INTERNSHIP REPORT ON

ASKARI BANK

SUPPLY BRANCH ABBOTTABAD

Submitted by: Adnan Akhtar

Roll # 205

Supervised by: Abdul Waheed

Government College of Management Sciences

Abbottabad
SESSION

2018-2019

INTERNSHIP REPORT ON

i
 ASKARI BANK

SUPPLY BRANCH ABBOTTABAD

Submitted by: Adnan Akhtar

Roll # 205

Supervised by: Abdul Waheed

This internship report is submitted in partial fulfillment of

the requirements for the degree of Master of Commerce
awarded by the AUST University,

Abbottabad

Government College of
Management Sciences Abbottabad
SESSION
2018-2019

Government College of Management Sciences

Abbottabad

ii
 APPROVAL SHEET

Approval Committee

1. External Examiner
2.
Mr.______________________ Signature____________________

3. Supervisor
Mr. Abdul Waheed Signature____________________

Designation: Lecturer(Commerce & Business Administration)

4. Head of department
Mr. Syed Arif Zahid Signature_____________________

Designation: Principal, GCMS Abbottabad

iii
 DEDICATION

This report is dedicated to my parents for giving me this opportunity to attend this
degree and supporting me throughout my student life who acted as a backbone and a
major reason behind my accomplishment and also to my honorable teachers who have
always guided me

iv
 ABSTRACT

In order to be able to cope with the changing environment it is necessary to have some
practical experience. As the students of Commerce there are need to pass through a
series of various managerial techniques. During this practical course we are provided
with an opportunity to learn that how the theoretical knowledge can be implemented in
practical grounds.

I selected to do my internship at Askari Bank Supply Branch. I worked there for 8

weeks and it gave me greater practical knowledge about the operations of a bank. In the
following pages I have narrated my experience, observations and all the working
activities which I observed during my internship period at Askari Bank Supply Branch.

v
 Table of Contents

ABSTRACT................................................................................................................................................V

ACKNOWLEDGEMENTS.....................................................................................................................IX

LIST OF ABBREVIATIONS...................................................................................................................X

EXECUTIVE SUMMARY......................................................................................................................XI

CHAPTER 1..............................................................................................................................................1

INTRODUCTION......................................................................................................................................1

1.1 PURPOSE OF THE STUDY.....................................................................................................................1

1.2 IMPORTANCE OF STUDY.....................................................................................................................2
1.3 PURPOSE OF THE REPORT...................................................................................................................2
1.4 SCOPE OF THE STUDY.........................................................................................................................2
1.5 METHODOLOGY OF THE STUDY..........................................................................................................2
1.5.1 Secondary Data.........................................................................................................................2

CHAPTER 2................................................................................................................................................4

INTRODUCTION TO THE ORGANIZATION.....................................................................................4

2.1 HISTORICAL BACKGROUND...............................................................................................................4

2.2 GENERAL INFORMATION....................................................................................................................4
2.2.2 Mission......................................................................................................................................4
2.2.3 Core Values...............................................................................................................................5
2.3 CORPORATE OBJECTIVES...................................................................................................................5
2.4 STRATEGIC PLANNING.......................................................................................................................5
2.5 CORPORATE PROFILE.........................................................................................................................6
2.6 BRANCH NETWORK............................................................................................................................7
2.7.1 AKBL Abbottabad Organizational Chart...............................................................................10
2.8 ACCOUNT OPENING DEPARTMENT....................................................................................................11
2.9 THE ACCOUNT OPENING FORM.......................................................................................................12
2.10 TYPES OF ACCOUNT...............................................................................................................13
2.11 REMITTANCES DEPARTMENT..........................................................................................................14
2.12 ACCOUNTS DEPARTMENT...............................................................................................................21
2.13 CASH DEPARTMENT........................................................................................................................22
2.14 CREDIT DEPARTMENT.....................................................................................................................24
2.15 CREDIT CARD DEPARTMENT...........................................................................................................25
2.16 TRADE FINANCE DEPARTMENTS.....................................................................................................26

vi
CHAPTER 3..............................................................................................................................................27

PRODUCTS & SERVICES.....................................................................................................................27

3.1 CONSUMER BANKING SERVICES....................................................................................................27

3.2 ASKARI FINANCE AND LOANS.........................................................................................................31
3.3ASKARI BANKING SERVICES.............................................................................................................33
3.4 INVESTMENTS PRODUCTS.................................................................................................................33
3.5 AGRICULTURE FINANCE SOLUTIONS................................................................................................37
3.6 CORPORATE & INVESTMENT BANKING GROUP (CIBG)................................................................38
3.6.1.1 ASK SONA CARD........................................................................................................................39

CHAPTER 4..............................................................................................................................................43

ANALYSIS OF ASKARI BANK.........................................................................................................43

4.1 INTRODUCTION.................................................................................................................................43
4.1.1 Purpose of Financial Analysis................................................................................................43
4.2 BALANCE SHEET..............................................................................................................................44
4.2 ANALYSIS.........................................................................................................................................46
4.3 VERTICAL ANALYSIS OF BALANCE SHEET.......................................................................................46
4.4 HORIZONTAL ANALYSIS OF BALANCE SHEET..................................................................................49
4.5 RATIO ANALYSIS.............................................................................................................................51
4.5.2 Net Working Capital...............................................................................................................52
4.5.3 Debt to Equity Ratio................................................................................................................53
4.5.4 Debt Ratio...............................................................................................................................53
4.5.5 Equity Ratio............................................................................................................................54
4.5.6 Net Interest Margin:...............................................................................................................55
4.5.8Earning Asset to total assets....................................................................................................55
4.5.9 Return on Earning Assets........................................................................................................56
4.5.10 Equity to Total Assets............................................................................................................57
4.5.11 Efficiency Ratio.....................................................................................................................57
4.5.12 Credit to Deposit ratio(CD ratio).........................................................................................57

CHAPTER 5..............................................................................................................................................58

FINDINGS/ RECOMMENDATION......................................................................................................58

5.1 FINDINGS..........................................................................................................................................58
5.2 CONCLUSION....................................................................................................................................58
5.3 RECOMMENDATIONS........................................................................................................................59

REFERENCES.........................................................................................................................................61

vii
 List of Tables

Table 1 Branch network.......................................................................................9

Table 2 Balance Sheet........................................................................................45

Table 3 Vertical Analysis...................................................................................47

viii
 ACKNOWLEDGEMENTS

All praise is for ALLAH, the most merciful and His Prophet Muhammad for every
torch of guidance and knowledge for humanity. I offer humblest and sincerest words of
thanks to ALLAH Almighty WHO blessed me with potential and ability to make
material contribution to already existing ocean of knowledge
I express my gratitude to Abdul Waheed who is our supervisor, and also our
respectable teacher. I am thankful for his kind support during the entire period.

I like to thank the staff members of Askari Bank Supply Branch Abbottabad, who
provided me with the information needed to complete this report.

I also like to thank my parents who supported me through their wishes and prayers during
the entire period.

Adnan Akhtar

ix
 LIST OF ABBREVIATIONS

AKBL Askari Bank Limited

APR Annual Performance Report

ATM Automatic transaction machine

CA Chartered Accountants

DD Demand Draft

ICAMP Institute of Cost and Management Accountants in Pakistan

ICAP Institute of Chartered Accountants in Pakistan

JO Junior Officers JO

LPR Leave Preparatory To Retirement

MAP Management Association of Pakistan

MO Manager Operations

MTO Management Trainee Officers

NIC National identity card

OJT On Job Training

PKR Pakistani Rupees

SAARC South Asian Association for Regional Corporation

SAFA South Asian Federation of Accountants

SBP State Bank of Pakistan

SWOT Strength, Weaknesses, Opportunities and Threats

HRD Human Resource Department

HRIS HRM Information System

HRM Human Resource Management

VHS Voluntary Handshake Scheme

VP Vice President

x
 EXECUTIVE SUMMARY

The report is about the internship at Askari Bank, Abbottabad, during eight weeks. This
internship is a requirement for our Master of commerce (M.Com) degree. The purpose
of internship is to eliminate the gap in our knowledge that occurs between the
theoretical and the practical implications in the banking sector.

The contents of the report includes general profile of Askari Bank, products and
services offered by the bank, the financial position of the bank like its advances and
deposits etc, comparison of branch performance with the overall performance of the
bank, its Strength, Weakness, Opportunities, Threats (SWOT) analysis, conclusion and
recommendations.

Askari Commercial Bank Limited was incorporated in Pakistan on Oct. 09, 1991. The
bank obtained business commencement certificate on Feb. 26, 1992 and started
operations from April. 1, 1992, as public limited company, and has since expanded into
a nation-wide presence of 200 branches.

The SWOT analysis of the bank has been done in order to give a clear picture of the
Bank Strengths, Weaknesses, Opportunities and Threats. SWOT is a useful tool for
providing a framework for analysis of an organization. It is widespread approach to
make assessments in terms of internal and external environment of the organization and
to formulate strategies by analyzing its internal strengths and weaknesses, external
opportunities and threats.

Some of the recommendations I made for the bank are that the bank should improve its
dealings in consumer banking which has a great potential of growth for the bank and
that the infrastructure of the bank should be improved, paid internship program should
be introduced for students to attract, motivate and retain competent future managers
among them and employees should be properly compensated for their work especially
during the overtime period and should not be forced but instead should be motivated.

xi
 CHAPTER 1
INTRODUCTION

Internship is an integral part of all the management courses at Govt. College of

Management Sciences, Abbottabad. The Students of M.Com are also required to
undergo an internship program of eight weeks in any Foreign or Domestic Bank of the
country. Comprehensive report writing follows the internship. The internee is required
to submit an internship report to the Head of Management Science Department, which
is properly evaluated. The internee is also required to undergo a viva-voca, in which
he/she is asked about the different activities he/she has performed in the organization.
To fulfill my academic requirement of M.Com course, I did my internship in Askari
Bank ., Supply Abbottabad Branch. Although the internship was carried out in the
entire bank departments, like
 Deposits Department
 Bills & Remittances
 Accounts Department
 Credits Department

1.1 Purpose of the study

Apart from the degree requirement of M.Com the basis idea of this report is to analyze
the activities preformed by the bank during the internship, also to analyze the
operations carried out in each department especially Deposits Department & Credits
Department of Askari Bank , Supply Abbottabad Branch. Besides the analysis,
certain recommendations are also made for the improvement.
In addition this study would be helpful for the students of banking and finance as well
as professional bankers to gain an additional insight into the banking sector of our
country.

1
1.2 Importance of Study
Banks play a central and a very important role in the economic life of a country. That’s
why they are considered as the lifeblood of modern economy. Today no one can deny
the importance of banking in the economy. They facilitate and expedite trade and
commerce and provide a variety of services that one can’t imagine with out banks.
Besides this, the Askari Bank plays an important role in the economic development of
Pakistan.

1.3 Purpose of the report

The purpose of the report is to critically evaluate the operations of each department of
Askari Commercial Bank at branch level. The internship was carried out to evaluate
the efficiency o\f management structure. Based on the analysis certain
recommendations are made for the improvement.
The study was carried out and the report being presented for the fulfillment of degree
requirement of M.Com at the Govt College of Management Sciences Abbottabad

1.4 Scope of the study

The main focus of the study is to describe the working of Askari Bank at branch level.
An evaluation of selected departments is carried out, and after some critical analysis
recommendations are given.

1.5 Methodology of the study

The study makes use of one kind of data, secondary source.

1.5.1 Secondary Data

Certain types of information such as the background details of the organization can be
obtained from available published records, the official web site of the organization and
other sources. Other types of written information such as company policies, procedures

2
and rules can be obtained from the organization’s records and documents. The
advantage of this data is that we don’t have to search for the needed information and
the disadvantage of this data is that the information may not be up to date as changes
occur in the organization time. For this report the secondary data is taken from annual
reports of 2017-2018.

3
 CHAPTER 2
INTRODUCTION TO THE ORGANIZATION

2.1 Historical Background

Askari Commercial Bank Limited was incorporated in Pakistan on Oct. 09, 1991. The
bank obtained business commencement certificate on Feb. 26, 1992 and started
operations from April. 1, 1992, as public limited company, and has since expanded into
a nation-wide presence of 200 branches, handled by a human capital of 8000 employees
and lowest turnover in Pakistani banking sector. The bank is listed on the Karachi,
Lahore and Islamabad stock exchanges and the initial public offerings was
oversubscribed by 20 times AKBL is principally engaged in the business of banking as
defined by the Banking Companies Ordinance, 1962.
AKBL continues to scale new heights in all areas of its operations. The safety and
security of depositor’s funds, high productivity and optimum use of technology are the
hallmarks of its corporate strengths.
While capturing the largest market shares among the new banks. AKBL has provided
good value to its shareholders. Share price of AKBL has remained approximately 15%
higher the average share price of quoted banks during the last four year.
Askari Bank is principally engaged in the business of banking as defined in the
banking company’s ordinance, 1962. As at December 31, 2002 the bank had total
assets of PKR 70.313 billion, with over 250,000 banking customers.

2.2 General information

2.2.1 Vision
To be pre-eminent financial institution in Pakistan and achieve market recognition both
in quality and delivery of service as well as the range of product offering.

2.2.2 Mission
To be the leading private sector bank in Pakistan with an international presence,
delivering quality service through innovative technology and effective human resource

4
management in a modern and progressive organizational culture of meritocracy,
maintaining high ethical and professional standards, while providing enhanced value to
all our stake-holders, and contributing to society.

2.2.3 Core Values

The intrinsic values, which are the corner-stones of its corporate behavior, are:
 Commitment
 Integrity
 Fairness
 Teamwork
 Service

2.3 Corporate Objectives

 To achieve sustained growth and profitability in all areas of business.

 To build and sustain a high performance culture, with a continuous improvement

focus.

 To maximize use of technology to ensure cost–effective operations, efficient

management information system, enhanced delivery capability and high service
standards.

 To develop a customer–service oriented culture.

2.4 Strategic Planning

 To comprehensively plan for the future to ensure sustained growth and profitability.

 To facilitate alignment of the Vision, Mission, Corporate Objectives and with the
business goals and objectives.

 To provide strategic initiatives and solutions for projects, products, policies and
procedures.

 To provide strategic solutions to mitigate weak areas and to counter threats to

profits.

5
 To create and leverage strategic assets and capabilities for competitive advantage.

2.5 Corporate Profile

Board of Directors ( As on 18th July, 2018)
Lt. Gen. Khalid Nawaz Khan, HI (M) (Retd)
Chairman - Board of Directors

Lt Gen Shafqaat Ahmed, HI(M) (Retd)

Director

Lt. Gen. Muhammad Haroon Aslam, HI (M),S Bt (Retd)

Director

Mr. Qaiser Javed

Director

Dr. Nadeem Inayat

Director

Mr. Manzoor Ahmed (NIT)

Director

Mr. Asif Reza Sana

6
Director

Mr. Zaffar Ahmad Khan

Director

Mr. Tariq Hafeez Malik

Director

Mr. Muhammad Ghous

Director

Syed M. Husaini
President & Chief Executive
Source: Source :http://akbl.com.pk/about-us/corporate-information/board-of-directors/
(Accessed on 01/05/2019)

2.6 Branch Network

During the year, Askari Bank opened 50 new branches including 4 Banking branches
and 11 sub-branches. We now offer services through a network of 200 branches,
including the wholesale bank branch in Bahrain. Through this branch network, we are
able to present our wide range of products and services to our valued customers.
Strategic branch expansion remains our priority to cover all important towns and cities
and to explore new markets in the smaller towns for our retail, agriculture and
Banking products and services, supported by our technology based services such as on-
line banking and ATMs.
The system of regional and area offices has been introduced since 1999 for the effective
supervision and control of branches. The scope of the system also spans the

7
development and management of the Bank’s business and activities, on a regional
basis.
Under this system, the Regional Heads have the primary responsibility for business
development, profitability, productivity, operational efficiency and credit quality. It has
now enabled the Bank to further expand and diversify its geographical reach and
business activities. Geographically, the bank is divided into the following regions and
200 branches.

SOUTH REGION
Karachi I 10
Karachi II 10
Karachi III 10
Karachi IV 10
Hyderabad 13
Quetta 9
Corporate 1
Banking 7
Total (South) 70
CENTRAL REGION
Lahore I 10
Lahore II 10
Lahore III 9
Faisalabad 11
Gujranwala 10
Multan 10
Corporate 1
Banking 8
Total (Central) 69
NORTH REGION
Islamabad 15

8
Rawalpindi I 12
Rawalpindi II 10
Peshawar 12
Banking 5
Total (North) 60
WHOLESALE
Bank Branch (Bahrain) 1
TOTAL BRANCHES /SUB-BRANCHES 200
Table 1 Branch network

9
2.7.1 AKBL Abbottabad Organizational Chart

Source: Self Made

2.8 Account opening department

This department is responsible for the opening and closing of accounts. In
consideration of AKBL, opening and/or continuing to maintain any account, the

10
Account Holder/Depositor or Investor would be bound by the terms and conditions
written on the account opening form.
The first part establishes the preference regarding the type of account to be maintained.
The various choices offered in this regard are:
 Current Account.
 Saving/ PLS Account.
 Basic Banking Account.

2.8.1 Current Account

The current account is the most common account and the most preferred amongst
business concerns. There is no restriction on the amount of withdrawal. Current
account enables the client to do cash transactions in a more efficient manner.

2.8.2 Saving / PLS Account

In Pakistan (PLS) saving account was introduced in January 1982. Individuals who
wish to invest their money in order to get profit maintain this account.

2.8.2.1 Features
 The minimum balance requirement for opening the account is Rs.1000.
 There can be profit or loss on the investment of the Customer’s funds deposited
with the bank and this amount shall be acceptable to the Customer. The profit is
paid half yearly.
 Deduction of Zakat.
 No Service Charges to close the account.
 Service Charges for maintaining minimum Balance Rs.50

2.8.3 Basic Banking Account

Basic Banking Account is opened is AKBL. The minimum amount deposit in this
account is very small as compared to other accounts.

11
2.9 The Account Opening Form
When a client comes to the bank, and makes a request for opening of an A/C. The
officer says that first fill up a prescribed application form.

2.9.1 Completion of The Form

The name, occupation, and complete address of the person opening the account are
written in the columns that are provided in the form. Signatures are obtained from the
customer where it is required. These signatures should be usual signatures and he
would operate the account with them.

2.9.2 Introduction
The introduction of a current account holder is accepted for the opening of either a
current account or a saving account. The introducer should be Account Holder. The
signature of the account-holder introducing the account is obtained at the place
provided for in the account opening form.
Specimen Signature Card, Cheques Book Requisition, Online Form:-
The signatures of the client are obtained on a specimen Signature card Cheque book
requisition and online form. These specimen signature cards are obtained in duplicate
with two signatures on each card from the customer. Every time a Cheque is received
for a payment from the client, the signature on the Cheque are verified by comparing
them with the Specimen Signature Card.

2.9.3 Account Number

When all the formalities are completed then the final approval of account has to be
taken from the Branch Manager. After obtaining approval of the branch manager an
account number is allotted to the customer all the information is entered into the
computer. Then that account number is written on the Cheque Book, Specimen
Signature cards and account opening form.

2.9.4 Send the form to Head Office

12
After fulfill all the requirement and verify the form from operation manager the account
opening form send to Head Office Rawalpindi and make request to issue the printed
cheque book.

2.9.5 Issuance Of A Cheque book

After opening an A/C with the bank, the A/C holder receive a letter of thanks from
Head Office then after receiving this letter client come to bank and makes a request in
the name of bank for the issuance of a Cheque book. The A/C holder mentions title of
A/C, A/C number, signs it properly. Normally AKBL issues a Cheque book having 25
leaves for Saving Account and 50 leaves Cheque Book to Current Account Holder.
Every Cheque book also contains one leaf that is used for another issue of a Cheque
book.

2.9.6 Entry of a Cheque book

Before issuance of a Cheque book, the employee performs certain functions. They
include:
Stamping requisition slip that is in Cheque book.
Enters it in the Cheque book issue register.
Check whether or not a senior officer has verified the signatures, if not then first gets
them verified.
After entry in the manual register, the employee issues the Cheque book to the A/C
holder with his/her signature on the register.

2.10 TYPES OF ACCOUNT

2.10.1. Accounts of General Customers
 Minor Account
 Illiterate Person Account
 Joint Account

2.10.2. Accounts of Special Customers

13
 Individual Account
 Proprietorship Account
 Partnership Account
 Limited Company’s Account
 Account of Club Societies and Association
 Agents Account
 Trust Account

2.11 Remittances department

Meanings of Remittances
“Remittance is transfer of funds from one place to another or from one person to
another.”
A Remittance is an important service provided by banks to customers as well as non-
customers. Since it is not a free service it is a source of income for the bank.

2.11.1 Parties involve in remittances

Four parties involved in remittance:-
1.Remitter
2.Remittee
3.Issuing Bank
4.Paying Bank

1. Remitter
One who initiates, or requests for a remittance. The remitter comes to the issuing or
originating branch, asks for a remittance to be made, and deposits the money to be
remitted. The bank charges him a commission for this service. He may or may not be
the branch’s customer.

2. Remittee
A Remittee is also called the beneficiary, or the payee. The person in whose name the
remittance is made. A remittee is also the one who receive the payment.

14
3. Issuing Bank
The bank that sends or affects the remittance, through demand drafts, telegraphic
transfers, or Mail Transfers.

4. Paying Bank
Paying Bank also knows as the drawee branch. The branch on which the instrument is
drawn. It has to make the payment (usually located in a different city country).

5. Kind of remittances
Transfer within the branch
Transfer from one branch to another
Transfer from one bank to another bank in the same city
Transfers from one bank to another bank in two cities.

6. Instruments used in remittances

 Demand Draft (DD)
 Pay Order (PO)
 Pay Slip
 Call Deposit Receipt (CDR)
 Telegraph Transfer
 Rupees Traveler Cheque (RTC)
 Cancellation of PO, DD & CDR
 Advance Tax against Remittances

2.11.1 Demand draft

Demand Draft is a negotiable instrument, which is drawn by one branch to another
branch of the same bank. In case of agency arrangement Demand Draft can also be
issued by one branch of the bank payable to other branch of the other bank e.g. DD
issued by the AKBL payable by UBL.

2.11.2 Process of the issuance of DD

15
When a customer requests AKBL Abbottabad to provide him a DD made on his
account or against cash payment for a particular city like Abbottabad Then, after having
the total amount including commission demand draft is issued in favor of the specified
person in that city and is drawn on AKBL Abbottabad Branch. So, when payee in any
bank presents this demand draft, it constitutes the inward clearing of AKBL
Abbottabad branch
When AKBL receive the Demand Draft then it pass the following entry

2.11.2 Pay order

Pay order is a negotiable instrument made by the bank, on account of a customer, to
pay on order the specified amount to the directed person (payee).

2.11.2.1 Use of Pay Order:-

Pay orders are used to make payment or to transfer money, with in the same city. Pay
order is always drawn on the bank that has issued it. The main advantage of pay order
is that it cannot be dishonored by the bank. Pay order can be endorsed if it is not
crossed. The payee may present pay Order for payment either over the counter for cash
payment or the payee may transfer credit to his account.

2.11.2.2 Process of issuance of pay order

Process of issuance of pay orderCash Deposited or gives Cheque in favor of AKBL
Fill Application Form for Pay Order and signed by Applicant
Entry in Bank Smart
Bank issue a Pay Order after recovering Charges (2 Copies) which is signed by two
officers
Do necessary Vouchering and Take Signature of Applicant at the Place of received
Instrument
Copy of Pay Order is given to Customer
Copy is for Filing Purpose

2.11.3 Pay slip

16
“It is a negotiable instrument like cheque issued by the bank on its own account to pay
a specified amount to the directed person.”

2.11.3.1 Use of Pay Slip

Pay Slips are used to make payment by the bank itself against certain expenses
incurred; like furniture purchased by bank, electricity charges.

2.11.3.2 Issuance of pay slip

 Bank issue a pay slip in favor of person, to whom payment is made.
 Affixes payee’s Account only stamp.
 Revenue stamp pasted on it.
 Entry in bank smart.

2.11.4 Cash Deposit Receipt (CDR)

AKBL also issues Cash Deposit Receipts (CDR).
“It is an instrument like Cheque issued by the bank on account of a customer & in favor
of a person, to pay the specified amount”.
CDR’s are issued to make payments, especially when a company goes for some tenders
or for purchase of government securities. The bank enjoys the benefit of keeping funds
deposited until the payment is not made.

2.11.5 Telegraph Transfer

Telegraphic Transfer or Telex Transfer , often abbreviated to TT, is an electronic
means of transferring funds overseas. A transfer charge is collected while sending
money.

2.11.6 Rupee Traveling Cheque

It is just a shape of Demand Draft. The difference is that it is not drawn on the specified
branch. It can be drawn on any branch of the same bank.
The paying bank has to verify the signatures and after verification payment is made.

2.11.7 Cancellation of PO, DD and CDR

17
After issuance of Pay Order, Demand Draft or Call Deposit Receipt by AKBL
Abbottabad if any one of these has to be cancelled by the customer, it is returned in the
bank. Then, after deducting the cancellation charges of Rs.100 for PO and Rs. 200 for
DD, the remaining (net) amount is paid to the customer.

2.11.8 Advance Tax against remittances

Advance Tax is deducted on issuance of PO & DD from customers except those who
have tax exemption form and credited in Tax on PO & DD account. Tax deducted has
to be paid to State Bank of Pakistan (SBP) with in one week of issuance of these
instruments.

2.11.9Collection
All the cheques under collection are called cheques under Collection in AKBL. There
are two types of bills for collection:
 Outward Bills for Collection (OBC)
 Local Bills for collection (LBC)

2.11.10 Out ward bills for collection

All the cheques are received on one counter along with the paying slips duly filled in
properly containing particulars of cheques and account holder. Counter folio of paying
slip is handed over to the customer by putting stamp for “cheque received for collection
for AKBL” on it duly signed by officer. These cheques are scrutinized and cheques for
local clearing are separated from OBCs. Cheques for local clearing are entered in
Clearing Register, whereas cheques for collection are entered in OBC register. OBC
number is allotted to the cheque from OBC register. Special crossing and bank
endorsement stamps are affixed on the cheque.

OBC Title Of Account Drawn Mailed Instrument Amount

Date Initial
No Account No On To No Rs.

18
Local bill for collection
If any other bank sends a cheque of AKBL, it is Inward Bill for Collection. AKBL
remits money after checking the balance of the customer account.
The process of collection starts when the cheques of AKBL are received from other
banks. Then these cheques are sent to the Head Office Karachi, which sends the
cheques to SBP for clearing and get the confirmation of cheque and credit advice. Main
activity of clearing is performed by Head Office, which contacts other banks through
SBP　

2.11.8　Clearing department

2.11.8.1 Meaning of clearing

The word clearing has been derived from the word “clear” and is defined as:“A system
by which banks exchange cheques and other negotiable instruments drawn on each
other within a specific area and thereby secure payment for their clients through the
Clearing House at specified time in an efficient way.”

2.11.8.2 Explanation
By clearing means sometimes the account holder of AKBL present a cheques, which is
not drawn on AKBL but the person, has an account in AKBL. In this case bank accepts
this cheques in clearing department and later on collets the amount from bank on which
cheques is drawn through clearing house. This function is called clearing.

2.11.9 Clearing House

It is a place where representatives of all banks sit together and interchange their claims
against each other with the help of controlling staff of NIFT.

19
It is one of the services provided by NIFT to other commercial banks. NIFT acts as a
clearinghouse. Different banks are the members of the clearinghouse. A representative
of each bank represents his bank in the clearinghouse.
Each bank has collected cheques as behalf of their customer but these cheques are not
drawn on their own bank so in the clearinghouse, they hand over these cheques to
respective banks on which these cheques are drawn. Similarly each bank receives
cheques from other banks if any.

2.11.10 Types of clearing

There are four types of clearing
1. Inward Clearing
2. Outward Clearing
3. Intercity Clearing
4. Same Day Clearing

1. Inward Clearing
Those Cheques and other negotiable instruments which are drawn on AKBL, sent by
other banks, constitutes the inward clearing of AKBL. After having all the stamps and
dates of cheques confirmed, the concerned drawer’s accounts are debited in AKBL
Abbottabad.

2. Inward Return
Return may be of any reason
 Presentation Flaw e.g. Clearing stamp not affixed or wrong discharge given by
collecting banker.
 Defect in the Cheques i.e. Post dated cheques, unauthorized cutting.
 Insufficient Balance.

3. Outward Clearing
When cheques and other negotiable instruments drawn upon other banks like City
Bank, MCB, UBL or Bank Alfalah of the same city (Abbottabad) are presented in

20
AKBL Abbottabad to deposit them in the respective payee’s accounts, these
instruments are lodged in outward clearing of AKBL Abbottabad.

5. Inter City Clearing

The cheques that are presented in inter city clearing are of another city and received by
air. In this type of clearing the bank confirm at that time that the cheques are clear or
not and give to the rider.

6. Same Day Clearing

The cheques that are presented in same day clearing are the local cheques and these
cheques are clear in same day. Basically it is the benefit that are provided to customer.
　

2.12 Accounts department

This department is responsible to keep the record of each and every transaction and
prepare reports about the amount of deposits and advances and sent to Head office or
State Bank of Pakistan on monthly, quarterly and yearly basis.

2.12.1 Activities
The accounts department deals with various routine activities for the bank. The main
activities performed by it are:-
a) Budgeting
b) Reporting
c) Maintenance & depreciation of fixed assets

a) Budgeting
Accounts department of a bank, for a year makes budget of every branch. Fiscal year of
bank starts from January 01 and ends on December 31. The accounts department starts
preparing budget from October for the next year.

b) Reporting
The accounts department, in the form of reports, clubs the details of various
departments together. Each and every minute detail is provided in weekly, monthly and

21
annual reports. The reports are submitted to head office, SBP and to the government.
The accounts department prepares many reports, of which the most common are:-
 Statement Of Affairs
 Income & Expenditure
 Business Report
 SBP Report
 Outstand Receipt Report
 Currency Wise Deposits Report
c) Maintaining of Fixed Assets & their Depreciation
Accounts department maintains the record of all the assets and charges depreciation on
them. The bank normally uses the straight-line method to compute the depreciation.
It is calculated on monthly basis and charged yearly. Bank not only depreciates the
existing assets but also the assets but also the assets transferred in and transferred out.

2.13 Cash department

The cash department is the most important department of the bank. It receives cash
from customers and then deposits it into the accounts of the customers and maintained
their balances.
The officers in this department are called teller and there were four tellers at the
counter. This department involves in two activates
1. Deposit cash in customer’s account
2. Make payments from customer’s account
Deposit Cash In Customer’s Account
When the customer want to deposit amount in his account at opening of account or
after that then he has to fill a deposit slip that shows the amount and the account in
which the cash will be deposited. Then teller will receive amount and credit the
customer’s account that shows increase in customer’s bank account.
Make Payments From Customer’s Account
When the customer draws a cheque on the bank to pay a certain amount then teller will
debit the customer’s account that shows reduction in his account balance.
There are two main types of cheques that are
1. Open Cheques

22
2. Crossed Cheques

1. Open Cheques
Open Cheques are those cheques, which are paid across the counter of the bank. Open
cheques may be
a) Bearer Cheques
b) Order Cheques.
c) Crossed Cheque

a) Bearer Cheque
If the drawer orders the bank to pay a stated sum of money to the bearer, it is called a
bearer cheque. Any person who lawfully possesses a bearer cheque is entitled to receive
payment of that cheque.

b) Order Cheque
The amount of this cheque is payable to the person whose name is written on the face
of the cheque. The amount is paid at counter after identification of that person.

c) Crossed Cheque
The amount of this cheque is not paid at counter. The amount of this cheque is
transferred to the person’s account whose name is specified on the cheque. Two parallel
transverse lines are drawn across the face of the cheque.

Kinds Of Crossing
Legally there are two kinds of crossing
a) General Crossing
b) Special Crossing

a) General Crossing
In case of General Crossing the payment can only be deposited into the payee’s account
only.

23
b) Special Crossing
In case of Special Crossing the payment can only be made to bank named therein the
cheque.

2.14 Credit department

a good financial support when officials of this department invest money of depositors
into feasible projects by lending loans to various business concerns. As the core activity
of bank is to provide short-term finance, which is mostly for working capital
requirements. As business concerns have money to complete the one production cycle,
but it is not necessary that amount would be received just after sale, but credit sales are
also made. So to finance next production cycle they obtain loans from commercial
banks on short-term basis, for continuity in operations.

2.14.1 Evaluation of client

This is the first requisite for team of credit department, to evaluate the client's position
regarding the financial and business performance concern. As for as, credit policy of
AKBL. is concerned, it doesn't given loan to individuals & business concerns.

2.14.2The five C’s of Credit

Credit team officials should be known as the five C's of lending. These are discussed
below:

i) Capital:
 The capital & resources of the borrower.
 The capital structure of the borrower and the gearing ratios.
 Is the borrower Under-capitalized?
 Does the borrower has its own resources to fall back on, in case of need.

ii) Capacity:
 Capacity or the capability of the borrower to manage his business profitably and the
capacity to repay the advances and service the facilities according to agreed terms.
 Is the borrower in a capacity to borrow? or is there any legal complication?

24
iii) Collateral:
 The security provided against the facilities.
 Is the security provided: Adequate, Realizable, Marketable, Valuable, Storable,
Non-perishable, Durable, Transferable/with clear Title. Transportable un-cumbered
etc?

iv) Character:
 Is the borrower's personal character, market standing and reputation impeccable?
 Has he met his part commitments?
 Does he have good bank reference.

v) Conditions:
 Have the conditions of lending been drawn up taking into account all possibilities
or
eventualities?
 Is the sector/industry in decline, is growing or it has reached at plateau?
 Is there a market for the products and the market size to justify production plans
and sales forecasts?

2.15 Credit card department

2.15.1 Types of Credit Card

 There are two Types of Credit Card.

 BACHELOR
 VISA

2.15.2 Further types of Visa Card

AKBL visa card offering following types of cards.
 Visa Gold
 Visa Classic
 Visa Classic Blue
25
 Women Exclusive

2.16 Trade finance departments

Trade Finance involves the import and export activities. This department provides
protection to the rights of importer and exporter. The function of this department is to
serve as a bridge between the importer and exporter in order to settle a transaction.
Trade Finance Department handles two activities:-
a)Import
b)Export

a) Import
Import Department of AKBL deals with the import of merchandise. Import can be
defined as:
　
b) Exports
Exports are major sources of earning foreign exchange and play an important role in
the economic development of the country. It helps to utilize excess resources of the
country.

Exports of all eligible commodities through authorized banking channels are admissible
under exchange control regulation.

26
 CHAPTER 3
PRODUCTS & SERVICES

3.1 Consumer Banking Services

3.1.1 Askari Mahana Bachat Account (1 + 3 Years Term)

Askari Mahana Bachat Account is a Term Deposit facility available to individual

customer with the option of 1 and 3 Years tenure. It has been designed keeping in view
savings needs of individual investors who don’t want to block their funds for longer
terms, with a competitive rate of return paid monthly on the 1st of every month. A
financing facility up to 90% will be available for customers if required.

3.1.2 Askari Roshan Mustaqbil Deposit

27
Askari Bank has launched the Askari Roshan Mustaqbil Deposit, a saving plan
specially designed for individual investors who wish to invest now for a regular return
at a later stage while keeping their principal amount intact. With Askari Roshan
Mustaqbil Deposit you can double your investment in a time period of ten years. Invest
now in the form of monthly deposits for five years and get paid back the same amount
for the next five years while receiving your principal amount in full at the end of the
tenure.

3.1.3 Askari Deposit Multiplier Account

Aim higher with your investments with Askari Deposit Multiplier account. This
account is for individual investors whose purpose is long term savings with high
returns. With a tenure of 10 Years and a competitive rate of return on maturity this
account is ideal for investors who wish to start saving for their future today.

3.1.4 Value Plus Deposits

28
Askari Bank leads the way, yet again with the introduction of Askari Value Plus
Rupee Deposit Accounts, which promise greater financial freedom and security, in an
un-matched way.Now you can open a "Value Plus Account" while enjoying the
flexibility of a normal checking account.

3.1.5 Askari Card

Askari Bank is committed to provide you innovative and competitive solutions to your
banking needs in a more efficient and personalized manner. Your Bank enjoys a
strategic competitive advantage over all domestic players by virtue of its leadership,
large network and technological advancement. In line with our tradition of innovation,
Askari Bank takes pride in announcing launch of Askari Bank's Debit Card.

29
Askari Debit Card means freedom, comfort, convenience and security, so that you can
have retail transactions with complete peace of mind. Askari Debit Card is your new
shopping companion which enhances your quality of life by letting you do shopping,
dine at restaurants, pay your utility bills, transfer funds, withdraw and deposit cash
through ATM anywhere, anytime.

3.1.6 Travelers Cheques

Askari Bank Limited has always remained at forefront in introducing innovative and
unique products in banking sector. Our financial instruments provide greater financial
freedom and security in an unmatched way to our valued customers.
Askari Bank offers you its "Rupee Traveller Cheques" eliminating all financial risks
while traveling. So avoid risk of carrying cash through Askari Bank's Rupee Traveler
Cheques.

3.2 Askari finance and loans

3.2.1 Smart Cash

30
This personal line of credit would be set up with a specified credit limit upto Rs.
500,000/-
3.2.2 Personal Finance

Personal Finance is a parameter driven product for catering to the needs of the general
public belonging to different segments. One can avail unlimited opportunities through
Askari Bank's Personal Finance. With unmatched finance features in terms of loan
amount, payback period and most affordable monthly installments, Askari Bank's
Personal Finance makes sure that one gets the most out of his/her loan.

3.2.3Mortgage Finance

31
Askari "Mortgage Finance" offers the convenience of owning a house of choice, while
living in it at its rental value. The installment plan has carefully designed to suit both
the budget & accommodation requirements. It has been designed for enhancing
financing facility initially for employees of corporate companies for purchase/
construction/ renovation of house.

3.2.4Business Finance

In pursuance of the National objectives to revive the economy of the country, AKBL is
providing loans to small and medium size business enterprises under Askari Bank's
Business Finance Scheme. Our goal is to offer a loan, which enables business
community to receive the financing required by them based on their cash flows. Our
valued customers can enjoy the convenience of getting financing on attractive terms
with the minimum processing turnaround time.

32
3.3Askari Banking Services
Banking was launched under the brand 'Askari Banking', by opening 6 dedicated
Banking branches in major cities of the country. Further expansion is planned with
improved capabilities for offering products conforming to the Shariah principles.
Askari Banking opens the doors for Halal banking solutions. Our objective is to put in
place an efficient banking system suuportive to economic justice and welfare of society
in line with Shariah standards.
A comprehensive range of Banking products and services is bieng offered, in order to
meet customer's demand of Shariah Compliant Banking, in the following areas:
 Corporate Banking

 Investment Banking

 Trade Finance

 General Banking

 Consumer Banking

Banking products have been approved by the Bank's Shariah Advisor. As per Shariah
requirements, funds and products of Banking are managed seperately from the
Conventional Banking side. All funds obtained, invested and shared in Halal modes &
investments, under supervision of the Shariah Advisor.

3.4 Investments products

3.4.1 Askari Paishgi Munafa Term Deposit
Askari Paishgi Munafa term deposit account is an innovative addition in the wide range
of bank’s products and value added services. This unique product will meet the
immediate financial needs of individual investors who want to invest funds for a
medium term. The most significant feature of this product is that the customer will
receive the entire profit upfront.

3.4.1.1Additional Benefits for Customers:

 Financing Facility up to 80% of Principal amount.

 Free Visa Debit Card issuance.

33
 No Minimum Balance requirement in checking account.

 Free Pay Orders in a month.

 No maximum limit for investment.

3.4.2 Askari Mahana Bachat Account (1 + 3 Years Term)

Askari Mahana Bachat Account is a Term Deposit facility available to individual
customer with the option of 1 and 3 Years tenure. It has been designed keeping in view
savings needs of individual investors who don’t want to block their funds for longer
terms, with a competitive rate of return paid monthly on the 1st of every month. A
financing facility up to 90% will be available for customers if required.
If you need any further information / assistance, please contact your nearest Askari
Bank branch or call at our Toll Free number 0800 00078. You can also mail your
queries along with your interest in our various other products too.

3.4.3 Askari Roshan Mustaqbil Deposit

Askari Bank has launched the Askari Roshan Mustaqbil Deposit, a saving plan
specially designed for individual investors who wish to invest now for a regular return
at a later stage while keeping their principal amount intact. With Askari Roshan
Mustaqbil Deposit you can double your investment in a time period of ten years. Invest
now in the form of monthly deposits for five years and get paid back the same amount
for the next five years while receiving your principal amount in full at the end of the
tenure.
If you need any further information / assistance, please contact your nearest Askari
Bank branch or call at our Toll Free number 0800 00078. You can also mail your
queries along with your interest in our various other products to:

3.4.4 Askari Deposit Multiplier Account

Aim higher with your investments with Askari Deposit Multiplier account. This
account is for individual investors whose purpose is long term savings with high
returns. With a tenure of 10 Years and a competitive rate of return on maturity this
account is ideal for investors who wish to start saving for their future today.

34
3.4.5 Askari value plus deposits

3.4.5.1 The Best You Deserve

Askari Bank leads the way, yet again with the introduction of Askari Value Plus
Rupee Deposit Accounts, which promise greater financial freedom and security, in an
un-matched way.Now you can open a "Value Plus Account" while enjoying the
flexibility of a normal checking account.

3.4.5.2 Types of Value Plus Account

1) Value Plus Current Account
2) Value Plus Saving Account
3) Value Plus Time Deposits

3.4.6 Askari rupee traveller cheques

Askari Bank Limited has always remained at forefront in introducing innovative and
unique products in banking sector. Our financial instruments provide greater financial
freedom and security in an unmatched way to our valued customers. Askari Bank
offers you its "Rupee Traveller Cheques" eliminating all financial risks while traveling.
So avoid risk of carrying cash through Askari Bank's Rupee Traveler Cheques.
3.4.7 ASKCARD
Askari Bank is committed to provide you innovative and competitive solutions to your
banking needs in a more efficient and personalized manner. Your Bank enjoys a
strategic competitive advantage over all domestic players by virtue of its leadership,
large network and technological advancement. In line with our tradition of innovation,
Askari Bank takes pride in announcing launch of Askari Bank's Debit Card.
Askari Debit Card means freedom, comfort, convenience and security, so that you can
have retail transactions with complete peace of mind. Askari Debit Card is your new
shopping companion which enhances your quality of life by letting you do shopping,
dine at restaurants, pay your utility bills, transfer funds, withdraw and deposit cash
through ATM anywhere, anytime.

3.4.8. Internet Banking Services

35
In pursuance of our quest to provide the most modern service to our customers, we
offer banking through internet. Askari Bank is the first bank in Pakistan to provide
such service to its valued customers which is absolutely FREE.

3.4.8.1 Important Features

 Balance enquiry

 Funds transfer

 Statement of accounts

 Chage of password

 Free payment of utility bills

 Payment of school fee

3.4.9 Electronic Bill Payment Services

It has always been our endeavour to introduce products and services tailor made to the
requirement of our valued customers. Now you can pay your Utility Bills through:
 ASKCARD (Askari Debit Card),
 Askari bank's ATMs Nationawide
 Internet Banking Services
 Call Center.

3.4.10 Cash Management Services

Askari Cash Management Services, aimed to effectively manage the accounts
receivable portfolio of medium and large corporate entities. While this service helps the
corporate entities to improve their liquidity, due to our well diversified branch network.
The service primarily aims at providing clearing, collection and cash / transfer facility
to corporate, under one resource center, which will handle the process through the
branches and provide adequate reporting to the corporate clients, on various aspects of
their accounts receivable portfolio, every month.

3.4.11 Investment Certificates

36
Askari Bank's Investment Certificates not only provide the added security, investment
and monthly return to the customers. These certificates are negotiable and can be
transferred to third party. Investment Certificates can be issued for a period of 3 months
and profit is payable on monthly basis through pre-printed tear-off coupons.

3.5 Agriculture finance solutions

3.5.1 Kissan Ever Green Finance
Askari Bank has launched this program with the sole motive to provide dignity,
prosperity and freedom to the tiller of the land. The program is designed to help small,
medium and large farmers in meeting their short-term input requirements against one
time sanction and automatically renewable upto 3 years subject to its stipulated
utilization/periodical adjustment. The credit line is sanctioned in the light of available
cash flows and input requirements i.e. Seeds, Fertilizer & Pesticides etc.

3.5.2 Kissan Tractor Finance

Traditional modes of cultivation viz Bullocks, Camels, horses etc can no longer keep
pace with the demands of present times due to manifold increase in the population.
Power in the form of modern technology is therefore the need of the hour. To meet this
emergent requirement, Askari Bank has launched a Askari Kissan Tractor Finance to
bring power to the fields.

3.5.3 Kissan live stock development finance

In order to supplement the income of the farmer, Askari Bank has launched a program
enabling the farmer to purchase Milch Animals, Goats, Sheep, Poultry and Fisheries
without incurring extra expenditure because of availablility at his farm. He will be able
to get milk, meat and eggs etc., which normally do not form part of his diet. This
program has the added advantage that besides fulfilling his own family’s consumption
needs he will be able to market the surplus and earn additional income. This will
further improve their cash flows to repay their other Loans / Revolving Credit on due
date.

37
3.5.4 kissan farm mechanization finance
Beside Power at the farm i.e. Tractor, the benefits / advantages of power are maximized
with the use of Mechanical Support i.e. modern and improved equipments which
essentially complement one another due to their cost effectiveness and time efficiency.
Askari Bank has launched an Askari Kissan Farm Mechanization Finance for the
assistance of the small farmers and provides finance for farm equipment, trailer,
thresher, drills & rotavators etc.

3.5.5 kissan farm transport finance

A grave handicap that afflicts our farmers is their inability, due to lack of proper
facilities, to take their produce to the market through efficient means of transportation.
This adversely affects the freshness, quality of the product and denies them the
desirable Price-Fetching opportunity. Conversely, they lack mobility to acquire much
needed inputs essential for their farming needs. One can safely conclude that if
provided with appropriate and speedy transport, the farmer can benefit by enhancing
his selling ability and thus increase his income / cash flow. it is pertinent to mention
that a number of Banks, Leasing Companies and Private Agencies have geared their
marketing efforts to concentrate on and have mainly captured the urban markets. There
is no support provided to cater to the transport needs of deserving rural farmer’s
community. Askari Bank true to its commitment has taken the lead to launch Askari
Kissan Farm Transport Finance.

3.6 Corporate & Investment Banking Group (CIBG)

As Askari Bank, we understand the unique business requirements of our corporate and
institutional clients, and accordingly, strive to meet their expectations through the
provision of a customized, relationship based banking approach, through the Corporate
and Investment Banking Group (CBIG)
CIBG is a one-window operation that provides all requisite banking services for our
corporate clientele in an efficient, dependable, consistent, and competitive manner – the
objective being to become your “bank of first call” for all your financial needs.
CIBG is specifically structured to provide dedicated banking services and products to
its corporate customers through two key divisions.

38
3.6.1 Corporate Banking Division

IBD provides value-added, specialist services and products through a dedicated team of
professionals, with world-class skills, to provide customized solutions to help our
clients meet their strategic objectives. IBD is responsible for seamlessly originating,
executing and distributing all forms of investment banking transactions ranging from
syndicated loans to complex structured and project financing transactions. Some
examples of products offered by IBD include:
 Strategic Advisory

 Privatization Advisory

 M & A Advisory

 Balance Sheet Restructuring

 Syndications

 Project Finance

 Finance

 Private Placements of Debt and Equity

 Issuance and distribution of Term Finance Certificates and Sukuk Bonds.

3.6.1.1 Ask Sona Card

Ask Sona Card is a joint venture of Askari Bank Limited (AKBL) & Fauji Fertilizer
Company Limited (FFCL), specially designed to create convenience and cater to the
business needs of FFCL and its dealers. It is an innovative, high-tech electronic cash
management solution that replaces the existing conventional collections system. The
payment/transaction specific debit card is proprietary technology, with plastic money
features which will revolutionize the concept of transfer of funds.
Askari Bank has become the market leader in cash management solutions with the launch
of Ask Sona Card. Please visit your nearest Askari Bank Branch to avail this facility.

39
 Features
 FAQs
 User-friendly

 Safe and easy to carry

 Plastic money, error free and cost effective

 Highest per-transaction limit of Rs. 2 million with

unlimited number of transactions in a day

 Instant transfer of funds from dealer’s account to FFCL account

 Instant confirmation of merchandise booking

 Ask Sona Card will only be used to purchase products from FFCL

 Ask Sona Card will have an expiration date of 5 years

 Zero issuance and replacement charges (once in a calendar year)

 Card accepted at all FFCL sales points across Pakistan basis

 Instant confirmation of funds transfer through SMS

3.6.2 Askari Kissan Evergreen Finance

Features Details

Product Profit Earning Account

Type:

Eligibility: Pakistani resident (individual)

Security: Mortgaged charge on agricultural land through the Zari Pass

Book

Profit Profit on credit balances will be paid on half yearly basis as

Amount: declared by the bank on PLS savings accounts

Tenor: Yearly Basis

40
Markup: The mark-up is charged for the actual days the finance is
utilized

Benefits: A special cheque book is issued to the farmer

Automatic renewal upon adjustment of the entire

principle amount with an annual mark-up

The account is farmer’s friendly in two ways. If the

account is in credit, it earns profit, otherwise it provides
instant finance to the farmer for his agricultural needs

41
 3.6.3 Askari Kissan Tractor Finance
 Features

Features Details

Product Profit Earning Account

Type:

Eligibility: Pakistani resident (owner as well as non-owner farmers)

Tenure: 5 years

Benefits: The farmer will have the privilege of availing non-

funded facility at reduced cost under this program on
account of more equity participation

Good farmer bonus will be available to the borrower

in case the loan is repaid as per terms of sanction

The farmer’s life, as well as his tractor will be

insured against contingencies, which will provide comfort
and peace of mind

Priority in delivery of tractor will be given by

manufacturer as per arrangements with the Bank

42
 CHAPTER 4
ANALYSIS OF ASKARI BANK

4.1 Introduction
The importance of financial statement analysis lies in their utility to satisfy the question
in the mind of stakeholders. Different classes of people are interested in the financial
statements with a view to assessing the economic and financial position of any business
or industrial concern in term of profitability, liquidity or solvency etc. for example, the
commercial banks are mainly interested in short term liquidity and profitability while
prospective investors may be investors may be interested in long terms liquidity and
solvency.
Financial statements among other things include balance sheet and income statement.
Balance sheet presents assets and liabilities of the business at a given date. Besides
showing the ability of the business to service the loans on the strength of its financial
structure and its profitability, helps in judging the impact of financial and fiscal
support.

4.1.1 Purpose of Financial Analysis

The analysis of Financial Statements (FS) is to examine past and current financial data
so the company’s performance and financial position can be evaluated and future risk
and potentials can be estimated. The analysis can yield valuable information about
tends and relationship, the quality of a company’s earnings, and its financial strengths
and weaknesses.

43
4.2 Balance Sheet
2018 2017

  (Jan – Dec) (Jan – Dec)

Assets    
Cash and Balances with treasury bank 49,187,645 44,239,325
Cash and Balances with other bank 4,093,402 3,193,835
Lending to financial Institution   2,250,000
Investments 260,233,987 314,956,748
Advances 343,107,147 258,693,086
Fixed Assets 12,791,827 9,885,958
Intangable Assets 741,361 842,869
Defferd tax Assets 3,773,779 100,755
other Assets 32,522,174 28,448,099
Assets attributable to discontinued operaion 214,757 327,949
  706,666,079 662,938,624
Liabilities    
Bills Payable 15,512,880 10,769,262
Borrowings 52,702,323 71,587,311
Deposits & Other Accounts 573,596,926 525,805,051
Liabilities against asset subject to F.lease    
Subordinated debts 9,993,600 4,992,800
Deferred tax liabilities    
other liabilities 21,178,476 17,098,223
Liabilities attributable to discontinued operaion 81,513 140,741
  673,065,718 630,393,388
Net Assets 33,600,361 32,545,236
     
Represented by    
Share Capital 12,602,602 12,602,602
Reserves 15,588,694 12,032,263
Surplus on revaluation of assets    
Continued Operation 1,649,197 5,142,254
discontinued operation 5,723 19,877
Unappropriated profit 3,710,867 2,703,887
  33,557,083 32,500,883
Non-controling interest 43,278 44,353
  33,600,361 32,545,236
Table 2 Balance Sheet

44
45
4.2 Analysis
The financial data of Askari Bank Limited is analyzed in the following two ways

4.3 Vertical analysis of balance Sheet

2018 2017

  (Jan – Dec) 2018% (Jan – Dec) 2017%

Assets      
Cash and Balances with treasury

bank 49,187,645 6.96% 44,239,325 6.67%

Cash and Balances with other bank 4,093,402 0.59% 3,193,835 0.48%
Lending to financial Institution   0.00% 2,250,000 0.34%
Investments 260,233,987 36.83% 314,956,748 47.51%
Advances 343,107,147 48.55% 258,693,086 39.02%
Fixed Assets 12,791,827 1.81% 9,885,958 1.49%
Intangable Assets 741,361 0.10% 842,869 0.13%
Defferd tax Assets 3,773,779 0.53% 100,755 0.02%
other Assets 32,522,174 4.60% 28,448,099 4.29%
Assets attributable to discontinued 214,757 0.03% 327,949 0.05%

operaion
  706,666,079 100% 662,938,624 100.%
Liabilities      
Bills Payable 15,512,880 2.20% 10,769,262 1.62%
Borrowings 52,702,323 7.46% 71,587,311 10.80%
Deposits & Other Accounts 573,596,926 81.17% 525,805,051 79.31%
Liabilities against asset subject to

Finance lease
Subordinated debts 9,993,600 1.41% 4,992,800 0.75%
Deferred tax liabilities      
other liabilities 21,178,476 3.00% 17,098,223 2.58%
Liabilities attributable to

discontinued operaion 81,513 0.01% 140,741 0.02%

  673,065,718 95.25% 630,393,388 95.09%
Net Assets 33,600,361 4.75% 32,545,236 4.91%
       
Represented by      

46
 Share Capital 12,602,602 1.78% 12,602,602 1.90%
Reserves 15,588,694 2.21% 12,032,263 1.81%
Surplus on revaluation of assets      
Continued Operation 1,649,197 0.23% 5,142,254 0.78%
discontinued operation 5,723 0.00% 19,877 0.00%
Unappropriated profit 3,710,867 0.53% 2,703,887 0.41%
  33,557,083 4.75% 32,500,883 4.90%
Non-controling interest 43,278 0.01% 44,353 0.01%
  33,600,361 4.75% 32,545,236 4.91%
Table 3 Vertical Analysis
4.3.1 Interpretation
Vertical analysis is an analysis of financial statements where the total assets divide all
balance sheet items of asset side and all credit side balances divided by all liability
items, and all income statement items are divided by net sales/revenues. Common size
analyses are extremely helpful to highlight changes over the time in financial
performance and financial conditions of the company. The table shows Vertical
analysis of the balance sheets for the years, 2017 & 2018.
Assets
Assets are things that a company owns and are sometimes referred to as the resources
of the company. An asset is a resource with economic value that an individual,
corporation or country owns or controls with the expectation that it will provide future
benefit. Assets are reported on a company's balance sheet, and they are bought or
created to increase the value of a firm or benefit the firm's operations. The vertical
analysis result for Assets in AKBL’s Balance sheet are explained below.

Cash and balances with treasury banks 6.67% in 2017 increased to 6.96% in 2018.
Balances with other banks 0.48% in 2017 to 0.59% in 2018. Investments decreased
from 47.50% in 2017 to 36.82% in 2018. Advances 39.02% in 2017 to 48.55% in 2018.
fixed assets increased from 1.49% in 2017 to 1.81% in 2018. Intangible asset are same
as 0.1% in 2017 to 0.1% in 2018. Deffered Tax Assets increased from 0.01% in 2017
to 0.5% in 2018. Other Assets increased from 4.29% in 2017 to 4.60% in 2018. Assets
discontinued operations are same as 0.03% in 2017 to 0.03% in 2018.

Liabilities

47
Bills payable increased from 1.62% in 2017 to 2.20% in 2018. Borrowings decreased
from 10.80% in 2017 to 7.46% in 2018. Deposits and other accounts` increased from
79.31% in 2017 to 81.16% in 2018. Sub-ordinate loans increased from 0.75% in 2017
to 1.41% in 2018. Other liabilities increased from 2.57% in 2017 to 3% in 2018.
Liabilities discontinued operations decreased from 0.02% in 2017 to 0.01% in 2018.
Total Liabilities increased from 95.09 in 2017 to 95.24 in 2018. Net Assets decreased
from 4.90 in 2017 to 4.75 in 2018.

48
4.4 Horizontal analysis of Balance Sheet

Table 4 Horizontal Analysis of Balance Sheet

2018 2017 2017 Vs

2018 %
(Jan – Dec) (Jan – Dec)
Assets
Cash and balances with treasury 49,187,645 44,239,325 11.18
banks
Balances with other banks 4,093,402 3,193,835 28.16
Lending to financial institutions - 2,250,000
Investments 260,233,987 314,956,748 (17.37)
Advances 343,107,147 258,693,086 32.63
fixed assets 12,791,827 9,885,958 29.39
Intangible asset 741,361 842,869 (12.04)
Deffered Tax Assets 3,773,779 100,755 36.45
Other Assets 32,522,174 28,448,099 14.32
Assets discontinued operations 214,757 327949 (34.51)
706,666,079 662,938,624 6.59
Liabilities
Bills payable 15,512,880 10,769,262 44.04
Borrowings 52,702,323 71,587,311 (26)
Deposits and other accounts` 573,596,926 525,805,051 9.09
Sub-ordinate loans 9,993,600 4,992,800 100
Other liabilities 21,178,476 17,098,223 23.86
Liabilities associated with 81,513 140,741 (42.08)
discontinued operations
673,065,718 630,393,388 6.76
Net Assets 33,600,361 32,545,236 3.24
Represented by
Share Capital 12,602,602 12,602,602 0
Reserves 15,588,694 12,032,263 29.55
Continued Operations 1,649,197 5,142,254 (67.92)
Discontinued Operations 5,723 19,877 (71.20)
49
 unappropriate profit 3,710,867 2,703,887 37.24
Non-Controlling Interest 43,278 44,353 (2.42)
33,600,361 32,545,236 3.24

4.4.1 Interpretation

Assets:

The assets of the AKBL have been growing very fast since its inception. This growth
is the result of the massive expansion policy the management has been following ever
since the inception of AKBL .

One of the important ingredients of any bank‘s growth is increase in most of current
assets that is a good sign as it increases their liquidity. Let us first have a look at the
liquid assets.

The Horizontal analysis shows that Cash and balances with treasury banks increased to
11.18% in 2018 and the Balances with other banks increased 28.16% in 2018.

In earning asset, the lending to financial institutions is decreasing whereas the other
investments decreased 17.37% and advances increased 32.63% . However the
investments have decreased in 2018. The 29 %Increase in the fix assets might be due to
branch expansion.

Liabilities:

As regards the liability section of the balance sheet chief liability of bank is its deposits
it generates from its customer. The Horizontal Analysis reveals that Bills payable
increased 44.04% in 2018 and the Borrowings decreased 26% as compared to 2017.

The ratio of increase in deposits in 2018 is 9.08% which is increase in 2017.

Equity:

Bank‘s Share Capital profits is same as 2017

50
4.5 Ratio Analysis
Ratio analysis is the most commonly used analysis to judge the financial strength of a
company. It is a quantitative relation between two magnitudes of the same kind. This
comparison allows the firm to detect major operating differences. the main categories
of ratios are.

4.5.1 Current ratio

The current ratio is a liquidity and efficiency ratio that measures a firm's ability to pay
off its short-term liabilities with its current assets. The current ratio is an important
measure of liquidity because short-term liabilities are due within the next year.
This means that a company has a limited amount of time in order to raise the funds to
pay for these liabilities. Current assets like cash, cash equivalents, and marketable
securities can easily be converted into cash in the short term. This means that
companies with larger amounts of current assets will more easily be able to pay off
current liabilities when they become due without having to sell off long-term, revenue
generating assets.
The current ratio is calculated by dividing current assets by current liabilities. This ratio
is stated in numeric format rather than in decimal format. Here is the calculation:

Current Ratio

Current Assets 2017= 44239325+3193835+2250000+314956748+258693086

=623332994
Current Libalities 2017= 10769262+71587311+525805051=608161624
Current Assets 2018=49187645+4093402+260233897+343107147=656622091
Current Libalities 2018= 15512880+52702323+573596926=641812129

CURRENT ASSET/CURRENT RESULT

YEARS LIABILITIES
2017 623332994/608161624 10.24%

2018 656622091/641812129 1.02%

51
Interpretation
Current ratio for the year 2017 is 10.24%, which decreased to 1.02% in 2018

4.5.2 Net Working Capital

Net working capital is a liquidity calculation that measures a company’s ability to pay
off its current liabilities with current assets. This measurement is important to
management, vendors, and general creditors because it shows the firm’s short-term
liquidity as well as management’s ability to use its assets efficiently.
Much like the working capital ratio, the net working capital formula focuses on current
liabilities like trade debts, accounts payable, and vendor notes that must be repaid in the
current year. It only makes sense the vendors and creditors would like to see how much
current assets, assets that are expected to be converted into cash in the current year, are
available to pay for the liabilities that will become due in the coming 12 months.
Formula

The net working capital formula is calculated by subtracting the current liabilities from
the current assets. Here is what the basic equation looks like.

YEARS CURRENT ASSETS – RESULT

CURRENT LIABILITIES
2017 623332994-608161624 15171370
2018 656622091-641812129 14809962

Interpretation
The calculation of this ratio show that net working capital in 2017 was Rs. 15171370
while in 2018 it is decreased to Rs. 14809962

4.5.3 Debt to Equity Ratio

The debt to equity ratio is a financial, liquidity ratio that compares a company's total
debt to total equity. The debt to equity ratio shows the percentage of company
financing that comes from creditors and investors. A higher debt to equity ratio
indicates that more creditor financing (bank loans) is used than investor financing
(shareholders).

52
The debt to equity ratio is calculated by dividing total liabilities by total equity. The
debt to equity ratio is considered a balance sheet ratio because all of the elements are
reported on the balance sheet.

YEARS TOTAL LIABITIES/TOTAL RESULT

EQUITY
2017 630393388/32545236 19.3%
2018 673065718/33600361 20.03%

Interpretation
Debt to equity ratio for the year 2017 is 19.3% while it increased in the current year
2018 to 20.03%, due to constant decrease in the liabilities

4.5.4 Debt Ratio

Debt ratio is a solvency ratio that measures a firm's total liabilities as a percentage of its
total assets. In a sense, the debt ratio shows a company's ability to pay off its liabilities
with its assets. In other words, this shows how many assets the company must sell in
order to pay off all of its liabilities.
This ratio measures the financial leverage of a company. Companies with higher levels
of liabilities compared with assets are considered highly leveraged and more risky for
lenders.
This helps investors and creditors analysis the overall debt burden on the company as
well as the firm's ability to pay off the debt in future, uncertain economic times.

The debt ratio is calculated by dividing total liabilities by total assets. Both of these
numbers can easily be found the balance sheet. Here is the calculation:

53
 YEARS TOTAL LIABILITIES/ RESULT
TOTAL ASSETS
2017 630393388/662938624 0.95
2018 673065718/706666079 0.95

Interpretation
Debt ratio is same in 2018 and 2017 i.e 0.95% which should be increased every year.

4.5.5 Equity Ratio

The equity ratio is an investment leverage or solvency ratio that measures the amount
of assets that are financed by owners' investments by comparing the total equity in the
company to the total assets.
The equity ratio highlights two important financial concepts of a solvent and
sustainable business. The first component shows how much of the total company assets
are owned outright by the investors. In other words, after all of the liabilities are paid
off, the investors will end up with the remaining assets.
The second component inversely shows how leveraged the company is with debt. The
equity ratio measures how much of a firm's assets were financed by investors. In other
words, this is the investors' stake in the company. This is what they are on the hook for.
The inverse of this calculation shows the amount of assets that were financed by debt.
Companies with higher equity ratios show new investors and creditors that investors
believe in the company and are willing to finance it with their investments.

YEARS TOTAL EQUITY/TOTAL RESULT

ASSETS
2017 32545236/662938624 0.05
2018 33600361/706666079 0.05
Interpretation
The equity ratio is calculated by dividing total equity by total assets. Both of these
numbers truly include all of the accounts in that category. In other words, all of the
assets and equity reported on the balance sheet are included in the equity ratio

54
calculation. Equity ratio for the year 2017 and 2018 is same 0.05% it is a good sign for
the organization.

4.5.6 Net Interest Margin:

Net interest margin (NIM) is a measure of the difference between the interest income
generated by banks or other financial institutions and the amount of interest paid out to
their lenders, relative to the amount of their assets. It is similar to the gross margin of
non-financial companies

Interest Expenses / Interest

Years Income
2017 2071958/16195262 0.12
2018 25059925/18609958 1.4
Interpretation.

This ratio examines how successful a firm's investment decisions are compared
to its debt situations. The interest margin ratio in 2017 is 0.12% while it
increased in 2018 to 1.4% which is favourable for the bank, because investment
decisions are well planed.

4.5.8Earning Asset to total assets

An asset that produces money for a company without any work needing to be
done. Earning assets include such things as loan, Lease, stocks, bonds,
certificates of deposit, and generally anything that earns interest or dividends.
Earning assets include loan, Lease, investment securities and money market
assets. This ratio show that the contribution of these assets to total assets.

Interest Earned/Total
Years Assets
2017 36267220/662938624 0.05
2018 43669883/706666079 0.06

55
Interpretation
The ratio of earning to total assets in 2018 is 0.06 and in 2017 it was 0.05which is
almost same, but the increase could be favorable.

4.5.9 Return on Earning Assets.

An indicator of how profitable a company is relative to its earning assets. ROEA gives
an idea as to how efficient management is at using its assets to generate earnings.

Years Net income/interest

income
2017 2,940,149/16,195,262 0.18
2018 1,109,189/18,609,958 0.05
Interpretation
Return on earning assets is decreases in 2018 as compared to previous year, due to
inefficient management of AKBL, showing unfavorable trend.

56
4.5.10 Equity to Total Assets.
The equity to debt ratio show how much AKBL have equity out of total assets.

YEARS EQUITY/TOTAL ASSETS

2017 32,545,236/662,938,624 0.04
2018 33,600,361/706,666,079 0.04

Interpretation
This ratio shows the ownership of the bank. In both 2017 and 2018 it is 0.04 which
shows in 2018 bank equity are same.

4.5.11 Efficiency Ratio

NPL, are loans that are no longer producing income for the bank that owns them. Loans
become nonperforming when borrowers stop making payments and the loans enter
default. The exact classification can vary from institution to institution, but a loan is
usually considered to be nonperforming after it has been in default for three
consecutive months.

4.5.12 Credit to Deposit ratio(CD ratio)

YEARS ADVANCES/ DEPOSITS

2017 258,639,086/525,805,051 0.49

2018 343,107,147/573,596,926 0.59

Interpretation
Credit to deposit ratio shows how much bank uses deposit to advances. In 2017 bank
use 0.49% deposit for advances but in 2018 bank use 0.59% deposit for advances.

57
 CHAPTER 5
FINDINGS/ RECOMMENDATION

Findings and Recommendations are considered to be the most important part of

internship report, without which no report is considered complete and meaningful.
Realizing the importance of this section, efforts have been made to give feasible
recommendations, which are categorized under the following headings.

5.1 Findings
5.1.1 Employee empowerment
Bank recognizes its employees as the prime asset and key contributors to the
performance of the bank and places great emphasis on the attraction, development, and
motivation of its employees.

5.1.2 Better compensation packages

During the year, the compensation package was substantially improved in order to
Enhance employee’s motivation and loyalty.
5.1.3 Involvement of Higher Management
Whatever AIBL have achieved would not have been possible without the patronage and
support of the manager, which is greatly appreciated and acknowledged.

5.2 Conclusion
After analyzing Askari Bank as a whole and its Finance department in particular the
following outcomes have been concluded:

 One of the major aspects regarding the efficiency of entity is to focus on the
financial management concerned with the acquisition, financing & management
of asset with some overall goal in mind. It has been observed that the bank
relies more on its interest rate giving less attention of utilizing its earning assets.

58
  It is concluded that the bank’s ability of decision making is effective and
profitable but its charges may effect on its deposits.

 The bank’s shareholders fund is showing percentage more than the share
capital, which shows that the bank own capital is less than the shareholders
capital.

 Increasing trend in ROA indicates that Askari bank is profitable relative to its
total assets; it means the return on the investments is positive.

 Analysis shows that return on earning assets have decreased as compared to

2009 analysis which indicates that the income generated by the assets for the
bank has decreased.

 Cost to income ratio of the Askari Bank has slightly increased, which indicates
that the firm is less efficient in reducing its cost.

 Corporate customer credibility has decreased during time.

5.3 Recommendations
Low interest rate should be imposed on advancement of loans and high rate of profit
for depositors. Deposit growth and loan growth are also both important. If deposit
growth is weak, other more expensive sources of funds might have to be tapped.
Likewise, if loan growth is sluggish, it will be more difficult for the bank to earn a
profitable spread on the money it controls.

 SBP should maintain the interest rates

 The bank should be efficient in collecting the outstanding loans.

 Bank should control their administrative expenses and spending in order to

maintain a optimal efficiency ratio.

 Higher margins can be a sign of great management. But it could the result of
riskier lending policies. Narrower margins can suggest trouble on the
deposit side and a higher cost of funds. Or it could mean more conservative
lending practices. Context matters when comparing numbers.

 Bank should enhance and utilize their earning assets for income rather than
depending on the loans and interest income.

59
 The higher authority should form team-based manager rather than
centralized management. It would result in improvement in uplifting the
morale of the employees. They will be more motivated and involved in all
their operations resulting in overall effectiveness of the organization.

 It is recommended that the employees should be trained to be polite and

maintain silence as much as possible and not to discuss politics or personal
problems with each other during work hours. This disturbs the working
environment of the bank and other employees cannot perform their work
properly.
 There is no proper delegation of authority. Executive at all level should be
given sufficient power and authority to make quick decisions. This will
increase the effectiveness and efficiency of the organization.

60
 REFERENCES

 AKBL Annual Report of Askari Bank Limited for the year 2017

 AKBL Annual Report of Askari Bank Limited for the year 2018

 Iffland, Charles & Langueton, Pierre. (1996); International Banking. New York.
Irwin Book Co:

 Khan Rana, Safdar Hussain & Ahmad, Shabir. (1991); Banking Currency and
Finance. Lahore Ilmi Kutab Khana:.

 Saeed, M Nasir. (1994); Economics of Pakistan. Lahore Ilmi Kutab Khana:

 Siddiqi, Asrar H. (1998): Practice And Law Of Banking In Pakistan (6th Ed).
Karachi. Royal Book Co:

 www.Askari bank.com.pk (last accessed on 3rd July 2019)

61