offering all basic consumer services along with
6) specialized services
 7) Honest and ethical conduct, including ethical handling of actual or apparent conflicts of
interest between personal and professional relationship.
8) To provide employment opportunities to people.
9) To help in development and industrialization of the country

TYPES OF BANKS
1. Central bank or state bank.

2. Commercial bank.

3. Exchange bank.

4. Industrial bank.

5. Agriculture bank.

6. Investment bank.

7. Saving bank.

CENTRAL BANK
Every country has its central bank or state bank. Its major
function is to carry out a country’s monetary policy with an aim
to safeguard its financial and economic stability. It has the
monopoly of note issue. It is also the custodian of money
market. State bank is the Banks bank and lender to the
government.

COMMERCIAL BANK
Commercial banks are profit earning concerns. They receive
deposits and advance loans to the borrows. They greatly help in
financing for internal and external trade of the country.

EXCHANGE BANK

 T h e m a i n f u n c t i o n o f t h e e x c h a n g e b a n k i s t o f i n a n c e t h e
foreign trade by the purchase and sale of foreign currencies in
the form of drafts, bills of exchange, telegraphic transfers. They
also perform the function of commercial bank. Receiving
deposits and advancing loans.

INDUSTRIAL BANKS

Commercial bank cannot afford to block their funds in long term

investments. The industrial banks receive long term deposits
and finance the industries by providing them long term credits.
In Pakistan the Industrial bank named as Industrial Development
Bank of Pakistan (I.D.B.P) was established in 1961 for this
purpose.

AGRICULTURAL BANK

Agricultural bank provides short and long period loans for

financing agriculture. The agriculturists need short and long

term loans for meeting their day to day and long term

requirements for making permanent improvement in the land. In

Pakistan Agricultural Bank is named as Agricultural

Development bank of Pakistan (A.D.B.P) and it was established

in 1961

INVESTMENT BANK

The main function of investment bank the merchandising of

shares and other securities, managing and distributing the issue
of shares and other securities.
SAVING BANKS
 T h e s e a r e t h e i n s t i t u t i o n s w h i c h a r e s p o n s o r e d b y t h e
government for having facilities to the people and small means.
These bank collect small saving of people and allow them to
withdraw in small amounts. Also another institution i.e. National
Savings is working in the same capacity.

HABIB BANK LIMITED

The working of the Habib Bank Limited was commenced on
25th August 1941 in Bombay and in 1948 it was established in
Pakistan. It was the first Muslim Bank in the Subcontinent,

Now there are 1773 branches inside the Pakistan and about 66
Branches overseas providing financial services to its worthy
customers.

Habib Bank is working for the last 50 years and become the
largest commercial bank in the country. It has the Authorized
capital of RS 5000 Million with a paid up capital and reserves of
RS 858 Million and its deposits are more than RS 213 billion in
approximately 10.7 Million accounts. It has the advances of 131
Million. Habib Bank has innovated a numbers of financial
schemes like term deposits, Special notice term deposits,
A.T.M. etc. As governments are hoping to be liberal and their
policies are innovative and liberal the scope of banking is
increasing and Habib Bank is on step ahead if the growth and
participating very much in the economic growth of Pakistan.

Habib bank HEAD QUARTER is situated in KARACHI that

building has highest number of stories in Pakistan.

Habib bank has basically 9 Regions all over the country those
control the entire activity of Habib bank operation is
countrywide.

ADVANCES / LOANS SECTION

 This dept. has been working under the supervision of knowledgeable experienced &
well qualified banker Mr. Saleem Mirza who has been serving this bank for last 20
years.

This Dept. has boon playing one of the primary functions of the bank because a bank is
the organization that accept deposits & give advances.
There are basically two types of loans:
a) Fund base
b) Non fund base
a) in fund base the cash is involved.
b) While is non fund base cash is not involved.
These are following types of advances those are given by the BANK.
1. Cash Finance (CF)
2. Running Finance (RF)
3. Machinery Loan.
4. International Development Agency Loan(IDA)
5. Transport Loan.
6. Staff Loan.

1.  CASH FINANCE (CF)

Cash Finance is the biggest loan given to the businessmen, industrialists, its limit is in
crores and bank do require security for this purpose. After the proper investigation and
documentation these finances are given and genuine property is pledged as a matter of
security.
These loans are taken for the purchase of stocks etc. The bank appoints its staff of two
or three persons at the place where that stock is lying. Bank also keeps the record of
the stock and current position too. A notice is also written at the place that the stocks
are pledged with the bank. To get these types of loans prior permission from the zonal
office of the Habib bank is also required. The bank gets back its principal amount and
also markup for the loan. The rate of markup is Rs.0.52/1000 per day and to calculate
the markup for finance period as per formula is:
Amount of Amount of
Finance + One installment
MARK UP=------------------------------------ Rate of Mark-up
2
Mo. of Period of
Installment one installment

Documents Require for the Loan.

1.Demand Promissory Note(DP Note)
 This document is filled in by the party that they promise to pay the amount whenever
it is demanded.
2. Facility Letter:
This is the requisition of the finance facilities to the bank By the party.
3. Balance Confirmation:
After the approval of the loan this letter is written by the Party that such amount is in
the account of the party.
4. Letter of pledge (IB26)
For the getting of the cash finance a letter of Pledge is to be given to the bank that
such property is to be pledged with the bank as a security.
5. Letter of Guarantee(IB29)
A letter for the personal guarantee is also required in which the guarantee from a
sound person to the party is attached with the application
6. Agreement for Financing(IB6)
This agreement for the short term medium term/long term on the mark up basis. At
most these are the documents required in attaining of the loan.

. RUNNING FINANCE:
Running Finances are also given for the purchase of stock etc. But its limit is not too
much. Normally upto RS 15,00,000 is given as a Running Finance and no staff is
appointed. This is termed as Hypothecation, which means that party is wholly liable
for the stock and payment of the principal amount and markup. The procedure is
almost same as for the cash finance and the loan is given to thoseparties which are
able to prove its genuineness and satisfies the bank. The bank also pledges the
genuine security of the party which normally more valuable then the amount of loan.
To get this type of loan prior permission of the zonal office is necessary.

The rate of mark up is RS 0.52/1000 per day and to calculate the mark up for the
finance period as per formula is:
 Amount of Amount of

Finance + one installment

Mark Up----------------------------- Rate of Mark up

No. of Period of

Installments One Installment.

Document Required for the Loan:

1. Demand Promissory Note(DP Note)

The party that they promise to pay the amount whenever it is demanded fills this
document.
2. Facility Letter.

This is the requisition of the finances to the bank by the third party.
3.  Balance Confirmation

After the approval of the loan the party writes this letter that such amount is in the
account of the party.
4. Letter Of Equitable Mortgage (IB24)

For the getting of the running finance a letter of equitable mortgage is to be given to the
bank that such property is to be mortgaged with the bank as a security.

5. Letter Of Guarantee (IB29)

A letter for the personal guarantees is also required is which the guarantees from a
sound person to the party is attached with the application.
6. Agreement for Finances (IB6)

This agreement for the snort term /medium term/long term on the mark up basis. At
most these are the documents required in attaining of the loan.

Letter of Hypothecation (IB25)

This letter that for all types of stock the party is liable and bank not needs to appoint any
person.

SWOT ANALYSIS

STRENGTH

H.B.L. has very effective Network of branches all over the country. Every 10 thPakistani
is A/C holder of H.B.L. has made huge investment in almost all the important economic
sectors of Pakistan. H.B.L. not only has made investment in industry but also in small
scale industry as well. H.B.L. has efficient & less bureaucratic set up H.B.L. has
introduced monthly income scheme that provides almost highest interest rate .A.T.M.
Was introduced in Pak. By H. B. L. master card facilities is also available to the clients.
WEAKNESS

No consumer banking has offered by the H.B.L. to its clients like phone banking evening
banking etc.

- Bed Debt rate is very high no special effort has been made to recover the bed
amounts.

- No marketing set up or structure is there. Most of people do not know how they have
to promote their activities.
 OPPORTUNITIES

H.B.L. is oldest bank in the country people do rely on this bank with some additional
efforts bank can attract high deposit from Pakistan and overseas.

Instead of emphasizing on big & long term projects bank should concentrate on small
scale investments heaving small maturity period.

Now-a-days H.B.L. has been investing almost 18% of its total investment on cotton
business, along with investment in cotton it should invest in other cash crops, i.e. Rice,
Sugar Cane, Tobacco, Wheat etc and there related agro based industry.
THREATS

First threat that bank has to face is the Privatization, down sizing & restructuring these
changes could make drastic effects as well.

New incoming local & specialy foreign banks those are main cause of stiff competition in
the market

DFI’s are going very well in financial set up of Pakistan. So, these are also effecting on
the operations of bank. Along with other threats the threat of corruption has vital
importance.

CONCLUSION

Habib Bank limited was rated among first 500 banks of the world but now it is in among
1000 banks in the world, H.B.L. is not progressing due to political influence, in efficient
management & corruption. If these draw backs have removed then bank will not only
join its previous position rather we hope it will be rated among world top ten banks.