Internship Report Soneri Bank limited

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Vision

To provide visionary services and dynamic banking solutions to cater the needs of all our stake holders

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Mission Statement

To develop Soneri bank into an aggressive and dynamic financial institution having the capabilities to provide personalized services to customers with cutting edge technology and a wide range of products, and during the process to ensure maximum return on asset with ultimate goal of serving the economy and society.

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Executive Summary

Economy of a country depends on many factors and keeps on fluctuating as a result of slight differentiation in any of the constituting factors. Among all the instruments required to control these factors are the banks. Pakistan has been furnished with a vast variety of banks both in private and government sector and there is also a increasing no of local and international banks. Of these banks Soneri bank is one of the prominent banks in private sector of Pakistan. It started its operations on September 28, 1991 and since then it has been spreading its services country wide and it has been quite successful in reaching the masses even in the remote areas. It is currently operating with 119 branches throughout out the country. The philosophy of Soneri bank is to serve the nation at the lower levels and also to help the local industries whether of small or medium sizes. Quite recently Soneri bank has also ventured in Islamic banking as well as in agriculture banking.

Agriculture banking is also of vital importance at Soneri bank that is why the extension of branches is balanced in cities as well as in villages. The Pakistan credit rating agency (PACRA) has maintained banks credit rating at ‘AA’ for the long term and ‘A1+’ for the short term and ‘A+’ for term finance certificates reflecting banks well maintained risk profile. In recent economic recession Pakistan’s economy also faced certain jolts due to global slowdown coupled with high costs of imports, inflationary pressures and other such factors. But despite all hurdles, due to prudence in liquidity management Soneri bank has remained a net lender in the market and it has also maintained a comfortable level of advance to deposit ratio.

Soneri bank is now expanding the circle of its services and it has issued visa debit card that is accepted at more than 24 million Visa outlets. Soneri bank also has correspondence in foreign countries with most of the major banks including Citi bank, Standard chartered, HSBC, ABN Amro, Bank of America, Bank of New York and Bank of Australia etc. Soneri bank is also home to people wanting to adopt a banking career and also to growth oriented employees. That is why it urges people both inside and outside the organization to take tests that are strictly prepared keeping in mind the need for potential workforce and every employee is given the opportunity to take the test. Those who are successful are then given the required training to serve the customer in a highly professional manner and growth opportunity for such employees is very high.

Over the years Soneri bank has been working in stiff competitive banking environment of Pakistan and it has been making its ground among all the giants. It is one of those banks in Pakistan which are equipped with latest banking charisma.

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The Organization Introduction

Economy of a country has some very dominant factors in its manipulation. These factors like the currency, inflation, interest rates, circulation of money as well as people’s buying powers are handled through means of different policy instruments. Banks are one such example of these instruments. A bank in theory is defined as “A bank is a financial institution licensed by government. Its primary activities include borrowing and lending money.

The concept of banking was formally and initially presented by Knights Templers. They formed different churches throughout Britain where one could easily deposit their money, gold or whatever possessions they had. Of course at that time the banking concept was just to provide some safe spot to save one’s money. Also the modern concept of ATM’s was also given by Knights Templers. So like all other things banking field kept on flourishing in different aspects reaching its present form and with modern age facilities like ATMs online banking, mobile banking and use of plastic money etc. Pakistan is also home to a no. of different local and international banks having different magnitudes.

One such bank is Soneri bank. Not quite old, Soneri bank has soon achieved a sound place in the banking industry of Pakistan and it is quite dominant in the SME sector. Incorporated on September 28, 1991 the first branch of Soneri bank formally opened doors in Lahore on April 16, 1992 followed by Karachi on May 2, 1992. The bank now operates with 119 branches all over Pakistan including the Northern Pakistan where up till now no other private bank has started operating. Soneri bank not just believes in increasing the no. of branches. The expansion of branches is based on a policy of maintaining a balance between the urban and rural areas with a view to offering the services even in the remote areas of Pakistan. Pleasant and sophisticated environment has been provided in the branches. The main essence of the banking environment is to cater the banking requirements of small and medium sized entrepreneurs, providing them qualitative and competitive services with emphasis on encouraging exports. Nearly 40 percent of the credit portfolio of Soneri bank is related to the export financing and credit decisions are taken within 48 hours of the request of the customer.

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The Bank operates in four segments: corporate finance, trading and sales, retail banking and commercial banking. Corporate finance includes syndicated financing and services provided in connection with mergers and acquisitions, underwriting, privatization, securitization, research, debt, equity, syndication, Initial Public Offering and secondary private placements. Trading and sales segment includes fixed income, equity, foreign exchanged, commodities, credit, funding, own position securities, brokerage debt and prime brokerage.

Retail banking segment includes retail lending and deposits, banking services, private lending and deposits, trust and estates investment advice and merchant/commercial/corporate cards. Commercial banking includes projects finance, real estate, export finance, trade finance, factoring and leasing. The bank is looking forward to attain further growth through activating the areas of Agricultural Credit.

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Corporate Information

Board of Directors

Auditors

Chairman

A.F. Ferguson & Co.

Mr. Alauddin Feerasta Chartered Accountants

Chief Executive Officer

Mr. Safarali K. Lakhani

Directors

Legal Advisor

Mr. Nooruddin Feerasta Manan Associates,

Advocates Mr. Inam Elahi Mr. S. Ali Zafar Mr. Abdul Hayee

Mr. Shahid Anwar (NIT Nominee) Mr. Manzoor Ahmed (NIT Nominee)

Audit Committee

REGISTRAR AND SHARE TRANSFER AGENT Mr. Nooruddin Feerasta (Chairman) THK ASSOSIATES (PRIVATE) LTD.,

Mr. S. Ali Zafar (Member) GROUND FLOOR,

Mr. Shahid Anwar (Member) STATE LIFE BUILDING NO.3,

Mr. Abdul Hayee (Member & Secretary) Dr. ZIAUDDIN AHMAD ROAD KARACHI-75530

Company Secretary

UAN: (021) 111-000-322

Mr. Abdul Hayee FAX: (021) 565 5595

Registered Office

RUPALI HOUSE 241-242, UPPER MALL SCHEME ANAND ROAD, LAHORE – 54000

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Organizational Structure

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Branch Structure (Hierarchy)

Chief Manager Senior Assistant Manager- OG-1 CD Incharge OG-1 Account Opening OG-1 Account Opening OG-2 Clearing & Remittance J.O J.O International Banking Incharge OG-1 International Banking OG-2 International Banking OG-3 International Banking J.O Advances Incharge OG-3 Advances OG-3 Head Cashier J.O Cashier J.O Assistant Agriculture Departmen t Typist

J.O AdministratorSystem N.C.S

STA F F STR ENGTH VP O.G-1 O.G-2 O.G-3 J.O Assistant SVP Massenger 1 1 4 2 4 7 1 1

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Departments in Soneri Bank

For the smooth working of an organization all the departments should work in complete order and harmony to get the desired results. Soneri bank carries out its working with the integrated working of its departments. The bank consists of the following departments. 1. Accounts Department 2. Cash Department 3. Remittance 4. Agriculture Department 5. Credit Department 6. Import & Export 7. Foreign Trade 8. Islamic Banking

Now each of the above departments will be discussed briefly.

1.Accounts Department:

Accounts department is the first way of communication and interaction between the bank and the customers. It is because the bank has to deal with two types of customers. One type consists of those customers who are called as the walking customers. These are not the potential customers of the bank. They just walk in casually to grab some information or to pay utility bills. The real asset of the bank is the permanent customers who maintain a long lasting relationship with the bank, who have to get benefit from different services of the bank. So as a first interaction they have to open a new account with the bank.

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To be a permanent customer first they have to open a new account. There is also a classification of accounts based on which the types of accounts are maintained. There are two classifications of the accounts. These are.

Type A accounts

For single, Joint personal and sole proprietorship accounts.

Type B accounts associations

For partnership, limited company, trusts, clubs

There are certain types of accounts which the customers can easily choose form according to their own convenience and suitability. These are as follows.

1. Current accounts

2. Profit and Loss accounts (PLS)

3. Soneri savings (SS)

4. Basic Banking accounts (BBA)

5. Term Deposit accounts

6. Foreign currency accounts

To get affiliated with the bank obviously the first step will be to open an account with the bank. So the account opening procedure is as follows:

Procedure of Account opening

If any person wants to open an account with the bank the account opening officer first of all gets the photo copy of CNIC of the customer and get it verified through NADRA. After getting verification from NADRA the officer gives application form to customer. Customer fills the form and gives back to officer with the required document.

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After analyzing the documents if documents are in order the officer makes entries into the account opening register and issues account number to the customer. Now the customer can operate his/her account after depositing certain amount.

Details of the Account Opening Form

In the account opening form the client is required to provide the following information. The first part establishes the currency in which the account is to be operated. The currencies include:

• Pakistani Rupee • U.S. Dollar • Pound Sterling • Euro

• Dirham

A fourteen digit code is given to the account holder that represents its account. e.g. 0201 02 01235602. Various numbers represent different category of the bank e.g.

1. 020 represents branch code 2. 102 represents product I.D. 3. 012356 represents customer I.D. 4. 02 represents prefix

The second part then establishes the preference regarding the type of account to be maintained. The various choices offered are:

• Profit and loss sharing account • Current account

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In this era, it is not possible to keep the money with us, so it is useful to deposit it into the bank for the safety. The depositor can withdraw his/her money from the bank according to his/her will and whenever he/she needs the money.

Most of the customers want to open the current account because there is not restriction to withdraw the amount, the account holder wants. Usually there is no interest on the current account up to the certain extent.

Types of Accounts:

1. Current Account

Current is a nonprofit account, flexible account with a great convenience for Individuals (in single or joint names), minors (to be operated by the guardian), charitable institutions, limited companies, firms, associations, educational institutions, etc.

Current account can be opened with a minimum amount of Rs. 10000/- (Rupees Ten Thousand). Rs. 50 will be deduct per month form account if balance decrease from Rs.10000.

Current Account entitles account holder to avail amazing facilities such as: • No limit on a number of transactions

• Free Cash Deposit and Withdrawal facilities through customer’s bank branch • Free Clearing facility to deposit cheques of other banks within the city

• Free Online Funds Transfer through Cheques to any account across Pakistan through customer’s bank branch

• Online Cash Deposit, Withdrawal and Funds Transfer through cheques from any of our branch across Pakistan (e.t.c)

2. Profit & Loss Savings Account

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be operated by the guardian) charitable institutions, provident fund and other funds of benevolent nature local bodies, autonomous corporations, limited companies, firms associations, educational institutions, etc.

The account may be opened with any amount; however accounts with balance below Rs.5000- on any day shall be subject to Service Charges as per our Schedule of Charges in force

The PLS Savings Account entitle Account Holder to avail amazing facilities such as: • Chequing Account facility with no limit on a number of transactions

• Free Cash Deposit and Withdrawal facilities through customer’s bank branch • Free Clearing facility to deposit cheques of other banks within the city

• Online Funds Transfer through Cheques to any account across Pakistan through customer’s bank branch

• Online Cash Deposit, Withdrawal and Funds Transfer through cheques from any of our branch across Pakistan (e.t.c)

PLS Savings Accounts:

• Rate of Return 5.00% p.a.

• Rs. 5,000/= minimum balance requirement. • Regular Chequing Account.

• Profit paid bi-annually.

Period Rate of Return

7 days 6.00% p.a

30 days 8.00% p.a

3. Soneri Savings (SS)

Soneri Savings Account is a flexible and fast growing cumulative profit account with a great convenience for individuals (in single or joint names), minors (to be operated by the guardian), charitable institutions, provident fund and other funds of benevolent nature local bodies, autonomous corporations, limited companies, firms associations, educational institutions etc. The rate of Profit in this savings

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scheme increases as customer’s balance increases without demanding and negotiating with SBL. The account may be opened with any amount. Soneri Savings Bank Account entitles Account Holder to avail amazing facilities such as:

• Free Cash Deposit and Withdrawal facilities through customer’s bank branch • Free Clearing facility to deposit cheques of other banks within the city

• Online Funds Transfer through Cheques to any account across Pakistan through customer’s bank branch

• Online Cash Deposit, Withdrawal and Funds Transfer through cheques from any of our branch across Pakistan

• Minimum balance requirement 5,000/-.

• Profit paid on monthly basis on daily products. (e.t.c)

Balance Rate of Return p.a

Upto Rs. 100,000 5.00 %.

Over Rs. 100,000 but upto Rs.1.0 Million 7.00 %. Over Rs. 1.0 Million but upto Rs. 5.0 Million 8.00 %. Over Rs. 5.0 Million but upto Rs. 10.0 Million 9.00 %.

Over Rs. 10.0 Million 11.00 %.

4. Basic Banking Account (BBA)

Soneri Bank Limited introduces Basic Banking Account Scheme with effect from July 01, 2006. Salient feature of the Scheme are:

• Basic Banking Accounts may be opened in the Pak Rupees by individuals including minors under guardianship.

• The accounts may be opened by initial deposit of any amount. • No minimum balance requirement is applicable.

• Basic Banking Account is non-profit bearing account.

• 4 withdrawals from a Basic Banking Account through cheques in one calendar month are free of service charges. Additional withdrawals through cheques in a calendar of month shall be subject to service charge @ Rs. 25/- per additional cheque.

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5. Term Deposit Accounts

Term deposit is offered by Soneri Bank to Individuals (in single or joint names), Minors (to be operated by the guardian), Charitable Institutions, Provident Fund and other funds of benevolent nature local bodies, Autonomous Corporations, Limited Companies, Firms, Associations, Educational Institutions etc who have the intention of retaining their savings for a fixed period thereby earning a higher rate of profit. The Term Deposit allows customer to save a fixed amount in Pak Rupee for a set period ranging from 1 month to 60 months at a provisional and attractive profit rate. The depositor has the option to reinvest the deposit automatically with or without profit.

Calculation of products on Term Deposit is computed on a daily product basis

Term Rate of Return p.a

1 month 8.00 %. 3 month 9.00 %. 6 month 10.00 %. 1 year 11.00 %. 2 years 12.50 %. 3 years 13.00 %.

6. Foreign Currency Account (FCA)

The FCA is Current/PLS account being dealt in foreign currency, particulars are same as of Current or PLS account.

2.Cash Department:

Cash department is one of the most critical departments and it encompasses the deposits of the bank and also of individual branches. The Cash department of Soneri Bank limited works under the operation department.

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This department is given the complete responsibility of cash as a result of transaction in local and foreign currencies. It is also responsible for the book keeping of these transactions and the safe custody of cash. This department is one of the most sensitive departments of the bank.

This department performs the main function: • Cash Receipts

• Cash Payments Cash receipts

In cash department depositors use deposit slip for depositing the amount into their accounts. The officer checks if the deposit slip is properly filled up containing title of account. Account number date and amount in words and figures. Detail on both counter file and cash receipt voucher should be the same. Cash is received by cash receiving officer twice counted and matched with the deposit slip. The cash details are written on the back of the deposit slip and are also entered in cash receiving register and the cash received stamp is affixed on the slip.

Cash payments

Soneri Bank deals with cash payments the process for payments of cheques local and foreign currency is same. First the cheque is presented by the customer to cash payment officer. He confirms that it is drawn on the same branch and the particulars of cheque are properly filled. One signature of the customer is taken on the back of the cheque. Cheque is handed over the officer cash department for security where officer checks the date, amount in figures and words. After proper checking account is debited and cheque is cancelled by the officer. It is posted in the system and posting stamp is affixed on it and then cheque is handed over to the cash payment officer for payment.

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3. Remittance Department:

Remittance department is basically related to the internal working of the bank. This department deals with following types of working.

• Pay Order • Online Transfer • Demand Draft • ATM • Debit cards • Credit cards

In the SBL the Remittance Department is headed by one person who is responsible for looking after the accounts of the branch and forming pay orders, Demand drafts, Telegraphic transfer. He has to make sure at everyday that the branch is a balance, in my days there; there was no one day that they had come across any problem of an unbalance.

1. Pay Order

Pay Order is a transferable instrument made by the bank, on account of a customer, to pay on order the precise amount to the directed person (payee). It is in the city area .The banks are not answerable of any theft or any mishandling of the pay orders. Pay Order is always drawn on the bank that has issued it.

Making of a Pay Orders

When a person requires a Pay Order, he is asked to complete the prescribed application form in which the amount of pay order is to be stated. Certain amount of commission and advance tax is charged on issuance of pay order. After having the total amount deposited in the bank (in cash or through cheque, in case of account holder), pay order is issued in favor of the payee.

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Like cheques, when pay orders issued by Soneri Bank Limited, are presented in other banks to get them deposited in the payee’s accounts, they comprise the outward clearing for those banks and inward clearing for Soneri Bank Limited.

2. Online Transfer

One branch may send cash to another branch straightforwardly, with of course, the permission of the head office. The usual process in such a case is that the head office in its books should debit the receiving branch and credit the sending branch. But in the books of the head office it views. The transactions as returning the cash to the head office and subsequently sending cash to another branch.

3. Demand Draft (DD)

Demand drafts are used for the transfer of the money between the cities. “A Demand Draft is a transferable instrument issued by the bank, on account of a person, and drawn on its own branch in a precise city or on the branch of a different bank in that city (in case bank doesn’t have any branch there), demanding it to pay the specified amount to the person named on it”.

Demand Drafts are used to make outstation payments or to transfer money, out of the city. Hence, a Demand Draft is always made for a detailed city.

Making of a Demand Draft

Assume a customer requests to provide him a Demand Draft made on his account for a particular city like Karachi. Then, after having the total amount (together with commission and advance tax) to be deposited with application form, demand draft is issued in favor of the specified person in Karachi (hypothetical) and is drawn on SBP Limited, Karachi Branch. So, when this demand draft is presented by payee in any bank, it constitutes the inward clearing of Soneri Bank Pakistan Limited, Karachi Branch.

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Soneri Banking Card offers convenient and 24-Hours-a-day, 365 days a year access to ATMs across the country. When traveling within Pakistan, use the Card at Soneri Bank’s own network of ATMs and hundreds of ATMs displaying either the 1-link or M-Net symbols.

5. Debit Cards

Soneri debit Card /Banking Card may also be used to pay for purchase / Services made / availed from Merchants Outlets displaying ORIX logo. Soneri Debit Card does not involve any repayments, interest charges or monthly billing, as you are using customer’s own funds in customer’s account.

Working of Remittance Department

All these methods work on same principle. This method involves debiting main Soneri account and then crediting client’s accounts. Changes are in form of symmetry or order of the operation. For instance TT is used to transfer money electronically but it has been replaced by online transfer on money. It has two types:

Advice and pay

In this method the customer is eligible to get the counter payment as soon as he/she gets the instrument i.e. DD/PO etc.

Advice and credit

In this method the customer is not eligible to get the counter payment instead the amount of instrument is directly credited to his/her account.

Clearing department is incomplete if IBC and OBC clearing schedules are not mentioned. These to schedules are inter-bank and intra-bank procedures which are performed on daily basis. The detail is given below:

Outward Bills for Collection

When an instrument is drawn on a bank, which is located outside the city, its proceeds can be collected through a mechanism called Outward Bills for Collection (OBC).

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Procedure:

All the cheques are received on one counter along with the paying slips duly filled in properly containing particulars of cheques and account holder. Counter folio of paying slip is handed over to the customer by putting stamp for “cheque received for collection for Soneri Bank” on it duly signed by officer. These cheques are scrutinized and cheques for local clearing are separated from OBCs. Cheques for local clearing are entered in Clearing Register, whereas cheques for collection are entered in OBC register. OBC number is allotted to the cheque from OBC register. Special crossing and bank endorsement stamps are affixed on the cheque.

Inward Bills for Collection

If any other bank sends a cheque of Soneri Bank Limited, it is Inward Bill for Collection. Soneri Bank remits money after checking the balance of the customer account. The process of collection starts when the cheques of Soneri Bank Ltd are received from other banks. Then these cheques are sent to the Head Office Karachi, which sends the cheques to SBP for clearing and get the confirmation of cheque and credit advice. Main activity of clearing is performed by Head Office, which contacts other banks through SBP.

4. Agriculture Department:

Agriculture department is a relatively new department and its goal is to provide facility to medium sized formers to cultivate their lands and to play their parts in the betterment of the country. Following agriculture finance facilities are provided by Soneri Bank Limited at its selected branches:

Production Loans:

Production loans are offered to meet the input and other working capital requirements for farming, orchards and nursery, tunnel farming, storage of raw material, transportation marketing grading and packing etc., by farmers.

Development Loans:

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transport for delivery of dairy, poultry, fisheries. Installation of tube-wells, turbine, land levelling, soil improvement, land reclamation, seed processing units and for godowns, silos and cold storages.

Livestock:

To meet the fixed cost and working capital requirements for cattle farming, cattle feed units, dairy farming, poultry farming; poultry feed units and fish farming.

Repayment Period:

Principal amount of Finance plus mark-up thereon is repayable depending upon nature of business ranging from one to five years. Revolving facility is also available under specific terms.

Mark-up Rate:

• All Type of Agriculture Loans upto Rs. 100,000/- : 6M Kibor + 2% • Production Loan under Revolving Credit Scheme: 6M Kibor + 3%

• Working Capital for Live Stock 6M Kibor +3.5%

• Development Loan (All kinds) : 6M Kibor + 4%

5.Credit Department:

Over the recent years credit department of any bank has got a vital importance primarily because of the car finance. It is a philosophy in banks that more the credit goes to the customers more will be the credibility of the bank in front of the customers, condition being applied that the financing gets along smoothly. The credit department has two types of financing.

• Consumer Financing • Commercial Financing

Consumer financing also comprises of following types of financing. • SONERI CAR FINANCE

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• SONERI GHAR FINANCE • SONERI PERSONAL FINANCE

Commercial financing consists of

• Small and Medium enterprises There are two main divisions of Credit division:

• Consumer Financing • Commercial Financing

Consumer Financing:

Consumer financing has further three constituents: • Soneri Car Finance

• Soneri Ghar Finance • Soneri Personal Finance • Soneri Generator Finance

1. Soneri Car Finance Purpose of Finance

Purchase of brand new:

• Un-registered cars for private use.

• Un-registered light commercial vehicles for private use. Eligible Borrowers

Salaried Persons, Self Employed Professionals, Business Persons Financing Amount

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• For Cars exceeding 2000 CC: Rs. 2.0 Million

2. Soneri Ghar Finance Purpose

• Purchase / Construction of Property for self-occupancy. • Extension / Renovation on self occupied residential Property. Product Categories

• Purchase of pre-constructed Residential Property.

• Construction of residential property on self owned plot of land. • Extension / Renovation on self owned & occupied property. • Balance Transfer Facility (BTF) for any of the above finance. Eligible Borrowers

Salaried Persons, Self Employed Professionals, Business Persons Financing Amount

• Purchase Rs.Up to 10 Million

• Construction Rs.Up to 10 Million

• Extension / Renovation Rs.Up to 03 Million • Balance Transfer Facility Rs.Up to 10 Million

3. Soneri Personal Finance Purpose of Finance

• To meet medical expenses for self or dependants of applicants. • To meet educational expenses of applicants children.

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• To meet travel expenses for self and family members. (e.t.c)

Product Categories

Eligible Borrowers

Salaried Persons, Self Employed Professionals, Business Persons 4. Soneri Generator Finance

Purpose of Finance

• For purchase of brand new Electric Power Generator to be installed at residential / commercial / industrial property owned by the borrower.

Eligible Borrowers

Salaried Persons, Self Employed Professionals, Business Persons Financing Amount

• Minimum Amount of Finance: Rs. 0.1 Million • Maximum Amount of Finance: upto Rs. 1.0 Million

Commercial Financing:

Commercial financing further caters: • Small and Medium Enterprises (SME)

Type Maximum Financing

Clean Financing Upto Rs. 0.5 Million Balance Transfer Facility (BTF) Upto Rs. 0.5 Million

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Soneri Bank Limited, arguably at the forefront of commercial excellence, has strengthened its product profile by introducing the following cost effective innovative tailor made small and medium enterprises (SMEs) financing options on flexible terms to its most discerning customers need.

The Market segment for this business is primarily SMEs and the bank stands committed to contribute in the process of national development with an explicit focus in providing quality finance solutions.

• SONERI SARMAYA SCHEME • SONERI AASAN SCHEME • SONERI TEJARAT SCHEME

The division between SME is as follows:

Trading Manufacturing Services

Sales Not More than 300M Not more than 300M Not more than 300M

Employees 50 250 250

Assets 50 Million 100 Million 50 Million

6.Import and Export Department:

Import and export department is closely tied with the foreign trade department. Basically it is an extension of the foreign trade department and whatever the bank has to offer in the foreign trade department is carried out through the import and export department. The import and export department works with the provision of following types of services.

• Advance payment • D/A or on credit

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7.Foreign Trade Department:

Specifically the FTD exists as a liaison between exporter and importer. It issues LC’s comprising of guarantees, issuance of documents including airway bills, bills of lading, E-Forms, exchange rates etc.

L.C commonly known as letter of credit or also documentary credit. In most of the cases L.C is maintained for exports.

The basic purpose of an L.C is to issue sort of a guarantee on behalf of an importer. Like if an importer asks for a shipment for which he or she intends to pay late or on credit then obviously the exporter needs some sort of guarantee that the importer will really give back his or her money as promised. Here the banks play their role.

The bank which opens the L.C is usually on the importer’s end giving a guarantee to the exporter’s bank that in case the importer fails to pay the payment in the due time then the opening bank will pay on his or her behalf. For opening an L.C there are certain requirements which the banks take care of. These

are:-• Invoices

• Bill of lading or airway bill • Packing list

• Inspection certification • Insurance cover Notification

Then it might also be the case that the opening bank which is opening the L.C on the behalf of the importer does not maintain a sound image in the banking environment or it operates in an environment that is unstable like in a war inflicted country that its worthiness can be doubted. So in such type of cases the banks acting on behalf of the exporter may ask to indulge an advisory bank or negotiating bank which is willing to give a guarantee on behalf of the opening bank.

8.Islamic Banking:

Islamic Banking is an emerging field in Pakistan and is gaining sound reputation simultaneously with advance banking. In contrast to the traditional

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banking it is based solely on Shariah. Soneri Bank offers four different types of services in Islamic Banking.

• SONERI JARI ACCOUNT (CURRENT A/C) • SONERI BACHAT ACCOUNT (SAVINGS A/C) • SONERI MUNAFA ACCOUNT (SAVING A/C) • SONERI MEAADI ACCOUNT (TERM DEPOSITS)

1. SONERI JARI ACCOUNT (CURRENT A/C)

Soneri Jari Account, on the basis of Qardh may be opened by individuals, partnerships, Joint Account holders, Companies, Corporate, Trusts e.t.c, with following unique facilities:

• No limit for minimum or maximum balance.

• No limit for minimum or maximum withdrawal amount within the available balance.

• Country wide cash deposit / withdrawal facility.

• Personalized Cheque book facility with no restriction on number of transaction.

• Fund utilized by the bank in accordance with Shariah Principles under the supervision of proficient Shariah Advisor.

2. SONERI BACHAT ACCOUNT (SAVINGS A/C)

Profit & Loss Sharing Soneri BACHAT Account may be opened by individuals, partnerships, Joint Account holders, Companies, Corporate, Trusts e.t.c, on the basis of Shariah Principles of Musharaka with the following unique facilities.

• Minimum amount for account opening Rs. 100/=.

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• Profit calculated on the basis of weightages for different tiers to benefit higher balance with higher return.-Extra premium on deposits of Rs. 10 Million and over.

• Weightages declared at periodically intervals to be announced on the web-site, and will be displayed on notice board.

• Soneri Bachat account with special operational facilities of Current Account.

3. SONERI MUNAFA ACCOUNT (SAVING A/C)

Profit & Loss Sharing Soneri BACHAT Account may be opened by individuals, partnerships, Joint Account holders, Companies, Corporate, Trusts e.t.c, on the basis of Shariah Principles of Musharaka with the following unique facilities.

• No Minimum amount for account opening. • Profit will be calculated on daily products.

• Profit calculated on the basis of weightages for different tiers to benefit higher balance with higher return.

• Extra premium on deposits of Rs. 10 Million and over. 4. SONERI MEAADI ACCOUNT (TERM DEPOSITS)

Profit & Loss Sharing Soneri BACHAT Account may be opened by individuals, partnerships, Joint Account holders, Companies, Corporate, Trusts e.t.c, on the basis of Shariah Principles of Musharaka with the following unique facilities.

• Minimum deposit Rs.10,000/= for a fixed period of 1 month, 3 months, 6 months, 1 year, 2 years, 3 years and 5 years.

• Profit payment at the option of client i.e., monthly, quarterly, half yearly, yearly or on maturity.

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• Profit declared quarterly.

• Net profit (after deduction of expenses & management fee) to be shared on the basis of weightages.

• Weightages on the basis of tenor and option of profit payment will be announced quarterly.

In addition to the Departments stated above there are several other additional services being provided by SBL. These are:

Other Services

Online Banking

On-Line Banking Services are available for all Chequing account holders. SERVICES:

• Cash Payments of cheques drawn on any of our all branches. • Cash Deposits in to customers account maintained at any of our all

branches. • Balance inquiry.

• Account statement production.

Soneri Saving Certificates

Soneri Bank's 3 years Soneri Savings Certificates provide investment opportunities to small and medium income group investors, Charitable /Benevolent Funds, Trusts, societies, Associations and Clubs with an attractive return.

Salient features of Soneri Savings Certificate

• Annualized Rates of expected Profit 11.50% p.a. • Certificates are issued for a fixed period of 3 years.

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• The certificates are issued in multiples of Rs. 10,000/- Provisional Rates

Annualized rates of expected profit for different types of PLS deposits. CERTIFICATES OF DEPOSITS

Term %age

3 years (Soneri Savings Certificates) 11.50 % p.a.

Diamond Deposit Certificates

Soneri Diamond Deposit Certificates provide investment opportunities to small and medium income group investors, Charitable / Benevolent Funds, Trusts, Societies, Associations and Clubs with an attractive return.

Salient features of Soneri Diamond Deposit Certificates

• Certificates are issued for fixed periods of 1, 2 and 3 years.

• Annualized Rates of expected Profit: from 11.00 % p.a. to 12 % p.a. • Profit paid at monthly intervals calculated from date of deposit. • The certificates are issued in multiples of Rs.

10,000/-• Financing facility upto 90 % of Deposit available. Provisional Rates

Annualized rates of expected profit for different types of PLS deposits. CERTIFICATES OF DEPOSITS

Term %age

Diamond Deposit Certificates

1 Year 11.00% p.a.

2 Years 11.50% p.a.

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Golden Deposit Certificates

Soneri Bank’s 5 years Golden Deposit Certificates provide monthly income based investment opportunities to small and medium income group investors, Charitable/ Benevolent Funds, Trusts, Societies, Associations and Clubs with an attractive return. Business Firms and Corporate can also invest.

Salient features of Golden Deposit Certificates:

• Annualized Rate of Expected Profit 10.25% p.a.(Effective from Nov 1, 2007. However deposits prior to Nov 1, 2007, shall be continue same rate up to their respective maturity dates.)

• Certificates are issued in multiples of Rs. 10,000/- for a fixed period of 5 years.

Soneri Premium Deposit

Cheque Free Soneri Premium Deposit is offered by Soneri Bank to individuals (in single or joint names), Minors (to be operated by the guardian), Charitable Institutions, Provident Fund and other funds of benevolent nature, local bodies, Autonomous Corporations, Limited Companies, Firms, associations, Educational Institutions, Clubs etc. who have the intention of retaining their savings for a fixed period of 12 months thereby earning a most lucrative rate of return thereon. The depositors have the option to reinvest the deposit automatically with or without profit.

Minimum Deposit Amount: Rs.25,

000-Annualized rate of Return (Provisional): 12% p.a.

Profit Payment Frequency: Annually at maturity of Deposit

Cheque Free Banking

• No Check book • 300,000/ Per day

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• Time Saving

• No Signature required

• No charges Can be used at POS Terminal deployed branches

Lockers

Specially designed lockers of various sizes to meet the requirements of applicants are available at our designated branches. The lockers may be operated during the banking hours of the branch.

ELIGBILITY:

Only Account holders of our branches are eligible to apply for renting the Safe Deposit Lockers.

ALLOTMENT OF LOCKERS:

• A locker of the size of applicant’s choice shall be allotted subject to its availability.

• Bank’s prescribed License Agreement on Stamped Paper to rent the Locker is required to be executed by the applicant with cost thereof payable by the applicant.

• Key Deposit money as per our Schedule of Charges in force is payable by the renter. The Key Deposit is refundable when the locker is surrendered. In case the key to the locker is lost, the key deposit shall be forfeited.

Telephone Banking

With Telephone Banking, customers can access all the information they need without making a trip to the branch. This means no Parking to find, no traffic to flight and no standing in line. At home, at work or on the go, all they need is a touch-tone telephone, customer’s card number and the T-PIN to access customer’s bank account, 24 hours a day & 7 days a week.

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If customers are having Soneri Banking Card, if they are maintaining a Soneri Bank PKR Current or Savings account Single or Joint account with either signatory authorized to operate the account, a further supplementary card can also be issued to the second account holder. All Soneri Banking Card holders use debit card facility. AVAILABLE SERVICES:

• Balance Enquiry

• Today's Transaction by Voice

• Instant statement of Account through Fax

• Request for Computer Generated Statement of Account • Request for cheque book

• Stop mark of lost Soneri Banking Card • Change customer’s T-PIN

• Latest Forex Rates • Product Information • T-Pin Change

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Learning as an Internee

While I was in Soneri bank, I observed that learning and infusion of knowledge is not restricted to the upper echelons of power. I was helped in every aspect and the staff was very supportive. In the course of my six weeks of internship in Soneri bank I was rotated in all the departments of the branch and was told every minute aspect of the working of the routine banking procedures.

Starting with the accounts department I was told that the accounts are the preface of the bank and the customers evaluate the bank on the outcome of their experience of how their accounts are managed. I got the experience of the account opening procedure and also how to handle the account closing. Although at lower level but I got a chance to audit the account forms. I also learnt different postulates required to get started with the account.

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Then I was shifted to the remittance department. This department can be considered the heart of the internal operations of any bank. It incorporates the internal working of the bank like IBC, OBC, ATM operations and debit cards etc.

Then moving to the cash department matters was quite delicate. It is because handling cash is quite sensitive matter but still I was given a chance to spend some time in the cash department and got quite comprehensive knowledge about cash payments and cash receipts.

Agriculture department was brief and I got hand on knowledge on how agriculture financing is done.

In the Credit department I was shown a book containing the rules of SBP which is the criteria for granting the loans to individuals and to different enterprises. Financing is done only after it is allowed by the regional head office in Lahore and I witnessed a case for car finance which was declined by the RHQ.

Then I attended the foreign trade department. It is a busy department given the working and interaction with international institutions. Here I was familiarized with E-forms, LC, lodgment of payment of advance and FDBC etc. I also got knowledge how to keep record of daily rates of foreign currencies.

I have to admit that learning and transfer of knowledge at Soneri bank is quite easy and what I liked best about this bank is that internships are not restricted just to those who have some connections inside and also there are chances to be the part of this institution as I have seen an internee to be accepted as an officer in the same branch. So it was really an honor and pleasure to work for some weeks and to get an on hand knowledge about the banking environment.

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SWOT Analysis

Following are some points of strengths and weaknesses for internal environment and opportunities and threats for external environment respectively.

Strengths

Supportive environment for learning: As mentioned in the report, environment in Soneri in Soneri Bank is conducive for learning and as an internee I was given full support and encouraged to diffuse the knowledge with my learning capabilities. Anyone wanting to be blended in a professional banking environment can be immensely benefited by the Soneri bank’s professional environment. More opportunities for career development thus resulting in more dedicated work force.

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Dedicated banking for SME sector: Soneri bank pays special attention to the SME sector thus resulting in a more professional and focused approach for the profound sector. So there is more to learn and serve for this important sector.

Reaching far distant lands like Northern areas thus grabbing first mover advantage: First mover advantage for any organization in any field is the key to become market leader. Same goes for Soneri bank because it has ventured in the northern areas before any other bank and certainly this venture gets Soneri bank a higher position and special position in the minds of people. • Job rotation as a periodic practice thus making the staff knowledgeable about

all fields: Job rotation for the staff in Soneri bank is a regular practice. It gives the employees insight in all aspects of general banking thus making them quite comprehensive about the minute details to be an effective banker.

Weaknesses

Less effective software: One of the most visible weaknesses is the software. Not that the software itself is faulty, but it becomes less effective with the often wavering link with the head office. If a customer returns because he or she was not entertained is definitely not in favor of any organization. So attention should be given to the matter in hand.

Broken down on line links: It is same problem as mentioned earlier. Wavering link often stops the entire working thus resulting in nothing but to wait for the link to become effective again. So of being idle the link should be upgraded as a first priority because broken links makes a no. of services irresponsive. • Broken down ATM network: This is also a staggering problem. ATM’s have

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gets benefit from them. But it is obviously annoying to see an ATM that is shut out. It may be a problem for the bank in this age of competition.

Relatively less scattered global network: When other banks are venturing in the global network Soneri bank is still falling short of an expansion in the global network. Like mass production, presence is more places may result in an opportunity to compete with other institutions and to make a distinguished place in minds of customers. There is still a huge gap in getting benefit from this aspect.

Opportunities

Establishing foreign branch network: As mentioned earlier opening new branches in abroad will definitely give Soneri bank more insight into the global markets thus making it more responsive to the latest trends in banking.

Capitalizing on information technology: I.T is booming in the current age, so besides taking all measures transfusing I.T in all fields will definitely give Soneri bank an edge for providing quality services.

Extension of serving markets: This is in reference to the above mentioned point. If the bank is present in more locations it will definitely give an opportunity to get benefited by the local responsiveness phenomenon.

Increasing the no of products and services related to online banking: As it is an age of I.T, more products easily attainable by the customers over Internet, more will be the credibility of the bank in their minds as a quality service provider.

Threats

Increasing no of private and international banks: Recently no of new banks have ventured in Pakistani banking industry and also there have been a no of

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distinguished organization because perception precedes action and amongst all the tough competition it will be a challenge to formulize a favorable perception in the minds of potential customers.

Advanced and sophisticated software used by other banks: Software is the core of banking these days. Like Habib bank uses Misys (Management Information System) and National bank uses CAMS (Computer asset management system). More effective soft ware will ultimately lead to better, effective and efficient banking solutions. So unless effective and comprehensive software is not obtained competing with other banks will be difficult.

Strict focus on SME sector: Soneri bank pays special attention to the SME sector and it is a healthy practice but other sectors also need to be given proper attention and priority as well because attention in one sector and negligence in the other might v\create an imbalance.

Unstable economic condition: Taking into consideration the recent economic turmoil that has shaken the economy of whole world, all banks need to be careful to be vigilant for any uncertain condition.

Financial Analysis

Ratio Analysis:

In finance, a financial ratio or accounting ratio is a ratio of two selected numerical values taken from an enterprise's financial statement. There are many standard ratios used to try to evaluate the overall financial condition of a corporation or other organization. Financial ratios may be used by managers within a firm, by current and potential shareholders of a firm, and by a firm's creditors. Security analyst use financial ratios to compare the strengths and weaknesses in various companies. If shares in a company are traded in financial markets, the market price of the shares is used in certain financial ratios.

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• Among companies • Among industries

• Among the different time periods for one company • between a single company and its industry average

The ratios of firms in different industries, which face different risks, capital requirements, and competition, are not usually comparable.

Financial ratios quantify many aspects of a business and are an integral part of financial statement analysis. Financial ratios are categorized according to the financial aspect of the business which the ratio measures. Liquidity ratios measure the availability of cash to pay debt. Activity ratios measure how quickly a firm converts non-cash assets to cash assets. Debt ratios measure the firm's ability to repay long-term debt. Profitability ratios measure the firm's use of its assets and control of its expenses to generate an acceptable rate of return. Market ratios measure investor response to owning a company's stock and also the cost of issuing stock.

Now there are some the calculation of the ratios which are shown in the tabular form below:

Ratios 2006 2007 2008

Liquidity Ratios

Current Ratio 1.34 1.07 1.53

Quick Ratio 0.52 0.49 0.88

Working Capital 4020716 4884922 39040081

Sales to working capital 1.38 1.28 1.20

Leverage Ratios

Interest Earned 2.40 0.21 1.48

Debt Ratio 4.51% 9.13% 9.14%

Debt to equity Ratio 0.93 0.93 0.91

Profitability Ratios

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Operating Income Margin 44.90% 44.17% 46.19%

Operating Asset Turnover 2.76 2.92 2.51

Sales to Fixed assets 2.87 2.91 2.63

Return on Equity 21.9% 17.5% 19.2%

Gross Profit Margin 31.93% 30.89% 30.60%

Market Ratios

Dividend Per Share 0.104 0.08 0.11

Earnings Per Share 3.29 2.43 1.70

Soneri Bank declared PAT of Rs 1 billion (EPS: Rs 2.43) in FY07-08 compared to Rs 0.985 billion (EPS: Rs 2.39) in FY06 reflecting a positive growth mainly due to upsurge in non-interest income. Net interest income grew by 9.6% to Rs 1.93 billion in FY07 over Rs 1.76 billion in FY06 due to an increase of PKR 4.7 billion in net advances of the bank along with a higher interest rate scenario. The growth in advances was 13% in 2007-08, which helped the bank to maintain its growth momentum. In the year, the provisions increased by almost six folds from 36 million (2006) to 234 million (2007-08).

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Noninterest income augmented by 41.5% to an amount of 1,064 million which is the major contributor to overall increase in profit before tax (1,476 million) despite of Non Performing Loans provisioning. This helped the bank to maintain its profitability. The non-interest income increased by PKR313 million during the period ended Dec-2007-08.

The profit after tax has grown by 1.5% in the year 2007-08 as compared to 7.1% and 41.4% in 2005 and 2006 respectively. The profit trend has been falling in last few years. The falling profitability is in line with the industry, but the Soneri is severely affected than others. Considering 2007-08, the return on assets stood at 1.36% while the industry enjoyed a 2% Return on Assets. As compared to the industry (23% Return on Equity), the Soneri had a Return on Equity of 16.37% which is way less than the competing banks. The bank did not pay cash dividends; shareholders were given the option to accept bonus stock of approximately 30% (99million shares).

The bank deposits have been growing. In 2007-08 alone, these recorded a growth of 13.5% that inflated the deposits to Rs 60 billion (2006: Rs 53 billion). This was the period when the banks didn't make high profits like the previous years. However, since the tightening of the monetary policy in 2006, the interest rates on deposits have increased, thus shrinking the spread that the sector had been enjoying. Moreover, budgetary measures along with monetary policy are all set to further decline the banking sector's spread in FY08.

The bank's assets have also grown to PKR76.8 billion in 2007-08, a growth of 8.7% (2006: Rs 70.7 billion). The profits again have not been able to meet the assets growth. Resultantly, the Return on Assets has declined from 1.47% in 2006 to 1.36% in 2007. Compared to the industry average of 2.1%, Soneri Bank lacks behind by a fair margin. In line with the sector's trend, the investments have shown a great increase as compared to advances.

The bank issued new shares worth PKR 997 million. This equity injection was done to meet the reserve requirements of the SBP and to finance its expansion plans. Overall, the bank's equity grew by 27.8% in 2007 to PKR 6.61 billion.

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FUTURE OUTLOOK:

During the year 2008 the bank has plans to expand is network of branches with focus on small and medium size business to enhance its market share. Taking an industry look the profit margins are likely to further squeeze as the funding costs will rise. Furthermore, the lending rates are likely to stay high in line with tight monetary by central bank. Consequently, the profitability of Soneri is also likely to show a declining trend. The budgetary and monetary measures like Federal Excise Duty on banking services increasing from 5% to 10%, increase in National Saving rates by 2%, increase in discount rate, frequent Open Market Operations will all result in a decline in profitability for the sector.

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Implications of Internship on my career

I think that internships are the preview of how crucial a professional working environment is going to be. By doing internships one can form their perception and a mindset that how he or she is going to adjust in the professional environment. Also internships are one of the ways to show the employers that one can be a valuable asset for an organization.

I have felt during my six weeks of internship that it has helped me to be vigilant for what awaits in the practical world. I have seen how things are carried out professionally. To be part of a banking environment I have gained quite an insight of how important and crucial banking can be. During the internship I was moved among all departments. This rotation has helped me a lot to form an impression of how to prepare myself to work there if I am given an opportunity to a part of them.

Also Internships give one sort of a guide line whether to set an organization as a career path or not. By doing this internship I have formed my opinion that I can choose banking as a prospective career. I can now stream line my intentions and efforts to be a part of a professional banking environment.

Internships Are also away to self analyze one’s true potential and level of efforts one can exert to work professionally. After spending six weeks in the internship, I think that I can opt banking and I hope that I can also apply for the banking field. So self evaluation for my career has been achieved by doing these six weeks internship.

Concluding the matters I hope that internships are quite grave in pointing out areas of interests, areas of specialization and plucking ones true potential out for a job. I sincerely hope that now my efforts will be more streamlined, organized and put together to apply for the banking field and later in my career it can be beneficial to prepare myself for what awaits in the professional and practical world.

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Recommendations

After passing the time in the bank I have felt that one of the biggest weak points of Soneri bank is its software called sonaware.net. It is because this software is newer version of the old software called Sonaware. After implementation of this software there is often a break down resulting because of the break in link. This breakage of link sort of paralyses the entire working making long pauses in the accounts department, remittance department and so on.

Also there is a problem in the ATM network of the bank. During my internship I have seen many times the broken down ATMs. Obviously it turns the customers away.

So in response to above stated problems and to some other restraints following are some recommendation.

• Improvement of the Software: - As it has been mentioned many times before that in this digital age software and I.T are becoming more important for day to day activities. So if a more comprehensive and dynamic software is adopted it will surely help to grasp the attention of quality seeking customers. • Up gradation of the ATM network: - It is evident that ATM’s are the most

crucial and dynamic form of modern banking and now a days, a bank without offering the facility of ATM is not going to stand in the stiff competition. So Soneri bank needs to cater the needs of the customers and the ATM network needs to be improved.

• Increase in the number of branches both in rural and urban areas to cater the needs of ever increasing no of potential clients: - More branches need to be opened. Obviously suitability and other factors need to be considered but one can never pluck the fruit out if not try for it. So unless more branches are not opened more benefits cannot be obtained.

• Better and effective marketing: - I have felt that Soneri bank is not very much into advertisement of its services and products. In this age of competition and

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mass media advertisement it is hard for you to be prominent and distinguished. So unless an effective marketing is not done people will fail to notice an organization even exists.

• Focusing the banking not only to SME but on other potential areas as well: - It will be favorable to extend the circle of services to more areas of serving. Because mass production ideas also can be applied to the services sector as well.

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Conclusion

To summarize the things I would like to say that in a short span of time Soneri bank has been successful in achieving a land mark amongst all private banks of Pakistan. It started its operations in 1992 as public limited company with paid up capital of Rs.300 (M). Now with its focus on the SME sector it has been successful in grabbing attention of a lot of potential customers. Also it is a bank with a lot of promises for new generation who want to choose banking as a career. Performance for the sake of performance is entertained and every individual is given opportunity to ascend to higher levels of their career by taking the test of Soneri bank which if passed is a guarantee to be appointed directly as OG-2 which is a healthy practice for promoting banking. Also with a less crowded management and board of directors there are fewer clashes of interests thus resulting in whole and unified efforts for the betterment of the bank. So in the end I just want to say that Soneri bank is a good place to be a banker and to excel in the banking field with its promising facilities and services to the public.

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Glossary

SBL Soneri Bank limited

KIBOR Karachi Interbank offer rate

L.C Letter of Credit

ATM Auto Teller Machine

SS Soneri Savings

BBA Basic Banking Account

SBP State Bank of Pakistan

PACRA Pakistan credit rating agency

PLS Profit and Loss sharing Account

TDA Term Deposit Account

FCA Foreign Currency Account

E-Form Export Form

CNIC Computerized National Identity Card

NADRA National Data Base and Registration Authority

DD Demand Draft

TT Telegraphic Transfer

PO Pay Order

PKR Pakistani Rupee

PIN Personal Identification Number

POS Point of Sale

BTF Balance Transfer Facility

SME Small and Medium Enterprise

FTD Foreign Trade Department

GSM Global System for Mobile communications

OBC Outward Bills for Collection

IBC Inward Bills for Collection

NIFT National Institute of Facilitation Technology

RHQ Regional Headquarters (Lahore)

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SWOT Strengths, Weakness, Opportunity and Threats

PAT Profit after Taxation

Bibliography

Web-Sites

www.Soneri.com www.google.com

Books

• Financial Institution in Pakistan by Khawaja Amjad Saeed. • Manual of Banking Laws by A.W. Chaudhary

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References

1. Mr. Chaudhry, Zaheer 2. Mr. Salam, Saqib 3. Mr. Bukhari, Najam 4. Mr. Hussain, Shaukat

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Index

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Figure

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