Professional Documents
Culture Documents
PAKISTAN
COMMERCIAL BANKING
4/7/2010
April 7, 2010
TO:
FROM:
SALMAN-UL-MUSTAFA 08117044
SECTION A
April 7, 2010
EXECUTIVE SUMMARY
April 7, 2010
CHAIRMAN & PRESIDENT
April 7, 2010
Board, Corp.Affairs, Privat. & Operat. Commitee
April 7, 2010
Corporate & Investment Banking
Group
Operations
Group
April 7, 2010
Audit & Inspection Group
/ NIT Trustee
Special Assets Management Group
April 7, 2010
Overseas Banking
Group
Funds
Management
Islamic
Banking Group
Compliance
Group
SBP Inspection
April 7, 2010
Explanation of work performed by the GOURPS of NBP.
Corporate & Investment Banking Group:
• The C & IBG unit has been structured to provide adequate focus and professional
approach towards enhancing NBP’s share of business within existing and more
importantly new business from larger corporate customers
• With complex product structure according to various markets, more emphasis on
relationship management and provision of a high quality and responsive customer
service, C & IBG expected to double its portfolios for the next coming years
• CIBG’s present roles includes:
§ Corporate and Investment Banking
§ Transaction structuring
§ Tailor made solution for corporate customers
§ Manage existing equity portfolios
• C & RBG is the largest business group within NBP offering a wide range of services, it
includes following services:
§ Mark-up based asset and liability products
§ Fee based products and services
• For the risk management in these services it has:
§ Standard operating procedures
§ Management information system
§ Verifications
§ Collections and recoveries
§ Write offs and write backs
• It deliver services through Regional offices, Branch Network, & Sales Teams
National bank treasury is currently regarded as a market leader in both foreign exchange and
rupee denominated products because of its emphasis on service quality. We offer
April 7, 2010
Overseas Operations:
• NBP overseas operations are segregated into developed and developing countries for
synergy of operating environment
Operations Group:
• The team of operation groups is working to change the face of this Bank by way of
improving its physical outlook, effective implementation of its systems & controls and in
the quality of service provided to its customers.
• To change the general perception held towards the Group of a back office and an
expense incurring Group which actually is an income generating engine
• Aiming at ‘Zero Complaints’ through application of sophisticated database.
• Optimum staffing level will be determined based on specific personnel needs of the
April 7, 2010
business groups for undertaking business development and develop a strong middle
management tier.
• Compensation structure will be revised to market comparable salaries for all key
positions responsible for account solicitation, product development and relationship
mangers
• Rationalization of existing staff based on skill set, experience and career aspirations
• Hire professionals with specialized areas of expertise for undertaking complex product
development and implementation
• Continuous training based on industry dynamics and changing customer needs.
Compliance Group:
The Audit Commission, an independent public body, carries out various inspections of how the
Council conducts its affairs and publishes its findings in reports. In particular inspection
April 7, 2010
Powers
1. The powers are to be exercised against all types of acceptable securities and collaterals
within the parameters of Prudential Regulations, Banking Laws, Companies Act,
Standard Procedures manual and Bank’s Policies issued from time to time.
2. The powers are subject to SBP restrictions, policies, and regulations in vogue and
amended from time to time.
3. The president may delegate higher limit to an individual or Regional Management
Committee by name and the powers so delegated.
4. These powers are subject to utilization of CREDIT & RISK GROUP and COMMERCIAL
AND RETAIL BANKING GROUP, CORPORATE & INVESTMENT BANKING GROUP as
explained in the figures (1,2,3,4,5,&,6) given below.
Limitations
1. The president is empowered to exercise unlimited financial powers vide BOD decision.
2. Powers and amounts represented in the next figures only for a time limit unless
otherwise specified.
3. All the sanctioning amounts provided in the following figures are annual.
4. All purchases to be strictly as per bank’s rules and the Procurement policy of NBP
5. To check expenses are under budget, Regional Management Committee on monthly
basis review all the expenses and a statement thereof to be sent to the Chief of
Operations Group, Head Office.
April 7, 2010
Figure 1: Against Liquid Securities
CUSTOMER TYPE Limited Company Firm (Partenership) Individual (Busi. & Ind.) Individual (Consumer)
LEVEL AUTORITY Funded Non Funded Funded Non Funded Funded Non Funded Funded Non Funded
BOD Unlimited (Within regulatory parameters)
The board of directors in its meeting, resolved that all the authority for credit approvals is delegated to the credit.
HEAD OFFICE
CREDIT COMMITEE However, Credit Proposals that fall within the purview of the Board as per directives of SBPshall continue to be
put up to the Board.
SEVP/EVP/Group Chief 200.00 Unlimited 125.00 Unlimited 75.00 Unlimited 10.00 Unlimited
Risk Mangement
SEVP 200.00 300.00 125.00 250.00 75.00 150.00 10.00 20.00
Group Chief
EVP 200.00 300.00 120.00 240.00 60.00 120.00 7.50 15.00
REGIONAL
MANAGEMENT 125.00 Unlimited 100.00 Unlimited 50.00 Unlimited 5.00 Unlimited
COMMITEE
REGION
SVP
VP 60.00 Unlimited 20.00 Unlimited 15.00 Unlimited 1.00 Unlimited
OG-I to OG-II 20.00 Unlimited 4.00 Unlimited 2.00 Unlimited 0.50 Unlimited
• Credit committee will also have authority to approve / confirm actions of the HO, REGIONS,
Branch.
• For SMEs powers granted for Commercial Lending will continue to be exercised, until such time
specific powers based on products to be introduced are determined and announced by
Commercial Banking Group / Risk Management Group / Retail Banking Group.
April 7, 2010
Figure 2: Against Pledge
Cotton, paddy, Rice, Sugar, Wheat, Pulses, Manufactured Goods, Products, Equipment, etc.
Rs. In
(For Industry, Business & Trade only) Million
CUSTOMER TYPE Limited Company Firm (Partenership) Individual (Busi. & Ind.)
Non Non
LEVEL AUTORITY Funded Funded Funded Funded Funded Non Funded
BOD Unlimited (Within regulatory parameters)
The board of directors in its meeting, resolved that all the authority for credit
HEAD OFFICE
CREDIT COMMITEE approvals is delegated to the credit. However, Credit Proposals that fall within the
purview of the Board as per directives of SBPshall continue to be put up to the
Board.
SVP
VP 20.00 40.00 10.00 20.00 3.00 6.00
• Credit committee will also have authority to approve / confirm actions of the HO, REGIONS,
Branch.
• For SMEs powers granted for Commercial Lending will continue to be exercised, until such time
specific powers based on products to be introduced are determined and announced by
Commercial Banking Group / Risk Management Group / Retail Banking Group.
April 7, 2010
Figure 3: Against Mortgage of Immovable property including Fixed assets of Industry.
Rs. In
(For Industry only) Million
CUSTOMER TYPE Limited Company Firm (Partenership) Individual (Busi. & Ind.)
Non Non Non
LEVEL AUTORITY Funded Funded Funded Funded Funded Funded
BOD Unlimited (Within regulatory parameters)
HEAD OFFICE
CREDIT COMMITEE The board of directors in its meeting, resolved that all the authority for credit
approvals is delegated to the credit. However, Credit Proposals that fall within the
purview of the Board as per directives of SBPshall continue to be put up to the Board.
SEVP/EVP/Group Chief 100.00 200.00 70.00 140.00 35.00 70.00
Risk Mangement
SEVP 100.00 200.00 70.00 140.00 35.00 70.00
Group Chief
EVP 80.00 160.00 50.00 100.00 30.00 60.00
REGIONAL
MANAGEMENT 80.00 160.00 50.00 100.00 30.00 6.00
COMMITEE
REGION
SVP
VP 20.00 40.00 10.00 20.00 5.00 10.00
• Credit committee will also have authority to approve / confirm actions of the HO, REGIONS,
Branch.
• For SMEs powers granted for Commercial Lending will continue to be exercised, until such time
specific powers based on products to be introduced are determined and announced by
Commercial Banking Group / Risk Management Group / Retail Banking Group.
April 7, 2010
Figure 4: Against Other Securities
Purchase of inland Bills, Purchase of or Finance against Bank Drafts & Payment Orders, Foreign Bills
Purchased, Negotiation of Export Documents.
purchase of Bank Instruments (Pay negotiaition of Export Documents Purchase of Bills under firm
FACILITY order/Draft) contract with collateral security
Individual Individual
Limited Limited Individual
Limited Co. Firm (Busi. & Firm (Busi. & Firm
Co. Co. (Busi. & Ind.)
LEVEL AUTORITY Ind.) Ind.)
BOD Unlimited (Within regulatory parameters)
HEAD OFFICE
The board of directors in its meeting, resolved that all the authority for credit approvals is delegated to the credit.
CREDIT COMMITEE
However, Credit Proposals that fall within the purview of the Board as per directives of SBPshall continue to be put up to
the Board.
SEVP/EVP/Group Chief 150.00 75.00 35.00 50.00 30.00 25.00 50.00 25.00 10.00
Risk Mangement
SEVP 150.00 75.00 35.00 50.00 30.00 25.00 50.00 25.00 10.00
Group Chief
EVP 100.00 50.00 25.00 40.00 25.00 20.00 40.00 20.00 7.50
REGIONAL
MANAGEMENT 55.00 30.00 15.00 35.00 20.00 15.00 35.00 15.00 5.00
COMMITEE
REGION
REGIONAL EVP 40.00 20.00 5.00 25.00 10.00 5.00 20.00 5.00 3.00
CHIEF Powers
to be SVP 20.00 15.00 5.00 15.00 5.00 2.00 15.00 5.00 2.00
excercised 10.00 5.00 2.00 10.00 5.00 2.00 10.00 5.00 2.00
jointly by RBC VP
and RRMC AVP 5.00 2.00 1.00 5.00 2.00 1.00 5.00 2.00 1.00
SVP
VP 10.00 5.00 2.00 10.00 5.00 2.00 10.00 5.00 2.00
AVP 5.00 2.00 1.00 5.00 2.00 1.00 5.00 2.00 1.00
OG-I to OG-II 2.00 1.00 0.50 2.00 1.00 1.00 2.00 1.00 0.50
• Credit committee will also have authority to approve / confirm actions of the HO, REGIONS,
Branch.
• For SMEs powers granted for Commercial Lending will continue to be exercised, until such time
specific powers based on products to be introduced are determined and announced by
Commercial Banking Group / Risk Management Group / Retail Banking Group.
April 7, 2010
Figure 5: Consumer & Retail Financing and Financing to Small & Medium Enterprises
Rs. In
Million
SCHEME Small & Medium Enerprises
Consumer &
Retail Non Non Non
LEVEL AUTORITY Financing Funded Funded Funded Funded Funded Funded
BOD Unlimited (Within regulatory parameters)
HEAD OFFICE
CREDIT COMMITEE The board of directors in its meeting, resolved that all the authority for credit approvals is delegated
to the credit. However, Credit Proposals that fall within the purview of the Board as per directives of
SBPshall continue to be put up to the Board.
SEVP/EVP/Group Chief
30.00 60.00 25.00 40.00 12.50 25.00
Risk Mangement
SEVP 30.00 60.00 25.00 40.00 12.50 25.00
Group Chief
EVP 30.00 60.00 25.00 40.00 12.50 25.00
REGIONAL
MANAGEMENT 25.00 45.00 20.00 35.00 10.00 25.00
COMMITEE
REGION
SVP
VP 5.00 10.00 2.00 4.00 0.50 1.00
• Credit committee will also have authority to approve / confirm actions of the HO, REGIONS,
Branch.
• As per approved powers of Retail Banking Group by Board of Directors (Figure 6)
• Definition of SME, Limits Securities and Pricing will be in accordance with Guidelines provided by
SBP and Bank from time to time. This chart only represents the sanctioning authority.
April 7, 2010
Figure 6: SANCTIONING POWERS – SECURED PRODUCTS
Rs. In Million
Regional Office Level Head Office Level
Sanctioning Sanctioning
Level Of Hierarchy Powers Level Of Hierarchy Powers [Max]
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HOW FOREIGN BANKS PENETRATE IN PAKISTAN
April 7, 2010
Pakistan is a country that exports or imports many of the products made or required by it. Its
export contribution to GDP is 14.1 billion (as decreased by the recent crises of power and
suicidal attacks). Similarly its trend toward importing has been increased by the last years.
Hence, in recent decades, international trade in goods and financial services has become
increasingly important. To facilitate such trade, many banking institutions have also become
international, because they found opportunity to break the circle of monopoly of the
Government in different developing countries and to earn the above average profits, one of the
countries is Pakistan. When foreign banks come into Pakistan, Government of Pakistan make
many of the banks privatize, during Zia-ul-Haq leading, that were previously owned by the
Government. Banks have expanded internationally by establishing foreign subsidiaries and
branches or by taking over established foreign banks. The internationalization of the banking
sector has been spurred by the liberalization of financial markets worldwide. Developed and
developing countries alike now increasingly allow banks to be foreign-owned and allow foreign
entry on a national treatment basis.
Financial liberalization of this kind proceeds, among other reasons, on the premise that the
gains from foreign entry to the domestic banking system outweigh any losses. Several authors
have addressed the potential benefits of foreign bank entry for the domestic economy in terms
of better resource allocation and higher efficiency. Some writers specifically mentions that
foreign banks may
1. Improve the quality and availability of financial services in the domestic financial market
by increasing bank competition, and enabling the greater application of more modern
banking skills and technology,
2. Serve to stimulate the development of the underlying bank supervisory and legal
framework, and
3. Enhance a country’s access to international capital.
Foreign ownership of banks is often thought to improve overall bank soundness, especially
April 7, 2010
when the foreign parent banks belong to well-regulated financial systems that are themselves
healthy. Such parent banks are expected to provide greater access to the capital and liquidity
that bolster balance sheet strength, and to transfer to local banks the skills and technology that
enhance risk management and internal controls. More broadly, foreign bank presence is
expected to fortify emerging market financial systems by encouraging higher standards in
auditing, accounting and disclosure, credit risk underwriting, and supervision opined that
foreign banks improve the quality and availability of financial services in the domestic financial
market by increasing bank competition, and enabling the application of more modern banking
skills and technology.
April 7, 2010