Internship Report

Awww thank you so much I’m truly touched with what you said here .
In Holly Quran Allah says "man finds nothing but for what
he struggles "Man is always mistaken .Struggle is only thing a man can do. actions are in our
hands but results are always in the hands of great Lord.
Being a student of M.B.A (Finance) the task of this internship report on the Bank of Punjab
was really a struggle demanding deed .The effort and struggle to my extent which we could
make I done it ,But as said "Results “let’s see what comes from it
Considering in mind the significance of Services Sector plays a vital role in the growth and
development of our country’s wealth, I decided to choose the organization (Bank of Punjab)
related to services sector.
Role of banking sector in services industry is known to everyone. So The Bank of Punjab is
an organization which is finalized as my concerned organization because this is mainly
performing the lot of services in all over the Pakistan. As this was my first ever practical
experience.
As I started the work in estate that I think about how to start I but now when I am writing these
lines by the "Grace of God “My final report is finalized.
By the Grace of
Almighty Allah and with the co-operation of entire staff of the branch specifically Branch
Manager Mr. Saeed Ahmad Cheema, and the Mam Sehar Muneer guided me in start that
how can I make this internship great learning to me and to prepare this entire report and so I
acknowledge all of these people who help me throughout this period and my parents who
always help me in different aspects
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I have done my internship at The Bank of Punjab, main Branch. There are three
departments in the branch, and I worked as an assistant in that branch. For the first
two weeks I worked in deposit department under the supervision of Saeed Ahmad
Cheema , where I have to perform following tasks:
• Entering information in KYC (know your customer) forms.
• Scanning and arranging specimen signature cards.
• Inform customer of essential conditions under which the account will be operated.
Afterwards I have learnt about vouchers, checking of vouchers is essential to confirm
that correct calculation has been done. Vouchers are properly bind sealed, and
checking by the manager. I have checked the following things:
• The check should not be post-dated/anti-dated.
• Amount in words and figures tallies.
• Cash paid stamps (with dates) are duly affixed in case of cash cheques and in case of
clearing stamps is affixed.
• Cutting/over writings are duly authenticated by the account holder, etc
Then another task for me was “issuing of cheques books”. It is one of the most
interesting works that I have learnt in the bank. Cheques books should be issued only
after all the formalities of the account opening forms, which have been checked by the
branch manager.
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Maintaining Dispatch register and Inward Mailing register was also included in duties
assigned to me. I also used to help different employees in their work. Another
interesting work was there in my internship that was yellow cab scheme which is
introduced by the Punjab government I deal this scheme with the help of Nawaz Masih
the officer in the branch it was great learning to me
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Introduction
1. MISSION STATEMENT............................................................................................................................................5
2. VISION STATEMENT...............................................................................................................................................6
3. CORE VALUES.......................................................................................................................................................6
4. HISTORY.............................................................................................................................................................6
5. SCOPE OF THE BANK.....................................................................................................................................8
6. MANAGEMENT OF THE BANK.........................................................................................................................8
7. EMBLEM...........................................................................................................................................................9
8. OBJECTIVES....................................................................................................................................................9
9. YEAR 2010 AND FUTURE OUTLOOK..........................................................................................................................9
10. SUBSIDIARIES AND SPONSORSHIP...............................................................................................................10
Organization structure
1. MANAGEMENT HIERARCHY..................................................................................................................................11
REGIONAL NET-WORK..........................................................................................................................................13
2. REGIONS AND BRANCHES............................................................................................................................13
Function of divisions
1. ADMINISTRATION DIVISION...................................................................................................................................15
2. OPERATIONS DIVISION.........................................................................................................................................16
3. BUSINESS DEVELOPMENT DIVISION..............................................................................................................17
4. CREDIT DIVISION...........................................................................................................................................18
5. INTERNATIONAL DIVISION..............................................................................................................................19
6. FINANCE DIVISION.........................................................................................................................................20
7. RECOVERY DIVISION............................................................................................................................................21
8. AUDIT AND INSPECTION DIVISION...........................................................................................................................22
SERVICES AND BUSINESS PROCESS

1. SERVICES PROVIDED TO CUSTOMER..............................................................................................................23
2. DEPOSIT SECTION..........................................................................................................................................24
3. NATURE OF DEPOSITS....................................................................................................................................24
4. ACCOUNT OPENING SECTION.............................................................................................................26
5. CLEARING DEPARTMENT...............................................................................................................................26
6. REMITTANCE DEPARTMENT.................................................................................................................28
7. ADVANCES / CREDIT DEPARTMENT...............................................................................................................31
Performance
1. DEPOSITS......................................................................................................................................................39
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2. ADVANCES.....................................................................................................................................................40
3. CAPITAL RESERVES......................................................................................................................................40
4. TOTAL ASSETS..............................................................................................................................................41
5. PROFITS........................................................................................................................................................41
6. GROWTH OF BOP SHARE HOLDERS............................................................................................................42
7. CATEGORIES OF SHAREHOLDERS.................................................................................................................42
Financial Analysis
1. THE BANK OF PUNJAB SUMMARISED BALANCE SHEET..............................................................44
2. THE BANK OF PUNJAB COMPARATIVE BALANCE SHEET............................................................46
3. THE BANK OF PUNJAB COMPARATIVE BALANCE SHEET................................................................................47
4. THE BANK OF PUNJAB SUMMARISED PROFIT & LOSS ACCOUNT.............................................48
5. THE BANK OF PUNJAB COMPARATIVE PROFIT & LOSS ACCOUNT.................................................................49
6. THE BANK OF PUNJAB COMPARATIVE PROFIT & LOSS ACCOUNT...........................................51
7. THE BANK OF PUNJAB TREND PERCENTAGES..............................................................................57
8. THE BANK OF PUNJAB TREND PERCENTAGES..............................................................................58
9. GRAPHICALLY PRESENTATION OF TREND PERCENTAGES...........................................................................59
RATIOS ANALYSIS
1. PROFITABILITY VS. INVESTMENT.............................................................................................................................63
2. PROFITABILITY RATIOS................................................................................................................................64
3. EARNING PER SHARE...................................................................................................................................65
4. REGULATORY RATIOS:..................................................................................................................................65
5. CAPITAL ADEQUACY RATIOS:.................................................................................................................................66
6. EFFICIENCY RATIOS:.....................................................................................................................................67
SWOT ANALYSIS
1. STRENGTHS...................................................................................................................................................68
2. WEAKNESSES................................................................................................................................................69
3. OPPORTUNITIES............................................................................................................................................69
4. THREATS.......................................................................................................................................................70
1. PRODUCT......................................................................................................................................................71
2. PRICE............................................................................................................................................................71
3. PROMOTION...................................................................................................................................................72
4. PLACE............................................................................................................................................................72
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1) Introduction
1. Mission statement
To exceed the expectations of our stakeholders by leveraging our relationship with the
Government of Punjab and delivering a complete range of professional solutions with a focus
on programmed driven products & services in the Agriculture and Middle Tier Markets through
a motivated team
2. Vision statement
"To be a customer focused bank with service excellence"
3. Core values
Our Customer As our first priority.
Profitability for the prosperity of our stakeholders that allows us to constantly invest,
improve and succeed.
Corporate Social Responsibility To Enrich the Lives of community where we operate.
Recognition and Reward For the talented and high performing employees.
Excellence In everything we do.
Integrity In all our dealings.
Respect For our customers and each other.
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4. History
The Bank of Punjab started functioning with the inauguration of its first branch of 7-Egerton
Road, Lahore on November 15, 1989. The architect of the bank Mr. Nawaz Sharif then, the
Chief Minister of Punjab, performed the inauguration.
In Pakistan, over long periods of time the gap in saving and investment and balance of trade
deficit has posed serious threat to the target levels of growth The ailments related to the
budgetary deficit and public debt, both foreign and domestic are in addition. Interestingly even
such adverse circumstances growth of real sector during the preceding year registered a
favorable change, which speaks of hidden potential and strength of economy
Fortunately, the banking sector of the country has the well organized and properly
institutionalized system, which is the major vehicle not only for mobilization of resources to
finance trade, agriculture, and industry but also for the effective conduct of monetary policy.
The Emergence of new bank on the national scene in the early 1990s has done two important
services to the nation.
 The saving base of the economy has effectively enlarged and hence the investment
opportunities have increased.
 The services of the banks in the fact of severe competition have improved considerably
so that now consumer are left with extensive choice to do or undo their business
relations with these banks keeping in view quality of their services.
The Bank of Punjab is working as a scheduled commercial bank with its network
Of 273 branches at all major business centers in the country.
The Bank provides all types of banking services such as Deposit in Local Currency, Client
Deposit in Foreign Currency, Remittances, and Advances to Business, Trade, Industry and
Agriculture. The Bank of Punjab has indeed entered a new era of science to the nation under
experience and professional hands of its management. The Bank of Punjab plays a vital role
in the national economy through mobilization of hitherto untapped local resources, promoting
savings and providing funds for investments. Attractive rates of profit on all types of deposits,
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opening of Foreign Currency Accounts and handling of Foreign Exchange business such as
Imports, Exports and Remittances, Financing, Trade and Industry for working capital
requirements and money market operations are some facilities being provided by the Bank.
The lending policy of Bank is not only cautious and constructive but also based on principles
of prudent lending with maximum emphasis on security. As agriculture is considered as
backbone of our economy the Bank of Punjab has introduced "Kissan Dost Agriculture
Finance Scheme" to small farmers.
The Bank of Punjab has the privilege to discharge its responsibilities towards national
progress and prosperity. Within the couple of years of its scheduling, the bank has not only
carved out for itself prominent niche in the mainstream banking of the country but in certain
areas it has the distinction of taking the lead. In the short span of time the Bank has been able
to evolve a distinct corporate culture of its owned-based policies, which are realistic and are
on highly professional footings.
5. Scope Of The Bank.

Being a commercial Bank, The Bank of Punjab performs all such functions as are attributed to
commercial banking institution both in the area of resource mobilization, loans, and
investment. The Bank is thus providing all type of advances to business, trade, and industry
on seasonal and annual basis, and is ensuring, through the prudent policy, the safety and
protection of its loan portfolios, as the resources base of the bank expands, project financing
will also be brought into its fold.
6. Management Of The Bank.

At the level of Decision-making and implementation, senior management of the bank is drawn
from highly accomplished bankers with rich experience in the banking profession both
domestic and international.
The entire responsibilities of policy formulation and management have been placed, under the
law, with the Board of Director. Furthermore it will be heartening to know that Mr. Nawaz
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Sharif, during his chief Minister ship of the province of Punjab issued special instructions to
the political and executives echelons not to interfere in The Bank of Punjab, thereby ousting
the possibility any pressure which may be put on the management of the bank in respect of
recruitment of staff or provision of credit. These instructions have become an essential part of
the culture of the bank.
7. Emblem.
The sun rising over the five wavy lines symbolizes the dawn of new era of progress and
prosperity for the land of five rivers and hence for Pakistan. Furthermore the main objectives
of the inclusion of cotton flowers and the spikes of wheat in the emblem is firstly to represent
the fact that the economy of the Punjab stands on its agriculture produces especially cotton
and wheat and secondly to highlight the emphasis which the bank is to place on development
of agro-based industry.
8. Objectives
The Bank of Punjab being a commercial bank performs all those function as are attributed to
such banking institutions both in the areas of resources mobilization and investment. It is
providing funds for commerce, trade, industry, and agriculture but its main emphasis is on
accelerated development of agro-based industry. So the main objective of the bank is to
channelize the resources into sectors, which have suffered from neglect. Other objectives
included.
1. To provide speedier services to the common man.
2. To provide the highest rate of return to the shareholders by achieving good profitable
growth.
3. To enter into financing contracts and to mobilize resources in local and now in foreign
currencies consistent with the objects of the bank.
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9. Year 2010 and future outlook
The newly elected Government has pledged to continue economic reforms and policies of the
previous regime resulting in the Government’s enhanced ability to engineer its economic
future, which reinforces the confidence that has emerged during 2010 The success and
growth, however, largely depends on the degree to which the Government can deliver on its
political agenda and how smoothly the transition of power can work towards bringing about a
greater degree of optimism amongst investors and the business community.
Although The Bank of Punjab are optimistic about the future outlook for Pakistan and are
confident that expected GDP growth target will be achieved yet the geopolitical situation
particularly with reference to Iraq the year 2010appears to be far more challenging where the
factors beyond our control may adversely affect our economy. Moreover, the prevailing
money market scenario with extremely low interest rates and stagnant private sector credit is
a serious deterrent to the banking sector growth. This situation will force the banks to shift
their focus from conventional banking approach to retail based consumer finance products
and service and the banks taking lead in this shift process will be least affected by the
prevailing unfavorable interest rate scenario.
10. SUBSIDIARIES AND SPONSORSHIP

The bank is one of the sponsors of Trust Management Services Pvt. Limited besides being
a co-sponsor of Trust Modaraba a Modaraba company incorporated in Pakistan under the
Modaraba companies and Modaraba (Floatation and control) Ordinance, 1980. Authorized
Modaraba Fund and paid up Fund of the said unit in Rs. 500 million and Rs. 150 million
respectively.
The Bank is one of the sponsors of Trust Leasing Corporation Limited a public limited
company established under the Companies Ordinances, 1984. Authorized paid up capital of
the company is Rs. 250 million and Rs. 100 million respectively.
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First Punjab Modaraba Services (Pvt) Ltd. established in Pakistan under Companies
Ordinance. 1984 and register under Moderate Companies and Modaraba (Flotation and
Control) Ordinance, 1980 is wholly owned subsidiary of the bank. Authorized fund of this
Modaraba is Rs. 500 million where as paid up fund is Rs 200 million.
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2) Organization structure
1. Management Hierarchy
Regional Chiefs
General Manger Chief Manger
Division Deparments
Figure 1
ADMINISTRATION ORGANIZATION & METHODS

OPERATIONS INFORMATIONAL & TECHNOLOGY
BUSINESS DEVELOPMENT OFFICERS TRAINING INSTITUTE
CREDIT SHARES
INTERNATIONAL LAW
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FINANCE STATIONERY
RECOVERY PLANNING RESERCH & PUBLICATION
AUDIT & INPECTION
TREASURY
REGIONAL NET-WORK
Figure 2
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2. Regions And Branches
Table 1
Regions Branches Regions Branches
Lahore Central-I 15 Multan Region 16
Lahore Central-II 15 Faisalabad Region 20
Lahore North Region 15 Gujranwala Region 10
Lahore South Region 16 Gujrat Region 13
Peshawar Region 09 Bahawalpur Region 15
Islamabad Region 11 D.G. Khan Region 15
Rawalpindi Region 13 Jhelum Region 10
Sialkot Region 12 Sheikhupura Region 11
Bahawalnagar Region 12 Sahiwal Region 11
Jhang Region 12 Khushab Region 11
Karachi Region 12
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3) Function of divisions
1. Administration division
Administration division
GM
Admin & Officer’s Training
Establishment Institute
Figure 3
This division deals with the problems relates to the staff administration. The main function of
this department is to arrange a comprehensive training program for recruited staff. Others
function includes:
 Recruitment
 Staff remuneration
 Placing the staff
 Providing and defining the opportunities for career development and growth
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 Devising and implementing services rules.
 Promotion and demotion
 Suspension and termination
 Transportation
 Security, health and benefits.
2. Operations division
OPERATIONS DIVISION
GM
O&M
Department
Engg. &
Maintenance
Computer
Dept.
Stationary
Dept.
Figure 4
This Division is concerned with the operational working in general banking, which is
concerned with the routine working of the bank. Any problem or ambiguity arise in any branch
working are rectified and suggested for correction by this division. This Division usually takes
technical procedures involved the decisions like commissions. And also.
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 The maintenance of the existing building owned by the bank.
 Opening new branches and their maintenance.
 It also deals with the stationery problems of the bank.
3. Business development division
Business Development Division
GM
Marketing Cell PRP Department
Figure 5
It is the other name of the marketing division. It promotes the bank cause i.e. deposits and
work for the over all development of the bank. Deposits are the lifeblood of any bank. Without
deposits bank cannot perform any function of banking. This division fixes the deposits target
of every branch by keeping and eye over the potential customers in the area. It gives
motivation to branches to achieve their targets through different campaigns and schemes like
cash prizes and special increments. It publishes a bulletin in which those branches are
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encouraged who achieves their monthly targets. The main function is to develop and attract
the customers and depositors. It also manages:
 Advertising policy
 Sales promotion.
 Schemes offered by the bank.
4. Credit division
Credit Division
GM
Agriculture Credit
Wing
Figure 6
This division control over all credit operations like sanction of loans, Inland Bill Purchased
(IBP) and also keeps check over securities mortgage, hypothecating or pledge. It also fix the
rate of mark-up and other decisions concerning with the credit.
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There is a credit committee, which consists of senior officers; Branches send the credit
proposal to head office credit division. Credit committee approves it after making a
thorough analysis. It also
 Prepare the policies regarding the sanctioning loan
 Monitor loans and credit
 Look after the portfolio of the bank
 Define credit limits against specified securities.
5. International division
International Division
GM
International
Forex Money
Market
Investment
Engg. &
Maintenance
Figure 7
This division is providing important services to the bank regarding the matters of International
Trade, Import, Export Letters of Credit, Travelers cheque etc.
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 It develops “ Correspondent Relationship” with others on commission basis and this
helps to deal with the clients having import export business.
 It handles treasury operations.
 The Marketing and Spot Inspection cell, which were introduced by the bank, are
showing positive results in terms of achieving foreign currency deposit targets and
other foreign related business.
6. Finance division
Finance Division
GM
Balance Sheet Results
Monitoring
SBP Affairs, and Compliance
Shares
Dept.
Company
Affairs
Figure 8
It controls the routine financial matters. The permission of special expenditure incurred in the
branches, and other such cases. The daily position and HO Extracts are daily sent to this
division by all the branches. This division not only estimates the profit and loss of every
branch but also prepare overall income statement and balance sheet of the complete bank. It
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also keeps record of total deposits of the bank and then their classification in the form of loans
into different sectors of economy. The basic functions are:
 Monitoring the fiscal and financial policies of the bank.
 Deals in exploring means for investing surplus bank funds.
 Maintenance and investment of Gratuity and Pension Funds of the employees .
7. Recovery Division
Recovery
Division
GM
Law
Department
Figure 9
The recovery division, which was established in 1994 to assist in regularizing the difficult loan
accounts, has rendered valuable services in this respect. To effect recoveries in an efficient
manner, a policy has been framed in accordance with the guidelines issued by the State Bank
of Pakistan Moreover, recovery cells at regional levels have been set up to assist the head
office. This division looks after the matters of recovery of loans with the assistance of legal
advisors.
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8. Audit and inspection division
Audit and
Inspection
GM
Audit of Rectification
Branches and Persuasion
Figure 10
This department ensures appropriate system of checks and balances. It checks all the
irregularities, errors and forgeries if any, under the rules and regulations formed by the
Government of Punjab. For this purpose it doesn’t only keep and eye on the branches in their
vicinity but also conduct surprise and comprehensive audits of the branches. This strategy
has improved working at the branch level. It not only points out the discrepancies but also
tries to solve it. Surprise audit maintain a good check on the over all working of the branch
especially of the side of finance.
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4) SERVICES AND BUSINESS
PROCESS
1. SERVICES PROVIDED TO CUSTOMER
The following are the services being provided to the claims.
 Acceptance of deposits
 Granting of loans
 Transaction Foreign Exchange Services
 Remittance – Collection
 SPEDFAX- instant Fund Transfer Service
 Lockers facility
 Utility Services
The Bank of Punjab attaches specials importance to the fee earning business and business
base remuneration. As part of diversification of the banks utility services, the collection of bills
of INSTAPHONE (mobile phone network) was added to existing collection arrangements for
WAPDA, SUI GAS, WASA, PTCL, and PAKTEL. By using bank’s extensive branch network,
effort have been to made to maximize the exploitation of this source in view of its rich
potential of yielding business and deposit direct earning of commission.
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2. DEPOSIT SECTION
In modern times very few business enterprises are carried out solely with the capital of the
owners. Borrowing funds from different sources has becomes an essential feature of today
business enterprise. But in the case of a entire banking system is based on it. The borrowed
capital of the bank is much greater then their own capital. Banks borrowing is mostly in the
form of deposits.
These deposits are lent out to different parties. The larger the difference between the rate at
which the deposits are borrowed and the rate at which they is lent out the greater of the profit
margin of the bank. Furthermore, the larger the deposit the larger will be the funds available
for employment; larger the funds lent out the greater will be the profit of the bank.
To receive the deposit is the basic function of all commercial banks. The bank does not
receive these deposits for save keeping purpose only, but they accept deposits as debts.
When banks receive deposit from a customer, the relationship of a debtor and creditor is
established where by the customer become the creditor and the bank a debtor. When the
bank receives amount of deposit as a debtor, it becomes the owner of it. It may, therefore use
it as deems appropriate. But there is an implicit agreement that the amount owned would be
paid back by the bank to the depositor after a specified period.
3. NATURE OF DEPOSITS
 CURRENT DEPOSITS
 PROFIT & LOSS SHARING ACCOUNT
 SHORT NOTIC TERM DEPOSITS
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 CALL DEPOSIT
 TERM DEPOSIT RECEIPTS (TDR).
CURRENT DEPOSITS:
In this type of account the client to allowed to deposit or withdraw money as and when he
likes. Because of their nature, these deposits are treated as the current liabilities of the bank.
There is not profit on such deposits. Usually this type of account is opened by the business.
PROFIT & LOSS SHARING ACCOUNT.
This type of accounts is one step towards the Islamization of banking system in Pakistan.
There are two types of PLS Accounts.
 PLS Saving Account
 PLS-TDR (Profit & Loss Sharing Term Deposit Receipts).
PLS saving accounts can be opened with the minimum sum of Rs. 100 and PLS-TDR account
can be opened for a sum of Rs. 1000 or above. Profit is paid on both types of the PLS
account on half yearly basis.
Under PLS saving account the depositor undertakes to share profit or loss on the deposits
earned or sustained by the bank. Secondly the bank is at the liberty to invest the funds of the
deposits in any avenue, it deems fit. The PLS deposits are invested in non-interested
channels.
SHORT NOTICE TERM DEPOSITS (SNTD)
This kind of deposit is for a short period. The depositor may withdraw his deposit at any time
by giving seven days notice to the bank. This type of deposit facilitates the depositor to
withdrawn his amount with interest of the deposited period .
CALL DEPOSIT
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Call deposits are the sorts of deposits, which are deposited with the banker against any
tender. This is without interest deposit. This may be with interest provided the depositor has
agreed to keep this amount with the bank for some fixed period.
TERM DEPOSIT RECEIPTS (TDR)
This type of deposit is same as the SNTD. The difference is that SNTD is for short period
(7- 30 days) while TDR is for long period (1 month up to 5 years).
4. ACCOUNT OPENING SECTION

Account opening is the first step towards establishing a relationship between the customer
and the bank. The Bank of Punjab is offering basically two types of account:
 CURRENT DEPOSIT ACCOUNT
 PROFIT & LOSS SHARING ACCOUNT
The necessary condition for a customer, who wants to open an account with the bank, is
introduction, which is preferably by the bank officers or any account holder of the bank. The
different categories of accounts that are available are as under.
 INDIVIDUAL account
 Joint Account
 Partnership Account
 Limited Company Account
 Clubs, Society, Association, or Trust Account
 SNTD
 TDR
 Foreign Currency Deposit
5. Clearing department
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Clearing is the most important department of the bank performing various function.
Clearing House:
A clearinghouse is an organization of the member banks, working under SBP and which is for
the purposes of setting inter banks claim resulting from transmission of funds from one bank
to another. The branch cheque/instruments are credited into the account of the customer. The
clearing can be:
 Outward
 Inward
Outward Clearing
The instrument collected or stored bank wise and a schedules is prepared separately for each
bank mentioning the total number of instruments and the amount of the instruments. Then
these are recorded in a register called “OUTWARD CLEARING REGISTER” then a main
schedule is prepared showing the total number of cheque and their aggregate amount being
presented in the clearing.
The cheque/instruments are handed over the clearing branch. Central clearing branch issue
CREDIT ADVICE to the branch for passing credit to its customer immediately. The branch on
receiving credit advice debits the clearing account and credit the respective customer
accounts.
Inward Clearing
On receiving cheque/instruments from central clearing branch, the in charge checks the
number and amount of cheque received in clearing must tally with the main schedule received
from central clearing branch.
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These cheque/instrument are entered in “INWARD CLEARING REGISTER” for the
cheque/instrument passed in clearing is a credit advice for the aggregate amount of cheque
passed in clearing is prepared, drawn on central clearing branch .
Reserves at State Bank of Pakistan.
Deposit held by bank at SBP serves as check clearing and collection balances. Rather than
physically transferring funds between banks, check clearing and collection can be done by
simply debiting or crediting a bank’s account at SBP .
6. REMITTANCE DEPARTMENT
Remittance is a major function of the bank. It is the transfer of money from one place to
another place. The need for remittance is commonly felt in commercial life particularly and in
everyday life generally.
By proving this service to the customers the Bank of Punjab earns a lot of income in the form
of service charges.
The Bank of Punjab deals with the following type of remittances: -
 Demand Draft (DD)

 Mail Transfer (MT)
 Telegraphic Transfer (TT)
 Pay Order
Now we discuss all these in detail: -
DEMAND DRAFT (DD):
Demand draft is a written order given by the one branch of a bank on behalf of customer to
another branch of the same bank to a certain amount to the certain person.
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Procedure for Prepare Demand Draft.
1. A draft voucher is filled which contains the following information
 Name of the parties involved

 Date
 Amount to be sent
 Account number (if DD is crossed)
2. A credit voucher is filled in order to get the excise duty and exchange commission.
3. The sender deposits the total amount of the two vouchers i.e. the debit and credit
vouchers.
4. Then the cashier sends the cash receipt voucher to the accounts department and
the account records the amount paid in his cash scroll.
5. Accountant gives the DD leaf along with the DD voucher to his assistant who
records the sender’s name, amount and receiver’s name. After writing all the
information in the DD register he gives it to the officer along with the DD for
authentication.
6. After authentication the DD is handed over to the sender and bank sends the
advice to the concerned branch. So when the party presents the DD in the
concerned branch its payment could be made.
Parties involved in the Demand Draft
The following parties are involved in demand draft;
1. Purchaser or Sender
The purchaser is the person who sends the money to a particular person payable at a
certain branch.
2. Issuing or Drawing Branch
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The branch from where the demand draft is issued to another branch of the same bank.
3. Drawer Branch
Branch in which the draft has drawn and called upon to pay the amount .
4. Payee
The person who is entitled to receive the amount after presenting the demand draft in the
drawer branch.
MAIL TRANSFER (MT):
It is the transfer of money from one branch to another branch of the same bank through mail
service. In mail transfer there is no need of advice as the amount is directly credited to the
receiver’s account.
Procedure
1. First a voucher is filled in whish the sender writes the amount to be sent, name,
account number of the receiving person with the branch name and date.
2. A credit voucher is filled in order to deduct exchange, postage charges according to
the amount of the mail transfer.
3. The sender deposits the total amount in the cash department.
4. The cash officer gives the vouchers to the officer after affixing received cash stamp
and writing the amount in red ink.
5. Then the officer writes the amount paid in the cash scroll and gives the MT to his
assistant.
6. MT leaf is filled according to the information provided in credit voucher. He also writes
the same information in the MT register. Then he gives the MT leaf and MT register to
the officer for authentication.
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TELEGRAPHIC TRANSFER (TT):
This is the most urgent method of remitting the money from one place to another place. This
method is used when the sender desires to send urgently, in this case the sender request the
manager of the branch to issue TT.
Procedure;
For sending the TT the manager and officer apply a test. In the test the manager and officer
uses a coding technique. They write their own code numbers, which is allotted, to them as the
bank branch code. After making all the conformation the concerned branch makes the
payment to the receiver. If the sender wants to convey the same message through telephone
then he has to pay the charges of telephone along with the TT charges. First the person
deposit the TT amount along with the charges through the credit voucher then his TT sent to
the relevant branch.
Pay Order (PO):
A pay order is a written order issued by the bank on its own branch, drawn upon and payable
by itself to pay a specified sum of money to the person. The purpose of a pay order is to
transfer the fund from one place to another. It is usually not issued in favor of the parties of
other cities. Usually the pay order is issued for the local transfer of money from one person to
another or from the person to any other department. It is used for different purposes. The
purpose may be the repairs of the branch or renovation of the branch.
Procedure.
The procedure of a pay order varies with the nature of the purpose. If the work is of huge
amount then first the manager writes a letter to the Zonal Chief in order to get sanction of the
work. Then the advertisement of the work is given in the newspaper in order to invite the
contractors. But if the work is small then the branch manager has discretionary power to
31
select the party whose rate is lowest. After finishing the work the contractor submits the bill of
work on his stamp pad. Then the bank issues a pay order, against the pay order the contactor
gets the amount from the issuing branch.
7. ADVANCES / CREDIT DEPARTMENT

“Major source of bank’s Income”
It is the loan function, which produces the major person of bank’s income, and as such it is
the major areas of professional banker’s concern and attention .

Principles while advancing
Basically there are five principles that must be duly observed while advancing money to
borrowers.
 Safety
 Liquidity
 Disposal
 Remuneration
 Suitability
Forms of Lending
Many there are two types of advances:
 Short-term (maturity within one year)
 Long term (maturity with the period of more than one year )
However they are further classified as:
32
 Running Finance
 Demand Finance
 Cash Finance
 Letter of Guarantee
Running Finance
This form of finance was previously known as “overdraft”. When a customer requires the
temporary accommodation, his bank allows withdrawal his account in excess of credit
balance, which the customer has in its account, a running finance occurs. The
accommodation is thus allowed collateral security. When it is against collateral securities, it is
called a “Secured Running Finance” and when the customer cannot offer any collateral
security except his personal security, accommodation is called a “Clean Running Finance.”
The customer is in advantageous position in running finance because he has to pay the mark-
up only the balance outstanding against him on daily product basis.
Demand Finance.
This is common form of financing to commercial and industrial concerns and is mad
available either against pledge or hypothecation of goods produce or merchandise. In
Demand Finance the party is financed up to a certain limit either at once or as and when
required. The party due to facility of paying mark-up only on the amount it actually utilizes
prefers this form of financing.
 Ordinary Shares
 Preferred Shares
It can be
 Quoted or Unquoted
 Registered
33
 Bearer
 Inscribed
Advances Against Immovable Property (Mortgage).
A mortgage is the transfer of and interest in specific immovable property for the purpose of
securing the payment of the money, advanced or to be advanced. By way of loan, and
existing debts or the performances of the engagement this may rise the pecuniary liability.
The transfer is called the ‘mortgager’ and the transferee the ‘mortgagee’ the principal money
and interest of which payment is secured for the time being and instrument by which the
transfer is effected, is called the letter of the mortgage deed.
Availability of adequate flows of credit for industry and agriculture are a sine qua non for the
growth and development of an economy. This acquires added importance when agriculture is
the mainstay of the economy as also the sector where the bulk of the poor are concentrated.
Growth and productivity in Pakistan's agriculture has slowed down in recent years and is,
therefore, of serious concern given its importance for the economic prosperity of the country.
Apart from various other weaknesses in the infrastructural support of the agricultural sector,
inadequacy and lack of efficacy of credit, flows to support agriculture related activities has
been a major constraining factor.
Agriculture is the largest sector of the economy. It contributes 25 percent to GDP,
provides raw materials to 80 percent of industry and employment to over 50 percent of the
population. This is a sector that has the shortest gestation period for investments and,
therefore, a remarkable capacity to bring about a turn around in the economy. This important
sector in Pakistan is suffering from a number of maladies and is consequently witnessing
stagnation in productivity.
Due to policy and administrative exigencies, the savings in the agriculture sector remain
low and, therefore, the sector has perpetually remained capital starved. The pricing of input
34
and output in agriculture over the years has forced the majority of farmers in Pakistan to
plough back their incomes into agriculture and non-institutional credit, and has more often
than not served to sap their potential earnings. Needless to say, that shortage of savings and
lack of availability of capital is one of the major reasons for poverty in the country. The
agricultural and rural sectors in Pakistan in general and in Punjab in particular are, therefore,
suffering from severe under-development. Under a desirable development model, Punjab can:
 Increase agricultural production to meet the country's requirement of essential foods
items and industrial raw materials.
 Develop agro-based industry in the rural sector for economic value addition;
 Generate additional employment opportunities in rural as well as adjacent small
towns/cities;
 Control massive migration to the urban centers that in turn is causing a number of
social, administrative (i.e. law and order) and economic problems for the urban areas.
 Elevate poverty and improve the income generating capacity of the agri-based
population.
Never before in the history of Pakistan, has the development of the agricultural and food
sectors been as critical as at this juncture and appropriate short and long term measures are
necessary for its revival, sustenance and stability. Supply of credit by Financial Institutions for
meeting the specific needs of agriculture and rural sectors are essential components for
improvement in both short and long-term development of the country. This has assumed even
greater importance in the present situation of declining water availability. Per acre, production
is plummeting. The per acre yield of most of the crops is stagnant rather diminishing. The
most important factors responsible for this downward trend in productivity are: -
FACTORS RESPONSIBLE FOR LOW YIELD PER ACRE:
o Imbalanced fertilizer use

o Lack, availability of certified, and good quality seeds
35
o Improper control of pests and weeds
SCARCITY AND INEFFICIENT USE OF WATER:
 Natural and mechanical water resources.
NON-USE OF MECHANIZED FARMING PRACTICES:
 LACK OF EDUCATION AND RESOURCES, MOTIVATION TO USE ADVANCED

TOOLS FOR AGRICULTURE:
 HIGH COST, LOW OUT PUT, UNSKILLED LABOUR INTENSIVE
 NON-AVAILABILITY OF CREDIT AND FINANCIAL ASSISTANCE TO THE
AGRICULTURE SECTOR
.
The importance of availability of credit to the agriculture sector has always been recognized
by Government and given Top Priority. Specialized institutions have been in place for a
number of years. However, these institutions have failed to realize the full potential from the
sector and at times contributed to its further deterioration. It is therefore of paramount
importance that The Bank of Punjab through well thought out policies ensures that it does not
repeat the follies of the past.
A number of institutions are in the field yearning to obtain results. We in The Bank of Punjab
will support the role of the Government in providing much needed support to the agriculture
sector but with a difference. The difference being that instead of subsidizing the needs we will
be active participants in economically viable projects thereby safeguarding the investments of
the Bank.
A precondition to lending by the Bank will be an undertaking from the customers/borrowers
not to borrow from any other source whatsoever. This is important to ensure against any
multiple borrowing and more importantly to restrain the borrower from falling into a debt trap.
36
The Bank of Punjab has been at the forefront in contributing to the Agriculture Sector at a
limited scale and has initiated schemes in harmony with the State Bank of Pakistan
approved/eligible programmes for the assistance/help of the agriculture farmers.
Presently, the Bank is financing farmers in some specific areas only. The State Bank of
Pakistan has expanded the scope of its scheme and included a number of items eligible for
credit under Agri-finance Schemes.

In terms of the importance, priority and current needs. We have short listed the items from
the State Bank of Pakistan's list provided under cover of its Circular letter No.
ACD/1044/1050/PD/P-08/2001 dated 26.04.2001.
The list of eligible items for Agri-Credit is mainly divided in two sectors; i.e.

 Farm Credit. And
 Non-Farm Credit
Farm Credit is further bifurcated into:
 Short-Term
 Medium-Term
 Long-Term Credit.
The priority items, which are recommended for inclusion in our schemes, are given here
under;
EXISTING: (Kissan Dost Agriculture Finance Scheme) Product /purpose of
Finance) Seeds, Fertilizers, Pesticides, Herbicides, Weedicides. All types of labor and water
charges are already embodied in our package financing, i.e., 8000 Per Acres (no change)
PROPOSED:
(Product /purpose of Finance)
1. Orchard and Nursery 2. Manual Sprayers
37
3. Sericulture 4. Apiculture
EXISTING: Tractors
(Product/purpose of Finance)
PROPOSED:
(Product & Purpose of Finance)

Tube-Well
Installation of Tube-Well, water management, equipment, modules & culvert, lining of

channels etc. Solar energy plants and pumps for irrigation, equipment for sprinkle/trickle/drip
irrigation system.
Mechanization Support
Agri-implements, Equipment, i.e. trailers and thrashers, power tillers, power & boom
sprayers, ploughs and cultivators, ridggers / drills, rotavators, diggers, saw machines for
crates making, press machines for wheat straw and dry fodders.
Farm Transport
Lease finance for purchase of Motor Cycles and small Vans for Milk and other agri products
transportation to local market.
Islah-e-Arazi
Precision land leveling & reclamation, soil improvement, embankment, land formation and
land improvement, laser leveling etc.
For the time being, we do not propose to extending Non-Farm Credit, i.e. for big Dairy Farms,
Poultry Farm but will accommodate existing borrowers and established small individual
38
farmers by financing livestock. (Goat, sheep, cattle & fattening animals) on a limited scale to
revive, accelerate and supplement the income generating capacity of the small farmers.

5) Performance
 Deposit
 Advances
 Capital & Reserve
 Total Assets
 Profit
 Growth of Shareholders
 Categories of Shareholders
1. Deposits
Table 2Table 3
Years Deposits (Rs in Million)
2003 12116
2004 14256
2005 15797
2006 17101
2007 15019
2008 17028
2009 19034
2010 23767
Figure 11
39
2010 23767
2009 19034
17028
2008
2007 15019
2006 17101
2005
15797 Years
2004 Deposits (Rs in Million
14256
2003 12116
Figure 12
2. Advances
2003 2909
2004 4208
2005 5065
2006 5612
2007 6151
2008 6144
2009 5772
2010 6621
3. Capital Reserves
Table 4
40
2003 1389
2004 1509
2005 1672
2006 1795
2007 1823
2008 2180
2009 2391
2010 2313
4. Total Assets
Table 5
2003 14340
2004 16419
2005 18512
2006 19886
2007 18215
2008 21275
2009 24802
2010 29532
5. Profits
Table 6
41
2003 174
2004 151
2005 163
2006 123
2007 28
2008 356
2009 222
2010 283
6. Growth Of Bop Share Holders

Table 7
2003 2691
2004 3955
2005 5389
2006 5389
2007 5389
2008 5896
2009 6436
2010 5891
7. Categories of shareholders
Table 8
No of Share
Categories Shares Held Percentage
Holders
Directors/CEO/Spouse 4 11576 0.01
Provincial Govern 1 51781427 51.57
42
Foreign funds 50 3052275 3.04
Individuals 5659 14378263 14.32
Insurance Companies 4 3453355 3.44
Financial Institutions 28 5881765 5.85
NBFI 103 16547565 16.48
Modaraba & Modaraba
8 9279 0.01
Management Co
Others 28 5299821 5.28
TOTAL 5891 100415326 100
0.01 5.28 0.01

16.48
5.85
51.57
3.44
14.32
3.04
Directors/CEO/Spouse Provincial Govern

Foreign funds Individuals
Insurance Companies Financial Institutions
NBFI Modaraba & Modaraba Management Co
Figure 13
6) Financial Analysis
 Summarized Balance sheets
43
 Comparative Balance sheets
 Summarized PLS Accounts
 Comparative PLS Accounts
 Trend Analysis
 Ratio Analysis
1. THE BANK OF PUNJAB SUMMARISED BALANCE SHEET

Rs. In Million
Table 9
For the Years 2010 2009 2008 2007 2006

ASSET
CURRENT ASSETS
281434 444 14834 20219 17464
Cash
1 8268 12 55 93
Balance with other 317027 432 45820 20715 19684
Banks 2 575 4 14 84
747983 677 29110 17500 46449
Account Receivable
3 6167 00 00 66
662098 577 61436 61506 41115
Advances
8 1526 64 48 00
200854 174 10996 11994 12471
TOTAL CURRENT ASSETS
34 28536 280 117 437
LONG TERM 829465 596 78657 49906 65805
INVESTMENT 1 9947 94 19 83
274 24857 23064 23360
Fixed Asset 388788
059 5 6 1
213
Capital work in progress 5048 2641 33749 44807
6
44
274 25121 26439 27840
TOTAL FIXED ASSETS 393836
059 6 5 8
185 19207
Deferred Tax Debt
070 7
942 88110 96131 55521
OTHER ASSETS 758930
955 8 2 0
295328 248 20186 18210 19885
TOTAL ASSETS
51 02703 475 443 638
CURRENT LIABILITIES
25014 16254 13048 87237 54330
Notes Payable
4 5 0 8 9
12895 25092 31231 10745 10009
Account Payable
47 62 9 674 548
Accrued Liabilities 64240 18804 67345 27857
73175 68665 53570 42993 41507
Other Liabilities
6 3 6 0 6
TOTAL CURRENT 23356 33772 97850 12115 10995
LIABILITIES 87 64 5 327 790
11743
Deferred Liabilities 3000 3000
5
23767 19034 17028 70919 42734
Long Term Liabilities
017 737 412 33 26
26220 22411 18006 16391 18090
TOTAL LIABILITIES
138 998 917 753 723
STOCK HOLDERS EQUITY
10041 97966 85188 85188 77443
Share Capital
54 2 0 0 6
13574 12751 13272 97104 10203
Reserves
99 91 31 9 43
Unappropriated Profit 1452 05 447 225 136
23631 23907 21795 18231 17949
Stock Holder Equity
05 05 58 54 15
Total Liabilities & 28583 24802 20186 18214 19885
Equity 243 703 475 907 638
45
2. THE BANK OF PUNJAB COMPARATIVE BALANCE SHEET
Rs. In Million
Table 10Table 11
For the Years 2002-2009 2009-2008
ASSETS Rs Rs
(In %AGE (In %AGE
CCURRENT ASSETS
Million) Million)
(1633927
Cash (93%) 2964856 170%
)
Balance with other Banks 2737697 139% (25629) (1.3%)
Account Receivable 703666 15% 3865167 83%
Advances 849462 20.6% (372138) (9%)
TOTAL CURRENT ASSETS 2656898 21% 6432256 51%
(1895847
LONG TERM INVESTMENT 2324704 35% (29%)
)
Fixed Asset 114729 49% 25484 11%
(1.12
Capital work in progress 2912 7% (505)
%)
TOTAL FIXED ASSETS 119777 43% 22843 8.2%
Deferred Tax Debt (185070) (96%) (7007) (3.6%)
OTHER ASSETS (184025) (33%) 61847 11%
TOTAL ASSETS 4730148 23.7% 4616228 23%
CURRENT LIABILITIES
Notes Payable 87599 16% 32065 6%
(1219715
Account Payable (12%) 2196943 21%
)
Accrued Liabilities 45436 163% 18804 67%
Other Liabilities 45103 11% 150947 36%
TOTAL CURRENT LIABILITIES 1041577 9.5% 2398759 22%
3914
Deferred Liabilities 117435
%
Long Term Liabilities 4732280 110% 2006325 47%
46
TOTAL LIABILITIES 3808140 21% 4405081 24%
Share Capital 24492 3% 127782 16.5%
Reserves 82308 8% (52040) (5%)
1064 (32.5
Unappropriated Profit 1447 (442)
% %)
Stock Holder Equity 27600 105% 211147 11.7%
Total Liabilities & Equity 3780540 19% 4616228 23%
3. THE BANK OF PUNJAB COMPARATIVE BALANCE SHEET

Rs. In Million
For the Years 2008-2007 2006-2005

ASSETS Rs Rs
%AGE %AGE
CCURRENT ASSETS (In Million) (In Million)
Cash (538543) (31%) 275462 15.7%
Balance with other Banks (161331) (82%) 103030 5.23%
Account Receivable 1161000 25% (62%)
(2894966)
Advances (6984) (.16%) 2039148 50%
TOTAL CURRENT ASSETS (997837) (8%) (477320) (3.8%)
LONG TERM INVESTMENT 2875175 44% (1589964) (24%)
Fixed Asset 17929 8% (2955) (1.2%)
(24.6
Capital work in progress (31108) (69%) (11058)
%)
TOTAL FIXED ASSETS (13179) (4.7%) (14013) (5%)
Deferred Tax Debt 192077 (100%)
OTHER ASSETS (80204) (14%) 406102 73%
TOTAL ASSETS 1976032 10% (1675195) (8.4%)
CURRENT LIABILITIES
Notes Payable (741898) (136%) 329069 60%
47
Account Payable (10433355) (104%) 736126 7%
Accrued Liabilities (67345) (241%) 39488 141%
Other Liabilities 105776 25% 14854 3.5%
TOTAL CURRENT LIABILITIES (11136822) (101%) 1119537 10%
Deferred Liabilities (3000) (100%)
Long Term Liabilities 9936479 232% 2818507 66%
TOTAL LIABILITIES 1615164 10% (1698970) (9%)
Share Capital 0 0% 77444 10%
Reserves 356182 35% (49294) (5%)
Unappropriated Profit 22 163% (89) 65%
Stock Holder Equity 356404 20.4% 28239 1.5%
Total Liabilities & Equity 1971568 10% (1670731) 8.4%
4. THE BANK OF PUNJAB SUMMARISED PROFIT & LOSS ACCOUNT

Rs. In Million
Table 12
For the Years 2010 2009 2008 2007 2006

Service Revenue
Mark up/Interest,
Discount & Returned 2069555 2172956 1934794 2260770 2259608
Earned
Fee Commission &
60320 51937 61395 60637 58521
Brokerage
Dividend Income 189051 109804 161307 71258 46738
Other Operating
104581 58647 47300 25725 26150
Income
Total Service
2423507 2393344 2204796 2425299 2391017
Revenue
Less: Cost /Return on
996335 1113151 1083344 1510145 1755443
Deposit
48
Gross Income 1392644 1259790 999004 912797 635100
Less: Operating
Expenses
Administrative
901041 837055 678675 722009 601368
Expenses
Provision against
non- performing 76076 39286 143059 81230 (123615)
advances
Provision for
diminution in value of (23472) 0 0 0 27273
investment
Bad Debts 1574 200 33 0 337
Total Operating
955219 876541 821767 803239 505363
Expenses
Operating Profit 437425 383249 177237 109558 129737
Other Income 43154 28480 21967 17269 7561
Other Charges 4664 1460 690 2088 1683
Profit Before Tax 431844 421275 319639 124739 135615
Less: Tax 147870 185030 162220 96500 12500
Profit After Tax 283979 236245 157419 28239 123115
5. THE BANK OF PUNJAB COMPARATIVE PROFIT & LOSS ACCOUNT

Rs. In Million
Table 13
For the Years 2010-2009 2009-2008

Rs Rs
Service Revenue %AGE %AGE
(In Million) (In Million)
Mark up/Interest, Discount
(103401) (4%) 238162 10%
& Returned Earned
49
Fee Commission &
8383 15% (9458) (17%)
Brokerage
(110%
Dividend Income 79247 170% (51503)
)
43.39
Other Operating Income 45934 175% 11347
%
Total Service Revenue 30163 1% 188548 8%
(116816) (7%) 29807 1.6%
Deposit
Gross Income 132854 21% 260786 41%
Less: Operating Expenses
Administrative Expenses 63986 10.6% 158380 26%
Provision against non-
36790 30% (103773) (84%)
performing advances
Provision for diminution in
(23472) (86%) 0 0%
value of investment
407.7
Bad Debts 1374 167 49.5%
%
Total Operating Expenses 78678 15.5% 54774 11%
Operating Profit 54176 41.7% 206012 159%
Other Income 14674 194% 6513 86%
Other Charges 3204 190% 770 46%
Profit Before Tax 10569 8% 101636 75%
Less: Tax 37160 297% 22810 183%

Profit After Tax 47734 38.7% 78826 64%
6. THE BANK OF PUNJAB COMPARATIVE PROFIT & LOSS ACCOUNT

50
Rs. In Million
Table 14Table 15Table 16
For the Years 2008-2007 2007-2006

Rs Rs
Service Revenue %AGE %AGE
(In Million) (In Million)
Mark up/Interest, Discount
(325976) (15%) 1162 1%
& Returned Earned
Fee Commission &
758 .71% 2116 3.61%
Brokerage
Dividend Income 90049 193% 24520 52%
Other Operating Income 21575 82.5% (425) (1.6%)
Total Service Revenue (220503) (9%) 34282 1.4%
(426801) (24%) (245298) (14%)
Deposit
Gross Income 86207 13.6% 277697 43.7%
Less: Operating Expenses
Administrative Expenses (43334) (7%) 120641 20%
61929 50% 204945 166%
performing advances
Provision for diminution in
0 (0%) (27273) (100%)
value of investment
Bad Debts 33 10% (337) (100%)
Total Operating Expenses 18528 3.6% 297976 59%
Operating Profit 67579 52% (20179) (15.5%)
Other Income 4598 61% 9708 128%
Other Charges (1398) (83%) 405 24%
Profit Before Tax 194900 143% (10976) (8%)
Less: Tax 65720 525% 84000 572%

51
Profit After Tax 129180 105% (94976) (77%)
Comparative Financial Statement

Comparative financial statement present financial information for the current period and one
or more past periods. In comparative analysis the statements predict about the movements
and trends of the business with respect to past years, whether there is increase in the
business activities or decrease. It may also help to comments about the future expectations of
the ways in which the financial and operating performance will go.
There are two type of comparative financial statement analysis.
 Horizontal Analysis
 Trend Percentage Analysis
Horizontal Analysis
Comparison of two or more years’ financial statement is called Horizontal Analysis. It shows
the changes between years both in rupee and percentages form. So in this way it facilitates
the analyst to predict about the ways if the business in which it is going. It emphasis the
proportional relationship between the reporting periods, rather than with in the reporting
period.
In this report I shall use this type of comparative financial statement analysis to analyze the
performance of The Bank of Punjab.
Trend Percentage Analysis

Trend percentages state the several years’ financial data in terms of a base year. The base
years equals to 100% with all other stated as some percentage of this base year. In this way it
predict good and easy way information about the business activities. By simple looking at
these percentages one can see the ways in which the business in going on whether the
business is making performance or not.
52
Comments on Comparative Analysis of 2010-2009
The results that I have perceived from the Comparative Analysis of Balance Sheet and Profit
& Loss Account of 2010-09.
From Balance Sheet
 The current assets increased by 21%, this is mainly due to a higher increase in
Balance with other Banks i.e. 139%but cash is reduced which is not good for the
Short term solvency of the bank. Account receivable also increases as compared to
last year but other assets decrease i.e. 33%.
 Total Assets are increased by 23.7%.
 Fixed Assets are increased by 43%.
 The increase in Balance with other banks by 139% is a good sign for the short-term
solvency of the bank.
 The Account receivable is increased by 15% in this period .
As a whole total assets and total liabilities plus owner’s equity is increased by 19% which
corresponds with the increase in service revenue.
From Profit and Loss Account
 The service revenue of the bank is increased by 1% than that of 2009, with the
decrease of –7% in the cost return on deposits. So service decreased less than that
of return on deposits.
 This less decrease, service revenue than that of return on deposits results in an
increase of 21% of Gross profit.
 The other income of the bank also increased in 2010 then that of in 2009. These
are increased by 194%.
 As the service revenue increased, the administrative expenses also increased by
11%.
53
 Overall profit after tax also increased by 39% in 2010 then that of 2009.

From Balance Sheet
 The current assets increased by 51%, this is mainly due to a higher increase in
cash i.e. 170% but balance with other bank is reduce which is not good for the
Short term solvency of the bank. Account receivable also increases as compared to
last year.
 Total Assets are increased by 23%.
 Fixed Assets are increased by 8.2%.
 The decrease in Balance with other banks by –1.3% is not good sign for the short-
term solvency of the bank.
 The Account receivable is increased by 83% in this period.
As a whole total assets and total liabilities plus owner’s equity is increased by 23% which
corresponds with the increase in service revenue.
 The service revenue of the bank is increased by 8% than that of 2008

26%.
 Overall profit after tax also increased by 64% 2009 then that of 2008.

54
The results that I have perceived from the Comparative Analysis of Balance Sheet and
Profit & Loss Account of 2008-2007.
From Balance Sheet
 The current assets decreases by -8%, this is mainly due to a higher decrease in
Balance with other Banks i.e. -82% and cash is also reduced by -31%, which is not
good for the Short-term solvency of the bank. Account receivable increase as
compared to last year but other assets decrease i.e. 14%.
 Total Assets are increased by 10%.
 Fixed Assets are increased by 8%.
 The decrease in Balance with other banks by -82% is not a good sign for the short-
term solvency of the bank.
 The Account receivable is increased by 25% in this period.
 The service revenue of the bank is decreased by -9% than that of 2007, with the
decrease of –15% Mark up interest on deposits. So service decreased less than
that of Mark-up Interest.
 This less decrease, service revenue than that of mark-up on deposits results in an
 The other income of the bank increased highly in 2008 then that of in 2007. These
 As the service revenue decreased, the administrative expenses also decreased by -
7%.
Overall profit after tax also increased by 105% in 2008 then that of 2007.
55
The results that I have perceived from the Comparative Analysis of Balance Sheet and Profit
& Loss Account of 2007-6.
From Balance Sheet
 The current assets decreases by –3.8%, this is mainly due to a higher decrease in
Account Receivable but increased in Balance with other Banks i.e. 5% and cash is
also increased by 15.7% which is good for the Short term solvency of the bank.
 Total Assets are decreased by -8.4%.
 Fixed Assets are also decreased by -1.2%.
 The Account receivables are decreased by -62% in this period.
 The service revenue of the bank is increased by 1% than that of 2006, with the
decrease of –14% in the cost return on deposits. So service decreased less than
that of return on deposits.
increase of 43.7% of Gross profit.
20%.
 Overall profit after tax decreased by -77% in 2008 then that of 2006.
7. THE BANK OF PUNJAB TREND PERCENTAGES
For the Years 2010/2006 2009/2006 2008/2006 2007/2006

ASSETS
CCURRENT ASSETS
Cash 161% 254% 84% 115%
56
Balance with other Banks 161% 21% 23% 105%
Account Receivable 161% 141% 62% 37%
Advances 160% 140% 149% 150%
TOTAL CURRENT ASSETS 161% 139% 88% 96%
LONG TERM INVESTMENT 126% 90% 119% 75%
Fixed Asset 166% 117% 106% 98%
Capital work in progress 11% 04% 05% 75%
TOTAL FIXED ASSETS 141% 98% 90% 94%
Deferred Tax Debt 00% 96% 100% 00%
OTHER ASSETS 136% 169% 158% 173%
TOTAL ASSETS 148% 124% 101% 91%
CURRENT LIABILITIES
Notes Payable 46% 30% 24% 160%
Accounts Payable 12% 25% 03% 107%
Accrued Liabilities 230% 67% 00% 241%
Other Liabilities 176% 165% 129% 103%
TOTAL CURRENT LIABILITIES 21% 30% 08% 110%
Deferred Liabilities 3914% 00% 00% 100%
Long Term Liabilities 556% 445% 398% 165%
TOTAL LIABILITIES 144% 13% 99% 90%
Share Capital 129% 126% 110% 110%
Reserves 133% 125% 130% 95%
Unappropriated Profit 1067% 3% 328% 165%
Stock Holder Equity 131% 133% 121% 101%
Total Liabilities & Equity 143% 124% 101% 91%
8. THE BANK OF PUNJAB TREND PERCENTAGES
For the Years 2010/2006 2009/2006 2008/2006 2007/2006

Service Revenue
Mark up/Interest, 91% 96% 85% 100%

57
Discount & Returned Earned
Fee Commission &
103% 88% 104% 103%
Brokerage
Dividend Income 404% 234% 345% 152%
Other Operating Income 399% 224% 180% 98%
Total Service Revenue 101% 100% 92% 101%
56% 63% 61% 86%
Deposit
Gross Income 219% 198% 157% 143%
Less: Operating
Expenses
Administrative Expenses 149% 139% 112% 120%
61% 31% 115% 65%
performing advances
Provision for diminution
(86%) 0% 0% 0%
in value of investment
Bad Debts 467% 59% 9% 0%
Total Operating
189% 173% 162% 159%
Expenses
Operating Profit 337% 295% 136% 84%
Other Income 570% 376% 290% 228%
Other Charges 277% 86% 40% 124%
Profit Before Tax 318% 310% 235% 91%
Less: Tax 1182% 1480% 1297% 772%
Profit After Tax 230% 191% 127% 22%
9. Graphically Presentation of trend Percentages

58
This table and graph shows the trend of Total current Assets, Total Fixed Assets, and Total
Assets during the years 2006-10
Table 17
No of Years 2010 2009 2008 2007 2006
Total Current
Assets 161% 139% 88% 96% 100%
Total Fixed
141% 98% 90% 94% 100%
Assets
Total Assets 148% 124% 101% 91% 100%
59
180%
160%
140%
120%
100%
80%
60%
40%
20%
0%
2010 2009 2008 2007 2006
Total Current Assets Total Fixed Assets Total Assets
Figure 14
This table and graph shows the trend of Gross Income, profit before tax, and Net income
Table 18Table 19Table 20

No of Years 2010 2009 2008 2007 2006
Gross Income 219% 198% 157% 143% 100%
Profit before Tax 318% 310% 235% 91% 100%
Net Income 230% 191% 127% 22% 100%
60
350%
300%
250%
200%
150%
100%
50%
0%
2006 2007 2008 2009 2010
Gross Income Profit before Tax Net Income
Figure 15
This table and graph shows the trend of current Liabilities, Deferred Liabilities and Long Term
Liabilities during the period 1998-02
No of Years 2010 2009 2008 2007 2006

Current Liabilities 21% 30% 08% 110% 100%
Long Term
556% 445% 398% 165% 100%
Liabilities
61
Total Liabilities 144% 13% 99% 90% 100%
600%
500%
400%
300%
200%
100%
0%
2006 2007 2008 2009 2010
Current Liabilities Long Term Liabilities Total Liabilities

Figure 16
62
7) RATIO ANALYSIS
The relationship of one item to another expressed in simple mathematical form is known as a
ratio. A single ratio in itself is meaningless because it does not furnish a complete picture. A
ratio becomes meaning full when compared with some standard. So we have taken ratios and
percentage of the BOP based in its record of the past financial and operating performance.
On the following pages, I make the analysis of the financial statements of BOP by using
related items for the last five years.
1. Profitability vs. Investment

Return on Assets Net profit after taxes / Total assets
Return on Deposits Net profit after taxes / Deposits
Return on Equity Net profit after taxes / Equity
No of Years 2010 2009 2008 2007 2006

Return on Assets .96% . 95% .70% . 15% . 61%
Return on Deposits 1.19% 1.24% .92% . 39% 2.8%
Return on Equity 12.01% 9.88% 7.2% 1.54 6.7%

%
Remarks.
The return on assets shows a increasing trend, which is good sign for the BOP. Return on
deposits is also not stable; in starting years it increases and then decreases and knows again
increase. This is due to an increase in deposits and less increase in profit. The ROE ratio of
63
five years of BOP indicates that the profitability of the bank with equity is increasing day by
day. This looks to be very positive sign.
2. Profitability Ratios
Gross Profit Margin Gross profit / Income
Operating Profit Margin Operating profit / Income
Net Profit Margin Net profit / Income
Table 21
No of Years 2010 2009 2008 2007 2006
Gross Profit Margin
57% 52% 45% 37% 27%
Operating Profit Margin

18% 16% 8% 5% 6%
Net Profit Margin

11% 9% 7% 1% 5%
Remarks.
The net profit margin of five years indicates that the income of the BOP after paying its non-
productive expenses is increasing year by year, which is a very good sign for the bank. As I
see the operating profit of the bank shows a increasing trend in ratio. This shows that the
earning capacity of the bank is increasing year by year.
3. Earning Per Share
64
Earning Per Share Profit after Tax / No of Shares
Table 22
No of Years 2010 2009 2008 2007 2006
Earning Per
2.83 2.41 1.85 .33 1.59
Share
Comments
Earning of BOP shows the increasing trend. This shows that the earning capacity of a single
share is increasing and shareholders are earning increase every year. This is very good sign
for BOP. This ratio should be as high as possible because it has a great importance for an
investor to invest in the Bank of Punjab.
4. Regulatory Ratios:
Advances to Deposits Ratio Advances / Deposits
Cash to deposits Ratio Cash / Deposits
Table 23
No of Years 2010 2009 2008 2007 2006
Advances to Deposits
28% 30% 36% 36% 33%
Ratio
Cash to deposits Ratio 12% 23% 9% 13% 42%

65
Remarks.Advances to deposits ratio of The Bank of Punjab shows that the portion of loan
in total deposit of the bank is not stable, 1st three year from 2006 to 2010 increase then
decrease. It means that the credit (advances) circulation of the bank has fallen from 36% to
28% during the last five years, which is a not good sign. And the cash to deposits ratio is also
decrease from 42% to 12%.
5. Capital adequacy Ratios:

Equity to Asset Ratio Total Equity / Total Assets
Equity to Deposit Ratio Total Equity / Deposits
Table 24
No of Years 2010 2009 2008 2007 2007
Equity to Asset Ratio 8% 10% 11% 10% 9%
Equity to Deposit Ratio 10% 13% 13% 12% 3%
Remarks.
This ratios is showing increasing trend, in 2010 it decreased. This means that deposit of the
banks are decreased in 2010 and assets are also decreased in 2010, which is not good for
the Bank of Punjab.
6. Efficiency Ratios:
Deposits to total liabilities Ratio Deposits/Total Liabilities
66
Investment to Total Assets Ratio Investments / Total Assets
Table 25
200
No of Years 2010 2009 2007 2006
8
Deposits to total liabilities Ratio 91% 85% 95% 92% 94%
Investment to Total Assets Ratio 28% 24% 27% 27% 34%
67
8) SWOT ANALSIS
WEAKNESSES OPPORTUNITIES
STRENTHS THREATS
BOP
Figure 17
1. Strengths
 BOP is majority owned (51%) by the government of Punjab. It has an asset base
ofPKR165 billion & total deposits of PKR138 billion
 The bank’s management realizes the necessity of existence of effective internal
controls to ensure smooth operations in current technical and swift business
environment.
 The bank has been proactive in adopting measures to monitor and mitigate risks
associated with banking industry. Bank has been meticulously following requirements
necessitated under Institutional Risk Assessment Framework (IRAF) questionnaire.
68
 Bank is fully committed to follow the timelines specified by the SBP in its Roadmap for
implementation of recommendations of Basel-II committee for Risk Measurement and
Management
 The financial statements, prepared by the management of the bank present fairly the
state of affairs, the results of its operations, cash flows and changes in equally
2. Weaknesses
 Loosing profit indictor “Bank’s spread” & having negative profitability every year is
mainly because the directors & President of BOP played scam with the bank by
involving in a fraud of billions of Rupees.
 Lack of proper internal controls came up when the credit scam was unleashed. The
recipients of the huge loans include owners of some companies that do not exist at all.
In other cases, fake identity cards were used and over-evaluated properties were
pledged as collateral.
 Advertisement on electronic media has not been seen
 The State Bank of Pakistan (SBP) has expressed its great concern over the Bank’s
“stem and controls”, terming them “quite weak
 Negative behavior of the staff with the customer due to the more influence of the
Government
 Low motivation level of staff due to no proper reward or remuneration
 No time management principles for customer care
3. Opportunities
 The year 2009 will prove to be another demanding year for the bank with scattered
opportunities and tough competition. Diversification, innovation and mission driven
approach are the key to success which BOP should adopt
 Progressive but cautious business expansion with strategic branch network extension
and introduction of innovative products in all areas of business.
69
 BOP should emphasize much on e-banking
 Commencement of new schemes there can even be a greater increase in its deposit
4. Threats
 Economic growth is likely to be slow, as agricultural growth may slow down due to
lower harvests of cotton and rice crop
 Adverse impact of “Credit Crisis ” can adversely affect BOP
 Facing a strong competition by its competitors
 Deposit growth can slowdown due to lack of customer trust in BOP
9) Marketing Analysis
Marketing department of BOP is weak in terms of “promotional activities”. However, now
print media advertising has been started but if it becomes more active it wil l increase
customer base & help developing BOP’s credibility
70
BOP Marketing Mix
PODUCT
PLACE BOP PRICE
PROMOTION
Figure 18
1. Product
Consumer, Finance, Agriculture
2. Price
Price charged is higher due to prevailing economic crisis & lending rate is 18-19% as
compared to 8% few months ago.”Hence price factor is important as the whole banking
sector is under its influence
71
3. Promotion
The analysis shows that during year 2009, BOP cut down its advertising expenditures
which mean that it is cutting cost through cutting off its promotional expenditure s
4. Place
Bank of Punjab sells its products & services through a number of branches across the
country so it does not involve middlemen or sellers.
Markets Served
BOP serves the following markets
Agriculture Market
 Household Consumers from middle to low income group
 Commercial Consumers from middle to low income group
 Corporate Customers
 As it is already serving all the Pakistani markets it does not need to extend its
operations to other markets as well.
10) RECOMMENDATIONS
In the light of the Knowledge obtained during internship and studying the organization, the
following recommendations may prove to be successful to the bank.
 In order to capture a considerable share in the banking sector of the country, the prime
objective should be awareness in the general public. For this it should launch a well-
planned advertising campaign in the general public.
72
 Physical facilities in a bank also play their role in enhancing its grade and sound image.
The bank should keep these facilities like furniture, parking facilities for the customer.
 Salaries of the officers must be compatible to other private banks so that the BOP can
attract professionals, intelligent persons.
 The Bank of Punjab should minimize its expenses.
 Special awards should be given to the hardworking employees who performed extra-
ordinary in the bank.
 The bank should come up with new and innovative products. It would be advisable to
make these products while keeping in mind the gap between what people want and
what their banks are providing them.
 The Bank of Punjab should concentrate more on advances than on investments
 The bank should come up with such products or services in which the customers would
not have to come to the bank at any stage i.e. Telephone Banking etc.
 The Bank of Punjab should use the latest technology because the bank which can
provide speedy, accurate and standard services in the delivery of products, loans etc.
to the customers will be successful e.g. computerization, fax installation.
 The authority should be delegated to the manager level.
 MIS should be improved by connecting all regional offices and branches to the head
office through a network for timely delivery of information.
 Management of Bank of Punjab should try to avoid the political influences and should
give loans on merit.
 The bank should make a plan to gear up its recovery function on war fooling and
recognize the recovery function.
 The Bank of Punjab should give some extra credit to concern to professional
qualifications such as MBA (IT)’s, M.B.A’s, C.A’s A.C.M.A’s at the time of recruitment
and selection.
73
 Interview should be conducted while recruiting personnel, to consider the personality
characters, communications skills and sociability.
 The bank should adopt a policy to accommodate and facilitate the research scholars
who want to study the banking affairs. The universities and other institutions can help
to launch the studies regarding banking business.
 All possible efforts should be made to protect the bank from the interruption of
Provincial government.
 There should be an association of employees to convey the voice of the employees to
the administration.
11) Conclusion
The Bank of Punjab is contributing a lot towards the industrial development and capital
formation in the country. As it is exhibit from the data regarding the bank’s financial
performance as shows in the financial performance as shows in the financial analysis, that
bank is sharing major banking business of the country. Furthermore the policies and schemes
as are introduced and carried on by the bank are of great source of help in its trading and
non-trading growth.
They facilitate trade both inside and outside the country. The Bank if Punjab has endeavored
to remain in the forefront of modern financial institutions and has consistently shows
tremendous growth in all area of its activity. However after scheduling, due to its emphasis on
consolidation and controlled lending, the growth of profit has somewhat declined. But the
ban’s performances are in line with its set goals.
The policies of the bank are uniform and going very smoothly. The employees are given all
the possible facilities and generous compensation. In return employees are stressed for their
best efficiency. Merit policy prevails in all the activities of the bank. Administration has studied
74
the administration of all other banks, and all their problems and drawbacks are planned to be
avoided. Therefore, the policies of the management are progressive and proper.
The progressive approach and trend towards progress and prosperity reflects that bank will
touch the zenith of development and progress. The dedicated, enthusiastic and motivated
employees can bring that time even earlier.
TABALES IN REPORT
TABLE 1.................................................................................................................................................................................... 14
TABLE 2TABLE 3......................................................................................................................................................................... 39
TABLE 4.................................................................................................................................................................................... 41
TABLE 5.................................................................................................................................................................................... 41
TABLE 6.................................................................................................................................................................................... 42
TABLE 7.................................................................................................................................................................................... 42
TABLE 8.................................................................................................................................................................................... 43
TABLE 9.................................................................................................................................................................................... 45
TABLE 10TABLE 11..................................................................................................................................................................... 46
TABLE 12.................................................................................................................................................................................. 49
TABLE 13.................................................................................................................................................................................. 50
TABLE 14TABLE 15TABLE 16........................................................................................................................................................51
TABLE 17.................................................................................................................................................................................. 60
TABLE 18TABLE 19TABLE 20........................................................................................................................................................61
TABLE 21.................................................................................................................................................................................. 65
TABLE 22.................................................................................................................................................................................. 66
TABLE 23.................................................................................................................................................................................. 66
TABLE 24.................................................................................................................................................................................. 67
TABLE 25.................................................................................................................................................................................. 68
75
TABLE OF FIGURES
FIGURE 1...................................................................................................................................................................................12
FIGURE 2...................................................................................................................................................................................13
FIGURE 3...................................................................................................................................................................................15
FIGURE 4...................................................................................................................................................................................16
FIGURE 5...................................................................................................................................................................................17
FIGURE 6...................................................................................................................................................................................18
FIGURE 7...................................................................................................................................................................................19
FIGURE 8...................................................................................................................................................................................20
FIGURE 9...................................................................................................................................................................................21
FIGURE 10.................................................................................................................................................................................22
FIGURE 11.................................................................................................................................................................................39
FIGURE 12.................................................................................................................................................................................40
FIGURE 13.................................................................................................................................................................................44
FIGURE 14.................................................................................................................................................................................61
FIGURE 15.................................................................................................................................................................................62
FIGURE 16.................................................................................................................................................................................63
FIGURE 17.................................................................................................................................................................................69
FIGURE 18.................................................................................................................................................................................72
Works Cited
WWW.BOP.COM.PK
WWW.WIKIPEDIA .COM
WWW.SCRIBED.COM
WWW.KSE.COM
FROM BRANCH MANGER OF SHEIKHUPURA BRANCH
WWW.GOOGLE .COM
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SERVICES AND BUSINESS PROCESS

5. Scope Of The Bank.

6. Management Of The Bank.

currencies consistent with the objects of the bank.

10. SUBSIDIARIES AND SPONSORSHIP

General Manger Chief Manger

ADMINISTRATION ORGANIZATION & METHODS

Lahore Central-I 15 Multan Region 16

Lahore Central-II 15 Faisalabad Region 20

Lahore North Region 15 Gujranwala Region 10

Lahore South Region 16 Gujrat Region 13

Peshawar Region 09 Bahawalpur Region 15

Islamabad Region 11 D.G. Khan Region 15

Rawalpindi Region 13 Jhelum Region 10

Sialkot Region 12 Sheikhupura Region 11

Bahawalnagar Region 12 Sahiwal Region 11

Jhang Region 12 Khushab Region 11

3. Business development division

Business Development Division

the customers and depositors. It also manages:

potential of yielding business and deposit direct earning of commission.

withdrawn his amount with interest of the deposited period .

4. ACCOUNT OPENING SECTION

presented in the clearing.

passed in clearing is prepared, drawn on central clearing branch .

Reserves at State Bank of Pakistan.

simply debiting or crediting a bank’s account at SBP .

 Demand Draft (DD)

DEMAND DRAFT (DD):

1. A draft voucher is filled which contains the following information

 Name of the parties involved

The following parties are involved in demand draft;

2. Issuing or Drawing Branch

MAIL TRANSFER (MT):

the officer for authentication.

Pay Order (PO):

7. ADVANCES / CREDIT DEPARTMENT

the major areas of professional banker’s concern and attention .

 Short-term (maturity within one year)

However they are further classified as:

Advances Against Immovable Property (Mortgage).

o Imbalanced fertilizer use

SCARCITY AND INEFFICIENT USE OF WATER:

 Natural and mechanical water resources.

NON-USE OF MECHANIZED FARMING PRACTICES:

 LACK OF EDUCATION AND RESOURCES, MOTIVATION TO USE ADVANCED

credit under Agri-finance Schemes.

(Product & Purpose of Finance)

Installation of Tube-Well, water management, equipment, modules & culvert, lining of

Years Deposits (Rs in Million)

Years Deposits (Rs in Million)

6. Growth Of Bop Share Holders

0.01 5.28 0.01

Directors/CEO/Spouse Provincial Govern

1. THE BANK OF PUNJAB SUMMARISED BALANCE SHEET

For the Years 2010 2009 2008 2007 2006

3. THE BANK OF PUNJAB COMPARATIVE BALANCE SHEET

For the Years 2008-2007 2006-2005

4. THE BANK OF PUNJAB SUMMARISED PROFIT & LOSS ACCOUNT

For the Years 2010 2009 2008 2007 2006

5. THE BANK OF PUNJAB COMPARATIVE PROFIT & LOSS ACCOUNT

For the Years 2010-2009 2009-2008