Internship Report on

The Bank of Azad Jammu and Kashmir

Main Branch
Muzaffarabad

Submitted By

Muhammad Nawaz

Roll No: 06

M.com Session: 2021-23

Registration Number; 2018-GMDB(B)-004494

Department of Management Sciences

The University of Azad Jammu & Kashmir

i
 Internship Report on
The Bank of Azad Jammu and Kashmir
Main Branch
Muzaffarabad

Submitted By

Muhammad Nawaz

This internship report is submitted in partial fulfillment of the requirements for

the degree of Master of Commerce awarded by the University of Azad Jammu &
Kashmir, Muzaffarabad

Department of management Sciences

The University of Azad Jammu & Kashmir

ii
iii
 Department of Management Sciences

Approval Sheet

1. Evaluator

Mr/Mrs Signature

2. Chairman

Dr Ayesha Sohail Signature

iv
 Student’s Declaration

I declare that my internship report on Bank of Azad Jammu and Kashmir is my

own work, not copy from others work and has not submitted by me for taking any
degree from. The university of Azad Jammu and Kashmir.

I have read and understood the referencing guidelines as recommended in the report
guide lines. If my report found incorrect university has right to withdraw my Master
degree.

I have read and understood the referencing guidelines as recommended in the report
guidelines.

Signature ______

Muhammad Nawaz

v
Scanned Copy of
Internship Letter

vi
 DEDICATION

I dedicate this report to my Parents who have constantly given me moral support
and encouraged me throughout my studies. Secondly, I would like to dedicate
this report to my teachers specially Sir Mudassar, Sir Aftab Qadir Kanth, and
other faculty members of Department of Management Sciences who guide me
during my degree and help me a lot. I am also thankful to the manager Mr.Babar
Iqbal and other staff of Bank Of Azad Jammu and Kashmir Main Branch
Chatter, Domail who helped me a lot during my internship.

7
 ACKNOWLEDGMENT
I am thankful to the mighty Allah, the most Merciful and kind who bless me with
knowledge and skills. I am also thankful to my parents, teachers and my friends.
This report is prepared in partial fulfillment of the degree of M.com.

I am thankful to the staff of The BOAJK main branch Muzaffarabad:

Mr. Maazullah khan (Division head)

Mr. Babar Iqbal (Chief manager)

Mr. Ashwaq Shiekh (Operation manager)

Mr. Waqas Ahmed (Credit Manager)

Because without their cooperation I was unable to write this internship report.
LIST OF ABBREVIATION/ACRONYMS

CD Current Deposit

ATM Automatic teller machine

BOAJK Bank of Azad Jammu and Kashmir

DD Demand draft

HO Head Office

IC Inward Clearing

IBC Inwards bills for collections

LBC Local Bills for Collections

MT Mail Transfer

LCY Local Currency

OBC Outwards bills for collections

PLS Profit & Loss Saving Account

TDR Term Deposit Receipt

RF Running Finance

SBP State Bank of Pakistan

SDA Special Deposit Accounts

SVP Senior Vice President

TABLE OF CONTENTS
Chapter No 1.....................................................................................................................1

INTRODUCTION OF THE REPORT:.........................................................................1

1.1 INTRODUCTION OF THE REPORT:....................................................................1

1.2 OBJECTIVE OF THE REPORT:............................................................................1

1.3 PURPOSE AND AIM OF THE REPORT:...........................................................1

1.4 SCOPE OF THE REPORT:......................................................................................2

1.5 SIGNIFICANCE OF THE REPORT;......................................................................2

1.6 METHODOLOGY:....................................................................................................2

1.6.1PRIMARY DATA;...................................................................................................2

1.6.2SECONDARY DATA;.............................................................................................2

1.7 STRUCTURE OF THE REPORT:...........................................................................3

Chapter 02........................................................................................................................4

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

2.1 INTRODUCTION OF BAJK, BACKGROUND AND HISTORY.........................4

2.2 VISION.......................................................................................................................5

2.3 MISSION....................................................................................................................5

2.4 CORE VALUE...........................................................................................................5

2.5 GOALS........................................................................................................................6

2.6 INTRODUCTION OF BRANCH AND ESTABLISHMENT.................................6

2.7 PROFESSIONALISM...............................................................................................6

2.8 PRODUCT AND SERVICES....................................................................................7

2.9 PRODUCTS OF The Bank of AJK main branch Muzaffarabad...........................7

2.10 TOP THREE COMPETITORS............................................................................12

CHAPTER 03.................................................................................................................16
ANALYSIS.....................................................................................................................16

3.1 BRANCH PROFILE................................................................................................16

3.2 JOB DISCRIPTION.................................................................................................16

3.2.1MODEL OF JOB DISCRIPTION........................................................................17

3.3 AN ANALYSIS OF FUNCTIONS PERFORMED................................................19

3.4 BALANCE SHEET..................................................................................................19

RATIO ANALYSIS........................................................................................................25

Asset Turnover Ratio:.....................................................................................................25

SOWT ANALYSIS.........................................................................................................27
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 EXECUTIVE SUMMARY

Effective, November 01,2006 the bank started

functioning as non-scheduled Commercial bank
to the date the bank has 70 branches. The
Government intend to scheduled bank with state
bank of Pakistan. The report is composed of
information obtained from interviews, observations,
reference book and annual report of BOAJK main
branch. This internship report focuses on different
area of bank performance.
In order to survive in banking sector, the BOAJK
has to make innovation in some products and
services by improving technical services, customer
support services, hiring skilled employees and
rewarding employees on their performances.

The financial highlights for past few years with financial analysis are also part of the
report. At the end I have discussed the SWOT analysis (Strengths, Weaknesses,
Opportunities and Threats) of the Bank of AJK Main Branch.

xiv
CHAPTER NO 1

INTRODUCTION OF THE REPORT:

1. Introduction of report
2. Objective of the report
3. Scope of the report
4. Significance of the report
5. Methodology
6. Structure of the report

1.1 INTRODUCTION OF THE REPORT:

I am a student of M.com at University of AJ&K. I have done 6 weeks internship at

BOAJK main branch that is the for requirement of our degree.

This report is about BOAJK Main branch bank square Chatter Domail. BAJK is the
commercial bank operating in Kashmir under the State Bank of Pakistan Ordinance
July 1, 1948 and is listed on all the stock exchange in Pakistan. Its head office is
situated in Azad Kashmir Muzaffarabad.

1.2 OBJECTIVE OF THE REPORT:

This report is carried out to fulfill degree requirement. The BOAJK has network of 70
branches all over the Kashmir. The BOAJK has good reputation in the eyes of people.
The objective of this report is also to suggest BOAJK what step should be taken by
them to improve their banking line.

1.3 PURPOSE AND AIM OF THE REPORT:

The purpose of the study is to do practical work in field and apply knowledge of
classroom lecture to real life situations.

 To understand the various operation of Bank.

 To improve report writing Skills.

1
  To enhance practical knowledge based on the study.

1.4 SCOPE OF THE REPORT:

This report may help students in future to understand banking practices. This report is
also an attempt to evaluate the overall performance of Bank o Azad Jammu and
Kashmir and its working environment.

1.5 SIGNIFICANCE OF THE REPORT;

During the session of six week, I worked in different sections on weekly basis, the
employees of the bank help me and provide me all required information. I studied
major functions, objectives and future planning. I worked in different sections during
working as an internee which proved to me very beneficial and make me able to get
basic concept of banking operations. The BOAJK has a friendly working
environment.

1.6 METHODOLOGY:

During data collection and report preparation I have used mixed approach both
primary and secondary data.

1.6.1PRIMARY DATA;

Such data include personal observations.

Discussion with staff of the branch

1.6.2SECONDARY DATA;

BOAJK annual report

BOAJK Broachers/ manuals

Journals and newspaper

Internet

2
1.7 STRUCTURE OF THE REPORT:

This report is divided into four chapters;

Chapter 1:

Introduction of the report includes objectives, introduction, scope, significance,

methodology and structure of the report.

Chapter 2:

Introduction of the organization includes communications, regions, historical

background, vision, mission, core value etc.

Chapter 3:

Analysis includes CPM, SWOT Analysis, Horizontal, vertical and Ratio analysis

Chapter 4:

Finding and recommendations includes Management, Leadership style, Employees

attitudes and morals budgets and financial.

3
4
CHAPTER 02

INTRODUCTION TO THE ORGANIZATION

2.1 INTRODUCTION OF BAJK, BACKGROUND AND

HISTORY

Bank is the organization that accept deposit from people who have surplus and lend it
to the people who need it. The bank of AJ&K was started working on 01 Nov,2005.
The Bank of AJ&K is the Government bank operating in AJ&K. The Bank of AJ&K
of AJ&K was incorporated in Pakistan under the Companies Ordinance, 1984 and is
listed on all the stock exchanges in Pakistan. It’s registered and head office is situated
in Azad Kashmir Muzaffarabad.

The bank is engaged in providing commercial banking and related services in Azad
Kashmir and overseas. The Bank’s services are available to individuals, corporate
entities and government.

BAJK headquarters in Muzaffarabad, all over the state of Azad Jammu & Kashmir
70 branches working in state wide. In today’s competitive business environment,
BAJK needed to redefine its role and shed the public sector bank image, for a modern
commercial bank. It has offloaded 35 percent share in the stock market, and while it
has not been completely privatized like the other three public sector banks, partial
privatization has taken place. It is now listed on the Stock Exchange.

 Handling of treasury transactions for the Government of Pakistan as agent to

the SBP.

 Accepting of deposits of money on current, fixed, saving, term deposit and

profit and loss sharing accounts.

 Borrowing money and arranging finance from other banks and advancing and
lending money to its clients.

 Buying, selling, dealing, including entering into forward contracts of foreign

exchange.

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  Financing of Car loan, gold loan etc.

 Carrying on agency business of any description other than managing agent, on

behalf of clients including Government and local authorities.

 Generating, undertaking, promoting, etc. of issue of shares and, bonds, etc.

 Transacting guarantee and indemnity business.

 Undertaking and executing trusts.

 Joint venturing with foreign dealers, agents and companies for its
representation abroad.

2.2 VISION

“To emerge as a premier financial institution, fostering Socio-economic development”

of the people of AZAD JAMMU & KASHMIR.

2.3 MISSION

To acquire market leadership through quality banking services, customized products,

best business practices, merit and performance culture and participation in
development process of the state for well-being of its people.

2.4 CORE VALUE

 Teamwork

 Quality

 People

 Collaboration

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  Honesty

 Responsibility

 Trust

 Growth

 Strategy

 Innovation

2.5 GOALS

To enhance profitability and maximization of BAJK share through increasing

leverage of existing customer base and diversified range of product.

Excellence in DIRECTION

Excellence in Performance

Excellence in Management

Excellence in Achievements

2.6 INTRODUCTION OF BRANCH AND

ESTABLISHMENT

The branch was established in order to meet the financial needs of the people. As it is
an agent of the State Bank of Pakistan so its main objective is to provide credit in
order to fostering growth in all the sectors so with the view of this The Bank of AJ&K
Head Office Main Branch Muzaffarabad came into existence. From last many years
this branch is not only achieving its targets of deposits and advances rather it remain
above the targets.

At present here Mr. Maazullah is the division head, Mr Babar iqbal is chief manager

and Saboor ali Awan is operational manager.

7
2.7 PROFESSIONALISM

All the staff of The Bank of AJK Main Muzaffarabad branch provided me their time
and information which help me to enhance my knowledge and thy also share their
experiences with me which I believe that it would be helpful in my practical life.

The profession and the name of all the staff members of The Bank of AJK Head
Office Muzaffarabad branch are as under;

Mr. Mazullah (Divisional Head HRM)

Mr. Kh. Abrar Ahmed (Manager HRM)

Mr. Babar Iqbal (Chief Manager )

Mr. Ashwaq Shiekh (Operational manager )

Mr Muneer (Messenger)

Mr. Abrar Mir (Operation officer)

Mr. Waqas Ahmed (Credit officer)

Mr Ghulam Nabi (Security)

2.8 PRODUCT AND SERVICES

Products of The Bank of AJK Main branch includes assets products like loans, BAJK
Cash and gold loan, BAJK Car financing, BAJK Advance salary, Revolving CREDIT
SCHEMES etc.

 A Liability product of BAJK includes deposits schemes like Current Account,

Term Deposits Certificates, Daily Product Account profit.
A Services of BAJK includes government payment and collection, utility bills, etc.

2.9 PRODUCTS OF THE BANK OF AJK MAIN BRANCH

MUZAFFARABAD

Products of BAJK Includes assets products like loans etc

1. DEPOSIT ACCOUNT
Current Account

8
  Individuals, corporations, organizations and government departments can
open accounts under the scheme.
 The Accounts may be opened singly in one name or jointly in two or
more names.
 The Accounts shall be opened with an initial/minimum deposit of Rs.
500/-
 There is No withdrawal Limit for customers.
 No Profit will be paid on Current Account.
 No Zakat Will is deducted on Current Account.
PLS Savings Accounts

The Accounts shall be opened with an initial/minimum of Rs. 100/-.

 The Accounts may be opened singly in one name or jointly in two or more
names.
 No withdrawal Limit.
 Profit will be paid on Six Monthly Basis.
 Withholding Tax will be deducted out of profits payable to the Account
Holders.
 ZAKAT is livable on deposits if Zakat Exemption Certificate (CZ-50) is
not provided

Special Deposit Accounts (SDA)

 No Withdrawal Limit.
 Individuals, corporations, organizations and government departments can
open accounts under the scheme.
 This is an operating/checking account
 The accounts can be opened in individual or joint names.

Bemisal Mahana Bachat Account (BMBA)

9
 The Bank of AZAD JAMMU & KASHMIR has launched a New & Unique deposit
Scheme with value added features. The details of the new Scheme are as under

 Minimum Deposit Limit for profit is Rs. 25,000/-, however, the account
can be opened with Rs. 1,000/-
 Customer can conduct maximum of two debit transactions between 6th
and last day of month. However, withdrawal before 6th of month will not
be treated as deviation.
 Free lockers facility will be offered to clients having minimum balance of
Rs. 1.00Million.
4.1.2 Commercial Advances

Consumer Financing Schemes

Advance Salary Programmed

The Bank of Azad Jammu and Kashmir offers "The Bank of Azad Jammu and
Kashmir Advance Salary Programmed” for Permanent Employee of the
Government /Semi Government Departments /Autonomous Corporations

Finance Amount

In our Advance salary Programmed an employee can take up to fifteen (15) take
home salaries in five years tenure. The average of last three months’ salary or the
current/last month salary slip/certificate amount, whichever is lower, will be taken as
a base salary to calculate the advance salary amount. If a person wants to avail the
scheme for less than five years’ time period, the number of salaries will be decreased
depending upon the time period and debt burden. The tenure and number of salaries
are as under.

2. PRODUCT & SERVICES DEPOSIT

Bank of AZAD JAMMU & KASHMIR Car Loan Scheme

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The Bank of Azad Jammu and Kashmir offers you the most convenient and affordable
Car Finance Scheme "The Bank of Azad Jammu and Kashmir Car Loan Scheme”
empowers you to have your dream car in a simple and quick manner.

Product Benefits & Features

 Hassle-free processing
 Personalized service
 Low Down payment
 Early Settlement Option without charges
 No hidden charges
 Lowest Mark-up rate.

Terms & Conditions

 Registration cost, CVT (Capital Value Tax) and other costs (if any) will be
borne by the customer.
 All rentals will be paid in advance and on the first day of every month.
 Insurance of the Vehicle will be mandatory and first year's insurance will
be taken up front.
 You will give post-dated cheques at the commencement of lease facility
each having a value of monthly rental.
 Disbursement will be made after completion of all legal documents.
 We reserve the right to disapprove financing request, without assigning
any reason whatsoever.

BANK OF AZAD JAMMU AND KASHMIR Motor Cycle Loan Scheme

The Bank of Azad Jammu and Kashmir Motorcycle Loan Scheme is lease facility for
purchasing brand new locally manufactured/assembled Motorcycle for personal use.

Product Benefits & Features

 Hassle-free processing

11
  Personalized service
 Low Down payment
 Early Settlement Option without charges
 No hidden charges
 Lowest Mark-up rate.
 The Flexible Financing period can be 12, 24, 36 months with our financing
up to 90% of Motorcycle cost.
 Competitive Insurance rates. Insurance will be mandatory where first
year's insurance will be taken up front.

4.2 Services

Remittance

Demand Draft

Clients of the bank of AZAD JAMMU & KASHMIR are also facilitated by issuance
of Demand Drafts. If the client intends to transfer funds within the State, the same is
done by issuing DD on BANK OF AZAD JAMMU AND KASHMIR branches where
as in case the funds are remitted outside the state, the same is done through UBL &
HBL as the BANK OF AZAD JAMMU AND KASHMIR is having agency
arrangements with United Bank Limited.

Mail Transfer

Within the State of AZAD JAMMU & KASHMIR, remittances are also carried out
through Mail Transfer between different branches.

Payment Order

For payments within the City, Payment Orders are also issued by all the branches.

Call Deposit Receipts

12
 Call Deposit Receipts are also issued to the Customers of the Bank as well as
general public. No charges are recovered on issuance of CDRs

Utility Bills

All the branches of the Bank are authorized to collect Water & Electricity Bills.
Collection of Telephone Bills will be started very soon.

Lockers

Lockers’ facility is available in main branches in three different sizes Small, Medium
and Large on annually fee with one time Security Deposit respectively to the size of
locker. Locker holders need to have an account in the Bank.

3. COLLECTIONS

 Cheques
 Bills
 Draft
4. DEALING IN FOREIGN EXCHANGE

 Foreign currency account

 Foreign remittance

 Trade finance

2.10 TOP THREE COMPETITORS

The top three competitors of BAJK are as follow;

 MCB

 HBL

 UBL

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COMPITITORS OF THE BANK OF AZAD JAMMU &
KASHMIR

BAJK HBL UBL MCB

ACCOUNTS

Current Current Account Current Account Current

Account Account

Pls Saving Pls Saving PlS Saving Pls Saving

Account Account Account Account

Advance Advance Salary Advance Salary Advance Salary

Salary Program Program Program
Program

AKSIC Loan AKSIC Loan AKSIC Loan AKSIC Loan

Scheme Scheme Scheme Scheme

Term Deposit Term Deposit Term Deposit Term Deposit

Account Account (TDA) Account (TDA) Account (TDA)
(TDA)

PRODUCTS

Consumer Consumer Consumer Consumer

Finance Finance Finance Finance

Commercial / Commercial / Commercial / Commercial /

SME Finance SME Finance SME Finance SME Finance

Agriculture Agriculture Agriculture Agriculture

Finances Finances Finances Finances

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Micro Micro Finances Micro Finances Micro Finances
Finances

SERVICES

Utility Bills Utility Bills Utility Bills Utility Bills

Services for Services for AJK Services for AJK Services for
AJK PSC PSC PSC AJK PSC

Advance Advance Salary Advance Salary Advance Salary

Salary

Car Loans Car Loans Car Loans Car Loans

Boards of
Directors

11 11 11 11

Deposits 31, Dec

2021

17.2 million 3.3 billion

NET ASSETS
Dec 31,2021

5,420,886

Share capital
Dec 31,2021

5,142,903

Reserve Dec 31,

2021

269,037

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16
CHAPTER 03

ANALYSIS

3.1 BRANCH PROFILE

Name of branch The Bank of Azad Jammu & Kashmir

Branch Code 001

Address The Bank of Azad Jammu & Kashmir Head

Office chatter, Domail Muzaffarabad

Name of Director Head HRM Mazullah khan

Name of Chief Manager Mr Babar Iqbal

Total number of employees 10

The position of this branch 1 of 70 branches

Total number of transactions 60-80 transactions

3.2 JOB DISCRIPTION

During the session of six weeks, I work in different sections on weekly basis. I
worked in different sections during working as internee which proves to me very
beneficial and me able to get basic concept of banking operations.

After joining the bank for internship, I got the practical exposure of all the banking
activities. The mechanism. is not too simple to understand easily but still lots of
complexities have been solved. All the staff of the branch provided me their time and
information which helped me to enhance my knowledge and they also shared their
experience with me which I believe that it would be helpful in my practical life.

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3.2.1MODEL OF JOB DISCRIPTION

WEEKS JOB FUNCTIONS SUPERVISION

1st WEEK Deposit Section I perform the function of Mr.Babar IQbal

a commercial bank is to
 Time
mobilize deposits of
Deposit
money from sever and
 Demand lend into for more
Deposit profitable purpose. I
perform the following
job during the 1st week.

Deposit

 Current Account
 PLS Saving
Account
 Bemisal Mahana
Bachat Account
(BMBA)
 Special Deposit
Accounts (SDA)

2nd WEEK ACCOUNT I perform the Syed Awais Shah

OPENING following functions
SECTION during the 2nd Week
about Opening of
accounts
 Issuance of
cheque books
 Closing of
accounts


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 3rd WEEK CASH DEALING During the period of Mr.Zaheer Mughal
SECTION 3rd week I
performed the
following functions
about the CASH
RECEIPT for
receive deposit Cash
payment for
encashment of
cheques
4th WEEK CLEARING The major function is to Mrs Bushra
SECTION receive the cheques and
collect the amount from
that bank on which
cheque is drawn through
the clearing house.
Bank charge some
commission for this
purpose. I learnt during
the period of 4th week in
the bank.

5th & 6th REMITTANCE I perform the Mr.waheed

WEEK SECTION following modes of
remittance Demand
Draft, Bank Draft,
Pay Order, Call
Deposit Receipt,
Foreign remittance
in the branch.
.

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3.3 AN ANALYSIS OF FUNCTIONS PERFORMED

The financial statement of any organization shows the results of its operations
and its position in the business. It is a process which involves reclassification
and summarization of information through the establishment of ratio and
trends. The overall objective of financial statement analysis is the examination
of a firm’s financial position.

3.4 BALANCE SHEET

FINANCIAL STATEMENT

THE BANK OF AZAD JAMMU AND KASHMIR

BALANCE SHEET

AS AT DECEMBER 31ST

2019 2020 2021

ASSETS
Cash and balances with 3,005,671 3,454,865 4,447,089
treasury banks
Balances with other banks 7,308,507 9,825,491 14,774,633
Landing to financial - - -
institutions
Investments 178,401 185,845 183,775
Advances 2,038,826 2,246,653 2,815,313
Operating fixed assets 238,881 230,026 253,886
Intangible Assets - - -
Deferred tax assets 22,426 26,407 30,011
Other assets 775,623 850,127 1,046,611
Total Assets 13,566,335 16,819,414 23,551,318

LIABILITIES
Bills payable 21,148 67,414 158,180
Borrowings - - -
Deposits and other 11,873,535 13,700,340 17,270,623
accounts
Liabilities against assets 122,388 132,911 138,519
subject to finance lease
Subordinated debt - - -

Deferred tax liabilities - - -

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 Other liabilities 322,201 534,159 563,110
12,339,824 14,434,824 18,130,432
NET ASSETS 1,227,063 2,384,590 5,420,886

REPRESENTED BY
Share capital 1,027,192 2,129,911 5,142,903
Reserves - - 269,037
Un-appropriate profit 217,161 267,130 22,743
Deficit on revaluation of (17,290) (12,451) (13,797)
assets
1,227,063 2,384,590 5,420,886

Horizontal Analysis of Balance Sheet

2020 2021
DETAILS % %
ASSETS
Cash and balances with treasury 948.94 931.83
banks
Balances with other banks 136.00 126.27
Lending to financial institutions 0 0
Investments (85.11) 490.12
Advances 508.09 683.32
operating fixed assets 426.23 484.40
Other assets 181.60 222.01
Total Assets 948.94 931.83
LIABILITIES
Bills payable 129.99 161.79
Deposits and other accounts 156.59 230.91
Deferred tax liabilities (407.96) 60.70
Deferred Government grant (40.00) 20.00
Other liabilities 186.40 239.51
186.58 230.91
NET ASSETS 151.81 168.72
REPRESENTED BY
Reserves 0 0
Un-appropriate profit (73.44) 151.43

21
 150.55 167.04
Surplus on revaluation of assets – 302.05 369.13
net
151.81 168.72

Comments on Horizontal Analysis of Balance Sheet

 Operating fixed assets of BANK OF AZAD JAMMU AND

KASHMIR also shows an increasing trend during last three years

 Investment increase in 2020 and 2021 respectively.

 Advance increase in 2020 and 2021.

 Other Assets increase in 2021 when compared to 2020 and 2019.

Comments on Horizontal Analysis of Balance Sheet

 Bill payable increase gradually in 2021.

 Deposits and other account increase trend continue from 2012 to 2021.
 Other liabilities increase in 2018 little bit when compared to 2020.

22
 THE BANK OF AZAD JAMMU AND KASHMIR

Profit and Loss Account

For The Year Ended December 31st

2019 2020 2021

DETAILS

Mark-up / return / interest earned 1,279,455 1,511,546 1,672,565

Mark-up / return / interest expensed 702,719 737,253 668,334
Net mark-up / interest income 576,736 774,293 1,004,221
Provision against non-performing
15,192 26,174 57,511
loans and advances
Reversal of provision/provision
against landing to financial (6000) (8000) (4,666)
institutions
Provision for diminution in the
- - -
value of investment
Bad debts written off directly - - -
9,192 18,174 52,845
Net mark-up / interest income after
253,131 223,895 292,874
provisions
NET MARK-UP/INTEREST
INCOME
Fee, commission and brokerage
10,150 15,078 19,605
income
Dividend income 3,463 6,810 4,433
Income from dealing in foreign
- - -
currencies
Gain on sale of securities – net 29,908 21,258 29,712
Unrealized gain / (loss) on
revaluation of investments - - -
classified as held for trading
Other income 2,714 2,217 2,745
Total non-markup / interest income 46,235 45,363 56,495
299,366 269,258 349,369
NON MARK-UP / INTEREST
EXPENSES
Administrative expenses 158,856 206,658 243,351
Other provisions / write offs - - -
Other charges - - -
Total non-markup / interest
158,856 206,658 243,351
expenses
23
 140,510 62,600 106,018
Extraordinary / unusual items - - -
PROFIT BEFORE TAXATION 140,510 62,600 106,018
Taxation – current 44,077 16,501 29,108
Taxation – prior years - - -
Taxation – deferred 619 (319) (3,093)
44,696 16,172 26,015
PROFIT AFTER TAXATION 95,814 46,428 80,003
Basic/ diluted earnings per share -
1.66 0.72 1.22
Rupees

24
 HORIZONTAL ANALYSIS OF PROFIT & LOSS ACCOUNT

2019 2020 2020

DETAILS % % %
Mark-up / return / interest earned 159.88 161.8 208.30
Mark-up / return / interest expensed 201.12 219.60 259.31
Net mark-up / interest income 130.09 120.05 171.45
Provision against non-performing
1523.77 2625.27 5768.40
loans and advances
(Reversal) of provision /provision
against lending to financial 0 0 0
institutions
Provision for diminution in the value 0 0 0
Bad debts written off directly 0 0 0
921.96 1822.86 5300.40
Net mark-up / interest income after
126.16 111.59 145.97
provisions
Fee, commission and brokerage
148.42 213.05 277.02
income
Dividend income 353.72 695.69 452.80
Income from dealing in foreign
0 0 0
currencies
Gain on sale of securities – net 179.26 127.41 178.08
Unrealized gain / (loss) on
revaluation of investments classified 0 0 0
as held for trading
Other income 134.55 109.91 136.09
Total non-markup / interest income 172.79 169.53 211.14
NON MARK-UP / INTEREST
EXPENSES
Administrative expenses 168.21 218.83 257.68
Other provisions / write offs 0 0 0
Other charges 0 0 0
Total non-markup / interest expenses 168.14 218.73 257.57
105.71 47.09 79.76
Extraordinary / unusual items 0 0 0
PROFIT BEFORE TAXATION 105.71 47.09 79.76
Taxation – current 108.90 40.77 71.92
Taxation – prior years 0 0 0
Taxation – deferred (1587.17) 843.58 7930.76
PROFIT AFTER TAXATION 103.6 50.20 86.50

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Interpretations:

• The interest earned by BOAJK shows an increasing trend during the last three
years.
• The interest expense also shows an increasing trend and is highest in 2021.
• The net mark/interest income after provision shows increasing trend.
• The dividend income also shows a fluctuating trend during all the years.
• The profit before taxation shows a mixed trend in three years.
• The profit after taxation also shows a mixed trend.

RATIO ANALYSIS
Ratio analysis enables the analyst to compare items on a single financial statement or
to examine relationship between items of two financial statements. After calculating
ratios for each year’s financial data, the analyst could then examine the trends for the
company across years. Since ratios adjust for size, using this analytical tool facilities
intercom any as well as intercom any comparisons.

Asset Turnover Ratio:

The amount of sales generated for every dollar's worth of assets. It is calculated by
dividing sales in dollars by assets in dollars.
Asset Turnover Ratio = Net Sales / Total Assets * 100
Table 3-1 Asset Turnover Ratio

Year 2017 2018 2019 2020 2021

Ratio % 10.16 9.44 10.28 9.06 9.53

Table3.11: Ratio Analysis:

Particular 2018 2017 2016 2015 2014

Efficiency Ratio
Return on assets -0.49% -1.01% 0.12% 0.15% -1.46%

Return on equity -12.02 -20.59 2.01 2.09 -56.28

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 (Loss )/profit before tax rario -7.17 -18.05 6.13 0.12 -15.33
to interest earned
Gross spread ratio 27.24 26.09 28.47 24.69 9.24
Advances to deposits ratio- 68.30 65.97 69.33 73.88 61.65
Gross
Advances to deposits ratio- 58.69 55.89 58.87 63.10 50.97
Net
Cost to revenue ratio 106.96 100.25 85.15 95.56 120.66
Total assets to total equity 24.43 20.36 17.45 13.47 38.66
times
NPL to gross advances ratio 17.15 17.74 20.68 19.07 27.16
Capital adequacy Ratio 5.01 10.10 10.02 12.05 4.25
RETURN ON ASSETS

This ratio expresses the capacity of earning profit by bank on its total assets employed
in the business. It is calculated as percentage of net profit after tax to total assets. It is
used for whole financial sector.

Return on Assets (ROA) = Net profit after tax/total assets *100

RETURN ON EQUITY (ROE)

Total shareholder’s equity= share capital+ reserves + un-appropriated profit

(loss)

Total shareholder’s equity =H.O capital account +reserves + unremitted profit

this ratio expresses the return on shareholder’s equity. ROE is direct measure
of returns to the shareholder’s .it is calculated as a percentage of the net profit
after tax to total shareholder’s equity. It is also useful for whole financial
sector.

Return on Equity (ROE) = Net profit after tax /total shareholder’s equity *100

EARNING PER SHARE/CERTIFICATE

The ratio between profits after tax to number of certificates is an important

efficiency ratio because it reflects how much amount is earned on each
certificate. It is useful for Modaraba Companies.

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 Earning Per Certificate= profit after tax/no of certificates

GROSS ADVANCES TO DEPOSITS

The ratio expresses the percentage of gross advances to deposits and expresses
the utilization of deposit in the core business of a bank.

Gross advances to deposits = gross advances / deposits * 100

SOWT ANALYSIS

A SWOT analysis of a bank formally evaluates the financial institution’s strengths,

weaknesses, opportunities and threats. This analysis identifies these four main
elements to help upper management better leverage its strengths to take advantage of
future business opportunities while better understanding its operational weaknesses to
combat threats to potential growth. A SWOT analysis can also address many other
scenarios, such as new business initiatives, marketing budgets or even advertising
campaigns.

1. STRENGTHS

The BANK OF AZAD JAMMU AND KASHMIR Muzaffarabad strengths are

its resources and capabilities that can be used as a basis for developing a competitive
advantage.

i. Low charges of products as compare to competitors.

ii. High salary & intensives for employee.
iii. The service process is easy as compared to other banks.

2. WEAKNESSES

The absence of certain strengths may be viewed as a weakness. Some

weaknesses of The Bank of Azad Jammu &Kashmir are as follow

i. Slow improvement and acceptance of technological changes.

ii. There is no online facility available in bank.
iii. There is no ATM and Credit cards facility available

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3. OPPORTUNITIES

The external environmental analysis may reveal certain new opportunities

for profit and growth. The Bank of Azad Jammu &Kashmir has the following
Opportunities

i. BANK OF AZAD JAMMU AND KASHMIR is the government Bank and

have opportunity to grow as other competitors.
ii. By bringing new technologies and business policies it can increase
profitability.

4. THREATS

Changes in the external environmental may also present threats to the firm. The
Bank of Azad Jammu &Kashmir is facing the threats are:

i. New Privates Bank coped with emerging new Technology of IT. This ease
of entry in the market is the threat to the BANK OF AZAD JAMMU AND
KASHMIR.
ii. The major threat that this department has is the stress levels that are
running high due to certain employees not being able to meet their targets.
iii. Introduction of credit marketing by local and foreign banks is badly
affecting the mobilization of the BANK’S deposits due to the non-
presence of such department in it.

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 CHAPTER 04

OBSERVATION & RECOMMENDATIONS

8.1 Observation and Recommendations Proposal to Boost the

Commercial Bank

INTRODUCTION

I. This chapter is important because in this chapter the deficiencies which I

have seen, as a modern organization during my stay at BANK OF AZAD
JAMMU AND KASHMIR is discussed and suitable recommendations are
made to cope with problems.
a) Recommendations and conclusion on the basis of financial statement:
b) Suggestion and recommendation for improvement:
c) Equal treatment: Every customer should be treated on equality bases
whether he is poor or rich.
d) Large capacity:
e) I suggest that internal capacity of branch in term of place should be
increased it will increase the efficiency and effectiveness of the branch.
f) Training of employees
g) Employees should be trained in order to make them efficient and
effective because efficient people can adjust in any environment of the
bank. New training programs should be launched by bank.
The recommendations are as follows

i. Training
BANK OF AZAD JAMMU AND KASHMIR staff lacks professionalism. The
lack of the necessary training to do the job efficiently and properly.

ii. Performance Appraisal

The manager should strictly monitor the performance of every staff member.
All of them should be awarded according to their performance and result in the shape
of bonuses to motivate.

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iii. Changes in Policies
There should not be abrupt policies change by the upper management, as this
practice hurts the customer confidences in the bank. Government should make long-
term policies.

iv. Need of Qualified Staff

Required, qualified staff should be provided to branch in order to improve the
functioning of the branch. Especially a telephone operator should be appointed.

v. Clean Loans
Clean loan or clean overdraft is the credit facility extended to the customers
without any security. These types of small term loans should not be extended to
anybody, because sometimes these loans are provided to blue-eyed people of the
management.

vi. Needs to be flexible in credit Policy

BANK OF AZAD JAMMU AND KASHMIR is very conservative in advances
and loans policy. It reduces the investment opportunities. It should adopt the flexible
credit policy while giving credit to the agriculture sector.

vii. Improper Distribution of Work

Proper distribution of work leads to success in every organization. Proper
distribution of work prevents the employee from over and under work situation.

During my internship I observed that there was no proper distribution of work in the
bank. I saw that some of the employee worked like another sat idle starting here and
there.

Inter Departmental Transfer

I watched during my internship that, there is number of employee’s who have

worked on one seat for many a year. It can have negative effects motivation of
employee who is hard working and intelligent.

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viii. Complaints of Customer
There should be an information desk to provide the information and to receive
the complaints of the customer in the bank. There is no complaint box availing in
the branch and not any person appointed to hear the complaints.

ix. Analysis of the Business

Proper analysis of the business reports should be conducted before extending
and type of loan. For this purpose professional training of the staff member is
required.

x. Organizational Commitment
It is suggested that employees working on daily wages basis should be given
some benefits, which the other employees are getting. Their salaries must increase
according to efficiency, performance and service

xi. Managerial Leadership

In the analysis, we have discussed the difficulties of the assistant in taking
any initiatives; therefore it is recommended that the assistants should be given
special training to make them ready for the leadership.

xii. Extended Banking Hours

The bank hours may be extended up to six, as being practiced by BANK OF
AZAD JAMMU AND KASHMIR opposite to it. Some of the business
community due to Law and Order situation are now reluctant to keep the fund in
their premises and would want to depart with it. Therefore, may extend the night
banking to cater to demand of the business community. The branch could also be
opened to cater the requirements of the business community.

xiii. Limited Staff

Staff of BANK OF AZAD JAMMU AND KASHMIR in village branches is
limited; they face much difficulty to perform their task efficiently. So, I
recommended that staff should increase in those branches for better development
of resources.

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 CONCLUSION
As this was not an easy task to execute successfully this study. But with the grace
of Almighty ALLAH it become not so difficult for me and I successfully executed the
task. BANK OF AZAD JAMMU AND KASHMIR is one of the most important name
in the banking sector of Azad Jammu & Kashmir. It is mission and vision policies and
procedures, objectives and strategies, performances and it is current market position
obviously denotes its strength and soundness. It is playing a vital role in the economic
growth of the country. It is important to note that business conducted; investment
make and expenditure incurred during the year 2021-2023 were in accordance with
the objectives of the bank.

During my internship period at BANK OF AZAD JAMMU AND KASHMIR, I got

the opportunity to learn the complex banking system. During this period, after
analyzing the working of the branch, some short comings are also focused which are
discussed as recommendations. In order to build on image, public relation department
should also be well established and well organized.

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 BIBLIOGRAPHY

During my research I get some helping material from the following

sources.

Mr Babar Iqbal (Chief Manager BOAJK main branch chatter Square

Muzaffarabad)

Mr. Ashwaq Shiekh (Operation Manager main branch chatter

Muzaffarabad)

 BANK OF AZAD JAMMU AND KASHMIR, annual Report 2019

 BANK OF AZAD JAMMU AND KASHMIR, annual Report 2020
 BANK OF AZAD JAMMU AND KASHMIR, annual Report 2021
 http://www.bankAzad Jammu & Kashmir.com/bod/bod.html
 http://www.bankAzad Jammu & Kashmir.com/core values
 http://www.bankAzad Jammu & Kashmir.com/loans_schemes.html

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