Internship Report on Scb2

8/4/2019 Internship Report on Scb2

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y the grace of God who has provided me with the skills and abilities to be able tocomplete this report and present a clear picture of what I have been doing during thecourse of my internship. I would firstly like to thank the Department of Administrative

Sciences for making this learning experience a part of our education and specificallythank Prof. G.S.K. Niazi for his advice and assistance in helping us avail thisopportunity. I also appreciate the efforts of Mr. Faisal Iqbal (Regional Sales Manager-North) who provided me with a vacancy for me to intern at Standard Chartered. I wouldalso like to express my thanks to Ms. Beenish Bukhari who was my direct superiorduring my internship and who helped me learn all that I could and served as my mentor.I would also like to mention that my internship would not have been possible without thecooperation and guidance that was given to me by Mr. Bilal Masood in particular andthe entire staff of the Diplomatic Enclave Branch in general.

I would also like to thank Maam Mehnaz who took the time to proof read my report and

gave me suggestions to make it better.

Lastly I would like to express my deepest and utmost thanks to my parents Mr. KhwajaAzam Ali and Mrs. Shamsa Khwaja who have made me whatever I am today.

External Internship Evaluation Form

Session:

Date:

Name of Student: Sajjad Ali

Total Marks:

Marks Obtained:

Comments:


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Signature of Examiner

Name of Organization

Table of Contents:

Preface:2

Acknowledgement:3

List of Acronyms: 7

Executive Summary 7

Introduction 9

A brief history of Standard Chartered 10

Mission Statement & Brand Values 16

Personal loans Marketing Mix Analysis 21

Review18

Methods of Data Collection 26

Personal Loans Hierarchy 27

Personal Loan Department Islamabad Daily Glance28

Personal Loans Help Desk Daily Glance 23


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Analysis31

Additional Features of SCB Personal Loans: 39

SWOT Analysis: 41

IRR Analysis: 38

Recommendations 41

Problems in Loan Applications & Disbursement 502

Problems & Suggestions for the Management 513

Suggestions for improving the Product: 535

List of Tables:

Table 1: markup and respective IRR Page # 38

Table 2: Amortization Schedule Page # 40

List of Charts:

PERSONAL LOANS HIERARCHY Page # 20

List of Acronyms:


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Acronym Used

SCB Standard Chartered Bank

CRO Customer Relationship Officer

PLHD Personal Loans Help Desk

AOF Account Opening Form

AOC Account Opening Checklist

KYC Know Your Customer

VA Verification of Applicants (Dept.)

ASF Account Service Form

PDC Post Dated Checks

BDE Business Development Executive

IRR Internal Rate of Return

PFC Personal Financial Consultants

SEP Self-employed Professional

Executive Summary:

The main theme behind this report is to help understand the major functions of thePersonal Loans Department of Standard Chartered Bank as I had the opportunity ofinterning at this prestigious bank. This requires that I introduce both the Bank and the


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Department and then I will go on to give a brief summary of the major points, related tomy internship that have been presented in this report.

Standard Chartered Bank is basically the result of a merger between two banks theStandard Bank and the Chartered Bank. Of these Chartered Bank is the oldest, having

been founded in 1853 whereas Standard Bank was founded in 1862. Over the 150years of banking services that this bank has provided till today. SCB the mergedStandard Chartered Bank has developed a very stable position. On one hand it has avery positive reputation in the international market which can be seen through theirpresence in over 50 countries. On the other hand they have the added advantage ofhaving merged with various banks such as ANZ Grindlays and the Chase ConsumerBanking operations in Hong Kong in 2000. So we can see that this bank has still not lostthe urge to grow. This along with over 90 billion in assets makes SCB a very prominentplayer in the international banking industry.

SCB has been one of the oldest amongst the foreign banks of Pakistan. At present it is

offering the banking consumers complete consumer banking and a wide range ofproducts such as long and short-term deposit/ current accounts, corporate bankingfacilities, unsecured loans and credit cards. So this bank has kept a variety of productsto be able to furnish their customer to the maximum.

My internship, as mentioned earlier was in the Personal Loans Dept. which comesunder the unsecured loans of up to RS. 500000. During my internship I was assigned tothe Personal Loans Help Desk and stayed at only this position during the 6 weeks that Iworked there. From this position I was able to study the working of this entiredepartment as the nature of my internship sent me to nearly all the people working inPersonal Loans. I soon learnt the entire process that an application goes through, the

nature and type of tasks that were done by people at various designations in thisdepartment. I also learnt the role that PLHD played for this dept and have thereforediscussed the entire department and also discussed the PLHD in detail. My desk wason the Floor where all the counters were and also where all the customers came. Iwas therefore, also able to grasp a slight idea about nearly all the departments of thebank and the type of functions they perform. But that knowledge is not comprehensiveenough to be presented in this report. A brief idea of each dept. has still been given inthe introduction. A marketing mix analysis of the personal loans dept. has also beenconducted. This is because it is easier to introduce this dept. in such a manner as it isbasically a marketing dept. and the major revenue generating dept. of SCB.

A major portion of the report is devoted towards explaining and describing the tasks thatI performed or that I observed other people performing. These tasks have beenexplained with relevance to the processes that I have discussed.

Various analysis of the dept. such as SWOT analysis, Competitive analysis and an in-depth analysis of the role of IRR and Markup and how they work separately yetcollectively to determine the amortization schedule is also given.


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The competitive analysis has been conducted with the major players of PakistansBanking Industry so as to give a realistic picture of SCB and its position in Pakistan.Some of the major competitors of SCB and specifically competitors of the PersonalLoans dept. of SCB have been considered in the competitive analysis. Such as HBL,Union Bank, Askari Commercial Bank etc.

Lastly I have discussed the problems that I think that this bank is facing at present andalso given recommendations as to how these can be resolved. My suggestions aredivided in categories where some suggestions are for the improvement of the productwhile others are for the management of Personal Loans.

INTORDUCTION

A brief history of Standard Chartered

Standard Chartered is one of the worlds leading banks headquartered in London. Itsbusinesses however, have always been overwhelmingly international. The main eventsin the history of Standard Chartered and some of the organizations with which it mergedare provided in this section.

The early years

Standard Chartered is named after two banks, which merged in 1969. They wereoriginally known as the Standard Bank of British South Africa and the Chartered Bank of

India, Australia and China. Of the two banks, the Chartered Bank is the older havingbeen founded in 1853 following the grant of a Royal Charter from Queen Victoria. Themoving force behind the Chartered Bank was a Scot, James Wilson, who made hisfortune in London making hats. James Wilson went on to start The Economist, still oneof the world's pre-eminent publications. Nine years later, in 1862, the Standard Bankwas founded by a group of businessmen led by another Scot, John Paterson, who hadimmigrated to the Cape Province in South Africa and had become a successfulmerchant. Both banks were keen to capitalize on the huge expansion of trade between


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Europe, Asia and Africa and to reap the handsome profits to be made from financingthat trade. The Chartered Bank opened its first branches in 1858 in Chennai andMumbai. A branch opened in Shanghai that summer beginning Standard Chartered'sunbroken presence in China. The following year the Chartered Bank opened a branch inHong Kong and an agency was opened in Singapore. In 1861 the Singapore agency

was upgraded to a branch, which helped provide finance for the rapidly developingrubber and tin industries in Malaysia. In 1862 the Chartered Bank was authorized toissue bank notes in Hong Kong. Subsequently it was also authorized to issue banknotes in Singapore, a privilege it continued to exercise up until the end of the 19thCentury. Over the following decades both the Standard Bank and the Chartered Bankprinted bank notes in a variety of countries including China, South Africa, Zimbabwe,Malaysia and even during the siege of Makeking in South Africa. Today StandardChartered is still one of the three banks which prints Hong Kong's bank notes.

Expansion in Africa and Asia

The Standard Bank opened for business in Port Elizabeth, South Africa, in 1863. Itpursued a policy of expansion and soon amalgamated with several other banksincluding the Commercial Bank of Port Elizabeth, the Colesberg Bank, the BritishKaffarian Bank and the Fauresmith Bank. The Standard Bank was prominent in thefinancing and development of the diamond fields of Kimberly in 1867 and later extendedits network further north to the new town of Johannesburg when gold was discoveredthere in 1885. Over time, half the output of the second largest gold field in the worldpassed through the Standard Bank on its way to London. In 1892 the Standard Bankopened for business in Zimbabwe, and expanded into Mozambique in 1894, Botswanain 1897, Malawi in 1901, Zambia in 1906, Kenya, Zanzibar and the Democratic Republicof Congo (D.R.C.), in 1911 and Uganda in 1912. Of these new businesses, Botswana,

Zanzibar and the D.R.C. proved the most difficult and the branches soon closed. Abranch in Botswana opened again in 1934 but lasted for only a year and it was not until1950 that the Bank re-opened for business in Botswana. In Asia the Chartered Bankexpanded opening offices in, Myanmar in 1862, what is now Pakistan and Indonesia in1863, the Philippines in 1872, Malaysia in 1875, Japan in 1880 and Thailand in 1894.Some 34 years after the Chartered Bank appointed an agent in Sri Lanka it opened abranch in 1892 to take advantage of business from the tea and rubber industries. During1904 a branch opened in Vietnam. Both the Chartered and the Standard Bank openedoffices in New York and Hamburg in the early 1900s. The Chartered Bank gaining thefirst branch license to be issued to a foreign bank in New York.

The impact of war

Even the First World War offered opportunities for expansion when the Standard Bankset up a branch in Tanzania shortly after British troops occupied the formerly Germanadministered Dar us Salaam in September 1916. Both banks survived the inter-waryears but the worlds trade slump led to the closure of operations in the Canary Islands,Liberia, the Netherlands, and Equatorial Guinea. Disaster struck the Chartered Bank'soffice in Yokohama, Japan, when an earthquake destroyed it in 1923, killing a number


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of staff. The Second World War particularly effected the Chartered Bank when Japanoccupied numerous Asian countries.

The post war years

After the Second World War many countries in Asia and Africa gained theirindependence. This led to local incorporation in some countries, particularly in Africa.Other operations such as those in Iraq, Angola, Myanmar and Libya were nationalized,while in Indonesia the Jakarta office was destroyed in an attempted coup d'etat. In 1948the Chartered Bank opened in Bangladesh and during 1957 it acquired the EasternBank. The Eastern Bank gave the Chartered Bank a network of branches includingAden, Bahrain, Beirut, Cyprus, Lebanon, Qatar and the United Arab Emirates. TheChartered Bank also entered into a joint venture to form the Irano-British Bank thatopened for business in 1959. The bank grew rapidly and had 24 branches when it wasnationalized in 1981. By mid 1950s the Standard Bank had around 600 offices inSouthern, Central and Eastern Africa. Its network grew substantially in 1965 when it

merged with the former Bank of British West Africa, which had some 60 branches inNigeria, 40 branches in Ghana and eleven branches in Sierra Leone in addition tooperations in Cameroon and Gambia. Despite these acquisitions and expansion intonew countries such as Mexico, South Korea and Oman (1968), both the Standard andChartered Bank networks were comparatively small. Both viewed the future with sometrepidation as the need to protect themselves from acquisition became ever moreapparent. Standard Chartered PLC In 1969 the decision was made by the StandardBank and the Chartered Bank to undergo a friendly merger thus forming StandardChartered PLC. It was one year later that the descendants of the "Chartered Bank ofIndia, Australia and China" were finally permitted to open a representative office inSydney, Australia. Standard Chartered subsequently acquired the UK based Hodge

Group, in which it already had a minority shareholding, and the Wallace Brothers Group.The Hodge Group brought to Standard Chartered an extensive network of UK officesspecializing in installment credit and industrial leasing, and after a period ofrationalization its name was changed to Chartered Trust Limited. Standard Chartered'soperations in Jersey emerged from the integration of other Hodge Group businesseswith those of Wallace Brothers Bank (Jersey), Limited.

Standard Chartered decided, after the merger, to expand the Group outside itstraditional markets. In Europe a number of offices were opened including Austria,Belgium, Denmark, Ireland, Spain and Sweden as well as several major cities in the UK.Standard Chartered also opened offices in Argentina, Canada, Colombia, the FalklandIslands, Panama and Nepal. In the USA a number of offices were opened and threebanks were acquired. These included the Union Bank of California that gave StandardChartered a presence in Brazil and Venezuela. The opening of a branch in Istanbul in1986 was overshadowed by a far more dramatic event when Lloyds Bank of the UKmade a hostile take-over bid for Standard Chartered. Standard Chartered won its rightto remain independent but entered into a period of considerable change.


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By the late 1980s Standard Chartered already had considerable exposure to third worlddebt. To this were added provisions against loans to corporations and entrepreneurswho could not meet their commitments. Standard Chartered reviewed its operations anddecided to focus on its core strengths of Consumer Banking, Corporate & InstitutionalBanking and Treasury in its well-established operations in Asia, Africa and the Middle

East. This led to a series of divestments notably in Europe, the United States andAfrica. During this time staff numbers were reduced; businesses not considered corewere sold or closed; associate holdings disposed of; unprofitable branches closed andback office functions consolidated. In addition expensive buildings were sold with theproceeds reinvested in the business, and the senior management team was radicallychanged and strengthened.

Standard Chartered in the 1990s

Even within this period of apparent retrenchment Standard Chartered expanded itsnetwork, re-opening in Vietnam in 1990, Cambodia and Iran in 1992, Tanzania in 1993

and Myanmar in 1995. With the opening of branches in Macau and Taiwan in 1983 and1985 plus a representative office in Laos (1996), Standard Chartered now has an officein every country in the Asia Pacific Region with the exception of North Korea. In 1998Standard Chartered concluded the purchase of a controlling interest in Banco Exteriorde Los Andes (Extebandes), an Andean Region bank involved primarily in tradefinance. With this purchase Standard Chartered now offers full banking services inColombia, Peru and Venezuela. In 1999, Standard Chartered acquired the global tradefinance business of Union Bank of Switzerland. This acquisition makes StandardChartered one of the leading clearers of dollar payments in the USA. StandardChartered also opened a new subsidiary, Standard Chartered Nigeria Limited in Lagos,acquired 75 per cent of the equity of Nakornthon Bank, Thailand; and agreed terms to

acquire 89 per cent of the share capital of Metropolitan Bank of the Lebanon.

Standard Chartered today

Today Standard Chartered is the world's leading market bank employing 30,000 peoplein over 500 offices in more than 50 countries. Primarily in countries in the Asia PacificRegion, South Asia, the Middle East, Africa and the Americas.

The new millennium has brought with it two of the largest acquisitions in the history ofthe bank with the purchase of Grindlays Bank from the ANZ Group and the acquisitionof the Chase Consumer Banking operations in Hong Kong in 2000.

These acquisitions demonstrate Standard Chartereds firm commitment to the emergingmarkets, where they have a strong and established presence and where we see theirfuture growth.

Mission Statement & Brand Values


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Mission Statement:

To offer outstanding value to our customers by providing knowledgeable,efficient and reliable services in a personal, helpful and responsive manner.

Over the 150 years of quality services that SCB has provided to its customers, the Bankhas had various mission Statements. However this is the one that is currently beingfollowed by the organization.

Brand Values:

From the above mentioned mission statement the bank has developed some very deep-rooted brand values. These values are mainly designed with the intention ofcommunicating with the customers. However they also serve the purpose of showingeach employee exactly what a customer expects when he walks into StandardChartered. The employees are constantly reminded of the customer expectations and

have to continuously evaluate how their behavior is conformant with what the customershave in mind. This is why it is common practice to display these values in almost eachdepartment and on all the notice boards.

These values are there for all employees and apply especially to the personal loansdepartment. As it is the people of this department who are mainly going out to meet thecustomers and getting the opportunity to communicate these values to them.

The values that have been developed over the 150-year life of this organization are asfollows:

CourageousA commitment to being there for you, in good times and bad. We help youachieve your aspirations by guiding you towards the right choice, not just theeasy one.

ResponsiveWe are good on our word. We are accessible whenever and wherever you needus. Not only do we strive to deliver solutions, we also aim to exceed yourexpectations.

International

We understand the balance between global and local. You trust us to beestablished and internationally networked, while at the same time sensitive toyour individual needs. Our strong network across culture helps us build strongerrelationships based on ideas, not formulae.

CreativeCreative thinkers are not limited by convention. They allow their minds to soarbeyond predictable solutions. That's how we approach each challenge posed to


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us, which is why we base our products and services on ideas that are innovative,perceptive and instinctive.

TrustworthyWe respect you, and the life you live. By understanding your needs and tailoring

the right financial solutions for you, we earn your trust.

Other Departments of Standard Chartered Bank

There are various departments in this bank due to the wide range of services that itoffers to its clients. Each dept. serves a very important role in making the differencebetween a satisfied and a dissatisfied customer. The major departments that I was able

to learn about are:

IT Department:

Even though this department works at the back end and customers are neveraware of whether IT people exist in SCB or not. IT has a very important role toplay. As it is this dept. that comes up with all the latest upgrades to the system tomake it more efficient and effective. It is they who clear out the bugs in the BPSsystem that generates Account Statements. IT also ensures that the inter branchconnection of this bank is maintained continuously through properly functioningPABX, Fax machines, systems etc.

Personal Financial Services Department:

This department basically consists of 4 Personal Financial Consultants (PFCs)who have the task giving all sorts of financial services to the client. They can beasked for information about any product of the bank or any advice to help inreaching the best decision by the customer. It is basically there job to assist thecustomer in any way possible. Their task also includes opening all types ofaccounts and letting customers know of the best-suited option for them.

Corporate Department:

This department mainly dealt with all matters related to corporate accounts. Bycorporate accounts I refer to all the companies that have opened accounts oftheir entire staff with SCB. Management of these accounts is done in thisseparate dept. of SCB. Other than management this department also has toachieve a certain target of getting a certain number of corporate arrangements tomake this banks corporate customer base stronger. SCB has corporate accountsof US Embassy, Australian High Commission etc.


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Cash Management and Remittances:

This department is mainly concerned with the most critical and nerve wrackingwork in the entire bank. This department includes the management of all cashrelated activities and therefore also includes the tellers and all activities related to

withdrawals or deposits by customers. The management of funds and thetransfer of money within the bank is also managed by this dept. and theadditional services that this dept. performs are money transfers, issuing newcheck books, making drafts etc.

Credit Card Department:

This dept. is basically concerned with all functions related to the credit cards ofSCB. There is a Visa card and a Gold card that is being offered by SCB. Gettingcustomers to buy these cards and also satisfying customers who have previouslygot this card is the major function of this dept. however the dept also manages its

own collections of bad debts or people who pay late. So it is a relatively self-sufficient dept that covers an entire product of SCB.

Priority Banking:

This dept basically exists for those customers who can open a minimum currentaccount for RS. 1 million or who open accounts of at least 2 million rupees incase of savings account. Priority banking solely deals with customers who fit theabove-mentioned criteria and not with the regular customers. A separate tellerthat is only for Priority Customers deals with matters of such clients. Apart fromthis, finding such clients and making them open accounts with SCB is also the

task of this departments staff.

Telemarketing:

This department as the name implies deals mainly with all telemarketing activityof SCB within Islamabad. They provide information regarding the banks products.They also serve clients by telling them their account balances or credit card limits

that are outstanding. This department provides further facilitation by helping getclients for Credit cards, Personal loans and Auto Loans. Customer complaintsare also made to this department if they are via telephone.

Auto Loans:


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This dept. basically deals with all SCB Car financing loans. This dept. also has afully equipped sales team like the Personal loan dept. and it is their job to getcustomers to finance their cars through SCB.

Personal loans Marketing Mix Analysis

Personal Loan is the major revenue-generating department for Standard Chartered. Itserves the purpose of providing the bank with an avenue through which it can earn

some essential markup on the collected deposits. Thus providing the bank with a meansto conduct its basic functions to go towards profitability and survival.

The nature of this department is purely sales and marketing. Therefore I have analyzedthe product offering and other features from a marketing perspective. In doing so wecan have an answer to the questions of what, where, at what price and how thedepartment is performing its functions.

However before moving on to answer these questions we must first have an idea ofwhat type of target market this product is designed for to be able to understand how itworks in a more comprehensive manner.

Target Market:

This product targets the permanent salaried individuals of Karachi, Lahore andIslamabad. Who are serving for any company that has already been approved andadded to the list of approved companies that is sent to Islamabad from the Head Officein Karachi. The list mainly consists of:

Local Corporate Organizations

Multinational Companies

Embassies

High Commissions

The United Nations


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Only Karachi has the additional target segment of self employed professionals.Personal loans are prohibited for the self-employed professionals category inIslamabad and Lahore. This segment will be opened shortly for these two cities.

The income requirement for employees who are working in A graded companies of the

Approved Companies list is Rs.15000 gross and Rs.10000 net. This requirement is alsothe same for employees of the B graded companies on the list. As the bank still adoptsa relatively conservative approach towards giving loans to government employees theincome requirement for the approved ministries is RS. 12000 Net.

The target market is then narrowed to employees who have been working in theparticular organization for at least 1 year.

There is also an age restriction that states that customers can only be between 23 62years of age.

The target market can consist of only those people that have all the above mentionedcharacteristics and also have Telephones at both their office and at their residence.

The above mentioned requirements have to be supported by a number of documentsbefore the customer can be made eligible to apply for a personal loan. The documentsthat are required are as follows:

A Graded Companies:

Copy of NIC

One salary Slip (preferably of current month) or three months Bank Statement.

ECC, issued by Authorized Signatory, with:

Date of joining

Employment status (permanent or contractual)

Gross salary (if salary slip is not provided)

B Graded Companies:

Copy of NIC

Three months Salary Slip (preferably current) or three months Bank Statement.

ECC


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We can see that even though there are not many required documents, in the words ofthe BDEs you have no idea how many people fulfill the criteria but make us wait forweeks to acquire their documents. In certain cases applicants are unable to provide thecomplete set of documents at all. So it is safe to say that the requirement of thesedocuments further narrows the target market.

Marketing Mix variables.

Product:

The product offering consists of loans of amount 50,000 to 500,000 Pak Rupees. Thematurity period of this loan varies between 1 to 3 years. The customer has the flexibilityof being able to pay of his debt earlier than the specified maturity period. However thereis an additional service charge in cases where the customer wishes to do so.

A complementary addition to this product comes in the form of a loan account of thecustomer with SCB that can be maintained at Zero balance.

Price:

The markup that is charged on a personal loan varies from case to case. Even thoughthe general markup for every loan is 10.05% the customers are also charged an IRRrate that determines the amount of each installment. The workings of the IRR rate aregoing to be presented at a later stage in this report. What we need to consider here isthat the IRR varies between 15-24% depending on the credibility of the Organization.

Apart from this some additional charges known as processing fee are also attached withthe Loan. This fee is either 1% of the approved loan amount or a minimum of Rs.1500in cases where 1% of the approved loan amount is less than Rs.1500.

Place:

Most of the personal loans sales team makes personal visits to organizations that areon the approved companys list. So the place is not particularly specific. Some casesare also dealt with at the diplomatic enclave branch. In the team managers words if aperson is in Islamabad and he is eligible we have to get to him.

Promotion:

There is very minimal promotion of this particular product as the major focus of thisdepartment is on getting sales through personal selling. A customer can however getbrochures related to personal loans or see certain displayed information regarding theproduct at nearly every Standard Chartered branch.


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Building personal relation and the vision that customer is not just client but is starting along-term relationship of mutual benefit is the theme that promotes the Personal Loandepartment.

REVIEW

Methods of Data Collection

During the course of my internship my main method of data collection was interview. Asthe best way to collect the most accurate information was to talk to the staff membersand discuss the various aspects of their work. This way I was able to understand exactlywhat type of work is being done by employees of various designations in the Personal

Loans department. The staff members sat with me during lunch and other free time andwould describe in layman terms what work they do. It was easier to understand theirjobs without the involvement of too many banking phrases.

I also learnt a lot through simply observing the employees at work. I would see themmake phone calls and deal with customers. I observed how certain dissatisfiedcustomers were dealt with and how the satisfied customers were asked to give moreleads. So observation also helped me a great deal in acquiring the data that I havepresented in this report.

Now that we have learnt how the data was collected during my internship we can moveon to the actual data. In this section we will discuss:

The hierarchy of this department.

The daily activities of the employees in various designations of this Department

The process and mechanism through which an application goes.

Personal Loans Hierarchy

In order to understand the above mentioned areas of study it is essential that we firstknow the hierarchical setup of this department. This will enable us to see all thedesignations and also help simplify the processes.

Chart 1: Hierarchy setup


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National Sales Manager

Mr. Omer Farooq

Personal Loans Help Desk

Customer Relationship Officer

Ms. Beenish Bukhari

Trainee

Sajjad Ali

Coordinator

Hasnat Ahmad

Regional Manager Sales- North

Faisal Iqbal

Team Manager

Shahzad Zafar

Team Leader

Mr. Sipere Irfan and Mr. Naveed Akhtar

Senior BDE

Mr. Ajmair Riaz

BDEs


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Personal Loan Department Islamabad Daily Glance

The day in the department starts at sharp 9 but the time to get off from work is notdefinite, rather indefinite, so rules of sun do not apply in this particular Department.

The day starts of with a Daily meeting in which expected customers are debatedand targets are given to BDEs by Team Manager and Team Leader with timeline to meet those targets.

The working of the previous day is shown to the team leaders. Then thedocuments that have been collected with the new applications of the previousday are dispatched to the to Credit Department and fresh applications are

submitted to the Verification Department for VA. (The role of VA will be discussedat a later stage in this report.)

The team leaders, BDEs and the Processors along with the CROs then busythemselves in maintaining and sending daily sales reports.

The BDEs then contest certain declined and pending cases with VA Department.The reason behind declining an application is discussed with the VA andemployees brainstorm for ways to be able to get that application through.

Then there is the task of resolving the Discrepancies in cases where the solution

is solvable. For e.g. some fields in the application form may not have been filledappropriately or some additional documents may be required.

It is also necessary for all the BDEs to concentrate on the maintenance of Callreports and a Pipeline showing their future clients. The Team Manager can atany time ask one of the BDEs to showhis/her pipeline and the BDEs live inconstant fear of that. So as soon as all the BDEs get time they work on this. Isaw most of the people organizing their future visits in the early morning hours,which after all the tasks above have been done means around 9:45-10:00 a.m.

Discussions with in Teams about planning and motivating also take place.

As a Department totally based on Marketing in the form of personal selling, itmostly counts on lots of calls and constant meetings with customers. So phonecalls are the major part of Personal Loan Department. As soon as the routinemorning work is gotten out of the way the BDEs hit the phones. Their callsmainly deal with checking the leads, setting up meetings with clients, informingclients about their daily status and generating more leads.


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Then the rest of the day is spent in going to appointments or in the words of thesales staff going on call.

On their return to the bank in the evening, the BDEs submit their newapplications to a Processor. The processor has the task of checking each

application for complete documents and information and prepares theapplications for the purpose of submission to the VA department. However thistask is mostly delayed to the next morning. This is not because of the Processorsinefficiency but because of the late times at which the applications are given toProcessor.

After the days work a BDE must always be careful to inform customers of theirdaily Status of application. This is done by most of the BDEs as they wish tomaintain long term relations with the client for one never knows who maycomeback for a Top up (enhancement of the loan)or provide some leads.

Photo copying of documents for record is also a task that has to be done, as it isan essential part of daily routine.

In short the whole day in the department is a complete scene of a Hurdle race asevery individual is constantly facing many hurdles and can still not lift his/her foot fromthe accelerator and lose speed.

As the Team Manger quotes By hook, or by Crook, I guess that explains the wholedaily glance.

Personal Loans Help Desk Daily Glance

Not having an earlier opportunity to explain what is the function of the Help Desk in thePersonal loans department I will discuss it now. This desk is occupied by a CRO who inmy case is Ms. Beenish Bukhari who was also my direct Boss during my internship. It ismainly concerned with customer dealings in two major areas. Answering queries ofcustomers interested in this product and assisting those customers who have eithersubmitted their applications or have been approved the loan amount and are wishing towithdraw their money. This desk also assists Personal loan customers in getting theircheckbooks and ATM cards for their loan accounts. There is further responsibility ofopening loan accounts for the approved applications. Apart from this the help desk isalso concerned with getting the complete applications that have been verified by the VA

department and getting them signed from the required people before sending theseapplications to the Lockers. In the Lockers these applications are scanned and sent toKarachi for approval.

The complete set of functions of this Help Desk will be easier to understand by seeingall the activities that take place in a typical workday. These activities will be given with alittle background and explanation to enable the reader to understand exactly what isdone how at the Help Desk.


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As the Branch opens at 9:00 a.m. sharp for the customers, the day for the PersonalLoans Help Desk starts at the same time. In case a customer visits this desk early.

Getting the Account Opening Register (AOR). This register is used to keep arecord of all the accounts that have been opened due to the reason of approval

of a particular personal loan application. As it is the Banks practice to open a newaccount in which the approved loan amount is transferred. This practice exists forall customers regardless of those who already have a personal/ current accountthat is being maintained at the Standard Chartered Diplomatic Enclave Branch.This allows the customers to have the flexibility of withdrawing the cash at theirown convenience and according to their needs.

Preparing the applications that have been approved by the VA along with all thedocuments (documents consist of over seen photocopied sets) for their finalapproval from Karachi. This involves attaching a KYC form to the application. AnAOC is also attached to the complete set of documents.

Sending the complete applications to the Branch Manager and ManagerOperations to be signed. Each personal loan application has to be signed by boththese authorities before it is sent to Karachi. The Manager Operation checkswhether the applications are in complete conformance with the requirement ofthe bank. If not then he returns the application to the Help Desk to be corrected.

Once the applications are signed, they have to be photocopied in two sets. Onephotocopy is then filed in the BDEs folder whose applicant it is and the other isfiled with the PLHD. The original set of documents is sent to the Lockers to bescanned to Karachi.

These are the activities that are involved in preparing and sending the applications toKarachi. However the Personal Loan Help Desk is also involved in doing many otherimportant tasks for this department. These tasks may be carried out at any time duringthe day so they do not fit in the Daily Glance. There may be certain days on which someof these tasks are not done at all. They are:

Calling customers and making appointments to receive documents.

Receiving PDCs from the customer once the loan has been approved, as this isthe only method of repayment that is applicable in Islamabad. These Post Dated

Cheques are not complete and it is often the CRO at the PLHD who has tocomplete the amount on these cheques. Even though this seems like a verysmall task it makes a difference when you receive sets of 35 cheques from 7-10customers in a day.

These cheques also have to be dated according to the installment dates that areapplicable to a particular case. These dates are mostly the 3 rd of each month, starting from


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one month after the loan has been disbursed. This is because the bank gives customers a grace period of one month

before the 1st installment is collected.

Photocopying the cheques and keeping the originals in a specified storage space. The photocopy of the cheques is sent

with the application to Karachi.

Dealing with all account opening activities of the customer once the loan account has been opened after approval and the

amount transferred to this account. This includes satisfying requests for ATM cards and Chequebooks. For this the CRO

first has to get the Cheque book requisition form or/ and the ATM card application filled by the customer. These are then

processed with other checkbook requests. Then it is also up to the CRO to call the customer to collect these when they

are issued. Most customers are informed to collect their respective item from the Saudi Pak Tower Branch. But they still

have to be reminded is the policy Ms. Beenish follows.

Even though it is the task of the BDEs to deposit the processing fee and attach a customer copy of this deposit to

complete the set of documents before they are sent to the Head office. It is often a task that has to be done by the CRO at

the PLHD. Then the customer copy of this deposit is photocopied and the originals maintained in a separate file while the

copy is attached to the application.

The PLHD also has to satisfy the demand of the BDEs for new account opening forms, letters of understanding, income

tax certificates, authority letters for bank statements and new personal loan applications.

Once the loan has been approved, the approved loan amount is not directly transferred to the loan account. The head

office first sends back a contract that has to have 7 signatures of the customer. This contract is then sent back to Karachi,

after which the loan amount can be transferred to the new account. Getting these 7 signatures is also in the array of

duties that the CRO at the PLHD has to perform

The PLHD also has to disburse the loan to the customer once the loan amount has been transferred. The customer can

either do this if he has been issued a Chequebook. However most often a customer does not have the time to wait till his

Chequebook has been issued. In such cases the CRO issues a loose check otherwise known as a counter check. This

may seem to be a small task. However it requires that the CRO first find out the account number that has been given for

this particular loan. Then we must find out the total amount that has been transferred to the customers account to avoid

filling out an amount that is not there in the account. Once this check is filled out it is submitted to the teller for signature

verification of the customer. After this the withdrawn amount is disbursed.

In some cases the customer may not wish to withdraw the amount and neither maintain two accounts at the same branch.

Instead he/she may wish to get an internal transfer from the loan account to his own personal or corporate account. To do

so the bank requires that the customer fill out an Account Service Form (ASF). Once this form is processed there is an

internal transfer from the loan account to the required account. All this is also included in the tasks and duties of the

person occupying the PLHD.

A major portion of some days is also spent in furnishing customers with answers to their queries regarding the balance of

their loan account or how many installments they have given. Other queries may be from customers who wish to pay off

their loan at an earlier date instead of giving installments for the specified time period.

These are the major tasks that are carried out by the PLHD. On some days there is an onslaught of customers and the CRO has to

do all these tasks. On other days she may have to do only some of these tasks. This mainly depends on the traffic at the PLHD.


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However the tasks that have been mentioned in the first portion are those which have to be carried out every day regardless of

whether PLHD has customers or not. In the words of Ms. Beenish its a rough job but some ones got to do it.

PROCESS FLOW FOR PERSONAL LOANS APPLICATION

DAY 1:

BDE picks up the application / discrepancy from the customer & submits it to PL Dept (Coordinator), along with one copy of the

application for VA, for screening.

Coordinator screens it and prepares it for submission to the Credit Dept.

DAY 2:

Coordinator submits the applications / discrepancies to the Credit Dept. & gets their VA copies received on a summary sheet from the

VA resource.

Credit receives the applications / discrepancies, screens them according to the credit policies & emails the status, at the end of the day,

after updating every received document.


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If any discrepancy is found, Personal Loans is informed.

DAY 3:

Credit submits the approved loans applications to Asset Operations for loan document printing.

Customer details are entered into the Asset Plus System. Asset plus generates the loan documents.

COU sends back the loans documents to credit

Credit makes a record of the customer documents and sends them to Personal Loan department.


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DAY 4:

Personal loan department receives the documents.

Coordinators give documents to CRO at PLHD.

CRO attaches a Personal Account Opening Form (AOF) with customers documents.

Stage II officer takes the complete documents to the customer for signatures.


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Customer gives instructions for mode of payment

1% processing fee is given by customer to be deposited into the PL commission account.

Stage II officer deposits the processing fee, logs it into the processing fee register & attaches it to signed loan documents.

Makes a pouch of all signed documents & gets the signatures verified.

Completes the AOFs & submits them to the CRO at PLHD


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DAY 5:

Personal loan department submits the loan documents to Personal loans Credit.

PLHD officer gets the loan account opened by the day end.

Keeps a copy of AOF with personal loans dept.

Credit Dept screens them according to the policy guidelines.

Declares all received document discrepant or OK in the day end emailed status.

Personal loans department informs customer about the discrepancy or disbursement.

If any discrepancy is found, Personal Loans is informed.


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DAY 6:

Credit department sends the OK documents to Asset Operations (AO) for disbursements.

AO checks whether the loan account is opened. If yes, loan is disbursed in it, returned to credit otherwise with stating discrepancy.


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DAY 8:

Customer walks into the branch & personal loans departments Customer Relationship officer at the Personal Loans Help Desk assist

him in accessing his disbursed loan.

The process that a personal loan application goes through has been described as accurately as possible. The role of the personal

loan help desk has not been shown as comprehensively as it should due to the difficulty in merging certain simultaneous activities.

But we can gather what role the CRO at the PLHD has from the daily activities that have been given from them in the previous

heading.

The role of other departments such as the Credit department and the Asset operations department is also mentioned to give a more

rounded picture of what goes on.


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ANALYSIS

The analysis of my study is based both on the product that this department offers and the major aspects of this department itself.

This has been done by using the following techniques of analysis:

A competitive analysis along with an analysis of what additional features the Personal Loan of Standard Chartered Bank

has as compared to other banks.

Apart from this a SWOT analysis of the entire Personal Loan Department is also given.

An IRR analysis through which we can see the role of the stated IRR and the precise impact that it has on the loan

installment amount.

Competitive Analysis:

SCB Union Bank ABN AMBRO MCB Askari HBL

Stage-1

Loan

Range

Rs. 50,000/-to

500,000/-

RS. 50,000/- to

1,000,000

Rs. 50,000/- to

500,000/-

Rs. 30,000/- to

500,000

Rs. 50,000/- to

500,000/-

times the

Basic

Tenure1-3 years Un limited 1-5 years 1-3 years 1-3 years 1-3 years

TargetMarket

SalariedIndividual

SalariedIndividual & SEP

Salaried individual& SEP

SalariedIndividual

Salaried &Business P

Salariedpersons

Age Limit

21-63 years

23-55 years

21-60 Years

25-55 years 25-63 Years 25-63 Years

Monthly

Income

Rs.10, 000/- (Net

Income)

Rs.25, 000/-

(Gross)

Rs 25,000/- (Net

20,000/-)

Rs 10,000/- (Net)Rs. 12,000/-

(Net)

Rs. 15,000/-

(Net)

CitiesKhi, Lhr, Rwp &

Isd

Khi, Lhr, Rwp &

Isd

Khi, Lhr, Rwp &

Isd

KarachiKhi, Lhr, Rwp &

Isd

Khi, Lhr,

Rwp & Isd


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Rate

Charged18%

19%

20%-24%

18%-24%

20%-24%

17.5% with

SI

Processing

Time

3-5 Days for

Approval (10

Days Max)

10-12 days Min

15 days7-10 days 4 days

7-10 days

10-20 days

10-20 days

Processing

Fee

1% of Loan or

Min 1,500

1,000/-

Documentation

Fee 1,500/- per

Anum

1% of loan

1% of Loan or

Min. 2,000 1% of Loan orMin 1,500

1% of Loan

Stage-2

Legal

Documents

Signed by the

customer after

loan approval

Already signed at

the time of

application

Already signed at

the time of

application

Already signed at

the time of

application

Signed by the

customer after

loan approval

Already

signed at the

time of

application

Additional Features of SCB Personal Loans:

Cost features:

Standard Chartered along with other banks take processing charges 1% with minimum Rs.1500, as according to rules and

regulations of State Bank of Pakistan with no annual charges, where as in Union Bank annual charges exist.

The Processing charges are for Legal documentation, Account opening and other charges for providing the facility of free ATM and

Checkbook.

Time features:

Standard Chartered takes 5-8 working days to process the Loan application and when Loan has been approved only then applicant

is made to sign Legal Documentation where as in other Banks, Legal procedure is carried out at the time of application. So Standard

Chartered Bank offers additional thinking and reviewing time and yet takes less time to disburse the amount.

Value added features:

Standard Chartered Bank provides customers with the facility that they can have their personal account in the bank in case that

there loan is approved. This account can be maintained at zero balance. Customers having personal accounts otherwise at this

bank have to maintain a minimum of 25000 rupees.

SCB offers its product to customers having Net salary figure of 10,000 whereas in other banks this figure is 25,000.

SWOT Analysis:


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A thorough study of the Personal Loans department has resulted in the compilation of the SWOT analysis. This analysis is also

important because the Department under consideration is a marketing/ sales department and a SWOT analysis is always useful in

assessing departments of this nature.

Strength:

There are various strengths of this department. These are:

The department firstly has the name of a very prestigious bank attached with it. The bank that this department represents

has a good image of providing quality services to customers who are looking for the best. The BDEs themselves say that

once they show their card and people recognize that they are from SCB, customers immediately give them more attention

and respect.

The major strength of the Department is the team members of the 2 teams that currently exist. These members are mostly

made up of the best sales people working for this particular product. Most of the members have enjoyed positions of sales

man of the month in Credit cards or Personal loans at various other banks such as Citibank, Union Bank etc. This has

resulted in each of the sales people having an already well established network through which they can achieve relatively

higher targets and still have a considerable number of leads in the pipeline for each month.

The product that this department offers has a clear edge over its competitors in certain areas. This allows the team to

market something that is better than what the market offers. The competitive advantage that this product holds has been

discussed previously in the competitive analysis.

The repute of the bank in areas apart from Personal loans is also very positive. Therefore customers of other products of

SCB are also sometimes willing to enjoy another product of this bank. This results in the department getting customers

without the hassle of making sales calls and proper presentation. These bonus customers also make a contribution to the

total applications and in some months, they contribute to more than a few loans.

Weakness:

The major weakness is that Standard Chartered is at present facing more than a few dissatisfied customers of credit cards as more

banks are offering lower rates and fees. These customers are having a slight impact on the banks image as word of mouth

circulates their dissatisfaction. this then has a direct impact on personal loan sales and other products of the Bank.

The department at present is facing the problem of continuos hiring and firing. This is resulting in greater difficulty of

coordination and the synergy that may exist in a stable environment. During the course of my internship of 6 weeks I saw

at least 3 people who left their job, 2 who were fired and approximately 7 employees who were hired.

Apart form this there is also the problem that time has to be taken out to train and induct the new employees. There is

however no designated trainer and therefore the BDEs have to carry out the training. This results in improper training and

extra burden on the BDEs who already have a very stressful job.

The management environment of this department promotes fear and the adopted leadership approach is to treat

employees as Theory X workers. This is resulting in a certain extent of dissatisfaction and also promoting a greater sense


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of insecurity amongst the BDEs. The result is loss of productivity that exists due to the difference between complete

commitment of the employees and the approach of just surviving that they have adopted at present.

The limited number of companies that are on the approved list of companies and the restriction of self employed

professionals not being eligible for personal loan are also limiting the department from making major inroads into the

Islamabad market.

Opportunities:

The major opportunity lies in the surfacing of new organizations that are getting approved and added to the Personal Loans

Approved list of companies. Box farm signatories as they are called, are polling in and opening new avenues for the sales team,

creating new customers and providing the BDEs with new leads.

Another opportunity is the rate of conversion of already approved loans into enhancements and top up cases. As more people are

utilizing this service it is really an area that all BDEs are looking forward to cash in.

Threats:

The major threat that this department has is the stress levels that are running high due to certain employees not being able to meet

their targets. This is having a negative impact on the figures for the entire department and causing increasing tensions. This may

result in declining applications if this situation is not resolved in an appropriate manner.

Another threat is the entry of new banks into this area of personal cash financing. As more banks are starting to offer this facility this

industry is becoming increasingly competitive and the already saturated target market is not showing great potential for growth. We

can see this from the loan that Citibank is currently offering with 0% interest these days.

The State Bank has limited the credit limit on credit cards to RS. 4999999. This is 1 rupee less than the maximum loan amount of

SCB. So people who wish to have this sort of money are shifting from financing their needs through personal loans to instead

utilizing the limit on their credit cards.

From the above analysis we can see that the Personal loan Dept. at present is evenly balanced. But the future holds many threats

both foreseen and unforeseen and how the management and the sales team take these threats is what is going to set whether this

department excels or starts facing declining applications as time goes by. The BDEs are eagerly looking forward to harnessing the

potential of the

opportunities that have been presented here. And their energy and enthusiasm along with the hard work hours that they put into the

job will most probably tip the scales in favor of SCB.

IRR Analysis and Installment Calculation:


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For this we can first see the different rates that are offered according to the organization that the client is employed in. the different

rates are:

Table 1: Markup and respective IRR

Mark up 10.05% 11.25% 12.5% 13.47% 9.4% 8.2%

IRR 18% 20% 22% 24% 17% 15%

From the table we can see the different markup rates that are offered to the clients according to the credibility of each case. The last

2 columns show the rates that are offered to the UN. These are annual rates. We can see that with each markup rate there is a

different attached IRR rate. This is because the bank uses the markup rate for the calculation of each installment amount or in other

words the amortization amount for the loan. However the calculation of what portion of principal will be recovered and what part of

the installment will go towards interest charges is calculated by using the IRR rate. To understand this in a better way we can take

an example to see how the IRR and markup work together to form the amortization schedules.

Suppose that there is a loan for RS. 100000. The markup rate in this case assumed to be 10.05% whereas the IRR is 18%.

Now firstly the bank will calculate the installment amount. This is done in the following way: 100000 * 10.05 = 10050

Now supposing that the loan is for 3 years we can get the total interest amount by:

10050 * 3 = 30150

So the total amount that the customer will pay for a 100000 rupee loan is going to be the principal plus the interest charge

which comes out to be 100000 + 30150. This means that the total repayment will be 130150 rupees.

To calculate the monthly installment amount for the 3 years in which this loan of 100000 rupees has to be repaid we use

the formula:

Total repayment amount / Total number of installments

So the installment amount for our example is:

130150 / 36 = 3615.3 or approximately 3615.

Up till now we can only see the role of the markup rate coming into play. But once the installment amount has been

calculated the IRR begins to operate. In this example the IRR rate is 18%. So the interest recovery from the 1st

installment will be calculated using the formula:

Principal amount / IRR

100000 / .18 = 18000


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as this 18000 is the interest that should be charged for the whole year ( the IRR is annual) we can see what amount will

be charged for the first month by dividing this 18000 per month i.e. 18000 / 12 = 1500

Now this RS. 1500 is going to be charged as interest repayment from the first installment. So the first installment of RS.

3615 will pay 1500 rupees towards interest and the remaining i.e. 2115 rupees towards the repayment of interest. This

means that the portion of interest for the second installment (being on the reducing balance basis) will be calculated by

deducting this 2115 from the total principal and then charging an interest on the remaining principal amount which, in this

case is 100000 2115 = 97885. So the interest repayment in the second installment is .18 * 97885 = 17619. Dividing this

over the months to get per month interest we get 17619 / 12 = 1468.3 ~ 1468. Therefore the second installment of 3615

will pay 1468 rupees towards interest repayment and the remaining 2147 rupees will be paid towards the principal. To

understand this in a better way I have made an amortization table of this example:

Table 2: Amortization Schedule

Sr.

No.

Beginning

BalanceMarkup Principal

Monthly

InstallmentsEnding Balance

1 100000 1499.6 2115.24 3615 97884.76

2 97884.76 1468.03 2146.97 3615 95737.79

3 95737.79 1435.83 2179.17 3615 93558.62

4 93558.62 1403.14 2211.86 3615 91346.76

5 91346.76 1369.96 2245.04 3615 89101.72

6

89101.72

1336.29

2278.71

3615

86823.01

7 86823.01 1302.11 2312.89 3615 84510.11

8 84510.11 1267.41 2347.59 3615 82162.53

9 82162.53 1232.20 2382.80 3615 79779.72

10 79779.72 1196.46 2418.54 3615 77361.18

11 77361.18 1160.18 2454.82 3615 74906.36

12 74906.36 1123.36 2491.64 3615 72414.71

13 72414.71 1085.98 2529.02 3615 69885.69

14 69885.69 1048.05 2566.95 3615 67318.74

15 67318.74 1009.54 2605.46 3615 64713.28


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16 64713.28 970.46 2644.54 3615 62068.74

17 62068.74 930.79 2684.21 3615 59384.53

18 59384.53 890.53 2724.47 3615 56660.06

19 56660.06 849.66 2765.34 3615 53894.72

20 53894.72 808.18 2806.82 3615 51087.90

21 51087.90 766.08 2848.92 3615 48238.98

22 48238.98 723.35 2891.65 3615 45347.33

23 45347.33 679.97 2935.03 3615 42412.30

24 42412.30 635.94 2979.06 3615 39433.24

25 39433.24 591.26 3023.74 3615 36409.50

26 36409.50 545.90 3069.10 3615 33340.41

27 33340.41 499.87 3115.13 3615 30225.27

28 30225.27 453.14 3161.86 3615 27063.41

29 27063.41 405.71 3209.29 3615 23854.12

30

23854.12

357.57

3257.43

3615

20596.70

31 20596.70 308.71 3306.29 3615 17290.41

32 17290.41 259.12 3355.88 3615 13934.52

33 13934.52 208.78 3406.22 3615 10528.30

34 10528.30 157.68 3457.32 3615 7070.99

35 7070.99 105.83 3509.17 3615 3561.81

36 3561.81 61.17 3561.83 3623 0.00

The table shows each installment is clearly charged 18% interest instead of the 10.05% that the bank will have told the customer

and advertised. So there is a difference amongst the rate that the customer is offered in comparison to the rate that he will actually

get. Had the rate used been 10.05% for the calculation of the amount of interest and principal to be repaid in each installment the

scenario would have been completely different and most probably resulted in lesser cost for the loan instead of the 130050 rupees

that the customer will now pay. This is because the interest that is charged on the reducing balance is still 18%. That is the actual


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amount that is not being deducted from the principal but instead going towards interest. Whereas this amount could been 10.05% of

the installment and resulted in greater repayment of principal and on the reducing balance basis lower interest charges by the bank.

From this table we can clearly see the effect of the IRR on the repayment of the loan. With the IRR we can see that the initial

payments tend to lean more towards interest repayment. A secondary purpose of this is to make the bank recover its revenue as

soon as possible so that in case of default the customer is bound to pay back the principal payment.

As the BDEs say we just focus on the 10.05 and try to ignore the 18% when making the sales pitch. I guess they believe in what

people dont know cant hurt them.

RECOMMENDATIONS

Problems in Loan Applications & Disbursement

The turnaround time for MNC Loan Applications Approval & Disbursement, Karachi, Lahore and Islamabad is 3 to 4 working days.

The turnaround time for Local Companies Loan Application & Disbursement is 4 5 working days for Karachi + 3 extra working

days for Lahore and Islamabad due to courier/mail.

ISB is facing a few problems due to which a delay is occurring in disbursement of the Loans. Following are the problems:

PROBLEMS SOLUTIONS

Delay in Verification

The TAT for VA is 48 hrs. This should be followed

religiously. Credits to ensure that no VA takes more than

48 hrs.

Finding out the Loan AmountBDE will use the LOAN CALCULATOR formula provided

by Credit to determine the right amount.

Employment Confirmation CertificateBDE shall submit the apps. Once all docs are in order. VA

can be done prior to submission of docs to Credit.

Authorized Signatory LetterConcerned person to contact the Company & resolve this

issue.

Loans from Unapproved CompaniesPlease make sure that all apps. Are from approved

companies.


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All BDEs should ensure that Applications are at least 75% correct / complete prior to submission of the application to the Credits

Department.

All Discrepancies should be resolved within 2 working days.

BDE should ensure that all Loans / Offer Letter are signed within 03 days of issuance of OL or the loan will be cancelled.

Problems & Suggestions for the Management

While interning at Standard Chartered even tough I noticed that the employees have a strong commitment to work and are provided

with a relatively cooperative work environment. There are still a few problems that were being faced by the employees who were

working in the personal loans department. Some discussions were also done with the BDEs and the following are the issues that

they felt were contributing to a less productive and comfortable atmosphere:

Problems:

The Personal Loan staff are at present being treated as the typical Theory X workers. The only motivation that they are

provided with apart from money is that they will face a very angry Boss if they are unable to achieve their targets.

Employees have been complaining about lost visiting card diaries, mobile phones and other articles. These articles are

lost from their desks or their personal storage space. This has added considerably to the already tense environment.

On my first day I chanced to witness a person who was being told to present his resignation to the Man in Charge, as he

had not been able to achieve his targets. However this exchange was done right in the middle of the department with a

clear intention of disgracing the employee. The major reason as perceived by the other employees, for this interchange

being done so publicly was to make them see an example of what might happen to them if they failed to achieve their

respective targets.

Solutions:

From the above mentioned problems we can see that the problems that are being faced are very basic in nature and can be avoided

with a few nice words of comfort. Some suggestions that I came up with are as follows:

The Regional Manager has clearly maintained an open door policy. However the employees of the personal loans

department are not entirely comfortable with the idea. This inhibition is further reinforced by the strict behavior that has

been adopted by the Team Manager and the Team Leaders. To remove this problem the regional manager should hold a

meeting to inform the employees of their importance and brief them as to how this open door policy will work.

If the open door policy is not working then the Team Manager must take it upon him to keep a few hours each day to

listen to the problems of the employees and also help them with any special cases that they might have brought.

The management must decide to move along the continuum between strictness and leniency and try to set a more

relaxed way to deal with the employees of the Personal Loan Department in particular and the entire organization in

general.


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In the end I would just like to reinforce that a few nice words and smiles can make a world of a difference in the

relationship between a superior and a subordinate. This along with the other suggestions can definitely improve staff

morale and motivate them to achieve a more positive direction.

Suggestions for improving the Product:

How Time can be minimized?

The competitors of SCB get the Legal documents signed during the time of approval of the application. Where as in

case of Standard Chartered the legal documentation is carried out only after the approval of the application and amount of

loan for a particular case.

If the process of other banks is followed and Legal documentation is carried out at the time of application then some extra

time can be saved.

Mode of repayment in all cases is by Post-Dated-Checks, the applicant provides checks of his/her salary account and

he mentions the installment and the date at which it will be presented according to the Legal Amortization schedule for the

installment, which requires 12, 24 or 36 PDCs. The problem in this system is that local banks like; HBL, MCB, ABL take a

week to give checkbooks to the customer. The Banks could have an agreement amongst themselves to furnish requests

for other banks on priority basis. This may be a very large-scale solution to some. Therefore a simpler solution is to ask

the customer to request for his/her checkbook as soon as the decision to take the loan is reached. This can be the 1st

thing that BDEs tell the clients. This will ensure some saving of time.

The process involves Credit department and Asset operation department. The Credit department approves the deal

and then Asset Operation prints the Legal documents for the approved deal and then the process is carried out further.

The extra time added due to the documents going from one department to another and then back to the original

department can be reduced in a way that Legal documents are added in a formal application and the Credit Dept. is given

the authority to provide Legal documents.

How Quality can be improved?

The quality of any services department relies as much on product itself as it relies on the staff that it acquires. The staff

is selected on merit and proper training of the staff is a must for ensuring quality. Proper incentives are also required to

keep them motivated and agile.

Department recently reduced the salary package and strengthened the commission structure. This must be reviewed to ensure

quality improvement.

The product is only targeted to salaried class and the segments of Businessmen and Self-employed persons are not

considered. The product must have flexibility to accommodate those segments. As the quality of this product can be

improved mainly through showing greater volumes of disbursed loans so that the bank realizes its increased importance

and gives the strategies of this department greater thought.

Value added features


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The product should include value added features like:

1. Pre-approval of Credit card as the procedure for approval of a Credit card is the same as that of a Loan. So when Loan

is approved the customer should have facility to get a Credit card without any further process.

2. Pre-approval of Car financing can also be provided to the customer who have been approved a loan. As they are now

customers of SCB they should be given reduced rates and a less lengthy process of getting car financing.

3. The Enhancement of loan amount is currently being done after 9 months. This can easily be reduced to 6-7 months. As

most of the customers are reliable and a large number have shown interest in enhancing their loan earlier than the

allowed period of 9 months.

Market penetration and Sales growth strategy

Market penetration

The target for this product is only the salaried class and Businessmen and Self-employed class are completely neglected.

The Government organizations are also not considered in the target market that has been specified and only a select few

Ministries are included in the approved list of companies.

The product must penetrate in sectors such as the Government, Armed forces and also Semi-Government Institutes for

the purpose of attaining more customers.

Features like mortgaged and guaranteed loans must be introduced to capture vast market of Businessmen. As SCB is at

present only dealing in unsecured loans and not competing in the market for Secured loans.

Portfolio cut strategy

Minimum requirement of salary is Rs.10,000 and in current economical situation maximum ratio of salaried class fall

between 8,000 to 10,000. Therefore this minimum criteria should be relaxed to around Rs.8000 to capture the maximum

market and also provide financing to the class which needs it most. Cases of deviation should also be applied to the

salary limits. For e.g. a 5% deviation from the required 10000 should be made acceptable if it is not possible to relax the

actual limit.


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Reduction of Non-conformance cost

The cost related to dissatisfied customer can result to reduction of market share and also damage the good will that this bank

maintains with its customers. One angry customer tells ten and then those ten spread it further and so on. So SCB has to try and

completely eliminate the prospect of having a dissatisfied customer. This can be done in the following ways:

Proper training of customer handling should be given to employees. Training workshops and coaching clinics should be

considered as an option that would provide adequate results.

Quick response to customer queries is necessary to maintain a healthy relationship with the customer.

Quick action should be taken against any miscommitment on part of the members of the Sales team.

Adding of value added features that offer competitive advantage is also a means of avoiding customer dissatisfaction.

Efforts should be made towards reducing the time consumed for disbursement

Surveys must be conducted regarding customer satisfaction level and all employees of this dept. should look forward to

getting feedback whenever possible.

Even though some of these recommendations may not be entirely workable a certain portion of each of these recommendations can

definitely be implemented for future improvement and a greater number of more satisfied customers and employees.