Internship Report On

Main Branch Rawalakot

Submitted By
Syed Zain-Ul-Abdin
Roll no: 05
Session: 2015-19

Department of Business Administration

Faculty of Management Sciences
University of Poonch Rawalakot

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 Dedicated

To

My beloved father

Who give me the courage to dream high

&

Open up avenues for me to explore my abilities

My most loving mother

Whose selfless love with always be cherished

But can never be repaid

&

Most respectful teachers

Who’s loving support in every aspect?

Enabled me to achieve what my parents had inspired me

to dream

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 TABLE OF CONTENTS

S. No TOPIC Page No
4. Acknowledgements Vii
5. Executive Summary Viii

CHAPTER No. 1

Introduction of AJK Bank

1.1 Banking Evaluation 01
1.1.1 Earliest Banks 01
1.1.2 During the Darns and Middle Ages 02
1.2 Western Banking History 03
1.2.1 Capitalism 04
1.3 Evolution of Banking in Pakistan 05
1.4 Definition of Bank 05
1.5 Types of Bank 06
1.5.1 Central Bank 07
1.5.2 Commercial Bank 07
1.5.3 Agriculture Bank 07
1.5.4 Industrial Bank 08
1.5.5 Co-Operative Bank 08
1.5.6 Saving Bank 08
1.5.7 Mortgage Bank 08
1.5.8 Investment Bank 09

2.0 Basic Function of Commercial Banks 09

CHAPTER No. 2

History of Bank of Azad Jammu & Kashmir

2.1History of the Bank of Azad Jammu & Kashmir 12
2.1.1As mandated by the stature of its establishment,
the Bank is required to achieve the following objectives? 13
2.1 Kashmir Bank Initiatives 13
CHAPTER No. 03
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Financial Statements
3.1 Financial Statements 20
3.2 Profit & Loss Account 21
3.3 Ratio Analysis 22
CHAPTER No. 04
Industry Analysis, Competitor’s Analysis and Swot Analysis
4.1 Porter Five Forces Model 29
4.1.1 Rivalry Among Competing Firms 29
4.1.2 Potential Entry of Competitors 29
4.1.3 Potential Development of Substitute Products 29
4.1.4 Bargaining Power of Suppliers 30
4.1.5 Bargaining Power of Consumers 30

4.2 Competitor’s Analysis 30

4.2.1 Local Private Banks in Pakistan 30
4.2.2 Foreign Banks in Pakistan 31
4.2.3 Nature of Competition 32
4.3 Competitor’s Goals and Strategies 32
4.3.1 United Bank Limited 32
4.3.2 MCB Bank 33
4.3.3 Askari Bank 33
4.3.4 Citi Bank 34
4.4 SWOT Analysis 35
4.4 SWOT Analysis of AJK Bank 35
4.4.1 Strengths 35
4.4.2 Weaknesses 37
4.4.3 Opportunities 37
4.4.4 Threats 39

CHAPTER No. 05

My Personal Experience
5.1 My Personal Experience 40
5.2 Activities accomplished done by me at bank 40
5.2.1 Accounts Department 40

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5.2.2 Opening of account by an individual 41
5.2.2.1An Introduction 41
5.2.2.2 Accounts opening form and specimen signature card 41
5.2.2.3 Specimen Signature Card 42
5.2.2.4 Account opening register 42
5.2.2.5 Issuance of Cheque Book 42
5.2.2.6Issuance of Pass Book 43
5.2.2.7Recording into General Ledger 43
5.3 Types of accounts maintained by AJK Bank of Pakistan 43
5.3.1 Current Account 43
5.3.2 Profit & Loss saving account 44
5.3.3 Fixed Deposit Account 45

5.4 Remittance Department 45

5.4.1 Remittance Meaning 45
5.5 Cash Department 47
5.5.1 Functions of Cash Department 47
5.5.1.1Cash Receipt 47
5.5.1.2Encashment of Cheque 48
5.6 Finance / Credit Department 49
5.6.1 Procedure for Granting of loans 50
5.6.2 Granting of Loan 51
5.7 Types of Loans 51
5.8 Computer Department 52

Chapter 06

Conclusion & Recommendations

6.1 Conclusion 53
6.2 Recommendations & Suggestions 54

References 57

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 EXECUTIVE SUMMARY

It is well known that time and tide waits for none. Due to this rapid change in time

and era we have to cope with it. During this era the student got an ample

opportunity of getting practical knowledge about the Banking system in Pakistan.

So to quench the thirst of practical exposure and for getting the basic knowledge

about practical field the student joined the bank of Azad Jammu and Kashmir.

During eight week in AJK Bank they all necessary information were gathered

about it.

Report is compiled in such a way that it will be easier to understand both for

students and supervisors. For this purpose report is divided into four chapters.

First chapter is about what is an internship and benefits of internship for students.

Second chapter is about Introduction of AJK Bank and its management and

workings, in third chapter third SWOT analysis of company is given, and in last

chapter financial ratios are enclosed.

At last I must say that this text is designed to stimulate the curiosity about

management practices of AJK Bank and to raise reader’s consciousness about the

Insurance system working in Pakistan and outside the Pakistan.

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 Acknowledgements

I am thankful to Almighty Allah Who gave me the strength, patience, courage and

enthusiasm needed to write and complete this report then to my friends who

assisted me in this effort and we worked day long to accomplish this assignment

and to my parents who supported me financially and encouraged me morally. I

have a debt of gratitude to all my teachers who taught me throughout my academic

career.

It was pleasure for me to be sent to the AJK Rawalakot Branch District Poonch. I

am very thankful to the honorable Internship incharge. I learnt a lot from this

training program and this would guide me a lot while selecting my career. I learnt

how to face the problems, how to find out the ways for their solutions and how to

deal with customers in a marketplace.

The preparation of this report was a massive undertaking but the highly competent

and experienced bankers of AJK Rawalakot Branch provided me with all

assistance, Information, advice and suggestions that I needed which contributed

importantly to this report.

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 Chapter # 01

INTRODUCTION OF AJK BANK

1.1 Banking Evaluation

It is believed tha the english word “bank” derived from the italian word

“banco”,because Jewish bankers sat them while providing currency exchange and

loan services, normally in populous areas like market or preaching halls. “Bank”

may also trace its origins to the German word “Banch”meaning “a pile” ,the word

Germans used to represent a kind of public debt. Regardless of how originated

banks have been important financial insititutions linking the economies of world

historically banks functioned to provide deposit, loan and currency exchange

services .With time, these banking services become increasingly important to a

nation’s economic advancement.

1.1.1 Earliest Banks

The first banks were probably the religious of the ancient world. In them were

stored gold in the form of easy-to-carry compressed plates. Their owners justly felt

that temples were the safest places to store their gold as they were constantly

attended, well built and were sacred, thus deterring would be thieves. There are

extant records of loans from the 18th century BC in Babylon that were made by

temple priests to merchants.

Ancient Greece holds further evidence of banking. Greek temples as well as private

and civic entities conducted financial transactions such as loans, deposits, currency

exchange, and validation of coinage. There is evidence too of credit, whereby in

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return for a payment from a client a moneylender in one Greek port would write a

credit note for the client with him on his journey.

Ancient Rome perfected the administrative aspect of banking and saw greeter

regulation of financial institutions and financial practices. Charging interest on

loans and paying interest on deposits became more highly developed and

competitive.

1.1.2 during the Dark and middle Ages

The ascent of Christianity in Rome and its influence restricted banking, as the

charging of interest was seen as immoral. Jews were ostracized from most

professions by local rulers, the Church and the guilds were pushed into marginal

occupations considered socially inferior, such as tax and rent collecting and money

lending, while the provision of financial services increasingly demanded by the

expansion of European trade and commerce.

A Great deal of Jewish legal scholarship in the Dark and the middle Ages was

devoted to making business dealings fair, honest and efficient. One of the great

problems was usury, or rather lending money at interest. This was a problem the

Jews had created for themselves, and for the two great religions which spring from

Judaism. Most early religious systems in the ancient Near East, and the secular

codes arising from them, did not forbid usury. These societies regarded inanimate

matter as alive, like plants, animals and people, and capable of reproducing itself.

Hence if you lent ‘food money’ or monetary tokens of any kind, it was lent

legitimate to charge interest. Food money in the shape of olives, dates, seeds of

animals was lent out as early as c. 5000 BC, if not earlier… Among the

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Mesopotamians, Hittites, Phoenicians and Egyptians, interest was legal and often

fixed by the state. But the Jews took a different view of the matter.

The Torah and later sections of the Hebrew Bible criticize interest-taking, but

interpretations of the Biblical prohibition vary. One common understanding is that

Jews are forbidden to charge interest upon loans made to other Jews, but allowed to

charge interest on transactions with non-Jews, or Gentiles. However, the Hebrew

Bible itself gives numerous examples where this provision was evaded. Johansson

holds that the Hebrew Bible treats the lending as philanthropy in a poor community

whose aim was collective survival, but which is not obliged to be charitable

towards outsiders.

Ironically, the papal bankers were the most successful of the Western world. When

Pope John XXII (born Jacques d’Euse (1249-1334) was crowned in Lyon in 1316.

He set up start of the Lombard money changers in Europe, who moved from city to

city along the busy pilgrim routes important for trade. Key cities in this period were

Cahors, the birthplace of Pope John XXII, and Figeac. Perhaps it was because of

these origins that the term Lombard is synonymous with Cahorsin in medieval

Europe, and means pawnbroker.

Templars wide flung larger, land holdings across Europe also emerged in the1100-

1300 time frame as the beginning of Europe-wide banking as their practice was to

take in local currency for which a demand note would be given that would be a at

any of their castles across Europe, allowing movement of currency money without

usual risk of robbery while traveling.

1.2 Western Banking History

Modern Western economic and financial history is usually traced back to the coffee

houses of London. The London Royal Exchange was established in 1565. At that

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time moneychangers were already called bankers, though the term “bank” usually

referred to their offices, and did not carry the meaning it does today. There was

also a hierarchical order among professionals; at the top were the bankers who did

business with heads of state, next were the city exchanges, and at the bottom were

the pawn shops or “Lombard’s. Most European cities today have a Lombard street

where the pawn shop was located.

After the siege of Antwerp trade moved to Amsterdam. In 1609 the

Amsterdamsche Wisselbank (Amsterdam Exchange Bank) was founded which

made Amsterdam the financial center of the world until the Industrial Revolution.

Banking officers were usually located near centers of trade, and in the late

17th century, the largest centers for commerce were the ports of Amsterdam,

London, and Hamburg. Individuals could participate in the lucrative East India

trade by purchasing bills of credit from these banks, but the price they received for

commodities was dependent on the ships returning (which often didn’t happen on

time) and on the cargo they carried (which often wasn’t according to plan). The

commodities market was very volatile for this reason, and also because of the many

wars that led to cargo seizures and loss of ships.

1.2.1 Capitalism

Around the time of Adam Smith (1776) there was a missive growth in the banking

industry. Within the new system of ownership and investment, money holders were

able to reduce the State’s intervention in economic affairs, remove barriers to

competition, and, in general, allow anyone willing to work hard enough-and who

also has access to capital-to become a capitalist. It wasn’t until over 100 years after

Adam Smith, however, that US companies began to apply his policies in large scale

and shift the financial power from England to America.

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1.3 Evolution of Banking in Pakistan

The State Bank of Pakistan was set up on July 1, 1948. As the central bank of the

country. At the time of independence it was decided that Reserve Bank of India

would provide the central bank services to both Pakistan and India. The

establishment of Central bank was necessary because Reserve Bank of India

refused to allow credit against securities to Govt. of Pakistan. The share in cash Rs.

750 million from the joint assist was not handed over to Pakistan.

In the developed societies, the bank do not have to make many efforts in

mobilizing savings, as it has become a second habit with the people. The

commercial banker financing the short and long-term capital needs of the business.

The loan and discounters of commercial banks include real state mortgages and

long term loans, which extend to as long period as ten years.

These banks also act as insurance agents and underwrites, provide brokerage

services and implement domestic as well as foreign economic policies of the Govt.

Commercial banks in developing countries have to make vigorous efforts of

resource mobilization at all levels. However, with the passage of time the

commercial banking operation is undergoing remarkable qualitative change. In

Pakistan for instance, banking facilities are being extended to the unbaked places.

Planed efforts are being made to enhance the supply of bank advance to the new

priority sectors in consonance with the present dystocia-economic needs.

1.4 Definition of Bank

 According to Banking Companies Ordinance, 1962, section 5(6) “Banking

means acceptance for the purpose of lending or investment, of deposit

money from the MCB bank limited, repayable on demand or otherwise.

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  Depository financial institution: a financial institution that accepts deposits

and channels the money into lending activities; “he cashed check at the

bank”; that bank holds the mortgage on my home”

 Sloping land (especially the slope beside a body of water); “they pulled the

canoe up on the bank”; “he sat on the bank of the river and watched the

currents”

 A supply or stock held in reserve for future use (especially in emergencies)

 Tip laterally; “the pilot had to bank the aircraft”

 A building in which the business of banking transacted; “the bank is on the

corner of Nassau and Witherspoon”

 Enclose with a bank; “bank roads”

 Do business with a bank or keep an account at a bank; “where do you bank

in this town?”

 Savings bank: a container (usually with a slot in the top) for keeping money

at home; “the coin bank was empty”

 A flight maneuver; aircraft tips laterally about its longitudinal axis

(especially in turning); “the plane went into a steep bank”

1.5 Types of Bank

According to Crowther, Bank is a dealer in debts his own and of other people. The

main

Types are as under:

 Central Bank

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  Commercial Bank

 Agriculture Bank

 Industrial Bank

 Co-operative Bank

 Saving Bank

 Exchange Bank

 Mortgage Bank

 Investment Bank

1.5.1 Central Bank

The central bank is the leader of all other banks. It does not compete for profit. It

has a right to issue notes. It is a bank of government and commercial banks. It

controls the operations of other banks for monetary and economies stability in the

country.

1.5.2 Commercial Bank

The commercial bank receives surplus money from the MCB bank limited and

lends to others who need funds. The bank collects cheque, bills of exchange etc. for

customers. It transfers money from one place to another. It provides agency and

general utility services. The purpose of a commercial bank is to earn profit.

1.5.3 Agricultural Bank

This bank provides loans to farmers for purchase of seeds, fertilizers, implements,

fencing, payment of land and improvement of land and equipments. The main

purpose of the bank is to develop agricultural sector.

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1.5.4 Industrial Bank

The bank meets the credit needs of the industries for short and long term. The

funds are required for purchase of raw material, payment of day-to-dayexpenses,

machinery, building extension and replacements.

1.5.5 Co-operative Bank

The bank is opened by persons of similar occupation living in same areas for

providing banking facilities. The bank is helpful to farmers and small producers. In

Pakistan the co-operative bank is registered under theca-operative society’s act.

1.5.6 Saving Bank

The bank collects saving of people having low income. The people can open

account in saving bank. They can take money back during working hours. A notice

is necessary if the amount exceeds a certain limit. The purpose of this bank is to

develop saving habits among the people with low earning.

Exchange Bank

The exchange banks have their head officers in foreign countries. Such banks deal

in foreign exchange. The banks offer finance to foreign traders import and export

of goods.

1.5.7 Mortgage Bank

The bank provides loans against land and building for short and long term. The

loan is generally granted for agriculture. In Pakistan there is a need of Mortgage

bank. At present HBFC is doing the work of a mortgage bank in housing sector.

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1.5.8 Investment Bank

The bank is opened to buy and sell shares and other securities. It also provides

loans for purchase of shares and debentures etc. It help new companies by under

writing the shares, bonds and other securities.

2.0 Basic Function of Commercial Banks

The basic functions of commercial banks are:

 Accepting of Deposit

 Advancing of Loan

 Agency Services to Customers

 The main deposit scheme introduced by the banks are as follows:

 Current Account

 Saving Account

 Fixed deposit Account

 They make loans and advances in the form of overdraft, cash credit,

discounting bills of exchange. Commercial banks also manufacture credit

money. They also perform agency services and general utility services are

as follows:

 Collection of Cheque

 Collection of Dividends

 Purchase and Sale of Securities

 Execution of Standing Instructions

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 Acting as a Trustee

 The utility services are as under:

 Foreign Exchange Business

 Act as a Referee

 Acceptance of Bills of Exchange

 Issuance of Traveler Cheque

 Supplying of Trade Information

 According to the provisions of Banks Nationalization Act 1974, all the

Commercial Banks were reorganized and merged into the following five

banks:

 AJK Bank Limited

 MCB Bank Limited

 AJK Bank Limited

 Muslim Commercial Bank Limited

 Allied Bank of Pakistan Limited

 Role of Commercial Banks in the Economic Development of the Country

 The commercial banks play a very important role in the economic

development of a country. They are the dealer in debts. They operate as

lenders and deposit administrations. In the absence of banks, the

commercial and industrial revolution would not have taken place. The

economic significance of commercial banks are summarized below:

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 Increase in Production

 Provide Loans to Trade and Industry

 Capital Formation

 Expansion in Business Promotion of Habit of Saving

 Effective Implementation of Monetary Policy

 Help to Basic Section of the Economy

 Help in Bridging the Regional Disparities

 Banks Create Credit

 Having a review of above-discussion we can conclude that a bank or banker

is a dealer in money. He is intermediate party between the borrower and the

lender.

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 Chapter # 02

HISTORY BANK OF AZAD JAMMU & KASHMIR

2.1 History of the Bank of Azad Jammu & Kashmir

In the wake of and aged long desire of the people of the State of Jammu &

Kashmir, the Azad Government of the State has since established the Bank of Azad

Jammu & Kashmir. The Bank in legal parlance took its birth through an

enhancement passed by the Legislative Assembly of the State of Azad Jammu &

Kashmir in the year 2005. The bill passed by the Assembly was finally assented to

by the President of Azad Kashmir. As per the enactment, the authorized capital of

the Bank is two billion rupees divided into two hundred million ordinary shares of

ten rupees each. However, the initial paid up capital of the Bank is five hundred

millions rupees. Further, the State Govt. at all times has to maintain equity

contribution of not less than 51%. For remaining part of the equity, participation

from the private sector shall be sought. In this concern, we are receiving a good

response and are on our war to accept subscription from such parties who have

strong representation in the private sector. Effective November 01, the Bank started

functioning as a non-scheduled commercial bank. To date, the Bank has network of

58 branches. As the time goes on, the Bank is flourishing and marching towards its

destination for locating a better standing in the banking arena. Further, the

Government intends to get the Bank scheduled with the State Bank of Pakistan in

the shortest possible time.

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2.1.1 As mandated by the Statute of its establishment, the Bank is

Required to achieve the following objectives?

 To mobilize private savings and public funds for diverting the same to

productive channels and ensure their availability.

 To promote industrial, agriculture, rural micro financing and othersocio-

economic processes through the active participation of private as well as

public sectors and the State. To help under-developed areas and create

employment opportunities especially in the rural areas of the State. Further,

to guide and assist the people of Azad Jammu & Kashmir serving overseas

to effectively and profitably invest their foreign savings in the State.

 To create a diversified and sound port-folio for utilization of the otherwise

idle funds and other investment in the existing as well as new ventures

specially in the pioneering of high tech, agro based, export oriented and

engineering projects to ensure maximum returns, and

 To participate and seek the share of the State in the capital market by way
of subscription through the locally resources in the leading stock exchanges
of neighboring Pakistan and eventually paving the way for the
establishment of stock exchange in the State.

KASHMIR BANK INITIATIVES

MOU with KASB BANK

KASB Bank signs agreement with Bank of Azad Jammu & Kashmir to extend its

Home Remittance network. An agreement was signed in Islamabad between KASB

Bank Limited and Bank of Azad Jammu & Kashmir to facilitate distribution of

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home remittances through the Bank of Azad Jammu & Kashmir’s 35 branches as

part of the Pakistan and Ministry of Overseas Pakistanis. MOU regarding Home

remittances would open of further avenues of business for the Bank of Azad

Jammu & Kashmir and allow the bank to better serve the people of Azad Jammu &

Kashmir not just here but abroad as well.

MOU with AKRSP

AJKRSP and AJK Bank have agreed develop a long term partnership between the

two parties for the overall goal of providing financial services to the un-

served population of AJK through the platform of community organizations (COs),

village organizations (VOs) and Local support organization (LSOs) fostered by

AJKRSP and its partner RSPs. The long term objective of the proposed partnership

is to link the Cos with AJK Bank so that they access financial services directly

from the bank while the short term objective is to develop some processes to

achieve the long term objective.

Corporate information

Board of Directors

Mr. Choudhary Latif Chairman

Mr. Fazal-Ur-Rehman Managing

Director

Secretary Finance Director

Secretary Revenue Board Director

Secretary Services Director

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 Principal Secretary to PM Director

Mr. Safdar Ali Butt Director

Mr. Chaudhary Muhammad

Yousaf Director

Mr. Khalid Faizi Director

Mr. Zulfiqar Ahmed Abbasi Director

Mr. Mumtaz Khan Director

Mr. Abdul Razzaq Director

Board Committees

Executive Committee

Secretary Finance Chairman

Dr. Safdar Ali Butt Member

Mr. Fazal-Ur-Rehman Member

Audit Committee

Secretary Revenue Board Chairman

Mr. Khalid Fiazi Member

Mr. Zulfiqar Ahmed Abbasi Member

Company secretary

Mr. Maazullah Khan

Chief Financial Officer

Mr. Maazullah Khan

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Auditor

A.F Ferguson and Co. Chartered Accountants

Registered Office

Bank Square Chatter, Muzaffarabad AJK Pakistan

Management of Board of AJK

Managing Director

Raja Mumtaz Ali

Mr. Mumtaz is a professional qualified banker having to his credit rich banking

experience of more that 37 years. He has held various senior management positions

in his banking career.

He is a law graduate and has passed part -1 of banking diploma examination of the

Institute of Bankers, Pakistan

He has started banking profession by joining AJK BANK and there after remained

associated with Allied Bank, where he has performed as Zonal Chief Executive,

Regional Chief Executive and lastly group Head Audit.

He has versatile exposure from bottom to top with deep insight in conflict

management. He has got various achievement awards from financial institutions.

He is highly proactive and self-disciplined.

Mr. Ishtiaq Ahmed Qureshi

Senior Vice President

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Mr. Qureshi if professionally qualified banker and bring with him banking

experience of 35 years. He remained associated with AJK Bank Ltd. Where he held

Senior Management positions as Controlling Officers besides field responsibilities,

as Zonal Chief General Manager Credit, General Manager Administration and

Regional Chief Executive. He grew his career from Junior Officer level and

reached to top field positions by dint of sheer hard work.

He hold Master in English from Punjab University and also passed part-a Diploma

Examination from the Institute of Bankers of Pakistan. He attended various

course/seminars at various financial institutions besides two courses on Credit and

Accounting at LUMS, Lahore. He looks after Human Resource and Treasury

Divisions.

MR. MAAZULLAH KHAN

Mr. Khan is a professionally qualified banker exposure of more than 24 years in

Investment, Commercial and Islamic Banking. Finance and Treasury Operations.

He started his career with National Savings Organization as National Saving

Officer. Thereafter, he remained associated with The Bank of Khyber where he

served at Head Office on various positions. He also remained as Acting Chief

Financial Officer. He specializes in the fields of Finance, Accounting, Treasury and

Islamic Banking.

He holds MS Degree in Management Sciences with specialization in finance from

Institute of Business and Management Sciences, N.W.F.P Agriculture University,

Peshawar, a Masters Degree in Economics from University of Peshawar, a Master

Degree in Business Administration From Mohi-ud-Din Islamic University, Nerian

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Sharif Azad Kashmir, Post Graduate Diploma in Islamic Banking and Finance and

is Diplomaed Associate of the Institute of Bankers, Pakistan.

He is working as Chief Financial Officer and Company Secretary. Besides he is

also Divisional Head Finance and Information Technology.

MR. GHULAM HUSSAIN

Vice President

Mr. Ghulam Hussain is an experienced and qualified banker. He served Allied

Bank Limited for more than 30 years. He is one of the pioneer team members of

AJK Bank. He enjoyed senior management positions at the Bank’s Head Office as

well as the field operations. Now he looks after the Bank’s Operations and

Business Development Divisions.

He is MA and has a vast experience in banking operations.

RAJA MUHAMMAD HANIF

Vice President

Mr. Raja is a professional qualified banker having to his credit rich banking

experience of more than 35 years. He has held various senior management

positions in his banking career. He is MBA, DAIBP.

He has started banking career by joining AJK BANK in 1975. Where he headed

various size of branches for two decades and thereafter has performed as Zonal

Chief, Regional General Manager Administration, operations, credit and audit.

He has multitalented personality with versatile exposure He has got various

achievement awards during his career. He is highly proactive and self-disciplined.

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MR. RAFIQUE KASHMIR

Vice President

Mr. Kashmiri is professional qualified banker having banking experience of more

than 40 years at his credit. He possesses vast all round experience both in the field

of Branch Management and Audit & Inspection. He remained associated with

Allied Bank Ltd, where he held senior positions. Beside Manager Foreign

Exchange, Manager of big branches, he held the position of Zonal Chief, Joint

Circle Executive Regional Audit Chief, Regional Controller Operations, Regional

General Manager, Head Branch Operation and Group Head.

By qualification he is BA, DAIBP

He is graduate from Karachi University and Diploma Associate of the “Institute of

Banker’s in Pakistan”.

He has attended various seminars / courses on Credit Analysis HR Management,

Operations and Audit arranged by leading Institutions in Pakistan. He is very

proactive and highly self disciplined.

He looks after Audit & Inspection Division of the Bank.

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 Chapter # 03

3.1 THE BANK OF AZAD JAMMU AND KASHMIR

STATEMENT OF FINANCIAL POSITION

AS AT DECEMBER 31, 2019

Notes 2018 2019

Rupees in '000

ASSETS

Cash and balances with treasury banks 6 970,020 32,28

Balances with other banks 7 2,120,390 2,667,72

Lending to financial institution 8 - 50,00

Investments 9 297,877 239,16

Advances 10 952,880 330,28

Operating fixed assets 11 32,951 22,98

Deferred tax assets -

Other assets 12 135,447 74,07

4,509,565 3,416,51

LIABILITIES

Bills payable 13 3,356 3,4

Borrowings -

Deposits and other accounts 14 3,883,035 2,876,84

Sub-ordinate loans -

Liabilities against assets subject to finance

lease -

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Deferred tax liabilities 15 1,635 8

Deferred Government grant 16 36

Other liabilities 17 76,742 46,26

3,964,804 2,927,39

NET ASSETS 544,761 489,1

3.2 THE BANK OF AZAD JAMMU AND KASHMIR

PROFIT AND LOSS ACCOUNT

FOR THE YEAR ENDED DECEMBER 31, 2013

2018 2019

Mark-up / return / interest earned 425887 347278

Mark-up / return / interest expensed 176427 145644

Net mark-up / interest income 294460 201634

Provision against non-performing loans and advances 4083 997

Provision against lending to financial institution 25000 ------

Provision for diminution in the value of investment 49940 -------

Bad debts written off directly ---- ------

Net mark-up / interest income after provisions 170437 200637

NON MARK-UP / INTEREST INCOME

Fee, commission and brokerage income 7993 7077

Dividend income 6619 979

Income from dealing in foreign currencies ------ ------

Gain on sale of securities – net 2828 16684

Unrealized gain / (loss) on revaluation of investments ----- -----

classified as held for trading ---- ----

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Other income 1262 2017

Total non-markup / interest income 18702 26757

189139 227394

NON MARK-UP / INTEREST EXPENSES

Administrative expenses 118238 94436

Other provisions / write offs ----- 41

Other charges ----- -----

Total non-markup / interest expenses 118238 94477

PROFIT BEFORE TAXATION 70901 132917

Taxation – current 21340 40472

– prior years ------ ------

– deferred

831 (39)

22171 40433

PROFIT AFTER TAXATION 48730 92484

Basic/ diluted earnings per share – Rupees 1.02 1.93

3.3 Ratio Analysis

The accounting ratio can help to analyze the effectiveness of the organization. By

comparing ratio of two similar nature business we can estimate how the business is

progressing. Similarly figures are only comparable if they have been built up on a

similar basis. The sales figures of company x which treats items as sale only when

cash is received cannot be properly compared with company y which treats item as

sales as soon they are invoice.

1) Current Ratio = C.A / C.L

22
 2018 2019

C.A 4341167 3119460

C.L 3886391 2880277

C.R 1.11 1.15

Comments

Current ratio shows the liquidity position of an organization. The bank of Azad

Jammu Kashmir has a low current ratio. It is less than industry average ratio.

2) Acid Test Ratio = Current Assets – Inventories / Current Liabilities

2018 2019

Quick Assets 3090410 2750013

Current Liabilities 3886391 2880277

Quick Ratio 0.85 0.95

23
Comments

Quick ratio is more liquid than current ratio because more liquid assets are used.

Ajk bank quick ratio is same as to industry average ratio which means it has quick

ability to pay off short term obligations.

3) Sales to Working Capital = Net Sales / Net Working Capital

2018 2019

Sales 425887 347278

Net W.C 454776 439183

Sale to W.C 93% 80%

Comments

This ratio shows how efficiently W.C be operating to generate sale. .

4) Working Capital = Current Assets – Current Liabilities

2018 2019

C.A 4341167 3319460

C.L 3886391 2880277

WC 454776 439183

24
Comments

The bank of Azad Jammu and Kashmir has more current assets and comparative

ratios of W.C tell that W.C is increasing year after year.

5) Net Profit Margin = NIAT/ interest income * 100

2018 2019

NIAT 48730 92484

Net Sale 294460 201643

NP Margin 16.54% 30.0%

Comments

The ratio of 2013, which is 30%, shows that out of 100% sales, The bank of Azad

Jammu Kashmir is earning 30%% as a net profit.

6) Gross Profit Margin = Gross Profit / Interest earned * 100

2018 2019

G.P 170437 200637

25
 Interest 294460 301634

Earned

G.P Margin 57.8% 66.5%

Comments

The ratio of 2012, which is 56.08%, shows that out of 100% sales, The bank of

Azad Jammu and Kashmir is earning 56.08% as a gross profit.

7) Return on Investment (ROI) = NIAT / Investments * 100

2018 2019

NIAT 48730 92484

Investment 297877 239164

ROI 16.3 38.66

Comments

ROI ratio of The bank of Azad jammu and kashmir is comparatively decreasing. In

10, HBL return out of investment is

26
8) Sales to Fixed Assets = Sales / Fixed Assets * 100

2018 2019

Interest Earned 425887 347278

Fixed Assets 32951 22988

Sales to fixed 13% 15%

Assets

Comments

Normal ratio is 2:5; has a low ability to meet the interest expense.

09) Return on Assets = NIAT / Total Assets

2018 2019

NIAT 48730 92484

Total 4509565 3416518

Assets

ROA 0.01 0.02

27
Comments

This ratio shows that in year 10, total asset contribution is 0.12 in every rupee of

net profit

10) Return on Operating Assets = NIAT / Operating Assets * 100

2018 2019

NIAT 48730 92484

Operating 32951 22988

Assets

Return on O.A. 1.47% 4.02%

Comments

Out of total assets, operating assets have 79.85% contribution to net profit.

28
 Chapter # 04

INDUSTRY ANALYSIS, COMPETITOR’S ANALYSIS

AND SWOT ANALYSIS

4.1 Porter’s Five Forces Model

This approach is widely used for competitive analysis. It is because of the high

intensity of competition among companies there five main competitive forces.

4.1.1 Rivalry among Competitive Firms

It is a very powerful force among the competitive forces the strategies pursued by

one firm can be successful only to extent that they provide competitive advantages

over the competitor. These competitive strategies may be lowering prices, best

quality series. The AJK BANK offering very low charges an demand draft,

telegraphy transfer, mail transfer and give other additional services to the

customers and to the Nation.

4.1.2 Potential Entry of New Competitors

Whenever new firms can easily enters a particular industry, the competition

increases. The gout restriction, tariffs, patents etc can stop new firm to enter into

the business as per Banking industry is concerned this market is already very

situated in Pakistan and there are banks with quality services and low charges. So

there is no threat to AJK BANK from potential entry.

4.1.3 Potential Development of Substitute Products

This is the third factor affecting the competitions. There may be some other

product can be substitute the product of that industry. For example banks offering

29
sawing schemes in Pakistan and these schemes are also offered by GPOs in

Pakistan so they must compete them in this field. If they offer low rates than GPOs

so people will go to deposit in GPOs. People concentration high rates so that’s why

sawing PLS accounts are more then current accounts. The next examples will

ATM, which substitute presenting cheques at counter and encash it. Luckily AJK

BANK is stronger in this field. It must further improve in this field to compete the

competitors.

4.1.4 Bargaining Power of Suppliers

The bargaining power of supplier affects the intensity of competition, especially

when there are a large number of suppliers. In case of banks the suppliers are

customers they supply the money to banks. Now they must offer good services,

Quality, safety and Low charges etc to customers. In this field AJK Bank Limited

is very good as it offers good quality services to customers. They charge low

charges on remittances. So that’s it is a competition to other banks.

4.1.5 Bargaining Power of Consumers

When customers are concentrated or large, or buy in volume, their bargaining

power represents a major force affecting intensity of competition. Now the number

customers in Pakistan for banks are very high. Banks offering variety of products

and services to their customers. AJK BANK has a large number of customs. Now it

must offer good services and products to their customers to attract them to come to

AJK BANK.

4.2 COMPETITOR’S ANALYSIS

4.2.1 Local Private Banks in Pakistan

 Allied Bank of Pakistan Limited

30
  Arif Habib Rupali Bank Limited

 Askari Commercial Bank Limited

 Bank Al Habib

 Bank Al Falah Limited

 Faysal Bank Limited

 MCB Bank

 United Bank Limited

4.2.2 Foreign Banks in Pakistan

 Citibank NA

 ABN AMRO Bank NV

 HSBC

 American Express Bank Limited

 Emirates Bank

 Doha Bank

 Bank of Tokyo Mitsubishi Limited

 However AJK Bank feels that its major competitors are as follows:

 United Bank Limited

 MCB Bank

 Citibank

31
 Askari Bank

4.2.3 Nature of Competition

As far as UBL is concerned, AJK Bank feels that it is a competitor because UBL

itself is a sister AJK BANK of AJK Bank as the Abu Dhabi Group has stake in

UBL and so there is always a comparison between them.

Furthermore, Askari Bank is a competitor because of the fact that the product and

services that it offers is fairly similar to that of AJK Bank and its markup rates are

similar as well. MCB, after being privatized has also introduced a wide variety of

services and with its large number of account holders, it is also a big competitor.

Citibank is a foreign bank that has been established in Pakistan for a long period of

time and has introduced a number of first class services and as AJK Bank is also

competing in the services industry, it needs to benchmark its product and services

to a bank with a stature to that of Citibank

4.3 Competitor’s Goals and Strategies

4.3.1 United Bank Limited

UBL was established in 1959, to provide banking facilities to the nation, after its

nationalization in 1971, the bank became an inefficient enterprise, however after its

privatization in 2000; the whole face of UBL has been changed.

Today UBL stands on a solid network of more than 1000 branches nationwide and

15 overseas branches and with an experience of 46 years its main goal is to become

the leading bank of Pakistan.

To achieve its goal, UBL has introduced innovative products in the banking sector

to facilitate the general public. It was one of the very first banks to introduce

32
internet and SMS banking to its customers. It has divided its banking into three

divisions, each having customized products to satisfy the needs of that particular

division:

Consumer: for individual customers

1 .Commercial: for small and medium enterprises

2. Corporate: for large national and multinational companies

These strategies have helped UBL to raise its image in the banking sector. Its long

term credit rating is ‘AA+.

4.3.2 MCB Bank

In 1974, MCB was nationalized along with all other private sector banks. This led

to deterioration in the quality of the Bank’s Loan portfolio and service quality.

Eventually, MCB was privatized in 1991. The vision of MCB is

‘Challenging and Changing the Way you Bank.’

The main strategies of the bank have concentrated on growth through improving

service quality, investment in technology and people, utilizing its extensive branch

network, developing a large and stable deposit base and managing itsnon-

performing Loans via improved risk management processes.

In 2006, MCB Bank was awarded the Euro money Award for the ‘best bank in

Pakistan’, which shows its commitment of changing the way you bank.

4.3.3 Askari Bank

Askari Commercial Bank was established in 1992, with the vision of maintaining

excellent standards of banking quality and service, so as to serve its customers

33
better. With time Askari Bank has also changed its identity, changing its name to a

shorter ‘Askari Bank’, a new logo and a new slogan ‘Ask Us’.

Askari Bank has a wide variety of product and services that cater to need of all type

of customers. It also developed a wide variety of products for the ‘Ksaans’ or

farmers of Pakistan, a segment of Pakistani’s neglected by the baking sector of

Pakistan. Askari bank was also the first bank in Pakistan to introduce ATM

machines on a third party basis.

Askari Banks long term rating of ‘AA+’ by Pakistan Credit Rating Agency Limited

(PACRA) also shows its commitment of developing excellent standard of products

and services for its customers.

4.4.4 Citi Bank

Citi Bank was established in Pakistan in 1990 and since then has been using its

international roots and knowledge to make a name in the Pakistani banking sector.

Its main vision is to provide right financial solutions - every time, all the time and

to fulfill their vision Citi Bank has used its ability to identify market needs and

develop products which are unique in concept and fulfill customer requirements.

Every customer is served by a versatile team of relationship managers who

ensurein-depth knowledge of trends and opportunities while synchronizing their

financial activities. Some of the innovative products introduced by Citi Bank or the

very first time in the Pakistani Banking sector are as follows

 Citi Gold Priority Banking

 Photo Credit Card

 First to launch Personal Loans in Pakistan

34
  First foreign bank to launch MasterCard in Pakistan

 Complaint Tracking System (CTS) launched

4.4 Swot Analysis

4.4.1 SWOT Analysis of AJK BANK

AJK BANK has very effectual net of branches all over the country. Each 10th

Pakistani is account holder of this bank. AJK BANK has made enormous savings

in almost all the essential economic sectors of Pakistan. AJK BANK not only has

made investment in commerce but also in small scale industry as well. AJK BANK

has well-organized & a smaller amount of technical set up. AJK Bank Ltd. has

introduced monthly revenue plan that provides almost maximum interest rate.

ATM was introduced in Pakistan by AJK Bank Ltd. Master Card facilities are also

accessible to the customers. AJK BANK is measured to be a very sound bank in

the financial circles. It is the bank where the clientele can securely keep their

money as long as they want.

In SWOT analysis the most excellent strategies accomplish in organization’s

mission by

 Taking advantage of opportunities and strengths.

 Reducing the effect of its threats and

 Evading its weaknesses.

4.4.2 Strengths

 A proficiency or potential that facilitates AJK BANK to visualize and put

into practice its strategies.

35
 The representatives of AJK BANK are considered as one of the most

competent professionals in the banking world.

 I noticed that AJK BANK employees cooperate with their clients as if they

are their personal friends and talk about their problems as their own.

 AJK Bank Limited has acquired a consistent and easy to use internal

computer system. All information regarding the transactions in customers’

deposits has been automated.

 AJK BANK uphold its data appropriately.

 AJK BANK has very good quality security arrangement.

 AJK BANK is the bigger commercial bank in Pakistan with the system of

58 domestic branches.

 AJK Bank Ltd. spotlights on consumer banking by rewarding schemes,

products and services suiting best to the requirements and demands of the

customers.

 AJK BANK has opened all its branches at marketable regions so that the

customers face no problems in reaching to the bank.

 The bank is all the time on the look to get better its services mutually to the

domestic customers.

 Human resources development and introduction of new technology towards

contemporary banking.

 Having prospective to meet the competitive environment in the market.

 Customer takes benefit from the services at the housing localities.

36
4.4.3 Weaknesses

 Maximum number of branches carrying out the proper maintenance and

complexity in providing identical working atmosphere at the every branch

 Inferior organization of revival of the system is a danger to bankruptcy.

 Be deficient in customer feedback.

 Little job contentment.

 Pitiable ATM’s Service

 Irregularity in efficiency and working environment due to the largest of

branches.

 Sense of uncertainty in the employees allocated at little money-

makingbranches due to the down sizing.

 Females feel nervous in an environment in the middle of the male workers.

 Prey of political, legal and socio-cultural stress

 Short of professionalism in the branch employees frequently.

4.4.4 Opportunities

 Huge available market prospective in consumer banking.

 An opportunity exists, in shape of opening of ladies banking segment inside

the branch which is completely a new idea and it will pull customers

towards bank.

37
 Chance for mounting value added services combined with corporate

banking relationships, cash management services to large and medium sized

corporate clients.

 Emergent strategy of government on business and commerce sector provide

AJK BANK opportunities to take return of these policies to meet

professionally with the business people to solve their problems with the

instant cash and investment facilities.

 Government is taking very courageous steps to endorse Information

Technology in Pakistan. AJK BANK has an opportunity to recover its

technology.

 Huge international net which mainly emphasizes on trade finance with

Pakistan can be operated to valve trade activities in other markets. In

addition, services such as cross border / offshore financing for corporate

customers can be improved.

 Customer advice on diverse products and accounts has really improved the

bank performance and encouraged the ambiance for other potential policies.

 AJK Bank Ltd. also has an opportunity to enlarge its new technological

expansion like; tele-banking and internet banking facilities in a way to serve

the customer more competently.

 E-banking facility too is an innovative opportunity which is a prosperous

business in foreign countries and can also be here, if AJK BANK takes the

step ahead.

38
  Due to well-organized and expert management group, AJK BANK can also

develop and enlarge its foreign business productively.

 AJK Bank Limited provides opportunity to make use of its abilities and

efficiencies in leasing business

4.4.5 Threats

 Consolidation in the banking segment ensuing in increased rivalry.

 Scarcity of qualified and focused personnel at minor managerial and officer

stage.

 The danger of irregularity and government policy concerning about

business and economics sectors, specially political and regional situation

which makes the environment doubtful.

 Increasing global technological progression.

 Firm regulation by government over credit conveniences to the customers

as poorly as to meet the prudential.

 Loss of assurance of out of the country customers due to freezing of

accounts.

 Facing more opposition by overseas banks in the mark

39
 Chapter # 05

MY PERSNAL EXPERIENCE

AJK Bank Pakistan AJK Bank Main Branch Rawalakot

5.1 Introduction

The AJK Bank Main Branch Rawalakot has following departments

 Account Department

 Remittance Department

 Cash Department

 Finance/ Credit Department

 Admin Department

 Computer Department

Now I explain these departments separately and describe activities performed by

me at these departments;

5.2 Activities accomplished done by me at Bank

5.2 .1 Account Departments

Deposits are important to the bank as a backbone is to the body of a man. They are

the lifeblood of the bank. AJK Bank of Pakistan and all other commercial banks

perform the function of deposit accepting from the general public by offering suit

AJKe rates of interest on them, or on simply a promise to repay on demand.

40
5.2.2 Opening of account by an individual

After entering into bank premises the person goes through the following steps for

opening an account in the bank and for becoming a bank customer.

5.2.2.1 An Introduction

The first important step to take place in bank is to get satisfactory introduction of

the person, who wants to become bank’s customer.

This introduction is made from the person /party who are respect AJKe and honor

AJKe and have an account with the bank.

In AJK (AJK Bank Main Branch Rawalakot) the branch manager takes great care

of this step and gets introduced with the person himself. His main intention is to

determine the prospective customer’s integrity, respectability, occupation, and

nature of business he is doing at the time of opening an account.

The person who wants to open account in AJK, first of all submitted copy of AJK

identity card because the bank verify the data of his clients from AJK Data Base

and Registration Authority (NADRA). For this purpose AJK operates the software

of NADRA.

5.2.2.2 Account Opening Form and Specimen Signature Card

Now the person is provided with an application form known as Account Opening

Form.

This form contains;

 Title of account

 Address

41
  Computerized Identity AJK Card number

 Telephone No. (Office and Residence)

 Introductory reference (all mentioned particulars of introducing him)

 Signatures of the applicant

 Amount deposited

 Check book series No.

The customer attaches a copy of his AJK Identity Card, also copy of two

guarantors who already have their accounts in the same branch, with the account

opening form.

5.2.2.3 Specimen Signature Card

Specimen of signatures will be obtained from depositor at the time of opening his

account. A specially designed card is used for this purpose; the card must be

countersigned by an official of the bank not below the rank of an officer.

5.2.2.4 Account Opening Register

Now the name of the customer will be recorded in account opening register, and

from here the account no. of the customer will be written on (top most corners)

account opening form and on specimen signature card.

5.2.2.5 Issuance of Cheque Book

The cheque book will ordinarily be issued to all customers desiring to have

chequing facility. Cheque book consists of 10, 28, 80, or 100 leaves depending

upon customer requirement. Customer can withdraw money by signing a cheque

and writing the amount he wants to withdraw from his account. A special cheque

book register is kept to enter the name of the person having cheque book.
42
5.2.2.6 Issuance of Pass Book

Pass Book is another important type of book handed over to the customer as he

opens the account with the bank. The withdrawal and deposit of money is recorded

date wise in this book.

5.2.2.7 Recording into General Ledger

The concerned officer records the name and amount deposited with the bank into

general ledger. Separate ledgers are maintained for different types of accounts e.g.

 Current Account Ledger

 Saving Account Ledger

 Fixed Deposit Account Ledger

 Call Deposit Account Ledger

As and when customer will deposit the money, amount will be credited in general

ledger and the withdrawal will be followed by a debit entry in the ledger.

5.3 Types of accounts maintained by AJK Bank Main Branch Rawalakot

AJK Bank of Pakistan maintain following types of accounts;

5.3.1 Current Account

This account is also known as running balance account. Simply we can say “A

bank account which may be used to lodge payments or to withdraw money on

demand.”

Its main purpose is to serve the businessman. Form number F-83 is provided to the

person to open the account. It is a statutory requirement to maintain current

account.

43
Features

 Minimum amount for opening this account is Rs.800

 Any person can open the account with the bank

 According to inter banks agreement interest is not paid on current account.

 Bank act as custodian of money

 Over draft facility is provided to the customers

 Customer can withdraw money through cheque supplied by bank

5.3.2 Profit and Loss Sharing Account:

In general it is also called saving account .To provide interest free banking

facilities in Pakistan, this type of account was introduced in January 1982 after the

Islamization of banking..

Features

 Instead of having fixed return in the form of interest the deposited money

will be shared in profit and loss of the bank.

 One can open the account by depositing minimum Rs.100

 Withdrawal is allowed 8 times in the month total not exceeding Rs.18000.

 To withdraw a large amount a notice of 7 days to the bank is necessary.

 There is not any kind of interest is provided on money deposited.

 Rate of profit is declared at the close of each half-year.

 Number of depositors in PLS account in AJK Bank of Pakistan up to31-8-

2001 were 4000 approximately.

44
5.3.3 Fixed Deposit Account:

This account is the major source of funds for the banks. This account is best for

people who have surplus money and don’t need such funds in nearer future.

The money is deposited for a fixed period of time.

Features

 Fixed amount is deposited for fixed period.

 Amount of profit can be obtained after each six months.

 Higher will be the time period, higher will be the rate of profit, and vice

versa.

 A receipt is used for the amount deposited called fixed deposit receipt.

 Period of deposit can vary from 3 months to 8 years.

 The amount can be withdrawn before maturity after surrendering

5.4 Remittance Department

5.4.1 Remittance Meaning

Money or something equivalent to money sent by any person to another on another

station, either in cash, money order, postal order, bill of exchange, cheque, bank

draft etc is known as a Remittance.

Now I will explain the procedure and importance of Bank Draft: (DD) Bank draft

can be defined as;

“An un-conditional instrument in writing drawn by a bank in favor of any person

on a branch of its own bank or any other bank to pay a certain sum of money to his

order, for value received.” From the definition it is clear that the draft is pay AJKe

45
to the beneficiary himself or to his order. The beneficiary or payee has to prove his

identification at the paying office of the bank, which sometimes causes

inconvenience to the public. Draft is the most popular and common form of

remitting funds from one place to another. Any person who may or may not happen

to be the bank’s customer against payment of bank charges can purchase drafts. It

is considered to be a source of income for the bank?

Procedure

In AJK Bank of Pakistan the drafts are issued on submission of application form

(always printed) filled in and signed by the purchaser with his full name and

address. The following particulars are generally required in the application form;

 Date

 The Name of the Office on Which It Is Drawn

 The name of the beneficiary

 Amount in words and figures

 Bank exchange rates

 The signature and address of the applicant

The draft is issued after the applicant tenders the money. Two authorized

signatories of the bank always sign draft. A separate book “Draft issued register” is

kept to record the particulars of the draft issued. The drawing branch of the bank

will give credit to the drawee branch on the same date the draft is issued; through

their account for settling inter branch transactions. Usually all the banks insert

special code number known as CHECK SIGNAL on the relative draft advices for

all the drafts for more than Rs.8000/-.

46
AJK bank of Pakistan does not pay the drafts before the receipt of relative advice.

On receipt of relative advice the drawee branch will credit the amount into their

“draft pay AJKe account” and each time a draft is paid this account will be debited

with the amount of the draft paid.

In case the draft advice is not received, the draft will be paid “ex advice” duly

entered in the "ex-advice register” and the entry in the said register will be marked

off on receipt of the relative advice.

.5.5 Cash Department

Cash department of AJK is given the complete responsibility of handling all

receipts

&disbursement of cash as a result of transactions in both local & foreign currencies

&near cash items such as traveler cheque etc.

As a consequence it is also responsible for the book-keeping of those transactions

&

The safe custody of cash & near cash securities.

5.5.1 Functions of Cash Department

5.5.1.1 Cash Receipt.

The depositor uses cheque deposit slip for depositing the amount. There are two

types of cash deposit slip

 One for current account holders

 Other for saving account holders.

47
  Both are in different colures for clear identification. There are two parts of

cash deposit slips.

 Counter foil.

 Adjacent credit voucher.

Procedure

The cashier first verifies all the requirements of the cash deposit slip that whether

these are fulfilled or not & verifies the amount written in words & figures. After

that he enters the detail of the receipt in the ‘Inward Cash Register’. The deposit

slip is stamped, cash is received & counter foil is given to the depositor. The

adjacent credit voucher is used for recording & posting purpose.

5.5.1.2 Encashment of Cheque

It include the following:.

a)Accepting of Cheque paid against

The cash is cheque of the client. The following points are kept in mind while

receiving the cheque from the client.

Cheque should be drawn on AJK.

 It should not be post dated.

 It should be a bearer cheque so the word bearer should not be crossed.

 Payment is not stopped by the drawer.

 Amount in words & figure should be same.

 Alteration in date/figure/word require drawer’s full signature, with

signature on the cheque.

48
  If signatures are not the same then it is returned back other wise forwarded

to computer terminal.

b) Affirmation of Signature.

After receiving the cheque the office verifies the signature of the account holder

with the signature on the signature on the cheque .If signature are not the same

them it is returned back otherwise forwarded to computer terminal.

c) Computer Terminal Process.

The cheque is received in computer terminal, where the computer operator checks

the balance of the account holder. The operator also sees whether the stop payment

instructions are received from account holder or not .After considering these two

points computer operator posts the cheque in account holder ledger & returns the

cheque back to the officer.

d) Payment of Cash.

The cheque is cancelled after posting is returned to cashier. The cashier enters the

cheque in Cash Paid register. Pays against the second signature of the receiver on

the back of the check.

Nearly every day in the morning time, cash comes from the state Bank of Pakistan

through brinks. This cash is required by the bank to meet the current needs of cash.

5.6 Finance/ Credit Department

AJK bank of Pakistan maintains a separate finance section. Its purpose is to grant

loans to the needy people, small & large business concerns, and to industries.

Advances in the form of money are the most remunerative use of bank resources.

The management of the bank will be very careful while granting the loans.

49
The person/proprietor of the business will go through a long process of application,

documentation, securitization etc. while requesting for loan. After proper

satisfaction from the party concerned the bank will grant loan to the party. Under

the Islamic modes of financing from 1982 onwards, AJK bank of Pakistan gives

loans on the basis of “Mark-up” instead of interest. Mark-up rate is different

depending upon the type loan.

5.6.1 Procedure for Granting of Loans

The following procedure is maintained by AJK bank while granting loan to any

person;

a) Loan Application Form & Specimen Signature Card

The bank provides a prescribed application form to the borrower. The borrower

will fill the form. In that form the borrower will tell about: -

 Type of the loan.

 Amount of the loan he needs.

 Period of time.

Applicant will also be provided a specimen signature card, to be filed by him.

b) Declaration of Properties Form:

This form will provide the information about the business he is involved, and also

provide the information about his properties in Pakistan.

50
5.6.2 Granting of Loan

After detailed investigation, and documentation if the finance section finds the

party well satisfactory and feasible then they sanction the finance to the concerned

party and the amount is transferred in his personal account.

5.7 Types of Loans

AJK Bank of Pakistan provides various types of loans depending upon the

requirement of the borrowers. Some of the important types of loans are;

5.7.1Demand Finance

Under a demand loan arrangement, a fresh demand loan account is opened through

the borrower may be having other deposit accounts with the banks. The amount of

loan has to be drawn by the borrower in lump sum and is to be repaid in

installments as agreed upon. The borrower cannot operate a demand loan account

by depositing and withdrawing amounts periodically.

5.7.2 Agriculture Finance

Agricultural finance is of great importance in Pakistan, as 68% of the population of

the country engages in the profession of agriculture. The agriculture finance is

granted for the agricultural purposes which include the development and

production purposes. Agriculture finance is categories into three types;

a) Short Term Loan:

The short term loan is taken at the most for one crop period and is fully recover

AJK from the proceeds of the same crop after its harvest. This loan is needed for

seeds, fertilizers, pesticides and wages of hired labors which are meant for input for

a particular crop.

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b) Medium Term Loan:

The medium term loan is usually taken for the period of three years and is taken

for the purchase of tractors, tube wells, cattle,, livestock and dairy and poultry

farming etc.

c) Long Term Loan:

The long term loan is generally taken for a period above three years and the

amount is used for buying land, construction embankments, improvement of land

of for arranging drainage.

5.8 Computer Department

AJK Bank Pakistan AJK Bank Main Branch Rawalakot its own computer

department which is responsible to store the record of all bank transactions. This

department is supervised by an IT Specialist who is the administrator of the

computer department. This department performs the following duties;

5.8.1 Duties of Computer Department:

 All the cheques, receipts and deposit slips are posted in the computer is the key

responsibility and duty of this department.

 This department is also responsible to look after the networking system of all

the computers and server.

 This department carried out the duties of installing software and Maintenance

of all computers and printers.

 This department is prints the Daily Day Book (Journal/ ledger) on daily basis

and Bank Book (Bank reconciliation Statement) when accounts holders

required and demanded.

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 Chapter # 06

CONCLUSION & RECOMMENDATIONS

6.1Conclusion

The main source of the economic development in every developed and developing

country is the commercial banks. Especially for the developing country like

Pakistan, banks prove to be a backbone of the economy. As for as AJK Bank Main

Branch Rawalakot is concerned, its story is a part of the struggle for economic

development. At the time of independence the Hindus controlled our economy.

After many stages of its evaluations and development the AJK Bank replaced

Imperial Bank of India in 1952 and at this time it is the one, largest bank for the

economic development in Pakistan.

The AJK Bank Main Branch Rawalakot is the only nationalized bank in Azad

Kashmir. This bank is also working as central bank. All the other commercial

banks have been privatized. For the smooth and continuous running in its

operational activities the AJK Bank has been divided into different departments

and during my internship program at the AJK Bank Main Branch Rawalakot. I got

training practically in following departments.

 Deposits Department

 Clearing Department

 Advance Department

 Remittance Department

 Cash Department

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These departments are well organized and esteemed institutions. I am feeling

Pleasure because these departments made my mental horizon and gave me practical

insight and courage. There are many challenges for the AJK Bank of Pakistan, like

privatization, information technology, world trade organization, corruption etc.

There are so many other problems for the bank. But the bank’s performance is

brilliant in this regard and its growing trend of future will be the prosperity of the

country as well as the nation.

6.2 Recommendations and Suggestions

During their internship period at AJK Bank I have come across certain aspects

which need some attention and improvement. I would like to give a few

suggestions and recommendations which might assist in the advancement and

achievement of the bank.

Computerization in Banking

AJK Bank has computerized its accounts but it has computerized its daily counter

services. Computerization its accounts but it has not computerized its daily counter

services. Computerization of all the branches may be a difficult task, but it could

result in a lot of saving for the bank. AJK Bank has computerized its accounts but it

has not computerized its daily counter services. Computerization of all the

branches may be a difficult task, but it could result in a lot of saving for the bank.

Evening Bank

In big cities and especially the branches located in commercial areas should extend

evening banking services to its clients as safe keeping of money after close of

business house not free of danger.

Proper Safeguarding of Bank Branches

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In these days many branches of various banks have been looted. In order to avoid

any such incidence, proper safeguarding measures should be taken to protect the

life and property.

Room for Improvement in Customer Services

Due to nationalization of banks the customer’s services of the bank are below than

the standard. Employees are not as active as they should have been, they have no

concern about customer service they only do their routine work. This is only

possible when they around give incantation to their employees. In some branches

there is shortage of staff and there is also over staffing in some branches. With

proper staffing improved services could be extended to the clients. In the AJK

Bank there is a need for the introduction of new saving schemes for low and middle

income people.

Reward System & Timely Promotions

There is no inventive of reward for the performance and hard working of

employees, promotion is only based on seniority. As a result, employees do not try

to work hard. In order to increase the productivity and performance of him

employees Bank should raise reward system, so that can accomplish their objects

successfully and discharge their duties efficiently. In many cases officers are

drawing maximum of their, pay scale for year together. In such cases timely

promotions should be made to create enthusiasm amongst its employees.

Effective Chequing System

In Pakistan, an effective chequing system is not prevailing. People prefer to receive

payment in hard cash rather than in the form of a cheque. This is mainly due to the

fact that in Pakistan collection of cheques takes time. In addition cheques are

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dishonored mainly due to the reason there are insufficient fund in he drawers

accounts. If the collection of cheque procedure is speeded up and the account

holders are made bound be bank to write cheques only when they have funds in

their accounts, an effective chequing system can be developed in our country.

Loans should be sanctioned on Merit

Unfortunately most of the loans are being given on the basis of political

background rather than on merit. Cash loans are later written off politically

resulting in a heavy amount of losses for the bank. It is suggested that the loan

sanctioning body of the bank must consist technical people. There should be no

pressure from the government regarding sanctioning and writing off of the loans.

Professionalism

AJK Bank, there is a lack of professionalism at most of the levels. Employees feel

overburdened due to the shortage of staff. The bank should create now jobs to have

Competent and professional persons for various posts, so increase in the number of

staff can raise the efficiency of the Bank.

Privatization

The bank’s performance under Nationalizations is through satisfactory to some

extent yet if the bank is de-controlled and privatized by the government, there are

possibilities that it will improve its present performance like other banks that are

showing excellent performance after privatization

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 References

Melanie, K. (2006). Banking in a Changing World. USA: Channel View Publications

Roger, L. (2002). Money, Banking and Financial Markets (4th Ed.). USA: Wiley

Doug, C and Jenni, G. (2003). Clients Forever (1st Ed.). Chicago: McGraw Hill

Eddyston, C. (1991). Managing Banks Effectively (1st Ed.), Canada: John Wiley and

Sons

James, A. And Mona, J. (2004). Banking and Financial Management (4th Ed.). Boston

USA: McGraw Hill / Irwin

Online Reference

 www.ajkbank.gov.pk

 www.wikipedia.com

 en.wikipedia.org/wiki/Bank

 wordnet.princenton.edu/perl/web

 www.projects.ex.ac.uk/RDavies/arian

 www.sbp.org.pk/bsd/2001/C38.htm

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