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Acknowledgement My report will remain incomplete if I do not mention the efforts of those people who helped me in completing this

work. First of all I will thank to my father Waheed Sheikh who got me opportunity to work in such a prestigious organization, which is well known in the country. I also tribute to my all teachers who able me to work with experienced persons and enable me to work very efficiently throughout the period of Internship. The administration department of HBL helped me in preparing my internship report, Especially Administration officer Mr. Tanveer Ahmed. The program was organized in such a way that sufficient time was given to each department according to its importance. I am really thankful for his co-operation during the internship. At last, I would like to thank all those persons who helped me in completing this report.

Table of Contents 1. Executive Summary 2. History of Habib Bank a. Mission statement of Habib bank b. Values c. Objectives d. Milestones e. Financial Highlights f. Types of branches g. Divisions of Habib Bank h. Branch Network 3. Business Operation a. Organizational Structure (Organizational Chart) b. SWOT Analysis c. Marketing Strategy d. Competitive Strategy e. Business process analysis 4. Learning as a Student Internee

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1. Executive Summary We are living in a time of extraordinary change. The ecological and economic threat is looming large on the entire sphere of Pakistanis economy. Pakistani firms must design and make better products and services and should find better ways to market them. What was once regarded enough is no longer competitive. What were once limitless resources are now to be used more efficiently. Today an organization is on the leading edge, or it is on the bleeding edge. I have learned the lessons perhaps the hardest way, that is, through my mistakes. I have tried my best to peep into the generic as well as real cumulative problems faced by the pioneer of banking industry in Pakistan but that degree of objective analysis proved to be of little use since this bank is firmly entrenched in the claws of royal bureaucracy. Several chapters have been inducted in the report but they seem to be very conventional in nature giving supplementary justification to the fact that HBL is the most conventional of the conventional bank. In order to be able to cope with the changing environment it is necessary to have some practical experience. As the students of Commerce we have to pass through a series of various managerial techniques. During this practical course we are provided with an opportunity to learn that how the theoretical knowledge can be implemented in practical grounds. I was selected to do my internship in Habib Bank Ltd. Empress Road Branch Lahore. I worked there for ten weeks & it gave me a greater practical knowledge about the operations of a bank. In the following pages I have narrated my experience, observations & all the working activities, which I observed during my ten-week internship at Habib Bank Ltd, Empress Road Branch Lahore.

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2. History of Habib Bank Ltd. In 1949 (September) U.K. devalued its currency, India followed suit but Pakistan did not. India said we had contravened the agreement of keeping both currencies at par. We said we had not done that; India had done it arbitrarily without consulting us. On October 3, 1949 the two central banks were to announce the new par value of both currencies but India denied a day earlier. India also froze our trade - balance surplus that is still an unsettled dispute. India also withdraws the Marwari merchants who were employed annually for movement of jute crop by financing it. Theyre being no jute industry, prices fell sharply, foreign banks and foreign merchants stood aside and an agrarian unrest was threatening. Two Ordinances were, therefore, issued 1.
2.

Jute Board Establishment Ordinance & HBL Ordinance dated 08.11.1949

Habib Bank Ltd. was established on November 9, 1949 under the National Bank of Pakistan Ordinance 1949 in order to cope with the crisis conditions which were developed after trade deadlock with India and devaluation of Indian Rupee in 1949. Initially the Bank was established with the objective to extend credit to the agriculture sector. The normal procedure of establishing a banking company under the Companies Law was set aside and the Bank was established through the promulgation of an Ordinance due to the crisis situation that had developed with regard to financing of JUTE trade. The Bank commenced its operations from November 20, 1949 at six important jute centers in the East Pakistan and directed its resources in financing of jute crop. The Banks Karachi and Lahore offices were subsequently opened in December 1949. The nature of responsibilities of the Bank is different and unique from other banks/financial institutions. The Bank act as the agent to the State Bank of Pakistan for handling Provincial/Federal Government Receipts and Payments on their behalf. Mr.Ghulam Farooq was chairman Jute Board and Mr. Mumtaz Hassan was chairman HBL. Until June, 1950, HBL remained exclusively in jute operations, thereafter-other commodities were also taken-up. After that Mr. Zahid Hussain, Governor SBP assumed Roll # 306-1400 4 B.Com Batch 14

additional charge also as chairman HBL's Board of Directors, and Mr.M.A.Muhajir became its first M.D. In 1962 when Mr. Mumtaz Hassan became MD (He had already served HBL for 10 years as its Chairman of government Director), the number of branches had increased from 6 to 239 and deposits from Rs.5 crore (50 million) to 106 crore (one billion & 60 million), profit from 3 million (30 lac) to 21 million and the staff increased from 380 to 7091, as compared to 1949-50. In Dec. 1966 its 600th branch was opened raising the deposits to 2.31 billion and staff to 14, 963. Up to 1965, the shareholders had received 225% of their original investment. Now it has more than 21549 employees 1537 branches and Rs.208283 million deposits. The Bank has also played an important role in financing the countrys growing trade, which has expended through the years as diversification took place. Today the Bank finances import/export business to the tune of Rs.62.17billion, whereas in 1960 financing under this head was only Rs.1.54billion. The field is being de-layered to improve customer services and enable faster decision-making. As a result of this de-layering zones have been eliminated and the numbers of regions have been increased. Organizational hierarchy at the regional level has been restructured and operational and business activities have been completely separated. This separation will improve communication, decision-making and promote teamwork. For the third consecutive year, the Bank is recognized as the best Bank in Pakistan for the year 2004 by the prestigious periodical. The Banker UK (a subsidiary of Financial Times Group) Were expanding horizons, reaching out, Being there and bringing something for everyone. After all, We are The Nations Bank.

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a. Vision

To be the pre-eminent financial institution in Pakistan and

Achieve market recognition both in the quality and delivery

Of service as well as the range of product offering.

Mission Statement To be recognized in the market place by Institutionalizing a Merit & performance culture, Creating a powerful & Distinctive brand identity, Achieving top-tier financial Performance, and Adopting & living out our core values. Roll # 306-1400 6 B.Com Batch 14

b. Values HBL aim to be an organization that is founded on a. Growth through creation of sustainable relationships with our customers. b. Prudence to guide our business conduct. c. A national presence with a history of contribution to our communities. HBL shall work to Meet expectations through Market-based solutions and products. Reward entrepreneurial efforts. Create value for all stakeholders. HBL aim to be peopling who Care about relationships. Lead through the strength of our commitment and willingness to excel. Practice integrity, honesty and hard work. We believe that these are measures of true success. HBL have confidence that tomorrow we will be Leaders in our industry. An organization maintaining the trust of stakeholders. An innovative, creative and dynamic institution responding to the changing needs of the internal and external environment c. Objectives Strong emphasis has been laid upon training of branch officers to better equip them for marketing of retail banking products. Initiatives on similar lines are being launched for the SME sector. In future HBL is going to introduce modern banking services to keep pace with the competition and more important our customer needs. These are as follows:

Debit cards Internet banking 7 B.Com Batch 14

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Call centers Mobile banking

d. Milestones Best Emerging Market Bank from Pakistan for the year 2005 Global Finance USA, May 2005 HBL is one of the Top 100 Banks of Asia Euro money UK, March 2005 Bank of the year 2001, 2003&2004 for Pakistan The Banker financial times Group UK. Best Foreign Exchange Bank in Pakistan global Finance USA, March 2004 Amongst Top 1000 Banks in the world and Number 1 in Pakistan the Banker Financial Times Group UK, July 2005

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e. Financial Highlights

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Performance at a Glance

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Future Outlook The 2004 results depict the success of the banks restructuring initiatives that were aimed at streamlining of domestic operations and empowerment of the field to facilitate decision-making, teamwork and communication. HBL now feel better positioned to pursue its drive for diversification of revenue base to preserve its margins and ensure optimum returns for its stakeholders. These results have been possible due to the commitment and dedication of its staff. HBL express its appreciation to the banks valued customers and the regulators for their confidence as HBL consolidate its position as the Nations Bank. f. Types of Branches There are a lot of different branches of Habib Bank Ltd. We explain them one by one. There are main branches in every city. In one city there is only one main branch, it is directly under the zonal office. Then there are commercial branches. These are the ordinary branches and are in the commercial areas such as the Mall Road Branch. The Industrial Branches are exclusively in industrial zones. There are also Residential Branches. These are exclusively in residential colonies. Another type is the Mixed Branch such as civil secretariat branch. Every kind of work is done.

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There are also Project Branches created for specific purposes i.e. the project and are at the site. Another unique type is the Model Branch. No other bank in Pakistan has these. In these branches the officers do all the work. Even the officers sit on the counters. Model Branches are in Karachi, Lahore and Islamabad.

g. Divisions of Habib Bank In order to perform all the functions, the Habib Bank Ltd. has made some divisions, which perform some specific functions. Following are the divisions: Credit division The main function of this division is to make the credit policies, and also to do credit ceiling, which means the maximum amount of credit that can be given to a certain client. This division also looks for the agricultural and small loans. It also considers the cases of right off i.e. bad debts. Corporate credit Division The major function of this division is to handle the big loans and industrial financing, I.B.R.D. It also does the evaluation of credit ceiling policy devised by the credit division. International Division This division has to look after the administration of Habib Bank Ltd. outside Pakistan. It takes care of all the affairs about the advances given outside, the management of the branches of the bank outside Pakistan, the posting of employees outside Pakistan etc.

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Recovery and Litigation Division This division comes into operation when recovery of advances given becomes difficult or impossible. It is the job of this division to decide whether to go court against the client or not. Audit and Inspection Division The major function of this division is to carry out the inspection of rules and policies. It also inspects the books of accounts, whether they are kept rightly or not. Administration Division This division consists of two wings the personnel wing and establishment wing. The personnel wing concerns with employee welfare and administration. It looks after things like rules relating to the administration of employees, the medical bills etc. There is also a disciplinary cell, which is for punishments if an employee does something wrong. The establishment wing has a main function of controlling the debt stock i.e. furniture, transport facility, stationary, sports portfolio, security arrangements, and staff welfare. Research Corporate Planning and Human Resource Development Division Their main job is to do human resource management. For this purpose there are staff colleges in Pakistan. There are four of them. They give training to employees outside organization and also outside the country. In 1998 Habib Bank ltd. staff colleges have trained about 7992 employees out of which 321 were executives 5553 officers and 1878 other staff. Outside Habib Bank Ltd. they trained 128 executives, 113 officers and 2 other staff. They have their own staff and also engage faculty from Punjab University and LUMS. Engineering and Maintenance Division The job of this division is maintenance of buildings, construction of projects, project designing. The head of this division is an engineer who has designation of executive vice president. Roll # 306-1400 15 B.Com Batch 14

Finance and investment division It looks after the accounts, investment in resources and decides where to allocate the surplus funds. Customer Service division The main job of this division is to manage the opening and closing of branches, Islamic policy, then there is a complaint cell where the customer makes the complaints if they are not treated well. This division also accepts Hajj applications. This division is very important as it directly concern the customers who are the ones to make the deposits, which the bank invests. Business Promotion and Marketing Division It concerns the marketing and selling of the policies and interest rates of National Bank of Pakistan through advertisements on television or in the papers etc. Law Division This division consists of an executives committee and an evaluation committee. Their job is documents evaluation and they give legal opinion to recovery and litigation division also. Computer Division This division does data processing through computers and develops control systems. All these divisions perform their functions through the branches and they are located at the head office in Karachi. Treasury Division HBL boosts the banking sectors largest treasury operation by virtue of being the principal bank for handling the exchequers business. Facing the current competitive interest rate environment, the bank has felt the need to enhance its asset yield through the use of derivative products. The bank recently executed a Quanta Interest Rate Roll # 306-1400 16 B.Com Batch 14

Swap aimed at providing cross currency interest rate hedge for one of its prime clients. This is a watershed, being the first such transaction to have been successfully launched in Pakistan and will serve as the foundation stone for the promotion of derivative products. Information Technology HBL has undergone a paradigm shift by synchronizing the adoption of technology with product development as they view it as a tool for optimizing customer satisfaction. Round the clock payment of utility bills in important cities is now in place and branches covering 85% of the banks business will be fully automated on a real time basis. While the One-Link ATM switch sharing arrangement will serve to enhance the 24/7 banking facility available to our customers, HBL is expanding its owned ATM base as well. HBL is also inviting local and international software solution providers for the supply, implementation and maintenance of the Core Banking Application software for its domestic and overseas branch banking operations. In addition to the Core Banking Application it is essential to understand the role of HBL as a major collection agent for the Government of Pakistan with over 34 different types of receipts and disbursements done through 1189plus branches of the bank. On an average the bank has approximately 1.5 million transactions per day for approximately ten million customer accounts across Pakistan. The Project includes computerization of Trade Finance, Retail, General Ledger / Finance, Investment Banking, Corporate Banking, National Investment Trust System, Litigation Monitoring, Credit and Risk Management System and Card Services. Compliance Division HBL continually strive to adopt the best corporate governance practices to safeguard the interests of our depositors, customers and shareholders. They have substantially intensified the scope as well as frequency of our internal audit operation while

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employees are encouraged and rewarded for compliance with the high ethical standards that are been set.

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Function of HBL as a representative of State Bank Collection of cheques and bill of exchange for its customers. Paying insurance premium, rent or other obligations of the customers. Collecting interests due, dividend, pensions and other sums due to customers. Transferring of money from place to place. Acting executors, trustees for the customers. Providing safe custody and jewelry, documents or securities. Issuing of travelers cheques and letter of credit to give credit facilities for travel. Purchasing shares for the customers. Accepting bills of exchange on behalf of customers. Undertaking foreign exchange business. Furnishing trade information and tendering advice to customers. Formulating operation policy guidelines for the banks. Laying down performance criteria for banks and taking steps for ensuring their observance. Evaluating the performance of the banks in the context of operational guidelines issued to the banks. Roll # 306-1400 19 B.Com Batch 14

Determining the areas of coordination of the banks. Formulating schemes under section of the act. Making recommendations to the federal government for the appointment of the president and members of the executive board. Analyzing and appraising financial statement including balance sheets and profit and loss accounts of banks and appointment of auditors of the bank. Conducting such surveys, inquiries and appraisals as may be necessary for the purpose of this act. Exercising and performing such powers and functions of the federal government under the act and such other functions as the federal government may assign to it. Establishing a research department or conduct banking research and in particular study overseas banking operation and problems of the agricultural financing. Establishing a central training institution for improving bank services. Coordinating the planning of the operations of nationalized commercial banks, and exercising general overall checks on the cost of their operations.

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Appointing lead banks and to apportion share of advance among the banks in respect of consortium loans financed by the nationalized commercial banks only, in accordance with resource availability of each bank. Watching the progress of the implementation of the rulings made in State Bank Annual Inspection Reports and the remedial and corrective measures taken by the banks with a view of removing imbalances. h. Branch Network USA Egypt Bahrain Bangladesh U.K. Wall Street New York, UN Plaza New York Washington D.C. and Chicago. Cairo Manama Dhaka Knightsbridge (London). France China Uzbekistan Saudi Arabia Germany Hong Kong Japan Korea Paris Beijing (Rep. Office) Tashkent Bank Al-Jazeerah Branches. Frankfurt Hong Kong & Kowloon Tokyo & Osaka Seoul

London Manchester, Glasgow, Bradford, Edinburgh, Sheffield, Birmingham &

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Branch Network Growth of HBL

Year

Total Branches

1950 1951 1952 1953 1954 1955 1956 1957 1958 1959 1960 1961 1962 1963 1964 1965 1966 1991 1997 1998 1999 2000 2001 2002 2006 Roll # 306-1400 22

17 29 40 52 65 67 73 85 105 129 156 194 239 330 450 519 618 1421 1468 1434 1434 1375 1245 more than 1537 B.Com Batch 14

3. Business Operation: A. Organizational Structure (Organizational Chart) The structure of HBL is shown in the organizational chart. As the chart shows the top governing body of Habib Bank Ltd. is the board of directors. The board of directors elects a president who then heads the executive board of directors, which comprises of provincial chiefs and division heads etc. Board of Directors The board of directors is the supreme governing body of HBL. It comprises of a government representative, Pakistan Banking Council Nominee, Nominee of corporate sector and three directors from HBL. Executive Board of Directors The Executive Board of Directors comprises of the four provincial chiefs, the three directors from Board of Directors, and the division heads. These people run the organization. They are answerable to the president and the president is answerable to the Board of Directors. Structure of a Provincial Office A provincial chief heads a provincial head office. As the organizational chart shows that under a provincial head office there are regional offices. In Punjab there are about nine regional offices. Under each regional office there are two or three zonal offices and under each office there are fifteen to twenty branches.

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A. Organizational Chart PRESIDENT

SENIOR EXECUTIVE VICE PRESIDENT GRADE 22

EXECUTIVE VICE PRESIDENT GRADE 21 VICE PRESIDENT GRADE 20 ASSISTANT VICE PRESIDENT GRADE 19 GRADE I OFFICER GRADE 18 GRADE II OFFICER GRADE 17 GRADE III OFFICER (GRADE 16)

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Organizational Structure

Chief Manager

Chief Operation anager (CRA) Manager Credit Processing

Manager Credit Operation

Manager FEX*

Manager JB*

Manager Admin

Manager Compliance

[Sections] FEX Export Import Remittance F/C A/C Inquiry Deposits Bills Clearing Utilities Accounts Cash/Chest Govt. Collection

[Sections] Reconciliation Dispatch Dead Stock Security Staff Welfare

[Sections] Audit /Inspection To sign all Br. Returns Money Laundering .etc

*FEX Foreign Exchange *JB Journal Banking

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B. (SWOT) Analysis Strengths HBL one of the largest financial institutions of Pakistan with eight million of customer base HBL holds 24.6% share of time and demand deposits in the country. Local currency deposits comprise 67% of bank's total deposits while foreign currency deposits account for the rest. HBL has an extensive domestic branch network of 1400 (according to the latest data) branches located all over Pakistan. The Bank also has a presence in 19 international locations including the USA, United Kingdom, Europe and the Far East. HBL's total assets stood at Pak Rs.370 billion on December 2000. This included total earning assets of about Pak Rs.268 billion with gross loan portfolio of Pak Rs.140 billion. The bank also has an investment portfolio of Pak Rs.91 billion, which comprises treasury securities, corporate bonds, shares and other securities. HBL cash provision as percentage of non-performing loans equal to 60% this coverage factor for the non performing loans is the highest amongst the nationalized commercial bank. HBL is working as right arm government of Pakistan as it is responsible for all claims of government for recovery as well as payment. All depositor of HBL are in relief that their money security is guaranteed by government of Pakistan. It acts as an agent of the Central Bank wherever the State Bank does not have its own Branch.

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Weaknesses HBL staff especially at lower considers their work as burden. They usually waste time in other task a part in performing their duty. Using government property for there own need. They are reluctant to accept change brought by latest restructuring efforts. The general out look and interior layout of branches are not as required according to modern banking HBL bearing up large burden in running those branches, which are not producing any income but keep on adding expenditure. HBL is relying on its traditional sources of income it has not taken benefit from innovation in banking like introducing retail banking or consumer banking and using any type of scheme to generate more deposits and producing more advances. HBL is far behind in offering modern banking facility like automated teller machines then other commercial bank in Pakistan as only eighteen branches in all over country have this facility. HBL has only 55% on line branches. While from remaining branches data gathering is time consuming, and not fool proof. Quantum of settlement within different branches is pending because of this updating daily record is becoming very difficult. Customers have to follow long lengthy procedure for opening of account as well applying for loans which discourages most of the people to invest in HBL. In HBL, most of the time merit not has importance in hiring of employees. Such practices are black spot on the face of bank and resulted big losses and fraudulent acts by HBL own employees.

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Opportunities Reorganizing efforts going on in the HBL has open many opportunities for HBL to grow. HBL current management has boarder vision. They have taken steps to improve customer services, streamline internal procedure and creating a delectating climate for technology initiative. To achieve above mention objective they have created operation group Starting of the retail banking initial working. Setting of target for of making at least 300 branches country wide on line. Closing of all those branches, which are burden on HBL. Management to offer specialized services to major corporate including advisory and debt syndication introduces the concept of relationship manager. Comprehensive training programs has been develop to up grade the core banking skills of the existing staff as well as integrate high quality hiring. To improve the motivation of staff a merit-based culture is being promoted. Through overhauling the manpower recruitment preservation and performance appraisal system. These actions taken by current management provide a great opportunity for HBL for making it future prosper and can make HBL not less than any modern commercialize bank in Pakistan.

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Threats Following are the major threats which national bank of Pakistan is facing: Major threats HBL facing is from its competitor especially from denationalized commercial bank. In which MCB is on the top of the list, The Bank provides 24 hour banking convenience with the largest ATM network in Pakistan covering 15 cities with over 100 ATM locations. Retail banking and consumer banking resulting in the products such as credit cards, housing finance and automobile finance lending to small individual consumers, and purchases of automobiles, housing, and consumer goods are generally made on a cash basis. These are causing another threat, if not counter will result in significance loss of customers. Recently banks and other financial institutions have introduced innovative schemes to attract deposits, like gift cheque scheme by MCB. These schemes offer prizes on short and long term fixed deposits, through lucky draws. Now banks are using technology which covers the distance no matter how far away any one, through a satellite based, on-line real-time banking system and by offering telephone banking, electronic funds transfer, E-Banking and other modern facilities. C. Marketing Strategy The marketing strategy of HBL can be foreseen by segregating it according to the 4 Ps of marketing. 1 Product 2 Price 3 Place 4 Promotion

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1 Products and Services Provided by HBL HBL Advance Salary


10 month salaries in advance (certain conditions apply). Minimum documentation. Repayable in 5 years. No processing charges; no collaterals, no guarantees, no insurance. Mark-up charged at 11% per annum on reducing balance method.

HBL Cash n Gold


Facility of Rs.5000 against 10 Gms of gold. Mark-up 11% per annum. No maximum limit of cash. Repayable after one year. Roll over facility. No penalty for early repayment.

HBL Kisan Dost

Loans available for the farmers for production, development purposes, for purchase of tractors, for installation of tubewells, for purchase of agricultural implements, micro loans, for godown construction, for construction of fish pond, for livestock farming, for milk processing, for cold storage, bio-gas plants etc.

Mark-up 11% per annum. Loans available at the farmers doorsteps.

Agricultural experts to guide farmers. Loans available against agricultural passbooks, gold ornaments and paper security.

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HBL Services Demand Drafts If you are looking for a safe, speedy and reliable way to transfer money, you can now purchase HBLs Demand Drafts at very reasonable rates. Any person whether an account holder of the bank or not, can purchase a Demand Draft from a bank branch. If you are looking for a safe, speedy and reliable way to transfer money, you can now purchase HBLs Demand Drafts at very reasonable rates. Any person whether an account holder of the bank or not, can purchase a Demand Draft from a bank branch. Letters of Credit (L.C) HBL is committed to offering its business customers the widest range of options in the area of money transfer. If you are a commercial enterprise then our Letter of Credit service is just what you are looking for. With competitive rates, security, and ease of transaction, HBL Letters of Credit are the best way to do your business transactions.

Travelers Cheque Pak Rupees Travelers Cheque are a negotiable instrument There is no restriction on the period of validity At 700 branches of HBL all over the country At all 400 branches of HBL No limit on purchase HBL Travelers Cheque are the safest way to carry our money

Negotiability: Validity: Availability: Encashment: Limitation: Safety:

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Pay Order HBL provides another reason to transfer your money using our facilities. Our pay orders are a secure and easy way to move your money from one place to another. And, as usual, our charges for this service are extremely competitive. Mail transfers Move your money safely and quickly using HBL Mail Transfer service. And we also offer the most competitive rates in the market. Foreign Banking To facilitate its customers in the area of Home Remittances, HBL has taken a number of measures to:

Increase home remittances through the banking system Meet the SBP directives/instructions for timely and prompt delivery of remittances to the beneficiaries

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New Features The existing system of home remittances has been revised/significantly improved and well-trained field functionaries are posted to provide efficient and reliable home remittance services to nonresident Pakistanis at 15 overseas branches of the Bank besides Pakistan International Bank (UK) Ltd., and Bank Al-Jazira, Saudi Arabia.

Zero Tariffs: HBL is providing home remittance services without any charges. Strict monitoring of the system is done to ensure the highest possible security. Special courier services are hired for expeditious delivery of home remittances to the beneficiaries.

Short term Investments HBL now offers excellent rates of profit on all its short-term investment accounts. Whether you are looking to invest for 3 months or 1 year, HBLs rates of profit are extremely attractive, along with the security and service only HBL can provide

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Equity Investments HBL has accelerated its activities in the stock market to improve its economic base and restore investor confidence. The bank is now regarded as the most active and dominant player in the development of the stock market. HBL is involved in the following:

Investment into the capital market Introduction of capital market accounts (under process)

HBLs involvement in capital markets is expected to increase its earnings, which would result in better returns offered to account holders Agricultural Finance HBL provides Agricultural Finance to solidify faith, commitment and pride of farmers who produce some of the best agricultural products in the World. Agricultural Finance Services: I Feed the World program, a new product, is introduced by HBL with the aim to help farmers maximize the per acre production with minimum of required input. Select farms will be made role models for other farms and farmers to follow, thus helping farmers across Pakistan to increase production. Agricultural Credit: The agricultural financing strategy of HBL is aimed at three main objectives:

Providing reliable infrastructure for agricultural customers Help farmers utilize funds efficiently to further develop and achieve better production

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Provide farmers an integrated package of credit with supplies of essential inputs, technical knowledge, and supervision of farming.

Agricultural Credit (Medium Term):


Production and development Watercourse improvement Wells Farm power Development loans for tea plantation Fencing Solar energy

Farm Credit Production Loans Working Capital and Short Term Loans Medium term loans and Capital Expenditure Financing

Loan Structuring and Syndication HBLs leadership in loan syndicating stems from ability to forge strong relationships not only with borrowers but also with bank investors. Because we understand our syndicate partners asset criteria, we help borrowers meet substantial financing needs by enabling them to reach the banks most interested in lending to their particular industry, geographic location and structure through syndicated debt offerings. Our syndication capabilities are complemented by our own capital strength and by industry teams, who bring specialized knowledge to the structure of a transaction.

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Cash Management Services With HBLs Cash Management Services (in process of being set up), the customers sales collection will be channeled through vast network of HBL branched spread across the country. This will enable the customer to manage their companys total financial position right from your desktop computer. They will also be able to take advantage of our outstanding range of payment, ejection, liquidity and investment services. In fact, with HBL, youll be provided everything, which takes to manage your cash flow more accurately. International banking HBL is at the forefront of international banking in Pakistan which is proven by the fact that HBL has its branches in all of the major financial capitals of the world. Additionally, we have recently set up the Financial Institution Wing, which is placed under the Risk Management Group.

The role of the Financial Institution Wing is


To effectively manage HBLs exposure to foreign and domestic correspondence Manage the monetary aspect of HBLs relationship with the correspondents to support trade, treasury and other key business areas, thereby contributing to the banks profitability

Generation of incremental trade-finance business and revenues

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1 Link ATM Network HBL has joined 1 Link ATM Network, linking it to the endless ATM Banking opportunities. 1Link is the ATM Network that works for you. Today marks the formation of a formidable banking technology network - 1 Link. Eleven banking powers bring HBL to the largest nation wide ATM Network that provides reliable 24-Hours access to cash. ATM Network supports transactions of following banks: Bank Alfalah, Union Bank, Allied Bank Limited, Askari Bank, Habib Bank, ABN Amro, Soneri Bank, Bank Al Habib, UBL, PICIC commercial Bank at the following places:

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2 Price In banking sector price is meant to be the interest rate bank is charging from the customer. The interest rates charged by HBL is the cheapest as compared to any other bank working in Pakistan. They are using the Market Penetration Strategy in terms of pricing. 3 - Place It has been a known fact country wide that HBL is the Nations Bank. It has the most enormous network of branches all over the country, which exceeds over 1400, and they also give an image to the customer of delivering goods at the doorstep. In this case they are using Market Push Strategy. 4 Promotion They are working right from the beginning of banking sector in Pakistan. So, they dont need promotion strategies like the other banks working in Pakistan but without letting people know about your product will cease survival. So, they have been continuously promoting the bank through mediums of electronic, print and Internet. Moreover its a bank of masses where everyone can open his/her account and no credit limit is required as they have a motto of facilitating each and everyone. This is the only reason fro which they have opened branches in places where no other bank exists for example a district like Pind Dadan Khan has a branch of HBL and a single branch of any bank existing in last village of Pak-China border is of HBL. D. Competitive strategy Banking industry in Pakistan is progressing in leaps and bounds and with these drastic increases in number is raising the bar of competition amongst the banking sector. Last year the better half of the foreign direct investment was in the banking sector. To stay in this incredible amount of pressure of competition and delivering the goods on the deadlines to obtain customer satisfaction and loyalty is the need of the hour and HBL Roll # 306-1400 38 B.Com Batch 14

has always proved itself in distant times by providing the cheapest interest rates on loans given to the corporate world, employees of government institutions in terms of Advance Salaries and to farmers made the bank to stand tall in the competition and contributed a lot to the competitive strategy of the bank. They are mainly using the Market Penetration Strategy to attract customers. E. Business Process Analysis The only problem bank is facing is the hierarchy at the top level as all the major decisions regarding marketing plan, financial advices and human resource policies of the bank are to be taken by the S.E.V.P (Senior Executive Vice President Mr. Tariq Taj) which creates a bit of bottle neck situation in case when the S.E.V.P is not present. However, they have appointed a lot of V.Ps (Vice President) and A.V.Ps (Assistant Vice President) to manage daily operations. Through the following diagram that bottleneck is shown.

Bottle neck diagram

Marketing All main decision are made by top management (S.E.V.P) which slows over all efficiency 39 B.Com Batch 14

Finance

Human resource Roll # 306-1400

4. Learning as an internee I joined HBL Empress Road branch. First day I reached the bank at start of official working time &I reported to the manager who introduced me about functioning of branch and its staff. HBL Empress Road Branch is a commercial branch, so during ten weeks of my internship, I worked in following departments of bank to seek maximum knowledge about banking practice and also about management skills. Management of Branch Management of HBL that helped me to provide the required data, which includes:

o o o o o o

Mr. Tariq Sheikh

o Mr. Bilal Rafi Butt Mr. Tanveer Ahmed Mr. Salman Butt Mr. Sheheryar Malik Mr. Danish Ahmed Mr. Emad Shah

General banking Information First of all, I was asked to work in different sections of general banking. The in charge of general banking having good command on banking operation. Here I dealt with new customers who wanted to get information about the branch and willing to deal with branch. This is very interesting department because here I met people of different types and deal with them accordingly.

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Deposit Department I worked in this department for 3 weeks. In this department I have two type of work. How to cash the cheques. How to deposit cheques/cash. How to Cash the Cheques I received the cheques from the customer who wants to withdraw amount and gave him a token after writing the token number on the cheques. Before doing this following things must be noted. The double signature of the customer behind the cheques. Check the date. If date on the cheques is 6 month later, then cheques can be accepted. But a post-dated cheque cannot be accepted for payment. Amount in figures and word. In case of overwriting, alter signature is needed. After checking these particulars, I stamped the cheque with pay cash, posted, signature, verify, stamp, And then I posted the cheque in ledger, If the cheque is of amount more than 25000 then withholding tax will also be deducted. The tax is Rs1/thousand on amount exceeding 25000. If the cheque is more than amount of 100,000 then 2 officers will pass this cheque. How to Deposit the Cash If the customers want to deposit amount in form of cash, then he is required to fill deposit slip in which the customer account #.and amount of cash is mentioned. This slip is given to cashier with the pre mentioned amount. How to Deposit the Cheque If the customer wants to deposit cheques then he is required to fill cheque deposit slip. The Account No, name of the account holder and the cheques number will be mentioned on it. Roll # 306-1400 41 B.Com Batch 14

This slip will be attached with the cheque. If the cheque is of same branch then simple transfer entry will be passed, but if the cheque is drawn on other banks or on other branches of HBL then cheque will be sent for clearing. The stamp of transfer and signature verify is stamped on it. Clearing Department In this department I have worked for 3 week. Here I learnt how the clearing is made. All the clearing work is computerized. The clearing cheques and the slips are to be entered separately in the ledgers. If more than one cheques are attached with slip then first enter the data about first cheque, i.e. the cheque number, name of the branch of the bank on which the cheque is drawn, and then enter the other cheque. When the clearing has been prepared then the next step is to stamp the cheques & slips with Clearing Stamp and state bank stamp. Clearing stamp is to be stamped in front of cheque & slip while state bank stamp is to be stamped back of check and slip. Cheques & slips are to be stamped carefully because sometimes clearing has been returned due to the reason of not properly stamped. After this clearing is to be passed to the in charge officer who signs on it, and clearing are handed over to the agent before 1 P.M Reasons Returning Clearing Cheques Cheque will be returned in the following situations There is less balance in customers account Difference in amount in words and figures, Signatures differ Cheque is post dated Cheque is out of date Payment stopped by the drawer Methods for returning Clearing Cheques First of all a debit voucher will be filled in which the amount of clearing cheques will be written. Roll # 306-1400 42 B.Com Batch 14

A memo will be attached to Cheque in which the reason of returning the Cheque is mentioned. The stamp of transfer and branch is stamped on it. The bank will keep the debit voucher while memo with the Cheque will be returned to clearing agent.

The data is also written in a ledge in which all amount and reason of return is written.

Account Opening Department Procedure for Opening Account Here I learn the procedure of opening & closing account. The both accounts (current account & profit and loss account) have the same opening procedure. Now I briefly explain the procedure. First I gave the account opening form to a new customer who is willing to open an account in this bank. After this, I briefly explain the requirements of account opening form and told the customer about the necessary documents to be attached with this form. Besides these necessary attachments such as identity card photocopy, photographs of account holder, bank also required the proper introduction of new account holder by the existing account holder, for the purpose of eliminating of his factitioness. The customer is required to fill the application form with the following true information. o His full name and address. o Detail of account either single or joint o NICs photocopy o Introducers full name, address, his account number, signatures, his NICs photocopy.

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After this, I marked an account number in account opening

register; I took the signature of new account holder on specimen signature card and then entered his name against the account number.

Procedure of Closing Account The customer can also close the account. The customer is required to submit an application for closing the account. Then the account is closed out and the account is closed out and his balance is paid to him. Chequebook is returned back to bank and the officer cancels the remaining cheques in the Chequebook. Bills Collection Department I spent 3 days of my training in bills collection department. Here I collected the utility bills of Gas, Electricity, Water & Telephones, Government challans, and income tax forms slip. After collecting bills Scrolls are prepared against each bill. After this the next step is to transfer the amount of bills collected by HBL to the government, e.g. the payment of electricity bills is transferred to WAPDA branch, the amount of all water bills is transferred to WASA and the amount if telephone bills is transferred to LDA branch. All the entries of Government and income tax are entered in Government register. The time of submission of Government is 5o clock. HBL charges Rs 2 for the bills of electricity and Sui-gas. Computer Department HBL has maintained both computerized and manual work system. Debiting does manual work, posting each and every transaction in computer does crediting the accounts in ledgers and computerized work. During my internship I spent 3 days in this department. This is very risky work, it requires more expertise and there is no chance of any mistake.

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In computerized work, HBL has set different numbers for different transactions, e.g. for clearing cheques there is separate code number. Similarly for transfer and simple cash cheques there are different codes. Each cheque is posted in computer before it goes to the cashier for payment. When cheques or other documents are posted in to the computer then cheque is stamped with computer posted stamp. After doing all the computerized work transfer scroll is checked, if transfer scroll is balanced, it means work done is ok, otherwise there will be mistake. At the end of the day, both computerized and manual work balance will be checked if the balances tally, then this balance is called the closing balance of this day, and the opening balance of the next day. If there is any deficiency in amount then the responsibility will fall upon bank. In case of excess balance, the excess balance will be transferred to salary account of the bank staff.

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Remittance Department I spent more than 2 weeks in this department. It is a most important and interesting department. Here I know how the amount is transferred and what the procedure is. Remittance is the monitory transfer from one place to another place, from one branch to other branch, and from one country to another country to fulfill the requirements of the customers by the order of the customer. The following are the main functions of this department. 1 2 3 4 Demand draft Pay order Telegraphic transfer Mail transfer

Demand Draft It is a bill made either on demand or otherwise by one bank on another in favor of third party or by one branch of the same bank or by the head office on a branch or vice versa. Issuance of Demand Draft The amount both in words and figures is written and the applicant has to sign on two places, which are helpful in case DD is to be cancelled. The applicant then has to deposit the cash at the counter. The officer in charge at the counter will affix the stamp cash received at the DD issued form. After the cash has been received the DD will be issued to him. Each DD has its own register along with name of the party in whose favor the DD was issued. Cancellation of Demand Draft For cancellations customer as to give an application to the bank that the DD is no longer required and has to sign the proper verification of the signatures will cancel the DD, and will pass the entry by debiting to main office and crediting party account. The bank will then issue a debit device to the main office.

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Pay Order It is a local document. It is made for inter city. The procedure of pay order is similar as to others. The person who wants to transfer his money inter city, is required to make a pay order. If he is the account holder of bank then he is required to make a pay order. If he is the account holder of bank then he is required to pay Rs. 50 as the pay order charges. If the person is not the account holder of that bank then he has to pay Rs. 100 as the charges of pay order. Issuance of Chequebook After opening the account bank send a letter of thanks to new account holder, at his home address within 7 days of application form, for the confirmation of address. On the other hand if the customer does not operate is account for a long time, then his account will be treated as Dormant. Procedure of Issuing Chequebook After receiving the letter of thanks, the customer is required to fill slip with his/her account number, chequebook leaves and the signature. The passing officer verifies the signature of the account holder and chequebook is issued to the account holder after keeping the record in chequebook register. This is the procedure of issuing chequebook at first time. The chequebook carries a requisition slip for the issuance of new chequebook. The account holder duly signs the slip; bank verifies the signature and chequebook is issued to the account holder. The Chequebook no is also entered in slip. The account no, against which chequebook is issued, the chequebook number, name of the account holder &date of issuance is also recorded in chequebook register and the signature of account holder will be taken on it.

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Issuance of Chequebook to 3rd Person In case if account holder sends a third person to get his chequebook then the procedure is as follows, 1 2 3 4 The account holder gives an authority letter to the third party. The account holder verifies the signature of the 3rd person on that authority letter. The bank officers get the signature of that third person to confirm whether he is the same, that account holder has sent for the purpose of chequebook collection. After verification, bank issues the new chequebook and the bank keeps authority letter. Charges of Chequebook HBL charges Rs 3 per leaf of Chequebook. In case if Chequebook is lost then the new Chequebook without requisition slip will be issued. In such case bank charges Rs. 100 in addition to Chequebook charges. There are three types of Chequebook of 25, 50 and 100 leaves with charges of 75, 150 and 300 respectively.

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In the end I would just like to say that what ever time I have spent in HBL, Empress Road Branch was the best time I had during my all jobs duration. I exactly dont know the reason but I think the main reason behind it is Mr. Abdullah Masood, my Banking Operation teacher. What ever that teacher told me and my class fellows regarding banks in class, thats what I exactly found in HBL. To be honest, I think this is the only subject that will be helpful to me throughout my life because this was the total reality and is practice able.

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B.Com Batch 14

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