Documente Academic
Documente Profesional
Documente Cultură
Report
Askari Bank Limited
Submitted To:
Hasnain Manzoor
Session 2008-12
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Sumission Date: 23-09-2011
Preface
Now a day the business environment keeps on changing everywhere. New dimensions
of business are coming before us. These dramatic and dynamic changes in business world
require the specialties about the all aspect of business of today. Because of these
requirements business knowledge became important and business education becomes the
need of time. The person with latest knowledge can survive in this vast field.
But practical knowledge is also necessary along with the theoretical knowledge. This
made the internship an integral part of B.Com. One can see how the theories and
knowledge are being practically implemented. I completed my internship in Askari Bank
Limited. This report carried the information about history, organizational structure,
departments, strengths and weaknesses etc. Askari Bank Limited. In this report I tried my
level best efforts to encompass and elaborate the necessary information about the Askari
Bank Limited. This internship report includes a complete introduction, performance and
financial analysis of the statements of the Askari Bank Limited.
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DEDICATION
To My Eminent
“MAAN JEE”
Who Spent Each And Every Moment of Her Life
Praying for Me
To My
And for My Success
“ABBU JEE”
TO My Friends
“And Respected Teachers”
Who Always Helped Me In
Spare Of Life 3
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ACKNOWLEDGEMENT
‘In the name of Allah, the most Gracious, the most merciful’
Completion of internship report is not an easy task. It requires continuous hard work and
zeal. Completion of this report would have not been possible with out the support of all
staff members at the bank, my respected teachers, my friends and my well wishers. I
would like to mention that Mr. Shakeel Ahmad Nadeem, who is presently serving the
bank as Manager Operations, has been very kind and supportive through out my stay at
the branch.
My gratitude will always remain due to the AIOU for expanding my knowledge and
experience. This prestigious institution will has a lasting impact on my life.
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May Allah Bestow His Blessings On All Of Us
EXECUTIVE SUMMARY
The Department of Commerce was established in 2007 and offers B.Com (Hons) in
2008. They are giving the best education and are offering for specialization, financial
management and Accounting. An important programmed is six to eight weeks internship
with any recognized institution.
I decided to take up Askari Commercial Bank Limited for my internship because it’s
competing bank nowadays and gives a good training to the internees. So in order to learn
more this was my choice.
This report is about my internship that I have undergone at Askari Bank Limited Jhang
Branch from 21st June 2011 to 2nd August 2011.
During my internship I am able to learn practical aspect of business, and get good working experience.
On the very first day of my internship I reported to Human Resource Manager / Operation Manager
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Shakeel Ahmad Nadeem. He gave me small introduction of the bank and introduced me to the staff of
the bank. Every internee is rotated among the bank’s departments and so was I. This rotation is done in
order to have general concept regarding bank’s functions, operations and policies. In this rotation the
stay in department is usually a week. I have learned more about the Bills and Foreign Trade department
and have given below the caption of activities I was involved in during the period of six weeks.
During my internship I found that Askari Bank is a best bank in Jhang because most of the Exports and
Imports in Jhang are done through this bank. Low profit rates are one of the major reasons for not
meeting the deposit targets. The profit rates on Askari deposit schemes are quite low when compared
with other banks especially with the National Saving Centers. In today every customers is the rational
customer he knows the value of money and wants a best return on his money.
Earlier Askari Commercial were able to attract customer due to their ancillary services like ATM Cards,
Credit Cards, Online Banking etc. but now all the banks are offering these services through their own
network or through third party contracting, so our plus points are no more our advantages. So the only
things through which ACBL can increase their deposits are profit rates, because the customers only
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BANKING IN PAKISTAN
Pakistan came into being on 14th August, 1947; sufficient banking services were
available in the areas forming Pakistan. Out of the total branches of the nearly 3,500 in
the undivided India, as many as about 1,500 branches were existing in these areas.It was
agreed between the two countries that reserve bank of India shall continue to function in
the Pakistan territory until 30th September 1948 and that Indian notes would continue to
be legal tender at Pakistan until 30th September 1948. Unfortunately, relationship
between the two countries became most strained immediately after independence;
banking was mostly in the lands of Hindus who immediately started transferring their
offices and assets into India. As a result most of the banks in Pakistan were closed down
and even those which were open were not doing any effective business.
The number of banking office in Pakistan came down to about 200 on 30th June 1948.
Branches of some European banks were also functioning in a limited manner, financing
in export of crops, and their number was limited to about 20. It was only the Habib bank,
which transferred its office from Bombay to Karachi Austral Asia bank was another bank,
which was in existence in the Pakistan territory at the time of independence. Despite of
best efforts on the part of government of Pakistan, no heady way could be made on this
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behalf and reserve bank of India was in no mood to help the new country. Imperial bank
of India, agent of the reserve bank of India also started closing down its branches in
Pakistan. to advance Reserve bank also refused money to Pakistan to make essential
payments such as salaries etc, also Pakistan’s share of Rs.75 billion in cash balance was
with held by bank, causing hardships to the newly born state. In view of these hopeless
state affairs it was agreed between the two countries that reserve bank would serve as
monetary authority in Pakistan only up to 30th June 1948.
Banking in fact is primitive as human society, forever since man came to realize the
importance of money as a medium of exchange, the necessity of a controlling or
regulating agency or institution was naturally felt. Perhaps it was the Babylonians who
developed banking system as early as 2000bc. It is evident that the temples of the
Babylon were used as ‘Banks’ because of the prevalent respect and confidence at the
clergy.
At the time of independence there were 631 offices of the scheduled banks in Pakistan, of
which 487 were located in West Pakistan alone. As a new country with resources it was
very difficult for Pakistan to run its own banking system immediately. Therefore the
expert committee recommended that the Reserve Bank of India should continue to
function in Pakistan until 30, September 1948, so that problems of time and demand
liability, coinage currencies, exchange etc, could be settled between India and Pakistan.
The non Muslims started transferring their funds and accounts to India. By the end of
June 1948, the number of officers of scheduled banks in Pakistan declined from 631 to
255. There were 19 foreign banks with the status of small branch offices that were
engaged solely in export crop from Pakistan, while there were only two Pakistani
institutions, Habib Bank, and Australasia Bank, the customers of the banks are not
satisfied with the uncertain condition of banking. Similarly the Reserve Bank of India
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was not in the favor of Govt. of Pakistan. The Govt. of Pakistan decided to establish a
full-fledge central bank. The governor general of Pakistan, Quaid-e-Azam Muhammad
Ali Jinnah, inaugurated the state bank of Pakistan on July 1, 1948.The first Pakistani
notes was issued in October 1948 in the state bank of Pakistan. After the establishment of
state bank, banking expansion got momentum. More Pakistan schedule bank continues to
be the established. The network of banking braches now covers a very large segment of
national economy.
Monetary policy and banking system play an important role in the development of all
economic fields of the country because necessary finances for completion of economic
plans are provided by them. Therefore an organized banking system and the financial
institutions play an active role in this matter. The stable an organize banking policy is
much effective to improve the level of saving and consequently the level of investment.
The monitory policy is adopted and controlled by the bank but its success depends upon
the cooperation of commercial banks. Availability of the credit is a big problem for
LDCs. The shortage of supply of capital can be improved better and organized banking
system because the banks can increasing the saving through launching the various
attractive schemes in various productive sectors banks also produce credit money and
through this way resources are supplied to productive sectors of the country.
KINDS OF BANKS:
In Pakistan following types of banks are operating in the business circle
like economics.
COMMERCIAL BANKS:
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These banks are set up on commercial basis. Therefore, their primary
objective is to earn profit and maximize it is far as possible. For this they received cash
deposits from the people in different accounts. They give loans to different business
enterprises and thereby create credit money.
The State Bank of Pakistan is the central bank of Pakistan, Commercial Banks, financial
institutions and cooperative banks are the other components of the banking system.
AGRICULTURAL BANK:
These banks are providing long term and short term credit facilities to
landlords and tenant farmers.
INDUSTRIAL BANK:
These banks are medium and long term loans to industrialists to set up
new industries for the extension of industries already in operation.
MORTGAGE BANKS:
These banks provide the loans to the people against their moveable and
immoveable property.
EXCHANGE BANKS:
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These banks deal in foreign exchange. They provide credit to importers and
exporters by discounting foreign bills of exchange.
SAVING BANKS:
These banks are set up to induce the people to accumulate their small
saving in these banks.
CENTRAL BANKS:
Each country in the world has its own central bank. This bank does not
deal with public directly. This means that it neither receives cash deposits from the people
nor it’s give them loans. Therefore it is not a profit making institution.
History Of Organization:
Askari Bank (formerly Askari Commercial Bank) was incorporated in Pakistan on
October 9, 1991, as a Public Limited Company. It started its operations on April 1,
1992. The bank principally deals with banking, as defined in the Banking Companies
Ordinance, 1962. The Bank is listed on the Karachi, Lahore & Islamabad Stock
Exchanges.
Askari Bank has expanded into a network of 226 branches, including 31 dedicated
Islamic banking branches, and a wholesale bank branch in Bahrain. A shared network of
4,173 online ATMs covering all major cities in Pakistan supports the delivery channels
for customer service. Askari Bank achieved planned growth in business and operations
during 2009. The total assets of the Bank amounted to Rs.254 billion as at December 31,
2009, registering an increase of 23 percent over December 31, 2008.Customer deposits
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reached Rs.206 billion by December 31, 2009, an increase of 23 percent over December
31, 2008.
Profit after taxation showed an increase of 187% at Rs.1.11 billion, when compared with
last year’s Rs.386 million. The banking spread registered slight improvement over last
year, despite absorbing the adverse impact on net mark-up income due to increased
nonperforming advances. The Bank’s NPLs stood at Rs.17.73 billion as of December 31,
2009 compared to Rs.11.69 billion at the end of previous year, an increase of 52 percent.
Askari Commercial Bank Limited (ACBL) works as a Unit of Army Welfare Trust was established
for the Welfare of Army Officials. The office of Army Welfare Trust is situated at AWT Plaza,
Rawalpindi. AWT offers the “AWT Saving Scheme” to the army officials only. AWT has its units as
under:
1. Askari Associates.
2. Askari Leasing.
3. Askari General.
4. Private Business.
5. Textile Mills.
6. Cement Industry.
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Incorporated in Pakistan on October 09, 1991. The bank obtained business commencement certificate
on February 26, 1992 and started operations form April 1, 1992, as public limited company, and has
since expanded into a nation-wide presence of 51 branches, supported by a network of online ATMs.
The Bank is listed on the Karachi, Lahore and Islamabad Stock Exchanges and the initial public
offering was over subscribed by 16 times. Askari Commercial Bank is scheduled Commercial Bank
and is principally engaged in the business of banking as defined in the Banking Companies Ordinance
1962.
Nature Of Organization
Vision Statement:-
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Mission Statement: -
Features
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A product ACBL includes all those services which customer normally required for
effectively managing his business. ACBL offers the following financial services to its
customers.
Personal Finance
Mortgage Finance
Debit/Visa Card
DEMAND DEPOSIT
Current Account
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Call Deposit Receipt
TIME DEPOSIT
Notice Deposit
Askari Advantage
Term Deposit
LOCKERS
Running Finance
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Cash Finance
Term Finance
Staff Finance
Trade Finance
Pre-shipment Finance
Post shipment
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Finance Against Packing Credit
It is popularly known as overdraft. It is offered for working capital requirement of the customer. It is
created in current account adjustment from time to time finally on expiry date. This facility is normally
issued against hypothecation of immovable property. It is allowed to the borrower under a pre-
sanctioned limit. A current account is opened and the conduct of this account is kept under review for a
period of three to six months. The borrower can draw cheque on his account maximally up to the
amount of limit sanctioned to him. The amount outstanding against the borrower is mark-up will be
changed on the basis of the amount outstanding. This facility is issued on revolving basis repayment
should be completed by the maturity date. Repayment in monthly installments is not required.
It is also offered for the working capital requirement of the customer. It is the type of loan in which
client is given cash in lump sum it is offered against the pledge of moveable property or stock of
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borrower. In majority of the cases this finance is allowed against pledge of stock. The amount of
finance is credited to borrowers CD account and he/she utilizes it for business purposes. Repayment is
not made by monthly installments. Adjustments are linked with delivery of goods kept under bank’s
pledge. Goods are pledge when the payment is done on delivery order of the bank. Goods released are
equivalent in value to the repayment amount and remaining goods are stills kept in pledge with bank
for further recovery. Goods are released on the Delivery Order (DO) by the bank to the Go down
Officer.
Term finance is offered to client for investment in any project or business. It is issued for fixed time
period. The amount of finance is credited to borrower’s personal account by debiting the Term Finance
Account. The amount of finance is credited to borrower’s personal account by debiting the Term
Finance Account. The amount of Finance is disbursed in lump sum. Partial transactions are not allowed
in the Term Finance account. The repayment of Term Finance is usually in installments and with other
documents a letter of installments is taken from the borrower at the time of disbursement. By that letter,
the borrower binds him to pay the installments at regular intervals. Monthly repayment amount is
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This type of finance is offered to the importer to finance their needs for meeting the cost including
freight, insurance, and customs and excise duty payable on the imported merchandise. The lending
bank mostly pledges the imported goods. The merchandise is released for the use of the importer
(borrower) upon repayment of the bank’s finance and charges either fully or partially, on production of
These are those types of facilities in which funds are not directly involved.
LETTER OF CREDIT:
The sights L/Cs call for the draft to be drawn ‘at sight’. Documents negotiated and received against
sight are held as security till their retirement. Drafts drawn under Usance are for a tenure specified in
Credit line proposal must clearly state the type of letter of credit the branch is intended to issue.
LETTER OF GUARANTEE:
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Guarantees issued by the bank can be classified under two broad categories.
Bank guarantees the fulfillment of a financial commitment on behalf of the customer. Under these
guarantees, the bank is called upon to pay in the event of a breach of terms on the part of the customer.
The bank guarantees the due fulfillment of a contract or other work as specified in the guarantee, by the
customer. The amount of guarantee is usually up to the extent of the value of the contract.
Bank issues guarantee in favor of the shipping company to enable the importer to obtain delivery of the
Core Values:
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ethical standards, based on the development of right attitudes. We believe in our 'core
values' as the essential and enduring tenets of our organization - the very small set of
guiding principles that have a profound impact on how everyone in the organization
thinks and acts. They have an intrinsic value for us and bear significant importance to all
our employees. They are the few extremely powerful guiding principles; the soul of the
organization - the values that guide all our actions.
The intrinsic values, which are the corner stones of our corporate behavior, are:
Commitment
Integrity
Fairness
Team-work
Service
CORPORATE PHILOSOPHY:
I n s p i r i n g R e l a t i o n s h i p s
Striving to address newer challenges with a single motivation: “the power to inspire
and be inspired”
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OBJECTIVES:
Deliver solutions that meet customer’ financial needs.
Build and sustain a high performance culture.
Build trusted relationships with all stakeholders.
Build and manage the Banks’ portfolio of business to achieve strong and
Sustainable shareholder return.
Create and leverage strategic assets and capabilities for competitive advantage.
To facilitate the bank with modern banking technique.
To accelerate commercial activities and capture large market share.
Technology has played a pivotal role in meeting customer expectations, particularly with
respect to speed and quality of service. We have fully automated transaction-processing
systems for back-office support. Our branch network is connected online real time and
our customers have access to off site as well as on site ATMs, all over Pakistan. Our
Phone Banking Service and Internet Banking Facility allows customers to enjoy routine
banking services from anywhere anytime in the world.
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FOREIGN BANKS
ABN Amro Bank Ltd.
American Express Bank Ltd.
Bank of America
Standard Chartered Bank
Chase Manhattan Overseas Corp.
Deutsche Bank AG
Credit Agricole Indosuez
Habib Bank AG Zurich
The French International Bank
Al-Baraka Islamic Investment Bank
Emirates Bank International Ltd.
Mashreq Bank
The Bank of Tokyo Mitsubishi Ltd.
Hong Kong and Shanghai Bank
Oman International Bank S.A.O.G.
LOCAL BANKS/DFIs/MODARABAS
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Faysal Bank Ltd.
Prime Commercial Bank Ltd.
Union Bank Ltd.
Bankers Equity Ltd.
Bolan Bank Ltd.
Prudential Commercial Bank Ltd.
Bank Al-Falah Ltd.
The Bank of Khyber
Gulf Commercial Bank Limited
Pakistan Industrial Credit & Investment Corporation Ltd.
Citibank Housing Finance Co. Ltd.
National Development Finance Corporation
International Housing Finance Ltd.
First Professional Modaraba
Industrial Development Bank of Pakistan
House Building Finance Corporation
Investment Corporation of Pakistan
ORGANIZATIONAL STRUCTURE
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Organizational BOARD OF DIRECTORS
Chart
Executive
Internal Audit
Committee
South I
Legal Affairs
South II
West
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A Typical Branch Hierarchy
General
Manager/
Regional
Manager
Customers
Services
Department
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Employees in Branch:
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Name Designation
1. Mr.SanaULLAH Gill Branch Manager
5. Mr. M. Imran O. GІ
RAWALPINDI/ISD REGION
F-10 Branch
Block 5-C, F-10 Markaz, Islamabad
GHQ BRANCH
Near GHQ Gate No. 7,
Rawalpindi.
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Chaklala Scheme III Branch
18-Commercial Area, Imran Khan Avenue,
Chaklala Scheme III, Rawalpindi.
NORTH REGION
Abbottabad Branch
Lala Rukh Plaza, Mansehra Road, Abbottabad.
Mardan Branch
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The Mall, Mardan.
Mirpur Branch
Hanfi Building Branch,121 C/1, Sector C-2,
Chowk Shaheedan, Mirpur.
LAHORE REGION
Gulberg Branch
10-E/11, Main Boulevard
Gulberg-III, Lahore.
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LCCHS Branch
L.C.C.H.S Society Office
Sector Y, Commercial Area,
Phase-III, Lahore Cantt.
EAST REGION
Bahawalpur Branch
1-Noor Mahal Road, Bahawalpur.
Gujranwala Branch
Trust Plaza, G.T. Road,
Gujranwala.
Multan Branch
Abdali Road, Multan.
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Phoolnagar Branch
Lahore-Multan Road, Distt. Kasur,
Sahiwal Branch
48/B & B1, High Street Branch, Sahiwal.
Sargodha Branch
80-Club Road, Old Civil Lines Sargodha.
Jhang Branch
Church Road Jhang Sadar
Sialkot Branch
Paris Road, Sialkot.
Gujrat Branch
Hassan Plaza (Opposite Pak Fan Mosque),
GT Road, Gujrat.
SOUTH REGION-I
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Cloth Market Branch
Laxmidas Street, Karachi
Gulistan-e-Jauhar Branch
Asia Pacific Trade Centre,
Rashid Minhas Road, Karachi.
Gawadar Branch
Airport Road, Postal Code 91200, Gawadar.
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Sukkur Branch
Sarafa Bazar, Sukkur
SOUTH REGION-II
Clifton Branch
Marine Trade Centre, Block-9,
Karachi.
Defense Branch
Jami Commercial Street No.11,
Off Khayaban-e-Ittehad,
Phase-VII, Defence Housing Authority, Karachi.
Sharah-e-Faisal Branch
11-A, Progressive Square, Block-6, P.E.C.H.S,
P.O. Box: 12696, Karachi.
Bahadurabad Branch
Zeenat Terrace,
265-Block 3,Bahaduryar Jang Society,
Bahadurabad, Karachi.
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Dar-ul-Aman Branch
Dar-ul-Aman, Housing Society,
47-A, Block No. 7& 8, Shahrah-e-Faisal, Karachi.
Hyderabad Branch
332-333, Saddar Bazar
Chaman Branch
Trunk Road, Off Mall Road, Chaman.
Corporate Information
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Mr. Shaharyar Ahmad
President & Chief Executive
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Director
(NIT Nominee)
Director
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Audit Committee
Road, Karachi
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Introduction Of All Departments
Accounts Department
Cash Department
Clearing Department
Credit Department
ACCOUNT OPENING
DEFINITION OF BANKERS:
As defined in section 3(b) of negotiable instrument act 1881,
‘”bankers” means the person transacting the business of accepting for the purpose of
lending on investment of deposits of money from the public, repayable on demand or
otherwise, and withdraw able by cheque, draft, or otherwise, and include the post
office savings the bank.
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QUALIFICATION OF CUSTOMER:
RIGHTS OF A CUSTOMER:
A customer has the following universally accepted rights.
Section (72) of negotiable instrument act 1881 lies down that the customer must
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present the cheques for payment and collection with in the business hours of the bank.
OPENING OF ACCOUNT
The banking history is replete with various instances of fraud largely
due to incorrect opening of accounts. These fraud could have been avoided in if the
branch managers and other designated officers had taken due care and exercised
required precautions at the time of opening of accounts.
At the time of opening of accounts, officers should tactfully obtain as much
information as possible about the integrate and character of the person, his correct
name, address and occupation. This infect will be the only opportunity when they will
be able to talk to the prospective customers in a friendly and frank atmosphere. This
is the time when they have a slight edge over the customer. He or she at this point of
time is willing to divulge as much information about his personal status and business
etc to the bank manager. It is therefore necessary that due care and proper procedure
be followed for opening different types of accounts for various types of customers.
INDIVIDUALS ACCOUNTS
PARTNERSHIP FIRM ACCOUNTS
JOINT STOCK COMPANY ACCOUNTS
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AGENCY ACCOUNTS
CLUBS, SOCIETIES & ASSOCIATIONS ACCOUNTS
When a customer opens an account under the law he enters into a contractual
relationship with the bank.
At the time of opening the account, intended customer must have the following
characteristics:
A He must have reached the age of majority
In term of section 3 of the Indian majority act 1875 (as adopted in Pakistan) a person
is a major if he attain the age of 18 years. However, the age of majority shall be 21
years in case of European nationals and also where guardian is appointed under the
guardians and wards act.
A person who is under the age specified herein above is considered a minor. In term
of section 11 of the contract act, a minor is declared incompetent to enter into a
contract. As such, any contract with a minor is a void. However, the banks generally
allow the minor to open accounts with a view to inculcate in them the habits of
saving. Such account is opened jointly with their guardian and is allowed to be
operated by the guardian. The guardian for the purpose will sign the account opening
from and the specimen signature card.
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A person is said to be of sane or sound mind it he understands the terms and the
conditions of the contract and is capable enough to form rational judgment as the
INFORMATION:
As much relevant information as possible must be elicited from the prospective
customer relating to his means, line and place of business etc.
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filled in with necessary details.
INTRODUCTION OF ACCOUNT:
Account must be properly introduced. In this concern, the following precautions are
to be observed.
Introducing from person having doubtful dealing with the bank should be discretely
declined. The staff member generally should not introduce the account. They will
introduce accounts only for those persons who are personally known to them and
whose credentials are absolutely clean.
As for possible, the account opening form should be completed by the prospective
customer in presence of the introducer who is then aware of the particulars furnished
and can corroborate the same.
Specific information concerning the profession should be recorded in the account
opening form. The description private Service’ or ‘Businessman’ is insufficient.
Signature on the account opening form must be put by the customer will attest them
properly in presence of introducer.
No cheque book should be issued to the new accounts are properly introduced.
Account may be opened with cash or cheque. Initial deposits, it is incumbent upothe
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Branch Manager to satisfy themselves additionally that title of account holder is
genuine for the cheque deposited. Prudent bankers avoid opening new accounts with
Cheque. Letter of thanks should be sent to the introducer the day the account is
opened. This precaution would accomplish the purpose of intimating the introducer
that the account has been opened on strength of his introduction thereby inviting
disclaimer if untrue.
A letter of thanks should be sent to the new account holder, preferably through
registered mail, to verify his address.
In the evening, the officer of the branch should visit the customer’s area to establish
that the address given by the customer is correct and the commands respect and honor
in the neighborhoods/vicinity he is living.
Number of the customer’s national identity card should be correctly recorded in the
account opening form and copy of it should be kept on record.
No account should be opened in the name of an undercharged insolvent.
TYPES OF ACCOUNTS
Let us now turn to procedure to be followed in case of each type of accounts.
INDIVIDUAL ACCOUNTS:
Such account may be classified as follows:
Accounts of literate ladies and gentlemen.
Accounts of parade observing ladies.
Joints accounts.
Minor accounts.
1. In order to open the account for literate people an account opening form,
signature card, form “A”, and an ID copy are required with Rs. 2500 for opening
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account and he must fulfil all customer characteristics.
2. In case of illiterate ladies and gents, the following precautions are observed in
addition to those provided in the above guideline.
a) Two photographs are to be obtained one to be pasted on account opening form and
the other specimen signature card.
b) Instead of signature left hand thumbs impression to be obtained on the specimen
signature card from gents and right hand thumb impression from the ladies.
c) Each time such customers should attend the bank personally and will put their
thumb impressions on the cheque before the passing officer.
d) Such customers should be advised not to issue cheque payable to third parties.
e) Cheque should be marked payment in person to ensure even if the cheque is
presented through clearing that particular cheque can only be paid in person
3. When account is opened by more than one person but the relationship between
them is neither of trustees nor partners it would be termed as joint account.
Whenever such accounts are open-end, definite instruction regarding operations on
the account and payments of balance in cased of death of any one of them should be
obtained.
4. A person who is under the age as specified above is considered as minor, a minor
is declared incompetent to enter into a contract. However, the banks generally allow
the minor to open accounts with a view to the condition of saving habits. Such
account is opened jointly with their guardian and is allowed to operate by the
guardian.
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While opening accounts of the partnership firms, the
partnership deed from registered firms is required obtained in the addition to account
opening form and specimen signature card. The partnership letter is attached with the
Accounts opening form, which must also be signed by all the partners of the firms
whether registered or unregistered.
In these accounts, the following points should be remembered.
1. All the partners must sign the account opening form.
2. The names of persons authorised to operate the account must be neatly and
correctly given in the account opening form.
3. For partnership concerns carrying on the business under impersonal name it is
generally described that the title of accounts should show name of the partners or
managing partner.
4. A cheque payable to the firm should not be accepted for credit to personal
accounts of the partners without the written authority of all the partners.
5. The maximum numbers of partners in general business 20 and the minimum is 2
for the banking firms the maximum numbers of the partners is 10 in Pakistan
however bank can not be opened by the partnership concern.
6. Since these are the business concern they will be allowed to open current
accounts. No saving s bank accounts be opened in partnership name.
Partnership account opening required following documents:
1) Account opening form (A.O.P)
2) A.O.P should be duly introduced
3) Copy of N.I.C Of all partners
4) Registration certificate (optional)
5) Partnership deed
6) Rubber-stamp on letterhead of the firm
7) Letter Head
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8) Official capacity (It means that all the partners will sign and choose the singe for
operation of account with the bank. And in account opening form the name of the
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directors of the company is properly constituted and request for opening the account
comes through resolution of the board of directors. The resolution for account
opening should bear company seal and signed by the chairman of the meeting where
d) Certificate of Incorporation.
e) Certificate of Commencement of Business (only required for public limited
companies.
f) National identity cards of directors.
g) List of director with their shareholding.
h) Specimen signature card duly signed
ACOUNT OF PROPRIETOR:
1. A.O.F should be duly introduced
2. Copy of N.I.C of proprietor
3. Specimen signature card duly signed
4. Proprietorship declaration concerns on firm’s letterhead’s
ACCOUNTS OF CLUBS, SOCIETIES AND ASSOCIATION:
Clubs, societies and associations are non-profit and non-trading in nature. They have
their own rules and regulations and committees mention their affairs, which is called
Governing Bodies.
Documents that are required are:
i) Account opening form
ii) Specimen signature card
iii) Resolution to be passed by their governing bodies
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iv) Certified copy of rules and regulations or Bye-law
v) Letter of registration
Letter of undertaking to the effect that as and when change take place they will
DEPOSITS:
Deposit is the lifeblood of a commercial bank. Main function of a commercial
bank is to enhance the savings from the savers to the ultimate user of funds. The
process of collecting savings is called Deposit Mobilization.
FORMS OF DEPOSITS:
Two broad forms of deposits with reference to time period are:
A) Demand deposit: These are payable on demand. They include current account,
sundry deposit (e.g. margin account) and deposit receipt. No profit is given on
demand deposits.
i) CURRENT ACCOUNT:
ii) This type of account is usually opened for businessman or such persons
who needs deposits and withdrawals facility without any restriction.
Introduction is necessary when opening a current account, the procedure
has already been explained else were in this book and account number is
allotted and for withdrawals cheque book is issued and a statement of
account is provided so that customer can reconcile his account with his
own record.
No interest return is paid on such account is Pakistan; This account can be
opened with Rs. 500. Banks usually recover service/incidental charges on current
account if the required minimum balance is not maintained. Or when the
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maintenance of the account becomes expenses e.g. For example too many
transactions take place on summing a large number of chequebooks and other
stationary not consistent with the average balance.
ASDA 01165
FCY 0213
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Example ACCOUNT NUMBER: 0089-01-165-0001-3
01 = Currency Code
MODES OF POSTING
Cash
Clearing
Transfer
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Procedure or Cheque Book Issue:
1. Signatures on cheque book requisition are verified by matching with the
3. The next chequebook number that was previously entered in the register is
allotted to the account holder.
5. The chequebook of that number is taken out and filled in with the title of
account, account number, etc and signed by the officer.
7. Cheque book charges are deducted from the account according to the leaves of
the cheque books (Rs.6/- for each leaf.)
8. To deduct the chequebook charges, the debit voucher should be filled with that
amount and should be handed over to the account holder.
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Categories of Cheque Books
1. Ten Leaves:
It is used for value Plus, PLS account and FADIA account.
2. Twenty-five Leaves:
It can also be used for current deposit, value plus, PLS and FADIA accounts.
3. Fifty Leaves:
It is used for current deposit and ASDA account.
4. Hundred Leaves:
It can also be used for current deposit, value plus, PLS and FADIA accounts.
REMITTANCE DEPARTMENT
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money from one place to another. By providing this service to the customer, bank earns a
lot of income. Also customer is able to meet its day to day financial requirements.
Demand Draft
It is an instrument payable on demand for which value has been received, issued
by the branch of the bank drawn i.e. payable at some other place (branch) of the same
bank. If two banks are involved then the DD is sent to other bank but in other case it is
handed over to the applicant.
Issuance Procedure:
The bank charges such as commission, excise duty is charged as per effective
schedule of charges. If he fills the tax exemption form, tax is not charged.
In case of cash deposit, the cashier counts the amount and signs the DD
application and enters it in the register.
Then the officer of remittance department signs it and operation manager counter
signs it.
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Vouchers are prepared and posted.
Payment Procedure:
The DD credit advice is received through mail. The numbers are checked and
signatures are verified.
An entry is made on the DD payable register and the vouchers are made.
DD credit is attached with the vouchers and given for posting to the computer.
When DD is received the test numbers are checked and the payment is made.
Vouchers are given for posting and the entry that was made in the register is
closed i.e. DD payable is Nil.
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It is the quickest way of transfer of funds from one place (Branch) to other place
(Branch) of the same bank. Generally, a mail transfer advice reaches the drawer branch
the next day through courier services. But sometimes, a customer demands that his funds
should be transferred through the quickest means. In such cases, transfer of funds
message is passed through telephone or telegram.
This mode of transfer was used before online. Online system is very effective for
this purpose now-a-days. In Askari Commercial Bank online system is used.
Issuance Procedure:
The request of issuing TT is taken on the standard printed form.
The Head of Remittance Department checks it, the charges such as commission,
tax and telex as per effective schedule and signs it.
Then a TT is made on white slip. There are 3 copies, the original one is faxed to
the Branch, one to the Head Office and one is kept for record.
When commission bill is received, it is attached to the TT office copy in the file.
Payment Procedure:
When a TT arrives, the test numbers are checked and the signatures are verified.
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The entry is made in the TT payable register.
If there is no account then the TT received needs revenue stamp and then payment
is made. TT receipt is strictly non-negotiable.
Pay Order
It is an instrument issued for payment in same city. Pay order issued from on e
branch can only be payable from the same branch. It is normally referred to as banker’s
cheque. It is also called confirmed cheque, because bank issues this on it own guarantee.
Issuance Procedure:
The standard form is given to the customer. He fills in the details and signs it.
Bank charges (or commission) as per the schedule of charges and the withholding
tax of 0.3% are applied.
A cash memo is signed, stamped and handed over to the applicant as a receipt.
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An entry is made in the pay order issue register.
Then the authorized officer signs it after checking the pay order.
The order is then handed over to the applicant after obtaining his signature on the
PO Form.
Then the amount is credited to the account of the customer or pain in cash.
Issuance:
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A credit voucher is sent from the account department to the remittance
department.
Pay Slip book is taken out and filled according to the credit voucher.
It is entered in the pay slip register.
It is signed by authorized Officer.
A voucher is prepared and posted.
Pay Slip is then handed over to the customer.
Payment Procedure:
Pay Slip is just like a cheque and bank is liable to pay against pay slip.
After that when the pay slip is received by the bank for payment, it is again
transferred in the register.
Then payment is made and it is posted in the computer.
Procedure:
The cheques that are of other cities are separated.
They are entered in the OBC Register and OBC numbers are given to them.
The OBC forwarding schedules are prepared for different branches.
The respective cheques are attached with the schedule.
The office copy is filled and original schedule is mailed.
On clearing, the respective banks send back the OBCs along with the IBCA (Inter
Branch Credit Advice).
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The OBC numbers are checked from the OBC register, after that entries are made.
Commission charges are deducted from the account.
The bills, which are received by the bank from other branches out of the city for
local clearing, are called Inward Bills for Collection.
Procedure:
The OBC of other branches will be the IBC of this branch. So an OBC forwarding
schedule is received by mail.
The cheques are entered in the IBC register. The IBC numbers are allotted to
them.
The cheques are lodged for clearing.
After realization, an IBCA is prepared and mailed to the branch from where the
cheque was received.
At the end of the day, two vouchers are prepared and posted.
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CLEARING
Meaning of clearing:
The word clearing has been derived from the word “Clear” and is defined as “a
system by which banks exchange cheques and other negotiable instruments draw on each
other within a specified area and thereby secure payment for their client through the
clearing house at specified time” in an efficient way.
Advantages of Clearing:
1. Since clearing does not involve any cash etc and all the transaction take place
through book entries, the number of transactions can be unlimited.
2. No cash is needed as such the risks of robbery, embezzlements and pilferage are
totally eliminated.
3. As major payments are made through clearing, the banks can manage cash
payment at the counters with a minimum amount of cash in vaults.
5. Since it provides an extra service to the customers of banks without any service
charger or costs, more and more people are inclined and attracted towards
banking.
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Clearing House:
It is a place where representatives of all scheduled banks sit together and
interchange their claims against each other with the help of controlling staff of State Bank
of Pakistan and where there is no branch of State Bank of Pakistan the designated branch
of National Bank of Pakistan acts as controlling member instead of State Bank of
Pakistan.
Working of clearing house:
All the bank which are the member of clearing house maintain accounts with
State Bank of Pakistan by debit and credit to which the clearing settlements are made. If
on a particular day, a bank delivers cheques and other negotiable instruments worth more
than the total amount of Cheque received by it that banks accounts with State Bank of
Pakistan will be credited with the differential amount. If on the other hand the total
amount of cheques and other negotiable instruments draw on a certain bank by other bank
is more than the total amount receivable by it from other banks, then this bank’s account
will be debited on that day.
The cheque delivered to the representatives of other banks for clearing are called
outward clearing, whereas cheques received from the representatives of other banks for
payment are called inward clearing.
Procedure of Settlement:
Presume that ACBL got the cheques which are drawn on HBL, NBP and MCB for
amounts Rs. 50,000/-, Rs. 15,000/- respectively, its total being amounts Rs.95,000/-, it
means that this amount is to be credited to ACBL A/C with S.B.P. on the other hand the
cheques drawn on ACBL are from HBL, NBP and MCB of Rs.15,000/-, Rs.75,000/- and
Rs.30,000/- respectively, its total being Rs.1,20,000/-, it means that this amount is to be
debited from ACBL account. The difference between Rs.95,000/- credit and debit
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Rs.1,20,000/- debit is Rs.25,000/- debit which means the house is against ACBL for
Rs.25,000/-.
2. ACBL has to receive Rs.30, 000/- from NBP and to pay Rs.75, 000/- to NBP so
difference is Rs.45, 000/- debit.
3. ACBL has to receive from MCB Rs.15, 000/- and to pay Rs.30, 000/- to MCB so
difference is Rs.15, 000/- debit.
GRAND TOTAL:
35000-45000-15000 = -25000
i.e. Rs.25000 debit.
Hence ACBL A/C with State Bank of Pakistan will be debited with Rs.25, 000/-
and the contra will be other banks accounts respectively. This called as “Debit and Credit
Rule”.
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1. The name of the branch appears on its face where it is drawn on
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3. The register is balanced, the credit voucher are separated form the instrument
and are released to respective departments against instrument and are released
to respective departments against acknowledgement in the register
4. The schedules are arranged bank-wise
5. The schedules are prepared in triplicate, two copies of which are attached with
the relevant instrument and the third is kept as office copy
6. The house page is prepared from schedules in triplicate
7. The schedules and house pages are signed by the officer incharge with branch
stamp
8. The grand total of the house page is taken and agreed with that of the outward
clearing register
9. The instruments along with duplicate and house page are sent to the Main
Office
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FOREIGN EXCHANGE DEPARTMENT
Foreign Exchange Department works like the general bank departments with the
difference that it deals in foreign currency. This department deals with the following:-
Import
Export
Foreign Currency Accounts
Foreign Remittance
Submission of Monthly Reports to SBP
IMPORT
The international trade transaction, in which one country buys goods from other
country, is called import.
The import trade in Pakistan is governed by import and export Act of 1950.
Previously, the regulating body of imports was controller of Import and Export. But this
function has been shifted to Export Promotion Bureau.
Foreign Exchange Departments of all banks are restricted to word under the rules
and regulations of government.
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The individuals and firms who desire to import goods from the foreign countries
are required to obtain import license. Import licenses are a type of artificial restraint on
the import trade of a country. To acquire import license, the importer has to submit
applications to the licensing authority. The importers can only get their merchandize
cleared from the custom authorities if they have the import license duly issued in their
names. The import licenses issued by the Import Trade Controller are required to be
registered with the State Bank of Pakistan.
Contract of sale:
After getting the license, the importer then negotiates with the exporter. When
they reach to an agreement on all terms of sale, they sign a contract. Thus contract
includes all information of terms and condition of sale.
Letter of credit:
Foreign trade payment problems are mainly solved by a letter of credit. A letter of
credit is issued by the importer’s bank. If guarantees payment to the exporter up to
specified amount of money provided the terms and conditions laid down the L/C are
fulfilled.
A letter of credit is a commitment on the part of buyer’s bank to pay or accept
draft drawn upon it, provided drafts do not exceed a specified amount.
A letter of credit thus is a (I) written undertaking by an importer’s bank to
exporter’s bank. (II) That it will pay or accept draft drawn upon it up to a stated amount
with a specified time. (III) The payment will only be made to the exporter if he compliers
with the terms of credit.
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1. Account party: The buyer or the importer on whose account and request the
letter of credit is opened is known as account party or opener.
2. Issuing bank: The bank which issues or opens a letter of credit at the request of
importer is called issuing bank.
3. Exporter or seller: The seller or the party in whose favor L/C is drawn is the
exporter. He is also called beneficiary.
4. Negotiating bank: The paying bank in the exporter’s country, on which the draft
is drawn, is called negotiating bank or paying bank.
Cash margin:
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The bank asks the importer to deposit cash or securities with the bank. The proper
margin of cash or securities to be deposited is decided by the bank depending upon the
credit worthiness of the importer.
Shipment of goods:
When the exporter receives L/C, he examines it to ensure that it conforms to the
terms of contract of sales. He then shifts the goods and presents all required documents
along with the bill to negotiating bank.
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accountable for the completeness of documents, not to see whether goods conform to the
contract of sale.
EXPORT
The international trade transaction in which one country sells its goods to other
country is called Export.
The controlling body of export in Pakistan is Export Promotion Bureau, it gives
different incentives to the businessmen for enhancing the exports and reducing the
Balance of payment deficit. It restricts the export of some goods and reinforces export of
other.
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The steps involved in import are described earlier from the importer’s point of
view. The procedure of export is same, as it can be described from exporters point of
view. The activities, which are different, described here.
Lodgment:
Lodgment means making the payment to exporter by bank against the purchase of
bill. Two types of rates are used in evaluating the amount:
Realization:
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Realization means receiving the payment from the foreign bank for the export of
goods.
Deposits Department
Deposit is the functional unit of a Commercial Bank. No bank can run its
operations without deposits. Main function of a commercial bank is to channelize saving
from the savers to the ultimate users of funds. The process of collecting saving is called
Deposit Mobilization.
Demand Deposit:
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These are payable on demand. They include current account, sundry
deposit (e.g. margin account) and call deposit receipt. No profit is given on demand
deposits.
Time Deposit:
Payable on demand with certain maturity. Attracts profit with respect to
time.
Remittance Department
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slips of Rs.10,000, Rs. 25,000, Rs.50,000, Rs.100,000, Rs.500,000 which is required.
Now government has made some restriction against TC because people have stared it to
use in place of money. There are no charges of any type such as postage, taxes, and
commission charges.
be drawn, that advice is called telex message. On the basis of which the other branch will
pay the money after tallying serial no. and test no. of TT.
TT is made if the client has account in the bank if he has no account then he has to fill
the TTR (telegraphic transfer receipt) which is a voucher for the official record in bank.
Its form is of blue colour. In DD the person has to take care of DD which is issued to him.
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easily draw money if he has account there. Demand Draft is issued by one branch of bank
payable to other branch of the other bank e.g. DD is issued by ACBL payable by MCB.
The person who pays the value and on whose behalf draft is issued is called purchaser.
The Branch/Office which issues a draft on another branch or office is called the
drawing/issuing branch.
The Branch /Office on which draft is drawn are called the drawee branch. The person
entitled to receive the payment is called the payee.
DD also has been made on three modes of payments.
1. On cash.
2. On cheques.
3. Through debiting account no.
Issuance of DD:
Request shall be on the standard DD application form.
Fill in all information such as name of beneficiary place where the DD is drawn,
amount, mode of payment cash/cheque /debit authority signature with name and
addresses.
Check the application form.
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After issuance of DD, an advice is send to the branch from where client wants the
money to be drawn, which confirms the DD. In this aspect cantra is another concept,
which is followed in the branch where money is transferred. Payment of DD takes place
in two ways:
1. If advice reaches the other branch before the draft then that branch debits the H.O of
bank and credit client.
2. If draft reach first then bank open the temporary account called suspense account or
red account through which amount is debited for the satisfaction of client and credited the
H.O of bank when that branch receives the advice than it debit the H.O of bank and
credited the suspense account.
There are postage and commission charges.
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Cancellation Of DD:
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The printed number and serial control number of DD issued shall be mentioned
on the application form.
Signatures of two attorney holders with their attorney number should obtained on
the DD. The 2nd signing officer must check all the particulars before signing.
The postage rate is fixed Rs.25and commission rates are as following:
Pay Order:
Pay order is also called “banker’s cheque” drawn upon the
issuing branch/Office itself. It required account no. and other information about client
which mean cross payment is its restriction.
Get the application form. Issues pay order after recovering charges.
Do necessary vouchering. Make entry in PO issue register.
All pay orders shall be crossed “payee’s account only”.
It may be noted that IBCA is not involved because PO are payable in same
branch.
Cancellation Of PO:
Application for cancellation. Surrender of original pay order. Recover cancellation
charges.
Lost And Duplicate Pay Order.
Check the record to ensure that payment has not been effected. Get application for
issuing of duplicate PO. Recover charges. Issue duplicate pay order.
Pay slip:
The banks for settlement of its own payment issue pay slips. There is no excise
duty and no commission.
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ASKARI CARD
ASKCARD means freedom, comfort, convenience and
security, so that you can have retail transactions with complete peace of mind.
ASKCARD is your new shopping companion which enhances your quality of life by
letting you do shopping, dine at restaurants, pay your utility bills, transfer funds,
withdraw and deposit cash through ATM anywhere, anytime.
Silver and Gold card can be used internationally for shopping and also can be used for
internet shopping.
* Local card can be used in Pakistan.
Travelers Cheques
The range of our products and value added services enhances with
introduction of Rupee Travelers Cheques (RTCs) launched in March 2002. In spite of our
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constraint on issuing higher denomination of RTCs against restrictions imposed by the
Central Bank of Pakistan we have been striving to attain our shares with sizeable
portfolio.
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TASK DONE
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paid. Secondly in these weeks I prepared (O/W) clearing for next day. Same as entered
cheque number account holder name amount and Bank name.
In these weeks I also entered cheque return in cheque return register and put cheque
return slip on cheque. I am full trained now in this particular job. How to fill cheque
return slip? How to enter in me /W, O/W clearing register.
Fifth Week
In Fifth week I work for Remittances Department. Demand draft and Pay order
preparation. Demand draft is for payment outside of city and pay order for local payment.
It is a secure source of payment.
There are no charges for Pay order while other banks charge for this service so it is an
advantage going to ACBL bank to attract customers.
In this week I repeatedly perform the jobs and I am fully trained in such type of
operations to make the DD, Pay order.
Sixth Week
In Sixth Week I worked in HR department. In the branch the HR Coordinator is
responsible for keeping the record of the employees, presence record and their
performances.
This department keeps record of leave application of the employees. If application of any
employee is missing then it asks him/her for the application. It also keeps the record of
the progress of employees and prepares the report.
Skills Used
I used courtesy, clarity, comprehension and cohesiveness that I studied in business
communication.
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Observing the whole organization critically and found the organizations strengths
and weaknesses.
Find the urgent solution of the problem
I also learned the skills, which are not possible to learn from books. I learned how
to create relationship with others.
Explanation of the required documents to open the new account or renew the
account is included in my internship description in this department.
In this department I learned how to do transfer of funds from one branch to
another with in the country through following banking instruments i.e. Demand
Draft, Telegraph transfer, Mail transfer and Pay Order.
Sending letter of thanks to new account holders to verify their addresses
Challenges Face:
Customer Satisfaction:
In ACBL customer dealing is will, but during rush hour the customer has to wait for a
long time for their turn. It’s quite hard for a new customer or potential customer to get the
required information.
During my internship I observed that filing system of branch is not good. When certain
record is needed the staff has to struggle
Work is not equally distributed. On one hand some employee have to work all day
without relaxing while some others have nothing to do at all. This not only creates
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confusion among employees but also hurting and disturbing for overall setup of the bank.
And above all it results in dissatisfaction among customers as well.
They don’t care about maintaining secrecy, especially during the rush hours. They speak
loudly about the account position and while getting clearance of cheque the person can
easily get the whole information from the ledge. The deposit clerk must be careful while
passing any cheque. In this regard another shortfall is in giving the information about the
balance on telephone.
It is notified that due to the lengthy procedure of paper work the bank employee are over
burdened. They are unable to give proper attention to the clients and face difficulties in
getting their job done. One reason for lengthy procedure and excessive paper work in the
bank is the lack of computerized technology
Efficient banking is one which does not emphasize on number of accounts but on greater
amount of deposits.ACBL is more interested in increasing its number of account
irrespective to its deposit. The main reason behind it is that bank does not provide
personalize service to all the account holders and does not improve its quality and
services.
Delegation of authority:
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Manager has very limited authority; he has to take the approval from his management
authority i-e. In case of advance he has to take the approval of general and regional
manager. The other problem is created, when the manager is not present in his office, the
customer have to wait for hours. This discourages both customer and officers because
they have to suffer a lot.
When customer comes to open an account, the staff does not bother to check his/her place
phone number and permanent address. It is important because in case of overdraft by
mistake or anything which places his account in debit it will be difficult to trace him. On
the other hand he may be involved in any fraudulent activities against the bank. In this
case the bank will be in awkward position
NBP does not provide adequate facility of specialized training to their staff. Training is
generalized rather than specialized. As the worker finishes his training, he is inducted into
a specific field without having great deal of knowledge about the field
It has been observed that there are delays in sanctioning of cases form the head office,
which results in customer dissatisfaction.
Financial Analysis
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Balance sheet
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3,089,984 2,945,640 2,584,828 2,627,051 1,839,077
Liabilities
Bills payable
Borrowings 25,554,777 19,300,163 15,190,148 17,553,525 14,964,084
Horizontal analysis
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Vs Vs Vs Vs
Vs
2005 2006 2007 2008 2009
Assets
Cash and balances with treasury banks 26% -10% 20% 21% 16%
Balance with other banks 32% -52% 13% 111% -55%
Lending to other financial institutions -17% 72% -69% 3% 99%
investments 11% 38% -10% 88% 53%
advances 15% 2% 28% 5% 13%
Operating fix assets 19% 35% 61% 12% 8%
Deferred tax assets
Other assets 40% 45% 62% 18% 34%
Total assets 14% 10% 13% 23% 24%
Liabilities
Bills payable 40% 43% -2% 14% 5%
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Interpretation:
From the analysis above we have seen that total assets of ASKARI bank has been
increased from 2006-2010. The main reason for this increase is that bank investment
increase in 2009 with a large amount i-e 88%. Another reason for increase in assets of
bank is the large amount of balances of other banks.
When we make a look on liabilities section of bank we have analyzed that the banks
liabilities have been increased in 2010 as compared to 2007 and 2008.which means that a
large amount of debts have been taken by a bank in this year.
Now move to equity section from the analysis of bank’s capital we came to know that the
total capital of bank has been increased in 2010 than in previous years which is a
favorable point for bank.
Hence the overall trend of the bank’s financial position that we have analyzed from
horizontal analysis is that.
Bank’s total assets have been increased with a minimum amount from
2006-2010
Bank’s investment shows a large amount of increase the main reason for
this change is its less lending to financial institutions and large amount of
balances of other banks
The total liabilities of bank also decreased which is not a favorable point
but it may be due to change in governmental policies or government
regulations, country’s economic position and many other factors.
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The capital of bank also shows a good point of bank’s financial position.
Income statement
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2010 2009 2008 2007 2006
Non mark-up /
interest income
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Gain on sale of 212,527 143,717 36,743 2,361,251 112,474
securities - net
Unrealized loss on
revaluation of
investments
classified as held for (354) (1,918) 22,384 1,728 (2,308)
trading - net
Non mark-up /
interest expenses
Administrative 7,812,618 6,995,857 5,904,169 4,789,536 3,277,355
expenses
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Profit after taxation 943,177 1,097,507 386,225 2,681,012 2,249,974
Basic / diluted earnings per share - 1.48 1.79 .76 8.92 7.48
Rupees
Horizontal Analysis:
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Dividend income 114% 26% 27% -6% 29%
Income from dealing in foreign 64% 12% 33% -40% -98%
currencies
Gain on sale of investments – net 12% 2008% -98% 291% 48%
Basic / diluted earnings per share – 11% 19% -88% 135% -17%
Rupees
Interpretation:
Net income of ASKARI bank has been increased with a large amount in
2010 as compared to 2006, 2007, 2008 and 2009.The main reason for this
increase is:
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Net mark up interest income is increased in 2010 because of loans and
advances taken by a bank in 2010 decreases with large amount.
Total non mark up interest income has been decreases in 2010.It were a
large amount in 2006-2009 which was not a favorable point.
Vertical analysis:
Technique for identifying relationship between items in the same financial
statement by expressing all amounts as the percentage of the total amount taken as
100. In a balance sheet, for example, cash and other assets are shown as a
percentage of the total assets and, in an income statement, each expense is shown
as a percentage of the sales revenue. Financial statements using this technique are
called common size financial statements dividing each expense item in the income
statement of a given year by net sales to identify expense items that rise more
quickly or more slowly than a change in sales. For example, an analyst may study
a firm’s balance sheet to compare the level of current assets with the level of
current liabilities in order to measure liquidity. Analyst often studies a firm’s
income statement to compare net income with total sales.
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Example:
In balance sheet all accounts of assets section will be divided by total assets while
in liabilities and owner’s equity sectional accounts will be divided by total
Liabilities and equity. In income statement the horizontal analysis will be done by
dividing all accounts by mark up interest/return earned.
Vertical analysis:
Balance sheet:
2006 2007 2008 2009 2010
Vs Vs Vs Vs Vs
2005 2006 2007 2008 2009
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Interpretation:
Assets
Cash and balances with treasury banks 9% 7% 8% 8% 7%
Deposits andTotal
other accounts 6%
79% 99%
84% 87%
87% 88%
86% 93%
86%
Subordinate loans 2% 2% 2% 3% 2%
Surplus on revaluation of assets net 1% 1% 13% 12% 7%
Liabilities against
of assets
tax subjects to - - - - -
finance lease
DeferredTotal
taxcapital
liabilities 7% 100% 100% 100% 100%
From the analysis of balance sheet, we have concluded that the total assets grew
by 24.0% contributed by 42% increase in cash balances, 52.5% increase in
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investments and 14.1% in advances. The investments in 'held for trading' rose by
68.6% which was added to the investments growth while nominal increases were
observed in investments in 'held to maturity' and 'available for sale'.
Vertical Analysis:
Income statement
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Non mark–up/interest income
Fee, commission and brokerage 8.0% 7.1% 7% 6% 5%
income
Dividend income 0.9% 0.9% 1% 1% 1%
Income from dealing in foreign 4.6% 4.3% 5% 2% -
currencies
Gain on sale of investments – net 0.9% 15.6% - 1% 1%
Unrealized gain on revaluation of - - - - -
investments classified as held for
trading – net
Other income 2.6% 2.2% 2% 2% 2&
Interpretation:
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On the total mark up interest earned, the lager part is contributed by mark up
interest expense in 2010 i.e. 64%
FINANCIAL RATIOS
1. Return on Average Assets
‗ Net operating Income × 100
Average Total Assets
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Interpretation:
This ratio is also known as firm’s return on investment. It measures firm’s
profit with its available assets. In the year 2006 the Askari Bank is generating
profit through its available assets is 1.40%, while in last year 2010 it was 3.3%
as shown in the graph. This shows that Bank is generating more/high profit
with its available assets, and its good for the Bank. The decline regarding
previous year is due to 14% decrease in profit for the year against 24%
increase in total assets.
2. Earning per share
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Interpretation:
This ratio represents the number of rupee earned on behalf of each outstanding share of
common stock. The graph shows that there is too much decrease in earning per share in
2010 i.e. 1.48% as compared to year 2006 i.e. 7.48%. The decrease is mainly due to less
then expected increase in net interest income, drop of 14% in non-markup-income and
12% increase in operating expenses. Also, the increase in number of shares has resulted
in EPS to show a declining trend.
3. Net Profit Margin
‗ Net Profit × 100
Total Income
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Interpretation:
This ratio measures the percentage of each sales dollar remaining after all cost and
expenses, including interest and tax, have been deducted. The higher this ratio the
better is company. The graph shows that the Net Profit Margin of AKBL increases
from 21.94% in 2005 to 50.44% in 2009.
4. Current Ratio
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Analysis:
Current ratio should not be less than 2. This indicates that the current assets are twice
than current liabilities. Care should be taken that current assets are not unduly inflated by
over valuation
Here in this case the current ratio of Askari bank is constantly decreasing from 2006 to
2009 which is not a good sign and shows poor liquidity position of the bank but in 2010 it
slightly increase which is a good indication.
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Analysis:
This ratio indicates the payment of interest by the bank. From the above
analysis this ratio has been decreasing from 2006-2010. In 2007 company is
paying its interest payments on time but in the next three years this ratio starts
falling.
6. Debt Ratio
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total Debt / Total 21663/254327 18,186/206,191 20,550/182,172
Asset
0.084 0.085 0.112
Analysis:
Debt ratio means how much debt company has been taken from its total assets.
The ratio has been decreased from 2007-2009 which means bank total debt has
been decreased due to which the amount of ratio has been decreases which is
favorable for bank.
7. Return on Assets
Analysis:
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This ratio shows that the return is lesser in 2008 as compared to return
on assets in the year 2007 (gradual increase). Although interest and
discount on loans which is the major source of revenue for bank, but
cost on deposits and borrowings which is the major expenditure of bank
has increased more in 2007 than in 2008. Another reason of decrease in
return is the decrease in lending rate and increase in financial cost. But
again we have seen a small increase in this ration in 2009.
8. Net Profit Margin:
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Analysis:
Calculation made on the base of data available shows that profit earning after
taxes in 2007 is greater than 2008, 2009 and 2010 years. Here in this ratio we
see that the ratio has decreased not only by the single factor but also due to
increase in interest. So, both these factors has resulted a decrease of the return.
But overall profitability of bank is decreasing that is not a good performance
point.
9. Earning Per Share:
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2009 2008 2007
Analysis:
This ratio is also decreasing from 2007 to 2009. It is not good from shar
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Analysis:
This ratio shows that how much cash is available to meet the demand
liabilities of the depositors. The bank should have reasonable cash balance to
meet the customer requirements against their deposits in the bank. In this case
bank ratio shows a decreasing trend since 2006-2010 which is not a good sign
from the bank point of view.
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“SWOT ANALYSIS”
STRENGTHS
In the bank service quality standards are designed and monitored to ensure a
consistent and convenient customer experience.
Products and services are as diverse as market segments. Bank has structured and
syndicated financing arrangements, working capital finance, financing of
international trade, consumer credit, small business loans, credit cards and ATM
cards.
The human resource philosophy at Askari Bank focuses on multi-talent hiring,
professional grooming, requisite training and merit based reward system.
Staff welfare has always been a priority. New initiatives like hospitalization plan,
home loan insurance have added new dimensions to the staff-care policy and
motivated them to out-perform competitors.
Bank enjoys a strategic competitive advantage over all domestic players by virtue
of its leadership in technological innovations.
Different cameras are located at different locations to monitor the working of staff
members and outside customers by branch manager.
Bank has fully automated transaction-processing systems for back-office support.
Bank's branch network is connected on-line real-time and customers have access
to off-site as well as on-site ATMs, all over Pakistan.
Bank also is pioneer in e-commerce venture in Pakistan through a major retail
distributor.
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ATM card is available with the withdrawal amount about Rs. 100000 a day.
Bank's total assets now exceed Rs.70.9 billion and bank has over 17 products and
services to match the individual needs of the customers.
Bank has been honoured with the "The Best Bank in Pakistan" award by the
Global Finance Magazine.
Bank was the first bank in Pakistan to offer Internet Banking services, b2b e-
commerce solutions for merchants looking to purchase on credit and E-bill
payment system.
With a network of 187 correspondents spread over 95 countries world-wide, the
bank continued to reinforce its leadership position in trade finance, transacting
business of over Rs.70 billion, during this year.
Bank is now actively involved in the acquisition of business and signed up over
300 merchant’s national wide which offer-shopping discount to the Bank's
Privilege Card members.
Askari Master Card is accepted worldwide and at over 3000 locations in Pakistan.
WEAKNESSES
Bank is providing credit facilities only to the urban areas not too much attention is
paid to the rural areas.
As Pakistan is agriculture country but no special schemes for the agri- loans.
Bank is not giving emphasis on the small-scale businesses. Which are large in
number in Pakistan.
There is enormous difference between the bank-lending rate and return on
deposits..
The procedure and documentation while sanction loan is thorny. This is a barrier
for advances.
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Bank gives targets to employees for deposits due to this reason they pay more
attention to fulfil these targets to save their jobs. This distracts their attention from
their duties.
Reasonable care is not taken while opening new accounts one of the reason is
because employees want to introduce more and more depositors.
No job security is there for the employees, and no union exits to secure them.
The online credit card facility was not secured that is why recently bank has
closed its online credit card shopping scheme.
Bank has not adequate number of branches as compared to its competitors like
MCB, UBL, ABL, NBP etc.
Due to small number of branches at greater distance potential customers may go
to other more feasible options.
A good number of facilities are only for the army persons, not for the general
public.
As every person in the bank has his/her own computer in the branch but they are
not well equipped with the knowledge of using the computer efficiently.
The return on deposits is very low.
ACBL has only agency arrangements with the foreign banks, no branch exists
outside the Pakistan.
While their main competitors have their own branch network outside the Pakistan.
Bank has no grievance-handling department for the internal problems of the
employees.
Due to lack of computer specialist at branch level it has to take assistance from
the head office.
To improve the services and to remove the problems of customer the bank has no
customer complaint department.
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Limited locker facility is there, which do not fulfil the requirements of customer
and charges of lockers are also very high.
OPPORTUNITIES
Bank has a small branch network so it has got the opportunities to increase the
number of its branches.
Bank has no foreign branches so it should open its branches outside the country
especially in U.K, U.S.A and in U.A.E.
Facilities like financing of housing should also be offered to general public
especially in the urban areas, not only army officers.
In agrarians cities like Rahim Yar Khan there is a potential for giving credit
facilities to farmers.
At least on software and hardware technician should be appointed at each branch.
Bank is not yet performing utility services for the utility companies like WAPDA
it can increase its operations also in this direction and so a new source of earning.
To increase its advances bank should focus small scale industries and choose one
among them and then a special scheme of lending should be introduced for that
particular small scale industry.
TH REATS
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Law and order situation in Pakistan is faulty that is why people are not confident
to invest anywhere.
The markets rates are now at extremely low levels, with very little chance of their
going up during the rest of the year. The low interest rate means low profits for
the banks.
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Saving rate in Pakistan is very low i.e.15% as compared to 30% in China and
40% in Malaysia. This is a problem in Pakistan.
As the banking procedures are complicated that is why general public takes
interest into other options of investments like in shares of companies and in Term
Finance Certificates.
Responding to the SBP's prudential regulations management takes too much care
while granting loans.
Now other banks are also imitating the modern banking concept of ACBL and
have started online facility and also have computerized their operations. So there
remain less competitive advantage areas for the bank.
Now the world is a global village so competitors may rise from anywhere in the
world at anytime.
To survive in the industry and to earn profits bank should not rely on its present
sources and facilities instead of this it should establish new ways of acquiring,
managing and sharing market information.
In near future the world is going to be free trade zone so the concept of "survival
of the fittest" will be in action.
After the 11 September incident and due to terrorist activities in Pakistan the
economy is moving very slow. It means less investment and as a result low loan
demands.
High rate of taxes on banking companies.
SBP have a heavy penalties on banks for violating the Prudential Regulation. So it
requires greater care while advancing.
Increasing ATM trend among the banks also requires attention of the management
to this side.
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CONCLUSION
Overall analysis of the bank leads to the conclusion that bank is performing at
satisfactory level. The bank is no doubt the best Modern Bank in Pakistan. And to keep
competitive advantage over its existing and potential competitors bank is trying to
introduce latest techniques on regular basis. The customers of the bank are increasing
every year and that is why not only the deposits of the bank are increasing but also
advances by the bank shows a steady growth during the last 5 years. As a result of
increasing advances and investment in higher yielding Treasury Bills. Equity base of the
bank is also increasing and in year 2000 it showed a positive growth of 20% over the
period of last 5 years. Total assets of the bank are also increasing continuously. Similarly
the earning per share is also increasing. During last year this ratio was highest in last 5
years.
During its short life of operation bank has achieved many awards not only with in
Pakistan but also from outside the Pakistan.
So we easily without any qualm can conclude that;
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Recommendations
To survive in the industry and to earn profits bank should not rely on its present
sources and facilities but also it should establish new ways of acquiring,
managing and sharing market information.
To increase the computer specialist at branch level.
To improve the services and to remove the problems of customer by making a
spread customer complaint department.
To increase locker facility and decrease the charges of lockers.
Law and order situation in Pakistan is faulty that is why people are not confident
to invest anywhere so we must control it.
Job description must be clear so that it can define the job related duties and
responsibilities.
To increase the number of branches.
Bank should not give targets to employees for deposits because it distracts their
attention from their duties.
Keep the up to date information on their web sites.
Bank should try to separate the working area and customers visit area.
Instead of preferring the old employees of the other banks management should
hire new and well-educated talent. This will contribute to the long-term benefits
of the bank.
Credit policy should cover both the rural and as well as urban areas.
Credit facilities should be enhanced to small-scale businesses.
The facilities currently availing by the army persons only, can be extended to
general public e.g. house building finance.
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Employees who perform extraordinary and achieve more than their targets should
be given bonuses.
Limitations
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Bibliog Graphy:
References: -
Web Sites: -
www.askaribank.com
www.sbp.org.net.pk
www.pkeconomist.com
www.google.com
Books:-
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Annexes
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Glossary
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