Professional Documents
Culture Documents
INTERNSHIP REPORT
INTERNSHIP REPORT
INTERNSHIP REPORT
INTERNSHIP REPORT
Submittd by:Ailiya Rizvi BBA-8 3219 Year of submission: 2011 Supervisor:Miss Tallat Shahid
INTERNSHIP REPORT
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DECLARATION
An Internship report submitted to the department of Management sciences, Lahore College for Women University, Lahore in partial fulfillment of the requirement for the degree of BBA / MBA.
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Dedication
I dedicate my report to my parents who really help me in the completion of such a lengthy and complicated project.
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Preface
The main purpose of the internship is to fulfill the academic requirements of my study. It encourages learning with emphasis on assigned projects. Besides this, the other purpose is to give a comprehensive review of ACBL. 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. This report is about my internship that I have undergone at Askari Commercial Bank Limited DHA Branch from 7h June 2010 to 21 July 2010 .During my internship I am able to learn practical aspect of business, and get good working experience.
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Table of contents
Chapter
Topic INTRODUCTION History & Background Business Philosophy Vision Statement/ Mission statement Market Standing MANAGEMENT SYSTEM Organizational Chart Corporate Profile Management Hierarchy Policy Formation process Managerial Policies MARKETING MIX Product Price Place Promotion Publicity FIANANCIAL STATEMENT ANALYSIS Trend/ horizontal analysis Vertical Analysis Financial Ratio Analysis SWOT ANALYSIS Strength Weakness Opportunity Threat
Pg no
11 14 17 19
21 25 29 32
36 45 56 63 67 73 86 97 101 102 103
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TRAINING PROGRAMME Divisional or Departmental detail Activities of intern Projects assignments completed PROBLEMS AND RECOMMENDATIONS CONCLUSION List of annexure
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Executive summary
ACBL was incorporated in Pakistan on October 9, 1991. It started its operations during April 1, 1992 and in the 15 years since; its growth and success patterns have far outgrown industry standards. It is offering one of the widest arrays of products to their customers through their extensive branch network all over the country. Each year ACBL recruits and hires a number of undergraduate and graduate interns to work in various positions throughout the organization. Internships have been a part and parcel of ACBL's history, offering a streamlined and comprehensive Internship Programs. In this report I have tried to mention all the aspects of ACBL are banking operations.
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Chapter: 1
Introduction
History & Background Business Philosophy Vision Statement/ Mission statement Market Standing
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Evolution of Banking:
Bank is a pipeline through which currency moves into and out of circulation. Bank accepts deposits and repays cash to its customers on their demand. The Bank borrows money at a lesser rate of interest and lends it to the borrowers at a higher rate. It is thus a profit-lending concern. Word Bank is said to be derived from the words Bancus or Banque that means a bench. Other authorities hold the opinion that the word Bank is derived from the German word Back which means joint stock fund. Later on, when the Germans occupied major part of Italy, the word Back was Italianized into Bank (Aslam, 1999) It is therefore, not possible to decide as to which of the opinions is correct, for no record is available to ascertain the validity of any of the opinion.
Early Growth:
The history of banking is traced to as early as 2000 BC. The priests in Greece used to keep money and valuables of the people in temples. These priests thus acted as financial agents. The origin of banking is also traced to early goldsmiths. They used to keep strong safes for storing the money and valuables of the people. The persons who had surplus money found it safe and convenient to deposit their valuables with them.
Banking in Pakistan:
At the time of partition total numbers of Banks were 38 only. Out of these Banks the Pakistani Banks were only 2, Indian Banks 29 & Exchange Banks were 7. The total of deposits of Pakistani Banks was Rs.880 Million. & advances were Rs: 198 Million. Banking started in Pakistan after the bold and emergent decisions of formulation of SBP on July 30, 1948. At the time of independence Bank services was badly affected. But with the passage of time these are improving. The government of Pakistan nationalized 15
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all Banks in early 1974. Two Banks (Allied Bank Of Pakistan Limited & Muslim Commercial Bank Of Pakistan Limited) have been denationalized. Since then Banks were working well. Now slogan of the Banks is to serve their customers in the best possible manner.
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Functions of ACBL:
ACBL is a commercial bank, which transacts the business of banking in accordance with the provisions of BCO, 1962. Section 7 of the Act authorizes banks to engage in the prescribed form of business. In the light of this section ACBLs functions can be categorized as under: Agency services. General utility services. 17
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Underwriting of loans raised by the government Providing specialized services to customers
Accepting deposits
Mission Statement: As it is said that an organizations culture, products, services, employees, their attitude, philosophy, self-concept, markets and environment throws light on the corporate mission, so one of the business executives at the bank, based on his personal observation and judgment, carved the following mission of The Askari Commercial Bank Limited as
The mission statement of the bank is: To be the leading private sector bank in Pakistan with an international presence, delivering quality services through innovative technology and effective resource management in a modern and progressive organization culture of meritocracy, maintaining high ethical and professional standards, while providing enhanced value to all their stakeholders, and contributing to society
Core Values:
We understand that our commitment to satisfy customers needs must be fulfilled within a professional and ethical framework. We subscribe to a culture of high ethical standards, based on the development of right attitudes. We believe in our 'core values' as the essential and enduring tenets of our organization - the very small set of guiding principles that have a profound impact on how everyone in the organization thinks and acts. They 18
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have an intrinsic value for us and bear significant importance to all our employees. They are the few extremely powerful guiding principles; the soul of the organization - the values that guide all our actions.
The intrinsic values, which are the corner stones of our corporate behavior, are: Commitment Integrity Fairness Team-work Service
OBJECTIVES:
Deliver solutions that meet customer financial needs. Build and sustain a high performance culture. Build trusted relationships with all stakeholders.
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Build and manage the Banks portfolio of business to achieve strong and Sustainable shareholder return. Create and leverage strategic assets and capabilities for competitive advantage. To facilitate the bank with modern banking technique To accelerate commercial activities and capture large market share.
Corporate Objectives:
To achieve sustained growth and profitability in all areas of business. To build and sustain a high performance culture, with a continuous improvement focus. To develop a customerservice oriented culture with special emphasis on customer care and convenience. To build an enabling environment, where employees are motivated to contribute to their full potential. To effectively manage and mitigate all kinds of risks inherent in the banking business.
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To optimize use of technology to ensure costeffective operations, strengthening of controls, efficient management information system, enhanced delivery capability, and high service standards.
To manage the Banks portfolio of businesses to achieve strong and sustainable shareholder returns and to continuously build shareholder value. To deliver timely solutions that best meets the customers financial needs. To explore new avenues for growth and profitability.
Strategic Planning:
To comprehensively plan for the future to ensure sustained growth and profitability. To facilitate alignment of the Vision, Mission, Corporate Objectives with the business. To provide strategic initiatives and solutions for projects, products, policies and Procedures. To provide strategic solutions to strengthen weak areas and to counter threats to profits. To identify strategic initiatives and opportunities for profit. To create and leverage strategic assets and capabilities for competitive advantage.
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Askari Bank seeks to maintain high standards of service and ethics enabling it to be perceived as impartial, ethical and independent. In addition to the general guidelines, the Following are the salient features of The Banks code of ethics and conduct. Presence of a corporate culture that seeks to create an environment where all employees are treated equitably and with respect. Employees must carry out their responsibilities in a professional manner at all times. They must act in a prudent manner and must avoid situations that could reflect unfavorably on themselves, the Bank or its customers Employees must commit to the continued development of the service culture in which the Bank consistently seeks to exceed customers expectations. Fairness,
Truthfulness and Transparency govern our customer relationships in determining the transactional terms, conditions, rights and obligations.
Employees must safeguard confidential information which may come to their possession during the discharge of their responsibilities. Respect for customers confidential matters, merits the same care as does the protection of the Banks Own affairs or other interests.
Employees must ensure that know your customer principles are adhered to by obtaining sufficient information about the customers to reasonably satisfy ourselves as to their reputation, standing and the nature of their business activities.
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Employees must avoid circumstances in which their personal interest conflicts, or may appear to conflict, with the interest of the Bank or its customers. Employees must never use their position in the Bank to obtain personal advantage or gain.
Employees must not enter into an agreement, understanding or arrangement with any competitor with respect to pricing of services, profit rates and / or marketing policies, which may adversely affect the Banks business.
Employees must not accept gifts, business entertainment or other benefits from a customer or a supplier / vendor, which appear or may appear to compromise commercial or business relationship.
Employees must remain alert and vigilant with respect to frauds, thefts or illegal activities committed within the Bank premises.
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Obligations supported by the highest capacity for timely repayment.
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Chapter: 2
MANAGEMENT SYSTEM Organizational Chart Corporate Profile Management Hierarchy Policy Formation process Managerial Policies
Organizational Chart
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Audit Commit
Dr. Bashir Ahmad Khan Chairman Mr. Ali Noormahomed Rattansey, FCA
Mr. Tariq Iqbal Khan, FCA
Company secretary
Mr. M. A. Ghazali Marghoob, FCA
Auditors:
AF. Ferguson & Co Chartered Accountants
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Legal advisors:
Rizvi, Isa, Afridi & Angell
Shariah advisors
Dr. Muhammad Tahir Mansoori Legal Advisors
Corporate Information
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President
Mahmood Chaudhari
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Audit Committee
Brig (R) Asmat Ullah Khan Niazi Chairman Brig (R) Muhammad Shiraz Baig Member Mr. Kashif Mateen Ansari Auditors Member
Chartered Accountants
Legal Advisors
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INTERNSHIP REPORT Rizvi, Isa, Afridi & Angell Executive Profiles Mr. Agha Ali Imam:
Senior Executive Vice President
Mr Imam is Group Head Of Consumer Banking Group. He oversees all aspects of the Bank's Consumer Business including industry leading sales production team and over Rs 12,000,000,000 consumer servicing portfolio.
Mr Imam joined Consumer Banking in 2002 where he led the organic growth of the Division and the successful integration of Retail Banking. He also engineered numerous successful growth and operational efficiency initiatives that resulted in notable Improvement in loan processing time, deeper mortgage product penetration among Retail Bank and commercial customers and a significant increase in market share.
M.R Mehkari:
Senior Executive Vice President
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Senior Executive Vice President
Mr. Nazim started his career almost 40 years back with UBL Karachi, relocating to UBL Abu Dhabi in 1972. Prior to joining Askari Bank, he was associated with United Arab Bank, Abu Dhabi & Dubai (affiliated with Societe Generale France). He worked with First International Investment Bank (managed by Amercian Express Bank). He performed at senior positions and was responsible for Funds Mobilization, Business Development, Liquidity Management and Credit OperationAcademically he is Masters in Business Administration from CUC, USA and qualified DAIBP and IBL-I, UK. His schooling was nursed from Saint Patricks High SchooHe had attended number of local and foreign, Seminars, Sessions, and Courses on Bank Operations, Economics, Leadership and Change Management..
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Executive Vice President
Mr. Tahir Aziz joined Askari Bank in 2005 and is currently holds overall responsibility for the Bank's Corporate & Investment Banking Group - that provides all requisite products and services to the Bank's corporate & institutional clients. Prior to joining Askari Bank, Mr. Aziz was working at Union Bank, as Head of Investment Banking, where he was responsible for successfully setting up investment banking as a new business for the bank. Prior to that Mr. Aziz was wit ANZ Banking Group, where he worked on a number of large ticket-transactions spanning the power, telecom, infrastructure, textiles, refining sector etc. Mr. Aziz was also a member of the Risk Integration team that consisted of 5-memebrs selected from the ANZ Banking Group worldwide, to develop proprietary risk models to be used in the bank globally for its Project Finance and other large-ticket corporate loans. Mr. Aziz holds an MBA from the Lahore University of Management Sciences and a Bachelors' in Computer Science and Physics from Grinnell College, USA.
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Vice President
Branch Manager
Assistant Manager
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Operations Manager
Clerical Staff
Non-Clerical Staff
Guards &
Managerial Policies:
A. Financial policies B. Procurement policies C. Marketing policies D. Promotional policies E. Lending policies F. Personal policies
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FINANCIAL POLICIES
The financial policies of any bank are the most important policies through which the whole banking activity is conducted. These policies are primarily conducted on: Source of funds Use of funds
SOURCE OF FUNDS:
The bank finance policy is acquiring funds from the following sources: Deposits of account holders. Interest on advances and loans granted to the borrowers. Income and commission from the services provided by the bank.
Bank opens various types of accounts for its customers Services are provided for earning.
Interest income and commission bank providing the services to its customer.
USE OF FUNDS:
After the acquisition of the funds their acquisition becomes necessary. The bank seeks the best way for making investment to get more profit with the maximum security. The bank has an investment portfolio in which it allocate its funds for crediting to borrowers, investment in the stock market, investment in the real estate property etc. for the
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allocation of funds a bank has to follow some banking policies and the prudential regulations of SBP these are: A bank has to maintain liquidity with state bank of Pakistan, i.e. 25 %of its total deposits. A bank cannot invest all of its funds otherwise it will be difficult to meet urgent needs. A substantial part of funds is received from interest on loans and advances. Before granting a loan the bank analyzes and observes the borrower and conduct a complete ratio analysis. Bank prepares credit line for this purpose the major thing is granting an advance is the security offered by the borrower and its actual market value.
PROCUREMENT POLICIES
Procurement policies are more concerned with manufacturing organizations. In bank industry that is service industry procurement means the procurement of funds from various sources such as deposits. It involves attracting and holding the funds of the depositors. After the acquisition of funds, the bank invest the acquire funds. One alternative is to lend its money and earned interest markup or invest in govt. securities etc. as already mentioned in the above paragraph the major sources of funds for a bank are the deposit of the general and the other sources of income includes interest or markup charges received for various services offered by the bank to its clients. A bank tries to attract maximum no. Of accounts so that it can increase its deposits and these lending ability. In order to get maximum no. of accounts the staff of the bank must
be efficient as compared to the other banks and the manager of the branch must take personal interest in attracting deposits. Good quality of the service is the key to success.
MARKETING POLICIES
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Marketing policies are also one of the most important policies because they are related to the growth of the organization. Marketing for a bank would mean:
1. Creation of new product and services. 2. The bank marketing must be consumer oriented. Following are the marketing policies of the ACBL. a. Keeping the track of latest development in the world and incorporating the latest and most modern equipment to make the banking procedures simple and easy for the customers. b. Development of products for the customers. c. Giving good services and maintaining good relations with the customers. These policies can be implemented by providing the right product and service to the customer at the right place, at the right time, at the right price. It is necessary for the managers to keep in touch with consumers, observe their needs and develop products, which meet their needs.
PROMOTIONAL POLICIES
Public relation and advertising has assumed a great importance in the modern banking business. As for as promotional activities are concerned, the main objective of the bank is
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to inform the existing clients and other people about its new products or change in the existing services. ACBL establishes its purpose through:
1. Direct contact with customers. 2. Relation with business organizations. 3. Community relations.
LENDING POLICIES
Every bank has its own lending policies except for those, which are common for all the banks, i.e. the policies, which are imposed on all the commercial banks by the SBP, are known as prudential regulations. The lending policies of ACBL are as follows: 1. The bank only invests in those sound and viable projects, which have good rate of return. 2. Bank prefers to advance loan to their account holders. 3. Loan is given to reliable person only. 4. No political loan is sanctioned by bank.
5.
Any account holder can apply for running finance or demand finance. The manger appraises the past record of account holder and his credit worthiness. If he finds any thing wrong he can refuse to sanction the amount.
6.
PERSONAL POLICIES
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Personal policies have an important role in the success of an any organization. ACBL have its proper personal policies. Good personal policies motivate the employees towards hardworking. Following are the main personal policies of ACBL: 1. Selection of employees on merit 2. Selection of capable employees. 3. Attractive salary package for motivation of employees. 4. To train and develop the future management of the bank. 5. Every employee must have certain set of clearly defined duties 6. Effective communication at al levels of the organization.
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Chapter: 3
MARKETING MIX
Product Price Place Promotion Publicity
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Marketing mix is defined as: The set of controllable tactical marketing tools that the firm
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LIMITED.
While successfully penetrating the key domestic markets through strategic expansion and business diversification, we remain alive to the challenges emanating from the developments in the global financial markets; the opportunities and threats engendered by greater deregulation, and increased customer expectations. These provide us the impetus to make the best use of available resources, including modern technology, to meet the challenges ahead. Historically, Askaris core marketing focus for its asset base has been the middle and upper middle business houses (including wholesales and manufacturers) operating in the large urban centers of Pakistan, which are primarily oriented towards foreign trade. This segment contributes significant revenues to the Bank. The liability side remains focused on the middle and upper middle class, retired and serving government and armed forces personnel, and mid size business houses. Benefiting from the banks growing balance sheet size, this division is now gaining momentum and our long term aim is to develop it into an independent strategic business unit (SBU). This would enable the bank to acquire, develop and retain specialized abilities, and enhance our focus on serving the emerging needs of the corporate clients. With the branch network of 46 and further expected increase of 18 during 2003, the ATMs facility and Internet Banking. Askari banks reach is ever increasing. In recognition of this reach, we set up Retail Banking Group in July 2000, dedicated to serving the urban consumer market. Askari is committed to aggressively market this segment. The strategy is to provide our customers with a banker of innovative products to meet their varying needs.
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In view of the fast changing market conditions and the narrowing of traditional lucrative margins on loans, Askari bank now commits itself to seek out new opportunities and make its existing operations more efficient. This is evident from revamping of the
Treasury that is being geared to provide innovative products and efficient services to our clients. In the process, we hope to improve overall margins on the surplus liquidity available with the Treasury. Despite the falling interest rates, which compelled people to divert their investments to the share market and property, our deposits increased from PKR 41 billion in 2001? Our operating Profit (before provisions) for the year, stood at PKR 1,595 million as at December 31, 2002, while the figure for last year was PKR 1,291 million. Although the interest margins were greatly squeezed during the year 2002, especially in the second half, we succeeded in compensating for the reduced margins by a substantial increase in volumes. The Board and Management are steering towards contemporary management design. This is evident from the conception of the new division for Planning and Corporate Affairs. The division was set up to play a proactive role in pursuing corporate and organizational development, giving strategic direction to the bank and looking out for new growth avenues. Askari is one of the first Pakistani banks to develop such a dedicated function with a high focus on the future. During the first quarter of 2003, the bank plans to operationally an Offshore Banking Unit (OBU) in Bahrain. In the near future, Askari bank also plans to launch some new consumer products, developed and designed by its Retail Banking Group. This will include debit cards, prepaid cards and electronic billing systems. The bank plans to enhance its ATMs and Internet banking services with new features like inter branch funds transfer, and the payment of utility bills. 43
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We plan to setup a Call Center and Date Warehouse to enhance the timeliness and quality of our services. Enhancements are also planned for the banking software so that funtions like Trade Finance, SWIFT messages, and credit approvals can be integrated into the core banking system. The bank is also in the process of obtaining a new IT system for its Treasury. Realizing that Assets make things possible, people make things happen. Askari plans to reemphasize its focus on its human resource. The bank will try to build the organization from within, giving special emphasis on the quality of its human resource. Our emphasis on technology is evident from the products that we are developing. We understand and are committed to enhancing our technology not just to keep abreast with the modern developments but also to retain our position as leaders in this field Our motivation is driven by one single factor Providing customer satisfaction
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PRODUCTS
Askari Bank presents you an entire range of products... whether you are looking for high returns on your deposits, lockers for your valuables, liquidity for your business needs, loans to meet an emergency cash need, or financing for the purchase of an automobile, we have the solutions to your questions. Policies Regarding Product Intangibility, inseparability and high perish ability are a significant product planning challenge in service marketing. So to overcome these challenges the service industry has to adopt various strategies. We would discuss these strategies in context of ACBL.
ACBL emphasis is on the benefit the service offers rather than on the service
itself. For example the e-statement service emphasis is on the customers convenience, easiness and advantage than on the service itself.
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That something very rewarding, giving higher returns, a worthy investment etc. so the customer mind instantly visualizes, associates the service with something physical. In relation to product feature the banks emphasis is on building up an effective brand image. In includes the whole theme more than just the brand name. Uses of distinctive color schemes, tangible objects, slogans etc are being used. Due to intangibility of products and in the absence of physical features the bank has to emphasize on differentiation of their offering.
Features:
Loan amount from Rs.50,000 to 500,000 Repayment period from 1 to 5 years Fixed monthly repayment Low rates that never change No pre-payment penalties Shortest processing time
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Funds may be obtained at any ACBL branch And certainly unmatched service quality When you are working towards your financial goals, how you borrow can be just as important as how you invest. The right borrowing options can improve your savings, your cash flow and your ability to take advantage of personal or business opportunities.
Eligibility to Apply:
Your age is between 21 and 57* You have a verifiable minimum gross monthly income of Rs. 15,000.
Salaried:
Minimum length of confirmed service with present employer is at least six months with a total length of at least one year service.
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accounts receivable portfolio of medium and large corporate entities. While this service will help the corporate entities improve their liquidity, due to our well-diversified branch network. The service primarily aims at providing clearing, collection and cash/transfer facility to corporations, under one resource center, which will handle the
Process through the branches and provide adequate reporting to the corporate clients, on various aspects of their accounts receivable portfolio, every month. As the product can be tailor made for National and Multinational companies. The transaction process flows, operational methodologies and service pricing varies from customer to customer, with marginal modifications, depending upon volumes and nature of transactions involved.
Advantages:
Partial liquidity offer on all time deposits Monthly return 24hours world-wide protection plan 48
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ASKCARD (Debit Card) & Our unmatched service quality
The blocks that you want, without touching the remaining investment. The unencashed blocks will continue at the same maturity and return.....and yet you don't lose the share of profit on the encased blocks. Upon maturity you have the freedom of either booking your time deposit for tenure of your choice, or let the bank roll it over automatically for a like period.
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Earn Rs. 842/- per month on investment of every Rs. 100,000/- for one year!" Earn Rs. 917/- per month on investment of every Rs. 100,000/for three years! Askari Mahana Bachat Account is a Term Deposit facility available to individual customer with the option of 1 and 3 Years tenure. It has been designed keeping in view savings needs of individual investors who dont want to block their funds for longer terms, with a competitive rate of return paid monthly on the 1st of every month. A financing facility up to 90% will be available for customers if required.
7. Askari Deposit Multiplier Account: Value of initial investment of Rs. 100,000/- will increase to Rs. 265,000/- at maturity! Aim higher with your investments with Askari Deposit Multiplier account. This account is for individual 50
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investors whose purpose is long term savings with high returns. With a tenure of 10 Years and a competitive rate of return on maturity this account is ideal for investors who wish to start saving for their future today.
9. ASKARI CARD:
Askari Bank is committed to provide you innovative and competitive solutions to your banking needs in a more efficient and personalized manner. Your Bank enjoys a strategic competitive advantage over all Domestic players by virtue of its leadership, large network and Technological advancement. In line with our tradition of innovation, Askari Bank takes pride in announcing launch of Askari Bank's Debit Card. Askari Debit Card means freedom, comfort, convenience and security, so that you can have retail transactions with complete peace of mind. Askari Debit Card is your new shopping companion which enhances your quality of life by letting you do shopping, dine at restaurants, pay your utility bills, transfer funds, withdraw and deposit cash through ATM anywhere, anytime.
Travelers Cheques
Askari Bank Limited has always remained at forefront in introducing innovative and unique products in banking sector. Our financial instruments provide greater financial freedom and security in an unmatched way to our valued customers. Askari Bank offers you its "Rupee Travelers Cheques" eliminating all financial risks while traveling. So avoid risk of carrying cash through Askari Bank's Rupee Traveler Cheque 51
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Business Finance:
In pursuance of the National objectives to revive the economy of the country, ACBL is providing loans to small and medium size business enterprises under Askari Bank's Business Finance Scheme. Our goal is to offer a loan, which enables business community to receive the financing required by them based on their cash flows. Our valued customers can enjoy the convenience of getting financing on attractive terms with the minimum processing turnaround time.
Mortgage Finance
Askari "Mortgage Finance" offers the convenience of owning a house of choice, while living in it at its rental value. The installment plan has carefully designed to suit both the budget & accommodation requirements. It has been designed for enhancing financing facility initially for employees of corporate companies for purchase/ construction/ renovation of house.
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whose purpose is long term savings with high returns. With a tenure of 10 Years and a competitive rate of return on maturity this account is ideal for investors who wish to start saving for their future today.
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Islamic Consumer Banking
Islamic Banking products have been approved by the Bank's Shariah Advisor. As per Shariah requirements, funds and products of Islamic Banking are managed separately from the Conventional Banking side. All funds obtained, invested and shared in Halal modes & investments, under supervision of the Shariah Advisor.
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ASKARI KISSAN AGRICULTURE FINANCE PROGRAM
The Askari Kissan Agri Finance Program (AKAFP) has been designed to meet ON FARM / OFF FARM credit requirements of farmers on the most convenient, flexible, easy terms and conditions. The program features: A broad array of credit lines designed to meet farming requirements. Repay and borrow at your convenience on revolving credit basis at lowest markup rates renewal able after three years. Convenient repayment terms based on cash flow abilities. Availability of leased Tractors / Transport without Land / Collateral. No Hidden Cost. Availability of interest free package for inputs and tractors etc. No Pre-adjustment penalties. Earn prompt payment Bonuses and reduce financial costs
.Insurance covers of leased assets, animals, crops and life assurance of borrowers.
The services related to agriculture financing are: kissan tractor finance kissan ever green fianc
kissan aabpaashi finance kissan livestock development finance kissan farm mechanization finance kissan farm transport finance
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PRICE
Pricing Policies
At Askari Commercial Bank Limited the pricing strategies applicable are: One price strategy Flexible price strategy For Priority Customers many of the charges are waived in order to facilitate them and provide them with high-class services.
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The bank staffs in higher posts are also in a position to waive some
charges in order to oblige their customers. So the pricing strategies are adaptable and stern depending upon the type of the customer.
Following are the possible pricing objectives Survival Maximum current profit, Maximum market share, Maximum market skimming,
Product quality leadership. When the management set its marketing objective its position in the market and the Product nature where it is an innovative product and creates monopoly in the market 57
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When the top management set its pricing objective then stage of setting the price of the Product come Following are the steps in setting price for a product: Selecting the pricing objectives; Determining the consumers' demand; Estimating costs; Analyzing the competitors' costs, prices and offers;
ACBL see the nature of product and charge price according to product if the product Is innovative it charge higher margin before lunching the new product the top Management must see and analyze the demand of product and estimate its costs Analyzing completion cost price and offer and then chooses a pricing strategy according To company objective Askari commercial bank has different product and services Each is based on its own target market and expectation toward the customer price is only Key which generate the revenue for the organization to achieve its financial objective And the success and failure of product and service is depend on the price strategy the
Detail of some product and service and their marketing strategy is given below:
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Detail
Price = Cost of Production + Margin of Profit. Setting a price based upon analysis and Research compiled from the targeted market. Also with the cost price Charge different price for civilian customer and army customer Askari commercial bank offer a range of product line for former such like Kissan Ever Green Finance,Kissan Tractor Finance, Kissan Aabpashi Finance Premium pricing is the practice of keeping the price of a product or service artificially high in order to encourage favorable perceptions among buyers Pricing method whereby the selling price of a product is calculated to produce a particular rate of return on investment for a specific volume of production Charge the price accoding to competitor Price strategy
Personnel finance
Agriculture Finance
Premium pricing
Target pricing
Islamic Banking
Lahore
59 Competition based Charge the price according Lahore College For Women University pricing to competitor Price strategy
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The detail of product and service and their pricing strategy is given below which is Based on company financial objective:
. .
Extra Large XL (16x 16) Rs. 3,750 p.a Extra Large XXL(16x31) Rs. 6,000 p.a
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Processing Fee for following Finances: 1% of the sanctioned facility amount Askari Kissan Evergreen Finance. Askari Kissan Tractor Finance. Askari Kissan Farm Mechanization. Askari Kissan Livestock Development Finance Askari Kissan Aabpashi Finance Askari Kissan Transport Finance Askari Kissan Green House & Tunnel Finance Askari Kissan Farm Storage Finance Askari Kissan Model Dairy Finance Askari Kissan Gold Fish Finance. Askari Kissan White Pearl Finance Askari Kissan Murghban Finance Askari Kissan Gulban Finance Askari Kissan Samar Bahisht Finance Asan Mali Sahulat.
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overdue (past) 90 days (whichever is higher) Transfer of Facility (on request within the bank) Rs. 1,000/- (flat) Amendments in terms of approval Rs. 500/- (flat) Rs. 1,500/- or Rs. 0.46/1000 on daily product
Provide a range of product and service to former and provide different loans for Agriculture
Retail banking:
Personal Finance
a. Processing fee for civilians i) Clean - 1.20% of loan amount min. Rs.2, 750/(Including legal & documentation charges) ii) Secured 1.20% of loan amount max. Up to Rs.5, 500/(Legal & documentation charges at actual) b. Processing fee for Armed Forces personnel i) Clean - 1.20% of loan amount min. Rs.1, 800/(Including legal & documentation charges) ii) Secured - 1.20% of loan amount max. Up to Rs.5, 500/(Legal & documentation charges at actual)
Smart Cash
a. Processing Fee i) Clean - 1.20% of loan amount min. Rs.3, 500/(Including legal & documentation charges) ii) Secured - 1.20% of loan amount max. Up to Rs.5, 500/(Legal & documentation charges at actual)
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Mortgage Finance
a. Processing Fee Rs.5, 500/- (Flat) b. Legal/documentation/valuation/income Estimation charges at actual c. Enhancement Charges Rs.5, 500/- (Flat) d. Late Payment Charges Rs.600/- per installment f. Premature Termination Charges a) In case of early settlement by the borrower charges will be Applicable in the following manner i) 1stYear: Unto 6% on outstanding balance ii) 2ndYear: Up to 5% on outstanding balance iii) 3rdYear onwards: Up to 4% on outstanding balance. b) Up to 10% of the outstanding balance, in case of balance Transferred to other bank, irrespective of the time period Balloon Payment allowed up to a maximum of 20% of The outstanding balance in a year Additional balloon Payment be up to 5.5% charges on the amount being paid g. Balloon Payment Rs.250/- per cheque
Business Finance
Processing Fee Rs.5, 500/- (Flat) Legal/documentation/valuation/income Estimation charges at actual Renewal Fee Rs.5, 500/- (Flat) Enhancement Charges Rs.5, 500/- (Flat) Cheque Return Charges Rs. 600/- (per cheque) Late Payment Charges 21% of the overdue am Premature Termination Charges Up to 6% of the limit.
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Auto Finance
a. Processing Fee Rs.5, 000/- (Rs.2, 200/- non-refundable) b. Legal/documentation/valuation/income Estimation charges at actual c. Premature Termination Charges Up to 6.5% of the outstanding loan amount d. Balloon Payment 15% of the outstanding balance in a year subject to 3.25% Charges on the amount being paid (balloon payment amount) e. Cheque Return Charges Rs.600/f. Late Payment Charges Rs.600/The price is based on competitor price and price include margin + cost
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Place
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Main offices
Address : City: Manager: PABX #: E-Mail: ASKARI BANK LIMITED AWT PLAZA BRANCH RAWALPINDI Rawalpindi Region : North 9063200 / 9273178 Manager (Ops) : 9063198 / 9273177 9063158 Fax No: 9273175 / 9273180 / 9273181 b0001@askaribank.com.pk Tlx:
Branch Code :
0001
Saima Trade Tower I.I.Chundrigar Road Br,karachi Karachi Region : South 0333-2335404 Manager (Ops) : 0321-3077975 021-2630731 Fax No: 021-2631176 b0002@askaribank.com.pk Tlx:
M.A. Jinnah Road,Quetta Main, Quetta Branch Code : 0003 Address : M.A.Jinnah Road Main Br, Karachi, Karachi Branch Code :0002 City: Quetta Region : South Manager: 081-2833333 Manager (Ops) : 081-3836051 PABX #: 081-2843751-4 Fax No: 081-2845602 E-Mail: b0003@askaribank.com.pk Tlx:
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PESHAWAR CANTT, Peshawar Branch Code : 0004 Address : FAKHR-E-ALAM ROAD PESHAWAR CANTT City: Peshawar Region : North Manager: 091-5271653 Manager (Ops) : 091-5279683 PABX #: 091-9212433-6 Fax No: 091-5276391 E-Mail: b0004@askaribank.com.pk Tlx:
Main / SAT Branch, Lahore Branch Code : 0006 Address : 7-A, Shahrah-e-Aiwan-e-Tijarat City: Lahore Region : Central Manager: 042-9203081 Manager (Ops) : 042-9203633 PABX #: 042-9203673-7 Fax No: 042-9203351 E-Mail: b0006@askaribank.com.pk Tlx:
Jinnah Avenue Branch, Islamabad Branch Code : 0008 Address : 24-D, Rasheed Plaza, Jinnah Avenue, Blue Area, P.O. Box 1499 City: Islamabad Region : North Manager: (051) 2871144 Manager (Ops) : (051) 2271801 PABX #: (051) 2271794-6 Fax No: (051) 2271797 E-Mail: b0008@askaribank.com.pk Tlx: 54683 ASKRI
PK
University Road Branch, Faisalabad Branch Code : 0009 Address : University Road Faisalabad City: Faisalabad Region : Central Manager: 041-9201001,0333-6509781 Manager (Ops) : 041-9201003,0333PABX #: E-Mail: 9201008-11 b0009@askaribank.com.pk Fax No: Tlx: 6664285 041-9201006
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Gujranwala Branch, Gujranwala Branch Code : 0012 Address : Opposite General Bus Stand G.T Road Gujranwala City: Gujranwala Region : Central Manager: 055-9200857 Manager (Ops) : 055-9200859 PABX #: 055-9200855-56 Fax No: 055-9200858 E-Mail: b0012@askaribank.com.pk TX:
Abdali Road Multan, Multan Address : 64-A, Abdali Road City: Multan Manager: 061-9201399 PABX #: 061-9201391-4 E-Mail: b0013@askaribank.com.pk
0013
Bahawalpur, Bahawalpur
Branch Code :
0025
Promotion
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Promotion is a form of corporate communication that uses various methods to reach a targeted audience with a certain message in order to achieve specific organizational objectives. Nearly all organizations, whether for-profit or not-for-profit, in all types of industries, must engage in some form of promotion. Under the concept of Integrated Marketing Communication ACBL attempt to develop a unified promotional strategy involving the coordination of many different types of promotional techniques. and, in most cases, to remain a loyal long-term customer. The purpose and objectives for marketing promotions of ACBL may include the Following: Build Awareness Create Interest Provide information Stimulate Demand. Reinforce the Brand The objective of promotion strategy is to getting customers to buy an organizations product
Advertising
The main source is used by ACBL is advertisement it involves non-personal, mostly paid promotions often using mass media outlets to deliver the marketers message. While historically advertising has involved one-way communication with little feedback opportunity for the customer experiencing the advertisement, the advent of computer technology and, in particular, the Internet has increased the options that allow customers to provide quick feedback. Advertising in News Papers and Television is used as a marketing tool by ACBL However it is often used when a new product is introduced. 69
Broachers:
The Bank publishes various brochures for the general guidance of the customers. These include the Schedule of Bank Charges, VISA Card Information, and Savings & Term Deposit Information etc.
Personal Selling:
Personal selling is also a norm at the Bank. The branch has well learned sales executives i.e., Business alumnae. Personal selling is used both for attracting individual and corporate clients.
Internet
Askari commercial bank use internet as a promotion tool to convey the message to the target audience all the information related to product and service and the organization is available on the internet
Social marketing
ACBL has made generous contribution in the area of sport culture poverty woman & child care health & medical science human development and scientific research ACBL sponsored international squash tournaments were professional from all over the world participated Askari commercial has also sponsored other sports tournament include Golf at both amateur and professional level the bank has also contribute toward awareness program for AIDS water conservation and blindness and has promoted the country 's 70
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cause on international forum by cosponsoring the first interactive encyclopedia of Pakistan.
Public Relations
The most popular tool use by the banker and manger to increase their deposit crate awareness and loyalty public relation s also tool of promotion.
Publicity:
This type of promotion uses third-party sources, and particularly the news media, to offer a favorable mention of the marketers company or product without direct payment to the publisher of the information. For example media cover any Tournament that is sponsored by ACBL.
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Chapter: 4
FIANANCIAL STATEMENT ANALYSIS
Trend/ horizontal analysis Vertical Analysis Financial Ratio Analysis
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Horizontal analysis:
A procedure in fundamental analysis in which an analyst compares ratios or line items in a company's financial statements over a certain period of time. The analyst will use his or her discretion when choosing a particular timeline; however, the decision is often based on the investing time horizon under consideration. The process of dividing each expense item of a given year by the same expense item in the base year. It allows assessment of changes in the relative importance of expense item over time and the behavior of expense items as sales change
Balance sheet:
A financial statement that summarizes a company's assets, liabilities and shareholders' equity at a specific point in time. These three balance sheet segments give investors an idea as to what the company owns and owes, as well as the amount invested by the 73
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shareholders.
The balance sheet must follow the following formula: Assets = Liabilities + Shareholders' Equity
Income Statement
A financial statement that measures a company's financial performance over a specific accounting period. Financial performance is assessed by giving a summary of how the business incurs its revenues and expenses through both operating and non-operating activities. It also shows the net profit or loss incurred over a specific accounting period, typically over a fiscal quarter or year. Also known as the "profit and loss statement" or "statement of revenue and expense".
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BALANCE SHEET Rupees in million 2007
Assets Cash and balances with treasury banks Balance with other banks Lending to other financial institutions investments advances Operating fix assets Deferred tax assets Other assets Total assets Liabilities Bills payable Borrowings Deposits and other accounts Subordinate loans Liabilities against assets subjects to finance lease Deferred tax liabilities Other liabilities Total liabilities Net assets Share capital Reserves inappropriate profit Total Surplus on revaluation of assets net of tax Total capital Total liabilities and capital 13,356 3,497 14,444 39,431 100,780 5,128 _ 5,535 182,172 2,627 17,554 143,037 2,997 _ 472 3,220 169,906 12,266 3,006 6,948 2,145 12,100 166 12,266 182,172 16,030 3,955 4,480 35,678 128,818 8,266 _ 8,964 206,191 2,585 15,190 167,677 2,996 _ 13 4,759 193,220 12,971 4,059 7,667 309 12,035 936 12,971 206,191 19,386 8,364 4,614 67,046 135,034 9,845 _ 10,036 254,327 2,945 19,300 205,970 5,995 _ 334 4,833 239,378 14,949 5,073 7183 886 13,143 1,806 14,949 254,327
2008
2009
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Horizontal Analysis:
2007 vs 2006
2008 vs 2007
2009 vs 2008
76
Liabilities
Bills payable Borrowings Deposits and other accounts Subordinate loans Liabilities against assets subjects to finance lease Deferred tax liabilities Other liabilities Total liabilities Net assets Share capital Reserves inappropriate profit Total Surplus on revaluation of assets net of tax Total capital Total liabilities and capital
Interpretation:
From the analysis above we have seen that total assets of sari bank has been decreased from 2007-2009.the main reason for this increase is that bank investment increase in 2009 with a large amount i-e 88%.another reason for increase in assets of bank is the large amount of balances of other banks.
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When we make a look on liabilities section of bank we have analyzed that the banks liabilities have been increased in 2009 as compared to 2007 and 2008.which means that a large amount of debts have been taken by a bank in this year. Now move to equity section from the analysis of banks capital we came to know that the total capital of bank has been increased in 2009 than in previous years which is a favorable point for bank. Hence the overall trend of the banks financial position that we have analyzed from horizontal analysis is that. Banks total assets have been increased with a minimum amount from 2007-2009 Banks investment shows a large amount of increase the main reason for this change is its less lending to financial institutions and large amount of balances of other banks The total liabilities of bank also decreased which is not a favorable point but it may be due to change in governmental policies or government regulations, countrys economic position and many other factors.
The capital of bank also shows a good point of banks financial position.
Income statement
2007 2009 2008
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Markup / return / interest earned Markup / return / interest expensed Net markup / interest income Provision against nonperforming loans and advances Impairment loss on AFS investment Provision for impairment in the value of investments Bad debts written off directly Net markup /interest income after provisions Non markup/interest income net Gain on sale of investments Fee, commissionon revaluation of Unrealized gain and brokerage income investments classified as held for Dividend income trading net dealing in foreign Income from Other income currencies Total nonmarkup / interest income Non markup/interest expenses: Administrative expenses Other charges Total nonmarkup / interest expenses Profit before taxation Taxation current prior years
2,361 1,073 2 137 656 337 4,565 7,101 4,790 12 4,802 2,300 99 (234) 79 (246)
37 1,258 22 174 874 343 2,707 6,377 5,904 11 5,916 461 17 (50) 108
144 1,308 (2) 163 538 404 2,555 8,672 6,996 34 7,030 1,642 562 120 (147)
deferred Lahore College For Women University (381) 75 534 Lahore 2,681 386 1,108 Profit after taxation 0.76 2.18 Basic / diluted earnings per share 6.61 Rupees
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Horizontal Analysis:
2007 vs 2006
Markup / return / interest earned Markup / return / interest expensed Net markup / interest income Provision against nonperforming loans and advances Impairment loss on AFS investment Provision for impairment in the value of investments Bad debts written off directly Net markup /interest income after provisions Non markup/interest income: Fee, commission and brokerage income Dividend income Income from dealing in foreign currencies Gain on sale of investments net Unrealized gain on revaluation of investments classified as held for trading net Other income Total nonmarkup / interest income Non markup/interest expenses Administrative expenses Other charges Total nonmarkup / interest expenses Profit before taxation 80 20% 24% 15% 248% 247% -44%
2008 vs 2007
21% 23% 20% -2% -50% 100% 45 45%
2009 vs 2008
23% 28% 17% -39% 100% 7600% -100% -28% 67%
17% 27% 33% -98% 1000% 2% -41% -10% 23% -9% 23% -80%
4% -6% -38% 289% -109% 18% -6% 36% 18% 209% 19% 256%
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Taxation current prior years deferred -90% -100% -318% -135% 19% 19% -82% -79% -144% -120% -86% -89% 3206% -340% -237% 612% 187% 187%
Interpretation:
Net income of askari bank has been increased with a large amount in 2009 as compared to 2007 and 2008.the main reason for this increase is:
Net mark up interest income is increased in2009 because of loans and advances taken by a bank in 2009 decreases with large amount. Another reason for this increase is increases in net mark up interest earned by a bank.
Total non mark up interest income has been decreases in 2009.it were a large amount in 2007 and 2008 which was not a favorable point.
Expenses done by a bank in these three years shows that in 2009 bank has done low expenses due to which its income increased. We have seen a decrease in banks administration expenses. Hence the horizontal analysis of askari bank shows that companys financial position was much better n 2009 as compared to 2007 and 2008.
Vertical analysis:
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Technique for identifying relationship between items in the same financial statement by expressing all amounts as the percentage of the total amount taken as 100. In a balance sheet, for example, cash and other assets are shown as a percentage of the total assets and, in an income statement, each expense is shown as a percentage of the sales revenue. Financial statements using this technique are called common size financial statements dividing each expense item in the income statement of a given year by net sales to identify expense items that rise more quickly or more slowly than a change in sales. For example, an analyst may study a firms balance sheet to compare the level of current assets with the level of current liabilities in order to measure liquidity. Analyst often studies a firms income statement to compare net income with total sales.
Example:.
In balance sheet all accounts of assets section will be divided by total assets while in liabilities and owners equity sectional accounts will be divided by total liabilities and equity. In income statement the horizontal analysis will be done by dividing all accounts by mark up interest/return earned.
82
2008 vs 2007
8% 2% 2% 17% 63% 4% 4% 100% 1% 8% 87% 2% -
2009 vs 2008
8% 3% 2% 26% 53% 4% 4% 100% 1% 8% 86% 3% -
Assets
Cash and balances with treasury banks Balance with other banks Lending to other financial institutions investments advances Operating fix assets Deferred tax assets Other assets Total assets
Liabilities
2% Bills payable Borrowings 10% Deposits and other accounts 84% Subordinate loans 2% Liabilities against assets subjects to finance lease Deferred tax liabilities
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Other liabilities Total liabilities Net assets Share capital Reserves inappropriate profit Total Surplus on revaluation of assets net of tax Total capital Total liabilities and capital 2% 100% 7% 25% 57% 17% 99% 1% 100% 2% 100% 7% 32% 59% 2% 93% 7% 100% 2% 100% 6% 34% 48% 6% 88% 12% 1005
Interpretation:
From the analysis of balance sheet, we have concluded that the total assets grew by 7% contributed by 42% increase in cash balances, 3% increase in investments and 13% in advances. The investments in 'held for trading' rose by 69% which was added to the investments growth while nominal increases were observed in investments in 'held to maturity' and 'available for sale'.
Vertical Analysis:
Lahore College For Women University Lahore
84
85
100% 100% Markup / return / interest earned 57% 58% Markup / return / interest expensed INTERNSHIP REPORT 43% 42% Net markup / interest income 26% 21% Provision against nonperforming
loans and advances Impairment loss on AFS investment Provision for impairment in the value of investments Bad debts written off directly
26%
1% 22% 20%
Net markup /interest income after provisions Non markup/interest income Fee, commission and brokerage income Dividend income Income from dealing in foreign currencies Gain on sale of investments net Unrealized gain on revaluation of investments classified as held for trading net Other income Total nonmarkup / interest income
17%
Non markup/interest expenses: Administrative expenses Other charges Total nonmarkup / interest expenses Profit before taxation Taxation current prior years
deferredLahore College For Women University -3% 0% 2.0% Lahore 18% 2% 4.9% Profit after taxation Basic / diluted earnings per share Rupees
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Interpretation:
On the total mark up interest earned, the lager part is contributed by mark up interest expense in 2009 i.e. 60%
Profit after taxation is lower in 2009 as compared to other two years, because of more expenses and payment of taxes by a bank in this year.
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Ratio analysis:
The ratio analysis and industry analysis tools below are very useful for individuals to instantly assess a company or industry by making two basic types of comparisons. First, the analyst can compare a present ratio with past (or expected) ratios for the organization to determine if there has been an improvement or deterioration or no change over time. Second, the ratios of one organization may be compared with similar organizations or with industry averages at the same point in time. This is a type of "benchmarking" so that one may determine whether the organization is "average" in performance or doing better or worse than others. For the professional, conducting such in-depth analyses is critical, allowing an analyst to make an informed business or investment decision.
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Liquidity:
Current Ratio = Current Assets / Current Liabilities
0.46
1.04
1.06
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90 80 70 60 50 40 30 20 10 0
Analysis:
Current ratio should not be less than 2. This indicates that the current assets are twice than current liabilities. Care should be taken that current assets are not unduly inflated by over valuation Here in this case the current ratio of Askari bank is lesser in 2007 as compared to 2008 and 2009 which is not a good sign and shows poor liquidity position of the bank
Current Assets Current Liabilities. 2008 197227 188449 8778 2007 176636 166275 10361
Current liabilities
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90 80 70 60 50 40 30 20 10 0
2007
2008
2009
Analysis:
Working capital is greater in 2007 because of lesser liabilities of bank as compared in 2009 and 2008.in 2009 the working capital of bank is negative which means banks assets are less than liabilities.
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90 80 70 60 50 40 30 20 10 0
2007
2008
2009
Analysis:
This ratio indicates the payment of interest by the bank. From the above analysis this ratio has been decreasing from 2007-2009. In 2007 company is paying its interest payments on time but in the next two years this ratio starts falling..
Debt Ratio =
total Debt / Total Asset
2008
18,186 / 206,191 0.085 92
2007
20,550 / 182,172 0.112
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90 80 70 60 50 40 30 20 10 0
2007
2008
2009
Analysis:
Debt ratio means how much debt company has been taken from its total assets. The ratio has been decreased from 2007-2009 which means bank total debt has been decreased due to which the amount of ratio has been decreases which is favorable for bank.
= 2009
2007
20,550 12,100 1.69 /
21663/ 13143
1.64
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90 80 70 60 50 40 30 20 10 0
2007
2008
2009
Analysis:
This ratio is also decreasing from 2007-2009 which means the portion of equity financing of banks total debt has been fallen in these three years.
Return on Assets =
Operating Income / Average Total Assets
2008
/ 2,531,035/ 206,191 0.012
2007
8,370,382 182,172 0.045 /
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90 80 70 60 50 40 30 20 10 0
2007
2008
2009
Analysis:
This ratio shows that the return is lesser in 2008 as compared to return on assets in the year 2007 (gradual increase). Although interest and discount on loans which is the major source of revenue for bank, but cost on deposits and borrowings which is the major expenditure of bank has increased more in 2007 than in 2008. Another reason of decrease in return is the decrease in lending rate and increase in financial cost. But again we have seen a small increase in this ration in 2009.
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100 80 60
2009
1108/ 13629
2009
2008
386 / 10651
2007
profit after tax m arkup interst expense
2681/ 6458
Analysis:
Calculation made on the base of data available shows that profit earning after taxes in 2007 is greater than 2008 and 2009 years. Here in this ratio we see that the ratio has decreased not only by the single factor but also due to increase in interest. So, both these factors has resulted an decrease of the return. But overall profitability of bank is decreasing that is not a good performance point.
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2009
2008
2007
1500
1108 Of
2008
386
2681 405
Total
No.
2009
508
2007
507
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Analysis:
This ratio is also decreasing from 2007 to 2009. It is not good from shareholder and investors perspective.
Cost of Borrowing:
Formula: (Mark up paid / Deposits)
2009
X 100
2008 2007
13629
10651
8686
205970 0.066
167677 0.635
143037 0.060
250000 200000 150000 100000 50000 0 2009 2008 2007 Mark Up/interest expense Deposits
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Analysis: Calculation made on the base of data available shows that cost of borrowing
is increasing from 2007-2009, which is a healthy sign for the bank..
6996
5904
4790
205970 0.033
167677 0.035
143037 0.033
250000 200000 150000 100000 50000 0 2009 2008 2007 Adm in. Expense s Deposits
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Analysis:
This ratio shows the cost incurred to manage and collect the deposits. The lower the ratio will be better for business. In our analysis there is only a minor change in the amount of ratios during 2007-2009.
100
Lahore
2008 2007
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Analysis:
This ratio shows that how much is available to meet the demand liabilities of the depositors. The bank should have reasonable cash balance to meet the customer requirements against their deposits in the bank. In this case bank ratio was greater in 2008 as compared to 2007 and 2009 which is not a good sign from the bank point of view.
Chapter: 5
SWOT ANALYSIS
Strength Weakness Opportunity
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Threat
SWOT ANALYSIS
An analysis indicating towards the organizations strengths, weaknesses, opportunities and threat is termed as SWOT Analysis. Such an analysis is very important for the management in retaining the strength, overcoming the weaknesses, capitalizing over the emerging market opportunities, and carving ways to successfully tackle with the threats and ultimately converting them in the strengths for the organization. During six weeks of my stay at Askari Commercial Bank, I have come across the following SWOT analysis of the bank.
ATM network:
The bank has the largest ATM Network cross the country. The customers of ACBL withdraw access their funds any time at all the ATM Sites with ASKCASH Logo.
Customized solutions:
The management of the bank believes in customer focused banking rather than the product oriented banking. The products and services designed by the bank are specifically tailored to the individual needs of its customers.
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the finest things in life, Priority Banking offers the very highest levels of personalized banking to match customers unique status.
Electronic banking:
The revolution in the banking in the form of electronic banking operations have opened avenues of excellent, efficient and quick services saving the time and costs of the customers and fortunately ACBL is among those few banks who are already reaping the benefits of electronic transactions.
Phone banking:
Phone banking service is very attractive for those classes of customers who dont have time to personally come to the bank i.e. banking on the phone line thus saving the precious time of the customers
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WEAKNESSES
In my opinions these are the points that might be detrimental to the efficiency and profitability of the bank.
Lack of specialization:
This famous and useful concept given by Adam Smith in 1776 seems to be missing in the bank. The employees are constantly rotated from one job to another job of totally
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different characteristic in the view of giving them the know-how of the working in all the departments. But I think this is not a very good tactics used by the management. Otherwise the situation might be like this Jack of all and master of none.
Centralization:
There is a high degree of centralization in the bank. Almost all the decision-making is in the hands of the upper management. But centralization is effective up to a certain level otherwise it becomes inefficient and at times costly too. I personally observed that delay occurred in the operations of the employees only due to the fact that they had not got any instructions from the head office.
OPPORTUNITIES
Apart from the ones discussed in External Factors Evaluation Matrix, the bank is facing the following threats and opportunities currently:
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A large amount of foreign investment is attracted to expand their business world wide It is external opportunity for Askari commercial bank to avail it and take a competitive edge and create a strong identity world wide
Technological improvements:
It is the opportunity for askari bank limited to make technical improvement in their operation and adopt new technologies of business and make their whole operation automatic it is convince for both customer and organization to save their time
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As discussed above, the job satisfaction level of the employee is very low resulting in high turnover, which is bad for any organization as there are huge monetary and nonmonetary costs involved in the fresh recruitments.
High charges:
The schedules of charges indicate that the fees charged by the bank on the various services it provides are extremely high. It may result in decrease in the number of its exiting customers. Further more, this could be very alarming situation for the bank in case some of the competitors grasped the opportunity and lowered its rates. The result would be either the lost of market share or decrease in the charges resulting in lowering the banks income.
Stiff Competition:
SCB is currently facing strict competition from the foreign banks especially the American who banks enjoy a good market position. Collectively U.S. banks hold approximately 9 Percent of all commercial banks' assets. At present, three American banks are operating in Pakistan: American Express Bank; Bank of America and Citibank.
High charges:
The schedules of charges indicate that the fees charged by the bank on The various services it provides are extremely high. It may result in decrease in the Number of its exiting customers. Further more, this could be very alarming situation For the bank in case some of the competitors grasped the opportunity and lowered its Rates. The result would be either the lost of market share or decrease in the charges Resulting in lowering the banks income.
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Chapter: 6
TRAINING PROGRAMME
Divisional or Departmental detail Activities of intern Projects assignments completed
DEPARTMENTS
The Askari Commercial bank has following department: Account Opening department Cash Department 110
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ATM Department Account Department Remittance Department Clearing Department Foreign Trade Department Credit Department Credit Card Department
TYPES OF ACCOUNTS
In ACBL, there are the following types of accounts: Current account. Saving Account. Askari Special Deposit Account. Term Deposit. Basic Banking Account Ever Green Account
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maintain a minimum balance of Rs. 50,000 at the end of the month. Thats why it is similar to current account. It is mostly opened by Business but individuals to open this account. Its code is 165.
TERM DEPOSITS
A term deposit is a deposit that is made for a certain periods of time at the end of the specific period. The customer is allowed to with draw the principle amount. ACBLs Term deposits are of types clear in the deposit scheme in the table). One of them is "Askari" Advantage one month. The rate of return on this account is 9.75%. The term deposit account vary one month to 5 years and the min balance requirement is Rs.5000/for all following accounts The amount of profit is given to depositors in three ways: By cash By sending a bank Draft to depositors Home address or Officers or whichever is specified as mailing Address.
The amount is credited in any one of the checking Accounts of the depositor
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INTERNSHIP REPORT RATE OF MINIMUM DEPOSIT SCHEMES PLS TERM DEPOSIT 1 MONTH 2 MONTHS 3 MONTHS 6 MONTHS 1 YEAR 2YEARS 3 YEARS 4% 4.5% 5% 5.5% 6% 7% 8% 5,000 5,000 5,000 5,000 5,000 5,000 5,000 MATURITY MATURITY MATURITY MATURITY SIX MONTHS SIX MONTHS SIX MONTHS SIX 5,000 MONTHS DAILY DAILY DAILY DAILY DAILY DAILY DAILY DAILY PAYMENT RETURN PRODUCT BASE
RETURN BALANCE OF
5 YEARS
9%
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INDIVIDUAL'S ACCOUNT
When a single man or women opens an account in his/her own name and has the right to operate it is called individual Account.
DOCUMENTATION REQUIREMENT
For literate person copy of National Identity Card is required as a primary requirement. For illiterate person and Veiled Women, along with the copy of National Identity Card requirement he or she must come in person for opening the account.
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OPERATION
The person place a "Check Mark " in the type of account and type of operation required He/She fills in part-I of the form , a fix his /her either two or four similar signature (or thumb expression in the signature space) and get it introduced and signed by a person who already has an account with the bank and write his account number in the specific rows in a specific space. The person fills in "next of Kin " position where he/she father, mother, husband/wife or any other relative's name, his /her address, phone no and affix his/her signature to certify this requirement. This requirement is needed because in his/her absence bank can have correspondence with the specific person. The person put her /his signature (" or thumb expression) on the signature Specimen Card (SS CARD) similar in the area on the form. One the back of S.S Card mailing address, telephone no, Person to contact and introducer space is filled in. These entire requirements are necessary for future The person deposits the initial amount for opening account on to the cash counter. The person put his signature on form -A (check book requisition) on two places in "authorized signature" and fills in the "Title of Account space by writing his name. If the person put his signature in Urdu or any language other than English, he signed a "Vernacular form" where under take that affixed signature are original and his own signature and two postal size photos are needed. The next day is the opening of account.
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DOCUMENTATION
For joint account copy of National Identity Card of all the persons is obtained other things remaining same as in individuals account.
OPERATION
The person checks the type of amount and type of operation required in the respective box on the form. The persons fill in the Part-I and part-II in the form.
Signature of both persons is obtained on the form in the area specified for signature and S.S. Card.
In the title of account space names of all the persons are mentioned.
Accounts holder specified in the form that they will operate the form singly or jointly.
PROPRIETORSHIP ACCOUNT
When an owner of a firm operating singly, opens an account in his firm name, this account is called a proprietorship account the proper himself liable for all his acts.
DOCUMENTATION REQUIRED
For this kind of account, an application for opening the account on the firm letter -pad (having the firm name) is required along with the N-I-C- Card of proprietor.
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DOCUMENTATIONS
Copy of C. N.I. C of all partners Application to open the account on the firm letter pad. Partner ship deed in case registered partnership firm. Letter showing the implied Authority of one or more partners to act on behalf of the firm. In case of non -registered partnership firm, understanding on behalf of the firm to remain liable for all acts of the firm. Name, address of all partners is written on the pad.
OPERATION
All other requirement remain same except that the form is dully signed by all partners cards are signed by all those partners who will act on behalf of the firm and along filling part-I , Part-Iv is also filled.
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DOCUMENTATION REQUIRED
Memorandum of Association. Articles of the Association Resolution of the Board of Director. Certificate of Incorporation. Certificate of commencement of business C-N-I-C
OPERATION
The persons authorized in the Resolution of the Board of Directors put their signatures on S.S Cards. Next of kin "requirement "is not need in case of a Limited Company. After completing each and every formality, introducer signature is verified by S.S card and is stamped "Verified" customer signatures are admitted by stamping "Admitting" near signature and again signatures on S.S card are admitted in the same way. The same process of verification and admission of the signatures is repeated on Form-A and next of Kin area. After completing each and every formality, Accountant is open in the computer by writing name, address, A/C Number etc.
LETTER OF THANKS
At the start of the letter 2nd day, ACBL issues letter of thanks to "Account opener" and Account Introducer for the trust the have on ACBL.
OTHER RESPONSIBILITIES
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ISSUING PROCEDURE
Signatures on cheque book requisition are verified by matching with signatures on SS. Cheque book leaves number, account number, account holders name are mentioned in the cheque- book is made by mentioning the and the total of sum of excise duty and provincial tax. The name of A/c holder and date of cheque book issuance is written on cheque book requisition the account-opening officer puts his initials on requisition leave. A/c number is stamped over the leaves of cheque book and finally authorized person affix his signature over the debit voucher and he voucher is attached from the cheque book and is handed over to the customer.
ACCOUNT CLOSING
Account is closed on the written request of the customer ACBL debits Rs. 100/- as charges for closing the customer account from that account. The account holder with draws the amount by writing a cheque and just leaves Rs. 100/- in his account. But to
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surrender the cheque book yet if some leaves are yet to be write to the bank as a necessary requirements for closing the account.
PROCEDURE
The customer for individuals account write an application to the manager of the bank an a simple paper about the closing of his account with the bank (In case of proprietor ship partnership and limited company account the application should be written an firm or company letter head) The individual or in case of other type- proprietor firm and company surrender the cheque book to the bank. The cheque book is then torn from one side and is attached with the application. In case of Ltd. Company account resolution of the board of directors is also obtained to attach it with the application. The account opening form of the account holder is taken from the accountopening file, and the application, cheque book, and resolution of board of directors in case of limited company account are attached with the form. Lastly, it is written in Red Ink on the form that account closed and Date of account closing.
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ISSUING PROCEDURE
The person, first open the account within the blank.
Then he fills the ATM application form in which name of account holder, Fathers name account number and C.N.I.Card number are mentioned. A copy of C.N.I.C is also attached with the application form.
After completing this process, the application package is sent to head office ACBL head office takes a period of 2-3 weeks for preparing and processing of ATM cards. First, list of card holder is issued and then after 15 days cards are send to ACBLs issuing branch. The card and list are not sent simultaneously in order to avoid any mishandling. ACBL takes Rs. 200/- per year as charges for a card
TERM DEPOSIT
Any person can open a term deposit. He needs not have an account in the bank.
PROCEDURE
The customer comes to the bank and specifies the number of days for which he wants to Deposit hid money in term deposit. The credit voucher is made for the amount of cash to be deposited. The presence of account is not necessary.
The term deposit form is then filled by the officer. The date of opening, the period, the name of the customer, the signature etc is all written on the form. 123
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The term deposit Receipt is filed according. All the requirements are carried out, the signature of the customer and the authorized officer, the stamp of the bank etc. The term deposit Receipt is then given to the customer. The number of the term deposit form and term deposit is noted receipt is then given to the customer. The number of the term deposit form and term deposit receipt is noted in the term deposit Register. After completion of the form, it is posted in the term deposit file. A 0.2% tax on the provincial amount is taken while issuing the receipt. A credit voucher made and the amount is credited to the tax on TD.
CASH DEPARTMENT
Cash department of Bank Alfalah works under the operation department. This department is given the complete responsibility of cash, as result of transaction in touch local and foreign currencies. It is also responsible for the book keeping of these transactions and the safe custody of cash. This department performs the main function. Cash receipts Cash payments
Cash Receipts
In cash department depositors use deposit slip for depositing the amount into their accounts. The officer checks if the deposit slip is properly filled up containing title of 124
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account, A/C number, date and amount in words and figures. Detail on both counter file and cash receipt voucher should be the same. Cash receiving officer, after twice counted and matched with the deposit slips will handover cash to the customer. The cash details are written on the back of the deposit slip and are also entered in cash receiving register. Cash received stamp is affixed on the face of the deposit slip along with the signature of the cash receiving officer.
CASH PAYMENTS
First the cheque is presented by the customer or holder to cash payment officer. He confirms that it is drawn on the same branch and the particulars of cheque are properly filled in. one signature of the holder is taken on the back of the cheque. Cheque is handed over to the officer cash department for scrutiny where officer checks the date, amount in words and amount in figures, payees name, crossing if any, account number, cheque serial number, any material alterations / endorsements and signature of the customer. Account is debited and then the officer cancels cheque. It is posted in the system and posting stamp and number is affixed on it. Cheque is handed over to the cash payment officer for payment. One more signature on that back of the cheque is taken from the holder to match with the first one, and then cash is paid to the cash detail is written on the back of the cheque. Cash paid stamp is affixed on the face of the cheque. Entry is passed in the cash payment register and system.
ACCOUNTS DEPARTMENT
Accounts department is a department which deals and checks all the activity of all the department .It also deals in expression of finance of the bank. Salary payment is also one function of the bank.
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OTHER ACTIVITIES
Preparation of daily bank positions statement Payment of salaries Preparation of the statements Depreciation calculation
REMITTANCES DEPARTMENT
Remittance department provides services to the customer of the bank. The main function of this department is transfer of fund
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Telegraphic transfer. Mail transfer. Pay order. OBC. IBC.
DEMAND DRAFT
A demand draft is an instrument, which is drawn by one bank upon another bank for a specific sum of money payable on demand. It is made by the bank and given to the purchaser against cash or cheque. If two banks are involved, then one banks sends a DD to another bank. But in customer - Bank case the customer sends his DD to the receiver.
ISSUANCE PROCEDURE
A demand draft application (Annexure--) to given to the customer, he fills in a relevant information and signs it. The Officer in charge then checks the information form. The charges such as commission, excise duty, postage is charged as per effective schedule of charges. Tax is exempted if he is taxpayer & knows his No. In case of cash deposit the cashier counts the amounts & signs the DD application and enters it in the register. The cash received equals the amount of remittance & the cheques there on. Then the officer of the bills & remittance department signs it and operation manager counter signs it. The entry is made in the DD issuing register. It is given to the customer.
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The vouchers and the DD form given for posting at the computer. The DD advises are printed at the computer and mailed to the respective branch. NOTE On the contra, when a DD is received i.e. a customer comes to us with the DD, the procedure is as follows.
The DD credit advice is received through mail. The Nos are checked & signatures are verified.
An entry is made on the DD payable register, and the vouchers are made.
Dr Cr
The DD credit is attached with the vouchers and given for the posting at the When DD is received, the test Nos are checked, and the payment is made.
The vouchers are given for posting. And the entry that was made in register is closed. I.e. DD payable is Nil.
Travelers Cheque
The range of our products and value added services enhances with introduction of Rupee Travellers Cheques (RTCs) launched in March 2002. In spite of our constraint on issuing higher denomination of RTCs against restrictions imposed by the Central Bank
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of Pakistan we have been striving to attain our shares with sizeable portfolio. Total volume handled by the department during the year 2004 is Rs. 798 Million. The safe way to carry cash.....another Valuable Financial Service Going places? Don't leave home without the convenience of Askari Travellers Cheques in your pocket. Available in the denomination of Rs.10, 000/-, it's light, safe and ideal for all travel purposes. Welcome to another valuable financial solution from your trusted bank.
Free Issuance
You don't have to pay any service charges for purchasing Askari Travelers Cheques. You can buy these either against cash or debit to your personal account. Simply visit any of our branches located all over Pakistan and enjoy the privileges of buying Askari Travelers Cheques
TELEGRAPHIC TRANSFER
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A telegraphic transfer is a fastest & safest way to transfer money. The message is fixed.
ISSUANCE
The request for maintenance through T.T is taken on the standard printed form. The customer fills it & signs it.
The Head & remittance department checks it, the charges such as commission, tax, telex as per effective schedule and signs it.
If he fills the tax exemption from then no tax is levied. Then a neat T.T is made on the white slip. There are 3 copies. The original faxed to the Branch, one to the Head Office and one is kept as record. The entry is made in the TT issuing register. The following vouchers are posted.
Cr Cr
W.H. Tax.
Cr
When commission bill is received, it is attached to the T.T office copy in the file.
PAYMENTS
When a T.T arrives, the test numbers are checked and the signatures are verified. The entry is done in the T.T pay able register. The following vouchers are prepared & given for posting.
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If there is no a/c then the T.T receipt needs revenue stamps and then the payment is made. The T.T receipt is strictly non negotiable.
PAYORDER
It is a cheque drawn by a bank on itself. Pay order is an instrument in which the parties are involved the purchase, the bank and the receiver. It can he purchased by any customer. It is usually made by govt. Bodies. A single bank is included in this case.
ISSUANCE
The standard form is given to the customer; he fills in the detail and signs it. The concerned staff checks the form. Charges as per effective schedule are applied. The cash of the pay order is received. A cost memo is signed, stamped and handed over to the applicant as a receipt. Then the pay order receipt is filled accordingly. Counter foil is also filled. An entry is made in the pay order issued register. Then the authorized office after checking the pay order signs it. The pay order is then handed over to the application after obtaining his signature on the P.O form. A voucher is also made and posted at the computer Cr bills payable account P.O issued.
PAYMENT
On representation of the pay two authorized officers of the branch sign order receipt the receipt. The P.O entry is made in the P.O issued register. 131
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Then the amount is credited to the account of the customer or paid in cash. The P.O is posted at the computer.
PAY SLIP
It is an instrument used by the bank s for its payment. The slips are issued to the employees of the banks their bills & invoices. The bills are transferred payments. In this case only one bank is involved .He is the issuer as well as the payer. Procedure prescribed for P.O for issuance and payment is followed for payment is followed for pay slips with the following expectations. Pay slips are issued by the bank for the settlements of this own payment. No excise duty is applicable on P.S.
ISSUANCE A credit voucher is sent from the accounts dept. to the b debt. According to the b debt. The P.S books is taken out & filled according to the credit voucher. It is entered in the P.S./P.O register. It is signed by, an authorized officer, Operational Manager Mr. Abdul Jabbar Qureshi. The pay slips is handed to the customer. A voucher made and posted payment. The P.S. is received on the counter, clearing or transfer. On receiving the P.S. if it is transferred in the P.S. register. The payment is made and the P.O. is posted at the computer. Dr. Bills payable P.S. issued.
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If Askari branch is in that city, the OBC forwarding schedule in sent to that Askari Branch. Otherwise it is addressed to the particular Branch to whom the cheque belongs.
PROCEDURE
The cheques that are banks in other cities are separated. They are entered in the OBC register, the number is written on the stamps. The OBC forwarding schedules are prepared for the different branches. The respective cheques are attached with the schedule. Two authorized officers sign the schedule. The office copy is filled and the original schedule is mailed. On clearance the respective banks send back the OBCS along with IBCA. Inter branch credit advice. The OBC no are checked for the OBC register and the received any entry is made. Charges i.e. commission charges and postages charges are deducted from the A/C. Vouchers of following entries are made.
Dr Cr Cr 133
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At the end of the day the contra vouchers are.
Dr Cr Dr Cr
PROCEDURE
The OBC of the other branches will be the IBCs of this branch. So an OBC forwarding schedule is received by mail. The cheques are entered in the IBC register. The IBC numbers are allotted to them. The cheques are lodged for clearing. After realization, an IBCA is prepared and mailed to the branch. At the end of the day two contra vouchers are made & posted. IBC collection IBC logged IBC Collection IBC lodged Dr. Cr Dr Cr
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CLEARING DEPARTMENT
The process by which cheque exchanged between the collecting and paying bank and the ensuing financial settlement is called clearing. This facility is provided by 135
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the state bank of Pakistan for offsetting of cross obligations between the different banks. Clearing is of two types. 1) 2) Inward clearing Outward clearing
Inward Clearing
When cheque drafts, etc, of our branch presented to us for clearing by the SBP. Cheque to be honoured by bank.
Outward Clearing
The cheque of other banks, which the account holder deposit in their accounts is, sends For collection. CLEARING PROCESS (INWARD/OUTWARD) Here the local cheques are received that are drawn on BAL. All the cheques are received on one counter along with the paying slips duly filled in properly containing particulars of cheque and account holder. Counter folio of paying slip is handed over to the customer by putting stamp for cheque received for collection for Bank Alfalah on it duly signed by officer. These cheques are scrutinized and cheques for local clearing are separated from OBCs. These are then entered in clearing register and cheques for collecting are entered in OBC register and handed over the bills department of collection. Clearing officer checks and verifies title of all the cheques deposited by the customer to confirm the good title of the cheques. Cheques are scrutinized properly and paying slips are separated from cheques. Special crossing, endorsement and clearing stamps are affixed on the cheques. Cheques of each bank are sorted and arranged branch wise. All the cheques are then entered into the clearing system of bank. Print out of the clearing is taken and details are attached. With the cheques of each bank. Details of these banks are then entered into the clearing schedule containing number of cheques presented and their total amount against the name of each bank. Then total number of cheques presented to all banks and their total amount is written on the foot of that schedule, which is tallied with the clearing register. 136
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Next morning, these cheques are delivered to the respective banks in clearing house of SBP between 9:00 to 9:30 AM. In the same manner, other banks present their clearing drawn on Bank Alfalah. Total number of cheques and their amount delivered to other banks are received from them are written on the clearing house schedule and handed over to the officer clearing house SBP. Cheques / DD received in clearing are given to the officer cash department of the branch for their repayment. After I proper scrutiny of cheques, verification of signatures and confirmation of balance in the account, officer cash department pays these cheque by canceling and posting them in the system. If any cheque is not passed due to insufficient balance or any other reason, officer cash department returns the same cheque by attaching a cheque return memo containing reason for return. This cheque is entered into the cheque returned register and bank charges are deducted according to the schedule of charges. Second clearing is called at 2:30 PM to check the fate of the cheques presented to other banks in the morning. If any cheque is to return, that is delivered to the same bank in second clearing. In the same manner, if any cheque presented by Bank Alfalah in first clearing is returned, they receive it and once again give schedule of clearing figure to the officer-clearing house SBP containing number of cheques and their amount delivered and received unpaid.
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With its presence in most export-oriented cities in the country, the volume of trade finance business ACBL is one of the highest in Pakistan. That is why most of the companies prefer banking with us. To support the growth of our business partners' ventures, we offer them a wide range of services: Documentary Collection Import Letter of Credit Export Letter of Credit Guarantees Bill Discounting Pre-shipment and Post-shipment Financing. Foreign Exchange Department works like the general bank departments with the difference that it deals in foreign currency. This department deals with the following: Import Export Foreign Currency Accounts Foreign Remittance Submission of Monthly Reports to SBP
IMPORT
The international trade transaction, in which one country buys goods from other country, is called import. The import trade in Pakistan is governed by import and export Act of 1950. Previously, the regulating body of imports was controller of Import and Export. But this function has been shifted to Export Promotion Bureau. Foreign Exchange Departments of all banks are restricted to word under the rules and regulations of government.
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Contract of sale:
After getting the license, the importer then negotiates with the exporter. When they reach to an agreement on all terms of sale, they sign a contract. Thus contract includes all information of terms and condition of sale.
Letter of credit:
Foreign trade payment problems are mainly solved by a letter of credit. A letter of credit is issued by the importers bank. If guarantees payment to the exporter up to specified amount of money provided the terms and conditions laid down the L/C are fulfilled. A letter of credit is a commitment on the part of buyers bank to pay or accept draft drawn upon it, provided drafts do not exceed a specified amount. A letter of credit thus is a
Written undertaking by an importers bank to exporters bank. That it will pay or accept draft drawn upon it up to a stated amount with a
specified time. 140
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The payment will only be made to the exporter if he compliers with the terms of
credit.
Account party: The buyer or the importer on whose account and request the
letter of credit is opened is known as account party or opener.
Issuing bank: The bank which issues or opens a letter of credit at the request
of importer is called issuing bank.
Exporter or seller: The seller or the party in whose favour L/C is drawn is the
exporter. He is also called beneficiary.
Negotiating bank: The paying bank in the exporters country, on which the
draft is drawn, is called negotiating bank or paying bank.
Scrutiny of application:
Before issuing a letter of credit, the bank will scrutinize whether the importer is of good financial standing, possesses the import license issued by import control. Authorities, the
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amount available covers the letter of credit applied for, market demand of goods, collateral offered to cover the credit etc
Cash margin:
The bank asks the importer to deposit cash or securities with the bank. The proper margin of cash or securities to be deposited is decided by the bank depending upon the credit worthiness of the importer.
Shipment of goods:
When the exporter receives L/C, he examines it to ensure that it conforms to the terms of contract of sales. He then shifts the goods and presents all required documents along with the bill to negotiating bank.
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accountable for the completeness of documents, not to see whether goods conform to the contract of sale.
EXPORT SECTION
The international trade transaction in which one country sells its goods to other country is called Export. The controlling body of export in Pakistan is Export Promotion Bureau, it gives different incentives to the businessmen for enhancing the exports and reducing the Balance of payment deficit. It restricts the export of some goods and reinforces export of other. Export section is another section of Trade Services Department. If any person wants to sell his or her products in the foreign countries, he can do all that with the help of export section of the bank. This department is responsible for the export procedures and Documentation. This department handles export documents complying with rules and regulations prescribed by the State Bank of Pakistan. These rules and regulations are briefly described as under. He must all in to sale contract with the importer. He must be having account with the bank. 143
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He must have registered himself with CCI&E. He must have export license from EPB. He must have income tax certificate that would be only for export purpose. He is not allowed to export to those countries for which Govt. has restrictions for foreign trade. Full value of goods exported from Pakistan must be declared to custom authorities.
1. Invoices:
The invoice form is needed along with the export documents which are sent to the importers bank. In the invoice form different information is provided regarding the goods to be shipped. It contains the amount, rate, and weight, description, sending and receiving parties names. 2.
This covering letter is very important letter with the export documents, which are sent to the importers bank. The exporters bank provides this letter. It contains all the 144
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information about parties names and addresses, amount, tenor, date, goods, enclosures and terms & conditions. 3. Shipping
Documents
The shipping document includes the buyers and buyers bank addresses, amount, tenor, shipping source and destination. 4.
Bill of Exchange
The bill of exchange is the negotiable instrument for the payments. This is also very important to attach with. 5.
Packing List
The packing list is also attached with the documents of export, which contains the information about the packing of goods being exported. 6.
Bill of Lading
The shipping company issues bill of lading. It means that the goods have been shipped and that goods are in the custody of the master of the ship. In the bill of lading all Information regarding the goods shipped is give. It also indicates that payment has been paid. 7.
Insurance
The insurance of the goods sent for exports should also be maintained and attached with the other documents. 8.
Letter of Credit
The letter of credit issued by the importers bank is also sent to the importers bank after the review and acceptance. 9.
Export Form
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This is just like the import form. It is issued by the exporters bank, which contains the information about goods, quality, invoices, port, consignee, tenor, consignor and mode of shipment.
Lodgement:
Lodgement means making the payment to exporter by bank against the purchase of bill. Two types of rates are used in evaluating the amount:
Usance rate:
It is the rate payment of which is to be made at a future date, normally within 30, 60, 90, 120, 150, or 180 days. 146
Other activities:
In addition to Export and Import, there are also other activities performed in Foreign Exchange Department.
1.
2. Foreign remittance:
Bank also operates in Foreign Currency accounts. In accordance with instructions of SBP, foreign currency accounts are opened in these currencies: US Dollar, Pond, Japanese Yen, and Euro. Funds are transferred abroad by Foreign Telegraphic Transfer Swift MT-100 is used for this transfer. Askari Commercial Bank has its agency arrangements in those countries, where its own branches are not established. Its agency arrangements with City Bank, American Express, ABN Amro, Standard Chartered Bank. Submission of monthly returns: 147
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It includes reporting of Form-M and Form-E to SBP. Reporting of Form-E: Every Exporter is required to submit a declaration of custom authorities for goods exported. This declaration is submitted on prescribed Form-E in quadruplicate, which is certified by authorized dealer. Four copies of Form-E are maintained. Form-E is reported to SBP at the end of the month, in which the amount is realized. There is a prescribed Performa used for the reporting of Form-E. It includes the reporting period, currency, Serial No. of Form-E, amount, Code No. of country and commodity.
Reporting of Form-M:
Every foreign bank deducts some charges form the value of goods. It is for miscellaneous purposes like foreign bank charges or foreign agent commission. Form-M is used to declare this outflow of foreign currency. At the end of the month of realization of the amount, Form-M is reported. It includes the list of Serial No. amount and purposes of every Form-M.
REFINANCING SECTION
Refinancing is the credit facility for the exporters provided by the Govt. at lower rate of interest, just to boost the exports in the country. It was started in early 70s. The interest rates are always changing in this facility. The state bank of Pakistan charges 8% and then bank will charge 10% from the customers. For banks this is free source of income because in this way fund of banks are not used. Refinancing is further divided into two parts. 148
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Finance against Packing Credit (FAPC). Finance against Foreign Bills (FAFB). 1. FAPC
Loan
This loan is on the basis of export contract. The shipment amount should be equal to the loan amount. It is approved within 48 hours or otherwise disapproved. If approved, the amount is credited in the account of the party. This is also called pre-shipment loan.
2. FAFB Loan
This loan is under L.C. It involves the bank risk line because of the transactions between the banks. This loan is given against security and this is called post-shipment loan.
CREDIT DEPARTMENT
Credit department is also one of the most important departments of the bank. It is called the mind of the bank. This department controls the affairs of bank related with the finances or loans. The credit department of Emirates Bank International also performs the functions relating to the credit administration and credit accounts. It performs following functions.
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Products and Services offered include: Trade finance Short Term Working Capital Finance Local Currency Syndication Finance (Foreign Currency Syndication can also be arranged) Medium Term /Long Term Finance Term Finance Certificates Offshore Loans Advisory Role (Balance Sheet Restructuring).
OBJECTIVES OF LENDING
In the modern economics, more than 90% business concern raises their funds from various financial institutions to meet their multifold transaction. Actually it very difficult for the modern businessman to run his business on a huge scale solely. He has to float his shares to the public or knock the doors of financial institutions, for example the banks. The most easy way to make fund available to seek assistance by such agencies including banks which have got surplus funds and will come to the assistance of producing units, distributing units and exchanging units. In this way of lending, the banks earn the profits in term of interest and mark-up.
Selection of Borrowers
The selection of a reasonable and trustworthy borrower is complicated and at the same time very sensitive task which requires decision-making power from the bank employees. In the words of the manager of a branch of Askari Commercial Bank. Good selection of borrowers does the half task in the profit of the Bank.
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So banks do not throw the money away but every application is tested carefully before being sanctioned. It is the policy of Askari Bank to provide a outline to all of its branches and on the basis on those requirements the bank select the borrower. Following are the main points, which are considered before lending. 1.
Character
The bank inquires the character of the borrower in every aspect. Because this is the right way to judge his dealing and business tactics. When the bank get sure that this person has good relationship with us and in the business market, they give him the facility of credit. 2.
Capacity
This factor is related with the ability of the borrower to manage his business successfully. So this is checked that either they have necessary management, accounting and technical skills and the degree of experience in the particular line of business for which the finance is required. This ability of the customer can be judge from the trading results, turnover ratios, and collection of receivables and management of accounts payables. 3.
Capital
The proportions of the borrowers own resources to the account of finance requested are the next point to receive the branch managers attention. This is checked that both the amount of loan required by the person is equal to his resources available in his business and will he be able to cover them out of his resources.
4.
Cash Flows
The source of repayment should be ascertained at the beginning. For this purpose
the financial worth of the customer is checked that either he is able to repay the loan by
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the sale of his inventory or from realization of the accounts receivables, then the loan is sanctioned. 5.
Collaterals
Security is to be correctly looked upon as the second source of repayment. As we
have discussed that this is one of the most critical decisions for the credit management to sanction the loan thats why they require any collateral by the customer for the security of the loan. In case the borrower is unable to pay his debts then the amount can be recovered by selling the collaterals.
6.
Purpose
Another important factor, which is taken into the consideration by the bank, is that for what purpose the loan is being sanctioned. If the customer wants to get the loan for business purpose then he is given the preference over when he wants to get loan for personal use. 7.
Period
It is the policy of every lender that first the period of the loan is decided. Normally the short-term loans are preferred to be sanctioned because of the lesser risks available. ACBL Bank has its own policy of lending. It only sanction the loans for short term period not for the long term period, normally these are less than or equal to one year.
CLASSIFICATION OF ADVANCES
The loans and advances given by the bank are classified into two parts. 152
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Unsecured or Clean Advances. Secured Advances.
1.
An unsecured advance is made against the personal reputation of the borrower with the bank. Normally these advances are given to the regular customers of the bank and have maintained a good dealing with the bank for many years. The policy of Askari Commercial Bank is to avoid such clean advances because of the unsecured nature. If the party is unable to repay the loan then it becomes very difficult for the bank to collect the loan. Thats why the bank uses this policy just to give this type of loan only to the exceptional customers.
2.
Secured Advances
The word security means any thing given to protect the repayment of an advance. This is the policy of every financial institution to provide the secured loans to the customers. So secured loans are those, which are backed by the tangible security. A tangible is that which has a physical existence for example Land and Building. Stocks. Share certificates NIT Units. Security of Cash in his Account.
TYPES OF ADVANCES
Lahore College For Women University Lahore
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ACBL normally classify the advances into the following three major types. Agricultural Advances. Commercial Advances. Industrial Advances.
1.
These credits are provided for purchase of inputs development of agricultural land. Following are two main classes of farm credit. 3.
Production Finance
This loan is provided to farmers for purchase of inputs like seeds, fertilizers and pesticides. 4.
Development Finance
This loan is provided for the development of agricultural land like purchase of tractors, for tube well and for watercourse improvements etc. The basic purpose of these is to boost up the small agricultural industry to provide the opportunities of earning in agricultural sector.
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Sericulture 2.
Commercial Advances
These are the advances which are given to the small business men, who want to
start the business on a small scale. Such loans or advances are not of large amounts but of small amounts. 3.
Industrial Advances
These advances are sanctioned to the industrial persons. The industrialists who
are running their businesses on a large scale can get the facility of these advances. These advances are in large amounts required for the import and exports of the goods and services. These advances are given on the credibility of the parties.
Credit Administration
When some one wants to obtain the loan and his loan is approved, the work of credit administrator starts. He prepares the documentations relating to the advances of the account holders and makes the further processing. He also prepares all the related reporting and then sends it to the head office. He also maintains the documents, which are required by the state bank of Pakistan. The filing of all the legal cases is also maintained by the credit administration. After that the officers maintain the credit accounts and ledgers of the customers.
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ISSUING CHARGES
When the card is given to cardholder, there are certain fee charges to by the bank, which is different for different cards.
. ISSUING PROCEDURE
Credit card is issued to three types of parties. Professional (Govt & private officers) Business man Landlord.
PROFESSIONALS
For professionals bank require Authorized letter from the concerned organization in which he works. This letter shows all particulars about the person, on the basis of these particulars; bank open on account and some feasible amount is required.
BUSINESS MAN
In the case of businessman bank need Balance sheet of businessman. Type of business. Turnover of 5 years. And then when it is sured that the business has the ability to cover the expenses of credit card and to pay it at any time, the bank issues the credit card.
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PAYMENT PROCEDURE
The cardholder should have to pay all the amounts what he has consumed. But in order to facilitate the cardholder, 5% is the minimum limit that the bank requires and that should be paid monthly. If you paid only 5% then 2% interests will be charged on remaining amount and it is added into the next month payments. If that 5% is not paid then Rs. 100 are the additional charges charged to the next month payment apart form the 2% interest.
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Accomplishments
I m fully trained in this job how to open the different accounts ,how to issue the cheque book and enter it in the register and how to transfer the amount through cash or cheque to an account and how to issue a Debit Card.
Second Week
In the Second Week they assigned me work in Clearing Department .Mr Jibran trained me very nicely and I learned lot of things in this department.
Duties
There are two types of clearing. 1. I/W (Inward clearing) 2. O/W (Outward clearing) In this week I entered the cheques lodged for inward clearing in clearing register as their cheque number account holder name cheque amount and bank name amount to be paid. Secondly in this week I prepared (O/W) clearing for next day. Same as entered cheque number account holder name amount and Bank name. In this week I also entered cheque return in cheque return register and put cheque return slip on cheque.
Accomplishments
I am full trained now in this particular job. How to fill cheque return slip? How to enter in I/W, O/W clearing register.
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Accomplishments
In this week I repeatedly performed this job and now I am fully trained in this job.
Fourth Week
In Fourth week they assign me work for Remittances Demand draft and Pay order preparation.
Duties
Demand draft is for payment outside of city and pay order for local payment. It is a secure source of payment. There are no charges for Pay order while other banks charge for this service so it is an advantage going to ACBL bank to attract customers. 160
Accomplishments
I am fully trained in this job i.e. to check that all the vouchers are scrutinized and matched with the activity
Accomplishments:
I in this week I m fully Trained in these jobs 161
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During the period of my internship I found this problem as a biggest problem that, they are not very effective in communication between themselves. They do not share the experience with each other and do not care the other employee. If one employee has a problem, then he asked to other, but he does not give clear solution to that problems. They are shows the facial expressions against each other.They are talk against each other in front of me. So finally it is very needy for a public services organization to keep atmosphere friendly among the management and employees.
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Computing skills are also low, some executive are very efficient in computing skills but some are not totally aware from this system. For example ATM machine at this branch is only handled to Mr. Naeem Shehzad manager. When operation manager is on leave branch faces problems about ATM machine.
4. Misuse
of resources
Resource are very needy, so there must be avoid to misuse the resources but in this branch it is reverse case, there is very wrong use of the resources, employees does not take care of resources and not used them in right direction. For example every person misuse telephone service even guards they use it for personal matters.
CONCLUSION
I observed the Askari Commercial bank a financially sound bank. Its profits are increasingly year-by-year. Its staff is very good and sincere with the bank. A Sheikh has made significant progress in building and strengthening both the corporate and retail banking sectors in Pakistan. Askari Commercial Bank views specialization and service excellence as the cornerstone of its strategy. The people at bank realize that innovation; creativity, reliability, customized, services and their execution are they key ingredients for their future growth. Revenues from these activities have started yielding dividends and they expect significant growth. They are aware that they have stepped into the 21st century and they must meet its challenges by acquiring the highest level of the technology. They will thus be accelerating their technological advance to enable them to distribute their products and services through most efficient and high tech means. They say that they will continue to invest in the modern tools and substantial allocation to resources will be made to achieve 163
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this objective during the current year. Online banking have been started and the introduction of ATM at strategic locations have been firmed up.
RECOMMENDATIONS
This is the fact that in this universe nothing is perfect. In every field of life there are some pluses and minuses. But the best institutions are those, which learn from the changing environment and competition. So it is necessary for them to keep them update with the changing environment. Although ACBL Lahore Branch is one of the good branches in Lahore but there are few points that should be improved for more perfection. Marketing department is very active but the feedback or the follow up of the customers should be improved.
As every thing is computerized in ACBL Lahore, the persons should be properly trained in the computer systems. As we have discussed that this is one of the busy branches in Lahore market, its building is not as per the requirements of the branch. So the building should be further expanded and there should be more space for the sitting arrangements of the customers.
The ATM service should be provided 24 hours. Because customers feel upset when most of the times the machine is out of order. The staff should be decreased in Foreign exchange Dept.., Credit dept. because the building under operation is in adequate for such a large staff. 164
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Under no circumstances cheque book should be given to the customer if the account formalities are incomplete
Cheques, which are drawn on Askari Commercial Bank Branch and returned unpaid in clearing, are not reflected in the statement of account of the
Customers. This cheque must be reflected in the accounts so that credibility of the customers may be assessed. Audit should be held internally, rather there should be an audit department in the branches to make audit on daily basis. This can become so, helpful as a different banks are having this department of their own
. When giving the loan, the Bank must carefully analyze the past six months transaction history of the borrower. This will help in the judgment of the dealing behavior and financial status of the client. In most cases, this thing is not properly done and this is the major reason for the default of many clients.
The Bank should try to give more loans to the small borrowers as the past history shows that most of the loans given to the corporate borrowers have converted into bad debts
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References:
Web Sites:
Askaricards.com/default.asp Dawn.com Pakistaneconomist.com Sbp.org.pk/index.asp En.wikipedia.org/w/index.php
www.askaribank.com/index.php www.sbp.org.net.pk
scribd.com
http://www.askaribank.com.pk/Reports/Askari
%20Financials%202008.pdf
Books
Financial Statement Analysis (Charles H. Gibson) Lahore College For Women University Lahore
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Annexure
Account opening form Deposit slips OBC Bundle cover Brochures Vouchers
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