Professional Documents
Culture Documents
Bank
Table fo Contens
PREFACE..........................................................................................................4
ACKNOWLEDGEMENT....................................................................................5
Author...............................................................................................................5
INTRODUCTION OF ASKARI COMMERCIAL BANK......................................6
FORMAL DEFINITION OF BANK.....................................................................6
Evolution of Banking. ........................................................................................7
Bank Origin........................................................................................................7
There are different views about origin of the world “Bank”. According to some
people the word “Bank” is derived from the world “Bancus” which means a
“Bench”. They argue their point by this transacted their business of money
exchange on the benches. If the business of any businessman failed, his
bench was destroyed by the people. Due to this practice the word “Bankrupt”
was also used. ..................................................................................................7
On the other hand some people say that the world “Bank” is derived from
German time the word “Bank” was replaced by the word “Bank” which is
called “Banco” in Italian language. ...................................................................7
Evolution of Banking .........................................................................................7
First Stage of Evolution. ...................................................................................8
Second Stage. ..................................................................................................8
Third stage of Evolution. ...................................................................................8
Fourth Stage of Evolution..................................................................................9
Growth of Banking in Pakistan. ......................................................................10
Time of Independence. ...................................................................................10
Establishment of State Bank...........................................................................11
Development of Commercial Bank..................................................................11
Specialized Financial Institutions....................................................................11
Nationalization of Commercial Banks.............................................................12
Privatization of Commercial Banks.................................................................12
COMMERCIAL BANKS...................................................................................13
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COMMERCIAL BANKING SCENARIO IN PAKISTAN ..................................14
ASKARI COMMERCIAL BANK.......................................................................14
CORPORATE FLOW......................................................................................15
ASKARI COMMERCIAL BANK LIMITED MULTAN........................................15
DEPARTMENTS .......................................................................................................16
TYPES OF ACCOUNTS.................................................................................17
CURRENT ACCOUNT....................................................................................18
SAVING ACCOUNT........................................................................................18
ASKARI SPECIAL DEPOSIT ACCOUNTANT................................................18
Interest Rate....................................................................................................19
ASKARI BACHAT ACCOUNT.........................................................................19
TERM DEPOSITS...........................................................................................19
ACCOUNT OPENING PROCEDURE.............................................................21
INDIVIDUAL'S ACCOUNT..............................................................................21
DOCUMENTATION REQUIREMENT.............................................................21
OPERATION...................................................................................................21
JOINT ACCOUNT...........................................................................................22
DOCUMENTATION.........................................................................................23
OPERATION...................................................................................................23
PROPRIETORSHIP ACCOUNT.....................................................................23
DOCUMENTATION REQUIRED....................................................................23
OPERATION...................................................................................................24
PARTNER SHIP ACCOUNT...........................................................................24
DOCUMENTATIONS......................................................................................24
OPERATION...................................................................................................25
LIMITED COMPANY ACCOUNT....................................................................25
DOCUMENTATION REQUIRED....................................................................25
OPERATION...................................................................................................25
LETTER OF THE THANKS ............................................................................26
ISSUING PROCEDURE.............................................................................................26
RECEIVING INWARD CHEQUES................................................................27
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Another responsibility and function of account Opening Department is to
receive Inward cheques for collection of other Banks as well as of ACBL.
Then these cheques are sent to clearing official who clears these checks at
SBP from other banks. Inward bills from collection opposite are IBC number,
their OBC number. Lodge in clearing cheques pending on realization. Cleared
cheques are credited in the bank account. ....................................................27
ENCASHMENT OF CHEQUE ........................................................................27
Closing of Accounts. .......................................................................................29
PROCEDURE..............................................................................................................30
EVERYDAY POSTING....................................................................................30
ATM- CARDS DEPARTMENT........................................................................31
ATM CARD......................................................................................................31
ISSUING PROCEDURE..................................................................................31
ASKARI BACHAT CERTIFICATE ..................................................................32
ACCOUNTS DEPARTMENT..........................................................................34
CHECKING BANK’S DAILY ACTIVITY...........................................................34
INSTRUMENTS OF BILLS & REMITTANCE DEPARTMENT.......................35
CRITERIA FOR OPENING FOREIGN CURRENCY ACCOUNT...................46
FEATURES OF FOREIGN CURRENCY ACCOUNTS .................................46
CREDIT CARD DEPARTMENT .....................................................................71
PROCEDURE FOR ISSUANCE OF CREDIT CARD.....................................72
ASKARI MASTER CARDS..............................................................................73
ISSUING PROCEDURE .................................................................................74
PROFESSIONALS .........................................................................................74
BUSINESS MAN ............................................................................................75
Land Lord .......................................................................................................76
PAYMENT PROCEDURE ..............................................................................76
TODAY’S POSITION OF BANK......................................................................77
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PREFACE
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Internship Report Askari Commercial
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ACKNOWLEDGEMENT
Author
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INTRODUCTION OF ASKARI
COMMERCIAL BANK
FORMAL DEFINITION OF BANK
Bank is an institution which revives money from one party and
lends to another party.
These are the following types of banks
Central Bank
Commercial Bank
Industrial Bank
Exchange Bank
Saving Bank
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Evolution of Banking.
Bank Origin.
There are different views about origin of the world “Bank”.
According to some people the word “Bank” is derived from
the world “Bancus” which means a “Bench”. They argue their
point by this transacted their business of money exchange
on the benches. If the business of any businessman failed,
his bench was destroyed by the people. Due to this practice
the word “Bankrupt” was also used.
On the other hand some people say that the world “Bank” is
derived from German time the word “Bank” was replaced by
the word “Bank” which is called “Banco” in Italian language.
Evolution of Banking
The history of banking evolution is very interesting. In the early
ages human like and wealth was not secure. Due to fear of loot-
mar and theft people buried their wealth under land but this
method was not satisfied. People started to search the custodians
of wealth. The evolution of banking started and it has crossed the
following stages.
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Second Stage.
During this period those receipts which were issued by the
goldsmiths against the valuables goods were being used as a
medium of exchange by the merchants. People purchased the
various things from the traders against their receipts against the
payments. So the receipts were used like the bank cheque of the
modern age.
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Internship Report Askari Commercial
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Time of Independence.
Hindues migration from Pakistan to India also caused drain on the
bank deposits. In order to ruin the economy of Pakistan. Hindues
closed down most of the head offices and branches of the
scheduled and non scheduled banks in Pakistan.
At the time of independence there were only two Pakistani banks,
that is Habib Bank and Australasia Bank. At the time, Pakistan had
631 branches of scheduled banks and 411 of no-scheduled banks.
The total deposits of Pakistan banks were Rs. 800 million and
advances were 198 million, the non-scheduled banks number
reduced from 411 to 106 over the same period.
The mass scale withdrawal of deposits closure of branches and
migration caused a deadlock in the banking business in Pakistan.
Keeping in view the above situation government, of Pakistan took
various steps to provide all kinds of facilities to they non-Muslim
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COMMERCIAL BANKS
Commercial banks are companies “which transact business of
banking in Pakistan Commercial banks have constituted the most
important source of institutional credit in the economy of Pakistan.
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CORPORATE FLOW
It the corporate body consists of 12 Board of director including one
chairman
1. President
2. Chief Executive
3. Secretary
4. NIT Nominees
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DEPARTMENTS
The bank has following department:
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TYPES OF ACCOUNTS
In ACBL, there are the following types of accounts:
• Current account.
• Saving Account.
• Askari Special Deposit Account.
• Askari Bachat Certificate.
• Term Deposit.
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CURRENT ACCOUNT
In current account there is no interest on it. It is for only transaction
purposes. They are paid on demand. When a banker accepts a
demand deposit, he incurs the obligation of the paying all cheques
drawn against him to the extended of the balance in the account.
As there is no profit paid on this account it is also called chequing
account because cheques can be drawn on it. Current account is
mostly opened for business.
SAVING ACCOUNT
The purpose of this account is to induce the habit of saving
individuals in the neighborhood. The profit is on the basis of 8.5%
per 6 month. The minimum deposit for opening the account is
Rs.100/- (as obvious in the Annexure).
Though individuals open such accounts for saving purpose,
persons belonging to Armed forces and different military
institutions are free to use this account on current basis.
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TERM DEPOSITS
A term deposit is a deposit that is made for a certain periods of
time at the end of the specific period. The customer is allowed to
with draw the principle amount .
ACBL Term deposits are of types clear in the deposit scheme in
the table). One of them is "Askari" Advantage one month. The rate
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INDIVIDUAL'S ACCOUNT
When a single man or women opens an account in his/her own
name and has the right to operate it is called individual Account.
DOCUMENTATION REQUIREMENT
For literate person copy of National Identity Card is required as a
primary requirement. For illiterate person and Veiled Women,
along with the copy of National Identity Card requirement he or
she must come in person for opening the account.
OPERATION
• The person place a "Check Mark " in the type of account and
type of operation required
• He/She fills in part-I of the form , a fix his /her either two or four
similar signature (or thumb expression in the signature space
and get it introduced and signed by a person who already has
an account with the bank and write his account no in the
specific rows in a specific space.
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• The person fills in "next of Kin " position where he/she father,
mother, husband/wife or any other relative's name, his /her
address, phone no and affix his/her signature to certify this
requirement. This requirement is needed because in his/her
absence bank can have correspondence with the specific
person.
• The person put her /his signature (" or thumb expression) on
the signature Specimen Card (SS CARD) similar in the area on
the form. One the back of S.S card mailing address, telephone
no, Person to contact and introducer space is filled in. All these
requirement are necessary for future
• The person deposits the initial amount for opening account on
to the cash counter.
The person put his signature on form -A (check book
requisition) on two places in "authorized signature" and fills in
the "Title of Account space by writing his name.
• If the person put his signature in Urdu or any language other
than English, he signed a "Vernacular form" where under take
that affixed signature are original and his own signature and
two postal size photos are needed.
The next day is the opening of account.
JOINT ACCOUNT
When two or more persons, neither partners, nor trustees, open an
in their name is called joint Account. Husband and wife or two
persons of same sex can open joint account.
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DOCUMENTATION
For joint account copy of National Identity Card of all the persons
is obtained other things remaining same as in individuals account.
OPERATION
• The person checks the type of account and type of operation
required in the respective box on the form.
• The persons fill in the Part-I and part-II in the form.
• Signatures of both persons are obtained on the form in the area
specified for signature and S.S. Card.
• In the title of account space names of all the persons are
mentioned.
• Accounts holder specified in the form that they will operate the
form singly or jointly.
PROPRIETORSHIP ACCOUNT
When an owner of a firm operating singly, opens an account in his
firm name, this account is called a proprietorship Account the
proper himself liable for all his acts.
DOCUMENTATION REQUIRED
For this kind of account, an application for opening the account on
the firm letter -pad (having the firm name) is required along with
the N-I-C- Card of proprietor.
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OPERATION
Al l operation remains the same except that the firm name is
written in the "Title of the Account" area and signature of the
proprietor are affixed in the S.S. Card and the area specified for
signatures on the form.
DOCUMENTATIONS
• Copy of N.I. card of all partners
• Application to open the account on the firm letter pad.
• Partner ship deed in case registered partnership firm.
• Letter showing the implied Authority of one or more partners to
act on behalf of the firm.
• In case of non -registered partnership firm, understanding on
behalf of the firm to remain liable for all acts of the firm.
• Name, address of all partners is written on the pad.
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OPERATION
All other requirement remain same except that the form is dully
signed by all partners cards are signed by all those partners who
will act on behalf of the firm and along filling part-I , Part-Iv is also
filled.
DOCUMENTATION REQUIRED
• Memorandum of Association.
• Articles of the Association
• Resolution of the Board of Director.
• Certificate of Incorporation.
• Certificate of commencement of business
• N-I-C
OPERATION
The persons authorized in the Resolution of the Board of Directors
put their signatures on S.S Cards. Next of kin "requirement "is not
need in case of a Limited Company. After completing each and
every formality, introducer signature is verified by S.S card and is
stamped "Verified" customer signatures are admitted by stamping
"Admitting" near signature and again signatures on S.S card are
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OTHER RESPONSIBILITIES
CHEQUE BOOK ISSUING
Check books are issued only for checking account such as current
Account, saving Account and ASDA Account. They are not issued
for other fixed and term deposits because of their Long term
Accounts “nature.”
ISSUING PROCEDURE
Signatures on cheque – book requisition are verified by
matching with signatures on SS.
Cheque – book leaves number, account number, account
holder’s name are mentioned in the cheque- book is made
by mentioning the and the total of sum of excise duty and
provincial tax.
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Internship Report Askari Commercial
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ENCASHMENT OF CHEQUE
Issuance of Token
After scrutinizing the apparent tenor of cheque a token is issued
to the account holder.
Verification of Signature
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Internship Report Askari Commercial
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After affixing the two stamps i.e. paid stamp and branch stamp, a
cheque Is sent to the accountant for the verification of signature
from signature specimen card. After authentication a cheque is
sent to cash department
Encashment of Cheque
Cashier pays the amount to token holder after getting back the
token from him.
Deduction of Zakat
Form the profitable accounts zakat is deducted at the rate of Rs.
2.5 % .annually on the outstanding balance of accounts on the first
day of every valuation dale i.e. first day of Ramzan. The Central
zakat Authority (CZA) fixes minimum balance for the deduction of
zakat before the valuation date
Withholding Tax
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Internship Report Askari Commercial
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Closing of Accounts.
There are many reasons for closing of account. Some of the more
common reasons are as follows: -
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Bank
PROCEDURE
1. The customer for individuals account write an application to the
manager of the bank an a simple paper about the closing of his
account with the bank (In case of proprietor ship partnership
and limited company account the application should be written
an firm or company letter –head)
2. The individual or in case of other type- proprietor firm and
company surrender the cheque book to the bank.
3. The cheque book is then torn from one side and is attached
with the application.
4. In case of Ltd. Company account resolution of the board of
directors is also obtained to attach it with the application.
5. The account opening form of the account holder is taken from
the account-opening file, and the application, cheque book, and
resolution of board of directors in case of limited company
account are attached with the form.
6. Lastly, it is written in “Red Ink on the form that account closed”
and “Date of account closing.”
EVERYDAY POSTING
Following transaction of cheque book is posted:-
Dr_____________ party A/c 25(for 10 leaves)
Cr______________ excises duty on cheque book 20
Cr______________ provincial tax on cheque book 5
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ATM CARD
ATM – Cards are only issued to Account Holder. Any account
holder of ACBL (current “Saving Value plus Saving Account”) can
obtain ATM card from ACBL with in 15 days. Maximum limit of
daily cash withdrawal is Rs. 10000.
ISSUING PROCEDURE
1. The person, first open the account within the blank.
2. Then he fills the ATM application form in which name of
account holder, account number, address, phone number are
mentioned.
3. Then on the same application form bank officer guides branch
code, application number and signatures are verified by the
bank. Bank manager puts his signatures.
4. After completing this process, the application package is sent to
card centre.
5. Card along with pin code is sent to the branch from the head
office. ACBL head office takes a period of 3-4 weeks for
preparing and processing of ATM – cards. First, list of card
holder is issued and then after 15 days cards are sent to ACBL
issuing branch. The card and list are not sent simultaneously in
order to avoid any mishandling.
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TERM DEPOSIT
Any person can open a term deposit. He needs not have an
account in the bank.
PROCEDURE
• The customer comes to the bank and specifies the number of
days for which he wants to Deposit hid money in term deposit.
• The credit voucher is made for the amount of cash to be
deposited. The presence of account is not necessary.
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• The term deposit form is then filled by the officer. The date of
opening, the period, the name of the customer, the signature
etc is all written on the form.
• The term deposit Receipt is filed according. All the
requirements are carried out, the signature of the customer and
the authorized officer, the stamp of the bank etc.
• The term deposit Receipt is then given to the customer.
• The number of the term deposit form and term deposit is noted
receipt is then given to the customer.
• The number of the term deposit form and term deposit receipt is
noted in the term deposit Register.
• After completion of the form, it is posted in the term deposit file.
• A 0.2% tax on the provincial amount is taken while issuing the
receipt.
• A credit voucher made and the amount is credited to the tax on
TD.
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Internship Report Askari Commercial
Bank
ACCOUNTS DEPARTMENT
Accounts department is a department which deals and checks all
the activity of all the department .It also deals in expression of
finance of the bank. Salary payment is also one function of the
bank. Mr. Kamran and Miss. Shagufta deal this department.
OTHER ACTIVITIES
Preparation of daily bank positions statement
Payment of salaries
Preparation of the statements
Depreciation calculation
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Internship Report Askari Commercial
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REMITTANCES DEPARTMENT
Remittance department provides services to the customer of the
bank. The main function of this department is transfer of funds.
Incharge of the department is Mr. Ahmad Feroz.
DEMAND DRAFT
A demand draft is an instrument, which is drawn by one bank upon
another bank for a specific sum of money payable on demand. It is
made by the bank and given to the purchaser against cash or
cheque. If two banks are involved, then one banks sends a DD to
another bank. But in customer - Bank case the customer sends his
DD to the receiver.
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ISSUANCE PROCEDURE
A demand draft application (Annexure--) to given to the customer,
he fills in a relevant information and signs it.
The Officer in charge then checks the information form.
The charges such as commission, excise duty, postage is
charged as per effective schedule of charges. Tax is exempted
if he is taxpayer & knows his No.
In case of cash deposit the cashier counts he amounts & signs
the DD application and enters it in the register.
The cash received equals the amount of remittance & the
cheques there on.
Then the officer of the bills & remittance department signs it
and operation manager counter signs it.
The entry is made in the DD issuing register.
It is given to the customer.
Vouchers are passed.
Commission charges Cr
Excise duty Cr
The vouchers and the DD form given for posting at the
computer.
The DD advises are printed at the computer and mailed to the
respective branch.
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NOTE
On the contra, when a DD is received i.e. a customer comes to us
with the DD, the procedure is as follows.
The DD credit advice is received through mail. The No’s are
checked & signatures are verified.
An entry is made on the DD payable register, and the vouchers
are made.
The Branch Dr
DD payable Cr
The DD credit is attached with the vouchers and given for the
posting at the computer.
When DD is received, the test No’s are checked, and the
payment is made.
The vouchers are given for posting. And the entry that was
made in register is closed. i.e. DD payable is Nil.
TELEGRAPHIC TRANSFER
A telegraphic transfer is a fastest & safest way to transfer money.
The message is fixed.
ISSUANCE
The request for maintenance through T.T is taken on the
standard printed form.
The customer fills it & signs it.
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Internship Report Askari Commercial
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The Head & remittance department checks it, the charges such
as commission, tax, telex as per effective schedule and signs it.
If he fills the tax exemption from then no tax is levied.
Then a neat T.T is made on the white slip. There are 3 copies.
The original faxed to the Branch, one to the Head Office and
one is kept as record.
The entry is made in the TT issuing register.
The following vouchers are posted.
Commission Charges Cr
Fax charges Cr
W.H. Tax. Cr
When commission bill is received, it is attached to the T.T office
copy in the file.
PAYMENTS
When a T.T arrives, the test numbers are checked and the
signatures are verified.
The entry is done in the T.T pay able register.
The following vouchers are prepared & given for posting.
Head Office Dr
T.T Pay able Cr
T.T Payable. Dr
Party A./C. Cr
If there is no a/c then the T.T receipt needs revenue stamps
and then the payment is made. The T.T receipt is strictly non
negotiable.
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PAYORDER
It is a cheque drawn by a bank on itself. Pay order is an
instrument in which the parties are involved the purchase, the
bank and the receiver. It can he purchased by any customer. It is
usually made by govt. Bodies. A single bank is included in this
case.
ISSUANCE
The standard form is given to the customer; he fills in the detail
and signs it.
The concerned staff checks the form.
Charges as per effective schedule are applied.
The cash of the pay order is received.
A cost memo is signed, stamped and handed over to the
applicant as a receipt.
Then the pay order receipt is filled accordingly.
Counter foil is also filled.
An entry is made in the pay order issued register.
Then the authorized office after checking the pay order signs it.
The pay order is then handed over to the application after
obtaining his signature on the P.O form.
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Internship Report Askari Commercial
Bank
PAYMENT
On representation of the pay two authorized officers of the
branch sign order receipt the receipt.
The P.O entry is made in the P.O issued register.
Then the amount is credited to the account of the customer or
paid in cash.
The P.O is posted at the computer.
PAY SLIP
It is an instrument used by the bank s for its payment. The slips
are issued to the employees of the banks their bills & invoices.
The bills are transferred payments. In this case only one bank is
involved. He is the issuer as well as the payer.
Procedure prescribed for P.O for issuance and payment is
followed for payment is followed for pay slips with the following
expectations.
1. Pay slips are the issued by the bank for the settlements of this
own payment.
2. No excise duty is applicable on P.S.
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ISSUANCE
A credit voucher is sent from the accounts dept. to the b debt.
According to the b debt.
The P.S books is taken out & filled according to the credit
voucher.
It is entered in the P.S. /P.O register.
It is signed by, an authorized officer, Operational Manager Mr.
Zubair Sheikh.
The pay slips is handed to the customer.
A voucher made and posted payment.
The P.S. is received on the counter, clearing or transfer.
On receiving the P.S. if it is transferred in the P.S. register.
The payment is made and the P.O. is posted at the computer.
Dr. Bills payable P.S. issued.
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Internship Report Askari Commercial
Bank
PROCEDURE
The cheques that are banks in other cities are separated.
They are entered in the OBC register, the number is written on
the stamps.
The OBC forwarding schedules / (Annexure) are prepared for
the different branches.
The respective cheques are attached with the schedule.
Two authorized officers sign the schedule.
The office copy is filled and the original schedule is mailed.
On clearance the respective banks send back the OBCS along
with IBCA. Inter branch credit advice.
The OBC no are checked for the OBC register and the received
any entry is made.
Charges i.e. commission charges and postages charges are
deducted from the A/C.
Party A/C Dr
Commission Charges Cr
Postage charges Cr
At the end of the day the contra vouchers are.
OBC collection Dr
OBC lodged Cr
OBC collection Dr
OBC lodged Cr
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Internship Report Askari Commercial
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PROCEDURE
The OBC of the other branches will be the IBC’s of this branch.
So an OBC forwarding schedule is received by mail.
The cheques are entered in the IBC register. The IBC numbers
are allotted to them.
The cheques are lodged for clearing.
After realization, an IBCA is prepared and mailed to the branch.
At the end of the day two contra vouchers are made & posted.
IBC collection Dr
IBC logged Cr
IBC Collection Dr.
IBC lodged Cr
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OTHER FUNCTIONS
BALANCING THE REGISTER
At the end of the day, all the registers are balanced with the
computer balances. The heads and checked are as follows.
DD payable
IBC collection.
MT payable.
OBC lodged.
OBC Collection.
TT payable.
IBC lodged.
Bills payable. P.S. issued.
Bills payable P.O. issued.
If the payables are not cleared for a lot of days, a reminder is sent
to the respective branches.
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There are not hard and fast rules for becoming the Foreign
Currency Account holder. Bank wants only introduction of the
Client and very little about the background. I.D card is also not
necessary, if someone has; well and good, otherwise no restriction
will be there for him.
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Internship Report Askari Commercial
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FACILITIES
This account provides following facilities:
1) Traveling quota
2) Out ward remittances
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EXPORT
Mainly export deals in:
Negotiation of documents
Sending the documents for collection
Pre-shipment financing
Post-shipment financing
Remittance against agent commission
Forward covered booking
Handling the documents for negotiation according to the
UCP 500 (uniform custom and practices)
Handling the documents for collection according to URR
(uniform rules for collection)
E form.
Internal transactions are through Nostro and Vostro
accounts.
Registration
Who so ever desires to export the goods first of all he has to get
his name, name of firm, or his limited company registered with the
export promotion bureau. After getting registration, the exporter
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Documentation.
The exporter must submit the following documents to the
negotiation bank.
• Bill of exchange
• Invoices
• Insurance documents
• Bill of loading
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E-Form.
Every exporter is required 10 furnish a declaration to customs
authorities for goods exported. This deceleration is submitted on a
prescribed Form-E in quadruplicate which is certified by the
authorized Dealers.
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Issuance of E-Form:
Blank 'E' form in quadruplicate is issued to the exporter having an
account with the branch against little request. In case the exporter
maintains his account at a branch other than the exchange dealing
branch, the request is routed through his branch. Before issue E-
Form it is ensured that the exporter has tendered the attested
photocopies of required documents e.g. valid export registration
corticated, N.I.C., NTN, Challan Copy of renewal few paid. Credit
report of the exporter is also obtained to ensure the credit
worthiness of the exporter. The set of E-Form after completion of
all formalities is then entered in the E-Form issuance register and
acknowledgement is obtained from the exporter or any authorized
person of the exporter.
Certification of E-Form
Before lodgment of E-Form to custom authorities is requested to
be certified by the authorized dealers. When the quadruplicate set
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Internship Report Askari Commercial
Bank
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Internship Report Askari Commercial
Bank
i) Mode of transportation.
Advance Payment
Sometimes the exporter may receive the payment for the item to
be exported in advance without waiting for documents in such a
case the advance payment received for this purpose is required to
be declared by the exporter on the prescribed form. Advance
payment voucher. A proceed certificate is issued to the exporter.
For such payments which is required to be produced at the time of
presentation of documents for negotiation.
CERTIFICATION
After certification of 'E' form all the four copies are submitted by
the exporter along with shipping bill to (he customs authorities for
clearance (^'consignment. Three copies of ‘E' form are returned by
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Bank
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Bank
COLLECTION MECHANISM
Goods Bill
Bill paid/
Presented
Documents acceptance
Proceeds
and paid
Credit to
exporter’s a/c
Documents COLLECTIONG
REMITTING
BANK
BANK
Proceeds
Remitted
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Internship Report Askari Commercial
Bank
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Internship Report Askari Commercial
Bank
IMPORT
Opening the letter of credit
For issuing the L/C bank requires sufficient funds in the
account of importer.
Scrutinize the documents receive from flowing bank under
letter of credit. Account to UCP 500 and extending the credit
facility to the importer informs FIM (finance against imported
merchandise) FATR (finance against trust receipt).
Arrange forward cover booking regarding import payments
Also arrange forward cover booking for letter of credit open
other then ACBL
Submission of monthly returns to SBP regarding the import
on form I
CREDIT DEPARTMENT
Credit department deals with the extension of advances to
individuals, companies etc. basic function of credit department is
to extend advances by checking carefully all the documents,
securities necessary for fulfilling the requirements which are
necessary, for extending advances. Incharge of the department is
Mr. Shaukat Babar.
Types of Advances.
i) funded advances
ii) non funded advances
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Internship Report Askari Commercial
Bank
Funded Advances
Funded advances are those advances in which funds of banks
are involved.
Funded Advances
Term Finance.
Main features of term finance are
i) It is for proper time period. May be of one year, two year,
and three year. House building finance is including in term
finance.
ii) Account will be debited only once adjustments are
possible further but account will be debited only once.
Term Finance
Clean Secured
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Internship Report Askari Commercial
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Secured Finance.
Financing against Govt. securities i.e. price bonds, defense saving
certificate.
Documents Required.
L/C, demand promissory note, L/G.
Clean Finance.
These funds are extended against personal guarantee for salaries
people.
Documents Required.
LC of Govt. salaries personal, letter of guarantee.
Revolving Facilities.
Proper limit is facility is called summing.
Running Finance.
It is extended the business community and Govt. enterprises.
Cash Finance.
Cash finance against tangible securities.
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Internship Report Askari Commercial
Bank
Objectives
Provision of suitable credit services and products
extension of credit is out compromising the rules and
regulations
Performance
The advancement shall focus on the development enhancement of
customer relationship
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Internship Report Askari Commercial
Bank
Administration
Administration should insure compliance that is all laws and
regulations of regulatory authorities loans / facilities and related
security shall be closely and regularly monitored and reviewed at
the branch level. By a separate unit unconnected it credit approval.
Total facilities
They must confirm it to the regulatory requirements.
Term facilities
Aggregate term facilities in excess of one year should not
exceed 30% of the total credit portfolio
Unsecured facilities
Similarly the aggregate of all advances to a single person should
not exceed the guideline. Exposure against none funds based
facilities. The aggregate of contingent or non-funds based facilities
should not exceed ten times paid up capital and open all
resources.
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Conditions
Borrowers liquidity ratio. The current ratio of the borrowers must
be equal to or less then one. The debt to equity ratio should not
exceed 60:40.
Credit reviews
All limits shall be subject to at least an annual review.
Credit Approval.
The primary individual factor determining the quality of the bank’s
credit portfolio is the ability of each individual authority. Credit will
be extended in accordance to the authority levels. Approved by the
BOD from time to time.
Credit administrations
The principle amount of credit add are as follows
• Credit approval
• Credit file maintenance
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Internship Report Askari Commercial
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• Facilities evidence
Secured Advances
Pledges, hypothecation, charges or mortgages on tangible readily
realizable assets.
Unsecured / clean
Which are not covered by any tangible security.
Credit committee
Head office credit committee only
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Internship Report Askari Commercial
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Objectives of Lending
In the modem economics, more than 90% business concern raises
their funds from various financial institutions to meet their multifold
transaction. Actually it is very difficult for the modem businessman
to run his business on a huge scale solely. He has to float his
shares to the public or knock the doors of financial institutions, for
example Bank. The most easy way to make fund available to seek
assistance by such agencies including Banks which have got
surplus funds and will to come to the assistance of producing
units, and distributing units, and exchanging units. This is the
primary factor which toads towards lending of money by Banks. No
doubt, we cannot neglect the second factor profit orientation while
running the credit business, the single way for the bank to earn
profit lies in lending money to the customer on comparatively
higher rate to mark-up that it gives to the depositors.
Principles of Lending
Apart from the instructions and directives sent by the state Bank of
Pakistan, Muslim commercial Bank, Ltd. Guided by three basic
principles of profitability, safety, and dispersal.
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Internship Report Askari Commercial
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1. Profitability
The management of Muslim Commercial Bank, ltd. Is very careful
to seek advances where advances can generate a higher return.
Bank has to spend huge amounts on establishment, payment of
profit to depositors, salaries of the staff, other variable expenditure
and to provide a fair return to the share holders, it must therefore,
earn profit.
2. Safety
Safety principle is very important. No one will take a risk of losing
the principle in order to earn profit. So bank will prefer to lend at
lower rates than to risk his money for higher rates. For making his
advances safe, a bank select his borrowers cautiously. Safety
does not necessarily means the taking of security. It would be
wise, not to lend however, good the security be if it is clear that it
will have to be realized for clearance the debt. Safety also employs
the borrower's ability to reply without difficulty. Another aspect of
safety is the lenders legal right to claim repayment from the
borrower.
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Internship Report Askari Commercial
Bank
manner that they are repaid in reasonable period so that the bank
can make new advances. Dispersing the advances in reasonable
amount over a large number and types of borrower is necessary to
avoid bid debt, stick up by single or few borrowers. It is therefore,
necessary to advance moderate sums to a large number of
customer engaged in different types of industries.
Selection of Borrowers
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Internship Report Askari Commercial
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1. Character
The bank get to know the customer we!! and be able to judge his
intentions, for the bank shall be entering into a contract with him
involving the financing of his business. It is, therefore, common
and business senses to make sure that the other party to this
contract will live up to his obligations, this factor, therefore,
contributes significantly to the safety of the advances, as it relates
to the willingness to repay under all circumstances. Particularly
adverse circumstances. Are the partners or directors of the
business unit, which is seeking finance, persons who can be relied
upon as regards details of their proposal as will as promise of
repayment? What is their reputation in the market place for
meeting their commitments in respect to prices & delivers to
purchasers and timely payment to their trade creditors?
Confidential and tactful inquiries from wholesalers, suppliers and
other bankers are necessary to obtain this essential information.
2. Capacity
This factor relates to the ability of the borrower to manage his
business successfully. Do they have the necessary management,
accounting and technical skills? And the degree of experience, in
the particular line of business for which the finance is required, to
utilize the advance productively and profitably, so that repayment
is possible, along with our share of the profits? This ability can be
judge from the trading results. A study of the company's audited
financial statements for the past few years would real whether
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Internship Report Askari Commercial
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3. Capital
The proportion of the borrower's own resources to the amount of
finance is requested, is the next point to receive the branch
manager's attention.
4. Cash Flow
The source of repayment should be ascertained at the beginning.
As commercial banks, bank advances must, be largely confirmed
to provide short" term finances to business customer. Hence
financing the current assets of traders and manufactures. Would
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Internship Report Askari Commercial
Bank
5. Conditions
From quantitative and qualitative information the bank need, to
examine the conditions which the firm is operating. This requires
identification of the factors that have up to now contributed to the
success of .the business, and to
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Internship Report Askari Commercial
Bank
6. Collateral
7. Purpose
Credit resources are scarce but have alternate uses- The unity's
needs demand that banks put them to the best possible for which
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Internship Report Askari Commercial
Bank
the finance will be used, within the credit policy the bank? In
conformity with the country's laws, credit control and exchange
control requirements. Is it a desirable one from the economic and
banking viewpoint? Is it for productive of emulate purpose?
8. Period
Short-term advances are favored that is for not more than a year,
renewable each year, if still justified. Accordingly the most usual
purpose is to assist manufacturing and trading customers in their
need to purchase current assets in line with their production or
trading cycle, and seasonal loans for agricultural purposes.
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Bank
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Silver card
Gold card
These are different due to their credit amount limit. For example
for silver card, cardholder can take the maximum amount
ranging between Rs. 30,000 to Rs, 200,000. For gold
cardholder this limit has been extended to Rs. 300,000.
ISSUING CHARGES
When the card is given to cardholder, there are certain fee
charges to by the bank, which is different for different cards.
Local cardholder is charged Rs. 1200 but if the cardholder
is Army officer there is special discount for him. And he is
special charged Rs. 750.
Silver cardholder is charged Rs. 2500.
Gold cardholder is charged Rs. 3500.
ISSUING PROCEDURE
Credit card is issued to three types of parties.
Professional (Govt & private officers)
Business man
Landlord.
PROFESSIONALS
For professionals bank require
Authorized letter from the concerned organization in which
he works. This letter shows all particulars about the person,
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Internship Report Askari Commercial
Bank
BUSINESS MAN
In the case of businessman bank need
Balance sheet of businessman.
Type of business.
Turnover of 5 years.
And then when it is sured that the business has the ability to cover
the expenses of credit card and to pay it at any time, the bank
issues the credit card.
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Internship Report Askari Commercial
Bank
Land Lord
In the case, the person is totally new, and the bank doesn’t know
anything about him. For this bank need an account having the
amount over and above the credit card limit of that credit card.
Usually, there is more chance of default in this case; so, the bank
avoids issuing credit card to that person.
PAYMENT PROCEDURE
The cardholder should have to pay all the amounts what he has
consumed. But in order to facilitate the cardholder, 5% is the
minimum limit that the bank requires and that should be paid
monthly. If you paid only 5% then 2% interests will be charged on
remaining amount and it is added into the next month payments.
If that 5% is not paid then Rs. 100 are the additional charges
charged to the next month payment apart form the 2% interest.
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Internship Report Askari Commercial
Bank
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Bank
RECOMMENDATION
During my internship, what I feel should be there are:
Human Resources Department should be there in order to
motivate and trained the employees. I have noted some
dissatisfaction among the employees, due to in efficient
promoting system. So the bank should provide clean and on
the merit basis promotion system.
The bank is now over staff. The building under operation is
in adequate for such a large staff. So the building should be
extended
LATTER
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