1.

Account Opening Department

In this department I have to learn how to open a new account of a customer. The HBL open the differ
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ent types of accounts. The opening of an account is the establishment of banker customer relationshi
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p. Before a banker opens a new account, the banker should determine the prospective customers int
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egrity, respectability, occupation and the nature of business by the introductory references given at t
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he time of account opening. I already explain these accounts. In order to open an account first of all t
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he customer has to fill a form prescribed by the bank. The person is required to bring some reference
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or introduction for opening the account. Introducer may be a person who has an account with HBL.
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Some important information regarding introducer e.g. the name and account number of the introduc
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er is written on the space provided on the specimen signature cards. Then in order to find out whethe
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r he is a true introducer or not a letter is sent to him thanking him for this introduction, so that anythin
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g wrong may come into notice. There are different requirement for different types of accounts and a
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ccount holders. An important thing is that the customer should have a corporate customer. The corp
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orate customer limit is 4 million and this branch always deals the corporate customer.
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Procedure0of0Account0Opening

Duly filled prescribed A/C opening form.

Attested photocopy of N.I.C./Passport of Account Holder(s), Proprietor, Partners, Directors
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and office Bearers as the case may be.

Certified true copy of the certificate of incorporation or registration (in case of limited comp

anies & registered bodies only).

Certified true copy of the certificate of commencement of business (in case of public limited

companies only).
Certified true copy of the memorandum and articles of association (in case of limited compa

nies).
Certified true copy of rules and regulations or By-Laws (in case of association etc.).

Certified true copy of the resolution of the Board of Directors/Managing Committee/Gover

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ning Body regarding conduct of the account.

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Procedure0for0Account0closing
Any time the customer can close their account if he is not satisfy with the bank or may be other reaso
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n. He can easily close their account. For closing of account the customer meets the manager that he
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want to close his account .For this purpose the application is written to the manager. The manager si
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ng this application and this is submit to the account opening department this department close the ac
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count of the custom.

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2. Remittance0Department
Remittance is a major function of the bank. It is the transfer of money from one place to another plac
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e without directly involving cash. As it is the function of the Bank to the money to any place where t
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here is a Bank. It is the most easiest and safe way to send money to any place. Bank charges menial a
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mount as a commission for the remittance. Here in the Habib Bank Limited Chubara Road Layyah
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Branch there is also remittance Department. By providing this service to the customers the national
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bank earns a lot of income in Exchange.

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There are two types of bills remittance:

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I)

Remittance Inward

II)

Remittance Outward

I.

Remittance0Inward

Cheques and Drafts received for payment and clearance or drawn on us from customer of other bank
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s on behalf of their customers is called Remittance Inward.

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II.

Remittance0Outward

All instruments issued by us, which are drawn on other branch of the same bank or instruments depo
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sited for collection from other bank locally or out of city are called Remittance Outward
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There are mostly four methods to remit the money. They are

Demand Draft (DD)

Mail Transfer (MT)
Pay Order (PO)
Telegraphic Transfer.(TT)
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Demand Draft (DD)

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It is the most commonly method used for remittance of money. It is very simple, firstly a form is to b
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e filled in which all details are specified that where and it which branch the draft is to be sent then the
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money is depositor which is called draft and money can be drawn after showing to the bank of the sp

ecified branch of the Bank. Only specified person can draw the money on that draft. Another metho
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d to secure the payment of the draft could be the crossing of the draft, which means that it will only b
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e deposited in the payee's account. To make it more secured and safe the Bank has coded the amount
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exceeding Rs. 15 . Only the banker or the person known the actual amount of the draft in return ban
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k gets a commission which is its mode of earning.

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Following parties are involved in demand draft:

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Applicant
Issuing branch
Drawee branch
Beneficiary
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A demand draft may be issued against the written request of the customer before issuing it must be s
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een that the demand draft is in order.

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The DD application must be scrutinized by the counter clerk in respect of following points.
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There should be branch where payment is to be made.

Full name of payer should be mentioned.
Amount in words and figures must be same
The applicant on two places should sign application.
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Mail Transfer (MT)

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The money is transferred through mail. One Branch of the bank sends advice to the branch of the sa
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me bank to credit the account of payee. In this type of transfer the payee must has the Bank account.
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For example, now days PTV's licenses are made all over the Pakistan. Bank also gets commission o
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n the mail transfers the amount to the PTVs Islamabad account.

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Pay Order (PO)

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Pay order is less expensive method of transfer money. Normally this method is used to transfer mon
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ey inside the city. If it is used city wide, it takes a long time. The bank charge Rs. 1 which is flat fee t
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he pay order and an excise duty of Rs, 1 per leaf withholding tax of 2 % on the sum is also taken from
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the party. Now if the pay order is to be cancelled or duplicate of the pay order is to be needed is case

of misplacement Rs.2 is to be paid.

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Following parties are involved in pay order:

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Applicant
issuing branch
Payee
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Telegraphic Transfer.(TT)
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It is a good safe and fast method of transferring money from one place to another. The advice is sent t
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hrough the telegram and the bank to which the advice is made reconfirms that whether the advice is
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made or not. After the confirmation the money is paid to the payee. Telegraphic Transfer could be m
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ade by giving the name and the telephone number of the payee but account number is considered go
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od and sage. The amount exceeding Rs.15 is coded in order to keep security.
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Following parties are involved in TT

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Applicant
Drawing branch
Drawee branch
Beneficiary
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Following important things should be included in TT:

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Full name of the beneficiary or account number should be mentioned in the application form

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Instruction regarding mode of payment should be obtained.
A record in the remittance outward register should be maintained.
All the remittance must be controlled through number or codes.

3. Advances0Department
This department has been working under the supervision of knowledge experienced & well qualifie
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d banker. Mr. Nadeem, who has been serving this bank for the last 22 years. This department has bee
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n playing one of the primary functions of the bank because a bank is the organizations that accept de
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posits & give advances. Advances department is one of the most sensitive and important department
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s of the bank. The major portion of the profit is earned through this department. The job of this depar
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tment is to make proposals about the loans. The Credit Management Division of Head Office directl
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y controls all the advances. As we known bank is a profit seeking institution. It attracts surplus balan
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ces from the customers at low rate of interest and makes advances at a higher rate of interest to the in
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dividuals and business firms. Credit extensions are the most important activity of all financial instit
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utions, because it is the main source of earning. However, at the same time, it is a very risky task and
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the risk cannot be completely eliminated but could be minimized largely with certain techniques. A
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ny individual or company, who wants loan from HBL, first of all has to undergo the filling of a presc
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ribed form, which provides the following information to the banker.

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Advances are investments of bank to earn profit. After restructuring of Habib Bank Limited, Head o
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ffice gives loan targets to each branch that must be achieved for its survival. The manager is responsi
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ble to achieve these targets in the given period. The amount is collected partially with an agreement
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containing the markup or interest rate, which is to be paid the interest, or markup is applied on a time
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limit after that it can be increased with the given conditions applied.

There are basically two types of loans.

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Fund base
Non-fund base
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Fund0base
In fund base the cash is involved.
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Non-fund0base
While is non fund base cash is not involved.
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These are following types of advances those are given by the BANK.
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Cash Finance (CF)

Running Finance (RF)
Machinery Loan.
International Development Agency Loan(IDA)
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Cash finance (CF)

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Cash Finance is the biggest loan given to the businessmen, industrialists, and its limit is in crores an
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d bank do require security for this purpose. After the proper investigation and documentation these f
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inances are given and genuine property is pledged as a matter of security.

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These loans are taken for the purchase of stocks etc. The bank appoints its staff of two or three perso
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ns at the place where that stock is lying. Bank also keeps the record of the stock and current position
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too. A notice is also written at the place that the stocks are pledged with
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the bank. To get these types of loans prior permission from the zonal office of the Habib bank is also
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required. The bank gets back its principal amount and also markup for the loan
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Running finance (RF)

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Running Finances are also given for the purchase of stock etc. But its limit is not too much. Normall
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y up to RS 15, , is given as a Running Finance and no staff is appointed. This is termed as Hypothe
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cation, which means that party is wholly liable for the stock and
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payment of the principal amount and markup. The procedure is almost same as for the cash finance a
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nd the loan is given to those parties which are able to prove its genuineness and satisfies the bank. Th
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e bank also pledges the genuine security of the party which normally more valuable than the amount
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of loan. To get this type of loan prior permission of the zonal office is necessary.
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Machinery loan
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Certain loans are given for the purchase of machinery. These loans are called Local Machinery Man
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ufacturing Loan (LMM LOAN). The bank finances for the machinery, which is manufactured in Pa
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kistan. Like other loans after the proper verification and proper documentation.
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With the prior approval from the zonal office, these loans are given. The bank pledges some genuine
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property as a security. Personal security is also required in the getting of this loan. The loan is to rep

ay in certain installments which includes the mark0

up also. Normally these loans are for the period of five years and first six or three months are exempt
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ed from the installments as the ease or as the terms and conditions may be. The rate of the interest to
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be paid by the party is 8% per annum.

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International Development Agency Loans.

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These loans are given for the purchase of foreign machinery, stocks, etc.
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Though these loans are not in practice but there is a provision for this loan. The cause of in practicin
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g of the loan may be the unawareness of the people about the provision.
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The rate of interest on these loans is 11% per annum.

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These finances are provided by the World Bank.

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Principles0of0Advances
There are five principles, which must be duly observed while advancing money to the borrowers.
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Safety
Liquidity
Dispersal
Remuneration
Suitability

Other Finance system of the HBL

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Demand finance

Fixed assets financing (FAF)

House Finance

Hire Purchase Financing

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4. Marketing0Department
Function0of0Market0Department
The function of the marketing department of a HBL is to advertise about the bank and reach more po
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ssible customer who would open accounts with the HBL. They usually start up the campaign or a pr
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omotional scheme explaining a benefit that come along with the process of account opening with th
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e bank. Such a campaign usually results in the increase in the customers base and increased the prof
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it for the HBL.

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Another important function of HBL is to use of the segmentation strategy, in it the HBL divide the m
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arket into distinct group of buyers with different needs how might require It is very important strateg
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y which is applied by the operation marketing department in the HBL, the Main focus of this selecti
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ng strategy is to spreading the market into different groups, where the persons have comparable nee
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ds as well as wants for services and products.

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The marketing department in HABIB BANK LIMITED is very strong. It is the main source of gaini
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ng and maintains the customers that can give a large profit to the bank. There are five relationship m
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anagers in Habib bank and every person is responsible for the credit of his party. There are three mar
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ket of HBL.
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Money0Market

T-Bill and Govt. Securities

Bonds of Provincial Govt.
Defense Saving Certificates
Mutual Funds etc.
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Capital0Market

Equities e.g. shares

Mutual Funds
Bonds
Debt Market
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Foreign0Exchange0Market

Spot Transactions
Outright Transactions
Swap Transactions
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Customer0dealing
HBL corporate center only deal with the following categories of business:
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The organization that have minimum 25 million sales in a year.

The organization that have availed 8 million finance
Agri based industry.
HBL do not deal with the agriculture sector.
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5. Clearing0Department
The major function of clearing department is to receive the cheques, which are drawn on some other
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banks. The customer can get the money in his account at Habib Bank Limited through a cheque dra
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wn on another bank. The bank accepts these cheques and collects the amount from that bank on whi
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ch cheques are drawn through the Clearing House. Bank charges some commission for this function
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Every bank performs both as a paying as well as collecting functions on behalf of its customer. It is h
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owever an important function of crossed cheques. A large part of this work is carried out through the
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bankers clearing house. A clearing house is a place where representatives of all the banks of a city g

et together and settle the receipts and payments of cheques drawn on each other bank. As the collecti
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ng banker runs the certain risks in receipt of their ownership, the law has provided certain protection
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s to the banks. The basic function of clearing dept. arises when HBL account holder deposits cheque
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of another back to collect its payment on his behalf or HBL account holder gives a cheque to any oth
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er party concerning to any other bank. Usually a cheque is sent through clearing is credited to the de
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positor account day after tomorrow.

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In this regard there are two types of clearings.

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Inward Clearing
Outward Clearing
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Inward0Clearing
Inward clearing means all those cheques which are issued by account holders too their parties and n
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ow these cheques are presented for payment (in term of amount of cheque credit to presenter accoun
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t).

Outward0Clearing
Similarly when outside parties issue some cheque to our account holders, they deposit these cheque
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s in cheque Receipts Department. Afterward these cheques, as relating to other banks operating in c
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ountry, are sent to clearing department or further process. Clearing dept. sends these cheques to resp
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ective banks and after realization of cheque, funds are credited to the account of respective customer
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. In this regard there are two types of clearing

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Intra city clearing

Intercity clearing
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6. Foreign0Exchange0Department
As the Pakistani currency accounts are opened the requirements are same for the foreign currency ac
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counts. All the transactions are made in the foreign currency in which the account is opened.
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7. Computer0Department
Through this department bank has make its way to enter in twenty0

first century. This department is playing a very important role in making the banking procedures fast
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ers and helping the bank for providing the new services to its customers. This division provided the
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bank with online branches system to make the whole procedure fool proof.
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Types0of0Branches:
There are three types of branches in all over the Pakistan.
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Online Branches
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The branches, which are directly, linked with the central computer AS0

4 through wide area networking through fiber optic cables. These branches have dumb terminal dir
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ectly linked with central computer. Yet only forty0

four branches all over the Pakistan are online. Out of forty0

four, seventeen are located in Karachi, seven are located in Lahore, and two are located in Islamabad
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and two in Multan and two in other regional offices.

Batch Branches;
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The branches where all transactions are carried out with the computer based system but these branch
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es are not connected to the central computer with wide area networking. Batch branches are using th
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ree types of system, Branch Back Office (BBO) based on FoxPro, Branch Automated System (BAS
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) based on UNIX Branch Integrated System (BIS) based on FoxPro, in Karachi mostly branches faci
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ng this problem. Now-a0

days efforts are under way to convert all branches into Electronic Banking System (EBS) which is u
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sed by online branches as this system doesn't require a person to remaining sitting till the branch clo
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sed its operation but the system automatically close itself when the branch time is over. The databas
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e in head office is also on this system.

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