Professional Documents
Culture Documents
7 GROWTH OF BANKING IN PAKISTAN.9 COMMERCIAL BANKS.11 COMMERCIAL BANKING SCENARIO IN PAKISTAN..12 ASKARI COMMERCIAL BANK..12 CORPORATE FLOW..12 ASKARI COMMERCIAL BANK LIMITED MULTAN...13 DEPARTMENTS..14 ACCOUNT OPPENING DEPARTMENT...14 TYPES OF ACCOUNTS.15 CURRENT ACCOUNT...15 SAVING ACCOUNT15 ASKARI SPECIAL DEPOSIT ACCOUNTANT16 ASKARI BACHAT ACCOUNT16 TERM DEPOSITS17 ACCOUNT OPENING PROCEDURE..18 INDIVIDUAL'S ACCOUNT.18 DOCUMENTATION REQUIREMENT.18 OPERATION18 JOINT ACCOUNT19 DOCUMENTATION19 OPERATION19 PROPRIETORSHIP ACCOUNT20 DOCUMENTATION REQUIRED.20 OPERATION20 PARTNER SHIP ACCOUNT..20 DOCUMENTATIONS20 OPERATION21
Internship Report
Page 1
Askari Bank Limited LIMITED COMPANY ACCOUNT.21 DOCUMENTATION REQUIRED21 OPERATION..21 LETTER OF THE THANK.22 RECEIVING INWARD CHEQUES..23 ENCASHMENT OF CHEQUE23 CLOSING OF ACCOUNTS24 PROCEDURE...25 EVERYDAY POSTING25 ATM- CARDS DEPARTMENT..25 ATM CARD..26 ISSUING PROCEDURE.26 ASKARI BACHAT CERTIFICATE.27 ACCOUNTS DEPARTMENT.28 CHECKING BANKS DAILY ACTIVITY28 INSTRUMENTS OF BILLS & REMITTANCE DEPARTMENT29 FOREING TRADE DEPARTMENT..37 OPENING OF FOREIGN CURRENCY ACCOUNT .37 EXPORT ..38 IMPORT45 CREDIT DEPARTMENT.45 TYPES OF ADVICES..45 POLICIES AND CONTRACT GUIDELINES...47 OBJECTIVE OF LENDING...50 PRINICIPLES OF LENDING51 CREDIT CARD DEPARTMENT56 PROCEDURE FOR ISSUANCE OF CREDIT CARD56 ASKARI MASTER CARDS57 RECOMMADATION....59
Internship Report
Page 2
Preface
This report is an internship report on, Askari Bank, Abdali Road Multan. It will provide you material and information about the bank. Along with the general information, in it, we will study about the special survey about the different prospects of the bank.
In addition, I tried to collect the secondary data, from the different Departments of the bank, Research papers, Internet, and from the Annual Reports of the bank, & from any possible source, which I could find.
Any how, I must thank to my supervisor Mr.Imran Zaffar on giving me the chance to report on Askari Bank. In normal circumstances, I would never be able to attain such valuable information about the respected bank.
Internship Report
Page 3
ACKNOWLEDGEMENT
All praise to ALLAH Almighty the lord of Worlds. In the former and the latter, praises be to the ALLAH Almighty, the creator of the heaven and the earth. Glory and praise to be ALLAH Almighty, who created the man, taught him the utterance, honored the human being and perfected him above many of the creatures with marked performance. Glory and praise to be ALLAH Almighty in His beloved way till He become well pleased, who created and bestowed us countless potentials, talents and abilities It is great pleasure for us to acknowledge our deepest sense of gratitude and humble thanks to our worthy teachers for being kind enough to extend his baseline guidance in the completion of this project program and report. We also pay special thanks to Mr. Imran Zaffar for his help and cooperation during the preparation of the report.
Internship Report
Page 4
EXECUTIVE SUMMARY
The Department of IMS offers Bachelor Degree BBA (Hons). They are giving the best education and are offering for specialization, financial management, marketing management, and human resource management and computer application to business. An important program is six to eight weeks internship with any recognized institution.
I decided to take up Askari Bank Limited for my internship because it is a competing Bank nowadays and gives a good training to the internees. So in order to learn more this was my choice.
This report is about my internship that I have undergone at Askari Bank Limited Multan Branch from 20th June 2011 to 30th July 2011. During my internship I become able to learn practical aspect of business, and get good working experience.
On the very first day of my internship I reported to Operation Manager Mr. Ahmed Feroz. He gave me small introduction of the Bank and introduced me to the staff of the Bank. Every internee is rotated among the Banks departments and so was I. This rotation is done in order to have general concept regarding Banks functions, operations and policies. In this rotation the stay in department is
usually a week. I have learned more about the Basic Banking, Credits department and have given below the caption of activities I was involved in during the period of six weeks.
Internship Report
Page 5
Bank is an institution which revives money from one party and lends to another party. These are the following types of banks
Central Bank Commercial Bank Industrial Bank Exchange Bank Saving Bank
Internship Report
Page 6
Evolution of Banking
The history of banking evolution is very interesting. In the early ages human like and wealth was not secure. Due to fear of loot-mar and theft people buried their wealth under land but this method was not satisfied. People started to search the custodians of wealth. The evolution of banking started and it has crossed the following stages.
Second Stage.
During this period those receipts which were issued by the goldsmiths against the valuables goods were being used as a medium of exchange by the merchants. Internship Report Page 7
People purchased the various things from the traders against their receipts against the payments. So the receipts were used like the bank cheque of the modern age.
Internship Report
Page 8
Time of Independence.
Hindues migration from Pakistan to India also caused drain on the bank deposits. In order to ruin the economy of Pakistan. Hindues closed down most of the head offices and branches of the scheduled and non scheduled banks in Pakistan. At the time of independence there were only two Pakistani banks, that is Habib Bank and Australasia Bank. At the time, Pakistan had 631 branches of scheduled banks and 411 of no-scheduled banks. The total deposits of Pakistan banks were Rs. 800 million and advances were 198 million, the non-scheduled banks number reduced from 411 to 106 over the same period. The mass scale withdrawal of deposits closure of branches and migration caused a deadlock in the banking business in Pakistan. Keeping in view the above situation government, of Pakistan took various steps to provide all kinds of facilities to they non-Muslim bankers for restoring normal banking facilities but response was not encouraging.
Commercial banks namely MCB and ABL were transferred to private sector. While other banks like HBL and UBL are under the process of privatization. In August 1991 government has also allowed the establishment of new private banks. Now new like Askari Bank, Platinum Bank, Indus Bank., Mehran Bank, Soneri Bank, Union Bank and Al-Habib Bank are established. These banks have established their branches in all the important cities of the country.
Internship Report
Page 10
COMMERCIAL BANKS
Commercial banks are companies which transact business of banking in Pakistan Commercial banks have constituted the most important source of institutional credit in the economy of Pakistan.
Internship Report
Page 11
CORPORATE FLOW
It the corporate body consists of 12 Board of director including one chairman 1. 2. 3. 4. President Chief Executive Secretary NIT Nominees
Internship Report
Page 12
MISSION To be the leading private sector bank in Pakistan with an international presence, delivering quality service through innovative technology and effective human resource management in a modern and progressive organizational culture of meritocracy, maintaining high ethical and professional standards, while providing enhanced value to all our stakeholders, and contributing to society.
Multan is zone covering a large population. Multan City is linked to many big cities. Agro based area constituting growers and gainers Army Offices & Fort Colony Educational Institution
The total strength of staff in ACBL Multan is 35. They are dedicated their work. The branch is progressing rapidly. Under the dynamic leadership of Vice President Mr. Zubair Sheikh
Internship Report
Page 13
DEPARTMENTS
The bank has following department: Account Opening department ATM Department Credit Card Department Account Department Credit Department Remittance Department Foreign Trade Department Cash Department
Internship Report
Page 14
TYPES OF ACCOUNTS
In ACBL, there are the following types of accounts: Current account. Saving Account. Askari Special Deposit Account. Askari Bachat Certificate. Term Deposit.
CURRENT ACCOUNT
In current account there is no interest on it. It is for only transaction purposes. They are paid on demand. When a banker accepts a demand deposit, he incurs the obligation of the paying all cheques drawn against him to the extended of the balance in the account. As there is no profit paid on this account it is also called chequing account because cheques can be drawn on it. Current account is mostly opened for business.
SAVING ACCOUNT
The purpose of this account is to induce the habit of saving individuals in the neighborhood. The profit is on the basis of 8.5% per 6 month. The minimum deposit for opening the account is Rs.100/- (as obvious in the Annexure). Though individuals open such accounts for saving purpose, persons belonging to Armed forces and different military institutions are free to use this account on current basis.
Internship Report
Page 15
Internship Report
Page 16
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 . ACBL 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 (as clear from Deposit Scheme in the table ).
Period One month 2nd 3rd 6th month One year 2 year 3 year
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.
Internship Report
Page 17
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.
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 no 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
Internship Report
Page 18
Askari Bank Limited S.S card mailing address, telephone no, Person to contact and introducer space is filled in. All these requirement 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.
JOINT ACCOUNT
When two or more persons, neither partners, nor trustees, open an in their name is called joint Account. Husband and wife or two persons of same sex can open joint account. 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 account 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. Signatures of both persons are 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.
Internship Report
Page 19
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.
OPERATION Al l operation remains the same except that the firm name is written in the "Title of the Account" area and signature of the proprietor are affixed in the S.S. Card and the area specified for signatures on the form.
DOCUMENTATIONS Copy of N.I. card 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.
Internship Report
Page 20
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.
DOCUMENTATION REQUIRED Memorandum of Association. Articles of the Association Resolution of the Board of Director. Certificate of Incorporation. Certificate of commencement of business 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.
Internship Report
Page 21
OTHER RESPONSIBILITIES
CHEQUE BOOK ISSUING Check books are issued only for checking account such as current Account, saving Account and ASDA Account. They are not issued for other fixed and term deposits because of their Long term Accounts nature.
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 cheque book is handed over to the customer.
Internship Report
Page 22
ENCASHMENT OF CHEQUE
Issuance of Token After scrutinizing the apparent tenor of cheque a token is issued to the account holder. Verification of Signature After affixing the two stamps i.e. paid stamp and branch stamp, a cheque Is sent to the accountant for the verification of signature from signature specimen card. After authentication a cheque is sent to cash department Encashment of Cheque Cashier pays the amount to token holder after getting back the token from him. Deduction of Zakat Form the profitable accounts zakat is deducted at the rate of Rs. 2.5 % .annually on the outstanding balance of accounts on the first day of every valuation dale i.e. first day of Ramzan. The Central zakat Authority (CZA) fixes minimum balance for the deduction of zakat before the valuation date
Internship Report
Page 23
Exemption from Zakat The accounts of foreigners (including Muslims of other nations) and Pakistani non-Muslims arc exempted from (lie compulsory deduction of Zakat. The accounts of the followers of Fiqah-e-Jafria sect are also exempted from the deduction of Zakat after the submission of affidavit on a legal stamped paper. Withholding Tax Whenever a profit is paid on any deposit it is subjected to the withholding tax @ 10% annually.
Closing of Accounts.
There are many reasons for closing of account. Some of the more common reasons are as follows: 1234Account holder's own request Death of account holder Bankruptcy of account holder Closing of account due to bad demeanor of account holder etc. An
account is .closed at the request of an account holder or as a result of improper conduct of the account holder or because of nil balance of the account. In first case account holders request the manager of the Bank to close his account in black and white.
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 surrender the cheque book yet if some leaves are yet to be write to the bank as a necessary requirements for closing the account.
Internship Report
Page 24
PROCEDURE 1. 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) 2. The individual or in case of other type- proprietor firm and company surrender the cheque book to the bank. 3. The cheque book is then torn from one side and is attached with the application. 4. In case of Ltd. Company account resolution of the board of directors is also obtained to attach it with the application. 5. 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. 6. Lastly, it is written in Red Ink on the form that account closed and Date of account closing.
EVERYDAY POSTING
Following transaction of cheque book is posted:Dr_____________ party A/c 25(for 10 leaves)
Cr______________ excises duty on cheque book 20 Cr______________ provincial tax on cheque book 5 ATM- CARDS DEPARTMENT This department deals in issuing ATM-Card, term deposits and Askari Bachat Certificate. Mr. Kamran deals this department.
Internship Report
Page 25
ATM CARD
ATM Cards are only issued to Account Holder. Any account holder of ACBL (current Saving Value plus Saving Account) can obtain ATM card from ACBL with in 15 days. Maximum limit of daily cash withdrawal is Rs. 10000.
ISSUING PROCEDURE 1. The person, first open the account within the blank. 2. Then he fills the ATM application form in which name of account holder, account number, address, phone number are mentioned. 3. Then on the same application form bank officer guides branch code, application number and signatures are verified by the bank. Bank manager puts his signatures. 4. After completing this process, the application package is sent to card centre. 5. Card along with pin code is sent to the branch from the head office. ACBL head office takes a period of 3-4 weeks for preparing and processing of ATM cards. First, list of card holder is issued and then after 15 days cards are sent to ACBL issuing branch. The card and list are not sent simultaneously in order to avoid any mishandling. 6. ACBL takes Rs. 200/per year or Rs. 100/semi annual as charges for a card. You can deposit money withdraw get balance inquiry transfer the fund 24 hours a day at any branch of ACBL which has ATM facility. ACBL ha shared ATM network with ABN AMRO and HBL.
Internship Report
Page 26
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. 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.
Internship Report
Page 27
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. Mr. Kamran and Miss. Shagufta deal this department. CHECKING BANKS DAILY ACTIVITY Accounts department deals and checks the entire working of the Branch; all the vouchers that have been posted at the computer are scrutinized in accounts department. The End of Day i.e. computer print is also received from the computer. The next day the activity is separated some statements from the End of Day. Then next day activity separated some statements from the End of Day. The vouchers are sorted out head wise. The vouchers are matched with the entries in the statements. Any abnormality if occurs, is immediately dealt with. All the vouchers and instruction are checked individually are checked individually against the computer printouts. After checking they are signed by Mr. Kamran and the internal auditor Mr. Shafiq.
OTHER ACTIVITIES Preparation of daily bank positions statement Payment of salaries Preparation of the statements Depreciation calculation
Internship Report
Page 28
REMITTANCES DEPARTMENT
Remittance department provides services to the customer of the bank. The main function of this department is transfer of funds. Incharge of the department is Mr. Ahmad Feroz.
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.
Internship Report
Page 29
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 he 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. Vouchers are passed. Commission charges Excise duty Cr Cr
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.
Internship Report
Page 30
Askari Bank Limited 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 computer. 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.
TELEGRAPHIC TRANSFER 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. Commission Charges Fax charges W.H. Tax. Cr Cr Cr
Internship Report
Page 31
Askari Bank Limited 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. Head Office T.T Pay able T.T Payable. Party A./C. Dr Cr Dr Cr
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.
Internship Report
Page 32
Askari Bank Limited 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. Then the amount is credited to the account of the customer or paid in cash. The P.O is posted at the computer.
Dr
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. 1. Pay slips are the issued by the bank for the settlements of this own payment. 2. 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. Zubair Sheikh. 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.
Internship Report
Page 33
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.
OUTWARD BILLS FOR COLLECTION The bills, which are sent to their cities banks for the local clearing in that city, are called outward bills for collection.
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 / (Annexure) 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.
Dr Cr Cr
At the end of the day the contra vouchers are. OBC collection OBC lodged OBC collection OBC lodged Internship Report Dr Cr Page 34 Dr Cr
INWARD BILLS FOR COLLECTION The bills are received from other banks out of city for the local clearing are called inward bill for collection.
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.
Dr Cr
Cr
Internship Report
Page 35
OTHER FUNCTIONS
BALANCING THE REGISTER At the end of the day, all the registers are balanced with the computer balances. The heads and checked are as follows. DD payable IBC collection. MT payable. OBC lodged. OBC Collection. TT payable. IBC lodged. Bills payable. P.S. issued. Bills payable P.O. issued. If the payables are not cleared for a lot of days, a reminder is sent to the respective branches.
Internship Report
Page 36
CRITERIA FOR OPENING FOREIGN CURRENCY ACCOUNT There are not hard and fast rules for becoming the Foreign Currency Account holder. Bank wants only introduction of the Client and very little about the background. I.D card is also not necessary, if someone has; well and good, otherwise no restriction will be there for him.
FEATURES OF FOREIGN CURRENCY ACCOUNTS There will be legal protection for the account holders. According to foreign exchange rules and regulation every citizen of Pakistan, either within the Pakistan or outside the Pakistan, can open the foreign currency account. Resident firms and Resident Companies including investment Banks can open Foreign Currency Accounts. All foreign nationals and foreign Companies in Pakistan or abroad can open Foreign Currency Accounts. Opening of Foreign Currency Accounts in the joint names of residents/nonresidents is permissible. Foreign Currency can be deposited by: Remittance received from abroad Foreign Currency Notes There will be no restriction and questioning to him about the currency, which he wants to deposit that from where he got that money. No Zakat will be deducted on these accounts; no Income Tax deduction, no Wealth Tax deduction will be there. Internship Report Page 37
These incentives reinforce and motivated the people to invest in foreign currency accounts rather to keep the foreign currency idle. Foreign currency accounts can easily be transferred from one person to another, one place to another, with in the ACBL Branches or in other Bank. The account holder can transfer the funds freely, in any currency to any part of the world. Foreign currency Accounts can be used for payment of purchases at Duty Free shops.
FACILITIES This account provides following facilities: 1) 2) 3) 4) Traveling quota Out ward remittances In ward remittances receiving To make remittances procedure flexible
EXPORT Mainly export deals in: Negotiation of documents Sending the documents for collection Pre-shipment financing Post-shipment financing Remittance against agent commission Forward covered booking Handling the documents for negotiation according to the UCP 500 (uniform custom and practices) Handling the documents for collection according to URR (uniform rules for collection) E form. Internal transactions are through Nostro and Vostro accounts.
Internship Report
Page 38
This section helps the exporters to settle the financial affairs Registration Who so ever desires to export the goods first of all he has to get his name, name of firm, or his limited company registered with the export promotion bureau. After getting registration, the exporter will be allowed to export his commodities. In order to get his name registered with EPB, he has to submit the following documents. Bank certificate, showing that the exporter is account holder and have a good dealing with us. Income tax certificate.
Documentation.
The exporter must submit the following documents to the negotiation bank. Bill of exchange Invoices Insurance documents Bill of loading
As an evidence of dispatch of goods the shipping documentary bill are indispensable part of documents. It is essential for the shipping documents to clearly sale the parties. The name and address of the shipper, the name of consignee. Shipping documents must be drawn out in prescribed from by valid shipping or airlines. The quantity, description, weight and packing of the goods should agree with the invoices documents must also clearly sale the route that the vessel or airline shall take. The route must be signed and initials should be appears on it. Sometimes the buyer through the documentary credit requests the sellers to certificate of origin and packing list. After submission of the documents to the negotiating bank seller is bound to receive his payment. The bank on its part to also duly bound to make the payment Internship Report Page 39
however it is only reasonable to allow the bank sufficient time to scrutinize the documents that exporter has submitted. If the bank finds the documents correct then the bank will make payment to the exporter after confirming with the buyers bank. The necessary documents includes the L/C form normally directly comes to the exporter and not to the bank. The exporter brings all these documents comes from foreign banks either through telex or courier service then the documents are sorted and test is applied and if it is correct, then stamp of test corrected without engagement on our part is affixed. After examining the documents, the advising bank made a scrutiny sheet to check the amount of L/C as well as amount of bill of exchange etc. The advising bank certifies From-E after checking the invoices, L/C and the contract attached with From E. after certification from the bank the exporter then goes to the custom authorities and makes certify form there and finally goes to the port for shipment.
E-Form. Every exporter is required 10 furnish a declaration to customs authorities for goods exported. This deceleration is submitted on a prescribed Form-E in quadruplicate which is certified by the authorized Dealers.
1.
The Stock of E form is provided by the authorized dealers Head Office to the Exchange dealing branches and the proper record is maintained in the E-form Stock Register the dealing branches maintained two registers one for the purpose of issuance of 'E' form and the other for certification of E-Form.
2.
Issuance of E-Form:
Blank 'E' form in quadruplicate is issued to the exporter having an account with the branch against little request. In case the exporter maintains his account at a branch
Internship Report
Page 40
other than the exchange dealing branch, the request is routed through his branch. Before issue E-Form it is ensured that the exporter has tendered the attested photocopies of required documents e.g. valid export registration corticated, N.I.C., NTN, Challan Copy of renewal few paid. Credit report of the exporter is also obtained to ensure the credit worthiness of the exporter. The set of E-Form after completion of all formalities is then entered in the E-Form issuance register and acknowledgement is obtained from the exporter or any authorized person of the exporter.
3.
Certification of E-Form
Before lodgment of E-Form to custom authorities is requested to be certified by the authorized dealers. When the quadruplicate set of E-Form is presented for certification the same is very minutely scrutinized and following details are checked 1. 2. Export registration number is correctly mentioned on the E-Form Signatures of the exporters or his authorized signatory are duly verified at the counters. 3. E-Form should be correctly and properly filled in withiest any overwriting unauthentic corrections etc.
The following columns should be properly filled a) NTR NUMBER, Income Tax Circle, and CCI & E Register number and date. NIC number with dale and place of issue. I) Name and complete address of the exporter along with Telephone number. II) III) IV) Item of export showing quantity and that it is not a banned item. Value of the: invoice mentioning the currency. Terms of payment e.g. C+F, C1F or FOB.
Internship Report
Page 41
V)
Country of export (destination) to ensure that the country where export is made is not a restricted one e.g. Israel.
VI)
Term of sale e.g. against Letter of Credit, firm contract or consignment safe. Whether on sight basis or on usance basis. It terms is of usance are beyond i20 days, .Stale Bank of Pakistan permission is also required to be obtained.
i) j)
Advance Payment Sometimes the exporter may receive the payment for the item to be exported in advance without waiting for documents in such a case the advance payment received for this purpose is required to be declared by the exporter on the prescribed form. Advance payment voucher. A proceed certificate is issued to the exporter. For such payments which is required to be produced at the time of presentation of documents for negotiation. Advance payment is certified on the reverse side of E from under the seal and signatures of the authorized dealer which is required for reporting to the state bank of Pakistan.
CERTIFICATION After certifying the correctness of the E-' Form certification register in the folio allocated to each exporter separately. Bank / branch stamp is filled beneath the duly certified are delivered to the exporter or his authorized person.
Submission of 'E* Form: After certification of 'E' form all the four copies are submitted by the exporter along with shipping bill to (he customs authorities for clearance (^'consignment. Internship Report Page 42
Three copies of E' form are returned by the custom authorities retaining the original after endorsement of shipment on relative portion on 'E' form. The duplicate copies retained by the exporter while the duplicate and triplicate copies are submitted to the authorized dealers along with other documents for negotiation within 14 days from the date of shipment. The bank retains the quadruplicate copy for its record while the duplicate coy is surrendered to State Bank of Pakistan or realization proceeds.
Utilization of E Form E form should invariably be utilized and received within 21 days from the date of certification for 14 days from the date of shipment failing which the exporter is persuaded to submit without further delay. In case the exporter does not respond to the requests, the matter is reported to State Bank of Pakistan.
Cancellation of form E E form is canceled is 2 ways. 1. If goods are not exported and E form is not presented to the customs the authorities, the same is surrendered to the cancellation which is recorded in the separate file duly marked canceled. 2. If E form has been tendered to customers authorities but the goods could not be shipped due to non availability of space in shop or due to any other reason, the exporter is required to submit three copes of E form along with original. Shut out notice duly stamped and certified by customs to the bank. The bank submits all the three copies along with shut out notice to the state bank of Pakistan under a covering letter for cancellation and record at their end. Collection mechanism explained diagrammatically.
Internship Report
Page 43
COLLECTION MECHANISM
EXPORTER
Documents
REMITTING BANK
COLLECTIONG BANK
Exporter and importer conclude sales contract. The exporter ships goods to the importers country. The exporter through a covering letter and lodgment form forwards his bill of exchange along with the supporting commercial and transport documents to the remitting bank.
Step 4.
The remitting bank forwards the documents to its branch or correspondent bank in the importers country called
COLLECTING BANK, under cover of its collection schedule called the COLLECTION BANK. Step 5. The collecting bank if it is not the importers bank will forward the documents to the importers bank for presenting them to the importer of payment or acceptance of the bill of exchange, as the case may be. Step 6. Step 7. The importer pays the sight bill o9r accepts if it is a usance bill. The collecting bank (or the presenting bank if it is other than the collecting bank) presents the accepted bill to the drawee (importer) on the maturity of the bill for making payment. Step 8. Step 9. The collecting bank remits proceeds to the remitting bank. The remitting bank credits the proceeds to the exporters account. Page 44
Internship Report
Askari Bank Limited IMPORT Opening the letter of credit For issuing the L/C bank requires sufficient funds in the account of importer. Scrutinize the documents receive from flowing bank under letter of credit. Account to UCP 500 and extending the credit facility to the importer informs FIM (finance against imported merchandise) FATR (finance against trust receipt). Arrange forward cover booking regarding import payments Also arrange forward cover booking for letter of credit open other then ACBL Submission of monthly returns to SBP regarding the import on form I
CREDIT DEPARTMENT
Credit department deals with the extension of advances to individuals, companies etc. basic function of credit department is to extend advances by checking carefully all the documents, securities necessary for fulfilling the requirements which are necessary, for extending advances. Incharge of the department is Mr. Shaukat Babar.
Types of Advances.
i) ii) funded advances non funded advances
Funded Advances Funded advances are those advances in which funds of banks are involved.
Funded Advances
Main features of term finance are i) It is for proper time period. May be of one year, two year, and three year. House building finance is including in term finance. ii) Account will be debited only once adjustments are possible further but account will be debited only once.
Term Finance
Clean
Secured
Secured Finance. Financing against Govt. securities i.e. price bonds, defense saving certificate. Documents Required. L/C, demand promissory note, L/G.
Clean Finance. These funds are extended against personal guarantee for salaries people. Documents Required. LC of Govt. salaries personal, letter of guarantee.
Internship Report
Page 46
Non Funded Advances. Non funded advances in which bank funds are not involved e.g. L/C, L/G.
Objectives Provision of suitable credit services and products extension of credit is out compromising the rules and regulations
Performance The advancement shall focus on the development enhancement of customer relationship
Administration Administration should insure compliance that is all laws and regulations of regulatory authorities loans / facilities and related security shall be closely and regularly monitored and reviewed at the branch level. By a separate unit unconnected it credit approval. Internship Report Page 47
Total facilities They must confirm it to the regulatory requirements. Term facilities Aggregate term facilities in excess of one year should not exceed 30% of the total credit portfolio Exposure to customer group Credit facilities extended any one or group must not exceed the guidelines currently inforce by the regulatory authorities. Unsecured facilities Similarly the aggregate of all advances to a single person should not exceed the guideline. Exposure against none funds based facilities. The aggregate of contingent or non-funds based facilities should not exceed ten times paid up capital and open all resources. Financing against shares Unsecured credit facilities will not be extended towards floatation of share capital listed companies. Conditions Borrowers liquidity ratio. The current ratio of the borrowers must be equal to or less then one. The debt to equity ratio should not exceed 60:40. Credit reviews All limits shall be subject to at least an annual review.
Credit Approval.
The primary individual factor determining the quality of the banks credit portfolio is the ability of each individual authority. Credit will be extended in accordance to the authority levels. Approved by the BOD from time to time.
Internship Report
Page 48
Credit risk assessment Prevention of criminal use of banking channels. Efforts should be made to determine the true identity of a customer and in case of cash transactions the source of funds is established. Credit administrations The principle amount of credit add are as follows Credit approval Credit file maintenance Facilities evidence
Credit monitoring and review Bank ACBL Capital funds Credit facilities / extensions
It means granting of financial accommodation or considerations to a customer, which incur the back in monitory loss in the case of non payment or non performance by the customer. Secured Advances Pledges, hypothecation, charges or mortgages on tangible readily realizable assets. Security is often an additional security over & above the assets. For example advance allowed against stock in trade. Unsecured / clean Which are not covered by any tangible security. Credit committee Head office credit committee only Internship Report Page 49
Objectives of Lending
In the modem economics, more than 90% business concern raises their funds from various financial institutions to meet their multifold transaction. Actually it is very difficult for the modem 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 Bank. The most easy way to make fund available to seek assistance by such agencies including Banks which have got surplus funds and will to come to the assistance of producing units, and distributing units, and exchanging units. This is the primary factor which toads towards lending of money by Banks. No doubt, we cannot neglect the second factor profit orientation while running the credit business, the single way for the bank to earn profit lies in lending money to the customer on comparatively higher rate to mark-up that it gives to the depositors.
Internship Report
Page 50
Principles of Lending
Apart from the instructions and directives sent by the state Bank of Pakistan, Muslim commercial Bank, Ltd. Guided by three basic principles of profitability, safety, and dispersal.
1. Profitability The management of Muslim Commercial Bank, ltd. Is very careful to seek advances where advances can generate a higher return. Bank has to spend huge amounts on establishment, payment of profit to depositors, salaries of the staff, other variable expenditure and to provide a fair return to the share holders, it must therefore, earn profit.
2. Safety Safety principle is very important. No one will take a risk of losing the principle in order to earn profit. So bank will prefer to lend at lower rates than to risk his money for higher rates. For making his advances safe, a bank select his borrowers cautiously. Safety does not necessarily means the taking of security. It would be wise, not to lend however, good the security be if it is clear that it will have to be realized for clearance the debt. Safety also employs the borrower's ability to reply without difficulty. Another aspect of safety is the lenders legal right to claim repayment from the borrower.
3. Liquidity and Disposal In its simple definition liquidity means the easy convertibility of an asset into cash. But when we speak of liquidity in relation to advances, it is rather different, It means the adjustment of advances at a short notices. Bank advances are made in such a manner that they are repaid in reasonable period so that the bank can make new advances. Dispersing the advances in reasonable amount over a large number
Internship Report
Page 51
and types of borrower is necessary to avoid bid debt, stick up by single or few borrowers. It is therefore, necessary to advance moderate sums to a large number of customer engaged in different types of industries.
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 Muslim Commercial Bank, Ltd. "Good selection of borrowers does the half task in the profit of the Bank. 'Bank do not through money away but every application is tested carefully before being sanctioned. To assist the Branch manager in this test, bank provides a performed, outlining the manner in which a proposal should be put forward for consideration. If any specific information that is required is not mention, it affects the proposal as a whole, making it appear weak or inconvenience, it is therefore, necessary for credit officers to see that all relevant questions following are, as far as possible completely and exhaustively answered. Following are 6'C, S and 3P's, which are considered before lending:
1.
Character
The bank get to know the customer we!! and be able to judge his intentions, for the bank shall be entering into a contract with him involving the financing of his business. It is, therefore, common and business senses to make sure that the other party to this contract will live up to his obligations, this factor, therefore, contributes significantly to the safety of the advances, as it relates to the willingness to repay under all circumstances. Particularly adverse circumstances. Are the partners or directors of the business unit, which is seeking finance, persons who can be relied upon as regards details of their proposal as will as promise of repayment? What is
Internship Report
Page 52
their reputation in the market place for meeting their commitments in respect to prices & delivers to purchasers and timely payment to their trade creditors? Confidential and tactful inquiries from wholesalers, suppliers and other bankers are necessary to obtain this essential information.
2.
Capacity
This factor relates to the ability of the borrower to manage his business successfully. Do they have the necessary management, accounting and technical skills? And the degree of experience, in the particular line of business for which the finance is required, to utilize the advance productively and profitably, so that repayment is possible, along with our share of the profits? This ability can be judge from the trading results. A study of the company's audited financial statements for the past few years would real whether sales have deep growing, stagnating or declining or declining. Similarly, the trends of gross & net profit margins indicate the profitability or other wise of the business. The efficiency of the management can be Judge from the turn-over ratios, collection of receivable and management of accounts payable.
3. Capital The proportion of the borrower's own resources to the amount of finance is requested, is the next point to receive the branch manager's attention. Is the amount required in proportion to the borrower's capital and contribution to the project? Is it within the powers of the borrower? In the case of a corporate customer, a check on the memorandum & articles of association is necessary to ensure it is within prescribed limits. If the amount describe to be borrowed is too large. Under the circumstances, can it be sagely reduced to an acceptable & practicable level? Past experience has taught bank that it is unwise to lend more than is actually required, as it sometimes has led to speculative uses of the surplus.
Internship Report
Page 53
4. Cash Flow The source of repayment should be ascertained at the beginning. As commercial banks, bank advances must, be largely confirmed to provide short" term finances to business customer. Hence financing the current assets of traders and manufactures. Would ensure that repayment would normally come from the sale of inventory and the realization of account receivable of our customers. If we are confident of the customer's ability to buy the right materials, at right markets and be able to produce finished goods which can be readily sold, at a satisfactory profit, there should be no doubt about repayment. Therefore, cash flow statements and profit projections need to be submitted by the borrower and carefully evaluated by the credit officers.
5. Conditions From quantitative and qualitative information the bank need, to examine the conditions which the firm is operating. This requires identification of the factors that have up to now contributed to the success of .the business, and to Examine factors change has recently occurred or is likely to occur in the near future which will adversely affect the profitability and prospects of the customs. Accordingly to nature and prospects of the customers' business need to examine will it continue to prosper, or will additional competitors or new competitors with the latest technology result in reduced profit margins? Is the product essentially required, in a wide market with continued demand? The industry conditions and the firm's place in industry and its market share need to be examined demand? The industry conditions and the firm's place in the industry and its market share need to be examined. An important quality here is the management's tendency to look and think ahead to anticipate and adapt to change by diversification or otherwise, which will instill confidence in the banker. For this purpose, it is necessary to maintain & update at the time of renewing the advances.
Internship Report
Page 54
6. Collateral Since the bank is lending money, which it has, received form depositors, the bank must ensure that there is a second way out. Security is, therefore, taken as a form of insurance. In case the business plans of the borrower, do not work out, due to circumstances or developments beyond his control. It is the final safe and credit officer should be able to identify appropriate assets, which would most suitably serve as security, in the given circumstances. The qualities which constitutes a good banking security are transferability i.e. whether a valid charge should be created by the borrower over his asset in favor of the bank should be such that the bank can obtain a good title with minimum formality and expense. Its value should be easily ascertainable and stable. It should be easily realized, in case of nee. Finally security be obtained & formalities completed before the finances is disbursed.
7. Purpose Credit resources are scarce but have alternate uses- The unity's needs demand that banks put them to the best possible for which the finance will be used, within the credit policy the bank? In conformity with the country's laws, credit control and exchange control requirements. Is it a desirable one from the economic and banking viewpoint? Is it for productive of emulate purpose? In short, they're in need to ensure mat the purpose is conductive & within the borrower's normal sphere of business activities and scale operations.
Internship Report
Page 55
8. Period Short-term advances are favored that is for not more than a year, renewable each year, if still justified. Accordingly the most usual purpose is to assist manufacturing and trading customers in their need to purchase current assets in line with their production or trading cycle, and seasonal loans for agricultural purposes. Being a developing country, EBI do grant medium-term loans but to a limited extent, for the fixed- asset financing need industrial customers.
Internship Report
Page 56
2.
American companies are Visa Card and Master Card. ACBL has the facility of master card only. They have to sent their credit cards, they have given the authority of master cards to two banks. First is City Bank and second is Bank of America. ACBL has the agreement with City Bank. ACBL takes master card from city bank and then issue to the customer.
3.
ACBL takes the yearly fee, interest fee, late payment fee, credit sale fee for issuance of the card. ACBL also pays certain percentage to City Bank.
4.
City Bank has the authority for the master cards for applying credit cards, master cards certain limit is mentioned.
There are following types of master card. Silver card Gold card These are different due to their credit amount limit. For example for silver card, cardholder can take the maximum amount ranging between Rs. 30,000 to Rs, 200,000. For gold cardholder this limit has been extended to Rs. 300,000.
ISSUING CHARGES When the card is given to cardholder, there are certain fee charges to by the bank, which is different for different cards. Local cardholder is charged Rs. 1200 but if the cardholder is Army officer there is special discount for him. And he is special charged Rs. 750. Silver cardholder is charged Rs. 2500. Gold cardholder is charged Rs. 3500. 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. Internship Report Page 58
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.
Land Lord In the case, the person is totally new, and the bank doesnt know anything about him. For this bank need an account having the amount over and above the credit card limit of that credit card. Usually, there is more chance of default in this case; so, the bank avoids issuing credit card to that person.
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.
RECOMMENDATION During my internship, what I feel should be there are: Human Resources Department should be there in order to motivate and trained the employees. I have noted some dissatisfaction among the employees, due to in efficient promoting system. So the bank should provide clean and on the merit basis promotion system. The bank is now over staff. The building under operation is in adequate for such a large staff. So the building should be extended
Internship Report
Page 59