Evolution of Banking: The Bank of Punjab

The Bank of Punjab
Evolution of Banking
The word 'Bank' is said to have been derived from the words Bancus or Banque or
Bank. This history of banking is traced to as early as 2000 B.C. The priests in
Greece used to keep money and valuables of the people in temples. These priests
thus acted as financial agents. The origin of banking is also traced to early
goldsmiths. They used to keep strong safes for storing the money and valuables of
the people. The persons who had surplus money found it safe and convenient of
deposit their valuables with them. The first stage in the development of modern
banking, thus, was the accepting of deposits of cash from those persons who had
surplus money with them.
The goldsmiths used to issue receipts for the money deposited with them. These
receipts began to pass from hand to hand in settlement of transactions because
people had confidence in the integrity and solvency of goldsmiths. When it was
found that these receipts were fully accepted in payment of debts; then the receipts
were drawn in such a way that it entitled any holder to claim the specified amount
of money from goldsmiths. A depositor who is to make the payments may now get
the money in cash from goldsmiths or pay over the receipt to the creditor. These
receipts were the earlier bank notes. The second stage in the development of
banking thus was the issue of bank notes.
The goldsmiths soon discovered that all the people who had deposited money with
them do not come to withdraw their funds in cash. They found that only a few
persons presented the receipts for encashment during a given period of time. They
also found that most of the money deposited with them was lying idle. At the same
time; they found that they were being constantly requested for loan on good
security. They thought it profitable to lend at least some of the money deposited
with them to the needy persons. This proved quite a profitable business for the_
goldsmiths. They instead of charging safe keeping charges from the depositors
began to give them interest on the money deposited with them. This was the third
stage in the development of banking.
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Institute of business & Information Technology
The Bank of Punjab
DEFINITION OF A BANK:
The term 'bank' is being used for a long time, yet it has no precise definition. The
basic reason is that the commercial banks perform not just one but many types of
functions. The term bank has been defined differently by different authors. Some
are as follows:
According to Crowther,
"Bank is a dealer in debts—his own and of other people."
According to G.W. Gilbert,

"A banker is a dealer in capital or more properly a dealer in money. He is
an intermediate party between the borrower and the lender. He borrows from one
party and lends to another."
According to Banking companies ordinance 1962
u/s3(B) of Banking Companies Ordinance 1962 "Banker means person

transacting the business of accepting for the purpose of lending or investment, of
deposits of money from the public, repayable on demand or otherwise and
withdraw able by cheque, draft, order or otherwise and includes any Post Office
Savings Bank."
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The Bank of Punjab
BANKING SYSTEM IN PAKISTAN
The non-Muslim before the partition of the sub-continent controlled the entire
banking business. At the time of independence there were only two Pakistani
banks, that is Habib bank and Australasian bank. At that time, Pakistan had 631
branches of scheduled banks and 411 of non-scheduled banks. The total deposits
of Pakistan banks were RS.800 million and advances were 198 million. The non-
scheduled bank number reduced from 411 to 106 over the same period.
The mass scale withdrawals of deposit closure of branches
and migration caused a deadlock in the banking business in Pakistan. Keeping in
view the above situation the government of Pakistan took various steps to provide
all kinds of facilities to the non-Muslim bankers for resorting normal banking
facilities but response was not encouraging.
After independence it was not possible for Pakistan to set up
the Central Bank immediately. The reserve bank of India acted as a Central Bank
of Pakistan till 30th September 1948. But it could not protect the interest of
Pakistan. To remove the financial difficulties and to development of banking
system govt. Established the State Bank on 1st July 1948. In the development of
banking system it played very important role as a Central Bank of the country.
In 1974 government of Pakistan nationalized all the banks.
By the result of more and more establishments The Bank of Punjab was
constituted pursuant to The Bank of Punjab Act, 1989.
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The Bank of Punjab
THE BANK OF PUNJAB

HISTORY:
Established in 1989, in pursuance of The Bank of Punjab Act 1989 and was given
the status of scheduled bank in 1994.The Bank of Punjab is working as a
scheduled commercial bank with its network of 266 branches at all major business
centers in the country. The Bank provides all types of banking services such as
Deposit in Local Currency, Client Deposit in Foreign Currency, Remittances, and
Advances to Business, Trade, Industry and Agriculture. The Bank of Punjab has
indeed entered a new era of science to the nation under experience and
professional hands of its management. The Bank of Punjab plays a vital role in the
national economy through mobilization of hitherto untapped local resources,
promoting savings and providing funds for investments. Attractive rates of profit
on all types of deposits & opening of Foreign Currency Accounts and handling of
Foreign Exchange business such as Imports, Exports and Remittances, Financing,
Trade and Industry for working capital requirements and money market operations
are some facilities being provided by the Bank. The lending policy of Bank is not
only cautious and constructive but also based on principles of prudent lending with
maximum emphasis on security. As agriculture is considered as backbone of our
economy the Bank of Punjab has introduced "Kissan Dost Agriculture Finance
Scheme" to small farmers
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The Bank of Punjab
BOP ACHIEVEMENTS
Excellence Award by the Central Board of Revenue:

The Central Board of Revenue presented "Excellence Award" to the Bank of
Punjab in recognition of the contribution made by the bank towards Government
exchequer.
3rd Kissan Time Awards:

In recognition of Bank's contribution in development and growth of agricultural
sector, the Bank honored with "Top Bank for Agriculture Loans" and "Best Bank
Crop Insurance" under 3rd Kissan Time Awards year 2006.
16th Bolan Excellence Award:

The Bank was awarded Best Bank Award under 15th Bolan Excellence Awards
distributed in 2006.
Best Corporate Report Award:

Annual Report of the Bank for the year 2005 won 5th position for "The Best
Corporate Report Award" for the Financial sector, adjudicated jointly by the
Institute of Chartered Accountants of Pakistan and the Institute of Cost
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The Bank of Punjab
REGIONAL NETWORK
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The Bank of Punjab
Mission Statement
To exceed the expectations of our stakeholders by leveraging our

relationship with the Government of Punjab and delivering a complete
range of professional solutions with a focus on programme driven
products & services in the Agriculture and Middle Tier Markets through
a motivated team.
Vision Statement
“To be a customer focused bank with service excellence”
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The Bank of Punjab
CORE VALUES
Our Customers As our first priority
Profitability For the prosperity of our stakeholders that allows us to

constantly invest, improve and succeed
Corporate social
responsibility To enrich the lives of community where we operate.
Recognition For the talented and high performing employees

and reward
Excellence
In every thing we do
Integrity In all our dealings
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Corporate information
The Bank of Punjab
Board of Directors
Safder Javed Chairman
Naeem-ud-Khan President
Director
Mr. Salman Siddique
Director
Mr. Qaiser Zulfaqar khan
Director
Mr. Sikandar Mustafa Khan
Director
Mr. Muhammad Ltif
Director
Mr. Syed Salman Ali Shah
Director
Mr. Shahzad Ali Malik
Mr. Gohar Ejaz Director
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The Bank of Punjab
Audit committee
Chairman
Mr. Qaiser Zulfaqar Khan
Member
Mr. Salman Siddique
Member
Mr.Shahzad Ali Malik
Member
Mr. Salman Ali Shah
Auditors
A.F Ferguson &co. chartered accountants
Registered office
7-Egerton road Lahore Pakistan
Web site
www.bop.com.pk
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The Bank of Punjab
management level
The organization chart within a department and in different offices is
as follows:
Divisional Heads …..……………… Head Office

Regional Head (SEVP) …..……………… Regional Office
Zonal Head (VP) …..……………… Zonal Office
Branch Manager …..……………… Branch
(VP, AVP, GRADE 1, 2, 3)
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The Bank of Punjab
regional network
Faisalabad Total 43 branches
Gujranwala Total 45 branches
Karachi/Quetta Total 07 branches
Lahore Total 68 branches
Multan Total 64 branches
Rawalpindi Total 38 branches
Peshawar Total 07 branches
Types of
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The Bank of Punjab
Banks' activities can be characterized as retail banking,

dealing directly with individuals and small businesses,
and investment banking, relating to activities on the
financial markets. Most banks are profit-making,
private enterprises. However, some are owned by
government, or are non-profit making. In some
jurisdictions retail and investment activities are, or
have been, separated by law.
CENTRAL BANKS are non-commercial bodies or government

agencies often charged with controlling interest rates and money supply across the
whole economy. They act as Lender Commercial: the term used for a normal bank
to distinguish it from an investment bank. After the great depression, the U.S.
Congress required that banks only engage in banking activities, whereas
investment banks were limited to capital markets activities. Since the two no
longer have to be under separate ownership, some use the term "commercial bank"
to refer to a bank or a division of a bank that mostly deals with deposits and loans
from corporations or large businesses. of last resort in event of a crisis.
TYPES OF RETAIL BANKS
Commercial Bank: the term used for a normal bank to distinguish it

from an investment bank. After the great depression, the U.S. Congress required
that banks only engage in banking activities, whereas investment banks were
limited to capital markets activities. Since the two no longer have to be under
separate ownership, some use the term "commercial bank" to refer to a bank or a
division of a bank that mostly deals with deposits and loans from corporations or
large businesses.
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The Bank of Punjab
Community Banks: locally operated financial institutions that empower
employees to make local decisions to serve their customers.
Community Development Banks: regulated banks that provide

financial services and credit to underserved markets or populations.
Postal Savings Banks: savings banks associated with national postal

systems.
Private Banks: manage the assets of high net worth individuals.

Offshore Banks: banks located in jurisdictions with low taxation and
regulation. Many offshore banks are essentially private banks.
Savings Bank: in Europe, savings banks take their roots in the 19th or
sometimes even 18th century. Their original objective was to provide easily
accessible savings products to all strata of the population. In some countries,
savings banks were created on public initiative, while in others socially committed
individuals created foundations to put in place the necessary infrastructure.
Nowadays, European savings banks have kept their focus on retail banking:
payments, savings products, credits and insurances for individuals or small and
medium-sized enterprises. Apart from this retail focus, they also differ from
commercial banks by their broadly decentralised distribution network, providing
local and regional outreach and by their socially responsible approach to business
and society.
Ethical Banks: banks that prioritize the transparency of all operations and
make only social-responsible investments.
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The Bank of Punjab
TYPES OF INVESTMENT BANKS
Investment Banks "underwrite" (guarantee the sale of) stock and bond
issues, trade for their own accounts, make markets, and advise corporations on
capital markets activities such as mergers and acquisitions.
Merchant Banks were traditionally banks which engaged in trade

financing. The modern definition, however, refers to banks which provide capital
to firms in the form of shares rather than loans. Unlike Venture capital firms, they
tend not to invest in new companies.
OTHER TYPES OF BANKS
Islamic Banks adhere to the concepts of Islamic law. Islamic banking

revolves around several well established concepts which are based on Islamic
canons. Since the concept of interest is forbidden in Islam, all banking activities
must avoid interest. Instead of interest, the bank earns profit (mark-up) and fees on
financing facilities that it extends to the customers. Also, deposit makers earn a
share of the bank’s profit as opposed to a predetermined interest.
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The Bank of Punjab
Islamic Banking
HISTORY OF MODERN ISLAMIC BANKING

The first modern experiment with Islamic banking was undertaken in Egypt under
cover without projecting an Islamic image—for fear of being seen as a
manifestation of Islamic fundamentalism that was anathema to the political
regime. The pioneering effort, led by Ahmad El Najjar, took the form of a savings
bank based on profit-sharing in the Egyptian town of Mit Ghamr in 1963. This
experiment lasted until 1967 (Ready 1981), by which time there were nine such
banks in the country
ISLAMIC BANKING
Islamic Banking refers to a system of banking or banking activity that is
consistent with Islamic law (Shariah) principles and guided by Islamic economics.
In particular, Islamic law prohibits usury, the collection and payment of interest,
also commonly called riba in Islamic discourse. Generally, Islamic law also
prohibits trading in financial risk (which is seen as a form of gambling). In
addition, Islamic law prohibits investing in businesses that are considered
unlawful, or haraam (such as businesses that sell alcohol or pork, or businesses
that produce media such as gossip columns or pornography, which are contrary to
Islamic values). In the late 20th century, a number of Islamic banks were created,
to cater to this particular banking market.
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departments of bop
The Bank of Punjab
CASH DEPARTMENT:
Cash department of BOP is given the complete responsibility of handling all

receipts & disbursement of cash. As a result of transaction in both local & foreign
current & near cash items such as traveler’s cheques etc.
As a consequent it is also responsible for the book keeping of this transaction &
the:
a) Cash receipts for receive deposits

b) Encashment of cheques
Cash department of BOP is a separate close part covered with glasses. No one
other than cash department employees is allowed to enter in to that area.
CURRENT DEPOSIT CREDIT SLIP

This type of slip is used to deposit the money into
the current accounts. This slip is of green color containing two parts. Both the
parts have to be filled by the account holder. The bank with the amount retains one
part and other is hand over to the account holder. Account holders should fill this
slip by these things,
• Date
• Account no.
• Title of account
• Amount in words
• Amount in figures
• Specific signatures
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The Bank of Punjab
PLS CREDIT SLIP

This type of slip is used to deposit the money into the profit and loss saving
accounts. This slip is of red color containing two parts. Both the parts have to be
filled by the account holder. The bank with the amount retains one part and other
is hand over to the account holder. Account holders should fill this slip by these
things,
• Date
• Account no.
• Title of account
• Amount in words
• Amount in figures
• Specific signatures
DEBIT INSTRUMENTS
As the credit instruments there are also the debit instruments. In cash department
the debit instruments are cheques, These are as follows.
CHEQUE
The cash is paid against the cheques of the client. The cheque is divided into the
following the following types.
Cheque
CD cheque PLS cheque
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The Bank of Punjab
CD CHEQUE
CD cheque stands for current deposit cheque. This cheque is the main instrument
of the bank. It is of red color. By this the account holder can withdrawal his money
from his current account. This money his given to the customer after checking
some important points. The specific signature present in the records of the bank
should match with the signature on the cheque. The account holder also singed on
the back of the cheque twice.
PLS CHEQUE
PLS cheque stands for profit and loss saving account cheque. This cheque is the
main instrument of the bank. It is of green color. By this the account holder can
withdrawal his money from his PLS account. This money his given to the
customer after checking some important points. The specific signature present in
the records of the bank should match with the signature on the cheque. The
account holder also singed on the back of the cheque twice.
Types of Bank Instruments
Accountancy (British English) or accounting (American English) is the process by

which financial information about a business is recorded, classified,
summarized, interpreted, and communicated. Auditing, a related but separate
discipline, is the process of an independent review of financial statements in
order to express an opinion as to the fairness and adherence to generally
accepted accounting principles. Accountancy is the act of collecting
information on resource usage for the purpose of capacity and trend analysis,
cost allocation, auditing and billing. Accounting management requires that
resource consumption be measured, rated, assigned, and communicated
between appropriate parties. Typical information that is gathered in
accounting is the identity of the user, the nature of the service delivered, when
the service began, and when it ended.
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The Bank of Punjab
There are main two types of instruments.
Bank Instruments
Credit Debit
Instruments Instruments
Credit what comes in?
Debit what comes out?
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The Bank of Punjab
Cheque
“Cheque a written order directing a bank to pay money;

"he paid all his bills by check" .”
OR
“Withdraw money by writing a cheque.”
OR
“A negotiable bank instrument, payable on demand,
that instructs a bank to pay the indicated amount to
the party named on the cheque from funds held on
deposit.”
OR
“Cheque is a negotiable instrument instructing a financial

institution to pay a specific amount of a specific currency
from a specific demand account held in maker/depositor's
name with that institution. Both the maker and payee may
be natural persons or legal entities.”
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The Bank of Punjab
KINDS OF CHEQUE
Usually the cheques are of three major kinds,
Kinds of cheque
Bear cheque
Order cheque
Cross cheque
BEARER CHEQUE
A bearer check is payable to anyone who is in possession of
the document: this would be the case if the check does not state a payee, or is
payable to "bearer" or to "cash" or "to the order of cash", or if the check is payable
to someone who is not a person or legal entity, It is an open cheque because it is
payable at the counter of the bank on its presentation. This cheque does not
include any instruction to the bank regarding the identification and payment of
amount of it to a specified payee. Any person who presents this type of cheque to
the bank can get the payment easily at the counter of the bank and the bank does
not bother to ask such person regarding his status for the right to receive the
payment.
ORDER CHEQUE
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The Bank of Punjab
An order check – the most common form in Pakistan – is payable only to the
named payee or his or her endorsee, as it usually contains the language "Pay to the
order of (name)." If the word bearer on the cheque is omitted or crossed, it makes
the cheque as “order cheque “. In this situation the name of the payee is essentially
be mentioned on the cheque because the bank makes payment of it only to that
person whose name has been written on it as being a payee.
CROSSED CHEQUE
If two parallel lines are drawn on the left side top corner of the cheque, it is called
a crossed cheque. The payee of this cheque cannot get the payment of this cheque
at the counter of the bank on its presentation. It can only be deposited in payee’s
account and after this the bank credits the realized amount of it to the payee’s
account.
TYPES OF CROSSING
There are two main types of crossing on the cheques, which are,
General Crossin Special

g
Crossing Crossing
GENERAL CROSSING
Section 123 says that where a cheque bears a cross its facts usually on
the left hand top corner. Two parallel transverse lines without any word or with
words and company or/and “not negotiable written in between the said two lines it
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The Bank of Punjab
is called general crossing where a cheque is crossed generally, the banker on
whom it is drawn shall not pay it otherwise to the banker.
SPECIAL CROSSING
Where a cheque bear across its face and addition of the name of a
banker, either with or without words “not negotiable/’ such an addition be deemed
to be a crossing, and the cheque is that case shall be deemed to be crossed
specially. Thus, where a cheque is crossed specially the banker on whom its drawn
shall not pay it otherwise than to the banker to whom it is crossed or his agent for
collection. Where the two parallel lines on the left side top corner of the cheque
are drawn with some instruction to the bank on which it is drawn such is called the
special crossing.
WHO MAY CROSS A CHEQUE?

Section 125 permits the crossing of a cheque in that following ways:
 Where a cheque is uncrossed, the holder may cross generally or specially

 Where a cheque is crossed generally, the holder may cross it specially
 Where a cheque is crossed generally or specially, the holder may add the
words “not negotiable”
 Where a cheque is crossed specially, the banker to whom it’s crossed may
again cross it especially to another banker or his agent for collection.
PARTIES TO A CHEQUE
Drawer
Parties 24
to a
Cheque
The Bank of Punjab
Drawee
Payee
WHEN BANKER MUST DISHONORED THE

CHEQUE
The banker is bound to dishonor the cheque in the following cases:
WHEN CUSTOMER COUNTERMANDS PAYMENT
When the customer issues instructions to the bank not to honor a particular cheque
issued by him, the banker is bound to comply either such instructions. The
countermand order must be given well in time so that the banker may not make the
payment of that cheque as countermanded.
GARNISHEE ORDER
On receipt of the garnishee order i.e.: a prohibitory order by any court attaching
and freezing the money in the respective customer’s account, the banker is bound
not to make any payment out of such account on the request of the customer or
anyone on his behalf.
DEATH, INSOLVENCY OR INSANITY OF THE

CUSTOMER
When the banker receives notice that the customer has died or has been adjudged
insolvent or has become insane his authority to draw cheque would stand revoked
and therefore the banker must not honor the cheque
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The Bank of Punjab
NOTICE OF ASSIGNMENT
When the banker receives a notice of assignment of credit balance from a
customer, he must refuse payments of the cheques drawn by the customer.
DEFECTIVE TITLE OF THE PARTY

When the banker becomes aware of the defective title of a person presenting
cheque the banker must refuse to honor the cheque.
LOSS OF CHEQUE
When the customer has inform the banker about the lost of his cheque the banker
must not honor the same if its presentment is made by some person who happens
to come in profession thereof.
WHEN THE CHEQUE IS IRREGULAR
When there is material alteration in he cheque or the signature of the drawer does
not tally the specimen signatures kept in the bank, the banker is not bound to
honor the cheque.
CLOSING OF ACCOUNT
On receipt of the “notice for closing the account”, from the customer, the banker
must not honor the cheque against such closed account.
PARTS OF A CHEQUE:
Cheques generally contain:
1. place of issue
2. cheque number
3. account number
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The Bank of Punjab
4. date of issue
5. payee
6. amount of currency
7. signature of the drawer
Validity of cheque
A cheque is generally valid indefinitely or for six months after the date of issue
unless otherwise indicated; this varies depending on where the cheque is drawn.
A cheque is never valid or authenticates till following thing will never kept in
mind. These may be possible in the following portions,
DATE
The date is the most important portion of a cheque. The cheque will be acceptable
by the bank when dates mentioned on the cheque. A cheque is acceptable before
six months of the present date. In the date is of the coming date then the cheque
will not be accepted, these types of cheque are called post dated cheque and
rejected by the bank. There should also no any cutting in the date portion.
PAY TO
In this portion of the cheque the drawer have to show the mode of the payment. It
may by write for himself or by the name of a specific person. If there will be the
name of a specific person it means that the cheque will not be cashed by any other
person. It must be filled by a specific condition.
RUPEE
There are two portions of rupee.
1.In words
It is that portion of the cheque on which we show our amount in worlds. This is
necessary to write as if there will be any difficulty while reading the figures then
we can easily understand it by the help of this portion. We must have to write
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The Bank of Punjab
‘only’ after showing the amount in words as no one can add more amounts in this
portion.
2.In figures
It is the most important part of a cheque. As an account holder write the amount in
words which he wants to deduct from his account. While writing the amount in
figures we should not give any space between the words and a slash after the
whole amount as no any addition will be made in it. The words should be very
clear as they can easily read.
SIGNATURE
The most important thing on a cheque is signature. The account holder sign on the
right end of the cheque, which are matched by the signature, they’re on the SS
Card (Specific signature card). The SS Card is kept in the record of the Bank. On
which the account holder shows his signatures.
FURTHER TYPES OF CHEQUE
SSA
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CFG
CFH
The Bank of Punjab
SSA Saving Plus Account
CFG Consumer Finance Guarantee
CFH Consumer Finance Hypothecation
REMITANCE DEPARTMENT:
Modes of Remittance
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The Bank of Punjab
There are three modes of remittance
Bank Draft
Mail Transfer
Telegraphic Transfer
BANK DRAFT
A bank draft is an order instrument issued for the payment of a certain sum of
money to or to the order of a certain person and drawn on one office of the bank
by another office usually.
There are three parties to the draft:
Drawer Issuing bank
Drawee The bank on which the draft is drawn
Payee The named person to whom the payment is to be made
Where a request is received by a banker to issue a DD, it should be a written

request either on the bank’s standard application form or on a separate paper
signed by the applicant enclosed with cash or cheque covering the amount of the
draft and other charges of the bank. While issuing a draft it is necessary that draft
should be free from alterations. . Its charges are same as of DD plus additional 75
rupees of postage; mail transfer advice is against cash recipient, cheques, and letter
of instrument.
MAIL TRANSFER
sometimes a constituent of a bank wants to transfer funds from one account to

another, or a non-constituent wishes to remit funds in a particular account
maintained at some place with a branch of a bank or when the account are
transferred from one branch to another branch, such accounts/balances are
remitted by means of mail transfer. The procedure for issuing of mail transfer is
the same as demand draft expect the application is provided with a memorandum
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The Bank of Punjab
for money received from him for the issuance of a mail transfer on a particular
branch of the bank.
TELEGRAPHIC TRANSFER
Generally a mail transfer advices reaches the drawee branch next day when courier
arrangements exist. However, when it is sent through post office it usually take to
reach its designation. But sometimes an individual whether customer or not
demands that his funds should be transferred from one place to another through
the quickest. In such cases transfer of funds message is passed through telegram,
ordinary or express, to the drawee branch of the bank. It is the bank-to-bank
transaction; the issuing bank makes payment on payment order. The beneficiary
(3rd party) is not directly involved in it. Two other modes of these transactions are:
• Telephonic transfer
• Fax
It is a coded massage by one bank to another bank. Each bank has its own code
number first they write message in the code form and after they apply its test
number on it. The bank can issue two types of transaction for TT.
Bank gives different codes to sending different types of TT. If any bank who has
not the facility of telegraphic transfer can avail the facility of telegraphic transfer
by paying some charges to national bank. Some times state bank exempts the bank
to pay the charges of TT to national bank. I worked on this seat for one day and I
learned how to make voucher for every expenses which bank is taking from other
bank or from the customer. In this transaction bank will debit THE BANK OF
PUNJAB GENERAL ACCOUNT and other bank will credit BOP general
account. A contra entry is passed against those charges which bank receives from
the customer or other bank.
PAY ORDERS
“Document which instructs a bank to pay a certain
sum to a third party. Such orders are normally
acknowledged by the bank which provides a
guarantee that the payment will be made.”
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The Bank of Punjab
Pay order is just like cash. If some one wants to make payment to some order
person, he can make payment through pay order slip. The main advantage of the
pay order is that the bank cannot dishonor it. When payment is required to be
made within the city then we can take this bank service and when wants to make
payment outside the city then we use demand draft. In case of cheque, there is a
possibility that the bank can dishonor it, but in case of pay order we have surety
that it can never be dishonored.
Pay order is an instrument which is made to pay the amount with in the city.
Payment order is made for the person on its special request so bank took some
charges for it. And it is necessary that person should have its personal account in
THE BANK OF PUNJAB (main branch). When bank will make PO it will
credited the account of that person with some specific charges against the debit of
the payment order. When receiver of PO who has not his account in main branch
will present his PO in own branch it will be again presented in front of bank (bank
of payee) and bank will clear and check that PO and amount will be paid. Bank
will charge the commission in following manner:
o 100 rupees for any customer who has not its account in MAIN
BRANCH
o Rs.50 for account holder
o Rs. 25 for students
o No commission will be charged against the PO of military officer and
government department.
THE BANK OF PUNJAB provides another reason to transfer your money using our
facilities. Our pay orders are a secure and easy way to move your money from one place
to another. And, as usual, our charges for this service are extremely competitive
CALL DEPOSIT RECEIPTS

CDR stands for call deposit receipt. These are mostly prepared for those people
who work on tender basis e.g., WASA, LDA etc. the amount for CDR is deducted
by the account holder’s account. The Bank of Punjab deducts his commission of
RS.50 with each CDR. The two officers on charge should sing on it.
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The Bank of Punjab
ACCOUNT OPENING DEPARTMENT:

Opening of account is the main and the most important thing in the Bank. The manager
grants the account opening. There are five types of account.
CD Current Deposit Account
PLS Profit & Loss Saving Account
SSA Saving Plus Account
FCN Foreign Currency Current Account
FSN Foreign Currency Saving Account
The Bank managers are naturally anxious to increase their deposits by opening
new accounts. They must, however, on no account, allow this enthusiasm to
compromise with and ignore the requirement of obtaining introduction and
references while opening these accounts.
CURRENT DEPOSITS
CD stands for current deposit account. There are mostly two types of accounts.
One is CD account and other is PLS account. These are mostly introduced among
the people. Current accounts are basically opened for permanently deposit of
money. In these types of account there is no any earning of profit. These accounts
are mostly for:
 Company
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The Bank of Punjab
 Businessmen
 Sole proprietor
These accounts are normally opened for the businessmen, as they have to deposit
their money for the day to day transactions. They never have to pay zakat. Special
care must be exercised while opening accounts of partnership firms, limited
companies, clubs, trusts and societies etc.
PROFIT AND LOSS SAVING ACCOUNTS
It is the most important type of the accounts. In these types of accounts zakat is
deducted by the Islamic mode of payment. In these types of accounts the Bank
pays profit to the account holder. The profit or loss equally shares by the account
holders of profit and loss saving accounts. This type of account is most popular
among the people. These types of accounts are normally for the following persons.
 Services (govt./private)
 Individuals
 Professionals
 House wife’s
 Teachers
 Others
AUTHORITIES OF ACCOUNT OPENING

Account opening should be handled preferably by the managers or senior officers
of the Bank. In the absence of the first manager the second manager can hold all
the responsibilities.
REQUIREMENTS OF ACCOUNT OPENING

There are some of the important points, which should kept in mind while opening
a new account.
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The Bank of Punjab
 Maximum information relating to the line, means and places of the business of
the prospective customer.
 There should physical appearance of the prospective customer.
 The account opening form should be completed by the prospective customer

and signed by the introducer in the presence of Bank staff.
 The account opening form should be completed in all respects. Copy of

attested National Identity Card must be obtained and attached with the account
opening form.
 The prospective customer should be the resident of Pakistan.
 The minor person can’t open the account in the Bank. Deposit may be accepted
from minors provided the account is opened and operated through a guardian.
 The account may be opened singly in one name or jointly in two or more
names.
 The Bank has the right to refuse to open an account without assigning any
reason.
 There should be initial deposit minimum of RS. 200/- while opening the
account.
 In the case of individual types of accounts the portion of “Authority Letter be

the Account Holder” must be filled.
 In the photo accounts the presence of the account holder is considered

necessary.
 In case of company account the Performa and letterhead that company should
be attached with there rubber-stamp.
 For the illiterate persons Urdu Performa should be attached.
 An unsound minded person can’t open the account in the Bank.
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The Bank of Punjab
 Introduction by holder of dormant account should not be accepted.
 The officer should admit the signatures of the applicant and introducer’s
signature should also be verified.
 After completing the whole requirements Letter of Thanks must be sent to

every new account-holder. Letter should be sent to the following two parties.
GENERAL RULES FOR PLS/CD/BBA ETC.

1) The Accounts shall be opened upon submission of duly
filled – in Bank’s prescribed Account Opening Form properly introduced in
the manner provided and on submitting all such documents as may be
requested by the Bank. The Bank reserves the right to demand such relevant
documents even after opening of account as deemed necessary.
2) The Bank has the right to refuse to open an Account without

assigning any reason.
3) The Accounts shall be opened with an initial / minimum

deposit as stipulated by the Bank from time to time unless specifically
exempted.
4) A distinctive number shall be allotted to every account and

this number should be quoted in all correspondence relating to the account
and at the time of making a deposit or withdrawal. The Bank reserves the
right to change the Account Number or any part of it in order to meet its
book keeping / administration requirement. However, intimation of change
in the account number shall be sent to the account holder.
5) The Accounts may be opened singly in one name or jointly

in two or more names.
MINOR ACCOUNT
6) Deposit may be accepted from minors provided the account

is opened and operated through a guardian.
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The Bank of Punjab
7) The Account thus opened will continue to be operated upon
by the guardian even if the minor attains the age of majority. The necessary
consent to this effect will be obtained at the time of opening of the account.
The orders of the court will, however, be followed in case the guardian is
appointed by the court.
8) All monies / instruments to be deposited in an account

should be accompanied by a pay in slip showing the title and number f the
account. They entry of transaction shall be authenticated by putting Bank’s
stamp under the joint signatures of two officers of the Bank on the pay in
slip and counterfoil thereof. The depositor should satisfy himself / herself
that the transaction has been so verified on the counterfoil.
9) All cheques to be depositor for credit to the account should

be payable to the Account Holder and be “Crossed” before deposit. Also
particulars of the cheques (name of the Drawee Bank, Cheque number etc.)
should be correctly written both on pay in slip and the counterfoil thereof.
The Bank shall not be responsible in case of any loss where the above
requirements are not complied with and in case of delay or loss occasioned
in collection.
10) Remittance received through mail will be acknowledge by

return post. An account holder who does not receive such
acknowledgement should communicate with the Bank immediately.
CHEQUE BOOK
11) Applications for issuance of Cheque Books should be made

on prescribed requisition slips obtained from the bank and thereafter for
further issuance of Cheque Books on the requisition slip inserted in the
Cheque Book already issued. Where a person is sent to take delivery of a
Cheque Book on behalf of the account holder, such person must be in
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The Bank of Punjab
possession of a written authority from the account holder to do so as well as
a Cheque Book requisition slip.
12) The account holders in their own interest and to reduce the
risk of fraud, are requested to keep their Cheque Books under lock & key
and to ensure that their Cheque Books do not get into unauthorized hands.
The Bank will not be responsible in any way, for any unauthorized payment
resulting from any disregard of these instructions and the burden of proof
will be upon the client that they have not been negligent in the safekeeping
of the Cheque Books.
13) Loss of Cheques leaves or Cheque Book or the Cheques

Book Requisition Slip should be immediately notified by the Account
holder to the Bank in writing.
WITHDRAWALS
14) Withdrawals from the account cant be made only by means

of Cheque supplied by the Bank in printed form or any other mode
approved by the Bank Cheque should be written in un – vanish able / un –
erasable and be signed as per specimen signature (s) supplied to the Bank
and any alterations in the instrument must be authenticated by the drawer
(s) under his / her / their full signature (s) as the case may be.
15) The credit balance in an account in the name of two or more

persons will be payable as per Operational Instructions given / signed by all
the Account Holders in Account Opening Form. However, the possible
cases can be as under:
16) No account is allowed to be overdrawn. If, however through

an oversight or otherwise the account is overdrawn, the balance in the
account is transferred to the TRF (Temporary Running Finance) account
which must immediately be adjusted by the Account Holder(s) on first
demand of the Bank along with the mark – up on overdrawn amount for the
period.
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The Bank of Punjab
17) Withdrawals will not be allowed against postdate (playable
on any future date) and stale (06 months after issuance date) Cheques and
against un-cleared funds.
18) In the case of 15(s) above if payments from an account are

at any time forbidden by any one or more of the account holders, the
amount will only be payable on the discharge of all the account holders or
the survivor or survivors of them.
STOP PAYMENT
19) All Stop Payment instructions will be accepted in writing

and signed by the account holder. The Bank, however, will not be
responsible in case such Cheque / Instrument paid through oversight of
otherwise.
STATEMENTS OF ACCOUNT
20) Statement of Account will be supplied to the Account

Holder at periodical intervals. The Account Holder(s) should carefully
examine the entries in the Statement of Account. If no error is reported
within 10 days, the account will be considered correct.
21) The Bank will take care to see that credit and debit entries
are correctly recorded in all accounts but in case of any error, the Bank
shall be within its right to make the correct / adjusting entries without
notice and recover any amount wrongly paid or credited. The Bank shall
not be liable for any loss or damage to the Account Holder due to such
errors or corrections thereof.
SERVICE CHARGES / PENALTY
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The Bank of Punjab
22) The Service Charges will be levied as per rates prescribed
by the Bank from time to time.
23) All Account Holders are required to maintain minimum

credit balance in their accounts, as announced by the Bank from time to
time. Violation of this condition will attract penalty at the rate as prescribed
by the Bank. The Bank reserves the right at its own to increase. Decrease of
otherwise change the minimum credit balance requirement, the amount and
mode of penalty to be charged and to withdraw or grant exemption.
CHANGE OF ADDRESS
24) Any change in the address of the account holder should

immediately be communicated to the Bank in writing so that any future
correspondence may be made to the new address. The Post Office and the
agents for delivery should be considered agents of the account holder(s) for
all deliveries of letters, remittance, etc, and no responsibility can be
accepted by the Bank for delay / non – delivery etc.
TRANSFER OF ACCOUNT
25) An account may be transferred, on a written application by

the Account Holder, from one branch of the Bank to another on any
working day, free of charge without effecting the position of the account.
However, the Account Holder shall be required to submit fresh Account
Opening Form and complete all necessary formalities for opening of
account at the Branch were his/her account has been requested to be
transferred.
DEATH OF ACCOUNT HOLDER(S)
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The Bank of Punjab
26) The death of an Account Holder shall immediately be
reported to the Bank in writing so as to avoid any monetary loss to the legal
heirs of the Deceased A/C holder.
27) In the event of death of any one or more of the account

holders of a Joint Account having operational instruction as 15(a) above, in
the absence of contract to the contrary, the credit balance in the account
will become payable to the survivor(s) without reference to the heirs of the
deceased person. In all other cases no payment will be allowed except on
production of a Succession Certificate or any other Court Order relevant for
the purpose and / or as per Bank’s Procedure in vogue.
CLOSURE OF ACCOUNT
28) Where any account is not conducted to the satisfaction of

the Bank, the account may be closed / seized without any notice. In case the
account is closed the balance will be remitted to the depositor at the address
given by the Account Holder(s).
29) The Account Holder(s) wishing to close the account must

present the Pass Book(if any) and unused cheques to the Bank and
withdraw the outstanding balance if any, after depositing A/C Closing
Charges as stipulated by the Bank.
MARKING OF ACCOUNT CD / PLS AS DORMANT /

INOPERATIVE / UNCLAIMED
30) In case a CD account is not operated for a period of 6

months and PLS account is not operated for a period of 12 months, or any
other period decided by the bank from time to time, the account will be
classified as “Dormant”. In case a CD account / PLS account is not
operated for a total period of 2 years it will be declared as inoperative
account and the account holder will have to come personally to meet the
Branch Manager for activation. All such account which remains inoperative
for another 3 years
shall be transferred to UNCLAIMED DEPOSIT ACCOUNTS. All unclaimed

deposits which will remain inoperative for 10 years or more from the last date of
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The Bank of Punjab
operation, the entire balance then outstanding at the credit of such deposits will be
transferred to the SBP as per their Statutory requirements.
BASIC BANKING ACCOUNT
31) The minimum initial deposit will be Rs. 1,000/-
32) Will be no remunerative account.
33) No limit on minimum balance. In cases, where balance in

BBA remains ‘nil’ for a continuous six month period, such accounts will be
closed.
34) No fee for maintaining BBA.
35) Maximum two deposit transactions and two chequing

withdrawals are allowed, free of charge, through cash / clearing per month.
36) Free of charge A.T.M. withdrawals from the bank’s own

ATMs. In case of withdrawal from BBA through the ATM machines of
other banks, bank shall recover charges as per schedule of charges.
37) Statement of Account will be issued once in a year.
38) For all other transactions made in BBA in contrary to the

Rule No. 34, 35 & 36, above, our Bank will recover charges as per schedule
of charges.
DISCLOSURE
39) The Bank shall make endeavors to preserve the secrecy of

the account of the Customer. Nevertheless, the Customer hereby expressly
authorizes the Bank to disclose the information if such is required by any
investigating agency, any government agency or such person as the Bank
feels that such disclosure in necessary.
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The Bank of Punjab
INDEMNITY AND UNDERTAKING
(Electronic Services)
In consideration of your acceptance of oral instructions from me / us over the

telephone, fax or implementation of other instructions where transmitted by
electronic means in connection with such facilities as may from time to time form
part of the services (“Services”) offered by you in accordance with your policy,
I/we irrevocably and unconditional agree and undertake to accept the veracity of
any such instructions and your implementation of the Services for all purposes
whatsoever. I/we further irrevocably and unconditionally ratify the same and
hereby waive any claim against you as a consequence of or in respect of the
provision by you of the Services, and not to use, or allow any third party to use the
Services on my / our behalf and / or for any fraudulent or unlawful purpose. I / we
confirm that any instructions given by me / us to you using any means may be
used as evidence in any court of law or other proceedings of whatsoever nature or
in resolving any dispute between us. I/We further irrevocably and unconditionally
agree to indemnify and hold you harmless from and against you, as a consequence
of, or in respect of the provision of the Services. I/We agree that you may ignore,
or suspend action on, any instructions received from me / us if you, in your
absolute discretion, deem it appropriate to do so. I/We further confirm my/our
understanding that compliance with such instructions and provision of the Services
shall be subject to the internal policies of The Bank of Punjab, which may change
from time to time and the relevant Circulars of State Bank of Pakistan.
I / We also confirm that the provision of Services shall also, where relevant, be
governed by the terms and conditions governing my / our existing account(s) with
you. I / We confirm that my / our Personal Identification Number shall be kept
confidential. I / We confirm that all information and data contained in this form is
accurate and true and there is no undisclosed material information which would
affect BOP decision to extend any of the Services to me / us. In consideration of
your agreeing to email me / us my / our account statements, I / We hereby waive
any requirement as per the account opening form to send any hard copy statements
or notice by post to my / our address.
For any cards issued to me / us by BOP, I / we undertake to immediately inform

the Bank in the event of loss or theft of the same. It is understood that I / We shall
continue to be liable for all the transactions until receipt of aforesaid intimation by
you. I / We further undertake to accept full responsibility for all transactions made
by the use of the card, whether or not made with my knowledge or authority, and I
/ we will accept the bank’s record of transaction as binding for all purposes. For
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The Bank of Punjab
the purpose of this Indemnity Undertaking the word “Services” shall be deemed to
include any form of banking services or products that BOP may offer its
customers from time to time including any cards. This Indemnity and Undertaking
shall be deemed to be an integral part of the account opening form executed by me
/ us as amended from time to time.
ADDITIONAL RULES FOR PLS BANK

40) Accounts PLS Savings Accounts may also be opened by
charitable institutions for Provident Funds and other funds of Benevolent
nature by Local Bodies, Autonomous Corporations, Companies,
Associations, Societies, Educational Institutions, Firms etc. and in all other
cases where such accounts are required to be opened under the orders of
Competent Court of law.
41) Not more than one PLS Savings Account may be opened at
a branch in any one name except in the name of a parent or guardian for
more than one child or for keeping funds of specified nature category by an
entity, with the Bank’s prior approval.
42) The Bank would have the right to make investment of the
credit balances / deposits in the PLS Saving Account at its sole discretion in
the Banking Business under PLS system.
43) Profit payable or Loss recoverable on PLS Saving Accounts

to be credited or debited will be determined by the Bank at its sole
discretion on the basis of its net working results at the end of each half –
year within the time prescribed by SBP from the date of the close of the
half – yearly books of
44) Accounts of the Bank. The rates of profits may vary from
period to period viz January to June /July to December each year.
Calculation of Profit on PLS Saving Accounts will be made for each
calendar month on the lowest credit balance of an account between the
close of the 6th day and the last day of the month. However, profit accrued
even for Rs. 1/- after deducting withholding tax will be payable to all
Account Holders. When an account is CLOSED before declaration of profit
rates, the accrued profit will be first credited in the account at the profit
rates previously declared by the Bank, or at provisional rates payable on
various PLS deposits as declared by our Finance Division for calculating
provision of profit for the current half year and thereafter the resultant
balance will be paid to the A/C Holder after charging monthly penalty, if
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The Bank of Punjab
any, and deducting closing charges as per Bank’s schedule of charges.
However, no recovery or payment of profit as a result of increase / decrease
in the rate of profit will be affected upon such A/C holders after
announcement of half – yearly profit rates by the Bank.
45) Withholding Tax at the rate notified by the government of

Pakistan from time to time will be deducted out of profits payable to the
Account Holders.
46) PLS Saving Account Holders hereby undertake to

reimburse the Bank with any claims in respect of losses on the basis of half
– yearly / yearly closing of the Bank’s Books of Accounts. The Bank is
within its right to debit the PLS Saving Account for the amount(s) of such
claims in settlement of the account.
47) Zakat is leviable on the assets as described in the Zakat &

Ushr Ordinance 1980 (as amended from time to time) on balances which
will fall within the definition of Zakatable assets as notified by the
Government of Pakistan on valuation date each year, provided Declaration
(original / attested photocopy) for exemption from compulsory deduction of
Zakat is filed on the prescribed proforma (CZ – 50) in the prescribed
manner one month preceding the valuation date except in the case of newly
opened accounts.
Letter of Thanks
Applicant Introducer
Letter should also be sent to the introducer as well as the applicant. These letters must
be acknowledges by the addressees. The main purpose of sending the Letter of Thanks
is to confirm the address of the applicant.
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The Bank of Punjab
Categories of Accounts
There are mostly two types of accounts, Current Deposits and Profit and Loss
Saving Accounts. These accounts are further named according to the duration.
These are further divided into four accounts.
Active
CD & PLS Dormant

Accounts
Unclaimed
Inoperative
ACTIVE ACCOUNTS
The active accounts are those accounts, which are operated continuously by the
account holders. As Current Accounts are for the businessmen so, in these types
the accounts are running after a very short interval.
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The Bank of Punjab
DORMANT ACCOUNTS
It is another type of account. For the Current Deposits those are called dormant
which are not operated till the period of six months.If a person never operate his
account for above the period of six months then his account will be named as the
Dormant Accounts.
INOPERATIVE ACCOUNTS
It is the third type of the Current Accounts. Inoperative accounts are those
accounts, which are not operated till the period of one year. After passing one year
the account will be named as the inoperative accounts.
UNCLAIMED ACCOUNTS
It is the fourth type of account. An account is said to be unclaimed if the Current

Account is not operated up to the period more than ten years. These types of
accounts are normally not operated due to any specific reason. After the period of
ten years the bank close this account after give him notices. And if they still not
respond then the account will be closed. No any account is closed without giving
any notice to the account holder. The account is never operated due to the major
reason that is why it is necessary to give the notice to that person.
OTHER TYPES OF ACCOUNT
DECEASED ACCOUNTS
When a person died than his account in the bank is named as deceased account.
The death of an Account Holder shall immediately be reported to the Bank in
writing so as to avoid any monetary loss to the legal heirs of the Deceased A/C
holder. In the event of death of any one or more of the account holders of a Joint
Account having operational instruction as 15(a) above, in the absence of contract
to the contrary, the credit balance in the account will become payable to the
survivor(s) without reference to the heirs of the deceased person.
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The Bank of Punjab
MINOR ACCOUNT
When a person below the age of eighteen than this account is named as minor
account. Deposit may be accepted from minors provided the account is opened
and operated through a guardian. The Account thus opened will continue to be
operated upon by the guardian even if the minor attains the age of majority. The
necessary consent to this effect will be obtained at the time of opening of the
account. The orders of the court will, however, be followed in case the guardian is
appointed by the court.
[[
Issuance of cheque book
When a customer opens an account with the bank, he is provided with

chequebooks for withdrawals of account. However, the first chequebook is given
to the customer only when the required documents are checked. A chequebook
contains twenty-five, fifty or hundred leaves. The chequebook also carries a
requisition slip for the issuance of the new chequebook. This slip is duly filled and
signed by the customer. The signature of the customers is verified by the bank and
new cheque book is issued to the customer and serial numbers of the cheques are
duly entered in the book of the bank. Among with the signature, person should
always write his full name & address. Usually only one cheque book is issued at a
time however big concern who need a number of cheques at a time may ask the
book to stock as number of cheques in their name and to point their name on these
cheque books.
Book debits the clients account for Rest. 75 per cheque and keep the chequebooks
ready for the customer, as on his advice. The officer keeps and maintains the
chequebooks register chequebooks inventory and chequebooks issued are recorded
in this register. The account number for which the chequebook is issued and the
number of leaves are also recorded in this register when the chequebook is issued
an entry is passed in the chequebook issue register.
After this F-11 slip is filled by the account holder. Application for issuance of
cheque books should be made on prescribed requisition slips obtained from the
bank and thereafter for further issuance of cheque books on the requisition slips
inserted in the cheque book already issued.
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The Bank of Punjab
Now the cheque book is printed in KARACHI. All the requisition slips are sent to
the KARACHI which needs one week for printing. So the customer is asked to
submit the slip before one week. And if he needs it immediately than he is issued a
manual cheque book.
In case of the illiterate person there should be illiterate stamp along with the
account stamp. The account holder in their own interest and to reduce the risk of
fraud, are requested to keep their cheque book under lock & key and to ensure that
there cheque book do not get into unauthorized hands. The bank will not be
responsible in any way, for any unauthorized payment resulting from any
disregard of these instructions and the burden of proof will be open the client that
they have been negligent in the safekeeping of the cheque book.
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The Bank of Punjab
CLEARING DEPARTMENT:
The word clearing means to Varity the specific instrument for the purpose of
payment. Clearing is most difficult and crucial job in banking. Because clearing of
the cheques and afterwards giving the details of complete balance to state bank is
the most vital work. In clearing procedure bank took the cheques of a person who
has its own account in The Bank of Punjab and accountholder wants to take the
payment from any other bank. So The Bank of Punjab performs this work on the
behalf of the account holder. He got cheques and through NIFT settled down his
cheques with any other bank. And balance will be shown in the day book at the
end of the day. Inter bank transaction will not be settled down by the State bank or
NIFT
Basically the main purpose of clearing is that to allow one institution to work with
the other institution. When one person gets a cheque from any other person or any
other source then the clearing will be held. For example, if a person is the account
holder of The Bank of Punjab and he received a cheque from any other bank, and
if he wants to deposit this cheque in his account The Bank of Punjab will send this
cheque for clearing.
TYPES OF CLEARING
Clearing department deals with two types of the clearance, which are states below:
 Inward clearing
 Outward clearing
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The Bank of Punjab
INWARD CLEARING:
“All those cheques of different branch drawn on any
bank when received through the channel of clearing
house than it is called inward clearing”
Cheques drawn on BOP and presented to the banks are handed over to BOP agent
in clearing house. That is inward clearance of BOP. So inward clearing results in
outflow of funds collection bands reducing the balance in the clearing account.
It is the first type of the clearing. In this type of clearing the other banks paid
money in various accounts on behalf of the customer. For example, a person has
the account in The Bank of Punjab and he gives a cheque to any person for the
purpose of payment. That person have the account in any other bank and he
deposit this cheque in his bank, that bank send this cheque for clearing, this is
called inward clearing for The Bank of Punjab. In other words we can say that
these are the instruments of The Bank of Punjab.
If the cheque is not paid due to any reason then it is called the ‘Cheque Return’.
These cheques are regularly entered into the “Cheque Return” register. The Bank
of Punjab deducts his commission of RS.100
OUTWARD CLEARING:
“All those cheques which has been drawn on other
bank and have been deposited for collection
through the channel of clearing house than it is
called outward clearing”
Similarly cheques, which are drawn on the bank and presented to BOP Main
branch, Lahore is known as outward clearance. So outward clearing results in
inflow of funds from paying bank into the clearing account maintained with
clearing house increasing the balance in the clearing account. Outward clearing
thus may be:
1) Local clearing
2) Outstation clearing
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The Bank of Punjab
Excess of outward clearing over inward clearing produces a net increase in the clearing
account balance. Excess of inward clearing over outward clearing produces a net
decrease in the clearing account balance. The first case is referred to as favorable clearing
& second case as unfavorable clearing.
There is a ‘Clearing House’ in which one member from every bank is present, they all
shows there cheques collected from the account holders or the customers. The ‘Clearing
House’ is checked the whole conditions and grants the approval to these banks to clear
the transactions with each other’s. This process is done after the next day of sending of
cheques. And at the third day the branch of The Bank of Punjab received the advice from
the head office. This advice allow the branch to be credited the account of the account
holder.
The Banks of Punjab collect money from the other banks on the behalf of the
customer. For example, a person has the account in any other bank and he gives a
cheque to any person for the purpose of payment. That person has the account in
The Bank of Punjab and he deposits this cheque in this bank, The Bank of Punjab
send this cheque for clearing, this is called Outward Clearing for The Bank of
Punjab. We can say that these are basically the instruments of the other banks then
The Bank of Punjab. The Bank of Punjab never deduct any money from his
cheque only the courier charges are deducted from his account If the cheque is not
paid due to any reason then it is called the ‘Cheque Return’. These cheques are
regularly entered into the “Cheque Return” register. The Bank of Punjab deducts
his commission of RS.100/-
NOTE
When the cheques have to send for clearing then it is the most important
point that all the cheques are stamped by the clearing stamp. In the clearing stamp
the date should be of the next working day, as that cheque will be delivered at the
next day. If the next day will be Sunday then the stamp should be of the Monday.
If unfortunately the stamp will be inserted of Sunday than these cheques will be
return.
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The Bank of Punjab
TYPES OF CLEARING CHEQUES
Some specifies types of cheques are being entertained in the clearing department
of BOP Main branch Lahore. These types of cheques are:
Local cheques
1) Out station cheques
2) In-house cheques
LOCAL CHEQUES
By local cheques or LSC we mean collection of cheques from the banks which are
the member of the clearinghouse and which are located within the city like Lahore.
OUTSTATION CHEQUES
By outstation cheques or SE we mean collection of cheques from the banks,
which are situated outside the city. It means that presenting bank and bank on
which the cheques is drawn are not situated in the same city .
IN-HOUSE CHEQUES
In house cheques are drawn on one branch of BOP and presented to another branch of
BOP such cheques are marked with transfer stamp.
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The Bank of Punjab
CLEARING HOUSE
“A clearing house in an association of commercial

banks set upon a given locality for the purpose of
interchange & settlement of credit claims”
OR
“An organization through which accounts may be

debited and credited, thus avoiding numerous
bilateral settlements.”
OR
“A central collection place where banks exchange

checks or drafts; participants maintain an account
against which credits or debits are posted.”
BOP acts as a clearinghouse. A representative of each bank represents his bank, in

the clearinghouse. The SBP maintains the accounts of the BOP like other
scheduled banks and debits the account of the drawee bank and credits the
presented bank, which is BOP in that case. I have seen that in daily
morning every branch receives the cheques which he has sent for the
clearing to the clearing house. They record the received cheques in their
computer system and then debit the account of the customer if the clearing
house clears that cheque. And if the cheques are retuned by the clearing
house with any rejection than the branch will not clear te payment to the
customer he will return the cheque with related reason and attached the
form of rejection with that cheque. Normally the cheque is retuned with the
reason “refer to drawer”.
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The Bank of Punjab
BILL REMITANCE DEPARTMENT:
Collection of utility bills

The Bank of Punjab also deals with the collection of bills. The bills are of four
types. These bills are collected after showing the transfer stamp of The Bank of
Punjab. These bills are regularly entered into the computer with their amount and
consumer number.
The scroll of these bills is printed out from the computer. There are three copies of
the scroll. Two are sending to the elated sector and one is the office copy.
Types of bills
There are four types of utility bills. These are shown as follows,
PTCL
WASA
SNGPL
LESCO
PTCL
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The Bank of Punjab
PTCL are the telephone bills. These are also submitted in the Bank of Punjab.
These are continuously entered in the computer also. There are two parts of the
bill; one is hand over to the customer after the transfer stamp. And the other part is
remained with the bank after transfer stamp. The Bank of Punjab its commission
of RS. 2 per bill. From the computer we print three copies of the PTCL bills;
these are called the scroll of PTCL. Two copies are for the dispatching purpose
and one is the office copy. We address these advises as follows,
Dispatches Addresses
Bills + Scroll (two) The Manager

CITI Bank
Karachi
Advice + Scroll (one) The Manager

The Bank of Punjab
Main Branch
Lahore
WASA
WASA are the water bills. These are also submitted in the Bank of Punjab. These
are continuously entered in the computer also. There are two parts of the bill, one
is hand over to the customer after the transfer stamp. And the other part is
remained with the bank after transfer stamp. The Bank of Punjab it’s commission
of RS. 2 per bill. From the computer we print three copies of the WASA bills,
these are called the scroll of WASA. Two copies are for sending to the WASA
record and one is for the office record, which is called office copy. We address
these advises as follows,
Bills + Scroll (two) + Advice The Manager

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The Bank of Punjab
The Bank of Punjab
Empire Center
Main Gulberg 111
Lahore
LESCO
LESCO are the electricity bills. These are also submitted in the Bank of Punjab.
There are two parts of the bill; one is hand over to the customer after the transfer
stamp. And the other part is remained with the bank after transfer stamp. The Bank
of Punjab charge RS.2 per bill as their commission. These are continuously
entered in the computer also. From the computer we print three copies of the
LESCO bills, these are called the scroll of LESCO. Two copies are for the
dispatching purpose and one is the office copy. We address these advises as
follows,

Revenue office
2-B Khizra Musjid
Lahore
Advice The Manager

The Bank of Punjab
Davis Road
Lahore
SNGPL
SNGPL are the Sui Gass bills. These are also submitted in the Bank of Punjab.
There are two parts of the bill, one is hand over to the customer after the transfer
stamp. And the other part is remained with the bank after transfer stamp. The Bank
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The Bank of Punjab
of Punjab charge RS.2 per bill as their commission. These are continuously
entered in the computer also. From the computer we print three copies of the
SNGPL bills, these are called the scroll of SNGPL. Two copies are for the
dispatching purpose and one is the office copy. We address these advises as
follows,

NIFT Davis Road
Lahore
Advice The Manager

The Bank of Punjab
Main Branch
Lahore
Journal/Inspection Vouchers
Every bank close their work at the end of the working hours. The main function of
the accounts department of BOP is to maintain general ledger account and after
the business hours the function of the accounts officer is to close the books.
The voucher of every work is printed out. These all vouchers are attached in a
specific sequence, these are called the vouchers.
• Voucher is a written authorization used in approving a transaction for

recording and payment.
• Voucher is a system, which is generally designed to provide strong internal

control over the transaction, which take place during the business hours.
• Whenever a transaction takes place in my department of the bank.
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The Bank of Punjab
• One debit and one credit voucher is prepared. At the end of the day, these
vouchers are collected and recorded
TYPES OF VOUCHERS
There are two types of voucher
Vouchers
General
Inspection
Vouchers
Vouchers
INSPECTION VOUCHERS
The head office vouchers relate the inspection vouchers. The head office vouchers
are those vouchers, which are related with the income and expense vouchers.
ATTACHMENTS
Normally we attached the following vouchers in the head office vouchers.
 Head office advise

 Other advises of payment (received against clearing)
 Other assets-excise duty recoverable
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The Bank of Punjab
 Allow other allowances
 Miscellaneous earnings
 Miscellaneous expenses
 Comm-remittances TT/DD/MT
 Comm-utility bills
 Comm-Gas bills
 Comm-C.D.R
 Comm-Paktel bills
 Income postage charges
GENERAL VOUCHERS
It is the prime record of the branch reflecting, its assets and liabilities and
serves as the master control of accounting system of the branch. It consists of only those
accounts, which authorized by the head office. These vouchers are not related to the
income or expenses. The debit and credit instruments of the bank normally relate
these. Two officers should sign all the vouchers attached in it.
ATTACHMENTS
In these types of voucher we attached the following things,
 Cash on hand
 Current Deposit cheques
 Current Deposit credit slips
 PLS cheques
 PLS credit slips
 Call Deposit Receipts
 Payment Order
 Balance with SBP
 CFH
 CHG
 Sundry debtors inward clearing
 Sundry debtors outward clearing
 O/L Income Tax Payable
 Sundry creditors (deposits)
 Other Receipts-cheque book issuance charges recovers
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The Bank of Punjab
EXPENSE VOUCHERS
All the expense vouchers passed by each department are routes through accounts
department. These expenses include:
• Salaries
• Wages
• Insurance-vehicle
• Insurance-cash
• Utility bills
• Medical allowance
• Cash carrying charges
Inward mail register
All the branches of The Bank of Punjab received the mails from the head office
and from the other branches. These mails are related to the different information
and instructions from the head office. The branch manager receives these mails.
As the record of these mails we must have to enter into a specific register, this
register is called the Inward Mail Register. In this register the mail is enter by date.
The serial number is also given to the received mail and the ‘Inward Mail Stamp’
is also stamped on it.
CREDIT DEPARTMENT:
Credit section means the area which is providing loans and financial facilities to
the people by giving loans to them. In this department we met with Mr. ASHRAF
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The Bank of Punjab
(operation manager) who guided me to met with the concerning person. In this
department I have found four types of Finance.
So, business finance means investing, borrowing and
spending of money with proper manners for the operation of business. Finance is
lifeblood for business. No business can run smoothly without finance. So, The
Bank of Punjab also offers finance to promote the business sector in Pakistan.
Property and equipment subject to finance lease are
accounted for by recording the assets and the related liabilities. These are stated at
fair values or present value of minimum lease payment whichever is lower at the
inception of the lease less accumulated depreciation. Financial charges are located
over the period of lease term so as to provide a constant periodic rate of financial
charges on the outstanding liability. The property and equipment acquired under
finance leasing contracts is depreciation over the useful life of the assets as per
rates given.
Actually the word Finance means loan. Finance may be defined as follows,
“Finance consists of providing and utilizing

the money, capital rights, credit and funds
of any kind, which are employed in the
Operation of an enterprise”.
TYPES OF FINANCE
The Bank of Punjab promotes finance without any higher rate of interest.
There are three types of finances, which The Bank of Punjab offers. These are as
follows,
Finance
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The Bank of Punjab
Consumer
Finance
Agricultura
l
Finance
Corporate
Finance
CONSUMER FINANCING
Consumer financing provides individuals the necessary financing for personal
purchases ranging from buying a car, shopping purchases to buying a house. Most
people don’t normally get access of capital through equity markets so they would
normally get access to debt finance through the established financial institutions
including banks, credit union, insurance companies etc. This debt is usually in the
form of a credit card or loan.
What are the benefits of getting finance?
A loan gives you the money you need to pay for something big like a house, a car,
college tuition, or major home repairs when you don't have the cash to cover the
purchase. While small purchases can be paid for in advance with a credit card.
Most people could not afford to do these things without finance.
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The Bank of Punjab
TYPES OF FINANCING OPTIONS FOR
CONSUMERS
BOP Quick Cash

BOP Car Loan
BOP House Loan
BOP SME Loan
BOP Aasaish Loan
BOP House Loan For Federal Govt
AGRICULTURAL FINANCE
 Kissan Dost Agricultural Finance Scheme

 Kissan Dost Agricultural Finance Scheme
 Kissan Dost Aabiari Scheme
 Kissan Dost Mechanization Support Scheme
 Kissan Dost Farm Transport Scheme
 Kissan Dost Eslah-E-Arazi Scheme
 Kissan Dost Live Stock Development Scheme
 Kissan Dost Live Stock Scheme
 Kissan Dost Commercial Agro Services Finance Scheme
 Kissan Dost Agri Mall Finance Scheme
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The Bank of Punjab
RUNNING FINANCE
Running finance is given against the liquid securities and liquid securities are like
defense saving certificate and foreign exchange currency. The limit of this finance
is up to one year but if he can not pay the loan then he can renew it. Finance is
granted against the securities and bank will keep 105 of the margin of securities
and remaining 90% is advances to the borrower. The mark up rate is calculated as
3 months average rate of KIBOR + 2% takes of one proceedings day of calendar
quarter for which the mark up is being calculated. The mark up will be calculated
quarterly by the bank but account will be debited yearly. The repayment of the
loan is given in lump sump. If the borrower can not pay whole amount then he can
request to the bank to make the installment per month.
DOCUMENTATION
1) F-48 Letter of agreement
2) F-51 Demand promissory note
3) F-53 Letter of continuity
4) F-59 Memorandum of deposit of title deeds
5) F-65 Agreement for financing short/medium/long term of mark up basis
6) F-68 Guarantee
7) Loan application form
8) Copy of sanction advice
9) Insurance of property
10) Life insurance of borrower
11)Original evaluation report
12)Lawyer opinion
13)CIB report
14)CNIC of borrower
15)Irrecoverable general power of attorney
16)Mortgage deed
17)Sale deed
18)Letter of authority to debit the account
19)Undertaking to comply with SBP’s prudential regulations
20)BBFS
21)FOL
22) PIT bearing the charge of the bank
23)NEC
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The Bank of Punjab
DEMAND FINANCE
DOCUMENTATION
 Memorandum of deposit of title deeds (F-59)

 Hypothecation of goods to secure a demand loan (F-60)
 Counter guarantee (F-69)
 Trust receipt (F-67)
 Agreement of financing short/medium/long term on mark up basis (F-65)
 Guarantee (F-68)
 Indemnity bonds
 Letter of continuity (F-53)
 Promissory note with joint and several liability (F-50)
 Agreement for sale & buy-back of marketable securities (F-64)
 Letter of hypothecation (F-54)
 Letter of pledge (F-56)
 Letter of lien for advances against shares, stocks and securities accepted as a
collateral (F-58)
 Hypothecation of goods to secure a demand loan (F-60)
Memorandum of deposit of title deeds

The memorandum of deposit of title deeds is attached with the document of
finance. It is written when any form of things is kept against the finance.
Hypothecation of goods to secure a demand

loan
When any loan is gives to anyone then the charge goods is given to him but the
possessions of goods are only with the bank. In such cases this schedule is
attached with document.
Counter charges
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The Bank of Punjab
In the type of finance the papers of residence as well as business place of the
lender are mortgage by the bank. In this case this Performa is attached with
finance documents
Trust receipt
There are many chances of frauds in finance. If any fraud is happened then the
bank imports these goods to case such person. In this schedule this authority is
given to the bank. The Bank of Punjab names this schedule as F-67.
Agreement of financing for short/medium/long-

term on mark up basis
The finance is of three types
 Long term
 Medium term
 Short term
In this type of schedule the period of loan is shown. The bank of Punjab named
this schedule as F-65.
Guarantee
When the money is given to any person then it is necessary that two persons give
his guarantee. These are important because when that person who take loan give
any fraud then the amount payable will be received by these guarantors.
Indemnity bonds
This is the contract by which one contracting party promises to save the bank from
any loss, which may cause or arise due to the conduct of the promise himself or
any other person, is called the indemnity bonds.
Letter of continuity
In this type of finance the finance taker can get back his things.
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The Bank of Punjab
MARK-UP RATES
Annualized
MARK-UP RATES Percentage Rate
BOP QUICK CASH SCHEME

For Senior
Average Six Months KIBOR +
Bureaucrats &
700 bps with Floor rate of 16% Its running finance
Executives of
p.a facility and Mark-
Corporate Clients
up is calculated on
For all customers Average Six Months KIBOR + daily product basis.
including BOP 700 bps with Floor rate of 18%
Employees p.a
BOP DEMAND FINANCE (CLEAN) – ADVANCE SALARY LOAN

01 Year: 11.16%
For all customers Average Six Months KIBOR + 02 Years: 11.07%
including BOP 850 bps with Floor rate of 20% 03 Years: 11.26%
Employees p.a 04 Years: 11.52%
05 Years: 11.79%
BOP CAR LOAN SCHEME
Average Six Months KIBOR + 375 bps with
7.53%
Floor rate of 12% p.a*
BOP HOUSE LOAN SCHEME
01 Year: 7.38%
02 Years: 7.25%
Average Six Months KIBOR + 375 bps with
03 Years: 7.31%
Floor rate of 10% p.a*
04 Years: 7.41%
05 Years: 7.53%
* Rate is based on the KIBOR of 3rd July 2008. The rate is applied by taking KIBOR of
the 1st day of each quarter. The differential mark-up amount in lieu of increase in rate
shall be adjusted accordingly.
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The Bank of Punjab
THE BANK OF PUNJAB

CHISHTIAN BRANCH
I did my internship in The Bank of Punjab, Chishtian Branch. Some
important information about my branch which I observed is as follows:
MANAGEMENT OF THE BRANCH
Branch Manager Mr.Mateen Ahmed
Operational Manager Mr. Muhammad Javed
Accountant Mr.Ahsan Mehmood
Accountant Mr.Attiq-u-Rahman
Credit Manager Mr.Muhammad Khalid
Cashier Mr.Amein Paracha
Clearing Incharge Mr.Muhammad Haroon
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The Bank of Punjab
MY FIELD OF ACTIVITIES
During my internship in the BOP, I really enjoyed to work with the
staff of Branch, Chishtian from 21st July 2009 to 31st August 2009 to
and have a wish to be employee of BOP. It was almost impossible to
work in all the departments within that limited time. But on my
request, the staff of the branch provided me the opportunity to work in
the different departments for the sake of practical knowledge. I am
really very thankful to branch manager Mr. Mateen Ahmed that
provides me a learning environment in the branch.
During my internship training in the BOP as I early mentioned that I have worked
in different departments & seats and learnt the followings.
1. Account Opening Department:

Account opening and closing is the function of accounts departments.
Bank’s customers may be individuals (Single or Joint), firms
(partnership/proprietorship), Autonomous corporations, Limited Companies,
Charitable Institutions, Associations Educational Institutions or Local Bodies.
Basics to Open an Account:

During the span of mine internship in BOP, I learned and observed a lot of
about the opening of an account. Basically I think that the opening of an account is
the establishment of a contractual relationship between the banker and the
customer. By opening an account at a bank a person becomes a ‘customer’ of a
bank. Further I am going to express the basic requirements and steps involved in
the opening of an account.
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The Bank of Punjab
Introduction and Preliminary Investigation
Before opening an account BOP as like the other banks in Pakistan
ascertain whether or not the person who is going to open the account is a desirable
customer or not. Then BOP determines the prospective customer’s integrity,
respectability, occupation and the nature of business by the introductory references
given at the time of account opening. Negligence in this informal preliminary
investigation may result in serious consequences not only for the banker
concerned directly but also for other bankers and the general public who may be
affected indirectly.
In order to further strengthen and streamline this process, the Federal

Ombudsman of Pakistan, vide his ruling on complaint No. II/31/5186, has directed
the banks to retain with the account opening form a Photostat copy each of the
National Identity Cards of the person desiring to open an account as well as that of
the introducer. As per these directions, the concerned Branch Managers are
required to obtain the original National Identity Cards along with their Photostat
copies and then return the original after attesting the authenticity of the retained
copy.
Preliminary investigation is necessary because of the following

reasons:
Avoid Frauds: In this regard I learned that if a banker does not make the
necessary inquiries mentioned above he may enable dishonest persons to possess
cheque books for fraudulent purposes. If any such person happens to be an
undercharged bankrupt, the banker might be placed in an awkward position for
having allowed such a person to open and open a bank account.
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The Bank of Punjab
Safeguard against unintended overdrafts
Sometimes due to a mistake an account may be given an overdraft, For
instance, the ledger keeper, misreading the balance of an account honors a cheque
for an amount larger than the balance. Similarly a credit entry belonging to a
customer may be made by mistake in another customer’s account. In such
situations the excess amount withdrawn by the customer can only be realized if the
customer is a respectable person.
Inquiries about clients
Being a banker I think BOP has a business obligation to respond to

inquiries from other banks etc. about his customer’s financial position. Though the
banker gives only a general ideal about the financial standing of his customer, it
should nevertheless have the necessary information available with him.
Specimen Signature
When an account is opened with BOP customer provides to the bank a
specimen of the form of signature which would appear on all his cheques to
express his authority for the payment of cheques drawn on his banker. This
specimen is taken generally on a card specially designed for this purpose, and rule
for the customers, full name, and account number are entered on it.
If the bank has reasons to doubt the genuineness of a signature, he should either
get it confirmed for his satisfaction or return the cheque with the remark
‘Signature differs’. If the signature of the customer is forged the banker cannot
escape his liability because he has actually acted on his customer’s mandate.
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The Bank of Punjab
How to Open an Account
Before opening an account in BOP I observed that the following points
must be considered in this regard.
• Another account holder of the bank should properly introduce the new
customer.
• The account holder should sign the account opening form in the presence of
bank officer and the signature is duly verified.
• A copy of identity Card is required by Bank.
• Against submission of the Bank’s prescribed application form, duly

introduced in the manner provided and on supplying such document, as
may be required and account may be opened. The Bank reserves to itself
the right to refuse to open and account without assigning any reason.
• Each account shall be allotted a distinct number that is to be quoted in all

correspondence with the bank relation to the account.
• Minimum amount for opening and continued maintenance of various types

of accounts is as follows:
Rs.
Saving 500
Current 500
Term Deposit 1000
The bank reserves the right to change the above mentioned minimum
balance requirement at any time without any notice.
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The Bank of Punjab
Procedure to Open an Account
According to my practice in BOP, when a customer wants to open an
account, the bank officer gives him an application form. All information, which is
necessary to be known by the bank, are requirements of the application form.
Form also requires the essential documents to be attached by the customer.
Basically following information is required to open an account with BOP.
• Title of Account
• Full Name of Applicant
• Occupation
• Address
• Telephone No.
• Currency of account
• Nature of Business
• Special instruction regarding the account
• Initial Amount of the Deposit
• Signature of the applicant
Documents to be Attached
Further I learned that if you wanted to open an account with BOP then you
should attach the following documents with your application form which are
different for different categories.
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The Bank of Punjab
Sole Proprietor’s Account
In order to open an account with BOP Sole Proprietors have to submit their
business registration certificate number.
Private / Joint Accounts
For individual or private or joint accounts National Identity Card is

required.
Partnership Firm Account
Information which is required to be submitted to BOP by a partnership firm in this

case is as follows:
• Full Names
• Address
• Specimen of signatures of the partners
• Certified true copy of partnership deed
• Registration No. if the Partnership is registered
Issuance of Cheques Book

When a customer opens an account with the bank, he is provided with
cheque book for withdrawals from account. However, the first cheque book is
given to the customer only when all the required documents are checked. A
cheque book contains five, twenty five, fifty or hundred leaves. The cheque book
also carries a requisition slip for the issuance of the new cheque book. This slip is
duly filled and singed by the customer. The signature of the customer is verified
by the bank and new cheque book is issued to the customer and serial numbers of
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The Bank of Punjab
the cheque are duly entered in the book of the bank. Along with the signature,
person should also write his full name & address.
Usually only one cheque book is issued at a time, however big concerns who need
a number of cheque books at a time, may ask the bank to stock as number of
cheque books in their name and to point their name on these cheque books. Bank
debits the client’s account for excise duty of Rs.3.00/- per cheque and keeps the
cheque book ready for the customer, as on his advice.
2. Cash Department:
Cash department of BOP, Chishtian branch is given the complete
responsibility of handling all receipts & disbursement of cash, as a result of
transaction in local currency & near cash items such as traveler cheque etc (when
they are issued against cash).As a consequence it is also responsible for the
book-keeping of these transactions & the safe custody of cash & near cash
securities. Following are the major functions of the cash dealing department of
BOP.
• Cash receipts (or receive deposits)
• Encashment of cheque
Cash department of BOP, Chishtian branch is a separate close part covered with
brown glasses. No one other than cash department's employee is allowed to enter
into that area.
I had work in this department and I have gained knowledge about it from cashier
of BOP.
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The Bank of Punjab
Cash Receipt or Receive Deposits

The depositor uses cheque deposit slip (or cash deposit slip) for depositing
the amount.
Information required
All the details are required regarding date, account number, and amount in
words & figures, title of account & signature of depositors.
Procedure
The cashier first verifies all the requirements of the cash deposit slip that
whether these are fulfilled or not & verifies the amount written in words & figures.
The deposit slip is stamped, cash is received & second copy is given to the
depositor.
Encashment of Cheque
Cheque encashment involves following four main steps. These steps are:
• Accepting of cheques
• Affirmation of signatures
• Entry into system
• Payment of cash
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The Bank of Punjab
Requirements to Encash a Cheque

Following requirements are essential to encash a cheque.
1. No Stop Payment Instruction
No stop payment instruction is presented for the account.
2. Instrument in Writing
It must be in writing. However, there is no bar on writing material

but the cheque written with lead pencil is not honored by the bank in
practice because unauthorized alternations can also easily be made
are difficult to detect so a cheque should be pen written.
3. Cheque must not be crossed
The cheque, which could be presented to the drawee bank for

encashment over the counter, should not be crossed whereas crossed
cheques are deposited into account.
4. The sum of money must be certain
A cheque must contain an order to pay a certain sum of money only

amount in figures and words must be same.
5. Drawer's Signature
The document in order to be validly called a cheque must bear the

drawer's (account holder) signature or that of his authorized person.
At the time of opening an account a customer provides a banker with
a specimen of his signatures, so the signature on the cheque must
tally with that.
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The Bank of Punjab
6. Sufficient Balance
Sufficient balance should be present in the customer's (drawer's)

account to encash cheque.
Acceptance of Cheque
The cash is paid against the cheque of the client. The following points are
kept in mind while receiving the cheque from the client.
• Cheque should be drawn on BOP.
• It should not be post dated.
• It should be a bearer cheque so the word bearer should not be

crossed.
• The drawer does not stop payment.
• Alternation in date/figure/word require drawer's full signature, with

signature on the cheque.
If signatures are not the same then it is returned back otherwise forwarded to
computer terminal.
Affirmation of Signatures
After receiving the cheque the officer verifies the signature of the
account-holder with the signature on the cheque. If signatures are not the same
then it is returned back otherwise forwarded to computer terminal.
Computer Terminal Process
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The Bank of Punjab
Now the teller checks the balance of the account holder. The teller also sees
whether the stop payment instructions are received from account holder or not.
After considering these two points teller posts the cheque in account holder ledger.
Payment of Cash
The cashier enters the entry cheque in computer & pays against the second
signature of the receiver on the back of the cheque.
3. Remittance Department
Besides cheques (the primary notes of exchange in a bank), banks also
handle Promissory Note, Bills of Exchange, Bank Drafts, Pay Orders, Traveler
Cheques, Pay Slips, Call Deposit Receipts; as negotiable instruments.
The remittance department of BOP Chishtian Branch performs following

functions:
• Pay Order (PO)
• Demand Drafts (DD)
• Telegraphic Transfer (TT)
Pay Order (PO)

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The Bank of Punjab
“Pay Order is a negotiable instrument made by the bank, on
account of a customer, to pay on order the specified
amount”
Pay Orders are used to make payment or to transfer money, with in the
same city. Pay Order is always drawn on the bank that has issued it.
Making of a Pay Order

When a person requires a Pay Order (made by The Bank of Punjab
Chishtian Branch, Chishtian), he/she is asked to complete the prescribed
application form in which the amount of pay order is to be stated. Certain amount
of commission and advance tax is charged on issuance of pay order. After having
the total amount deposited in the bank (in cash or through cheques, in case of
account holder), pay order is issued in favor of the payee.
Like cheques, when pay orders issued by Bank, are presented in other
banks to get them deposited in the payee’s accounts, they constitute the outward
clearing for those banks and inward clearing for the same bank.
Demand Draft (DD)

“A Demand Draft is a negotiable instrument issued by the bank,
on account of a person, and drawn on its own branch in a specific
city or on the branch of another bank in that city (in case bank
doesn’t have any branch there), requesting it to pay the specified
amount to the person named on it”.
Demand Drafts are used to make outstation payments or to transfer money,

out of the city. Therefore, a DD is always made for a particular city. In fact, the
bank persuades the customer to transfer money by drafts and avoid the risk of
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The Bank of Punjab
frauds involves in MT and T.T. Draft is only issued when the bank knows
customer and bank has the confidence in him
Making of a Demand Draft

Suppose a customer requests the accountant of The Bank of Punjab
Chishtian Branch to provide him a DD made on his account for a particular city
like Islamabad. Then, after having the total amount to be deposited with
application form, demand draft is issued in favor of the specified person in
Islamabad (supposed) and is drawn on The Bank of Punjab, Islamabad Branch. So,
when this demand draft is presented by payee in any bank, it constitutes the
inward clearing of The Bank of Punjab, Islamabad Branch.
Cancellation of PO & DD
After issuance of Pay Order, Demand Draft by The Bank of Punjab,
Chishtian Branch, if any one of these has to be cancelled by the customer, it is
returned in the bank. Then, after deducting the cancellation charges. The
remaining (net) amount is paid to the customer through Cash Payment Voucher.
Telegraphic Transfer (TT)

This type of transfer is simple, now a day this is famous by the name of
“ON LINE”. After filling the application form the concerning officer shall fill the
telegraphic transfer form. Then it is sent to the required bank which on receiving it
immediately makes the payment to the customer and afterwards the voucher are
sent to that bank by ordinary mail.
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The Bank of Punjab
Advance Tax against Remittances
Advance Tax is deducted on issuance of PO & DD (when customers don’t
have tax exemption form) and credited in Tax on PO & DD account. Tax deducted
has to be paid to State Bank of Pakistan (SBP) with in one week of issuance of
these instruments.
4. Collection Department
When cheques and other negotiable instruments drawn upon other banks
outside the city (Chishtian) are presented in The Bank of Punjab, Chishtian
Branch, Chishtian to deposit in payee’s accounts, then instead of clearing, these
instruments are lodged in collection and constitute outward bills for collection.
Cheques of cities, where The Bank of Punjab branch exists (e.g. Islamabad,
Faisalabad etc.) are sent to that branch where these cheques are lodged in is
outward clearing. Otherwise, they are directly sent to the drawee bank. Postage &
other charges are deducted on account of payee according to Schedule of Charges.
CLEARING PROCESS (INWARD/OUTWARD)
Here the local cheques are received that are drawn on BOP. 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 Bank of Punjab on it duly signed by officer. These cheques are scrutinized and
cheques for local clearing are separated from OBCs. These are then entered in
83
The Bank of Punjab
clearing register and cheques for collecting are entered in OBC register and
handed over the bills department of collection. Clearing officer checks and verifies
title of all the cheques deposited by the customer to confirm the good title of the
cheques. Cheques are scrutinized properly and paying slips are separated from
cheques. Special crossing, endorsement and clearing stamps are affixed on the
cheques. Cheques of each bank are sorted and arranged branch wise.
If any cheque is not passed due to insufficient balance or any other reason, officer
cash department returns the same cheque by attaching a cheque return memo
containing reason for return charges are deducted according to the schedule of
charges.
84
The Bank of Punjab
SWOT analysis is analysis of four important factors faced by an

organization. These factors are strengths, weakness, opportunities and threats.
These factors play vital role in success or collapse of an organization. In today’s
world only those organizations survive which has the ability to manipulate these
factors effectively to the best interest of organization. Of these, two factors are in
internal environment that are Strengths and Weaknesses, with an effort of
management these can be controlled to a great extent. While opportunities and
threats are presented in external environment and need to be competed with Here
is an outlook of SWOT Analysis of THE BANK OF PUNJAB as an organization.
85
The Bank of Punjab
Formulation of successful strategic plan requires managers to have an
accurate and complete understanding of internal capabilities and external threats
that organizations have .The starting point of formulation of strategy is through
SWOT ANALYSIS.
STRENGTHS:
• Good pay scale for employees as compare to other commercial banks which
are good incentives for recruitment of new employees.
• Due to frequent visit of higher management to all Branches, good internal
control of management on its Branch Network.
• Regular training of staff about various operations of the bank, like
computers, CIB Reports etc.
• Cooperation among employees resulting in good working environment.
• Regular internal audit of all the branches by BOP internal auditors.
• Service to customer even at the cost of bank increases the business.
• Automation and online business.
• Good and experienced staff right from the bank’s incorporation.
• The commitment of employees towards secrecy.
• A good system of training new comers and internees in the bank.
• A good system of communication flow is there.
• The bank has a good team of customer relation managers and customer
relation officers to help the people.
86
The Bank of Punjab
WEAKNESSES:
• Lack of computers for the storage of financial data.

• The outlook of branches is not up-to-date as compare to other commercial
banks in Pakistan.
• Working Condition for employees are not good as there is lack of facilities in
small branches.
• All stationary of the BOP is printed in Karachi which results in delay to all
branches through out the country.
• Very slow procedure of upgrading of the employees resulting in very few
chances for promotion.
• Due to get of computerized system the customer have to wait for a long time to
get their cheques called.
• Centralized decision making, therefore delay in making spontaneous decisions.
• No frequent designing of new schemes for the depositors.
• Shortage of counters in branch, two cashiers are dealing all types of transaction
like cash receipts, payment, collection of utility bills and so on b/c the
customers are facing difficulty to make their transaction
• Higher charges of some services as compared to some other banks.
• No. of Employees is not enough in the branches.
• There is lack of proper advertising like sponsoring of any festival or any event
like ports etc
• It seems that there is lack of enthusiasm and zeal in the staff of Bank of Punjab
Chishtian branch.
87
The Bank of Punjab
OPPORTUNITIES:
• BOP only Government based Commercial Bank in the Banking sector, in

Pakistan.
• Act as right hand of State Bank of Pakistan for receipt i.e. taxes and payments,
pensions, salaries, zakat on behalf of Government.
• Act on behalf of SBP in cities and areas where no representative branch of SBP
is.
• Largest network of branches in the country.
• Lowest Service Charges as compared to all other Commercial Banks of
Pakistan.
• Having better contact with central Government than any other Commercial
Bank, BOP faces less difficulty for approval of introduction of new schemes
for its customers.
• Being only Government Bank, it has special remuneration packages for its
staff.
• A good sales team and marketing people.
• A good job recruitment policy of hiring business graduates.
• They can run a local advertisement campaign of the various schemes of the
bank to motivate people.
• When the bank was setup, a major portion of staff came from other banks and
they all know the good banking practices
• The role of personal bankers and relationship managers may increase its
market share.
88
The Bank of Punjab
THREATS:
• No credit card facility for customer.

• No customer credit facilities such as car loan, home appliances etc.
• Lack of publicity for its products like students loan etc.
• The adoption of online system and developing of web sites by other banks can
create a threat to the bank
• The employee turnover can create a serious problem for the bank
• Pakistan is a developing country and our debt burdened economy is a major

threat for the banking business
• Delay in launching a credit card
• Lack of promotion and advertisement
• Latest electronics equipments are not available
• Few deposits and advances schemes
• Start of evening banking by some banks
• Higher limit for account opening and profit earning
89
The Bank of Punjab
These are following suggestion and recommendations for The Bank of Punjab as
I, founded during our practical internship.
• Increase sitting capacity in reception area I have found that some times
the customers have to stand it creates a disturbance during working hours
• Computers should be available to all employees. These computers should
be connected through LAN so that employees can share information.
• More employees should be send to attend to attend short duration IT and
other courses and the training for banking.
• I also fund one thing that the employees working in The Bank of Punjab
are not very regular so the working system disturbed mostly. They should not
allow too much leaves.
• Appointment of CRO’S to help customers about various activities of the
branch.
• More rest room, prayers room and common rooms should be made for
females.
• Bonuses should be given at branch level to motivate employees on their
good performance. I have found that the bonus is not given to the employees who
are working on contractual basis.
• Stationary provision should be made easily so that there should be no
obstacle in work.
• There should be another ATM machine so that there should not be wastage of
time.
90
The Bank of Punjab
• Refresher Courses for the staff are most important in any international
organization. All the employees should have these courses according to their
requirement. Foreign experts can also be called for this purpose
• The bank is that there is no proper timing of the bank and there is made an
unnecessary delay in the banking transactions, which might not be a good
sign for the bank from future prosperity point of view.
• Bank should give some more incentive to its employees in order to remove
the conflict between lower and higher officers and should try to improve
the working condition of the bank.
• As such system should be designed that every employee who has some
problems with his officers can communicate it to the higher management
and some steps must be taken to improve that.
• Recruitments should be strictly on merit basis and induction should be after

proper and extensive training.
• Proper attention should be paid to upgrade customer services.
• Foreign branches should be opened in order to capture the international

market and to earn international repute for the bank.
• Working environment, equipment, furniture and staff dressing should be

according to the modern banking style.
91
The Bank of Punjab
The Seven weeks spent at Bank of Punjab, Chishtian Branch were, no

doubt a source of great learning for me about a lot of things particularly working
in bank’s atmosphere and system of bank. It’s my quite first experience to do work
practically in some well established organization like bank. This practical training
program did not only help me acquire loads of knowledge about the predominant
functions performed by banking companies, but also imparted a lot of training as
regards the set of behavioral traits which distinguish a particular person from the
rest of the lot in a professional environment.
During my internship I concluded that currently Bank of Punjab has a high market
share and is not facing any type of risk.
Due to highly trained professionals and experienced it is used to make progress

leaps and bound so the bank continuously enhances its superior technological
competency to provide innovative solutions to its customers’ needs. So we can say
that the management of Bank of Punjab is very loyal to its “Customer Service
policy”
BOP pays a huge amount annually in the form of taxes to the government of
Pakistan.
The main objective of bank is to build strong relationship with the customers and
make them believe that Bank of Punjab is right for them by providing effective
and efficient services.
92
The Bank of Punjab
It has also created a strong goodwill and trust in the market because of his interest
rate to lenders, higher profit rate to its deposit holder and as well as maximum
dividend to its share holders.
At this point it is significant to write a word of gratitude for the institute, which
makes it sure, that all the students get an exposure to practical life in relatively
well-reputed organizations
I must underscore the fact that writing this internship report was an evenly
memorable experience as actually doing the internship. I honestly tried my level
best to come up with an original piece of writing that could serve as a vivid proof
of the fact that students at Institute of Business & Information Technology,
University of the Punjab, are certainly doing the internship.
93
The Bank of Punjab
Web Sites:
• www.google.com
• www.bop.com.pk
• www.fbr.com.pk
• www.sbp.com.pk
• www.ibp.org.pk
Officials:
• Mr.Mateen Ahmed
(Branch Manager)
• Mr.Attiq-ur-Rahman
(Manager Operations)
• Mr.Amein Paracha
(Cash Officer)
94

Evolution of Banking: The Bank of Punjab

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The Bank of Punjab

According to G.W. Gilbert,

According to Banking companies ordinance 1962

u/s3(B) of Banking Companies Ordinance 1962 "Banker means person

BANKING SYSTEM IN PAKISTAN

THE BANK OF PUNJAB

Excellence Award by the Central Board of Revenue:

3rd Kissan Time Awards:

16th Bolan Excellence Award:

Best Corporate Report Award:

To exceed the expectations of our stakeholders by leveraging our

“To be a customer focused bank with service excellence”

Our Customers As our first priority

Profitability For the prosperity of our stakeholders that allows us to

Recognition For the talented and high performing employees

Integrity In all our dealings

Mr. Gohar Ejaz Director

A.F Ferguson &co. chartered accountants

The organization chart within a department and in different offices is

Divisional Heads …..……………… Head Office

Faisalabad Total 43 branches

Gujranwala Total 45 branches

Karachi/Quetta Total 07 branches

Lahore Total 68 branches

Multan Total 64 branches

Rawalpindi Total 38 branches

Peshawar Total 07 branches

Banks' activities can be characterized as retail banking,

CENTRAL BANKS are non-commercial bodies or government

TYPES OF RETAIL BANKS

Commercial Bank: the term used for a normal bank to distinguish it

Community Development Banks: regulated banks that provide

Postal Savings Banks: savings banks associated with national postal

Private Banks: manage the assets of high net worth individuals.

TYPES OF INVESTMENT BANKS

Merchant Banks were traditionally banks which engaged in trade

OTHER TYPES OF BANKS

Islamic Banks adhere to the concepts of Islamic law. Islamic banking

HISTORY OF MODERN ISLAMIC BANKING

Cash department of BOP is given the complete responsibility of handling all

a) Cash receipts for receive deposits

CURRENT DEPOSIT CREDIT SLIP

PLS CREDIT SLIP

CD cheque PLS cheque

Types of Bank Instruments

Accountancy (British English) or accounting (American English) is the process by

There are main two types of instruments.

Credit what comes in?

Debit what comes out?

“Cheque a written order directing a bank to pay money;

“Cheque is a negotiable instrument instructing a financial

General Crossin Special

WHO MAY CROSS A CHEQUE?

 Where a cheque is uncrossed, the holder may cross generally or specially

WHEN BANKER MUST DISHONORED THE

WHEN CUSTOMER COUNTERMANDS PAYMENT

DEATH, INSOLVENCY OR INSANITY OF THE

DEFECTIVE TITLE OF THE PARTY

FURTHER TYPES OF CHEQUE

SSA Saving Plus Account

CFG Consumer Finance Guarantee

CFH Consumer Finance Hypothecation