arbaz final report bank of punjab

7/29/2019 Arbaz Final Report Bank of Punjab

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1. EXECUTIVE SUMMARY:

Internship programs are designed to make students known to the practical work and to give

them proper experience that would help them in their future endeavors. For my MBA course

requirement I got an opportunity to work as an internee in any organization.

I decided to take up Punjab bank Limited for my internship because I really like to work in

banking sector And in HasilPur there is no other opportunity to do internship. I apply in

some banks. First of all Punjab bank call me to work as an internee in Bank of Punjab. And

I have also a reference in Punjab bank. So in order to learn more this was my choice.

This report is about my internship that I have undergone at Punjab Bank Limited Hasilpur

Branch. During my internship I am able to learn practical aspect of business, and get good

working experience.

On the very first day of my internship I reported to Operation Manager Sajjad Haider Khan.

He gave me small introduction of the bank and introduced me to some staff of the bank.

Every internee is rotated among the banks departments and so was I. This rotation is done

in order to have general concept regarding banks functions, operations and policies. In this

rotation the stay in department is usually a week or fifteen (15) days. I have learned more

about the credit, Foreign Trade and accounts department. Also worked in the operations

department that has clearing, account opening and remittances have given below the caption

of activities I was involved in during the period of seven weeks.

The working environment in Punjab bank is something that can be found only in a

challenging and in a reputed multinational corporation. The senior staff is always open for

any kind of suggestions and help for the junior staff and the internees. One is provided withplenty of opportunities to groom his career and to learn while working this sort of an

environment. Apart of completing a course requirement, I learnt a lot from this internship in

terms of how to deal with people while you are on a job.

2. OBJECTIVESOF STUDYINGTHE ORGANIZATION


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The primary purpose of this study is to fulfillment of the requirements for the degree of MBA

(Banking & Finance).For this connection each student of this particular course is required to

undertake training in a relevant organization selected by them, for a period of 6-8 weeks.

The secondary purpose of this internship is to understand how the theoretical knowledge can be

applied to the practical situations and examine an organizations financial issues and identify its

opportunities/ problems and also suggest corrective measures. This internship is also very

necessary to gain confidence and become aware of the mechanism of an organization. As an

internee I want to achieve following objectives during my internship and organization study:

1. To familiarize with a business organization.

2. To familiarize with the different departments in the organization and their functioning.

3. To enable myself to understand how the key business process are carried out in

organization.

4. To understand how information is used in an organization for decision making at various

levels.

5. To relate theory with practice.

6. I was also keen to gain professional experience in an actual testing environment.

7. I want to develop my skills in the application of theory to practical work situations.

8. To develop my attitude conducive to effective interpersonal relationships.

9. To acquire good work habits and sense of responsibility.

10. To enhance my learning experience by application of fundamental concepts previously

learned.

11. To observe, analyze and interpret the relevant data competently and in a useful manner.


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12. To develop my interpersonal communication.

OVERVIEWOFTHEORGANIZATION

History

The Bank of Punjab started functioning with the inauguration of its first branch of 7-

Egerton Road, Lahore on November 15, 1989. The architect of the bank Mr. Nawaz Sharif then,

the Chief Minister of Punjab, performed the inauguration.

In Pakistan, over long periods of time the gap in saving and investment and balance of

trade deficit has posed serious threat to the target levels of growth The ailments related to the

budgetary deficit and public debt, both foreign and domestic are in addition. Interestingly even

such adverse circumstances growth of real sector during the preceding year registered a

favorable change, which speaks of hidden potential and strength of economy

Fortunately, the banking sector of the country has the well organized and properly

institutionalized system, which is the major vehicle not only for mobilization of resources to

finance trade, agriculture, and industry but also for the effective conduct of monetary policy.

The emergence of new bank on the national scene in the early 1990s has done two

important services to the nation.

The saving base of the economy has effectively enlarged and hence the investmentopportunities have increased.

The services of the banks in the fact of severe competition have improved considerably

so that now consumer are left with extensive choice to do or undo their business relations

with these banks keeping in view quality of their services.


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The Bank of Punjab has the privilege to discharge its responsibilities towards national

progress and prosperity. Within the couple of years of its scheduling, the bank has not only

carved out for itself prominent niche in the mainstream banking of the country but in certain

areas it has the distinction of taking the lead. In the short span of time the Bank has been able

to evolve a distinct corporate culture of its owned-based policies, which are realistic and are

on highly professional footings.

Scope of the Bank.

Being a commercial Bank, The Bank of Punjab performs all such functions as are attributed

to commercial banking institution both in the area of resource mobilization, loans, and

investment. The Bank is thus providing all type of advances to business, trade, and industry

on seasonal and annual basis, and is ensuring, through the prudent policy, the safety and

protection of its loan portfolios, as the resources base of the bank expands, project financing

will also be brought into its fold.

NATUREOF BANKOF PUNJAB

The Bank of Punjab is working as a scheduled commercial bank with a network of almost 280

branches at all over major locations in the Punjab. The Bank provides all types of banking

services such as Deposits in Local Currency and client 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. The bank

offers attractive rates of profit on all deposits, opening of foreign currency accounts and handling

of foreign exchange business for example imports, exports and remittances, financing, trade and

industry for working capital requirements and money market operations. The lending policy of


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bank is not only cautious and constructive but also based on principles of prudent lending with

maximum emphasis on security.

The Bank of Punjab is working as a scheduled commercial bank with its network of 282

branches at all major business centers in the country and strength of employees

Branches of this bank are increasing all over the country at a gradual speed which shows

that customers are placing confidence and satisfaction in the services of BOP.

In fact, it has made wonderful advancement in a very short time as compared to other

banks in Pakistan.

THE BANKOF PUNJAB (BOP)

Punjab Government wishes to state that being the major stake holder in the Bank of Punjab it

has full faith in the new management and operations of the Bank. The government further

pledges its unequivocal support to the Bank and firmly believes that the affairs of the Bank are

sound and its financial health robust

BUSINESS VOLUMEOF UNITED BANK LIMITED

These are the quick facts of the business in October 2010. At that instant BOPs business volume

is as under.

Assets(Current + Fixed) US$ 2.7 Billion PKR 164.7 Billion

Loans US$ 1.7 Billion PKR 103.7 Billion

Deposits US$ 2.3 Billion PKR 140.3 Billion

Business Volume in terms of Investment, Current & Fixed Assets, Share Capital, Revenues,

Deposits, Advances, Income, and EPS for the last 5 years is as under:


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2007 2008 2009 2010 2011

Total assets RS (M) 43,621 66,320 111,154 164,855 234,974

Revenue RS (M) 3,675 5,488 10,912 18,603 26562

Shareholder's

Equity RS (M) 3052 4,420 6,777 10,659 15,110

Investment RS (M) 11,458 16,198 18,026 28,233 73,462

Deposits RS (M) 34,938 54,724 88,465 137,728 191,968

Advances (net) RS (M) 18,344 39,439 63,624 101,320 133,894

Income RS (M) 831 1,368 2,353 3,804 4,446

EPS (Rs/share) Rs 6.86 9.08 10.01 13.14 10.51

ROI % 7 8 13 13 6

MAIN OFFICES

Head Office and the main branch of BOP is in Gulberg 3, Lahore & Egerton, Lahore

Respectively.

The Bank has been divided into seven regions

Each consisting a number of branches.

Lahore Region


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Faisialabad Region

Gujranwala Region

Rawalpindi Region

Karachi/Quetta Region

Multan Region

Peshawar Region

Rest are the branches working under these regions. Which are almost 270 in all over Pakistan.

NUMBEROF EMPLOYEESOF BANK OF PUNJAB

The total number of employees in the organization is 3859. Which is increasing. Regular hirings

are taking place.

Categories of Services

The services in The Bank of Punjab are classified in different categories.

President

Executive Vice President (EVP)

Senior Vice President (SVP)

Vice President (VP)

Assistant Vice President (AVP)


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Officer Grade I

Officer Grade II

Officer Grade III

Cash Officer

Clerical Staff

Non-Clerical Staff

Driver

Guards

Gate Keepers

Tea Boy

3.5 PRODUCT LINES

Category D:

Category c:

Category B:


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CONSUMER PRODUCTS

1. Saving Accounts

2. Current or demand accounts

3. Fixed accounts

1. SAVING ACCOUNTS(PLS)

These types of accounts are designed to encourage the saving habit of the

customer and lead to long term or invest relationship. Bank saving account are in the nature of

deposit accounts and are not normally available for drawings.

Rates of interest are typically ahead, by a small margin. Savings accounts with the banking

sector represent a very small proportion of total deposits. Customer can make withdrawals from

this type of account. The cash reserve ratio is typically low then the current account because the

withdrawals against this account are very low.

2. CURRENT OR DEMAND ACCOUNT

These are those deposits, which can be drawn by the depositor at any time by

representing a cheque to the bank. People deposits their money in this account they gave a ready

command on their account in developed countries of world, a very significant part of money is

kept under current or demand account. On this type of account of interest transfer of cash or by

at sight. The cash reserve ratio for his account is very high. The operating cost for the handling

of this type of account is very regular.

3. FIXED OR TERMS ACCOUNT


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Fixed accounts are those which are deposited for a fixed period of time and repayable

after the expiry of stipulated time to the customer. Those people who have surplus funds and

want to have save investment deposit the amount in the fixed account.

The rate of interest given to depositor varies with the length of deposit, i-e. It is higher

for longer period and lower for shorter period.

The rate of this type of deposits is higher the saving bank accounts. The cash reserve against this

deposit are vary low because there no fear of with draw of a month before the stipulated of time.

FINANCE PRODUCTS

1. Agriculture Schemes

2. Business Promotion Finance Schemes

1. Agriculture Schemes

There are many agriculture promotion schemes provided by BOP.

Kissan Dost Agricultural Finance Scheme

Kissan Dost Tractor Finance scheme

Kissan Dost Aabiari Scheme

Kissan Dost Mechanization Support Scheme

Kissan Dost Farm Transport Scheme

Kissan Dost Eslah-E-Arazi Scheme


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Kissan Dost Live Stock Development Scheme

Kissan Dost Live Stock Scheme

Such type of schemes provides farmers a real plate form to accelerate. Some facilities given by

Kissan Dost Agricultural finance scheme are:

- Purpose

Provision of financial facility to farmers for purchase of inputs (Seed, fertilizer, pesticides,

fungicides etc).

- Amount

Maximum of Rs.500000 according to per acre limit of the crop.

- Security

Charge on Agriculture Land through Agriculture Pass Book.

- Insurance

The borrower will have to arrange life assurance under the Banks charge.

- Mark-up

9% mark-up per Annum.

2. Business Promotion Finance Schemes

BOP Quick Cash

BOP Car Loan


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BOP House Loan

BOP SME Loan

BOP Assaish Loan

BOP House Loan For Federal Govt

2.1. BOP CAR LOAN

BOP car loan is a demand financing facility to purchase brand new locally

manufactured/Assembled cars for personal use. This facility can be availed by salaried person of

different nature and by the business persons. All must have the holdings of NIC.

2.2. BOP Aasaish Loan

BOP Aasaish loan is demand finance facility for purchase of consumer durable goods like TV,

Refrigerators, Mobiles, Microwave Oven, Fans, Audio/Video system etc with no down payment,

in addition with the free home delivery. The financing tenure of this product is max 36 months.

The nature of employment should be salaried or the business man.

SERVICES

These are the services provided by the BOP.

ATM Facility


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Letter of Credit

Pay Order

On-Line Banking

E-Banking

Debit Card

Consumer Financing

Agriculture Financing

Corporate Financing

Commission free Remittance

Demand Drafts

Collection of Utility

Lockers Facility

3.1. Automated Teller Machine (ATM)

Through the ATMs Customers have access to the various services such as withdrawal,

balance enquiry and mini statement? Complete security is ensured because access to the account

is only possible by entering a four digit personal identification number (PIN) known only to the

account holder. Cash withdrawal limit is up to Rs.20, 000 per day. Annual charges of ATM is

Rs.250/- per card.

3.2. Online Banking


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BOP is currently offering window-based online banking to its customers, which gives

access to information on their accounts and the liability to act on the latest information received

over the net.

3.3. Lockers

It is one of the utility services that BOP provides to their customers for keeping

jewellery, important documents and other valuables.

3.4. Demand Drafts

BOP provides safe, speedy and reliable way to transfer money at vary reasonable

rates. Any person whether an account holder of the bank or not, can purchase a Demand Draft

from a bank branch.

3.5. Letters of Credit

BOP is offering its business customers the widest range of option in the area of

money transfer. BOPs letter of credit service is with competitive rates, security, and ease of

transaction, BOP Letter of credit is the best way to do the business transactions.

3.6. Pay Order

BOP provides transfer of money using different facilities. Its pay orders are a

secure and easy way to move the money from one place to another. The charges for this service

are extremely competitive.

3.7. Mail Transfer

Moves money safely and quickly from BOP Mail Transfer service. The rates for

this service is quiet impressive as compare to the market.

3.8. Short Term Investment

BOP offers excellent rates of profit on all its short term investment accounts. The


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packages are starting from 3 months. BOPs rates of profit are extremely attractive, along with

the security and service only BOP can provide.

3.9. Agricultural Finance

It help farmers utilize funds efficiently to further develop and achieve better

production. Provides farmers an integrated package of credit with supplies of essential inputs,

technical knowledge, and supervision of farming.

MAJOR CUSTOMERSOF BOP

Some of the major customers of Bank of Punjab are:

Educational Institutes

Agriculturists

Pakistan Telecommunication Private Limited

WAPDA

Pharmaceutical Companies

WASA

MDA


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4 Organizational Structure of Bank of Punjab

BOARDOF DIRECTORS (BOP)

01 MR. JAVED MAHMOOD

CHAIRMAN

02 MR. SAJJAD HUSSAIN ACTING PRESIDENT

03 MR. SOHAIL AHMAD

DIRECTOR

04 MR. ALMAN ASLAM

DIRECTOR

05 MR. ANEEQ KHAWAR

DIRECTOR

06 MR. SHAFQAT ELLAHI

DIRECTOR

07 MR. SHAFQAT MAHMOOD

DIRECTOR

01 MR. RAZA SAEED

SECRETARY

TO THE BOARD


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BOP TOP LEVEL MANAGEMENT

Mr. Naveed Hafeez Shaikh Acting General Manager HR

Mr. Nadeem Amir General Manager Finance

Mr. Sharjeal Masud General Manager Operations

Mr. Muhammad Salim Mirza General Manager Treasury

Mr. Shaheen N. Qureshi General Manager Special Assets

Dr. Shahid A. Zia General Manager T.R.C. & P Division

Mr. Feisal Azmat Khan General Manager IT

Mr. Muhammad Hanif Head Audit & Inspection

Mr. Salman Saeed Head Credit Policy

Mr. Moazzam M Maneka Head Agriculture Credit Department

4.1 ORGANIZATIONAL (MANAGEMENT) LEVELSAT BOP

Successful and profitable banking management deepens upon two principal factors:


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a) The manner in which the function of banking, that is, the acquiring of deposits, the

investing or converting such deposits into earning assets, and the servicing of each

deposits, are performed.

b) The degree to which officers and employees contribute their talents to the progress and

welfare of the bank in discharging duties and responsibilities.

Management is a distinct process consisting of activities of planning, organizing, actuating and

controlling performed to determine and accomplish stated objectives with the use of human

being and other resources. The management has two types i.e..,

a) Centralized (Centralized Management tends to concentrate decision making at the top of

the organization)

b) Decentralized (Decentralized disperses decision making and authority throughout and

further down the organizational hierarchy)

BOP has a centralized type of management because all the decisions are taken by the top

management. The BOP has four types of management levels which are as fallows:

TOP MANAGERS

Top managers are responsible for making organization-wide decisions and establishing the plans

and goals that affect the entire organization. These individuals typically have titles such as

executive vice president, president, managing director, chief operating officer, chief executive

officer or chairman of the board. The BOP have its top management in their head office at

Karachi. They are responsible for making the plans and establishing goals the run their business

smoothly all over Pakistan & around the globe. Among seven member of group Chief Executive

is called the president. The bank has directors for superintendence and direction of its business.

The Government appoints six directors as members and one president. These members are also

responsible for making the policy of the bank.


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MIDDLE MANAGERS

Middle managers include all levels of management between the first line level and the top level

of the organization. These managers manage the work of first line managers and may have titles

such as department head, project leader, plant manager or division manager.1 BOP divided his

management into various regions such as Rawalpindi region, Gujranwala region etc. In BOP,

regional management falls under this category. They are responsible for the planning,

organizing, leading and controlling of the resources and staff of the whole region.

FIRST LINE MANAGERSOR LOWERLEVEL MANAGEMENT

First level managers are the lowest level of management and manage the work of non-managerial

individuals who are involved with the production or creation of the organizations products. The

branch managers of BOP fall under this category. These managers are responsible for planning,

organizing, leading and controlling the staff and all affairs of the branch.

NON MANAGERIAL EMPLOYEES

Non managerial employees are not concerned with any decision making. They are normally

specialized in their work. The nature of their job is repetitive & clerical as they do same work

again & again. The non managerial employees of BOP consist of OG-II, OG III and clerical

staff.

HIERARCHYOF BANK OF PUNJAB


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The Hierarchy (An arrangement of objects, people, elements, values, grades, orders, classes etc.,

any system of persons or things ranked one above another) of BOP is shown as Annexed at the

end of this report. The hierarchy may include:

Categorization of a group of people according to ability or status.

A body of clergy organized into successive ranks or grades with each level subordinate to

the one above.

A series in which each element is graded or ranked

A body of officials disposed organically in ranks and orders each subordinate to the oneabove it; a body of ecclesiastical rulers.

An organization with few things, or one thing, at the top and with several things below

each other thing.

The President of BOP is ranked Top at the hierarchy. The other six directors of BOP are ranked

second in the hierarchy. The Provisional, Regional & Zonal chiefs are ranked 3rd, 4th& 5th

respectively. The vice President & assistant vice Presidents of BOP are ranked 6th& 7th

respectively. The Officers Grade I, II & III are ranked 8 th at the hierarchy of BOP. The lower

level of BOP is consist of Clerical & non- clerical staff.


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4.3 DEPARTMENTSOFTHE BRANCH

Banking procedures are divided between various departments. Different departments do theirjobs in occurrence with the bank policies. In BOP each branch is divided into various

departments depending on their size and volume of business. Head of department manages each

department & officials of the branch follow procedures. The departments working within BOP

Bahawalpur Central branch are as under:

1. Clearing House Department

2. Remittance Department

3. Computer Department

4. Deposits Department

5. Advances Department

6. Account Opening Department

7. Accounts Department

8. Cash Department

CLEARING HOUSE DEPARTMENT

As part of their daily business activity, banks receive cheques and other financial instruments

from their customers drawn on other banks, to be collected and credited to their accounts.

Similarly, banks receive cheques/instruments from other banks, deposited by customers of the

banks drawn on the customers of the drawee banks. Therefore, the banks act as Collecting Banks

when they send cheques/instruments for collection and as paying Banks, when they receive

cheques/instruments for collection from other banks. Since each bank receive and sends

cheques/instruments for collection to and from an number of banks, the process of settlement


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would clearly be very cumbersome and time consuming if every cheques/instrument had to be

sent by the collection bank to each of the drawee banks or branch upon which different collection

items are drawn and to individually pay the proceeds to each of the bank sending

cheques/instrument in for collection. Therefore, the banks have evolved what is called the

Bankers Clearing arrangement.

The Clearing System enables cheques to be paid or cleared centrally and settlement made for

receivables and payables between the banks. The SBP co-ordinates clearing activity through its

offices, called the Clearing Houses, set up in big cities and towns. Where SBP does not maintain

its own office, some other bank, usually BOP (BOP) performs this function. But the clearing

house facility is available only for cheques/instruments drawn on banks situated within the samecity/clearing house area.

WORKINGOFTHE CLEARING PROCESS

Under the clearing arrangements, the State Bank of Pakistan (SBP) offers a Clearing House or a

centralized exchange facility, which works on the following general lines:

All the banks operating in a city who are members of the Clearing House maintain an

account with the SBPs Clearing House.

Every day representatives of all the banks in every city meet the Clearing House, first

meeting in the morning, at an appointed time, for the purpose of depositing their own

customers , cheques/instruments to be collected from other banks and receiving

cheques/instrument drawn on their account holders from the others banks.

At the Clearing House accounts of all the banks are debited by the total amount of

cheques/instruments drawn on their customers accounts and credited with the amount of

their customers cheques/instruments drawn on other banks, as per the list of cheques

submitted by each bank.

The cheques/instruments received, also called Inward Clearing, and are taking back by

each bank to its bank/branch. The amounts of each cheques/instrument is debited or


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recovered from each drawee customers account and credited to the Clearing House

account. Similarly, against the amount credited by the Clearing House as Outward

Clearing, the appropriate customers accounts are credited and clearing House account is

debited.

Any cheques/instruments received by a bank that cannot be paid, due to insufficient

balance in its customers account or for any other reason, are returned back to the

Clearing House and a credit is claimed and obtained there against.

RULES & REGULATIONSOF CLEARING HOUSE

Timing:(Monday to Saturday)

i. 1st Clearing at 10:00 a.m.

ii. 2nd Clearing at 2.30 p.m.

Each bank will send competent representative to exchange the cheques.

Each bank is required to insure that all cheques and other negotiable instruments are

properly stamped and suitably discharged

An objection memo must accompany each and every cheque when return unpaid duly

initialed.

Each bank is required to maintain sufficient funds in the principal account with SBP to

meet the payment obligations.

The State Bank of Pakistan debit the account of each member of the clearinghouse withthe proportionate working expenses incurred on the operation of clearing house. These

expenses are very nominal.

OUTWARD CLEARINGATTHE BRANCH


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The following points are to be taken into consideration while an instrument is accepted at the

counter to be presented in outward clearing:

The name of the branch appears on its face where it is drawn o.

It should not stale or post dated or without date.

Amount in words and figures does not differ.

Signature of the drawer appears on the face of the instrument.

Instrument is not mutilated.

There should be no material alteration, if so, it should be properly authenticated.

If order instrument suitably indorsed and the last endorsees account being credited.

Endorsement is in accordance with the crossing if any.

The amount of the instrument is same as mentioned on the paying-in-slip and

counterfoil.

The title of the account on the paying-in-slip is that of payee or endorsee (with the

exception of bearer cheque).

If an instrument received other than BOP then special crossing stamp is affixed across

the face of the instrument. Clearing stamp is affixed on the face of the instruments,

paying-in-slip and counterfoil (The stamp is affixed in such a manner that half

appears on counterfoil and paying-in-slip). The instrument is suitably discharged,

where a bearer cheque does not require any discharge and also an instrument in favor

a bank not need be discharged.

The instrument along with pay-in-slip is retained while the counterfoil is given to the customer

duly signed. Then the following steps are to be taken:


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1. The particulars of the instrument and the pay-in-slip or credit voucher are entered in the

outward clearing register.

2. Serial no is given to each voucher.

3. The register is balanced; the credit vouchers are balanced from the instruments and are

released to the respective departments against acknowledgement in the register.

4. The instruments are arranged bank wise.

5. The schedules are prepared in triplicate, two copies which are attached with the relevant

instrument and the third is kept as office copy.

6. The house page is prepared from schedules in triplicate.

7. The schedules and house pages are signed by the house in charge with branch stamp.

8. The grand total of the house page is taken and agreed with that of the outward clearing

register.

9. The instrument along with duplicate schedule and house page are sent to the main office.

10. The entry of the instrument returned unpaid is made in Cheques returned Register. If the

instrument is not to be presented again in clearing then a covering memo is prepared. The

covering memo along with returned instrument and objection memo is sent to the

customer who sent the same to his account.

INWARD CLEARINGOFTHE BRANCH

1. The particulars of the instruments are compared with the list.

2. The instruments are detached and sort out department wise.

3. The entry is made in the inward clearing register (serial no. Instrument no. Account No)

4. The instruments are sent top the respective departments


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5. The instruments are scrutinized in each respect before honoring the same.

SPECIAL CLEARING

In addition to the normal clearing function at Clearing house it is mutually agreed to hold an

extra clearing at the clearing house on the particular day and time which is known as special

clearing it is arranged due to the rush of work arising out of say, more Holidays declared by the

Central Govt. at a time, but normally special clearing is held on last working day of half yearly

and yearly closing i.e. 30th June and 31st Dec. every year.

REMITTANCE DEPARTMENT

The Remittance department deals with the transfer of money from one place to another. Funds

transfer facility or remittance of funds is on of the key functions of the banks all over the world.

Remittances through banking channels save time, costs less and eliminate the risks involved in

physical transportation of money from one place to another. BOP transfers money in the

following ways.

Pay Order

Demand Draft

Mail Transfer

Telegraphic Transfer

Pay Slip

Call Deposit Receipt

Letter of Credit

Travelers Cheque


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The Job responsibilities & requirements of remittance department include:

Responsible for money transfers, issuance of pay-orders & drafts, collection items,

maintenance of cheque books & ATM cards and all other counter specific products and

services

Ensure highest level of customer service in a professional and competent manner

Must ensure that the activities are carried out strictly in accordance with the laid down

procedures/processes, and SBP/Compliance guidelines

Responsible for Cash, Clearing, Inland remittances including Demand Drafts and PayOrders

Ensure high standards of customer services within the assigned turn around time

Ensure compliance with SBP's regulations and internal controls

handling cash, clearing, local remittances, and other related activities at branch level

PARTIESINVOLVEDIN REMITTANCES

There are four parties involved in Remittance, which are

Remitter

Remittee

Issuing Bank

paying Bank

REMITTER


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One who initiates, or requests for a remittance. The remitter comes to the issuing or originating

branch, asks for a remittance to be made, and deposits the money to be remitted. The bank

charges him a commission for this service. He may or may not be the branchs customer.

ISSUING BANK

The bank that sends or affects the remittance through demand drafts, telegraphic transfers, Mail

Transfers, Pay order etc

PAYING BANK

Paying Bank also knows as the drawee branch, the branch on which the instrument is drawn. Ithas to make the payment (usually located in a different city or country).

KINDSOF REMITTANCES

Transfer within the branch

Transfer from one branch to another

Transfer from one bank to another bank in the same city

Transfers from one bank to another bank in two cities.

ACCOUNT OPENING DEPARTMENT

The opening of an account is the establishment of banker-customer relationship. This department

performs the duty of opening accounts for customers. It also issues checkbooks to customers. A

person who wishes to open an account with the bank has to fill an account opening form

obtained from any branch of BOP. The bank officer tactfully obtains information about

character, integrity, responsibility, occupation and the nature of business of the perspective

customer. Any individual, who has attained the age of majority and is of sound mind can open

and maintain his/her account. Two or more individuals may open an account jointly. Similarly,


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business organizations such as sole proprietary concerns, partnership firms, and limited liability

companies as well as non-profit organizations like clubs, trusts, societies, associations and

NGOs etc, may open their accounts. The documents required for BOPs Account opening are

showed as Annexed at the end of this report.

The following requirements are necessary for opening an account.

Identification of the new customer.

Ascertaining the genuineness of the stated occupation business of the customer.

Determining the correct residential and permanent address.

Completion of all relevant columns of the Account opening form.

Proper completion of documentation.

FUNCTIONSOF ACCOUNT OPENING DEPARTMENT

Providing account opening form according to the customer's requirements,

Guide the customer about the requirements of the account opening and form filling,

Check the forms whether they are correctly completed or not,

Preparing checklist,

Stamping on the form,

Maintaining account opening register,

Pasting of forms in register after release from general banking in charge,

Issuance of cheque books,


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Issuance of accounts maintenance certificate,

Closure of account

Verification of signature in case of cheque presented before releasing of account opening

from SS card is not yet scanned

CASH DEPARTMENT

All physical movement of cash in the bank is made through the cash department. As bank is

borrowing and lending institution, therefore cash is the top most priority of Bank. Another aspect

is that cash department is for the security purpose, security in a sense that there should be no

embezzlement of funds or in money leaded to bank by any party or person. The efficiency of

bank is also related to this department the more efficient the bank is the stronger and busy is the

cash department. Cash department perform following functions

Cash department owes its important to the fact that it is a major point of contract between the

bank and the customer, the banks most valued relationships. This department is the showcase of

the bank and conveys the first impressions about the banks commitment to professionalism in its

systems and procedures and to courteous and efficient customer service.

Normally cash department performs following functions

Collection of funds

Acceptance of deposits

Collection of utility bills

Payment of checks


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Remittances

Act according to any standing instructions

Transfer of funds from one account to another

Verification of signatures

Posting

Handling of Prize bond

The two main activities of cash department are as fallows:

DEPOSIT CASH IN CUSTOMERS ACCOUNT

When the customer want to deposit amount in his account at opening of account or after that then

he has to fill a deposit slip that shows the amount and the account in which the cash will be

deposited. Then teller will receive amount and credit the customers account that shows increasein customers bank account.

MAKE PAYMENTS FROM CUSTOMERS ACCOUNT

When the customer draws a cheque on the bank to pay a certain amount then BBO Operator will

debit the customers account that shows reduction in his account balance.

CHEQUEENCASHMENTPROCEDURE

RECEIVING OF CHEQUES

The cash is paid against the cheques of the client. The following points are important.

Cheque is drawn on same branch


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Cheque is not post dated.

Amount in words and figure are same.

It should be bearer cheques so the word bearer should not cross.

VERIFICATIONOF SIGNATURE

After receiving the cheques the cheques the operation manager verify the signature of the

account holder and the signature on the cheques. If the signature is not same it is returned

back otherwise forward to BBO Operator for posting.

COMPUTER TERMINAL PROCESS

The cheque is received in computer terminal, where BBO operator checks the balance of the

account holder. The BBO operator also sees the stop payment instructions, whether received

from account holder or not. After considering these points BBO Operator post the cheque in

BBO (Branch back office system) and forward to operation manager.

PAYMENT OF CASH

After posting the cheque the operation manager cancelled the cheque and returned back

to cashier. The cashier enters the cheque in cash paid registered and pays against the

second signature of receiver on the back of the cheque.

DEPOSITS DEPARTMENT

The primary function of BOP is to accept and receive surplus money from the people, which

they willingly deposit with the Bank. Like all other Banks, BOP also take incitation to attract as

much depositors as it can. The deposit department accepts/collects deposit from accountholders.

The BOP offer different deposit schemes to its customers, which includes the following:

Current Deposits


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PLS Saving Deposits

Fixed Deposit Account ( Time Deposits)

Foreign Currency Account

BOP Premium Aamdani

Foreign Currency Account

ADVANCES DEPARTMENT

The bank is profit seeking institution. It attracts surplus balance from the customer at low rate of

interest and makes advances at a higher rate of interest to the individuals and business firms.

Credit extensions are the most important activity of all the financial institutions, because it is the

main source of earnings. Advances department is one of the most sensitive and important

department of the bank. The major portion of the profit is usually earned through this

department. The job of this department is to make proposals about the loans; the creditmanagement division of head office directly controls all the advances.

The advances Department receive application from intending borrowers. After receiving

application the advance department processes it further. After analyzing and detailed

investigation, they decide whether to approve the loan or not. Some loan approvals are made by

the Manager of the branch within his powers as prescribed by the banks higher authorities,

while some loan applications are submit to higher authorities for their approval. Some advances

are of the following nature

Agriculture advance to farmers

Medium term advance for working capital

Long term advance for setting industry


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Short term advance to businessman

The Advances department deals in following transactions:

1. Preparation and submission of proposals of Running finance, Cash finance, Demand

finance, Export finance, Staff finance, Finance against imported merchandise etc for

sanction of finance limit from the hire authority.

2. Preparation and posting of vouchering of all type of finance.

3. Accruals & recovering of Markup on finances on periodical basis.

4. Approval of transfer of funds through DD-TT, PO, MT, IBCO etc to various branches by

debiting the limits.

5. Preparation of weekly, monthly, quarterly, and annually statement to the hire authority.

6. Transfer of funds from one account to another account of the party taking the authority

letter.

7. Preparation of advances record.

8. Timely submission of returns/reports, daily, weekly, monthly & quarterly.

9. Checking of computer outputs of the department on daily basis.

10. Balancing of all financing heads.

COMPUTERDEPARTMENT

This department is playing a very important role in making the banking procedures faster and

helping the bank for providing better services to its customers. The BOP has three types of

branches in all over Pakistan, these included

ONLINEBRANCHES


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The branches, which are directly, link with central computer AS-400, through wide area

networking through fiber optics. These branches have dumb terminal directly linked with central

computer.

BATCH BRANCHES

The branches where all transactions are carried out with the computer base system but these

branches are not connected to the central computer with wide area net working. Batch branches

are using three type of system, Branch Back Office (BBO) based on FoxPro, Branch Automated

System based (BAS) on UNIX, Branch Integrated System (BIS) based on FoxPro in Karachi

mostly branches are facing this problem. BAS was establish in the beginning while BBO iscurrently implemented now efforts are under way to convert all branches into Electronic Banking

System (EBS) which is used by online branches as this system does not require a person to

remain sitting till the branch closed its daily operation but the system automatically close it self

when the branch timing is over. The database in head office is also based on this system.

MANUAL BRANCHES

The branches where all transactions are carried out manually and records are maintained onregisters usually stored in big wardrobes. Manual branches reports Regional head office

regarding their daily transactions. In Regional head office through On Line, terminal data goes to

head office central computer; Except for branches those are On Line as they transfer there daily

data directly through there own terminal. As day-to-day, activities of all branches are recorded in

a central computer.

EVENINGDATARECEIVINGCENTER

Data form batch branches reach the main branch in floppy diskettes while form manual branches

it is in form of hard copy. Data comprises of transactions in profit loss account, current account,

advances etc termed as Daily Transaction Report. Clerk in charge register all diskettes and

manual in registers called job booking register one for each of two type of data. These floppies


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and manual are bring in by riders. There are fourteen riders in total who bring information form

all branches located in Karachi region.

DATAENTRY DEPARTMENT

The next task after receiving the data is to enter that data in to a computer. The floppy disk is

directly inserted in the computer. The program in used is based on COBOL language. This

program is designed in away that it demand Hash Value value before opening the floppy for

further action this value serve the purpose of password or pin code send by the branch on

entering that value the data enter in to the computer. This computer is attached with the terminal

of central computer. The operator of that terminal takes the data from the computer and

converted it in to a text file through that terminal the data finally goes to the central computer.

DEFECTSAND ERROR HANDLING

Errors of different origin occur when the data goes to central computer. Sometime retrieving data

from the system (BAS, BBO, and BIS), other than used in HO (EBS) also caused errors. Other

errors include Unmatched (This error occurs when document no matched with the previous one

exists), no master (when opening of new account is not mentioned), Date in Valid, duplicate

cheques (this error occur when the last objection is not removed). These and other such errors are

seen by the person in charge. In the end of day print out of the data enter in central computer is

taken. Any Incomplete information for any branch and any information require by that particular

branch is sent to that branch. More over material is used to make a WST which is sent to State

Bank of Pakistan.


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STRUCTUREOF BRANCHS ACCOUNTS DEPARTMENT

5.1 Description of Accounts Structure

The structure of BOPs Accounts department is shown as Annexed at the end of this report. The

Accounts department of the branch is controlled by the Chief Accountant under direct

supervision of Branch Manager. The Branch has one cashier & two clerks for assistance and help

of Chief Accountant. The BBO (Branch Back Office system) Operator has also assist Chief

Accountant in various tasks.

The head of branchs Accounts department is called Chief Accountant, who performs his

functions under direct supervision of Branch Manager. The Chief Accountant is responsible for

the central accounting records and controls over all financial transactions of the Branch. He also

directs a wide variety of accounting activities and meets important deadlines& analyzes and

interprets accounting data of the branch. The other responsibilities of Chief Accountant include:

Plans and directs the activities of Cashier, BBO Operator and clerical employees of the

branch engaged in the maintenance of a variety of accounting records.


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Directs and participates in the development and revision of procedures in order to meet

requirements of law, provide services to Branch Manager, improve efficiency in branch

activities, and coordinate branch activities with those of other departments.

Directs and reviews the preparation of periodic and special financial statements, reports,

projections, and recommendations, on which important administrative decisions are

based.

Directs and reviews the study of new and revised laws, rules, and programs affecting the

central accounting system and records and installs or recommends changes as

appropriate.

Designing and operating a system to capture, record, process, and store all relevant

documents and information about the financial activities of the branch.

Ensuring the integrity and reliability of the information system, and preventing fraud

from inside and outside the branch.

Preparing financial statements that are reported to Regional Management of BOP.

Preparing financial statements and accounting reports for distribution to the branch

Manager for their planning, control, and decision-making needs.

The Chief Accountant with the help of branchs clerical staff is preparing following

reports:

o Monthly Profit & Loss account- F48

o Daily Statement- F21

o General Ledger

o General Ledger Abstract


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o General Ledger head wise

o Bank transfer Scroll

o Misc Book

o Monthly return file

o Charger List

o PLS Profit list

o Weekly Telegram

o Transfer Responding Advice Dispatched Register- F15

o Cash Remittance In

o Cash Remittance Out

o BOP General Account

o Clearing register

o Debit & Credit supplementary

Debit supplementary is used for debit voucher and credit supplementary is used for credit

voucher books and register maintained by bank are as fallows

General ledger included:

Statement of daily affairs

Cash book or cash cum day book


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Transfer book

Income & expenditure ledger

Income& expenditure includes:

1. Discount

2. Service charges

3. Commission from utility services

4. Salaries allowances & provident fund

5. Rent taxes insurance lighting

6. Profit paid on deposits and borrowings

7. Auditors fee & legal charges

5.2 BANK ACCOUNTING OPERATIONS

Accounts Department

Accounts Department of the bank can be considered the most important department. This

department is basically concerned with processes and activities of recovering, sorting,

summarizing and reporting data resulting from the whole day transactions of all the departments.

Actually the process of this activity starts from the preparation of all the required vouchers by

different related departments. When these vouchers are prepared, these are posted into respectivecomputer terminals by the relevant departments. Before merging, a batch list is printed out by

Computer Department and duly checked by the respective departments. After this, merging stage

comes, after which a proof list is printed out. This is the stage, where Accounts Department

starts performing its function. Proof list is checked by the Accounts Department. The account

department prepare following vouchers and reports


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Monthly Profit & Loss account- F48

General Ledger

General Ledger- Abstract

Check Book Issue Register

Western Union payments Register

Demand Notices

Miscellaneous Book

Bank Transfer scroll

General Ledger- Head wise

Hash Value Register

End of Day register

Monthly return register

Charges A/c register

P-L-S Profit list

Weekly Telegram

Mail Transfer Register

Provident file


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Transfer Responding Advice Dispatched Register-F15

Cash Remittance IN

Cash Remittance OUT

BOP General Account

Utilities register

Statement of affairs

Closing entries

Daily activity checking

Minor expense recording

5.3 ROLE OF CFO (CHIEF FINANCIAL OFFICER)

The organizations most senior executive role charged with leading and directing

financial strategy and operations.

Financial Management:

PBOPic Financial Management (PFM) is the system by which financial resources are

planned, directed, and controlled to enable and influence the efficient and effective delivery of

public service goals.

ROLE OF CFO (Chief Financial Officer):

Traditional role of Chief Accountant:


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The Chief Accountants used to perform several tasks which were preparing accounts,

preparing budgets, operational reporting and interpreting, evaluating operating results, preparing

income tax returns, establishing internal control procedures to safe-guard the companies assets.

Transition from Chief Accountant to Chief Financial Officer:

Due to increased governance requirement there arises a need to empower the chief

accountant and to make him responsible by requiring him to sign the accounts. There comes the

code of corporate governance, which makes the chief accountant powerful and more responsible.

With the new role, Chief Accountant becomes Chief Financial Officer (CFO).

APPOINTMENT AND APPROVAL REQUIREMENT:

The appointment, removal and remuneration terms and conditions of employment of the

chief financial officer of a listed company shell be determined by the Chief Executive Officer

with the approval of the Board of Directors.

QUALIFICATION REQUIREMENT:

The qualification requirement is defined under the code of corporate governance that is

the person appointed as the Chief Financial Officer must be Member of recognized body of

professional accountants or

A graduate from a recognized university or equivalent, having at least 5 years experience

in handling financial and corporate affairs of a listed company.

Attending Board Meetings:

The Chief Financial Officer of a listed company is required to attend the meeting of the

board of directors.

THE CFO IN A PUBLIC SERVICE ORGANIZATION:


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1 Is a key member of the Leadership Team, helping it to develop and implement

strategy and to resource and delivers the organizations strategic objectives sustainably and in

the public interest;

2 Must be actively involved in, and able to bring influence to bear on, all material

business decisions to ensure immediate and longer term implications, opportunities and risks are

fully considered, and alignment with the organizations financial strategy; and

3 Must lead the promotion and delivery by the whole organization of good

financial management so that public money is safeguarded at all times and used appropriately,

economically, efficiently and effectively.

To deliver these responsibilities the CFO:

4 Must lead and direct a finance function that is resourced to be fit for purpose;

5 Must be professionally qualified and suitably experienced.

Implication of New Responsibilities:

The new responsibilities apply to all Chief Financial Officers of Listed Companies,

Insurance Companies, Banks and DFIs. Mostly the CFO presents the financial position relating

to the period which has been over, and the period which has to come that is the financial position

attained and the financial projection i.e. where the organization will be.

Responsibilities towards Board of Directors:

The Chief Financial Officer is required to furnish necessary and classified information to

the board of directors along with his analysis and suggestions as the Chief Financial Officer

attends the board meetings, any issue with financial implications is being discussed, the person

likely to be most in command of these implication is on the spot and immediately available for

questions.


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In order to strengthen and formalize corporate decision-making process, significant issues

are required to be placed for the information, consideration and decision of the boards of

directors by the CFO. These are:

Annual business planes, cash flow projection, forecasts and long term

planes.

Budgets include capital, manpower and overhead budgets along with

variance analyses.

Quarterly operating results of the company as a whole and in terms of its

operating divisions or business segments.

Details of joint ventures or collaboration agreements or agreements with

distributors, agents, etc.

Default in payment of principal and/or interest, including penalties on late

payments and other dues, to a creditor, bank or financial institution, or default in

payment of public deposit.

Failure to recover material amounts of loans, advances, and deposits made

by the company, including trade debts and inter-corporate finances.

Significant public or product liability claims likely to be made against the

company, including any adverse judgment or order made on the conduct of the

company.

Responsibilities towards Shareholders:

The Chief Financial Officer is required to provide all the necessary data to be presented

in the Directors Report. For this purpose Chief Financial Officer must ensure the following.

The financial statement, prepared by the management of company, present fairly its states

of affairs, the results of its operation, cash flows and changes in equities.


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Proper books of accounts of the company have been maintained

Appropriate accounting policies have been consistently applied in preparation in financial

statements and accounting estimates are based on reasonable and prudent judgment.

International accounting standards, as applicable in Pakistan, have been followed in

preparation of financial statements and any departure there from has been adequately

disclosed.

The system of internal control is sound in design and has been effectively implemented

and monitored.

There are no significant doubts upon the companies ability to continue as going concern.

There has been no material departure from the best practice of corporate governance as

detailed in the listing regulations.

Internal And External Reporting for Decision Making

Chief Financial Officer now has extensive responsibilities for internal and external

reporting. All the information required for decision-making by the Board of Directors and Chief

Executive is processed and furnished by the Chief Financial Officer. Apart from this, external

reporting requirement is fulfilled by Chief Financial Officer, the accounts and financial

statements are signed by the Chief Financial Officer before they are sent to concerned

authorities.

CCG requires that the listed companies submit their quarterly accounts to the

shareholders within one month of the close of the first and third quarter of year of account.

The CCG does not prescribe the time for submitting half yearly accounts to the

shareholders. Here we can refer to section 245 of companys ordinance 1984 for this purpose,


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which requires half yearly accounts to be submitted within two months of the close of first half.

The CCG requires a limited review of half yearly accounts by external auditor.

Annual audited accounts are now required to be submitted within four months of the

close of financial year.

5.4 USEOF ELECTRONIC DATAIN DECISION MAKING

USEOFELECTRONICDATAINDECISIONMAKING

Electronic data gives exact values and figures which top level management required. Because of

electronic data they came across to know those minute things which impacts a lot on final place.

Through this they can measure exact profit and loss accounts, assets and liabilities up to a branch

level from where they can decide which should be kept and which should not.

Through this top level management is able to decide which product should be taken into course

for further level or which should stop.

Electronic data make management able to take decision at any point of time.

Decision making can be regarded as an outcome of mental processes leading to the selection of a

course of action among several alternatives. Every decision making process produces a final

choice. The output can be an action or an opinion of choice.A significant part of decision making

skills is in knowing and practicing good decision making techniques. One of the most practical

decision making techniques can be summarized in following simple decision making steps:

1. Identify the purpose of your decision. What is exactly the problem to be solved? Why it

should be solved?

2. Gather information. What factors does the problem involve?


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3. Identify the principles to judge the alternatives. What standards and judgment criteria

should the solution meet?

4. Brainstorm and list different possible choices. Generate ideas for possible solutions.

See more on extending your options for your decisions on my brainstorming tips page.

5. Evaluate each choice in terms of its consequences. Use your standards and judgment

criteria to determine the cons and pros of each alternative.

6. Determine the best alternative. This is much easier after you go through the above

preparation steps.

7. Put the decision into action. Transform your decision into specific plan of action steps.

Execute your plan.

8. Evaluate the outcome of your decision and action steps. What lessons can be learnt?

This is an important step for further development of your decision making skills and

judgment.

The decision making of Management of BOP rely on information system resources which

includes people and a variety of hardware, software, data, and communications network

technologies as resources to collect, transform, and disseminate information in Bank.


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SOURCESOF FUNDSTREND

The major sources of funds are:

Public Source

As the largest regional bank of Pakistan according to asset base with specialized in

Agriculture has a large deposits with 80% from the rural areas of the Punjab. The Banks

major source of funds is from the Public.

Money Market

Figurative expression for the informal network of dealers and investors over which short-

term debt securities are purchased and sold. Money market securities generally are highly

liquid securities that mature in less than one year, typically in less than ninety days.

Corporate treasuries and Government Institutions

Corporate sector is one of the major sources of funds in all types of Banking. All major

organisations, financial institutions and government & private organisations are the major

sources of the funds e.g., WAPDA.

ALLOCATIONOF FUNDSTREND

BOPs funds are allocated to the following departments. The banks major focus is on short term

financing. Major allocation of funds are on these divisions.

LONG TERM FINANCING

Long term financing includes a tenure more than one year.


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SHORT TERM FINANCING

Short term financing includes period less than one year. The banks major focus is on short term

financing.

From the above it is further sub distributed to

1. SME Division

2. Agriculture financing

3. Consumer financing

4. Corporate financing

The distribution of funds to these departments are Banks internal matter and they avoid to

disclose. Through Financial Statements it is only possible to analyze long term and short term

financing.

AGRICULTUREFINANCING

The bank provides adequate and timely financial assistance to the farmers to improve

production potential of agriculture sector. Insurance of leased assets, animals, crops and life

assurance of borrowers are all source of money for the bank.

E-BANKING

The bank has a centralized database that is web-enabled. All the services that the bank has

permitted on the internet are displayed in menu. Any service can be selected and further

interaction is dictated by the nature of service.

UTILITYBILLS

The bank also makes possible the payment of electricity, gas and telephone bills for its customers

charging some commission on each payment.


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LOCKERS

Commission charged on lockers provided by bank for customers, is also a source of inflow for

the bank.

CONSUMERFINANCING

Personal Finance, mortgage finance, business finance, smart cash, auto financing and travelers

cheques are all sources of funds for the bank. The bank finances all these loans and facilities on

competitive mark up rates.

AGRICULTUREFINANCING

The bank provides adequate and timely financial assistance to the farmers to improve production

potential of agriculture sector. Insurance of leased assets, animals, crops and life assurance of

borrowers are all source of money for the bank.

5.5 SOURCESOF FUNDS

Rupees in Millions

Year 2007 2008 2009 2010 2011


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Share Capital 4,924,106 5,908,927 7,090,712 8,154,319 8,969,751

Reserves 10,813,914 13,536,041 13,879,260 15,772,124 19,941,047

Borrowings 11,084,790 8,756,847 11,704,079 10,886,063 40,458,926

Deposits

465,571,71

7

463,426,60

2

501,872,24

3

591,907,43

5 624,939,016

Other Liabilities 23,068,314 24,974,450 26,596,300 30,869,154 39,656,831

Horizontal Analysis (%)

Share Capital 100 120 144 166 182

Reserves 100 125 128 146 184

Borrowings 100 79 106 98 365

Deposits 100 100 108 127 134

Other Liabilities 100 108 115 134 172

Table 5.1 Sources: BOP Annual Report

GENERATIONOFFUNDS

Rupees in

Millions

Year 2007 2008 2009 2010 2011

Markup/return/interest earned

20,947,33

3

33,692,66

5

44,100,93

4

50,569,48

1 60,942,798

Net markup/interest income 14,387,93 23,370,89 30,153,71 33,629,47 37,058,030


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5 7 6 0

Net markup/interest income after provisions

12,639,77

0

21,146,97

0

27,782,17

0

28,906,73

5 26,087,216

Total non-markup/ Interest income 8,304,716 9,392,351

12,162,89

2

13,544,84

5 16,415,862

Total income ( Interest + non-Interest)

20,944,48

6

30,539,32

1

39,945,06

2

42,451,58

0 42,503,078

PROFIT BEFORE TAXATION

11,977,60

1

19,056,02

8

26,310,57

7

28,060,50

1 23,000,998


Markup/return/interest earned 100 161 211 241 291

Net markup/interest income 100 162 210 234 258

Net markup/interest income after provisions 100 167 220 229 206

Total non-markup/ Interest income 100 113 146 163 198

Total income ( Interest + non-Interest) 100 146 191 203 203

PROFIT BEFORE TAXATION 100 159 220 234 192


5.7 ALLOCATIONOF FUNDS

Rupees in

Millions

Year 2007 2008 2009 2010 2011

Lendings to Financial Institutions 10,511,322 16,282,942 23,012,732 21,464,600 17,128,032

Investments 149,350,09 156,985,68 139,946,99 210,787,86 170,822,491


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6 6 5 8

Advances

220,794,07

5

268,838,77

9

316,110,40

6

340,677,10

0 412,986,865

Operating Fixed Assets 9,202,969 9,454,365 9,681,974 25,922,979 24,217,655

Other Assets 19,141,569 23,941,056 37,113,698 30,994,965 44,550,347


Lendings to Financial Institutions 100 155 219 204 163

Investments 100 105 94 141 114

Advances 100 122 143 154 187

Operating Fixed Assets 100 103 105 282 263

Other Assets 100 125 194 162 233


6. CRITICAL ANALYSIS

During Internship it was my prime objective to furnish my knowledge (Theory) to various

practical situations. The practical work presents an analytical problem while relating theory with

practice. As a result, analysis of practical versus theory requires a distinct approach. This part of

report is the essence of the internship, as this will help to better understand the working

environment of the bank by finding the relationship between what is written in the books and

what is actually going on in fields. The theory written in the books in cases is not implemented

as it is. In some cases theory is implemented with a little modification but in other cases theory

has nothing to do with practice.


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In accounting, banks dont prepare worksheet, but part of worksheet is prepared like trial

balance. The securities for the loans are handled in the same way as theory says like mortgage,

pledge, hypothecation, advances against insurance policies or liquidation procedure is the same.

There is some difference lies in types of loans in bank that is theory talks about four or five types

of loans that is cash finance, overdraft, loans etc., but in practice there are some more types used

by bank like running finance, demand finance etc. All other concepts of remittances, bills,

foreign exchange deposits, letters of credit are in accordance with theory almost. A bank's

balance sheet is different from that of a typical company. You won't find inventory, accounts

receivable, or accounts payable. Instead, under assets, you'll see mostly loans and investments,

and on the liabilities side, you'll see deposits and borrowings.

CONCLUSION

To me, Theory gives the direction to understand the processes and the terminologies going

across the World using best business practices in a broader view covering each and every aspect

of possible business scenarios. On the contrary practical life is specific, enclosed in a jar.

FINANCIAL STATEMENTS ANALYSIS

Financial analysis is a process which involves reclassification and summarization of information

through the establishment of ratios and trends. Financial statement analysis is the process of

examining relationships among financial statement elements and making comparisons with

relevant information. It is a valuable tool used by investors and creditors, financial analysts, and

others in their decision-making processes related to stocks, bonds, and other financial

instruments. The goal in analyzing financial statements is to assess past performance and current

financial position and to make predictions about the future performance of a company. Investors

who buy stock are primarily interested in a company's profitability and their prospects for

earning a return on their investment by receiving dividends and/or increasing the market value of


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their stock holdings. Creditors and investors who buy debt securities, such as bonds, are more

interested in liquidity and solvency: the company's short-and long-run ability to pay its debts.

Financial analysts, who frequently specialize in following certain industries, routinely assess the

profitability, liquidity, and solvency of companies in order to make recommendations about the

purchase or sale of securities, such as stocks and bonds.

The analysis of financial statement refers to the examination of the statements for the purpose of

acquiring additional information regarding the activities of the business. The users of the

financial information often find analysis desirable for the interpretation of the firms activities.

The overall objective of financial statement analysis is the examination of a firms financial

position and returns in relation to risk. This must be done with a view to forecasting the firms

future prospective.

Analysts can obtain useful information by comparing a company's most recent financial

statements with its results in previous years and with the results of other companies in the same

industry. Three primary types of financial statement analysis are commonly known as horizontal

analysis, vertical analysis, and ratio analysis.

RATIO ANALYSIS

Ratio analysis enables the analyst to compare items on a single financial statement or to examine

the relationships between items on two financial statements. After calculating ratios for each

year's financial data, the analyst can then examine trends for the company across years. Since

ratios adjust for size, using this analytical tool facilitates intercompany as well as intercompany

comparisons. Ratios are often classified using the following terms: profitability ratios (also

known as operating ratios), liquidity ratios, and solvency ratios. Profitability ratios are gauges of

the company's operating success for a given period of time. Liquidity ratios are measures of the

short-term ability of the company to pay its debts when they come due and to meet unexpected

needs for cash. Solvency ratios indicate the ability of the company to meet its long-term


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obligations on a continuing basis and thus to survive over a long period of time. Financial ratios

allow for comparison:

Between companies

Between industries

Between different time periods for one company

Between a single company and its industry average

HORIZONTAL ANALYSIS

This technique is also known as comparative analysis. It is conducted by setting consecutive

balance sheet, income statement or statement of cash flow side-by-side and reviewing changes in

individual categories on a year-to-year or multiyear basis. The most important item revealed by

comparative financial statement analysis is trend. A comparison of statements over several years

reveals direction, speed and extent of a trend(s). The horizontal financial statements analysis is

done by restating amount of each item or group of items as a percentage. Such percentages are

calculated by selecting a base year and assign a weight of 100 to the amount of each item in the


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base year statement. Thereafter, the amounts of similar items or groups of items in prior or

subsequent financial statements are expressed as a percentage of the base year amount. The

resulting figures are called index numbers or trend ratios.

Formula = Current Year amount / Base Year amount * 100

Horizontal analysis, whilst simple to execute and useful to a certain extent, has its limitations.

These limitations include:

Being highly dependent on the selection of base year and the period under examination in

the financial model.

Horizontal analysis provides little insight into why the trend occurred in a financial

model.

Horizontal analysis does not provide insight into whether the trend in the financial model

results was superior/inferior to some benchmark.

Horizontal analysis does not address the challenge of negative numbers.

RATIO ANALYSIS FOR LAST FIVE YEARS:

HORIZONTAL ANALYSIS : THIS TYPEOFANALYSISREPRESENTSTHE PERCENTCHANGEINSPECIFIC

LINEITEMOFTHE INCOMESTATEMENTORTHE BALANCESHEETFROMTHE LASTYEAR. THIS

ANALYSISISUSEDTO COMMENTONTHE GROWTHOFSPECIFICLINEITEMIN THE INDUSTRYOR

THE FIRM.

2007 2008 2009 2010 2011

Operating Results

Markup/ return/ interest earned % -24.399 34.8728

58.2857

1

47.1025

1 33.98141

Markup/ return/ interest expenses %

-

105.785

32.6842

8

73.0610

7

64.4559

9 46.12956


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Net markup income % 9.0678

35.7298

5 46.875 15.086 -13.0556

Non-markup based Income % 54.994

24.2479

5

17.5807

7

54.9424

5 45.52831

Non-markup based expenses % 4.09182

12.8695

7

10.9217

7

31.4027

6 17.78069

Provision against NPLs % -575

82.9787

2 85.8006

11.4973

3 80.19068

Net profit before tax % 56.8862

42.2811

1

45.1500

8

33.6338

9 1.588939

Net profit after tax % 58.7808 49.6345

41.8614

5

38.1440

6 14.43995

Balance Sheet

Total Assets % 32.2964

34.2264

8

40.3350

3

32.5746

9 29.84117

Advances (net) % 63.9065

53.4876

6

38.0123

9 37.2049 24.3282

Investments % 27.6052

29.2628

7

10.1409

1

36.1527

3 61.56789

Shareholders Equity % 22.5754

30.9502

3 34.7794

36.4199

3 29.45731

Revaluation Reserve % 55.9165

36.9698

7

50.3989

6 -26.0838 -40.7207

Deposits % 31.9738

36.1559

8

38.1405

1

35.7683

3 28.25508

Borrowings from FIs % 51.9374

5.22598

9

58.2977

5

2.83302

3 60.83058

NONPERFORMING LOAN NPL:


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What DoesNonperforming Loan - NPL Mean?

A sum of borrowed money upon which the debtor has not made his or her scheduled payments for at least 90 days.

A nonperforming loan is either in default or close to being in default. Once a loan is nonperforming, the odds that it

will be repaid in full are considered to be substantially lower. If the debtor starts making payments again on a

nonperforming loan, it becomes a reperforming loan, even if the debtor has not caught up on all the missed

payments.

Nonperforming Loan - NPL

Institutions holding nonperforming loans in their portfolios may choose to sell them to other

investors in order to get rid of risky assets and clean up their balance sheets. Sales of

nonperforming loans must be carefully considered since they can have numerous financial

implications, including affecting the company's profit and loss, and tax situations.

2011 2010 2009 2008 2007

Non Performing

Advances 48,593 39,101 27,839 22,012 16,255

Advances 368,692 382,478 390,903 316,737 260,909

NPL Ratio = Non

Performing Loans /

Advances (%) 13.17984 10.22307 7.121716 6.949614 6.230142

VERTICAL ANALYS IS

It represents the percent of a line item (expenses, tax, interests, dividends) impacts on total

revenues.


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2007 2008 2009 2010 2011

Markup/ return/ interest earned % 66.69 69.96 82.15 79.67 76.38

Non-markup based Income % 33.31 30.04 17.85 20.33 23.62

Markup/ return/ interest expenses % 19.40 19.69 35.80 51.67 60.70

Non-markup based expenses % 40.16 31.49 17.31 12.95 9.97

Provision against NPLs % 0.32 1.29 4.44 2.57 8.22

Net profit before tax % 40.16 47.54 42.45 32.81 21.10

Net profit after tax % 27.62 37.46 31.56 26.17 19.36

Ratios 2007

2008 2009 2010 2011

Gross spread ratio %71

72 56 35 21

Profit before tax to total income %49.8

59.19 66.11 67.89 53.71

Markup/ Interest cover ratio Times5.15

5.08 2.79 1.94 1.65

Profit after tax to total income %34.26

46.65 49.16 54.16 49.27

Total assets turnover times0.06

0.06 0.07 0.09 0.1

Return on avg total assets (after tax) %1.88

2.49 2.65 2.76 2.22


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Price earning ratio times5.09

7.25 10.23 7.71 9.31

EPS (Non dilutive) Rs./share6.86

9.08 10.01 13.14 10.51

Dividend per share Rs./share 2.5 4 5.2 3.25 3.5

Market value per share Rs./share34.95

65.9 102.45 101.25 97.8

No. of branches No.241

253 266 266 272

Staff Strength No.3,019

3,144 3,430 3,681 3,859

Gross margins %4.00%

3.51% 4.19% 3.10% 3.30%

Net margin %3.30%

3.41% 3.99% 3.03% 3.16%

Net Interest Margin %3.23%

3.34% 3.90% 2.95% 3.09%

Total revenue %5.50%

5.34% 5.39% 4.81% 4.91%

Equity / Assets %11.60%

11.90% 12.10% 10.80% 10.30%

RoE %16.20%

21.00% 21.90% 25.50% 25.40%

Cost/Income %49.80%

38.10% 26.90% 26.40% 24.70%

Bank Analysis with reference to commercial Banks listed

on stock exchange

Financial Position of Commercial Banks

Registered in Pakistan

Name

of As of June 2010

Commercial Paid up Reserves Assets Deposits Advances Profit Earnings Branch Credit

Bank Capital (Rs. Bn)

(Rs.

Bn) (Rs. Bn) (Rs. Bn)

After

Tax

Per

share Network Rating

(Rs. (Rs. (Rs) (Nos)


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Bn) Bn)

Habib Bank 7.59 23.6 735.71 584.85 411.36 7.5 9.75 1400 AA+

UBL 8.97 18.54 788.12 621.53 173.42 8.1 9.03 1249 AAA

Allied Bank 6.46 5.48 344.7 293.97 168.45 2.51 3.88 757 AA

MCB 6.28 35.88 450.34 350.72 228.98 7.68 12.22 1038 AA+

United Bank 10.12 12.82 576.02 465.54 328.55 5.59 5.53 1100 AA+

First Women 0.28 0.22 8.04 6.4 3.09 0.05 1.67 38 BBB+

Bank of Punjab 5.29 7.43 217.85 180.82 142.85 -2.63 -4.97 272 AA-

Soneri Bank 4.11 1.88 81.61 64.73 45.83 0.47 1.13 90 AA-

Askari Bank 4.06 7.59 194.21 153.32 114.04 0.05 1.01 155 AA

Bank Al- Habib 4.79 2.8 167.36 136.75 93.25 1.25 2.61 203 AA

Bank of Khyber 4 1.34 34.43 24.4 11.14 0.11 0.27 34 BBB+

Bank Al- Falah 8 2.95 333.02 287.77 180.02 1.69 2.12 231 AA

Saudi Pak 5 0.22 50.83 42.35 27.62 -0.81 -1.54 55 A-

Faysal Bank 5.3 3.57 137.31 99.61 87.61 0.75 1.41 111 AA

KASB Bank 4.02 0.17 53.66 44.33 32.65 0.08 0.39 41 A

Meezan Bank 4.54 0.81 71.74 57.84 38.3 0.44 0.98 111 A+

NIB Bank 28.44 8.46 177.98 112.12 85.43 -0.73 0.23 240 AA-

Mybank 4.24 0.41 45.47 31.96 23.03 0.43 1.02 69 A

Atlas Bank 5.01 0.52 30.7 22.18 17.5 -0.2 -0.39 31 A-

Standard

Chartered 38.72 1.95 276.38 173.81 126.27 1.31 0.34 176 AA+

JS Bank 5.11 0.01 24.16 14.08 9.57 0.16 -0.31 11 A-

Habib 6.02 6.7 192.45 128.97 101.22 1.57 2.6 100 AA+


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Metropolitan

A stock exchange is a corporation or mutual organization which provides "trading" facilities for

stock brokers and traders, to trade stocks and other securities.The securities traded on a stock

exchange include: shares issued by companies, unit trusts and other pooled investment products

and bonds. To be able to trade a security on a certain stock exchange, it has to be listed there.

The initial offering of stocks and bonds to investors is by definition done in the primary market

and subsequent trading is done in the secondary market. In Pakis

arbaz final report bank of punjab

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