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Supervised By: Miss Nafees Akhtar

Submitted to: Miss Nafees Akhtar

Submitted By:

Name. Sajida Hafeez

Roll No. 39

Class. Msc Applied Psychology

Session. 2010-2012

Date. 01-10-2012

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Sr. No. Contents Page

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Internship training programme provides a chance to students to make

themselves Familiar with the actual business environment. It also provides an

opportunity to study the theories of book in practice. This is the reason why the

students of IMS are required to complete internship programme at any recommended

organization. After completing the internship, it is required to write an internship

report, covering all aspects of that organization

This report is written on Faysal Bank Limited, which is divided into seven

parts covering all the working and behavior of organization

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By the grace of Allah the almighty, who has enabled me to do this entailinghard work. It is a matter of great pleasure and privilege for me to write this internship

report on Faysal Bank Limited, Chistian Branch., I am pleased to acknowledge the

help which I received in write this report. I express my special thanks to following

persons, working in Faysal Bank Limited, Chistian Branch for their kind cooperation

in completing this report.

------------------

I am also to acknowledge Miss Nafees Akhtar -, the Director of

our internship program, has always patronized the internship training programmes &

without his inspiring teaching & guidance, I would not have been able to write this

report. I am indebted to my class fellows who gave their Valuable suggestions at the

time when they were most needed.

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Faysal Bank Ltd.

WHAT IS BANK?

In Simple words we can say that bank is a pipeline through which money moves into

and out of circulation. Bank accepts deposits and repays cash to its customers on

demand. The bank borrows money at a lesser rate of interest and lends it to the

borrower at a higher rate.

At the time of independence, there were 487 offices of scheduled banks in the

territories now constituting Pakistan. Following the announcement of independence

plan in June 1947, the Hindus residing in the territories now comprising Pakistan

started transferring their registered offices in Pakistan, transferred them to India in

order to bring a collapse of the new state. By 30th June 1948, the number of offices of

scheduled banks in Pakistan declined from 487 to only 195.

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Pakistan has indeed unique banking history commencing as were from scratch at the

time of Pakistan of this subcontinent. However it soon comes over its extra ordinary

banking problems and by grace of Allah we have a stable banking sector.

INTRODUCTION

Faysal Bank Limited (Bank) was incorporated in Pakistan on October 03, 1994 as a

public quoted company listed on Karachi & Lahore stock Exchanges. The six

Pakistan branches of Faysal Islamic Bank of Bahrain E.C. amalgamated with the

Bank when it commenced business operations effective January 01,1995.

The year 2002 is the 15th year for Faysal Bank serving the Pakistani economy and

market. Similarly, Al Faysal Investment Limited was incorporated in Pakistan in 1991

as the investment arm of the group and make valuable contributions in the public and

private sectors based on Shariah approved modes of funding.

As of January1,2002, the two entitles of the group in Pakistan, Faysal Bank Limited

and Al Faysal Investment Bank Limited, merged into one and today only Faysal Bank

Limited remains as a larger, stronger and much more versatile institution among

private banks in the country. In fact it is amongst three largest in terms of quality,

which after the merger stands at over Rs.4.0 billion. The total balance sheet size of

Faysal Bank after the merger is in excess of Rs. 40 billion

SHAREHOLDERS

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The Bank has been incorporated with an authorized share capital of Rs. 1.5 billion of

which Rs.1.1 billion is issued and paid-up. As 31st December, 1995 the Bank share

capital was held by:

Faysal Islamic Bank of Bahrain E.C.(FIBB) including its nominee directors

NIT, general public and employee

FIBB is a Bahrain based bank; established in 1982 and is a subsidiary of Dar Al-Mal

Al Islamic (DMI), Geneva with H.R.H.Prince Mohammad Al Faisal Al Saud as its

chairman

OVERALL VISION

Faysal Bank derives its mission statement from its principals Shamil Bank Bahrain

E.C and its holding company DMI Trust. The overall mission being:

The introduction of a just and equitable financial system by being a world class

multi-purpose financial institution, providing a range of specialized services, working

on Shariah principles.

VALUES

Training the spirit of Shariaa into modern financial products and

services

Maintaining a high reputation for prudence in the financial community

Reflecting high standards of integrity, propriety, goodwill and teamwork

in its conduct, within the family and its marketplace.

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Faysal Bank Ltd.

Faysal Bank Limited as incorporated as a public limited company under the

Companies Ordinance,1994 on October 3,1994 in Lahore vide Certificate of

incorporation No,LO7391 of 1994-95 with an authorized capital of Rs.1,500 million

ordinary shares of RRRs.10/-each.The Ban has been established by Faysal Islamic

Bank of Bahrain E.C.,pursuant to the federal Government permission/sanction letter

no.F 8(23) Bkg.IV/92-5443 dated April 7,1993 ,as amended, for establishment of a

commercial bank

The state Bank of Pakistan-SBP, vide its letter no . BRD (NBFI)676/625-E-93 dated

September 16, 1993 has also agreed in principle to the setting up of the Bank in term

of the governments aforementioned permission letter. SBPs said letter also contains

interalia, its agreement in principle for they merger (amalgamation) with the Bank of

the existing branches of Faysal Islamic Bank of Bahrain E.C. (hereinafter referred to

as FIBB- Pakistan Branch) subject to meeting with the requirements of the law, in

particular section 48 of the Banking companies Ordinance, 1962 & on the condition

that the transfer of assets &liabilities shall be on the basis of the break-up value or

net- worth of the FIBB-Pakistan Branch as per the books. The FIBB- Pakistan branch

will merge with the Bank on a going concern basis.

The entire under taking of FIBB in Pakistan scheme of amalgamation are as follows:

The entire undertaking of FIBB in Pakistan, including all it s assets &

liabilities & all the rights & obligations, etc as at the effective data (data of

approval of the scheme by the state Bank), shall with out any future act, action or

deed, stand transferred to, & vest in the Bank . As a consequence, the FIBB

Pakistan branch shall stand merged with the Bank.

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A consideration for the transfer, the Bank shall pay to FIBB, a sum equal to

the non-worth of its branches in Pakistan, as per the books, as on the

amalgamation date, the net-worth will be certified by the auditors of FIBB-

Pakistan Branch.

Notwithstanding the effective date, the cut-off date i-e the date as of which the

amalgamation of FIBB- Pakistan Branch with the Bank shall be deemed to have

taken place as envisaged to be the close of business on December 31, 1994.

After approval by the shareholders of FIBB &the Bank the scheme would be

presented to the SBP for approval in terms of section 48 of the banking

companies ordinance, 1962.

Bank was incorporated as a public limited company. Its shares are quested in

Pakistan. 60% of the capital is held by Faysal Islamic bank of Bahrain E.C & 40%

by the general public. The Faysal Islamic Bank of Bahrain E.C merged into the

Bank when it commenced business operations on January 02, 1995.

CONFORMITY TO ISLAMIC SHARIAA

The Holy Quran outlines for Muslims a complete code of life for dealing individually

or collectively. This is future amplified by saying and practice of Holy Profit(May be

upon him) From these guidelines , an Islamic economic system can be elaborated

upon, aimed at creating a socially, economically and politically viable and just

environment supporting the universal well being of humanity

In this context all functions of the bank are performed in strict adherence to the

principles of Islamic Shariaa. In order to ensure such conformity of Shariaa, the

Bank operations are checked and monitored by its Religion Supervisory Board to

whom the management reports periodically. In case of new operations and activities

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prior approval of Religious Supervisory Board is invariably obtained by the bank

management.

The Religious Supervisory Board of the bank itself comprises eminent scholars of

Islamic Shariaa from Bahrain, Egypt, Saudi Arabia, Turkey, and Pakistan possessing

in-death knowledge of the conditions in which the Bank operates. The Groups

Religion Board, composed also of many internationally renowned Islamic Scholars,

provides advice from time on issue that pertain to Group level implementation

ACTIVITIES OF THE BANK

Its activities include act as a manager, on a trustee basis of a series of Modaraba

investments funds and private portfolio investments accounts in accordance with

Islamic laws and principles particularly with regard to the prohibition of receiving or

paying interest.

SOUND MANAGEMENT

Its sources are largely due to the management style and polices of senior manager.

It sees Modaraba syndications as a major growth area and there are possibilities that

the bank will arrange such syndications for corporations and companies in these

countries especially in the high growth economics of South East Asia in particular

Malaysia and Indonesia.

There have been suggestions that this type of specialist facility could be intended to

other regions such as the Middle East, North Africa and the Muslims Central Asia

Republics where commodity export and import finance is in big demand.

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SYSTEMS DEVELOPMENT

Faysal bank ltd. (FBL) provides a unique mix of services to its customers. That is why

off the shelf software packages and third party vendours are not successful in

providing a complete range of software packages to fully meet the operational needs

of its wholesale and retail banking operations, customers services support and

sophisticated MIS. The Bank has succeeded in completing in house development of

software for meeting all of its requirements. This results in interlining all the

operational units of the Bank to allow fast exchanges of data and information.

PURPOSE OF OPERATIONS IN PAKISTAN

The following are the main objectives of the establishments of FBL in Pakistan.

1. To extend Islamic financial services to the people of Pakistan.

2. To enhance trading relations between Islamic countries.

3. To support market opening in Pakistan by diversion and mobilization of

surplus funds available from within and from other Islamic nations.

SERVICES OFFERED

FBL offers a wide range of banking services to public and private sector corporations,

partnerships, individuals, professional, and expatriate Pakistan working abroad .

These services include:

Deposits

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- Current Accounts

- Profit and loss sharing deposit

- Saving account

- Call/notice/term deposit accounts

Foreign Currency

- Current and saving accounts

- Call/notice/term deposit accounts.

Documentary Credits/Guarantees

- Import letter of credit

- Negotiation and collection of export documents

- Issuance of letters of guarantee

- Performance bonds, etc.

Financing

Short Term

- Modarba (Financing resale of goods)

- Working capital

Short/medium term

- Syndicated financing

Medium/long term

- Modaraba

- Moshakara

- Ijara

Other Services

Remittances

Demand drafts, pay orders, telegraphic and mail transfers.

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Foreign exchange bearer certificate

NIT units.

Foreign exchange and travelers cheques.

SOURCES OF FUNDS

The banks main sources of funds are:

a. Demand deposits (current accounts balances)

b. Investment deposits (funds under management)

Within theses two basic categories, the bank is able to offer differently

structured accounts to provide a range of deposit series such as

current, saving, call term, modaraba etc.

SHARIAS IMPLEMENTATION

Bank continues to meet the liquidity requirements by making investments in

Shariaa compatible instruments. Steps have been taken to bring operations of the

bank in greater conformity with Shariaa operations are under review to evaluate their

compatibility with the shariaa and to refine them in consolation with Maulana

Mohammad Taqi Usmani, Deputy Chairman, Islamic Fiqah Academy (OIC).

H.R.H Prince Mohamed Al Faisal Al Saud Chairman

Mr. Farook Bengali President & CEO

Mr. Khalid Abdulla Janahi Director

Dr.Said Saad Al-Martan Director

Mr. Mahmood A. Faruqui Director

Mr. Nasir Ali shah Bukhari Director

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Mr. Ziad H.Rawashdeh Director

Mr. Tariq Iqbal Khan Director

EXECUTIVE COMMITTEE

Mr. Khalid Abdullah Janahi Chairman

M. Farook Bangali Member

Mr. Ziad H. Rawashdeh Member

MANAGEMENT

Mr. Farook Bangali President&CEO

Mr. Khalid Tirmizey Country General Manager,

Commercial Banking

Mr. M. K. Hoti Country General Manager,

Investment Banking

Mr. Bashir A. Sheikh General Manager Commercial

Banking Central

Mr. Mohammad Saleem Head of Country Operations

& Information Technology

Mr. Ahmed Kamran Regional Manager, Corporate

Banking

Mr.Mansoor Hamdani Head of Internal Audit

Mr. Arif Hasan Khan Head of Human Resources&

General Services

Mr. Ejaz Rahim Deputy General Manager,

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Investment Banking

Mr. Zubair Gilani Area Manager, Investment

Banking North

Mr. Hasan Imam Country Risk Manager

Mr. Mohammad Iqbal Head of Finance

Mr. Mohammad Siddique Memon Company Secretary & legal

Advisor

Mr. Sohail Nawaz Area Manager, North

Mr. Richard Rath Area Manager, Southern

Branches

Mr. Saleem Shafi Head Corporate Communications

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ANALYSIS OF ORGANIZATIONAL BEHAVIOUR

Some of the characteristics of the bureaucracy are present in the organizational

structure of FBL. These include

1. Positions arranged in hierarchy.

2. In all the departments, excluding the Credit Marketing and Accounts,

comparatively higher degree of the set procedures and rules exist.

VERTICAL ANALYSIS

1. Centralization Versus Decentralization

Geographical

FBL has its branches in main cities and countries of the world show that it is

geographically decentralized.

Functional

and procedures All the seventeen branches of FBL have their own personal

Departments. But, at the same there is a personnel Departments of all other branches

in Pakistan

Within Multan branch, there is centralization to a greater extent. Up to the level of

Assistant Vice President and Grade 2 officers (only in the Credit Marketing

Department), there is decentralization and there is too within the rules, polices, of the

State Bank ofPakistan and Head Officers of the Bank in Bahrain.

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2 Flat Versus Tall Structure

The structure of the organization is tall with a few members at each level. As a result

there is a narrow span of control and supervisors have close control over their

subordinates

HORIZONTAL ANALYSIS

1. Departments

FBL has a functionally departmentalized structure. As the organization chart shows,

various functional departments are further departmentalized on the basis of their

services.

2. Line and Staff Concept of Organization

Persons at the management level (Senior vice President, Assistant Vice President, and

Regional Vice Presidents) are in line while others persons are in staff.

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TYPES OF MANAGEMENT

POLICIES

The following main types of managerial polices have been discussed here:

1. Personnel Policies

Personnel polices cover the major problems of providing and maintaining anefficient

work force.

2. Marketing Policies

Marketing polices deal with the problems of planning for sales activities .

3. Financial Policies

Financial polices are concerned with the problems of providing and handling capital

That is required for the business.

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.

1. HOURS OF WORK

Timing of the Job

9.00 a.m to 5.00 p.m with one hour break for lunch and Zuhar prayer

Days: 5 days a week

2. VACATIONS

AfterCausal leaves: 15 per anum

Privilege leaves: 30 per anum

Privilege leaves are given to the employees for relaxation and recreational purposes

after continuous work. Such leaves help the employees in mental and physical

relaxation. During one month of privilege leaves, employees are also given the pay

for that month so as to compensate for the recreational charges he has to bear during

that period.

Employees are encouraged to take the leaves allowed to them by the Bank so that they

can get some time out of their busy routines. This practice has shown that the

employees feel more fresh, enthusiastic, and energetic when return to their jobs

vacation.

Medical leaves are also provided to the employees if an employees is not feeling fit

and needs for getting well properly. Bank also reimburses the medical expenses and

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their dependents i.e. Bank pays 100% medical free payables on thebehalf of its

employees.

3. WORKING CONDITIONS

Working conditions both physical and environment is very crucial for employees

working in any organization since it is the organization where they spend most of

their day. Working conditions can both motivate and de-motivate the employees

depending upon whether proper or improper working conditions have been provided.

From the environment maintained in, even a person FBL who enters the Bank for the

first time can realize that the management of Bank is well aware of the important

impact of working conditions on the efficiency and morale of employees.

4. SAFETY

Safety is the main concern for manager, officers and employees. The money and other

valuables in vaults and lockers in banking business are more then any other business.

Therefore, management of FBL has taken special measures to safeguard the life and

property of both their employees and the customers. Many of these measures were

decided and taken at the time of the construction of the building while others short

term decision were taken after the bank started proper functioning. Some of the salient

features of such safety measures are discussed here:

a) The walls of the lockers area and the cash vault are made up of concrete which

makes them non-drillable. Moreover the lockers and the vault are made up

fire-proof steel. These measures help preserve the loss and cash either by some

human being or by an accident such as fire.

b) Two gunmen have been appointed at the entrance that makes sure that no

suspicious person enters the Bank. These are responsible for safeguarding the

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life and property of Banks employees and customers. One guard is also

present at each floor. Shifts of guards change with time. After banking hours,

one guard remains in the Bank over night.

c) Doors are made up of heavy wood so that it becomes difficult for a running

person both to enter and leave the Bank. This makes sure that in case of

robbery, the person to open the door quickly.

d) In order to safeguard against fire, special alarm system has been installed in

the Bank. Smoke detecting instruments, present on the roof, start ringing the

alarm bell whenever they detect smoke. In case of fire, this system will help

saving the life of the persons in the Bank who can leave the Bank immediately

through special exit door.

5. PHYSICAL CONDITIONS

The following physical facilities have been provided by the Bank:

a) Light

There is a proper arrangement of light in the Bank. The whole bank is illuminated

with lights, which makes the working conditions pleasant. Moreover, there is also

suitable arrangement for daylight in the entire building.

b) Temperature

Central heating/cooling system ensures the moderate temperature necessary for proper

working of the employees.

Some other facilities provided to the customers include: calm and quit working

environment, modernly designed washrooms, fully carpeted.

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SOURCES OF CAPITAL

Deposits are the major source of capital for FBL. Deposits are mostly obtained from

customers. However, Head Office also invests a certain amount of money as deposit

from time to time to earn money on his investment.

MONEY AT CALL

In case the Bank needs capital and deposits with it are not sufficient to its

requirements, the Bank goes to the inter Bank market for finances. From this local

market Bank can obtain both long and short term finances. Such money is called the

Inter Bank Call Money and is obtained at Inter Bank Call rates decided by the SBP.

Investment

Another source of obtaining capital for the Bank is the profits which it earns on

Investment Portfolio

The amount invested in various projects.

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SERVICE FACILITIES

Faysal Bank continues to strengthen its position in consumer banking. For extending

quality service to retail customers, the bank offers attraction local and foreign

currency deposit schemes. FBL launched its first branded liability product Rozana

Munafa Business Account in July 1995, targeted toward large corporate and personal

business. The bank has also redesigned and refurbished most of its branches, having a

constant identity in terms of design, dcor and colour.

FBL realizes the importance of customer found services. That is why it has

commenced evening banking at all seventeen branches. FBL is divided in to

following departments, which provide different facilities to different customers:

Customer Service Department

Documentary Credit Department

Credit Administration Department

Credit Operations Department

Corporate Banking Group Department

Accounts & general Services Department

Customer Service department is further divided in to two sections which include

Account Opening section and Cash dealing section To provide better and accurate

service the Bank has computerized the bank accounts which results in saving the time

along with greater speed, accuracy and neatness in accounts.

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MANAGEMENT INFORMATION SYSTEM

Information system is the life blood of any firm especially the financial institution. In

FBL, managers make use of it to formulate polices, make decisions, and resolve

problems. Management and other employees of FBL together with the use of

sophisticated computers and carefully planned and designed procedures are able to

achieve the maximum pay-offs for the Bank within the special goals.

Information is the major ingredient of the success of the bank especially in the credit

department where the credit officers get all the pertinent data, organize it in a form

suitable for the managers and to obtain necessary information and to base their

decisions upon some logical and sound footings.

In FBL management Information System is the responsibility of the Account

Department. All the information generated in various departments is routed to the

Accounts Department where it is presented in a form usable for the managers at

different levels and other users of information.

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SOURCES OF INFORMATION

Patterns of communication exist to ensure that the manager get right information at

right time. Some sources of getting information include; telephone, personal

communication with employees, public, etc. other banks, and clients. Upper

management is also one important means of providing information to the credit

officers who organize these into useful form.

Location

Keeping in view the customer group, target market, and resources of the Bank, it has

the possible location (so far as Multan branch is concerned). FBL is neither a saving

bank nor it has a very huge target market consisting of all types of customers from

small to large, therefore, the present location i.e. at Abdali road a very clean and

open area of Multan is more than suitable for the Bank. Beautifully designed and

decorated building with neat and clean surroundings, and pleasant colour combination

in the interior just matches the tastes and appeals of its customers. Area surrounding

the bank is also inhabited by those people who fall under the target market of the

Bank.

Distribution

Most of the offerings other Bank are of an intangible nature. As a result of the lack of

a physical product, there is no need for the distribution and the middlemen. The bank

has its ten branches in Pakistan where services are created and offered to the

customers without the intervention of any middlemen.

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SBP has an important role to play in formulating policies regarding the commission

rates, charges to be taken, tax to be deducted, etc. from the customers. All the

commercial banks have to operate within in those prescribed limits and FBL is no

exception. It follows and charges the rates as issued by SBP from time to time.

There are, however, certain services for the provision of which SBP has given

maximum and minimum limits to be charged from the customers. In such situation,

FBL does offer confessional rates to certain customers for competing in the market.

The above discussion makes it clear that there are not very significant changes in the

prices of services offered by FBL and other bank.

FBL does not charge anything to the customers for their statements. Customers can

come to Bank many times in a month and can get their statements within minutes.

This is the additional edge that the Bank has over many other Banks.

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Customers satisfaction is the major policy of the Bank along with many other

policies. It is because of this policy that Bank provides best services, best6

environment, and courteous behaviour to its customers. As a result, customers not

only themselves remain loyal to the Bank but also speak good to others about the

bank. Since a satisfied customer is more powerful means of promotion than both

advertising and personal satisfaction, therefore, FBL pays more attention for the

satisfaction of the customers. The Bank. thus, do not need to spend huge amount on

promotional medias.

Sales Appeals

Sales appeals used by the bank primarily consist of promptness and accuracy of

services. Other things that help the bank in establishing itself in the market are quality

of services, personality and ability of officers, and sincere attitude for the well being

and financial help of the customers.

Sales Promotions

FBL uses newspapers, journals and magazines for advertising purpose with the

objective of telling public about the services provided by the Bank. The share of

advertisements in total expenditures is, however, very less. The reason is that the bank

management believes in promoting the good name through personal solicitation.

Moreover, for existing set up, a satisfied customer and a happy employee are

sufficient for necessary promotion.

Effect of Incorporation

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The Bank has gone in to public from January 1995, so managers have, therefore,

planned to increase the expenditures for advertisements. Advertisements will become

important because general public want to know and hear about the company in which

they invest or plan to invest money.

The accounting system followed by Faysal Islamic Bank is completely tailored to its

own individual needs and to the needs of modern banking. Accounting system has

been designed not only to record post facto information but also to cope with the

needs of forward- looking decision making. A good information system should be

capable of generating all information for planning, organizing and controlling the

activities of an organization from a common database.

Quite clearly no meaningful plan can be established without the fullest possible

information. An efficient costing system is needed so that the cost of different

services and of running different parts of the system can be established as precisely as

possible. Accuracy of accounts is desirable and essential for the success of the Bank.

Bank neither buys nor sells goods and commodities. It renders certain services to his

constituents, the cost of which it finds out in order to see whether or not a certain

customer account is a paying one.

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Bank keeps accounts not only for the purpose of finding the cost of an article, or

certain services, but also for finding the exact amounts owing to and by industrial and

commercial concerns. In this regard, FBL is very careful because failure to keep

proper accounts not only affects its credit, but it may also land it in difficulties.

Sometimes even businessmen depend upon their bank records in the matter of their

financial dealings. Bank cannot afford to be careless in the, matter of accounting, and

therefore, this department has been placed under a competent senior officer of the

Bank.

The chief objects with which bank accounts are kept, are the following:

To have a chronological account of all transactions done by the Bank, as it must be

able to produce sufficient proof of what it does from day to day. These running

accounts are very important.

To know the exact amounts owing to and by the Bank. Unless the Bank knows what

are exact amounts due from various customers, it cannot possibly make demands

upon them. Similarly, unless a Bank knows what are the amounts owing by him to his

customers, it cannot honour their cheque and make other payments required by them.

To know its exact position at all times and, thus, to find whether or not the business is

making progress.

Main functions of record keeping, in system term are the provision of information and

implementation of control.

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BAD DEBTS

Multan branch does not have any bad debts. Accounts Department has, however,

created a general provision for bad debts.

CURRENT ACCOUNTS

Under the Islamic financial system as governed by the glorious Sharias, clients

wishing to deposit funds with an Islamic financial institution and seeking their

guaranteed return do not receive any income or benefit. Such funds are indicated as

current accounts and Bank treat these as loans from the customer to the Islamic

financial institution repayable on first demand. Bank chooses to make use of such

funds for investment purpose on its own risk. Current account funds are treated as the

Banks liability and are reported above the line in the Banks balance sheet.

DEPOSITS ACCOUNT

An investor can deposit his amount in the Deposit Account in FBL if he wants to

receive benefits, if accruing, from the investment of his funds. The depositor assumes

all the risks inherent in the investment of such funds. Faysal Islamic Bank guarantees

the return of the principal only not profit. Only in the case of grossnegligence on the

part of the Bank, which is proved as such, the Bank is liable for making good losses

incurred owing to such proved gross negligence.

BASIS OF ACCOUNTING FOR CASH

FIFO basis is used for the cash in the main safe.

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ACCOUNTING CONVENTIONS

Bank record of savings accounts shows all deposits, withdrawals, and dilly balance in

account. Rank record of current accounts shows all deposits and withdrawals.

CAPITAL EXPENDITURES

Separate budget is made for capital expenditures on which only depreciation can be

charged. Estimated cost for the purchase of capital asset is included in the budget and

depreciation is also charged to the asset to show the exact value of the assets after

certain period.

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REVENUE EXPENDITURES

Proper budgeting of each and every revenue expenditure is done. For example, an

important item in the overhead charges is the employee cost. To prepare the budgeted

figure of this expenditure, the bonus that is expected to be given to employees, any

increment that is expected to be given to the employees, and the pay of the employees

for that year are added together to find the employee cost. Moreover, any chances of

increases or decreases in the employee cost, depending upon the plan, to hire new

employees or to terminate an employee are also taken into consideration while

making budgets, likewise, each item of expenditure and income is taken into

consideration to find out the budgeted figure of it. Theses amounts are then presented

in the form of profit and loss account to calculate the net income for the years.

POLICY

Any expenditure-capital or revenue is treated as revenue expenditure if it is up to Rs.

5,000. Above this level, capital expenditures are treated in capital account.

REVALUATION

Heavy expenses are amortized over the period for which these will remain in use.

ENTERING RATES INTO SYSTEM ON DAILY BASIS

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New rates are fed into the computer on daily basis. These rates are then used for

finding the daily position of balances. Whenever a new rate is fed, an evaluation entry

is generated that automatically debits or credits the accounts (according to the

increase in FCY rates) to keep the total balance according to new rates.

ACCRUAL REVERSE

Bills of electricity, gas, etc. consumed during a month come next month. Therefore,

provision for taxes are kept for the month. At the time of receipt of actual bill, entries

made are reversed and entry for actual expense is entered.

Mr. Kamran Ashraf is the head of this department.

Customer Services Department of Faysal Bank Ltd. Can further be divided into

following sections:

Customer Services Section

Cash Dealing Section

It started its function on the very first day of operation of the bank in Multan. Mr.

Kamran Ashraf is operating this department.

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Mr. Kamran Ashraf is dealing with this department.

In customer services section, the customers are provided the following services:

Opening the Accounts

Special Deposits

Remittances

Collections

Issuance of Travelers Cheques (T/CS).

Issuance of Foreign currency (USD, Pound, DM)

Receipts of T/CS.

Receipts of Foreign currency.

Some of these are described below:

ACCOUNT OPENING

It is the most important department of bank

Mr. Kamran Ashraf deals in this department. Following procedure is adapted for this

purpose.

PROCEDURE OF ACCOUNT OPENING

It is very simple and quick procedure. A person who wants to open FBL provides the

facility of opening the accounts according to open an account must has the

introduction of banks staff or any existing account holder of the bank. The customer

is required to fill an opening form. AOF is very standard and up to the mark which

contains almost all information about the customers. Customer is guided to fill to fill

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all columns of AOF.All formalities and requirements are completed and verified, and

all supportive documents are taken and checked according to the nature of account. If

any formality is incomplete, cheque book is not issued until it is fulfilled.

Account number is allotted to the customer and all particular such as nature of

account, opening date, initial deposit, title of accounts are written in register

Account is opened in the system by putting all the particulars of the customer in the

system. The letter of thanks is sent to the customer for confirmation of address. After

complete procedures finally the manager of the Bank signs the AOF and these forms

are filed in proper sequence.

TYPES OF ACCOUNTS

There are following types of accounts:

Individual Account

Any individual or proprietor of a business can open an individual account at FBL

Following requirement has to be fulfilled for this account.

Signature of the customer

Name of the customer

N.I.C photocopy attached

Name and account no of the introducer

Verified sign of the introducer

Joint Account

When more than one person opens a single account it is called it is called joint

account. The names of persons are written on title of A/C

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Joint A/C cannot be opened by single person. Both persons have to sign on cheques.

Following requirements has to be fulfilled for this account

Sign of both customers on the back of AOF

Sign on joint A/C # mandate

NIC copies of both members

Mode of operation

Name and account number of introducer

Third Party Mandate

In this type of account A/C holder can authorize any person to draw his account. He is

authorized to run that title of account. Title of account will be in the name of account

holder.

Following are the requirements for this type of account:

Copy of NIC

Power of attorney

Company Account

In order to open an account of accompany there are following requirements:

An up-to-date copy of the companys memorandum & articles of association

The companys certificate of incorporation

The Companys certificate to Commerce Business (Public company only)

Also following documents are required:

Copy of certificate of Incorporation

Memorandum & articles association

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List of directors

Copy of board resolution

Certificate to Commerce of business (if required)

Signature cards

Copy of NIC

CLUB, SOCIETY, ASSOCIATION OR TRUST

The opening of this account require:

Copy of NIC of all society or Trustee members

Stamp of society or club

Certified copy of resolution

Copy of rules

List of office Bearers

Partnership Account

Account title will be the name of the partnership firm.

Following are the requirements for opening this account:

Sign of customers on back of AOF

NIC copies of all partners

Partnership deed (certified copy)

Partnership mandate (prescribed format)

Companies rubber stamp

Foreign Currency Account

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For opening of this type of account

Copy of NIC

Copy of Passport

Closing Of Account

When a customer wants to close an account he has to give a hand written application

to the head of the operations department to close his account plus remaining leaves of

check book.

The manager first verifies the sign of A/C holder then closing is done from the

register on the computer where the account was opened. In the File of the A/C holder

his account opening form is crossed.

Cheque Book Issuance

When the account is opened, then the customer is given a customer is given a cheque

book sign upon and encash money. It proceeded as included:

PROCEDURE

The account opening formalities must be completed before issuance of check book.

Particulars of the check book requisition should be completed containing title of

account, account number, type of currency and signature of the customer Signature of

the customer are verified on the requisition.

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The check book is taken from safe/locker. It is assured that series of check. Particulars

are entered in the cheque book issuance register. Account number is stamped on every

leave of the check book and those leaves are counted. Name of the account holder is

written on the cover of the cheque book. And requisition on the check book for

further issuance is properly filled, stamped and signed by office of the bank.

Cheque book is delivered to the customer and his signature are taken on cheque book

issuance register. Check book serial number entered in the system. Stock of cheque

book are balanced at the end of each day and kept under safe custody.

FBL issues the following cheque books

Saving account25 leaves

Current account - 50 leaves

TYPES OF ACCOUNTS

FBL deals with the following types of accounts:

Faysal Sahulat Account (Current)

Rozana Munafa Account

Rozana Munafa Plus

Faysal Premium Account

FCY Saving

FCY Current

Faysal Sahulat Account

TYPES OF CUSTOMERS

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FBL open accounts for the following types of accounts depending on the type of the

customers:

Individual Personal Account

Joint Account

Sole Proprietorship Account

Partnership Account

Public Limited

Private Limited

Association, Clubs, Charitable Institutions, etc. Account.

Attorney Accounts

Autonomous Accounts

DORMANT ACCOUNT

Current and Saving Accounts, which remain inactive for the following periods are

classified as Dormant Accounts:

Current Accounts L.CY. 06 months

Current Accounts F.CY. 12 months

Savings Accounts F.CY. 06 months

Savings Accounts F.CY. 12 months

PROCEDURE

The EDP unit provides daily a list of those accounts, which did not have any

customer, oriented transaction for the last six months and have now been transferred

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to Dormant section. The ledgers of such accounts in marked as CAUTION-

DORMANT ACCOUNT.

The specimen signature cards of Dormant accounts are taken away from Tellers area

and are kept in the custody of the officer who has been designated to approve

operations in the Dormant accounts.

When an account has been placed on Dormant status, a letter is sent to the account

has been inactive for sometime and it is appreciated if he continues to use it.

Upon reclassification of the Dormant account, the accounts are transferred to active

are with the prior approval of the incharge of the Customer Services Department.

Mr. Manjoka deals with this department.

Cash section of FBL works under the operation department. This department is given

the complete responsibility of cash, as result of transaction in touch local and foreign

currencies. It is also responsible for safe custody of cash.

This department performs the two main functions:

Cash Receipts

Cash Payments

CASH RECEIPTS

Mr. Manjoka deals cash receipts in this department depositor uses deposit slip for

depositing the amount in to their accounts. The officer cheeks if the deposit slip is

properly filled up containing title of account, A/C number, date and amount in words

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and figures and figures. Detail on both counter files and cash receipt voucher should

be the same. Cash is receipt by cash receipt officer, twice counted and matched with

the deposit slip. The cash details are written on the back of the deposit slip and also

entered in the cash receiving register. Cash received stamp is affixed on the face of

the deposit slip along with the signatures of the cash receiving officer. Deposit slip

and cash receiving register is given to the officer in the cash.

PAYMENT OF CHEQUE

Mr Manjoka deals with the payment of the cheques .First the cheque is presented by

the customer or holder to the cash payment officer. He confirms that it is drawn on the

same branch and particulars of the cheque are properly filled in. One signature of the

holder is taken on the back of the cheque. Cheque is handed over to the officer of the

cash department. For scrutiny where the officer checks the amount in the words,

figure, date, payees name crossing if any account number cheque serial no and

signature of the customer. It is posted in the System And posting stamp and number is

affixed on it.Cheque is handed over the cash payment officer for the payment and the

cash paid stamp is written on the back of the cheque. Enteries passed in the cash

payment register

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SPECIAL DEPOSIT INCLUDE

a) CDR (Call Deposit Receipt)

These Deposits operated on no profit no loss basis. Money deposited with the bank

this head is exempt from Zakat. Customers who deposit their money under this head

can get money when they need it. CDR can be made Open as well i.e. the person

who deposits the money does not need to do signature for getting the deposited money

back.

USES

CDRs are used by the customers for making the payments of bills.

2) DRs are used for keeping the money temporarily in the Bank without involving the

procedure of writing cheques because cheque is a legal document of the money

deposited by the customer, which he has to show to the tax authorities

NDR (NOTICE DEPOSIT RECEIPT

The following are the period for which these terms deposits are issued:

07 days

30 days

Profits are given on theses deposits and Zakat is also deducted from these deposits.

TDR (TERM DEPOSIT RECEIPT)

The following are the period for which these terms deposits are issued:

1 month

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2 month

3 month

6 month

1 year

2 year

3 year

FUNDS TRANSFER APPLICATIONS

For the transfer of funds the following applications are required here:

Telegraphic Transfer (local/foreign)

Pay Order

Demand Draft (local/foreign)

SBP check

PAY ORDER

Pay order is issued for local station. Application form is given to the customer to fill.

Two signatures are taken on the form .One for request and otter for receiving the

instrument. All the particulars of the application form are checked and bank

commission charges and with holding tax is written on the top of the application. If

the customer is maintaining his account with the branch he can give cheque for the

total amount of instrument plus bank charges. Cheque and application form is then

given to the officer cash department for payment ,post the cheque and signs the

application .If the customer wants to pay cash, cash is deposited on cash counter Cash

receiving officer receives cash on the application form along with the bank charges

and withholding tax. Application form is given to the remittances incharge for

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issuance of instrument. He enters all the particular of the application form in the

system and computer gives the auto control number to the instrument.

DEMAND DRAFT

Demand draft is issued for some outside station. It is the instrument that is used to

transfer amount from one city to another city. It can be made on cash as well as on the

cheque. If it is made through cheque, then it is necessary that the person must be

account holder. While in the case of cash, it consist of the three copies.

Original copy which is given to the account holder

DD advice is sent to the central branch

Copies for reconciliation. Its photocopy is kept with bank while original is sent to the

head office for reconciliation.

PROCEDURE

The client who wants to transfer his funds from one city to the other fills a form

requesting the bank to prepare a DD.DD application form contains columns requiring

information for the preparation of DD. e.g.

Beneficiary name

Applicants name

Address

Amount to be sent etc

Bank deduct charges against DD.

TELEGRAPHIC TRANSFER

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It is another mode of transfer of the funds. It is the quickest mode of the transfer of

funds from one city to the other city. For TT, client has to submit the application on

prescribed form of the Bank. Client can deposit money in the bank or can request the

bank to deduct the amount. Against the TT along withy the charges against the

issuance of TT from his account. The charges against the issuance of TT charged by

Faysal Bnak.

Call Deposit

When the party wants to give payment itself to another party then it makes call

deposit. The bank keeps it with itself unless it does not receive instruction from other

bank. Normally it is made on cash and goes on party account.

PAY SLIP

It is used when Bank itself pay for any type of transaction e.g. purchase of stationary.

COLLECTIONS

All the cheques under collection are called cheques under collection in FBL.There

are two types of bills for collection:

Outward Bills for Collection

Inward Bills for Collection

Outward Bills for Collection

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All the cheques are received on one counter along with the paying slips duly filled in

properly containing particulars of cheques and account holder. Counter folio of

paying slip is handed over to the customer by putting stamp for cheque received for

collection of FBL on it duly signed by officer. Theses cheques are scrutinized and

cheques for local clearing are separated from OBCs. Cheques for local clearing are

entered in clearing register, whereas cheques for collection are entered in OBCs

register and handed over to the bills department for Collection. OBC number is

allotted to the cheque from OBC register. Special crossing and Bank endorsement

stamps are affixed to the main branch of that city for collection.

RESERVE CASH

Cash left with the Bank at the end of the day is known as the Reserve Cash.

Reserve cash is divided in to two parts:

CASH IN HAND

It is the cash which is not kept in vaults but is kept in special boxes. There are two

tellers in the Bank and each of them has a separate box for putting cash in hand. As

per policy, Cash in hand should not be greater than Rs. 1500000 . Any amount greater

than this amount is transferred to the vault at the end of each day.

CASH IN VAULT

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Any amount (in whole numbers not in paisas) greater than the Cash in hand and

which cannot be kept in tellers boxes is placed in vaults.

CREDIT DEPARTMENT

The credit department comprises of following three departments in FBL.

Credit operations

Credit Administration

Corporate Banking Group

Mr. Kazmi deals with this department.

It also started its function from the very first day of the bank. Following facilities are

accommodated by this department.

1) FUNDED FACILITIES

LPO (Local Purchase Order)

Ore-shipment

Post shipment

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T/R (Trust Receipt

PAD (Payment against Documents)

2) NON- FUNDED FACILITIES

a) Sight LC

b) Guarantees

DOCUMENTS AND FORMALITIES FOR APPROVAL

OF FACILITY

Following are the documents and formalities, which are to be submitted by the

customer in favour of FBL

Request Letter

Board resolution

Signature of customer/partner /director

Visiting card

NID card (NIC)

Certificate of incorporation

Certificate of commencement of business

Import/Export Registration Number

Financial of last three years + Audit reports

Commitment if required

In case a new customer comes to FBL and asks for approval of facility (Project

Financing), the concerned bank officer asks him, to submit following documents to

him.

Request Letter

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Feasibility Report

Background Information sheet

And all other documents which he thinks must be submitted. In Feasibility report, the

concerned bank officer observes the following points before he makes the decision

of FAF.

INTRODUCTION

Sponsors

Project cost details

Debt Equity ratio

Implementation or construction schedule

If the (officer) is satisfied he will make the proposal of facility.

A) LOCAL PURCHASE ORDER

Definition

It is a short term provided by the bank through its own sources to the customers for

the following purposes:

To purchase the stock of raw material

To meet expenses of production

To meet the expenses other than production

Rate

Profit is charged on it after 90 days or quarterly

Rate of profit is different for different customers

Period

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PAF of LPO is available for only one year

After one year if the customer wants to renew this facility, bank will see if the

(customer) had fully utilize the credit facility in the previous year. If he has fully

utilize the credit facility and paid the profit satisfactory, he will be given this facility

again. But if he has made satisfactory repayment of profit but has not fully utilized his

credit facility, he must give solid reasons acceptable to the Bank if he wants to renew

his credit facility for the new year

Bank will either hypothecate or pledge the stock of the customer

Bank is more secure in case of pledge because items pledged are placed in covered

godowns, watchman is appointed by the Bank, Banks Board on godown, and register

record is maintained for amount of items containing in or going out of godown.

In case of hypothecation, goods may be placed in uncovered godowns, So Bank is not

very much secure.

b) Equitable Mortgage property

(i.e. customer cannot sell property or rent it, if the Bank does not agree).

c) Personal Guarantee of Directors

B) PRE-SHIPMENT (OWN SOURCE)

A customer comes to bank and asks it to provide him credit facility so that he can

produce items which he can ship (export).

Securities (For PAF)

1. Personal guarantee of directors

2. Charge on Export bill sent in collection

3. Lien on property. (Sometimes)

4. Hypothecation

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Rate

Different rate of profit is charged on this credit facility, from different customers.

Usually 16-20%

Period

Maximum period for which this loan can be provided is 180 days but PAF is prepared

for 1 year and can be renewed each year.

DOCUMENTS: Required from Customer

LC or Contact

Request letter

Demand promissory note

C) POST SHIPMENT (OWN SOURCE)

This is the credit facility required by the customer after he has made shipment and

needs funds for carrying on his production of goods.

Documents Required from Customer (By C.O Dept)

LC or Contact

E

Bills of Lading

Bill Exchange

Invoice

Other documents

SECURITIES

Required for Proposal raising or PAF

Personal guarantee of Directors

Lien on Export Bills sent in collection

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Property under lien

Rate

This credit facility is provided at different rates to different customers. Usually 10-

14%

Period

It can be provided for maximum of 180 days but PAF is prepared for 1 year (it can be

renewed each year).

D) CREDIT FACILITY AGAINST SIGHT L/C

1. Trust Receipt (very near to LPO)

When a customer has imported goods but cannot make payment against the Draft Bill

of Exchange then Bank his signature on T.R documents and pays for imported goods

on customer behalf. Then Customer must pay the amount for which goods were

imported on the date as agreed as well as Profit to the Bank on T.R facility.

2. Securities

All those securities as per LPO.

If Credit operations Department prepares PAF under sight LC

Bank retains a certain amount of CASH MARGIN on imported goods amount (Not

less than 30% under new policy).

Lien on imported goods.

E) CREDIT FACILITY AGAINST USANCE LC

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Acceptance

Customer signs an acceptance in favour of Bank that he will make payment of

imported goods up to a certain date, so bank pays the amount of imported goods.

Securities required

Lien on imported goods.

NON-FUNDED FACILITIES

F) BANK GUARANTEES

Customer obtains bank guarantees to give to different institutions e.g Sui Gas

Corporation.

Securities

Cash margin of guarantees

Personal guarantee of the director

Equitable mortgage of required value of property

G) FINANCIAL GUARANTEES

When the Bank(e.g FBL)is not in a position to give credit facilities to the customer it

will issue a financial guarantee to customer.

LONG TERM CREDIT FACILITIES

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It means FBL provides long term finance to the project. Project financing facility is

normally given in case when new project has to be set up. All its details are given

below:

Securities

All the stocks, properties and assets are in the charge of the bank, i.e Bank advances

finance on the security of whole project.

Period

This PAF is prepared or renewed every year.

Profit Rate

Profit rate is different for different customers.

Types of Project Financing

Foreign Currency Credit facility (for import of machinery)

LMM (Credit for Local Machinery Manufactured)

FAPC (Finance Against Packing Credit)

Most of the Banks (Foreign) avoid giving credit facilities to the customer and also

FBL does not prefer to offer these credit facilities.

Period

5 to 10 years but PAF renewed every year.

LEASING

FBL makes two agreements with the customer.

Lease Agreement

Sale and Lease Back Agreement

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Procedure

Customer opens LC for the import of machinery but the Bank pays for it. Then Bank

acts as the lesser and the Customer as a lessee, and machinery is given to Customer

under lease agreement.

Bank calculates and notes the following:

Principal amount of item to be leased. Say 50,00 Million.

Residual value (say 10%)(at the start of lease period) 5.00 Million.

Documentation fee Suppose Rs. 300.

Front-end fee (1% of principal amount) Rs.500, 000.

Then concerned Bank officer prepares Authorization Schedule.

Name of the customer is (single party or customer or company is mentioned on the

top of the page.

Background

Date of registration

Authorization Capital + experience

Chief executive name +experience

Line of business

Nature

PAST PERFORMANCE

Availability of Facilities: Facilities sanctioned and if under utilized then solid

reasons for utilization.

Nature of facilities

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Adjustment of facilities: How much of facilities has been adjusted or satisfied

Operation of current account: What is the average balance, minimum balance

(maintained or not)

Profitability: Banks earning on customers current account during previous

year

Expansion of business

Charges in corporate set up

DOCUMENTARY CREDIT DEPARTMENT

Mr. Zaidi deals with this department.

TYPES OF FACILITIES

There are two types of facilities:

Non-funded Facilities

Funded Facilities

NON FUNDED FACILITIES

FBL gives guarantees on the behalf of its customers to pay the principal in case of any

mis- happening on:

Customer Guarantees

Sui Gas Guarantees

Wapda

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Excise

Financial Institution

When one client goes to a financial institution for loan, that institution does not

believe on customer and demand for Bank guarantee. Then financial institution gives

his guarantee to another financial institution.

There are non funded facilities in which Banks own finances are not utilized. Other

non-funded facilities include:

Letter of Credit

L/c at Sight

L/s Usance

FUNDED FACILITIES

Funded Facilities are those which are related with the flow of Finances. In funded

facilities Banks own finances are involved. Theses are of many types:

Export Facilities

Pre Shipment

Post-Shipment

Long Term Financing

Import Financing

Financing Against Imported Merchandise (FIM)

Trust Receipt

Foreign Bills Purchased

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Provision of non funded facilities is the responsibility of Documentary Credit

Department, while the provision of Funded facilities is the task of Credit Operation

Department.

DETAILS REQUIRED ON GUARANTEE

FBL generally asks for the following details on guarantee:

Name and address of the applicant

Name and address of the beneficiary

Currency and amount of guarantee

Terms of guarantee

Expiry date of guarantee

ENTRY IN GUARANTEE REGISTER

A separate register known as guarantee register is maintained for recording

guarantees issued by the Bank. Date, letter of guarantee number, name of the

applicant, name of the beneficiary, commission, amount of LG and date of expiry are

recorded in it and a running serial number is allotted to the guarantee there from.

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Pricing And Distribution of Export Forms:

FBL maintains a complete record of all export forms printed by the Bank and of their

distribution to their branches and customers. For this purpose, it maintains a Stock

Register which shows branch-wise distribution of the export forms.

MAINTENANCE OF PARTY WISE RECORD OFCERTIFIED EXPORTS FORMS

Bank maintains another for recording therein the particulars of export firms issued

and certified by it in respect of each exporter. In this register it records against each

form, the date of submission the export documents when shipments have been made.

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Faysal Bank Ltd.

Mr. Nadeem deals with this department.

Accounting department is the running blood of the Faysal Bank. It handles almost all

the problems occurring in the bank.

The important activities preformed by accounts department are as follows :

TREASURY

A special officer in FBL performs a portion of this operation .

CLEARING

Mr. Liaqat Ali deals with clearing.

Before discussing it is necessary to what is clearing?

The process by which cheques exchanged between the collecting and paying bank

and the ensuring financial settlement is called clearing

This is facility is provided by the state bank of Pakistan for offsetting of cross

obligations between the different banks. Clearing is of two types.

Inward Clearing

When cheques drafts, etc, of our branch presented to us for clearing by the SBP.

Cheques to be honored be bank.

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Outward Clearing

The cheques of other banks which the account holder deposits in their accounts are

send for collection.

Clearing process (inward/outward).

Here the local cheques are received that are drawn on FBL. All the cheques are

received on one counter along with the paying slips duly filled in properly containing

particulars of cheques and account holder. Counter folio of paying slip is handed over

to the customer by putting stamp for cheque received for collection for Faysal bank

limited on it duly signed by officer. These cheques are scrutinized and cheques for

local clearing are separated from OBCs. These are then entered in clearing register

and cheques for collecting are entered in OBC register and handed over the Bills

Department of Collection. Clearing officer checks and verifies titles of all the cheques

deposited by the customer to confirm the good title of the cheques. Cheques are

scrutinized proper and paying slips are separated from cheques. Special crossing,

endorsement and clearing stamps are affixed on the cheques. Cheques of each bank

are sorted and arranged branch wise. All the cheques are then entered into the clearing

system of bank. Print out of the clearing is taken and details are attached.

With the cheques of each bank. Details of these banks are then entered into the

clearing schedule containing number of cheques presented and their total amount

against the name of each bank. Then total number of cheques presented to all banks

and their total amount is written on the foot of the schedule, which is tallied with the

clearing register.

Next morning these cheques are delivered to the respective banks in clearing house of

the SBP between 9:00 to 9:30 AM. In the same manner, other banks present their

clearing drawn on Faysal Bank. Total number of cheques and their amount delivered

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to other banks are received from them are written on the clearing House schedule and

handed over to the Officer Clearing House SBP. Cheques/DD received in clearing are

given to the Officer Cash Department of the branch for their payment. After proper

scrutiny of cheques, verification of signatures and confirmation of balance in the

account Officer Cash Department pays these cheque by canceling and posting them in

the system.

ADVANTAGES TO FBL

Foreign currency is purchased at a certain rate. During the period if rate increases to a

higher rate, the difference between the two rates is the source of income for Bank.

In case of any mis-happening, Banks risk is minimum because foreign deposits are

backed up by SBP.

Receipt of Foreign Currency

By law, the branch of any bank cannot keep foreign currency. It has to sell this

currency at spot rates to its Head Office. Therefore, whenever the Bank receives

Foreign Currency through cheques, it sells this amount on the same day to Karachi

branch.

BUDGETING

Accounts department in the bank is responsible for making all the plans for the bank.

These plans range from yearly to daily plans.

Five Yearly Budget

Bank first of all makes a plan for five years. This plan include the budgetary figure for

five years, new avenues to search, new customers to find, etc. Such a plan gives only

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the broad guide to mark the direction in which the bank wants to move in the near

future.

Yearly Budget

Next step is that the account head makes a very accurate yearly budget incorporating

all factors like increase in tariff rates, rules and regulations of SBP, dollar fee, charges

in profit rates, etc. The annual budget is made for the year on quarterly basis. The

budget, this shows the targets for the bank, e.g. target deposits to be achieved, targets

expenditures, target profit, etc. After the approval of the budget by the top

management, it is communicated to all levels.

Comparison

Bank employees, management, etc. try their best to achieve the targets. After each

quarter to access the performance of the bank in terms of established objective, the

actual figure for income, expenditure and profits are compared with budgeted figures.

The quarter-wise analysis is done for control purpose. It helps in finding out whether

the expense have increased beyond the targets and whether the objectives set by the

management have been achieved. The answer to these questions help in finding out

the areas wherever the performance was not up to the desired level.

Revised Budget

Revised budget is sometimes necessary in order to incorporate the new policies

introduced by SBP or to show the effect of new changes in rates, etc. Budgets made

by the accounts department are flexible budget to readily incorporate the rates of

uncontrollable factors.

Monthly Review

Officers in accounts department makes profit and loss accounts both at the end of the

each quarter and at the end of each month. The advantages of monthly review is that

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the management comes to know about any deficiencies which are hindering the way

of achieving the targets and then can try to overcome these in the subsequent months.

For example, if the income earned from the investments made by the bank falls below

the budgeted figure, the bank management can start looking for new avenues so that

the gap between the budgeted and actual figures can be minimized during the

subsequent months.

The advantages of these budgets is that at the end of the year, management has the

annual, quarter-wise as well as monthly figures for review purpose.

Variances

Any variances resent in the actual amount and budgeted amount is probed into all the

factors; internal, cultural, social economical and political are taken into consideration.

If for example, the expenditure increases as compared to budgeted figure as it

happened last year when the printing expenditures had increased because of increase

in the cost of paper, the true causes of the increases are found out. If the causes are out

of control as in the above mentioned case and are expected to prolong, appropriate

adjustments are made in the budgets. If , however, the causes are in the control, then

the appropriate policies are made to encourage the employees and the concerned

persons to curtail the expenditures

SWOT ANALYSIS

STRENGTHS

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Faysal Bank Ltd.

Faysal Bank limited has strong belief on customer services

Manager and EVP Mr. Safdar Qureshi has good coordination with staff members

The environment of Faysal Bank Limited is very friendly

FBL is Fully computerized, each department has its own PC

The products of FBL are very excellent

Customers are allowed to give suggestion for the improvement of Bank and these

suggestions are listened carefully

WEAKNESSES

Faysal Bank Limited has no ATM facility

Faysal Bank Limited has no Credit card facility

The building of FBL is small

OPPORTUNITIES

Information technology

Credit card facility

ATM card facility

Establishing foreign branches

THREATS

There is great competition in the market

Faysal Bank Limited is the first bank which has come under listing in Pakistan. Faysal

Bank Limited has been active in Pakistan since the last seven years and has been in

the forefront in Islamic mode of financing. Faysal Bank Limited has a clear advantage

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over other new banks as the bank did not have to start from scratch, it has access to

already established international network and has mobilized sizable deposits.

Faysal Bank Limited is successful in employee retention, customer satisfaction and

high profit generation because of good services. Happy employees help create happy

customers, which, in the next cycle, reinforce the happy employees, and so on.

Faysal Bank Limited is more than satisfied with its customers. The track record of the

customers is excellent and the repayment procedure is satisfactory. The bank is fully

aware of the financial strength as well as the market repute of all of its customers.

Much of the good reputation of Faysal Bank Limited, is because of the good behavior

and response of the employees of the bank. Good and friendly attitude on part of

workers is the result of excellent management of the bank who believe that people are

the central case of any organization, especially those engaged in providing services to

their customers. As a result of customer oriented policy of the management,

employees have been trained to behave in a very friendly manner with customers.

Environment of the bank also plays an important role in customers satisfaction.

Employees always talk very politely on the telephone because telephone, if not

used properly, can be a cause of spoiling the good name of the organization.

The entire environment of the bank gives the impression that customers are very

important to the bank. They are offered seats even when they come for very small

task.

However, there are some suggestions for improvement.

Establishment of more branches in Pakistan

More advertisement on electronic media.

Introduction of more credit schemes like Rozana Munafa.

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I observed Faysal Bank Limited a financially sound bank. Its profits are increasing

year by year. Its staff is very good and sincere with bank.

Faysal Bank views specialization and service excellence as the cornerstone of its

strategy. The people at Bank realize that innovation, creativity, reliability, customized

services and their execution are the key ingredients for their future growth

They are aware that they have stepped into 21st century and they must meet its

challenges by acquiring the highest level of technology. They will thus be

accelerating their technological advance to enable them to distribute their products

and services through most efficient and high technology means. Online banking

services and introduction of ATMs at strategic locations have been firmed and willbe

fully operational during the year 2003.

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