REPORT ON HBL

Internship Report on Operation Management OfHabib Bank Limited

DEDICATIONAll Our Words Dedicated with Respect

and Reverence Love and Affection to

My Parents

INTERNSHIP REPORT

HABIB BANK LIMITEDSpecialization:MARKETING

Submitted to: The ChairmanDepartment of Business Administration

Submitted By:Name: Imran HaiderRoll #: W587675 Reg. #: Mailing Address: H # 463, St #14, Gulistan Colony, Mustafabad Lahore.Contact #: Date of Submission:

DEPARTMENT OF BUSINESS ADMINISTRATION ALLAMA IQBAL OPEN UNIVERSITY, ISLAMABADACKNOWLEDGMENTSGreat is Allah and great is His mercy. Who taught by the pen, taught men what he knew not. It is through his boundless grace and infinite mercy that we have been able to bring out this.Special praise is for our beloved Holy Prophet (S.A.W.W) who is inspiration for all who seek knowledge and is symbol of knowledge and complete guidance for humanity as a whole.We do not have words to express deep gratitude and thanks to our respected teachers and instructors who helped us and encourage us in every possible way. He was with us whenever we needed him. No matter how many times we went to bother him with our problem, He never seemed irritated. In return all we can do is to offer our greatest respect and honor for a great teacher. In fact he has been a great source of inspiration for us in particular.I am also very obliged to Mr. Tauqeer Ahmed (HBL) who provided me guidance and showed kindness in the form of keen interest. I am also extending our sincere appreciation to all our friends and class fellows.Words are lacking to express obligations to our affectionate Parents their love, good wishes, inspirations and unceasing prayers, without which the present destination would have been mere a dream.All our prayers and gratitudes for them, who pray for us, help us, and encourage us to achieve our goal.Best Regards

Ather Hussain

Executive SummaryI was given a Report on internship training program, which is compulsory for the degree requirement of MBA program. The Internship duration must be at least 6 8 weeks. The internship is done by me in Habib Bank Ltd.. This report has been made on Habib Bank Limited. a prominent name in Insurance sector of Pakistan. The report revolves around the accounting and finance department of Habib Bank Limited.. As per my internship program my report has the information related to the HBL such as the Products & Services offered by the HBL. As per the required format of university, this report includes all those elements in detail description about each component which is laid down in the prescribed format for MBA (Finance) students.This report includes the overview of business sectors of the organization, introduction to the group, detailed information about finance department, organizational structure, finance department structure, key duties performed analysis of financial statements, accounting & finance system of the organization, financial reviews, recommendations and other supporting material used in this report. I also discussed the other departments like Marketing Departments; companys marketing strategies, SWOT analysis with respect to the competitorsBy analyzing and reading this report, a reader or analyzer will come to know about the Habib Bank Limited., its structure, working environment, duties performed during internship program finance specialization students, get information about key financial statements a general perception regarding insurance.

TABALE OF CONTENTS:

Sr. NoTitlePage

1.OBJECT OF STUDYING THE ORGANIZATION06

2.CORPORATE VALUES

06

3.HISTORY OF HBL

09

4.NATURE OF THE ORGANIZATION

10

5.ORGANIZATION STRUCTURE

11

6.PRODUCTS & SERVICES

12

7.STRUCTURE OF OVERALL ORGANIZATION

22

8.REVIW OF VARIOUS DEPARTMENTS IN TERM OF FUNCTIONS

23

9.DEPOSIT DEPARMENT

23

10.CLEARING DEPARMENT

30

11.BILLS DEPARMENT

35

12.REMITTANCE DEPARTMENT

36

13.SOURCES OF FUNDS

37

14.GENERATION OF FUNDS

39

15.ALLOCATION OF FUNDS

41

16.FUTURE PROSPECT OF THE ORGANIZATION

42

LIST OF TABLES & ILLUSTRSTIONSSr.Table NamePage

1.Source of funds(Table no. 13.1)40

2.Source of funds(Table no. 13.2)40

3.Generations of funds(Table no. 14.1)41

4.Generations of funds(Table no. 14.2)41

5.Allocations of funds(Table no. 15.1)43

6.Allocations of funds(Table no. 15.2)43

Allama Iqbal Open University

Internship Report on HBL13Objectives of studying the organizationThe main objective is to study the organization to know about the OPERATION MANAGEMENT of Habib Bank Limited. Following are the working on OPERATION MANAGEMENT of Habib Bank Limited.HBL Values Excellence Integrity Customer focus Meritocracy Progressiveness

Corporate InformationRegistered Office:-Habib Bank LimitedHabib Bank PlazaI.I. Chundrigar RoadKarachi 75650Pakistan.Head Office:-Habib Bank LimitedHabib Bank PlazaI.I. Chundrigar RoadKarachi 75650Pakistan.Phones: 2418000Fax: 21-2411647Telex: 20086-20751 HBANK-PKAuditors:Taseer Hadi Khalid & Co.(a member firm of KPMG International)Sh. Sultan Trust Bldg. No. 2Beaumont RoadKarachi 75530Pakistan.A.F. Ferguson & Co.(a member firm of PriceWaterhouseCoopers)State Life Building 1 CI.I. Chundrigar RoadKarachiPakistan.

Board of Directors

Zakir MahmoodSultan AliPresident & Chief Executive Officerchairman

Iain Donald CheneDirector

Mr. Sajid ZahidDirector

Mustaq MalikDirector

Ahmad JawadDirector

Management HierarchyPresidentBoard of directorMember executive boardRegional chiefZonal chiefBranch managers

History of Habib BankThis bank was incorporated under companies act 1913 on 9th July, 1947 (just before partition) at Calcutta. But due to changing scenario of the region, the certificate of incorporation was issued on 17th August, 1948 with a delay of almost 1 year; the certificate was issued at Chitagong. The first Head office of the company was established at Dacca and Mr. G.M. Adamjee was appointed its first chairman. It was incorporated with an authorized capital of Rs. 15 million.After some time the registered office of the company was shifted to Karachi on August 23rd, 1956 through a special resolution, now recently the Head office of HBL has been transferred to Islamabad in July, 1999 and now Head office is termed as Principle Office.This institute was nationalized with other on January 1st, 1974. At that time it had 506 branches and deposits amounting to Rs. 1,640 million. Although. HBL has a reputation of a conservative bank but nationalization also left its effects on this institute as well and by end of year 1991 in which it was privatized had deposits amounting to as high as Rs. 35,029 million.After privatization Mr. Mian Mansha took over as Chairman, the bank revised all of its previous policies, aiming towards higher profits as he himself is an industrialist and those instincts are the driving force behind his zealous efforts for the financial well being of the organization. Thus, the bank under his chairmanship has improved a lot, aiming to provide quality services to its clients and standing up to the intense competition in the banking sector. They now understand that cutting edge technology is vital for any modern organization. HBL continuously designs products and services that harness the best technology for the sole benefit of its customers. It is all concerned with changing the conservative and anti progressive slant adopted by the previous management at HBL. In the result now HBL has 1057 domestic and 7 oversees branches in the world.Nature of the organizationAs it is an institution called bank so the purpose of banks is to provide some services to the general public. And for this purpose different banks provide different services to the people in different forms. The HBL Bank is a commercial bank, in modern time commercial banks play a very important role and their functions are manifold. The main functions and services which HBL Bank Limited provides to different peoples are as follows. Open Different accounts for different peoples Accepting various types of deposits Granting loans & advances Undertaking of agency services and also general utility functions, few of those are as under:- Collecting cheque and bill of exchange for the customers. Collecting interest due, dividend, pensions and other sum due to customers. Transfer of money from place to place. Acting an executor, trustee or attorney for the customers. Providing safe custody and facilities to keep jewellery, documents or securities. Issuing of travelers cheque and letters of credit to give credit facilities to travel. Accepting bills of exchange on behalf of customers. Purchasing shares for the customers. Undertaking foreign exchange business. Furnishing trade information and tendering advice to customers.

Organization StructureOrganization Structure of HBL ManagementAs HBL is a banking company listed in stock exchange therefore it follows all the legalities which are imposed by concerned statutes Mr. Muhammad Mansha is chairman & chief executive of the company with a team of 10 directors and 1 vice chairman to help in the business control and strategy making for the company, annex is attached at the end of the report.Operational management of the bank is being handled by a team of 10 professionals. This team is also headed by Mr. Muhammad Mansha. The different operational departments are Consumer Banking & IT Division, Financial & inter branch Division, banking operation div, HR & Legal Div, Financial Control & Audit Div, Credit management Div, Commercial Banking Div, Corporate Banking Div, Treasury Management & FX Group and lastly Special Assets Management (SAM) Group.Organizational Structure of HBL A quick view organizational structure is as following:- Banking Operationsa. Wholesaleb. Retailc. Treasury and Capital Markets Wholly Owned Subsidiariesa. HBL Asset Management Co.b. MNET Services (PVT) Ltd,c. HBL Trade Services Ltd, (HK)d. Muslim Commercial Financial Services Associated Companiesa. Adamjee Insurance Co.b. First Women BankProduct & ServicesProduct Line has been categorized into three segments with different people handling each category. These categories are:Corporate BankingThese are branches which have an exposure of over Rs. 100 million. Usually includes multinational & public sector companies.Commercial BankingThe branches which has a credit exposure of less than Rs. 100 million but having a credit portfolio of more than Rs. 20 million (excluding staff loans), Usually branches in large markets and commercial areas come under this category.Consumer BankingThese are the branches which have exposure up to Rs. 20 million and these include all the branches which are neither corporate nor commercial branches.HBL Product Mix against productsRetail Products and Services:Typical Retail products and services of HBL are as follows:1) HBL Credit Card Welcome to a world of convenience, flexibility and opportunity. The HBL Credit Card will add simplicity and excitement to your life. Accepted at over 24 million merchants worldwide, HBL Credit Card makes shopping fun and paying simple. Make the most out of your shopping experience with your very own HBL Credit Card. Benefits Convenience Security Affordability Cash Advance Balance Transfer Facility ConvenienceInstead of paying with cash, simply present your HBL Credit Card to the shopkeeper and pay for anything you want. Bill Payments SMS Alerts E-Statements Statement by Fax SecurityYour HBL Credit Card ensures your money stays completely secure. You cannot lose cash if you dont carry it. In the unlikely event that your card is stolen, call us at HBL Phone Banking and your card will be blocked immediately.

Affordability HBL Credit Card gives you the flexibility to buy what you want, when you want and pay for it later. A credit card statement will be sent to you every month with details of all your purchases. You will have 21 credit free days to make the payment from the statement date. Please pay at least 3 days in advance if you make your payment by cheques to allow enough time for clearance. You have the freedom to pay the entire outstanding amount on your card statement or as little as 5% of the outstanding balance in your statement. The remaining amount will be transferred to next months statement. A nominal service charge will be applied to the unpaid amount each month. Just make sure all your HBL Credit Card payments are made before the due date and you will benefit from a reduction in the rate of service charges at the end of each year. Cash Advance If you require cash urgently, you can go to any specified HBL branch and withdraw cash at the counter. You can also go to any 1 Link ATM in Pakistan and more than 780,000 ATMs and financial institutions worldwide displaying the Visa/Plus logo. You can withdraw cash up to the available cash advance limit on your HBL Credit Card. Balance Transfer Facility With your HBL Credit Card Balance Transfer Facility, you have the opportunity to pay off balances you owe to other banks through your HBL Credit Card at lower service charges. Habib Bank MasterCardHabib Bank MasterCard opens a world of convenience. Be it shopping or traveling or medical expense, HBL MasterCard sets free from the hassles of carrying cash, wherever customer are. You have the option to choose from our Domestic or International card depending on your requirements. Worldwide acceptability Up to 30% of your spending limit as cash advance Travel accident insurance coverage worth Rs. 2.5 million Foot feature to help avoid misuse HBL ATMATM can pay cash at odd hours within your withdrawal limit as long as there is balance in your account. You can get cash from any Habib Bank ATM regardless of the fact that your account is in a different branch or a different city. You can check your account balance and get a printed mini statement. It is an extremely convenient way of banking, totally oblivious of time and location. Money when you need it! The good thing about it is that it is a user-friendly machine.The usage of ATM in Pakistan is gaining ground perceptibly. The shared ATM network, which has obviously come to stay, is contributing to the usage factor due to unprecedented convenience of timeless banking. Habib Bank has a large ATM network and enjoys the privilege of being a founder-member of a fast expanding shared ATM network.Objectives of HBL value visa cardTo build credibility and stronger relationship with the existing account holder by providing convenience and value added offerings through HBL Value visa debit card. To revenue increase revenue per customer through increased transactions at point of sale. To strengthen spending side by migrating transactions to point of sale. To reduce the workload on branches counters by use of ATMS and point. It is an international product for the holders of our online branches. It is backed by the extensive global network acceptability and power of visa international. it is card holders direct link to cash in his personal HBL accounts through ATM/POS. It is the card holder direct link to cash in his personal HBL account through ATM/POS. No matter where in the world customer will be, his bank will be with him. On payment through HBL value debit card the exact purchase amount is automatically deducted from the linked HBL account.Habib Bank Flexi LoansWith the rising cost of living, it is becoming increasingly difficult to make expensive purchases or meet unexpected expenses. We can help you finance them with Habib Bank Flexi Loans. You may avail a personal loan of up to SIX TIMES of you net take-home salary subject to a maximum of Rs.300,000/- provided you work for an organization approved by HBL. Quick processing Minimum security Maximum tenure Minimum documentation Low monthly installmentsAdvantages Flexible tenure: 12, 24, or 36 months Low rates No processing fee Credit Life & Disability Insurance Repayment through easy and affordable monthly installments Credit Life & Disability Insurance Repayment through easy and affordable monthly installments You determine the need, we help you financeDocuments required Repayment schedule Insurance enrollment cover from alico/nji for credit life insurance. Assignment of legal heirs Health declaration (in case of ALICO) Declaration (in case of NJI) Undertaking for non-utilization of loan for subscription in initial public offering. Habib Bank Auto FinanceHabib Bank Auto Finance Lease offers the most flexible and convenient option to the salaried as well as self-employed individuals to get a car of their choice. Now customers have the flexibility of structuring their lease finance in terms of tenure, down payment and deferred payment to suit their requirement.INTRODUCTION We have the geographic presence to launch asset based products. HBL auto finance is based upon current market dynamics Spirit behind auto finance is to capture large market share in consumer finance. Auto finance diversify over revenues streams within RBG. Auto finance is marketed as lease finance It is the introduction of the concept of Islamic banking. Features Lease finance available for all new locally assembled cars and light transport vehicle Accommodating fixed lease tenures of 36, 48 and 60 months Minimum down payment as low as 10% Amount of leasing available up to Rs.1,500,000 Option of deferred payment up to 30% of the vehicle's invoice price to reduce your monthly rental Lowest processing charges Best comprehensive insurance package at the most competitive rates which includes third party liability and security against theft and terrorism, accident cover for Rs.200,000/- any where in the world for the lessee & his/her family, speedy process of claims and many more No hidden cost involvedEligibility Pakistani National Minimum 25 years and maximum 60 year of age at the maturity of the lease. Businessmen with minimum experience of 3 years in the same business and profession. For salaried individuals, a confirmed employee in any of our Approved Organization List (AOL) with minimum 1 year of experience. Remaining length of service should be at least equal to the lease tenure period. Monthly rental should not exceed up to 30% of net take home income.How to apply Just visit any HBL branch or Habib Bank Auto Finance Centre for details and application. Submit complete set of application without any charges to the branch or the Auto Center. Sign the necessary documents on approval of the application Payment is released within 24 hours of the submission of post-dated cheques and initial payment after approval of the request.HBL House financeWhy housing finance Government policy to enhance housing activity. To enhance the economic activity Employment generation Large target market Low risk Contribution to the income of RBGDocuments RequiredSalaried Individual Complete Application Form Salary Certificate / Most recent Salary Slip Bank Statement for past one year Two Copies of NIC Employment Certificate with date of joining Two passport size photographs Copy of the last paid utility bill (residence) Self Employed / Professional Complete Application Form Two Copies of NIC Two passport size photographs Letter of proprietorship / Registered Partnership Deed Certified latest Form A and Form 29, where applicable, along with articles and Memorandum of Association Copy of last paid utility bill (residence) Bank Statement for the last 1 year Eligibility Criteria Pakistani National Minimum one year with six months in current job. Confirmed employee Remaining length of service should be at least equal to the lease tenure period. AgeI. Minimum 21 yearsII. Maximum 60 years at maturity of loanIII. Maximum 60 years at maturity of loan for contract staffBank AssuranceHBL and New Jubilee Life Insurance Company Limited (NJLI) introduce Amaan (Retirement Plan) and Tabeer (Child Education & Marriage). These products have been designed keeping HBLs customer base as the focus and will provide life insurance along with an investment option.AmaanAmaan is a pension plan that provides an opportunity for growth through investment in a balanced portfolio with post-retirement income benefits. The plan covers life insurance and gives attractive returns on investment to its customers. Plans are available for both under and over 45 years of age.TabeerTabeer is a plan that provides parents with a means to accumulate a fund over a period of time which can then be used to pay for a childs education or marriage. Plans are available for both under and over 45 years of age.Muhafiz Rupee Travelers ChequesWith the advantages of 100% free purchase and encashment, MUHAFIZ remains the foremost choice with travelers wishing to carry cash in a safe and convenient way. MUHAFIZ is equally suitable to both personal use and business transactions. Regardless of whether you have an account with HBL or not, you can be a MUHAFIZ customer and relish the benefits of Pakistan's leading Rupee Travelers Cheque, including: Accessibility: Issuance from more than 700 branches across the country. Convenience: Encashment at more than 1400 branches. Choice: Available in denominations of Rs. 10,000, 25,000, 50,000 and 100,000. Guarantee: Prompt refund in case of loss or theft. Advantage: Convenience of transferability. Facility: Safety of special security printing. Freedom: Flexibility of no expiry date. Structure of overall organizationAs HBL is a banking company listed in stock exchange therefore it follows all the legalities which are imposed by concerned statutes Mr. Muhammad Mansha is chairman & chief executive of the company with a team of 10 directors and 1 vice chairman to help in the business control and strategy making for the company.Operational management of the bank is being handled by a team of 10 professionals. This team is also headed by Mr. Muhammad Mansha. The different operational departments are Consumer Banking & IT Division, Financial & inter branch Division, banking operation div, HR & Legal Div, Financial Control & Audit Div, Credit management Div, Commercial Banking Div, Corporate Banking Div, Treasury Management & FX Group and lastly Special Assets Management (SAM) Group. The organ gram is attached end of the report (Annex-B)The administrational authority structure follow is as following: President/CEO Head Administration Asst Manager Administration Senior Admin officer Procurement Admin Officer Logistics Asst Admin Officer Stationery & Bill Process Area Manager Branch Manger

Review of Various DepartmentsDeposit Department The function of deposit department is to collect deposits from customers. Following type of deposits are offered by Habib Bank.1) Term account2) Current account3) Saving account4) Foreign currency account1. Term Accounts HBLs Term Accounts are offered in a variety of tenure with deposits as low as Rs.10,000. Special Notice Time Deposit F.I. Term Deposit Receipts Munafa Plus Deposit (Certificates) IPDC Remittence Munafa Plus Deposit (Certificates)Special Notice Time Deposit 7 days or 30 days (and over) notice Minimum deposit of Rs. 10,000 Balances less than Rs. 1 million Balances equal to and greater than Rs. 1 million Returns range from 0.75% to 4% depending on notice period and amount F.I. Term Deposit Receipts 3 month term deposit Minimum balance of Rs. 10 million Returns range from 0.75% to 2.25% Munafa plus Deposit (Certificates) Available in 3 month, 6 month, 1 year, 3 year, 5 year and 10 year terms Profit disbursement (except for 3 & 6 month terms) is monthly, quarterly, bi-annually and on maturity Returns range from 6.15% to 14% IPDC Minimum investment of Rs. 20 million except in the case of 1 month where minimum investment is Rs. 100 million Available in 1 month, 3 month, 6 month, 12 month and 3 year terms Profit paid on maturity Rates on IPD are conveyed on a daily basis by the Treasury Division Remittence Munafa Plus Deposit (Certificates) Available in 1 year, 3 year and 5 year certificates 10. Current Accounts Profit disbursement is monthly, quarterly, bi-annually, annually and on maturity Returns range from 7.8% to 11%2. Current Accounts Our Current Accounts offer features that meet your daily banking needs. For more information on these products, Current Account Basic Banking Account (BBA) Current Account Non-profit bearing No transaction limits Minimum balance of Rs. 10,000. If the average balance falls below this amount, then service charges will be deducted No restriction on anyone opening a Current Account (as long as regulatory guidelines are met) Features A deposit payable on demand. No Zakat deduction.Can be opened in the name of Individuals single or joint Trusts Firms Clubs, associations Private limited companies Societies Public limited companies Institutions.Basic Banking Account (BBA) No minimum balance No service charges Requirements For new customer give new Account opening form For existing customer request convert CD/PLS account into BBA account. The banks revised KYC form. Copy of his CNIC.FEATURES Normal procedure for account New account type (CD) Minimum balance will be Rs.1000 No profit will be paid No service charges Accounts will be closed manually BBA holders will be informed immediately Maximum two deposits and two withdrawals transactions per month. For each additional transaction except ATM withdrawal Rs.20 per transaction will be recovered by the system. TRF not allowed Statements of account once in a year The existing CD/PLS-SB Account holder can convert their account into BBA. The existing account will be closed.

Savings Accounts HBLs Savings Accounts cater to individual saving habits. To find the account best suited to your needs, PLS Savings Account HBL Value Account HBL Super value Account Remittance Munafa Plus Saving Account PLS - Special Saving Bank Deposit Scheme PLS - Daily Munafa Plus Deposit Account PLS Savings Account Profit paid bi-annually Minimum average balance of Rs. 10,000 Less than Rs. 20,000 earns 0.10% profit Greater than Rs. 20,000 earns 1% profit HBL Value Account 7% profit per annum* Profit credited every 3 months Deposit ranges from Rs. 10,000 to Rs. 100,000 Flexibility of withdrawals Features Every individual including existing customer can open The minimum initial deposit Rs. 100,000 Maximum balance of Rs.500, 000 Profit rate 7.25% and expected annualized rate 7.40% No profit on balance exceeding maximum limit Quarterly credit of profit Normal service charges if the balance falls below Rs. 10000 Maximum of two withdrawals per month. In case of more two withdrawals the depositor will forfeit the profit for the month. Cheque book 10 leaves will only be issued if value visa card facility is not available Can use the visa card at POS. TRF not allowed Recovery of withholding tax and Zakat as per rule. HBL Super value Account 7.25% profit per annum* Profit credited every 3 months Deposit ranges from Rs. 100,000 to Rs. 500,000 Flexibility of withdrawals Remittance Munafa Plus Saving Account Remittance Based (no credit allowed except remittance) Daily Basis Product Tiered ] Monthly profit Minimum average balance of Rs. 10,000 Less than Rs. 20,000 earns 0.10% profit Rs. 1 million and above earns 5% profit PLS - Special Saving Bank Deposit Scheme Daily Basis Product Tiered Monthly profit Minimum balance of Rs. 20,000 Returns up to 8% PLS - Daily Munafa Plus Deposit Account Daily Basis Product Tiered Monthly profit Minimum balance of Rs. 50,000 Returns up to 8% Foreign Currency AccountsHBL offers Foreign Currency Accounts in multiple currencies as savings and term accounts are FC-SB and HYFFD (High Yield Foreign Currency Fixed Deposit) FC-SB Savings Account offered in 3 currencies, USD (US dollar), EUR (Euros) and GBP (UK pound) Tiered product, with rates depending on choice of currency To earn profit, minimum balance in USD, EUR and GBP is 1,000 Interest is payable on a quarterly basis HYFFD (High Yield Foreign Currency Fixed Deposit) Available in 1 month, 2 month, 3 month, 6 month and 12 Month in USD, EUR and GBP Tiered product, with rates depending on choice of currency and term Profit paid on maturity only. No interim interest is payable. These are indicative rates and are liable to change. Taxes and other deductions as per applicable laws

Clearing Department1. Introduction 1. Clearing House 1. Advantage of Clearing House 1. Function of Clearing Department 1. Procedure of depositing cheque 1. Types of cheques collected by clearing department 1. Scrutiny of pay in slip 1. Procedure after scrutinizing 1. Procedure of clearing at clearing house IntroductionEvery bank acts in two way i.e. Paying Bank Collecting Bank Here in theory no legal obligation on a banker to collect cheques, drawn up to other banks for a customer. It is, however, an important function of crossed cheques. A large part of this work is carried out through the bankers clearing house wherever it is established.Clearing houseA clearing house is the place where representatives, of all the banks get together for the purpose of offsetting the inter bank indebtedness arising from the transfer of deposits by a customer of a particular bank to another bank.Advantage of clearing houseThe advantages are manifold. It prevents the cost and waste involved in collection each and every cheque and claim. That a banker holds against another, across the counter with all the danger of loss in the transit incumbent upon it. Great economy is also achieved in the employment of liquid cash by setting the difference by simpler transfer of credit from one account to another, thereby minimizing the necessity of holding large cash balances, clearing house works under the control of State Bank of Pakistan.A banker has no legal obligation to collect cheques drawn upon other banks for the customers, though modern banks have assumed this important function of their own choice. Therefore, it is very important that since they have assumed this function, the banker should be very careful in their performance, otherwise they will face more difficulties. So, if they provide this facility when the cheques are crossed.Function of clearing department The following are the main functions of clearing department.1. To accept transfer deliveries and clearing cheques from the customer of the branch and to arrange for their collection. 1. To arrange the payment of cheque drawn on the branch and given for collection to any other branch of Habib Bank of Pakistan or any other members, or sub-members of the local clearing house. 1. To collect amounts of cheques drawn on members, sub-members of the local clearing house, sent for collection by those Habib Bank Limited, branches which are not represented a the local clearing house. Procedure of depositing cheques in clearing department Whenever a customer wants to deposit cheque, etc, he fills a pay in slip and hands it over the counter along with the instruments he wants to deposit with bank. As far as possible, the customer desire that on of the staff member fill in a slip for him, he should be obliged promptly. The smaller portion of the perforated pay in slip is handed over to the depositor and the portion becomes the regular portion of a credit voucher.Types of cheques collected by clearing department a. Transfer Cheques Transfer cheques are those cheques, which are collected and paid by the same branch of bank.b. Transfer Delivery Cheques Transfer Deliver cheques are those cheques, which are collected and paid by two different branches of a bank, situated in the same city.c. Clearing Cheques Clearing cheques are those cheques in which the payee (Person who deposit cheques for collection) and the drawer of a cheque maintain the account with different banks. When the cashier receives the cheques, which are to be deposited for clearing purpose, the following points must be verified.1) The instruments should be neither stale nor post dated.2) If the instruments is crossed, not negotiable, it can be for the third party (can be endorsee of an order cheque, or a holder of bearer cheque).3) The instrument should not bear any unauthorized alteration. 4) The amount in words and figures should be the same. 5) The instruments should be drawn on a member, or any of local branches. 6) If the cheque is crossed "Account payees" "Account payee only" or "Payees Account", it should only be accepted for collection for the payees account. 7) The cheques or drafts should not be crossed specially to any other bank. 8) A cheque payable to one of the joint account holder should not be collected for the joint account without the payees endorsement, or consent. 9) A cheque payable to a firm should not be accepted for credit to a partners account.A cheque drawn by a customer in the capacity of an agent, Attorney, or Manager of his company or firm, should not be collected for credit to his personal account. 10) Pay orders, although negotiable, should not be collected for third parties. 11) Do not collect an instrument in the accounts of an agent, or of the servant of the payees of endorsee of the instruments. 12) Mail transfer Receipts pay ships and treasury receipt should not be collected for persons other than the payee. 13) If an account is new, or the balance or operation of the account is not satisfactory, satisfy yourself about the titles of the customer to the instruments before the titles of the customer to the instrument before accepting the deposit. 14) Branch agents permission should be obtained before accepting a third party cheque or draft for credit of the account of the staff member. 15) If the payee is a government department, government official, or a trust account, the instrument cannot be collected, but for the payees account. 16) If the payee of an instrument is Habib Bank Limited, it can be collected for credit of the drawers account, or the amount of the instrument may be utilized as desired by the drawer in writing. 17) Cheque payable to a trust, account should not be collected for credit to at trustee account. 18) All the endorsement should be regular, and on endorsement should be missing. After the cashier scrutinizes the cheques he must also scrutinize the pay in slip.Scrutiny of pay-in-slipThe following steps are involved in the scrutiny of pay in slip. 1. On both the counterfoil and the pay in slip following should be checked. i. Date of Deposits ii. Account number iii. Title of the account iv. The cheque/number and the drawer bank/name. v. Total amount in words and figures Customer should use separate pay in slip for transfer, transfer delivery, and clearing cheques. The amount noted should be the same as the amount of the instruments, and the amount in words and figures should be same. Procedures after scrutinizingAfter scrutinizing the cheques and other deposit instruments and paying slip at the counter the following procedure is under taken by cashier if he is satisfied.1. Fixing the stamp. 1. Scrutiny, and receipt by the authorized officer 1. Returning the counter foil to the depositor. 1. Certificates and confirmation by the officer-in charge of the department. 1. Separating the cheque into transfer delivery, and clearing cheque.Procedure of clearing at clearing houseThe mechanism of setting inter bank indebtedness operates as follows. Clerks representing various banks meet at a common place, the clearinghouse, and every day. Every clerk then delivers to the others the cheques and the other claims which their respective banks hold against his banks hold against his bank cheques and other documents dishonored will be returned to the representative of the respective bank. The various amounts of receipts and deliveries are now added up and a balance is struck there in and the final settlement is effected by the supervisor of the clearing house by transferring balance kept and the central bank by these various clearing bank.Bills DepartmentBills department performs the following functions.a. Inward Bills for Collection (IBC) b. Outwards Bill for Collection (OBC) Inward bills for collection (IBC)These are bills or cheques etc. which are collected locally. They are received from outstation branches banks and parties.Demand draftIf refers to the payments of money on demand of the holder of draft. Demand draft includes DD issues and DD payable.Outwards bill for collection (OBC)Clean bills.These are negotiable instruments, drawn on outstation branches, bills sent for collection on behalf of the customers i.e. cheques, drafts or treasury bills etc.Documentary bills.These are bills accompanied by documents such as R.R.T.R Bills of landing etc. having title to goods, collected by the bankers on behalf of their customers.Pay slip.Pay slip is an instrument in receipt, issued by the bank in the following cases:a. On account of expenditure incurred by the bank. b. On account of refund of a payment to a persons under certain circumstances. Pay order.Pay order is issued to other banks for collection of make the payment as said.Remittance DepartmentRemittance department performs following functions:i. Mail Transfer (MT) ii. Telegraphic transfer (TT) iii. Demand Drafts (DD) Mail transfer (MT)When a customer request the bank to transfer his money from one branch of bank to another branch of the same bank or from one city to another city to the same bank or any other bank. Customer fills the form given by bank. If the customer has an account with that amount as mentioned in the application form then concerned officer will undertake the following procedure to make the mail transfer complete.i. Branch Mail Transfer form ii. Receiving Branch Register copy iii. Issuing Branch register copy iv. Beneficiary advicev. Advice to Customer In case where the customer is not account holder of the bank then the customer will have to deposit the amount which he wants to transfer under Mail. Then the above said procedure will be done. Telegraphic transfer (T.T.)This type of transfer is simple. After filling the application form the concerning officer shall fill the telegraphic transfer form. Then it is sent to the required bank which on receiving it immediately makes the payment to the customer and after wards the voucher is sent to that bank by ordinary mail.Demand draft (D.D.)Demand draft is just like cheques and issued when the customer wants to take cash with him personally. The idea behind it is to avoid the risk and burden of currency notes in huge quantity. Demand draft can easily be handled whatever amount it has and the money can easily be taken from the bank when it is presented. In fact, the bank persuades the customer to transfer money by drafts and avoid the risk of frauds involves in M.T and T.T Draft is only issued when the bank knows customer and bank has the confidence in him.

Sources 0f Funds

To show the sources of funds data have been taken from the financial statements as per desired by the university,Table No. 13.1Balance sheet As at Dec 31, 2008DetailRS. 000RS. 000RS. 000RS. 000RS. 000

Assets2,0082,0072,0062,0052,004

Deferred tax assets-net--172,373191,967-

Other assets net19,810,47617,868,76111,031,4505,464,4266,154,370

Liabilities

Borrowings22,663,84039,406,83123,943,47627,377,5027,590,864

Deposits and other accounts330,274,155292,098,066257,461,838229,345,178221,069,158

Sub-ordinate loan-479,2321,597,4401,598,0801,598,720

Long term debt43,917,09051,129,32435,114,97235,989,10214,116,863

Represented by:

Share Capital6,282,7686,282,7685,463,2764,265,3273,371,800

Contingencies and Commitments 59,064,331 55,747,952 41,390,642 23,734,296 14,890,064

Table No. 13.2Profit and Loss Account As at Dec 31, 2008Detail2,0082,0072,0062,0052,004

RS. 000RS. 000RS. 000RS. 000RS. 000

Mark-up / return / interest earned40,043,82431,786,59525,778,06117,756,2329,083,863

Above shown tables 16.1 & 16.2 are taken from the balance sheet and also from the profit and loss account statements to show the sources of funds as per required by the university.The most important sources of funds are share capital, assets and some kind of liabilities. Share capital is growing significantly day by day as per shown in the Table no. 16.1 form year 2004 to year 2008 it has been almost doubled which is a good sign of HBLs stability.in the segment of liabilities deposits and other accounts are also seemed improved year by year as these are called the back bone of banking industry. And other figures of also shown comparatively year by year in the tables above given for quick analysis.

Generation of FundsTo show the generation of funds data have been taken from the financial statements as per desired by the university,Table No. 14.1Balance sheet As at Dec 31, 2008DetailRS. 000RS. 000RS. 000RS. 000RS. 000

Assets 2,0082,0072,0062,0052,004

Operating fixed Assets17,263,73316,024,1239,054,1568,182,4547,999,821

Liabilities

Deposits and other accounts330,274,155292,098,066257,461,838229,345,178221,069,158

Liabilities against assets subject to finance lease-----

Represented by:

Inappropriate Profit9,193,3325,130,7505,530,973210,662165,208

Surplus on revaluation of assets-net of tax6,191,1899,705,5195,187,6395,423,7695,354,323

Table No. 14.2Profit and Loss Account As at Dec 31, 2008DetailRS. 000RS. 000RS. 000RS. 000RS. 000

2,0082,0072,0062,0052,004

Mark-up / return / interest expensed11,560,7407,865,5334,525,3592,781,4682,057,640

Net mark-up / Interest income after provision24,463,96320,856,01120,069,96513,830,4096,746,533

Non-mark-up / interest income

Fee, commission and brokerage income2,866,7292,634,6102,311,2352,448,9501,992,356

Dividend Income617,554632,300811,801480,344378,908

Income from deeling in foreign currencies 727,564693,408692,010531,455492,738

Gain on sale of securities net740,4291,500,865605,865866,895804,419

Unrealized loss on revaluation of investments classified as held for trading(103,198)(13,105)-851(11,440)

other income net942,3621,000,149570,5051,084,576576,007

Total non - mark-up / interest income5,791,4406,448,2274,991,4165,413,0714,232,988

Above shown tables 14.1 & 14.2 are taken from the balance sheet and also from the profit and loss account statements to show the generation of funds as per required by the university.The difference between sources of funds and generation of funds can be distinguished as that sources of funds are directly related to the funds which are outsider funds, and generation funds are those funds which are earned by using the assets/operations of industry.As shown in the table 14.1 fixed assets and deposits are growing day by day, the real impact of these accounts that bank can manage more funds or bank is able to grow more funds if required.

Allocation of Funds

To show the allocation of funds data have been taken from the financial statements as per desired by the university,Table No. 15.1Balance SheetBalance Sheet Detail2061/622062/632063/642064/652065/66

2004/20052005/20062006/20072007/082008/09

Rs. In Million Rs. In Million Rs. In Million Rs. In Million Rs. In Million

Capital Structure

Authorized Capital10001000100020002000

Issued Capital650772.2810.811013.511216.22

Liabilities

Issued and Paid Up Capital643.5772.2810.811013.511216.22

Reserves & Surplus898.25993.981335.691499.481903.67

Debentures360360360860500

Borrowings146.05144.62235.9783.180

Deposits24814.0126490.8530048.4231842.7934681.35

Others556.35698.74728.26876.571019.1

Total27,418.1629,460.3933,519.1436,175.5339,320.32

Table No. 15.2Profit and Loss Account As at Dec 31, 2008DetailRS. 000RS. 000RS. 000RS. 000RS. 000

2,0082,0072,0062,0052,004

Mark-up / return / interest expensed11,560,7407,865,5334,525,3592,781,4682,057,640

Provision for dimlnution in the value of investments net2,683,994105,269121,197(98,982)(172,876)

Provision against loans and advances net1,335,1272,959,5831,014,5401,242,153443,795

Bad debts written of directly-19947,0001,1848,771

Non-mark-up /Interest expenses

Administrative expenses7,546,8785,426,1166,482,5926,459,4907,244,200

Other Provision / (reversal)-net10,120(3,743)11,411(72,740)149,593

other charges830,839573,83066,708178,84141,864

Total Non-Mark-up / interest expenses8,387,8375,996,2036,560,7116,565,5917,435,657

Extra ordinary / unusual item---340,598513,852

Taxation- Current Year7,341,2576,442,3565,701,4434,611,3591,555,764

Above shown tables 15.1 & 15.2 are taken from the balance sheet and also from the profit and loss account statements to show the allocation of funds as per required by the university.As for as the banking productivity is growing day by day the allocation of funds is also increasing which is infect the hint of its stability and exposure of the industry which is being observed from the year 2004 to year 2008 in the HBL as above statements are shown. Future Prospects of the OrganizationHBL Bank is a leading commercial bank of Pakistan. It is among the five largest banks of Pakistan. These banks dominate the banking structure of Pakistan. In the previous years HBL has shown a significant growth. It is a first Pakistani organization which was listed on London stock exchange. In 2008 it received a euro money award for best bank in Asia 2008. Future prospects for HBL are very bright. HBL has a shown 43% growth in FY 2007.With SBP raising the upper limit of retail exposure to PkR75mn (not be more than 2% of gross retail portfolio of the bank) in case of consumer loans and small business loans, HBL has increased its penetration this high margin segment. Despite the challenges of declining demand & rising NPLs due to higher interest rate vulnerability and late entry along with established brand equity of existing players like UBL, Consumer financing continues to be a profitable niche for HBL. HBL is in process of launching more innovative products which will help HBL bank in growing more. As the size of HBL is very large and it comes under the five largest banks there are much chances of growth for HBL due to its strong muscles because of following also One Of The Highest Roe Among Tier 1 Banks Highest Net Interest Margins Lowest Average Deposit Rates High Consumer Loan Growth Extensive Branch NetworkShort-Falls/weaknesses When we analyze profit and lose we can easily observe that the non interest income fee commission brokerage is on decreasing side each year there is a need to relocate this area. Same in the P &L Major increase found in markup interest expenses it was 15.45 in 2004 and slightly recovered in 2005 but after it sharply increased till 2008. Other charges shown in the Profit and Loss are increasing continuously, to smooth the process should take measurements, issue notes them, recovery system should be finalized in way that can be gripped for the benefit of bank. Its EPS growth rate is decreasing over the past year comparing to other banks like UBL. Though its investment is increasing but 40% are confined to investment in government securities. This reduces its returns. HBL has threat from banks like UBL which has 67% low cost deposit base. HBL has threat from banks like UBL which has 67% low cost deposit base Cash and balance with treasury banks increasing but that is a need to reduce there balance with other banks. Contingencies and commitments is increasing each year it means company has no sufficient funds. There is need to control the contingencies and overcome the risk faced by the bank.1