Vous êtes sur la page 1sur 88

CHAPTER ONE: THE ORGANIZATION

BANKING IN RETROSPECT
The word “Bank” is of a European origin and is derived from the
Italian word “BANCO”, which means a table or a counter. In the
opinion of the eminent scholars of banking, the reason why this
word was given to the banking business was the then prevailing
traditions of Lombardian money changers. It was at the end of the
middle ages when the trade and the business of exchange of money
was flourishing in the Northern cities of Italy and the money
changers used the wooden benches to carry out their business in
the markets of buying and selling of various currencies.

It will be no use to involve the origin of the word “BANK”. It,


however, found its way through the passage of various conditions
prevailing at various stages. Banking, however, did not become a
coordinated and systematized business. It has evolved and
developed according to the conditions and requirements ever since.
A through study of subject will reveal that modern banking is not
very much different from its past, and therefore, it would, no doubt,
be useful to have a general comprehension of the methods which
were practiced in this field in the ancient days.

It is a difficult task to establish the first starting point of the banking


business, but one thing is clear that the money as means of
exchange at the beginning of organized agriculture, industry and
trade gave birth to the banking transaction first and then converted
the scattered money transaction into an organized shape. The

Institute of Business and Information Technology


1
conditions needed for the growth of the system are the development
of civilization, its stability and the environment in which the
confidence grows and trade flourishes. The first were the cultures of
Sumerians and Babylonians under which the various activities were
quite different in the form and appearances, were introduced in the
banking system.

The Greeks, in the early stages, had almost the similar banking
activities to that of Babylonians. At that time the sacred temples
were the most popular place of banking operations but did not
monopolize it totally. The financial activities like accepting deposits
giving loans, checking and exchanging money and making
remittances between different cities, to minimize the risk of carrying
money were being carried out during 4th Century B.C.

The Romans, when appeared on the horizon of a new civilization,


served their apprenticeship in the art of banking under the Greeks
and altogether changed the banking procedure in most of the
ancient world along with the expansion of their influence. After the
fall of Roman Empire till the dawn of Islam the world passed through
the darkest period and faced the most corrupt and unsettled
conditions known in the history of banking. With the dawn of Islam,
the darkness was removed from the face of life and the environment
of security and stability re-established in the areas which came
under the influence of Islam. Islam came as a religion for the
guidance of the misled humanity and to rectify the deviation of
belief, to establish justice and to guide life to righteousness and
goodness. For a better understanding of the above principles the
ban on usury (RIBA) was necessary for the way of life. Islam

Institute of Business and Information Technology


2
introduced in the society which was aimed to honor and provide
protection from being ether the oppressor or the oppressed.

MODERN BANKING
The banking which was known in various forms and guises in the
ancient civilization in various parts of the world did not coincide with
the emergence of the modern Banks. The banking which had its
roots in the flourished culture and had lost its required effectiveness
regained the strength with the development of the modern banking.

The development of modern banking operations began when the


trade in the cities of North Italy flourished due to the advantage of
their locations, as they were situated near the passes of Alps and
were being used as trade routes. Thus the birth of the modern
banking took place in the same area which had witnessed the burial
of the ancient relations of cultures of this field. Probably this might
be the reason the name of first bank was given as “BANCO” which
means the wooden desks. The money changers of Lombardia used
to sit behind their wooden desks and, therefore, the place became
known as Banco. At a later stage, this word became closely
connected with banking title in the current age. Lombardia, Geneva
and Milano became famous but Florence and Venice excelled. The
various conditions and factors which were responsible for the slow
beginning in the development of banking in the early period had a
significant effect on giving banking operations a form which was
pragmatic. It was because of the various laws which remained
inconsistent, reflecting the difference and disparity of the points of
view of the various legislation on those subjects.

Institute of Business and Information Technology


3
BANKING ORGANIZATION IN PAKISTAN
Pakistan’s financial sector consists of Scheduled Commercial Banks
which include nationalized, foreign, and private banks; and Non-
banking Financial Institutions (NBFIs) which include Development
Finance Institutions (DFIs), Investment Banks, leasing companies,
Modarabas, and housing finance companies.

Scheduled Banks and NBFIs (excluding Modaraba and leasing


companies) are both regulated by the State Bank of Pakistan’s
Prudential Regulations, albeit through different wings, and are
subject to different SBP regulatory requirements such as capital and
liquidity reserve requirements.

Modaraba and leasing companies are being regulated by the


Securities and Exchange Commission of Pakistan (formerly
Corporate Law Authority), which is a body corporate. Compared to
commercial banks which cater mostly to short term working capital
requirements, NBFIs cater to medium and long term financing needs
and, thus, are barred from engaging in any commercial banking
activities including trade business and issuing cheques. However,
the SBP allowed commercial banks to undertake long term project
lending. Among the scheduled banks, only Pakistani commercial
banks are listed.

Institute of Business and Information Technology


4
BRIEF HISTORY OF BANKING IN PAKISTAN
Prior to partition in 1947, banking in Pakistan was dominated by
branches of British banks. The State Bank of Pakistan, the central
bank, was formed after partition in 1948. It assumed the
supervisory and monetary policy powers of the State Bank of India.
In the period of 60s to 70s, the emergence of a number of
specialized development financial institutions (DFIs) such as
Industrial Development Bank of Pakistan (IDBP) and the Agricultural
Development Bank (ADB). These DFIs were either controlled directly
by the state or through the SBP, and were intended to concentrate
on specific priority sector lending. In 1974 all domestic commercial
banks were nationalized by the Government. The Pakistan Banking
Council was established, which assumed the role of a banking

Institute of Business and Information Technology


5
holding company but with limited supervisory powers. However,
PBC was dissolved in 1997, leaving the SBP as the sole regulatory
authority for banks and financial institutions in Pakistan.
Nationalization of the banking sector led to pet projects. The branch
network of NCBs also proliferated in an effort to provide banking
services to all regions/territories of the country, often with disregard
to the viability or feasibility of such expansion.

Institute of Business and Information Technology


6
HISTORY AND BACKGROUND OF FAYSAL BANK
Faysal Bank started operations in Pakistan in 1987, first as a branch
set-up of Faysal Islamic Bank of Bahrain and then in 1995 as a
locally incorporate Pakistani bank under the present name of Faysal
Bank Limited. On January 1, 2002, Al Faysal Investment Bank
Limited, another group entity in Pakistan, merged into Faysal Bank
Limited which resulted in a larger, stronger and much more versatile
institution. In fact it has the highest share capital amongst private
banks in Pakistan and is amongst the largest in terms of equity.
Faysal Bank Limited is a full service banking institution offering
consumer, corporate and investment banking facilities to its
customers.

The Bank’s widespread and growing network of branches in the four


provinces of the country and Azad Kashmir, together with its
corporate offices in major cities, provides timely and differentiated
services in an effective manner.
The strength and stability of Faysal Bank Limited is evident through
the Credit Rating assigned by JCR-VIS Credit Rating Company
Limited of “AA” (Double A) for long to medium term and “A-1+” (A
One Plus) for short term.

The majority share holding of Faysal Bank Limited is held by


Ithmaar Bank B.S.C an investment bank listed in Bahrain. The
remaining shareholders comprise of general public, NIT and other
Pakistani institutions.

VISION
“Excellence in all that we do.”

Institute of Business and Information Technology


7
MISSION
“Achieve leadership in providing financial services in chosen
markets through innovation.”

Group Information
Ithmaar Bank B.S.C. is licensed by the Central Bank of Bahrain and
listed on the Bahrain Stock Exchange (ITHMR). It has a paid-up
capital of US$360 million, total equity of US$1.1 billion and is a full
investment bank with its direct business covering the Middle East
and North Africa (MENA) region, as well as South Asia, Asia-Pacific
and Europe. Besides holding significant investments in the banking,
financial services and real estate sectors in different markets, the
main activities of the Bank include underwriting (equity and other
financings), private equity (structuring, participation and portfolio
management), Islamic financing, private banking, and advisory
services covering project financing, investments, capital markets
and mergers & acquisitions.

Capital and Ownership


The majority share holding of Faysal Bank Limited is owned by
companies of the Dar Al Maal Al Islami Trust (DMI) including Shamil
Bank of Bahrain E.C. The remaining shareholders comprise of the
general public, NIT and other Pakistani institutions. The Bank’s
shares are quoted on the Karachi and Lahore Stock Exchanges.

Conformity to Islamic Sharia’a


The Holy Quran outlines for Muslims a complete code of life for
dealing individually or collectively. This is future amplified by saying
and practice of Holy Profit(May be upon him) From these guidelines ,
an Islamic economic system can be elaborated upon, aimed at

Institute of Business and Information Technology


8
creating a socially, economically and politically viable and just
environment supporting the universal well being of humanity

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


adherence to the principles of Islamic Sharia’a. In order to ensure
such conformity of Sharia’a, the Bank operations are checked and
monitored by its Religion Supervisory Board to whom the
management reports periodically. In case of new operations and
activities prior approval of Religious Supervisory Board is invariably
obtained by the bank management.

The Religious Supervisory Board of the bank itself comprises


eminent scholars of Islamic Sharia’a from Bahrain, Egypt, Saudi
Arabia, Turkey, and Pakistan possessing in-death knowledge of the
conditions in which the Bank operates. The Groups Religion Board,
composed also of many internationally renowned Islamic Scholars,
provides advice from time on issue that pertain to Group level
implementation

Board of Directors
Syed Naseem Ahmad Chairman

Naved A. Khan President & CEO

Graham Roderick Walker Director

Mohamed A. R. Hussain Director

Mohammed A. Rahman Director


Bucheerei

Farooq Rahmatullah Director

Tariq Iqbal Khan Director

Institute of Business and Information Technology


9
Shahid Ahmad Director

The members of the board are highly respected individuals who


have substantial knowledge and experience of corporate law and
regulatory practices and running successful businesses, industries
and financial sector enterprises.

The day to day affairs of the bank are managed by professionally


qualified and experienced finance, business and banking
professionals with substantial exposure in their respective fields of
specialization providing the bank with a fine blend of expertise in
various financials/banking disciplines under one roof.

Management Information

Naved A. Khan President & CEO

Nauman Ansari Head of Corporate & Investment


Banking and Acting Head of
Commercial Banking

Aarij Ali Head of Retail Banking & Acting


Head of Strategic Development

Salman Ahmed Usmani Head of Treasury

Ahmed Kamran Head of Services

Mehreen Amin Head of Human Resources

Nasir Islam Head of Compliance

Bashir A. Shaikh Advisor on Special Assets and

Institute of Business and Information Technology


10
Acting Chief Risk Officer

Syed Majid Ali Chief Financial Officer

PRODUCTS AND SERVICES


FBL offers a wide range of banking products and services to public
and private sector corporations, partnerships, individuals,
professional, and expatriate Pakistan working abroad. These include:

Deposit Products (Accounts)


• Faysal Savings Account
• Rozana Munafa Plus Account
• Basic Banking Account
• Faysal Moavin
• Faysal Premium
• Faysal Izafa
• Mahfooz Sarmaya
• FCY Saving Plus

Faysal Savings Account

Faysal Savings is specially designed to cater to the need of those


who like to earn on their hard earned savings. This account provides
convenience for the account holders.

Features:

• Account can be opened with an initial deposit of Rs. 10,000/.


• Profit is calculated on monthly minimum balance.

Institute of Business and Information Technology


11
• Profit is paid on six monthly basis.
• Access to account through on-line banking at all Faysal Bank
branches across Pakistan.
• Easy access through cheque book and Pocketmate Visa
Debit card. Pocketmate can be used at more than a million
ATMs and 29 million points of sale (POS) terminals around
the world.

Faysal Sahulat

Faysal Sahulat is a transactional account specially designed for


individuals and business customers who seek instant access to their
funds at any FBL branch in Pakistan.
Features:

• Account can be opened with an initial deposit of Rs. 5,000.


• Free access to account through online banking at all Faysal
Bank branches countrywide.
• Unlimited transaction facilities.
• On maintaining a monthly average balance of Rs. 500,000 or
more following additional facilities are provided, free of cost:
o Cheque Book
o Pay orders
o Small Locker (Subject to Availability)
o Visa ATM/Debit Card
o Statement of Account

Institute of Business and Information Technology


12
• Easy access through cheque book and Pocketmate Visa Debit
card. Pocketmate can be used at more than a million ATMs and
29 million point of sale (POS) terminals around the world.

Rozana Munafa Plus


Rozana Munafa Plus is a savings account in which profit is calculated
on day end balance, and is disbursed on a monthly basis. The
customer gets benefited because it provides customer with the
option of a high value, monthly profit account.
Features:

• Account opening and minimum balance requirement of Rs.


100,000 for individual customers and Rs. 500,000 for
corporate customers.
• Profit is calculated on daily balance basis.
• Profit is disbursed on monthly basis.
• Access to account through online banking at all Faysal Bank
branches countrywide.
• Easy access through cheque book and Pocketmate Visa
Debit card. Pocketmate can be used at more than a million
ATMs and 29 million points of sale (POS) terminals around
the world.

Basic Banking Account

Institute of Business and Information Technology


13
As per SBP prudential communicated via BPD circular No.30, Faysal
Bank has introduced the Basic Banking Account (BBA) to cater the
needs of low income groups having the following features.

Features:

• Account can be opened with Rs. 1000/.


• No requirement for maintaining a minimum balance.
• Maximum of two free deposits and withdrawals through
counters/clearing are allowed in a month.
• Unlimited transaction facility through ATMs.
• Free of charge statement of account for customers once a
year. In case more statements are required than standard
charges would be applicable.
• Free ATM transactions on Faysal Bank ATM machines.
However charges would apply on non Faysal Bank ATM
machines as per SOC

Faysal Moavin Savings Account

Faysal Moavin is a Savings account made for genuine individual


savers. Faysal Moavin offers the perfect combination of savings
account matched with the flexibility of a current account.

Features:

• Account can be opened with an initial deposit of Rs. 20,000.


• No restriction on the number of transactions.
• Profit is calculated on daily balance basis.
• Profit is paid on monthly basis.

Institute of Business and Information Technology


14
• Tiered profit structure providing an incentive to save more.
This means, as the deposit amount increases, the profit also
increases.
• Access to account through on-line banking at all Faysal Bank
branches across the country.
• Easy access through cheque book and Pocketmate Visa
Debit card. Pocketmate can be used at more than a million
ATMs and 29 million points of sale (POS) terminals around
the world.

Faysal Premium

Faysal Premium is a savings account specially designed for high


value deposits with attractive profit rates.

Features:

• Account can be opened with an initial deposit of Rs. 5


million.
• Profit is calculated on daily balance basis.
• Profit is paid on monthly basis.
• Access to account through on-line banking at all Faysal Bank
branches across Pakistan.
• Easy access through cheque book and Pocketmate Visa
Debit card. Pocketmate can be used at more than a million
ATMs and 29 million points of sale (POS) terminals around
the world.

Institute of Business and Information Technology


15
Faysal Izafa

Faysal Bank realizes that every customer's financial needs are


different. As a result, the Faysal Izafa Term Deposit is designed to
provide individuals and corporate customers an opportunity to grow
their money securely and earn attractive profits.

Features:

• Minimum required investment as low as Rs. 25,000/.


• Tenure from one year to five years.
• Annual, six monthly and monthly profit payment option
available.
• Financing facility of up to 90% of the invested amount.
• First cheque book is provided free on investment of Rs.
300,000/ or more.
• Access to profit through online banking at all Faysal Bank
branches and more than 3,000 ATMs countrywide.

Faysal Mahfooz Sarmaya

Faysal Bank endeavors to build and strengthen customer


relationships by providing innovative banking products and services.
To provide convenience and value to customers with foreign
currency related needs, Faysal Bank's Mahfooz Sarmaya foreign
currency account offers attractive features:

Features:

Institute of Business and Information Technology


16
• Account can be opened in three major international currencies:
US Dollars, Pound Sterling and Euro.
• Minimum balance for opening Mahfooz Sarmaya is 1000 units
of the currency in which the account is opened.
• Account can be opened in any of the following types:
o Savings Account
o Term Deposit Account
o Current Account
• With Mahfooz Sarmaya Account, the account holder becomes
eligible for Pak Rupee financing facility of up to 75 percent of
the deposit in the account at very competitive financing rate.
• With Mahfooz Sarmaya Account, the account holder
automatically qualifies for special rates for car and home
financing.

FCY Saving Plus

FCY Saving Plus is a new foreign currency savings account with


attractive profit rates where customers get their profit on a monthly
basis.

Features:

• Account can be opened in US Dollars, Pound Sterling and Euro


currency.
• Minimum balance for opening FCY Saving Plus is 500 units of
the currency in which the account is opened.

Institute of Business and Information Technology


17
• Profit is calculated on monthly average balance.
• Profit is disbursed on monthly basis.
• Tiered profit structure providing an incentive to save more.
• No FCY cash deposit charges.
• On maintaining the monthly average balance equivalent to
USD 50k or above, the following additional facilities are
provided.
o Free online banking.
o Priority Banking.
o Borrowing in PKR up to 90% of FCY.
o Preferential rates on consumer finance.

Consumer Finance Products


• Faysal Car Finance

• Faysal Housing Finance

• Faysal Finance

Faysal Car Finance

Product Features

Vehicle Type Locally manufactured.

Lease Term: Up to 5 Years.

Markup Rate Variable (12Mths Kibor+5% -


Annually revised).

Equity Minimum 20%.

Institute of Business and Information Technology


18
Eligibility Criteria

Age 21 years to 55 years.

Service/Business Age 2 years of corporate


employment.

3yrs of established business.

Qualifying Income 70: 30 (i.e. Max installment not


higher that 30% of your net
disposable income which includes
all credit commitments including
FBL Car Rental).

Insurance Comprehensive Insurance


inclusive at nominal rates.

Documentary Requirement

Salaried Individual

• Copy of CNIC.

• 2 Photographs (passport-sized).

• Salary Certificate.

• Bank Statement for Past 6 months / 12 months.

• Proof of Profession (for SEP).

• Tax Returns for Past 2 years (SEB/SEP).

Institute of Business and Information Technology


19
• Certificate of Commencement of Business / Registered
Partnership Deed / Memorandum & Article of Association /
Form A & 29 (SEB/SEP).

• Utility Bill / Bills of Cell Phone / Credit Card Bills.

• NTN Certificate.

• Valid Driving License.

• Completely filled application form.

Faysal House Finance

Product Features

• Buying a new home.

• Building a new home.

• Buy a Land plus construction.

• Remodeling or Renovation of Existing home.

Minimum Financing: Minimum Rs.500,000/- or maximum 70% of


Financing the property value (50% in

Institute of Business and Information Technology


20
renovation)

Repayment Period 1 year to 20 years

Markup Rate Variable (12Mths Kibor+5% -


Annually revised)

Repayment Equal monthly installment

Disbursement In single tranche 1. In tranches


against approved amount 2. In
tranches against approved
amount, first tranche will not be
more than 50% of the sanctioned
facility limit or 50% of land value
whichever is lower 3. In pre-
agreed installment against
approved amount 4

Eligibility Criteria

Age 25-60 years of age.

Service/Business Age 2 years of service, 1year


employment with current
employer is mandatory.

2 years of established business /


profession.

Qualifying Income 60: 40 (i.e. Max installment not


higher that 40% of you

Institute of Business and Information Technology


21
disposable income which includes
all credit commitments including
FBL House Rental).

Residency Pakistani / NRPs.

Tax Payer Proof of Tax Payment.

Education Intermediate level or equivalent.

Documentary Requirement

• Copy of Computerized National Identity Card.

• 2 Photographs (passport-sized).

• Tax Returns for Past 3 years.

• Copy of last month’s paid utility bill (any one utility).

• Professional degree (for self employed professionals).

• Proof of last drawn salary (for salaried applicants).

• Salary certificate from the employer (for salaried applicants).

• Bank Statement for Past 12 months (for Past 24 months for


SEP/SEB).

• Company Financials for the last 2 years (for businessmen).

• Proprietorship letter (if proprietorship concern).

• Partnership Deed (if partnership concern).

• Certificate of Commencement of Business / Registered


Partnership Deed / Memorandum & Article of Association /
Form A & 29.

Institute of Business and Information Technology


22
Faysal Finance

Product Features

Maximum Financing Rs.500, 000/- (up to Rs.1M in secured


cases – residential property).

Repayment Equal monthly installment.

Repayment Period 3 Months to 60 Months.

Markup Rate Fixed (Variable in secured cases).

Residency Pakistani / NRPs.

Collateral Liquid / Residential Property.

Financing Margin 90% & 70% (for Liquid / Residential


Property).

Income Clubbing Facility of clubbing of spouse income is


available.

Eligibility Criteria

Age: 21 years to 60 years (up to 65


years in SEB/SEP).

CCM “A” Min 06 month’s employment


tenure required.

CCM “B”& others 02 years employment tenure


required (1year employment with
current employer is mandatory).

Business Age Min 3 years in the current


business and associated with the
industry for the at least 5 years

Institute of Business and Information Technology


23
(SEB).

Qualifying Income 67:33 (i.e. Max installment not


higher than 30% of applicant net
disposable income which include
all credit commitments including
FBL - Faysal Finance rental).

Documentary Requirement

• Clear Copy of valid CNIC / NICOP.

• 01 Recent photograph (passport sized).

• Recent Salary Slip/Salary Certificate.

• Bank Statement for 06 months for CCM “A” rated companies


and 01 year for CCM “B” rated & others companies which
reflecting salary.

• Bank Statement for last 12 months (SEB/SEP).

• Copy of NTN Certificate (SEB/SEP).

• Utility Bills/Credit Cards Bills for CCM “B” rated & others.

• Completely Filled and singed application form by the applicant.

Corporate and Investment Banking


• Corporate Financing

• SME Finance

• Trade Financing

Institute of Business and Information Technology


24
• Treasury & Capital Markets

• Investment Banking

• Agricultural Financing

• Cash Management

Corporate Financing

Faysal Bank Limited is fully geared to meet the changing economic


challenges present in Pakistan. FBL is ever striving to build
meaningful relationships with its customers and become partners in
their growth and progress by acting as financial advisors and
consultants as well as financiers. Its Corporate Finance Group
extends both short and long term financing facilities designed to
fulfill the individual need of each corporate customer.

Small and Medium Enterprise Financing

Small and Medium Enterprise (SME) unit of the Bank is geared


towards catering to the banking requirements of small to medium
businesses in a timely and therefore cost effective manner. All the
branches of Faysal Bank are equipped to speedily attend incoming
financing requests from SMEs. FBL helps its customers grow from
strength to strength by acting as their bankers and financial
advisors.

Trade Financing

Faysal Bank has established a strong presence globally in Trade


Financing through its network, affiliates and correspondents. The
Bank has conveniently maintained relationships with major banks in

Institute of Business and Information Technology


25
the international financial market and continues to develop new
ones wherever needed. Its Trade Finance services include a full
range of import, export and guarantee products, thus offering tailor-
made solution to fit the individual need of each customer.

Treasury and Capital Markets

Faysal Bank's Treasury is one of the leading market makers in


quoting competitive prices in all major currencies and provides
dynamic corporate and institutional marketing teams with up-to-
date market information. The bank’s cutting edge is the in-time
advice and execution of deals for its customers.

Faysal Bank's treasury team strives to satisfy the customer's


financial needs in a timely and a flawless manner. Faysal Bank has
earned immaculate reputation in the field of Capital Markets, which
is quite evident from its track record and market share in this area.

Investment Banking

With the ever-changing business environment in Pakistan,


companies need expert partners with a keen understanding of
business to help achieve profit objectives. At Faysal Bank, the
leaders of businesses and institutions are offered, corporate
advisory services and a wide array of tools to help them accomplish
their goals. The bank advises and facilitates the arrangement of
commercial paper, syndications, mergers, acquisitions and
underwriting arrangements amongst many others. Whether the
customers require financing of a project or managing of
investments, it can guide them through the markets and tailor a
solution to meet their specific needs.

Institute of Business and Information Technology


26
Agricultural Financing

Faysal Bank offers specialized products for the agricultural sector.


All of its branches located in agricultural areas of Pakistan are
equipped to help the local farmers improve their yield and methods
of farming by offering timely and affordable modes of financing to
suit their needs. To increase its outreach into agricultural regions of
Pakistan, Faysal Bank has entered into strategic partnership with the
specialized entities engaged in the Agro related supplies and
services.

Cash Management

Faysal Bank's Cash Management department has emerged as one of


the leading cash management solution providers in strategic
markets such as local corporates, multi-national companies, and
mid-tier markets. Faysal Bank's role in these segments, span the
entire spectrum of services including, but not limited to Strategic
Receivables/Payables Management, Corporate Electronic Banking,
Payroll and Fund Management Services, Dividend Processing, and
Process Re-engineering. Success of Cash Management services is
primarily attributable to its focus on providing streamlined and
customized solution that adds value to business process of its
clients.

Services
• PocketMate Visa Debit Card

• Travellers Cheques

• Transfer of Funds

Institute of Business and Information Technology


27
• Safe Deposit Lockers

• Non-stop Banking

PocketMate Visa Debit Card

Combining the wide acceptability of a credit card and the thoughtful


prudence of an ATM card, Faysal Bank PocketMate is the most
convenient way to carry cash. No more fear of overspending. No
more searching for the nearest ATM. PocketMate Visa Debit Card
provides customers with the freedom of world wide acceptability at
over 27 million merchant outlets as an ATM card operative at all
ATMs in Pakistan plus at over 1 Million ATMs worldwide bearing VISA
logo.

Travelers Cheques

Customers can purchase American Express, US Dollar and Pound


Sterling Travelers cheques at selected branches of Faysal Bank.

Transfer of Funds

Customers can deposit and withdraw cash from any branch of Faysal
Bank, regardless of which branch the account is in. Customers need
only to carry their cheque book.

Money Transfer through SWIFT and Western Union Service

Institute of Business and Information Technology


28
Customers of Faysal Bank can now easily and speedily transfer
funds in foreign currency through the SWIFT system installed at the
Bank. Customers who receive money transfers from overseas
through the Western Union service can now withdraw their funds
through any Faysal Bank branch.

Safe Deposit Lockers

At Faysal Bank, customers are offered Safe Deposit Lockers in a


pleasant and secure environment. All lockers are discretely placed
within the Bank’s professionally guarded premises. Lockers are
available in three different sizes to suit individual customer needs at
reasonable rentals. Faysal Bank also offers an added insurance
feature with locker.

Non Stop Banking

All branches of Faysal Bank remain open for business from 9 a.m. to
5 p.m. from Monday to Thursday and Saturday. On Friday, the bank
is open from 9 a.m. to 12.30 p.m. and then again from 3 p.m. to 5
p.m. To suit customer needs, FBL has extended its banking hours on
Saturdays. Now customers can enjoy its consistent and quality
service from 9 a.m. to 5 p.m.

Institute of Business and Information Technology


29
GENERAL PROFILE OF FBL
Company Profile Faysal Bank Limited

Ticker FYBL

Exchanges LSE, KSE, ISE

2009 Profit Rs. 476,392000

Major Industry Financial

Sub Industry Commercial Banks

Country Pakistan

Employees 5000 approximately

Branches 129

Website www.faysalbank.com

ORGANIZATIONAL STRUCTURE
The organisational structure of Faysal Bank is functional. Faysal
Bank has nation wide network of branches. Most of the departments
have been divided on the basis of functions.

Although the current structure of the organization promotes


economies of scale because all employees are located in the same
department and share the same resources but this structure has
also restricted coordination among the departments and hence lead
to a lesser degree of innovation.

In order to have a flat, fast and agile corporate structure, the


operating model of the Bank was restructured in line with
internationally acceptable banking standards. A number of policies

Institute of Business and Information Technology


30
and procedures including the prudent risk management have been
put in place.

Structural dimensions
Formalization

Faysal bank is highly formalized. The reason is that the customers


are to be satisfied and the management can’t bear any negligence
in the customer’s records. To have a proper and quick database of
customers, formalization is there. High formalization in Faysal bank
is specified to every employee in the departments but there is no
rigidity found in this context, every employee is volunteer to help
other. Some rules are there, like to maintain the record of customer
first or to deal customer fairly, no smoking and the things which
irritate the customers are not allowed, things are to be done
properly and in pleasant manners and procedures are there to
perform those rules.

Specialization

In today’s dynamic environment and tough competition, banks need


efficiency and have to perform specialized tasks. There are many
departments in Faysal Bank and jobs are divided among the
employees of each department. Specialization among the
department is there. As every department is performing its task
separately, the employees are highly efficient in performing their
work in the specialized environment.

Standardization

Institute of Business and Information Technology


31
In Faysal Bank, standardization is there. There are standard rules
and procedures defined by the top management for the execution of
tasks. The organization of the standards keeps every employee
aware of the procedures adopted during different situations.

Hierarchy of Authority

Hierarchy of authority of Faysal bank is short because there are so


many people working under the supervision of one person. So the
span of control is wide.

Centralization

In Faysal bank the Centralization is high and the goals are set by the
top management and low-level management just works according
the guideline provided by the top management.

Complexity

Complexity refers to the variety in the tasks performed. In Faysal


bank the vertical complexity is low and the horizontal complexity is
high because of variety of activities performed and the number of
departments there in bank.

Professionalism

Professionalism is high in Faysal Bank. After every 3 months


employees are trained under the experienced and skilled
researchers in terms of education, career development and above
all, ethics training.

Institute of Business and Information Technology


32
ORGANOGRAM AT THE HEAD OFFICE LEVEL

Board of Directors

Chief Executive
Officer

Executive
Committee

Executive Incharges

Area Manager North Area Manager South

Institute of Business and Information Technology


33
ORGANOGRAM AT THE BRANCH LEVEL

Institute of Business and Information Technology


34
DIFFERENT DEPARTMENTS OF FBL

Different departments of Faysal Bank are as under:

Operations Department

Operations Department is subdivided into following four


departments:

• Remittance

• Cash

• Account Opening

• Customer Service

Agri-Finance Department

This department provides agriculture loans to the formers at


nominal rates with easy terms. It includes short term financing for
fertilizers, seeds, pesticides etc and long term financing for purchase
of harvesting machines and installation of tube-wells etc.

Credit Administration Department

This department supervises the loans either given or received in the


form of deposits. It administers the conditions imposed at the time
of delivering of loan like security etc.

Marketing Department

It peruse the customers to make business with the bank either in the
form of deposits or by applying for financing. Different tools and

Institute of Business and Information Technology


35
techniques of marketing are used such as making contact personally
with the customers, advertisement through television, news papers
and on the website.

Consumer and Finance Department

This department provides loans to the ultimate consumer in the


form of car leasing, house financing and as well as personal loans.
Besides this it also administers the loans already given.

Documentary Credit and Foreign Trade Department

This department provides assistance to customers regarding foreign


trade, such as it deals with the international companies and
provides goods and services required by customers. The kind of
assistance it provides includes letter of credit facility, guarantor and
also helps in foreign remittances.

Institute of Business and Information Technology


36
Overall Appraisal, Problems
Faysal Bank is enjoying the status of leading commercial banks in
Pakistan. Faysal Bank operates in retail banking, consumer banking,
and investment banking etc. with the IT infrastructure. The branches
are working online giving 24 hour services to the customers. Faysal
Bank promises the innovative product and services to the customers
and adopts the changing trends in the market and therefore going
towards the new era of success. Despite the success of Faysal Bank,
there are some problems associated with the bank:

• The employees are important part of the bank, but they are
not satisfied with the pay- scale which is very low. The bonus
given and the annual increase in pay are very low which may
cause dissatisfaction in employees or it may lead towards the
high turnover of the employees.

• Salaries are given on individual basis but the company should


adopt the policy of performance base salary system.

• There is no separate human resource department in each


branch of Faysal bank.

• The company is not adopting the policy of direct hiring.

• The performance appraisal has been done on traditional basis


(yearly basis).

• Transportation facility has not been provided to all the


employees except Branch manager.

• No mobile facility is to be provided by Faysal bank.

Institute of Business and Information Technology


37
• There is no proper job rotation in Faysal bank.

• No Traveling allowance is to be provided by Faysal bank.

• Some time the working time exceeds the limits of twelve


hours.

CHAPTER TWO: INTERNSHIP ACTIVITIES

Departments, I served
During my internship at FBL, I got a chance to work in three main
departments.
These are:
• Clearing Department
• Account Opening
• Remittance

CLEARING
I started my internship in the clearing department where my
supervisor was Madam Shabnam Riaz. I spent 4 weeks in this
department. During my stay in this department, my supervisor told
me the basics and the practical work involved in cheque clearing
and cheques received for collection purposes.

I would like to start from cheque clearing. The major things involved
in this context are to be discussed here.

Types of Clearing
The Clearing process is of two types:
• Inward clearing

Institute of Business and Information Technology


38
• Outward clearing

The clearing facility is provided by the state bank of Pakistan for


offsetting of cross obligations between the different banks. The
facility is now handed over to NIFT abbreviated as National
Institutional Facilitation Technologies Pvt. Limited. I will discus both
clearing through SBP and through NIFT and their roles after
discussing inward and outward clearing.
Inward Clearing
Inward clearing is where the FBL customer draws cheque in the
favor of a non- FBL customer. The inward clearing process decreases
the deposits of the bank.

Procedure of Inward Clearing


Before Centralization
Before the centralization of the inward clearing process, the cheques
of different banks drawn on FBL branches were received at the
concerned branches along with the schedule of other banks. The
NIFT riders used to give cheques to the branches. The respective
branch used to make jotting of cheques and schedule of banks
separately. Both jottings must tally. The posting of cheques in the
system was also done at the branch level.
If for any reason, a cheque received in inward clearing is not
honored, it was returned with the memo showing the reason for not
passing the cheque. The cheques returned were entered in the
inward clearing returned register.
After Centralization

Institute of Business and Information Technology


39
In FBL, inward clearing is now centralized and the CPU (Central
Processing Unit) at the Mall does all the inward clearing like
verification of cheques, stamping and posting etc. In case of any
difficulty, the CPU sends faxes to the respective FBL branches
regarding the confirmation of client and also the signature
verification of the client. The branches then reply to the faxes after
necessary verification and fax them back if the status of the client is
ok and ask the CPU to make the payment. In case of any difference
in the signatures of the client as per stored signature database, the
bank carefully monitors and discourages the payment of such
doubtful cheque. The branch only maintains all the correspondence
with the CPU in a separate file named as “Inward Clearing to CPU”.
Outward Clearing
Outward clearing means cheques drawn by non- FBL customers in
favor of the FBL customers and deposited in one of the branches of
the FBL. The outward clearing increases the deposits of the bank.

Procedure of Outward Clearing


Before Centralization
Before the centralization of the outward cheque clearing process,
the cheques were received and posted by the branches after the
necessary scrutiny and stamping of the cheques.
After Centralization
The outward cheque clearing process is now centralized meaning
there by all the posting of the cheques is done at the CPU. When a
branch receives cheques to be sent for local clearing, the following
work is done:

Institute of Business and Information Technology


40
• Counter foil of the pay-in slip signed by an authorized officer of
the branch bearing the stamp “Received for Clearing” is
returned to the customer for his/her record.
• The cheques received at the counter are then given to the
clearing department for the purpose of clearing.
• The clearing officer does all the necessary scrutiny of the
cheques like:
 Checks the date of the cheque. This is the most
important thing in the cheque clearing process. The
post dated cheques should not be received for
clearing. They should be received on the date
mentioned on the cheques.
 The amount in words and figures must be matched.
 The account title must be same on the cheque and
the bank’s copy of the deposit slip.
 The cheques are checked for crossing whether it is
simple crossing or payee account crossing. In
simple crossing, the cheque is deposited in the
account but it can be endorsed in favor of another
party other than the name of the payee on the
cheque. In account payee crossing, the amount
must be credited in the account bearing the name
on the cheque.
 The clearing officer also checks that there should
not be any cutting and overwriting on the cheques.
 The cheque should not be mutilated. If so, the
stamp of “Mutilation Guaranteed” must be affixed

Institute of Business and Information Technology


41
at the back of the cheque and is duly signed by the
authorized officer.

After looking for the necessary components of the cheque, the next
procedure is to affix stamps on the cheque and the deposit slips.

Stamping on the Cheques and Deposit Slips


For cheques, two stamps are affixed:

• “Payee’s Account Credited” on the back of the cheque.


• “Clearing Stamp” on the front of the cheque.

For deposit slips, only one stamp is used:

• Clearing stamp.
• The stamps are duly signed by the authorized officer of the
bank. In FBL new garden town branch, the manager operations
Mr. Ahsan Iqbal Sheikh signs the stamps.
The date on the clearing stamp is always one day ahead, because
the cheques are presented in the concerned branches the next day
for payment.

Preparation of Excel Sheet


All the cheques are entered in the excel sheet in lots of 50. In the
excel sheet, following are the fields that are filled:

• Cheque amount.
• Deposit slip amount.
• Depositor’s account number.

Institute of Business and Information Technology


42
Jotting
After the preparation of excel sheet the cheques and the deposit
slips are separated and jotting of cheques and deposit slips is
separately done in order to assure that the total of all cheques
agrees to the total of deposit slips/vouchers.

Cheques ready to sent for clearing


After jotting of cheques, the cheques are bundled in lots of 50 and a
bundle cover is attached to the cheques which are provided by the
NIFT containing the following information:

• Bank /Branch code.


• No. of Instruments.
• Date.
• Amount of total cheques.
• Signature by the Manager Operations
After preparing bundle covers, a sheet is prepared named as
“Outward cheques for Clearing” which includes the total number of
instruments and the deposit slips and the consolidated amount of
the cheques. The sheet is duly signed by the Manager Operations
and is then attached with the bundle of cheques and the deposit
slips and send for the purpose of clearing to the CPU Mall where
these cheques are again scrutinized and entries are posted in the
system. After posting the cheques, the NIFT riders come to CPU and
collect the cheques for clearing.

Filing of Documents

Institute of Business and Information Technology


43
NIFT sends daily scroll sheet to the bank’s branches which contains
the detail of both inward and outward cheques returns. This sheet is
kept along with the print out of daily excel sheets in a separate file
named as “Outward Cheques for Clearing”.

Same Day Clearing

The practice of issuing SBP cheque on behalf of the customers for


the purpose of same day adjustment adopted by the banks have
been dis-continued and a system has been introduced for same day
clearing through NIFT.

Pre- Requisites for Same Day Clearing

The following are the requirements for availing this facility:

• Same day clearing is restricted to instruments valued at Rs.


500,000/- and above and received by 10:00 AM.
• The depositor must make specific request to the branch for
same day clearing.
• The same day clearing is restricted to the branches that are
designated only which will ensure that the timings in this
respect are strictly followed.

Cheques Returned in Outward Clearing

The cheques which are sent for local clearing may be returned for
the following reasons:

• Funds Insufficient
• Signatures Differs
• Dormant Account

Institute of Business and Information Technology


44
• Stop Payment by the Drawer etc.

The returned cheques are entered in the separate register called


“Returned Cheques in Outward Clearing” the day when they
received. After making the entries, the client is called for the
collection of such cheques. If the client does not come to the bank
after the reasonable time period, the cheque is then dispatched to
the customer along with the letter containing the details of the
cheque like cheque date, cheque number and the reason for return
of the cheque. The photocopy of both the cheque and the letter is
kept in a file called “Returned Cheques Dispatched”.

If the client comes to collect the cheque, photocopy of the cheque


and the return memo is also kept and then receiving of the client is
taken on the cheque return register and the photocopies of both the
cheque and the return memo are kept in a file named as “Returned
Cheques”.

Now I would like to discuss the procedure of clearing through State


Bank of Pakistan and the role of NIFT in the clearing process.

CLEARING THROUGH STATE BANK OF PAKISTAN


Before the incorporation of NIFT (National Institutional Facilitation
Technologies Pvt. Limited) in 1995, the State Bank of Pakistan used
to provide the services of clearing and settlement of commercial
bank accounts. This clearing process was very time consuming,
inefficient and costly.

Procedure of Clearing through SBP

Institute of Business and Information Technology


45
At the time when NIFT was not incorporated there were around 8
national and the branches of international banks working in Pakistan
and representative of each bank used to sit in the clearing room of
State Bank of Pakistan.

The cheques were collected by each branch of the respective bank.


Before the end of working hours each branch used to send the
collected cheques to the head office of the particular bank where
they segregate and sort the cheques with respect to the bank name
and branch code. After this process the agent of each bank took
those cheques to the State Bank of Pakistan where the
representative of every bank negotiates with each other and collects
the respective bank cheques. The representative of each bank after
the clearing collected the cheques and those cheques were
transferred to the head office where they again sorted the cheques
according to the branch codes and then sent to them.

That clearing process was not efficient and the cost was high,
chances of dishonor of the cheques were high and process of
clearing was lengthy. State Bank of Pakistan also kept no proper
records of clearing cheques.

THE ROLE OF NIFT IN CLEARING


What Is NIFT?

NIFT stands for National Institutional Facilitation Technologies


Pvt. Limited. The institution was incorporated in September 1995
as joint venture between a consortium of six banks and
entrepreneurs from the private sector. All banks in Pakistan, a total

Institute of Business and Information Technology


46
of 42, are participating members of NIFT with branches spread
throughout the country. Six equity holder banks are:

• Habib Bank Limited.


• MCB Bank Limited.
• National Bank of Pakistan.
• United Bank Limited.
• Allied Bank Limited.
• First Women Bank Limited.

As of June 2007, 40 commercial banks and their 4500 branches in


100 major cities utilize NIFT’s services. NIFT has signed an
agreement with the central bank for provision of automated clearing
services to all banks and their branches; SBP has a monitoring role
in the clearing operations of NIFT. NIFT has setup elaborate data
centers geared to provide automated services for document
processing particularly in the payment arena.

NIFT is responsible for the establishment and management of


automated clearing house facilities in Pakistan. NIFT is actively
involved in the modernization of payment systems in the country. All
commercial banks in Pakistan are members of NIFT’s clearing
system and bank plays monitoring role on the clearing operations of
NIFT.

Services Provided by NIFT

The services provided by NIFT includes collection and delivery, inter-


branch settlement, reconciliation, return (un-paid) cheques

Institute of Business and Information Technology


47
processing, the same day clearing (express) two-hours, clearing
services and inter-city clearing to all commercial banks and their
branches in Karachi, Lahore, Rawalpindi, Islamabad, Hyderabad,
Faisalabad & Peshawar. NIFT services cover over 90 percent of all
cheques clearing transactions that take place in the country.

Explaining the procedure, the NIFT collects the outward clearing


directly from every branch and arranges processing, presentment
and processing of returns, providing the net position, etc to the
banks and their branches.

Automated Cheque Clearing House

The opening of automated cheque clearing house is another


milestone in the field of payment of settlement system, which is
known for its fast cheque clearing process. The automation of
clearing operation which commenced with the establishment of the
first centre at Karachi (in 1996) has now been propagated to all the
major cities of Pakistan. NIFT has established data centers in
Karachi, Lahore, Islamabad, Rawalpindi, Gujranwala, Sialkot,
Faisalabad, Hyderabad, Peshawar, Multan, Bahawalpur, Quetta,
Sukkur, D.I.Khan and Muzaffarabad. NIFT has set up a grid of
automated clearing which provides efficient and cost effective
intercity clearing involving 15 major and over 85 satellite cities in
Pakistan. NIFT has facilitated setting up of citizen data base by
National Database and Registration Authority (NADRA) by image
archiving of 64 million census forms.

Automated Clearing

Institute of Business and Information Technology


48
Automated clearing services are provided by the NIFT at most of the
field offices. Through electronic clearing, different risks of
commercial banks and customers have been minimized and
payment processing costs have also been reduced. Increasing
volume of non-cash payment instruments like cheques, drafts,
payment orders etc are being processed through a network of
clearing house. Each participating bank’s net position is generated
through automated clearing house.

The introduction of the automated clearing involved creating local


standards for encoding cheques and other instruments, assisting
banks in preparing standard code line and training bank branch
staff.

Procedure of Clearing through NIFT

Payment and settlement systems are crucially important to the


smooth functioning of the economy. It is the responsibility of a
central bank to promote sound and efficient payment and
settlement systems.

Financial institutions use payment systems to settle financial market


transactions. State Bank of Pakistan has made incredible efforts for
improving the efficiency of the payment system.

Being an operational arm, the SBP facilitates in maintaining an


efficient, safe and reliable payment and settlement system. During
the period under review, payment instruments of commercial banks
have been standardized to facilitate the automated clearing facilities

Institute of Business and Information Technology


49
provided by the National Institutional Facilitation Technologies
(NIFT).

In major cities, the functions of the SBP clearing house have been
handed over to NIFT to the extent of sorting of payment instruments
and preparing clearing schedules. The agent of NIFT directly collects
the cheques from each branch of the bank instead of collecting from
head office. Now the process of segregation and sorting the cheques
is done by the NIFT rather commercial banks through the automated
system. NIFT also keeps the record of cleared cheques and also
provides the net position to the banks.

After discussing the role of NIFT and SBP, I would like to discuss the
procedure of cheques on collection which is as follows

Cheques on Collections
Cheques for collection are those which are not included in the local
clearing. They are outside city cheques. There treatment is
somewhat different as compared to local clearing cheques.

Procedure for Cheques on Collection (COC’s)

The collection is also handled by the clearing officer. When the


concerned staff at the counter collects the cheque for collection
purposes, the customer’s copy of the deposit slip is returned by
affixing the stamp “Cheque Received Subject to Realization”, which
means that on the realization of the cheque, amount will be
transferred to the customer’s account. The same scrutiny of the
cheques is done as in the case of clearing.

Stamping of the cheques

Institute of Business and Information Technology


50
The following stamps are used for collection:

• Crossing stamp of “Faysal Bank Limited” on the face of the

cheque.
• “Payee’s Account will be Credited on Realization” stamp on the
back of the cheque.
• “Outward Collection Number” stamp on the back of the
cheque. The same stamp is also affixed on the deposit slip.

Entries in the Register

After stamping, the entries of the cheques are made in a register


called “Outward Bills for Collection” (OBC). The register contains the
following fields:

• Date.
• Beneficiary Name.
• Cheque Number.
• Account Number.
• Amount.
• Bank Name and Address.

Posting Entries in the System

After stamping and entries, the cheques are posted in the system.
The software used for this purpose in Faysal Bank is “SYMBOLS”.
After posting of cheques, the letters are printed from the system

Institute of Business and Information Technology


51
containing the address, name, cheque number, amount of the
cheque. The letter is stamped with the Faysal Bank crossing stamp
and is duly signed and stamped by the authorized officer, here in
this case is the Manager Operations of the bank. The stamps are
also signed by him.

Collection Area where FBL has its Branch

For those outside city areas, where Faysal bank has its branches,
cheques on collection are sent to these branches which collects the
funds from the branches on which cheque is drawn and then credits
the same in the customer account. This branch sends those cheques
in its local clearing and after the clearing process the funds are
transferred to the customer’s account.

Collection Area where FBL has no Branch

Those areas where FBL has no branch, the cheques are directly sent
to the branches on which the cheques are drawn. These branches
draws a Demand Draft in favor of Faysal Bank which when received
by the branch lodge in the local clearing for the release of funds.

Time Period for Collection

Where FBL has a Branch 3 Days

Where FBL has no Branch 7 Days

Filing of Documents

After the preparation of the letters and cheques, the photocopies of


the cheques and the letters and also the deposit slips are kept for
the bank’s record and are maintained in the file called “Cheques on

Institute of Business and Information Technology


52
Collection (COC)”. The cheques along with the original letters are
then dispatched to the respective branches for collection purpose.

Reminders for Delayed COC’S

The cheques which are sent for collection, if not realized after a
reasonable period of time, reminders are issued to the respective
bank’s branches. For record purposes, photocopies of reminders are
maintained in the file called “COC Reminders”.

Realization of COC’S

When cheques are sent for collection, they are treated as a liability
for the bank. When COC gets realized, the entries are made in the
OBC (Outward Bills for Collection) register bearing the realization
date. The realized cheques on collection are also kept in separate
file called as “COC Realized”.

COC Returned

Those cheques which are returned in the collection are recorded in


the returned register in the collection returns portion.

Institute of Business and Information Technology


53
ACCOUNT OPENING
After working in the clearing department, I was moved to the
account opening department where my supervisor was Madam
Rabia Shafqat. She told me the basics of account opening. I spent
one week in this department. The things which I have learned in this
department are shown as below:

Procedure of Account Opening


Account opening is the most important department of a bank; the
reason is that it is where a customer- banker relation starts. The
procedure which I am going to explain is the general procedure of
account opening which is applicable to all categories of accounts.
The required documentation is discussed after the procedure for
each category of account. The three significant steps in the account
opening process are:

• Obtaining the Required Documents.


• Proper Introduction of the Account.

Institute of Business and Information Technology


54
• Know your Customer (KYC) details.

The following procedure is followed for account opening purposes:

• Introduction of Account.
• Introduction by Staff.
• Obtaining CNIC from the Customer.
• CNIC Verification from NADRA.
• Verification of the Customer’s Name.
• Occupation/ Employment Evidence.
• Customer Profile Form (CPF).
• Verification of signatures on Account Opening Form and SSC
(Signature Specimen Card).
• Signature Scanning from AOF/SSC.
• Sending Documents to CPU.
• Initial Deposit.
• Letter of Thanks.
• Issuance of Cheque Book.

Introduction of Account

Introduction of an account is one the essentials from State Bank of


Pakistan. The introduction of an account can be given by the Faysal
Bank’s existing customer and in this case the bank ensures that the
account is at least 3-6 months old with satisfactory conduct. The
account opening officer verifies the signature of the introducer from
the system containing his/her information.

Introduction by Staff

Institute of Business and Information Technology


55
The introduction of the new customer can be given by the
permanent staff member of the bank. In this case the name of such
staff member is provided on the AOF [CRF] by means of a notation
underneath the introducer’s column “Personally Known to me”.

Obtaining CNIC from Customer

After the introduction of the account, the customer is given the


account opening form and he/she fills out the necessary columns
which are required for the purpose of account opening. After filling
out the form, photocopy of the CNIC is obtained from the customer.
The account opening officer ensures in this case that CNIC must not
be expired. For expired CNIC’s, customer has to submit copy of
expired CNIC and a NADRA receipt in evidence of having applied for
renewal of CNIC.

CNIC Verification from NADRA

The CNIC’s of the customers are verified through the NADRA’S


specialized software which is called as “VERISYS”. This software is
being used in FBL for the purpose of the confirmation of the client’s
information regarding address, name, CNIC number etc. which is
provided by him/her in the account opening form.

Verification of the Customer Name

The person’s name whose account is to be opened is confirmed from


the following two documents:

• OFAC (Office for Foreign Asset Control).

• Concerned Party List (CPL).

Institute of Business and Information Technology


56
The OFAC and the CPL contains the list of those customers which
have been blocked for any kind of financial and public dealings.

Occupation/Employment Evidence

The occupation or the employment evidence is obtained from the


customer in the shape of a letter confirming occupation,
alternatively a business card (only subject to on spot verification) or
a valid student ID (If student account is being opened).

Customer Profile Form (CPF)

The customer profile form serves the purpose of identifying the


customer’s various credentials such as how marketed, past banking
history, introducer’s particulars, expected transactional activity and
average amount of transactions etc.

The CPF also pinpoints based on the above parameters as a derived


conclusion whether the customer is rated as an average risk as (or)
higher than average risk customer by the bank. The completion of
this form as a part of KYC strategy is fundamental to account
opening formalities.

Verification of Signatures on AOF and SSC

The signatures on the completed AOF and SSC must match with
each other. The account opening officer must give reasonable
attention for the purpose of verification of the signatures. This is
manually done by the officer without using the system.

Signature Scanning from AOF and SSC

It is a decentralized activity. The branch is responsible for the


scanning of signatures from SSC and AOF. The scanned signatures

Institute of Business and Information Technology


57
are recorded in the database of the system and are promptly
considered for future transactions of the customer.

Stamping of the Account Opening Form

After gathering the necessary information from the customer along


with the documents and internal documentation of the bank, the
stamping is done on the AOF. The following stamps are required for
this purpose:

• “A/c Opening in my Presence” stamp.


• “OFAC/CPL Checked” stamps.
• B.M and O.M stamps and their signatures.
• “Original Seen” stamp on ID cards.
Sending Documents to CPU

After stamping on the account opening form, the account opening


set is sent to the Central Processing Unit (CPU) for the purpose of
the verification of the account opening documents because the
account opening process is also centralized. The account opening
set contains the following things:

• Cheque Book Requisition.


• SSC (Signature Specimen Card).
• A/c Opening Form.

Initial Deposit

After the confirmation from CPU after three working days that the
account has been opened for the customer, the account number is
allotted to the customer and the customer deposits an initial amount
in cash. Cheques may only be accepted as part of the initial deposit

Institute of Business and Information Technology


58
in the case of undoubted customers and on the personal
responsibility of the branch manager.

Letter of Thanks

Letter of thanks is the letter issued by the bank to the customer for
two purposes:

• First purpose is to say thanks to the customer for opening the


account in their bank.
• Second purpose is to confirm the address provided by the
customer while opening the account.

Issuance of Cheque Book

Cheque book is issued to the customer after sending the letter of


thanks when the customer comes with the letter of thanks and
requests for the issuance of the cheque book. A cheque book
(usually having 25 leaves) is issued to the customer. The first
cheque book is issued free of cost, but the subsequent are charged
Rs. 5/- for every leaf. The procedure in this manner is to complete
the cheque book requisition containing title of account, account
number, type of currency and signature of the customer. Signature
of the customer on the cheque book requisition is verified through
the system. Particulars are entered in the cheque book issuance
register. After taking these necessary steps, the customer is given
the cheque book and the concerned staff takes the customer’s
signatures on the cheque book issuance register and affix stamp of
signature verification. After verifying signatures from the system,
the account opening person signs the stamp and issues the cheque
book after taking signatures of the account holder on the cheque

Institute of Business and Information Technology


59
book requisition acknowledging that he/she has taken the cheque
book.

Closing of Account

At any time the customer can come to the bank and ask for the
closing of the account. For this purpose, the following requirements
are to be fulfilled:

• Filling the Closing A/c Form.


• The cheque Book is Torne.
• Nil the A/c of the Customer.

After doing this, the documents which are to be sent to the Central
Processing Unit (CPU) are:

• A/C Opening Form.


• Inter Office Memorandum (IOM) containing the basic details of
the Account Holder.
• Closing A/c Form.
• Statement describing the Nil A/c.

The CPU confirms the credentials of the account holder and after
necessary verification, closes the account of the customer and
confirms the branch via fax.

Categories of Accounts
An account can be opened in any of the following categories:

• An Individual Account.

• Joint Account.

Institute of Business and Information Technology


60
• Proprietorship Account.

• Limited Company Account.

• Partnership.

• Club, Society, Association and Trust.

Documentation In Case Of Limited Company Accounts

• Photocopies of National Identity Cards of each Director.


• Copy of Company’s Memorandum and Articles of Association.
• List of Directors.
• Copy of Board Resolution.
• Certificate of Incorporation.
• Power of Attorney/ Mandate.
Documentation In case of Partnership Account

• Certified Copy of Partnership Deed.


• Power of Attorney/ Mandate (If Required).
• Attested Copy of Registration Certificate with the registrars of
Firms.
• CNIC Copy of Partners.
• Partnership Mandate.
• Original Authority Letter of Partners Favoring Persons
Authorized to Operate the Account.

Documentation In Case of Club, Society, Association or Trust

• Certified Copy of (By- laws rules and Regulations and


Certificate of Registration).

Institute of Business and Information Technology


61
• Certified Copy of the Resolution of the Governing Body for
Opening the Account and Authorizing the person(s) to operate
the Account.
• Copy of CNIC of Authorized Persons.
• Undertaking signed by all Authorized Persons Mentioning
Intimation to the Bank in case of change of Authorized Persons
Operating the Account.

Documentation In Case of Individual/ Proprietorship

• Copy of CNIC.
• Copy of Services Card or any other proof of employment.
• Power of Attorney.
• Declaration of Proprietorship.

Documentation In Case of Joint Account

• Copy of CNIC.
• Completed Signature Specimen Card.
• Power of Attorney.
• Income Proof.
• Any Other.

REMITTANCE DEPARTMENT
In the last week of my internship I was moved to the remittances
department where my supervisor was Mr. Siddiq Ahmed. He was
very encouraging personality and helped me in each and every way

Institute of Business and Information Technology


62
to know the domain of remittances and the practical work involved
in it. Before discussing in depth about the remittances, I should first
define the term remittance:

“It refers to the transfer of money from an individual, usually a


person who has emigrated from his/her city or country of origin, to
another individual, usually a relative who remains at home.”

Remittances are financial flows arising from the movement or


transfers of money from one place to another within or outside the
city or country.

Remittances contribute to economic growth and to the livelihoods of


needy people worldwide. Moreover, remittance transfers can also
promote access to financial services for the sender and recipient,
there by increasing financial and social inclusion.

My supervisor told me that the remittance includes the following


things:

• Pay Orders.
• Demand Drafts.
• Traveler’s Cheques.
• Tele-graphic Transfer through SWIFT.
• Western Union Money Transfer.

Pay Orders

Pay order abbreviated as “P.O” is a negotiable instrument (such as a


draft) which instructs a payer bank to pay a certain sum to a third

Institute of Business and Information Technology


63
party within the city. It is a payment instrument which is used by
the banks to settle payment obligations on behalf of their
customers. This instrument is guaranteed by the bank for its full
value and is similar to a demand draft.

In FBL, P.O is payable at any of the Faysal bank’s branch in Pakistan.


Payment through pay order is a confirmed payment. The reason is
that when pay order is made, the applicant who has an account with
the Faysal bank is debited and the amount is added to the pay order
account. And from that account, the beneficiary account is credited
for the amount of pay order. FBL only issues “Payee Account Only”
pay orders. Pay orders in cash are not issued in FBL.

Validity

Pay order is valid for 6 months after the date of issue. If the
customer does not claim the payment within 6 months of the issue
then the amount of the pay order is included in the “Unclaimed
Account” and the amount stays there for 10 years.

Procedure for the Issuance of Pay Order

When a customer comes for the issuance of pay order, the


processing steps includes the following:

• The customer is given the “Funds Transfer- Application Form”.

• The customer fulfills the application form which includes the


following details:

o Transaction Details.

Institute of Business and Information Technology


64
 It includes Amount in Figures and Words.

 The desired Currency.

 Mode of Payment.

o Beneficiary Details (In whose favor P.O is issued).

o Applicant’s Detail (Who Requests for P.O).

• The filled form along with the cheque is given to the


remittance officer who verifies the form through the following
stamps:

o Sign Verification (Where the customer has done the


Signatures) on the application form.

o Transfer Posted (Means amount is transferred from the


Applicants account to the Beneficiaries Account).

o Time Stamp (Contains the Date and the Time of


Receiving of Application).

The remittance officer then makes the necessary entries in the


system by debiting the account of the applicant and crediting the
account of the beneficiary. The commission is deducted at the time
of issuance of the P.O. The commission charges are flat Rs. 80/-
which are charged to the applicant’s account. After the entries, the
P.O is ready to be given to the customer.

Demand Draft

Institute of Business and Information Technology


65
A demand draft referred to as “DD” is a banker’s own draft drawn
upon another banker as per agency arrangement (or) upon one of
its own branches payable on presentation by the drawee bank.

Types

• Local DD.

• Foreign DD.

Local DD

In FBL, local demand drafts are not issued. Local DD’s are those
which are issued by the banks for the settlement of funds between
the cities.

Foreign DD

Foreign currency demand drafts are issued in FBL. Foreign DD is the


banker’s own draft drawn upon another bank/ correspondent bank in
a country other than the country from where it is issued and drawn
and payable in currency of the country in whose bank/ branch it is
drawn. For this purpose, the bank has maintained its “Nostro A/c”
with Standard Chartered Bank, HSBC and Mashriq Bank for demand
draft Purposes. FBL does its remittance in abroad with HBL. Through
Nostro account, outward remittance in DD takes place. I will explain
the term Nostro A/C for outward and Vostro A/c for inward
remittances as follows:

Nostro A/c

To best remember it is “Our account with them in their currency”.


Nostro accounts are usually in the currency of the foreign country.

Institute of Business and Information Technology


66
This allows for easy cash management because currency does not
need to be converted.

Vostro A/c

To best remember it is “Their account with us in our currency”.


These accounts are maintained by the correspondent banks in the
currency of the country in which the account is opened. These
accounts are also known as “Loro Account”.

For the purpose of inward foreign currency demand drafts, FBL is


maintaining Vostro account of Shamil Bank of Behrain and Qatar
International Islamic Bank.

Traveler’s Cheques

Traveler cheques (TC) is form of currency cheques for travelers


which is convenient to carry and incase of misplace or lost one can
easily have their cash again. In previous years businessmen were
mostly carrying their cash in form of currency notes, usually they
were worried about their cash, and it shouldn’t be stolen or lost by
them. For those reasons and for the comfort of the business
community internationally countries decided to issue them travelers’
cheques, and now a day’s business community could use it easily
without any fear of lost and steal.

In Faysal Bank, the traveler’s cheques are issued at the selected


branches. In Faysal Bank new garden town branch, traveler’s
cheques are not issued.

Telegraphic Transfer through SWIFT

Institute of Business and Information Technology


67
It is largely the obsolete method of transferring funds through a
telegraph or telex link from one country to another. With the help of
this service a customer can transfer money to the bank account of a
beneficiary in most foreign countries of the world also called wire
transfer; it has been replaced by secure cable and wireless
telecommunications networks. In FBL, the transfer of funds through
this medium is implemented through SWIFT which is the standard in
all banks of the industry. The telegraphic transfer is of two types:

• Local TT.

• Foreign TT.

Local TT

In local telegraphic transfer, the funds are transferred from one city
to another. The local transfer system is not been used in FBL. The
method was that the customer who wanted to avail this facility was
given the funds transfer application. The person who wanted to
remit the money used to provide the details of the receiving person.
The transaction was done between the banks. The bank remitting
the money used to credit the account of the person sending the
money and the paying bank used to debit such account and made
payment to the receiving person. The payments were done on the
counters. The NIC of the persons were taken in that kind of
transactions. This system has not been used today because the SBP
has started restricted the counter payments due to the fraudulent
nature of the transaction.

Foreign TT

Institute of Business and Information Technology


68
The foreign telegraphic transfer means the transfer of funds to a
foreign country. Both inward and outward is done at FBL. The
foreign TT is done through SWIFT which is acting as a quickest mode
for the transfer of funds to abroad. The TT is only done account to
account in FBL. The procedure for the foreign TT followed by the
remittance officer is explained as:

• The customer comes to the bank for the purpose of TT.

• The customer is given the Funds Transfer Form on which the


customer provides the details like:

o Amount of the Transaction in Words and Figures.

o The Desired Currency.

o Beneficiary Details to whom the funds are to be


transferred.

o Beneficiary Bank’s details in the abroad.

o Applicant’s Details.

• After filling out the information, the customer signs the form
and hands it over to the remittance officer along with the
cheque.

• The remittance officer in the scrutiny process assures himself


that the requirements of the Anti- Monet Laundering (AML)
regulation of the SBP in this context are fulfilled.

Institute of Business and Information Technology


69
• The name of the person who is remitting is confirmed from the
Office for Foreign Asset Control (OFAC) list.

• The Know Your Customer (KYC) requirements are duly


accounted for.

• The remittance officer makes sure that the purpose of the


remittance must be provided by the customer.

• The charges of TT are deducted from the account which is flat


16 US dollars.

• The stamping is done on the form and the remittance officer


signs the form.

• The form also gets signed by the operations manager.

The completed form along with the cheque is sent to the FBL head
office where all the SWIFT operations are taken place. The head
office makes all the dealing with the correspondent banks in abroad
for the purpose of TT.

THE ROLE OF SWIFT IN TELEGRAPHIC TRANSFER


SWIFT stands for the Society for Worldwide Interbank Financial
Telecommunication, a member-owned cooperative through which
the financial world conducts its business operations with speed,
certainty and confidence. Over 8,300 banking organizations,
securities institutions and corporate customers in more than 208
countries are the members of SWIFT and every day exchange
millions of standardized financial messages.

Institute of Business and Information Technology


70
Its role is two-fold. They provide the proprietary communications
platform, products and services that allow its customers to connect
and exchange financial information securely and reliably. They also
act as the catalyst that brings the financial community together to
work collaboratively to shape market practice, define standards and
consider solutions to issues of mutual interest.

SWIFT enables its customers to automate and standardize financial


transactions, thereby lowering costs, reducing operational risk and
eliminating inefficiencies from their operations. By using SWIFT
customers can also create new business opportunities and revenue
streams.

SWIFT has its headquarters in Belgium and has offices in the world's
major financial centers and developing markets.

SWIFT is solely a carrier of messages. It does not hold funds nor


does it manage accounts on behalf of customers, nor does it store
financial information on an ongoing basis. As a data carrier, SWIFT
transports messages between two financial institutions. This activity
involves the secure exchange of proprietary data while ensuring its
confidentiality and integrity.

Services Provided by SWIFT

SWIFT network provides the following services to the banks:

• The exchange of real-time messages using XML standards.

• The exchange of bulk messages (e.g. non-urgent and low value


payments).

Institute of Business and Information Technology


71
• A secure browser for accessing account information.

Joining SWIFT

In Pakistan the banks get the membership of SWIFT through State


Bank of Pakistan. The Financial documents along with the
registration application are submitted to State Bank and from where
these are transferred to the SWIFT. After verification SWIFT gives
the membership to the Bank.

Following are the steps below to learn how to join SWIFT, connect to
the SWIFT network and become fully operational.

Procedure

Every client has its own SWIFT BIC code, in order to identify
Financial Institutions. BIC stands for Bank Identifier Code. To transfer
messages securely and efficiently, the client bank connects through
SWIFTNet network by the assigned SWIFT BIC code. SWIFT clients
can configure their existing email infrastructure to pass email
messages through the highly secure and reliable SWIFTNet network
instead of the open Internet. SWIFTNet Mail is intended for the
secure transfer of sensitive business documents, such as invoices,
contracts and signatories, and is designed to replace existing telex
and courier services, as well as the transmission of security-
sensitive data over the open Internet.

SWIFT code

The SWIFT code is 11 characters made up of:

Institute of Business and Information Technology


72
• 4 characters: Bank code (only letters).
• 2 characters: 3166-1 alpha 2 country code (only letters).
• 2 characters: location code (letters and digits).
• 3 characters: Branch code, optional (xxx for primary office)
(letters and digits).
Procedure for International Clearing

Outward Transfer

For the purpose of outward transfer, as the foreign bank branch


receives the SWIFT message, the Nostro account is debited for the
bank’s record. The transferee has account with the foreign bank, the
funds simply transfers to the transferee’s account.

Inward Transfer

For the purpose of inward transfer, as the domestic bank branch


receives the SWIFT message, the Vostro account is debited for the
bank’s record. The transferee has account with the domestic bank,
the funds simply transfers to the transferee’s account.

Western Union Money Transfer

The Western Union Company, under the Western Union, Orlandi


Valuta and Vigo brands, touches people around the world with
379,000 Agent locations in 200 countries and territories. Hundreds
of millions of people currently live outside of their home countries
and use Western Union services to remain connected to their
families and homelands. Western union money transfer is a fastest
way to receive money worldwide.

Institute of Business and Information Technology


73
There are other banks and institutions that are dealing in Western
Union. They include National Bank of Pakistan, Pakistan Postal
Service, Dollar East, and Master Currency etc. FBL acts as agent
between the sender and the receiver. Only receiving money option
is there in FBL.

Procedure of Payment

The Western Union is a counter payment which means that the


sender of the money does not need to have an account with FBL.
The procedure followed by the remittance officer in this context is as
follows:

• The person who wants to receive money is given the Western


Union Money Transfer form.

• The person fulfils the following details on the form:

o Date.

o MTCN (Money Transfer Control Number). It is a unique


number which is given to the person remitting the money
abroad by the money exchanger of that particular
country.

o Sender Name. The name of the sender must include the


surname.

o Sender Country.

o Amount in PKR (Approximate Amount).

Institute of Business and Information Technology


74
o Receiver Contact.

When the customer completes the form, the remittance officer asks
for the photocopy of the valid identity card of the receiving person.
If the ID card is not available, the photocopy of the passport is taken
from the customer. The officer then makes the needed entries in the
Western Union software which is installed at FBL. The entries are
made in the software in the form called as “To Receive Money”.
After making the entries, the print out of the form is taken, the
officer signs the western union form. The money transfer form is
kept by the bank for its own record purposes. The customer is given
the “To Receive Money” form and the customer puts his/her
signatures on the form and takes the payment from the counter by
presenting such form and photocopy of ID card.

At the remittance department, my supervisor also told me how to


issue a term deposit receipt because this was also the responsibility
of the remittance officer.

Term Deposit Receipt (TDR)


TDR is an amount of money either in Pak rupee or foreign currency
kept for a fixed term subject to profit and loss. The receipt is a non-
negotiable item. The minimum amount for opening a TDR is Rs.
25000.

Duration

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

• 1 Month.

Institute of Business and Information Technology


75
• 2 Month.

• 3 Month.

• 6 Month.

• 1 Year.

• 2 Year.

• 3 Year.

• 4 Year.

• 5 Year.

• 6 Year.

• 7 Year.

• 7 Days Notice.

Profit Rates

The profit rate on TDR is of two types:

• Wrack Rate.

• Grid Rate.

Wrack Rate

Wrack rate is the normal rate which is decided on the basis of


KIBOR. It is a bi-annually rate. This rate is given to most of the

Institute of Business and Information Technology


76
customers. There is no special approval for this rate. This rate is
negotiable on the basis of the amount of investment.

Grid Rate

Grid rate is the special rate which is given to the prime customers
and is determined on daily basis. In FBL, the approval is to be taken
from the area manager for providing such rate to the customer.

Processing of a New TDR

When the customer comes to the bank for the opening of a new
TDR, then the following procedure is adopted for this purpose:

• The customer is given the Term/Notice Deposit- Application


Form.

• The customer fulfills the form which contains the following


fields:

o Title Account.

o Amount of Investment in Words and Figures.

o Term/Notice Deposit Duration.

o Profit Payment Frequency (Monthly, Quarterly, Half


Yearly, Yearly, and On Maturity).

After filling the application form, the customer signs the form and
hands it over to the remittance officer. The remittance officer after
scrutiny of the form affixes the following stamps on the form:

• Time Stamp.

Institute of Business and Information Technology


77
• Sign Verification stamp

After stamping, an Inter Office Memorandum (IOM) is prepared


which contains the TDR amount, its tenure, profit rate, account
number. The IOM is duly signed by the branch manager and the
manager operations.

The completed form, IOM and the profit rate approval sheet from the
branch manager or area manager is sent to the FBL head office
(Karachi) for the approval of TDR.

Redemption of TDR

On the date of maturity, the customer has the option to re-invest the
amount. There are three options available to the customer:

• Principal Re-investment.

• Principal plus Profit Re-investment.

• No Re-investment.

Premature withdrawal of TDR

The premature withdrawal occurs where the customer encashes the


TDR before the expiry of the term (Maturity). Penalty is imposed on
the premature encashment. The penalty is imposed as:

Tenor equal to (or) less than 0.5 % on the principal amount


1 year for the remaining days,

Institute of Business and Information Technology


78
maximum equal to profit
worked out.

Tenor greater than 1 year 1.0 % on the principal amount


for the remaining days,
maximum equal to profit
worked out.

MANAGEMENT STYLE
Management of Faysal Bank is fully responsible for establishing and
maintaining adequate controls and procedures. The bank’s
management fully recognizes this responsibility and appreciates its
value and significance. Accordingly, policies and procedures
encompassing various functional and administrative areas have
been developed and circulated across all pertinent levels of the
organization. These policies and procedures are approved by the

Institute of Business and Information Technology


79
senior management and ratified by the board of directors as and
when developed. The bank’s internal audit function keeps
monitoring compliance with these policies and procedures and
regularly apprises the board on the same through the Audit
Committee. Similarly, financial performance is kept under regular
review and the board is kept updated on the same through the
Executive Committee.

The management feels confident by adopting the above mentioned


measures and the internal control environment is maintained at a
satisfactory level.

In Faysal Bank, the management has a participative style. From the


branch manager to the officer, all are fully involved and interlinked
with each other. The branch manager has a full control over the
branch. The regularity, punctuality and work appraisal is
implemented under their authoritative style of management.

The bank allows subordinates to voice their opinions about their


immediate supervisor and this becomes a welcome addition to the
practice of participative management.

APPLICATION OF KNOWLEDGE/ SKILLS LEARNED


DURING IBIT STUDIES
The study at IBIT is definitely very helpful in my internship. The
practice of making projects and assignments at the semester
system has done a great job while I was doing my internship. These

Institute of Business and Information Technology


80
projects and assignments have taught me how to work in a timely
and smart manner. I have really found these things helpful in my
whole internship where I had to complete the work in an effective
and efficient manner. The IT skills at IBIT acted as a plus point for
me as it was not difficult for me to understand the routine work
performed on the software and the basic implementation of IT.

NEW THINGS LEARNED


My internship experience has given me a realistic preview of my
field of education. Now I feel that I am better prepared to enter the
world of professional work. 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 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 earning money is not so easy after
all, it takes a lot of hard work and devotion, and not to forget time. I
definitely have learned things, which will impact my career and my
character. The overall experience of my internship was very good; I
have learnt the sense of responsibility in its literal meaning. I am
now capable of dealing with different sort of customers, and how to
be patient while doing so. Besides this I also gained knowledge
about banking which I 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.

Institute of Business and Information Technology


81
CHAPTER THREE: OVERALL SUMMARY AND
RECOMMENDATIONS

OVERALL SUMMARY
Faysal Bank Limited is a full service banking institution that offers
consumer, corporate and investment banking facilities to its
customers. The bank offers a variety of consumer products such as
auto finance, home loans, saving schemes and debit cards.

The bank also offers specialized products for the agricultural sector.
Its trade finance services include a range of import, export and
guarantee products. The bank also offers services such as cash
management, automated teller machines, traveler’s cheque,
transfer of funds, safe deposit lockers and non stop banking.

Faysal Bank continues to pursue a goal of improving upon its risk


management procedures with the aim of attaining full compliance of
the State Bank of Pakistan guidelines.

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


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

Faysal Bank views specialization and service excellence as the


cornerstone of its strategy. The people at Bank realize that
innovation, creativity, reliability, customized services and their
execution are the key ingredients for their future growth

They are aware that they have stepped into 21st century and they
must meet its challenges by acquiring the highest level of

Institute of Business and Information Technology


82
technology. They will thus be accelerating their technological
advance to enable them to distribute their products and services
through most efficient and modern technology means.

RECOMMENDATIONS FOR FAYSAL BANK LIMITED


Global competition, customer attrition and the pressures to reduce
the operating costs have created a harsh environment for the
world’s financial institutions. Banks face many challenges in today’s
dynamic market place. In a global economy, bank needs efficient
development of products that can quickly satisfy a more demanding
customer base and build long term customer trust. Customers now
have many choices than ever before. Many institutions are
struggling to find the right mix of retail and commercial strategies as
well as the optimal way to combine their self service, online and
branch channels.

In order to cope with today’s turbulent environment, Faysal Bank


must adopt a strategic approach toward information and process
management that enables customer centricity, demonstrates a
commitment to world class customer service and improve the depth
of their relationship with customers.

I have a very limited knowledge to give suggestions about the bank.


But my stay in Faysal Bank as an internee has given the chance to
explore different aspects of the organization. In view of these
aspects, I have some suggestions for the bank which are as follows:

• Faysal Bank should increase the efficiency and effectiveness of


their marketing campaigns.

Institute of Business and Information Technology


83
• Faysal Bank should have a close look on regularity measures of
anti-money laundering.

• Effective implementation of corporate governance is the key


for sustainability of banking sector. Faysal Bank should also
consider this point.

• The promotion criterion in Faysal Bank is not satisfactory. It


must initiate reasonable steps for the improvement of this
system and should develop a performance based reward
system.

• One way to retain customers is to offer a wide range of


services such as tax advice, free life insurance equivalent to
amount deposited, shares portfolio management and fund
management facility etc. Banks should have a slightly different
mix of services and means of providing these such that
customers can choose the mix that suits them best.

• The top management should immediately start thinking in


terms of rotating the employees in various departments, as
this transforms work force into human capital. If a particular
individual keeps on employing his/ her efforts in one sphere of
banking it would not only create a sense of monotony and
boredom, but also let the employees not interested in polishing
their skills.
• One of the most pressing needs of the time is to advertise the
products and services in the electronic media. Faysal Bank
Limited has not yet employed advertisement in electronic

Institute of Business and Information Technology


84
media as a full fledge marketing tool, It should start doing this
as a mean to attract potential customers.

RECOMMENDATIONS FOR THE INSTITUTION IBIT


• The institute should start a separate department for the
internship program. There should be a liaison officer in this
department who should make contacts with different well
reputed banks and organizations for the arrangement of
internships for the students.

• As MBIT degree is still not familiar in the market as compared


to the MBA degree, the institution should contact seminars and
invite the HR managers of different organizations and banks
and make them aware the benefits of this degree.

• Only one banking course is in the curriculum. The institute


should add more advanced banking courses in the course
outline.

• Latest articles on financial crisis, discussions boards and other


informative material like business journals and magazines
should be placed on the institution’s website from where the
students can easily take help for their assignments and
projects.

• Case studies and reading articles about the banking problems


should be given to the students in the class.

Institute of Business and Information Technology


85
RECOMMENDATIONS FOR INSTITUTE FOR NEXT
INTERNSHIP IN THIS ORGANIZATION
• The teachers should have a contact with the managers with
whom the student is attached.

• There must be some visits by the teachers in the organization


during the time of students’ internship.

• There must be a clear statement obtained from the bank about


the activities of the student on weekly basis.

• The institute must make counseling in making the internship


reports.

TABLE OF CONTENTS

CHAPTER ONE: THE ORGANIZATION.....................................................1

BANKING IN RETROSPECT...................................................................1

MODERN BANKING..............................................................................3

BANKING ORGANIZATION IN PAKISTAN................................................4

BRIEF HISTORY OF BANKING IN PAKISTAN...........................................5

HISTORY AND BACKGROUND OF FAYSAL BANK.....................................7

VISION ............................................................................................................. 7

MISSION ........................................................................................................... 8

Group Information..............................................................................................8

Capital and Ownership .......................................................................................8

Conformity to Islamic Sharia’a............................................................................8

Board of Directors...............................................................................................9

Institute of Business and Information Technology


86
Management Information.................................................................................10

PRODUCTS AND SERVICES.................................................................11

Deposit Products (Accounts) ............................................................................11

Consumer Finance Products ............................................................................18

Corporate and Investment Banking..................................................................24

Services ........................................................................................................... 27

GENERAL PROFILE OF FBL.................................................................30

ORGANIZATIONAL STRUCTURE..........................................................30

Structural dimensions.......................................................................................31

ORGANOGRAM AT THE HEAD OFFICE LEVEL.....................................................33

ORGANOGRAM AT THE BRANCH LEVEL............................................................34

Overall Appraisal, Problems .............................................................37

CHAPTER TWO: INTERNSHIP ACTIVITIES.............................................38

Departments, I served......................................................................38

CLEARING ........................................................................................................ 38

CLEARING THROUGH STATE BANK OF PAKISTAN...........................................45

THE ROLE OF NIFT IN CLEARING ...................................................................46

Cheques on Collections.................................................................................50

ACCOUNT OPENING..........................................................................................54

Procedure of Account Opening......................................................................54

Categories of Accounts..................................................................................60

REMITTANCE DEPARTMENT..............................................................................62

THE ROLE OF SWIFT IN TELEGRAPHIC TRANSFER..........................................70

Term Deposit Receipt (TDR)..........................................................................75

MANAGEMENT STYLE........................................................................79

Institute of Business and Information Technology


87
APPLICATION OF KNOWLEDGE/ SKILLS LEARNED DURING IBIT STUDIES80

NEW THINGS LEARNED......................................................................81

CHAPTER THREE: OVERALL SUMMARY AND RECOMMENDATIONS.........82

OVERALL SUMMARY..........................................................................82

RECOMMENDATIONS FOR FAYSAL BANK LIMITED................................83

RECOMMENDATIONS FOR THE INSTITUTION IBIT.................................85

RECOMMENDATIONS FOR INSTITUTE FOR NEXT INTERNSHIP IN THIS


ORGANIZATION.................................................................................86

TABLE OF CONTENTS........................................................................86

Institute of Business and Information Technology


88