Malik Asad Pervez's Internship Report on Askari commercial Bank Limited

7/30/2019 Malik Asad Pervez's Internship Report on Askari commercial Bank Limited

1/43

1

An Internship Report

PREFACE

As a student of BBA (Hons), it was my desire to have a practical experience of my education and

knowledge which I got in my university life. This internship program which I completed

successfully has fulfilled my desire and was quite helpful in perfecting deficiencies of my

bookish knowledge and concepts. The purpose of this training program is to offer an opportunity

to the students for acquiring experience about the organization set up of well-organized

organizations. Consequently I opted for Askari Bank Limited, Fakhr-e-Alam Road Peshawar for

my internship program because Askari Bank is one of the well-established financial institution

and it is playing a key role in the mobilization of national financial resources and hence

developed a sense of investment in the society.

Asad Pervez

BBA (HONS)


2/43

2


DEDICATION

This Report is dedicated to

My Dear Parents

My Dear Friends

And

My Honorable Teachers

Whos Guidance; Prayers & Support is Always With Me.


3/43

3


ACKNOWLEDGEMNTS

I offer my humblest thank to Almighty Allah and Hazrat Muhammad (PBUH) from the core of

my heart that they always provided me guidance and blessings which are uncountable. This task

was assigned to me as a student of BBA (Hons) and I complete this task with my full

concentration and devotion.

I am thankful to Assistant Professor Mr. AhsanEjaz Edwards College Peshawar, Mr. Muhammad

Ehtisahm, officer grade 1 and Mr. Esrar Ahmad Shinwari Management Trainee Officer at Askari

Bank Peshawar; because they supervised my writing activity and their cooperation and guidance

helped me to achieve my target.

I feel pleasure to admire all the management of Government College of Management Sciences

Peshawar for their tireless efforts for the betterment of the students and provision of better

educational atmosphere. I am also thankful to all staff members of Askari Bank Peshawar for

their help and guidance.

I am highly indebted to my course instructors who provided not only an opportunity to learn

about practical work and its implementation but also guide me through email for its completion. I

am very great full to my Teachers who always helped me.

I am also thankful to my parents who always supported me to do my work efficiently and

effectively in all fields of my life.

Special thanks go to my friends who have always helped me and supported me.

Asad Pervez

BBA (HONS)


4/43

4


EXECUTIVE SUMMARY

This work projects the emphasis on the working as an internee in a bank. It is the requirement of

every business graduate that he/she should get practical exposure by joining organization related

to his/her specialization. My specialization was in finance so, I choose Askari Bank to get

financial exposure in practical and the experience as an internee in Askari Bank Limited has

given me the exposure to the financial world. My report includes the introduction of banking

sector in Pakistan. It goes beyond saying that banking is one of the most sensitive businesses all

over the world. Banks play very important role in the economy of a country and Pakistan is no

exception. Banks are custodian to the assets of the general masses. It is the banking sector which

plays a significant role in a contemporary world of money and economy.

It influences and facilitates many different but integrated economic activities like resources

mobilization, poverty elimination, production and distribution of public finance. Whether it is

purchase of a car or building of home, bank is always there to serve you better. Whether its a

playground or any educational or healthy societal activity, the money from banks nurtures them.

Similarly, in case of an industrial project or agricultural development of the country the sponsor-

ship of banks plays a pivotal role. In a nutshell, banks play a very positive and important role in

the overall economic development of the country.

Pakistan has a well-developed banking system, which consists of a wide variety of institutions

ranging from a central bank to commercial banks and to specialized agencies to cater for special

requirements of specific sectors. The country started without any worthwhile banking network in

1947 but witnessed phenomenal growth in the first two decades. By 1970, it had acquired a

flourishing banking sector. State Bank of Pakistan now acts as a nucleolus in the financial system

of the country. It is the linchpin of countrys banking system. Today, a central bank is the central

arch of the monetary and fiscal framework in many countries of the world and its activities are

essential for the proper functioning of the economy and critical for the fiscal operations.

The present structure, operation and authority of the SBP originate from the SBP Act 1956. State

Bank of Pakistan is entrusted with the prosperity, stability, and growth of the domestic economy.


5/43

5


It is sole bank of issue, holder of gold and currency reserves, banker to the government, lender of

the last resort to commercial banks and supervisor of the others banks. It is also responsible for

National Credit Policy.

In October 1993, complete autonomy was granted to SBP. It was the milestone in the history of

SBP. Main reason of its full autonomy is to assume increased independent inputs in

macroeconomic policy making of the country. Autonomy granted to the SBP has strengthened its

supervisory and regulatory powers now all the financial institutions have also been under the

supervision of SBP.

Improvements to better understand the need of the customers. The threats always remain there

for every business, and the business which fails to address its threats goes down by the time. So

identifying those threats was also the part of this report. Lastly in this report I have presented

some of my suggestions and made recommendations for improvement. On the whole, this report

is a sincere effort of understanding the financial markets with the aspect of marketing. I have

done a sincere effort to project my work truly with the facts, knowledge and the skill gained

through the practical experience of internship in Askari Bank Limited.


6/43

6


CHAPTER 1:

INTRODUCTION OF THE REPORT

1.1 Background of Study:Banking sector is one of the examples of financial institutions which can play a very vital role in

development of the overall economy of a country. Banking sector has now become a very

challenging field with the advent of modern technology and increased competition.

The banking sector has witnessed a dramatic change during the last ten years with the

development of Askari Bank, which is not only redefining priorities and focus of the banks, but

also threatening the domination of traditional players.

Nationalization of Banks was not done since 1st

January 1974 under the Nationalization Act 1974

due to certain objectives. But it had negative effects on the efficiency of the banking sector.

Afterwards, a Privatization Commission was set up on January 22, 1991. The commission

transferred many banks to the private sector, i.e., MCB and ABL. The government approved and

permitted the establishment of 10 new private banks in August 1991. Hence many new private

banks have incorporated since then. Askari Commercial Banks is one of the namely established

private scheduled banks. It is a branch ofArmy Welfare Trust (AWT).

Army Welfare Trust (AWT):

Army welfare trust was established mainly for the welfare of army officials. The office of army

welfare trust is situated at AWT Plaza, The Mall Rawalpindi. AWT offers the AWT Saving

Scheme to the army officials only. AWT has following units:

Askari Associates Askari Leasing Askari General Insurance Private Businesses Textile Mill Cement Industry


7/43

7


PetroleumAskari Association deals with the shareholding. Askari General Insurance &Askari Leasing are

registered at stock exchange. Cement Industry, Firstly produced Nizam Cement. Recently

AWT invested their capital with Mobil named as Askari Mobil.

The organ gram below depicts the overall activities of AWT:

1.2 Purpose of Study:

The main purpose of the study was to fulfill the requirement for the award of degree of

Bachelors of Business Administration (Hons). Other purpose includes:

Studying the overall operations carried out at the Askari bank Peshawar Cantt Branch. To apply Business and Administrative knowledge Acquired, in practice. To summarize my weekly observations. To suggest and recommend feasible steps needed to improve its performance. To fulfill the requirement of my degree; BBA(Hons) by acquiring practical experience of

a work environment of any financial institution by working in it as an internee and

prepare and submit report regarding it to the controller of examination of UOP ,

1.3 Scope of Study:

The scope of my work is based on the complete observation of Askari bank. In which I have

identified problems and remedies have been too suggested to overcome these problems.

1.4 Methodology of Study:

I used a number of techniques to collect the required material and conduct the report. The

methodology, which I adopted for this study, is based on both the primary data and secondary

data.


8/43

8


1.4.1 Sources of Primary Data

Interviews of the banks staff members. Personal observation. Help from the relative bankers.

1.4.2 Sources of Secondary Data

Askari Bank Annual Reports. Bank Manuals. Bank Magazines. Bank Brochures. Banking concept Books. Internet.

1.5 Scheme of Report

Chapter -1: Introduction section of Report is divided into different topics. This includes the

background of study, purpose of study, scope of study, methodology of study and scheme of

report.

Chapter-2: Contains Organizational overview, i.e. introduction, history, products and services,

departments, competitors etc.

Chapter-3: Contains all work experience gained by interest in 8 weeks.

Chapter-4: Contains Analysis; It includes SWOT Analysis and Askari Banks five years

performance glance.

Chapter-5: Contains findings and recommendations.

Chapter-6: Contains references and sources of data acquired.


9/43

9


Chapter 2:

ORGANIZATIONAL INTRODUCTION OR OVERVIEW

2.1 The Introduction/Overview of Askari Bank Limited

Askari Bank Ltd (formerly Askari Commercial Bank) was incorporated in Pakistan on October

9, 1991, as a Public Limited Company. It started its operations during April 1, 1992. The bank

principally deals with banking, as defined in the Banking Companies Ordinance, 1962. The Bank

is listed on the Karachi, Lahore & Islamabad Stock Exchanges and its shares are currently the

highest quoted from among the new private sector banks in Pakistan.

Askari Bank has since expanded into a network of 261 branches / sub-branches, including 34

dedicated Islamic banking branches, and a wholesale bank branch in Bahrain.

A shared network of 5,903 online ATMs covering all major cities in Pakistan supports the

delivery channels for customer service. As at December 31, 2012, the Bank had equity of Rs.

19.7 billion and total assets of Rs. 353 billion, with 907,984 banking customers, serviced by our

5,597 employees. Askari Investment Management Limited and Askari Securities Limited are

subsidiaries of Askari Bank engaged in managing mutual funds and share brokerage,

respectively.

Askari Bank is the only bank with its operational head office in the twin cities of Rawalpindi-

Islamabad, which have relatively limited opportunities as compared to Karachi and Lahore. This

created its own challenges and opportunities, and forced as to evolve an outward-looking

strategy in terms of Askari market emphasis. As a result, Askari developed a geographically

diversified assets base instead of a concentration and heavy reliance on business in the major

commercial centers of Karachi and Lahore, where most other banks have their operational Head

offices.

While successfully penetrating the key domestic markets through strategic expansion and

business diversification they remain alive to the challenge emanating from the development in


10/43

10


the global financial markets; the opportunities and threats engendered by greater deregulation

and increased customer expectations. These provide them the impetus to make the best use of

available resources, including modern technologies, to meet the challenges ahead.

Historically, Askaris core marketing focus for its asset base has been the middle and upper

middle business houses (including wholesalers and manufacturers) operating in the large urban

centers of Pakistan, which are primarily oriented towards foreign trade. This segment constitutes

significant revenues to the bank. The liability side remains focused on the middle and upper

middle class retired and serving government and armed forces personal and mid-size business

houses.

With this branch network of75and further expected increase in future, the ATMs facility and

internet Banking, Askari Banks reach is ever increasing. In recognition of this reach, they have

set up a retail-banking group in July 2000, the mobile ATMs facility is first time started by

Askari commercial bank in 2005 dedicated to serving the urban consumer market; Askari is

committed to aggressively market this segment. The strategy is to provide their customers with a

basket of innovative products to meet their varying needs.

Askari's emphasis on further broadening its core foreign trade business translated into handling a

higher volume of Export and Import business of Rs. 36 billion registering a growth of 42% over

the previous year. This enhanced foreign trade business was secured due to excellent customer

services and efficient international settlement arrangements with our correspondent banks.

Askari Bank is operating throughout Pakistan. Most of the branches are connected through State

of the Art, On-line Communications Network, which gives the bank a competitive edge in

providing instant services to its clientele. It also offers direct access to the latest Foreign

Exchange Rates through our Online Communications.


11/43

11


2.2Vision Statement of AKBL

To be the leading bank in the region

2.3The Mission Statement of AKBL

To be the leading private sector bank in Pakistan With an international presence,

Delivering quality services Through innovative technology An effective resourcemanagement In a modern and progressive organization Culture of meritocracy, maintain

High ethical and professional standards, With providing enhance value to all our

stakeholders, And contributing to society.

2.4 Core Values

Integrity is the most valued standard in whatever the bank does. It understands that its

commitment to satisfy customers needs must be fulfilled within a professional and ethical

framework. It subscribes to a culture of high ethical standards, based on the development of right

attitudes. The intrinsic values, which are the corner stones of the banks corporate behavior, are:

Commitment Integrity Fairness Teamwork Service

2.5 Objectives OF The AKBL

As Askari Bank looks ahead to the future by moving through the decade of the 1990's its efforts

are guided by a broad framework of corporate objectives, which are as follows:


12/43

12


To achieve sustained growth and profitability in all areas of business. To build and sustain a high performance culture, with a continuous improvement focus. To develop a customer-service oriented culture with special emphasis on customer care

and convenience.

To build an enabling environment, where employees are motivated to contribute to theirfull potential.

To effectively manage and mitigate all kinds of risks inherent in the banking business. To maximize use of technology to ensure cost-effective operations, efficient management

information system, enhanced delivery capability and high service standards.

To manage the Bank's portfolio of businesses to achieve strong and sustainableshareholder returns and to continuously build shareholder value.

To deliver timely solutions that best meets the customers financial needs. To explore new avenues for growth and profitability.

2.6 Competitors OF AKBL

Competitors are firms or organization that provides the same product and service in the same

market at same time. Askari Bank faces many of competitors that provided the same product and

services. When competitions are increase other firms not only provide the same product andservice but they also at the same place. I have observed most of the banking Branch side by side

in different city of Pakistan due to this there are lots of chance to turn of customer to other bank

branch if you are not satisfying customer at his desire .These are the followings banks that

provided same product and service that provided by Askari Bank Limited.

MCB (Muslim commercial Bank Limited) Faysal Bank Limited Habib bank limited Bank Alfalha Limited Meezan Bank Limited


13/43

13


Bank of Punjab United bank limited Al-Habib Bank limited National Bank of Pakistan KSAB Bank limited City Bank limited Stander chartered Bank limited Barclays Bank

2.7 Products and Services OF AKBL

ABL (askari bank) has wide range of products which cater under different lines of banking,

which they are operating according to the requirement of their customers. Usually products

names are same but their features, facilities or terms &conditions are different, so

AKBLspecializes in catering different segments of the market.

Product Line OF AKBL

Askari commercial bank offer four main product Consumer banking Islamic banking Agriculture

finance solution and corporate investment banking under these four product banks offer a range

of product line

A) Consumer banking product

Askari finance loan Personal Finance

Mortgage Finance Business Finance Smart Cash ASK4CAR


14/43

14


Master CardB) Investment product

Mahana Bachat Account Roshan Mustaqbil Deposit Deposit Multiplier Account Value Plus Deposits Rupee Traveler Cheques ASKCARD (Askari Debit Card) Internet Banking Service Electronic Bill Payment Services Cash Management Services Investment Certificates

C) Islamic banking services

Islamic Corporate Banking Islamic Investment Banking Islamic Trade Finance Islamic General Banking Islamic Consumer Banking

D) Agriculture finance solution

Kissan Ever Green Finance Kissan Tractor Finance Kissan Aabpashi Finance Kissan Livestock Development Finance Kissan Farm Mechanization Finance Kissan Transport Finance

E) Corporate & Investment Banking

Corporate Banking Division


15/43

15


Term Loans Fund Transfers / Remittances Investment Banking Division Project Finance Islamic Finance

Several Other Facilities Provided By AKBL

There are several other facilities which are offered by ABL, they are usually used to facilitate the

customer. They are listed below

Debit/credit Cards

Travelers Cheque Remittance Virtual Banking Mobile Banking

These product & services enable ABL to be one of the leading banks of Pakistan with a deposit

base of about Rs. 400 billion and total assets of around Rs.300 billion. The Bank has a customer

base of approximately 4 million and a nationwide distribution network of over 1100 branches,

including 8 Islamic banking branches, and over 450 ATMs.


16/43

16


2.9 Departments of AKBL

Banking procedures are divided between various departments. Different departments do their

jobs in concurrence with the bank policies. In ABL each branch is divided into various

departments. Head of department manages each department & officials of the branch follow

procedures.

Following departments are working within Peshawar cantt branch:

Remittances Budgeting Reconciliation Foreign Currency Dealing

Clearing Daily Expenses Dealing Foreign Trade

Online banking

ATM

Account opening

Cash

Mortgage Loans

Personal Loans

Commercial Loans

Agriculture Loans

GENERAL

BANKING

DEPARTMENT

ACCOUNTS

DEPARTMENT

FOREIGN

EXCHANGE

DEPARTMENT

CREDIT

DEPARTMENT


17/43

17


2.9) General Banking Department of AKBL

Mr. Shokat Ali Meer is the head of General Banking department; he is operation manager at this

branch of Askari bank. He is held responsible to carry out all the operations of the bank, making

decisions and to solve the problems faced by the collogue Bankers. The following departmentscome in the General banking department.

A. Remittance Department.B. Clearing department.C. ATM Department.D. Online banking.E. Account opening Department.F. Foreign Exchange Department.

A) REMMITTANCE DEPARTMENT

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

generally. The main function of the remittance department is to transmit money from one place

to another. By providing this service to the customers bank earns a lot of income. Also, the

customers are able to meet their day-to-day financial requirements.

The functions of remittance department are to handle with the following instruments:

Functions of remittances department

Pay Order Demand Draft Pay slip Telegraphic Transfer Payment of Remittances Cancellation of pay order & demand draft

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


18/43

18


This department deals with the local currency transfer only. AKBL provides these services to

both customers & non-customers

Remittance can be made through:

Instrument transfer Electronic transfer Mail transfer

Instruments of the Remittances Departments:

1) PAY ORDER

Pay order issued from one branch only be payable from the same branch. It is normally issued

for payment in the same city. It is normally referred as banker's cheque

Get the application form. Issue pay order after recovering cheques. Do necessary vouchering. Make entry in PO issue register. All pay order shall be crossed" payees account only".

2) DEMAND DRAFT

A demand draft is an instrument, which is drawn by one bank upon another bank for a specific

sum of money payable on demand. It is made by the bank and given to the purchaser against

cash or cheque. If two banks are involved, then one bank sends a DD to anther bank. But in

customerBank case the customer sends his DD to the receiver.

It is an instrument 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 the same bank. In case of agency


19/43

19


arrangement- demand draft can also be issued by one branch of the bank payable to other branch

of the other bank e.g. DD issued by ACBL payable by MCB.

3) TRAVELERS CHEQUE

The range of AKBL products and value added services enhances with introduction of Rupee

Travelers Cheques (RTCs) launched in March 2002. In spite of Askaris constraint on issuing

higher denomination of RTCs against restrictions imposed by the Central Bank of Pakistan they

have been striving to attain shares with sizeable portfolio. Total volume handled by the

department during the year 2012 was around Rs. 976 Million.

B) CLEARING DEPARTMENT

1) MEANING OF CLEARING

The word clearing has been derived from the word Clear and is defined as a system by which

banks exchange cheques and other negotiable instruments drawn on each other within a specific

area and thereby secure payment for their clients through the Clearing House At specified time

in an efficient way.

Since clearing does not involve any cash etc. and all the transaction take placethrough book entries, the number of transaction can be unlimited.

No cash is needed as such the risk of robbery, embezzlements and pilferage istotally eliminated.

As major payments are made through clearing, the banks came manage cashpayments at the counters with a minimum amount of cash in vaults.

A lot of time, cost and labor are saved. Since it provides an extra service to the customer of banks without any service

charges or costs, more and more people are inclined and attracted towardsbanking.


20/43

20


2) CLEARING HOUSE

It is a place where representatives of all banks sit together and interchange their claims against

each other with the help of controlling staff of State Bank of Pakistan And where there is no

branch of State Bank of Pakistan the designated branch of National Bank of Pakistan act as

controlling member instead of State Bank of Pakistan

3) RULES AND REGULATIONS HAVE CLEARING HOUSE:

Timing:(Monday through Saturday)1. 1st Clearing at 10:00 a.m.2. 2nd Clearing at 2.30 p.m.

Each bank will send competent representative to exchange the cheques. Each bank is required to insure that all cheques and other negotiable instruments

are properly stamped and suitably discharged

An objection memo must accompany each and every cheque when return unpaidduly initialed.

Each bank is required to maintain sufficient funds in the principal account withSBP to meet the payment obligations.

The State Bank of Pakistan debit the account of each member of theclearinghouse with the proportionate working expenses incurred on the operation

of clearing house. These expenses are very nominal.

C) ATM ISSUANCE DEPARTMENT

Automated Teller Machine is a hi-tech invention in the field of the banking. It facilitates a

depositor who can withdraw money at any time without the need of presenting cheque to

banking personnel at the banks counter. Money can also be deposited with the help of this

machine. But it is not so much practiced here because of some drawbacks.


21/43

21


In this branch of AKBL Miss Nadia, has the authority of issuance of the ATM card to the

customers while the operational manager Mr, Shokat Ali Meer has the authority to feed the

number of ATM card in the computer and verify the customer signatures.

Every ATM card has a PIN code that should be entered for the first time at the ATM machine to

activate the card then the customer is guided to change the default PIN code with its own PIN

code by the ATM machine.

Issuing Procedure of ATM Cards

The person first opens the account within the bank.

Then he fills the ATM application form in which name of Account Holder,Fathers name Account number and C.N.I. Card number is mentioned.

A copy of C.N.I.C is also attached with the application form. After completing this process, the application package is sent to head office. ABL head office takes a period of 2-3 weeks for preparing and processing of

ATM cards. First, list of cardholder is issued and then after 15 days cards are sent

to ABLs issuing branch. The card and list are not sent simultaneously in order to

avoid any mishandling.

D) Online Banking

Online banking means that the customer of Askari Bank Limited can deposit or withdraw funds

in or from other branches of Askari Bank Limited. Askari bank provides online facility to all of

its branches.

Every account at Askari Bank is online. Online banking is done through two modes as mentioned

below:

Over the counter. Through ATM.


22/43

22


E) Account Opening Department

The account opening department performs the function of opening individual, business and

corporate accounts. The account opening procedure in AKBL is very tuff because it follows the

policies of SBP strictly. This department also held responsible for activating a dormant accounts

of the customer, issuance of cheque books, informing customers about their account balance on

their demand. The account opening department in charge is Mr. Jamshid Khan. Types of account

exist in AKBL are following.

Types of Accounts In AKBL

Are discussed below;

1) Current Account

On current account there is no interest paid by the AKBL. It is for only transaction purposes.

They are paid on demand. When a banker accepts a demand deposit, he incurs the obligation of

the paying all cheques drawn against him to the extent of the balance in the account. As there is

no profit paid on this account it is also called Chequing Account because cheques can be drawn

on it. Current Account is mostly opened for business. The minimum amount should be Rs 5000

for opening this account.

2) Saving Account

The purpose of this account is to induce the habit of saving individuals in the neighborhood. The

profit is PLS saving and ASDA Accounts in ABL are chequing accounts paid on the basis of

profit and loss sharing at the rate of8.5% six monthly. The minimum deposit for opening the

account is Rs.1000/-. Individuals open such accounts for saving purposes, persons belonging to

Armed Forces, and different military and civilian institutions open this account.

3)Askari Special Deposit Account (ASDA)

ASDA account is an interest bearing current account interest is paid. The payment of return is

monthly, whereas the rate of return with aspect to the amount of minimum deposit clear from


23/43

23


deposit schedules in following table). It is also checking account because cheques can be drawn

on it. It is necessary for this account that the client must maintain a minimum balance of Rs.

50,000 at the end of the month. Thats why it is similar to current account. It is mostly opened by

Business but individuals to open this account.

4) Askari Bachat Account

ABCs are long term fixed deposit for 3 and 5 years. These are not term deposits because

payment of return is on monthly basis rather than on maturity of deposits. The minimum balance

requirement is Rs. 25000/- and maximum balance requirement is Rs. 1.0 Million. If ABC is for

3-years, the rate of return for 3-years is 12% if ABCs is for 5-years the rate of return is 13%.

Because in such account the balance is kept for either '3' or '5' years within the bank no cheque is

drawn on it. That is why it is not a checking account. Return is made monthly.

.

F) ACCOUNTS DEPARTMENT:

Accounts department is a department, which deals and checks all the activity of the entire

department. It also deals in expression of finance of the bank. Salary payment is also one

function of the bank. Mr. Iqbal and Miss. Samina deal this department.

Checking Banks Daily Activities

Accounts department deals and checks the entire working of the Branch; all the vouchers that

have been posted at the computer are scrutinized in accounts department. The End of Day i.e.

computer print is also received from the computer. The next day the activity is separated some

statements from the End of Day. Then next day activity separated some statements from the

End of Day. The vouchers are sorted out head wise. The vouchers are matched with the entries

in the statements.

Any abnormality if occurs, is immediately dealt with. All the vouchers and instruction are

checked individually are checked individually against the computer printouts. After checking

they are signed by Mr. Iqbal and the internal auditor Miss. Samina.


24/43

24


Other Activities

Preparation of daily bank positions statement Payment of salaries Preparation of the statements Depreciation calculation

G) FOREIGN EXCHANGE DEPARTMENT

Every country is blessed with different things and blessings by Allah. This is the point where

different countries come together to exchange their competencies and efficiencies. The countries,

which lack in any of the resource, start importing those resources from the country that is having

excess of it. In this way the trade starts between different countries. There are two functions

performed by the foreign exchange department, which are as under;

1) Foreign Currency Accounts

A depositor can open account in US Dollar, Pond, Japanese Yen and Euro with nominated

branches. For opening of account a Form is provided to the person/party, introduction of the new

account holder or by the Officer of the Bank. Procedure of opening foreign currency accounts issame as other accounts. No Zakat is deducted on these accounts, no income tax deductions, no

wealth tax deduction will be there, and these incentives reinforce and motivate the people to

invest in foreign currency accounts rather to keep foreign currency idle.

2) Imports and Exports

The foreign exchange department of AKBL also facilitates imports and exports on behalf of its

customers. Imports means when a person wants to bring something in Pakistan and exports

means when a person sends something outside the Pakistan.


25/43

25


CHAPTER 3:

WEEK WISE WORK DISTRIBUTIONLEARNINGS AS AN INTERNEE IN ASKARI BANK Ltd.

There were following learning points for me that I have learned in AKBL.

3.1) First & Second Week In Account Opening Department

In my first week in Askari Bank, they assigned me work in Account Opening Department. The

Officer Mr. Jamshid Khan trained me very nicely and I learned lot of things in this department.

He told me different accounts names and their codes and the requirements to how to open the

account for individual or business, Conditions are as follows:

New Computerized national identity card is must for opening of new account. For salary person documents like; NIC copy, recent salary slip Copy and written

application from the firm where that person works is required for account

opening. These documents must originally present at the time of account opening

otherwise the account will not be opened.

For Business man documents like; NIC Copy ,national tax number copy, Federalboard of Revenue and chamber of commerce membership certificate, application

and undertaking on the business letter head is required for account opening and all

of these documents must be originally seen by the attender.

Signatures must be taken on account opening form from the person in hispresence only otherwise his/her account cannot be opened

How to fill-up Customer Identity Form (CIF), where signature of the personshould be taken and where the required stamp is pasted.

How to fill the deposit Slip if anyone wants to transfer cash in the account oronline transfer

How to fill the different accounts Forms such as filling of individual andBusiness man account opening form.

The procedures for the issuance of ATM cards and to fill up form for theCustomer for the ATM card


26/43

26


The stamp pasted on CIF for specimen signatures of the customer is Signature admitted,the signatures that need to be verified the signature verified stamp is pasted and the

documents that are originally seen the original seen stamp is pasted.

The documents of the salary person and business man must be attested from a gussetedofficer.

Dormant account is an account which becomes partially freeze means that the money canbe deposited by the customer but he cannot withdraw the amount from it .the account

become dormant after six months. When there is no transaction made by the account

holder during six months from his account the account become dormant.

The accounts such as current and saving become inactive within 1 year and 2 yearrespectively.

3.2) Third & Fourth Week In Clearing Department

In the Third Week they assigned me to work in Clearing Department. Mr. Khurshid trained me

very well regarding the function of clearing department. Clearing means bank to bank transfer of

funds where the NIFT Facilities are available and from one place to another.in clearing function

the bank work as an agent between the drawer of the cheque means maker of the cheque and the

payee of the cheque, payee means to whom to pay. there are two types of clearing one is inward

clearing and second is outward clearing in inward clearing the same bank cheques drawn on itwhich means the fund will goes from bank and in outward clearing the other banks cheques

drawn on the AKBL which means the fund will be received by the bank and these both types of

clearing include clearing like intercity clearing which refers to the transfer of funds from one city

to another where the NIFT provided facilities are available and intra city clearing which refers to

the transfer of funds with in one city and these both can be for same day as well as normal

clearing.

In these weeks I entered the cheques lodged for inward clearing in clearingregister as their cheque number account holder name cheque amount and bank

name amount to be paid.


27/43

27


Secondly, I entered the cheque lodged for outward clearing for next day. Same asinward clearing just entering cheque number account holder name amount and

Bank name

In these weeks I also entered the amount; drawer name and cheque number ofcheques returned in cheque return register with the reason for what it has been

returned and attached cheque return reason memo or slip with cheque.

The cheque that are to be cleared with in the same day some extra charges arededucted while for normal clearing the charges are Rs.300.

The cheques that are crossed need to be cleared so the amount is to be transferredto another person account.

The clearing is done through State Bank appointed institution NIFT which is anabbreviation of NATIONAL INSTITUTIONAL FACILITATION

TECHNOLOGIES. And where the facilities of NIFT are not available then there

the clearing is done through BOC (Outward Bills for Collection).

The cheques that are in bank favor, Payment Received stamp is pasted on back ofthem while those that are not in favor of bank, Payees Account Credited on

Realization Stamp is pasted on back of the cheque. These stamps decrease the

liability of the bank.

The cheques that are to be cleared in a working day should not be stale dated aswell as postdated, they should be for the same branch where they presented,

amount in words and figures should be same, clearing stamp of the bank should

be clear and signature should not be differed otherwise cheque will be returned.

The bank which pastes the clearing stamp on the front of the cheque must pat thedischarge stamp on the back of the cheque.

Every cheque presented to be clear in AKBL has a summary from NIFT.

In inward clearing; inter branch credit advice is given to the head branch situatedin Karachi and the other branches give advices to Cantt branch of AKBL which is

the main branch.

In outward clearing the cantt branch of AKBL receive advices from other banks. At last NIFT provides summary of inward and outward clearing to the AKBL.


28/43

28


3.3) Fifth Week In Remittances Department

In Fourth week they assigned me to work for Remittances. Remittances also mean transfer of

funds through Demand draft and Pay order instruments from one place to another on behalf of

banks customers.

In this week I learned that pay order is an instrument that is for local or intra cityfund transfer while demand draft instrument is for inter-city fund transfer.

In Pay order three parties are involved the first is the maker of instrument(Drawer) the second is the bank which is drawee and third is the beneficiary

means payee; to whom the payment is to be made.

In Demand Draft there are four parties are involved the first is the customer the2

nd

is the bank, maker of the instrument (Drawer) the third is the bank (Drawee)and the fourth one is beneficiary means payee to whom the payment is to be

made,

The pay order is a Quasi Instrument means lie in the mid of negotiability and non-negotiability.

Demand Draft is a negotiable instrument. That can easily be transferable to anyother party.

The purposes of payments through pay order and demand draft are confirmingpayments, easily traceable by any time and less risky.

The AKBL act as an intermediary between the maker and the payee, The AKBL deduct charges on pay order and demand draft up to the amount of

one million. More than the amount of one million no charges are deducted on

transfer of funds through these instruments.

Government taxes are always deducted on both the instruments.3.4) Sixth Week In Deposit Department

In sixth week of my internship I worked in Deposit or Cash Department. They assigned me to

work in cash department. The in charge of deposit department Mr. Zulfiqar trained me very

efficiently about the cash payments and cash collections of AKBL. When a person comes to the


29/43

29


cash counter of the bank and presents a cheque of amount to be paid to him is called cash

payment of the bank. When a bank make a payment of cash it credits the customer and debit

itself because payments to the account holders decrease liability of the bank and when a

customer come to deposit some amount of cash in his/her account the bank credit itself and debit

its customer because deposits are the liabilities for the bank . In cash department I learned about

cash Receipts and Payments and about to record all the cash payment entries that appeared as a

credit Vouchers in front of me in a register and then I further recorded them in the computer

system of the AKBL for the proper evaluation of total cash payments and deposits at the end of

every day.

However most of the customers come to cash counters for online fund transfer from one city to

another and the charges for online fund transfer are Rs.116 for civilians while no online charges

are deducted from army personals

3.5) Seventh Week In Accounts Department

In sixth week I was assigned to work in Accounts Department in accounts department I learned

that:

How to sort the cheques according to the account numbers and account types inascending and descending orders then to sort the vouchers enclosed with the

cheques as according to the order of cheques. When the cheques and credit vouchers are sorted the time comes to tally each and

every cheque and voucher with daily movement report of the bank for the

purpose to find out all the entries are correctly mentioned in the report or not.

And all of this is done by ticking each and every cheques and vouchers amount,

account number cheque number and account holder name.

The cheques represent debit entries in the report while voucher represents creditentries in the report.

3.6) Eight Week In Foreign Exchange, ATM Card & Lockers Issuance Department

In Eight Week I worked in Foreign Exchange department as well as ATM card and Lockers


30/43

30


Issuance department. The in charge of foreign exchange department briefly introduced me about

foreign exchange department functions. In this department I learned that the foreign exchange

department performs two types of functions one is of foreign currency handling also called

foreign remittances and 2nd

is foreign trade.

In foreign currency; foreign currency accounts are opened for the customers thosewant foreign currency only and to deal with in it only. For foreign currency

accounts opening the necessary requirements are as same as PKR account

opening but the difference is, in foreign currency account opening the nominee

should be clarified as well as the business proof or salary slip of the sender of

foreign is necessary.

In foreign trade the bank issues letter of credit and letter of guarantee on behalf ofits customers to facilitate them in import and exports.

3.6.1) ATM Card & Lockers Issuance Department

In ATM card issuance and lockers issuance department. Miss Nadia Waqas introduced me very

well about this department and about its workings.in this department I learned that:

An ATM card is a plastic money and key of account holders account so it is verysensitive thing so it should be used carefully otherwise It bring the cause of generating

very sensitive matters. ATM is only issued to individual account holder and to the Type B account holders

Means or Survivor account holders.

Lockers of AKBL are only available to the account holders of AKBL of Cantt Branch,there are three types of lockers; small, medium, large are offered by the AKBL to its

customers, these lockers are insured and in case of occurrence of any damage the

customers can claim for the insurance amount as according to the type of lockers they

held.

3.7) NOWLEDGE ACQUIRED DURRING MY INTERNSHIP

During the internship there was a practical knowledge acquired about the banking sector. What

activities are performed by banks and how to deal with public? Also, commitment about work


31/43

31


and operations of banks. How financing and credits and other public services are performed by

the banks? What are implementations of banking rules in banking sector? And more so learnt

about the various executives experiences and their skills. What is role of higher authority

(manager) in decision-making and how to solve the problems? How much money or reserves are

used to meet the requirements in the branch. What are the duties of operation manager and how

to pay cheques and all procedures relating to opening account in the banks?

I have gained a lot from my Internship. In AKBL Bank I have learned a lot of work which I

didnt learn in my specialization in Finance. My communication and negotiation skills are very

much improved by learning how to communicate with the professional people.


32/43

32


CHAPTER 4:

SWOT ANALYSIS & ASKARI BANKS FIVE YEARS PERFORMANCE GLANCE

4.1) SWOT Analysis

The strength, weaknesses, opportunities and threats of AKBL, one by one are described below.

1) Strengths

A) Network

Network is a major strength AKBL has. AKBL is a Pakistani Bank with the most extensive and

comprehensive global network that open up new opportunities in near future. Their up graded

technological infrastructure is also important which provides uniform service system across the

Banks network that will allow much higher levels of efficiency and customer service.

B)CUSTOMERRELATIONSHIP

The Bank has a distinctive client focus with a view of attaining greater customer satisfaction.

Continual efforts are made by the Bank to revisit customer needs and for improving customer

services. Management continues to further rationalize Banks network with a view of improving

efficiency. The trust associated with AKBL is also its strength to stand out. The bank continues

to re-engineer processes and centralize functions to make AKBL services more cost efficient to

improve customer response. AKBL commitment to provide customers with banking facilities of

an international standard and its policies towards modernization helps them gain more strength.

The survival of a service organization like AKBL is dependent on superior customer service and

relevant products. AKBL strong culture of customer service and satisfaction reflects ABL

distinctive competence. They value their customers business and want to seek satisfaction.

Thats why a very strong population of 1.5 million users supports them.

C) International Operations

The international operations of AKBL allow it to get benefit from synergies of countries within

specific geographical areas. International operations are segmented into regional businesses by


33/43

33


formation of six major regional centers viz UK, continental Europe, Africa, Middle East, Asia

Pacific and USA.

D) Online Banking

The bank always remain online through a proper network so the customer can avail the facility of

transferring of funds online from one place to another rather with in the same city or to other

cities. The bank has also started ATM facility in most of its branches. 24-hour banking is new

trend in Pakistan and AKBL has also taken apart in this trend.

E) Customer Suggestions

Customer gives suggestion for the improvement of bank and these suggestions are listened carefully and

communicated to the higher management so that action taken on relative deficiencies

immediately.

F) Innovative Products

Askari Commercial Bank developing & delivering the most innovative products, manage

customer experience, deliver quality service that contribute to brand strength, establishes a

competitive advantage and enhances profitability, thus providing value to the stakeholders of the

bank.G) Secure Banking

The online banking facility provides less chances of fraud. Because the receipts of any online

transaction are given to customers at the time transaction takes place and also can be checked

any time. To make it much more secure the NIC copy of the person is Also submitted at the time

of online transaction but those customers who also have their accounts in the same branch do not

need to submit the copy of NIC as their copy is already attached with their account opening

forms.

2) WEAKNESSES


34/43

34


A) Cash Withdrawal Limit from ATM

One of the weaknesses of AKBLs ATM is that they have prescribed cash withdrawal limit for

all kinds of customers. They have cyclic withdrawal limit which allows each customer to have

his own cash withdrawal limit, so the customers in case of emergency cannot withdraw cashabove from their limits and feel unsatisfied from AKBL.

B) Waiting Line for Payment OF Utility Bills

There is a facility offered by AKBL for payment of utility bills but customers have to wait in

waiting line for a long period of time due to short number of service providers.

C) Transfer of Funds Through ATM

No facility on behalf of AKBLs ATM is offered regarding transfer of funds between PLS

savings account and current account of same customer through same ATM card.

D) Shortage of ATMS

ATMs, despite of AKBLs extensive and comprehensive network is still unavailable in many of

its branches. Similarly there are some profitable geographical locations where there are prospects

of increased profitability for example an ATM at Murree means new segment for AKBL.

E) ATMS Working

ABL ATMs are usually out of work without any notification to customers as compared to MCB,

which advertises in newspapers that a certain machine is out of order. Moreover one of their

customers also mentioned in a survey that the ATM machine is out of order mostly at weekends.

F) Recruitment System

The human resource department is not performing fair function of selection and recruitment very

effectively. Selection process is not on merit due to which competent persons cannot be selected.

E) Improper Guidelines


35/43

35


Proper guideline should be given to the customer about bank products. They should be informed

with current information. Many of the customers complaint that there should be two or more

person on reception who should guide people at entrance where they have to move, concerned

person and department, teach how to fill forms, slips and cheques.

3) OPPORTUNITIES

A) Use of ATM as A Credit Card

It can be an opportunity for AKBL to introduce ATM card also as a credit card which will

invite a different segment and which will improve profitability. The Bank can also earn income

in this way.

B) Technological Improvements

Various technological improvements may lead to success for AKBL. If AKBL opens up its

deposit box facility for customers it can heavily increase its profitability. If implemented this

opportunity can be a competitive advantage as well. AKBL can also implement the conversion

facility for example if the ATM receives the request for payment of amount in dollars then it

should pay the customer in Dollars. They can make ATM more attractive and enjoyable place

to come rather than a bossy bore environment. To provide customers with an enjoyable event

whenever they visit the ATM they can change their machine styles, have variations in colors

and add audio instructions following the transactions. As Internet and World Wide Web usage

continues to increase AKBL should extend its exploitation of this market by acquiring and

merging with companies with specialized technological expertise.

C) Improving Customer Focus

AKBLs commitment to making substantial investment in technology (planned expenditure of

USD 20-25 million over next three years) to provide customers with banking facilities of an

international standard is an opportunity for making technological improvements in this

business so the customer focus will be increase that is an opportunity for AKBL.


36/43

36


D) Illiterate People

Illiterate people are also an opportunity for AKBL in regarding this service. ABL can serve

these people by giving instructions in Audio and in Urdu. They can also have instructions

written in Urdu on card or even they can have a display in Urdu. They can increase their targetmarket, market share and profitability.

E) Entertainment Facilities

Entertainment facilities should be available in the Bank, when customer comes to the Bank and

wait for a long period of time to be served he will enjoy newspaper, magazines, television and

serve with tea, soft drink etc.so in this way he will not feel dis satisfied from the bank.

4) THREATS

A) Economic Environment

Economic environment is a major threat to AKBLs success. For example in 2000 when the

government embarked on an economic revival plan with a complete task of resource

mobilization, GDP growth and poverty alleviation in a different economic environment with

continued international sanctions.

During the year domestic demand though improving still remained weak and fiscal constraints

did not allow the government to increase development expenditure and boost demand. The

biggest threat in the banking sector is the continuous downfall of the country economy since the

last few years. If this downfall remains for more few years then it may be the great hindrance in

achieving the Banks objectives

B) Political/Legal Environment

Law and order situation has a direct impact on how frequently or how many people use ATM.

Also legal obligations also hinder/pose threat to ATM availability. For example there is a rule

that the two ATMs should be at least 3 kilometers away from each other. If there are strict

regulations on this policy then it is a threat to ATM availability for example there is an ATM in


37/43

37


Saddar and also at ChowkYadgar so it is important that legal environment is positive and firm

enough to pose threat to Banks activities.

C) Expense Base

The expense base will be a major threat to the ATM because it will impact the need to spend in

order to modernize ABLs customer interface. Expenditure has to be incurred on Branch

rationalization and computerization. This expenditure is essential, given poor infra-structure at

Branch level resulting from years of underinvestment. Because 90 million is sufficient money to

invest to open an ATM there should be a strong expense base to support the expansion of ATM.


38/43

38


ASKAIR BANKS FIVE YEAR PERFORMANCE GLANCE

Rupees In Million

Description December

31,2008

December

31,2009

December

31, 2010

December

31, 2011

December

31,2012

Total Assets 206191 254327 314744 343756 353056

Total Liabilities 193220 239,378 298,740 325,980 333,368

Total Equity 12971 14949 16004 17776 19688

Shareholders Fund 12,971 14,949 16,004 17,776 19,688

Total Income 21,101 25,131 30,129 35,669 36,520

Total Expenditures 20,640 23,499 28,856 33,257 34,790


39/43

39


Description December

31,2008

December

31,2009

December

31, 2010

December

31, 2011

December

31,2012

Total Cash Flows 20,659 27,850 26,350 32,403 33,299

Total Employees

(Regular)

4,252 4,393 4,473 4,470 4,272

Total Number of

Branches/Sub Branches200 226 235 245 261

Business transacted

Imports Exports Guarantees

148.24 140.16 177.32 166.51 143.30

99.70 105.41 105.11 112.71 98.03

55.77 58.55 67.55 59.63 69.92


40/43

40


CHAPTER 5:

FINDINGS AND RECOMMENDATION

FINDINGS

I observed the Askari Bank Limited a sound financial bank. Its profits are increasing year-by-

year. Its staff is very good and sincere with the bank. Askari Bank Limited Peshawar cantt

branch has made significant progress in building and strengthening both the corporate and retail

banking sectors in Pakistan.

Askari Bank Limited 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 their key ingredients for future growth.

Revenues from these activities have started yielding dividends and they expect significant

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

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

technological advance to enable them to distribute their products and services through most

efficient and high tech means. They say that they will continue to invest in the modern tools and

substantial allocation to resources will be made to achieve this objective during the current year.

Online banking has been started and the introduction of ATM at strategic locations has beenfirmed up.

RECOMMENDATIONS

This is the fact that in this universe nothing is perfect. In every field of life there are some pluses

and minuses. But the best institutions are those, which learn from the changing environment and

competition. So it is necessary for them to keep them updated with the changing environment.

Although ABL Peshawar cantt branch is one of the good branches in Peshawar, but there are few

points that should be improved for more perfection. Keeping this aspect in view, I have made

following recommendations:


41/43

41


Marketing department is very active but the feedback or the follow up of the customersshould be improved.

As everything is computerized in AKBL, the employees should be properly trained in thecomputer systems.

AKBL is one of the busy bank in the banks market, its building is not as per therequirements of the branch. So the building should be further expanded and there should

be more space for the sitting arrangements for the employees as well as for customers.

The ATM service should be provided 24 hours to the customers. Because customers feelupset when most of the times the machine is out of order

.

The number of staff should be decreased in Foreign exchange department and Creditdepartment. Because the building under operation is in adequate for such a large staff.

Under no circumstances cheque book should be given to the customer if the accountformalities are incomplete.

Cheques, which are drawn on Askari Bank Branch and returned unpaid in clearing, arenot reflected in the statement of account of the customers.

These cheques must be reflected in the accounts so that credibility of the customers maybe assessed.

Audit should be held internally, rather there should be an audit department in thebranches to make audit on daily basis. This can become as helpful as different banks are

having this department of their own.

When giving the loan, the Bank must carefully analyze the past six months transactionhistory of the borrower. This will help in the judgment of the dealing behavior and


42/43

42


financial status of the client. In most cases, this thing is not properly done and this is the

major reason for the default of many clients.

The Bank should try to give more loans to the small businesses to fulfill their financialneed because they also take part in the economic development as the past history of the

bank shows that most of the loans granted to the corporate businesses and more often that

loans converted into bad debts.

Evening banking should also be started in this branch so the customer can be served.

In AKBL more importance is given to army personnels as compare to civilians, so thatconcept needs to be changed otherwise the bank will loss more of its valuable

customers.


43/43

43

CHAPTER 6:

REFRENCES

Askari Bank Annual Report 2012. Askari Banks employees training Program, computer based training guide. Charles H. Gibson, (1987)Financial statement analysis (Ed.7), New York, NY Gerald white, Sondhi, fried, (1991) Financial statement (Ed. 3), Wiley India Pvt Ltd Horne, James C. (1998), Fundamentals of financial management, (10th Ed), Prentice-Hall

Inc.

Block, Stanley. B. (1978), Foundations of financial management, (9 th Ed), Irwin McGrawHill.

Ross, Stephen A. (1988), Corporate Finance, (7th Ed), Irwin McGraw Hill. Saunders, M. (2003), Business research methods for students , (3rd ed), Anand sons,

India,

www.blurtit.com www.sbp.org.net.pk www.scribed.com www.dostoc.com www.vu.com.pk
http://www.sbp.org.net.pk/http://www.sbp.org.net.pk/http://www.scribed.com/http://www.scribed.com/http://www.dostoc.com/http://www.dostoc.com/http://www.vu.com.pk/http://www.vu.com.pk/http://www.vu.com.pk/http://www.dostoc.com/http://www.scribed.com/http://www.sbp.org.net.pk/

Malik Asad Pervez's Internship Report on Askari commercial Bank Limited

Documents

Transcript of Malik Asad Pervez's Internship Report on Askari commercial Bank Limited