Professional Documents
Culture Documents
INTERNSHIP REPORT
BANKING IN PAKISTAN
Pakistan has indeed unique banking history commencing as were from scratch at
the time of Pakistan of this subcontinent. However it soon comes over its extra
ordinary banking problems and by grace of Allah we have a stable banking sector.
INTRODUCTION
Faysal Bank Limited (Bank) was incorporated in Pakistan on October 03, 1994
as a public quoted company listed on Karachi & Lahore stock Exchanges. The six
Pakistan branches of Faysal Islamic Bank of Bahrain E.C. amalgamated with the
Bank when it commenced business operations effective January 01,1995.
The year 2002 is the 15th year for Faysal Bank serving the Pakistani economy and
market. Similarly, Al Faysal Investment Limited was incorporated in Pakistan in
1991 as the investment arm of the group and make valuable contributions in the
public and private sectors based on Shariah approved modes of funding.
As of January1,2002, the two entitles of the group in Pakistan, Faysal Bank
Limited and Al Faysal Investment Bank Limited, merged into one and today only
Faysal Bank Limited remains as a larger, stronger and much more versatile
institution among private banks in the country. In fact it is amongst three largest in
terms of quality, which after the merger stands at over Rs.4.0 billion. The total
balance sheet size of Faysal Bank after the merger is in excess of Rs. 40 billion
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SHAREHOLDERS
The Bank has been incorporated with an authorized share capital of Rs. 1.5 billion
of Which Rs.1.1 billion is issued and paid-up. As 31st December,1995 the Bank
share capital was held by:
Faysal Islamic Bank of Bahrain E.C.(FIBB) including its nominee directors
NIT, general public and employee
FIBB is a Bahrain based bank; established in 1982 and is a subsidiary of Dar AlMal Al Islamic (DMI), Geneva with H.R.H.Prince Mohammad Al Faisal Al Saud
as its chairman
BRANCH NETWORK
The Bank has seventeen branches, five at Karachi, one at Quetta, three at Lahore,
one at Faisalabad, one in Multan, one in Sialkot, two in Islamabad, one in
Rawalpindi, one in Peshawar, one at Mirpur Azad Kashmir
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MISSION STATEMENT
OVERALL VISION
Faysal Bank derives its mission statement from its principals Shamil Bank
Bahrain E.C and its holding company DMI Trust. The overall mission being:
The introduction of a just and equitable financial system by being a world class
multi-purpose financial institution, providing a range of specialized services,
working on Shariah principles.
VALUES
Training the spirit of Shariaa into modern financial products and services
Maintaining a high reputation for prudence in the financial community
Developing operational
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Bank
of
Bahrain
E.C.,pursuant
to
the
federal
Government
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The Holy Quran outlines for Muslims a complete code of life for dealing
individually or collectively. This is future amplified by saying and practice of Holy
Profit(May be upon him) From these guidelines , an Islamic economic system can
be elaborated upon, aimed at creating a socially, economically and politically
viable and just environment supporting the universal well being of humanity
In this context all functions of the bank are performed in strict adherence to the
principles of Islamic Shariaa. In order to ensure such conformity of Shariaa, the
Bank operations are checked and monitored by its Religion Supervisory Board
to whom the management reports periodically. In case of new operations and
activities prior approval of Religious Supervisory Board is invariably obtained by
the bank management.
The Religious Supervisory Board of the bank itself comprises eminent scholars of
Islamic Shariaa from Bahrain, Egypt, Saudi Arabia, Turkey, and Pakistan
possessing in-death knowledge of the conditions in which the Bank operates. The
Groups Religion Board, composed also of many internationally renowned Islamic
Scholars, provides advice from time on issue that pertain to Group level
implementation
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GROUP OBJECTIVES
1. To put before all Muslims, contemporary Islamic financial services, helping
to executive their financial dealing in strict respect of the ethical individual
and social values of Islamic Shariaa, without contravening the heavenly
imposed prohibition of dealing in riba (interest or usury).
2. To serve all Muslims communities in mobilizing and utilizing the financial
resources needed for their true economic development and prosperity with
the principles of Islamic justice assuring the rights and obligations of both
the individual and community .
3.
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SOUND MANAGEMENT
Its sources are largely due to the management style and polices of senior manager.
It sees Modaraba syndications as a major growth area and there are possibilities
that the bank will arrange such syndications for corporations and companies in
these countries especially in the high growth economics of South East Asia in
particular Malaysia and Indonesia.
There have been suggestions that this type of specialist facility could be intended
to other regions such as the Middle East, North Africa and the Muslims Central
Asia Republics where commodity export and import finance is in big demand.
SYSTEMS DEVELOPMENT
Faysal bank ltd. (FBL) provides a unique mix of services to its customers. That is
why off the shelf software packages and third party vendours are not successful in
providing a complete range of software packages to fully meet the operational
needs of its wholesale and retail banking operations, customers services support
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SERVICES OFFERED
FBL offers a wide range of banking services to public and private sector
corporations, partnerships, individuals, professional, and expatriate Pakistan
working abroad . These services include:
Deposits
-
Current Accounts
Saving account
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Foreign Currency
-
Documentary Credits/Guarantees
-
Financing
Short Term
-
Working capital
Short/medium term
-
Syndicated financing
Medium/long term
-
Modaraba
Moshakara
Ijara
Other Services
Remittances
Demand drafts, pay orders, telegraphic and mail transfers.
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SOURCES OF FUNDS
The banks main sources of funds are:
a.
b.
STRATEGIC INITIATIVES
Significant risk management initiatives have been taken to ensure ongoing health
of the banks financing portfolio. These initiatives include risk rating of the entire
portfolio on a predetermined risk scale, monitoring of industry concentration,
classification of credits against State Bank of Pakistan as well banks own in house
developed guidelines. A Risk Assets Review Unit (RAR) has also been
established. PARs primary responsibility is to perform independent audit of the
Banks financing and investment portfolio on an ongoing basis.
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CONSUMER BANKING
Faysal Bank continues to strengthen its position in consumer Banking. While
extending quality service to retail customers, the Bank Offers attractive local and
foreign currency deposit schemes. FBL
Launched its first branded liability product Rozana Munafa Business Account in
July 1995, targeted towards large corporate and personal business. The Bank has
also redesigned and refurbished most of its branches, having a consistent identify
in terms of design, dector and colour. FBL realizes the importance of customer
focused services, having commenced Evening Banking at all nine branches.
Personal Services Centers have also been established at most of the retail
Branches Where Personal Service Officers are available to provide personalized
service to individual customers and business. The Bank Plans to launch ATMs and
telephone banking as a self service banking Concept available 24 hours on a
countrywide basis in the near future. Priority banking for up scale customers will
also be introduced during 1996.
HUMAN RESOURCE
Hiring and retention of talented and qualified personnel will
Continue to receive priority attention. The recent trend in the financial sector calls
for specialized training in the fields of credit, operations transactions banking,
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treasury and corporate finance. The bank is committed to providing the best
needed training to its staff and to upgrade their skills.
SHARIAS IMPLEMENTATION
Bank continues to meet the liquidity requirements by making investments in
Shariaa compatible instruments. Steps have been taken to bring operations of the
bank in greater conformity with Shariaa operations are under review to evaluate
their compatibility with the shariaa and to refine them in consolation with
Maulana Mohammad Taqi Usmani, Deputy Chairman, Islamic Fiqah Academy
(OIC).
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BOARD OF DIRECTORS
H.R.H Prince Mohamed Al Faisal Al Saud
Chairman
Director
Director
Director
Director
Director
Director
EXECUTIVE COMMITTEE
Mr. Khalid Abdullah Janahi
Chairman
M. Farook Bangali
Member
Member
MANAGEMENT
Mr. Farook Bangali
Mr. Khalid Tirmizey
President&CEO
Country General Manager,
Commercial Banking
Mr. M. K. Hoti
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Mr.Mansoor Hamdani
Head of Finance
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AUDITORS
A. F. Ferguson & Co.
Charted Accountants
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ORGANIZATIONAL BEHAVIOUR
ANALYSIS OF ORGANIZATIONAL BEHAVIOUR
Some of the characteristics of the bureaucracy are present in the organizational
structure of FBL. These include
1.
2.
?In all the departments, excluding the Credit Marketing and Accounts,
comparatively higher degree of the set procedures and rules exist.
VERTICAL ANALYSIS
1. Centralization Versus Decentralization
Geographical
FBL has its branches in main cities and countries of the world show that it is
geographically decentralized.
Functional
All the seventeen branches of FBL have their own personal Departments. But, at
the same there is a personnel Departments of all other branches in Pakistan
Within Multan branch, there is centralization to a greater extent. Up to the level of
Assistant Vice President and Grade 2 officers (only in the Credit Marketing
Department), there is decentralization and there is too within the rules, polices, and
procedures of the State Bank of Pakistan and Head Officers of the Bank in
Bahrain.
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HORIZONTAL ANALYSIS
1. Departments
FBL has a functionally departmentalized structure. As the organization chart
shows, various functional departments are further departmentalized on the basis of
their services.
2. Line and Staff Concept of Organization
Persons at the management level (Senior vice President, Assistant Vice President,
and Regional Vice Presidents) are in line while others persons are in staff.
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INTER SE RELATIONSHIPS
RELATIONSHIP AMONG THE EMPLOYEES OF ONE
DEPARTMENT
Relationships among the employees are congenial and friendly. They take personal
interest in each others joys as well as problems. They like to share the work of
each other. Whenever an individual comes in the morning he, before going to his
seat, visits other departments to keep himself in touch with other persons in the
bank.
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GROUPS
Employees working in one department or related departments e.g. Credit
Marketing, Credit Administration, are more close to none another because
according to George Homans theory, the more numerous will be their interactions,
and stronger will be their sentiments.
COMMITTEE ORGANIZATION
In FBL the committees are present at the top levels of the management pyramid.
Theses committees include:
1. Branch Credit committee (BCC);
This committee exists at the branch level. Every branch of the Bank has its own
committee. The functions of these committees are to approve the credit up to a
certain limit which has been allocated are to them by the Head Office in Bahrain.
2. Regional Credit Committee (RCC)
This committee exists at the regional level.
JOB DESIGN
Job design is an important work area for work motivation and the study of
organizational behaviour. It includes the specification of the tasks and activities
associated with a particular job.
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JOB ROTATION
Management of FBL always try to adopt the modern management practices to
improve further the efficiency its human resource. It continues to design new
methods to make the job more interesting and acceptable to the workers.
JOB ENRICHMENT
This concept states that the job must be designed to provide opportunities for
achievement, responsibility, advancement, and growth. The concept of job
enrichment is very much applied in FBL. Because of the introduction of computer
technology, the prospects of job enrichments has further increased.
GOAL SETTING
Goal setting is an effective tool for the practice of human resource management
and an overall performance system approach in the form of management by
objective (MBO).
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MANAGERIAL POLICIES
PRODUCTION FOR THE FORMULATION OF POLICIES
FBL. Policies are formulated at the three levels discussed below;
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IMPLEMENTATION OF POLICIES
Managers, officers, and workers, at each level, try to follow the polices set up at
various levels. Any failure in following up the polices are immediately brought to
the notice of the corresponding management along with the reason, either proposes
solutions for the implementation of polices or makes amendments in the polices, if
reasons for non-compliance are genuine.
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1. Personnel Policies
Personnel polices cover the major problems of providing and maintaining an
efficient work force.
2. Marketing Policies
Marketing polices deal with the problems of planning for sales activities.
3. Financial Policies
Financial polices are concerned with the problems of providing and handling
capital That is required for the business.
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PERSONNEL POLICIES
Banking is a business of trust. It is only on the basis of trust that people deposit
their money and other valuables in the bank. Moreover people also believe that
their money will be best taken care of.
The image and efficiency of the banking is conditioned largely by the quality and
expertise of banking personnel. Fresh university graduates are selected and
imparted theoretical and practical training. On completion of practical training,
bank managers absorbs the trainees in their organization
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Individuals, once selected by the Selection Committee, are kept under observation
in the beginning. During that period their capabilities, IQ, ability to do various
jobs, behaviour and
gets satisfied with their performance their appointed as training officers. This is
one step before the selection of the individual as an officers.
Selection Criteria
Bank management is very particular while recruiting and including in their work
force. The suitability of the individual is always checked by the method shown
above in order to avoid any complications in the future. Before recruiting any
individual management makes sure that the person has capabilities to work for
achieving targets of the organization. It is because of this policy and practice
employed while recruiting the employees that till now, no man has been asked to
quit the job. However, Bank does not stop the employees from leaving the jobs
themselves if new job is more suitable to them.
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Training
Training has become a pre-requisite for advancement in the profession. In FBL,
employees are provided training according to the requirements of the individuals.
Training programmes attended by the Bank employees are mostly sponsored by
Pakistan Institute of Management and Institute of Bankers in Pakistan.
Management accesses the development and training needs of each individuals and
enrolls the employees accordingly. Along with these formal training programmes,
employees are given informal training regularly by their immediate superiors
according to individual needs and deficiencies. In short, training is a continuing in
FBL.
If the people are hired from outside for higher jobs and the already working
employees remain working in their grades, it becomes difficult to maintain the
desired levels of performance. Moreover, such a practice also results in creating
unrest among the employees, and as a result the cannot wok up to their maximum
capabilities.
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Days:
5 days a week
2. VACATIONS
Causal leaves:
15 per anum
Privilege leaves:
30 per anum
Privilege leaves are given to the employees for relaxation and recreational
purposes after continuous work. Such leaves help the employees in mental and
physical relaxation. During one month of privilege leaves, employees are also
given the pay for that month so as to compensate for the recreational charges he
has to bear during that period.
Employees are encouraged to take the leaves allowed to them by the Bank so that
they can get some time out of their busy routines. This practice has shown that the
employees feel more fresh, enthusiastic, and energetic when return to their jobs
after vacation.
Medical leaves are also provided to the employees if an employees is not feeling
fit and needs for getting well properly. Bank also reimburses the medical expenses
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and their dependents i.e. Bank pays 100% medical free payables on the behalf of
its employees.
3. WORKING CONDITIONS
Working conditions both physical and environment are very crucial for employees
working in any organization since it is the organization where they spend most of
their day. Working conditions can both motivate and de-motivate the employees
depending upon whether proper or improper working conditions have been
provided. From the environment maintained in, even a person FBL who enters the
Bank for the first time can realize that the management of Bank is well aware of
the important impact of working conditions on the efficiency and morale of
employees.
4. SAFETY
Safety is the main concern for manager, officers and employees. The money and
other valuables in vaults and lockers in banking business are more then any other
business. Therefore, management of FBL has taken special measures to safeguard
the life and property of both their employees and the customers. Many of these
measures were decided and taken at the time of the construction of the building
while others short term decision were taken after the bank started proper
functioning. Some of the salient features of such safety measures are discussed
here:
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a)
The walls of the lockers area and the cash vault are made up of concrete
which makes them non-drillable. Moreover the lockers and the vault are
made up fire-proof steel. These measures help preserve the loss and cash
either by some human being or by an accident such as fire.
b)
Two gunmen have been appointed at the entrance who make sure that no
suspicious person enters the Bank. These are responsible for safeguarding
the life and property of Bank s employees and customers. One guard is
also present at each floor. Shifts of guards change with time. After banking
hours, one guard remains in the Bank over night.
c)
Doors are made up of heavy wood so that it becomes difficult for a running
person both to enter or leave the Bank. This makes sure that in case of
robbery, the person to open the door quickly.
d)
In order to safeguard against fire, special alarm system has been installed in
the Bank. Smoke detecting instruments, present on the roof, start ringing
the alarm bell whenever they detect smoke. In case of fire, this system will
help saving the life of the persons in the Bank who can leave the Bank
immediately through special exit door.
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5. PHYSICAL CONDITIONS
The following physical facilities have been provided by the Bank:
a) Light
There is a proper arrangement of light in the Bank. The whole bank is illuminated
with lights, which makes the working conditions pleasant. Moreover, there is also
suitable arrangement for daylight in the entire building.
b) Temperature
Central heating/cooling system ensures the moderate temperature necessary for
proper working of the employees.
Some other facilities provided to the customers include: calm and quit working
environment, modernly designed washrooms , fully carpeted.
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MARKETING POLICIES
SERVICES POLICIES
Introducing a Service in the Market:
FBL considers multitude of factors while introducing a new service in the market.
a)
The primary aim and objective and the basic reason of establishment of
the Bank is the promotion of Islamic Banking System. This, therefore,
service as the main guiding force for all of the activities of the Bank. This
factor is taken in to consideration every time Bank introduces a new
service. Religious Supervisory Board makes sure that every instrument,
which the Bank is planning to use, meets the requrement of Islamic
Shariaa.
b)
FBL has introduced rupee deposits product, Rozana Munafa, whose main
features (no account charges, a high yield as well as transaction
convenience etc.) and even its name, was developed in close collaboration
with a focus group of actual and potential customer of the bank.
c)
Bank is largely under the expansion and is planning to open many new
branches in Pakistan, Recently there are nine branches operating in
Pakistan and two other branches in Sialkot and Gujranwala are going to
start their operation.
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PROMOTIONAL POLICIES
ADVERTISING
FBL spends relatively less on advertising than mutual savings banks and savings
and loan associations, its main competitors FOR deposits. However, the Bank is
spending more of its attention on Rozana Munafa Scheme through newspapers.
FINANCIAL POLICIES
SOURCES OF CAPITAL
Deposits are the major source of capital for FBL. Deposits are mostly obtained
from customers. However, Head Office also invest a certain amount of money as
deposit from time to time to earn money on his investment.
MONEY AT CALL
In case the Bank needs capital and deposits with it are not sufficient to its
requirements, the Bank goes to the inter Bank market for finances. From this local
market Bank can obtain both long and short term finances. Such money is called
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the Inter Bank Call Money and is obtained at Inter Bank Call rates decided by the
SBP.
Investment
Another source of obtaining capital for the Bank is the profits which it earns on
the amount invested in various projects.
Investment Portfolio
1.
FBL is very particular while investing its money . It never invested its
money in Treasury Bills with SBP through such n investment promises
highest returns. But since, such investment is based on interest, it is not
used by the Bank.
2.
FBL has very conservative portfolio policy. It mostly gives loan to very
established customers. Moreover, its investment in shares is very small.
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REPAYMENT OF LOANS
Delay on the part of customers for the repayment of loan is a big problem for
other banks. In Islamic system, Morabaha transactions provide a sort of
protection against such risks because the maturity period of Modaraba
transactions very short. Only 60,120,180 days are required for the liquidation
of the transaction. Within such a short period , the management evaluates the
customers on the basis of whether he is paying the due amount or not.
Bank has never given any loan whereby customers has to pay the installment
after three years and has never allowed the customers to continue taking the
profits while doing adjustment once a year.
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OTHER POLICIES
1
If the beneficiary of the letter of credit is not the Bank customers, over
telephone followed by a mail advice. Before delivering the letter of credit
to the beneficiary or his representative, the officer obtains an authority
letter. The signature on this letter is verified by the beneficiaries banker,
which, in turn is verified by Bank designated employee/officer. The
letter of credit is then delivered to the beneficiary or his authorized
representative after retaining a photocopy in the file.
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DEPRECIATION
Depreciation is provided on the straight line method at rates intended to write off
the cost of various assets over their estimated useful of three to ten years, freehold
buildings over their estimated useful life of fifty years and leasehold buildings
over the life of the lease. Land and capital work in progress are not depreciated.
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Islamic Financing
Islamic financing consists of mainly trade financing agreements (Modaraba) or
investments in joint ventures (Musharaka) which are stated at cost. Where the
ultimate income is both contractually determined and quantifiable at the
commencement of transaction then such income is accrued at straight line basis
over the period of transaction. Where the income from a contract is not
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Deferred Taxation
Deferred taxation is provided using the liability method.
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SERVICE FACILITIES
Faysal Bank continues to strengthen its position in consumer banking. For
extending quality service to retail customers, the bank offers attraction local and
foreign currency deposit schemes. FBL launched its first branded liability product
Rozana Munafa Business Account in July 1995, targeted toward large corporate
and personal business. The bank has also redesigned and refurbished most of its
branches, having a constant identity in terms of design, dcor and colour.
FBL realizes the importance of customer found services. That is why it has
commenced evening banking at all seventeen branches. FBL is divided in to
following departments, which provide different facilities to different customers:
Customer Service Department
Documentary Credit Department
Credit Administration Department
Credit Operations Department
Corporate Banking Group Department
Accounts & general Services Department
Customer Service department is further divided in to two sections which include
Account Opening section and Cash dealing section To provide better and accurate
service the Bank has computerized the bank accounts which results in saving the
time along with greater speed, accuracy and neatness in accounts.
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INFORMATION
SOURCES OF INFORMATION
Patterns of communication exist to ensure that the manager get right information
at right time. Some sources of getting information include; telephone, personal
communication with employees, public, etc. other banks, and clients. Upper
management is also one important means of providing information to the credit
officers who organize these into useful form.
CLASSIFICATION OF INFORMATION
The information needed by the bank can be classified in the following two broad
categories.
1 INTERNAL INFORMATION
Internal information is always available within an organization in one form or
another. It may be in the mind of an employee or manager, in accounting records,
in filling cabinets, or on computer. Internal information tells the management
about actual performances as against delegation of authority, responsibility
budgetary controls and future targets and enables it to take appropriate decisions to
plan, organize, and control the operations.
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2. EXTERNAL INFORMATION
External is collected from outside the organization. It relates to the environment in
which an organization operates. Such as fiscal policies and political, social and the
economic trends on the one hand and the information regarding the competitors as
to their past performance, present activity and future plans, on the other.
EXTERNAL INFORMATION
Government and fiscal policies:
Social trends:
Economic trends:
Competitive Information:
Customer information:
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PRESENTATION OF INFORMATION
In the Bank, the information is presented in the form of reports.
It is also
presented orally and in writing. The selection of form and means depends on the
nature of information, purpose, and the level of user. The purpose of information is
an important factor in determining the form and means of presentation.
SVP is mainly concerned with overall information and not detailed analysis.
Therefore, information is presented to him in a concise form for the purpose of
saving his time and instant understanding. The middle management needs detailed
information for the purpose of monitoring and controlling. The traditional form of
presentation in columnar statements or narratives is used at middle management is
normally action oriented and can best be conveyed in plain language for the
purpose of clear understanding and getting the required action.
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BANK AS A SYSTEM
A bank is a system established for a particular reason. It has inputs and outputs.
The input of one system is frequently derived from the outputs of others and its
own output then becomes the input of yet another system in the chain. A bank
system is one, which provides a financial service and earns profits.
COMPUTERIZATION OF BANK
ACCOUNTS
FBL is making an efficient use of information. One factor that is contributing
towards this efficiency is the presence of fully computerized processes and
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procedures. Computers are being used optimally in all the departments for data
processing.
The following are some of the important advantages, resulting from the
computerization of Bank accounts:
Saving in staff, space and stationery:
Saving in time:
Greater speed, accuracy, and neatness in accounts:
Accurate information:
Better training and more liquidity of the staff:
Analysis of large volumes of data:
MARKETING MIX
FBL is a marketing- oriented Bank. It offers the marketing mix to attract
customers from business and corporate sector. Marketing mix offered by the Bank
is in accordance with its target customers and its policies and objectives. It is due
to practical marketing mix provided by the Bank that it has built its good name
within a short span.
MARKETING MIX
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There are number of different description of mix elements. Probably the most
popular is McCarthys the four Ps: service (for service industry) place, price, and
promotion.
SERVICES
Services offered by FBL are meant to attract customers from corporate sector.
Marketing mix includes services such as financings, account handling, facilities of
import and export. Services mix provided by indicates that the objective of FBL
management of FNL is to encourage big clients and to discourage small ones.
Marketing Services
FBL is one of the organizations in the service sector that goes far beyond offering
the physical product into offering aboard array of need satisfaction. Everyone in
the bank is producing and selling some element of service, which may or may not
require the use of tangible goods. Financing provided by the credit department,
cheque books, travelers cheques etc. issued by customer service department are the
services which require the use of tangible goods like papers, documents, money,
etc. while some services like consultancy provided to the clients do not require the
use of tangible goods.
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Dimension in the bank have also gained added power from the lack of a tangible
product offering (Basic Marketing).
Those operating at the point of sale have an especially important role to play,
possibly the most important of all. The main contact with customers is over the
bank counter, by telephone, and in the manager room. Management realizes this
and, therefore, Bank recruitment, promotion, and training policies are all geared
to this situation.
Specialization
It is the requirement of SBP that commercial banks cannot restrict themselves to
the provision of few services only. All those primary functions, which are laid
down by SBP bye-laws, have to be performed and operated on the prescribed lines
by the Bank. Therefore, Faysal Bank, being a commercial bank, cannot adopt the
policy of providing and specializing in only a few services. It has to perform all
the functions.
FBL has been operating on the policy of providing the best of all the operations.
The management believes that especially in the banking industry, it is not possible
for an organization to specialize in one field only and to provide average services
in others. When a customer enters the bank and starts dealing with the bank, he
expects to enjoy the base facilities. Once he opens the account, he would start
using other facilities like import, export, financing on Islamic lines etc. provided
by the Bank. Unless the entire functions are on strong footings, he will get
objected and discouraged. Therefore, the Bank management tries to improve upon
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and specialize in all the subsequent functions right from opening the accounts to
provision of functions.
Quality of Services
The most thing about FBL is that it provides very prompt services to its customers.
Promptness is important because any customer who enters the bank wants his job
to be done first. Quick services provided by, therefore, is an important factor FBL
offers for customers satisfaction. However, it is not only the quickness that
attracts and has kept the customers loyal to the Bank. It is, in fact, quickness with
accuracy that has helped the bank in earning a good repute in a short span of time.
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PLACE
Location
Keeping in view the customer group, target market, and resources of the Bank, it
has the possible location(so far as Multan branch is concerned). FBL is neither a
saving bank nor it has a very huge target market consisting of all types of
customers from small to large, therefore, the present location i.e. at Abdali road a
very clean and open area of Multan is more than suitable for the Bank. Beautifully
designed and decorated building with neat and clean surroundings, and pleasant
colour combination in the interior just matches the tastes and appeals of its
customers. Area surrounding the bank is also inhabited by those people who fall
under the target market of the Bank.
Distribution
Most of the offerings other Bank are of an intangible nature. As a result of the lack
of a physical product, there is no need for the distribution and the middlemen. The
bank has its ten branches in Pakistan where services are created and offered to the
customers without the intervention of any middlemen.
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PRICE
SBP has an important role to play in formulating policies regarding the
commission rates, charges to be taken, tax to be deducted, etc. from the customers.
All the commercial banks have to operate within in those prescribed limits and
FBL is no exception. It follows and charges the rates as issued by SBP from time
to time.
There are, however, certain services for the provision of which SBP has given
maximum and minimum limits to be charged from the customers. In such
situation, FBL does offer concessional rates to certain customers for competing in
the market. The above discussion makes it clear that there are not very significant
changes in the prices of services offered by FBL and other bank.
FBL does not charge anything to the customers for their statements. Customers
can come to Bank many times in a month and can get their statements within
minutes. This is the additional edge that the Bank has over many other Banks.
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PROMOTION
Customers satisfaction is the major policy of the Bank along with many other
policies. It is because of this policy that Bank provides best services, best6
environment, and courteous behaviour to its customers. As a result, customers not
only themselves remain loyal to the Bank but also speak good to others about the
bank. Since a satisfied customer is more powerful means of promotion than both
advertising and personal satisfaction, therefore, FBL pays more attention for the
satisfaction of the customers. The Bank. thus, do not need to spend huge amount
on promotional medias.
Sales Appeals
Sales appeals used by the bank primarily consist of promptness and accuracy of
services. Other things that help the bank in establishing itself in the market are
quality of services, personality and ability of officers, and sincere attitude for the
well being and financial help of the customers.
Sales Promotions
FBL uses newspapers, journals and magazines for advertising purpose with the
objective of telling public about the services provided by the Bank. The share of
advertisements in total expenditures is, however, very less. The reason is that the
bank management believes in promoting the good name through personal
solicitation. Moreover, for existing set up, a satisfied customer and a happy
employee are sufficient for necessary promotion.
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Effect of Incorporation
The Bank has gone in to public from January 1995, so managers have, therefore,
planned to increase the expenditures for advertisements. Advertisements will
become important because general public want to know and hear about the
company in which they invest or plan to invest money.
CRITIQUE
Of all the elements in the marketing mix, FBL needs to pay more attention to the
promotion part. Though it is true that personal solicitation and satisfied customers
are a good means of promotion, yet Bank should try to create its name recognition
among the public.
Management of FBL always tries its best to carry out the business according to the
pride lines provided by Shariaa. people do not have this view of FBL. They think
it to be like other banks operating on interest free banking. Management should try
to promote this positive point of the bank through media. A gradual promotional
policy educating will result in increasing the deposits of the bank that is why they
have launched a new scheme (Rozana Munafa), which is going very popular.
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ACCOUNTING PROCEDURES
The accounting system followed by Faysal Islamic Bank is completely tailored to
its own individual needs and to the needs of modern banking. Accounting system
has been designed not only to record post facto information but also to cope with
the needs of forward- looking decision making. A good information system should
be capable of generating all information for planning, organizing and controlling
the activities of an organization from a common database.
COSTING
Quite clearly no meaningful plan can be established without the fullest possible
information. An efficient costing system is needed so that the cost of different
services and of running different parts of the system can be established as
precisely as possible. Accuracy of accounts is desirable and essential for the
success of the Bank. Bank neither buys nor sells goods and commodities. It
renders certain services to his constituents, the cost of which it finds out in order to
see whether or not a certain customer account is a paying one.
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by him to his customers, it cannot honour their cheque and make other payments
required by them.
To know its exact position at all times and, thus, to find whether or not the
business is making progress.
BAD DEBTS
Multan branch does not have any bad debts. Accounts Department has, however,
created a general provision for bad debts.
CURRENT ACCOUNTS
Under the Islamic financial system as governed by the glorious Sharias, clients
wishing to deposit funds with an Islamic financial institution and seeking their
guaranteed return do not receive any income or benefit. Such funds are indicated
as current accounts and Bank treat these as loans from the customer to the
Islamic financial institution repayable on first demand. Bank chooses to make use
of such funds for investment purpose on its own risk. Current account funds are
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treated as the Banks liability and are reported above the line in the Banks balance
sheet.
DEPOSITS ACCOUNT
An investor can deposit his amount in the Deposit Account in FBL if he wants to
receive benefits, if accruing, from the investment of his funds. The depositor
assumes all the risks inherent in the investment of such funds. Faysal Islamic Bank
guarantees the return of the principal only not profit. Only in the case of gross
negligence on the part of the Bank, which is proved as such, the Bank is liable for
making good losses incurred owing to such proved gross negligence.
ACCOUNTING CONVENTIONS
Bank record of savings accounts shows all deposits, withdrawals, and dilly
balance in account. Rank record of current accounts shows all deposits and
withdrawals.
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EXPENDITURES
CAPITAL EXPENDITURES
Separate budget is made for capital expenditures on which only depreciation can
be charged. Estimated cost for the purchase of capital asset is included in the
budget and depreciation is also charged to the asset to show the exact value of the
assets after certain period.
REVENUE EXPENDITURES
Proper budgeting of each and every revenue expenditure is done. For example, an
important item in the overhead charges is the employee cost. To prepare the
budgeted figure of this expenditure, the bonus that is expected to be given to
employees, any increment that is expected to be given to the employees, and the
pay of the employees for that year are added together to find the employee cost.
Moreover, any chances of increases or decreases in the employee cost, depending
upon the plan, to hire new employees or to terminate an employee are also taken
into consideration while making budgets, likewise, each item of expenditure and
income is taken into consideration to find out the budgeted figure of it. Theses
amounts are then presented in the form of profit and loss account to calculate the
net income for the years.
POLICY
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REVALUATION
Heavy expenses are amortized over the period for which these will remain in use.
ACCRUAL REVERSE
Bills of electricity, gas, etc. consumed during a month come next month.
Therefore, provision for taxes are kept for the month. At the time of receipt of
actual bill, entries made are reversed and entry for actual expense is entered.
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RATIO ANALYSIS
For 2001
Current Ratio
Current Ration
Current Assets
Current Liabilities
6625432
22492887
.30 times
For 2002
Current Ratio
Current Ration =
=
7142337
21787882
.33 times
For 2001
Networking Capital
6625432 22492887
- 15867455
7142337 2178711
- 14645545
For 2002
NWC
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For 2001
Debt Ratio
Total Liabilities
x 100
Total Assets
23,588,466
x 100
2440736
996%
For 2002
Debt Ratio
22483907
x100
2399647
937%
23,588,466
2441000
9.6 times
For 2002
Debt Equity Ratio
22483907
2400,000
9.37 times
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For 2001
Ratio on Equity
NPAT
x100
SHE
275,718
x100
2441,000
.11%
For 2002
Ratio on Equity
207,298
x100
2400,000
9%
For 2001
Ratio on Assets
275,718
x100
26029000
1%
For 2002
Ratio on Assets
207,298
x100
24,725,000
.8%
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ACCOUNT OPENING
It is the most important department of bank
Mr. Kamran Ashraf deals in this department. Following procedure is adapted for
this purpose.
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After complete procedures finally the manager of the Bank signs the AOF and
these forms are filed in proper sequence.
TYPES OF ACCOUNTS
There are following types of accounts:
Individual Account
Any individual or proprietor of a business can open an individual account at FBL
Following requirement has to be fulfilled for this account.
Signature of the customer
Name of the customer
N.I.C photocopy attached
Name and account no of the introducer
Verified sign of the introducer
Joint Account
When more than one person opens a single account it is called it is called joint
account. The names of persons are written on title of A/C
Joint A/C cannot be opened by single person. Both persons have to sign on
cheques.
Following requirements has to be fulfilled for this account
Sign of both customers on the back of AOF
Sign on joint A/C # mandate
NIC copies of both members
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Mode of operation
Name and account number of introducer
Company Account
In order to open an account of accompany there are following requirements:
An up-to-date copy of the companys memorandum & articles of association
The companys certificate of incorporation
The Companys certificate to Commerce Business (Public company only)
Also following documents are required:
Copy of certificate of Incorporation
Memorandum & articles association
List of directors
Copy of board resolution
Certificate to Commerce of business (if required)
Signature cards
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Copy of NIC
Partnership Account
Account title will be the name of the partnership firm.
Following are the requirements for opening this account:
Sign of customers on back of AOF
NIC copies of all partners
Partnership deed (certified copy)
Partnership mandate (prescribed format)
Companies rubber stamp
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Closing Of Account
When a customer wants to close an account he has to give a hand written
application to the head of the operations department to close his account plus
remaining leaves of check book.
The manager first verifies the sign of A/C holder then closing is done from the
register on the computer where the account was opened. In the File of the A/C
holder his account opening form is crossed.
PROCEDURE
The account opening formalities must be completed before issuance of check
book. Particulars of the check book requisition should be completed containing
title of account, account number, type of currency and signature of the customer
Signature of the customer are verified on the requisition.
The check book is taken from safe/locker. It is assured that series of check.
Particulars are entered in the cheque book issuance register. Account number is
stamped on every leave of the check book and those leaves are counted. Name of
the account holder is written on the cover of the cheque book. And requisition on
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the check book for further issuance is properly filled, stamped and signed by office
of the bank.
Cheque book is delivered to the customer and his signature are taken on cheque
book issuance register. Check book serial number entered in the system. Stock of
cheque book are balanced at the end of each day and kept under safe custody.
FBL issues the following cheque books
Saving account25 leaves
Current account - 50 leaves
TYPES OF ACCOUNTS
FBL deals with the following types of accounts:
Faysal Sahulat Account (Current)
Rozana Munafa Account
Rozana Munafa Plus
Faysal Premium Account
FCY Saving
FCY Current
Faysal Sahulat Account
Under the Islamic financial system as governed by the glorious Sharias, clients
wishing to deposit funds with an Islamic financial institution and seeking their
guaranteed return do not receive any income or benefit. Such funds are indicated
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as current accounts and Bank treat these as loans from the customer to the
Islamic financial institution repayable on first demand. Bank chooses to make use
of such funds for investment purpose on its own risk. Current account funds are
treated as the Banks liability and are reported above the line in the Banks balance
sheet.
order that the parties are fully aware of all risks, rewards and their respective rights
and obligation.
TYPES OF CUSTOMERS
FBL open accounts for the following types of accounts depending on the type of
the customers:
Individual Personal Account
Joint Account
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DORMANT ACCOUNT
Current and Saving Accounts, which remain inactive for the following periods are
classified as Dormant Accounts:
Current Accounts L.CY. 06 months
Current Accounts F.CY. 12 months
Savings Accounts F.CY. 06 months
Savings Accounts F.CY. 12 months
PROCEDURE
The EDP unit provides daily a list of those accounts, which did not have any
customer, oriented transaction for the last six months and have now been
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last
taken place, the account holder gives three months notice in writing by registered
post acknowledgement due on the last known address. If no acknowledgement or
reply is received the balance amount is paid to the State Bank of Pakistan and the
Bank is discharged from the liabilities of such as account.
The specimen signature cards and other documentation of such account continue
to be preserved till such time as intimation from the State Bank of Pakistan is
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received in writing advising that such documentation need not be preserved any
longer.
CASH SECTION
Mr. Manjoka deals with this department.
Cash section of FBL 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 safe custody of cash.
This department performs the two main functions:
Cash Receipts
Cash Payments
CASH RECEIPTS
Mr. Manjoka deals cash receipts in this department depositor uses deposit slip for
depositing the amount in to their accounts. The officer cheeks if the deposit slip is
properly filled up containing title of account, A/C number, date and amount in
words and figures and figures. Detail on both counter files and cash receipt
voucher should be the same. Cash is receipt by cash receipt officer, twice counted
and matched with the deposit slip. The cash details are written on the back of the
deposit slip and also entered in the cash receiving register. Cash received stamp is
affixed on the face of the deposit slip along with the signatures of the cash
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receiving officer. Deposit slip and cash receiving register is given to the officer in
the cash.
PAYMENT OF CHEQUE
Mr Manjoka deals with the payment of the cheques .First the cheque is presented
by the customer or holder to the cash payment officer. He confirms that it is drawn
on the same branch and particulars of the 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 of the cash department. For scrutiny where the officer checks the
amount in the words, figure, date, payees name crossing if any account number
cheque serial no and signature of the customer. It is posted in the System
And posting stamp and number is affixed on it.Cheque is handed over the cash
payment officer for the payment and the cash paid stamp is written on the back of
the cheque. Enteries passed in the cash payment register
SPECIAL DEPOSITS
SPECIAL DEPOSIT INCLUDE
a) CDR (Call Deposit Receipt)
These Deposits operated on no profit no loss basis. Money deposited with the bank
this head is exempt from Zakat. Customers who deposit their money under this
head can get money when they need it. CDR can be made Open as well i.e. the
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person who deposits the money does not need to do signature for getting the
deposited money back.
USES
CDRs are used by the customers for making the payments of bills.
2) DRs are used for keeping the money temporarily in the Bank without involving
the procedure of writing cheques because cheque is a legal document of the money
deposited by the customer, which he has to show to the tax authorities
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1 year
2 year
3 year
PAY ORDER
Pay order is issued for local station. Application form is given to the customer to
fill. Two signatures are taken on the form .One for request and otter for receiving
the instrument. All the particulars of the application form are checked and bank
commission charges and with holding tax is written on the top of the application.
If the customer is maintaining his account with the branch he can give cheque for
the total amount of instrument plus bank charges. Cheque and application form is
then given to the officer cash department for payment ,post the cheque and signs
the application .If the customer wants to pay cash, cash is deposited on cash
counter Cash receiving officer receives cash on the application form along with
the bank charges and withholding tax. Application form is given to the remittances
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incharge for issuance of instrument. He enters all the particular of the application
form in the system and computer gives the auto control number to the instrument.
DEMAND DRAFT
Demand draft is issued for some outside station. It is the instrument that is used to
transfer amount from one city to another city. It can be made on cash as well as on
the cheque. If it is made through cheque, then it is necessary that the person must
be account holder. While in the case of cash, it consist of the three copies.
Original copy which is given to the account holder
DD advice is sent to the central branch
Copies for reconciliation. Its photocopy is kept with bank while original is sent to
the head office for reconciliation.
PROCEDURE
The client who wants to transfer his funds from one city to the other fills a form
requesting the bank to prepare a DD.DD application form contains columns
requiring information for the preparation of DD. e.g.
Beneficiary name
Applicants name
Address
Amount to be sent etc
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TELEGRAPHIC TRANSFER
It is another mode of transfer of the funds. It is the quickest mode of the transfer of
funds from one city to the other city. For TT, client has to submit the application
on prescribed form of the Bank. Client can deposit money in the bank or can
request the bank to deduct the amount. Against the TT along withy the charges
against the issuance of TT from his account. The charges against the issuance of
TT charged by Faysal Bnak.
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computer gives the auto control number to the TT message of receiving branch.
This message is then sent through Telex to the receiving branch followed by the
TT advice. The customer is confirmed that TT has been sent
authorized officer are verified on TTR and after proper scrutiny ,it is posted .
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amount of FDD plus the ban commission. Cheque and application form then
given to the officer cash department for payment cheque
After proper scrutiny, officer cash department posts the cheque and sign the
application form, to assure that payment is received.
Then cheque and application form is given to incharge. Remittances, ho will enter
the particulars of the application in the FDD issuance register. if the customer
wants to pay the cash. it is deposited by the customer on cash counter. Cash
receiving officer receives cash on the application form along with the bank
charges. Application form is then given to the remittance in charge for the issuance
of the instrument. A control number is allotted to the instrument for FDD register.
Instrument is completed by putting all the particulars in it and signed by two
attorney holders. Instrument is then handed over to the customer. FDD advice is
sent to the responding foreign bank. Where they are maintaining the Dollar
account through registered mail. Exchange transaction credit advice is sent to the
Head office for reimbursement .Copies of the FDD and ETCA are kept in the
record of bank
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particulars of application form are checked and bank commission are charged,
which is US $15/- that rate for each amount of FTT.
If the cheque is received from the customer, it is taken for total amount of FTP
plus bank charges. Cheque and application form is then given to the officer cash
department for payment of cheque After proper scrutiny, officer cash department
posts the cheque and signs the application to assure that payment is received. If the
customer wants to pay cash, it is deposited by the customer on the cash counter,
cash receiving officer receives cash on the application form along with the bank
charges. Application form is then given to the remittance incharge for the issuance
of the instrument. He enters all the particulars for the application form in the FTT
register and control number is allotted to FTP.TT message is written in the telex
containing name of the transferring branch, name of the receiving branch ,date,
amount, currency, page name and account number. A test number is given to FTP
message for receiving branch. This message is then sent through telex to receiving
branch. Customer reconfirmed that FTT has made . Exchange transaction credit
advice is sent to the head office .Copies of the advice and FTR are kept in record
for bank
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CALL DEPOSIT
When the party wants to give payment itself to another party then it makes call
deposit. The bank keeps it with itself unless it does not receive instruction from
other bank. Normally it is made on cash and goes on party account.
PAY SLIP
It is used when Bank itself pay for any type of transaction e.g. purchase of
stationary.
COLLECTIONS
All the
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in OBCs register and handed over to the bills department for Collection. OBC
number is allotted to the cheque from OBC register. Special crossing and Bank
endorsement stamps are affixed to the main branch of that city for collection.
TELLERS
Tellers play a major role in establishing the good will of the Bank. Tellers perform
the task in which customers are more sensitive i.e. depositing and withdrawing
money. For the convenience of customers, the tellers are not provided irrelevant
functions. This is a great factor in minimizing the customers waiting time and
inconvenience
RESERVE CASH
Cash left with the Bank at the end of the day
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CASH IN HAND
It is the cash which is not kept in vaults but is kept in special boxes. There are two
tellers in the Bank and each of them has a separate box for putting cash in hand.
As per policy, Cash in hand should not be greater than Rs. 1500000 . Any amount
greater than this amount is transferred to the vault at the end of each day.
CASH IN VAULT
Any amount (in whole numbers not in paisas) greater than the Cash in hand and
which cannot be kept in tellers boxes is placed in vaults.
CREDIT DEPARTMENT
The credit department comprises of following three departments in FBL.
Credit operations
Credit Administration
Corporate Banking Group
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1) FUNDED FACILITIES
LPO (Local Purchase Order)
Ore-shipment
Post shipment
T/R (Trust Receipt
PAD (Payment against Documents)
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Board resolution
Signature of customer/partner /director
Visiting card
NID card (NIC)
Certificate of incorporation
Certificate of commencement of business
Import/Export Registration Number
Financial of last three years + Audit reports
Commitment if required
In case a new customer comes to FBL and asks for approval of facility (Project
Financing), the concerned bank officer asks him, to submit following documents
to him.
Request Letter
Feasibility Report
Background Information sheet
And all other documents which he thinks must be submitted. In Feasibility report,
the concerned bank
decision of FAF.
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INTRODUCTION
Sponsors
Project cost details
Debt Equity ratio
Implementation or construction schedule
If the (officer) is satisfied he will make the proposal of facility.
Rate
Profit is charged on it after 90 days or quarterly
Rate of profit is different for different customers
Period
PAF of LPO is available for only one year
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After one year if the customer wants to renew this facility, bank will see if the
(customer) had fully utilize the credit facility in the previous year. If he has fully
utilize the credit facility and paid the profit satisfactory, he will be given this
facility again. But if he has made satisfactory repayment of profit but has not fully
utilized his credit facility, he must give solid reasons acceptable to the Bank if he
wants to renew his credit facility for the new year
Bank will either hypothecate or pledge the stock of the customer
Bank is more secure in case of pledge because items pledged are placed in covered
godowns, watchman is appointed by the Bank, Banks Board on godown, and
register record is maintained for amount of items containing in or going out of
godown.
In case of hypothecation, goods may be placed in uncovered godowns, So Bank is
not very much secure.
b) Equitable Mortgage property
(i.e. customer cannot sell property or rent it, if the Bank does not agree).
c) Personal Guarantee of Directors
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4.
Hypothecation
Rate
Different rate of profit is charged on this credit facility, from different customers.
Usually 16-20%
Period
Maximum period for which this loan can be provided is 180 days but PAF is
prepared for 1 year and can be renewed each year.
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Bill Exchange
Invoice
Other documents
SECURITIES
Required for Proposal raising or PAF
Personal guarantee of Directors
Lien on Export Bills sent in collection
Property under lien
Rate
This credit facility is provided at different rates to different customers. Usually 1014%
Period
It can be provided for maximum of 180 days but PAF is prepared for 1 year (it can
be renewed each year).
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2. Securities
All those securities as per LPO.
If Credit operations Department prepares PAF under sight LC
Bank retains a certain amount of CASH MARGIN on imported goods amount
(Not less than 30% under new policy).
Lien on imported goods.
Securities required
Lien on imported goods.
NON-FUNDED FACILITIES
F) BANK GUARANTEES
Customer obtains bank guarantees to give to different institutions e.g Sui Gas
Corporation.
Securities
Cash margin of guarantees
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G) FINANCIAL GUARANTEES
When the Bank(e.g FBL)is not in
Securities
All the stocks, properties and assets are in the charge of the bank, i.e Bank
advances finance on the security of whole project.
Period
This PAF is prepared or renewed every year.
Profit Rate
Profit rate is different for different customers.
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Period
5 to 10 years but PAF renewed every year.
LEASING
FBL makes two agreements with the customer.
Lease Agreement
Sale and Lease Back Agreement
Procedure
Customer opens LC for the import of machinery but the Bank pays for it. Then
Bank acts as the lesser and the Customer as a lessee, and machinery is given to
Customer under lease agreement.
Bank calculates and notes the following:
Principal amount of item to be leased. Say 50,00 Million.
Residual value (say 10%)(at the start of lease period) 5.00 Million.
Documentation fee Suppose Rs. 300.
Front-end fee (1% of principal amount) Rs.500, 000.
Then concerned Bank officer prepares Authorization Schedule.
Name of the customer is (single party or customer or company is mentioned on the
top of the page.
Background
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Date of registration
Authorization Capital + experience
Chief executive name +experience
Line of business
Nature
PAST PERFORMANCE
Availability of Facilities: Facilities sanctioned and if under utilized then
solid reasons for utilization.
Nature of facilities
Adjustment of facilities: How much of facilities has been adjusted or
satisfied
Operation of current account: What is the average balance, minimum
balance (maintained or not)
Profitability: Banks earning on customers current account during previous
year
Expansion of business
Charges in corporate set up
PURPOSE OF FACILITY
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PROFITABILITY
Profitability of the facility advanced e.g on LPO @20%P.A
BANK CHECKING
I.e. bank while preparing PAF obtains confidential opinions about the customers
from other Banks and Companies.
MANAGEMENT
Number of Directors
Manpower-Skilled and Unskilled
MARKETING OUTLOOK
Companys business position in the market.
RELATIONSHIP
Relationship of the customer (Company), its directors with the Bank preparing
PAF.
Approval
When approval of facility is prepared it is sent for approval.
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CREDIT ADMINISTRATION
Mr. Ihtishan deals with this department.
The main function of this department is to critically examine the securities given
by the client against credit facilities.
For through checking they may need a check list of following documents.
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6. Agency Agreement
This document is prepared by the Banks lawyers on behalf of the Bank and it is
accepted by the Customer.
7. Morabaha Financing Agreement
This document shows that the parties (FBL and Customer) have agreed on some
Purchase and Resale financing agreement.
8. Personal Guarantee
Personal guarantee given by some person (Director in cases of limited company)
to the Bank (FBL that customer will pay the loan he has received according to the
terms and conditions he has agreed on).
9. Letter of hypothecation of Movables
In favour of FBL
10. Letter of hypothecation of Receivables
In favour of FBL
11. Letter of Lien and Authority to Set off
In this document customer agrees that all the sums of money deposited in his bank
account will be the security for the payment of financial activity availed by him
and all other costs or charges in terms of financing agreement between the
customer and Bank.
The customer also agrees not to withdraw the already agreed amount of money
from the deposit
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TYPES OF FACILITIES
There are two types of facilities:
Non-funded Facilities
Funded Facilities
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There are non funded facilities in which Banks own finances are not utilized.
Other non-funded facilities include:
Letter of Credit
L/c at Sight
L/s Usance
FUNDED FACILITIES
Funded Facilities are those which are related with the flow of Finances. In funded
facilities Banks own finances are involved. Theses are of many types:
Export Facilities
Pre Shipment
Post-Shipment
Long Term Financing
Import Financing
Financing Against Imported Merchandise (FIM)
Trust Receipt
Foreign Bills Purchased
Provision of non funded facilities is the responsibility of Documentary Credit
Department, while the provision of Funded facilities is the task of Credit
Operation Department.
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EXPORT SECTION
All exports from Pakistan, which are subjected to exchange control regulations,
are required to be declared on form E to one of the authorized dealer for
certification only after it has been completed and signed by the exporter himself or
bank.
While certifying form E bank ensures that exports give only one address. After
the form E has been certified by the bank, it is submitted to customer/personal
authorities at the time of shipment .The customer authorities detach original copy
and after filling in portion related to them and affixing there seal and signature
thereon forward it to the State Bank.
FORM-E
Government has provided facility to exporter in taking E-form from any bank and
he can present it to any bank for negotiation. Export proceed realization certificate
SBP gives rebate to exporter against export after realization. It is paid according to
commodity wise and bill wise.
SCRUTINY OF DOCUMENTS
On receipt of the bills of lading along with the for E and the export documents,
officer compares the and/or documents with the relative export form and satisfies
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himself that theses confirm in all respects to the declaration made on the relative
export forms.
RECEIPT OF L/C
Bank receives L/C from the Opening Bank in the following ways
By mail
By telex/Cable
In both cases, the officer checks the authenticity of L/C. If it has been received by
the telex, he confirms its test and if it has been received by mail, he matches its
signature with the signature already present on signature cards.
After the confirmation of the authenticity of the L/C, the exporter is handed over
the original L/C. If the authenticity of the L/C cannot be proved, Original is kept
with the Bank and a photocopy is handed over to the exporter.
VERIFICATION OF L/C
The signature on a letter of credit is verified from the available record of specimen
signature of the concerned bank. If the specimen signature record is not available,
the obtains a tested telex confirmation from the letter of credit opening bank.
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SCRUTINY OF DOCUMENTS
Officer, departmental Supervisor and then Branch Manager at the time of
approving negotiations/ Purchases of Export Bills for his satisfaction, scrutinize
the export documents.
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In case of discrepancies that violate the condition of letter of credit FBL advises
the opening bank. A covering schedule containing a list of discrepancies is sent of
opening along with documents. Asks the opening branch to send authority for the
FBL acceptance discrepancies if the seller agrees. If the opening sends authority
for acceptance. If opening fails to reply within 10 days, Bank send.
TRANSFERENCE OF L/C
Sometimes the word transferable is written on the L/C. This word shows that if the
exporter, who has original made contract with the importer, is not in a position to
send the goods, he is allowed to give this L/C to other exporter provided the new
exporter will send the same goods as mentioned in the L/C.
RECEIPT OF PAYMENT
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Upon the receipt of payment from the importer, the Bank commission to the agents
of foreign importer up to allowable limit.
MAINTENANCE OF RECORDS
Pricing And Distribution of Export Forms:
FBL maintains a complete record of all export forms printed by the Bank and of
their distribution to their branches and customers. For this purpose, it maintains a
Stock Register which shows branch-wise distribution of the export forms.
IMPORT SECTION
Import section deals in letter of credit. But before opening of letter of credit it is
necessary the importer is license holder.
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VERIFICATION OF SIGNATURES
A designated officer verifies the signature of the customer on Application
Agreement for genuineness as well as to ensure that the owner of the signature has
the authority to issue the instructions.
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MARKETING DEPARTMENT
Mr. Amjad and Mr. Mubashir deals with this department.
Nowadays marketing of products is prime importance for any organization. This
dynamic organization has its own marketing department, which is responsible for
creating the demand for goods and services.
Faysal Bank Limited has its own marketing department at the head office,
Karachi. This department operates different deposit schemes for its customer time
to time in order to increase the business of the Bank. At FBL the marketing people
make customer calls and personally visit the potential customers and convince
them to invest in FBL. They make phone to customers and inform them about their
schemes, profit rates etc.
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ACCOUNTS DEPARTMENT
Mr. Nadeem deals with this department.
Accounting department is the running blood of the Faysal Bank. It handles almost
all the problems occurring in the bank.
The important activities preformed by accounts department are as follows:
TREASURY
A special officer in FBL performs a portion of this operation.
CLEARING
Mr. Liaqat Ali deals with clearing.
Before discussing it is necessary to what is clearing?
The process by which cheques exchanged between the collecting and paying
bank and the ensuring financial settlement is called clearing
This is facility is provided by the state bank of Pakistan for offsetting of cross
obligations between the different banks. Clearing is of two types.
Inward Clearing
When cheques drafts, etc, of our branch presented to us for clearing by the SBP.
Cheques to be honored be bank.
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Outward Clearing
The cheques of other banks which the account holder deposits in their accounts are
send for collection.
Clearing process (inward/outward).
Here the local cheques are received that are drawn on FBL. All the cheques are
received on one counter along with the paying slips duly filled in properly
containing particulars of cheques and account holder. Counter folio of paying slip
is handed over to the customer by putting stamp for cheque received for collection
for Faysal bank limited 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 titles of all the cheques deposited by the customer to confirm the good title
of the cheques. Cheques are scrutinized proper 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
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banks and their total amount is written on the foot of the schedule, which is
tallied with the clearing register.
Next morning these cheques are delivered to the respective banks in clearing
house of the SBP between 9:00 to 9:30 AM. In the same manner, other banks
present their clearing drawn on Faysal Bank. 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 payment. After 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.
ADVANTAGES TO FBL
Foreign currency is purchased at a certain rate. During the period if rate increases
to a higher rate, the difference between the two rates is the source of income for
Bank.
In case of any mis-happening, Banks risk is minimum because foreign deposits
are backed up by SBP.
Receipt of Foreign Currency
By law, the branch of any bank cannot keep foreign currency. It has to sell this
currency at spot rates to its Head Office. Therefore, whenever the Bank receives
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Foreign Currency through cheques, it sells this amount on the same day to Karachi
branch.
BUDGETING
Accounts department in the bank is responsible for making all the plans for the
bank. These plans range from yearly to daily plans.
Yearly Budget
Next step is that the account head makes a very accurate yearly budget
incorporating all factors like increase in tariff rates, rules and regulations of SBP,
dollar fee, charges in profit rates, etc. The annual budget is made for the year on
quarterly basis. The budget, this shows the targets for the bank, e.g. target deposits
to be achieved, targets expenditures, target profit, etc. After the approval of the
budget by the top management, it is communicated to all levels.
Comparison
Bank employees, management, etc. try their best to achieve the targets. After each
quarter to access the performance of the bank in terms of established objective, the
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actual figure for income, expenditure and profits are compared with budgeted
figures. The quarter-wise analysis is done for control purpose. It helps in finding
out whether the expense have increased beyond the targets and whether the
objectives set by the management have been achieved. The answer to these
questions help in finding out the areas wherever the performance was not up to the
desired level.
Revised Budget
Revised budget is sometimes necessary in order to incorporate the new policies
introduced by SBP or to show the effect of new changes in rates, etc. Budgets
made by the accounts department are flexible budget to readily incorporate the
rates of uncontrollable factors.
Monthly Review
Officers in accounts department makes profit and loss accounts both at the end of
the each quarter and at the end of each month. The advantages of monthly review
is that the management comes to know about any deficiencies which are hindering
the way of achieving the targets and then can try to overcome these in the
subsequent months. For example, if the income earned from the investments made
by the bank falls below the budgeted figure, the bank management can start
looking for new avenues so that the gap between the budgeted and actual figures
can be minimized during the subsequent months.
The advantages of these budgets is that at the end of the year, management has the
annual, quarter-wise as well as monthly figures for review purpose.
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Variances
Any variances resent in the actual amount and budgeted amount is probed into all
the factors; internal, cultural, social economical and political are taken into
consideration. If for example, the expenditure increases as compared to budgeted
figure as it happened last year when the printing expenditures had increased
because of increase in the cost of paper, the true causes of the increases are found
out. If the causes are out of control as in the above mentioned case and are
expected to prolong, appropriate adjustments are made in the budgets. If ,
however, the causes are in the control, then the appropriate policies are made to
encourage the employees and the concerned persons to curtail the expenditures.
Advantages
With the use of computers in MIS, the complete record of each account holder can
be obtained for full one year in the form of report. This shows the total
transactions does with each customer along with the amount of income the bank
has earned on his account, the number of LCs he has opened during the month, the
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amount of commission his account has earned, the total amount present in the
savings account, current and deposits accounts, etc.
It is one of the management to judge the overall performance of the customer
during one year. Information thus obtained can also be used for control purposes.
Wherever a customer comes to the bank to take any facility, management use the
information maintained his account to decide whether to provide him the facility
or not. In cases the management sees that the customer has not maintained good
record with the bank. The tip management negotiates with him to find out the
causes and the provide assistance if needed.
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EFFICIENCY
Employees at FBL are quite efficient. As Multan branch is new one. Its employees
have to bring their bank among the list of good banks. Therefore, they work more
than their working hours and it is all according to their will. It also shows their
loyalty to organization.
CUSTOMER SERVICE
All the customers are entertained individually. Same kind of behavior and
attention is given to all customers.
PRODUCTS
Prioritizing its product! Portfolio in the line with its corporate and consumer needs
and wants, the bank is committed to develop products that give more value to its
customers in both sectors.
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SWOT ANALYSIS
STRENGTHS
Faysal Bank limited has strong belief on customer services
Manager and EVP Mr. Safdar Qureshi has good coordination with staff members
The environment of Faysal Bank Limited is very friendly
FBL is Fully computerized, each department has its own PC
The products of FBL are very excellent
Customers are allowed to give suggestion for the improvement of
Bank and
WEAKNESSES
Faysal Bank Limited has no ATM facility
Faysal Bank Limited has no Credit card facility
The building of FBL is small
OPPORTUNITIES
Information technology
Credit card facility
ATM card facility
Establishing foreign branches
THREATS
There is great competition in the market
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RECOMMENDATIONS AND
SUGGESTIONS
Faysal Bank Limited is the first bank which has come under listing in Pakistan.
Faysal Bank Limited has been active in Pakistan since the last seven years and has
been in the forefront in Islamic mode of financing. Faysal Bank Limited has a
clear advantage over other new banks as the bank did not have to start from
scratch, it has access to already established international network and has
mobilized sizable deposits.
Faysal Bank Limited is successful in employee retention, customer satisfaction
and high profit generation because of good services. Happy employees help create
happy customers, which, in the next cycle, reinforce the happy employees, and so
on.
Faysal Bank Limited is more than satisfied with its customers. The track record of
the customers is excellent and the repayment procedure is satisfactory. The bank is
fully aware of the financial strength as well as the market repute of all of its
customers.
Much of the good reputation of Faysal Bank Limited, is because of the good
behavior and response of the employees of the bank. Good and friendly attitude on
part of workers is the result of excellent management of the bank who believe that
people are the central case of any organization, especially those engaged in
providing services to their customers. As a result of customer oriented policy of
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the management, employees have been trained to behave in a very friendly manner
with customers.
Environment of the bank also plays an important role in customers satisfaction.
Employees always talk very politely on the telephone because telephone, if
not used properly, can be a cause of spoiling the good name of the
organization.
The entire environment of the bank gives the impression that customers are
very important to the bank. They are offered seats even when they come for
very small task.
However, there are some suggestions for improvement.
Establishment of more branches in Pakistan
More advertisement on electronic media.
Introduction of more credit schemes like Rozana Munafa.
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