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Chapter # 1

Introduction

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ZTBL History
Zarai Taraqiati Bank Limited (ZTBL) erstwhile Agricultural Development Bank of Pakistan (ADBP) is the premier financial institution geared towards the development of agriculture sector through provision of financial services and technical knowhow. The restructuring of former ADBP is being carried out with the aim to uplift the agriculture and rural sector by raising farm productivity, streamlining the institutional credit and increasing income generating capacity of the farming community. ZTBL was incorporated as a Public Limited Company on 14th December, 2002 through repeal of ADB Ordinance of 1961. The new corporate structure redefines the bank's status as a public limited company registered under companies Ordinance'1984 with an independent Board of Directors which aims at ensuring good governance, autonomy, delivering high quality ZTBL is a key R.F.I of Pakistan providing affordable, rural and agriculture financial/nonfinancial services to the rural Pakistan, comprising 68 % of the total population. The Bank through a country-wide network of 358 branches is serving around half a million clients annually and over one million accumulated account holders with the average loan size of around Rs.89,000 serving 65%, 31% & 4 % of subsistence, economic and large growers respectively. The total assets of the Bank stand at Rs.84 billion with authorized capital of Rs.25 billion as of 31.12.2005, with a nation-wide working strength comprises 5500 employees. The share of ZTBL in total national institutional agricultural credit remains around 35%. ZTBL was incorporated as a Public Limited Company on 14th December, 2002 through repeal of formal Agricultural Development Bank of Pakistan Ordinance of 1961. Thereby transforming the bank as a corporate entity to serve as a R. F.I.

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Transformation of ZTBL to R.F.I of the country and road to excellence Healthy and well-functioning rural finance markets are directly related to achieving the two key national policy objectives of accelerating rural/agriculture growth and reducing poverty. The realization of these objectives depends on the simultaneity of developments in rural finance and non-financial markets to foster the creation of diverse sources of rural finance to build sustainable financial institutions, and stimulate products and capital flows in the rural sector. For this, rural finance must be seen as an integral part of equitable development within a framework of macroeconomic stability. The ongoing corporatize restructuring lays the basis for fundamental reforms for rural finance market development.

The recurring financial drain, pursuing the old rural finance paradigm and the narrowing fiscal space have also promoted a shift in Government strategy that now seeks viable intermediaries for enhancing outreach.

For the majority, access to affordable rural finance services is also important to enable them to compete in the post-World Trade Organization scenario. Inability to compete because of high financial costs could reduce income of the majority of farmers and rural clients, particularly the small and subsistence clients. Lack of access to affordable rural finance services will also prevent the clients from switching to non-farm activities.

The ZTBL restructuring plan covering the following; (i) governance: establish an environment that facilitates good governance and accountability; (ii) systems: modernize operations through use of technology, networking, and communication tools; (iii) business processes: streamline products and delivery systems so as to reduce transaction costs, simplify operations, and increase

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outreach; (iv) products and services: introduce products and services that are financially economically viable; (v) human resource development: improve standards and skills of management and staff and strengthen training capacity; and (vi) IT: establish new hardware and software platform to support MIS, accounting system including forensic accounting, and risk management functions. The reforms shall establish ZTBL as a key R.F.I of the country, aiming to outreach annual rural clientele to 600,000 by the end of year 2008. By expanding its private sector role, the bank aims to establish network of high tech rural and agri. financial services through intermediations under public private participation and whole-sale -retail lending mechanism.

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Board of director
Muhammad Zaka Ashraf President ZTBL

Muhammad Saleem Khan

Director

Muhammad Javed Malik

Director

Iskandar Muhammad Khan

Director

Muhammad Zakria Kasi

Director

Ejaz Hussain Rathore

Director

Mr.jan Ali khan Junejo

Director

Mr.Mansoor Khan

Director

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Corporate Vision

Dedicated to serve the needs of the farming community, by delivering financial products and technical services on a competitive and sustainable basis, in a convenient, efficient and professional manner, leading to success of the Bank and the farmers

Corporate Mission To play effective role in the promotion of economic growth, by enhancing the availability of credit to the agriculture sector, through reliable access to sustainable financing, special lending programs, technical assistance, and other products & services, and to promote career development opportunities for increasing professionalism and technical proficiencies of employees.

Corporate Objectives Develop and operate as a financially and operationally sustainable R.F.I of the country. Assist rural community, particularly the small farmers, in raising their productivity and income levels through timely delivery of credit, advisory and ancillary services.

Build ZTBL's image as a proactive, client friendly, financially & operationally sustainable with indigenous product deployment. Establish and provide backward and forward linkages to strengthen agri. value added commodity chains.

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Engage in public - private and wholesale - retail partnership to deepen outreach and reduce operating cost. To function as a rural commercial bank to mobilize rural capital formation and to commercialize the agri. sector by delivering the true value of credit to the client. Provide a wide range of risk insurance products to its clients. Open up it venues of operation to Domestic & International Banking Industry to avail comparative advantages.

Branches
ZTBL has a large network of branches, which extend to the remotest areas of the country, currently with an integrated network of 342 branches; ZTBL gives direct access to a comprehensive range of better banking facilities

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Subsidiary
Kissan support Services Ltd was incorporated as a ZTBL owned subsidiary with an authorized capital of Rs.100 million fully subscribed by the bank it aim at providing support to ZTBL management to focus on core banking business and assign non-core activates to its subsidiary.

KSSL Vision

Dedicated to serve the needs of the farming community, by delivering financial products and technical services on a competitive and sustainable basis, in a convenient, efficient and professional manner, leading to success of the Bank and the farmers

KSSL Mission To play effective role in the promotion of economic growth, by enhancing the availability of credit to the agriculture sector, through reliable access to sustainable financing, special lending programmers, technical assistance and other products & services and to promote career development opportunities for increasing professionalism and technical proficiencies of employees.

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Chapter # 2 Products and Services Offered by ZTBL

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Crop Maximization Project


An agreement was executed between Ministry of Food & Agriculture (CMP-II M1NFA) and ZTBL on 06.6.2009 for implementation of Crop Maximization Project-II in which both have agreed to participate in establishment and Operationalization of Revolving Fund. To implement the decision a new saving scheme under the name and style of MINFA Revolving Fund Deposit Account (MRFDA), M1NFA Special Saving Deposit Account (MSSDA.) and Member Farmers Saving Account (MFSA) have been exclusively designed for Government's Crop Maximization Project-TI (CMP-II M11'JFA).

Crop Loan Insurance Scheme ZTBL has launched Crop Loan Insurance scheme (CLIS) as per instructions of Government/ SBP.

Kissan Dost Scheme

Kissan Dost Scheme (KDS) has been launched with immediate effect on concessional rate of mark-up for financing crop production loans, (seed, fertilizer, pesticides & other etc.). The financing would be for one season crops i.e. either Rabi or Kharif.

Sada bahar scheme

In order to facilitate the farmers and provide the timely inputs (seed, fertilizer, pesticides, insecticides, POL and labour charges etc) for crops loan under Sada Bahar Scheme(SBS) are

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provided. Besides, working capital for dairy, poultry and fishery are provided to the interested borrowers under the scheme.

White Revolution- ZTBL & Nestl


Zarai Taraqiati Bank Ltd has been financing Milk Processing Units for UHT as well as pasteurized besides conventional dairy farming in the country since long. Bank has now embarked upon to bring white revolution in the country through integration of dairy farmers and milk processors.

In order to increase milk supply, mitigate poverty in the country and improve the living standard of the rural populace, as a first step, modalities of Strategic Partnership of Bank with M/s. Nestl Pakistan Ltd. have been worked out and an agreement to this effect has been executed.

Green Revolution Scheme

In order to achieve the aim of providing farm machinery and implements to encourage the mechanized farming for the enhancement of agriculture productivity as compared with traditional tillage system a Memorandum of Understanding between Zarai Taraqiati Bank Ltd. and Department of Agriculture.

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Red Meat Financing Package for Sheep/ Goat Rearers Pakistans economy is predominantly agrarian. The agriculture sector contributes 21% to the GDP. Livestock being the largest sub-sector of the agriculture accounts for 50% of value addition. 35 million rural populations depend directly on this sector. Thus this scheme has been launched to promote this sector.

Awami Zarai Scheme (AZS)- Farm Credit Mandatory for all new borrowers and optional for existing borrowers of crop production loan under Sada Bahar Scheme to avail revolving limit under Awami Zarai Scheme to get inputs through M/s Kissan Support Services Limited (KSSL) - a subsidiary of ZTBL under kind system. Financing Package for Karachi

A financing package for the branches falling under Karachi Zone has been notified through which financing for Fisheries, Dairy, Poultry Farming, Feed Mill, Horticulture, Vegetable raising & Nursery for Orchards, Covered Horticulture, Cut Flower, Ornamental Plants, Agri. Machinery, Irrigation Schemes & Milk Collection CentresS, is advanced to accelerate the ir development.

Rural Development Scheme In order to provide Credit Assistance for Dairy, Poultry, Sheep & Goat Farming in the rural areas of the State of Azad Jammu & Kashmir, a Memorandum of Understanding between Zarai Taraqiati Bank Limited and Azad Kashmir Small Industries Corporation has been signed. The following are the salient features of the scheme.

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Banking Services
ZTBL also provide complete banking services to its customers it has a large network of 342 branches nationwide. Services provided at branches are..

Current Account This is a business account by nature under which there is no restriction of cash withdrawals and deposit in a day or period under current account. it is a non-remunerative account so attracts no profit on its balance kept with the bank.

Saring Saving Deposit Account This is a sharing account by nature under which profit is paid on PLS-sharing saving at rates declared but the bank from time to time.

Zarai Bachat Account This scheme is offered to individual sole proprietors firms and limited companies minimum initial deposit for ZBA is Rs.20000].

Business Deposit Account Bank accept money from general public for opening of business deposit account by allowing facilities of current account as well as of PLS saving bank account

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Chapter # 3 Internship Experience

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Duties and Responsibilities


As an internee you have to do many things instead of just one or tow responsibilities, as I was getting under the two person, that why I had to help the manger as well as to the deputy manager of the head office branch. So my duties and responsibilities changed from time to time. the internship has no doubt been a great learning experience for me. as part of my rotation I was assigned to work in the different department of ZTBL My main duties which I performed are as fellows Internal audit of vouchers Preparation of vouchers\ Cash collection Cheque management File management Accounts maintenance Tax and interest calculation

I joined the ZTBL as an internee, so I had to perform different duties to assist my advisors and office staff. I was working under the supervision of tow person at the time first one is the finance manger and the second person was the deputy manager head office branch

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Head office Accounts Department


Function This department deals with the preparation or maintenance of head office employee payroll after deduction medical allowance house rent allowance conveyance allowance utility bills This department also provides advance and loan on the specified rate of interest to their own employees clerical or non clerical car loan motorcycle loan and house building loan and advance payment of salaries etc The function of this department is to deal with employee fund unit payment unit and inter branch reconciliation unit too. Major tasks learnt I was placed In accounts department I learnt the various function carried out by the department and got an opportunity to help in the various daily weekly and monthly activates under the supervision of deputy manager. Payroll Calculation In the payroll unit department I had the opportunity to maintain or preparation of gross salaries after deduction for each clerical and non clerical employees of the head office branch on the basis of different allowance and the rate allowable to the employees.

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Fund Allotment The activities I performed and learnt in the employers fund unit were Maintenance of books of accounts Finalization of financial statement of these trust funds Entertaining the best way for investment of surplus fund in approved schemes Maintenance of employees contributory fund general provident fund contributory provident fund, employees provident fund.

Payment Orders The activates I performed and learnt in the payment unit are To make payments at head office level Maintain account books Response of advices H.O.level Collection of zakat from branches and deposit in state bank of Pakistan Collection of federal tax duty Maintains of vouchers Deduction of withholding tax from the parties Data processing To coordinate with the auditors in respect of head office audit

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Inter Branch Reconciliation I learnt the transaction make in branch to branch and head office to branch and vice versa. All Outstanding entries in inter branch transaction account and in suspense account are reconciled and taken into the proper head of account whit in a maximum period of time 30 days from the date of recording transaction. Settlement and adjustment of outstanding entries mean unsettled entries that are incurred due to the following reasons wrong branch contra code. Advice to not reach to concerns on time wrong contra date wrong.

Central Accounts Department


Function Formulation of accounting policies and procedures with a view to present the true financial position of the bank in financial statement Formulate and maintain accounting policies and procedures manual In line with applicable accounting standards ensure dissemination and implementation across the bank Preparation of financial statements as per requirement of state bank of Pakistan and security and exchange commission of Pakistan

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Major task learnt I had the opportunity to work in the central accounts department under the supervision of assistant manager central accounts department and leart a lot regarding the procedure required to formulate the policies these procedure are as follows Providing guidelines for adjustment of suspense account Devise accounting procedure regarding accounting in the branches as wells at the head office To arrange payment to the external auditors Coordinate with the external auditors Prepare bank charges schedule and circulation thereof amongst the branches and submission to SBP on half yearly basis Coordinate with the credit rating company for providing information for credit rating of the bank Maintain the personal file of the employees Tax During my internship I were placed in the tax unit of central account department I performed the following task Guide branches for settlement of tax issues Pursue the tax refund case with income tax officer Preparation of annual tax statement Coordinate with the tax consultant

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Budgeting and Funds Management Department


Function To arrange adequate recourses for maintenance of adequate liquidity for efficient disbursement trimly discharge of liabilities and operation of the bank Preparation of financial plan for bank credit limit funds and their application. Major task learnt I was placed in the budgeting and funds management department and carried out the different activities regarding budget like budget planning budget analysis and funds reconciliation. Budget Planning During my internship In ZTBL I worked under the supervision of assistant manager in the budget planning unit and learnt the experience to plan for the budget for the budget Plan for the budget and budgeting techniques were assigned the following task Revise department polices Procedure for financial management Develop budget planning process and parameters Communicate with the administrative and governance group on the budget process and budget issue Issuing of budget call memos

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Budget Analysis In the budget department I learnt the analysis coordinating and assessing data reflecting performance of department wise financial activities. And had the opportunity to see the different monitoring trends in expenses for ensuring financial discipline. And step taken by the remedial administrative financial for excess expenditure and communication with administrative and governance groups and develop assumption and strategy for the future budget cycle Fund Reconciliation I already had the experience of reconciliation of bank account that I performed in the accounts department also for the reconciliation funds unit and further I had the opportunity for responding to the advices issued but the branches relating to unit claimed deposit and preparation of daily cash position relating to remittance of funds monitoring of reconciliation of bank account of branches with other commercial bank

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Regulatory reporting department


Function Compliance to the statutory reporting requirement Periodic financial reporting to the management Prompt and accurate analysis to aid decision making Improve effectiveness in meeting statutory reporting obligation Major task I were placed in the regulatory reporting department and learnt different activities carried in the same department. Reporting I was placed in the reporting regulatory reporting department for one week and I learnt the various activities carried out by the concerns and report them to the top level management like implementation of internal reporting mechanism. Coordinating redesign system of data capturing, Its consolidation and subsequent reporting as per regulatory requirement.

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Head office Model Branch


The head office model branch is like a commercial bank. head office model branch is a fully computerized branch. I was placed in the depositing department I learnt various function carried out by the department and got an opportunity to help in daily activity the depositing department handled by two officers Major task learnt I was placed in the depositing department I learnt various function carried out by the department and got an opportunity to help in daily activity the depositing department handled by two officers. Daily Activities Debit and credit vouchers are posted pertaining to customer deposit Cheque are issued to customers are daily basis Accounts are closed and activated by the department Cheque received and clearing are also deposited by the deposit department Signature of the customers is also up to date from this department The maintain and look after the account opening files of the customers Change in address or customers missing CNIC and changes in also are checked

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Demand Draft It is an instruments payable on demand for which values has been received issued by the branch of the drawers bank payable at some other place of the same bank if the tow banks are involved then the DD are sent to another bank. Procedure and issuance of DD is like DD can be issued by filling application from the customer. Then bank apply some charges such as commission excise duty according to the schedule of charges, if he fills the tax exemption from tax is not charged then the cashier account the amount and sign the DD application and enter in the register

Maintains of Cheque Book


Cheque books are maintained on daily basis also made the cheque book the procedure of maintain the cheque book is that if account is newly open the cheque book requisition slip is filled by the customers there is clearly mention the leaves of the cheque book. Daily number of customers gives request for new cheque book if the customer has an old cheque book then he will fill the cheque that is present in the cheque book and give it the cheque book issuance counter. Time for receiving new one in one week.

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Business Deposit Account (BDA)


Bank accepts money from general public for opening of business deposit account by following facilities of current account as well as PLS saving bank account Feature of BDA Minimum initial deposit is Rs.10000 No limited transaction Zakat will be deducted Income tax as source will be deducted rate of return announced by head office will be applicable on daily product basis

Learning
Positive learning This internship increase our exposure We learn how to make public relatio The team work is very much effective for the efficiency The way we should dress up in a corporate level is improved Good image building skill Willingness to compromise and show flexibility Maintains time Marinating stress

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Computer skill during internship significant portion of my work was on computer and due to this I got full command on MS office Knowledge about ZTBL business after working in the ZTBL I came know about the banking businesses and their working style Knowledge about the organization culture Knowledge about the organization policies and rules Knowledge about the reward system of the bank How to perform the task under pressure and rush areas Ability to deal with complexity Self confidence after dealing with the customers and colleagues

Negative learning Officers does not sometimes take care about Ego of their subordinates Employees used to give their work load to internee and this become Burdon for internee No proper place for offering prayer Without any reference they did not call any internee for internship Unsatisfactory working condition On time incentives are not granting Food provided in the cafeteria is not hygiene Lengthy credit processing and documentation procedure

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Experience
I joined the ZTBL after completing my two semester of MBA fianc though six week was a short time to properly understand all the function of the department but I learned and understand the most of the them. Working ZTBL was a great experience and I learned a lot and staff was very cooperative and they helped me at each and every step general things which I learned during internship were discipline and rules and regulation of bank. I learned the business communication that how to communicate with branches and distant offices also learned that how to handle work load and I learned how to deal with customers Internship developed confidence in my personality and I learned how to interact with organization employees customers how information passes from upward to downward and downward to upward in organization hierarchy.

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Chapter # 4 Business Analysis

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SWOT Analysis of ZTBL


SWOT is useful tool for providing a framework for analysis of an organization SWOT stands for strength weakness opportunities and threats it is a common approach to make assessment in terms of internal and external environment of the organization and to formulate strategies analyzing its internal strength and weakness external opportunities and threats coming up is the SWOT analysis for the ZTBL.

Strengths ZTBL is a key player in delivering high quality and viable financial services to the rural population and thus playing a significant role in national development ZTBL has a visible role in turning around agriculture sector in terms of farm mechanization, self sufficiency in wheat rice cotton sugarcane dairy Market leader in the agriculture credit with over one million Clint base Bank has a wide spread network in rural areas with 25 zonal office 342 branches and 1269 MCO to provide agriculture credit to farming community at their doorstep Bank loans are fully secured mostly against tangible security Adequate legal provision is available for securing bank credit advancement ZTBL has a well trained experienced and dedicated manpower mobile credit officer ZTBL has established IT organization structure compiling with good market practice and well established knowledge of IT business processes for bank core competence

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Weaknesses Due to sharp fluctuation 111 prices of agricultural produce at the time of harvest, ZTBL borrowers' often fetch low price as compared to their investments which adversely affect the recoveries.

Huge portion of Non-performing loan portfolio. The Bank has weak deposit base due to inadequate products, less attractive rates of return, improper infrastructure and location of branches outside commercial areas.

Announcement of relief packages, declaration of certain areas as calamity affected by the Government including write-offs and delays in reimbursement of claims adversely affects the recoveries and the financial health of the Bank.

Increasing restrictions by the regulator on various business activities including capped mark-up rates.

Political and extraneous influences in operational/administrative matters of the Bank. Bank's business is more prone to natural calamities, therefore, recovery of Bank's dues are at risk.

Low margin of profit over the funds borrowed from SBP. Restriction of disbursement up to 90% of the amount recovered each year resulting in gradual decrease in disbursement.

No effective tool/authority with the Bank for quick recovery of outstanding dues. Lack of centralized computer system to prepare management information reports and financial statements.

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Lack of motivational factor i.e. career advancement, effective appraisals and effective awards distribution to the staff.

Lack of training, development process and updating of IT system IS hampering the working capacity of the employees.

The major weakness of some units IS limited no. of employees carrying the unit work activities.

Decision making process is very slow In this computerized banking era Central Accounts Department still working manually, which ultimately leads to low performance.

Lack of proper implementation of strategy to get the exact/desired results. \

Opportunities In the week of current global food crisis, an opportunity has arisen to grow more food. Worldwide there is more focus on agriculture and scope of heavy investment in this Sector. Bridge huge untapped gap between agriculture credit required by the agriculture sector & availability of funds from formal resources. Extension of outreach to 6.6 million farms yet untapped for farm credit facilities. Developing a proper marketing strategy would help the farmers in getting maximum price for their products which would ultimately result into efficient repayment of bank's

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loan. Increased agriculture credit will lead to maximum production of food and attractive rates to the growers resulting in good returns to ZTBL. Potential for marketing of new product lines on commercial basis. Exploit potential for expansion through mobilization of rural & urban savings. To extend outreach to bring larger land area under cultivation with preferential consideration for small provinces. Introduction of specific projects like Corporate Farming or other mechanics of bulk financing for onward lending to small farmers. Appraisal system should be implemented to motivate the employees of the unit.

Threats Government had imposed ban on arrest of small defaulters. Similarly the Bank was authorized to disposal of mortgaged properties, agriculture lands under LACIP Act or through Recovery & Finance Ordinance 200 I which has been suspended in case of small farmers. This imposition has adversely affected the Bank's performance as the lending is directly linked with recovery of dues. Agriculture is open to calamities, vagaries, therefore in the event of drought or floods etc. areas are declared as calamity hit and bank has to defer its recoveries. Such calamities have badly affected bank's recoveries in Baluchistan and Sindh provinces during last many years. Success of different GOs especially Rural Support Programs (RSPs) is providing new
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innovative channels for lending/savings with flexible repayment schedules. ZTBL's inability to dispose collateral due to statutory limitations. Accumulation of PLs and increasing trend in SAM (Special Asset Management) portfolio with slow pace of recovery. Civil unrest and law and order problems in various part of the country expose the Bank to operational ri k. Current recession in the economy due to fuel and food crisis resulting in delayed recovery of Bank's dues affecting the sustainability of the Bank. Competitor Banks are increasing their market share with latest Information & Communication technology solutions. As ZTBL is a government owned entity, so there is a pressure from Government while giving loans.

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Risk Management
The primary objective of risk management is to support senior management 111 correctly identifying, adequately measuring, effectively limiting and properly monitoring and controlling risk taking throughout the Bank. The Bank ensures systematic and integrated risk management. This is based on the following structured process risk identification, risk measurement, risk management and control, risk monitoring and risk reporting.

Credit Risk

Credit risk is the risk that arises from the potential that an obligor is either unwilling to perform on an obligation or its capability to execute such obligation is impaired resulting in economic loss to the Bank. Principally, exposures are only approved when reasonably assured for repayment capacity of counter party. Standardized procedures are adopted and under no circumstances it exceeds approved credit lines. The Bank credit appraisal structure comprises of well-defined credit appraisal, approval and review methods for the purpose of prudence in its lending operations and ensuring credit across the bank. The Bank pays particular concentration to the management of NPLs. An independent Special Asset Management (SAM) department is operational at the head office.

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Market Risk

Market risk is the risk of loss arising from movements in market variables including observable variables such as interest rates, exchange rates and equity indices, and others which may be only indirectly observable such as volatilities and correlations. The Bank is not involved in commercial activities like underwriting, trading and discounting operations. The Bank operates foreign currency transactions through SBP 111 local currency by paying exchange fluctuation risk fee to the SBP. The Bank is not exposed to interest rate risk as it has a fixed lending rate portfolio of advances and investments/placements are being placed in held to maturity securities/investments. Correspondingly the borrowing from SBP is in the process of restructuring. Liquidity position of the Bank is closely monitored by the Asset Liabilities Management Committee (ALCO) on periodic basis.

Foreign Exchange Risk

The Bank is not directly exposed to foreign exchange risk as the Bank is not engaged in foreign operations. Foreign transactions, i f any, are undertaken through S B P.

Equity position Risk

The Bank is not exposed to equity position risk as all the shares are held by Federal and Provincial Governments. Its securities are not publicly traded.

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LOSS ACCOUNT FOR THE YEARS ENDED DECEMBER 31,2008,2009 & HORIZONTAL ANALYSIS FINANCIAL YEARS % Incr IOcr 10 Incr & 2010 2008 2009 2010 2008 & 09 08 & 09 Mark-up/return/interest earned 6,822,719 5,996,03 7,022,360 (12.12) 17.12 IDcr 2009 Mark-up/return/interest expensed 391,738 2,802,78 3,418,023 615.47 09 21.95 Net mark-up/interest income 6,430,981 3,193,24 3,604,337 (50.35) 12.87 0 Provision against non-performing 5 advances 4,731,992 1,767,23 3,090,206 (62.65) 74.86 5 Write offs 1,482,44 567,445 (61.72) loans and under Government relief packages 4 3,249,68 3,657,651 12.55 Net mark-up/interest income after 8 provisions 1,698,989 (56,43 (53,31 (103.32) (5.53) 2 NON MARK-UP/INTEREST Fee, commission and brokerage 3,157 2,544 2,338 (19.42) (8.08) 7) 4) Dividend 6,458 6,458 2,153 (66.66) INCOME income Other income 828,519 5,514,07 5,729,582 565.53 3.91 income Total non mark-up/interest income 838,134 5,523,07 5,734,073 558.97 3.82 2,537,123 5,466,64 5,680,759 115.47 3.92 7 IN MARK-UP/INTEREST 9 2 Administrative expenses 2,612,337 2,760,45 3,788,935 5.67 37.26 Provision/(reversal) for diminution in " O EXPENSES value of investments, net (585) 10,110 (686) (1,828.21 ) (106.79) 2 Provision against other assets 12,936 2,048,971 72,149 15,739.29 (96.48) the Other charges 3,802 306 5,849 (91.95) 1,811.58 Total non mark-up/interest ex pens 2,628,490 4,819,839 3,866,247 83.37 (19.78) (91,367) 646,803 1,814,512 (807.92) 180.54 U USUAL ITEM 30,366 PROFIT BEFORE TAXATION (91,367) 646,803 1,784,146 (807.92) 175.84 Taxation - Current 38,434 217,539 631,484 466.01 190.29 - Prior years 8,285 - Deferred (607) 9,458 111,561 (1,658.15) 1,079.54 37,827 226,997 751,330 500.09 230.99 PROFIT AFTER TAXATION (129,194) 419,806 1,032,816 (424.94) 146.02 Unappropriated profit brought 861,549 702,355 1,008,200 (18.48) 43.55 732,355 1,122,161 2,041,016 53.23 81.88 Profit available for appropriation forward Basic earnings per share (Rupees) (0.11 ) 0.350 0.870 (418.18) 148.61

PROFIT

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Horizontal Analysis
ZARAI TARAQIATI BANK LIMITED Blance sheet as at December 31, 2008, 2009, 2010 FINANCIAL YEARS % Iner lDer % Iner lDer 2008 2009 2010 2008 & 09 2008 & 09 Rupees in '000 2009 2009 1,585,421 1,295,464 2,103,682 -18.29 62.39 7,813,844 7,781,056 11,943,898 -0.42 53.50 12,820,668 5,634,499 7,604,233 -56.05 34.96 52,925,286 60,839,057 61,313,006 14.95 0.78 690,141 817,003 865,293 18.38 5.91 1,829 -100.00 6,667,463 9, I 00, 195 9,556,224 36.49 5.01 82,504,652 85,467,274 93,386,336 3.59 9.27 235,741 51,257,213 2,644,647 3,204,323 12,100,331 69,442,255 11,869,612 245,387 702,355 245,043 82,504,652 276,333 51,257,213 2,882,384 3,204,323 7,629 14,239,221 71,867,103 11,869,612 359,348 1,008,200 363,011 85,467,274 392,726 51,257,213 4,323,150 3,204,323 119,191 19,134,241 78,430,844 11,869,612 565,911 1,834,453 685,516 93,386,336 17.22 8.99 42.12 0.00 49.99

ASSETS Cash and balances with treasury Balances with other banks banks Investments Advances Operating fixed assets Deferred tax assets Other assets Total Assets LIABILITIES Bills payable Borrowings Deposits and other accounts Sub-ordinated loans Deferred tax liability Other liabilities Total Liabilities Share capital Reserves Unappropriated profit Surplus on revaluation of assets Total Liabilites & S.H.E.

17.68 3.49 46.44 43.55 48.14 3.59

34.38 9.13 57.48 81.95 88.84 9.27

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ZARAI T ARAQIA TI BANK LIMITED PROFIT AND LOSS ACCOUNT FOR THE YEARS ENDED DECEMBER 31, 2008, 2009 & 2010 VERTICAL ANALYSIS FINANCIAL YEARS Taking 2008 as Base 2008 2009 2010 2008 2009 2010 Mark-uplreturn/interest earned Mark-up/return/interest expensed Net mark-up/interest income Provision against non-performing loans and advances Write offs under Government relief packages et mark-up/interest income after provisions NON MARK-UP/INTEREST INCOME Fee, commission and brokerage income Dividend income Other income Total non mark-up/interest incom XON MARK-UP/I TEREST EXPENSES Administrative expenses Provision/(reversal) for diminution in the value of investments, net Provision against other assets Other charges Total non mark-up/interest expens U USUAL ITEM PROFIT BEFORE TAXATION Taxation - Current - Prior years - Deferred PROFIT AFTER TAXATION Unappropriated profit brought forward Profit available for appropriation 6,822,719 391,738 6,430,981 4,731,992 5,996,030 2,802,785 3,193,245 1,767,234 1,482,448 3,249,682 (56,437) 2,544 6,458 5,514,077 5,523,079 5,466,642 2,760,452 10,110 2,048,971 306 4,819,839 646,803 646,803 217,539 9,458 226,997 419,806 702,355 1,122,161 0.350 7,022,360 3,418,023 3,604,337 3,090,206 567,445 3,657,651 (53,314) 2,338 2,153 5,729,582 5,734,073 5,680,759 3,788,935 (686) 72,149 5,849 3,866,247 1,814,512 30,366 1,784,146 631,484 8,285 111,561 751,330 1,032,816 1,008,200 2,041,016 0.870

100 100 100 100

87.88 715.47 49.65 37.35

102.93 872.53 56.05 65.30

1,698,989 3,157 6,458 828,519 838,134 2,537,123 2,612,337 (585) 12,936 3,802 2,628,490 (91,367) (91,367) 38,434 (607) 37,827 (129,194) 861,549 732,355 (0.11 )

100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100

-3.32 80.58 100.00 665.53 658.97 215.47 105.67 -1728.21 15839.29 8.05 183.37 -707.92 -707.92 566.01 -1558.15 600.09 -324.94 81.52 153.23

-3.14 74.07 33.34 691.55 684.15 223.91 145.04 117.30 557.74 153.85 147.09 -1985.96 -1952.72 1643.03 -18379.08 1986.23 -799.43 117.02 278.69

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Vertical Analysis
BALANCE SHEET AS AT DECEMBER 31, 2008, 2009, & 2010 VERTICAL ANALYSIS

ASSETS Cash and balances with treasury Balances with other banks banks Investments Advances Operating fixed assets Deferred tax assets Other assets Total Assets LIABILITIES Bills payable Borrowings Deposits and other accounts Sub-ordinated loans Deferred tax liability Other liabilities Total Liabilities Share capital Reserves Unappropriated profit Surplus on revaluation of assets Total Liabilites & S.H.E.

FINANCIAL YEARS 2008 2009 2010 Rupees in '000 1,585,421 1,295,464 2,103,682 7,813,844 7,781,056 11,943,898 12,820,668 5,634,499 7,604,233 52,925,286 60,839,057 61,313,006 690,141 817,003 865,293 1,829 6,667,463 9,100,195 9,556,224 82,504,652 85,467,274 93,386,336 235,741 51,257,213 2,644,647 3,204,323 12,100,331 69,442,255 11,869,612 245,387 702,355 245,043 82,504,652 276,333 51,257,213 2,882,384 3,204,323 7,629 14,239,221 71,867,103 11,869,612 359,348 1,008,200 363,011 85,467,274 392,726 51,257,213 4,323,150 3,204,323 119,191 19,134,241 78,430,844 11,869,612 565,911 1,834,453 685,516 93,386,336

Taking 2008 as Base 2008 2009 2010 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 81.71 99.58 43.95 114.95 118.38 136.49 103.59 117.22 100.00 108.99 100.00 117.68 103.49 100.00 146.44 143.55 148.14 103.59 132.69 152.86 59.31 115.85 125.38 143.33 113.19 166.59 100.00 163.47 100.00 158.13 112.94 100.00 230.62 261.19 279.75 113.19

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ZTBL Ratio Analysis


Financial Ratios of ZTBL

Ratios

2008

2009 ') ')

2010

Current Ratio

4.97 .J . .J

2.20

Working Capital Cash ratio Total Assets turn over Gross profit margin Net profit margin Return on Assets Return on equity Debt Ratio Equity Ratio Coverage ratio

46026416 44018633 81.06% 0.08 94.26% -1.89% 0% -1% 84.42% 5.42 0.77 47.5% 0.04 53.26% 7% 0.5% 3% 84.09% 4.81 1.23

38805564 43.36% 0.04 51.33% 14.71% 1% 7% 83.99% 5.24 1.52

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ZTBL ratio Analysis

Current Ratio=current assets/current liabilities year 2008 2009 2010 Current assts 57621721 63125633 71203314 Current liabilities 11595305 19107000 32397750 Current ratio 4.97 3.3 2.20

Interpretation: current ratio of bank is decreased in the year 2010.in 2008 liquidity position of bank was very good but it very much above the benchmark of 2 so some assets are kept idol due to more increase in current liabilities in year 2009 and 2010 liquidity ratio is decreasing which is not good but current ratio is still good and banks liquidity is good

80000000 60000000 40000000 20000000 0 2008 2009 2010 Current ratio Current liabilities Current assts year

year Current assts Current liabilities Current ratio

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Working Capital Net working capital=current assts-current liabilities

year 2008 2009 2010

Current assts 57621721 63125633 71203314

Current liabilities 11595305 19107000 32397750

Working capital 46026416 44018633 38805564

80000000 70000000 60000000 50000000 40000000 30000000 20000000 10000000 0 2008 2009 2010 Working capital Current liabilities Current assts year year Current assts Current liabilities Working capital

Working capital is continuously decreasing and it shows poor management of working capital. Management should take necessary steps this decreasing trend.

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Cash Ratio Cash ratio=cash equivalents/current liabilities Year Cash and cash equivalents 2008 2009 2010 9399265 9076520 1447580 11595305 19107000 32397750 81.06% 47.5% 43.36% Current liabilities Cash ratio

35000000 30000000 25000000 20000000 15000000 10000000 5000000 0 2008 2009 2010 Cash ratio Current liabilities Cash and cash equivalents Year Year Cash and cash equivalents Current liabilities Cash ratio

Interpretation: Cash ratio decreased during the financial period of 2008 to 2010 but decrease is due to the payment for current and fixed liabilities

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Total Assets turn over Total assets turn over=mark up revenue/average total assets Year 2008 2009 2010 Mark up revenue 6434981 3193245 3604337 Total assets 83847887 85467274 93386336 Total assts turnover 0.08 0.04 0.04

100000000 80000000 60000000 40000000 20000000 0 2008 2009 2010 Total assts turnover Mark up revenue Year Year Mark up revenue Total assts turnover

Assets turn over ratio is decreased in 2009 and is same in 2010 so management should take action for properly utilization of assets of bank are not efficiently used by the management.

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Gross Profit Margin Gross profit margin=gross profit/net revenue*100 Year 2008 2009 2010 Gross profit 6434981 3193245 3604337 Gross revenue 6822719 5996030 7022360 G.P margin 94.26% 53.26% 51.33%

8000000 6000000 4000000 2000000 0 2008 2009 2010 G.P margin Gross revenue Gross profit Year

Year Gross profit Gross revenue G.P margin

Gross profit margin of bank is continuously decreasing each year which is not favorable this is because due to the decrease in markup income bank should take necessary steps to increase sales.

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Net profit margin Net profit margin=net income/net revenue*100 Year 2008 2009 2010 Net income 129194 419806 1032816 Net revenue 6822719 5996030 7022360 Net profit margin -1.86% 7% 14.71%

8000000 6000000 4000000 2000000 0 -2000000 2008 2009 2010 Net profit margin Net revenue Net income Year

Year Net income Net revenue Net profit margin

Net profit of bank was negative in 2008 but now from 2009 it is increasing which is a good sign bank should decrease its expense its and should increase its sale in order to be more profitable.

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Return on Assets Return on assets=net income/total assets Year 2008 2009 2010 Net income 129294 419806 1032816 Total assets 83847887 85467274 93386336 Working capital 0% 0.5% 1%

100000000 80000000 Year 60000000 40000000 20000000 0 2008 2009 2010 Working capital Total assets Net income Year Net income Total assets Working capital

In 2008 ROA was 0% which was an alarming figure and it is increased in 2009 and 2010 but percentage is very low. it shows that assists are not fully utilized and earning are not generated by assets.

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Debt Ratio Debt ratio=total liabilities/total assets*100 year 2008 2009 2010 Total liabilities 70785490 71867703 78430844 Total assets 83847887 85467274 93386336 Debt ratio 84.42% 84.09% 83.99%

100000000 80000000 year 60000000 40000000 20000000 0 2008 2009 2010 Debt ratio Total assets Total liabilities year Total liabilities Total assets Debt ratio

Debt to assets ratio is decreased from 84.42% to 83.99% which is good. it shows that most of bank are obtained from creditors.ZTBL capital structure is week it mostly assets are financed by creditors so bank long term debt position is week.

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Return on Equity Return on equity=net income/average stockholder equity Year Net income Average stockholder equity 2008 2009 2010 129194 419806 1032816 13062397 14955492 14955492 -1% 3% 7% Return on equity

16000000 14000000 12000000 10000000 8000000 6000000 4000000 2000000 0 -2000000 Year Net income Average stockholder equity Return on equity Average stockholder equity Net income Year 2009 2010 Return on equity

2008

Return was -1% in 2008 it increased in 2009 and 2010 profitability is very low dew to increasing costs and reducing profits.Manaegment policies are weak so profitability is not very good its improving.

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Equity Ratio Equity ratio=total liabilities/total stockholder equity year Total liabilities Total stockholder equity 2008 2009 2010 70785490 71867703 78430844 13062397 14955492 14955492 5.42 4.81 5.24 Equity ratio

80000000 70000000 60000000 50000000 40000000 30000000 20000000 10000000 0 2008 2009 2010 Equity ratio Total stockholder equity Total liabilities year year Total liabilities Total stockholder equity Equity ratio

Debt to equity ratio is decreased from 5.42 to 5.24 which is not good because equity is decreased and in result management control over bogusness is also decreasing.

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Coverage Ratio Coverage ratio=EBIT/interest expense year 2008 2009 2010 EBIT 300371 3449588 5202169 Interest expense 391739 2802785 3418023 Coverage ratio 0.77 1.23 1.52

6000000 5000000 4000000 3000000 2000000 1000000 0 2008 2009 2010 year Coverage ratio Interest expense EBIT year EBIT Interest expense Coverage ratio

ZTBL is able to pay its interest expenses and its coverage ratio is also increasing but its shows very less increase. Now bank should take necessary steps to increase its incomes in order to pay its interest obligation on time

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Chapter # 5 Major Problems

[52]

Major problem are Observed


Paper work and the file work need to be computerized Some employees are not following the bank timing properly Date of bank is being updated on weekly batch basis instead of daily basis No ATM services are provided by the bank Lack of the computer skill in employees Branches and incomplete information to head office Non responsive attitude of ho department lack of proper implementation of strategy to the get the desired result Senior employee ask juniors for their personal work during the office hours

[53]

Recommendation to Problems
The tendency of late coming must be controlled which reflect and adversely on the image of the insinuation and has posed a serious problem Promotion are made on the base of vacant seats first and then seniority not on the bases of the performance of the employess.promotion should be on the basis of performance ZTBL should start online banking and ATM services for their customers Distribution of work in not on equity basis work has not been allocated properly some workers to work hard. so I suggest that steps should be taken to allocate the work properly The employee should be fair with the internees there must not be gender discrimination Senior employee should not ask juniors for their personal work senior management should discourage this practice Stress management course should be added in the presentation course of employees All the outstanding entries should be settled within the specified time as bank is currently paying penalties against outstanding transaction ZTBL can easily compete its competitor by offering new innovative products There should be proper training for new employees Loan procedure should not be cumbersome and should be made easier. so as to made ease for customer. Student who are eligible for internship should be selected on the basis of merit, Communication among the different department as well as among the different branches of ztbl should be improved I have observed in some case the bank was unable to understand the message sent by another branch.
[54]

Conclusion
ZTBL is the best option among all the company and reason being that it is well established organization there are more chance to learn as compare to a newly merged company. While among the proceeding company has government touch in its management style and some companies were at slugged phase, management ZTBL rules are specified and implemented on all the regardless of their designation there is homogeny in all regulation aspects. There are a time to time motivational rewards increments and acknowledgment

[55]

Bibliography
ZTBL accounts manual 2010 Islamabad ZTBL annual reports 2008-2009-2010 ZTBL operation manual 2010 Islamabad ZTBL staff regulation 2010 Islamabad ZTBL Islamabad Pakistan at a glance 2008-2009-2010 www.ztbl.com.pk Staff of the ZTBL Islamabad head office

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