1

2
3
 PREFACE

In Study of Business Administration, Internship program is an important part

to give students an opportunity to have experience of practical field. Unless and until
the students experience the novelty of practical work, their knowledge of what they
study in theoretical courses remains incomplete. The most important point in an
Internship Program is that the student should spend their time in a true manner and
with the spirit to learn practical orientation of theoretical study framework.

Banking sector undertakes an important rob in the economy of any country in

the terms of its wide function. This is of course a very important aspect, which
inspired me to have internship training. No doubt the experience gained & practice of
work these off shall help and lead me to the path of unprecedented progress in my
practical and profession life. This report is based on my 6(six) weeks training in The
Bank of Punjab,

The Bank of Punjab has gained a prestige & possesses quite good history
behind it. This bank has been very good in terms of providing excellent services in
Pakistan when need arose, I am confident that this report will guide & will be a
source of great help to its readers, to know about the activities of this bank. I have
made every possible effort to make this report comprehensive & meaningful, yet I
feel that period was not adequate enough to grasp the tough procedure & function of
the bank, as a student is not able to comprehend all of these functions in such a
short time period and describe it in a perfect manner.

Please also bear in mind that the Rohillanwali Branch of the bank does not
comprise any Foreign Exchange or Import or Export Departments.

4
 ACKNOWLEDGEMENT

IN THE NAME OF ALLAH THE MOST BENEFICIENT

AND THE MOST MERCIFUL
All the prayers are for Almighty Allah who only
is soul power to keep the universe well in control
as he desired. Too small to wield my humble pen in
praise to Almighty Allah who has provided me the
opportunity to study at his prestigious institution
and enabled me to finalized this task of internship
report on The Bank of Punjab.

No work can be completed successfully without the

cooperation and guidance of others same is
applicable to this report. I am highly indebted to all
persons for their generous cooperation in
preparation of this internship report. I am also
thankful to Branch Manager & Other Staff
members who guided me in preparation of this
report.

5
 Especially I am thankful to Mr. Arshad Hafeez
Makhdoom, Operational Manager and Mr.
Kamran Latif Manager in BOP Branch Rohillan
wali Branch, for their kind guidance and devotion
provided me to

complete this assignment with his experienced and

wise opinion. The guidance and affection of my all
teachers stood special worth and power to
complete this tedious work. I have tried to compile
this assignment to their precious guidance. May
Allah give me success in my attempt. (Ameen).

Ihsan
Kareem

6
 Dedication

I want to dedicate my Report to

Last and Ever Last
Prophet of Almighty Allah,
Hazrat Muhammad (PBUH)
And
To the persons who are cause of my success,

7
 These are my Loving and Caring Parents
Who are always sources of successes for me,
&
Who are always ready to give their children,
May God make me able to give the smallest part
of what they gave me from my childhood to infinity
Old age. (Aamin)

8
 TAB TABLE

TTABLE OF CONTENTS
OCONTENTS

SERIAL # DESCRIPTION PAGE #.

01 Executive summary 9
02 Introduction 10
03 Vision, Mission, Values 12
04 Objectives 14
05 Bank Management 17
06 Organizational Structure 19
07 Division & Departments 22
08 Functions of Department 24
09 Services 33
10 Performance 59
11 Financial Analysis 66
12 SWOT Analysis 73
13 Suggestions And Recommendations 77
14 Conclusion 80

9
 I have completed my 08 weeks internship at Bank of Punjab under internship
program 2009-10 conducted by Department of Management Sciences, The Islamia
University of Bahawalpur. I tried my best to gain experience practically more and
more from this opportunity. This report starts from the introduction of word
‘Banking’, and then History of Bank of Punjab . The history of BOP shows that how
it has helped its Nation in both war & peace.
Bank Mission statement & Vision shows its focus on overall performance of the bank
and quality of services and products rendered to the customers.
After restructuring of the bank the objectives of the bank are changed. Now it has
objectives to overcome past mistakes, realize the real importance of customer as king
of the business so now it has main objective to achieve customization.
A commercial bank has basic functions that must be performed by it as a bank i.e;
• Accept money as deposits.
• Investing deposits to earn profit.
• Leading Money as Loan
• Miscellaneous functions.
In this way each branch of the bank is divided on the basis of these functions into
different sections.
Deposit section opens different accounts of clients and maintains record of deposited
money from the customer & credited it into his account. It also maintains record of
payment to the customer when he presents cheque.
Advances section deals the customers who demand loans against required security.
Remittance & collection section deals customers who want to transfer or collect their
money from/to other city.

10
Foreign Exchange section deals customers who have foreign account in the bank &
deals exchange of foreign currencies.
Bank also provides facility of L.C to support export and import in the region.
A SWOT analysis Bank of Punjab is also conducted with great deal of care which
shows that at present it has small number of strengths and lot of weaknesses..

The Bank Of Punjab started functioning with the inauguration of its first

branch of 7-Egerton Road, Lahore on November 15, 1989. The architect of the bank

Mr. Nawaz Sharif then, the Chief Minister of Punjab, performed the inauguration.

In Pakistan, over long periods of time the gap in saving and investment and

balance of trade deficit has posed serious threat to the target levels of growth the

ailments related to the budgetary deficit and public debt, both foreign and domestic

are in addition. Interestingly even such adverse circumstances growth of real sector

during the preceding year registered a favorable change, which speaks of hidden

potential and strength of economy

Fortunately, the banking sector of the country has the well organized and

properly institutionalized system, which is the major vehicle not only for mobilization

of resources to finance trade, agriculture, and industry but also for the effective

conduct of monetary policy

The emergence of new bank on the national scene in the early 1990s has done two

important services to the nation.

11
 The saving base of the economy has effectively enlarged and hence the

investment opportunities have increased.

 The services of the banks in the fact of severe competition have improved

considerably so that now consumer are left with extensive choice to do or

undo their business relations with these banks keeping in view quality of their

services.

The Bank of Punjab is working as a scheduled commercial bank with its

network of 273 branches at all major business centers in the country. The Bank

provides all types of banking services such as Deposit in Local Currency, Client

Deposit in Foreign Currency, Remittances, and Advances to Business, Trade,

Industry and Agriculture. The Bank of Punjab has indeed entered a new era of

science to the nation under experience and professional hands of its management.

The Bank of Punjab plays a vital role in the national economy through

mobilization of hitherto untapped local resources, promoting savings and

providing funds for investments.

Attractive rates of profit on all types of deposits, opening of Foreign Currency

Accounts and handling of Foreign Exchange business such as Imports, Exports

and Remittances, Financing, Trade and Industry for

working capital requirements and money market operations are some facilities

being provided by the Bank. The lending policy of Bank is not only cautious and

constructive but also based on principles of prudent lending with maximum

emphasis on security. As agriculture is considered as backbone of our economy

12
 the Bank of Punjab has introduced "Kissan Dost Agriculture Finance Scheme" to

small farmers.

The Bank of Punjab has the privilege to discharge its responsibilities towards

national progress and prosperity. Within the couple of years of its scheduling, the

bank has not only carved out for itself prominent niche in the mainstream banking

of the country but in certain areas it has the distinction of taking the lead. In the

short span of time the Bank has been able to evolve a distinct corporate culture of

its owned-based policies, which are realistic and are on highly professional

footings.

To be the customer Focused Bank with service Excellence.

Be a dynamic resource of economic development and growth for

stakeholders through service excellence achieving high standards of
professionalism, dedication integrity and team work.

13
 Our customer as our first

prioroty

 Profitablity for the

prosperity of stakeholders that
allows us to constantly invest, improve
and success

 Excellence I every thing we do

 Integrity I all our dealings

 Respect for our customer and

each other

 Recognition and Reward for the

talented and high performing employees

14
EMBLEM:
The sun rising over the five wavy lines symbolizes the dawn of new

era of progress and prosperity for the land of five rivers and hence for Pakistan.

Furthermore the main objectives of the inclusion of cotton flowers and the spikes

of wheat in the emblem is firstly to represent the fact that the economy of the

Punjab stands on its agriculture produces especially cotton and wheat and

secondly to highlight the emphasis which the bank is to place on development of

agro-based industry.

OBJECTIVES:

The Bank of Punjab being a commercial bank performs all those function as

are attributed to such banking institutions both in the areas of resources

mobilization and investment. It is providing funds for commerce, trade, industry,

and agriculture but its main emphasis is on accelerated development of agro-based

industry. So the main objective of the bank is to channelize the resources into

sectors, which have suffered from neglect. Other objectives included.

1. To provide speedier services to the common man.

2. To provide the highest rate of return to the shareholders by achieving good

profitable growth.

15
 To enter into financing contracts and to mobilize resources in local and now in

foreign currencies consistent with the objects of the bank

The Bank Of Punjab was established under the provisions of Section 28 of

Federal List included in the 4th schedule of the Constitution of the Islamic Republic of

Pakistan 1973.

The Bank was established under the Act of Punjab Assembly viz. The Bank of

Punjab Act 1989. He Bill to this effect was passed by the Provincial Assembly on July

3, 1989 and was passed to, by Governor Punjab in accordance with the Provisions of

the Constitution on July 26, 1989.

The Act provided for the foundation on which the edifice of the bank was erected.

It also included and provided for various modalities concerning the structure, the

organization and scope of the bank laying down its objective share capital and

principle of lending. The Act defines rules for the following.

1. Short title, extent, and commencement.

16
2. Establishment and incorporation of the Bank.

3. Share Capital.

4. Register of Shareholders.

5. Qualification of Shareholders.

6. Government to be shareholders.

7. Head Office of the Bank.

8. Board of Director.

9. Managing Director.

10. Qualification and disqualification of the directors.

11. Removal of Directors.

12. Terms of office of directors.

13. Vacancies.

14. General and special meetings.

15. Votes of the shareholders.

16. Business, which the Bank is authorized to transact.

17. Business, which the Bank is not authorized to transact.

18. Auditors / Governments auditors.

19. Right and duties of the auditors.

20. Liquidations of the Bank.

21. Powers of the Board to make byelaw.

17
 Being a commercial Bank, The Bank of Punjab performs all such functions as

are attributed to commercial banking institution both in the area of resource

mobilization, loans, and investment. The Bank is thus providing all type of advances

to business, trade, and industry on seasonal and annual basis, and is ensuring, through

the prudent policy, the safety and protection of its loan portfolios, as the resources

base of the bank expands, project financing will also be brought into its fold.

At the level of Decision-making and implementation, senior management of

the bank is drawn from highly accomplished bankers with rich experience in the

banking profession both domestic and international.

The entire responsibilities of policy formulation and management have been

placed, under the law, with the Board of Director. Furthermore it will be

heartening to know that Mr. Nawaz Sharif, during his chief Minister ship of

The province of Punjab issued special instructions to the political and executives’

echelons not to interfere in The Bank of Punjab, thereby ousting the possibility

any pressure which may be put on the

management of the bank in respect of recruitment of staff or provision of credit.

These instructions have become an essential part of the culture of the bank.

18
 The bank is one of the sponsors of Trust Management Services Pvt. Limited

besides being a co-sponsor of Trust Modaraba a Modaraba company incorporated in

Pakistan under the Modaraba companies and Modaraba (Floatation and control)

Ordinance, 1980. Authorized Modaraba Fund and paid up Fund of the said unit in Rs.

500 million and Rs. 150 million respectively.

The Bank is one of the sponsors of Trust Leasing Corporation Limited a

public limited company established under the Companies Ordinances, 1984.

Authorized paid up capital of the company is Rs. 250 million and Rs. 100 million

respectively.

First Punjab Modaraba Services (Pvt) Ltd. established in Pakistan under

Companies Ordinance.1984 and register under Moderate Companies and

Modaraba (Flotation and Control) Ordinance, 1980 is wholly owned subsidiary

19
of the bank. Authorized fund of this Modaraba is Rs. 500 million where as paid up

fund is Rs 200 million

BOARD OF DIRECTORS

CHAIRMAN

SENIOR EXECUTIVE VICE PRESIDENT

EXECUTIVE VICE PRESIDENT

VICE PRESIDENT

ASSISTANT VICE PRESIDENT

OFFICER GRADE-I

20
 OFFICER GRADE-II

OFFICER GRADE-III

CASH OFFICER

The services in The Bank of Punjab are classified in different categories.

Category A:
♦ President

♦ Executive Vice President (EVP)

♦ Senior Vice President (SVP)

♦ Vice President (VP)

♦ Assistant Vice President (AVP)

Category B:
♦ Officer Grade I

♦ Officer Grade II

♦ Officer Grade III

21
 ♦ Cash Officer

Category c:
♦ Clerical Staff

Category D:
 Non-Clerical Staff

♦ Driver

♦ Guards

♦ Gate Keepers

♦ Tea Boy

22
 DIVISION DEPARTMENTS

♦ ADMINISTRATION ♦ ORGANIZATION & METHODS

♦ OPERATIONS ♦ INFORMATIONAL &

♦ BUSINESS DEVELOPMENT TECHNOLOGY

♦ CREDIT ♦ OFFICERS TRAINING

♦ INTERNATIONAL INSTITUTE

♦ SHARES
♦ FINANCE
♦ LAW
♦ RECOVERY
♦ STATIONERY
♦ AUDIT & INSPECTION
♦ PLANNING RESERCH &
♦ TREASURY
PUBLICATION

23
HEADED BY: - HEADED BY: -

GENERAL MANAGER CHIEF MANAGER

REGIONAL CHIEFS

BRANCH
NETWORK

24
 FAISALABAD LAHORE
Total Branches 43 Total Branches 69

GUJRANWALA MULTAN
Total Branches 48 Total Branches 49

KARCHI / QUETTA RAWALPINDI

Total Branches 06 Total Branches 38

DG Khan
Total Branches 13

25
 G.M

Admin & Officer’s Training

Establishment Institute

This division deals with the problems relates to the staff administration. The

main function of this department is to arrange a

comprehensive training program for recruited staff. Others function includes:

♦ Recruitment

♦ Staff remuneration

♦ Placing the staff

♦ Providing and defining the opportunities for career development and

growth
♦ Devising and implementing services rules.

♦ Promotion and demotion

♦ Suspension and termination

♦ Transportation

♦ Security, health and benefits.

G.M

Computer Dept:
26
 Stationary Dept:
Engg & Maintenance

O & M Department

This Division is concerned with the operational working in general banking,

which is concerned with the routine working of the bank. Any problem or ambiguity

arise in any branch working are rectified and suggested for correction by this division.

This Division usually takes technical procedures involved the decisions like

commissions. And also,

♦ The maintenance of the existing building owned by the bank.

♦ Opening new branches and their maintenance.

♦ It also deals with the stationery problems of the bank.

G.M

Marketing PRP
Cell Department

27
 It is the other name of the marketing division. It promotes the bank cause i.e.

deposits and work for the over all development of the bank. Deposits are

the lifeblood of any bank. Without deposits bank cannot perform any function of

banking. This division fixes the deposits target of every branch by keeping and eye

over the potential customers in the area. It gives motivation to branches to achieve

their targets through different campaigns and schemes like cash prizes and special

increments. It publishes a bulletin in which those branches are encouraged who

achieves their monthly targets. The main function is to develop and attract the

customers and depositors. It also manages:

♦ Advertising policy

♦ Sales promotion.

♦ Schemes offered by the bank.

G.M

Agriculture Credit

This division control over all credit operations like sanction of loans, Inland

Bill Purchased (IBP) and also keeps check over securities mortgage,

28
hypothecating or pledge. It also fix the rate of mark-up and other decisions concerning

with the credit.

There is a credit committee, which consists of senior officers; Branches send

the credit proposal to head office credit division. Credit committee approves it after

making a through analysis. It also

♦ Prepare the policies regarding the sanctioning loan

♦ Monitor loans and credit

♦ Look after the portfolio of the bank

♦ Define credit limits against specified securities.

G.M

International wing

Forex Money
Market
Investment

Engg &
Maintenance

29
 This division is providing important services to the bank regarding the matters of

International Trade, Import, Export Letters of Credit, Travelers cheque etc.

♦ It develops “Correspondent Relationship” with others on commission basis

and this helps to deal with the clients having import export business.

♦ It handles treasury operations.

♦ The Marketing and Spot Inspection cell, which were introduced by the bank,

are showing positive results in terms of achieving foreign currency deposit

targets and other foreign related business.

G.M

Balance Sheet
Results Monitoring
SBP affairs and
Compliance
Shares Dept.

Company Affairs

30
 It controls the routine financial matters. The permission of special expenditure

incurred in the branches, and other such cases. The daily position and HO Extracts are

daily sent to this division by all the branches. This division not only estimates the

profit and loss of every branch but also prepare overall income statement and balance

sheet of the complete bank. It also keeps record of total deposits of the bank and then

their classification in the form of loans into different sectors of economy. The basic

functions are:

♦ Monitoring the fiscal and financial policies of the bank.

♦ Deals in exploring means for investing surplus bank funds.

♦ Maintenance and investment of Gratuity and Pension Funds of the employees.

G.M

Law
Department

31
 The recovery division, which was established in 1994 to assist in regularizing

the difficult loan accounts, has rendered valuable services in this respect. To effect

recoveries in an efficient manner, a policy has been framed in accordance with the

guidelines issued by the State Bank of Pakistan Moreover, recovery cells at regional

levels have been set up to assist the head office. This division looks after the matters

of recovery of loans with the assistance of legal advisors.

G.M

Audit of Rectification
and
Branches
Persuasion

32
 This department ensures appropriate system of checks and balances. It checks

all the irregularities, errors and forgeries if any, under the rules and regulations

formed by the Government of Punjab. For this purpose it doesn’t only keep and eye

on the branches in their vicinity but also conduct surprise and comprehensive audits

of the branches. This strategy has improved working at the branch level. It not only

points out the discrepancies but also tries to solve it. Surprise audit maintain a good

check on the over all working of the branch especially of the side of finance.

The following are the services being provided to the claims.

♦ Acceptance of deposits

♦ Granting of loans

♦ Transaction Foreign Exchange Services

♦ Remittance – Collection

33
 ♦ SPEDFAX- instant Fund Transfer Service

♦ Lockers facility

♦ Utility Services

The Bank of Punjab attaches specials importance to the fee earning business

and business base remuneration. As part of diversification of the banks utility

services, the collection of bills of INSTAPHONE (mobile phone network) was added

to existing collection arrangements for WAPDA,

SUI GAS, WASA, PTCL, and PAKTEL. By using bank’s extensive branch network,

effort have been to made to maximize the exploitation of this source in view of its rich

potential of yielding business and deposit direct earning of

Commission.

In modern times very few business enterprises are carried out solely with the

capital of the owners. Borrowing funds from different sources has becomes an

essential feature of today business enterprise. But in the case of an entire banking

system is based on it. The borrowed capital of the bank is much greater then their own

capital. Banks borrowing is mostly in the form of deposits.

These deposits are lent out to different parties. The larger the difference

between the rate at which the deposits are borrowed and the rate at which they are lent

34
the greater of the profit margin of the bank. Furthermore, the larger the deposit the

larger will be the funds available for employment; larger the funds lent out the greater

will be the profit of the bank.

To receive the deposit is the basic function of all commercial banks. The bank

does not receive these deposits for save keeping purpose only, but they accept

deposits as debts. When banks receive deposit from a customer, the relationship of a

debtor and creditor is established where by the customer become the creditor and the

bank a debtor.

When the bank receives amount of deposit as a debtor, it becomes the owner

of it. It may, therefore use it as deems appropriate. But there is an implicit agreement

that the amount owned would be paid back by the bank to the depositor after a

specified period.

♦ CURRENT DEPOSITS

♦ PROFIT & LOSS SHARING ACCOUNT

♦ SHORT NOTIC TERM DEPOSITS

♦ CALL DEPOSIT

♦ TERM DEPOSIT RECEIPTS (TDR).

35
CURRENT DEPOSITS:

In this type of account the client to allowed to deposit or withdraw money as

and when he likes. Because of their nature, these deposits are treated

as the current liabilities of the bank. There is not profit on such deposits. Usually this

type of account is opened by the business.

PROFIT & LOSS SHARING ACCOUNT:

This type of accounts is one step towards the Islamization of banking system in

Pakistan. There are two types of PLS Accounts.

♦ PLS Saving Account

♦ PLS-TDR (Profit & Loss Sharing Term Deposit Receipts).

PLS saving accounts can be opened with the minimum sum of Rs. 100 and

PLS-TDR account can be opened for a sum of Rs. 1000 or above. Profit is paid on

both types of the PLS account on half yearly basis.

Under PLS saving account the depositor undertakes to share profit or loss on

the deposits earned or sustained by the bank. Secondly the bank is at the liberty to

invest the funds of the deposits in any avenue, it deems fit. The PLS deposits are

invested in non-interested channels.

36
SHORT NOTICE TERM DEPOSITS (SNTD)

his kind of deposit is for a short period. The depositor may withdraw his

deposit at any time by giving seven days notice to the bank. This type of deposit

facilitates the depositor to withdrawn his amount with interest of the deposited period.

CALL DEPOSIT

Call deposits are the sorts of deposits, which are deposited with the banker against

any tender. This is without interest deposit. This may be with interest provided the

depositor has agreed to keep this amount with the bank for some fixed period.

TERM DEPOSIT RECEIPTS (TDR)

This type of deposit is same as the SNTD. The difference is that SNTD is for short

period (7- 30 days) while TDR is for long period (1 month up to 5 years).

37
 Account opening is the first step towards establishing a relationship between

the customer and the bank. The Bank of Punjab is offering basically two types of

account:

♦ CURRENT DEPOSIT ACCOUNT

♦ PROFIT & LOSS SHARING ACCOUNT

The necessary condition for a customer, who wants to open an account with

the bank, is introduction, which is preferably by the bank officers or any account

holder of the bank. The different categories of accounts that are available are as under.

♦ INDIVIDUAL account

♦ Joint Account

♦ Partnership Account

♦ Limited Company Account

♦ Clubs, Society, Association, or Trust Account

♦ SNTD

♦ TDR

♦ Foreign Currency Deposit

38
 Clearing is the most important department of the bank performing various functions.

Clearing House:

A clearinghouse is an organization of the member banks, working under SBP

and which is for the purposes of setting inter banks claim resulting from transmission

of funds from one bank to another. The branch cheque/instruments are credited into

the account of the customer. The clearing can be:

♦ Outward

♦ Inward

Outward Clearing

The instrument collected or stored bank wise and a schedules is prepared

separately for each bank mentioning the total number of instruments and the amount

of the instruments. Then these are recorded in a

register called “OUTWARD CLEARING REGISTER” then a main schedule is

prepared

showing the total number of cheque and their aggregate amount being presented in the

clearing.

39
 The cheque/instruments are handed over the clearing branch. Central clearing

branch issue CREDIT ADVICE to the branch for passing credit to its customer

immediately. The branch on receiving credit advice debits the clearing account and

credits the respective customer accounts.

Inward
On receiving cheque/instruments from central clearing branch, the in charge

checks the number and amount of cheque received in clearing must tally with the

main schedule received from central clearing branch.

These cheque/instrument are entered in “INWARD CLEARING REGISTER”

for the cheque/instrument passed in clearing is a credit advice for the aggregate

amount of cheque passed in clearing is prepared, drawn on central clearing branch.

Reserves at State

40
 Deposit held by bank at SBP serves as check clearing and collection balances.

Rather than physically transferring funds between banks, check

clearing and collection can be done by simply debiting or crediting a bank’s account

at SBP.

Remittance is a major function of the bank. It is the transfer of money from

one place to another place. The need for remittance is commonly felt in commercial

life particularly and in everyday life generally.

By proving this service to the customers the Bank of Punjab earns a lot of income in

the form of service charges.

The Bank of Punjab deals with the following type of remittances: -

 Demand Draft (DD)

 Mail Transfer (MT)

 Telegraphic Transfer (TT)

 Pay Order

Now we discuss all these in detail: -

DEMAND DRAFT (DD):

Demand draft is a written order given by the one branch of a bank on behalf of

customer to another branch of the same bank to a certain amount to the certain person.

41
 Procedure for Prepare Demand Draft.

1. A draft voucher is filled which contains the following information

 Name of the parties involved

 Date

 Amount to be sent

 Account number (if DD is crossed)

2. A credit voucher is filled in order to get the excise duty and exchange

commission.

3. The sender deposits the total amount of the two vouchers i.e. the debit and

credit vouchers.

4. Then the cashier sends the cash receipt voucher to the accounts department

and the account records the amount paid in his cash scroll.

5. Accountant gives the DD leaf along with the DD voucher to his assistant

who records the sender’s name, amount and receiver’s name. After writing

all the information in the DD register he gives it to the officer along with

the DD for authentication.

6. After authentication the DD is handed over to the sender and bank sends

the advice to the concerned branch. So when the party presents the DD in

the concerned branch its payment could be made.

Parties involved in the Demand Draft

The following parties are involved in demand draft;

1. Purchaser or Sender

42
 The purchaser is the person who sends the money to a particular person

payable at a certain branch.

2. Issuing or Drawing Branch

The branch from where the demand draft is issued to another branch of the

same bank.

3. Drawer Branch

Branch in which the draft has drawn and called upon to pay the amount

4. Payee

The person who is entitled to receive the amount after presenting the demand

draft in the drawer branch

MAIL TRANSFER (MT):

It is the transfer of money from one branch to another branch of the same bank

through mail service. In mail transfer there is no need of advice as the amount is

directly credited to the receiver’s account.

Procedure

1. First a voucher is filled in whish the sender writes the amount to be sent,

name, account number of the receiving person with the branch name and date.

43
 2. A credit voucher is filled in order to deduct exchange, postage charges

according to the amount of the mail transfer.

3. The sender deposits the total amount in the cash department.

4. The cash officer gives the vouchers to the officer after affixing received cash

stamp and writing the amount in red ink.

5. Then the officer writes the amount paid in the cash scroll and gives the MT to

his assistant.

6. MT leaf is filled according to the information provided in credit voucher. He

also writes the same information in the MT register. Then he gives the MT

leaf and MT register to the officer for authentication.

TELEGRAPHIC TRANSFER

(TT): This is the most urgent method of remitting the money from one place to

another place. This method is used when the sender desires to send urgently, in this

case the sender request the manager of the branch to issue TT.

Procedure:

For sending the TT the manager and officer apply a test. In the test the

manager and officer uses a coding technique. They write their own code numbers,

which is allotted, to them as the bank branch code. After making all the conformation

44
 the concerned branch makes the payment to the receiver. If the sender wants to

convey the same message through telephone then he has to

pay the charges of telephone along with the TT charges. First the person

deposit the TT amount along with the charges through the credit voucher then his TT

sent to the relevant branch.

Pay Order (PO):

A pay order is a written order issued by the bank on its own branch, drawn

upon and payable by itself to pay a specified sum of money to the person. The

purpose of a pay order is to transfer the fund from one place to another. It is usually

not issued in favor of the parties of other cities. Usually the pay order is issued for the

local transfer of money from one person to another or from the person to any other

department. It is used for

different purposes. The purpose may be the repairs of the branch or renovation of the

branch.

Procedure:

The procedure of a pay order varies with the nature of the purpose. If the work

is of huge amount then first the manager writes a letter to the Zonal Chief in order to

get sanction of the work. Then the advertisement of the work is given in the

newspaper in order to invite the contractors. But if the work is small then the branch

manager has discretionary power to select the party

45
 whose rate is lowest. After finishing the work the contractor submits the bill of

work on his stamp pad. Then the bank issues a pay order, against the pay order the

contactor gets the amount from the issuing branch.

“Major source of bank’s Income”

It is the loan function, which produces the major person of bank’s income, and

as such it is the major areas of professional banker’s concern and attention.

Principles while advancing

Basically there are five principles that must be duly observed while advancing

money to borrowers.

♦ Safety

♦ Liquidity

♦ Disposal

♦ Remuneration

♦ Suitability

Forms of Lending:

Many there are two types of advances:

46
 ♦ Short-term (maturity within one year)

♦ Long term (maturity with the period of more than one year)

However they are further classified as:

♦ Running Finance

♦ Demand Finance

♦ Cash Finance

♦ Letter of Guarantee

Running Finance:

This form of finance was previously known as “overdraft”. When a customer

requires the temporary accommodation, his bank allows withdrawal his account in

excess of credit balance, which the customer has in its account, a running finance

occurs. The accommodation is thus allowed collateral security. When it is against

collateral securities, it is called a “Secured Running Finance”

and when the customer cannot offer any collateral security except his personal

security, accommodation is called a “Clean Running Finance.” The customer is

in advantageous position in running finance because he has to pay the mark-up only

the balance outstanding against him on daily product basis.

Demand Finance:
47
 This is common form of financing to commercial and industrial concerns and

is mad available either against pledge or hypothecation of goods produce or

merchandise. In Demand Finance the party is financed up to a certain limit either at

once or as and when required. The party due to facility of paying mark-up only on the

amount it actually utilizes prefers this form of financing.

Securities for Advances:

♦ Pledge

♦ Hypothecation

♦ Guarantee

♦ Indemnity

♦ Charge

♦ Advances against “ Stock Exchange Securities

♦ Advances against immovable property “Mortgage”

Pledges:

“The bailment of goods as security for the payment of the debt and the

performance of a promise is called pledge”

48
 Pledge is the characteristic mode of taking goods as the security and the pledge occurs

when the goods or document of the title thereto or the securities are delivered by the

customer to his banker to be held as security for the repayment of the advance.

In a pledge, the ownership remains with the pledger but the pledgee has the

exclusive possession of the property until the advances in repaid in full, while in case

of default the pledgee has the power of sale after giving due notice. People with the

safe custody of goods, when entrusted with the goods for the specific purpose may

not make the valid pledge.

Hypothecation:

“A legal transaction where by goods may be made available as the security for

a debt without transferring either the property or the possession to the ledger.”

When the property in goods is in charged as the security for a loan from the

bank but the ownership and the possession is left with the borrower, the

goods are said to be hypothecated. The essence of the hypothecation is that neither the

property in the goods nor the possession of them passes to the lender, but the security

is guaranteed by means of Letter of Hypothecation, which usually provides for a

banker’s charge of the hypothecated goods.

Guarantees

49
 “A contract to perform the promise, or discharge the liability of the third

person in case of his default”

This is so when an application for the advances cannot offer any tangible

security, the banker may rely on the personal guarantees to protect himself against

loss and advances or overdraft to the applicant. Therefore a guarantee may be either

written or Oral. The Grantee is a promise by one person called

the guarantor or security to another for answering the present or future debt if a

second person called the “Principal Debtor”.

Indemnity

“A contract by which one party promises to save the other from loss caused to

him by the conduct of the promisor himself or by any other person is called the

contract of indemnity”

Thus in an indemnity, the promisor is the only person who becomes liable to

the promise if the latter suffers a loss on account of his doing something at the express

desire of the former.

Charge

50
 When immovable property of one person is by act of parties, or operation of

law, made security for payment of money to another, and the transaction does not

amount to mortgage, the latter person is said to have the charge on the property, and

all the provisions herein before contained which apply to a simple mortgage shall, so

far as may be apply to such charge.”

This means that a charge is a right of payment out of certain property. The

charge can be created by the act of parties or by the operation of the law and although

the property is made a security the payment of loan, is still not he mortgage.

Advances against Stock Exchange Securities:

Stock Exchanges Securities is the vast term which covers all gilt edged

securities such as:

♦ Federal and Provincial Government Bonds

♦ Post trust or Municipal Bonds

♦ Shares and debentures

Banker, as security for advances to the customer, frequently accepts these

securities. Advances can be against:

♦ Preference Shares

♦ Ordinary Shares

♦ Preferred Shares

It can be

♦ Quoted or Unquoted

51
 ♦ Registered

♦ Bearer

♦ Inscribed

Advances against Immovable Property (Mortgage):

A mortgage is the transfer of and interest in specific immovable property for the

purpose of securing the payment of the money, advanced or to be advanced. By way

of loan, and existing debts or the performances of the engagement this may rise the

pecuniary liability.

The transfer is called the ‘mortgager’ and the transferee the ‘mortgagee’ the

principal money and interest of which payment is secured for the time being and

instrument by which the transfer is effected, is called the letter of the mortgage deed.

Availability of adequate flows of credit for industry and agriculture are a sine

qua non for the growth and development of an economy. This acquires

added importance when agriculture is the mainstay of the economy as also the sector

where the bulk of the poor are concentrated. Growth and productivity in Pakistan's

52
agriculture has slowed down in recent years and is, therefore, of serious concern given

its importance for the economic prosperity of the country. Apart from various other

weaknesses in the infrastructural support of the agricultural sector, inadequacy and

lack of efficacy of credit, flows to support agriculture related activities has been a

major constraining factor.

Agriculture is the largest sector of the economy. It contributes 25 percent to

GDP, provides raw materials to 80 percent of industry and employment to over 50

percent of the population. This is a sector that has the

Shortest gestation period for investments and, therefore, a remarkable capacity to

bring about a turn around in the economy .This important sector in Pakistan is

suffering from a number of maladies and is consequently witnessing stagnation in

productivity.

Due to policy and administrative exigencies, the savings in the agriculture

sector remain low and, therefore, the sector has perpetually remained capital starved.

The pricing of input and output in agriculture over the years has forced the majority of

farmers in Pakistan to plough back their incomes into agriculture and non-institutional

credit, and has more often than not served to sap their potential earnings. Needless to

say, that shortage of savings and lack of availability of capital is one of the major

reasons for poverty in the country. The agricultural and rural sectors in Pakistan in

general and in Punjab in particular are, therefore, suffering from severe under-

development. Under a desirable development model, Punjab can:

♦ Increase agricultural production to meet the country's requirement of essential

foods items and industrial raw materials.

53
 ♦ Develop agro-based industry in the rural sector for economic value addition;

♦ Generate additional employment opportunities in rural as well as adjacent

small towns/cities;

♦ Control massive migration to the urban centers that in turn is causing a

number of social, administrative (i.e. law and order) and economic problems

for the urban areas.

♦ Elevate poverty and improve the income generating capacity of the agri-based

population.

Never before in the history of Pakistan, has the development of the agricultural

and food sectors been as critical as at this juncture and appropriate short and long

term measures are necessary for its revival, sustenance and stability. Supply of credit

by Financial Institutions for meeting the specific needs of agriculture and rural sectors

are essential components for improvement in both short and long-term development

of the country. This has assumed even greater importance in the present situation of

declining water availability. Per acre, production is plummeting. The per acre yield of

most of the crops is stagnant rather diminishing. The most important factors

responsible for this downward trend in productivity are: -

FACTORS RESPONSIBLE FOR LOW YIELD PER ACRE:

* Imbalanced fertilizer use

* Lack, availability of certified and good quality seeds

* Improper control of pests and weeds

SCARCITY AND INEFFICIENT USE OF WATER:

54
 * Natural and mechanical water resources.

NON-USE OF MECHANIZED FARMING PRACTICES:

♦ LACK OF EDUCATION AND RESOURCES, MOTIVATION TO USE

ADVANCED TOOLS FOR AGRICULTURE:

♦ HIGH COST, LOW OUT PUT, UNSKILLED LABOUR INTENSIVE

♦ NON-AVAILABILITY OF CREDIT AND FINANCIAL ASSISTANCE TO

THE AGRICULTURE SECTOR

The importance of availability of credit to the agriculture sector has always been

recognized by Government and given Top Priority. Specialized institutions have been

in place for a number of years. However, these

Institutions have failed to realize the full potential from the sector and at times

contributed to its further deterioration . It is therefore of paramount importance that

The Bank of Punjab through well thought out policies ensures that it does not repeat

the follies of the past.

A number of institutions are in the field earning to obtain results. We in The

Bank of Punjab will support the role of the Government in providing much needed

support to the agriculture sector but with a difference. The difference being that

instead of subsidizing the needs we will be active

participants in economically viable projects thereby safeguarding the investments of

the Bank.

55
 A precondition to lending by the Bank will be an undertaking from the

customers/borrowers not to borrow from any other source whatsoever. This is

important to ensure against any multiple borrowing and more importantly to restrain

the borrower from falling into a debt trap.

The Bank of Punjab has been at the forefront in contributing to the Agriculture

Sector at a limited scale and has initiated schemes in harmony with the State Bank of

Pakistan approved/eligible programmes for the assistance/help of the agriculture

farmers.

Presently, the Bank is financing farmers in some specific areas only. The

State Bank of Pakistan has expanded the scope of its scheme and included a number

of items eligible for credit under Agri-finance Schemes.

In terms of the importance, priority and current needs. We have short listed the

items from the State Bank of Pakistan's list provided under cover of its Circular letter

No. ACD/1044/1050/PD/P-08/2001 dated 26.04.2001.

The list of eligible items for Agri-Credit is mainly divided in two sectors;

i.e

►Farm Credit. And

►Non-Farm Credit

Farm Credit is further bifurcated into:

♦ Short-Term

♦ Medium-Term

♦ Long-Term Credit.

56
 The priority items, which are recommended for inclusion in our schemes, are given

here under;

FARM CREDIT (SHORT

EXISTING:

(Kissan Dost Agriculture Finance Scheme) Product /purpose of Finance) Seeds,

Fertilizers, Pesticides, Herbicides, Weedicides, All types of labor and water charges
are already embodied in our package financing, i.e., 8000 Per Acres (no change)
PROPOSED:

(Product /purpose of Finance)

1. Orchard and Nursery 2. Manual Sprayers

3. Sericulture 4. Apiculture

Farm Credit (Medium & Long

Term):

EXISTING: Tractors

(Product/purpose of Finance)

PROPOSED:

(Product & Purpose of Finance)

Tube-Well

57
 Installation of Tube-Well, water management, equipment, modules & culvert,

lining of channels etc. Solar energy plants and pumps for irrigation, equipment for

sprinkle/trickle/drip irrigation system.

Mechanization Support:

Agri-implements, Equipment, i.e. trailers and thrashers,

power tillers, power & boom sprayers, ploughs and cultivators, ridggers / drills,

rotavators, diggers, saw machines for crates making, press machines for wheat straw

and dry fodders.

Farm Transport:

Lease finance for purchase of Motor Cycles and small Vans for Milk

and other agri products transportation to local market.

Islah-e-Arazi:

Precision land leveling & reclamation, soil improvement, embankment, land

formation and land improvement, laser leveling etc.

Non-Farm Credit: (Livestock

58
 For the time being, we do not propose to extending Non-Farm Credit, i.e. for

big Dairy Farms, Poultry Farm but will accommodate existing borrowers and

established small individual farmers by financing livestock. (Goat, sheep, cattle &

fattening animals) on a limited scale to revive, accelerate and supplement the income

generating capacity of the small farmers.

59
Years Deposits (Rs in Million)

2001 17028

2002 19035

2003 23767

2004 34938

2005 54724

2006 88465

2007 137728

2008 191969

60
Years Advances (Rs in Million)

2001 6144
2002 5772
2003 6621
2004 18344
2005 39439
2006 63624
2007 101320
2008 133894

61
 Years Investment (Rs in Million)

2001 7866

2002 5970

2003 8295

2004 11458

2005 16198

2006 18026

2007 28233

2008 73462

Years Capital (Rs in Million)

62
2001 4537
2002 1509
2003 1672
2004 1795
2005 1823
2006 2180
2007 2940
2008 4537

Years Assets (Rs in Million)

2001 20186
2002 24803

63
2003 29533
2004 43621
2005 66320
2006 111154
2007 164855
2008 234974

Years Profit (Rs in Million)

2000 28
2001 157
2002 236
2003 284
2004 689
2005 1368
2006 2353
2007 3804
2008 4446

64
 Growth (Rs in
Years
Million)
2001 1823
2002 2180
2003 2225
2004 1290
2005 2684
2006 2832
2007 6791
2008 6989

65
 Balance Sheet
as at December 31, 2008
Restated
Note 2007 2008
Rupees in ‘000’

Assets
Cash and balances with treasury banks 14,054,859 14,210302
Balances with other banks 3,722,089 19,27662
Lendings to financial institutions 11,846,823 24,50000
Investments 28,233,211 73461695
Advances 101,319,954 133,893585
Operating fixed assets 2,068,744 32,52759
Deferred tax assets - -
Other assets 3,609,457 57,78192

164,855,137 234,974195

Liabilities
Bills payable 856,448 937647
Borrowings 6,989,424 17,84842915
Deposits and other accounts 137,727,606 191,968909
Sub-ordinated loans _ _
Liabilities against assets subject to finance lease 40,988 40321
Deferred tax liabilities 298,616 220,5530
Other liabilities 2,816,341 29,83079

148,729,423 215,978401

Net assets 16,125,714 18,995794

66
Represented by
Share capital 2,902,490 42,30379
Reserves 4,537,232 7427232
Unappropriated profit 3,219,246 34,52842

10,658,968 15,110453
Surplus on revaluation of assets 5,466,746 3885341

16,125,714 18995794

Comparative Financial Statement

Comparative financial statement present financial information

for the current period and one or more past periods. In comparative analysis the

statements predict about the movements and trends of the business with respect to

past years, whether there is increase in the business activities or decrease. It may also

help to comments about the future expectations of the ways in which the financial and

operating performance will go.

There are two type of comparative financial statement analysis.

 Horizontal Analysis

 Trend Percentage Analysis

Comparison of two or more years’ financial statement is called

Horizontal Analysis. It shows the changes between years both in rupee and

percentages form. So in this way it facilitates the analyst to predict about the ways

67
 if the business in which it is going. It emphasis the proportional relationship

between the reporting periods, rather than with in the reporting period.

In this report I shall use this type of comparative financial statement

analysis to analyze the performance of The Bank of Punjab.

Trend percentages state the several years’ financial data in terms of a base

year. The base years equals to 100% with all other stated as some percentage of this

base year. In this way it predict good and easy way information about the business

activities. By simple looking at these percentages one can see the ways in which the

business in going on whether the business is making performance or not.

This table and graph shows the trend of Gross Income, profit before tax, and

Net income.

No of Years 2008 2007 2006 2005 2004

Gross Income 219% 198% 157% 143% 100%
Profit before
318% 310% 235% 91% 100%
Tax
Net Income 230% 191% 127% 22% 100%

68
 RATIO ANALYSIS

The relationship of one item to another expressed in simple mathematical form

is known as a ratio. A single ratio in itself is meaningless because it does not furnish a

complete picture. A ratio becomes meaning full when compared with some standard.

So we have taken ratios and percentage of the BOP based in its record of the past

financial and operating performance. On the following pages, I make the analysis of

the financial statements of BOP by using related items for the last five years.

Profitability Ratios.

Gross Profit Margin Gross profit / Income

Operating Profit Margin Operating profit / Income
Net Profit Margin Net profit / Income

No of Years 2008 2007 2006 2005 2004

Gross Profit Margin 12.23 5.92 3.78 -5.90
-18.18
Operating Profit Margin 15.69 -9.44 4.87
10.85 11.02
Net Profit Margin 7.25 8.28 5.96 -5.47
-25.07

Remarks.

69
 The net profit margin of five years indicates that the income of the BOP after

paying its non-productive expenses is increasing year by year, which is a very good

sign for the bank. As I see the operating profit of the bank shows a increasing trend in

ratio. This shows that the earning capacity of the bank is increasing year by year.

Earning Per Share

Earning Per Share Profit after Tax / No of Shares

200 200
No of Years 2008 2005 2004
7 6
10.5 -
Earning Per Share 9.01 .61 1.53
1 1.22

Comments

Earning of BOP shows the increasing trend. This shows that the earning

capacity of a single share is increasing and shareholders are earning increase every

year. This is very good sign for BOP. This ratio should be as high as possible because

it has a great importance for an investor to invest in the Bank of Punjab.

Regulatory Ratios

Advances to Deposits Ratio Advances / Deposits

Cash to deposits Ratio Cash / Deposits

70
 200 200 200 200
No of Years 2004
8 7 6 5
Advances to Deposits Ratio 28% 30% 36% 36% 33%
Cash to deposits Ratio 12% 23% 9% 13% 42%

Remarks.

Advances to deposits ratio of The Bank of Punjab shows that the portion of loan in

total deposit of the bank is not stable, 1st three year from 1998 to 2001 increase then

decrease. It means that the credit (advances) circulation of the bank has fallen from

36% to 28% during the last five years, which is a not good sign. And the cash to

deposits ratio is also decrease from 42% to 12%.

Capital adequacy Ratios:

71
 Equity to Asset Ratio Total Equity / Total Assets
Equity to Deposit Total Equity / Deposits

Ratio

200 200 200 200

No of Years 2003
8 7 6 5
Equity to Asset Ratio 8% 10% 11% 10% 9%
Equity to Deposit
10% 13% 13% 12% 3%
Ratio

Remarks.

This ratios is showing increasing trend, in 2002 it decreased. This means that

deposit of the banks are decreased in 2002 and assets are also decreased in 2002,

which is not good for the Bank of Punjab.

72
 STRENGTHS

 The major shares of BOP is owned by the Govt. of the Punjab, so it

can develop a good image & trust among it customers.

 Stability of Bank is strength of any bank. The Bank of Punjab has

stable growth since its establishment.

 The Bank provides the loan facility on sound basis that is very crucial

for any bank to recover the loan. The Bank of Punjab has conservative

policy for advances. So there are very less bad debts.

 Personal selling has key role in banking service. The officers of the

Bank of Punjab go to the potential customers to develop the business.

By the relationship with customers, they achieve the deposit targets.

 The promotion criteria of the bank are on the basis of the efficiency

and passing the diploma examination of Pakistan Institute of Bankers.

 Entry in gains book if world record, rapid growth in expansion in short

span of time, 273 branches in Pakistan.

 It is the policy of the management that requirements are made

according to the principles of merit. The bank to train them in gives the

staff banking. The past percentage of the candidates of Bank of Punjab

is the highest among the entire commercial every year.

 People have trust in the Bank of Punjab because govt. of Punjab 52%

shares of the bank.

73
 There is no union in the Bank of Punjab.

 Working environment is good. Officers and managers work together as

a team. They are very cooperative with each other.

 The bank has very good branch network in Punjab and now after

scheduling the bank is opening its more branches in other provinces.

 Higher management is experienced.

 The management style of the management is flexible.

 Profit rate is high as comparative to other banks.

WEAKNESSES

The Bank of Punjab is centralized organization. The authority is not given to the

branch level. Managers have to take permission from the Regional office or Head

office for credit. Manager had to get permission if they have to given more rate of

profit to the customers. So the customers have to wait for days, which may cause the

change of customers. Managers cannot negotiate with customers without the

permission of head office.

 Salaries of the officers are less as compared to other private banks.

 The Bank of Punjab has very less promotional activities. Their

advertising campaign is very low. They only use personal selling.

 The Bank of Punjab has very less staff in the branches of South Punjab

as compared to Upper Punjab. This creates the problem employees

have to spent most of their time in the bank to complete even their

daily routine work. They have to sit till 7:00 to 8:00 PM before going

74
 back to their homes. For this reason their normal life is disturbing

which create the irritation in the behavior of employees.

 The bank’s expenses are increasing at very high rate.

 The Bank of Punjab has less interest in foreign exchanges. And BOP

has less number of expert officers in the foreign exchange business.

 Mostly small branches are going in loss.

 The Bank of Punjab has only six regional office in whole Pakistan. It is

very difficult to control all branches in one region.

 The Bank of Punjab is deviating from the basic banking principles,

because the basic function of bank is to accept the deposit and advance

loans. But analysis of financial statement of BOP shows that advances

are less as compared to investment.

 BOP is not taking keen interest in the marketing of traveler cheque

than others bank. BOP is loosing its share due to the less interest.

OPPORTUNITIES

Υ Although commercial banks have launched many products but a gap exist

between the customer’s want and what the banks are providing. This is an

opportunity for the Bank of Punjab to move in and fill the gap between the

ideal bank and the current service offerings by aggressive advertising,

consumer friendly attitude products and service for attracting customers.

75
 Υ The Bank has opportunity to expand the branch network all over the country,

and it would be able to develop business and can start many other schemes for

investment.

Υ The Bank has opportunity to use latest technology for providing good services

to customers.

Υ There is an opportunity for more businesses if the BOP opens its branches in

foreign countries.

Υ There is an opportunity for more businesses if the BOP offered credit cards.

Υ Different multinational are establishing their businesses in Pakistan. So there

is a lot of potential for future businesses.

THREATS

 The salaries of the officers of the Bank of Punjab are less as compared to

other private banks. It may cause transfer of the experts from the Bank of

Punjab to other banks.

 Expansion of newly establishment banks like, Union Bank, Al-Falah

Bank, Askari Commercial Bank etc. and their better performance may

cause loss of the marker share of the BOP.

 The Bank of Punjab is also forced to give loans on potential basis. Due to

this the recovery of such loans may become very difficult.

76
 In the light of the Knowledge obtained during internship and studying the

organization, the following recommendations may prove to be successful to the bank.

 In order to capture a considerable share in the banking sector of the country,

the prime objective should be awareness in the general public. For this it should

launch a well-planned advertising campaign in the general public.

 Physical facilities in a bank also play their role in enhancing its grade and

sound image. The bank should keep these facilities like furniture, parking facilities for

the customer.

 Salaries of the officers must be compatible to other private banks so that the

BOP can attract professionals, intelligent persons.

 The Bank of Punjab should minimize its expenses.

 Special awards should be given to the hardworking employees who performed

extra-ordinary in the bank.

77
 The bank should come up with new and innovative products. It would be

advisable to make these products while keeping in mind the gap between what people

want and what their banks are providing them.

 The Bank of Punjab should concentrate more on advances than on investments

 The bank should come up with such products or services in which the

customers would not have to come to the bank at any stage i.e. Telephone Banking

etc.

 The Bank of Punjab should use the latest technology because the bank which

can provide speedy, accurate and standard services in the delivery of products, loans

etc. to the customers will be successful e.g. computerization, fax installation.

 The authority should be delegated to the manager level.

 MIS should be improved by connecting all regional offices and branches to the

head office through a network for timely delivery of information.

 Management of Bank of Punjab should try to avoid the political influences and

should give loans on merit.

 The bank should make a plan to gear up its recovery function on war fooling

and recognize the recovery function.

 The Bank of Punjab should give some extra credit to concern to professional

qualifications such as M.Com(finance)’s MBA(IT)’s, M.B.A’s, C.A’s A.C.M.A’s at

the time of recruitment and selection.

 Interview should be conducted while recruiting personnel, to consider the

personality characters, communications skills and sociability.

78
The Bank of Punjab is contributing a lot towards the industrial

development and capital formation in the country. As it is exhibit from

the data regarding the bank’s financial performance as shows in the

financial performance as shows in the financial analysis, that bank is

sharing major banking business of the country. Further more the policies

and schemes as are introduced and carried on by the bank are of great

source of help in its trading and non-trading growth.

In a pledge, the ownership remains with the pledger but the pledgee has

the exclusive possession of the property until the advances in repaid in

full, while in case of default the pledgee has the power of sale after giving

due notice. People with the safe custody of goods, when entrusted with

the goods for the specific purpose may not make the valid pledge.

79
In Pakistan, over long periods of time the gap in saving and investment

and balance of trade deficit has posed serious threat to the target levels of

growth

the ailments related to the budgetary deficit and public debt, both foreign

and domestic are in addition. Interestingly even such adverse

circumstances growth of real sector during the preceding year registered a

favorable change, which speaks of hidden potential and strength of

economy

Fortunately, the banking sector of the country has the well organized and

properly institutionalized system, which is the major vehicle not only for

mobilization of resources to finance trade, agriculture, and industry but

also for the effective conduct of monetary policy. The Bank of Punjab has

very less staff in the branches of South Punjab as compared to Upper

Punjab. This creates the problem employees have to spent most of their

time in the bank to complete even their daily routine work. They have to

sit till 7:00 to 8:00 PM before going back to their homes. For this reason

their normal life is disturbing which create the irritation in the behavior of

employees.

Bank is offering a widest array of products to customers through its

extensive branch network all over the country. Bank seeks to maintain

80
high standards of service and ethics enabling it to be perceived as
impartial, ethical and independent. Bank is providing different services to
the customers in order to facilitate them. The products it is offering to the
customer include Demand Deposit, Time Deposit, Lockers, Fund Based
Loans, Import and Export related Finance etc. This bank is financing loan
not only to the large and medium size enterprises but also the individual
customer. From the opinion of international organization the overall
strong standing of the bank is very clear. The bank is fully equipped with
the modern technology and it is also providing all the latest banking
services like online banking, Internet banking, ATM cards, traveler
chouse, and credit cards etc. The bank is trying to introduce latest
techniques on regular basis because it is backed by AWT that’s why
people have complete confidence on them. BOP has won the confidence
of all its customers by providing them the online services within few
seconds.
The future of bank is progressive and will be a leading bank of Pakistan
even competing with foreign banks. BOP has always remained at
forefront in introducing innovative and unique products in banking
sector. Its financial instruments provide greater financial freedom and
security in an unmatched way to its valued customers. The bank has great
potential to achieve sustained growth and profitability in all areas of
business.
The banks is offering different good quality services to its customers and
deliver timely solutions that best meet the customers’ financial
needs.Fortunately, the banking sector of the country has the well
organized and properly institutionalized system, which is the major

81
vehicle not only for mobilization of resources to finance trade,
agriculture, and industry but also .For the effective conduct of monetary
policy. Bank is committed to provide innovative and competitive
solutions to banking needs in a more efficient and personalized manner.
Bank enjoys a strategic competitive advantage over all domestic players
by virtue of its leadership, large network and technological
advancement.BOP has always remained at forefront in introducing
innovative and unique products in banking sector. Its financial
instruments provide greater financial freedom and security in an
unmatched way to its valued customers. The bank has great potential to
achieve sustained growth and profitability in all areas of business.

This department ensures appropriate system of checks and balances. It

checks all the irregularities, errors and forgeries if any, under the rules

and regulations formed by the Government of Punjab. For this purpose it

doesn’t only keep and eye on the branches in their vicinity but also

conduct surprise and comprehensive audits of the branches. This strategy

has improved working at the branch level. It not only points out the

discrepancies but also tries to solve it. Surprise audit maintain a good

check on the over all working of the branch especially of the side of

finance.

82
Being a commercial Bank, The Bank of Punjab performs all such

functions as are attributed to commercial banking institution both in the

area of resource mobilization, loans, and investment. The Bank is thus

providing all type of advances to business, trade, and industry on seasonal

and annual basis, and is ensuring, through the prudent policy, the safety

and protection of its loan portfolios, as the resources base of the bank

expands, project financing will also be brought into its fold.

It controls the routine financial matters. The permission of special

expenditure incurred in the branches, and other such cases. The daily

position and HO Extracts are daily sent to this division by all the

branches. This division not only estimates the profit and loss of every

branch but also prepare overall income statement and balance sheet of the

complete bank. It also keeps record of total deposits of the bank and then

their classification in the form of loans into different sectors of economy.

Advances to deposits ratio of The Bank of Punjab shows that the portion

of loan in total deposit of the bank is not stable, 1st three year from 1998

to 2001 increase then decrease. It means that the credit (advances)

circulation of the bank has fallen from 36% to 28% during the last five

years, which is a not good sign. And the cash to deposits ratio is also

decrease from 42% to 12%.

83
The pricing of input and output in agriculture over the years has forced

the majority of farmers in Pakistan to plough back their incomes into

agriculture and non-institutional credit, and has more often than not

served to sap their potential earnings. Needless to say, that shortage of

savings and lack of availability of capital is one of the major reasons for

poverty in the country.

It was such a pleasant Experience to Work in THE BANK OF PUNJAB I

own my gratitude and thankful to all those who helped me in preparing

this internship Report by sharing there best of knowledge.

It is due to endless efforts of my friends and fellow members at THE

BANK OF PUNJAB who provided me every favor and the last but not

the

least I am really very thankful to my beloved parents who have always

been a source of inspection for me.

The policies of the bank are uniform and going very smoothly. The

employees are given all the possible facilities and generous

compensation. In return employees are stressed for their best efficiency.

Merit policy prevails in all the activities of the bank. Administration has

studied the administration of all other banks, and all their problems and

84
drawbacks are planned to be avoided. Therefore, the policies of the

management are progressive and proper.

The progressive approach and trend towards progress and prosperity

reflects that bank will touch the zenith of development and progress. The

dedicated, enthusiastic and motivated employees can bring that time even

earlier. The Bank of Punjab attaches specials importance to the fee

earning business and business base remuneration. As part of

diversification of the banks utility services, the collection of bills of

INSTAPHONE (mobile phone network) was added to existing collection

arrangements for WAPDA,

SUI GAS, WASA, PTCL, and PAKTEL. By using bank’s extensive

branch network, effort have been to made to maximize the exploitation of

this source in view of its rich potential of yielding business and deposit

direct earning of Commission.

The progressive approach and trend towards progress and prosperity

reflects that bank will touch the zenith of development and progress. The

dedicated, enthusiastic and motivated employees can bring that time even

earlier.

Internship, a practical training, is an integral part of BBA study. For

internship I was sent to The Bank of Punjab. It is a six weeks training

85
period in which I tried my best to get complete knowledge and training in

different sections of the branch. This report contains the necessary

information about the sections and functions of BOP. This report is

prepared in simple and understandable format so that ordinary person can

also take benefit from this report.

86