Internship Report on Askari Bank by Linky City

INTERNSHIP REPORT

BANKING IN PAKISTAN

Monetary policy and banking system play an important role in the

development of all economic fields of the country because necessary finances for

completion of economic plans are provided by them. therefore an organize banking

system and the financial institutions plays an active role in this matter.

The stable an organize banking policy is much effective to improve the level of saving

and consequently the level of investment. The monitory policy is adopted and controlled

by the bank but its success depends upon the cooperation of commercial banks.

availability of the credit is a big problem for LDCs. The shortage of supply of capital can

be improved better and organized banking system because the banks can increasing the

saving through launching the various attractive schemes in various productive sectors

banks also produce credit money and through this way resources are supplied to

productive sectors of the country.

KINDS OF BANKS:

In Pakistan following types of banks are operating in the business circle

like economics.

COMMERCIAL BANKS:

These banks are set up on commercial basis. Therefore, their primary

objective is to earn profit And maximize it is far as possible. For this they received cash

deposits from the people in different accounts. They give loans to different business

enterprises and thereby create credit money.

The State Bank of Pakistan is the central bank of Pakistan, Commercial Banks, financial

institutions and cooperative banks are the other components of the banking system.

1

THE ISLAMIA UNIVERSITY OF BAHAWALPUR

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AGRICULTURAL BANK

These banks are provide long term and short term credit facilities to

landlords and tenant farmers.

INDUSTRIAL BANK

These banks are medium and long term loans to industrialists to set up

new industries for the extension of industries already in operation.

MORTGAGE BANKS

These banks provides the loans to the people against their moveable and

immoveable property.

EXCHANGE BANKS

These banks deal in foreign exchange. They provide credit to importers

and exporters by discounting foreign bills of exchange.

SAVING BANKS

These banks are set up to induce the people to accumulate their small

saving in these banks.

CENTRAL BANKS

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Each country in the world has its own central bank. This bank does not

deal with public directly. This means that it neither receives cash deposits from the

people nor its give them loans. Therefore it is not a profit making institution.

Askari Bank was incorporated on October 09, 1991 as a Public

Limited Company and is listed on the Karachi, Lahore and Islamabad Stock Exchange. It

started its operations from April 01, 1992. The bank was declared as “Best Bank in

Pakistan” in 2001 in Global Finance. The bank’s registered office/Head Office is situated

in AWT Plaza, The Mall, P.O.Box No. 1084, Rawalpindi, (Pakistan).

Askari Bank Limited has expanded into a nation wide presence of over a 100

branches, comprising commercial and Islamic banking branches, connected online and

supported by a network of Automated Teller Machines (ATMs). It also enjoys an

offshore banking unit in Bahrain. Over the years, Askari Bank Limited has proven its

strength as a leading banking sector entity with ever increasing commitment to its

clients, through a strategic investment in electronic technology. It has A1+, the highest

possible credit rating, for short-term obligation, and AA+ for long-term rating. Beside

day-by-day banking solutions, Askari Bank Limited has a wide range of Corporate,

Consumer, and Islamic Banking products.

Askari Commercial Bank Limited was the first bank in Pakistan to offer Internet

banking Services and B2B e-commerce (Business to Business electronic Commerce)

solutions for merchants looking to purchase on credit. They believe that balanced growth

is the key to survive in the today’s global banking environment.

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Mission Statement: -

The mission statement of the bank is

“To be the leading private sector bank in

Pakistan with an international presence,

delivering quality services through

innovative technology and effective

resource management in a modern and

progressive organization culture of

meritocracy, maintaining high ethical and

professional standards, while providing

enhanced value to all their stakeholders,

and contributing to society”

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Core Values:

We understand that our commitment to satisfy customers’ needs must

be fulfilled within a professional and ethical framework. We subscribe to a culture of

high ethical standards, based on the development of right attitudes. We believe in our

'core values' as the essential and enduring tenets of our organization - the very small set

of guiding principles that have a profound impact on how everyone in the organization

thinks and acts. They have an intrinsic value for us and bear significant importance to all

our employees. They are the few extremely powerful guiding principles; the soul of the

organization - the values that guide all our actions.

The intrinsic values, which are the corner stones of our corporate behavior, are:

Commitment

Integrity

Fairness

Team-work

Service

Vision:

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“To be the Bank of first choice”

CORPORATE PHILOSOPHY:

I n s p i r i n g R e l a t i o n s h i p sI n s p i r i n g R e l a t i o n s h i p s

From knowing our customers requirements to understanding employee needs, from

utilizing modern technology to making responsible social contributions, from enhancing

stake-holders value to practising corporate ethics.... We are continuously and consistently

striving to address newer challenges with a single motivation: “the power to inspire

and be inspired”

OBJECTIVES: Deliver solutions that meet customer’ financial needs.

Build and sustain a high performance culture.

Build trusted relationships with all stakeholders.

Build and manage the Banks’ portfolio of business to achieve strong and

sustainable shareholder return.

Create and leverage strategic assets and capabilities for competitive advantage.

To facilitate the bank with modern banking technique.

To accelerate commercial activities and capture large market share.

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Corporate Information

Lt. Gen. Imtiaz

Hussain (HIM) Chairman

Lt. Gen. (R) Zarrar

Azim

Chairman

Executive

Committe

e

Mr. Shaharyar AhmadPresident

& Chief

Executive

Brig (R) Muhammad

Shiraz BaigDirector

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Brig (R) Asmat Ullah

Khan Niazi Director

Brig (R) Muhammad

Bashir Baz Director

Brig (R) Shaukat

Mahmood Chaudhari Director

Mr. Zafar Alam Khan

SumbalDirector

Mr. Kashif Mateen

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Ansari Director

Mr. Muhammad Najam

Ali Director

Mr. Muhammad Afzal Munif Director

Mr. Tariq lqbal Khan Director (NIT

Nominee)

Mr. A.J.Mubbashar Company

Secretary

Audit Committy

Brig (R) Asmat Ullah Khan

NiaziChairman

Brig (R) Muhammad Shiraz Baig Member

Mr. Kashif Mateen Ansari Member

Auditors

A.F.Ferguson & Co. Chartered

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Accountants

Legal Advisors

Rizvi, Isa, Afridi & Angell

Registrar & Share Transfer Office

M/s THK Associates (Private) Limited,

Ground Floor, State Life Building # 3,

Dr. Ziauddin Ahmad Road, Karachi – 75530

P.O.Box No. 8533, Karachi.

Tel : (021) 5689021, 5686658, 5685681

Fax: (021) 5655595

Registered Office /Head Office

AWT Plaza, The Mall,

P.O.Box 1084, Rawalpindi.

Tel : (051) 9063000

Fax: (051) 9272455

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Website

:http://www.askaribank.com.pk/

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http://www.askaribank.com.pk/

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Executive Profiles

• Mr. Agha Ali Imam- Senior Executive Vice President

• M.R Mehkari - Senior Executive Vice President

• Suhail Ahmad Rizvi- Executive Vice President

• Mr. Nazimuddin A. Chaturbhai, Senior Executive Vice President

• Malik Asad Ali Noon, Executive Vice President

• Mr. Tahir Aziz, Executive Vice President

• Mr. Israr Ahmed, Executive Vice President

• Mr. Riaz Khan Bangash, Senior Vice President

• Mr. Nauman Bashir Khan, Senior Vice President

• Mr. Muhammad Ahmed Khan-Senior Vice President

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Branch Network.

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Product and services:

Personal Finance

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Personal Finance is a parameter driven product for

catering to the needs of the general public belonging to

different segments. One can avail unlimited

opportunities through Askari Bank's Personal Finance.

With unmatched finance features in terms of loan

amount, payback period and most affordable monthly

installments, Askari Bank's Personal Finance makes sure

that one gets the most out of his/her loan. Once a good

credit history is established, the door to opportunity

opens much wider.

Mortgage Finance

Askari "Mortgage Finance" offers the convenience of

owning a house of choice, while living in it at its rental

value. The installment plan has carefully designed to suit

both the budget & accommodation requirements. It has

been designed for enhancing financing facility initially

for employees of corporate companies for purchase/

construction/ renovation of house.

Business Finance

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http://www.askaribank.com/mortgagefinance.php

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In pursuance of the National objectives to revive the

economy of the country, ACBL is providing loans to

small and medium size business enterprises under Askari

Bank's Business Finance Scheme. Our goal is to offer a

loan, which enables business community to receive the

financing required by them based on their cash flows.

Our valued customers can enjoy the convenience of

getting financing on attractive terms with the minimum

processing turnaround time.

Smart Cash

This personal line of credit would be set up with a

specified credit limit upto Rs. 500,000/-

Auto Financing

16 THE ISLAMIA UNIVERSITY OF BAHAWALPUR

http://www.askaribank.com/askaricar.php

http://www.askaribank.com/askarismart.php

INTERNSHIP REPORT

Yet another of our products, Askar offers the most

convenient and affordable vehicle- financing scheme,

which provides our valuable customers an opportunity to

own a brand new vehicle of their choice. With minimum

down payment, lowest insurance rates and widest range

of available car makes and models, Askcar offers the

best value to our esteemed customers

ASKARI CARD

ASKCARD means freedom, comfort, convenience and

security, so that you can have retail transactions with complete peace of mind.

ASKCARD is your new shopping companion which enhances your quality of life by

letting you do shopping, dine at restaurants, pay your utility bills, transfer funds,

withdraw and deposit cash through ATM anywhere, anytime.

TYPE OF CREDIT CARD.There are three types of credit cards issued.

i. Silver card

ii. Gold card

iii. Local card

* Silver card has limit upto 2 lac.

* Gold card has limit upto 5-lac.

* Local card has limit upto 2 lac.

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INTERNSHIP REPORT

Silver and Gold card can be used internationally for shopping and also

can be used for internet shopping.

* Local card can be used in Pakistan.

Travelers Cheques

The range of our products and value added services enhances with

introduction of Rupee Travelers Cheques (RTCs) launched in March 2002. In spite of our

constraint on issuing higher denomination of RTCs against restrictions imposed by the

Central Bank of Pakistan we have been striving to attain our shares with sizeable

portfolio.

Value Plus Deposits

The first liability product launched by this unit is showing a

remarkable acceptability in the market. The growth of this product is witnessed by its

share, which has presently reached at Rs. 1,079 Million even after lowering down the

profit rates due to sufficient liquidity in the market.

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http://www.askaribank.com/travelerschecques.php

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FUNCTIONS OF ASKARI COMMERCIAL BANKS

1. Accepting Deposits

Cash in the hand of the people is unsafe because it can be lost. moreover, because some

people lack entrepreneurial talents and therefore do not make investment in any

enterprise, but they want income on the amount of money they have. Bank promises to

solve these problems of people.

Banks receives three types of deposits from the people.

Current deposits

Fixed Deposits.

Saving Deposits.

Advancing Loans

Every bank has learn experience that depositors do not draw whole of their deposits at a

time. They only draw a part of it for day to day transactions. Therefore, a bank keeps a

part of total deposits as “cash reserve” to meet the cash demand of depositors and

advances the remaining part of deposits to businessmen on interest.

A bank gives loans entrepreneurs/businessmen in the following ways:

By Opening a loan account.

By means of overdraft.

By discounting bills of exchange.

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By purchasing bonds and securities.

Creation of the safest medium of exchange:

It is neither safe nor easy to make payment in the form of metallic coins or paper notes.

Therefore, payments are made by cheques these days.

Agency Services

A commercial bank performs many services as an agent of its clients or

depositors. It makes payments on order cheques issued by its depositors. It receives the

amount of money on crossed cheques issued in the favour of its clients and deposits the

amount in their accounts.

General Utility Services

A bank provides general utility services to its clients as well, for

example it keeps their precious documents, gold ornaments, bonds and shares etc. in safe

custody in its lockers.

Financing of Foreign Trade.

A commercial bank receives foreign exchange earned by exporters and

makes payment also in foreign exchange in foreign countries on behalf of importers. It

also advances loans.

Departments Of Askari Commerical Bank

Accounts Department

Cash Department

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Clearing Department

Credit Department

DEPOSIT & ACCOUNT OPENING

DEFINITION OF BANKERS

As defined in section 3(b) of negotiable instrument act 1881,

‘”bankers” means the person transacting the business of accepting for the purpose of

lending on investment of deposits of money from the public, repayable on demand or

otherwise, and withdraw able by cheque, draft, or otherwise, and include the post office

savings the bank.

DEFINATION OF THE CUSTOMER:

A customer is the person who maintains a regular bank

accounts without taking in to consideration the duration and frequency of operation of his

accounts it means that the person becomes a customer of the bank as soon as he open his

accounts deposit money in the same and the bank accepts the said deposit.

QUALIFICATION OF CUSTOMER:

He should not be a minor because a minor is not competent to

contrect.according to section (3) of the majority act 1875 a person is deemed to have

attained the age of majority when he has completed the age of (18) years.

He should be a person of sound mind

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Section (12) of the contract act says that “the person is said to be of sound mind for

entering into contract if at the time when he makes it he is capable of understanding it

and of forming a rational judgement as to its effects upon his interest.

He should have not been debarred from entering in to any contract under the law.

There is an offer by the customer and acceptance by the banker. The customer offer the

money to deposit and banker offers to accept it.

RIGHTS OF A CUSTOMER

A customer has the following universally accepted rights.

To draw cheques against his credit balance in the account.

To receive pass book or statement of his account.

To sue the bank for the cost, loss and damages, when his cheque is wrongfully

dishonoured by the banker.

To sue when the banker has not maintained the secrecy of his account, except when it is

done under compulsion of law in the interest of the bank or as the duty to public.

DUTIES OF THE CUSTOMER

Section (72) of negotiable instrument act 1881 lays down that the customer must present

the cheques for payment and collection with in the business hours of the bank.

To keep his cheque book under lock and key

To draw the cheques very carefully so that there is no room for any fraudulent additions

or alterations.

To see that the cheque issued by him presented to the bank for payment with in a

reasonable time.

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OPENING OF ACCOUNT

The banking history is replete with various instances of fraud largely due

to incorrect opening of accounts. These fraud could have been avoided in if the branch

managers and other designated officers had taken due care and exercised required

precautions at the time of opening of accounts.

At the time of opening of accounts, officers should tactfully obtain as much information

as possible about the integrate and character of the person, his correct name, address and

occupation. This infect will be the only opportunity when they will be able to talk to the

prospective customers in a friendly and frank atmosphere. This is the time when they

have a slight edge over the customer. He or she at this point of time is willing to divulge

as much information about his personal status and business etc to the bank manager. It is

therefore necessary that due care and proper procedure be followed for opening different

types of accounts for various types of customers.

Askari commercial bank limited has the following classifications of accounts,

A INDIVIDUALS ACCOUNTS

B PARTNERSHIP FIRM ACCOUNTS

C JOINT STOCK COMPANY ACCOUNTS

D AGENCY ACCOUNTS

E CLUBS, SOCIETIES & ASSOCIATIONS ACCOUNTS

F EXECUTORS AND ADMINISTRATORS ACCOUNTS

G TRUSTS

H LOCAL BODIES ETC.

I PROPERITORSHIP

J JOINT ACCOUNTS

K OTHER MISC ACCOUNTS


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When a customer open an account under the law he enters into a contractual relationship

with the bank.

At the time of opening the account, intended customer must have the following

characteristics:

A He must have reached the age of majority

In term of section 3 of the Indian majority act 1875 (as adopted in Pakistan) a person is a

major if he attain the age of 18 years. However, the age of majority shall be 21 years in

case of European nationals and also where guardian is appointed under the guardians and

wards act.

A person who is under the age specified herein above is considered a minor. in term of

section 11 of the contract act, a minor is declared incompetent to enter into a contract. As

such, any contract with a minor is a void. However , the banks generally allows the minor

to open accounts with a view to inculcate in them the habits of saving. Such account is

opened jointly with their guardian and are allowed to be operated by the guardian. The

guardian for the purpose will sign the account opening from and the specimen signature

card.

B He must be of sane mind

A person is said to be of sane or sound mind it he understands the terms and the

conditions of the contract and is capable enough to form rational judgement as the effects

of the contract upon his interest.

C He must not be insolvent and bankrupt.

At the time of opening the account, he should not be adjudicated as insolvent. Generally a

person is considered as insolvent if his liabilities exceeds the assets he is possessing.

D He must not be debarred under any law from entering into any contract.

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It is the duty of the banker to make sure that all above criteria is satisfied before he allow

the opening of the account.

For general guidance of the officers, given below are the essential points that must not

escape their attention while opening the accounts.

WHO DEAL WITH OPENING OF ACCOUNT:

As for as possible the account opening job should be handled by the branch manager

himself. Only in exceptional cases in main branches, the job may be assigned to other

officers.

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INFORMATION:

As much relevant information as possible must be elicited from the prospective customer

relating to his means, line and place of business etc.

FORMS TO BE FILLED IN CAREFULLY:

Each and every column of the account opening form should be neatly and correctly filled

in with necessary details.

INTRODUCTION OF ACCOUNT:

Account must be properly introduced. In this concern, the following precautions are to be

observed.

I As for as possible, the person introducing the account should attend the

personally with the prospective customer. This would serve the dual purpose.

A The branch manager shall have the opportunity of eliciting vital

information as to the standing, respectability and the means of the person he is

introducing.

B The identity of the customer must be properly established beyond any

doubt.

Iintroducing from person having doubtful dealing with the bank should be discretely

declined.

The staff member generally should not introduce the account. They will introduce

accounts only for those persons who are personally known to them and whose credentials

are absolutely clean.

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As for possible, the account opening form should be completed by the prospective

customer in presence of the introducer who is then aware of the particulars furnished and

can corroborate the same.

Specific information concerning the profession should be recorded in the account

opening form. The description private Service’ or ‘Businessman’ is insufficient.

Signature on the account opening form must be put by the customer will attest them

properly in presence of introducer.

No cheque book should be issued to the new accounts are properly introduced.

Account may be opened with cash or cheque. Initial deposits, it is incumbent upon the

Branch Manager to satisfy themselves additionally that title of account holder is genuine

for the cheque deposited. Prudent bankers avoid opening new accounts with cheque.

Letter of thanks should be sent to the introducer the day the account is opened. This

precaution would accomplish the purpose of intimating the introducer that the account

has been opened on strength of his introduction thereby inviting disclaimer if untrue.

A letter of thanks should be sent to the new account holder, preferably through registered

mail, to verify his address.

In the evening, the officer of the branch should visit the customer’s area to establish that

the address given by the customer is correct and the commands respect and honour in the

neighbourhood/vicinity he is living.

Number of the customer’s national identity card should be correctly recorded in the

account opening form and copy of it should be kept on record.

No account should be opened in the name of an undischarged insolvent.

TYPES OF ACCOUNTS

Let us now turn to procedure to be followed in case of each type of accounts.

INDIVIDUAL ACCOUNTS:

Such account may be classified as follows:

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Accounts of literate ladies and gentlmen.

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Accounts of parade observing ladies.

Joints accounts.

Minor accounts.

1. In order to open the account for literate people an account opening form, signature

card, form “A”, and an ID copy are required with Rs. 2500 for opening account and he

must fulfil all customer characteristics.

2. In case of illiterate ladies and gents, the following precautions are observed in

addition to those provided in the above guideline.

a) Two photographs are to be obtained one to be pasted on account opening form and the

other specimen signature card.

b) Instead of signature left hand thumbs impression to be obtained on the specimen

signature card from gents and right hand thumb impression from the ladies.

c) Each time such customers should attend the bank personally and will put their thumb

impressions on the cheque before the passing officer.

d) Such customers should be advised not to issue cheque payable to third parties.

e) Cheque should be marked payment in person to ensure even if the cheque is presented

through clearing that particular cheque can only be paid in person

3. When account is opened by more than one person but the relationship between them

is neither of trustees nor partners it would be termed as joint account. Whenever such

accounts are open-end, definite instruction regarding operations on the account and

payments of balance in cased of death of any one of them should be obtained.

4. A person who is under the age as specified above is considered as minor, a minor is

declared incompetent to enter into a contract. However, the banks generally allow the

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minor to open accounts with a view to the condition of saving habits. Such account is

opened jointly with their guardian and is allowed to operate by the guardian.

ACCOUNTS OF PARTNERSHIP FIRMS

While opening accounts of the partnership firms, the partnership

deed from registered firms is required obtained in the addition to account opening form

and specimen signature card. The partnership letter is attached with the accounts opening

form, which must also be signed by all the partners of the firms whether registered or

unregistered.

In these accounts, the following points should be remembered.

1. All the partners must sign the account opening form.

2. The names of persons authorised to operate the account must be neatly and correctly

given in the account opening form.

3. For partnership concerns carrying on the business under impersonal name it is

generally described that the title of accounts should show name of the partners or

managing partner.

4. A cheque payable to the firm should not be accepted for credit to personal accounts of

the partners without the written authority of all the partners.

5. The maximum numbers of partners in general business 20 and the minimum is 2 for

the banking firms the maximum numbers of the partners is 10 in Pakistan however bank

can not be opened by the partnership concern

6. Since these are the business concern they will be allowed to open current accounts.

No saving s bank accounts be opened in partnership name.

Partnership account opening required following documents:

1) Account opening form (A.O.P)

2) A.O.P should be duly introduced

3) Copy of N.I.C Of all partners

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4) Registration certificate (optional)

5) Partnership deed

6) Rubber-stamp on letterhead of the firm

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7) Letter Head

8) Official capacity (It means that all the partners will sign and choose the singe for

operation of account with the bank. And in account opening form the name of the official

capacity is written in special instruction and recommended by all the partners).

ACCOUNTS JOINT STOCK COMPANIES

Joint stock companies include

Private limited companies and

Public limited companies

PRIVATE LIMITED COMPANIES

Private limited companies are those where the share capital is not offered to

the general public instead the offer is restricted to particular class of society or with in the

family members. Generally their share are not transferable. The minimum number of

shareholder is 2 and maximum, is 50 private limited company are not listed on stock

exchanges and therefore their shares are not publicly quoted.

PUBLIC LIMITED COMPANIES:

In this case, the promoters and general public contribute share capital.

Any Pakistani who is authorised to enter into contract can purchase share. Shares of these

companies are transferable and brought and sold freely in stock exchanges. The minimum

number of shareholder is 10 whereas there is no upper limit.

The following documents are required for joint stock companies account opening.

a). Copy of resolution

While opening the company’s account, the manager must ensure that board of directors

of the company is properly constituted and request for opening the account comes

through resolution of the board of directors. The resolution for account opening should

bear company seal and signed by the chairman of the meeting where such resolution is

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passed and counter-signed by the company’s secretary or authorised director must be

submitted to the bank before an account can be opened.

b) A.O.F. duly signed.

c) Memorandum of Association & Articles of Association.

d) Certificate of Incorporation.

e) Certificate of Commencement of Business (only required for public limited companies.

f) National identity cards of directors.

g) List of director with their shareholding.

h) Specimen signature card duly signed

ACOUNT OF PROPRIETOR:

1. A.O.F should be duly introduced

2. Copy of N.I.C of proprietor

3. Specimen signature card duly signed

4. Proprietorship declaration concerns on firm’s letterhead.s

ACCOUNTS OF CLUBS, SOCIETIES AND ASSOCIATION:

Clubs, societies and associations are non-profit and non-trading in nature. They have their

own rules and regulations and committees mention their affairs, which is called

Governing Bodies.

Documents that are required are:

i) Account opening form

ii) Specimen signature card

iii) Resolution to be passed by their governing bodies

iv) Certified copy of rules and regulations or Bye-law

v) Letter of registration

vi) Letter of undertaking to the effect that as and when change take place they will

inform the bank of such changes.

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DEPOSITS:

Deposit is the lifeblood of a commercial bank. Main function of a commercial bank is

to enhance the savings from the savers to the ultimate user of funds. The process of

collecting savings is called Deposit Moblization.

FORMS OF DEPOSITS:

Two broad forms of deposits with reference to time period are:

A)Demand deposit: These are payable on demand. They include current account,

sundry deposit (e.g. margin account) and deposit receipt. No profit is given on demand

deposits.

i) CURRENT ACCOUNT:

ii) This type of account is usually opened for businessman or such persons who

needs deposits and withdrawals facility without any restriction. Introduction is

necessary when opening a current account, the procedure has already been

explained else were in this book and account number is allotted and for

withdrawals cheque book is issued and a statement of account is provided so

that customer can reconcile his account with his own record.

No interest return is paid on such account is Pakistan, This account can be opened

with Rs. 500. Banks usually recover service/incidental charges on current account if

the required minimum balance is not maintained. Or when the maintenance of the

account becomes expenses e.g. For example too many transactions take place on

summing a large number of chequebooks and other stationary not consistent with the

average balance.

ii) CALL DEPOSIT RECEIPT:

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It is a contract for a specific deposit transaction and is used as a security for bidding etc.

It is non-transferable and is payable only to beneficiary or purchaser.

iii) SUNDRY DEPOSIT -MARGIN ACCOUNT,

At the time of issuance of LG / LC or acceptance the party is supposed to deposit is

kept in an account called sundry deposit. Margin account Similarly, at the time of

allotment of locker the locker holder is supposed to deposit a certain sum as security,

which is kept in sundry deposit account.

FEATURES OF MARGIN/SUNDRY DEPOSIT ACCOUNT.

Reduces risk/exposure.

Free of cost deposit enhances profitability

Respective accounts are opened.

Deposit

Accounts

Minimum

Balance

(Rs)

Rate of

Return p.a.

%

Payment

of

Return

Product

Base.

FISDA

(financial

institutional special

deposit

account)

50,000 &

above

0.25% Monthly Daily

ASDA (Askari

special deposit

account)

50,000to

999,999

1000000&

above

1.00%

2.00%

Monthly

MonthlyDaily

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Deposit

Accounts

Minimum

Balance

(Rs)

Rate of

Return p.a.

%

Payment

of

Return

Product

Base.

Value Plus

(saving

account)

Minimum

Rs 10,000 2.00% Monthly

Minimum

monthly

balance

Notice deposits

07 days

30 days

5,000

5,000

0.50%

1.00%

Maturity Daily

Non checking account- rather customer has no approach to this account. As far as

operations are concerned

It relates to the liability L/C, L/C acceptance and is adjusted when liability is

redeemed/released.

B) TIME DEPOSIT: Payable on demand with certain maturity. Attracts profit with

respect to time.

PLS Saving accounts

maturates Askari FISDA (ASDA)

Special notice time deposits are of two types: i account

Askari Special Deposit Account.e. 7 & 30 days notice.

All TDRS (term deposit receipt) of different, maximum one year.

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SAVING ACCOUNT (INTEREST BASED SYSTEM)

As the name denotes savings accounts are basically meant for mobilizing

saving of people. In the interest based system a saving account could be opened with only

Rs. 2500 for new persons but regular customer’s saving account can be opened with Rs.

500 for single individual or for two or more individuals jointly, charitable institution,

provident or other funds of benevolent nature for local bodies, autonomous corporation,

companies, associations, educational institutions etc.

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CLOSING OF ACCOUNTS.

TDR

One month

Two months

Three months

Six months

One year

5,000

5,000

5,000

5,000

5,000

1.00%

1.25%

1.5%

2.00%

2.50%

Maturity

Six monthly

Daily

Daily

It is the prerogative of either party to the contact i.e. the banker or the customer whether

to keep the account with a particular bank or close the same without assigning the any

reasons. A customer generally uses this discretion.

When the particular branch becomes out of the way or too far from his place of

business.

The purpose for which the account was opened has been served.

The bank branch is unable to give him certain credit facility that he requires.

In such a case the customer should surrender the unused chequebooks to the bank and

withdraw the balance lying to his credit after informing the bank formally.

Bank may also closed the account of the customer after notifying the banks intention

and giving him a reasonable time to make arrangement to have his cheques in circulation

presented for payment before the notice period expires. Closing of customers account

warrants a proper Notice determining the contractual relationship. Following are the

reasons by which bank can close the account of customer.

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a) By frequently drawing cheques much in excess of the balance in his account which

are return unpaid.

b) By introducing accounts of parties, which becomes undesirable in cause of time.

c) By frequently contravening the Rules for operation on the account.

d) By making himself aggravate during his visit to the banks branches and picking

quarrel with the staff unnecessarily.

LOCKERS:

ACBL also offers the facility of lockers of three type to it customer

to offer security.

Types Size Annual rent (Rs) or

Refundable deposit (Rs)

Small 6 inches x 2feet 1,000

15,000

Medium 12 inches x 2feet 1,500

20,000

Large 2 feet x 2feet 2,500

35,000

Key deposit is Rs 1,000 per locker.

In the case if customer lose the key of locker then breakage fee will be charged about Rs.

2,000 per locker plus actual charge of supplier of locker.

DOCUMENTS REQUIRED FOR LOCKER OPENING:

Locker opening form

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Specimen signature card

Copy of NIC

Applicant should be account holder in the bank.

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CLEARING

Clearing is a system by which bank exchange cheques and other negotiable

instruments drawn one each other within specified area and securing the payment for

their clients through the clearing house. A clearinghouse is an organization where these

cheques are brought and the mutual claims of each bank on the other are offset ad

settlement is made by the payment of difference. The responsibility of operation for the

clearinghouse function lies with the state bank of Pakistan.

The function of clearing can be understood with the help of a simple example.

Every bank has its account with state bank of Pakistan. Suppose on of the account holder

of ACBL brings a cheques of habit bank of (Rs 7000/-). Now in state bank of Pakistan

the representatives of both banks will appear for clearing physical payment of cash is not

made, but our banks (ACBL) account would be reduced by RS. 7000 and increased by

Rs. 10,000 the reverse would be true for habit bank limited the clearing may be “for” or

“against” if our bank’s A/C in sbp contains a net debit balance then it would be for and if

credit balance then it would be “against” clearing.

COLLECTION OF CHEQUES;

These cheques may be drawn on UBL HBL, or MBPor other banks of

Pakistan. The clerk collects all the cheques of different banks and prepares schedule for

them. Representatives of all banks will receive the cheques related to their branch either

issued by its branch or other banks. If bank transfers funds in the same city, it is called

IBC “INWARD BILL OF COLLECTION” and if bank transfers funds to another city

when it is called OBC OUT WARD BILL OF COLLECTION. Bills are of 2 types

Clean and documentary clean bills include finance instruments and documentary includes

documents attached with goods.

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.

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ADVANTAGES OF CLEARING:

Systematic arrangement for collection and clearance of cheques.

Speedy and economic collection and clearance of cheques.

Clearance of cheques and other instruments of different branches of different

banks in a systematic manner without any flaw and mistake.

The collection and clearance of Govt. bills, instruments, and cheques.

The collection of Govt. revenue through cheques, pay order and drafts payable

through the State Bank of Pakistan and National Bank of Pakistan.

It avoids the difficulties and cumbrances to be faced by the branches if they

collect the instruments directly from branch to branch.

Confidence among the clearing members is produced.

CLEARING OUTWARD:

When the customer deposits cheques and other instruments of other banks

for collection, we send the cheques in outward. Clearing.

PROCEDURE:

cheques are received duly entered on pay-in-slip.

Counter foil is returned to customer after signatures.

Crossing stamp is fixed on the cheque.

Clearing stamp is fixed on the cheque and pay-in-slip.

Clearing stamp with next date is fixed on the cheque and pay-in-slip.

Endorsement stamp is fixed on the reverse of the instruments.

CLEARING HOUSE;

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In the clearinghouse the representatives of all the banks gather and

exchange their instruments. They enter the total amount of cheques delivered and

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received in their summary sheets. The total of schedule received tally with the total of

summary.

Clearing cheques received from other banks are sent to branches which will clear the

cheques and instruments to respective amounts. Some cheques are returned un paid with

the reasons mentioned in the cheques return memo.IBCA for net amount is sent to main

branch.

In the 2nd house clearing cheques are return and exchanged by the representative of the

banks. A summery is prepared for cheques received and delivered and net position is

ascertained. Amounts are settled through SBP accounts.

After cheques are returned, the main branch sends IBCAs for net amount to the branches.

Computer entries are made for (-) credits for returns and debits to main office A/C.

INWARD CLEARING:

In clearing house the cheques received from other banks are collected & sent to branches

for their payment.

Crossing stamps, clearing stamps and endorsement are checked.

Crossing stamp other than collecting bank is cancelled.

Cheques & instruments are posted to the debit of respective accounts.

Any instruments returned un-paid shall be returned in the second session of the

clearinghouse i.e. 2nd clearing.

Cheques & instruments if un-paid are returned along with return memo.

IBCA,s for net amount is sent to the main branch.

ENTRIES

FOR O/W CLEARING:

Dr. Suspense A/C clearing.

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Cr. Customers A/Cs.

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FOR I/W CLEARING:

Dr. customers/Cs clearing(for return)

Cr. suspense A/C clearing (1/W clg)

TRANSFER DELIVERY:

This is the arrangement by which instruments of the branches of the same bank with in

the city are collected and cleared.

OUTWARD TRANSFER DELIVERY:

The system is just like outward clearing.

In outward clearing branch wise schedule are prepared.

The clearing instruments are presented to the branches through main branch of the city.

This is more effective & speedy process as compared to LBC because fate is received

next date.

PROCEDURE OF O/W TRANSFER DELIVERY:

The customers deposits cheques & instruments of the branches of ACBL at Lahore along

with pay-in-slip duly filled in.

Crossing stamp is fixed on the instruments.

Transfer delivery stamp is fixed for next date.

Endorsement stamp is fixed on reverse of the instrument.

Payee’s A/C is credited

Askari Commercial Bank Ltd

Badami Bagh Lahore.

INWARD TRANSFER DELIVERY:

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Cheques drawn on the branch are received with the schedule. The

entries are made in the I/W. TD register and balanced with the summery of T.D.

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cheques are debited to respective account and cheques which are not passed returned with

the objection memo.

The IBCA is sent for the net amounts for cheques passed.

INTERNAL CLEARING:

When the customer deposits the cheques in the branch drawn on the account in the same

branch. The cheques are received along with the pay-in-slip. The amount is transfer from

the account where the cheque is deposited and credited to the account where it is transfer.

SPECIAL DELIVERY:

SBP conducts special clearing when clearance of special Government revenues is

required.

Government cheques. Pay order treasury cheques are cleared and paid.

Remittance department plays an important an important role in transfer

of funds; it includes DD, TT, MT, TC and pay order.

It is an instrument payable on demand for which value has been received issued by the

branch of the bank drawn i.e. the payable at some other place (Branch) of the same bank.

TRAVELLERS CHEQUES (TC):

TC (traveller’s cheques) is for all branches with no charges. We give

the money in cash/cheque/direct debit instructions to the banker and he gives in return the

slips of Rs.10,000, Rs. 25,000, Rs.50,000, Rs.100,000, Rs.500,000 which is required.

Now government has made some restriction against TC because people have stared it to

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use in place of money. There are no charges of any type such as postage, taxes,

commission charges.

TELEGRAPHIC/MAIL TRANSFER (TT/MT):

This is an instrument that is use to transfer the money from one branch to other

branch of same bank through bank. The person known as payee, for whom TT is made,

TT is only paid to him after seeing his ID card. TT has been made on following modes of

payments.

1. On cash.

1. On cheques.

2. Through debiting account no.

After issuing TT it is get registered in issuing register. Which required TT/MT no. payee

name and address, amount, account no.(if through account payment has been made),

cheque no.. Along TT/MT an advice also be send to other branch from where money will

be drawn, that advice is called telex message. On the basis of which the other branch will

pay the money after tallying serial no. and test no. of TT.

TT is made if the client has account in the bank if he has no account then he has to fill

the TTR (telegraphic transfer receipt) which is a voucher for the official record in bank.

Its form is of blue colour. In DD the person has to take care of DD which is issued to

him.

Demand Draft (DD):

The demand draft (DD) is issued to the person who want to

draw money from another branch in any other city, then by showing that draft he can

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easily draw money if he has account there. Demand Draft is issued by one branch of bank

payable to other branch of the other bank e.g. DD is issued by ACBL payable by MCB.

The person who pays the value and on whose behalf draft is issued is called purchaser.

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The Branch/Office which issues a draft on another branch or office is called the

drawing/issuing branch.

The Branch /Office on which draft is drawn is called the drawee branch. The person

entitled to receive the payment is called the payee.

DD also has been made on three modes of payments.

1. On cash.

2. On cheques.

3. Through debiting account no.

ISSUANCE OF DD:

Request shall be on the standard DD application form.

Fill in all information such as name of beneficiary place where the DD is drawn,

amount, mode of payment cash/cheque /debit authority signature with name and

addresses.

Check the application form.

Charge commission as per schedule of charges.

Get voucher from cash department. After the customer has made payment by cash

/cheque.

Prepare the demand draft (Security Stationery)

The issuance of DD is computerised and the amount is automatically protected

graphed during printing for avoidance of forgery.

Entry is then made in DD issued register, in the DD issued register separate folio is

allotted for each draw branch and a serial control number is applied.

After issuance of DD, an advice is send to the branch from where client wants the

money to be drawn, which confirms the DD. In this aspect cantra is another concept,

which is followed in the branch where money is transferred. Payment of DD takes place

in two ways:

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1. If advice reach the other branch before the draft then that branch debit the H.O of

bank and credit client.

2. If draft reach first then bank open the temporary account called suspense account or

red account through which amount is debited for the satisfaction of client and credited the

H.O of bank when that branch receives the advice than it debit the H.O of bank and

credited the suspense account.

There are postage and commission charges.

CANCELLATION OF DD:

Obtain application in writing along with original DD.

Verify the signature of applicant. This signature should tally with signature on DD

application form.

Mark cancellation in DD issued register.

Payment from suspense account DD cancelled after recovery of cancellation cheques

as per current schedule of charges.

Inform the drawee branch regarding cancellation and ask for IBCA.

On receipt of IBCA adjust amount paid out of suspense account.

Lost/Stop Payment/Issuance Of Duplicate DD.

Get application from purchaser and verify the signatures.

Inform the drawee branch of the loss of DD and advise them to mark caution against

payment if presented.

After necessary checking, the drawee branch will inform us about the status of DD-

whether it has been paid or is still outstanding.

Write on the face of duplicate DD in red ink “Duplicate in lieu of original DD.

no.____ dated ____ reported lost”.

The duplicate DD will have the same control number.


INTERNSHIP REPORT

The printed number and serial control number of DD issued shall be mentioned on the

application form.

Signatures of two attorney holders with their attorney number should obtained on the

DD. The 2nd signing officer must check all the particulars before signing.

The postage rate is fixed Rs.25and commission rates are as following:

PAY ORDER:

Pay order is also called “banker’s

cheque” drawn upon the issuing branch/Office itself. It required

account no. and other information about client which mean cross

payment is its restriction.

Get the application form. Issues pay order after recovering charges.

Do necessary vouchering. Make entry in PO issue register.

All pay orders shall be crossed “payee’s account only”.

It may be noted that IBCA is not involved because PO are payable in

same branch.

CANCELLATION OF PO:

Application for cancellation. Surrender of original pay order. Recover cancellation

charges.

LOST AND DUPLICATE PAY ORDER.

Check the record to ensure that payment has not been effected. Get application for

issuing of duplicate PO. Recover charges. Issue duplicate pay order.

Pay slip:

The banks for settlement of its own payment issue pay slips. There is no excise

duty and no commission.

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“ C r e d i T D e p a r t m e n t ”

“The major source of bank’s income

Credit department is most important department of bank to earn her income by lending

money to other at different rates as compare to that deposit interest rate. Normally, bank

takes money from depositors at rate X and utilize those funds by advancing them at X+1

rate, so X- (X+1)=1 this 1 is the income of the bank. If we say that bank is body then

credit is blood of that body. It generates revenue for the bank so credit decisions are to be

carefully analyzed.

Different departments are working in SBP to monitor credit.

* BCD.................. Banking control Department.

* BSD.................... Banking supervision Department.

* BPRD ............... Banking policy and regulation department,

Commonly operations regulate credit size, sector and bank. Credit line is given to banks

finance the purchase of crops after every six months .

NATIONAL CREDIT PLAN:

Every year economic survey is made and with the help of this survey government

patronize certain sectors and also advise banks to give more loans in these sectors.

According to this year the agriculture sector is the target for financing.

CREDIT REGULATION 1992:

In 1992, certain regulation are made by SBP for credit advancement:

Bank cannot lend more than 10% of its reserves.

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No bank can lend to its directors.

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No bank can finance its own shareholders.

If bank finance to other bank’s shareholder than it has to take permission from SBP.

Bank has to handle its suspense liabilities within 30 days.

Advances ratio should not exceed 65%.

Bank should check the current ratio of the customer.

PROCEDURE FOR TAKING LOANS:

For taking loan first credit line proposal (CLP) is made. In a CLP there are different types

of documents:

Application form

Credit information

Application form:

The customer requests the application form from the bank for the loan. Some documents

are also attached with the application, which are of two types:

Permanent Information Memo

Charge Document

Permanent Information Memo:

These are the documents in which there are permanent information of customer and

his business.

Charge Document:

Charge document is made for the security purpose. These document are sign by

borrower. Purpose for sign is that if the borrower does not pay the loan in a certain

specific period of maturity then these documents can be shown in a court against him.

Credit Information:

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For the satisfaction purpose bank also take credit information about the party.

Credit information is taken from the Credit Information Bureau (CIB). This type of

information is taken when loan of huge amount is taken, above 5 million. Clearance

report is checked.

All these documents are arranged in a file. This file is called credit line proposal. Every

loan is sanctioned after the preparation of CLP.

DISCRETIONARY POWERS OF ADVANCES:

Up to certain limit each level can give orders of advancing loan but for the bigger

amount branches have to take permission from upper level of authorities.

Credit sanction advice move through these levels.

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TYPES OF SECURITIES

Normally loans are of two kinds.

i. Clean loans.

ii. Documentary or secured loans.

In clean loan no tangible securities are taken from the customer. But in secured loans

tangible securities are

Different kinds of secure securities are

Deposit with bank.

Deposit with other banks.

Government securities.

Account receivable /notes receivable.

Inventory.

Moveable /immovable property

Fixed assets are hypothecating, Pledging or mortgaging. In these three cases tittles

charge and control varies among bank and the borrower

Type Title Charge Control

HypothecationBorrowers Bank Borrowers

Pledge Borrowers Bank Bank

Mortgage Joint Bank Bank

GOOD LENDING PRINCIPLES.

There are five good lending principles, which are kept in mind while considering a credit

decision.

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1. SAFETY

Lending must be safe enough and given to one who already has the ability in the form of

cash flows to show and for this purpose some liquidity security should be pledge.

2. SUITABILITY

Lending must fit into the plan and loans are given to a business a growing industry.

3. LIQUIDITY.

Business cycle should be complete in one year. The credit will be refunded in liquid form

and for debt security bank consider most liquid security.

4. DISPERSAL

Loans should be given in diverse sector and should not be concentrated just to one sector

to maintenance balance growth of economy.

5. REMUNERATION

Lending must be remunerative and ultimate goal is to maximize the profit.

RISK ANALYSIS

We know higher the risk higher the return but risk must be carefully evaluated.

There are five Cs, which should be considered.

1. CHARACTER

Normal and social character of an individual or organization should be good. He should

not be involved in any illegal and unethical business like smuggling or black- marketing.

2. CAPACITY

Borrower must have the capacity to take the loan and repay that loan.

3. CASH

There must be regular cash flows of business because liquidity is important for refund of

loan.

4. COLLATERAL

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Transaction must be secured by collateral. The applicant should have such amount of

asset that can be used as security of credit he has taken from bank.

5. CONDITIONS

Different conditions are important to minimize the risk of lending mostly these conditions

are two kinds.

These conditions relate to industry and country environment.

Positive condition: Bank does not restrict the applicant to do something but it

demand for some paper to be signed.

Negative condition: Bank restrict the applicant to invest this credit in pre-specified

business.

TYPES OF LENDING:

There are two types of advances:

A. Funded finance

B. Non-funded finance

A. FUNDED FINANCE

In a fund base loan cash are involved. In these loans cash transaction are made

directly. Fund based loans are further divided into five types:

1. Running finance

2. Cash finance

3. Term finance

4. Staff finance

5. Clean finance

6. Mortgage finance


INTERNSHIP REPORT

7. Trade finance

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1. RUNNING FINANCE

This is also known as current finance or hypothecation. Per day mark-up is a

charge but customer is flexible to draw within the drawing power. Hypothecation of stock

is the prime security. In running finance amount is mentioned clearly. Mark-up is charges

on the amount that is drawn not on full amount. Previously this is known as

“overdraft”, in which customer can withdrawal his credit account in excess of credit in it.

2. CASH FINANCE

This is just like in running finance the only distinction in this case security is stock

pledged form and the security margin is also charged. Chequebook is not issued. Cash

flow must be regular one.

Bank issues delivery order if the borrower wants to draw stock equal to money

deposited by customer.

3. TERM FINANCE

Its time period is fixed. Amount and mark-up rate is mentioned. Mark-up is

charged on the full amount of loan because amount is withdrawal at once. Term finance

is secured by security. Credit should be given according to the security. It is more

profitable than running and cash finance because mark-up is charged on whole amount.

There are some cases when long term finance is also provided, these are:

* Existing plant is in running and expansion in it is needed

* To running plant for replacement of machinery

* To running plant for modernization

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4. STAFF FINCNE (PERSONNEL)

This facility is given to the staff of ACBL. The amount of loan depends upon the rank of

staff.

* OG iii to OG I the amount of loan is Rs,25,000

* Above OGI up to SVP Rs.50,000.

* And above SVP Rs.100, 000

Repayment period is 2 years and instalments are deducted from salary. Mark-up rate is

5% no security is needed it is against GP fund. The eligibility is 2 years or more service.

5. CLEAN FINANCE:

These are the special types of finance is given without the security. In the ACBL

these type of finance are given to the Army officers mostly. The amount of this finance is

Rs 25000. The bank should not be given more than Rs. 25000.

6. MORTGAGE FINANCE

This I also transacted through Retail Banking Division. as a security simply the mortgage

of property is demanded by the bank. this is for three purposes;

* Purchase of house

* Construction of house

* Renovation of house

This facility is for individuals. Repayment period is 15 years for construction and

purchase of house and for renovation 7 years subject to remaining service. The mark-up

is SBP discounting rate 4% plus with a floor rate 15%. Total service of the applicant

should be 3 years and minimum 2 years with the existing employer. no complicated

procedure only the recommendation of the employer is needed.

8. TRADE FINANCE:

There are two kinds of the trade finance.

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1. Import related finance

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2. Export related finace

1). IMPORT RELATED FINANCE:

There are two types of import related finance:

Finance against trust receipt (FATR)

Finance against imported merchandise (FIM)

Payment against documents (PAD)

FATR:

In this type of finance cash is involved between borrower and bank only. This type of

loan is given on the basis of trust only. This type of finance is very risky, so the bank

charges high interest rates. FATR finance is given to selective persons. The can put

signee behind the bars without going to court after 180 days purchase good from

exporter.

FIM:

Importer says that he has no money and wants to import goods. Bank then opens LC

and pledge all the imported goods. After arrival of goods bank allows him to take away

goods as he pays to the bank and charges mark-up to the remaining balance. It is like cash

financing.

PAD:

If the importer does not pay with in 3 days of arrival of good then bank converts LC into

funding facility and charges mark-up .

2). EXPORT RELATED FINANCE:

There are two types of export finance.

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1. FAFB (finance against foreign bills)

2. FAPC (finance against packing credit )

2a. Pre-shipment finance

2b. Post-shipment finance

1. FAFB:

This is provided in case of usance LC. The exporter discounts usance LC with bank and

bank after taking cushion (check) makes payment.

2. FAPC:

This type of finance is given for the packing purpose. It can be before shipment for

purchasing raw material and for packing of shipment and after shipment, for giving the

salary of labours and payment of raw material.

B. NON FUND BASED

It is the commitment and does not involve hard cash. It is normally an obligation of the

bank and in case of default of original borrower the bank stands responsible. In this type

of facility bank asks the applicant for cash margin and for mortgage of property. Because

even though no funds of bank involve but this facility is as risky as funded finance. But it

is very lucrative for bank because no funds of bank are involved but bank charges and

interest on the cash margin by head office generates revenues for bank.

TYPES OF NON_FUNDED FINANCE:

There are two types of non-funded finance.

1. Letter of credit (LC)

2. Letter of guarantee (LG)

1. Letter of credit:


INTERNSHIP REPORT

There are two types of LCs:

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Usance LC

Sight LC

Usance LC:

It is the LC in which the time period is involved. Time period is 60, 120, 160, days. Bank

makes the payment of LC when they received the documents, like transport receipt and

invoice.

Sight LC:

It is the LC, opposite to usance LC, in which payment to the exporter is made on the sight

of documents.

LETTER OF GUARANTEE.

Banks issue guarantees when contract is made between two parties. It requires no

prime security and only collateral security is taken. The amount of guarantee to be given

is calculated after valuation of assets of applicant, which he/she wants to give as

collateral. 70% of total property is taken as FORCED SALE value of the assets and after

taking 25 %security margin on forced sale value the guarantee is given for remaining

value. Normally 25%cash margin is also taken for guarantee. This margin may vary

according to the credibility of the applicant. No mark-up is charged but commission is

taken. The rates for commissions are:

* Up to 5million . 4% or minimum Rs 500.

* 5m-10m . 3%

* 10m-200m . 25%

* over200m .2%

* .125% is charged to Govt. and semi-Govt. Organizations

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This commission is charged quarterly.

TYPES OF GUARANTEE

Most of the guarantees are given in case of contracts. Guarantees are

allowed for the purchase of fertilizers and for travailing agencies to PIA.

Following are the major type of guarantees:

1. BID BOND

Banks give commitment for a bid. Normally 5 % contract amount is kept as bid security

to qualify bid. Now bank gives guarantee to beneficiary on behalf of applicant for this

amount. If bid is accepted then contractor asks the bank for ADP.

2. ADVANCE PAYMENT GUARANTEE (ADP)

Bank gives this guarantee to beneficiary to provide the contractor the advance payment

because he now has to start work.

3. PERFORMANCE BOND GUARANTEE

That the contractor will perform the task assigned with in the specified period of time.

4. SHIPPING GUARANTEE

This type of guarantee is very rare and given it at 100 % margin.

“FOREIGN EXCHANGE”Foreign exchange is one of the important departments of ACBL. It deals with foreign

currency and foreign exchange. In a foreign exchange department ACBL deals with

Account opening, Withdrawal, deposits and remittance.

ACCOUNT OPENING:

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There is two type of account opening in foreign exchange.

1. Frozen or Old scheme accounts

2. Incremental or New scheme accounts.

FROZEN OR OLD SCHEME ACCOUNTS:

This type of accounts was frozen on 28, May 1998. In frozen accounts, account holders

can withdrawal their amounts only in Pakistani currency. Account holder cannot

withdrawal their amount in foreign currency.

INCREMENTAL OR NEW SCHEMEM ACCOUNTS:

A new scheme was introduced by SBP for foreign currency accounts. In this new

foreign currency account, account holder is allowed to open an account in foreign

currency. Deposit and its withdrawal both can be done in foreign currency. There will no

restoration on foreign remittance. Deposits of foreign currency are easily transfers for

investment purpose.

State bank of Pakistan does not charge forward coverage fee on new scheme accounts.

But the SBP charges forward coverage fee on the old account because Pakistani

government holds deposit in these accounts. In the ACBL foreign currency account

deposits are also reported in a local currency. Foreign currency deposits are also revalued

at the end of each month. Revaluation rate is announced at the end of each month.

TYPES OF SERVICES IN FOREIGN EXCHANGE:

ACBL provides two types of services in foreign exchange.

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Trade Related services

Travel Related services

TRADE RELATED SERVICES:

ACBL provides two types of trade related services.

1. Export related

2. Import related

EXPORT RELATED TRADE SERVICES:

Export means transfer of goods and services from the home country to another country.

There are four methods of payment, that is used in a export trade services.

Cash against documents collection (CAD)

Foreign bill purchase

Consignment sale basis

Advance payment

CASH AGAINST DOCUMENTS COLLECTION (CAD):

In CAD there is no guarantee and liability of the bank. Bank of the exporter will send

shipping document to the advising bank. Then the importer’s bank transfers the

documents to the importer after the payment is received. After completing the assurance

that payment has been received than the exporter’s bank makes the payment to the

exporter.

FOREIGN BILL PURCHASED:

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In this mode of purchase importer will send LC to the advising (importer) bank. After

receiving the LC the advising bank will give it to the exporter. After the shipping of

goods, exporter will hand-over shipping documents to negotiating bank and they will

receive payment from the negotiating bank.

CONSIGNMENT SALE BASIS:

In this mode of payment, payment is received within 120 days. Importer will receive

the goods after paying the custom duty. The importer makes the payment when he

receives the sale proceeds and after the attestation of the sale proceeds receipt from

concerned embassy.

Advance payment:

Advance payment means payment of the goods before they are delivered to importer. In

the advance payment inward remittances are transferred from the foreign bank to the

exporters account.

IMPORT RELATED TRADE SERVICES:

Import is receiving goods and services from the foreign country to home country.

Four modes of payment are used for imports:

1. Cash against documents (CAD)

2. Deferred payment

3. Advance payment

4. LC\ documentary credit

1. CASH AGAINST DOCUMENTS (CAD):

Bank of the exporter will send shipping document to the advising bank. Then the

importer’s bank transfers the documents to the importer after the payment is received.

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After completing the assurance that payment has been received than the exporter’s bank

makes the payment to the exporter.

2. DEFERRED PAYMENT:

In this mode of payment, the important thing is the mutual concern of exporter and

importer. In this case the seller shipping the good and the buyer makes the payment with

a mutual understanding.

3. ADVANCE PAYMENT:

In this mode of payment the seller receives advance payment of his goods. The buyer

can also take discount benefit for his advance payment. The seller takes the benefit

through investing advance in the preparation of goods.

4. LC\ DOCUMENTARY CREDIT:

LC means letter of credit. The opening bank on the behalf of the applicant writes

letter of credit in the favor of beneficiary. This letter of credit is written for a

specified amount against the submission of shipping documents. Applicant requests

for the LC through bank, which is called LC opening, bank. In this case beneficiary

is exporter and applicant is importer. Other parties of LC are:

Advising bank

Negotiating bank

Reimbursing bank

ADVISING BANK:

Advising bank is the bank of importer. Its duty is to transfer LC documents to the

exporter bank.

NEGOTIATING BANK:


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Negotiating bank is the bank of exporter country bank. It makes the payment to the

exporter for his goods, which he exports to the importer.

REIMBURSING BANK:

Reimbursing bank is the foreign bank. This is a bank, which has the Nostro Accounts

of the ACBL. The duty of this bank is to make the payment to the negotiating bank.

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HR Philosophy:

Askari Bank has a progressive and a dynamic human resource (HR) philosophy. The

Bank believes in transforming its human capital into a key source of competitive

advantage. The Bank believes that investment in human capital is critical for achieving

and sustaining growth.

Nature of Strategic Planning in Askari Bank

Askari Bank is trying to achieve Business Level Competitive Strategy, which will help

them in strengthening the business’s long-term competitive position in the market place.

The Bank is using Human Resource as a strategic weapon, which will help them in

achieving short term as well as long-term objectives.

Importance of Human Resource Division of Askari

Bank: -

“Our staff is our most valuable asset”

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That’s why Staff is given on the job as well as site training in diverse areas of banking

and management. Fifty two in house courses were organized during 2001 in Askari Bank

for training the employees.

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The HR manager says that we are committed to provide a healthy

environment, culture, job satisfaction, opportunity and compensation that attracts and

retains outstanding individuals.

Askari Bank value a work place where:

People are promoted on their merit rather than on their tenure.

People treat each other with mutual respect and dignity.

People truly feel that no matter how large we grow, each one of us can make a

difference.

No discrimination among the male and female employees.

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HR Head’s Responsibilities;

Human Resource Division of Askari Bank was successful in implementing:

1. Staff Hospitalization Plan;

2. Staff Transport Finance Scheme;

3. Medical Leave of Absence Facility;

4. Privilege Leave of Absence Encashment;

5. Enhancement in Staff House Finance Limit;

6. Insurance of House Finance;

7. Increment in Salaries Up to 15%;

8. Rationalization of Pay Scales;

9. Performance Appraisal System;

10. House Rent Facility.

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JOB ANALYSIS AND DESIGN:

Job Analysis.

Provide information about jobs currently being done and the knowledge, skills, and

abilities that individuals need to perform the job adequately

Steps In Job Analysis.

1. Understand the purpose of job analysis.

Managers do the job analysis and assign responsibilities according to the caliber

and skill of the employee.

2. Understand the role of the job in the organization.

3. Benchmark positions.

4. Determine how to collect job analysis information

Managers collect the information through Observation, technical conference.

5. Seek clarification.

6. Develop draft.

7. Review draft with supervisor

JOB DISCRIPTION, JOB SPECIFICATION

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Job Description.

Service manager according to the skills capabilities personality communication skill

confidence level has designed Job description.

Job Specification.

Statements indicating the minimal acceptable qualifications incumbents must possess

to successfully perform the essential elements of their jobs. In which includes the

knowledge, skills, education, experience, certification, and abilities need to do the job

effectively.

Askari Bank mainly focuses on the communication and confidence level of the

candidate as skill can be updated.

Recruitment is the process of searching for prospective employees and stimulating them

to apply for jobs in the organization.

Objective:

Askari Bank believes that by bringing together our collective expertise, insight, and

professionalism, we will grow individually and succeed collectively.

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RECRUITMENT CRITERIA:

if you want to work for us, and have the right capabilities and experience, our

process will ensure that all candidates are provided with equal opportunities to secure a

position.

You are:

Entry level fresh Induction:

At this level, fresh graduates are hired normally in officer cadre of the bank

ranging from OG–III to OG–I.

Management Trainee Officers:

A special batch of qualified, energetic, high caliber and qualified young with good

academic records is also hired as Management Trainee Officers (MTOs) on

annual basis with an aim to nurture high-talented lot of future

executives/managers for the Bank.

Hiring of experienced professionals:

At this level, experienced and skilled professionals are hired normally for Senior

Slots.

ROLE OF HRD IN RECRUITMENT PROCESS:

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HRD of Askari Bank is responsible for designing the selection system and

managing its everyday operation.

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RECRUITMENT SOURCES:

Recruitment of employees, in general the sources of recruitment can be classified

into two types.

i) Internal Job Posting:

Filling a job opening from within the firm has the advantages of stimulating

preparation for possible transfer, or promotion and increasing the general level of morale.

ii) External Job Posting:

Askari Bank also goes to external sources for positions whose specification

cannot beam by present personnel. Askari Bank uses following outside sources.

Advertising:

Employment Agencies:

Casual Applications:

Leasing:

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THE HIRING PROCEDURE FOR NEW/FRESH EMPLOYEES.

RECRUITMENT PROCESS (FRESH/ BATCH PROGRAMS):

SELECTION

Our selection processes differ from position-to-position, and are designed to

effectively match an individual’s knowledge, skills, interests, and experiences to those

needed for a particular position.

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THE HIRING PROCESS:

In the hiring procedure, Askari Bank is following steps to discover significant

information about an applicant.

1) Call for application

2) Preliminary interview

3) Applications blank

4) Check of References

5) Psychological lest

6) Employment interview

7) Approval by the supervisor

8) Physical examinations

9) Induction or orientation

ASKARI BANK

INTERVIEW ASSESSMENT FORM

Job Title: ___________ Trade:

_____________ Department: ___________

Name: ___________ Age/DOB ______________App.

Source: ___________

Place of Domicile: ___________ Available to joining No:

_____________________

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Expected Salary Rs: ____________________________

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Name of the Interview: 1. (HRD Executive)

2. (Concerned Executive)

3. Supporting Executive)

(1) (2)

a) Appearance ABC a) Assignment

Knowledge ABC a)Potential ABC

b) Health ABC b)Experience Rating ABC b)

Behaviour ABC

c) Education ABC c) Professionalism

ABC c) Observation ABC

d) Experience ABC d) Verbal/Written

Expression ABC

e) Skill ABC

f) Confidence ABC

g) Intelligence ABC

Rating ABC Final Rating: Merit Rating:

1. Excellent: ________________

2. Good: ________________

3. Average: ________________


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4. Below Average: ________________

General Remarks:

_____________ _____________ _____________

HRD Executive Concerned Executive Supporting Executive

ORIENTATION AND PLACEMENT

Once employees are "on board" their personal growth and development overtime

become a major concern. Change is a fact of an organizational life and to cope it

effectively.

OBJECTIVES:

The following are the objectives of orientation program of Askari Bank:

1) To make the employees comfortable

2) To get along with the workers

3) To learn them new culture of the organization

ORIENTATION OF NEW EMPLOYEES


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After the selection of successful employees the first step in their introduction to

bank policies, practices and benefits is an orientation program.

The Orientation program in Askari Bank is completed in three phases.

FIRST PHASE:

The first phase is usually conducted by the staff personnel unit. Subjects covered

include products of the bank, employee benefits, salary schedules, safety, probationary

period, timed recording and absence, holidays equal employment opportunity programs,

packing and the grievance procedure.

SECOND PHASE:

The second phase of most organized induction program is performed by the

immediate supervisor. The inductee is introduced to fellow employees, given a tour of the

department, and informed about such details as locker and rest rooms, supply procedures,

hours of work overtime, call in procedures, rest and lunch periods, and lunching facilities.

THIRD PHASE:

The complete in action program will provide for phase three follow up some

week later. The interview, conducted by either the supervisor or a personnel specialist is

concerned with

1) Employee satisfaction with the job and organization.

2) Supervisor satisfaction with the employees.

PLACEMENT:

In Askari Bank Placement means

“Right person for a right job”

A lot of applicants’ abilities are matched with a specific job requirement and then that

person is placed on that position.

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TRAINING AND DEVELOPMENT

After the employee has been received, selected and inducted, he or she must next

be developed to better fit the job and the organization.

INVESTMENT IN THEIR ASSETS:

Askari Bank is a multinational organization in which importance has been given

to training.

The management considers the training as an "Investment in their Asset".

OBJECTIVE:

The objectives of training and development programs are to enhance and improve

the capabilities, efficiency, and productivity of an employee up to the desired standards

for current and future assignments and responsibilities.

We have our own specialized in-house training facilities in the shape of Training

Academies at Rawalpindi and Lahore.

AREAS OF TRAINNING:

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The Training Academies of the Bank are equipped with modern state of the art

facilities and are responsible for imparting multi-functional high quality trainings to all

staff members in the following areas:

s

The employees of Askari Bank are also sent to attend specialized courses by various

banking /non-banking training institutes.

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Business Development

» Customer Service

» Liabilities Management

» Asset Development

» Consumer Finance

Commercial Banking

» General Banking

» Foreign Trade

» Credit Management

Credit Administration

Risk Management

Consumer Banking

Soft Skills

» Effective Communication Skills

» Negotiation Skills

» Team Building

» Selling Skill

» Customer Care etc.

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TRAINING NEEDS ASSESSMENTS:

In Askari Bank there are three level of analysis for determining the needs training

can fulfill.

1. Organization analysis:

Focuses on identifying where within the organization training is needed.

2. Operation analysis:

Attempts to identify the content of training - what an employee must do to

perform competently.

3. Individual Analysis:

Determines how well each employee is performing the tasks that make up his or

her job.

At this level, training needs may be defined in terms of a simple equation.

Desired performance - Actual Performance = Training need.

OPERATIVE TRAINING:

The development of operative calls for specific increased in skills and knowledge

to perform a particular job. In Askari Bank there is primarily two basic methods in use.

1) On The Job Training:

Since most jobs in Askari Bank can be learned in a relatively short period of time,

this method is most widely used.

The type of on the job training implemented in Askari Bank is:

Apprenticeship progra m which include both classroom instructions as well

as on the job training. This type of training is given to the new inductees and usually two

years long.

2) Off the Job Training:

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There are following methods used in Askari Bank for Off the Job training.

i) Staff Training Program:

ii) Special Courses:

iii) Selling and Technical skills training program:

iv) Opportunities For Improvement Of Educational And Technical Qualification:

EVALUATING TRAINING PROGRAMS:

To assess the utility or value of training, in Askari Bank management seek

ensures to four questions.

1. Did change occur?

2. Is the change due to training?

3. Is the change positively related to the achievement of organizational goals?

4. Will similar change occur with new participants in the same training programs?

MEASURES OF CHANGE:

In evaluating training programs, measures of change fall into four categories.

Reaction:

How do participants feel about the training program?

Learning:

To what extent have trainees learned what was taught?

Behavior:

What on the job changes in behavior occur because of attendance at the training

program?

Results:

Is what extent have cost related behavior outcomes or quality improvement, turn

over or accident reduction (productivity) resulted from the training.

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DEVELOPMENT:

We also focus on providing opportunities and facilitating our executives and officers for

developing their managerial and leadership skills through management development

programs for present and future responsibilities.

PERFORMANCE APPRAISEL

Definition:

It is a formal process and structured process through which management

measures, evaluates and assesses job related attitudes behavior and out comes.

Importance of performance appraisal in Askari Bank:

It identifies employees current job i.e. what is he doing?

It will help in identifying in weak and strength points.

It will help an employee to improve his or her performance.

Organization compensation and rewards are all based on performance appraisal.

It motivates the individual to face constructive criticism when there is negative

performance appraisal.

It also helps in assessing in training and development needs.

It helps in documenting the HR policies.

It helps in decision making of retention and termination.

It is important for promotion, transfer and termination.

Method used in Askari Bank for performance appraisal:

A special document is used for performance appraisal in Askari Bank, which is

known as GDD (grade development document)

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Following are the main things, which are included in document.

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Assignments

Job duties

Achievements

Audit objectives

Complaints

These things are discussed in document with regard to performance of employee.

Performance appraisal is done on annually basis.

Some other methods of performance appraisal normally used in

Askari Bank:

Written essay:

Here you write the employee weak and strong points, future potential and past

achievement and area for improvement.

Critical incident method:

Here the appraisal based on those factors which are very effective and the events

where your performance was efficient

Problems with the appraisal:

There is no specific problem is faced in performance appraisal


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JOB EVALUTON

Definition:

It is a process by which the relative worth of various jobs is determined for pay purpose.

It checks the out the amount of employee’s pay or salary to the contribution made by this

job. The job is evaluated according to its importance.

JOB EVALUATION:

The process of job evaluation involves assessing the relative dollar-worth of each job

to the organization to set up internally equitable pay structures. If pay structures are

not equitable, employees will be dissatisfied and quite, or they will not see the

benefits of striving for promotions. To put dollar values on jobs, it is necessary to get

information about different jobs to determine which jobs deserve higher pay than

others.

Job Evaluation.

Askari Bank do job evaluations with the help of

Manager Analysis

Mystery shopping

Quizzes/Snaps

Exit interviews

Curiously calls

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Training

Attitude

Relations with Customer and Employee

Targets

Specifies the relative value of each job in the organization.

HEALTH, SAFETY & WELFARE

SAFETY AWARENESS:

The employees are given a physical environment that is comfortable and healthy. In

summer there is adequate air-conditioning and in winter there is central heating. Since

Askari Bank is handling with services and there is no potential danger in the nature of

its business, hence the only thing that the HR management needs to ensure a healthy

environment.

HEALTH AND SAFETY:

A monthly health and safety meeting held at Askari Bank. Chief Manager

presides this meeting and discuss any accident if happen in preceding month.

Measures in future to avoid these types of accidents.

Working hours = 48 hours per week.

Sick leave = 8 days

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Casual leave = 10 days

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FEATURES OF COMPENSATION SYSTEM AND SOCIAL SERVICES:

* Fixed salary

* Overtime is paid according to Government rules and regulations i.e. double on

holidays.

* Group Insurance scheme is practiced for the compensation of two objectives:

i) Accidents

ii) Injuries

* Employees old age benefit scheme.

* Gratuity scheme.

* Bonus is awarded (Minimum one bonus in a year)

* Monthly Medical Allowance

* Social Security services are obtained for employees.

HEALTH SERVICES:

Following are included in the health services of Askari Bank:

Adequate facilities for emergency

Pre-employment medical examinations

Reasonable first aid to employees for non-occupational illness while on the job.

Information and education services for the personal health of employees

Advice and supervision, where necessary, to maintain proper company sanitation.

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COLLECTIVE BARGAINING

It is a process to determine the terms and conditions of employment and

regulating employment relationship, which utilizes the process of negotiation between

representative of management and employees intending to result in an agreement, which

may be applied across the group of employees.

Terms of Employment: -

The following are four categories of employment in Askari Bank Limited;

1. Regular Employment;

2. Probationer Employment;

3. Contractual Employment;

4. Temporary Employment; and

5. Casual Employment.

Regular Employment: -

These are the employees, which are after the final selection employed for a

regular period. These employees enjoy all the benefits such as annual gratuity fund,

Retirement benefit and after the retirement, pension etc. Usually managers and

supervisors fall in this category.

Probationer Employment: -

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When an employee is selected for some post, he or she undergo for the probation

period of 6 months normally. However for the management cadre, it can be less than 6

months. When the probation period is completed, the employee signs a contract with

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personnel manager.

Contractual Terms: -

There are three major considerations;

Employment is temporary in nature.

The person should be of age 60 or above.

Duration of employment contract is one year and renewable.

When the bank management feels that the person retiring from the job have enough

capabilities and potential to work more in the benefit of the organization, then sign this

type of agreement with the retired employee. Employee form the top to bottom can be

included in this type of employment terms.

Temporary Workers: -

Employees of cadre of workers and supervisors are hired for a period of 6-9 months

according to government rules on temporary terms of employment.

Casual Workers: -

It is concerned with the daily wages workers. When the company requires the workers

urgently, they employ the casual worker to fill the vacancies.

Apprenticeship Training: -

According to government regulation, Banks have to hire the apprentices against the

regular scheme.

Askari Bank is not bound to give regular jobs to the apprentice trainees.

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GRIEVANCES

DEFINITION:

Grievance is any dissatisfaction or feeling of injustice in connection with one’s

employment situation that is brought to the attention of management.

HANDLING CONFLICT SITUATION:

Obvious sources of conflict range from a difference of opinion, problematic working

conditions or unrealistic work expectations through discriminatory behavior, to poor

communication or non-compliance with organization norms or values.

Conflict can be covert and take the form of resentment or irritation. Such conflict is much

harder to detect and easier to ignore.

ADVANTAGES OF MANAGING CONFLICTS:

Advantages of managing conflict situations for the Askari Bank management are:

Better motivated staff; staff energies are directed to work rather than emotions

An organization or staff that presents a positive name to the outside world

Improved team work

Better personal development of individuals

DIFFERENT TYPES OF DISPUTES IN ORGANIZATION:

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There are some signs of disaffection with organization such as strikes,

confrontation leading to lockouts and various forms of withdrawal of cooperation by staff

in furthermore of their claims. And other conflicts such as poor training, turnover, and

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absenteeism. To solve all disputes Askari Bank, management take action which are very

right and then all the employees are happy ad are more committed to their work.

ROLE OF HRD IN SOLVING PROBLEMS:

HRD performs following chief roles.

Supportive behavior on manager's part.

A work group problem solving.

To design job techniques in such a way that gives satisfaction for individual and

opportunity for improving performance.

Letting everyone to have his or her say.

DISCIPLINE

DEFINATION:

Discipline is condition where employees know that what is expected from them

and what will be the consequences of violation.

Purpose of discipline in Askari Bank:

Following are the main purposes of discipline in Askari Bank:

To enforce rules and regulations

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Smooth running of organization.

To ensure efficiency of workers.

To improve work relations.

CAREER DEVELOPMENT

Askari Bank values performances. We have introduced an objective system of

performance evaluation based on Management by Objectives and Behavioral

Competencies. The system allows for mid-year reviews and is 100% open to appraisees.

CAREER PLANNING:

It entails matching an individual’s skills and aspirations with opportunities that are or

may become available in the organization. This matching process requires that those in

charge of career planning know the skill requirements of the various jobs. This allows

them to guide individuals into jobs in which they will succeed and be satisfied.

CAREER DEVELOPMENT IN ASKARI BANK:

Askari Bank Limited is one of the most progressive institutions in the country today. -

Currently, Askari Bank is pursuing an ambitious expansion strategy, which envisions

opening a large number of branches throughout the country.

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Askari Bank, besides being the most rapidly expanding Bank in the market, is also the

choice of many career-focused individuals since it offers some of the following

benefits:

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Stability of Career

Tremendous Growth Opportunities

Extensive Training & Development Program

Motivating Work Environment

Attractive Salary Packages

Nurturing Culture

MANPOWER PLANNING

Askari Bank has a progressive and a dynamic human resource (HR) philosophy.

The Bank believes in transforming its human capital into a key source of competitive

advantage for that they believe in human resource planning.

BASIC PURPOSE:

In Askari Bank basic purpose for which HRD in relation to HRP serves are as

under:

1. Balancing the cost between utilization of plant &

manpower:

This theme involves comparing costs of these two resources in different

combinations and selecting the optimum.

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2. Determining recruitment needs:

It is an essential prerequisite to the process of recruitment. It means that HRD unexpected

shortages, wastage, blockages of unexpected shortages, wastage, blockages in promotion

flow and needless redundancies.

3. Determining training needs:

HRD plans fundamental training programmes for which it is necessary to assess not only

quantity but also quality in terms of the skills required by Askari Bank.

4. Management Development:

HRD provides succession of trained and experienced manager that is essential to

the effectiveness of the organization and this depends on accurate information about

present and future requirements in all management level in Askari Bank.

A system of HRP in Askari Bank:

A system of HRP in Askari Bank has some specific points on which Banking Act.

1. Defining or redefining organizational objectives.

2. Determining and implementing the basic requirement to sound planning.

3. Assessing future requirements to meet objectives.

4. Assessing current resources and availability of resources in the future.

5. Monitoring system and amending as indicated.

REASONS FOR HUMAN RESOURCE PLANNING

Following are specific reasons for which Askari Bank management is carrying on

systematic human resource planning.

1) Future Personnel Needs:

2) Coping with Change:

3) High-Talent Personnel:

4) Strategic Planning:

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5) Equal Employment Opportunity:

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6) Foundation for Personnel Functions:

THE PLANNING PROCESS:

Planning for human resources is tied in with overall Askari Bank long range

planning. The process of planning in itself forces management to think through objectives

of firm and people problem relating to achieving those objectives through planning.

1) GOALS AND PLANS OF ORGANIZATION:

Human resource planning is a part of overall strategic planning for Askari Bank.

A personnel vice-president and his staff cannot make useful plans for period of one or

three or five years, unless they have data on possible corporate expansions new products,

new plants, new markets and so on.

IMPORTANT STEPS:

Important steps involved in overall planning for Askari Bank are:

1. To analyze and evaluate environmental influence.

a) Political trends and legislation which will have impact upon the business.

b) Social trends in leisure time, consumer tastes, work values and retirement.

c) Technological advances affecting enterprise.

2. To identify the values and aspirations of Askari Bank's directors and executive.

3. To identify and evaluate the internal strengths and weaknesses of the enterprise.

4. To create specific enterprise objectives and plans for achieving these objectives.

5. To evaluate progress toward implementation of plans and take corrective action

where necessary.

PLANNING PERIOD:

Askari Bank's planning period is from 3 years to 5 years. Period for three year is

short range and of five years is long-range period.

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2) CURRENT HUMAN RESOURCE SITUATION:

The second phase of the planning process for Askari Bank is the preparation of an

inventory of personnel presently within the organization. A skill inventory consists of up-

to date information regarding the qualifications of the selected categories of personnel.

IMPORTANT USES OF SKILL INVENTORY:

The skills inventory has several important uses.

1) After preparing human resource forecast, Askari Bank compare, the number,

types and skills specified by forecast with the present baseline or current position

given by skill inventories to ascertain what skills must be developed from present

personnel via training, up grading and special development efforts.

2. Other use is to identify talent within the organization for specific job opening.

3. An up to date skill inventory is valuable for the preparation of rosters of qualified

technical and managerial personnel.

COMPUTERIZED SYSTEM:

Askari Bank along with manually prepared Human Resource Data cards also use

computerized system to handle data. The computer can readily provide a printout of the

age distribution of all mangers by level, job, and department.

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TRANSFERS, PROMOTIONS AND SEPARATION

TRANSFERS:

The Headquarters of all employees as mentioned in the letter of appointment is

subject to change at the discretion of the Management in which event an employee will

be required to work anywhere in Pakistan as Headquarters with no extra remuneration

and /or allowance or compensation whatsoever in the salary structure. In case of a

transfer, an employee will be entitled to the following transfer benefits:

I) Air-conditioned Coach train fare or air passage as per entitlement for himself

and his immediate family to the place of transfer will be provided.

II) 14 days upcountry allowance (Boarding & Lodging allowance) as per entitlement

in the traveling scheme will be provided.

For single employees, reimbursement is at a flat rate. The amount allowed will be

specified in the transfer letter served by the Management.

In cases where the Management has initiated the move, it can at its discretion,

allow a higher ceiling/additional benefits.

Transfers are also being done within the city and outside the city. The purpose is

to provide employees a better chance to excel in their area at different locations and in

different bank branches. Job rotation is also being done. Traveling and transfer

allowances are also given so that employees get settled as soon as they join the duty.

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Promotion: -

Promotions are an integral part of the job. Every employee is looking forward

towards its career path. In Askari Bank the promotions are given on the basis of superior

performances. The promotion occurs both in the ranks and in the salary structure.

SEPARATION OF SERVICE:

a) An employee's service can be terminated on three months notice in case of a

manager or level above that and one month's notice in case of a junior Officer,

Senior Officer and Assistant Manager or pay in lieu thereof

b) If in the course of an employee's service, the employee suffers from any serious

ailment or permanent disability of any kind which in the opinion of the

management may or is likely to interfere with the due performance of duties, the

employee's service may be terminated at the discretion of the management by

giving notice as mentioned above, or payment in lieu thereof as the bank may

deem fit.

SALARY AND INCENTIVES

Salary: -

Askari Bank tries it best to keep the staff fully satisfied and provide them with

perfect career paths. The employees are paid well so that they can maintain reasonably

decent living and are motivated to work as bank’s employees.

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The employee compensation at Askari Bank caters both

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“Direct financial payments”

“ Indirect financial payments”.

The pay scale is determined on the commendable factors and on the decision-making

ability for the managers and executives.

Allowances:

Which are given to employees other than the basic pay, are as follows:

House Rent Allowance.

Utilities Allowance

Technical allowance.

Traveling Allowance and Daily allowance.

Fringe Benefits: -

In Askari Bank, following benefits are offered to the employees.

Medical Facility.

Facilities at residence.

Grants of incentives for improving qualification every year.

Cash prizes.

Increments (Annual increase in pay)

Bonuses.

Indirect Compensations: -

Askari Bank offers three types of indirect compensation to its workers.

Employee insurance scheme

Providing funds

Gratuity scheme.

department shall initiate the case to P & A.

Pay Plans and Incentives at Askari: -

Establishing Pay Rates: -


INTERNSHIP REPORT

For establishing the pay rates, first step is to conduct the salary surveys.

The Salary Surveys: -

For the purpose of conducting salary survey, Askari Bank is taking help of The

Ferguson firm, which conducts surveys and researches in the field of marketing and

finance. Moreover, the bank’s managers are well informed about the pay and salary

structure for the candidates to be hired in case of hiring. This external survey is

conducted once in two years. Complete documented information is being delivered to the

bank so that the pay scales do not vary from the market rates.

Job Evaluation: -

Evaluation of the job performance is done yearly. The purpose is to see and

identify the employees who have done their respective work well through out the year

considered and who have not been able to show good performances.

. Pay Plan at Askari: -

Pay plans at Askari are established on the basis of job rating. All jobs are ranked

from top to bottom, on the basis of commendable factors. Employee with higher rank gets

higher salaries and incentives. Askari Bank has its own criteria for establishing pay rates.

. HR manager believes that competency and skill based pay can increase

motivation and employee commitment. But more often employees are paid on the basis

of their jobs. Their pay is based on job or skills.

Skill Based Pay: -

Skill based pay is given to employees for the recognition of their knowledge,

decision making, problem solving abilities and competency of efficient and effective

working in their jobs.

Variable Pay: -

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Variable pay is a group incentive plan that ties pay to some measure of an

organization’s overall profitability. When the bank performs or the branch of the bank

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performs spectacularly in terms of profitability for a particular year, the whole branch is

given a variable pay.

Compensation Plan: -

Compensation plan for Askari employees involves following things;

Basic Salary;

Bonuses;

Allowances;

Reimbursements;

Short term Incentives;

Long term Incentives.

Basic salary involves fixed compensation paid regularly. Bonus is given two times in

a year to managers and professional employees, percentage of which lies from 80% to

100%. Allowances and reimbursements are short-term incentives.

Askari Bank has also several incentive plans, including individual performance

awards and bonuses, team awards.

Incentives for the Employees at Askari: -

Employees at Askari are paid basic salary as well as some sort of short and long-

term incentives. Individual incentive programs are launched at Askari to give income

over and above basic pay to individual employees who meet specific individual

performance standards.

Incentives for Managers and Executives: -

Managers and executives play a central role in influencing divisional and

corporate profitability. Askari Bank Limited puts considerable attention towards their

rewards. Most managers get short bonuses and long-term incentives in addition to salary.

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Askari Bank offers stock option to its managers as the long-term incentives. The

purpose of stock option is to motivate and reward management of the bank for long term

corporate growth, prosperity and shareholder value.

Bonus: -

Along with the basic salary, bonuses are given to managers two times in a year.

The percentage of bonus is 80% and sometimes 100% to their pay.

Allowances: -

House rent and Utility allowance are also given to managers. Managers are paid

42.5% and 10% of their incremental pay as house rent and utilities allowance

respectively. 10% of the salary is given to as medical facility, and for the general utilities

like telephone 10% of the salary is also being given to the utilities. So the overall salary

comes to a higher level including all these cash and other benefits.

Reimbursements: -

Reimbursements for medical, telephone and petrol expenses are also given to

managers and executives.

Incentives for middle and lower level Employees: -

Middle level employees and professionals are also paid bonus, allowances, and

reimbursements along with their basic pay. Lower level employees like peon, driver, and

technicians are paid dearness allowance, house rent allowance and medical

allowance along with their basic salary. The incremental stages for these employees are

+30, where as others have +25 stages in their jobs.

Ensuring Accuracy & Authorization: -

The following payments shall be made in the routine, with such additional

payments as the management may direct from time to time:

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Medical Reimbursement: -

Medical reimbursements are made to staff and executives of the bank according to

the bills presented by them. What to be done and how to reimburse the medical

expenditure is shown in the required action section.

Claims for Traveling allowance and Daily allowance: -(TA,DA)

Allowances are given to the employees for the traveling of the executives from

one city to another or abroad, all the expenditure is on the bank, daily expenditure can

also be recovered through claims.

Fuel and Lubricants: -

The bank also provides free traveling facilities to its employees by paying amount

against the consumption of fuel dependent upon their respective ranks. It is of two types;

1. Reimbursement to executives;

2. Official Expenditure.

Office Expenditure: -

PTCL connections.

Corporate connections

Mobile phones and connections

Reimbursements to executives.

Salary Disbursement: -

Payments to regular staff

Payments to contractual staff

Arrears payments

Bonus payments.

Insurance: -

Life insurance and car insurance are some of the benefits, which are also given to the

employees and more precisely to the managers and to the executives.

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BENEFITS AND SERVICES OF ASKARI BANK

LEAVE: ENTITLEMENTS & RULES

CONFIRMED EMPLOYEES

All confirmed employees are entitled to leave according to the rules and

regulations stated below:

i. CASUAL LEAVE

Ten days with pay in a calendar year, at the discretion of the Management.

Casual leave is meant to meet urgent and/or unforeseen circumstances. Prior

approval of the Management has to be obtained whenever possible, stating the reason for

leave.

a) Casual leave may be allowed to be availed at one time for a maximum of 3 days

and shall not normally be combined with any other leave, holidays and /or public

holidays.

b) Causal leave shall not be accumulated and carried forward beyond a calendar

year.

c) Casual leave may be allowed in continuation of Sick Leave in cases where the

Doctor recommends sick leave is exhausted and further leave.

ii. SICK LEAVE

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The entitlement is 14 calendar days in a year. Sick leave if not availed during a

calendar year may be carried forward but the total accumulation of Sick leave shall not

exceed 28 days at any time.

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a) Any application for sick Leave which exceeds 3 days should be supported by a

medical certificate from a registered practitioner.

b) The management may at its discretion have any employee examined by the bank

Doctor and the advice of the Doctor shall be final, for the purpose of granting

leave to the employee.

c) If sick Leave is availed on Thursday and also on the following Sunday, such leave

will be counted for four days and a medical Certificate should accompany the

leave application.

d) In case of prolonged illness, where the required leave exceeds the entitlement, the

adjustment of leave beyond entitlement may be made against C/L or P/L, or be

granted as a special sick Leave at the discretion of the Management.

iii. PRIVILEGE LEAVE

The P/L entitlement for all employees is as follow:

For the 1st completed year of service 3 weeks (21 Calendar days).

For 2nd to 5th completed year of service or part thereof 4 weeks (28 Calendar

days).

For 6th year onwards- 5 weeks (35 Calendar days)

a) An application for P/L shall be submitted to the Human Resource Division duly

recommended by the concerned Superior, a minimum of 14 days before

commencement of leave.

b) A minimum of 2 weeks P/L pertaining to one year has to be availed in order to

receive Leave fare Assistance for the year. According to the profit of the bank, the

Management could allow a maximum of 1 month’s basic salary as LFA subject to

approval. However, as minimum LFA, a fixed amount will be paid.

c) Leave will always be adjusted first against any remaining balance of a previous

year before being adjusted against the current year's entitlement.

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d) Prefix and suffix of weekly/gazette/other holidays to Privilege Leave will be

allowed and as such will not be counted as Privilege Leave. However, should any

holiday fall during the leave, it will be counted as Privilege Leave.

e) The management reserves the right to refuse any leave if the exigencies of

business so require.

iv. MATERNITY LEAVE

Maternity Leave will be allowed to the concerned employee for a period of 12

weeks (85 Calendar days) for each case.

Application for the period of leave should be submitted well in advance.

PROBATIONARY EMPLOYEES

During the probationary period of any employee there will be no entitlement to

any kind of leave, be it Casual Leave, Sick Leave, Privilege Leave or Maternity Leave.

Sick Leave if required, will be approved as a very special case only if supported by a

Medical Certificate from a registered medical practitioner.

Any other leave if availed, will be treated as without pay.

However, on confirmation if the employee so desires, the leave may be adjusted

against his entitlement and the deducted amount refunded.

LOAN POLICY

The bank guarantees loans for car and scooter/ motorcycle.

1. Application under the Loan Policy, which is duly recommended by the concerned

Division/Department Head, should be forwarded to Human Resource Division for

processing. Applications will be approved subject to availability of Funds at the

concerned Banks.

2. As per the Bank's Policy for financing loans, the vehicle should be jointly

registered in the name of the Bank and employee.

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3. All employees will also have to take out a comprehensive insurance policy for the

vehicle in order to avoid monetary loss in case of accidents.

These are normally given to employees involved in actual sales only.

CAR LOAN FACILITY

The bank has decided to adopt a policy for granting bank guaranteed loans for

purchase of a car to all assistant managers irrespective of whether they are involved in

sales.

In case a mileage is sanctioned the pick & drop facility presently enjoyed at the Head

Office and regional or zonal office will be withdrawn.

This fund will be an interest bearing fund and the rate of interest will be 12% per

annum.

TRAVELING SCHEME:

All official arrangements for employees whether at Karachi or upcountry will be

made after prior approval.

The concerned employee keeping in mind, the entitlement and the length of stay planned

may also take a traveling advance. For this purpose an advance form may be filled in,

recommended by the Division/Department Head and forwarded to Human Resource

Division for approval.

Breakup of Boarding Allowance:

Breakup 15%, Lunch and dinner 30%, each Misc. 25%.

a) 100% Boarding will be allowed in case if absence from the Headquarters for 12

hours or more.

b) 50% boarding will be allowed in case of absence from the Headquarters for 6 to

12 hours.

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FOREIGN TRAVEL

In case of foreign travel, rules and regulations of the State Bank of Pakistan will

apply. Claims can be made according to the Daily allowance prescribed for different

countries by our principals.

The concerned Division regarding any planned visit abroad by any employee

should inform the administration division and Human Resource Division. The bank will

make all official travel arrangements and a traveling advance may also be taken and

substantiated as mentioned above.

MATERNITY

90% of maternity bill will be reimbursed, up to a maximum expenses limit under

this head or one basic salary, which ever is HOSPITALIZATION

In those cases where admittance to hospital is required total hospitalization

expenses, which include Doctor's fees, X-Ray charges, Medicines, Laboratory charges

etc. will be reimbursed by the bank at its description against proper receipts. No payment

will be made for nursing charges, diet charges or any non-medical items.

INSURANCE PLAN

The bank has made arrangements to provide adequate 24 hour insurance coverage

of all its employees in case of death or permanent disability while at work or traveling or

at home.

i. PERSONAL ACCIDENT POLICY

In the case of death of an injured employee, the bank will pay the amount received from

the insurance bank to the employees’ nominated beneficiary.

The benefits of this plan with the limits of Compensation are as follows:

1. Death only 100% of sum insured

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GENERAL

The bank reserves the right to refer any person to the bank Doctor as and when

deemed necessary to scrutinize all medical bills and to reject payment of factious bills, if

any.

Any misuse of the medical scheme by an eligible employee would be liable to

strict disciplinary action.

Medical Expenses

Under this plan employees are covered for the medical expenses incurred on

account of hospitalization and treatment, resulting due to accidents only, for a maximum

period of 52 weeks after the date of the accident.

Under this policy it is necessary to report an accident to the insurance bank

immediately followed by the claim forms which are filled in to substantiate the claim. All

employees must therefore report any such accident immediately to their

Division/Department, with a copy to H.R.D. within 24 hours.

ii. GROUP LIFE INSURANCE POLICY

All confirmed employees are also covered under this policy. If an employee dies,

while insured under this policy, the insurance bank will subject to provisions of the

policy, immediately upon receipt of due proof in writhing of the death of the employee,

pay the amount for which the employee is insured, which will be paid by the bank on

receipt from the insurance bank to the nominated beneficiary. This is in addition to the

accident insurance.

2. Permanent disablement:

i) Permanent total loss 100% of sum insured of both eyes or of two limbs.

ii) Permanent total loss 75% of sum insured of one eye and of one limbs.

iii) Permanent total loss 50% of sum insured of one eye of one limb.

iv) Permanent total 10% of sum insured of the finger or thumb.

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HR AUDIT

DEFINATION:

HR Audit is related to examine that how HR Managers are performing their HR

responsibilities.

APPROACHES TO HR AUDIT:

There are five types of HR Audit that are

Comparison Approach

Outside Authority Approach

Statistical Approach

Compliance Approach

MBO Approach

Askari Bank used comparison approach for audit purpose.

TOOLS FOR HR AUDIT:

The following are tools of HR Audit.

Interviews

Surveys/ Questionnaires

Historical Analysis

Grievance Audit

Compensation Audit

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Askari Bank used each tool of HR Audit for audit purpose but mostly used that tool

which suits to the environment of their organization.

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SUGGESTIONS BY EMPLOYEES

Suggestions are always encouraged but no extra award or recognition is given to

the employees if the suggestion or a creative idea benefits the organization in terms of

reduced cost, increase in profit etc.

CONCLUSION

In this competitive environment, where Askari Bank is facing tough competition

with other multi national companies, HRD has been successful in retaining its employees

by offering a clearly defined reward and incentive system.

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BALANCE SHEET AS ON DEC.31 2006 2006 2005

ASSETS:

Cash and balances with treasury bank 8,762,866 6,678,026

Balances with other banks 4,847,899 2,650,166

Lending to financial institutions 2,324,839 5,770,842

Investments 17,239,157 22,104,425

Advances 69,938,041 44,777,538

Other assets 1,459,716 1,425,986

Operating fixed assets 2,595,023 1,979,919

107,167,541 85,386,902

LIABILITIES:

Bills payable 1,227,093 973,703

Borrowing from financial institution 13,781,555 15,903,055

Deposits and other accounts 83,381,795 61,656,607

Sub-ordinated loans 1,000,000

Liabilities against assets subject to finance lease 14,159 37,350

Other liabilities 1,282,981 962,592

Deferred Tax Liabilities 526,865 806,753

101,151,448 80,340,060

Net Assets 6,016,093 5,046,842

Represented by:

Head office capital accounts 1,255,848 1,141,680

Capital reserve 4,317,301 2,759,599

Un remitted profits

5,573,149 3,901,279

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INTERNSHIP REPORT

Surplus on revaluation of securities-net of tax 442,944 1,145,563

6,016,093 5,046,842

ASKARI COMMERCIAL BANK LIMITED(Rupees in thousand)

Mark-up/return / interest earned 4,487,206 4,073,715Mark-up/return / interest expensed 1,117,206 1,379,609Net mark-up / interest income 3,370,000 2,694,106Provision against non performing loans and advances 277,398 308,528Provision for diminution in the value of investments 38,066 -Bad debts written off directly 7 -

315,471 308,528Net mark-up / interest income after provisions 3,054,529 2,385,578NON MARK- UP/ INTEREST INCOMEFee, commission and brokerage income 649,988 524,775Dividend income 26,318 37,658Income from dealing foreign currencies 180,992 112,808Other income 776,230 278,512Total non mark-up / interest income 1,633,528 953,753

4,688,057 3,339,331NON MARK-UP / INTEREST INCOMEAdministrative expense 1,845,179 1,436,304Other provisions / write offs - -Other charges 138 1,227Total non mark-up / interest expense 1,845,317 1,437,531

2,842,740 1,901,800Extra ordinary unusual items - -PROFIT BEFORE TAXATION 2,842,740 1,901,800Taxation – Current 876,089 873,639

Prior years - -Deferred 43,611 (74,904)

919,700 798,735Profit after Taxation 1,923,040 1,103,065Inappropriate profit brought forward - -Profit available for appropriation 1,923,040 1,103,065APPROPRIATIONS:Transfer to:Statutory reserves 384,608 220,613Capital reserves (reserves for the issue of bonus shares) 251,170 114,168

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INTERNSHIP REPORT

Revenues Reserves 1,036,092 539,948Proposed cash dividend 251,170 228,336

1,923,040 1,103,065Un-appropriated profit carried forward - -Basic earning per share - (Rupees) 15.31 8.78

PROFIT AND LOSS ACCOUNT

FOR THE YEAR ENDED 31ST DECEMBER, 2006

TREND ANALYSIS

(Horizontal Analysis)

FINANCIAL SUMMARY

Trend Analysis, also called Horizontal Analysis of the financial statements is one

directional- upward or downward analysis and involves the computation of the

percentage relationship that each statement item bears to the same item in the base year

139


2002 2003 2004 2005 2006Profitability (Rs in million)

Total Income 3840 5047 5704 5028 6121

Interest income 3213 4251 4858 4074 4487

Interest exp 2274 2902 3017 1380 1117

Fee, comm.

Exch.Income506 677 299 638 831

Other income 122 119 247 317 802

Spread 939 1349 1841 2694 3370

Operating expenses 680 854 1093 1438 1845

Operating Profit 886 1291 1595 2210 3158

Non performing

assets134 283 351 308 315

Profit b/f tax 752 1008 1244 1902 2843

Taxation 436 458 557 799 920

Profit after taxation 316 551 687 1103 1923

INTERNSHIP REPORT

The operating expenses of the bank has been increased with sharp margin, the ACBL is

newly born bank of only 14 years old and is growing rapidly so, we can say that the

reason behind the rapid increase of its operating expenses may be the expansion of

business. In order to get handsome profit the expenses are necessary as it is shown by the

fact that if the bank’s operating expenses have been increased then, there is also an

increase in the profit before income tax and profit after income tax.

SHAREHOLDER’S FUNDS

TREND ANALYSIS

140


2002 2003 2004 2005 2006

Shareholder’s

Funds(Rs in million)

Total share holders

fund 2155 2579 4173 5047 6016

Share capital 986 1036 1087 1142 1256

Reserves 1229 1521 1940 2760 4317

Surplus on ROA (60) 22 1146 1145 443

2002 2003 2004 2005 2006

Shareholder’s

Funds%AGE

Total share holders

fund 100 119.6 193.6 234.2 279.2

Share capital 100 105.0 110.2 115.8 127.4

Reserves 100 123.7 157.8 224.6 351.2

INTERNSHIP REPORT

The shareholder’s fund of the bank is continuously increasing, as the bank is running on

profit, therefore, the business take interest in this project and wish to participate in it. The

bank’s share capital and reserves are also increasing with the expansion of business.

LIABILITIES

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2002 2003 2004 2005 2006

Liabilities (Rs. in million)

Customers

deposits30360 41200 51732 61657 83319

Refinance

borrowings2882 3222 3392 7329 9777

Sub-ordinated

loans- - - - 1000

Other liabilities 3058 3980 11016 11354 7055

INTERNSHIP REPORT

TREND ANALYSIS

New if we analyze the liability side of the bank we see that the bank’s deposits are going

on increasing since its birth which is a very healthy sign for the bank as the bank’s basic

business is to deal in money. The increase in deposits show that the people have interest

in the bank and deposit their fund in the bank without any hesitation. However it has not

been mentioned here that how many of the deposit are current and how many of them

have fixed nature but we can say that it is a very important source of the bank to earn

profit. As the banks usually earn through interest or mark ups imposed on the deposits

they keep with themselves.

ASSETS

2002 2003 2004 2006 2007

Assets (Rs. in million)

Advances 17893 23292 30035 44778 69938

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2002 2003 2004 2005 2006

Liabilities PERCENTAGE

Customers

deposits100 135.7 170.4 203.0 274.4

Refinance

borrowings100 111.7 117.7 254.3 340.0

Other liabilities 100 130.1 360.2 371.3 230.7

INTERNSHIP REPORT

Investments 8651 11706 26737 22104 17239

Cash, short funds and

statutory deposits with

SBP

10056 13436 10061 15099 15936

Operating fixed assets 641 723 1663 1980 2595

Other assets 1213 1824 1817 1426 1460

Total assets 38454 50980 70313 85387 107168

Now we will discuss the assets side of the bank. The liquidity position is essentially

important for the bank, as it must have all the time sufficient funds to meet the demands

for the money that may be made on it. It is the protection against the risk that losses may

develop if banks are forced to sell or liquidate creditworthy assets in an adverse market.

The current liquidity position of the bank has improved as indicated by the percentages

shown in the table below.

TREND ANALYSIS

2002 2003 2004 2005 2006

Assets (Rs. in million)

Advances 100 130.2 167.8 250.2 390.9

Investments 100 135.3 309.1 255.5 199.3



SBP

100 133.6 100.0 150.1 158.4

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Operating fixed assets 100 112.7 259.4 308.9 404.8

Other assets 100 150.3 149.8 117.5 120.4

Total assets 100 132.5 182.8 222.0 278.7

An upward trend in deposits accompanied by a upward trend in advances too, and mark

up revenues means in effective credit policies, efficient credit collection resulting in

healthy financial development.

The property plant and equipment is the kind of asset, which is required by the service

business only to increase its network therefore the ratio of the bank’s plant and

equipments as compared with the other important particulars of the assets is high. But

here one thing should be mentioned that it is the policy of the bank not to start the

business on the rented premises. The bank has mostly started business on its own

premises. The other assets of the bank are also showing a good amount that means that

bank is in position to earn money from every available source.

BUSINESS TRANSACTED

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2002 2003 2004 2005 2006

Business

Transacted (Rs. In billion)

Imports 26.2 32.0 40.2 48.7 75.2

Exports 30.6 38.8 47.3 56.8 70.1

Guarantees 4.8 6.2 14.2 14.4 25.3

INTERNSHIP REPORT

TREND ANALYSIS

Now we will discuss the business transacted opt the bank in terms of import and exports

we see that imports and exports through ACBL are continuously on increase which is a

very health sign for the banking business as the banks earn major portion of their profit

through imports and exports. It shows the efficiency of the credit department. The

reasons for this improvement may be

Careful scrutinizing of all the documents

Intelligent corresponding with the customer

True 7 C’s analysis of the customer such as his business and moral character

This improvement in imports and exports is extremely large if we compare it with the

figures of 2000.

COMMON SIZE ANALYSIS

(VERTICAL ANALYSIS)

COMMON SIZE ANALYSIS

An analysis of percentage financial statements where all balance sheet items are divided

by total assets and all income statements items are divided by net sales or revenues.

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2002 2003 2004 2005 2006

Business

Transacted (PERCENTAGE)

Imports 100 122.1 153.4 185.8 287.0

Exports 100 126.8 154.5 185.6 229.1

Guarantees 100 129.2 295.8 300.0 527.1

INTERNSHIP REPORT

In addition to other financial ratios over time, it is often useful to express balance sheet

items and income statement items as percentages. Common –size Analysis, also called

Vertical Analysis, or Component Percentage, or 100 percent Statements as each

statement is reduced to the total of 100 and each individual item is stated as a percentage

of the total of 100.

INTERPRETATION

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2002 2003 2004 2005 2006

Profitability (Vertical Analysis)

Total Income 100 100 100 100 100

Interest income 83.6 84.2 85.2 81.0 73.3

Interest exp 59.2 57.5 52.9 27.4 18.2

Fee, comm.

Exch.Income13.2 13.4 5.24 12.7 13.6

Other income 3.18 3.94 4.33 6.30 13.1

Spread 24.4 26.7 32.3 53.6 55.0

Operating expenses 17.7 16.9 19.2 28.6 30.1

Operating Profit 23.1 25.6 27.9 43.9 51.6

Non performing assets 3.49 5.61 6.15 6.12 5.15

Profit b/f tax 19.6 19.9 21.8 37.8 46.4

Taxation 11.3 9.07 9.76 15.9 15.0

Profit after taxation 8.23 10.9 12.0 21.9 31.4

INTERNSHIP REPORT

The most important component of any profit and loss account of a banking concern is its

mark up expenses it has to pay for servicing the depositors. The foregoing data shows

that the markup expenses absorb about 85% of the revenues (a favorable position). This

shows that the bank has been successful in

Selling larger volumes of higher profit items.

Increasing economy in procurement

Adopting other effective and more profitable deposit raising policies at a lower

lost.

The interest expense of the ACBL is 18.2% of the total revenue of the bank in 2004,

which is remarkable as the bank is earning about 85% of the revenue as interest income.

We have handsome margin between the interest income and the interest expense of the

bank. The data shows that the bank’s other income %age is not as much high rather it is

very low which shows that the bank does not rely on other sources for its profit but it

earns major portion of its income through its basic business.

The bank seems to have increased control over its operating expenses, i.e. non-mark up

expenses as these now absorb only 30% on average of the total revenues, that is a very

healthy sign for the bank. In the net shell, it would not be wrong to say that the bank has

improved its financial position and operating efficiency over the last years.

The profit after tax is showing about 31.4% of the total revenues of the bank although the

margin of profit is not too much high but it is shown from the data that the bank is going

on increasing its profit after tax over the year.

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LIABILITIES AND OWNER’S EQUITY

(Vertical Analysis)

INTERPRETATION

The liabilities and owner’s equity are side components of the bank showing the

relationship as compared with the total of the liabilities and owner’s equity. The bank’s

shareholders fund is showing percentage more than the share capital, which shows that

the bank own capital is lees than the shareholders capital. However it is also evident from

the data that the %age is decreasing of the overall %age of the share capital over the last


2002 2003 2004 2005 2006

(Vertical Analysis)

Total share holders

fund 5.29 4.82 5.69 5.65 5.38

Share capital 2.42 1.93 1.48 1.28 1.12

Reserves 3.02 2.84 2.64 3.09 3.86

Customers deposits 74.6 76.9 70.5 69.0 74.5

Refinance

borrowings7.08 6.02 4.62 8.21 8.74

Other liabilities 7.52 7.43 15.0 12.7 6.31

Total 100 100 100 100 100

INTERNSHIP REPORT

two or three years. But it is also seen that the share capital %age as compared to the total

liabilities of the bank has also been decreased. So we can say that the same conditions are

prevailing regarding the share capital and the shareholders fund.

Among the assets of the bank the highest %age is of the customer deposits. The bank’s

management seems to have adopted a very effective marketing policy, as the deposits of

the bank constitute about 75% of the total assets of the bank. In the last year, this figure

stood at 69% of the total resource. This shows the high level of products and associated

services provided by the bank.

ASSETS

(Vertical Analysis)

2002 2003 2004 2005 2006

Assets (Vertical Analysis)

Advances 46.5 45.7 42.7 52.4 65.2

Investments 22.4 22.9 38.0 25.8 16.1



SBP

26.1 26.3 14.3 17.6 14.8

Operating fixed assets 1.67 1.42 2.36 2.32 2.42

Other assets 3.15 3.57 2.58 1.67 1.36

Total assets 100 100 100 100 100

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INTERPRETATION

On one hand Advances have also increased from 52% in the previous year to 65% in the

current year which may indicate that the bank utilize the funds raised in the other

activities primarily lending to the financial institutions as it is the most secure source of

financing available in the economy.

Cash, short term funds and statutory deposits with SBP are also increasing. The property

plant and equipment of the bank is showing a little portion of the bank’s total assets.

In the last the bank is over all showing a good financial health and is going on healthy

tracks in near future it has no risk of bankruptcy. Although the bank is showing good

results but we can’t say that these are the best conditions prevailing in the bank as we are

unaware of the market conditions and can’t compare it with other banks.

RATIO ANALYSIS

PROFITABILITY RATIOS

LIQUIDITY RATIOS

PROFITABILITY RATIOS

The continued viability of any bank depends on its ability to earn an appropriate return on

its assets and capital. Good earning performance enables a bank to fund its operations,

remain competitive in the market and increase or decrease in market funds.

RETURN ON CAPITAL FUND

Formula = Net mark up Received

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Capital Funds

2006 = 3370000 = 60.47%

5573149

2005 = 2694106 = 69.06%

3901279

2004 = 1638357 = 54.13%

3026550

INTERPRETATION

This ratio relates the net profits to the amount of capital funds that have been employed in

making that profit.

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The above given ratios suggest that the profitability of the bank has increased very in the

year 2003 indicating more profitable operations of the bank. While discussing the trend

analysis, we mentioned that the mark up charges have increased in some proportion but

the mark up earned by the bank resulting increase in the profit available on the capital

funds employed. This ratio showing a very good financial position of the bank.

RETURN ON INVESTMENT

Formula = Net income after taxes

Total Assets

2006 = 3370000 = 1.79%

5573149

2005 = 1103065 = 1.29%

85386902

2004 = 686994 = 0.98%

70313073

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INTERPRETATION

This ratio indicates the profit earned by the bank on the resources employed. As far as

ACBL is concerned, we observe an increase in the utilization of the resources. It has

increased to 1.29 % in the year 2003 from 0.98 % in the year 2002, It has increased to

1.79 % in the year 2004 from 1.29 % in the year 2003, the reason behind the slight

increase in the increase of profit may be due to the efforts of the management.

RETURN ON RISK ASSETS

Formula = Net income after taxes

Total risk assets

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2006 = 1923040 = 2.75%

69938041

2005 = 1103065 = 2.46%

44777538

2004 = 550051 = 2.36%

23291367

INTERPRETATION

This ratio, with some fluctuation in 2003 came up from 2.46% in 2003 to2.75 % in the

year 2004. It is indicating active utilization in the form of advances. The bank is finding it

difficult to keep the level of its expenses less in proportion to the advances it has

disbursed. Lending, no doubt is the core function of a banking concern. But the bank

should find out effective ways of credit provisions affecting less on profitability of the

operations. Non-mark up revenues should also be increased in the face of lower credit

disbursements resulting in more.

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RETURN ON DEPOSITS

Formula = Net income before taxes

Total Deposits

2004 = 2842740 = 3.41%

83318795

2005 = 1901800 = 3.08%

61657000

2006 = 1244022 = 2.47%

41200166

INTERPRETATION

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This ratio indicates to what extent deposits which represent funds mobilization on the

part of the bank contribute towards income generation. Although the other ratios

regarding the profitability are showing satisfactory position of the bank but still bank

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need to increase its utilization of resources in order to increase its profitability because

the banks have to pay heavy taxes on their profit.

OPERATING EXPENSES TO NET REVENUE

Formula = Operating Expenses

Net Revenue

(Rs. In million)

2006 = 1845 = 30.1%

6121

2005 = 1438 = 28.6%

5028

2004 = 1093 = 19.2%

5704

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INTERPRETATION

This ratio signifies the proportion of the revenues that is used to cover the operating

expenses of the bank. The ratios calculated above gives a good picture of the bank’s

operations. This ratio is increasing from year 2002 to 2004 and giving a bright picture of

the profits for the bank. With respect to the banking expansions this ratio is showing a

very good picture as we know the expansions required lot of expansions, although the

operating expenses of the bank are increasing as we have seen in the trend ratio but their

proportion of increase is not alarming.

In short, the bank in an attempt to maintain at a good level of liquidity, has a low level of

profitability but there is a continuous push in the profits and there are chances that the

bank will reach at a point of high liquidity and profitability.

LIQUIDITY RATIOS

The liquidity position of a bank is like a reservoir. It may be adequate, although nearly

depleted, just before the start of the rainy season. Or it may be inadequate, although three

quarters full just before the summer drought.

Liquidity can be defined as:

“The bank’s ability not only to meet possible deposit withdrawals but also to provide for

the legitimate needs of the economy as well”

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ADVANCES TO DEPOSITS RATIO

Formula = Advances

Total Deposits

2006 = 69938041 = 83.9%

83318795

2005 = 44778000 = 58.6%

61657000

2004 = 30035484 = 72.62%

51731506

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INTERPRETATION

It demonstrate the degree to which bank has already used up its available resources to

accommodate the credit needs of its customers.

This ratio, a comparison of funds generation and its funds mobilization, indicates the total

loans sanctioned by the bank in relation to total amount of money deposited with the

bank stands at 83.9% compared with the last year figure of 58.6%. This shows that the

bank has greater potential to advance additional loans. Total loan able funds roughly

measured by the deposits are sufficient to enable the bank to make additional loans

without recourse to more or less continuous borrowing. At present, the bank has got a

relatively small amount of advances as compared with its deposits raised. One reason for

fewer advances is the cautious and selective approach on the part of the management

while deciding upon credit proposals.s

DUE FROM BANKS TO TOTAL ASSETS

Formula = Due from banks

Total Assets

2006 = 2324839 = 2.17%

107167541

2005 = 5770842 = 6.75%

85386902

2004 = 3414470 = 4.86%

70313073

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INTERPRETATION

It is an indication of ACBL’s funds management policies. The funds allocation to the

financial institutions has increased to a great extent despite the fact that still it holds a

small proportion relevant to the total resources raised by the bank. It is a positive

indicator in the sense that the financing to the banks are the most secure ways of lending.

Considering the economic conditions of the country, it seems to be the best alternative

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available to the bank. In the current year this ratio has been reduced to the little extent.

Although it is declining but the situation might not be alarming.

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DUE FROM BANKS TO DUE TO BANKS

Formula = Due from banks

Due to Banks

2006 = 2324839 = 16.87%

13781555

2005 = 5770842 = 36.29%

15903055

2004 = 3414470 = 29.79%

11460394

INTERPRETATION

It shows the relationship between what the bank owes from other banks and what is due

to it. An unfavorable condition has been observed in this ratio in the current year

showing the fact that the bank has to seek fewer funds from the financial institutions

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owing to the strong liquid financial position. This ratio is going on increasing in last year

but decreasing in current year, which involves a slight risk. In the phase of economic

instability, the bank’s management should be efficient to access the risk involved in

lending and they should control this ratio.

DUE TO BANKS TO TOTAL DEPOSITS

Formula = Due to banks

Total deposits

2006 = 13781555 = 16.54%

83318795

2005 = 15903055 = 25.79%

61656607

2004 = 11460394 = 22.15%

51732000

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INTERPRETATION

This ratio is an indicative of the proportion of the lending from the financial institutions

in relation to the total funds raised by the bank in the form of deposits.

This ratio for ACBL is 16.54% in the year 2004. There has been a significant decline in

this ratio as previously the bank depended slightly more on the borrowings from financial

institutions. It shows that the bank is concentrating on raising funds from depositors and

trying to relies less on the borrowed funds.

It is a favorable indication in the sense that the bank has large potential to ask for

borrowed funds in the phase of tight liquidity position.

Further more, it shows the efficiency of the marketing department to have created

so much of deposits that the bank does not need to look at the financial

institutions for help in improving its liquid position.

There is another favorable aspect of this declining tendency. The rate of interest

offered to the depositors is very low in comparison with the interest to be paid to

the financial institutions for their funds. A decline in this ratio means less mark up

burden on the bank resulting in less financial risk for the bank.

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“SWOT ANALYSIS”

STRENGTHS In the bank service quality standards are designed and monitored to ensure a

consistent and convenient customer experience.

Products and services are as diverse as market segments. Bank has structured and

syndicated financing arrangements, working capital finance, financing of

international trade, consumer credit, small business loans, credit cards and ATM

cards.

The human resource philosophy at Askari Bank focuses on multi-talent hiring,

professional grooming, requisite training and merit based reward system.

Staff welfare has always been a priority. New initiatives like hospitalization plan,

home loan insurance have added new dimensions to the staff-care policy and

motivated them to out-perform competitors.

Bank enjoys a strategic competitive advantage over all domestic players by virtue

of its leadership in technological innovations.

Different cameras are located at different locations to monitor the working of staff

members and outside customers by branch manager.

Bank has fully automated transaction-processing systems for back-office support.

Bank's branch network is connected on-line real-time and customers have access

to off-site as well as on-site ATMs, all over Pakistan.

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Bank also is pioneer in e-commerce venture in Pakistan through a major retail

distributor.

From a humble beginning with just 10 branches in 1993, today bank enjoys a

network of 36 outlets, spread across the country. A network of self-service ATMs

supports these outlets.

ATM card is available with the withdrawal amount about Rs. 25000 a day.

Bank's total assets now exceed Rs.70.9 billion and bank has over 17 products and

services to match the individual needs of the customers.

Bank has been honoured with the "The Best Bank in Pakistan" award by the

Global Finance Magazine.

Bank was the first bank in Pakistan to offer Internet Banking services, b2b e-

commerce solutions for merchants looking to purchase on credit and E-bill

payment system.

With a network of 187 correspondents spread over 95 countries world-wide, the

bank continued to reinforce its leadership position in trade finance, transacting

business of over Rs.70 billion, during this year.

Bank is now actively involved in the acquisition of business and signed up over

300 merchants national wide which offer-shopping discount to the Bank's

Privilege Card members.

Askari Master Card is accepted worldwide and at over 3000 locations in Pakistan.

WEAKNESSES

Bank is providing credit facilities only to the urban areas not too much attention is

paid to the rural areas.

As Pakistan is agriculture country but no special schemes for the agri- loans.

Bank is not giving emphasis on the small-scale businesses. Which are large in

number in Pakistan.

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There is enormous difference between the bank-lending rate and return on

deposits..

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The procedure and documentation while sanction loan is thorny. Which is a

barrier for advances.

Bank gives targets to employees for deposits due to this reason they pay more

attention to fulfil these targets to save their jobs. This distracts their attention from

their duties.

Reasonable care is not taken while opening new accounts one of the reason is

because employees want to introduce more and more depositors.

No job security is there for the employees, and no union exits to secure them.

The online credit card facility was not secured that is why recently bank has

closed its online credit card shopping scheme.

Bank has not adequate number of branches as compared to its competitors like

MCB, UBL, ABL, NBP etc.

Due to small number of branches at greater distance potential customers may go

to other more feasible options.

A good number of facilities are only for the army persons, not for the general

public.

As every person in the bank has his/her own computer in the branch but they are

not well equipped with the knowledge of using the computer efficiently.

The return on deposits is very low.

ACBL has only agency arrangements with the foreign banks, no branch exists

outside the Pakistan.

While their main competitors have their own branch network outside the Pakistan.

Bank has no grievance-handling department for the internal problems of the

employees.

Due to lack of computer specialist at branch level it has to take assistance from

the head office.

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To improve the services and to remove the problems of customer the bank has no

customer complaint department.

Limited locker facility is there, which do not fulfil the requirements of customer

and charges of lockers are also very high.

OPPORTUNITIES

Bank has a small branch network so it has got the opportunities to increase the

number of its branches.

Bank has no foreign branches so it should open its branches outside the country

especially in U.K, U.S.A and in U.A.E.

Facilities like financing of housing should also be offered to general public

especially in the urban areas, not only army officers.

In agrarians cities like Rahim Yar Khan there is a potential for giving credit

facilities to farmers.

At least on software and hardware technician should be appointed at each branch.

Bank is not yet performing utility services for the utility companies like WAPDA

it can increase its operations also in this direction and so a new source of earning.

To increase its advances bank should focus small scale industries and choose one

among them and then a special scheme of lending should be introduced for that

particular small scale industry.

TH REATS

Law and order situation in Pakistan is faulty that is why people are not confident

to invest anywhere.

The markets rates are now at extremely low levels, with very little chance of their

going up during the rest of the year. The low interest rate means low profits for

the banks.

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Saving rate in Pakistan is very low i.e.15% as compared to 30% in China and

40% in Malaysia. This is a problem in Pakistan.

As the banking procedures are complicated that is why general public takes

interest into other options of investments like in shares of companies and in Term

Finance Certificates.

Responding to the SBP's prudential regulations management takes too much care

while granting loans.

Now other banks are also imitating the modern banking concept of ACBL and

have started online facility and also have computerized their operations. So there

remain less competitive advantage areas for the bank.

Now the world is a global village so competitors may rise from anywhere in the

world at anytime.

To survive in the industry and to earn profits bank should not rely on its present

sources and facilities instead of this it should establish new ways of acquiring,

managing and sharing market information.

In near future the world is going to be free trade zone so the concept of "survival

of the fittest" will be in action.

After the 11 September incident and due to terrorist activities in Pakistan the

economy is moving very slow. It means less investment and as a result low loan

demands.

High rate of taxes on banking companies.

SBP have a heavy penalties on banks for violating the Prudential Regulation. So it

requires greater care while advancing.

Increasing ATM trend among the banks also requires attention of the management

to this side.

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Recommendations and Suggestions: - To survive in the industry and to earn profits bank should not rely on its present

sources and facilities but also it should establish new ways of acquiring,

managing and sharing market information.

To increase the computer specialist at branch level .

To improve the services and to remove the problems of customer by making a

spread customer complaint department.

To increase locker facility and decrease the charges of lockers.

Law and order situation in Pakistan is faulty that is why people are not confident

to invest anywhere so we must control it.

Job description must be clear so that it can define the job related duties and

responsibilities..

To increase the number of branches.

Bank should not gives targets to employees for deposits because it distracts their

attention from their duties.

Keep the up to date information on their web sites.

Bank should try to separate the working area and customers visit area.

Instead of preferring the old employees of the other banks management should hire

new and well-educated talent. This will contribute to the long-term benefits of the

bank.

Credit policy should cover both the rural and as well as urban areas.

Credit facilities should be enhanced to small-scale businesses.

The facilities currently availing by the army persons only, can be extended to

general public e.g. house building finance.

Employees who perform extraordinary and achieve more than their targets should

be given bonuses.

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There should be separate marketing department in each branch. Although it will

increase the expenses but benefits will be greater than expenses.

Returns on the term and fixed deposits should be increased to the level of

competitors.

CONCLUSIONOverall analysis of the bank leads to the conclusion that bank is performing at

satisfactory level. The bank is no doubt the best Modern Bank in Pakistan. And to keep

competitive advantage over its existing and potential competitors bank is trying to

introduce latest techniques on regular basis. The customers of the bank are increasing

every year and that is why not only the deposits of the bank are increasing but also

advances by the bank shows a steady growth during the last 5 years. As a result of

increasing advances and investment in higher yielding Treasury Bills. Equity base of the

bank is also increasing and in year 2000 it showed a positive growth of 20% over the

period of last 5 years. Total assets of the bank are also increasing continuously. Similarly

the earning per share is also increasing. During last year this ratio was highest in last 5

years.

During its short life of operation bank has achieved many awards not only with in

Pakistan but also from outside the Pakistan.

So we easily without any qualm can conclude that;

"Bank is going exactly on the way of development and progression"

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References: -

Web Sites: -

www.askaribank.com

www.sbp.org.net.pk

www.pkeconomist.com

www.google.com

Books

Financial Statement Analysis

( Charles H. Gibson)

HR & Personnel Manegement

( Werther )

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http://www.pkeconomist.com/

http://www.sbp.org.net.pk/

http://www.askaribank.com/