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Objectives of Studying the Organization
Purpose of studying this organization is that, I have my own interest in this bank, because of my friend and good repute of this bank. My friend is doing job in this bank and I think this bank provide better jobs opportunity as compare to other organizations, that’s why I choose this organization for internship. Another reason for studying this organization is that, the bank manager was my father friend, therefore my father recommend this bank for internship program and here I gained practical experience related with my course and I come to know how bank use the policies and strategies and how evaluate its performance. I feel pleasure and honor that I got the opportunity to work in such a privileged and reputable bank of the country. During my internship program I tried my every best to equip myself with all important knowledge. In this report, I have tried to humble endeavor to cover various aspects of bank like, introduction, its history, main departments, culture, objectives and working financial analysis.
2. Overview of the Organization
2.1 Brief History of the Organization
Askari Bank Limited works as a Unit of Army Welfare Trust was established for the Welfare of Army Officials. The office of Army Welfare Trust is situated at AWT Plaza, Rawalpindi. AWT offers the “AWT Saving Scheme” to the army officials only. AWT has its units as under: • • • • • • • Askari Associates. Askari Leasing. Askari General. Private Business. Textile Mills. Cement Industry. Askari Bank Limited. 1
Askari Bank Limited was incorporated on October 9, 1991, as a Public Limited Company, and is listed on Karachi, Lahore and Islamabad Stock Exchanges. The Bank obtained business commencement certificate on February 26, 1992 and started operations form April 1, 1992. Askari Bank is scheduled Commercial Bank and is principally engaged in the business of Banking as defined in the Banking Companies Ordinance 1962. Askari Bank Limited 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 strength. In 1994, Askari bank limited earned international recognition as Asia Money Award and the title of “Best Bank of Pakistan” for the year 1994, while Euro money declared the Bank as best domestic Bank of Pakistan for the year 1995.
2.1.1 Askari Bank Limited Multan
Askari Bank Limited Multan was inaugurated on December 28, 1994. It is located on Abdali Road Opposite to PIA Office. The location is connected to all the main trade centers in Multan. It is a prosperous branch streaming towards great achievements. At the time of its establishment the factored that were considered are as follows • • • • • Multan is zone covering a large population. Multan City is linked to many big cities. Agro based area constituting growers and gainers Army Offices & Fort Colony Educational Institution
2.2 Nature of the Organization
It is a commercial band providing lending services to consumers and corporate bodies, the basic purpose of the bank is to earn profit. This bank is known as Askari bank Ltd. Askari bank Ltd. The head office of Askari bank Ltd. is situated in Rawalpindi. In view of deteriorating operating environment, bank slowed down the expansion plan and added one branch in 1998 making a total number of branches 27. In 2001, the total number of branches increased to 30 all over the country (Pakistan). Multan is a cotton city, so to get
the export market of cotton Askari Bank Ltd. open its branch in Multan in December, 1994. In a short span of time this branch increases their business remarkably. In 2001 this branch gets the trophy of highest profit for the year 2001. This branch has highest deposits and advances as compare to other banks working in Multan. In 2007, the total numbers of branches are 115 all over the country. Every bank deals in money, accept the money from those people who have spare it, and give them who have need it, basically band is a business of money. Askari bank Ltd. deals in money accept the deposits from people and lend them who need it. Basic purpose of the bank is to earn the profit. Bank lends the money in shape of consumer finance and agriculture finance and auto finance and many more facilities which provide the bank to its customers.
2.3 Business volume of the Askari Bank Limited
In 2008, the profit of the Askari Bank Ltd. Abdali road Multan Branch was 113.5 Million. But if we look towards the Business volume in terms of revenue, deposits, advances of the Askari Bank of all branches is such as given bellow: • Current, Savings and other Deposits. Customer deposits increased to Rs. 1318 billion by end 2008, an increase of 11% over last year. A compensation of deposits by type reveals that current accounts i.e. non remunerative accounts increased by 19% followed by saving deposit accounts, which increased by 11% over the previous year. The fixed deposits increased by 6%. • Earnings per share. Earnings per share increased by 11% fro Rs. 10.09 last year restated for issue of bonus shares during the year, to Rl. 1123 at the close of year. • NPLs and provisions against NPLs. NPLs increased by 54% during the year to Rs. 3656 million from Rs.2373 million from last year due to further downgrade of few large exposures. While these NPLs are being closely monitored for recovery, Rs.1128 million has been appropriated as provisions against nonperforming advances, against previous year’s Rs. 639 million. During the year, the base of
000 20.000 Revenues Deposits Advances Source Share Capital 2008 2007 2006 2005 2004 2008 6.000. Rs.000 100.000.818 4.000 40.000 160.000 Value '000 80.000 60.000.000. In ‘Million’ Business Volume Revenues Deposits Advances Share Capital Business Volume 180.676 128.000.000 140.376 167.058 4 .general provision was revised from judgmental to consistent vases and now general provision is maintained @ 5% on all performing advances except consumer advancesgeneral provision on consumer advances is maintained as per SBP prudential regulations for consumer finances.000.000.000.000 120.000.
one president and remaining are the employees.Ferguson & Co. Shahid Mahmud Mr. Isa.R. Mehkhari & Chief Executive Lt. Muhammad Riyazul Haque Mr.1 Corporate Information Lt. Abdali Road Multan is 57. (R) Imtiaz Hussain Mr. M. Noormahomed Rattensey Mr. Gen. Javed Zia Mr.2. Noormahomed Rattensey Dr.F.4 Number of Employees Total number of staff in the Askari Bank Limited. Gen. Saleem Anwar Secretary Audit Committee Dr. Total number of employees of all the branches of Askari Bank is almost 6500. including five Executive. Tariq Iqbal Khan (NIT Nominee) Mr. Bashir Ahmad Khan Mr. three peons. 2. Kashif Mateen Ansari Mr.4. Afridi & Angell Shariah Advisor Dr. Zafar Alam Khan Sumbal Mr. Bashir Ahmad Khan Mr. Legal Advisors Rizvi. Muhammad Tahir Mansoori 5 Chartered Accountants Chairman Member Member Company Director Director Director Director Director Director Director Director Chairman President . Zafar Alam Khan Sumbal Auditors A.
Shafique Credit Card Mr. Kiran 7 . M.2. Sheraz Mrs. Rizwan Azad Exports Mrs. Mr. waseem Faiz Mr.2 Branch Level Hierarchy VP/Branch Manager Zubair Ahmed Sheikh kazi AVP/Operation Manager Mr. Shahzad Remittance Deptt.Sohail Mr. Sajjad Ali OPERATION DEPARTM ENT General Banking Manager FOREIGN EXCHANGE DEPARTMENT CREDIT DEPARTM ENT Incharge Imports Mr.Shahzad A/C Opening Mr. Asad Bhutta Accounts Dept. Bilal Naeem Cash Department Mr. Noor Ul Islam Area Manager Mr. Personal Finance Mr.4. Agriculture deptt. Saima Naz Mr.
1 Consumer Banking Services • • • • • • • • Personal Finance Mortgage Finance Business Finance Smart Cash Askari Debit card Travelers’ cheques Value plus Deposits Profit / Markup Rates on Products 2.5 Product Lines/Services offered by the Askari Bank Limited Askari bank offered the following products and service to its customer.5.5.2 Islamic Banking Services • • • • • Islamic Corporate Banking Islamic Investment Banking Islamic Trade Finance Islamic General Banking Islamic Consumer Banking 2.2.5. 2.3 Agriculture Finance • • • • • • Kissan Ever Green Finance Kissan Farm Mechanization Finance Kissan Aabpashi Finance Kissan Livestock Development Finance Kissan Farm Mechanization Kissan Farm Transport finance 8 .
1 Main offices (Head office and Branches) The head office of the Askari bank Ltd is situated AWT Plaza. 3.2 Review of the Various Departments of the Organization The bank has following department: • • • • • • • • • Account Opening department ATM Department Accounts Department Credit Department Credit Card Department Remittance Department Foreign Trade Department Cash Department Clearing Department 3.2.During the year. by opining 6 dedicated Islamic Banking branches in major cities of the country. Organizational structure 3. The mall. The branch network is given in Annexes. Further expansion is planned with improved capabilities for offering products conforing to the shariah principles.5. Islamic Banking was launched under the Askari Islamic Banking. Rawalpindi and the total branches are 115.1 Account Opening Department 9 .2.4 Corporate & Investment Banking • • Corporate Banking Division Investment Banking Division 3.
there are the following types of accounts: • • • • Current account. As there is no profit paid on this account it is also called chequing account because cheques can be drawn on it. he incurs the obligation of the paying all cheques drawn against him to the extended of the balance in the account. These deposits are lent out to different parties. When a banker accepts a demand deposit.1050/. They are paid on demand. Current account is mostly opened for business.1. Saving Account. 3.1. Askari Special Deposit Account. But in the case of a bank borrowing funds from outside parties is al l the more vital because the entire banking system is based on it. 3. 3.2. The borrowed capital of a bank is much greater their own capital.(ASDA) Term Deposit.1.1 Types of Accounts In Askari Bank Limited. Such deposit creation is done through opening an account in the Bank.1.1.Borrowing funds from different sources has become an essential feature of today's business enterprises.1. The minimum deposit for opening the account is Rs.2.(as obvious in the Annexure). Sheeraz Hassan is operating the account opening department along with performing some auxiliary functions of Check Book Issuing 3. Though individuals open such accounts for saving purpose.2. In Askari Bank Limited Multan Mr. It is for only transaction purposes.3 Askari Special Deposit Account 10 .2. persons belonging to Armed forces and different military institutions are free to use this account on current basis.1 Current Account In current account there is no interest on it. Banks borrowing is mostly in the form of deposits.2 Saving Account The purpose of this account is to induce the habit of saving individuals in the neighborhood.1.
1. The customer is allowed to with draw the principle amount.4 Term Deposits A term deposit is a deposit that is made for a certain periods of time at the end of the specific period. The amount is credited in any one of the checking Accounts of the depositor. AKBLs Term deposits are of types clear in the deposit scheme. That’s why it is similar to current account. 11 . there are different types of account holders are required for all these types of account holders. The term deposit account varies one month to 1 year for all following accounts. "Limited Company" And "Club society or Association” as explained below.2.1. The operation /procedure requirement that is needed for " Individual Account " differ greatly from " Joint account " proprietorship "Partner ship “. where as the rate of return with aspect to the amount of minimum deposit clear. SAVING). It is necessary for this account that the client must maintain a minimum balance of Rs. 50. The payment of return is monthly. The rate of return on this account is set by head office.1. It is mostly opened by Business but individuals too open this account. Tax of 0. 000.ASDA account is an interest bearing current account interest is paid. 3. 3.2 Account Opening Procedure For the chequing accounts (C/A.3 Individual's Account When a single man or women opens an account in his/her own name and has the right to operate it is called individual Account.25.2. 3. One of them is "Askari" Advantage one month. • • • • The amount of profit is given to depositors in three ways: By cash By sending a bank Draft to depositors Home address or Officers or whichever is specified as mailing Address. It is also chequing account because cheques can be drawn on it.000 at the end of the month.1. ASDA.3% would be deducted on ASDA if withdrawals are more than Rs.2.
phone no and affix his/her signature to certify this requirement. All these requirement are necessary for future • • • The person deposits the initial amount for opening account on to the cash counter. telephone no.S card mailing address.Documentation For literate person copy of National Identity Card is required as a primary requirement. For illiterate person and Veiled Women. husband/wife or any other relative's name. mother. • The person put her /his signature (" or thumb expression) on the signature Specimen Card (SS CARD) similar in the area on the form. he signed a "Vernacular form" where under take that affixed signature are original and his own signature and two postal size photos are needed. a fix his /her either two or four similar signature (or thumb expression in the signature space and get it introduced and signed by a person who already has an account with the bank and write his account no in the specific rows in a specific space. Operation • • The person place a "Check Mark " in the type of account and type of operation required He/She fills in part-I of the form . The person put his signature on form -A (check book requisition) on two places in "authorized signature" and fills in the "Title of Account space by writing his name. • The person fills in "next of Kin " position where he/she father. his /her address. If the person put his signature in Urdu or any language other than English. Person to contact and introducer space is filled in. along with the copy of National Identity Card requirement he or she must come in person for opening the account. This requirement is needed because in his/her absence bank can have correspondence with the specific person. One the back of S. 12 .
1. Operation 13 . this account is called a proprietorship Account the proper himself liable for all his acts.• The next day is the opening of account.5 Proprietorship Account When an owner of a firm operating singly. Documentation For joint account copy of National Identity Card of all the persons is obtained other things remaining same as in individuals account.S. nor trustees. Operation • • • • • The person checks the type of amount and type of operation required in the respective box on the form. neither partners. In the title of account space names of all the persons are mentioned. Card. opens an account in his firm name.4 Joint Account When two or more persons. an application for opening the account on the firm letter -pad (having the firm name) is required along with the NIC Card of proprietor. Documentation For this kind of account. 3. The persons fill in the Part-I and part-II in the form. Husband and wife or two persons of same sex can open joint account. Accounts holder specified in the form that they will operate the form singly or jointly. open an in their name is called Joint Account. 2.1.2. Signatures of both persons are obtained on the form in the area specified for signature and S. 3.
In order to facilitate their transaction with outside parties. understanding on behalf of the firm to remain liable for all acts of the firm. In case of non -registered partnership firm. bank provides many facilities.S.2. The partners in the partnership firm are liable for the acts of the firm jointly and severely. 3. Operation All other requirement remain same except that the form is dully signed by all partners cards are signed by all those partners who will act on behalf of the firm and along filling part-I . Documentation 14 . Part-Iv is also filled. Documentation • • • • • • Copy of N. partners by drawing and enclosed cheques.C card of all partners Application to open the account on the firm letter pad.1. Name. Every partner has in a firm has an implied authority bind his co.1. Partner ship deed in case registered partnership firm. 3.7 Limited Company Account This account is for limited companies.All operation remains the same except that the firm name is written in the "Title of the Account” area and signature of the proprietor are affixed in the S. Card and the area specified for signatures on the form.6 Partnership Account The account is opened in the firm name and all partner designate one two persons to act on behalf of the partner ship firmer all acts on behalf of firm.2. address of all partners is written on the pad. Letter showing the implied Authority of one or more partners to act on behalf of the firm.I.
3.2.S card are admitted in the same way.8 Receiving Inward Cheques Another responsibility and function of account Opening Department is to receive Inward cheques for collection of other Banks as well as of Askari Bank Limited.1. 3. Next of kin "requirement "is not need in case of a Limited Company. Certificate of commencement of business N-I-C Operation The persons authorized in the Resolution of the Board of Directors put their signatures on S. Certificate of Incorporation.0 Procedure • The customer for individuals account write an application to the manager of the bank an a simple paper about the closing of his account with the bank (In case of 15 .S Cards.2.9 Account Closing Account is closed on the written request of the customer Askari Bank Limited free of cost.S card and is stamped "Verified" customer signatures are admitted by stamping “Admitting" near signature and again signatures on S. Accountant is open in the computer by writing name.2. address. A/C Number etc. 3. Then these cheques are sent to clearing official who clears these checks at SBP from other banks.• • • • • • Memorandum of Association.2. Articles of the Association Resolution of the Board of Director. After completing each and every formality. The same process of verification and admission of the signatures is repeated on Form-A and next of Kin area.1. introducer signature is verified by S. But to surrender the cheque book yet if some leaves are yet to be write to the bank as a necessary requirements for closing the account. After completing each and every formality.
• Lastly.proprietor ship partnership and limited company account the application should be written an firm or company letter –head) • • • • The individual or in case of other type. The cheque book is then torn from one side and is attached with the application.2. Mr. 16 . Fathers name account number and N. cheque book. it is written in “Red Ink on the form that account closed” and “Date of account closing.” 3.2. Sheeraz Hassan deals this department. In case of Ltd. First. term deposits and Askari Bachat Certificate.2 ATM. Then he fills the ATM application form in which name of account holder.I. Company account resolution of the board of directors is also obtained to attach it with the application.proprietor firm and company surrender the cheque book to the bank. list of card holder is issued and then after 15 days cards are send to Askari Bank Limited issuing branch. The card and list are not sent simultaneously in order to avoid any mishandling. card is also attached with the application form. and the application. The account opening form of the account holder is taken from the account-opening file.Cards Department This department deals in issuing ATM-Card. the application package is sent to head office Askari Bank Limited head office takes a period of 3-4 days for preparing and processing of ATM – cards.Card number are mentioned. A copy of N.1 ATM Card ATM – Cards are only issue to Account Holder Issuing Procedure • • • • • The person. After completing this process. first open the account within the blank. 3.I.2. and resolution of board of directors in case of limited company account are attached with the form.
350/.2 Other Activities • • • • • Preparation of daily bank positions statement Payment of salaries Preparation of the statements Depreciation calculation Lockers Issuance 3.for 1st time issuance as charges for a $card Biannually takes Rs 75. computer print is also received from the computer.• • Askari Bank Limited takes Rs. Shafiq. After checking they are signed by Mr.2. all the vouchers that have been posted at the computer are scrutinized in accounts department.3 Accounts Department Accounts department is a department which deals and checks all the activity of all the department . Salary payment is also one function of the bank. The vouchers are sorted out head wise. . 3.3. Then next day activity separated some statements from the “End of Day”. The “End of Day” i.1 Checking Bank’s Daily Activity Accounts department deals and checks the entire working of the Branch.4 Credit Department 17 .Naeem Shehzad and the internal auditor Mr. Any abnormality if occurs. 22.214.171.124.It also deals in expression of finance of the bank.2. 3. The vouchers are matched with the entries in the statements. The next day the activity is separated some statements from the “End of Day”. is immediately dealt with.e. All the vouchers and instruction are checked individually are checked individually against the computer printouts.
4.2. 3.1. Bank borrows money at a lesser rate of interest and lends to the borrower at higher rate of interest. and grow!. bank gives this service for nothing. which makes it grow.. But this is not to say that. No matter what your need is.1.2. dine at restaurants. A bank accepts deposits of money and repays cash to its depositors on demand..4. through which they gain major part of their profits. With unmatched financing features in terms of loan amount.1. Askari Bank has more ways to serve you than ever before. Askari Bank’s Personal Finance makes sure that you get the most out of your loan.4. 3.2. convenience and security.4. Askari Debit Card is your new shopping companion which enhances your quality of life by letting you do shopping. 18 . 3.1.1 Personal Finance One can avail unlimited opportunities through Askari Bank’s Personal Finance.4 Debit card Askari Debit Card means freedom. Now you can stop worrying about your daily cash requirements.3 Business Finance You always wanted to put in that extra money into your business. transfer funds. and start enjoying our unique Askari Business Finance facility. Credit department deals in the following categories. And the difference between these two is the profit of the bank. so that you can have retail transactions with complete peace of mind.Lending or financing is one of the basic functions of banks of all categories. anytime. payback period and most affordable monthly installments. comfort.1 Consumer Banking Services 126.96.36.199. 3. withdraw and deposit cash through ATM anywhere.2 Auto Finance Askari Bank offers you the most convenient and affordable vehicle financing scheme to help you own your favorite brand new car. pay your utility bills.
No purchasing limit.6 Travelers Cheques Askari Bank offers you its "Rupee Traveler Cheques" eliminating all financial risks while traveling. Askari mortgage finance enables you to pursue your goal without any problems.2 Agriculture Finance 3. 3. Valid until encashed.2. Facility of encashment through clearing.2. The credit line is sanctioned in the light of available cash flows and input requirements i. shelter has been rated among the primary needs of mankind.2. • • • • • • • • • • Free Issuance. Facility of encashment in cash to the purchaser. Fastest refund procedure in case of loss/theft. medium and large farmers in meeting their short-term input requirements against one time sanction and automatically renewable up to 3 years subject to its stipulated utilization/periodical adjustment.2. So avoid risk of carrying cash through Askari Bank's Rupee Traveler Cheques.e. Askari Bank has made the realization of your dream to have a house of your very own possible. tailor made to your requirements or buy a constructed house. Fertilizer & Pesticides etc. Easily Transferable. Whether you plan to build a house.1 Kissan Ever Green Financing Askari Bank has launched this program with the sole motive to provide dignity.4.3. prosperity and freedom to the tiller of the land.4.4. Free Encashment. 3.5 Mortgage Finance Ever since the inception of life. Account relationship not mandatory. Nationwide acceptability. Owning a home for oneself still remains an exclusive dream for many.188.8.131.52. Seeds. The program is designed to help small. 19 .
horses etc can no longer keep pace with the demands of present times due to manifold increase in the population.2.2.2. to take their produce to the market through efficient means of transportation. To meet this emergent requirement.3. modern and improved equipments which essentially complement one another due to their cost effectiveness and time efficiency.4. drills & rotavators etc. Increased use of mechanical means thus provides a ready alternative.2. the benefits / advantages of power are maximized with the use of Mechanical Support i. diesel and solar energy units) water management equipments and water channel development etc.4 Kissan Farm Transport Finance A grave handicap that afflicts our farmers is their inability. Keeping in view the scarcity of water.e. 3. 3. Conversely. which will help farmers to make optimum use of limited water resources.4 Kissan Farm Mechanization Finance Beside Power at the farm i. Camels. they lack mobility to acquire much needed inputs essential for their farming needs. which is the lifeblood of arable lands. to finance installation of Tube-Wells (electric. We can combat the prevalent water scarcity by harnessing more natural resources. Askari Bank has launched an Askari Kissan Farm Mechanization Finance for the assistance of the small farmers and provides finance for farm equipment. Askari Bank has launched a Askari Kissan Tractor Finance to bring power to the fields.3 Kissan Tractor Finance Traditional modes of cultivation viz Bullocks.e. Askari Bank has started a program for farmers. Tractor.2 Kissan AabPashee Financing Agriculture farming is impossible without adequate water. One can safely conclude that if provided with appropriate and speedy transport. due to lack of proper facilities.184.108.40.206. quality of the product and denies them the desirable Price-Fetching opportunity.4.2. the farmer can benefit by enhancing his selling ability and thus increase his 20 .2. trailer. Power in the form of modern technology is therefore the need of the hour. thresher. This adversely affects the freshness. 3..
Leasing Companies and Private Agencies have geared their marketing efforts to concentrate on and have mainly captured the urban markets. meat and eggs etc.4.2.1 Kissan Live Stock Development Finance In order to supplement the income of the farmer.3 Fund Based Loan 3. It is created in current account adjustment from time to time finally on expiry date.4..4. it is pertinent to mention that a number of Banks. The amount of finance is credited to borrowers CD account and he/she utilizes it for business purposes. 3. It is offered for working capital requirement of the customer. It is the type of loan in which client is given cash in lump sum it is offered against the pledge of moveable property or stock of borrower.2. Repayment in monthly installments is not required.income / cash flow. 3.4. which normally do not form part of his diet. Repayment is not made by monthly installments. Poultry and Fisheries without incurring extra expenditure because of availability at his farm. 21 . Askari Bank has launched a program enabling the farmer to purchase Milk Animals. Goats.2. It is allowed to the borrower under a pre-sanctioned limit. Sheep.3. In majority of the cases this finance is allowed against pledge of stock. This facility is normally issued against hypothecation of immovable property. He will be able to get milk.4. A current account is opened and the conduct of this account is kept under review for a period of three to six months. Goods are depledging when the payment is done on delivery order of the bank.2 Cash Finance (C/F) It is also offered for the working capital requirement of the customer. This will further improve their cash flows to repay their other Loans / Revolving Credit on due date.2.1 Running Finance (R/F) It is popularly known as overdraft. 3.2.3. Adjustments are linked with delivery of goods kept under bank’s pledge. 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.
4. By that letter.5.3 Term Finance (T/F) Term finance is offered to client for investment in any project or business. Credit line proposal must clearly state the type of letter of credit the branch is intended to issue. 3. Drafts drawn under usance are for a tenure specified in the L/C and are payable by the customer on due date.2. the borrower binds him to pay the installments at regular intervals.4.2. The sight L/Cs calls for the draft to be drawn ‘at sight’. He told me that the bank is authorized to issue the credit card of two companies. Kiran deals this department.4. Monthly repayment amount is calculated by dividing the principal amount by time period plus mark-up.2. The amount of finance is credited to borrower’s personal account by debiting the Term Finance Account.3. AKBL Multan branch deals n only 3.1 Master Card 22 .4.4 Non-Fund Based Facilities 3.2. The amount of finance is credited to borrower’s personal account by debiting the Term Finance Account.2. 3. The amount of Finance is disbursed in lump sum.3. It is issued for fixed time period.5 Credit Card Department Mss. which are under bank of America. Usance letter of credit. The repayment of Term Finance is usually in installments and with other documents a letter of installments is taken from the borrower at the time of disbursement.1 • • Letter Of Credit Letter of Credit issued by the bank can broadly be classified as under: Sight letter of credit. • • Master Card Visa Card But due unavailability of visa card machine in Multan. Documents negotiated and received against sight are held as security till their retirement.
4 Professionals For professionals bank require Authorized letter from the concerned organization in which he works.5. Gold cardholder is charged Rs. • • • Professional (Govt & private officers) Business man Landlord.000 to 500. bank open on account and some feasible amount is required. This letter shows all particulars about the person. 3. 1200 but if the cardholder is Army officer there is special discount for him. 25. For example for silver card. • • • Silver card Local silver card Gold card These are different due to their credit amount limit. 23 . which is different for different cards.5. on the basis of these particulars. 3. 2500. 3500. 25.There are following types of master card.000. cardholder can take the maximum amount ranging between Rs.3 Issuing Procedure Credit card is issued to three types of parties. 300. 200.000 for gold cardholder this limit has been extended to Rs.2 Issuing Charges When the card is given to cardholder. While the local silver cardholder can use this card up to Rs. • • • Local cardholder is charged Rs. there are certain fee charges to by the bank. 3.2.000. And he is special charged Rs.2. 750.2. Silver cardholder is charged Rs.5.000 to Rs.
and the bank doesn’t know anything about him.2. the bank avoids issuing credit card to that person. 100 are the additional charges charged to the next month payment a part form the 2% interest.2. 3. By providing this service to the customer. there is more chance of default in this case. If that 5% is not paid then Rs. Usually. Type of business. And then when it is sured that the business has the ability to cover the expenses of credit card and to pay it at any time.6 Land Lord In the case. the bank issues the credit card. the person is totally new.3. If you paid only 5% then 2% interests will be charged on remaining amount and it is added into the next month payments.5. But in order to facilitate the cardholder.6 Remittance Department The need of remittance is commonly felt is commercial life particularly and in everyday life generally.7 Payment Procedure The cardholder should have to pay all the amounts what he has consumed. 3.5 Business Men In the case of businessman bank need • • • Balance sheet of businessman. Turnover of 5 years.6.5.2. The main function of the remittance department is to transmit money from one place to another.5. 3. so. Also customer is able to meet its day to day financial requirements. Bank earns a lot of income.2. 3. 5% is the minimum limit that the bank requires and that should be paid monthly. For this bank need an account having the amount over and above the credit card limit of that credit card.1 Demand Draft 24 .2.
DD payable is Nil. Payment Procedure • • • • • • The Bank receives DD. issued by the branch of the Bank drawn i.e. Then the officer of remittance department signs it and operation manager counter signs it. tax is not charged. If two Banks are involved then the DD is sent to other Bank but in other case it is handed over to the applicant.It is an instrument payable on demand for which value has been received. Issuance Procedure • • • • • • • • A demand draft application is given to the customer. When DD is received the test numbers are checked and the payment is made. An entry is made on the DD payable register and the vouchers are made. 3.6.2. The numbers are checked and signatures are verified.2 Pay Order 25 . Vouchers are given for posting and the entry that was made in the register is closed i. The officer checks the information form.e. The DD credit advice is received through mail. The entry is made in the DD issuing register. In case of cash deposit. DD is given to the customer. DD advises are printed and mailed to the respective branch. The Bank charges such as commission. payable at some other place (branch) of the same Bank. Vouchers are prepared and posted. excise duty is charged as per effective schedule of charges. he fills in relevant information and signs it. DD credit is attached with the vouchers and given for posting to the computer. the cashier counts the amount and signs the DD application and enters it in the register. If he fills the tax exemption form.
stamped and handed over to the applicant as a receipt. The cash amount of the pay order is received.It is an instrument issued for payment in same city. Then the pay order receipt is filled accordingly. because Bank issues this on it own guarantee. Counter foil is also filled.3% are applied. Pay order issued from one branch can only be payable from the same branch. A cash memo is signed.6. PO entry is made in the PO issue register. It is also called confirmed cheque. 26 . Then the amount is credited to the account of the customer or pain in cash. A voucher is also made and posted at the computer. are called Outward Bills for Collection. Bank charges (or commission) as per the schedule of charges and the withholding tax of 0. Payment Procedure • • • • On presentation of the pay order receipt.3 Outward Bills for Collection The bills. Then the authorized officer signs it after checking the pay order. The order is then handed over to the applicant after obtaining his signature on the PO Form. which are received by the Bank and sent to other cities (branches) for the local clearing in that city. PO is posted at the computer.2. The concerned officer checks the form. An entry is made in the pay order issue register. He fills in the details and signs it. 3. Issuance Procedure • • • • • • • • • • • The standard form is given to the customer. two authorized officers of the branch sign the receipt. It is normally referred to as Banker’s cheque.
The respective cheques are attached with the schedule. Procedure • • • • • The OBC of other branches will be the IBC of this branch. At the end of the day.7 Foreign Trade Department Foreign trade department deals in: • • • Foreign currency account Exports Imports 27 .6. which are received by the Bank from other branches out of the city for local clearing. So an OBC forwarding schedule is received by mail. After realization. 3. the respective Banks send back the OBCs along with the IBCA (Inter Branch Credit Advice). Commission charges are deducted from the account. are called Inward Bills for Collection. They are entered in the OBC Register and OBC numbers are given to them. after those entries are made. The cheques are entered in the IBC register. The IBC numbers are allotted to them. two vouchers are prepared and posted. On clearing. an IBCA is prepared and mailed to the branch from where the cheque was received. The cheques are lodged for clearing.4 Inward Bills for Collection The bills. The office copy is filled and original schedule is mailed. 3.2.Procedure: • • • • • • • • The cheques that are of other cities are separated.2. The OBC forwarding schedules are prepared for different branches. The OBC numbers are checked from the OBC register.
According to foreign exchange rules and regulation every citizen of Pakistan. in any currency to any part of the world. personal and companies account Criteria for Opening Foreign Currency Account There are not hard and fast rules for becoming the Foreign Currency Account holder. no Wealth Tax deduction will be there. Opening of Foreign Currency Accounts in the joint names of residents/nonresidents is permissible. 28 . Resident firms and Resident Companies including investment Banks can open Foreign Currency Accounts. These incentives reinforce and motivated the people to invest in foreign currency accounts rather to keep the foreign currency idle. Features of Foreign Currency Accounts • • • • • • • • • • • • There will be legal protection for the account holders. All foreign nationals and foreign Companies in Pakistan or abroad can open Foreign Currency Accounts. The account holder can transfer the funds freely. Foreign Currency can be deposited by: Remittance received from abroad Foreign Currency Notes There will be no restriction and questioning to him about the currency. if someone has. either within the Pakistan or outside the Pakistan.1 Foreign Currency Account Mainly this account deals in individual.2.7. with in the ACBL Branches or in other Bank. can open the foreign currency account. well and good. which he wants to deposit that from where he got that money. No Zakat will be deducted on these accounts. one place to another. Foreign currency accounts can easily be transferred from one person to another. I.3. no Income Tax deduction.D card is also not necessary. Bank wants only introduction of the Client and very little about the background. otherwise no restriction will be there for him.
Form-E should be filled correctly and then bank authenticates the E-Form. bank purchases the export bill and makes payment for the value of goods in Pak Rupee to the Exporter. as it can be described from exporter's point of view. commercial invoice. Lodgment Lodgment means making the payment to exporter by bank against the purchase of bill. It restricts the export of some goods and reinforces export of other. Shipping Company issues Bill of Lading or Airway Bill. Bank scrutinizes the documents. Exporter should be account holder of the bank. After fulfilling these requirements. it gives different incentives to the businessmen for enhancing the exports and reducing the Balance of payment deficit. bank records the export bill in the FBP register where name of 29 .7. 3. Exporter goes to the custom authorities for custom clearance. which are different. The controlling body of export in Pakistan is Export Promotion Bureau. The activities. Exporter should bring other documents like certificates of Origin.7. The steps involved in import are described earlier from the importer’s point of view. The procedure of export is same.2.2.1 Foreign Bill Purchased (FBP) Following requirements must be fulfilled before the purchase of Foreign Export Bills. Bank issues the Form-E. Before the lodgment. Facilities This account provides following facilities: • • • • Traveling quota Out ward remittances In ward remittances receiving To make remittances procedure flexible 3. described here.2.2 Export The international trade transaction in which one country sells its goods to other country is called Export. packing list etc.• Foreign currency Accounts can be used for payment of purchases at Duty Free shops.
Usance rate It is the rate payment of which is to be made at a future date. the name of bank which open the LC. Bank gets little amount of commission for the collection of FDBC. Mainly export deals in: 30 . In FDBC bank acts as a intermediary party. bank lodged this FDBC. 90. Advance Payment of Bills This is another function which the export department of ABL Multan branch performs. Tenor of bills maturity. it means bank record this export bill in the FDBC register where name of exporter. bank which open the LC.exporter. payment of which is to be received within 12 days from the date of lodgment.2. 60. Like FBP exporter deposit all the important documents of export bill to the bank. importer. In advance payment bank pay the amount of export bill to the exporter before the shipment of goods.2. Two types of rates are used in evaluating the amount: OD Buying rate/At sight rate It is the rate of export bill. 3. while in FDBC banks collect the export bill on the behalf of exporter on the date of maturity. normally within 30.7.2 Foreign Documents Bill for Collection (FDBC) In FBP bank purchase the export bills from the exporter and make payment to the exporter before the maturity of that bill. or 180 days. For this purchase of bill bank gets more charges as compare to FBP. maturity date is written. 120. name of importer. ABL receive the credit advice from the treasury office situated in Karachi that the payment of the FBP Number this receive. Realization Realization means receiving the payment from the foreign bank for the export of goods. 150. If the payment FBP is less than the amount it was lodged than remaining amount will receive from the exporter. Tenor.
Account to UCP 500 and extending the credit facility to the importer informs FIM (finance against imported merchandise) FATR (finance against trust receipt). • • • Arrange forward cover booking regarding import payments Also arrange forward cover booking for letter of credit open other then ABL Submission of monthly returns to SBP regarding the import on form I The international trade transaction. Previously. Foreign Exchange Departments of all banks are restricted to work under the rules and regulations of government. Import and Export Act of 1950 govern’s the import trade in Pakistan.2. Import License and Registration The individuals and firms who interested to import goods from the foreign countries are required to obtain import license. in which one country buys goods from other country. the regulating body of imports was controller of Import and Export. But this function has been shifted to Trade Development Authority.• • • • • • • • • Negotiation of documents Sending the documents for collection Pre-shipment financing Post-shipment financing Remittance against agent commission Forward covered booking Handling the documents for negotiation according to the UCP 500 (uniform custom and practices) Handling the documents for collection according to URR (uniform rules for collection) Submission of monthly returns to SBP regarding the export on form A-2/O-2 3.7. Import licenses are a type of artificial restraint on the 31 .3 Import • • Opening the letter of credit Scrutinize the documents receive from flowing bank under letter of credit. is called import.
A letter of credit is issued by the importer’s bank. Letter of credit Foreign trade payment problems are mainly solved by a letter of credit. The import licenses issued by the Import Trade Controller are required to be registered with the State Bank of Pakistan. • • Account party: The buyer or the importer on whose account and request the letter of credit is opened is known as account party or opener. 32 . A letter of credit thus is a (I) written undertaking by an importer’s bank to exporter’s bank. Thus contract includes all information of terms and condition of sale. Issuing bank: The bank which issues or opens a letter of credit at the request of importer is called issuing bank. the importer has to submit applications to the licensing authority. Parties to a letter of credit There are four parties involved in letter of credit. To acquire import license. A letter of credit is a commitment on the part of buyer’s bank to pay or accept draft drawn upon it. The importers can only get their merchandize cleared from the custom authorities if they have the import license duly issued in their names. they sign a contract. the importer then negotiates with the exporter. If guarantees payment to the exporter up to specified amount of money provided the terms and conditions laid down the L/C are fulfilled. (II) That it will pay or accept draft drawn upon it up to a stated amount with a specified time. When they reach to an agreement on all terms of sale. (III) The payment will only be made to the exporter if he compliers with the terms of credit. provided drafts do not exceed a specified amount.import trade of a country. Contract of sale After getting the license.
The information. on which the draft is drawn. Cash margin The bank asks the importer to deposit cash or securities with the bank. is called negotiating bank or paying bank. possesses the import license issued by import control. Authorities. brief description of goods. documents to be presented. He will prepare an application on the prescribed form available from the bank. Scrutiny of application Before issuing a letter of credit. market demand of goods.• • Exporter or seller: The seller or the party in whose favor L/C is drawn is the exporter. collateral offered to cover the credit etc. He is also called beneficiary. import license etc. such as value of merchandise. the amount available covers the letter of credit applied for. the bank will scrutinize whether the importer is of good financial standing. The L/C may be sent directly to the exporter or the advising bank in the exporter’s 33 . port of unloading. Issue of the letter of credit The importer bank after being fully satisfied will issue a letter of credit in favor of the exporter. Opening of letter of credit The main steps involved in the opening of the letter of creditor as follows: Application for letter of credit The importer will request with own bank or any other bank. The bank depending upon the credit worthiness of the importer decides the proper margin of cash or securities to be deposited. port of shipment. which deals in foreign trade transactions to issue a letter of credit in favor of the exporter. Negotiating bank: The paying bank in the exporter’s country. which are supplied in the application are based on the contract of sale and include only the important feature of contract.
the payment would be released by the bank. In such a case. the importer’s bank pays the amount on the same day charging the importing customer’s account.county. The issuing bank is only accountable for the completeness of documents. he examines it to ensure that it conforms to the terms of contract of sales. the advising bank will inform the exporter about opening a letter of credit. Payment by importer to the bank First the importer pays all his obligations the bank then bank releases the documents. Shipment of goods When the exporter receives L/C. If the documents of title accompanying the bill are in order. not to see whether goods conform to the contract of sale. He then shifts the goods and presents all required documents along with the bill to negotiating bank. the importer discharges his obligations to the accepting bank on or before the maturity date of acceptance. Payment to the exporter 34 . Liability of the issuing bank On receipt of documents and the bill. If the documents on the face appear to be in order. In case of a time draft. The accepting bank will then release all the shipping documents to the importer. In case any defect is found in the documents and the draft is honored by the issuing bank the importer can claim damages on the issuing bank. Role of negotiating bank The negotiating bank after receiving all the documents and the bill from the exporter will scrutinize them whether these conform with the terms of letter of credit. the issuing bank will examine them. In case of sight draft. these will be sent to the importers bank for payment.
8 Cash Department Cash department deals in money. It includes the list of Serial No. This declaration is submitted on prescribed Form-E in quadruplicate.9 Clearing Department 35 .2. amount and purposes of every FormM.The exporter can obtain payment from the negotiating bank by discounting the draft (L/C) immediately after shipping the goods and obtaining shipping documents. currency. amount. cheques and other primary functions. which is certified by authorized dealer. efficiently and effectively perform his duties. 3. of Form-E. At the end of the month of realization of the amount. Reporting of Form-E Every Exporter is required to submit a declaration to custom authorities for goods exported. Submission of Monthly Returns It includes reporting of Form-M and Form-E to SBP. of country and commodity. Form-E is reported to SBP at the end of the month. that’s why this department is very carefully fulfill his duties. Cash department is the responsible for any fraud or any replacement of cash. Serial No. It includes the reporting period. Form-M is reported. Cash officer after identification pays the money to the cheque holder at that time. Code No. Cheques are cashes on the cash counter. in which the amount is realized. There is a prescribed Performa used for the reporting of Form-E. Four copies of Form-E are maintained.2. this department accept the money on counter and withdrawals on the counter. 3. Form-M is used to declare this outflow of foreign currency. Reporting of Form-M Every foreign bank deducts some charges form the value of goods. Credit card bills can be deposited on the cash counter. Cash officer accept the utilities bills and perform different function with respect to bonds. It is for miscellaneous purposes like foreign bank charges or foreign agent commission.
embezzlements and pilferage is totally eliminated. A lot of time.9. the number of transactions can be unlimited.2. Working of clearing house All the banks which are the members of clearing house maintain their accounts with State Bank of Pakistan by debit and credit to which the clearing settlements are made. No cash is needed as such the risks of robbery. more and more people are inclined and attracted towards banking.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 draw on each other within a specified area and thereby secure payment for their client through the clearing house at specified time” in an efficient way. 3. As major payments are made through clearing. cost and labor are saved.1 Clearing House It is a place where representatives of all scheduled banks sit together and interchange their claims against each other with the help of controlling staff of State Bank of Pakistan and where there is no branch of State Bank of Pakistan the designated branch of National Bank of Pakistan acts on behalf of State Bank of Pakistan. a bank delivers cheques and other negotiable instruments worth more than the total amount of Cheque received by it that banks accounts with State Bank of Pakistan will be credited with the differential amount. Since it provides an extra service to the customers of banks without any service charger or costs. If on a particular day. Advantages of Clearing • • • • • Since clearing does not involve any cash etc and the entire transaction take place through book entries. the banks can manage cash payment at the counters with a minimum amount of cash in vaults. If on the other hand the total amount of cheques and other negotiable instruments draw on a certain bank by other bank is more 36 .
its total being amounts Rs.2.000-45.000/.9.45.debit is Rs.to NBP so difference is Rs. whereas cheques received from the representatives of other banks for payment are called inward clearing.75. Rs.30. Rs. 3.000 = -25.respectively. NBP and MCB of Rs.000/-.than the total amount receivable by it from other banks.debit. 000/. NBP and MCB for amounts Rs. • • • ABL has t receive Rs. ABL has to receive from MCB Rs. 000/.and Rs.25. it means that this amount is to be credited to ABL A/C with S.000/.credit and debit Rs.2 Outward Clearing at the Branch The following points are to be taken into consideration while an instrument is accepted at the counter to be presented in outward clearing: 37 .95. ABL has to receive Rs. 000/. on the other hand the cheques drawn on ABL are from HBL.P.000-15.30. its total being Rs. 25.from HBL and to pay Rs.15. 50.to MCB so difference is Rs.75.15. The difference between Rs.and the contra will be other banks accounts respectively.000/-. 000/. it means that this amount is to be debited from ABL account.and to pay Rs. 000/. 15. 000/.000/-.50.20. 000/.1.000/.B.from NBP and to pay Rs.000 I.30. Procedure of Settlement Presume that ABL got the cheques which are drawn on HBL.000 debit Hence ABL A/C with State Bank of Pakistan will be debited with Rs. The brief detail is following. 000/.000/.25. This called as “Debit and Credit Rule”. 000/.15.debit.000/. then this bank’s account will be debited on that day.credit. 000/.20. Rs.1. GRAND TOTAL: 35.e.25.15.000/respectively.to HBL so difference is Rs. The cheque delivered to the representatives of other banks for clearing are called outward clearing.35.95.debit which means the house is against ABL for Rs.000/-.000/-.
two copies of which are attached with the relevant instrument and the third is kept as office copy The house page is prepared from schedules in triplicate 38 . Serial number is given to each voucher The register is balanced. Clearing stamps is affixed on the face of the instruments.• • • • • • • • • • The name of the branch appears on its face where it is drawn on It should not be stale or post dated or without date Amount in words and figures does not differ Signature of the drawer appears on the face of instrument Instruments is not mutilated There should be no material alteration if so. The instrument is suitably discharged. it should be properly authenticated If order instrument. If an instrument is in order then out bank’s special crossing stamp is affixed across the face of the instrument. the credit voucher are separated form the instrument and are released to respective departments against instrument and are released to respective departments against acknowledgement in the register • • • The schedules are arranged bank-wise The schedules are prepared in triplicate. where a bearer cheque does not required any discharge and also an instrument in favor of a bank need not be discharged. paying-in-slip and counterfoil (The stamp is affixed in such a manner that half appears on paying-in-slip and half on counterfoil). Then the following steps are to be taken:• • • The particulars of the instruments and the pay-in-slip or credit vouchers are entered in the Outward Clearing Register. The instrument along with paying-in-slip is retained while the counterfoil is given to the customer duly signed. suitably endorsed and last endorsee’s account being credited Endorsement is in accordance with the crossings if any The amount of the instrument is same as mentioned on the paying-in-slip and counterfoil The title of account on the paying-in-slip is that of payee or endorsee (with the exception of bearer cheque).
• Financial accounts analysis and receivable/payabl planning e) • Investor relations • Internal • Pensions control management • Preparing • Insurance/risk financial management 39 statements • Tax analysis • Preparing and planning budgets • Preparing VICE PRESIDENT Operations . amount of the instrument is written).9. account number. instrument number.2. The instruments are sent to the respective departments against acknowledgement in the Inward Clearing Register. Structure and Functions of the Accounts/Finance/Audit Department 4.3 Inward Clearing of the Branch • • • • • The particulars of the instruments are compared with the list The instruments are detached and sort out department wise The entry is made in the Inward Clearing Register (serial number.• • • The schedules and house pages are signed by the officer incharge with branch stamp The grand total of the house page is taken and agreed with that of the outward clearing register The instruments along with duplicate and house page are sent to the Main Office 3.1 Organizational Chart of Finance Department BOARD OF DIRECTORS TREASURES • Capital budgeting PRESIDENT • Cash (Chief Executive Officer) management CONTROLLER • Commercial • Cost banking and accounting investment VICE PRESIDENT VICE PRESIDENT • Cost banking Marketing Finance management relationships (Chief Executive • Data • Credit Officer) )Offi processing management • General • Dividend ledger disbursement (Payroll. The instruments are scrutinized in each respect before honoring the same 4.
to the securities and exchange commission (SEC) and to stockholders. Pension Management) 40 . The Vice President of finance or Chief Financial Officer (CFO). Const accounting as well as budgets and forecasts. Treasurer The treasurer’s responsibilities fall into the decision areas most commonly associated with financial management: • Investment (Capital Budgeting.The above figure is the structure of finance department of Askari Bank Ltd. concerns internal consumption. Financial operations over seen by the CFO will be split into two branches such as: • • Controller Treasurer Controller The controller’s responsibilities are primarily accounting in nature. External financial reporting is provided to the Internal Revenue Service (IRS). In Askari Bank Ltd. generally reports directly to the president or Chief Executive Officer (CEO).
They note all the banks charges and expanses. The main focus on bank financial statement. Preparation of special reports as per instruction by Branch Manager. All accounting and financing activities are checked in this department. Supervise all the working of other staff members.• • Financing (Commercial Banking and Investment Banking relationships. • Supporting to make the monthly budget of the company. Asset Management (Cash Management and Credit Management). Liabilities Generation and Allocation of funds Manager Accounts • • • • Finalize the Accounts on monthly basis. • Supporting to Manager Accounts to finalize the Accounts on monthly basis. Verify the party’s payment & all other expenses payments Deputy Manager Accounts • Posting in the Accounting System. They check the daily voucher and posting. 41 . they prepare the financial statement annually and semi annually of the bank. Investor relations.2 Finance and Accounting Operations Askari bank deals in finance and accounting operations. Dividend disbursement). 4.. • Preparation of Debtors and Creditors reconciliation reports and aging schedules. Preparation of Special reports for decision making of Management. • • • • • • Preparation of daily bank positions statement Payment of salaries Preparation of the statements Depreciation calculation Expanses. Income.
• Supporting to prepare weekly budget. The role of CFO in this bank is very important. Our financial manager uses the decision making and ratio analysis to earn a profit and decrease the expanses of the ABL. Financial manager is responsible for maintaining the record of accounts. He control and monitor the all the banks department and also check the performance of the bank and make necessary decisions. • E-Filing of both (Sales tax & Parties tax payment) • E-Filing of both (Sales tax & Parties tax payment) 4. He 42 . he control the other activities of credit management. Tax Officer • Handle all sales tax and income tax matters. • Preparation of Refund case & Processing in department.Accounts Officer • Prepare fund flow statement on daily basis. Financial manager is responsible for all kind of operations of the bank. cash management and credit management. Achievement of goals and objective based on financial manager how he can get them and what activities he applies. He monitor all kind of cash management activities in which area more cash should be invested and for whom people should grant the loan. Financial use the policies and strategies how to generate a fun and where have to invest.3 The Role of Financial Manager Financial manager stands between the firm’s operations and financial markets. • Posting of Funds Received from parties. Financial manager must have considered the interest rates on the load and concluded that it was not too high. Financial manager also involve in financing decision.
Used for preparing the daily Reports. • So on the bases of these reports Manager decide the future planning for the Askari bank. It is very important for decision making and it is helpful in the following ways: 1. Markup. Advances.058 7.667 . 3. 4. 2. Used for calculate the Profitability of the Bank. SOURCES OF FUNDS Share Capital Reserves 43 4. For this purpose Askari bank used software which name is: • • • Uni-Bank Software Its working is so simple and it is user interfering software.4 Use of Electronic Data in Decision Making Now this is the age of information technology.is responsible to control the bank efficiency and checks all the staff of the bank and also check the performance of financial manager. 4. Used for entering the daily Deposits.5 Source of Funds Major sources of funds are as follows. So the banking system is also become computerized. A/R and Revenue.
000 140. ABL generate fund from interest over loan and markup over load and consumers are the most important source of generation of funds.000 Share Capital Reserves Deposits & Due to Financial Other Accounts Institutions Source 2008 2007 2006 2005 2004 4.000 20.000.000 100.000.Sources of Funds 180. ABL provide a facility of loan to its consumers and generate funds.000 160. ABL generate funds from mark up.000.000 60.000 40.000.000.000. markup and consumers.000.000.7 Allocation of Funds Askari bank allocates the funds in the following fields.000 80. 4. these are the important source of funds.000 Value '000 120.000. 44 .6 Generation of Funds Funds are generated from interest.
Storage & Communication Commercial & Trade Construction Electricity.Transport. Storage & Communication Commercial & Trade Construction Electricity. commercial and small and medium enterprise. Gas & Water Supply Manufacturing 45% 32% Mining & Querrying Other Private Business 4% 2% Community & Other Personal Service Activities Education Policy of Allocating Funds Our bank adopts different kind of strategies and policies for the allocation of funds. 45 . retail banking. and corporate. This bank allocates the funds among different department according to the annual budgets prepared at the start of every financial year. Gas & Water Supply Manufacturing Mining & Querrying Other Private Business Community & Other Personal Service Activities Education % 3% 45% 2% 4% 32% 1% 4% 7% 2% Allocation of Fund 2% 4% 1% 7% 3% Transport. This fund is allocating in different areas like agricultural.
1. Critical Analysis 5. 5.1 Financial Analysis 5.1 Balance Sheet 46 .Remaining fund which left this fund is allocated in other areas such as bank invest in something or purchase something for the benefit of bank.
1.2 Profit & Loss Account Operating Fixed Assets Deferred tax assets 47 16 3 4 35 128 8 8 206 .AS ASSETS Cash and balances with treasury banks Balances with other banks Lending to financial institutions Investment Advances Other assets 5.
P FO R TH E M ark-up / return / interest earned M ark-up / return / interest expensed N et mark-up / interest income Provision against non-performing loans Provisions for impairment in the value o Bad debts w ritten off directly N et mark-up / interest income after pro 48 .
20,000,000 18,000,000 16,000,000 VALUE PKR '000 14,000,000 12,000,000 10,000,000 8,000,000 250,000,000 6,000,000 4,000,000 200,000,000 2,000,000 PKR '000 150,000,000 49 INTEREST INCOME 2004
5.1.3 Ratio Analysis
R A T IO
E A R N IN G T O A S S E T S
FO RM U LA
E A R N IN G A S S E T S TO TA L ASSETS
2 P K R ('0
16 2 ,2 4 6 386,
20 6 ,1 9 1
P R E T U R N O N E A R N IN GR O F IT A F T E R T A X ASSETS E A R N IN G A S S E T S E Q U IT Y C A P IT A L T O T O T A L E Q U IT Y TOTA L A SSETS TO TA L ASSETS Key Figure 3 L O A N T O D E P O S IT LOAN
16 2 ,2 4 6
4,0 5 8 ,
20 6 ,1 9 1
D E P O S IT S
12 8 ,8 1 8
C U R R E N T R A T IO
EARNING TO ASSETSA S S E T S CURRENT
16 7 ,6 7 6
18 8 ,9 6 0
C U R R E N T L IA B IL IT IE S 18 RETURN ON EARNING ASSETS 8 ,4 4 7
B IT IN T E R E S T C OCAPITALETO TOTAL EQUITY V E R A G E R A T IO IN T E R E S T E X P E N S E P R O F IT A F T E R T A X N E T P R O F IT M A R G IN X 100
461, ASSET 1 0 ,6 5 0 386,
LOAN TO DEPOSIT
EARNING TO ASS ETS 0.8600 0.8400 0.8200 0.8000 0.7800 0.7600 0.7400 0.7200 0.7000 2008 2007 2006 2005 2004
RETURN ON EARNING ASSETS
0.0250 0.0200 0.0150 0.0100 0.0050 -
Earning and Return On Earning Assets
Earning assets are the assets which are very important for any company for the bank. Ratio tells that on what percentage earning assets contribute the total assets. While bank also has increased it’s earning assets ratio shows the more profitability of the bank as it can be shown by the profit and loss account of the different year that shows the net mark up income more for the year as compared to the previous years so bank is going gradually to the more profitability by giving more advances and loans.
EQUITY CAPITAL TO TOTAL ASSETS 0.79. It has been gradually increases year to year due to its performance.0050 2008 2007 2006 2005 2004 Equity to Total Assets Equity capital to assets is a common measure used to analyze capital adequacy of a bank.0200 0. In 2006 is 0. in 2005 it is 0.0117.0121 again decreases from previous year and in 2007 it is 0.0100 0.0168 decreases as compare to previous year and in 2007 it be 0. 52 . Equity capital to total assets ratio in is almost decreases year to year.0250 0. But bank’s total assets has increased but increase in the equity is so small because of less profit in the year and this less profit is due to more provisions.Earning assets ratio in 2004 is 0.0024.75 which is little decrease as compare to previous year.0214. Return on earning assets ratio in 2004 is 0. In 2006 are 0.84. in 2005 it is 0. This ratio in 2006 is 0.0165 which is decreases as compare to previous year.0195 which is little increase in as compare to previous year.0169 and it is highest in last year 2008 which is 0.0104 and in last year 2008 which is 0.0150 0. in 2005 it is 0.0197. while bank has decreased its capital adequacy ratio in the year.80 a little increase from previous year and in 2007 it is 0.82 and it is little increase in last year 2008 which is 0. Equity capital to total assets in 2004 is 0.
75 a little increase from previous year and in 2007 it is 0. It is lowest in first year in 2003.8500 0. Loan to deposits ratio in 2004 is 0. But if a bank has low deposits then obviously it will give low loans because bank gives its loans by the deposits and earn on the loans then pay mark up on the deposits to the customers.LOAN TO DEPOSIT 0.70 which is little decrease as compare to previous year.72 and loan to deposits ratio is highest in last year 2008 which is 0.7000 0.6000 2008 2007 2006 2005 2004 Loan to Deposits While there is a concept that bank’s loans are its assets while its deposits are liabilities. 53 .6500 0.8000 0. Loan to deposits ratio in 2006 is 0.77. Loan to deposit ratio in 2005 and 2007 is almost equal.7500 0.84. in 2005 it is 0.
0300 1.9900 0. the more capable the bank is of paying its obligations. Current ratio in 2006 is 1.CURRENT RATIO 1. A ratio under 1 suggests that the company would be unable to pay off its obligations if they came due at that point.0000 0.9800 2008 2007 2006 2005 2004 Current Ratio The ratio is mainly used to give an idea of the bank ability to pay back its short-term liabilities (debt and payables) with its short-term assets (cash.as there are many ways to access financing .0500 1.0400 1.0100 1.04.03 which is little increase as compare to previous year. receivables).0200 1. inventory.but it is definitely not a good sign.04 and current ratio is almost same in last year 2008 which is 1. The higher the current ratio.04 a little increase from previous year and in 2007 it is 1. 54 . it does not necessarily mean that it will go bankrupt . Current ratio in 2004 is 1. in 2005 it is 1.00. While this shows the bank is not in good financial health.
in 2005 it is 0.043.5000 1.5000 - 2008 2007 2006 2005 2004 Interest Coverage Ratio A ratio used to determine how easily a bank can pay interest on deposits and other accounts. its ability to meet interest expenses may be questionable. Interest coverage ratio in 2006 is 0.54. the more the bank is burdened by debt expense.0000 0.48 increases from previous year and in 2007 it is 0. An interest coverage ratio below 1 indicates the bank is not generating sufficient revenues to satisfy interest expenses.5000 2. The ratio is calculated by dividing a bank's earnings before interest and taxes (EBIT) of one period by the bank's interest expenses of the same period: The lower the ratio. 55 .0000 2. When a bank's interest coverage ratio is 1.0000 1.26 which is increases as compare to previous year. Interest coverage ratio in 2004 is 0.5 or lower.67 and interest coverage ratio is highest in last year 2008 which is 2.INTEREST COVERAGE RATIO 3.
in 2005 it is 17.86 is almost equal from previous year and in 2007 it is 23. It measures how much out of every rupee of interest income a bank actually keeps in earnings.0000 35.0000 20.099. 56 . Net profit margin in 2006 is 17. Net profit margin in 2004 is 2.0000 40.0000 30.0000 5.0000 25. or net profits divided by interest income.NET PRO FIT MARGIN 45.0000 2008 2007 2006 2005 2004 Net Profit Margin A ratio of profitability calculated as interest income divided by revenues.0000 15.70 which is increase as compare to previous year.03 and net profit margin is highest in last year 2008 which is 42. A higher profit margin indicates a more profitable bank that has better control over its costs compared to its competitors.86. Profit margin is displayed as a percentage.0000 10. Profit margin is very useful when comparing bank in similar industries.
0350 0. Net interest margin is almost equal in all years.035 which is little decrease as compare to previous year.0250 0.0300 0. deposits). Net interest margin in 2004 is 0.031 and Net interest margin in last year 2008 which is 0.0100 0.031. in 2005 it is 0. 57 .0050 - 2008 2007 2006 2005 2004 Net Interest Margin Net Interest Margin (NIM) is a measurement of the difference between the interest income generated by banks or other financial institutions and the amount of interest paid out to their lenders (for example.0150 0. Net interest margin in 2006 is 0.034 a little decrease from previous years and in 2007 it is 0.038.0200 0. It is considered similar to the gross margin of nonfinancial companies.0400 0.NET INTEREST MARGIN 0.
0700 0.0100 2008 2007 2006 2005 2004 Average Yield on Assets Annual or other periodic rate of return on investments because banks act as custodians of deposits for many years until money must be paid out the depositors.083 which is decrease as compare to previous year. Average yield on assets in 2004 is 0.076 a little decrease from previous year and in 2007 it is 0.0605 and average yield on assets is minimum in last year 2008 which is 0. Yield is also important to the depositors that include a specific investment element.042. They invest it to achieve a yield adequate to meet these obligations.0300 0. It is highest in last year in 2007.0500 0.0200 0.AVERAGE YIELD O N ASSETS 0.0900 0. Average yield on assets in 2006 is 0.0600 0.1000 0. in 2005 it is 0.0400 0.089. 58 . Average yield on assets in 2004 and 2003 is almost nearly.0800 0.
This ratio in 2006 is 0.7000 0.49 and ratio is lowest in last year 2008 which is 0.1000 2008 2007 2006 2005 2004 Interest Expense to Interest Income Interest expense to interest income ratio in 2004 is 0.5000 0.2000 0.25.INTEREST EXPENSE TO INTEREST INC O ME 0.58.55 a little decrease from previous year and in 2007 it is 0.57 which is little decrease as compare to previous year.3000 0. in 2005 it is 0.4000 0. 59 .6000 0.
5. to express the idea of reviewing data for a number of consecutive periods. Comparing analytical data for a current period with similar computations for prior years affords some basis for judging whether the condition of the business is improving or worsening. This comparison of data over time is called as horizontal analysis.1.4 Horizontal and Vertical Analysis An analysis of percentage financial statements where all balance sheet or income statement figures for abase year equal 100% and subsequent financial statement items are expressed as percentages of their values in the base year. It is distinguished from vertical analysis which refers to the review of the financial information of only one accounting period. 60 . A percentage analysis of financial statements where all balance sheet items are divided by total assets and all income statement items is divided by net sales or revenues.
1.4.1 Horizontal & Vertical Analysis of Balance Sheet A ASSETS C ash and balances w ith treasu ry bank B alances w ith o ther bank s L end ing to financial and o ther institu Investm ent A d vances O ther assets 61 .5.
2 Horizontal & Vertical Analysis of Profit & Loss Account 62 .5.1.4.
P FOR THE YE VERT 2008 200 D Mark-up / return / interest earned Non Mark-Up / Interest Income Fee. commission and brokerage income Dividend income Income from dealing in foreign currencies Gain on sale of investment Unrealised gain/loss on revaluation of investment ` Other income 63 Total non mark-up / interest income 87% 7 6% 1% 4% 0% 0% 2% 1 .
In the balance sheet the ratio of the advances and the deposits are high which is good.4. We need to control over the expanses and improve the performance of the bank. Liabilities of our bank are also increasing from year to year we need to control over it.3 Interpretation of Horizontal and Vertical Analysis Interpretation of Horizontal Analysis An analysis of percentage financial statement where all balance sheet or income statement figures for a base year equal 100 (percent) and subsequent financial statement items are expressed as percentages of their values in the base year. introducing new products and car financing. Total assets of our bank are also increasing from year to year which is useful for our bank. But the Administrative expanses increase during the 2007 due to new customer services.1. Deposits are increase in 2006 due to high interest rates. 64 . So the above situation shows that the trend of progress is positive. Profit before taxation fluctuate between different years and gradually increase and in the last year 2008 it is little bit decrease. Interpretation of Vertical Analysis An analysis of percentage financial statements where all balance sheet items are divided by total assets and all income statement items divided by net sales of revenues. Profit before taxation is also increasing in first four years and it is decrease in the last year 2008. Administrative expanses are fluctuating during the different years it is maximum in the year of 2008. Administrative expanses are increasing by year to year we need to control over it.5. we need to more focus on it.
82 815.70 46.42 195. Its year of listing was 2000.000 12.155.50 279.447.31 1.400 Pak Petroleum 25.00 4.00 62.05 3.02 1.19 6.45 287.50 46.365.90 59.10 22.10 61.22 43. i. The bank’s commitment and endeavor to excel in rendering contemporary banking services along with acceleration of business mobilization will.04 934.25 102.29 8.25.25 7.25 46.2 Organizational Analysis With Reference to the Industry Symbol Volume Open Rate High Rate Low Rate 123.80 105.88 Change Change 1. The outlook for the rest of the year 2007 remains challenging and is dependent on the success of the Government’s economic policies and n improvement in the investment climate.00 2.80 423.46 4.35 1.O.600 Bank Al-Falah NIB Bank B. the reduction in the interest rate environment will overall have a negative impact on the financial sector's profitability in the short term.PunjabXB Fauji Fert BinXD 19.20 Price % Index Weightage (%) 14.10 22. ABL's book value was Rs 105.643.45 108.35 4.900 100. agriculture.00 Current Rate 125.72 300.870.34 45.43 650. Inshallah. The Future vision of the management of the Askari Bank Abdali Road is starting 65 .60 107. further enhance the portfolio of its business.07 1.735.605.40 285.46 3.19 40.500 National Bank 20.27 21.383. (million) 539.40 The company's financial year end is DEC.5. On the retail side focus will be on additional fee business while maintaining stringent controls over cost.70 124.183.40 21. which have traditionally received less attention from the financial sector.00 2.80 8.25 0. both on corporate and retail side.e.330.25 274.59 227. in the ensuing half-year. and the profitability. small and medium enterprises and of the entire range of retail products.65 31.28 5.60 278.10 0.500 Askari Bank 20.336.14 Index Points 30.25 5.XD 27.201.85 62.55 277.95 1.79 5.984.84 5.15 21.00 49. Calculated against 2008's annual report and today's closing price.000 12.861.648.95 1.40 105.20 281.90 126.07 Outstanding Shares (million) 4.45 110.01 1.79 12.99 0.430.441.900 18.22 1. To meet these challenges NBP will focus on building our loan portfolio.3 Future Prospects of the Organization Going in 2008.00 45.91 3.40 273.93 685.25 105.300.99 4. ABL key strength remains its customer base of over 9 million and is confident that bank is in positioned to capitalize on the opportunities. 5. Longer term we will be focusing on those sectors in the country.11 Market Capt.76 Oil and Gas Dev.
the Mobile ATM services in the Multan. 66 . This service is already provided in the Karachi Lahore and Islamabad.
• One distinctive feature of the Bank is that it is the only Bank The Bank has also started ATM facility in most of its branches. which was established by Army Welfare Trust. Multan are handling by ABL Multan.2 Weaknesses • • ABL has lesser number of branches as compared to many other bank branches. 6. • • The productivity of the Bank is very good. Bank should lend to very sound parties and increase its payment rate.6. Remittance Department is working very efficiently in transferring the funds of people due to this system. 6. The human resource department is not performing the function of selection and recruitment very effectively. Bank is weak in its credit management. • trend. • • Bank is not introducing new products and new schemes. Selection process is not on merit due to which competent persons cannot be selected. Short-falls/Weaknesses of the Organization 6. Bank is providing a high ABL have strength that most of the imports which are done in quality service to its customers. 24hour Banking is new trend in Pakistan and ABL has also taken apart in this working for the welfare of army officers.1 Strengths • ABL has got a well-developed on-line system in most of its branches. Bank should boost the product development and increase the range of facilities offered for customers.3 Opportunities 67 .
is taking very bold steps to promote IT in Pakistan. 68 .4 Threats • • • ABL has many competitors. Because human resource is the most valuable resource. which are continuously increasing its products and marketing aggressively. It has an opportunity to do aggressive marketing to increase its business. ABL has an opportunity to improve in technology. • ABL may increase its branches in competitive areas 6. Pakistan India relations often create a war danger. • ABL is surrounded by many competitors. It may cause its customers to shift to competitors. Some other banks have competent taskforce.• Govt. which is also a threat for ABL.
Dealing with customers Working Discipline Punctuality of time Commitment with task After this internship I learn many more about the banking organization which I not know 69 . Due to this internship I learn many things Such as: • • • • before my internship. Due to Internship I feel that I can face the people with confidence. Conclusions I conclude from my internship that the Askari bank is a growing organization It provides all the possible services which the customer wanted The behavior of the employee’s are very good with the customer and their dealing are very good . During the internship I compare my theoretical knowledge to my practical knowledge and clear the many concepts. So the net result is that it improves my confidence and my theoretical concepts.7.
First of all. Some person has more burden of work while some have fewer burdens. most of them are P II so the working efficiency of the computer is very low. • In any organization we have to work like a group as a whole. Because during the internship the internees come here to learn and know about the working of the organization. which have less work for internees. The attitude of the one employee can cause tension in the whole environment so it is suggested that they should work as a team and co-operate with each other as well as with internees for better working environment. some recommendations are given. So that they can learn how they have to work in an organization when they get the job. They should try to tell as much to the internees as possible. • Another important problem ABL Multan Branch face is the number of employees working in the bank. Recommendation No doubt Askari Bank is one of the leading banks of the country and upholds its name but still I have a few suggestions in my mind which I think its my duty to mention. in order to make a good working environment of the bank. It is also recommended that all the employees must have computer system so that they can work effectively.8. which is available. • For this purpose they should either make a schedule for the internees or the rotation time period be reduced in those department. There is little number of computers available in the branch the computer. All the employees have not a computer system. 70 . But the most problem is they have shortage number of computer. • Askari Banks do good progress in Multan. The number of employees are very low due to this problem the distribution of work is also not right.
Mr. Mr. Ali Raza OG-2 Askari Bank 03216377335 2. Aamir Accounts Manager. Mr. Reliance commodities 03217325946 3. Aamir Shahzad Director of Oxford College 061-6522850 4. Mr. Naveed Askari Bank Abdali Road Multan 061-9201391 03006320830 5. Ali Sadiq Cash officer in National Saving Centre 71 . Mr. References 1.9.
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