1 INTRODUCTION
2.2 PEST ANALYSIS:-
2.2.4 TECHNOLOGY
The Banking sector in Pakistan has experienced a rapid transformation. Just about a decade back this sector was limited to the Sarkari (read nationalized) and co-operative banks. Then came the multi-national banks, but these were confined to serving an elite few. One could regard the past as the 'medieval ages' in the banking industry, wherein every branch of the same bank acted as an independent information silo and multi-channel banking (ATMs, Net banking, Tele-banking, etc) was almost non-existent. Today banks have to look much beyond just providing a multi-channel service platform for its customers. There are other pressing issues that banks need to address in order to chalk-out a roadmap for the future. Here are the top three concerns in the mind of every bank's CEO. The customer is interested in how he/she can benefit from the bank and its products. That's why it becomes necessary for a bank to differentiate its products from the others. Some of the ways in which differentiation can be introduced are through specialization, new products, and increasing the added value
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Chapter – III
INTERNSHIP
EXPERIENCE
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3.1 CONCERN DEPARTMENT , DUTIES & LEARNING
My duties at the bank during my internship were of the diversified nature. I was rotated in the different departments of the bank. I was also assigned with some responsibilities of the minor level. They gave me some assignments as well to give me the true exposure of practical work environment. So my duties can be categorized department wise as under:
CLEARING DEPARTMENT
In this department I spent about 3-4 days. I observed the procedure carried down here.
Based on my observation and briefing from the staff I was asked to prepare advices for collection of demand draft amount, Outward Bill for Collection (OBC), fill in the deposit slips presented by the customers, enter the proceedings in concerned registers.
ONLINE FACILITY PROVIDER DEPARTMENT
Online banking is a wide spreading concept in banking sector. This department mainly performs the basic operation of fund transfer and other functions facilitating the transfer and enquiries. I observed the basics of the department. I didn’t have the opportunity to seek the details because the online department is a sensitive area and also electronic based.
I prepared online transfer slips foe the customers. I also informed the customers of their account balance, account status and about other queries available online.
CUSTOMER CARE DEPARTMENT
This department serves as the front representative of the bank. Multiple tasks are executed in this department. I was asked to observe different complaints received by the bank by its customers. I maintained the sundry account register, suspense account register. I put the applications received for the ATM cards in the register. I also had to maintain the register maintained to record the receipt of new account opening forms along with the register kept for recording those ATM cards, which have been delivered FOREIGN EXCHANGE DEPARTMENT
This is the department with a very vast scope and a variety of dimensions. There, I had to maintain the record of some Letters of Credit (LCs). I was liable for making drafts of outgoing SWIFT messages. I also made the entries of incoming SWIFT messages in the register. I was asked to enter the particulars of I-form (Import form) and E-form (Export form) in their respective registers.
Faisal Pervaiz-03315597157 26 ADVANCES AND CREDIT DEPARTMENT
In this department I was given some files to study, which were about the applications of credit to be approved. The person in charge of there briefed me about the term and conditions on which the bank accepts or rejects an application foe the credit. In this department, like the online department, I didn’t have an opportunity to practically handle the work due to the sensitive nature of the work.
DIVERSE DUTIES
Apart from the duties mentioned above, I had to perform some other duties as well. The prominent amongst them is called “Calling” in the banking jargon. It’s manual checking of the record produced by the computer pertaining encashment, transfer and collection of cheques and other instruments like deposit slips and online slips. I had to work with the person responsible of keeping the record of DD payable. I was assigned with the duty of keeping the record of DD payable of a given period.
NEW KNOWLEDGE ACQUIRED CHEQUE BOOK ISSUING PROCESS
If some one opens a new account and become the client of the Allied bank of certain branch then he gets the requisition slip on which cheque book is issued Normally people use two types of accounts
1)Current Account
2)Profit and loss account or PLS Account 3)Term Deposit Account
Current account cheque book has 50 leaves and it cost RS.100
Profit and loss account or PLS account cheque book has 25 leaves and it cost RS.125
Term deposit account cheque book has also 25 leaves and it also cost RS.50
In every cheque book there is also a requisition slip available for the purpose of reissue of a cheque book, if the first cheque book has no more leaves. There is written the title of account holder, his account number, the stamp of Allied bank and the signatures of the authorized person on every page of cheque book and also on the requisition slip.
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This department receives negotiable instruments drawn on local branches of other banks.
NIFT clearing house, in which cheques and other negotiable instruments are brought by each local bank representative and the claims of each bank on other is offset and a settlement is made by the payment of difference. Clearing system is helpful for both the customers and bank in saving money, time and labour.
PROCEDURES
The cheques and drafts come to branch from different BANKS. They enter the particulars of the cheques on a register. After this process the balance with total drafts and total amount are given to the representative. ABL works under the rules and regulations prescribed byf State Bank of Pakistan (SBP) and has an account with SBP.
The clearinghouse of SBP (NIFT), through whom brnches forward/receive-clearing cheques along with a schedule conducts clearing.
The clerk of forwarding branch prepares the schedule and vouchers of all the claearing cheques, which he receives by the clerk on that day and sends these cheques to the checking officer. Checking officer passes these cheques and vouchers by his initials, endorsement stamp and branch special crossing stamp. Clerk posts the contra entries of these vouchers in the clearing register. Representatives’ banks collect these cheques.
Next day at 8:30 A.M. representatives of all local banks and foreign banks exch The cheques and drafts come to branch from different banks.
They enter the particulars of the cheques on a register. After this process the balance with total drafts and total amount are given to the representative. ABL works under the rules and regulations prescribed byf State Bank of Pakistan (SBP) and has an account with SBP. The clearinghouse of SBP (NIFT), through whom branches forward/receive-clearing cheques along with a schedule conducts forward/receive-clearing.
The clerk of forwarding branch prepares the schedule and vouchers of all the clearing cheques, which he receives by the clerk on that day and sends these cheques to the checking officer. Checking officer passes these cheques and vouchers by his initials, endorsement stamp and branch special crossing stamp. Clerk posts the contra entries of these vouchers in the clearing register. Representatives’ banks collect these cheques.
Next day at 8:30 A.M. representatives of all local banks and foreign banks exchange their cheques, which are drawn on their banks.
The clearinghouse debits/credits the payee/receipt branch with the total amount of the cheques paid on their behalf. The settlement of book entries e.g., if ABL is to give Rs. 2
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Million to UBL and UBL has to give Rs.1 million to ABL then ABL will draw a cheque of 1 Million in favour of UBL. SBP will debit this amount from ABL account and credit of UBL account. In this way mutual cross debiting and crediting in the books of SBP consolidated debit/credit advice to the branches in respect of clearing cheques delivered to or received from the branches. The amount of the advice will agree with the total be office. amount appearing in the schedule of cheque delivered/received. The head office will similarly send advice to the branches of the returns, if any. Copies of all advices will sent to the head office
INTER-BRANCH CLEARING AND COLLECTION
transfer and delivery of cheques. The same clearing cheque procedure will be adopted in the transfer deliveries except in case when the facility of SBP is not availed. In case of cheques drawn on one branch and collected by an other branch for the credit of its constituents, the branch delivering the cheques will send a consolidated debit advice. If any cheque is returned unpaid, aBranch receives the cheques and other negotiable instrument drawn on other branches of the same bank. Main branch of ABL handles the credit advice will be sent to the branch returning the cheque
.
COLLECTION CHEQUES OR OBC
The collection cheques/OBCs are the cheques, which we have cleared for our customers when some of our customers receive the cheque that is of some other city.
These types of cheques are known as collection cheques or the other name we gave them is OBC
PROCEDURE OF COLLECTION
On the cheque there is written that the person to whom it may concern can cash it from the certain branch of the bank in favour of which it’s drawn. The customer presents the cheque to his branch, which send a document called “OBC” to the bank that has to make the payment. The clearing department of the receiving bank follows a prescribed procedure and credits the amount to sending bank through a central account
maintained by each bank with SBP. ABL sends the cheque to it’s own branch if available for collection from the payer’s bank otherwise the OBC is directly sent to other bank.
Faisal Pervaiz-03315597157 29 MAINTAINING REGISTER for OBCs
We have a register in which we have the serial no for OBCs with other details like amount, date, sending and receiving branches’ codes. Every OBC is entered in tha register on daily basis. If OBC is not cleared due to what ever fault, we take it back as a return but after that we call the concerned person and we also write name of the perso
ACCOUNT OPENING
I learnt how to open a new account. The person willing to open an account has o complete the account opening forms, which has several particulars pertaining to personal information of the person.
The bank makes sure that all the information provided by the person is authentic. Along with the information given by the person himself, bank requires introduction of an already existing account holder of the same bank but preferably of the same branch.
The bank also requires account no. and copy of the introducer’s NIC.
Bank also requires a copy of the NIC from account opening person. He will also have to provide two samples of his specimen signatures for any withdrawal of amount. In case of illiterate person, he will provide the bank with his left thumb impression along with two photographs. In case of a Pardah Observing lady, the bank prefers not to open an account but if so, it will require her to provide impressions of her both thumbs.
After all this formality, the bank after a few days sends a letter of thanks to the address of the person disclosed in the AOF. When the letter is received, the person may come to bank and collect his cheque book
The bank also informs its head office about the new accounts and also charges nominal amount at first time.
MATTER OF ZAKAT
The deductions of Zakaat from the account of Muslims are made on the 1st
Ramadan according to the Islamic rate. But the people who do not want the bank to deduct Zakaat and want to disburse it at their own, they have to provide an affidavit on a prescribed format provided by the bank.
ONLINE TRANSFER
The department providing online facility to the customers, I liked the most. I learnt different procedures regarding this department. I learnt the process of online transfer. The whole this process need is filling of a slip, and cheque or cash. In the slip the name of remote branch and account number of the remote person must be entered. If the person is not an account holder of the bank then he has to attach his NIC copy with the slip for his identification. The person availing this facility submits the cash on the cash counter and
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then gives the slip to the host person at the department, who then enters the data in the computer. In this way the money is transferred to an account through PAK account, which is the central account of the bank and all the inter branch transactions has to go through this process.
LEARNINGS IN FOREIGNEXCHANGE & ADVANCES DEPTT
As an internee I learnt many things some of which I have described above. The remaining few include the processes involved in the foreign exchange and advances department. Now a day, both of these departments are considered to be the backbone of any bank. Foreign exchange department brings foreign reserves. Mostly import and export business takes place through foreign exchange department.
Advances/Credit department is equally important. This department gives the bank a real business. The bank gives money to the borrowers on interest and earns a lot in this way.
The bank lends money against some guarantee or pledges some property for this purpose.
So that in case the customer cannot pay back money, the bank can meet over come its expenditures.
HOW EXPERIENCE IMPACTS MY CAREER
My internship experience has given me a realistic preview of practical life. Now I feel that I am better prepared to enter the world of professional work. I have come to know and been appreciated by a number of professionals who are lending their services to the banking sector for more than a decade.
I feel honored that I have worked with such experienced professionals. I must admit that such interaction in this respectable professional community will help me in seeking out good job opportunities in the near future.Each task I performed was a different experience in itself. By the end of it, I must say I realize my potentials, I have realized that practical life is not so easy after all, it takes alot of hard work and devotion, and not to forget time previously lacked and many more products being offered by the bank. So in a nutshell, this internship gave me the experience, which would no doubt boost my confidence to work in future.
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Chapter – IV
FINANCIAL
ANALYSIS
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investments 46953241 18.63% 83958463 26.23% 82631118 22..53%
Ad net 144033634 57.15% 168407280 52.61% 212972008 58.08%
Fixed asset 6445111 2.56% 7548628 2.36% 11134436 3.04%
Asset 638168 0.25% 662431 0.21% 1029223 0.28%
Other asset 10161361 4.03% 10705374 3.34% 17369961 4.74%
Total asset 252026776 100% 320109723 100% 366680192 100%
Liabilities Customer dept
206031324 87.92% 263972382 100% 366680192 86.39%
Inter bank
243339023 100% 300231481 100% 344324578 100%
Net assets 17687753 7.55% 1987242 6.62% 22355614 6.49%
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24745023 100% 30408306 122.88% 25750533 104.06%
Lending to institutions
19050239 100% 18419241 96.68% 15793183 82.901%
investment
144033634 100% 168407280 116.92% 212972008 147.86%
Op fixed
10161361 100% 10705374 105.35% 17369961 170.93%
Total
206031324 100% 263972382 128.12% 297475321 144.38%
Inter bank borrowing
18410428 100% 22933656 124.59% 27778151 150.88%
B/P 2278007 1005 3494384 153.39% 2952490 129.60%
ASSETS 17687753 100% 19878242 112.38% 22355614 126.3%
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4.3 RATIO ANALYSIS
LOAN TO DEPOSIT RATIO FORMULA
(TOTAL LOANS/TOTAL DEPOSITS)*100 (RS IN MILLION)
2006 2007 2008 Total loans advance 144033 168407 212972
Total deposits 206031 263972 297475 69.90% 63.79% 71.59%
GRAPHICAL REPRESENTATION
ANALYSIS
This ratios shows a r/s between loans and advances and reveals how much Productively the deposits are used. Analysis shows an increase in loan to Deposit ratio, because advances are also increasing sharply with the increase Of deposits. This condition is favorable or the bank. If deposits increase by Higher rate than an increase in loan than bank has to face difficulty
Faisal Pervaiz-03315597157 35 LOAN TO ASSET RATIO
FORMULA
(TOTAL LOANS/TOTAL ASSETS)*100
RUPEES IN MILLION
2006 2007 2008 Total loans advances 144033 168407 212972
Total ASSETS 252026 320109 366680 57.00% 52.60% 58.06%
GRAPHICAL REPRESENTATION
ANALYSIS
Total advances of the bank increased from 2006 to 2008 and total asset Also increase from in 2006 to in2008. This parallel increase in advances Provide us gradually increasing ratio.
Faisal Pervaiz-03315597157 36 NET PROFIT RATIO
FORMULA
(NET PROFIT/RETURN ON FINANCING)*100
RUPEES IN MILLIONS
2006 2007 2008 Net profit 4156 4076 4397
Return on financing 15006 12387 12166 27.69% 32.90% 36.14 GRAPHICAL REPRESENTATION
ANALYSIS
The net profitability of the company is increasing from 2006 to 2008 as Shone above. The increasing net profit trend shows the managements Efficiency to control the operating cost and to maximize the profit
Faisal Pervaiz-03315597157 37 RATE OF RETURN AT LOAN
FORMULA
(INTEREST INCOME/TOTAL LOAN)*100
(RUPEES IN MILLION)
2006 2007 2008 Interest income 9.717 8.467 10.854 Total loan 144.033 168.407 212.972 6.74% 5.02% 5.09%
GRAPHICAL REPRESENTATION
ANALYSIS
The rate of return at loans of the company is increasing. This show that the bank is in good position. When we compare the interest income of the company with the loan.
The rate of return is increasing with the amount of total loan. This shows that the bank Is earning favorable interest income on the loans.
Faisal Pervaiz-03315597157 38 RETURN ON ASSET
FORMULA
(NET INCOME/TOTAL ASSETS)*100 (RUPEES IN MILLION)
2006 2007 2008 NET INCOME AFTER TAX 4397 4076 4156
Total ASSETS 252026 320109 366680 1.74% 1.27% 1.13%
GRAPHICAL REPRESENTATION
ANALYSIS
In return on assets ratio we evaluated whether the bank management has Earned a reasonable return with the assets under its control. The bank is Required to increase its performance as the standard rate of return is 3 % or more.
Faisal Pervaiz-03315597157 39 RETURN ON EQUITY CAPITAL
FORMULA
(NET INCOME/EQUITY CAPITAL)*100 RUPEES IN MILLION
2006 2007 2008 NET INCOME AFTER TAX 4397 4076 4156
Total ASSETS 4488 5386 6463 97.97% 75.67% 64.30%
GRAPHICAL REPRESENTATION
ANALYSIS
The equity capital of the bank is increased every year while in 2007 the net Income decrease and in2008 the net income is also increased. Due to this the Equity capital ratio has decreasing trend from 2006 to 2008. we cannot set any Standard for the bank’s return on capital because different capitals have different Capacities.
Faisal Pervaiz-03315597157 40 RETURN ON EQUITY
FORMULA
(NET INCOME/SHARE HOLDER EQUITY) (RUPEES IN MILLION)
2006 2007 2008 NET INCOME AFTER TAX 4397 4076 4156
SHARE HOLDER E QUITY 16299 18404 20805 27.09% 22.14% 19.97%
GRAPHICAL REPRESENTATION
ANALYSIS
It is a tradition that stock holders have expected to earn in average annual return Of 12%or more from equity investment in large companies. In this case we can See that the banks return on equity is up to the standard of the return on equity And stock holders received favorable return from 2006 to 2008.
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Chapter – V
CONCLUSION AND
RECOMENDATIONS
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5.1 CONCULSIONS AND RECOMMENDATIONS
The critical analysis ABL in the previous section is the representation of its past, mirror of its present, and an insight into its future. The past data of ABL Tench Bazaar branch enabled me to study the organization in a historical perspective and understand the nuisances in the banking operations. Study of he present of ABL helped me evaluate the organization in comparison to its future and competitors
. The data obtained from the analysis of its present and future in combination with my professional studies resulted in some suggestions and implementation plans, which can help to increase the profitability and operational success of the ABL, Tench Bazaar branch Rawalpindi.
Some of the major findings suggestions are discussed.
PHYSICAL FACILITIES.
The physical facilities or the layout are the most fundamental features in an organization, which the customers observe in forming an opinion, perception or idea
The physical facilities or the layout are the most fundamental features in an organization, which the customers observe in forming an opinion, perception or idea