Internship Report on Askari Commercial Bank 2009-2

8/3/2019 Internship Report on Askari Commercial Bank 2009-2

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www.VU39.comAcknowledgements

First of all I am thankful to Almighty Allah who gave me knowledge and

power to make me able to complete my internship successfully.

I am also thankful to Department of Administrative Sciences Quaid-I-AzamUniversity Islamabad who provide me this opportunity to have an experiencein a reputed organization and groom myself for the future professionalresponsibilities.

I shall also like to wish to acknowled ge and show my deep gratitude to ourrespective teacher, Ms. Mehnaz Khan, for her consistence, advice andsupport given during the writing up of this report.

I offer my heartiest tribute and cordial gratitude to present my thanks to

Mr. Shoukat Hayat Babar Operation Manger of ACBL Multan Branch and Mr.Ateeq ur Rehman Credit Incharge of ACBL Multan for their kind support andcooperation in this project.

To Mr. Farooq Bosan, I owe more than what I can mention.her inspiringguidance, remarkable suggestions, consta nt encouragement, keen interest,constructive criticism, and friendly discussion enabled me to complete thisreport efficiently. Without her support and proper guidance, it would bealmost impossible to accomplish this task successfully.

Table Of Contents

Page No.

Acknowledgements 1

List of Tables 3


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www.VU39.comList of Acronyms 4

Executive Summary 5

Section 1

INTRODUCTION TO ACBL 7

Awards & Achievements 9

The Mission 10

Core Values 11

Corporate Philosophy 11

Code of Business Principles 11

Section 2

REVIEW 12

Credit Department 13

Deposit Department 27

Remittance Department 30

Foreign Exchange Department 39

Section 3

ANALYSIS 46

Financial Analysis 47

SWOT Analysis 49

Strength 49

Weaknesses 49

Opportunity 49

Threat 50


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www.VU39.comSection 4

FINDINGS AND RECOMMENDATION 51

Findings 52

Recommendation 56

List of Person Interviewed 57

Reference 58

List of Tables

1. Organizational Hierarchy

2. Charges of Online Transaction

3. Charges of Letter of Credit

4. Financial Performance

5. Name of Major Withdrawal of Deposits

6. Name of Major Withdrawal of Advances

7. Name of Person Interviewed

LIST OF CHARTS

1. ORGANOGRAM

List of Acronyms


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www.VU39.comAWT Army Welfare Trust

PACRA Pakistan Credit Rating Agency

CLP Credit Line Proposal

EF Export Finance

FAPC Finance Against Packing Credit

FCEF Foreign Currency Export Finance

FIM Finance Against Imported Merchandize

FCIF Foreign Currency Import Finance

LC Letter of Credit

FS Financial Statements

RF Running Finance

CF Cash Finance

CD Call Deposits

TF Term Finance

DO Delivery Order

CSA Credit Sanction Advice

DP Drawing Power

SS Specimen Signature

AOF Account Opening Form

ASDA Askari Special Deposit Account

FISDA Financial Institution Special Deposits Account

DD Demand Draft

TT Telegraphic Transfer


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www.VU39.comPO Pay Order

OBC Outward Bills for Collections

IBCA Inter Branch Credit Advice

IBC Inward Bills for Collections

SBP State Bank of Pakistan

EPB Export Promotion Bureau

FBP Foreign Bills Purchased

FDBC Foreign Documents Bills for Collection

ATM Auto Teller Machine

EXECUTIVE SUMMARY

The Department of Administrative Sciences was established in 1975 and offers Mastersdegree in Business and Public Administration. They are giving the best education and areoffering for specialization, financial management, marketing management and computerapplication to business. An important programmed is six to eight weeks internship withany recognized institution.

I decided to take up Askari Commercial Bank Limited for my internship because itscompeting bank nowadays and gives a good training to the internees. So in order to learnmore this was my choice.

This report is about my internship that I have undergone at Askari Commercial Bank

June 2003 to 10th August, 03. During myLimited Multan Branch from 26 th

internship I am able to learn practical aspect of business, and get good workingexperience.

On the very first day of my internship I reported to Human Resource Manager /

Operation Manager Mr. Shoukat Hussain Babar . He gave me small introduction


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www.VU39.comof the bank and introduced me to the staff of the bank. Every internee is rotatedamong the banks departments and so was I. This rotation is done in order to havegeneral concept regarding banks functions, operations and policies. In thisrotation the stay in department is usually a week. I have learned more about theBills and Foreign Trade department and have given below the caption of activities

I was involved in during the period of six weeks.

During my internship I found that Askari Commercial Bank is a best bank inMultan because most of the Exports and Imports in Multan are done through this bank. Multan is one of the cotton growing cities of Pakistan. Most of thebusinesses in Multan are directly or indirectly linked to cotton that is also the casewith Askari Commercial Banks clients. Because Multan is a Agricultural City,and its major export is Cotton and Mango. So its export is done on seasonal basis.In the season of cotton and Mango export Askari Commercial Bank get its targeteasily but difficult for it to get its target in the off season. Same with the case ofimports, in Multan major imports is Oil Seeds which is also done on seasonal

Basis.

Low profit rates are one of the major reasons for not meeting the deposit targets.The profit rates on Askari deposit schemes are quite low when compared withother banks especially with the National Saving Centers. In today every customersis the rational customer he knows the value of money and wants a best return on

his money.

Earlier Askari Commercial were able to attract customer due to their ancillaryservices like ATM Cards, Credit Cards, Online Banking etc. but now all the banksare offering these services through their own network or through third partycontracting, so our plus points are no more our advantages. So the only thing


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www.VU39.comthrough which ACBL can increase their deposits are profit rates, because the

customers only want maximum profit ontheir investment.

SECTION 1

INTRODUCTION TO ASKARI

COMMERCIAL BANK

INTRODUCTION TO BANK 1:

Askari Commercial Bank Limited (ACBL) works as a Unit of Army WelfareTrust was established for the Welfare of Army Officials. The office of ArmyWelfare Trust is situated at AWT Plaza, Rawalpindi. AWT offers the AWT

Saving Scheme to tharmy officials only. AWThas its units as under:

1. Askari Associates. 2. Askari Leasing. 3. Askari General. 4. Private Business.

5. Textile Mills.


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www.VU39.comKarachi and Lahore. This created its own challenges and opportunities, and forcedus to evolve an outward-looking strategy in terms of our market emphasis. As aresult, we developed a geographically diversified assets base instead of aconcentration and heavy reliance on business in the major commercial centers of

Karachi andLahore, whermost other banks

have theioperational HeadOffices.

Multan is a cotton city, so to get the export market of cotton ACBL open itsbranch in Multan in December, 1994. In a short span of time this branch increasetheir business remarkably. In 2001 this branch gets the trophy of highest profit forthe year 2001. This branch has highest deposits and advances as compare to other banks working in Multan. Now recently this branch gets the trophy of highestimports for the month of July 2003 as compare to all the branches of Askari

Commercial Bank working in Pakistan.

Aw ards & Achievements 2

Over the years, ACBL have received several awards for the quality of our bankingservice to individuals and corporate. ACBL have been declared The Best Bankin Pakistan by the Global Finance magazine for the years 2001 & 2002. Also,ACBL have been given the Best Consumer Internet Bank award for Pakistanby the same magazine for the year 2002. in 1994, 1996 and 1997, ACBL received

Euro money and Asia money awards. Askari has A1+ rating for short-termobligations the highest possible for the category, while the long-term rating

stands at AA . Askari Bank won the prestigious Best Presented AnnualAccounts awards for 2000 and 2001 from the Institute of CharteredAccountants of Pakistan and the Institute of Cost and Management Accountantsof Pakistan , for the services sector. For the past four years, ACBL have received


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www.VU39.comprizes from the South Asian Federation of Accountants for The Best Presented

Annual Accounts for thfinancial sector, in the ASSRCregion.

Over the years, Askari Bank has proved its strength as a leading banking sectorentity, by achieving the following

firsts in Pakistani banking.

I. First Pakistani Bank to offer on-line real time banking on acountrywide basis.

II. First Bank with a nation-widATM network III. First Bank to offer InterneBanking services

IV. First Bank to offer E-Commercsolutions

The Vision 3:

To be the Bank of First Choice in the Region To be the Bank of First Choice in the Region To bethe Bank of First Choice in the Region To be the Bank of First Choice in the Region

The Mission 4

To be the leading private sector bank in Pakistan with an international

presence, delivering quality service through innovative technology and


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www.VU39.comeffective human resource management in a modern and progressive

organizational culture of meritocracy, maintaining high ethical and

professional standards, while providing enhanced value to all our

stakeholders, and contributing to society.

Core Values 5The intrinsic values,

which are corner stonesof our corporatbehavior, are:

Commitment Integrity Fairness

Team-work andService

Corporate philosophy 6

Inspiring Relationships

From knowing our customer requirements to understanding employee needs, fromutilizing modern technology to making responsible social contributions, fromenhancing stake-holders value to practicing corporate ethics We arecontinuously and consistently striving to address newer challenges with a singlemotivation:


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the power to inspire and be inspired

Code Of Business Principles 7

Our Code Of Business Principles is to: Deliver solutions thameet customers financialneeds;

Build and sustain a highperformance culture;

Build trusted relationships withall stakeholders;

Build and manage the Banks portfolio of business to achievestrong and sustainable shareholders

returns; and

Create and leverage strategic assets and capabilities forcompetitive advantage

SECTION 2

REVIEW

CREDIT DEPARTMENT


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www.VU39.comTo give credit is to finance directly or indirectly the expenditure of others against

future payment.

Lending or financing is one of the basic functions of banks of all categories,through which they gain major part of their profits. A bank accepts deposits ofmoney and repays cash to its depositors on demand. But this is not to say that;bank gives this service for nothing. Bank borrows money at a lesser rate of interest

and lends to the borrower at higher rate of interest. And the difference betweenthese two is the profit of the bank.

Credidepartment dealswith all thactivities relatedto giving credito customers.

CREDIT MANAGEMENT CYCLE:

Credit Management is composed of six steps:

1. Proposal 2. Processing 3. Decision

4. Documentation 5. Disbursement

6. Review

PROPOSAL:


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www.VU39.comThe first step in the Credit Management is receiving a credit request, which is alending proposal for the bank each borrower has a purpose for borrowing. Someborrow to fulfill their working capital needs, others wants to finance any project.The customer presents his idea to the banker and wants the information on banksfacilities. Then after collecting information if the customer deems it beneficial he

makes a loan request. This bank customer relationshipshould be mutually beneficial.

PROCESSING OF LOAN PROPOSAL:

Managing a safe, healthy and profitable credit portfolio depends on the quality of judgment exercised by the officer and the depth of their risk associated with thenature of the borrowers business. The banker is supposed to make a judicious judgment, which should be based on a critical study of advance proposals. It isvery much neces sary that the banker should have a complete confidence in theintegrity and ability of the customer to use the money to his advantage and repay it

within a reasonable period. Information must be collected and confirmed byinvestigation and negotiation duringprocessing of the proposal.

In respect of fresh (ending proposal, the CLP is the end result of a series ofinternal and external investigation exercises following the identification of a

potential customer, beginning withthe first call on the customer.

EVALUATION:


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www.VU39.comevaluated and future risk and potentials can be estimated. The analysis can yieldvaluable information about trends and relationship, the quality of company

earnings and its financial strengths andweaknesses.

Financial Statements among other things include balance sheet and incomestatement. Balance sheet represents assets and liabilities of the business at a given

data. Besides showing the ability of the business to service the loans on thestrength of its financial structure. It also helps in evolving secured basis forextending financial support. Apart form showing the profitability of a business,income statements disclose how the business has been conducted and determines

factors behind a rise or decline in the net worth.

VALUATION OF COLLATERAL SECURITIES:

Valuation of collateral securities is an area which is fraught with dangers because

there can be errors of judgment or deliberate over estimation for ulterior purposes.As far as cash and other liquid securities are concerned, there is not difficulty indisposing them of because their merits are self-evident. However, in respect of real

estate, there are somimportant aspects, whichneed special examination.

An additional problem with collateral securities are that there is many securitytypes whose valuation remains subjective because of the fact that there are no

verifiable market prices quoted for them.

When any asset of the customer is taken into charge with the bank, the concernedofficer visits the security and examines the suitability of the security for thefacility required by the borrower. Banker must also check whether there are anyexisting charges on the asset because is that case the institution which has


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www.VU39.comregistered the charge first will have prior claim on the proceeds on the event of

borrowers liquidation.

After that a surveyor examines those fixed assets and estimates their value. Itshould be remembered that not every surveyor is competent to value every type ofasset. So reliable experts competent to assess particular type of asset must carry

out valuation.

NEGOTIATION:

While processing a loan proposal, a banker has to do a detailed negotiation withthe customer, to have first hand knowledge about certain things and then confirmthem. The negotiation phase is very important for creating a safe credit portfolio.The information collected in this phase may include the type of advance, the modeof creating charge over securities, the source of repayment and period for which

the facility is needed.

FUND BASED LOAN:

In this type of loan, funds are directly involved.

RUNNING FINANCE: (R/F)


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www.VU39.comIt is popularly known as overdraft. It is offered for working capital requirement ofthe customer. It is created in current account adjustment from time to time finallyon expiry date. This facility is normally issued against hypothecation ofimmovable property. It is allowed to the borrower under a pre-sanctioned limit. Acurrent account is opened and the conduct of this account is kept under review fora period of three to six months. The borrower can draw cheque on his accountmaximally up to the amount of limit sanctioned to him. The amount outstanding

against the borrower is mark-up will be changed on the basis of the amountoutstanding. This facility is issued on revolving basis repayment should becompleted by the maturity date. Repayment in monthly installments is not

required.

CASH FINANCE: (C/F)

It is also offered for the working capital requirement of the customer. It is the typeof loan in which client is given cash in lump sum it is offered against the pledge ofmoveable property or stock of borrower. In majority of the cases this finance isallowed against pledge of stock. The amount of finance is credited to borrowers

CD account and he/she utilizes it for business purposes. Repayment is not made bymonthly installments. Adjustments are linked with delivery of goods kept under banks pledge. Goods are pledge when the payment is done on delivery order ofthe bank. Goods released are equivalent in value to the repayment amount andremaining goods are stills kept in pledge with bank for further recovery. Goods are

released on the DeliverOrder (DO) by the bank tothe Go down Officer.


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www.VU39.comSight letter of credit. Usance letter of credit.

The sight L/Cs call for the draft to be drawn at sight. Documents negotiated andreceived against sight are held as security till their retirement. Drafts drawn underusance are for a tenure specified in the L/C and are payable by the customer on

due date.

Credit line proposal must clearly state the type of letter of credit the branch isintended to issue.

LETTER OF GUARANTEE:

Guarantees issued bthe bank can b

classified under twobroad categories.

(1) FINANCIAL GUARANTEE:

Bank guarantees the fulfillment of a financial commitment on behalf of thecustomer. Under these guarantees, the bank is called upon to pay in the

event of a breach of terms on the parof the customer.

(2) PERFORMANCE GUARANTEE:

The bank guarantees the due fulfillment of a contract or other work asspecified in the guarantee, by the customer. The amount of guarantee is

usually up to the extent of the value of thecontract.


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www.VU39.com(3) SHIPPING GUARANTEE:

Bank issues guarantee in favor of the shipping company to enable theimporter to obtain delivery of the goods without production of the Bill of

Lading.

MODES OF CREATIN

CHARGE OVER SECURITIES :

Primarily bankers rely on the character, capacity and capital of the borrower inensuring the safety of his funds. The viability of the project itself and its cashgenerating capacity ensure to a large extent the safety of bank funds. But the banker cannot afford to take any risk and hence the reliance is placed on thetangible assets of the borrower. In case of default by the borrower in repaying theloan the bankers interest if safeguarded if he possesses change or right over thetangible assets of the borrower. Loans with such rights conferred upon the bankersare called secured advances. In secured advances, charges are created on thetangible assets in several ways depending upon the nature of assets. Modes of

creating such charges are as follows:1. Lien 2. Pledge

3. Hypothecation 4. Mortgage


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Lien:

Lien has been defined as the right of a person to retain the property of the borrower until a debt due from him (borrower) is repaid. In ordinary lien, theownership of the property under the lien remains with the borrower, although its

actual or the lien remains with the borrower, although its actual or constructivepossession is with the creditor, though the creditor does not have any right to sellit. This is not the case with bankers lien, as a bankers lien is an implied pledgeand the banker has the right to sell the securities under lien after giving a

reasonable notice to the borrower in case ohis default.

Pledge:

The bailment of goods as security for payment of a debt or performance of apromise is called pledge. The relationship of a customer and a banker is this caseis that of a pledger (customer) and a pledgee (banker). The ownership of the

goods, pledgremains with th borrower, whilthe possession iswith the banker.

Bailment is the delivery of goods by one person to another for some purpose, upona contract that they shall, when the purpose is accomplished be returned or

otherwise,disposed of according to thdirection of th person deliverinthem.

Mortgage:

A mortgage is the transfer of an interest in specific immovable property for thepurpose of securing the payment of money advanced or to be advanced by way of

loan, existing or future debt.


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www.VU39.comThe transferor is called a mortgagor and the transferee a mortgagee. The principalamount and the interest of which the payment is secured are called the mortgagedamount and instrument (if any) by which transfer is affected is called the mortgage

deed.

The mortgage does not transfer the ownership of the property and the actual possession of the property is also not transferred. He (mortgagor) transfers only

some of his rights as an owner e.g. He now cannot sell the property without theconsent of the mortgagee.

Hypothecation:

An agreement to give a charge to goods or documents of title without conferring possession is called hypothecation. The goods are charged as security for a loan

form the bank but ownership and possession remains with the borrower. Thesecurity is granted by the borrower to the lender by a letter of hypothecation,

which contains the termsand conditions of thhypothecation agreement.

As physical possession of goods remains with the borrower, the banker s eeksperiodical stock reports from the borrower confirming full description and value ofthe stock hypothecated. In order to prevent a possible loss of stock by fire, theft,dacoity, and the borrower is asked to get his stock insured. The hypothecated stockis liable to be inspected by banks authorized person. The creditor (Banker) has the

right to take possession othe hypothecated goods asand when required.

Repayment of the Credit:(Identify the source of repayment)


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Making a Lending Decision:

Bank credit decision for any proposal has to be very rational one, because there

are many restrictions on monetary and credit expansion by the State Bank ofPakistan and it is no longer within the power of banks to distribute it freely. Creditoffice must learn to make the best use of the banks available deposits bydeploying them in the most productive advances. To make a prudent decision it isrequired that decision should be made only after comparing the benefits availablefrom several competing proposals and agree to finance the proposal which offers arisk-reward combination closest to the standard set out in the Banks CreditPolicy. Before recommending facilities for any customer, banker must ask himselfthe question Why should we lend to this customer in particular? Why not the next

one?

Consideration for Lending Decision:

Usually, the two major considerations for recommending fresh credit facilities arethe business anticipated from the borrower in relation to the funded facilities andprojected earnings from facility utilization by the borrower. In case of renewal ofexisting facilities the consideration is the business received in the past and

earnings and that promised bthe borrower for the followingyear.

Besides these, there could be other supplementary considerations such as deposits

of the borrower, including title, amount, period and profit / interest rate being paidon such deposits is important in order to ascertain the profitability of the overall

relationship.


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www.VU39.comThe entire information will help the decision maker in reaching a conclusion aboutthe relative importance of the customer for the bank. But for making a profitableand safe decision, the information on which the decision is based should be

gathered carefully and checked that thfigures are correct.

After receiving the proposal and processing it by analyzing its all risk-return

characteristics, the credit officer prepares CLP. CLP is the input of the decisionstage, which is used for approval of the proposal. Once the CLP is prepared, firstBranch Credit Committee approves it and then it is forwarded to Head Office,from where the final decision is made. The Credit Officer first uses his judgmentand recommends potential proposals. Then Branch Credit Committee further

screens out risk proposal. In this way a profitable portfolio imaintained.

DOCUMENTATION:

Document shall include any matter written, expressed or described upon anysubstance by means of letters, figures or marks or by more than one of those

means which isintended to be used fothe purpose of recordingthat matter.


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www.VU39.com3. Each page of the document is requi9red to be signed by the

executing person.

4. There should be no cutti9ng, alteration, overwriting or erosion inthe documents. The executing person under his full signature if any,

must authenticate the cuttings.

5. Documents must be completed in all respects. Blank and undateddocuments sometimes pos

serious problems for thbank.

6. Documents when executed should be: a. Properly diaries.

b. Placed in Safe. 7. Documents should not be punchedor torn out.

8. Documents where requiredmust be duly registered.

Maintaining and Balancing the Documents:

Among other activities, maintaining and balancing the documents is also animportant activity of the Credit Department. These documents carry a substantialvalue and create a great problem if any dislocation occurs. Different documentsare of different values. These documents are counted, stamped and properly placedin the strong room of the branch. A separate ledger is maintained for these blankdocuments for accounting purpose. After a s hort time period, the total value of

actual documents is matched with th

balance in the ledger.


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Disbursement:

Procedure of Loan Disbursement:

1. Proper documents, which are legally valid and enforceable at law,are obtained.

2. The concerned Credit Officer in the branches prepares proposal(CLP), it is also known as Credit Sanction Advice (CSA). The purpose of making CLP is to record the required information on itand having approval of the Branch Credit Committee and Head

Office on it.

3. Credit line proposalinclude the followinginformation:

Date of opening. Date of maturity. Nature of the business.

Type of facility. Purpose of facility.


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Source of repayment.

4. There is a Branch Credit Committee in each Branch. Committeeholds a meeting and takes decision whether to give loan or not. Thisdecision is taken by keeping in view all the risks associated with that

borrower.

5. New account with a new account number is opened. Theseaccount numbers are previously fed into the computer if the system

is online.

6. The Drawing Power (DP) is issued to each borrower. DrawingPower depends on

the amount of loanand the period ofinancing.

7. There are two accounts maintained for each borrower, CreditAccount and the borrowers account. In the start, the credit account

has a credit balance equal to thamount of loan.

8. After all other requirements are fulfilled; the loan is actuallytransferred to the borrower by debiting the credit account and

crediting the customer account.

9. Now the borrower can draw the amount from his accountaccording to his allotted Drawing

Power (DP).

10. After a fix time period, on each installment date, borrower has torepay the principal and mark-up. Loan repayment installments arededucted by debiting the customer account and crediting the credit

account.


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www.VU39.comAccount Monitoring Loan Status Review:

Account monitoring system is an evaluation technique intended to provable a basisfor reviewing over all condition of an existing borrower. It will help in identifyingsymptoms of possible problems in the areas of financial or business managementand indicate the need for corrective action to prevent the account form becomingslow moving or eventually delinquent. This exercise of monitoring alerts the

amulets or account manager to the need for appropriate corrective action startingwith a detailed discussion with the borrower to understand the borrowers point of

view on the areas high lighted by thanalysis of the account.

Account Status Review:

In this section, different things about the current status of the account are checked.For instance, what is limit of the account? What drawing power was allotted to the borrower? What is the outstanding balance? Since when the account is inactive?

What is the Net Asset Value?

Account Conduct Review:

This section includes monitoring the account conduct. These questions areanswered for this purpose. The borrower draws cheques of what maximum value?Is post dated cheques drawn by the borrower frequently or not? Is there a default

on interest or mark-up payment?

OTHER FINANCING ACTIVITIES:


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www.VU39.comInstead of giving loan to the general public Credit Department of AskariCommercial Bank performs various activities to facilitate the general people andArmed Forces. Recently ACBL performs various financing activities, which are as

follows:

CREEK CITY: (A project of DHA Karachi)

DHA (Defence Housing Authority) of Karachi has recently announced his newscheme in the name of Creek City. This project is started in DHA Karachi Phase-

VIII. In this project Four types oApartments will be constructed,

Three Bed Apartments

Four Bed Apartments

Pent House with Swimming Pool Pent House without Swimming Pool

The balloting amount of three and four bed apartments are Rs.155000/-, and forboth pent house Rs. 205000/-, out of which Rs. 5000/- are non-refundable. 90% ofthe amount out of Rs 150000/- and Rs. 200000/- are finance by ACBL. Thisamount is repay in the period between 1 to 5 years and the markup rate is 8.5% onthe financed amount. Conditions of financing is that the person must be the the


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www.VU39.comaccount holder of the bank whether that person is salaried class, business class orarmy officer. Askari Commercial Bank takes no security against this financing,

except they accept the promissornote against financed amount.

Askari Banks Personal Finance: 8

Askari Bank recently started a new financing project that is Askari BanksPersonal Finance. According to this financing Scheme only Armed forces can

avail. Following are features of this financingscheme:

Featuring : Loan amounts from Rs. 30000 toRs. 300000 are available.

Repayment period from 1 to 3 years Fixed monthly repaymentLow markup rate i.e 12%

No pre-payment penalties Shortest Processing time i.e 3 weeks Funds may be obtained at any ACBL branch

Some restriction are apply on getting the loan, Your age is between 21 yrs to 57 yrs

You have a verifiablminimum gross monthlincome of Rs 15000/-


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www.VU39.comMinimum length of confirmed service with present employer is at least six

months with a total length of at leasone-year service.

DEPOSITS DEPARTMENT

Deposit is the functional unit of a Commercial Bank. No bank can run itsoperations without deposits. Main function of a commercial bank is to channelizesaving from the savers to the ultimate users of funds. The process of collecting

saving is called Deposit Mobilization.

Two board categories odeposits with reference to timperiod are:

Demand Deposit:

These are payable on demand. They include current account, sundry deposit (e.g.margin account)

and call deposireceipt. No profit isgiven on demanddeposits.

Time Deposit:

Payable on demandwith certain maturity.Attracts profit withrespect to time.

TYPE OF ACCOUNTS:

PLS Saving Bank Account:

Saving deposits were introduction to inculcate and encourage the of saving amongpeople of small means in order to achieves of Islamisation of the banking system


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www.VU39.comin the country, the government authorized the banks to accept Saving Deposit onprofit and loss sharing basis. Deposits received under this scheme are invested innon-interest bearing advances and other avenue so as to eliminate the element of

interest.

Points to Remember:

1. The PLS Saving Account may be opened in the name of an

individual, or jointly in the names of two or more persons. Theseaccounts may also be opened by charitable institutions or gotprovident fund and other funds of benevolent nature by local bodies,autonomous corporations, companies, associations, societies and

educational institutions.

2. PLS SB Accounts can be opened with initial cash deposit of notless than Rs.10000. The amount of initial deposit should bementioned on AOF. A minimum balance of Rs.500 (or as per bankpolicy announced from time to time) will have to be maintained for

qualifying for sharing profit/loss.

3. Not more than one account may be opened in any one nameexcept in cases where such accounts are opened in the name of

parent of guardian for more than one child.

4. Statement of PLS accounts are normally provided once in everysix month as on J une 30 and December 31.

5. No service charges shall be levied on PLS saving account as perSBP prudential regulations.


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www.VU39.com6. Profit on PLS SB deposit is calculated on minimum monthly balanced standing from 6th of the month till the end of the month.The profit is paid on half yearly basis announced by the Head officer

after June 30 and December 31.

7. Zakat at the rate of 2.5% is deducted from the PLS SB accountholders on the 1st Ramazan-ul-Mubarik. Balanced below a certain

limit that is announced by the government every year is exemptedform Zakat.

8. A withholding tax at the rate of 10% on profit is also recoveredfrom the accoun

holders irrespective othe amount of profit.

9. The rate of return on PLS account vary with minimum balance.The rate of return is 1% on minimum balance of up to Rs.9,999, 2%

on Rs.10,00024,999.

Current Account:

A current account is a running account, which is continuously in operation, by thecustomer on all working days of the bank. The customer deposits without the

current deposits without previous notice to thbank.

Points to Remember:

1. Current account can be opened with an initial deposit of not lessthen Rs.5,000. The amount of initial deposit should be mentioned on

AOF. A minimum balance of Rs.---------- will have to bemaintained.


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www.VU39.com2. It is an open account for which there is no fixed period for

deposit.

3. There is no restriction on making deposits in an d withdrawalsfrom this account.

4. Bank does not pay any interest on these deposits, as they can be

withdrawn without notice. 5. Cheques are used fowithdrawals from thesaccounts.

6. Loans and credits may be sanctioned to the credit worthy currentaccount holders with ease.

PLS Term Deposit:

Fixed or term deposits are the major source of funds of a commercial bank. Termdeposits, as the name implies, are deposits kept with a bank for a certain period oftime. They are not payable on demand like the current deposit. The depositor canonly withdraw them after the specified period of time. The persons or firms trust,religious bodies, which have surplus funds keep the money in fixed deposits with

bank. Points to Remember:

1. PLS Term deposit are grouped into the following categories: 1Month, 2 Months, 3 Months, 6

Months, 1 Year.

2. Minimum balanced of Rs.5,000 is to be maintained in PLS TermDeposit.


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www.VU39.com3. Profit on this account is paid on

maturity.

4. Because the deposited amount remains fixed during the period theprofit is calculated on that fixed amount.

5. The rate of interest on fixed deposits is higher than that of saving

deposits and it varies with time of deposit. Rate of interest is 1% on1 Month, 1.25% on 2 Months, 1.50% on 3 Months, 2% on 6 Months,

2.5% on 1 Year.

6. The holder of Term Deposit cannot issue cheque for thewithdrawal of the amount.

REMITTANCE DEPARTMENT

The need of remittance is commonly felt is commercial life particularly and in

everyday life generally. The main function of the remittance department is to


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www.VU39.comtransmit money from one place to another. By providing this service to thecustomer, bank earns a lot of income. Also customer is able to meet its day to day

financial requirements.

Demand Draft:

It is an instrument payable on demand for which value has been received, issued

by the branch of the bank drawn i.e. payable at some other place (branch) of thesame bank. If two banks are involved then the DD is sent to other bank but in

other case it is handed over to the applicant.

Issuance Procedure:

A demand draft application is given to the customer, he fills inrelevant information and signs it.

The officer checks the information form.

The bank charges such as commission, excise duty is charged as

per effective schedule of charges. If he fills the tax exemption form,tax is not charged.

In case of cash deposit, the cashier counts the amount and signs theDD application and enters it in the register.

Then the officer of remittance department signs it and operationmanager counter signs it.

The entry is made in the DD issuing register, DD is given to thecustomer.


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www.VU39.com Vouchers are prepared and posted.

DD advises arprinted and mailed to threspective branch.

Payment Procedure:

The bank receives DD.

The DD credit advice is received through mail. The numbers arechecked and signatures are verified.

An entry is made on the DD payable register and the vouchers aremade.

DD credit is attached with the vouchers and given for posting tothe computer.

When DD is received the test numbers are checked and the

payment is made.

Vouchers are given for posting and the entry that was made in theregister is closed i.e. DD payable is Nil.

Telegraphic Transfer (TT):

It is the quickest way of transfer of funds from one place (Branch) to other place(Branch) of the same bank. Generally, a mail transfer advice reaches the drawerbranch the next day through courier services. But sometimes, a customer demandsthat his funds should be transferred through the quickest means. In such cases,

transfer of funds message is passed through telephone otelegram.


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www.VU39.comThis mode of transfer was used before online. Online system is very effective for

this purpose now-a-days. In AskariCommercial Bankonline system is used.

Issuance Procedure: The request oissuing TT is takenon the standardprinted form.

The customer fills the formproperly and signs it.

The Head of Remittance Department checks it, the charges such ascommission, tax and

telex as per effectivschedule and signs it.

If he fills the taxexemption form then no taxis deducted.

Then a TT is made on white slip. There are 3 copies, the originalone is faxed to the Branch, one to the Head Office and one is kept

for record. The entry is made in the TT issuingregister.

When commission bill is received, it is attached to the TT officecopy in the file.

Payment Procedure:

When a TT arrives, the test numbers are checked and thesignatures are verified.

The entry is made in the TT payablregister.

If there is no account then the TT received needs revenue stampand then payment is

made. TT receipt isstrictly non-

negotiable.


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www.VU39.comPay Order:

It is an instrument issued for payment in same city. Pay order issued from on e branch can only be payable from the same branch. It is normally referred to asbankers cheque. It is also called confirmed cheque, because bank issues this on it

own guarantee.

Issuance Procedure:

The standard form is given to the customer. He fills in the detailsand signs it.

The concerned officer checks the form.

Bank charges (or commission) as per the schedule of charges andthe withholding tax of 0.3% are applied.

The cash amount of the pay order isreceived.

A cash memo is signed, stamped and handed over to the applicantas a receipt.

Then the pay order receipt is filledaccordingly.

Counter foil is also filled. An entry is made in the pay ordeissue register.


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www.VU39.com Then th

authorized officesigns it aftechecking the paorder.

The order is then handed over to the applicant after obtaining his

signature on the PO Form. A voucher is also made andposted at the computer.

Payment Procedure:

On presentation of the pay order receipt, two authorized officers of the branch signthe receipt.

PO entry is made in the PO issuregister.

Then the amount is credited to the account of the customer or pain

in cash. PO is posted at the computer. Pay Slip:

It is an instrument issued by the bank for the settlement of its own payment. It isused for payment by the bank to anyone (may be employees) in this case only one

bank is involved. He is the issuer as well asthe payer.

No Excise DutyNo Commission

Issuance:


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A credit voucher is sent from the account department to theremittance department.

Pay Slip book is taken out and filled according to the creditvoucher.

It is entered in the pay slip register.

It is signed by authorized Officer. A voucher is prepared and posted. Pay Slip is then handed over to thcustomer.

Payment Procedure:

Pay Slip is just like a cheque and bank is liable to pay against payslip.

After that when the pay slip is received by the bank for payment, it

is again transferred in the register. Then payment is madand it is posted in thcomputer.

Outward Bills for Collection:

The bills, which are received by the bank and sent to other cities (branches) for thelocal clearing in that city, ar

called Outward Bills forCollection.

Procedure:


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www.VU39.com The cheques that are of othe

cities are separated.

They are entered in the OBC Register and OBC numbers are givento them.

The OBC forwarding schedules are prepared for different

branches. The respective cheques arattached with the schedule. The office copy is filledand original schedule ismailed.

On clearing, the respective banks send back the OBCs alongwiththe IBCA (Inter Branch Credit Advice).

The OBC numbers are checked from the OBC register, after that

entries are made. Commission charges ardeducted from the account.

Inward Bills for Collection:

The bills, which are received by the bank from other branches out of the city forlocal clearing are called Inward Bills fo

Collection. Procedure:

The OBC of other branches will be the IBC of this branch. So an

OBC forwarding schedule is receivedby mail.

The cheques are entered in the IBC register. The IBC numbers areallotted to them.


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www.VU39.com The cheques are lodged for clearing.

After realization, an IBCA is prepared and mailed to the branchfrom where the cheque was received.

At the end of thday, two vouchers arprepared and posted.

ON LINE TRANSACTION:

Askari Bank has provided the facility of on line transaction. In this case theaccounts and their details in the other branches of ACBL can be displayed oncomputer which is connected through server to the computer at the other end.Commission is charged on providing this service this is beneficial as it takes verylittle time in the transference of funds. This facility is available all the branches ofAskari Bank except Bhai Pheru Branch. Following charges are deducted in online

transaction:

Table 1

Charges

Amounts


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www.VU39.comUp to - Rs. 25000/-

Rs. 50/- Rs. 25001 - Rs. 200000/-

Rs.100/-Rs. 200001 - Rs.

Rs. 500000/-

250/-Rs. 500001 - Rs.Rs. 2000000/-

500/- Rs. 2000001 Above

Rs.750/-

ATM:

Automated Teller Machine (ATM) is facility provided by the Askari CommercialBank Limited Multan Branch. There are certain requirements, which are to befulfilled, buy the person before he can have ATM card. There is a need of primaryaccount number and then the secondary account number. The primary accountnumber is the regular account number as maintained with the bank of the personand the bank on which the card is issued gives the secondary account number.Apart from this there is Personal Identification Number (PIN) without which ATMcannot be operated. The person can change the PIN from time to time so that thereis no chance of fraud in his account. If someone gets to know the PIN of the ATMof a certain person he can operate that easily so the PIN should not be disclosed to

anyone. In case the card of a person is damaged or the person loses his card, then


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www.VU39.comcharges of Rs.100/- are taken and a new card is issued by the Head Office. In caseof replacement, the charges are Rs.100/- and in case of faulty card means when thecard is inserted in machine and on the screen the caption faulty card is written thenno charges are taken by the bank for the issuance of new card. This branch hasissued almost three thousand five hundred cards. This beneficial because if a

person wants to drawsome amount he can

easily do it after bankinghours.

CLEARING:

Meaning of clearing:

The word clearing has been derived from the word Clear and is defined as asystem by which banks exchange cheques and other negotiable instruments drawon each other within a specified area and thereby secure payment for their client

through the clearing house aspecified time in an efficient way.

Advantages of Clearing:1. Since clearing does not involve any cash etc and all thetransaction take place through book entries, the number of

transactions can be unlimited.

2. No cash is needed as such the risks of robbery, embezzlementsand pilferage are totally eliminated.

3. As major payments are made through clearing, the banks canmanage cash payment at the counters with a minimum amount of

cash in vaults.


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www.VU39.com4. A lot of time, cost and labor are saved.

5. Since it provides an extra service to the customers of bankswithout any service charger or costs, more and more people are

inclined and attracted towards banking. Clearing House:

It is a place where representatives of all scheduled banks sit together andinterchange their claims against each other with the help of controlling staff ofState Bank of Pakistan and where there is no branch of State Bank of Pakistan thedesignated branch of National Bank of Pakistan acts as controlling member

instead of State Bank of Pakistan.

Working of clearing house:

All the bank which are the member of clearing house maintain accounts with StateBank of Pakistan by debit and credit to which the clearing settlements are made. Ifon a particular day, a bank delivers cheques and other negotiable instrumentsworth more than the total amount of Cheque received by it that banks accounts

with State Bank of Pakistan will be credited with the differential amount. If on theother hand the total amount of cheques and other negotiable instruments draw on acertain bank by other bank is more than the total amount receivable by it from

other banks, then this banksaccount will be debited on that day.

The cheque delivered to the representatives of other banks for clearing are calledoutward clearing, whereas cheques received from the representatives of other

banks for payment are called inward clearing. Procedure of Settlement:


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www.VU39.comPresume that ACBL got the cheques which are drawn on HBL, NBP and MCB foramounts Rs. 50,000/-, Rs. 15,000/- respectively, its total being amountsRs.95,000/-, it means that this amount is to be credited to ACBL A/C with S.B.P.on the other hand the cheques drawn on ACBL are from HBL, NBP and MCB ofRs.15,000/-, Rs.75,000/- and Rs.30,000/- respectively, its total being Rs.1,20,000/-, it means that this amount is to be debited from ACBL account. The difference between Rs.95,000/- credit and debit Rs.1,20,000/- debit is Rs.25,000/- debit

which means the house is against ACBLfor Rs.25,000/-.

If we separately show it them.

1. ACBL has t receive Rs.50,000/- from HBL and to pay Rs.15,000/-to HBL so difference is Rs.35,000/- credit.

2. ACBL has to receive Rs.30,000/- from NBP and to payRs.75,000/- to NBP so

difference is Rs.45,000/- debit.

3. ACBL has to receive from MCB Rs.15,000/- and to payRs.30,000/- to MCB so

difference is Rs.15,000/- debit. GRAND TOTAL:

35000-45000-15000 = -25000 i.e. Rs.25000 debit.

Hence ACBL A/C with State Bank of Pakistan will be debited with Rs.25,000/-and the contra will be other banks accounts respectively. This called as Debit and

Credit Rule.


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www.VU39.com

Outward Clearing At The Branch:

The following points are to be taken into condsideration while an instrument isaccepted at the counter to be presented

in outward clearing: 1. The name othe branch appearson its face where iis drawn on

2. It should not be stale or posdated or without date

3. Amount in words and figures doesnot differ

4. Signature of thdrawer appears on the fac

of instrument 5. Instruments is not mutilated

6. There should be no material alteration if so, it should be properlyauthenticated

7. If order instrument, suitably endorsed and last endorsees accountbeing credited

8. Endorsement is inaccordance with thcrossings if any

9. The amount of the instrument is same as mentioned on the paying-

in-slip and counterfoil


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www.VU39.com10. The title of account on the paying-in-slip is that of payee or

endorsee (with the exception of bearecheque).

If an instrument is in order then out banks special crossing stamp is affixedacross the face of the instrument. Clearing stamps is affixed on the face ofthe instruments, paying-in-slip and counterfoil (The stamp is affixed in

such a manner that half appears on paying-in-slip and half on counterfoil).The instrument is suitably discharged, where a bearer cheque does notrequired any discharge and also an instrument in favor of a bank need notbe discharged. The instrument along with paying-in-slip is retained whilethe counterfoil is given to the customer duly signed. Then the following

steps are to be taken:-

1. The particulars of the instruments and the and the pay-in-slip or credit vouchers are entered in the Outward Clearing

Register. 2. Serial number is given to eachvoucher

3. The register is balanced, the credit voucher are separatedform the instrument and are released to respectivedepartments against instrument and are released to respective

departments againsacknowledgement in thregister

4. The schedules are arranged bank-wise

5. The schedules are prepared in triplicate, two copies ofwhich are attached with the relevant instrument and the third

is kept as office copy


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Foreign Exchange Department works like the general bank departments with thedifference that it deals in foreign currency. This department deals with the

following:-

Import Export

Foreign Currency Accounts Foreign Remittance Submission of Monthly Reports toSBP

IMPORT:

The international trade transaction, in which one country buys goods from othercountry, is called import.

The import trade in Pakistan is governed by import and export Act of 1950.Previously, the regulating body of imports was controller of Import and Export.

But this function has been shifted toExport Promotion Bureau.

Foreign Exchange Departments of all banks are restricted to word under the rulesand regulations of government.

Import License and Registration:

The individuals and firms who desire to import goods from the foreign countriesare required to obtain import license. Import licenses are a type of artificial


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www.VU39.comrestraint on the import trade of a country. To acquire import license, the importerhas to submit applications to the licensing authority. The importers can only gettheir merchandize cleared from the custom authorities if they have the importlicense duly issued in their names. The import licenses issued by the Import Trade

Controller are required tobe registered with the StatBank of Pakistan.

Contract of sale:

After getting the license, the importer then negotiates with the exporter. Whenthey reach to an agreement on all terms of sale, they sign a contract. Thus contract

includes all information of terms andcondition of sale.

Letter of credit:

Foreign trade payment problems are mainly solved by a letter of credit. A letter ofcredit is issued by the importers bank. If guarantees payment to the exporter up tospecified amount of money provided the terms and conditions laid down the L/C

are fulfilled.

A letter of credit is a commitment on the part of buyers bank to pay or accept draftdrawn upon it, provided drafts do

not exceed a specified amount.

A letter of credit thus is a (I) written undertaking by an importers bank toexporters bank. (II) that it will pay or accept draft drawn upon it up to a statedamount with a specified time. (III) the payment will only be made to the exporter

if he compliers with the terms of credit.


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www.VU39.comParties to a letter of credit:

There are four parties involved in letter of credit.

1. Account party: The buyer or the importer on whose account andrequest the letter of credit is opened is known as account party or

opener.

2. Issuing bank: The bank which issues or opens a letter of credit atthe request of importer is called issuing

bank.

3. Exporter or seller : The seller or the party in whose favor L/C isdrawn is the exporter. He is also

called beneficiary.

4. Negotiating bank: The paying bank in the exporters country, onwhich the draft is

drawn is called

negotiating bank opaying bank.

Opening of letter of credit: The main steps involvedin the opening of the letteof creditor as follows:

Application for letter of credit:

The importer will request his own bank or any other bank, which deals in foreigntrade transactions to issue a letter of credit in favor of the exporter. He will preparean application on the prescribed form available from the bank. The information,

which are supplied in the application are based on the contract of sale and includeonly the important feature of contract, such as value of merchandise, port ofshipment, documents to be presented, port of unloading, brief description of

goods, import license etc.


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Scrutiny of application:

Before issuing a letter of credit, the bank will scrutinize whether the importer is ofgood financial standing, possesses the import license issued by import control.Authorities, the amount available covers the letter of credit applied for, market

demand of goods, collateral offered tocover the credit etc. Cash margin:

The bank asks the importer to deposit cash or securities with the bank. The propermargin of cash or securities to be deposited is decided by the bank depending upon

the credit worthiness of the importer. Issue of the letter of credit:

The importer bank after being fully satisfied will issue a letter of credit in favor ofthe exporter. The L/C may be sent directly to the exporter or the advising bank inthe exporters county. In such a case, the advising bank will inform the exporter

about opening a letter of credit.

Shipment of goods:

When the exporter receives L/C, he examines it to ens ure that it conforms to theterms of contract of sales. He then shifts the goods and presents all required

documents along with the bill to negotiating bank. Role of negotiating bank:


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www.VU39.comThe negotiating bank after receiving all the documents and the bill from theexporter will scrutinize them whether these conform with the terms of letter ofcredit. If the documents of title accompanying the bill are in order, these will be

sent to the importers bank for payment.

Liability of the issuing bank:

On receipt of documents and the bill, the issuing bank will examine them. If the

documents on the face appear to be in order, the payment would be released by thebank. In case any defect is found in the documents and the draft is honored by theissuing bank the importer can claim damages on the issuing bank. The issuing bank is only accountable for the completeness of documents, not to see whether

goods conform to the contract of sale.

Payment by importer to the bank:

First the importer pays all his obligations the bank then bank releases thedocuments. In case of sight draft, the importers bank pays the amount on the sameday charging the importing customers account. In case of a time draft, theimporter discharges his obligations to the accepting bank on or before the maturitydate of acceptance. The accepting bank will then release all the shipping

documents to the importer. Payment to the exporter:


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www.VU39.comThe exporter can obtain payment from the negotiating bank by discounting thedraft (L/C) immediately after shipping the goods and obtaining shipping

documents. Charges of Letter of Credit:

Table 2

Each Sub-

First Quarter orCash LCs Minimum sequent

Quarter

Part Thereof

or Part thereof

CommissionCost to Rs. 5M 0.30% Rs. 1000/-

0.40%

Cost over Rs.5M to Commission

0.25% Rs. 15M 0.35%

Cost above Rs. Commission0.20%

15M to Rs. 25M 0.25%

0.15% Or subjectCost in excess of Commission to negotiation and

Rs 25 M 0.20% approval fromCredit Division

EXPORT:


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www.VU39.comThe international trade transaction in which one country sells its goods to other

country is called Export.

The controlling body of export in Pakistan is Export Promotion Bureau, it givesdifferent incentives to the businessmen for enhancing the exports and reducing theBalance of payment deficit. It restricts the export of some goods and reinforces

export of other.

The steps involved in import are described earlier from the importers point ofview. The procedure of export is same, as it can be described from exporters point

of view. The activities, which ardifferent, described here.

FOREIGN BILL PURCHASED (FBP):

Following requirements must be fulfilled before the purchase of Foreign ExportBills.

Exporter should be account holder of the bank. Bank issues the Form-E. Form-E

should be filled correctly and then bank authenticates the E-Form. Exporter goesto the custom authorities for custom clearance. Shipping Company issues Bill ofLading or Airway Bill. Exporter should bring other documents like certificates of

Origin, commercialinvoice, packing lisetc. Bank scrutinizesthe documents.

After fulfilling these requirements, bank purchases the export bill and makespayment for the value of goods in Pak

Rupee to the Exporter.

Lodgment:


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www.VU39.comthis function for the convenience of exporter. In this function bank performs as a

intermediary party.FOREIGN CURRENCY ACCOUNTS:

A depositor can open account in US Dollar, Pond, Japanese Yen and Euro withnominated branches. For opening of account a Form is provided to theperson/party, introduction of the new account holder or by the Officer of the Bank.

Procedure of opening foreign currency accounts is same as other accounts. NoZakat is deducted on these accounts, no income tax deductions, no wealth taxdeduction will be there, these incentives reinforce and motivate the people to

invest in foreign currencaccounts rather to keepforeign currency idle.

1. Foreign remittance:

Bank also operates in Foreign Currency accounts. In accordance with instructionsof SBP, foreign currency accounts are opened in these currencies: US Dollar,Pond, Japanese Yen, Euro. Funds are transferred abroad by Foreign Telegraphic

Transfer Swift MT-100 is used for this transfer. Askari Commercial Bank has itsagency arrangements in those countries, where its own branches are notestablished. Its agency arrangements with Citi Bank, American Express, ABN

Amro, Standard Chartered Bank.

SUBMISSION OF MONTHLY RETURNS:

It includes reporting of Form-M and Form-E toSBP.


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www.VU39.comReporting of Form-E:

Every Exporter is required to submit a declaration to custom authorities for goodsexported. This declaration is submitted on prescribed Form-E in quadruplicate,which is certified by authorized dealer. Four copies of Form-E are maintained.Form-E is reported to SBP at the end of the month, in which the amount isrealized. There is a prescribed Performa used for the reporting of Form-E. It

includes the reporting period, currency, Serial No. of Form-E, amount, Code No.of country and commodity.

Reporting of Form-M:

Every foreign bank deducts some charges form the value of goods. It is formiscellaneous purposes like foreign bank charges or foreign agent commission.Form-M is used to declare this outflow of foreign currency. At the end of themonth of realization of the amount, Form-M is reported. It includes the list of

Serial No. amount and purposes of every Form-M.

SECTION 3ANALYSIS


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www.VU39.comFINANCAIL ANALYSIS 9

ACBL achieve the best annual reports of services organization award in 2002. Thereport show that the ACBL increase its Profitability for last five years. Following

are the financial analys is

obtains from the annual report oACBL.Table 3

Rs. In Million 1998 1999 2000 2001 2002

PROFITABILITY Total Income 4035 3889 3840 50475704

Interest Income 3475 3350 3213 4251 4655Interest

Expenditure 2511 2486 2274 2902 3017Fee, Comm. &

Exchange Income 509 472 506 677 802

Other Income 51 67 122 119 247 Spread 965 864 939 1349 1638

OperatingExpenses 569 589 680 854 1093

Profit beforeIncome Tax 854 712 752 1008 1244

Income tax on profit 495 430 436 458 557


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www.VU39.com profit after taxation 359 282 316 551 687

TotalShareholders'

SHAREHOLDERS'

funds 1937 2046 2155 2579 4173 FUNDS

Share Capital 986 986 986 1036 1087

Reserves 951 1060 1229 1521 1939CustomerDeposits 23417 24358 30360 41200 51732

LIABILITIES Refinance borrowings 2194 3145 2882 3222 3392

Other Liabilities 1184 1477 3058 3980 11016Loans and

advances 9708 13056 17893 23292 30035 Investments 13888 8679 8651 11706 26759

Cash, short termfunds and

statutory deposits ASSETS with SBP 3504 7210 10056 13436 10020Property, plants &

equipments 501 536 641 723 1663 Other Assets 1130 1546 1213 1824 1835 Total Assets 28731 31027 38454 50980 70313

Rs in Billion Imports 11.5 17.5 26.2 32 40.2

BUSINESS

Exports 20 22.8 30.6 38.8 47.3 TRANSACTED

Guarantees 3.2 5.3 4.8 6.2 14.2


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www.VU39.comPercentage

Return on averageshareholders'

funds (after tax) 19.3 14.2 15 23.2 20.3Return on average

assets (after tax) 1.4 0.9 0.9 1.2 1.1Rate of cash

dividends 20 17.5 15 20 20Advances to

RATIOS

deposits 41.5 53.6 58.9 56.5 58.1Property, plants &equipments toaverageshareholders'

funds 27 27 30.5 30.5 49.3Capital adequacy

ratio 16.98 13.2 11.95 10.78 12

Rupees Earning per share 3.6 2.9 3 5.06 6.32SHARE

Net Assets perINFORMATION

share 19.64 20.75 21.85 24.9 38.38 OTHER No. of employee 996 1001 11471281 1456

INFORMATION No. of Branches 27 28 29 36 46

SWOT ANALYSIS


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SWOT (Strength, Weaknesses, Opportunities & Threats) analysis of ACBL isdescribed below:

Strength:

ACBL has got a well-developed on-line system in most of its branches. Remittance Department is working very efficiently intransferring the funds of peopl

due to this system.

The bank has also started ATM facility in most of its branches.24-hour banking is new trend in Pakistan and ACBL has also taken

apart in this trend.

One distinctive feature of the bank is that it is the only bankworking for the welfare of army officers, which was established by

Army Welfare Trust.

The productivity of the bank is very good. Bank is providing ahigh quality service to its customers.

ACBL have strength that most of the imports & exports whichare done in Multan are handle b

ACBL Multan.

Weaknesses:


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www.VU39.comACBL has lesser number of branches as compared to many

other branches. Due to this problem, army officers can not avail thebenefits of their own bank.

The human resource department is not performing the functionof selection and recruitment very effectively. Selection process is not

on merit due to which

competent persons cannobe selected.

Bank is not introducing new products and new saying schemes.Bank should boost the product development and increase the range

of facilities offered for customers.

Bank is weak in its credit management. Bank should lend tovery sound parties and increase its

payment rate. Opportunities:

Govt. is taking very bold steps to promote IT in Pakistan. ACBLhas an opportunity to improve in

technology.

Stock exchange is very volatile and takes immediate effect. So,in the time o

crises,conservativeinvestors returnto saving

deposits.

ACBL is surrounded by many competitors. It has an opportunityto do aggressive marketing to

increase its business.

Threats:

ACBL has many competitors, which are continuously increasingits products and marketing aggressively. It may cause its customers

to shift to competitors.


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www.VU39.comSome other banks have competent taskforce, which is also a

threat for ACBL. Because human resource is the most valuableresource.

Pakistan India relations often create a war danger. This chance ofwar may cause army officer and their families to increase the

frequency of withdrawals,

which would decreasdeposits.

In Multan Imports & Exports business are done on seasonal basis.Which effect the whole business o

ACBL Multan.

SECTION 4

FINDINGS AND RECOMMENDATION

FINDINGS

Following are th

problem face by thACBL MultanBranch since lasquarter.


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www.VU39.com Deposit Decreased Advances Decreased

Import Decreased Reasons For Decreasing Deposits

The major reasons for decreasing deposits are Low Profits Rates as compare to otherbanks:

Low profit rates are one of the major reasons for meeting the deposit targets. The profit rates on ACBL deposit schemes are quite low when compared with other banks especially with the National Saving Centers. In todays every customers isthe rational customer he knows the value of money and wants a best return on his

money.

Earlier ACBL was able to attract customer due to their ancillary services likeATM Cards, Credit Cards, Online Banking etc. but now all the banks are offeringthese services through their own network or through third party contracting, soACBL plus points are no more their advantages. So the only thing through which

they can increase their deposits are their profit rates, because the customers onlywant maximum profit on their investment.

Due to the increase in foreign remittances there are ample opportunities for gooddeposits but a knowledgeable customer always invest in the stock exchange thatare not only growing day by day but are also giving handsome profits in the shapeof dividends and stock trading. The left behind deposit is invested in that financialinstitution which provides him handsome return/profit, like national savingschemes and investment bank. Now in the stock exchange that are not only day by


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www.VU39.comday but also giving handsome profits in the shape of either in dividend or the stocktrading. APBUMA and HQ2 corps are the main accounts that s hifted to other banks due to our low profit rates. They totally withdraw approximately 40 M

during the 2nd quarter.

Under lien deposit have been withdrawn:

High rates on advances against lien deposits have been one of the major reasonsfor deposit withdrawals. On of ACBL customers Mr. Awais account number01165007017 deposited 50 million in ACBL on which he was getting 3.0% profitrate (quite low as compared to other banks). Later he was given loan against thatdeposit by making the account under lien at 7.5% markup, but he got a good offerfrom other bank that bank not only gave him the good deposit rate of 5% but alsooffer him the loan against deposit at lower rate them Askari Bank. Due to this dualadvantage he shifted his deposits to that bank and his account decrease a net

withdrawal of 21million during a period of 1st April2003 to 310, Jun2003.

1. Major Withdrawals

Table 4

Account Withdrawal during

Account #

Title the period 01-04-


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www.VU39.com2003 to 30-06-2003

HQ20110006592 23 M

CORPS

M.

0116507017 21 M AWAIS 0110058739 APBUMA 17 M

Reasons for Decreasing Advances:

Seasonal Business:

Multan is one of the cotton growing cities of Pakistan. Most of the businesses inMultan are directly or indirectly linked to cotton that is also the case with ACBLclients. Most of ACBL clients are from textile sector which borrow for 4 months

as so, i.e October January. During this period all ACBL major clients thatinclude Fazal Cloth Mills, Ahmed Fine, Hussain Mills, Fatima Enterprises etc. areusing their limits to the full as they have to buy and stock the cotton for wholeyear for further processing later in the month came. So ACBL will be able to

achieve the targets later in the year.

That is also the case in Oil Seeds business (other major business sector in Multan).They usually borrow during the period of April to July and their borrowing is to

full extent in the month of July.


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High Rates of Markup:

Another reason of shortfall/low lien advances is the high rate of markup, which ischarged to clients. Due to high markup rates, many customer are running their

business to othe

banks which aroffering them low ratesas compared to us

. Prepayment of TF dueto Non competitive

Markup Rate:

Due to high markup rates, some of the parties to whom TF was given are adjustingtheir TF in advances as they are able to get TF at better rates as compared toACBL. One of the example is that of Ahmed Fine (Pvt.) Ltd. who have adjustedtheir TF in advances due to high rates. Due to that ACBL have not only lost the

profit but also the other business from the client.

Non Introductory of MoneyMarket Transaction:

When the banks have more liquidity and they have more deposits with them thanthey can lend to customer or float in the stock market then they lend them to other banks for short period of time usually of 30 to 90 days. This is money markettransaction. The rates on these money market transactions are lowest in the marketand ranges between 1.2% to 1.5%, but now the banks due to high liquidity havestarted to offer the money market transaction rates (with slight increase) to theircustomer which are highly liquid companies for short term period i.e. 30 to 90days. Their payments and repayments are done in full. Our big groups borrowfrom other banks at money market rates and pay to us when they want their stock


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www.VU39.comand later they pay to that bank at quite a low rate, which they would have to payus. Askari Bank has not started these transactions, so ACBL are loosing their

customers.

2. Major withdrawal:

Table 5

Withdrawal

during the

Customer

Facility period 01-01-

Name2003 to 30-06-

2003

FATIMAENTERPRISE FIM $ FCF FE-25

$7,785,820

S

FAZALFAPC $ FCF

CLOTH$2,658,708

PART I FE-25 MILLS LTD.

AHMEDFINE FAPC $ FCF$ 3,005,000

(Pvt). Ltd. PART I FE-25

SHUJUABADFIM $ FCF FE-25 $ 2,000,025

OIL


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FATIMAENTERPRISE CASH

FINANCE Rs. 13,000,000

S

Reasons for shortfall of Imports:

Seasonal Business:

The reason of decreasing imports is also seasonal business done in Multan. ACBLmajor clients doing the import business are Oil seeds Companies. ACBL majorclients are Khawaja Bashir and Sons, Shujabad Oil etc. they mostly import the inthe period between July and March. So most of import business is done in the last2 quarters of the year, because they need raw material between the above-mentioned period for producing the Oil. During the month of July ACBL Multan

Branch are going to open the LCamounting to Rs. 450 million.

RECOMMENDATIONS:


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www.VU39.comis not good. So the ACBL Multan Branch have need of good, honest, skilled

young employees who can increasthe efficiency of the bank.

RECORDING OF SOURCES

REFERENCES

Reference # 1-7 & 9

from Annual Report o

ACBL 2002

Website of ACBLwww.askaribank.com.pk

Reference # 8 from Broachers of Askari Bank PersonalFinance Scheme

Schedule of Bank Charges Report


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Internship Report on Askari Commercial Bank 2009-2

Documents

Transcript of Internship Report on Askari Commercial Bank 2009-2