internship report on ztbl, prepared by wasim uddin orakzai student of finance 2010, kust (2)

Zarai Taraqiati Bank Ltd. Chapter 1 Introduction to Report

CHAPTER 1

“INTRODUCTION TO REPORT”

1.1 BACKGROUND OF STUDY

The Zarai Taraqiati Bank Limited is the premier financial institution geared

towards the development of agriculture sector by providing financial products and

services to their customers. It is a common practice at universities during the

completion of the masters and bachelors program to attain practical experience in

different fields. Students are required to undergo an internship program of two

months to fulfill the requirement for their degree completion. The selection of the

firm is based on the choice of the student. The institute requires an internship report

based on the theoretical and practical learning of the student.

The Internship is the bridge between academic qualification and professional

career of fresh graduates”. This internship report is mainly focused on the working of

the Finance and Accounts Division of the ZTBL. Moreover, the internship is a unique

aspect of education that integrates study with planned and supervised career-related

work experience. The students are involved as non-paid “authentic employees”

receiving academic credit for work experiences. The purpose of the internship

program is to develop and strengthen the student’s educational and career

preparation. By doing internship in any organization that obviously exposes the

interpersonal relationships not only with employees but also with supervisor that are

essential in obtaining a successful and satisfying career.

This background of the study is mainly focus on the performance, functions and

objectives of the Finance and Accounts Division of the ZTBL and its internal

working and operations of this division. While, the internship is any experience

where students learn by taking on responsible roles as workers in organizations and

observing and reflecting on what happens while they are in the workplace. It provides

Institute of Management Sciences, Kohat University of Science & Technology

1


many advantages to student that helps him throughout his life. Some advantages of

internship program are given as under;

To gain professional experience and receive academic credit

To enhance independence, responsibility and self-confidence

To Interact and collaborate confidently with employees

To share ideas with one another.

To translate classroom knowledge into the professional work environment and

to make plan, how to carry the activities.

To work towards the process improvement.

1.2 PURPOSE OF THE STUDY

The purpose of conducting this study is to develop some insight into the

working of the Finance and Accounts Division of the ZTBL and to gain the

experience regarding the overall operations and procedures of the bank, in order to

complete the BBA (Hons) degree as well. The purpose of the internship program is to

develop and strengthen the student’s educational and career preparation, which they

gain from university. Another important aspect of the internship program is that

internee is placed to various departments of the organization through job rotation. It

provides a glance of each department, as the period is too short for learning in detail.

Other objectives of the study are as follows:

To gather relevant information then interpret and analyze it in a useful

manner.

To highlight the facilities and products offered by the ZTBL to its customers.

Internship can develop good work habits and to reduce student dropouts.

To develop, enhance and strengthen the communication skills.

To observe and participate in a professional work situation which represents

an area of career interest.


2


To develop an understanding of the organization, its mission, objectives and

management philosophy.

To acquire good work habits and gain an awareness of the community’s vast

resources.

To be responsible and work toward specific achievable goals.

To analyze the bank through different analysis such as Ratio & SWOT

analysis.

1.3 SCOPE OF THE STUDY

The scope of the conducting this study is given as under;

It is a compulsory requirement for the award of Bachelor’s Degree in

Business Administration from the Kohat University of Science & Technology.

This report is concerned with the performance, functions and objectives of the

“Finance & Accounts Division of the ZTBL” Head Office Islamabad.

It will help the students in making assignments and writing reports on the

ZTBL.

It can provide help to the management of the ZTBL in identifying their

Strengths, Weaknesses, Opportunities and Threats.

It can also provide assistance for the students in seeking annual reports for the

purpose to calculate and interpret financial ratios, in order to check the

liquidity, leverage and profitability of the ZTBL.

Further more, students are able to analyze the human resources & analyze the

marketing of products and services schemes that the ZTBL provide his

customers.

1.4. IMPORTANCE OF STUDY

Banks play a central and very important role in the economic life of a country,

that’s why they are considered as the lifeblood of modern economy. Today no one

can deny the importance of banking in the economy. They facilitate and expedite


3


trade and commerce and provide a variety of services that one can’t imagine without

banks.

I have chosen the ZTBL for my internship because it has a large network of

zonal offices and branches. But besides this, the ZTBL plays an important role in the

economic development and growth of Pakistan.

1.5. RESEARCH METHODOLOGY

During the internship at the ZTBL Head Office Islamabad, the most important

task was to collect as much as information on the bank in order to have a full

productive report. For the collection of information and data, I used two methods for

collecting data for the preparation of internship report such as primary and secondary

collection methods, which is given as under;

1.5.1. Primary Data Collections: In primary data collection method, I interviewed

different officers for this purpose. The interviews were not of formal nature but it

went along with time and the questions arose with identification of problems. I

prepared many questions and discuses with Bank officers asked all the detailed

function and procedures of there departments. All officers fully cooperated with me

and provided all the necessary information which was required to me. The interviews

have been taken from the bank officers and also the discussion was conducted with

the heads of different departments. For collecting primary data, I use my own

observation and discuss my problems with previous internees.

1.5.2. Secondary Data Collection: The data that are previously collected and

assembled for the some projects other than the one at hand. It is also called as

historical data. This method can almost always be gathered faster ant at a lower cost

than primary data. The secondary data is collected from following sources;

Annual Reports & Accounts manual.

ZTBL web site & Internet.

Brochures.

Pamphlets.


4


Newspapers.

Business journals.

Books.

1.6. LIMITATIONS OF THE STUDY

There are some limitations which, I had to face as an internee during the

Internship program in the ZTBL Head Office Islamabad, which are described as

under;

Time was too short to visit all division and departments of the organization.

The problem of loud shedding makes delay in preparing this internship report

of the ZTBL.

All staff members avoided to give every information. However, they kept

most of the data secrets. So, it was very difficult to collect the relevant

information.

The vice presidents, executives, managers and other staff members have their

own matters of bank and it was a great problem for me.

Lack of co-operation by some employees because they were non-research

oriented and also lack of accuracy of the relevant data.

Instead of all these difficulties, I have completed this internship report on the

Finance and Accounts Division of the ZTBL Head Office with full

cooperation of few managers.

1.7 SCHEME OF THE REPORT

The internship report on the Finance & Accounts Division of the ZTBL is

arranged in four sections and ten chapters. The report is arranged in the following

sequence.

SECTION-I

This section has one chapter.

Chapter 1:


5


This is an introductory chapter which describes the introduction, background,

purpose, scope, importance, research methodology, limitations and scheme of the

report.

SECTION-II

This is lengthiest section of the report; it includes the review of the ZTBL. This

section is comprised of eight chapters.

Chapter 2:

This chapter is about bank and banking, evaluation of banking, overview of banking

in Pakistan and role of banks in the economic development of the Pakistan.

Chapter 3:

This chapter encompasses the introduction, history, mission, vision, objectives,

restructuring plans, BOD, zonal offices & branches, ranking of staff members and

subsidiary of the ZTBL.

Chapter 4:

This chapter briefly describes the products & services such as loans & schemes and

the recovery procedure of the loan of the ZTBL.

Chapter 5:

This chapter is concerns with the introduction, objectives, functions, classification

and hierarchy of the Finance and Accounts Division of the ZTBL.

Chapter 6:

This chapter describes the introduction, objectives, functions and units of the Central

Accounts Department of the ZTBL.

Chapter 7:

This chapter describes the introduction and units of the Head Office Accounts

Department of the ZTBL.

Chapter 8:

This chapter is concerns with the introduction, objectives, functions and units of the

Regulatory Reporting Department of the ZTBL.


6


Chapter 9:

This chapter describes the introduction, objectives, functions and units of the Budget

& Fund Reconciliation Department of the ZTBL.

SECTION-III

This section also has one chapters and it is about the various analyses of the ZTBL.

Chapter 10:

This chapter explains the SWOT analysis, ratio analysis, human resource analysis &

marketing analysis of the ZTBL.

SECTION-IV

This section contains only one chapter.

Chapter 11:

This chapter explains findings, recommendations, personal experience, conclusions &

annexures of the ZTBL.


7


CHAPTER 2

“INTRODUCTION TO BANKING”

2.1 MEANING & ORIGIN OF BANK

Some authors are of opinion that the word bank is derived from the word

"Banquet" which means a "Bench". This is attributed to the fact that the Jewish

transacted the business of money exchange on bench in market place. “A bank

includes a body of person, who carry on the business of banking” or “a bank may be

as an institution dealing mainly in money and credit. It accepts deposits from one

class of people at a lower rate of interest and industry for meeting the requirements.

This provides finance for successfully carrying on various stages of production as

well as distribution.”

Moreover, a bank can stimulate the habit of savings amount for the people and

provide the security and interest they offer with these savings which are deposited by

people are in a position to utilize the deposited amount more productively.

In short, a bank can increase the transaction capacity of the customers by

advancing loans when they require for additional funds to finance their expanded

program of business transaction.

2.2 EVOLUTION OF BANKING


8


According to the banking companies ordinance 1962 “banking is business that

receive investment or lending of deposits of money from public and repayable on

demand or otherwise and which draw able by cheque, draw orders or otherwise”. As

regards the growth of modern commercial bank, it can be traced to as early as 600BC.

The “An Outline of Money”, written by G. Crowther, has traced the history of

modern English Commercial banking. According to him, the present day banker has

three ancestors such as merchants, goldsmiths & money lenders; which are briefly

explain as under;

2.2.1 The Merchants: The earliest stage in the growth of banking can be traced to

the working of merchants. These merchants were traders in commodities. The trading

activities were carried on by them from one place to another. It was risky for the

traders to carry metallic money with themselves for payment. The traders with high

reputation began to issue receipts which were accepted as titles of money. These

receipts or letters of transfer also called hundi in Indo Sub Continent were the first

mode of payments. The merchant banking thus forms the earliest stage in the

evolution of modern banking.

2.2.2 The Goldsmiths: The second stage in the growth of banking is normally traced

to earlier goldsmiths. These goldsmiths also called Seths in India used to receive gold

and silver for safe custody. The goldsmiths began to issue receipts for the metallic

money (gold & silver) kept with them. These receipts with the passage of time

became payable to the bearer on demand. In this way the ‘goldsmiths’ note, become a

medium of exchange and a mean of payment. The goldsmiths, thus, can rightly be

termed as the fore-runners of the modern bank note.

2.2.3 The Money Lenders: The third stage in the development of banking arose

when the goldsmiths became the money lenders. By experience the goldsmiths (who

were called money lenders) came to know that they could keep a small proportion of

the total deposits for meeting the demands of customers for cash and the rest they

could easily lend. They allowed the depositors to draw over and above the money


9


actually standing to their credit. In Economic terminology, we can say that they

allowed the overdraft facilities to their depositors.

When every money lender and goldsmith issued receipts and most of them

allowed the overdraft facilities, there was too much confusion in the banking system.

The money lenders and goldsmiths, in order to earn profits, could not keep adequate

reserves for meeting the demands of the customers for cash. The failure on the part of

the money lenders and goldsmiths to return money caused widespread distress among

the people. In order to create confidence among the people, steps were taken to

regulate the banking organization. A conference was held in Nuremburg in 1548. It

was decided that a bank should be set up by the state which should streamline the

banking organization and technique. The first central bank was formed in Geneva in

1578. Bank of England was established in 1694. The modern commercial banking

system actually developed in the 19th century.

2.3 EVALUTION OF BANKING IN PAKISTAN

At the time of independence the areas, which now constitute the Pakistan were

producing only food grains and agricultural raw material. For Indo-Pak sub continent,

there were practically no industries and whatever raw material was produced was

being exported from the Pakistan. How ever commercial banking facilities were

provided fairly well here. There were 487 offices of scheduled banks in the territories

now constituting the Pakistan. As a new country without resources it was very

difficult for the Pakistan to run its own banking system immediately. Therefore in

accordance with the provision of Indian independence Act 1974, an expert committee

was appointed to study the issue.

On the recommendation of committee Reserve Bank of India continued to

function in the Pakistan, till 30th September 1984, so that problem of time and

demand, liability, coinage, currencies exchange etc be settled between India and

Pakistan. It was decided that Pakistan will take over the management of public debt


10


and exchange control from reserve Bank of India on 1st April 1948, and that India

notice would continue to be legal tender to the Pakistan till 30th September 1948.

Following the announcement of independence plan in June 1947, the Hindus

residing in the territories now comprising Pakistan started transferring their assets to

India. Moreover the banks including those having the registered offices in Pakistan

transferred to India in order to bring a collapse of new state. By 30th June 1948, the

number of offices of scheduled banks declined from 487 to only 195 in the Pakistan.

There were 19 non-Indian foreign banks with the status of small branch offices,

which were engaged solely in export of crops from the Pakistani institutions i.e.,

Habib Bank and Australia Bank.

The government promulgated the Banking Companies Ordinance 1947, to

safeguard the interests of both banks and the customers. The Imperial Bank closed

down most of its offices in Pakistan, which created serious problems. The Indian

government withheld Pakistan’s share of Rs.75 corer in cash balance held by them at

the time of partition. The urgency of assuming control of banking and currency was

very badly felt now. The government of Pakistan decided to establish a full-fledge

central Bank. Father of the Nation, Quaid-i-Azam Muhammad Ali Jinnah,

inaugurated the State Bank of Pakistan on July 1948, after the State Bank of Pakistan

order was promulgated on 12th May 1948. The SBP provided every help and

encouragement to Habib Bank to expend its network of branches and formulated and

developed NBP in 1949 as an agent bank, which took over the agency functions in

1952 from Imperial Bank of India. In order to develop sound banking and weeding

out week institutes, the Banking Companies Act was promulgated in 1949,

empowering the SBP to control the operations of banking companies in Pakistan. In a

very short period of time number of scheduled banks and other specialized credit

institutions rose to thirty six. By June 1965, the numbers of branches of scheduled

banks were 1591. Pakistani commercial banks were nationalized in 1974, but the

process was reversed as nationalization proved to be defective. The ZTBL, MCB,


11


ABL and UBL have been privatized and HBL is expected to be privatized within near

future.

The nationalization of Banks in Pakistan since 1st January 1947 has heralded a

new era of development and progress. It has taken a complete banking system with

effect form January 1981. The privatization process of state owned banks and

enterprises started in 1991.

2.3 CLASSIFICATION OF BANKS IN THE PAKISTAN

The banks are classified according to their spheres of activities. The main types

of banks are as under:

1. Central Bank: Every civilized country now has its own central bank. The

primary function of the central bank is to regulate the flow of money and

credit in order to promote efficiency, stability and growth in the country. In

Pakistan, the SBP is the country’s central bank.

2. Commercial Banks: These banks are engaged in performing the routine

duties of banking business. They collect surplus money from the people. They

make loans and advances in the form of overdrafts, cash credits, discounting

bills of exchange. The commercial banks also manufacture credit money.

They also provide agency services and general utility services. These banks

are considered the lifeblood of the economic society. Some commercial banks

are owned and controlled by the government which is called as public sector

banks. For e.g., NBP, HBL, UBL…etc while other commercial banks that are

owned by corporations is called as private sectors banks. For e.g., MCB,

ABL, City Bank…etc.

3. Exchange Banks: As name signifies, these banks mainly deal with

international trade. These banks take the responsibility of settlement of

foreign exchange and arrange the foreign business. In Pakistan, all the

nationalized commercial banks have been allowed to do the business of

exchange banks.


12


4. Saving Banks: Saving banks are those banks which collect and keep the

small savings of the public. They are called also thrift promoting institutions.

The saving banks invest the funds in the safest government securities. The

Post offices and saving centers perform the business of saving banks in

Pakistan.

5. Agriculture Banks: The agricultural banks (specialized banks) are set up

to provide financial assistance to the agriculturists. The agriculture banks

provide short term credit to the farmers for the purchase of seeds, fertilizers,

pesticides, fuel….etc. They also make medium term advances for buying

tractors and introducing modern techniques in farming. In Pakistan, the

Agricultural Development Bank of Pakistan was set up in 1981 for meeting

the financial requirement of agriculture, the ADBP is incorporated as public

limited company, according to the “Company Ordinance 1984” & is name

was changed to the ZTBL in 2002. An agriculture bank is also called as

domestic banks because these banks are registered and incorporated within the

country.

6. Industrial Banks: The industrial banks mainly provide medium and long

term credit to the industries. Since the industrial banks have long term

deposits, they are in a position to permit long term investment in industries. In

Pakistan, the Industrial Development Bank was set up in 1961. The other

institutions engaged in providing financial assistance to industries are PICIC,

NDFC….etc.

2.4 ROLE OF ZTBL IN THE ECONOMIC DEVELOPMENT OF

THE PAKISTAN

Banks play an important and active role in the economic development of a

country. If the banking system in a country is effective, efficient and disciplined, it

brings about a rapid growth in the various sectors of the economy such as agriculture,

industrial, and the SME sectors. If the banking system is unorganized and inefficient,


13


it creates maladjustments and impediments in the process of development. In

Pakistan, the banking system is very well organized. The SBP established on July 1st,

1948 stands at the apex and is responsible for the operation of the banking system in

Pakistan. The other banks such as commercial, specialized or unspecialized banks

which form the banking structure in the Pakistan are playing an active role in the

economic development of the country. The role of the ZTBL in order to achieve

economic growth and development of the Pakistan is briefly explained as under:

1. Development of Agriculture & Industrial Sector. The ZTBL particularly in

rural areas of Pakistan are now providing credit for the development of

agriculture & industrial sector. The provision of credit to agriculture &

industrial sector has greatly helped in raising agricultural productivity and

income of the farmers. This has led to increased demand for industrial goods

and expansion of trade & industry. The use of bank drafts, cheque, bills of

exchange, credit cards….etc, has revolutionized both national and

international trade.

2. Banks Promote Capital Formation. The ZTBL plays an important role

in rising of the financial resources. They encourage savings by giving various

types of incentives to the savers. They expand branches of the banks in the

rural and urban areas and mobilize savings even at far of places. These

savings are then made available to the businesses which make use of for

productive purposes in the country.

3. Investment in new Enterprises. Businessmen normally hesitate to invest

their money in risky enterprises. The ZTBL generally provide short, medium

& long term loans to farmers to invest in new enterprises and adopt new

methods of production. The provision of timely credit increases the

productive capacity of the country. The organized banking system helps in

directing physical resources into productive channels. It also keeps a balance

between the availability and requirements of the capital in the country.


14


4. Balanced Development of different regions. The ZTBL plays an important

role in achieving balanced development in different regions of the country.

They help in transferring surplus capital from developed regions to the less

developing regions. The trade industries etc of less developed regions are able

to get adequate capital for meeting their business needs. This in turn, increases

investment, trade and production in the country.

5. Monetization of the Economy. The commercial banks by opening branches

in the rural and backward areas are reducing the exchange of goods through

barter. The use of money has now greatly increased the volume of production

of goods. The non monetized sector (barter economy) is now being converted

into monetized sector with the help of commercial banks.

6. Implementation of Monetary Policy. The central bank of the country

controls and regulates volume of credit through the active cooperation of the

banking system in the country. It helps in bringing price stability and

promotes economic growth within shortest possible period of time. The ZTBL

under the supervision and guidance of the SBP help in implementing and

achieving the objectives of the monetary policy which vary from time to time.

7. Financing Development Projects. The ZTBL provide short, medium & long

term loans for financing of development projects both in private and public

sectors. The ZTBL starts projects with the Ministry of Food, Agriculture &

Livestock (MINFAL) launched an integrated development program entitled

“Crop Maximization Project” in 15 districts. The MINFAL will provide funds

to the tune of Rs.299.833 millions to the ZTBL and thus help in accelerating

the rate of economic development in the country.

8. Booting the Exports: In order to boosts the exports of the agriculture and

industrial goods of the Pakistan, the banks have established export promotion

cell for the information and guidance of the exporters.

9. Less Reliance on Foreign Capital: A planed banking system by launching a

vigorous campaign of mobilizing idle saving in the country can meet the


15


capital development requirements from within the country. The country will

thus have to rely less on foreign capital for financing in the development

projects.

CHAPTER 3

“INTRODUCTION TO ZTBL”

3.0 INTRODUTION

The Zarai Taraqiati Bank Limited is the leading, premier and specialized

financial institution geared towards the development of agriculture, industrial and

SME sector, by providing financial products, services and loans for their customers.

The restructuring plan is being carried out with the aim to uplift the agriculture and

rural sector by raising the productivity, streamlining the institutional credit and

increasing income generating capacity of the farming community. The ZTBL was

incorporated as the public limited company on 14th December, 2002 through repeal

of the ADB Ordinance of 1961.


16


The ZTBL provides financial and technological services to the agriculturalist

at their doorstep for modernization of agriculture sector in Pakistan. The main

purpose of the ZTBL is to provide sustainable rural finance and services particularly

to small farmers and low-income households to strengthen the rural and agricultural

sector, mitigate poverty, capital market and investment activities. The core values of

the ZTBL is the professional integrety, teamwork, customer satisfaction and loyalty.

The ZTBL has a one subsidiary which is known as the Kissan Support Services

Limited. The bank can charge 9% interest. The auhorized capital of the ZTBL is

Rs.25,000,000,000. This amount is dividend into Rs.2,500,000,000 ordinary shares &

the price of each shares is ten rupees. The total number of shares of the ZTBL is

Rs.1,186,961,000 and paid up capital is Rs.11,869,612,000 of the ZTBL. The

ZTBL has one chairman, one president and ten directors. The tatal number of

employees is 5,326, while 982 employees is provided by the KSSL. The ZTBL make

investment in some listed companies such as Nestle Milkpak Limited, Uqab Breeding

Farm Limited, Mubarik Dairies Limited & Dadabohy Agriculture Leasing Limited in

order to generate profit.

3.1 HISTORY OF ZTBL

It was considered after independence of Pakistan that the existing institutional

sources of credit, such as, taccavi and cooperatives, were insufficiently meeting the

credit needs of farmers. Therefore the need for establishment of a third source of

agricultural credit was essentially percolated so as to fulfil the credit requirements of

farmers not only for production but even for the development purposes.

Consequently, the ADFC was brought into existence in 1952 for the purpose of

expanding financial facilities and promoting the development and modernization of

agriculture in the Pakistan. Subsequently in 1957, the ABP was established that can

provide both short term loan for production and long term loan for development. The

ADFC & ABP were merged together as the ADPB in 18th February 1961. The

ADPB is the main credit supplier to the agriculture sector in the country. According


17


to the “Companies Ordinance 1984”, the ZTBL was incorporated as a the public

limited company on 23th October, 2002. The ZTBL is governed by Memorandum

and Article of Association and registered with the SECP under “Companies

Ordinance 1984”. Consequently, on 18th November, 2002, all the assets, contracts,

liabilities, proceedings and undertakings of the ADBP were transferred and vested in

the ZTBL on 14th December, 2002 by the Federal Government.

3.2 CORPORATEAVISION

To develop and operate the ZTBL as a commercially viable bank with focus

on rural and agriculture finance and to serve the needs of farming

community, by delivering financial products and services.

3.3 CORPORATE MISSION

To play an effective role in the promotion of economic growth, by enhancing

the availability of credit to the agriculture sector, through reliable access to

sustainable financing, special lending programs, technical assistance, products

& services, and to promote career development opportunities for increasing

professionalism, technical proficiencies & trainings of employees.

3.4 CORPORATE OBJECTIVES

To assist rural community, particularly the small farmers, in raising their

productivity and income levels through timely delivery of credit, advisory and

ancillary services.

To build the image of the ZTBL as a proactive, client friendly, financially &

operationally sustainable with indigenous product deployment.

To establish and provide backward and forward linkages to strengthen the

agriculture and industrial sector.


18


The ZTBL can engage in public and private, wholesale and retail partnership

to deepen outreach and reduce operating cost.

The ZTBL act as rural commercial bank to mobilize rural capital formation

and to commercialize the agriculture sector by delivering the true value of

credit to the client.

3.5 RESTRCTURING PLAN OF ZTBL

The restructuring means activity involving expansion or contraction of a

organization’s operations or changes in its assets and financial structure. The

restructuring plan of the ZTBL covering the following factors;

1. Governance: The ZTBL establish an environment that facilitates good

governance and accountability.

2. Systems: The ZTBL modernize operations through use of technology,

networking and communication tools.

3. Business Processes: The streamline products and delivery systems of the

ZTBL are to reduce transaction costs, simplify operations, and increase

outreach.

4. Products and Services: The ZTBL introduce products and services that

are financially and economically viable.

5. Human Resource Development: The ZTBL can improve standards and

skills of staff & management and strengthen training capacity.

6. Information Technology: The ZTBL establish new hardware and

software platform to support the MIS, accounting system including forensic

accounting, and risk management functions.

3.6 BOARD OF DIRECTORS

The ZTBL has one chairman, one president and ten directors. The seven

meetings of the board are held during each year. The main resposibility of the BOD is

to establish and maintain a system of internal control, prepare and present the


19


financial statements with aproved accounting standard and requirement of the

‘’Banking Companies Ordinance, 1962’’ and the “Companies Ordinance 1984”. The

new corporate structure redefines the bank's status as the Public Limited Company

registered under “Companies Ordinance 1984”, with an independent BOD which

aims at ensuring good governance, autonomy, delivering high quality. The list of the

BOD is given as under;

“List of Board of Director”

3.7 COMMIITTEES & ORGANIZATION STRUCTURE OF ZTBL

The overall management, functions, meetings of the ZTBL is control by two

committees known as “Board & Management Committees”. The sub-committees of

these two committees is explain as under;

3.7.1 Board Committees

1. Audit Committee: This committee has one chairman, four members that are

the directors of the ZTBL and one secretary from the Audit Department. The

designation of secretary is the “Chief Internal Auditor” of Audit Department.

2. Human Resource Management (HRM) Committee: This committee has

one chairman & president of the ZTBL, four members that are the directors of


20


the ZTBL and one secretary from the HRM Department. The designation of

secretary is the “Head” of the HRM Department.

3. Risk Management Committee: This committee has one chairman & three

members that are the directors of the ZTBL. But one member designation is

the risk manager. But in risk management committee, the company secretary

act as member and secretary as well.

4. Information Technology(IT) Committee: This committee has one convener

& two members that are the directors of the ZTBL. One member is from IT

Department & his designation is the Chief information officer. While one

secretary (Head) of IT Department.

3.7.2 Management Committees

1. Assets Liabilities Management Committees: This committee has one

convener (CEO) & three members. The designation of the first member is the

SEVP of Operation Department. The designation of the second member is the

risk manger. But the third member (Chief Financial Officer) act as member

and secretary as well.

2. Executive Coordination Committee: This committee has one convener

(CEO), one secretary (Compliance Officer) & three members. The

designation of the first member is the SEVP. The designation of the second

member is the EVP. The designation of third member is the risk manger.

3.7.3 Organization Structure of ZTBL: The organizational structure of the ZTBL

is shown in below diagram;


21


3.8 ZONAL OFFICE AND BRANCHES

In public sector, the ZTBL is largest financial development institution with a

wide network of 25 zonal offices and 342 branches in the Pakistan. The network of

the ZTBL Head Office is given as under;

3.9 RANKING OF STAFF MEMBERS


22


The ranking of staff members in order of seniority in the ZTBL is given as

under;


23


3.10 SUBSIDRAY

The ZTBL has one subsidiary which is known as the “Kissan Support

Services Limited”. It was incorporated as owned subsidiary of the ZTBL that

function independently effective from 1st January 2006. The KSSL is a separate and

distinct legal entity that is controlled by the ZTBL. The KSSL has an authorized

capital of Rs.100 million. Its aim is to provide a support to the management of the

ZTBL such as to focus on core banking business and assign non-core activities. The

KSSL operates under the Memorandum and Article of Association. The KSSL also

provide support staff and services to the ZTBL in the following areas;

I. The KSSL has recruited and developed support staff of following table

categories in ZTBL, Head Office as will as in field offices;

S.No. Category of Employees Provided By KSSL No. of

Employees

01 Darbans and Armed Guards 526 02 Drivers 291 03 Naib Qasids 54 04 Mali / Beldars 25 05 Typists, Assistants & Senior Assistants 41 06 Security Supervisor 03 07 Sweepers 07 08 Players 20 09 Others 15 Total 982

ll. Besides manpower support a service, the KSSL has also provided following

support services to the ZTBL;

Provide mail management, repairing, maintenance & photographing

services to ZTBL

Recruitment and provision of staff

Provides farms and the ZTBL Staff College.


24


Provide security services not only to the ZTBL Head Office but also to

branches and zonal offices.

CHAPTER 4

“PRODUCTS & SERVICES OF ZTBL”

4.0 INTRODUCTION

The ZTBL has provided many products and services for their customers. The

product and services of the ZTBL can raise the living standard of rural areas and

develop the agriculture sectors of a country as well. The Pakistan is an agriculture

country and the products and services of the ZTBL plays very important role in

increasing the GDP and accelerates economic growth. For this purpose, the ZTBL

provides many facilities for their customers, such as provides schemes and loans,

obviously help the customers to invest money in their businesses, to get maximum

profit from it and to pay low interest rates.

4.1 SCHEMES OF ZTBL

The ZTBL provides various schemes for customers, in order to strengthen the

rural and agricultural sector of econnomy, mitigate poverty and accelarte groth. The

Schemes of the ZTBL is which is briefly explains as under ;

4.1.1 Sairab Pakistan Scheme: The ZTBL can raise the irrigated area for the

purpose to accelerate rate economic growth and to facilitate the farmers. The ZTBL

has assigned the collaboration agreement with the KSB Pumps Company Limited

under the Sairab Pakistani Scheme. The ZTBL will provide loans to the farmers for

installation of tube wells and turbines whereas KSB Pumps Company Limited will

provide quality pumps, turbines, equipments to borrowers for efficient pumping of

waters. The water can plays vital role to improve per acre yield. Out of total 31

million hectors area of the Pakistan, 22 million hectors is cultivated while 9 million


25


hectors is not cultivated & waste mainly due to non-availability of water. More over

increase in water supply being a key input is required to raise cropping intensity and

hence the income of the farmer. Since inception the ZTBL financed over 143000 tube

wells amounting to Rs.15 billion. The KSB Pumps Company will provide quality

machinery and equipment for efficient pumping of water. The company shall also

provide after sale service including replacement of parts and availability of spares

through its network of dealers despite technological advancements and rapid growth

of industrial sector, agriculture is still the back bone of the Pakistan's economy. It

contributes 22% towards the GDP and employs nearly 45% of country's labor force.

It provides raw material for preparation of industrial products. So it has both pulled &

pushes effect on the economy.

4.1.2 Supervised Agriculture Credit Scheme: Under this scheme agriculture

loans are given for short, medium and long term loans up to Rs.1 million per

borrower. The loans are sanctioned for fats, livestock, orchard, tractor, agricultural

machinery, tube well and irrigation facilities. Under the scheme besides provision of

credit, information is to the farmers for planning the farm, production, guidance for

implementation of the scheme, marketing and repayment of loans.

4.1.3 White Revolution Scheme: In order to modernize the dairy farming for

increasing milk supply, mitigate poverty in Pakistan, and improving the living

standards of the rural areas in Pakistan for the purpose to achieve growth and

development in agriculture sector of Pakistan, the ZTBL may start the “Strategic

Partnership” agreement with the Pakistan Development Diary Company (PDDC)

and the Nestle Pakistan Limited (NPL) under the white revolution scheme. Under this

participatory approach, the diary sector would be modernized with a view to increase

milk supply, mitigate poverty and improve the living standard of the rural population.

The ZTBL has earmarked funds to the tune of Rs.5000 millions for financing of

50,000 animals (buffaloes and imported cows) during the five years period 2007 to

2011. The PDDC will also help the ZTBL in the selection of clients and processing of

loan cases. Initially the schemes will be for modernization of 5000 farmers during 5


26


years period involving Rs.700 million. Under the scheme 1000 farms would be

covered on yearly basis. The modernization of dairy farm will be carried out through

financing milk cooling tank, generator, voltage stabilizer, hot water geezer, water

pump, cooling pad and other dairy equipment. There would be maximum limit of

loan of Rs.1 million per borrower party. The PDDC would bear the entire amount of

mark-up charged in the loan cases & provided the 50% of principal part of loan is

repaid in time by the borrower. The remaining 50% amount of principal along with

the amount of mark-up would be paid by the PDDC.

The Nestle Pakistan Limited would help to select and identify good clients for

the ZTBL to improve quality breed of foreign and local dairy animals. The NPL can

provide technical guidance to the farmers through nestle veterinary doctors. The NPL

would purchase milk through its network and make weekly payments of milk sale to

the ZTBL for the adjustment of loan.

4.1.4 Micro Credit Scheme: This Scheme has been launched since 15th July, 2000

for the uplift of rural poor. The landless poor such as; tillers, harries and small land

owners having land not exceeding 2 acres may avail loan under Micro Credit

Scheme. It is operational in all branches of the ZTBL through all the Mobile Credit

Officers. Both, men and women may obtain loans under the scheme as an individual

or as a member of group of 5-10 members. The minimum credit limit is Rs. 5,000

while maximum credit limit is Rs.25,000. One hundred and thirty six income

generating activities or cottage industry items have been identified for lending under

the scheme. The loan may be advanced against one surety with 50% solvency of the

assessed value of property owned by the guarantor or security of tangible property.

Being small loans involving high cost 18% per annum mark-up is charged, whereas

2% rebate is given on timely repayment. All loans under these Schemes are

recoverable within 18 months after disbursement of loan.

4.1.5 Zarkhaiz Scheme (One Window Operation): For timely and conveniently

provision of credit to purchase inputs, loans is provided to the borrowers under this

scheme being conducted twice a week during Rabi & Kharif seasons. All the related


27


departments such as revenue, agriculture, post office….etc. attend the focal points

which are established at convenient places. The farmers get their pass books prepared

and loan applications processed on the same day whereas sanction payments are

made within three days at branch. For Rabi crops, one window operation from

October to January and for Kharif crops from April to September each year which is

extendable as per requirement of particular area.

4.1.6 Sada Bahar Scheme: For providing timely input loans for crops and working

capital for poultry and fishery etc, the ZTBL has launched a Sada Bahar Scheme.

This scheme is also known as “Revolving Finance Scheme”. The assessment for

inputs requirements for the whole year is made at the time of first application. The

amount so assessed is treated as revolving limit provided it is within the security

limit. The managers are authorized to sanction such loan limits up to Rs.5 Lake. The

salient features of the scheme are given as under:

1. Revolving Credit Limit is fixed to cater production credit and ancillary

requirements of the farmers during one year period.

2. The borrowers can draw the credit in lump sum or in installments according to

his requirement.

3. The borrowers can repay in lump sum or in installments during the year when

his cash position allows him.

4. The Pass Book containing transactions in his account is supplied to every

borrower free of cost.

4.1.7 Tea Financing Scheme: In order to increase the tea cultivation in Mansehra,

Swat, Mutta and Dir in Malakand Division, the tea financing scheme has been

introduced which would not only save the hard earned foreign exchange but would

also help to improve the socio-economic condition and living standard of the

inhabitants of the area. The salient features of the scheme are given as under:

1. The maximum credit ceiling of Rs.60,000 per acre has been fixed.

2. All the farmers owing land up to five acres are eligible to avail loans.


28


3. The amount of credit will be given in three installments; the first year

installment is Rs.30,000, second year installment is Rs.15,000 and third

installment is year Rs.15,000.

4. The credit would be repayable within 11 years with 6 years grace period with

prescribed markup of 9% per annum.

4.2 LOANS OF ZTBL

The ZTBL provides loans for the development and growth of rural areas and

uplift of farm activities. The loans of ZTBL are briefly explained as under;

4.2.1 Production Loans: These loans are given to farmers for seed, fertilizer,

pesticides, labor charges…etc. to grow crops and vegetables including working

capital for poultry, dairy, orchard and fishery and are recoverable within one and half

year. The amount of disbursement of production loan, at the end of December 31, is

50,222 million for overall four provinces. The example of production loans items are

given as under;

1. Seeds, fertilizers and fuel

2. Pesticides, insecticides and herbicides manual sprayers

3. Poultry feed, chicks and medicines

4. Hire charges of farm power

5. Water charges and electric charges for tube well

6. Production loan for growth of mushroom

7. Hired labor, water rates & fuel wood for tobacco curing

4.2.2 Development Loans: The loans for purchase of items like farm machinery,

tractors, irrigation, land development, orchard, green houses, dairy, poultry, fishery,

livestock, farming…..etc are recoverable up to one to eight years. The amount of

disbursement of development loan is 5,690 million at the end of 2007, for overall four


29


provinces. However, the provinces wise disbursement of loans & its percentages at

end of 31st December, 2007 is given as under;

S.No. Provinces Disbursement of Loans ( Rupees) %age

1. Panjab 44,327,000,000 79.50%

2. Sindh 7,384,000,000 13.20

3. NWFP 3,802,000,000 6.80

4. Balochistan 99,000,000 0.20

Moreover, the term wise disbursement of loans of bank is on short, medium and long

term basis.

I. The short term loans are also called production loans having maturity period is

one year. These loans are given to farmers for seed, fertilizer, pesticides, labor

charges…etc. to grow crops and vegetables. These loans are recoverable in lump

sum commencing after the harvest or marketing of respective crops.

II. Medium term loans are for development and advance purposes the examples of

these loans are dairy farming and livestock. The installments of these loans are

made on monthly, biannually and annually basis and the recovery or maturity

period is 5 years.

III. The long term loans are for tractor, agricultural machinery, poultry farming, and

orchard. The installments of these loans are made on monthly, biannually and

yearly basis and the maturity period is 8 years and above.

“Summary of Term Wise Disbursement of Loans”

S.No. Term wise Disbursement of Loans Maturity %age

1. Short Term Loan (Production Loans) 12months 89.80%

2. Medium Term Loan (Development Loans) 5 years 3.40

3. Long Term Loan (Development Loans ) 8 years 6.80


30


4.3 RECOVERY PROCEDURE OF LOAN

The recovery procedure of the ZTBL loan is to carried and taken by three steps

such as recovery schedule, issuance of notice and legal action which is briefly explain

as under;

4.3.1 Recovery Schedule: The recovery schedule in each loan case as per terms of

sanction of loan is fixed and communicated to the borrowers after disbursement of

loan. In case of default or failure in repayment of any installment on due date the

mark-up shall continue to be charged and last installment due to this may differ from

the amount of installments fixed at the time of disbursement.

4.3.2 Issuance of Notice: The ZTBL can issue notice for recovery of loan which is

known as “Demand Notice”. It is issued before the due date of every installment. A

legal notice is issued one month after the due date informing the borrower that if the

amount is not repaid within next one month, further legal action will be taken to

recover the dues.

4.3.3 Legal Action: The legal action can be initiated against the defaulter if loan is

not repaid even after expiry of legal notice period. Where the court in bank's favor

has decreed a case, account is to be settled by recovery of amount from the auction of

the mortgaged property. The bank may purchase the mortgaged property if

considered feasible to dispose it off later on through auction or in any manner deemed

fit for getting the best price. The bank may dispose off the mortgaged properties of

defaulters for satisfaction of its dues with out intervention of courts under “Financial

Institutions Ordinance 2001”.


31


CHAPTER 5

“FINANCE & ACCOUNTS DIVISION”

5.0 INTRODUCTION OF THE FINANCE & ACCOUNTS

DIVISION

The Finance and Accounts Division of the ZTBL is responsible for handling

the financial affairs and keeping the records of all the transactions, preparation of

accounts, financial statements and budgets and to manage, distribute and reconcile

funds of all zonal offices and branches of the ZTBL. Moreover this division acts as

the backbone for the bank, in order to strengthen the rural and agricultural sector of

Paksitan, to manage funds, mitigate poverty, capital market and investment activities.

The main aim and responsibility of this division is to make policies, planning,

mobilization and administration of the bank's financial resources such as products and

services. This division provides schemes and loans for small and large farmers. By

getting loans and register with schemes, the farmers can invest money in their

businesses and to get maximum profit from it and to pay low interest rates. This

division manages the bank’s financial relations with the objectives of providing loans

to borrowers. The ZTBL lends money to the individuals or corporations for

consumption or investment and charge interest on the loans. But besides this, finance

is the science that deals with the funds management such as saving and lending

money while account is a record of financial transactions for an asset or individual. In


32

http://en.wikipedia.org/wiki/Consumption_(economics)

http://www.investorwords.com/cgi-bin/getword.cgi?5046

http://en.wikipedia.org/wiki/Saving

http://en.wikipedia.org/wiki/Funding

http://en.wikipedia.org/wiki/Interest

http://en.wikipedia.org/wiki/Investment


other words, an account is an arrangement between a buyer and a seller in which

payments are to be made in future.

In short, this division can a gain a tremendous importance over the other division

in the ZTBL, through its functions and truly be called as the backbone for the bank, in

order to manage funds, mitigate poverty and increase the living standard of people of

rural ares.

5.1 FUNNCTIONS OF FINANCE & ACCOUNTS DIVISION

This division mainly deals with concept of time, money and risk and how they are

interrelated. It also deals with how money is budgeted. However, finance works most

basically through individuals and business organizations depositing money in a bank.

The main functions of the FAD is given as under;

To providing proactive financial policy, timely strategic financial planning and

risk management.

To managing the bank’s assets and liability portfolio.

To prepare, prompt and accurate financial reporting and preparing audited

financial statements for the bank's annual report.

To overseeing internal controls in the processing of financial transactions

accounts, budgets, and credit of the bank.

To reconcile funds of all zonal offices and branches of the ZTBL.

To administer, monitor and control the bank’s loan and portfolios, including

management and disbursement of loans.

To manage the cash inflows and out flows.

To maintain a books of accounts.

To coordinate and facilitate a business planning, budgeting and to formulate the

budgeting estimates of revenue and capital expenditure.

To manage and rectify the accounts of zonal offices and braches.


33

http://en.wikipedia.org/wiki/Bank

http://en.wikipedia.org/wiki/Deposit_account


To consolidate all the financial statements of zonal offices and braches, in order

to make financial decisions.

To prepare quarterly, semiannually and annual financial statements and its

agenda for presentation to the Audit Committee and the BOD & also to prepare

annual capital adequacy ratio for certification by external auditors

This division ensuring that all financial obligations are met and collections are

made.

5.2 CLASSIFICATION OF FINANCE & ACCOUNTS DIVISION

In order to classify the finance and accounts division of ZTBL, there are four

departments, which plays very important role in financial affairs and keeping the

records of all the transaction, preparation of accounts, financial statements, budgets

and to manage, distribute and to reconcile funds of all zonal offices and branches of

the ZTBL Heads Office. The four departments & their sub unit of the FAD are given

as under;

1. Central Accounts Department (CAD)

Policy Unit

Accounts Unit

Tax Unit

Fixed Asset Unit (FAU)

Pre-payment Verification Unit (PVU)

2. Head Office Accounts Department (HOAD)

Payroll Unit


34


Fund Unit

Payment unit

Intra Branch Transaction (Reconcilitation) Unit (IBTU)

3. Regulatory Reporting Department (RRD)

Regulatory & Internal Reporting Unit (RIRU)

Financial management Information Unit (FMISU)

4. Budget & Fund Reconciliation Department (BFRD)

Budget Planning Unit

Budget Analysis Unit

Treasury Unit

Fund Reconciliation Unit (FRU)

5.3 HIERARCHY OF FINANCE & ACCOUNTS DIVISION


35


CHAPTER 6

“CENTARL ACCOUNTS DEPARTMENT”

6.0 INTRODUCTION OF CAD

The CAD is abbreviated to Central Accounts Department. There are many

accounting policies & procedures used in the CAD, In order to present the true


36


financial position of he bank in financial statements, the accountants formulate the

accounting policies & procedures. This department maintains the actual or real

accounts of the ZTBL. In this department, I was attached actually to maintain the real

accounts which are assets and liabilities. They are responsible for both kinds of assets

fixed and liquid assets and to maintain the depreciation accounts for all those assets

acquired by the bank. In this department the balance sheet and profit and loss account

is also prepared for financial year, to get the image in sense of profitability or loss

and to make financial decisions.

6.1 OBJECTIVES OF CAD

Formulation & maintenance of the accounting policies & procedures with

applicable accounting standards which ensure dissemination &

implementation across the bank.

Preparation of financial statements as per requirement of statue and to ensure

the proper accounting of assets, liabilities, owner’s equity, income, revenues

and expenses.

6.2 FUNCTIONS OF CAD

To issue the instructions relating to accounting policies & procedures and

allocation of specimen signature numbers to the authorized signatories of

the branches & maintenance of signature booklet.

To notify the schedule of bank charges.

To maintaining & updating of chart of accounts for recording of financial

transactions.

To prepare the periodic financial statements of the bank & to deal with all

related matters.

To Issue the guidelines and instructions regarding periodicals closing of

accounts and deductions of tax at source.


37


To deal with all corporate tax matter & liaison with tax department, tax

advisors, consultants….etc

The compilation of fixed assets schedule of the Head Office departments &

branches.

Follow up and collection of fixed assets schedule along with supporting

documents from the ZTBL Head Office departments, zonal offices &

branches.

To coordinate with internal & external auditors and the SBP inspection team

and to arrange credit rating of the bank.

To conduct prepayment verification of sanctions pertaining to the HOAD.

To perform administrative functions for the department such as, sanction of

leaves & approvals for tour programs & travel allowance

6.1.3 UNITS OF CENTRAL ACCOUNTS DEPARTMENT

6.1.3.1 Policy Unit:

To device accounting procedure regarding accounting in the Head Office

and branches & to circulate revision of mark-up or return rate for

compliance by the branches.

To deal with management latter & executive summary.

To coordinate with external auditors & to arrange payments to external

auditor’s bills.

To arrange compliance of internal & external audit observation relating to

the accounting matters of the ZTBL Head Office, zonal offices and

branches.

To coordinate with other departments in the Head Office on policy matters.

To maintains personal files of the employees, deals with their leaves & other

administrative matters, such as policy matters relating to the operation of

accounts.


38


To update the specimen signatures booklet for use of authorized signatories

in the ZTBL Head Office, zonal offices & branches.

To prepare bank charges schedule & there circulation among branches and

submission to the SBP on half yearly basis.

To allocate new GLH for accounting purpose and issue instructions those

are relevant to the books of accounts.

To provide guidelines to the zonal offices and branches regarding

rectification, settlement of accounting errors, audit observation and

adjustment of suspense account.

To arrange & coordinate with credit rating of the bank & provide

information regarding credit rating of the bank.

6.1.3.2 Accounts Units:

To coordinate with concerned departments of is division for timely

production of statement of affairs.

To arrange compilation and merger of statement of affairs and it is also

provide to auditors for auditing purposes.

TO compile balances under relevant group of heads from trial balances for

preparation of financial statements.

To prepare list of abnormal entries & balances for rectification.

To deal with all matters relating to system analysis, software development

& maintenance of statement of affairs.

To Issue guidelines and instructions to the branches regarding closing of

accounts on quarterly, semiannually and annual basis.

To prepare quarterly, semiannually and annual financial statements and its

agenda for presentation to the Audit Committee and the BOD & also to

prepare annual capital adequacy ratio for certification by external auditors.

To coordinate with internal and external auditors and the SBP inspection

team regarding periodical accounts.


39


6.1.3.3 Tax Unit:

To Issue guidelines regarding deduction of tax at source under the

“Income Tax Ordinance, 2001”.

To collect tax payment documentary evidences for tax deducted at source

from the branches for submission, to tax advisor and tax department.

To coordinate with tax consultant, income tax authorities & the SBP on tax

issues.

To pursue the tax refund case with income tax offices, through tax

consultant.

To prepare statement & payment of advance tax under the “Income Tax

Ordinance, 2001”.

To guide branches for settlement of tax issues and to attend tax related audit

observations and arrange compliance.

To arrange payments to tax advisor, appeals fee & other mandatory

payments required under the “Income Tax Ordinance, 2001”.

6.1.3.4 Fixed Asset Unit:

To timely dispatch of format for fixed assets schedule to the ZTBL Head

Office departments, zonal offices and branches.

The persuasion & collection of fixed assets schedule along with supporting

documents from branches as well as from ZTBL Head Office departments.

To reconcile the data with statement of affairs of the concerned zonal

offices and branches.

To compile or summarize the fixed assets schedule on country level.

To maintain the up-to-date record of fixed assets at the zonal offices

branches and the ZTBL Head Office.

To compile the addition and deletion of fixed assets on quarterly basis by

the ZTBL Head Office, zonal offices and branches..


40


To monitor and verify the depreciation charged by departments of the ZTBL

Head Office, zonal offices and branches on quarterly basis.

To make the adjustment of depreciation charged under intimation to

concerned accounts units and to verify the disposal of fixed assets booked

by the branches.

To calculate the amount for the deferred tax assets.

To coordinate with the external auditors on the issues relating to fixed assets

of the bank.

To perform any other assignment as and when assigned by the competent

authority.

6.1.3.5 Pre-payment Verification Unit

To verify all payments relating to Head Office.

To check availability of sanction of the competent authority.

To check competence financial power of approving authority.

To check budget, its ceiling and procedural compliance.

To check completeness of documentation and

To verify the arithmetic accuracy of payments & budgets.

To perform any other assignment as and when assigned by the competent

authority.

CHAPTER 7

“HEAD OFFICE ACCOUNTS DEPARTMENT”


41


7.0 INTRODUCTION OF HOAD

The HOAD is abbreviated to Head Office Accounts Department. The main

objective of this department is to maintain accounting functions of all over the bank

and to centralize the accounts as well”. In the HOAD, the specialized accounting

software and the COBOL administrative system is used for recording the

transactions, financial information and to deduct tax from salaries of the employees.

7.1 UNITS OF HOAD

7.1.1 Payroll Unit: In this unit, I have learnt how to prepare the payroll, and how to

process the payments of bounces, leave encashment, overtime and other allowances.

This department also works on tax deduction from pay. In this unit, the COBOL

administrative system is used for the purpose to record the salaries, which is paid to

employees. The COBOL is the acronym for COmmon Business Oriented Language,

defining its primary domain in business, finance, and administrative systems for

companies and government.

In short, this unit mainly deals with the accounts related to salary of

employees, how tax is deducted and distributed to employees which are managed by

this wing.

7.1.2 Funds Unit: In this unit, I have learnt how to manage the deductions from the

salary of employees as a fund. The main objective of this unit is to maintain the book

of accounts, employee’s contributory funds such as contributory provident fund,

employee’s provident fund and general provident fund and also the investment of

surplus funds in approved schemes. Moreover, there are ten types of deductions from

fund in the ZTBL Head Office, which are given as under;

1. ZTBL Employees benefit fund

2. Benevolent fund (officers)

3. Benevolent fund (staff)


42

http://en.wikipedia.org/wiki/Business

http://en.wikipedia.org/wiki/Acronym


4. General provident fund (officers)

5. General provident fund (staff)

6. Contributory provident fund

7. Pension fund

8. Gratuity fund

9. Employees provident fund

10. Gratuity 2005 Fund trust

7.1.3 Payment Unit: In this unit, the working is related to the payments, here the

payment is not in cash, they issue notes to the employees of bank and issue cheques

to the outsiders. The basic functions are to make payments to employees or outsiders

from whom we have gotten goods or services, and then record them on papers and

also on computer database. The main function of this unit is to summarize the record

of transactions and to provide different kinds of reports to the needy department and

personals.

7.1.4 Inter Branch Transaction Unit (IBTU): In this unit, I have learnt that in this

wing all the queries related to the branches and zonal offices are maintained in the

ZTBL Head Office. Here they basically prepare the reconciliation statements relating

to zonal offices and branches in the ZTBL Head Office. This unit becomes important

for banks to protect their assets. In case of fraudulent or errors in transaction due to

negligence, a good bank reconciliation system helps detect these. In view of above it

is direly needed that to have an efficient and robust the Inter Branch Reconciliation

System with effective internal controls to handle high volume of data with accuracy

& also with an in built flexibility to handle the expectations. The main function of the

IBTU is to ensure timely reconciliation of inter branch transactions and to provide the

list of outstanding entries to the branches for reconciliation for the purpose to

correspond with the branches and zonal offices for settlement of outstanding entries

in order to coordinate with the ZTBL Head Office for follow-up. Here the nature of

the IBTU is to reconcile the Head Office to branch books. The transactions between

the Head Office & branches to transfer the cost and amount of assets, liabilities,


43


expenses & income are called the “Inter Branch Transactions”. These transactions

are of two types.

I. Branch to Branch Transactions.

II. Head Office to Branch & Vise Versa.

Moreover, Specialized accounting software is designed or being used for

reconciliation of the “Inter Branch Transactions”. Following checks are applied in

software to get accurate results & to reduce the chances of risk.

Checking of contra branch code and central account code.

Checking of transaction date and advice number.

Checking of the GLH

Checking of debt amount into credit amount.

Checking of credit amount into debit amount.

On the other hand, in the IBTU, a document is used, known as an “advice”. It is

a printed form of document (ACF-71), is used for inter branch transaction which

contains following information.

Nature of transaction

Date of transaction

Transaction amount

Contra branch information

In other words, advice is document which is used only to communicate the

information of certain transaction to authorized offices of the ZTBL. The debit advice

is prepared to transfer the assets & expenses by one office to another office of the

ZTBL. The bank’s liabilities & Income are transferred through credit advice. The

vouchers are also prepared parallel to advice to record these transactions. The

performance of the IBTU is dependent on branches behavior. Hence, there is a need

to fix responsibility on branches to clear all outstanding entries either originated or to

be responded. While, outstanding entries are unmatched records of the Central

Accounts File (CAF) or a record exists either only in “O” file or “R” file.


44


7.1.4.1 Objectives of IBTU: The IBTU can manage the two objectives such as

internal control and prudence of the SBP instructions.

I. Inter control implies proper check on inter branch transactions to minimize

the chances of fraud & to run the operations effectively & efficiently. In this

regard various policies and procedures were formulated to secure the Bank’s

operations. These are being revised by management on different occasions to

increase the effectiveness & efficiency.

II. The SBP is regulatory body who monitors and regulates the function and

activities of banks in Pakistan. The SBP issues instructions and guidelines in

respect of operations, financial reporting, risk assessment…..etc for all banks.

In this connection relevant instruction on the issue is reproduced such as;

“For all the outstanding entries in Inter Branch Transaction account and in

suspense account must be reconciled and taken into the proper head of

account with in a maximum period of time thirty days from the date of

recording transaction.”

7.1.4.2 Unit Structure of the IBTU : This unit is divided into three sub sections on

the basis of its operations and the unit structure is given as under;

7.1.4.3 Responsibilities of Unit Incharge of the IBTU: The unit incharge can

supervise the over all management, in order to plan, manage & supervise daily

reconciliation process. However, unit incharge can also ensure that inter branch

accounts are properly reconciled on daily basis, randomly review of matched items

and coordination with concerned departments and units to ensure that expectations


45


are cleared on a timely basis. It is also the responsibility of unit incharge that is to

prepare the monthly reconcilement balancing reports.

l. Responsibilities of Computer Section of the IBTU: The main responsibility

of this department is to collect data from the ITSSD on daily basis and to

producing list of outstanding entries and its updating. However, necessary

corrections are made & monthly statement of cash in transit is prepared. The

computer section also prepares special reports for external and internal

auditors & the SBP inspection team.

ll. Responsibilities of Coordination Section of the IBTU: This section assist

unit Incharge in planning & managing of daily reconciliation process.

However, this section also assists computer section in preparation of reports

for higher management and special reports for external and internal auditors

and the SBP inspection team. This section not only coordinates with Head

Office, zonal offices and branches but also with departments and units of

Head Office for settlement of outstanding entries and coordination with sub

sections of IBTU in closing of accounts as well.

lll. Responsibilities of Record Maintenance Section of the IBTU : This section

can maintain branch wise records, diary, dispatch file and coordination with

internal and external auditors & the SBP inspection team.

7.1.4.4 Steps in Information Processing of the IBTU: There are some steps in

information processing of the IBTU, for reconciliation of transaction, which is briefly

explained as under;

I. The vouchers & advices are prepared in branch and posted to the Zonal

Computer Center (ZCC) on daily and weekly basis.

II. The ITSSD compiles the Central Accounts File (CAF), 6950 on daily basis &

access is given to the IBTU. The CAF, contains information about the Inter

Branch Transactions. The file consists of two sub files:-

a. The “O" file of central account file keeps the records of originating

entries.


46


b. The “R” file of central account file keeps the records of responding

transactions.

III. The IBTU is using software for reconciliation of the Inter Branch

Transactions.

IV. The computerized merging & matching process is started after collection of

fresh data on daily basis.

a. The “merging process” means copying a fresh data from main CAF &

pastes it in existing data base of the CAF maintained by the IBTU.

b. The “matching process “ is a process wherein “O” file reads “R” file &

match the contents of originating transactions with the responding

transactions.

V. A computerized list of outstanding entries is produced after merging and

matching of data. This can be seen on the IBR system throughout the

branches.

VI. In final step, persuation will be done by the IBTU, for reconciliation.

However, persuation means follow-up to settle the entries for advice.

7.1.4.5. Diagrammatic Representation of Information Processing of the IBTU:

The diagrammatic representation of the information processing of the IBTU is

given as under;


47


CHAPTER 8

“REGULATORY REPORTING DEPARTMENT”

8.0 INTRODUCTION OF RRD

This department sends reports to the SBP. The ZTBL has to communicate

and submit different returns to the SBP and truly be called as regulator at different

intervals. For the purpose a department named as Regulatory Reporting Department

(RRD) has been established. There are two ways of sending report to the SBP such

as, to send report through courier service or to send online. Here in this department, I

learnt how to prepare balance sheet, income statement and how to find ratios. The

RRD basically is to collect, process, analyzed, customize and provide with the

information to various stakeholders to meet their specific requirement on timely

basis. The main aim of the RRD is to compliance to the statutory reporting

requirements & makes periodic financial reporting to the management. This

department collects information from various sources such as zonal offices, branches,

ITSSD, CAD…..etc and reports the data to the SBP after consolidation.

8.1 OBJECTIVES OF RRD

To improve effectiveness in meeting statutory reporting obligations.

To prompt and accurate analysis to aid decision-making.

To make periodic financial reporting to the management.

8.2 FUNCTIONS OF RRD

To redesign system of data capturing, its consolidation and subsequent

reporting as per regulatory requirements.


48


To ensure implementation of changes in reporting requirements as amended

from time to time and to design and implement internal reporting

mechanism.

To coordinate with different departments and zonal offices for collection of

requisite data and to Issuance of guidelines for preparation and

consolidation of data.

To arrange compliance of internal or external audit observation on

regulatory reports.

To carry out periodic review and analysis of financial results and it’s

reporting to concerned.

8.3 UNITS OF RIRD

8.3.1 Regulatory and Internal Reporting Unit (RIRU): In this unit, I have

learnt how the data is process, analyzed, customize the collected data of bank and

which is then provide to various stakeholders to meat their specific requirement on

timely basis. Moreover, the main aim of this unit is to customizes the collected

information on needed basis and forward it to the respective recipients such as SBP,

Internal and external auditor, agencies…..etc. The RIRU has been designed to face

the over changing needs of internal and external reporting. Staff members have been

assigned duties in such away that is to facilitate the whole procedure of data

collection, customization, analysis & eventually the reporting.

The main source of information is the Information Technology and System

Support Department (ITSSD). The information is mainly collected through FMISU in

coordination and relationship management, not only with ITSSD but also with some

other departments such as:

I. Central Account Department (CAD)

II. Head Office Account Department (HOAD)

III. Head Office Operations Department (HOOD)

IV. Budget and Funds Reconciliation Department (BFRD)’


49


V. Recovery Department (RD)

VI. Branch Banking

8.3.2 Financial Management Information System Unit (FMISU): The FMIS is

that system which is helping the management of the bank financially, in making the

right decisions at the right time. On the other, hand, the MIS is the study of

information system in business and management and act as bridge between top and

low level management in the ZTBL. The FMIS provides the mangers with reports

and often online access to organization’s current performance and historical records.

This system is oriented almost exclusively for internal events but not for external

events and can help managers to gain access data of the bank at any time, which is

precise and accurate that also save the precious time in the age of globalization.

While, the FMIS help managers to collect financial information at any time such as

on daily, weekly, monthly, quarterly, semiannually and yearly results. Although, the

FMIS enables mangers, to drill down and to see daily or hourly data if required.

In short, the FMISU can plan, control and summarize the internal data of

bank, in order to make financial decision and comparison for the purpose to check the

productivity, growth and development of the ZTBL in agriculture sector of Pakistan.

8.3.2.1 Role of the FMISU: Every unit has their own importance but the FMIS is

performing and playing a vital role in the ZTBL, although its development has been

started since 1997. They are now developing and implementing the FMIS in the

ZTBL in each and every department by the use of computerized processing and

management report systems. All the information is updated day by day due to the use

of FMIS. The process of recording transactions is error free with the use of the FMIS,

in the ZTBL is availing many advantages which are given as under;

1. The working load on employees is reduced.

2. The chances of data loss are minimized.

3. Quick access to data and services.

4. Better communication among divisions, departments and units.


50


5. Easy and quick data transfer from one branch to another.

6. Customized annual reports are generated.

7. Middle managers check the financial reports.

CHAPTER 9

“BUDGET & FUND RECONCILIATION DEPARTMENT”

9.0 INTRODUCTION

The BFRD stands for Budget & Fund Reconciliation Department. This

department is also known as Budget & Fund Management Department. In this

department, I have learnt that how to respond for application of note received from

branch or any department, and issue the fund or budget to the needy department or

branch. This department maintains budget and fund for branches and other needy

departments. The BFRD receives the intimation and they transfer fund and to receive

the surplus fund form the branches. The branches send their records to BFRD. This

department monitors their record which receives from zonal offices and branches in

order to fulfill the requirements.

Here ZTBL remits the needs of the branches through commercial banks such as,

National bank of Pakistan, Habib Bank Limited, United Bank Limited, Allied Bank

Limited and Muslim Commercial Bank Limited However, this department prepares

the budget for upcoming financial year or monitors the previous budget and to create

funds. The main aim of this department is to preparation of financial plan for bank’s

credit limits, funds review and their application.

A budget is a road map that facilitate where one is and where one want to go

and how can one go to one’s desired goal point. While, budgeting is an effective tool

of planning and control exercised in the ZTBL to help management, in order to get

the desired goals of stakeholders’ value enhancement. However, budgets are used for,

owner oversight, goal focus and financial control. The main purpose of budget is to


51


plan, communicate, motivate, control and evaluate. The more clear, accurate and well

thought out budgets in the beginning the more likely you will be able to;

To adjust plans, activities and spending as needed.

To spend money cost-effectively.

To reach the specific goals you have set.

To strength the internal control system.

To analyze, compile report and to manage funds.

Moreover, the main sources of budget are primary & secondary data, treasury &

treasury data, annual reports…..etc

9.1 O B J E C T I V E S BFRD

To arrange adequate resources for maintenance of adequate liquidity for efficient

credit disbursement.

To reconcile budget and fund in order to enhance the value of stakeholders.

Timely discharge of liabilities and all operation of the ZTBL.

9.2 FUNCTIONS OF BFRD

To developing policies, procedures and standards for budget planning and

analysis.

To coordination with administrative and governance groups on the issues

relating to the budget.

This department is based on the strategic planning of the bank arranging

budget estimates from all over the bank.

To allocate of departmental code numbers with the change in the

organizational set up as per requirement.

The Automation of budget process, preservation of the data and obtaining

approval from the BOD for annual budget.


52


To dealing with matters relating to the appropriation and re-appropriation of

capital and revenues expenditures as well as reserves for contingencies during

the year.

To prepare the information regarding performance of department-wise

financial activities and their analysis according to the data reflecting to the

performance.

To monitor the expenses for ensuring financial discipline and taking remedial

steps for excess expenditures.

To develop a future strategy for projection of budget.

To preparation of quarterly evaluation and review on expenditure with budget

provisions and submission to the Audit Committee.

To arrange the training and support to the departments and divisions for the

Budget Development Cycle.

The Provision and analysis of any other information required to support

institutional planning and decision making.

To dealing with matters relating to borrowings from the SBP.

To make arrangements of adequate resources for bank’s requirements.

To optimize the return on financial resources of the ZTBL.

To reconcile bank accounts with the SBP & commercial banks at the ZTBL

Head Office.

To provide funds to needy branches and receive back from branches having

surplus funds with them.

To make repayment of principal installments and their interest in time in

respect of the SBP loans.

The settlement of audit objections relating to the SBP, Ministry of Finance

and senior management of the bank.

To monitor of reconciliation of the bank accounts of branches with other

commercial banks.


53


The fixation of cash limit of branches and monitoring of cash of branches as

per prescribed limits and regularization of audit.

9.3 UNITS of BFRU

9.3.1 The Budget Planning Unit: This unit can develop departmental policies,

procedures, budget planning process and parameters and standards for financial

management. This unit can communicate with administrative and governance groups

on the budget process and budget issues. This unit mainly involves in processing of

information for the purpose to prepare of annual budget and to issue the budget calls

memos. However, this unit can arrange allocation of departmental code number with

the change in organizational set up whenever required. The capital and revenue

expenditure is also appropriate for additional funds from contingency and unforeseen

reserves for new schemes introduced. But the overall expenditure can evaluates and

reviews on quarterly basis against budget provision and its submission to the Audit

Committee. This unit not only provides information and analysis to support

institutional planning and decision making but also provide support to department

and divisions throughout the BDC.

9.3.1.1 The Budget Development Cycle (BDC) : There are ten steps in BDC of

ZTBL Head Office in order to achieve one’s desired goal point. The ZTBL can

monitor the budget on quarterly basis. The steps are briefly explained as under;

1) The Budget Criteria Committee is constituted by the President of the ZTBL

Head Office to discuss and finalize the budget criteria for allocation of

budget.

2) Time horizon is planned for the preparation, approval and circulation of

budget.

3) The call circular of budget is reviewed and finalized, which covers all

guidelines and instructions for preparation of budget proposal is issued along

with budget performance to all divisions, departments, zonal offices and

branches of the ZTBL Head Office.


54


4) The budget criteria is prepare for budget allocation under revenue and capital

expenditures. Presently the budget allocation under major head is made on the

following criteria ;

Stationary and communication

Traveling Expenditure

Repair and maintenance

Salary and allowance

Rent, taxes, insurance and expenditure

Revenue and investment on securities.

5) Approval of budget criteria recommended by the Budget Criteria Committee.

6) Examination & scrutiny of budget proposal received from all divisions,

departments, zonal offices and branches of the ZTBL Head Office and

allocation of funds under revenue and capital expenditures in accordance with

the approved budget criteria.

7) The consolidation, computerization, verification and rectification of finalized

proposed budget data of all divisions, departments, zonal offices and branches

of the ZTBL Head Office.

8) Preparation of the Budget Agenda, that contains revised estimates of current

year and proposed budget estimates.

9) Presentation of the Budget Agenda for approval from the Budget Criteria

Committee, President and the BOD.

10) In final step, proposed budget estimates approved by the BOD are circulated

to all zonal offices and branches of the ZTBL Head Office for implementation

through a budget circulating letter containing detailed instructions for proper

utilization of funds and judicious spending.

9.3.2 The Budget Analysis Unit: The main aim of this unit is to prepare, analyze,

coordinate and assess data regarding financial activities that reflecting the

information regarding the performance of the departments. This unit can provide


55


information and analysis to support institutional planning and decision-making.

However, this unit can take administrative and financial steps for excess expenditure.

For this purpose this unit can communicate with administrative and governance

groups. But the overall expenditure can evaluates and reviews on quarterly basis

against budget provision and its submission to the Audit Committee. This unit also

develops assumptions and strategy for the budget for future and to monitoring trends

in expenses.

9.3.3 Treasury Unit: The main aim of this unit is to arrange funds, to maintain

records of the ZTBL and operations of bank accounts with the SBP and commercial

banks. The remittance of funds is to be done to the needy branches on daily basis.

Moreover, payment to tractor manufacturing companies the remittance of funds is to

be done to the needy branches on weekly basis. This unit update, maintain and record

all the information regarding the remittance of funds. This unit also maintains and

monitors the liquid cash reserves with the SBP and also ensures appropriate cash

balances is maintained in branches.

The treasury unit can prepare periodic statement showing movement of the

SBP loans and position of government securities. The matters relating to investment

in securities and placement of surplus funds is also handle by this unit for the purpose

to keep the record of cash inflows and outflows, deposit rate declaration & fixation of

cash limit. This unit not only coordinates with accounts unit in finalization of

quarterly, semiannually and annual accounts but also coordinate with the SBP,

commercial banks and internal & external auditors with reference to the matters of

treasury unit.

9.3.4 Funds Reconciliation Unit: The main aim of this unit is reconcile the bank

accounts that are being maintained with commercial banks at the ZTBL Head Office.

This unit follows the accounting standards of funds such as how the amount is

remitted and received from branches and other transactions relating to the department

of the ZTBL Head Office. This unit can monitor the excess cash and reconciliation of

bank accounts in branches with other commercial banks. However, the preparation of


56


daily cash position relating to remittance and receipt of funds from branches is also

handling by this unit. However, the Fund Reconciliation Unit can respond to advices

issued by the branches relating to un-claimed deposits, the SBP penalties, to match

information…etc.

CHAPTER 10

“VARIOUS ANALYSES”

10.0 INTRODUCTION

The analysis is a tool, which is used for checking the over all performance of

any organization. It is not only used on national level but also on international level

for the purpose to check internal and external factors that influence the organization,

positively or negatively and leads the organization towards failure to success. There

are various analyses, such as the SWOT analysis, ratio analysis, human resource

analysis and marketing analysis, which is briefly explain as under;

10.1 SWOT ANALYSIS

The word “SWOT” is abbreviated to strengths, weakness, opportunities and

threats while analysis is a tool, which is used for checking the over all performance of

any organization. The SWOT analysis is a strategic planning tool used to evaluate the


57

http://en.wikipedia.org/wiki/Strategic_planning#Elements


overall organization’s strengths, weakness, opportunities & threats and involves

specifying the objective of the organization and identifying the internal and external

factors that are favorable and unfavorable to achieve that objective. The SWOT

analysis is designed to help an organization from failure to success. Finally, we do the

strength & opportunities because it is helpful while we avoid the weaknesses and

threats which is harmful for organization, which is shown in below figure.

10.1.1 Strengths: The attributes of the organization which are helpful in achieving

the objective. In other words, strengths means, the activities that an organization does

well favorable chances or positive factors in the internal environment due to which

organization achieve the objective. The strengths of the ZTBL is given as under;

1. Strong Supervision and Management: The supervision and management of

the ZTBL is very strong such as, step by step, effective and efficient that leads

the bank toward failure to success.

2. Provide many Facilities for Employees: For maintaining the employees, the

ZTBL provides the facility of health, safety and employee relations &

training.

3. Employee’s Traits: All staff members are well mannered in attitude,

communications & following the ethics.

4. Credit Rating: The report of Jun 22, 2008, the credit rating of the ZTBL was

reaffirmed the medium to long-term entity rating of ‘AAA’ (Triple A) with a


58


stable outlook and short term rating of A-1+ (A-One Plus) assigned to the

ZTBL.

5. Risk Management: The risk management of the ZTBL is still in the process

of restructuring and efforts have been put in place to adequately equip the risk

management function with credit review, credit risk rating and value at risk

models. Pakistan is an agriculture country with major portion of its economy

dependent on agricultural sector. ZTBL recognizes this responsibility and thus

also caters to agriculture sector which promises high returns.

6. Expansion of ZTBL: The ZTBL is expanding day by day because customer

accepts it. Its network expanded to 342 branches and 25 zonal offices in the

Pakistan, which will attract large number of customers.

7. The Elevator and Cameras Systems: In the age of globalization, the

elevator makes it possible to save time. While the cameras in ZTBL, make the

employees to stress on their work which is assigned or given.

10.1.2 Weakness: The attributes of the organization which are harmful in

achieving the objective. In other words, weakness means, the activities that an

organization lakes or unfavorable chances or negative factors in the internal

environment due to which organization do not achieve the objective. The weakness of

the ZTBL is given as under ;

1. Understaffing: The total number of employees is 5,326 in the ZTBL Head

Office. In age of technology and globalization, the understaffing may cause

unnecessary work burden on employees decreasing their efficiency.

2. Lack of Refreshment Courses: Although the ZTBL has its own Training

and Development Canter but it needs to give refreshment courses to its

employees more frequently so that they came explore new dimensions and

conquer worlds.


59


3. Seniority Based Promotion: Promotion in the ZTBL is purely on seniority

basis rather than on performance. This really de-motivates the employees

because they know that it doesn’t matter whether they perform well or bad.

4. Lake of Job Rotation: Most of the employees work in a particular

department and they specialize only in one department. In case of absence of

one employee, any other employee cannot perform this work. In this way

bank not only loses the business but also results in dissatisfaction of the

customer.

5. Shortage of skillful Labor: The shortage of skillful labor or manpower that

will lead the organization from success to failure. Because in the ZTBL, there

are many contract and temporary based employees that has lake of managerial

& financial skills.

6. Lake of Qualification: The employees working on the same position may

have different degrees like B.Sc., B.A.… etc which devaluate the students of

MBA, BBA, and other well qualified staff. So there is a lack of professional

staff in different departments and lack of theoretical knowledge of the

employees as well.

7. The Rate of Absenteeism and Turnover: The absenteeism & turnover rate is

too high that’s results the conflicts in the organization.

10.1.3 Opportunities: The attributes of the organization which are helpful in

achieving the objective. In other words, opportunities means, the activities that an

organization does well or favorable chances or positive factors in the external

environment due to which organization achieve the objective. The opportunities of

the ZTBL is given as under ;

1. Proper Utilization of Recourses: The Organization is made up three types

of recourses, such as human, physical & financial resources which come from

external environment. However, in the age of globalization for achieving


60


growth, the competent, skillful and the English speaking employees are on of

the requirement of the organization.

2. Increasing Extensive Advertisments: The ZTBL can increase the

extensive advertisements of new products, services, vacancies, in order to

increase customers & heir competent employees from external environment.

3. Mobile Credit: The ZTBL can start mobile credit which is the best way to

effectively utilize its present resources to gain a competitive edge.

4. Increasing the Amount of Loans and Capital: The ZTBL increases the

amount of loan for their customers, which is five lacks, in order to attract the

large number of customers. The ZTBL issue a large amount of capital to

agriculture sector, in order to, utilize its resources more efficiently and to earn

more profit.

5. Creating Public Relations: The ZTBL also, involves in creating public

relations that will increase the image and profitability of the bank. Often,

public relations are conducted through the media that is, newspapers,

television, magazines, internet….etc that’s attract a large number of

customers.

10.1.4 Threats: The attributes of the organization which are harmful in achieving

the objective. In other words, threats means, the activities that an organization lakes

or negative factors in the external environment due to which organization do not

achieve the objective. The threats of the ZTBL is given as under ;

1. Avoid Discrimination: The ZTBL can avoid discrimination because it is

harmful for the bank in achieving its objective. The bank can hire the employees

from external environment. The right person is for right for job will leads the

organization towards failure to success.


61


2. Avoid Illegal Activities: The employees of the ZTBL can avoid the illegal

activities in external environment that will reduce the reputation and image of the

ZTBL.

3. Internet Banking: It is the main problem that was found to be a lack of trust in

the new banking channel by customer. However, effective complaint management

can increase customer’s loyalty and trust in Internet Banking. However, the

“Crises Management Plan” has been developed which is under review by the

senior management. The objective of this plan is to have clear guidelines and

communication in the event of any crises occurrence, which may threaten the

safety of its staff, the security of its assets, the continuity of its operation and the

reputation of the ZTBL.

10.2 RATIO ANALYSIS

The term “ratio” means, “the relationship between any two variables”, while

analysis is a tool, which is used for checking the over all performance of any

organization. In other words, the ratios analysis is used to identify the financial

strengths and weaknesses. For this purpose, we use ratio analysis of financial

statements such as, balance sheet and income statement. However, “ratio analysis is a

tool, which involves methods of calculating & interpreting financial ratios to analyze


62


and monitor the firm performance”. There are many ratios such as liquidity ratios,

profitability ratios, debt ratios, activity ratios. For this purpose, we use data from

2005 to 2007 of annual reports of the ZTBL, to check the liquidity, leverage and

profitability.

10.2.1 Liquidity Ratios

It is measured by its ability to satisfy short-term obligations when they

become due. There are many ratios of liquidity such as, current ratio, quick ratio and

networking capital, which is given as under;

10.2.1.1 The Current Ratio: The calculation of current ratio of the ZTBL from 2005

to 2007 is calculated and interpreted as under;

Interpretation of Current Ratio: If we interpret the current ratio of the

ZTBL, it is slowly increasing from 2005 to 2007. The current ratio in 2005 lower

than rest of the years which is 1.31 which means that the bank is able to pay the

current liabilities 1.31 times from its current assets. In 2006, the current ratio is 1.32

and then sharply increased to 1.40 in 2007. However, the higher the current ratio, the

more the bank is considered to be liquid in order to satisfy short term obligation.

10.2.1.2 Quick Ratio: The calculation of quick ratio of the ZTBL from 2005 to

2007 is calculated and interpreted as under;


63


Interpretation of Current Ratio: If we interpret the quick ratio of ZTBL, it is

higher in 2005 while lower in 2006. The quick ratio of 1.0 or greater is occasionally

recommended but for the organizations, the quick ratio cannot provides a better

measure of overall liquidity only when a firm’s inventory cannot be converted into

cash, because the short term investment is lower than short term financing from 2005

to 2007.

10.2.1.3 Net Working Capital (NWC): The calculation of the NWC of the ZTBL

from 2005 to 2007 is calculated and interpreted as under ;

Interpretation of NWC: The NWC of the ZTBL from 2005 to 2007 is

increasing gradually and has positive working capital & considering favorable,

because the total current assets are greater than total current liabilities and the bank is

better able to pay its short term obligation as they become due. On the other hand, if

total current assets are lower than total current liabilities, the firm has negative

working capital & considering unfavorable. In this case the bank is not able to pay its

short term obligation as they become due.

10.2.2 Leverage Ratios


64


It measures the firm's ability to repay long-term debt that is used in a firm’s

capital structure. There are many ratios of leverage; i.e. debt ratio, total debt to net

worth ratio & time interest earned ratio which are given as under;

10.2.2.1 Debt Ratio: The calculation of debt ratio of the ZTBL from 2005 to 2007 is

calculated and interpreted as under;

Interpretation of Debt Ratio: The debt ratio of the ZTBL in 2005 is 84.17%,

which is a highest from the rest of the years while lower in 2006 which is 83.50% and

then gradually increase to 84% in 2007. The high the ratio, the more the bank is

risky & having more leveraged while low ratio will leads a firm less risky &

having less leveraged. The high leveraged consider to beunfavrable if the creditors

of the bank can start to demand repayment of debt.

10.2.2.2 Total Debt to Net Worth Ratio: The total debt to net worth ratio of the

ZTBL from 2005 to 2007 is calculated and interpreted as under;

Interpretation of Total Debt to Net Worth Ratio: If we interpret the debt

to net worth ratio of the ZTBL, it is gradually decreasing from 2005 to 2007. In 2005,


65


the debt to net worth ratio is greater form the rest of the year which is 5.32% while

lower in 2007, which is 5.24%. In 2007, the ZTBL can improved the debt to net

worth ratio, which is 5.24% and is lower & considered to be favorable from the rest

of the years. The higher the debt to net worth ratio, greater will be the business is

considered to be risky and consider to be unfavorable. The lower the debt to net

worth ratio, lower will be the business is considered to be risky and consider to be

favorable. The high leverage usually indicates the business has a lot of risk because it

must meet principal and interest on its obligations.

10.2.2.2 Time Interest Earned Ratio: The time interest earned ratio of the ZTBL

from 2005 to 2007 is calculated and interpreted as under;

Interpretation of Time Interest Earned Ratio: The time interest earned ratio of

the ZTBL in 2005 is 1.16 which is lower from the rest of the years while highest in

2007 which is 1.47. The higher the time interest earned ratio, the bank is better able

to fulfill its interest obligation. In 2007, the time interest earned ratio is improved due

to the highest amount of the earning before interest & taxes as compared to other

years.

10.2.3 Profitability Ratios

This ratio examines the relationship between the profits made on trading

activities against the sales. It is the indication of business ability to use capital, labor

& management to generate profit. There are many ratios of profitability, such as

ROA, ROE and EPS which is given as under;


66


10.2.3.1 Return on Assets (ROA): The return on asset of the ZTBL from 2005 to

2007 is calculated and interpreted as under;

Interpretation of Return on Assets (ROA): The ROA is gradually increasing

from 2005 to 2007 due to increase in the amount of total assets and total income. The

ROA in 2005 is lower from the rest of the year which is 0.50% that shows a bank can

earn less money on more investment. The ROA is gradually decrease to 0.49% while

sharply increase to 1.11% in 2007, that shows a bank can earn more money on less

investment. The Higher the ROA ratio shows that the bank has efficiently managed

its assets portfolio to earn a more money on total assets, achieving economic

efficiency & more opportunities of financing in the year 2007 as compared to the rest

of years.

10.2.3.2 Return on Equity (ROE): The ROE of the ZTBL from 2005 to 2007 is

calculated and interpreted as under;

Interpretation of Return on Equity (ROE): The ROE is moderate in 2005

which is 9.29% & gradually decreased to 8.25% in 2006 due to the lower in income.

Any how, the ROE is sharply increased to 13.65% in 2007 due to increase in the


67


amount of total income and stockholder’s equity. The highest ROE indicates that

bank can earn a high return on less equity is generating cash internally. The higher

the ROE ratio, the greater will be the opportunities to earn high return & consider to

be favorable while lower the ROE ratio, the lower will be the opportunities to earn

low return & consider to be unfavorable.

10.2.3.3 Earnings Per Shares (EPS): The EPS of the ZTBL is calculated &

interpreted as under;

Interpretation of EPS: The EPS from 2005 to 2006 is gradually increasing

from 0.346 to 0.350 respectively. A small increase is seen in 2006 due to increase in

net income which is 419,806. While in 2007, the EPS is sharply increased to 0.870

due to further increase in net income with same amount of total number of ordinary

shares. Higher the EPS indicates that the ZTBL can earn on behalf of each share, but

not the amount of earnings actually distributed to shareholders.

10.3 Human Resource Analysis

The organization is made up by three types of resources such as human,

physical and financial resources. Recently, the ZTBL can properly utilize their

resources more efficiently in order to strengthen the rural and agricultural sector,

mitigate poverty and investment activities. But the most important is the human

resource and which the key ingredient for successes of any organization. Hiring and

retaining productive people is critical to the success of every organization which is

permanent, temporary or contract basis. The Human Resource Division mainly

involve in hiring of employees, training and development of employees, employees


68


motivation….etc. “Activities necessary for staffing the organization and sustaining

high employee performance” The achievements of the ZTBL and the implementation

plans for future can never be possible without skilled and motivated employee, for

this purpose the HRD makes continuous effort to attract highly educated, skilled and

trained manpower in different fields especially in the filed of IT, HR and Finance.

Trainings, workshop, seminars, support for higher education are the few activities

being carried out to upgrade the skills of professionals working. The ZTBL can

motivate their employees by providing compensation packages, house rent, medical

allowance…etc. The Human resource analysis is briefly explained as under;

1. Hiring of Employees: The ZTBL can hire the employees by submitting the CV

in the Human Resource Department. If the person is eligible for the post, then the

Head of HRD will call to inform the person for the interview. Recruitment staff

including job description, preparation, preparing advertisement, checking

application forms, short listing, interviewing and selecting candidates through the

selection procedure is done by HRD.

2. Training & Development of Employees: Once the employees are recruited by

the Human Resource Department, it is very important to develop their skills.

There are two ways to develop their skills and to give trainings in the ZTBL Staff

collage such as theoretical and practical training. However, initial training or pre-

service training is given to the employees at initial stages of fresh candidates. This

training covers the theory related topics such as banking rules, regulations and

operations. After completing the theoretical training, they are placed on different

branches for getting practical training.

3. Employee’s Motivation: The ZTBL can motivate their employees by providing

different facilities. The employees, who are motivated, exert a greater effort to

perform the assigned tasks effectively and efficiently than those who are not

motivated. Various measures are used in the ZTBL for motivating the employees.

The techniques are as follows;


69


I. Compensation Package: The compensation is based on the employee’s

knowledge, education, skills and experience. There is no fixed pay scale in the

bank. Many people get different salaries even though they had been selected

for the same batch under the same circumstances with same qualification but

mostly depend on the grade on which the employees is ranked.

II. Promotions: The ZTBL can promote the employees to higher grades on the

basis of performance during each year.

III. House Rent: The house rent is provided to all categories of staff. This

allowance is not payable to those who are provided with accommodation by

the ZTBL. The ZTBL can also provide the accommodation facility for their

employees, in order to reduce the absenteeism.

IV. Medical Allowance: The ZTBL will reimburse the cost of medical advice

and medicines, claimed by the employees for themselves and their dependents

on production of medical certificates from employees indicating disbursement

made by him.

10.4 The Marketing Analysis

The marketing is a process of managing the performance of business

activities designed to plan product, price and promote; in order to achieve

organizational objectives. Though it sounds simple, the actual practice poses many

challenges. The marketing analysis of any organization plays a vital role in directing

its future direction. A good marketing analysis can give new heights, whereas a

poorly designed analysis can prove to be disastrous. However, the marketing is based

on the customer’s satisfaction through its value added products and services. The

ZTBL regularly use different methods of marketing in order to aware and attract

customers regarding their products and services. The marketing analysis is done by

using various methods used by the ZTBL, which is briefly explained as under;

1. Print Media Advertisement: The ZTBL give different advertisement

regarding their products and services, in order to attract large number of

customers from time to time in the newspapers.


70


2. The 4P’s: The 4P’s means the product, price, place & promote. The ZTBL

can use 4P’s regularly in order to attract large numbers of customers, by

proving lot of products and services.

I. Product: The ZTBL strategy is offer most comprehensive portfolios of

personalized financial solutions that are customer tailored to serve the

requirements of customer.

II. Price: The ZTBL follows the strategy of “low margins, high volume”

with its low mark up and easy repayment schedule it tends to be more

attractive even for consumers with less money.

III. Promotion: The ZTBL effectively advertises its services and product

using the through broachers, book let magazines and low margin on loan

is also the base of promotion.

IV. Placement: With a wide network of ZTBL the bank operates through 25

zonal offices with 342 branches under them with over 1250 agriculture

graduates known as MCO.

3. Internet and Electronic Media Advertisement: The ZTBL consistently give

information regarding their products and services on the internet and also give

commercials on the television for awareness and attracting the large number

customers.

4. Brochures: They have designed different brochures for each department and for

each product; these are given to customers for information and attraction

purposes.

5. Sports Sponsorship: The ZTBL can sponsor different sports promotion activities

on television and radio like Cricket, Hockey….etc.


71


CHAPTER 11

“FINDINGS & RECOMENDTIONS”

A two months internship program can never provide all the information about

an organization. One roughly gets to spend a single week in each department. So in

this section only some of the problems have been pinpointed and possible solutions

have been recommended the concerned personnel of the department narrated some of

these problems. The finding and recommendation for ZTBL Head Office are given as

under;

10.1. FINDINGS

I. The employees working on the same position may have different degrees like

B.Sc., B.A.… etc which devaluate the students of MBA, BBA, and other well

qualified staff. So there is a lack of professional staff in different departments.

II. There is no job rotation for employees which create job burning.

III. The officers of RRD face many problems during preparing different financial

reports which consume lot of time.

IV. The employees are not satisfied with the compensation package; they are just

getting experience and want to shift to another organization that has strong

position in the agriculture finance market.

V. The availability of staff training makes employees aware of work and is know

done by the ZTB Staff College which is provided by the KSSL.

VI. The absenteeism & turnover rate of the employees is too high that’s results

the misunderstanding and conflicts in the bank.


72


VII. In the ZTBL, there is problem is understaffing of employees. The total

number of employees is 5,326 in the ZTBL Head Office. In age of technology

and globalization, the understaffing may cause unnecessary work burden on

employees decreasing their efficiency.

10.2. RECOMMENDTIONS

I. Although sill, there is cooperative environment in the ZTBL, but there is a

need to further boost it up. There must be cooperation among staff members,

management, customer and shareholders.

II. The job rotation of duties of employees should be implemented to

improve the performance which will enhance their skills and confidence.

III. The motivation level of the employees should be enhanced by increasing

compensation and giving extra fringe benefits.

IV. The advertisements of the products and the services of the ZTBL should be

done in a proper way with a strategic management.

V. To hire creative, skillful and young employees on the basis of their

eligibility and experience but not on discrimination basis. The recruitments

should be strictly on merit basis and induction should be after proper and

extensive training.

VI. To remove the file keeping barriers, which waist a lot of time on searching

of files. There should be a proper check and balance. The documentary

records of the ZTBL should be correct and complete.

VII. More rewards and bonus schemes should be for management as well as

for employees and promotion should be based on performance of employees

and not on favoritism.

VIII. The ZTBL has developed a web site but still only its front home page has

been developed while other banks have good attractive sites.


73


IX. The efforts should be made to reduce the employee turnover and

absenteeism rate because it creates misunderstanding and conflicts in the

ZTBL.

X. In order to increase cooperation among employees, management has to

arrange different parties or get together which will create love, care and

cooperation among employees.

XI. The MIS is still not fully understood by all of the employees. To cope with

this situation, the management should arrange workshops and short courses,

so that the employees can benefit fully from the MIS.

XII. The employee’s attitude and behavior towards work and customers must be

positive and polite way at time of conversation.

XIII. In order to increase the motivation, job satisfaction, and organizational

commitment the organization should give special incentives to all the old as

well as new employees. This may be in the form of promotion or increase in

pay or other facilities provided to them on performance basis.

XIV. The promotions should be given to the employees of ZTBL on the basis of

performance rather than seniority, time period or designation.

XV. The job rotation techniques should be adopted so as to make the staff

knowledgeable of the operation of various departments of the ZTBL.

10.3 PERSONAL EXPERIENCE

My internship at Bank ZTBL was a positive experience. This experience

gave me a chance to analyze and change myself for the better. An internship program

provides me an opportunity to bridge what I learn in the classroom with real life job

requirement. As we know that when any one enter into an organization for internship

or for job, most important thing is his communications skills. So the thing that helped

me and boosted my confidence was communication skill. As we have studied

Business communication skills and presentation during the BBA program, it gave me

the confidence to speak in front of many people. While working as an internee in the


74


ZTBL, I observed that the first rule of game is to respect your customer. As an

employee one has to listen to whatever customer has to say with full attention and

patience. Moreover the right tactics for convincing customers on your view point

requires great communicational skills.

The subjects such as Finance, Accounting, Statistics, Business Math…etc that

I studied during my BBA program that help me to understand the operations &

functions of the Finance & Accounts Division of the ZTBL. During my internship I

improve my soft skills, expand knowledge of related field and gain experience by

work under the highly experienced person, to see the norms and value of the

organization, which may be called the culture of the organization. Actually all the

organizations have their own culture, norms and value under which the organizations

exist.

In short, I am really impressed with the friendly and challenging culture of the

ZTBL having such a high level of professionalism, task orientation and event

celebrations like 14th August and 6the September. As internee in the ZTBL, I utilize

my communication skills, abilities, confident; what I have studied till 7th term & now

it is time to convert the theoretical knowledge into the practical knowledge because I

will go in the practical life after some time, so we must aware about the internal

working of organization.

10. 4 CONSLUSION

While concluding my report, I would like to say that an internship report

normally covers one academic term and may be either paid or unpaid. The main

purpose of the internship is to develop and strengthen the student’s educational and

career preparation. I did my internship at ZTBL, working in the Finance and

Accounts Division. My internship goals included completing the reports assigned to

me, learning about the ZTBL, which is public limited company and also developing

positive relationships with employees. Some of my activities as an internee post in

the ZTBL is to coordinate with employees, working on my giving tasks, performing


75


full concentration and preparation of my internship reports. So an internship is an

opportunity to gain real-life experience doing the work of an employee in your career

area of interest. Ideally, this experience allows me to try out many aspects of the job

and to apply skills learned in the classroom environment. An internship is any

experience where students learn by taking on responsible roles as workers in

organizations and observing and reflecting on what happens while they are in the

workplace.

11.5 ANNEXTURES

1).


76


2).


77



78


BIBLIOGRAPHY

1. Annual Report of ZTBL 2007

2. Annual Report of ZTBL 2006

3. Annual Report ZTBL 2005

4. www.ztbl.gov.pk

5. www.wikipedia.com

6. Saeed, M Nasir. (2007) Money Banking & Finance, Imtiaz Book depot,

Khalid Plaza, Urdu Bazar Lahore.

7. Iffland, Charles & Langueton, Pierre. (1996) International Banking, Irwin

Book Co., New York.

8. Khan Rana, Safdar Hussain & Khan Rana, Ahmad Shabir. (1991) Banking

Currency and Finance, Ilmi Kutab Khana, Lahore.

9. Klein, John F. (1998) Money and the Economy, Mc Grath Hill, New York.

10. Meenai, S A. (1992) Money and Banking in Pakistan, Habib Publisher,

Multan.

11. Siddiqi, Asrar H. (1998) Practice And Law Of Banking In Pakistan,6th Ed,

Royal Book Co., Karachi.

12. Saeed, M Nasir. (1994) Economics of Pakistan, Ilmi Kutab Khana, Lahore.


79

http://www.wikipedia.com/

http://www.ztbl.gov.pk/



80



81



82



83



84



85



86



87



88



89



90



91



92



93



94



95

internship report on ztbl, prepared by wasim uddin orakzai student of finance 2010, kust (2)

Documents

internship report

report chapter

students educational

professional experience

work experiences

finance accounts division

professional work environment

professional work situation