Académique Documents
Professionnel Documents
Culture Documents
Internship Report
EXECUTIVE SUMMARY
Internship is an integral part of MBA programme. For the sake of internship the most initial
thing is to have a practical experience. This effort may get a student to get a practical
experience if right organization is selected. During the internship, a student comes to particle
knowledge. He/she learns what he has studied so far. As a MBA student I have also done my
internship at Askari Commercial Bank SAT branch Lahore. Here I come to know a different
and very interesting experience of learning and working with people. This internship report
consists of six chapters.
In the first chapter I explain the history of banking and the history of Askari bank. In this
chapter I also described the role of Askari bank, vision and mission statement, business
philosophy, corporate objectives and market of Askari bank. In the second chapter I
described the management system of Askari bank which includes organizational structure,
management hierarchy, company profile, management social responsibilities and policy
formation process.
In the third chapter I explained the marketing mix of Askari bank which includes product,
price, place and promotion. In the fourth chapter I briefly performed the SWOT analysis and
competitor analysis of Askari bank. In the fifth chapter I performed the financial analysis of
Askari bank which includes ratio analysis, horizontal and vertical analysis. In the last chapter
I briefly described the training programme, departmental detail of Askari bank. In the last I
also described the problems which I faced and also list out some suggestions.
I have learned many things during my internship program which enable me to mange my
work properly and gave me confidence in decision making. In my opinion Askari bank
limited performs its task very well and satisfy their employees and customers with full
responsibility.
Page 1
MBA
Internship Report
INTRODUCTION
Page 2
MBA
Internship Report
INTRODUCTION TO BANKING SYSTEM AND ASKARI
BANK
FORMAL DEFINITION OF BANK
Bank is an institution which revives money from one party and lends to another party
These are the following types of banks
Central Bank
Commercial Bank
Industrial Bank
Exchange Bank
Saving Bank
EVOLUTION OF BANKING
There are different views about origin of the world Bank. According to some people the
word Bank is derived from the world Bancs which means a Bench. They argue their
point by this transacted their business of money exchange on the benches. If the business of
any businessman failed, his bench was destroyed by the people. Due to this practice the word
Bankrupt was also used.
On the other hand some people say that the world Bank is derived from German time the
word Bank was replaced by the word Bank which is called Bunco in Italian language.
Evolution of Banking
The history of banking evolution is very interesting. In the early ages human like and wealth
was not secure. Due to fear of loot-mar and theft people buried their wealth under land but
this method was not satisfied. People started to search the custodians of wealth. The evolution
of banking started and it has crossed the following stages.
Page 3
MBA
Internship Report
SECOND STAGE
During this period those receipts which were issued by the goldsmiths against the valuables
goods were being used as a medium of exchange by the merchants. People purchased the
various things from the traders against their receipts against the payments. So the receipts
were used like the bank cheese of the modern age.
Page 4
MBA
Internship Report
GROWTH OF BANKING IN PAKISTAN
The entire banking business was controlled by the non-Muslims before the partition of the
sub-continent. When Hindus became sure about the divisions of the sub-continent, they
secretly began to transfer their capital to the safe places in India. The funds and other
valuables were transferred to India.
TIME OF INDEPENDENCE
Hindus migration from Pakistan to India also caused drain on the bank deposits. In order to
ruin the economy of Pakistan, Hindus closed down most of the head offices and branches of
the scheduled and nonscheduled banks in Pakistan. At the time of independence there were
only two Pakistani banks, that is Habit Bank and Australasia Bank. At the time, Pakistan had
631 branches of scheduled banks and 411 of no-scheduled banks. The total deposits of
Pakistan banks were Rest. 800 million and advances were 198 million, the non-scheduled
banks number reduced from 411 to 106 over the same period. The mass scale withdrawal of
deposits closure of branches and migration caused a deadlock in the banking business in
Pakistan. Keeping in view the above situation government, of Pakistan took various steps to
provide all kinds of facilities to them non-Muslim bankers for restoring normal banking
facilities but response was not encouraging.
COMMERCIAL BANKS
Commercial banks are companies which transact business of banking in Pakistan
Commercial banks have constituted the most important source of institutional credit in the
economy of Pakistan.
Page 5
MBA
Internship Report
Page 6
MBA
Internship Report
The Best Annual Report Award for the year 2012-2nd Runner-up by
ICAP&ICMAP.
The Best Annual Report Award for the year 2011 by ICAP & ICMAP.
Best Presented Annual Report Award and SAARC Anniversary Awards for
Corporate Governance Disclosures 2011 by South Asian Federation of
Accountants.
The Best Bank in Pakistan by Global Finance magazine. 2001 and 2002.
Best Consumer Internet Bank by Global Finance magazine 2002 and 2003.
Euro money and Asia money Awards 1994, 1996 and 1997.
Page 7
MBA
Internship Report
Best Corporate Report Award for the year 2008 by ICAP & ICMAP 2008
The Best Annual Report Award for the year 2010 by ICAP & ICMAP.
The Best Presented Accounts Award 2010-2nd Runner Up-Joint by South Asia
Federation of Accountants.
Page 8
MBA
Internship Report
MOBILIZATION OF SAVINGS
It is a very big task for the banks. Savings of the people in urban and rural are mobilized by
the askari bank and these are used for investment.
INCREASE IN INVESTMENT
The banks and financial institutions advance loans for various development projects to public
and private sector. By increasing the rate of investment it has increased the rate of economic
growth in the country.
Page 9
MBA
Internship Report
PLS SCHEME
The Askari bank has also introduced the profit and loss sharing accounts. At the end of the
financial year it announces the profit. The depositors receive profit instead of interest.
AGENCY SERVICES
The askari bank performs various types of services for the customers. It keep the valuable
goods in their safe custody. They collect the utility bills of Gas and phone and electricity etc.
They receive and pay the deposits.
PROMOTE EXPORTS
The Askari bank is providing finance to promote the exports. In this regard letters of credit
are issued. For the guidance of exporters export promotion cell is established by the banks.
CAPITAL FORMATION
It is the basic requirement for the economic development. The askari bank is very helpful in
increasing the real assets of the nation. The bank is very helpful in financing the new
development in the country.
QARZE HASNA
This scheme is introduced by the commercial banks to provide loan to the poor students.
This facility is provided to Pakistani students inside and outside the country and askari bank
also providing loan to poor students.
TRADE PROMOTION
The Askari bank is providing finance for domestic and international trade. This facility has
increased the volume of trade and encouraged the exports.
Page 10
MBA
Internship Report
an innovative product range, being best rated in the market, the Bank continues to surpass its
allocated targets for agriculture financing. While focusing on business development, this unit
also achieved further refinement in back office processing including credit initiation,
operations, risk management, in line with the business dynamics and regulatory framework.
ARBD has extended to 89 branches across the country and remains proactively engaged with
its stakeholders for aggregation of services and improving life standard of farmers through its
distribution network.
EXPANSION OF MARKET
Askari bank helps in the expansion of markets. They help in the formation of sound economic
infrastructure in order to raise living standards and to expand trade and commerce of an
economy.
Page 11
MBA
Internship Report
Page 12
MBA
Internship Report
BUSINESS PHILOSOPHY
CORPORATE OBJECTIVES
STRATEGIC PLANNING
To comprehensively plan for the future to ensure sustained growth and profitability;
To facilitate alignment of the vision, mission, corporate objectives with the corporate
goals and objectives;
To provide strategic initiatives and solutions for projects, products, policies and
procedures;
To provide strategic solutions to strengthen weak areas and to counter threats to
profits;
To identify strategic initiatives and opportunities for profit
Page 13
MBA
Internship Report
STATEMENT OF ETHICS & BUSINESS PRACTICES
Askari Bank seeks to maintain high standards of service and ethics enabling it to be perceived
as impartial, ethical, and independent. In order to achieve these objectives, following
principles of ethics and conduct are mandatory for all employees of the Bank:
Render, with integrity, a responsible and effective service of high quality which is
accessible by all customers, present and prospective;
Not abuse the authority that he or she has been assigned as an employee of the
Bank, in dealings with customers and other employees;
Act judiciously, fairly and impartially with all customers when exercising any
discretion in the performance of duties;
Refrain from divulging any information received in the course of their work and
duties unless the performance of duty or the needs of justice require otherwise;
Refrain from making wrong declaration to the Bank, other employees or
customers;
Resist and report any offers of bribes or other corruption emanating from any
source;
In their private life behave in a manner, which does not bring discredit to or impair
the dignity or reputation of the Bank;
Seek to attain the highest possible standards of performance, interpersonal
relationships
and exercise care for others in employment related activities;
Take official decisions and enforce policies of the Bank within the ambit of law of
the land faithfully and impartially; and
Respect and comply with the statement of ethics and business practices, if they
have reason to believe that a violation of this Statement, laws or regulations has
occurred or is about to occur, report the matter to the Banks management.
CORPORATE CULTURE
The Bank recognizes employees behavior and interaction with others as a vital part of
their duties. In order to achieve the desired level of performance and corporate objectives,
preservation of congenial and professional working environment is encouraged. Askari
Bank seeks to create an environment where all persons are treated equitably and with
respect, where persons rights are respected and where efforts of staff are encouraged and
their achievements given due recognition.
PROFESSIONALISM
Professionalism embraces the necessary skills, qualification and knowledge to undertake
tasks in a competent manner. Bank employees are expected to carry out their responsibilities
in a professional manner at all times. They must conduct financial or other obligations in a
prudent manner and should avoid situations that expressed and restricted to only those could
reflect unfavorably on them Bank has the relevant expertise and authority.
UNIVERSITY OF EDUCATION, LOWER MALL CAMPUS, LAHORE
Page 14
MBA
Internship Report
CUSTOMER RELATIONSHIP
Knowing our customers and their needs is the key to our business success. Fairness,
truthfulness and transparency govern our customer relationships in determining the
transactional terms, conditions, rights and obligations. Employees should seek to understand
customers financial circumstances and needs to be able to provide them with most suitable
products and services. All employees must ensure that any advice.
MAINTAINING CONFIDENTIALITY
Bank employees have a duty to safeguard confidential information, which may come to their
possession during their day-to-day work. Respect for customers private affairs, merits the
same care as does the protection of the Banks own affairs or other interests. This duty of
confidentiality involves not divulging information to third parties unless required by statutory
authorities / law.
CONFLICT OF INTEREST
Circumstances should be avoided in which personal interest conflicts, or may appear to
conflict, with the interest of the Bank or its customers. Circumstances may arise where an
employee, his / her spouse or family member directly or indirectly hold a business interest
which conflicts or may conflict with the Banks interest. In order to ensure that the Bank
makes objective decisions, employee must declare in advance such interest to the
management. Any involvement in an outside activity or any external position held by an
employee:
must not give rise to any real or apparent conflict with a customers interest;
must not adversely reflect on the Bank; and
Must not interfere with an employees job performance.
Employees must not negotiate or contract on behalf of the Bank with an enterprise in which
they have a direct or indirect interest. Employees on the payroll of Askari Bank must not
undertake any other employment, whether part time, temporary or other, or act as consultant,
director or partner of another enterprise except with the prior permission of the Bank.
Page 15
MBA
Internship Report
Unusual or erratic movement of funds.
PERSONAL INVESTMENTS
Employees must ensure that no conflict of interest arises between their personal transactions
and corporate and customer responsibilities. Employees must never attempt to use their
position to obtain an advantage to buy and sell investments. Employees shall not, at any time,
carry out:
short sales of marketable securities or currencies or any other form of trading which
is speculative in nature in their own account or for the account of their spouse or
family members; and
Trading in shares, securities or currencies which involve improper use of unpublished
price sensitive information for personal benefit.
POLITICAL ACTIVITIES
No employee of the Bank shall contribute or lend money or items of any value to any of the
political candidates or parties. This also includes using Banks facilities, equipment,
personnel etc. for the purpose. However, they shall be free to participate in political process
as concerned individuals through means of voting. In case of an employee considering
assuming any public office, prior specific information with all related reasons must be
provided to the Bank for approval.
UNIVERSITY OF EDUCATION, LOWER MALL CAMPUS, LAHORE
Page 16
MBA
Internship Report
FRAUD, THEFT OR ILLEGAL ACTIVITIES
Employees are expected to remain alert and vigilant with respect to frauds, thefts or illegal
activities committed within the Bank premises.
HARASSMENT AT WORKPLACE
Employees must avoid any behaviors that can be termed as harassment, offensive,
threatening or disturbing to other employees.
Page 17
MBA
Internship Report
CORPORATE THINKING
Creating opportunities with innovation and technology
Our vision to be the bank of first choice in the region demands continuous strive for creation
of business opportunities with innovation while maintaining our core values to meet our
commitment to all our stakeholders. The range of our products aims to serve our diverse
customer base that comprises of corporate, SMEs, individual savers, households and, farmers.
At the same time, our people are constantly engaged in assessing customer needs and market
dynamics to realign our products and priorities to attain brand recognition and competitive
edge. We are continuously reviewing and reshaping our portfolio of businesses by investing
in higher growth areas, extending and developing our core competencies and moving out of
weak and noncore segments.
Technology has played a pivotal role in meeting customer expectations, particularly with
respect to speed and quality of service. We have fully automated transactionprocessing
systems for backoffice support. Our branch network is connected online realtime and our
customers have access to offsite as well as onsite ATMs, all over Pakistan and
internationally. Our phone and internet banking facilities allow customers to enjoy routine
banking service from anywhere, anytime in the world. We also pioneered an ecommerce
venture in Pakistan. Our mobile ATMs are the first in Pakistan. To further strengthen and
enhance our technology platform, the Bank is in final stages of replacing the existing
technology with comprehensive state-of- the-art technology solutions. Upon complete
implementation will greatly improve our product delivery and service abilities.
Page 18
MBA
Internship Report
CORE VALUES
Integrity is the most valued standard in whatever we do. We understand that our commitment
to satisfy customers needs must be fulfilled within a professional and ethical framework. We
subscribe to a culture of high ethical standards, based on the development of right attitudes.
The intrinsic values, which are the corner stones of our corporate behavior, are:
Commitment
Passionate about our customer success and delighting them with quality of our
service.
Integrity
A distinctive investment, delivering outstanding performance, return and value
Fairness
Exemplary compliance, governess and business ethics
Teamwork
Caring for our people and helping them to grow
Service
Dedication towards social development and improvement in quality
OUR CUSTOMERS
Knowing our customers and their needs is the key to our business success. Our products and
services are as diverse as our market segments. Our client relationship managers are well
equipped and well trained to provide the most efficient and personalized service to the
customers. Askari Bank is proud of its pioneering role in providing the most modern and
technologically advanced services to its 907,984 relationships.
OUR INVESTORS
We believe that the bottom line of any business is creating shareholder value. To gain their
trust and confidence, we believe in providing our investors timely, regular and reliable
information on our activities, structure, financial situation, and performance.
OUR REGULATORS
We firmly believe in regulatory discipline and harmony of our corporate objectives with
regulatory framework. Our business methodologies are designed to ensure compliance with
the directives of all our regulators.
UNIVERSITY OF EDUCATION, LOWER MALL CAMPUS, LAHORE
Page 19
MBA
Internship Report
OUR EMPLOYEES
We strongly believe that the interests of the Bank and the employees are inseparable. At
Askari we try to create a we culture where there is mutual trust and respect for each other.
We encourage ownership behavior so that everyone feels responsible for the performance
and reputation of the Bank. We are committed to develop and enhance each employees
skills and capabilities through extensive inhouse and external training programs and job
rotations. In order to ensure meritocracy, our appraisal system is purely performance based.
OUR COMMUNITIES
We fully recognize our corporate social responsibility and our contributions to different
areas of the social sector are aimed to help improve the quality of life in our country
Page 20
MBA
Internship Report
VISION STATEMENT
Page 21
MBA
Internship Report
Page 22
MBA
Internship Report
CORPORATE OBJECTIVES
Page 23
MBA
Internship Report
Page 24
MBA
Internship Report
EFFICIENCY
Employees at Askari Bank are quite efficient. As Gulshan-e-Ravi branch is a new one, its
employees have to bring their bank among the list of good banks. Therefore, they work more
than their working hours and it is all according to their will. It also shows their loyalty,
commitment to organization.
CUSTOMER SERVICES
All the customers are entertained individually. Same kind of behavior and attention is given
to all the customers.
EMPLOYEE BENEFITS
Employees are given the benefits like bonus, gratuity funds, loans, increments, house rent,
medical and conveyance.
Page 25
MBA
Internship Report
Short Term
A1+
Long Term
AA
DEFINITIONS BY PACRA:
A1+:
Obligations supported by the highest capacity for timely repayment.
AA:
Denote a very low expectation of credit risk. They indicate very strong capacity for timely
payment of financial commitments. This capacity is not significantly vulnerable to foreseeable events.
A plus (+) appended to a rating denotes relative status within major rating categories.
Page 26
MBA
Internship Report
MANAGEMENT SYSTEM
Page 27
MBA
Internship Report
CORPORATE STRUCTURE
As Askari Bank is a banking company listed in stock exchange therefore it follows all the
legalities which are imposed by concerned statutes Mr. Syed Majeedullah Husaini,
President & chief executive of the company with a team of above mentioned directors help in
the business control and strategic management of the organization. Operational Management
of the bank is being handled by a team of 9 professionals. This team is also headed by
different officers. The different operational departments are Consumer Banking and IT
division, Financial and Inter branch division, Banking operations division, HR and Legal
division, financial control And Audit division, Credit management division, Commercial
Banking division, Corporate Banking division, Treasury management & And FX Group
Special Assets Management (SAM) Group & Askari Special Loan Division.
Askari Bank has been divided into 3 regions, each under the control of a regional General
Manger (RGM). The RGM is not any fixed designation in the organizational
hierarchy. The person appointed for its position can be a SEVP and EVP.
List of all these are below:
North Region
Islamabad
Central Region
19
Lahore I
South Region
13
Wholesale Bank
Karachi I
11
12
Rawalpindi I 20
Lahore II 13
Karachi II
Rawalpindi
II
16
Sahiwal
Karachi III 12
Peshawar
13
Faisalabad 10
Karachi IV
14
Azad
Kashmir
Gujranwal
a
12
Hyderabad
16
Corporate
Multan
Quetta
10
Islamic
12
Corporate 1
Corporate
Islamic
89
12
12
12
85
Islamic
Branch (Bahrain)
Total branches
261
10
86
Page 28
MBA
Internship Report
Page 29
MBA
Internship Report
MANAGEMENT HIERARCHY
The management hierarchy represents the different positions and designations in t h e
h i e r a r c h y o f t h e A s k a r i b a n k . H o w e v e r, t h i s i s n o t t h e r e p o r t i n g
h i e r a r c h y b u t m e r e l y represents the positions and grades on the basis of seniority and
grades.
PRESIDENT
VICE PRESIDENT
BRANCH MANAGER
Page 30
MBA
Internship Report
MANAGEMENT
Syed Majeedullah Husaini joined the Bank as President & Chief Executive on June 03,
2013.Mr. Husaini is Masters in Economics from Karachi University and has obtained
professional certifications by the National Association of Securities Dealers, USA and North
American Securities Administrators Association. He brings experience of over 30 years in
Banking, of which the first ten years were spent overseas with a number of International
Banks in Kenya, Sierra Leone, South Africa and the Middle East. His assignments led him to
successfully manage diversified areas of banking business including foreign trade finance,
Commercial and Corporate finance and Liability management. He played a significant role in
developing training programs and has remained faculty member with a number of Financial
Institutions.
Through a major part of his career, Mr. Husaini has held key positions which required
expertise in startups of Financial Institutions, infrastructural and business development for
Commercial Banks in developing countries. He helped in establishing the Rozgar Micro
Finance Bank at Karachi and became the first CEO of that Bank. This provided him with a
perspective on issues of poverty alleviation through a program of small business loans.His
other major assignments in Pakistan include President KASB Bank, CEO of a Modaraba,
Head of Corporate Banking Group, MCB and at National Bank of Pakistan.
Page 31
MBA
Internship Report
FARRUKH IQBAL KHAN
EVP / Group Head Operations
Mr. Farrukh Iqbal joined Askari Bank in February 2010 as EVP/Head of Audit and
Inspection Division and is currently holding the position of 'Group Head Operations. He
carries diversified banking experience of 20 years.
He started his professional career with State Bank of Pakistan in 1993 and later on also
served as Head of Audit in KASB Bank Limited from January 2004 to 2010.
Academically he is CISA & CICA qualified, holds Banking Diploma from IBP and has done
Masters in Business Administration. He has also got Certificate of Directors Education
from Pakistan Institute of Corporate Governance and is serving as nominee Director on the
Boards of 'Askari General Insurance' and 'Askari Investment Management Limited'. He has
attended number of training courses during his service.
KHURSHID ZAFAR
EVP / Group Head Corporate & Investment Banking Group
Mr. Khurshid Zafar is presently designated as Group Head- Corporate and Investment
Banking Group. He joined Askari Bank Limited in July 2010 and served on key positions
including that of Regional General Manager South and Group Head - Commercial Banking.
Mr. khurshid Zafar possesses vast experience of over 23 years in the field of Corporate,
Investment Banking, Retail and Commercial Banking. He has served in various Investment
and Commercial Banks at senior positions and has attended number of local and foreign
training courses. He holds an MBA Degree from Quaid-e-Azam University, Islamabad.
SALEEM ANWAR
EVP / Chief Financial Officer
Mr. Saleem Anwar, Chief Financial Officer (CFO) has extensive experience spanning over
20 years in the fields of finance, taxation, audit, planning & corporate affairs in Pakistan and
abroad. He joined Askari Bank in June 2008 as head of strategic planning and company
secretary and was later assigned the role of chief financial officer in April 2009.
After completing his training from M/s Price Waterhouse Coopers, Chartered Accountants,
he joined Al Faysal Investment Bank Limited in 1992 where he worked till 2001 as vice
president. Later, he served Faysal Bank as Financial Controller. Prior to joining Askari Bank,
he served as Head of Finance and Special Projects for Islamic Banking initiative of Mashreq
Bank, Dubai, UAE. Mr. Anwar is a fellow member of the Institute of Chartered Accountants
of Pakistan. He has participated in various professional training courses / seminars in
Pakistan and abroad.
Page 32
MBA
Internship Report
ABDUS SAMAD KHAN
EVP / Country Head Agriculture Division
Mr. Abdus Samad Khan has joined Askari Bank as Executive Vice President and Executive
Incharge in May 2012. He was given additional charge of Country Head HRD in October
2012. Mr. Khan is presently designated as Country Head Agriculture Division. Mr. Khan
holds an MBA Degree and is a Diploma Associate of the Institute of Bankers in Pakistan. He
has been director on the Boards of Commercial Bank/Investment Bank/AMCS/Leasing and
Insurance companies and has remained a member on the Board of Governors of Sarhad
University at Peshawar. He has attended a number of local & foreign training courses,
workshops and seminars.
He possesses diversified banking experience spanning over 33 years in the field of
Commercial, Corporate, Treasury and Investment Banking. He started his career in 1978 with
Habib Bank Limited and within few years was posted overseas at Bahrain to Head the
Offshore Banking Unit of HBL. In 1993 he became the Treasurer of HBL during which time
he founded the FMA (Financial Markets Association of Pakistan). In 1998 he joined Saudi
Pak Industrial & Agricultural Investment Company Limited as EVP and Country Head
Treasury & Capital Markets. He also served at Capital Development Authority for two years
as Head of Investment Management with the status of Member. Prior to joining Askari Bank
he was the Chief Executive Officer of First Dawood Investment Bank Limited.
REHAN MIR
EVP / Global Treasurer
Mr. Rehan Mir joined the Bank in January 1995 and is presently designated the Global
Treasurer at Treasury Division since December 2008. Before his becoming the Global
Treasurer, he worked on different important assignments in the Treasury. Mr. Mir holds a
graduate degree from the University of the Punjab, Lahore. During his Banking career, he has
attended a number of foreign and local training courses on treasury and Foreign Exchange
operations.
He possesses over 34 years of rich Banking experience mainly comprised of treasury
operations, money market and foreign exchange operations. He started his professional career
in 1978 with UBL as a Trainee Officer and later on switched to Askari Bank Limited in 1995.
Zain Ul Abidin
SVP / Country Head Compliance & Data Division
Mr. Zain Ul Abidin joined Askari Bank in March 2009 and is designated Country Head Compliance & Data Division since September 2011. Mr. Abidin holds a Masters degree in
Economics from University of Peshawar and MBA in Banking & Finance from Allama Iqbal
Open University. He has attended a number of training courses. He possesses over 16 years
of diversified Banking experience. He started his professional career in 1997 with State Bank
of Pakistan by qualifying in State Bank Officer Training Scheme (SBOTS-III) and has served
in Banking Inspection Department and Exchange & Debt Management Department.
UNIVERSITY OF EDUCATION, LOWER MALL CAMPUS, LAHORE
Page 33
MBA
Internship Report
In September 2004, he moved to Securities & Exchange Commission of Pakistan where he
served in NBFCs Department, Specialized Companies Division for over four years as Joint
Director Monitoring & Inspection Wing.
Page 34
MBA
Internship Report
Islamic Bank. Prior to joining Askari Bank he was Regional Manager - North of Bank
Alfalah Islamic Bank.
ZEHRA KHALIKDINA
SVP / Country Head - RMD
Ms. Zehra Khalikdina is presently working as Country Head Risk Management Division. She
joined Askari Bank in December 2007 as SVP. Her professional Banking career spans over
19 years in leading financial institutions of Pakistan (MCB Bank and Meezan Bank).
She has broad based experience covering the entire spectrum of Commercial & Shariahcompliant Banking; culminating in her core competency as a Subject-Matter Expert in
Enterprise-wide Risk Management. Ms. Khalikdina has Enterprise-wide Risk Management
experience encompassing Credit Risk domains for Corporate, SME, Retail; Market Risk
including Treasury & Liquidity Risk; Operational Risk; Compliance including Anti Money
Laundering, Fraud Risk, Business Continuity Management; Information Security and Internal
Control; Risk Governance including Basel II Compliance and streamlining Quantitative Risk
Management for Economic Capital & Stress Testing. Having attained academic and
professional excellence from Institute of Business Administration (IBA) Karachi and
securing the Banking Diploma from Institute of Banker in Pakistan (IBP), and the course for
Certified Islamic Banker from NIBAF, State Bank of Pakistan; she has also cleared The
Credit Skill Assessment Program from Omega Performance Pte Ltd of Singapore.
M. A. GHAZALI MARGHOOB
SVP / Company Secretary and Head Corporate & Legal Affairs Division
Mr. M. A. Ghazali Marghoob is the Company Secretary and Head Corporate & Legal Affairs
Division / SVP of the Bank. He is looking after corporate and legal affairs of the Bank and is
Secretary to all committees of the Board. He brings with him diversified experience
spanning over 29 years in the field of Finance & Corporate Affairs in Banking & Services
Industry.
He started his professional career with Marriott Hotel as Assistant Finance Controller and
later on worked in Saudi Paki Industrial & Agricultural Investment Company as CFO &
Company Secretary. Prior to joining Askari Bank Limited, he was working as CFO &
Company Secretary at SME Bank Limited. Mr. Marghoob is a Chartered Accountant by
profession and fellow member of the Institute of Chartered Accountants of Pakistan, Institute
of Corporate Secretaries of Pakistan and Institute of Public Finance Accountants. He has
completed Directors Training Program from PICG and is a Certified Independent Director.
Page 35
MBA
Internship Report
ABDUL WASEEM
SVP / Country Head Credit Administration Division
Mr. Abdul Waseem joined Askari Bank in June 2000 and is presently designated Country
Head -Credit Administration Division since September 2011. Earlier he worked on different
positions in the Commercial Banking Group and various Regional Offices, and as the Acting
Group Head Operations.
Mr. Waseem holds M.Com degree from University of the Punjab and has attended a number
of training courses. He possesses over 28 years of experience. He started his professional
career in 1984 with Habib Bank Ltd and later on switched to Askari Bank in 2000.
SHAHID ABBASI
VP / Country Head Audit & Inspection Division
Mr. Shahid Abbasi joined Askari Bank in December 2007 and is presently designated
Country Head at Audit & Inspection Division since September 2011. Before his designation
as Country Head, he worked on different important assignments related to audit and
inspection. Mr. Abbasi qualified as a chartered accountant in 2001 and is a Fellow member of
the Institute of Chartered Accountants of Pakistan. He has attended various professional
training courses/seminars within Pakistan and abroad.
He possesses over 13 years of Post Qualification experience in the field of External Audit,
Internal Audits, Accounts and Finance. He was trained with M/s Coopers & Lybrand,
Chartered Accountants, (now Pricewaterhousecoopers). Before Joining Askari Bank he has
worked with Askari Leasing Limited, Saudi German Group and Pakistan Telecommunication
Company Limited. Earlier he served Askari Bank from January 2005 to January 2007.
Page 36
MBA
Internship Report
WAQAR UL ISLAM
EVP / Regional General Manager - South
Mr. Waqar Ul Islam is an MBA from IBA Karachi. He is a seasoned international banker
with a professional experience of 37 years including 26 years with Swiss financial institutions
where he has also served as member of Management Committee of a Swiss Bank. Mr. Islam
is an expert in Credits, Treasury and Risk Management with experience of setting up business
and rolling out branches. He has an excellent track record in soliciting and developing new
business for financial Institutions in UK, Luxembourg, Bahrain, UAE, Cayman Islands and
Pakistan. Mr. Islam started his career in 1976 with BCCI Karachi and was posted to Central
Credit Division in London. Later he joined Banque de Commerce et de Placements (BCP),
Geneva in Dec 1982 and served this Bank for 23 years in Luxembourg and Bahrain as
Country Manager.
He successfully set up the dealing room in Luxembourg. In addition to Treasury business, he
successfully developed Private Banking & Correspondent Banking business for Luxembourg
and Bahrain branches. He successfully set up Askari Bank OBU operations in Bahrain in
2003 and served as Senior Vice President and General Manager. Then he joined Fortis
Banque (Suisse) SA, Dubai office in 2005 as the Vice President & Head of Private Banking Pakistan desk. He also served as Advisor to the CEO of Equitable Management Consultants,
Dubai for two years. He also served as Head- Risk Management Division at KASB Bank for
6 months prior to joining Askai Commercial Bank Ltd. as EVP/ RGM South in July 2013.
SAULAT HAMEED
SVP / Acting Regional General Manager - Central
Mr. Saulat Hameed joined Askari Bank in 1997 and is presently designated Acting Regional
General Manager - Central. Earlier, he worked on different important assignments related to
branch banking operations which include those of Chief Manager and Area Manager. Mr.
Hameed holds MBA degree from University of the Punjab and has attended a number of
training courses. He is also Diploma Associate of Institute of Bankers in Pakistan (DAIBP).
He possess over 32 years of diversified banking experience. He started his professional career
in 1980 with Bank of Credit & Commerce as MTO and later on served in BCCI Lahore. He
also served in BCCI Oman and Bank Dhofar Al Omani Al Fransi as Branch Manager in
various branches in Oman before joining Askari Bank in 1997.
UNIVERSITY OF EDUCATION, LOWER MALL CAMPUS, LAHORE
Page 37
MBA
Internship Report
COMPANY PROFILE
BOARD OF DIRECTORS
AUDIT COMMITTEE
COMPANY SECRETARY
Mr. M. A. Ghazali Marghoob, FCA
AUDITORS
KPMG Taseer Hadi & Co
Chartered Accountants
LEGAL ADVISORS
Rizvi, Isa, Afridi & Angell
SHARIAH ADVISOR
Dr. Muhammad Tahir Mansoori
Page 38
MBA
Internship Report
REGISTERED / HEAD OFFICE
AWT Plaza, The Mall,
P.O. Box No. 1084
Rawalpindi-46000,
Pakistan
Tel: (92 51) 9063000.
Fax: (92 51) 9272455
E-mail: webmaster@askaribank.com.pk
ENTITY RATINGS
Long Term: AA
Short Term: A1+
by Pakistan Credit Rating Agency PACRA
WEBSITE
www.askaribank.com.pk
Page 39
MBA
Internship Report
At Askari Bank, the goal of Corporate Social Responsibility (CSR) program is to give back to
the society in which it operates; thereby encouraging a positive impact through its activities
on the communities environment. We promote activities that contribute in the growth and
development of society. Active participations are made in events meant for the uplift of the
less privileged class in order to bring them at par with other segments of the society by
sponsoring various events primarily in the areas of education, sports, environment and social
sector.
Education,
Sports
Environment
Social Sector
Page 40
MBA
Internship Report
EDUCATION
We believe that promoting education is the best way of rewarding a community. Our CSR
program, therefore, gives special focus to providing learning opportunities and encouraging
youth to strive in this field.
The Bank made contribution by sponsoring various events towards this noble cause
Page 41
MBA
Internship Report
SPORTS
In our CSR policy, sponsoring sporting activities is one of the key priorities. We believe that
healthy body produces healthy mind and such activities are imperative for ensuring physical
health of our youth. The Bank remained actively engaged in sponsoring various events.
Some of them are as under:
Sponsorship of 13th, Fina World Swimming Championships
Page 42
MBA
Internship Report
ENVIRONMENT
We are environment conscious and encourage public initiatives that help increating
awareness about the ambiance and surroundings we live in. The Bank worked hand in hand
with organizations and sponsored conferences, walks, and festivals towards, some of them
are as under:
Page 43
MBA
Internship Report
SOCIAL SECTOR
Sponsorship of Food, Agri & Liv Asia 2009 for E-commerce Gate Pakistan.
Page 44
MBA
Internship Report
POLICY FORMULATION PROCESS
POLICY STATEMENT
Operating businesses to the highest standards of ethical conduct is crucial to the preservation
and enhancement of reputation. Individually, ABL must earn that reputation every day by
consistently demonstrating unquestionable integrity and good judgment in the conduct of
their banking business.
ACBL faces a particular challenge - to uphold consistent standards of conduct while at the
same time respecting the culture and varying business customs Prevailing all over the
country. For these reasons, upper management have taken various steps over the years to
develop compliance standards, such as growing a network of compliance officers to help
businesses operate to the required standards. ABL now have to achieve a more fundamental
goal. The goal is to fully integrate compliance into their day to day operations, so as to
develop and enhance the culture of compliance in the bank. This is particularly achieved by
continually evaluating the compliance risk areas and successfully managing them through
comprehensive compliance training programs. Demonstrating a high level of compliance
provide the necessary reassurance to the Board, their stockholders and to their regulators. It
therefore follows that responsibility for compliance lies with every individual in each area of
operation. It is essential to their continued success that they all accept this personal
responsibility and treat compliance as a priority. This will help them to achieve their goal of a
successful compliance culture.
INTRODUCTION
In the ordinary course of business the ACBL collects, holds, processes and transfers personal
data of its employees (current, past, prospective and temporary employees, and their
dependants).As a first class international banking group it is vital that the bank establishes
and operates to a very high standard of data protection for personal data and for commercial
data. Failure to do so can have serious commercial and legal implications for the Group.
Clearly personal data in some contexts means personal data about customers, but this Policy
is designed for employee personal data. This Data Protection & Privacy Policy relates to the
handling and processing of all Group employee personal data, whether held manually or
electronically. It forms an important part of the overall branch data protection environment,
the basic structure of the bank is as follows:
Page 45
MBA
Internship Report
Data Protection & Privacy Statements for Employees, Temporary Employees and Job
Applicants, by which the bank states to its employees the purposes for which data will
be used and the circumstances in which data will be disclosed.
This Policy sets out the minimum global standards of conduct and procedure the bank expects
from data users in HR and other functions for the handling of personal data wherever the
Group operates. If country HR heads consider that it is necessary to provide staff with
translations of this Policy, or of other associated documents, they may do so provided that the
translations accurately reflect the requirements of the original.
Page 46
MBA
Internship Report
BASIC VALUES OF THE POLICY
MANAGERIAL POLICIES
Major managerial policies in Askari Bank are as follows:
1. Financial policies
2. Procurement policies
3. Marketing policies
4. Promotional policies
5. Lending policies
6. Personal policies
1. FINANCIAL POLICIES
The financial policies of any bank are the most important policies through which the whole
banking activity is conducted. These policies are primarily conducted on:
Source of funds
Use of funds
SOURCE OF FUNDS
The bank finance policy is acquiring funds from the following sources:
Page 47
MBA
Internship Report
Interest income and commission bank providing the services to its customer.
USE OF FUNDS
After the acquisition of the funds their acquisition becomes necessary. The bank seeks the
best way for making investment to get more profit with the maximum security. The bank has
an investment portfolio in which it allocate its funds for crediting to borrowers, investment in
the stock market, investment in the real estate property etc. for allocation of funds a bank has
to follow some banking policies and the prudential regulations of SBP these are:
A bank has to maintain liquidity with central bank, i.e. 25 %of its total deposits.
A bank cannot invest all of its funds otherwise it will be difficult to meet urgent
needs.
A substantial part of funds is received from interest on loans and advances. Before
granting a loan the bank analyzes and observes the borrower and conduct a complete
ratio analysis. Bank prepares credit line for this purpose the major thing is granting an
advance is the security offered by the borrower and its actual market value.
1. PROCUREMENT POLICIES
Procurement policies are more concerned with manufacturing organizations. In bank industry
that is service industry procurement means the procurement of funds from various sources such
as deposits. It involves attracting and holding the funds of the depositors. After the acquisition
of funds, the bank invest the acquire funds. One alternative is to lend its money and earned
interest markup or invest in govt. securities etc. as already mentioned in the above paragraph
the major sources of funds for a bank are the deposit of the general and the other sources of
income includes interest or markup charges received for various services offered by the bank to
its clients.
A bank tries to attract maximum no. Of accounts so that it can increase its deposits and these
lending ability. In order to get maximum no. of accounts the staff of the bank must be
efficient as compared to the other banks and the manager of the branch must take personal
interest in attracting deposits. Good quality of the service is the key to success.
2. MARKETING POLICIES
Marketing policies are also one of the most important policies because they are related to the
growth of the organization. Marketing for a bank would mean:
Page 48
MBA
Internship Report
Keeping the track of latest development in the world and incorporating the latest and
most modern equipment to make the banking procedures simple and easy for the
customers.
Development of products for the customers.
Giving good services and maintaining good relations with the customers.
These policies can be implemented by providing the right product and service to the customer
at the right place, at the right time, at the right price. It is necessary for the managers to keep
in touch with consumers, observe their needs and develop products, which meet their needs.
3. PROMOTIONAL POLICIES
Public relation and advertising has assumed a great importance in the modern banking
business. As for as promotional activities are concerned, the main objective of the bank is to
inform the existing clients and other people about its new products or change in the existing
services. Askari Bank establishes its purpose through:
4. LEADING POLICIES
Every bank has its own lending policies except for those, which are common for all the
banks, i.e. the policies, which are imposed on all the commercial banks by the SBP, are
known as prudential regulations. The lending policies of Askari Bank are as follows:
The bank only invests in those sound and viable projects, which have good rate of
return.
Bank prefers to advance loan to their account holders.
Loan is given to reliable person only.
No political loan is sanctioned by bank.
Any account holder can apply for running finance or demand finance. The manger
appraises the past record of account holder and his credit worthiness. If he finds
anything wrong he can refuse to sanction the amount.
The bank while taking security prefers govt. Securities to shares.
It also advances working capital loans.
5. PERSONAL POLICIES
Personal policies have an important role in the success of any organization. ASKARI Bank
has its proper personal policies. Good personal policies motivate the employees towards
hardworking.
Page 49
MBA
Internship Report
Following are the main personal policies of Askari Bank
Managers style of managing has been a continuing cause of concern to his organization, his
subordinates, and, at times, the manager himself. All have recognized that the manager's style
is one of the major contributors to the performance and effectiveness of his unit. In Askari
Bank most managers will develop a personalized managerial style soon after being placed in
a position of greater responsibility. After interviewing the departments mangers it came to
know that the style developed by the managers mostly might have been influenced by the
following:
Page 50
MBA
Internship Report
MARKETING MIX
Page 51
MBA
Internship Report
Product
Price
Place
Promotion
Marketers use numerous tools to elicit desired responses from their target market. These tools
constitute a market mix.
Four Ps
Four Cs
Product
Price
Place
Convenience
Promotion
Communication
While successfully penetrating the key domestic markets through strategic expansion and
business diversification, the bank remain alive to the challenges emanating from the
developments in the global financial markets; the opportunities and threats engendered by
greater deregulation, and increased customer expectations. These provide the bank impetus to
make the best use of available resources, including modern technology, to meet the
challenges ahead.
Page 52
MBA
Internship Report
1. Branch Banking
2. Corporate & Investment Banking
3. Consumer Banking
4.
5.
6.
7.
Page 53
MBA
Internship Report
1. BRANCH BANKING
Through a branch network in major cities, towns and cantonments, made up of conventional,
corporate, consumer, Islamic, as well as agricultural banking service branches, we aim to
provide our customers with a wide array of offerings catering to their banking needs.
MAHANA BACHAT
Askari Mahana Bachat Account is a term deposit designed for individuals with a short to
medium term investment appetite. It offers customers the option of investing for one and to
three years tenures and has been designed keeping in view savings needs of customers who
want profit on a monthly basis. With competitive rates of return paid monthly on the 1st of
every month and the option of getting a financing facility of up to 90 percent, Askari Mahana
Bachat Account caters to customers saving needs without blocking their funds for a longer
duration.
PAISHGI MUNAFA
Askari Paishgi Munafa Account is a unique term deposit designed to meet the immediate
financial needs of individual investors / savers who want to invest their funds for a medium
term. The most significant feature of this product is that the customer receives the entire
profit upfront at the time of placing the deposit in a way that the investors / savers can fulfill
their financial needs of today without depleting their savings.
Page 54
MBA
Internship Report
CURRENT ACCOUNT
Current accounts cater to the variety of financial needs of our diverse customer base with
added benefits of free ATM card, cheque book, issue of demand drafts / pay-orders and much
more. These products include value plus current accounts, basic account with no minimum
balance requirement.
SAVINGS ACCOUNT
A range of saving accounts offered by the Bank to both individual and institutional customers
include Askari Special Deposit, Value Plus Savings besides normal saving account based on
profit and loss sharing basis. Askari saving deposits offer attractive features and competitive
returns and certain flexibility similar to current accounts.
BANCASSURANCE
The Bank offers innovative banking solutions with a touch of insurance in it by fusion of
banking, wealth management and insurance products. In partnership with Eastern
Federal Union (EFU) Life, the Bank offers its customers with value added life insurance
and wealth management products tailored to suit their long term financial requirements
and protection plans through select branches. As an extended feature of bancassurance,
the Bank has also pioneered a co-branded credit card Askari EFU Life co-Brand Credit
Card. This feature offers benefits such as cash back facility, standing charge option,
reward points for each retail transaction conducted and much more.
INVESTMENT CERTIFICATES
Askari Banks Investment Certificates provide the added security, investment and
monthly return to the customers. These certificates are negotiable and can be transferred
to third parties. Investment Certificates are available for a three month period and profit
is payable on a monthly basis through preprinted tear-off coupons.
Page 55
MBA
Internship Report
2. CORPORATE & INVESTMENT BANKING
At Askari, we understand the unique business requirements of our corporate and institutional
clients, and accordingly the Banks Corporate and Investment Banking Group (CIBG)
strives to meet their expectations through provision of customized and relationship based
banking approach.
CORPORATE BANKING
Corporate Banking works on a long-term relationship based business model to provide a
single point within the Bank for meeting all business requirements of its corporate and
institutional customers, including public sector enterprises, with the primary objective of
enhancing customer service. Dedicated relationship managers for each of our corporate client
ensure customer satisfaction, which remains top priority. Our relationship oriented outlook
focuses upon providing a complete array of tailored financing solutions, that are practical and
cost effective, some of which include:
INVESTMENT BANKING
Investment Banking focuses on origination and execution of a range of financial
advisory and capital raising services to corporate and institutional clients as well as
actively managing the Banks proprietary investments in the local equity and debt
markets. Investment Banking offers various and tailored financial solutions including
debt syndications, project finance and advisory services, debt placements through
UNIVERSITY OF EDUCATION, LOWER MALL CAMPUS, LAHORE
Page 56
MBA
Internship Report
capital markets as well as structured trade finance facilities. Whether a company is
seeking to access the local or cross border syndications and debt capital markets,
project financing needs, advisory services related to M&A or the local equity capital
markets for raising capital, Askari Banks Investment Banking is well positioned to
provide due assistance. We can create and tailor the right structured solutions for
business needs in order to enhance shareholders wealth and market competitiveness.
3. CONSUMER BANKING
Askari Banks consumer finance is focused on enhancing retail portfolio through new
and improved initiatives and products. Special attention is given to business
opportunities involving strategic alliances to earn sustainable returns, with greater
emphasis on secured form of consumer lending and an aim to increase product
offerings while improving and maintaining quality of asset portfolio.
CONSUMER FINANCING
Consumer financing is provided to the consumers to improve their standard of living and to
enhance their consumption, so that they could fulfill their requirements and dreams of life is
called consumer finance.Consumer financing provides individuals the necessary financing for
personal purchases ranging from buying a car, shopping purchases to buying a house. Most
people dont normally get access of capital through equity markets so they would normally
get access to debt finance through the established financial institutions including banks, credit
union, insurance companies etc. This debt is usually in the form of a credit card or loan.
Consumer finance induces demand and consumption that are necessary for any industry to
develop and propagate to an ideal limit. It also establishes the employment on strong base and
invites fresh investment in industrial sectors, especially those that are producing consumer
durables.
ASK 4 CAR
It is a product for vehicle financing for both new and used vehicles at affordable and
competitive mark-up, easy processing without any hidden costs.
UNIVERSITY OF EDUCATION, LOWER MALL CAMPUS, LAHORE
Page 57
MBA
Internship Report
ASKARI BANK PERSONAL FINANCE
Askari Banks Personal Finance is a term loan to meet the demands of salaried employees to
finance their expensive purchases/ need. Demand may be for purchasing schoolbooks, paying
off existing debts, childs education, daughters wedding or even just for shopping etc.
Length of loan may vary with individual requirements e.g 1 to 5. With unmatched financing
features in terms of loan amount, payback period and most affordable monthly installments,
Askari Banks Personal Finance makes sure that customers can get the most out of their loan.
No matter what need is, Askari Bank has more ways to serve customers then ever before.
MORTGAGE FINANCE
Whether our customer plan to construct a house, buy a constructed house, or renovate a
house, Askari mortgage finance enables them to pursue their goal without any problems.
Mortgage is a premium home financing product for customers belonging to the upper, upper
middle and middle income groups, residing in the urban areas of Pakistan.
Page 58
MBA
Internship Report
catered under this facility:
Page 59
MBA
Internship Report
5. AGRICULTURAL BANKING
Agricultural banking products and services are specifically designed for Pakistans crop
farming, other farming and rural business segment. Agricultural Banking products and
services, some of which are listed below, offer improved and efficient delivery and control
mechanism for meeting increased demand for credit by the farmers in easy, accessible and
affordable manner.
1.
2.
3.
4.
5.
Page 60
MBA
Internship Report
KISSAN EVER GREEN FINANCE
Product Type:
Profit Earning Account.
Eligibility:
Pakistani Resident (Individuals).
Security:
Mortgaged charge on agri land through Zari Pass Book.
Profit Amount:
Profit on credit balances will be paid on half yearly basis as declared by the
bank on PLS savings accounts.
Tenor:
Yearly Basis.
Markup:
The mark-up is charged for the actual days the finance is utilized.
Benefits:
A special cheque book is issued to the farmer.
Automatic renewal upon adjustment of entire Principal amount
with mark-up once in a year.
The account is farmer friendly which benefits the farmers both
ways. If the account is in credit, it earns profit, otherwise it
provides instant finance, to the farmer for his agriculture needs.
Page 61
MBA
Internship Report
Benefits:
Page 62
MBA
Internship Report
KISSAN FARM MECHANIZATION FINANCE
Beside Power at the farm i.e. Tractor, the benefits / advantages of power are maximized with
the use of Mechanical Support i.e. modern and improved equipments which essentially
complement one another due to their cost effectiveness and time efficiency. Askari Bank has
launched an Askari Kissan Farm Mechanization Finance for the assistance of the small
farmers and provide finance for farm equipment, trailer, thresher, drills & rotavators etc.
Features
Under this program the farmer will get benefit of use of modern agricultural tools,
implements and equipments which are cost and time effective.
Improves per acre yield of agri crops and quality of agriculture produce to get good price
in the market.
Helps to match / compete with international standards for exportable agriculture produce
Page 63
MBA
Internship Report
6. ISLAMIC BANKING
With the help of Shariah advisor and professional bankers, Askari Islamic banking provides
Riba free and Shariah Compliant solutions to various customer segments through branch
network in major cities of Pakistan. It offers following main products:
HOME MUSHARKAH
Askari Islamic banking offers Shariah compliant home financing to purchase, construct,
improve and transfer of the property under the concept of diminishing musharakah. This
means being able to cope with other financial commitment, while still having money left
over for extras and unexpected expenses.
Page 64
MBA
Internship Report
CALL CENTER
Askaris Call Center provides a single point of contact for all of its customers, yet offer
unique and individualized services on real time information for its time-conscious customers;
it is operated 24/7 and service customers for providing information of products and services,
handling inquiries, attending requests.
Page 65
MBA
Internship Report
1. ADVERTISING
Is any non personal paid form of communication using any form of mass media.
2. PUBLIC RELATIONS
Involves developing positive relationships with the organization media public. The art of
good public relations is not only to obtain favorable publicity within the media, but it is also
involves being able to handle successfully negative attention.
3. SALES PROMOTION
Commonly used to obtain an increase in sales short term. Could involve using money off
coupons or special offers. Sales promotions are non-personal promotional efforts that are
designed to have an immediate impact on sales. Sales promotion is media and non-media
marketing communications employed for a pre-determined, limited time to increase
consumer demand, stimulate market demand or improve product availability. Examples
include:
coupons
discounts and sales
contests
point of purchase displays
rebates
UNIVERSITY OF EDUCATION, LOWER MALL CAMPUS, LAHORE
Page 66
MBA
Internship Report
gifts and incentive items
free travel, such as free flights
Sales promotions can be directed at either the customer, sales staff, or distribution channel
members . Sales promotions targeted at the consumer are called consumer sales promotions.
4. PERSONAL SELLING
Selling a product service one to one. Personal selling is oral communication with potential
buyers of the products with the intention of making a sale. The personal selling may focus
initially on developing a relationship with the potential buyer , but will always ultimately end
with an attempt to close the sale.
Personal selling is one of the oldest forms of promotion. it involves the use of a SALES
FORCE to support a PUSH STRATEGY (encouraging intermediaries to buy the product) or
a PULL STRATEGY ( where the role of sales force may be limited to supporting retailers
and providing after sale service).
5. DIRECT MAIL
Direct mail allows an organization to use their resources more effectively by allowing them
to send publicity material to a named person within their target segment. By personalizing
advertising, response rates increase thus increasing the chance of improving sales. Listed
below are links to organization who's business involves direct mail.
Askari Bank is well aware about its promotional requirements. The most prominent and
important way to attract a large number of customers is the advertisement of bank and its
products/services. Askari Bank used many promotional tools like advertisements in print
media as well as in electronic media but its marketing strategies are not very aggressive.
Moreover Askari Bank has adopted many more approaches for the promotion purpose. For
example, Askari Bank sponsored the first ever Health Expo 2006 held in Islamabad they are
also the official sponsors of the Pakistan National Hockey Team for 2006 and in addition,
they are also sponsors of National polo team in the world cup play offs. Askari Bank has been
keenly participating in sponsoring golf events both national and international events held in
Pakistan. They also sponsored the 23rd Fedral Cup National Ranking Tennis Championships
2006 held at Islamabad so these sponsorships serve a great promotion tool for Askari Bank.
Along with the advertisement, the bank is providing personal services to its clients with
maximum security as other banks provide. Bank also encourages the public relation policy of
marketing. Some brochures and promotional material has been printed but it is distributed
mainly through the clients who visit the branch for their day-to-day business or through the
customers who come to get information about new schemes launched by the bank.
Page 67
MBA
Internship Report
Page 68
MBA
Internship Report
PRICING STRATGYOF ASKARI BANK
Pricing is one of the four Ps of the marketing mix. The other three aspects are product,
promotion, and place. Price is the only revenue generating element amongst the 4ps, the rest
being cost centers. Askari commercial bank use different price strategy for different products
and service to Achieve the organization Financial goals for each product it use different
strategy when any new product is lunched by the Askari commercial bank the top
management of the organization must the see the marketing objective Before selecting a
suitable price for a product, the marketer is needed to review the company's objectives. The
more clearer the companys objectives the more easily to set a price.
Following are the possible pricing objectives.
Survival
Maximum current profit,
Maximum market share,
Maximum market skimming,
Product quality leadership.
When the management set its marketing objective its position in the market and the product
nature where it is a innovative product and create monopoly in the market when the top
management set its pricing objective then stage of setting the price of the product come
Following are the steps in setting price for a product:
ACBL see the nature of product and charge price according to product if the product is
innovative it charge higher margin before lurching the new product the top management must
see and analyze the demand of product and estimate its costs analyzing completion cost price
and offer and then choose a pricing strategy according to company objective Askari
commercial bank has different product and services each is based on its own target market
and expectation toward the customer price is only key which generate the revenue for the
organization to achieve its financial objective and the success and failure of product and
service is depend on the price strategy the detail of some product and service and their
marketing strategy is given below;
Page 69
MBA
Internship Report
Page 70
MBA
Internship Report
SWOT ANALYSIS
Page 71
MBA
Internship Report
Page 72
MBA
Internship Report
STRENGTHS
LEADING PRIVATE SECTOR BANK
Askari bank is the leading private sector bank. In the banking network in Pakistan with many
of them online branches in major cities of the country
AUTOMATIC OPERATIONS
The operations performed by the bank are highly automated that result in assurance for the
customers that their transactions are completed reliably, efficiently and securely.
ATM NETWORK
The bank has the largest ATM Network across the country. The customers of Askari Bank
withdraw access their funds any time at all the ATM Sites with ASKCASH Logo.
CUSTOMIZED SOLUTIONS
The management of the bank believes in customer focused banking rather than the product
oriented banking. The products and services designed by the bank are specifically tailored to
the individual needs of its customers. Thats why every branch has a suggestion box in front
of the reception desk.
ELECTRONIC BANKING
The revolution in the banking in the form of electronic banking operations have opened
avenues of excellent, efficient and quick services saving the time and costs of the customers
and fortunately ASKARI BANK is among those few banks who are already reaping the
benefits of electronic transactions.
Page 73
MBA
Internship Report
TECHNOLOGICAL ADVANCEMENTS IN OTHER BANKS
Askari Bank has using very old software system UNIBANK which is an inefficient system
while other banks continuously improving their technology so Bank has finally taken steps
toward the technological advancement & will soon introduce a new system named Flex cube
(a software of the Oracle Financial Services Software Limited), in all its branches. Training
facilities are being provided in this regard & some of the branches have already started to use
this system
WEAKNESSES
NOT HIGHLY AUTOMATED
The bank has still some of the traditional ways of operations in this advanced technological
environment.
MANUAL BOOK-KEEPING
Although the bank has computerized accounting system but, still the bankers use to make
their entries in the accounting register.
LACK OF SPECIALIZATION
This famous and useful concept given by Adam Smith in 1776 seems to be missing in the
bank. The employees are constantly rotated from one job to another job of totally different
characteristic in the view of giving them the know-how of the working in all the departments.
But I think this is not a very good tactics used by the management. Otherwise the situation
might be like this Jack of all and master of none.
CENTRALIZATION
There is a high degree of centralization in the bank. Almost all the decision making is in the
hands of the upper management. But centralization is effective up to a certain level otherwise
it becomes inefficient and at times costly too. I personally observed that delay occurred in the
operations of the employees only due to the fact that they had not got any instructions from
the higher authority.
UNIVERSITY OF EDUCATION, LOWER MALL CAMPUS, LAHORE
Page 74
MBA
Internship Report
LACK OF TRAINING FACILITIES
Every now & then Askari send its employees on training which is compulsory to all. This is
done to empower employee regarding the latest methods practiced in bank but here the fact is
ignored that during the training period, the particular employee work is not taken care of
SERIOUSLY, due to which when employee returns from his training, he spent more hours to
rectify his work.
OPPORTUNITIES
SUPPORT FROM THE ARMY
The bank has the support from the army and has good financial position in the market
therefore having a good position to expand their business.
Page 75
MBA
Internship Report
OPEN BRANCHES IN RURAL AREAS
It is the opportunity for Askari commercial bank to expand their business in rural areas and
met unmet segment in geographical areas and promote their business
TECHNOLOGICAL IMPROVEMENTS
It is opportunity for Askari commercial bank limited to make technical improvement in their
operation and adopt new technologies of business and make their whole operation automatic
it is convince for both customer and organization to save their time
THREATS
ECONOMIC CONDITIONS
Now a days changing economic and political conditions of Pakistan can be a bigger threat of
all the banks and thus for Askari bank also.
INCREASING COMPETITION
ASKARI BANK is currently facing strict competition from the other banks. As Bank Alfalah
has very strong market campaign as compared to Askari Bank.
LEGAL REGULATION
Legal regulation is serious threat for organization because government change their policies
and put different kind of taxes and regulation on the organization top management always
keep the eye on moving trend of government
HIGH CHARGES
The schedules of charges indicate that the fees charged by the bank on the various services it
provides are extremely high. It may result in decrease in the number of its existing customers.
Page 76
MBA
Internship Report
COMPETITORS ANALYSIS
COMPETITORS OF ASKARI BANK
National Bank of Pakistan
Meezan Bank Limited
Alied Bank Limited
MCB Bank Limited
NIB Bank Limited United
United Bank Limited
Habib Bank Limited
House Building Finance Corporation
Khushhali Bank Limited
In competitive analysis we analyze that on which ground our company has a competitive
edge on its competitors. A competitive advantage is an advantage over competitors gained by
offering consumers greater value, either by means of lower prices or by providing
greater benefits and service that justifies higher prices. Askari bank has some competitive
edge on the following ground.
Union bank gives free ATM card but requires you to maintain Rs.100000/ Avg monthly balance, otherwise deducts Rs.200/month while Askari bank
does not deduct any charges.
A s k a r i b a n k i s o f fe r i n g I N e t f a c i l i t i e s b u t A l f a l a h b a nk i s n o t
o f f e r i n g s u c h facility.
Union bank charges Rs. 20/ leaf for cheque book and Askari charge Rs. 5/ leaf.
If you are an account holder of Askari bank then you can
e n j o y t h e o n l i n e information facility you can also transfer your funds
but ABN AMRO do not provide such type of facilities.
Page 77
MBA
Internship Report
ACBL provide online utility bills payment facility like PTCL, Mobile Bills
etc, but Standard chartered do not provide this facility to its account holders.
The withdrawal limit of Askari ATM card is Rs. 25000 but HSBC
withdrawal limit is 15000.
BOK is not offering ATM card do you believe?
BOP charges Rs. 10 for each ATM transaction but Askari do not cut any charges on
ATM transaction.
ACBL provide you free account statement twice in a year but after that
deductRs.50 if you want to take more than provided limit and hand over you on the
spot but standard chartered gives you monthly statement, deducts Rs.50 per statement
and usually hand over you after 1 day.
The initial deposit of ACBL current account is Rs. 5000 but initial deposit of Standard
charted current account is Rs. 25000.
Minimum balance requirement for profit of ACBL SB account is Rs.10000 while
standard charted requirement is RS. 25000.
ACBL provides free online transfer up to Rs 1.0 million and every branch is online.
Free issuance of travelers cheques with incentives for retention beyond one month.
As far as profit rates are concern Askari bank offers very low profit rate currently
Askari profit rate is 9% for 5 years but Faysal bank is giving 11% for one year.
Askari bank cut Rs.175 ATM charges after every six months but Bank Alfalah does
not cut any ATM charges from its customers.
As compare to HBL, ABL, UBL, NBP, and MCB, askari bank has very less number
of branches
Page 78
MBA
Internship Report
FINANCIAL
STATEMENTS ANALYSIS
Page 79
MBA
Internship Report
RATIO ANALYSIS
Ratio Analysis is a form of Financial Statement Analysis that is used to obtain a quick
indication of a firm's financial performance in several key areas. The ratios are categorized as
Short-term Solvency Ratios, Debt Management Ratios, Asset Management Ratios,
Profitability Ratios, and Market Value Ratios. Ratio Analysis as a tool possesses several
important features. The data, which are provided by financial statements, are readily
available. The computation of ratios facilitates the comparison of firms which differ in size.
Ratios can be used to compare a firm's financial performance with industry averages. In
addition, ratios can be used in a form of trend analysis to identify areas where performance
has improved or deteriorated over time.
Because Ratio Analysis is based upon accounting information, its effectiveness is limited by
the distortions which arise in financial statements due to such things as Historical Cost
Accounting and inflation. Therefore, Ratio Analysis should only be used as a first step in
financial analysis, to obtain a quick indication of a firm's performance and to identify areas
which need to be investigated further. The pages below present the most widely used ratios in
each of the categories given above. Please keep in mind that there is not universal agreement
as to how many of these ratios should be calculated. You may find that different books use
slightly different formulas for the computation of many ratios. Therefore, if you are
comparing a ratio that you calculated with a published ratio or an industry average, make sure
that you use the same formula as used in the calculation of the published ratio.
1. LIQUIDITY RATIOS
Liquidity ratios are used to determine a companys ability to meet its short-term debt
obligations. Investors often take a close look at liquidity ratios when performing fundamental
analysis on a firm. Since a company that is consistently having trouble meeting its short-term
debt is at a higher risk of bankruptcy, liquidity ratios are a good measure of whether a
company will be able to comfortably continue as a going concern.
CURRENT RATIO
Current ratio is also known as working capital ratio or 2: 1 ratio. It is the ratio of total current
assets to total current liabilities. Current assets are those which are usually converted into
cash or consumed with in short period (say one year). Current liabilities are required to be
paid in short period (say one year).
Current ratio indicates the liquidity of current assets or the ability of the business to meet its
maturing current liabilities. High current ratio finds favor with short-term creditors whereas
low ratio causes concern to them. An increase in the current ratio reflects improvement in the
liquidity position of the business while the decrease signals that there has been a deterioration
in the liquidity position of the business. As a convention 2 :1 is regarded as satisfactory level
i.e. current assets should be almost double than the current liabilities
UNIVERSITY OF EDUCATION, LOWER MALL CAMPUS, LAHORE
Page 80
MBA
Internship Report
Formula:
Current ratio = Current assets / current liabilities
Particulars
Year 2010
Year 2011
Year 2012
Current assets
290431231
318385849
328724287
Current liabilities
284552910
311530406
319006625
Current ratio
1.02
1.02
1.03
ANALYSIS:
The Current Ratio is calculated by dividing Current Assets by Current Liabilities. Current
Assets are the assets that the firm expects to convert into cash in the coming year and Current
Liabilities represent the liabilities which have to be paid in cash in the coming year. The
appropriate value for this ratio depends on the characteristics of the firm's industry and the
composition of its Current Assets. However, at a minimum, the Current Ratio should be
greater than one. From the above calculation it shows that the current ratio of the bank is
almost in the last few years. Also the ratio is above 1 which means that bank can easily pay
its short term debts without any obligations.
WORKING CAPITAL:
This ratio indicates whether a company has enough short term assets to cover its short term
debt. Anything below 1 indicates negative W/C (working capital). While anything over 2
means that the company is not investing excess assets. Most believe that a ratio between 1.2
and 2.0 is sufficient.
FORMULA:
Working Capital=current assets-current liabilities
Particulars
Year 2010
Year 2011
Year 2012
Current assets
290431231
318385849
328724287
Current liabilities
284552910
311530406
319006625
Working Capital
5878321
6855443
9717662
Page 81
MBA
Internship Report
ANALYSIS:
From the above calculation it shows the net working capital of the company has increased
over the last few years. It shows that company has enough short term assets to cover their
short term debts. The ratio shows a positive sign as company does not have to worry for their
debts because they can easily settle their debts.
QUICK RATIO
An indicator of a companys short-term liquidity. The quick ratio measures a companys
ability to meet its short-term obligations with its most liquid assets. For this reason, the ratio
excludes inventories from current assets, and is calculated as follows:
Formula:
Quick ratio =(current assets advances) / current liabilities
Particulars
Year 2010
Year 2011
Year 2012
quick assets
137646977
1676673293
184996452
Current liabilities
284552910
311530406
319006625
Quick ratio
0.483
0.538
0.584
ANALYSIS
Ideally, quick ratio should be 1:1.
If quick ratio is higher, company may keep too much cash on hand or have a problem
collecting its accounts receivable. Higher quick ratio is needed when the company has
difficulty borrowing on short-term notes. A quick ratio higher than 1:1 indicates that the
business can meet its current financial obligations with the available quick funds on hand.
A quick ratio lower than 1:1 may indicate that the company relies too much on inventory or
other assets to pay its short-term liabilities.
CASH RATIO
Cash Ratio is an indicator of company's short-term liquidity. It measures the ability to use its
cash and cash equivalents to pay its current financial obligations. Cash Ratio formula is:
FORMULA
Page 82
MBA
Internship Report
Particulars
Year 2010
Year 2011
Year 2012
26352728
32404322
33300725
Current liabilities
284552910
311530406
319006625
cash ratio
.093
.104
.104
ANALYSIS
Cash ratio measures the immediate amount of cash available to satisfy short-term liabilities.
A cash ratio of 0.5:1 or higher is preferred. Cash ratio is the most conservative look at a
company's liquidity since is taking in the consideration only the cash and cash equivalents.
Cash ratio is used by creditors when deciding how much credit, if any, they would be willing
to extend to the company.
DEBT RATIO
The debt ratio measures the proportion of total assets by the creditors. The greater this ratio
the greater the amount of other peoples money being used to generate profits. The higher this
ratio greater the degree of indebtedness an more financial leverage. The Debt Ratio, DebtEquity Ratio, and Equity Multiplier are essentially three ways of looking at the same thing:
the firm's use of debt to finance its assets. The Debt Ratio is calculated by dividing Total
Debt by Total Assets. The Debt-Equity Ratio is calculated by dividing Total Debt by Total
Owners' Equity. The Equity Multiplier is calculated by dividing Total Assets by Total assets.
FORMULA
Page 83
MBA
Internship Report
Particulars
Year 2010
Year 2011
Year 2012
Total liabilities
298,747904
325,983862
333383893
Total assets
314,780129
Debt ratio
94.9%
343865720
353,055,627
94.8%
94.3%
ANALYSIS
This ratio shows that in 2012 the debt ratio was 94.3% which is lower than year 2011 &
2010. This means that now company has lower debt on their assets compare to year 2011 &
2010. This is a good sign for the company as now they have lower debts on their assets.
Year 2010
1273136
Year 2011
Year 2012
11138847
10857912
2412751
1729727
4.62
6.28
ANALYSIS
Time interest earned ratio sometimes called interest coverage ratio, measure the ability to
make contractual interest payments. The higher its value the better able the organization is to
fulfill its interest obligations.
Page 84
MBA
Internship Report
FORMULA
Particulars
Year 2010
Year 2011
Year 2012
Total liabilities
298,747904
325,983862
333383893
16032225
18.64
17881858
18.22
19827381
16.8
3. PROFITABILITY RATIOS
A class of financial metrics that are used to assess a business's ability to generate earnings as
compared to its expenses and other relevant costs incurred during a specific period of time.
For most of these ratios, having a higher value relative to a competitor's ratio or the same
ratio from a previous period is indicative that the company is doing well.
FORMULA
Gross profit margin= Sales-cost of goods sold
Sales
Page 85
MBA
Internship Report
Particulars
Year 2010
Year 2011
Year 2012
Gross profit
1,273,136
2,412,751
1,729,727
Sales
27,952,162
32,766,351
32,402,187
4.56 %
7.37 %
5.34%
ANALYSIS
The calculation of gross profit margin ratio shows that year 2012 the ratio has been lowered
to 5.34 compare to 7.37 in year 2011. This means the gross profit of the company has been
decreased and it might lower the net income as well. The reason for the decrease in the
increase in the expense as well as an increase in the cost of goods sold.
Particulars
Year 2010
Earning available for 919461
common stock holder
27331702
Sales
Year 2011
1,705207
Year 2012
1289145
32768950
32404345
5.20%
3.98%
3.36%
Page 86
MBA
Internship Report
ANALYSIS
The profit margin ratio shows that in year 2012 the profit margin of the company has come to
3.98% which was 5.20% in year 2011. This shows that now company profit has decreased
due to unknown reasons and it might give trouble to investors who want to invest in the
company.
RETURN ON ASSETS
The Return on Assets Ratio indicates the dollars in income earned by the firm on its assets
and the Return on Equity Ratio indicates the dollars of income earned by the firm on its
shareholders' equity. It is important to remember that these ratios are based on accounting
book values and not on market values. Thus, it is not appropriate to compare these ratios
with market rates of return such as the interest rate on Treasury bonds or the return earned
on an investment in a stock.
FORMULA
Particulars
Year 2010
Year 2011
Year 2012
PAI & T
919461
1,705207
1289145
Total assets
314,780129
Return on asset
.29%
343865720
.49%
353,055,627
.36%
ANALYSIS
The return on assets ratio shows us that in year 2012 the return on the assets of the company
has lowered to 0.36 %which was high in 2011 on 0.49%. This shows that the management of
the assets is not good in 2012 and it might have affected the ratio. The ratio might increase
due to increase in the number of assets of the company.
RETURN ON EQUITY
Return on Equity (ROE) is an indicator of company's profitability by measuring how much
profit the company generates with the money invested by common stock owners. It is also
known asReturn on Net Worth. Return on Equity formula is:
FORMULA
Page 87
MBA
Internship Report
Particulars
Year 2010
Year 2011
Year 2012
PAI & T
919461
1,705207
1289145
shareholder equity
16032225
Return on equity
5.74%
17881858
9.5%
19827381
6.5%
ANALYSIS
The return on equity shows us that in 2012 the ratio has been lowered to 6.5% and it has been
on decline compare to the last year. This means that now the investors of the company will
get lower return on the amount they have invested in the company. The owners of the equity
will be entitled to receive lower returns due to decrease in the ratio.
sales
Total assets
Particulars
Year 2010
Year 2011
Year 2012
Sales
27331702
32768950
32404345
Total assets
314,780129
0.08times
343865720
0.09times
353,055,627
0.09times
ANALYSIS
The total assets turnover shows that company has a bit change in the total assets compare to
the last years. This shows that now company has made lower sales on their total assets
compare to the sales made in year last year.
UNIVERSITY OF EDUCATION, LOWER MALL CAMPUS, LAHORE
Page 88
MBA
Internship Report
DUPONT RETURN ON ASSET
A method of performance measurement that was started by the DuPont Corporation in the
1920s. With this method, assets are measured at their gross book value rather than at net book
value in order to produce a higher return on equity (ROE). It is also known as "DuPont
identity".
FORMULA
Return on asset= net profit margin *total asset turnover
Particulars
Year 2010
Year 2011
Year 2012
3.36%
5.20%
3.98%
0.08times
0.09times
0.09times
DUPONT RETURN
ON ASSET
.29%
.49%
.36%
Particulars
Year 2010
Year 2011
PAI&T
919461
1,705207
642743940
707018334
1.48
2.41
Year 2012
1289145
813071084
1.58
ANALYSIS
Earnings per share (EPS) are the earnings returned on the each share. Higher eps is good but
here EPS is is increased which is good.
Page 89
MBA
Internship Report
Page 90
MBA
Internship Report
HORIZONTAL ANALYSIS OF BALANCE SHEET OF
ASKARI BANK
Page 91
MBA
Internship Report
COMMENTS
It is the second head of the income statement of any banks financial statements. It is the
major and critical expense for any banking company because Mark-up / return / interest
earning is generated because of this expense and all of this banks expenses are paid off from
the Mark-up / return / interest earned. Markup is paid on local currency deposits. Return is
paid on the investments that have been made by the customers in different type of securities
in banking company. While Interest is paid on the transaction of foreign currencies other than
Pakistani Rupees, As it is the major expense of the business and majority of the income of the
bank is dependent on the sources on which these expenses are being incurred and this
expense may decrease the ultimate profit of the bank that is NET Profit and this finally
distributed in the shareholders of the bank. So extraordinary increase or decrease in this
expense may be alarming for the banking company This head may be increase or decrease
due to numerous factors but an increase in this expense may not be considered harmful for
the business or sometimes decrease in this expense is considered dangerous for the banking
concern. Mark-up / return / interest expense are incurred on the deposits made by the
customers in the bank or on the borrowing made by the bank to cater or to make it stable the
liquidity position of bank.
Mark-up / return / interest expense may be increased to the:
From the above horizontal analysis of the balance sheet of Askari bank it shows that there is a
3% total change in the assets of the company in year 2012 which is lower than the 9% and
24% of the preceding years. There is a negative 7% change in the cash and balance with
treasury banks of Askari bank and it means that now the cash and balances of company are
lower than compare to recent years. Other than the assets of the company there is also a
decline in the percentage change of liabilities of company and now they have come to 2%
which was 9% and 25% in the preceding years. The net assets of the company are however
same for year 2012 and 2011 which is 11% but it was lower to 7% in year 2010. The share
capital of the company was 15% in 2012 and 10% in 2011 and 27% in year 2010. This
UNIVERSITY OF EDUCATION, LOWER MALL CAMPUS, LAHORE
Page 92
MBA
Internship Report
change shows that in year 2012 the share capital of the company has been lowered and there
is a significant change in the reserves of the company as well. But there is a big change in the
inappropriate profits of the company and now they rank at the percentage change of negative
23% in year 2012.
Page 93
MBA
Internship Report
COMMENT
The income statement shows us that there is a negative percentage change in the mark-up /
return / interest earned of the bank which means that the sales of the company has been
lowered compare to the percentage change of the last two years which was very good for the
bank. The expense of the company has also become lower and now it ranks at 1% same as the
mark-up earned by the bank. There is a negative 18% change in the interest income after
provisions for the bank and it is a disappoint for the bank as now there sales are very lowered
compare to the last two years where company has appositive change of 30% and 72%
respectively. This shows that bank is having problem in getting a good interest from its
customers. The interest or non-markup income of the bank has been increased by huge 42%
which is very good and looking inside it shows us that for the year 2012 and 201, company
has a percentage change of 258% in their divided income which means that bank has earned
huge amount from its dividend income.
Another good thing is that the expenses of the bank have been lowered and now the
percentage change is only 5% which was 11% and 33% in year 2011 and 2010. This shows a
good management of expenses by the bank and it shows a positive growth in the bank. The
profit before taxation has been lowered by negative 21% which is not good as company had
90% changes in the profit before taxation in year 2010 and 2011. On the whole the profit
before and after taxation was not satisfying for the bank.
Page 94
MBA
Internship Report
VERTICAL ANALYSIS OF ASKARI BANK BALANCES
SHEET
Page 95
MBA
Internship Report
COMMENT
From the above vertical analysis calculation on every single item of the balance sheet shows
us that there is a 1%% increase in the cash balance of the bank which is lower than the year
2011 as it was 8% in the last year. There is also a 2% increase in the investments of the bank
and 3% increase in the advances of the bank. The liabilities of the bank shows us that the
bills payable of the bank has been same with the last years but there is an increase in the
deposits and other accounts of the bank and the increase is on 3% in year 2012 and it was
decreased by 3% from year 2010. For the net assets of the bank it shows a 1% increase from
year 2011 and for the year 2010 and 2011 there was no increase in the net assets of the bank.
The share capital of the bank has been increased by 1% in year 2012 but there was no
increase in year 2010 and 2011. The reserves of the bank have been decreased by 3% in year
2012 and it was same over the last two years.
Page 96
MBA
Internship Report
VERTICAL ANALYSIS OF ASKARI BANK INCOME
STATEMENT
Page 97
MBA
Internship Report
COMMENT
From the above analysis it shows that in the markup / interest there is no change as it remains
same for the last three years but there is a 2 % increase in the interest expense of the bank.
The interest income of the bank has been lowered by 2% compare to the year 2011 and it has
been on constant decrease from the last 3 years. The interest income after provisions is also
decreased by 4% in year 2012. However the interest income and non-mark-up income has
been same for the last 2 years which is 34% and it was increased by 1% in year 2011. The
interest expense of the company has been increased by 1% in year 2012 and it was decreased
by 2% in year 2011. On the whole the profit for the bank before taxation has been decreased
by 2% and he profit after taxation has been decreased by 1%. The decrease in the profit of the
bank is not good for the company has it shows a decrease from last 3 years. Given below is
the graph of balance sheet vertical analysis.
Page 98
MBA
Internship Report
INTER COMPANY ANALYSIS
Ratio analysis in inter firm comparison indicates relative position. It provides the relevant
data for the comparison of the performance of different departments. If comparison shows a
variance, the possible reasons of variations may be identified and if results are negative, the
action may be initiated immediately to bring them in line.
CURRENT RATIO
2012
Current ratio
Comments
ASKARI BANK
Allied Bank
Bank Alfalah
1.031
1.125
1.044
Askari bank Limited has higher current ratio than Bank Alfalah but lower
from Allied Bank.
Higher current ratio is better for any Organization.
QUICK RATIO
2012
Quick ratio
ASKARI BANK
Allied Bank
Bank Alfalah
0.584
0.63
0.58
Comments
As Askari bank Limited has lower Quick ratio than allied bank, therefore it
is the weak point of the bank and needs to improve that part.
CASH RATIO
2012
Cash ratio
ASKARI BANK
Allied Bank
Bank Alfalah
0.104
0.082
0.169
Page 99
MBA
Internship Report
Comments
ASKARI BANK
Allied Bank
Bank Alfalah
6.28
1.52
1.25
Comments
Askari bank has higher time earned Ratio than Askari Bank and Allied Bank.
Generally, a ratio of 2 or higher is considered adequate to protect the creditors interest in
the firm.
DEBT RATIO
2012
Debt ratio
ASKARI BANK
Allied Bank
Bank Alfalah
94.3%
92%
94%
Comments
Lower the ratio better for company but askari bank has higher ratio.
ASKARI BANK
Allied Bank
Bank Alfalah
16.8
11.33
16.61
Comments
Lower the ratio better for company but Askari bank has more ratio as compare to allied
bank and bank Alfalah
Page 100
MBA
Internship Report
ASKARI BANK
Allied Bank
Bank Alfalah
2%
9.8%
16%
Comments
Lower the ratio better for company.
Allied Bank
Bank Alfalah
3.98%
24%
9%
Ratios
Net profit margin
Comments
A high long term debt to capitalization ratio would indicate the financial weakness of the
firm and the debt would most likely increase the risk of the company.
RETURN ON ASSETS
2012
ASKARI BANK
Allied Bank
Bank Alfalah
0.36%
2.07%
0.96%
Ratios
Return on assets
Comments
Askari bank has lower ratio as compare to allied bank and bank alfalh.
Page 101
MBA
Internship Report
RETURN ON EQUITY
2012
ASKARI BANK
Allied Bank
Bank Alfalah
6.5%
27.45%
16.26%
Ratios
Return on equity
Comments
Higher the ratio better for company.
Allied Bank
Bank Alfalah
0.36%
20.64%
0.87%
Ratios
DuPont Return on Assets
Comments
Higher the ratio better for company
Allied Bank
Bank Alfalah
0.09times
0.86times
0.097times
Ratios
Total assets turnover
Comments
Higher the ratio better for company
Page 102
MBA
Internship Report
EARNINGS PER SHARE
2012
ASKARI BANK
Allied Bank
Bank Alfalah
1.58
12.34
3.38
Ratios
Earnings per Share
Comments
Askari bank has lower ratio as compare to allied Ban and bank alfalah.
Allied Bank
Bank Alfalah
11.81
16.17
12.67
Ratios
Capital adequacy ratio
Comments
Higher ratio means bank has more capital against their debts. Higher ratio is favorable.
Allied Bank
Bank Alfalah
5.03%
49.4%
14.72%
Ratios
Profit Before Tax Ratio
Comments
Higher the ratio better for company.
Page 103
MBA
Internship Report
GROSS SPREAD RATIO
2012
ASKARI BANK
Allied Bank
Bank Alfalah
37.1%
40.32
Ratios
Gross Spread Ratio (Net 20.10%
Mark
Up Income / Gross Mark
Up Income )
Comments
Bank Alfalah Limited is in good position.
Page 104
MBA
Internship Report
ASKARI BANK
ALLIED BANK
BANK ALFALAH
Page 105
MBA
Internship Report
FINANCIAL STATEMENTS OF ASKARI BANK
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
As at December 31, 2012, 2011&2010
Rupees in 000
2010
2012
2011
22,565,190
3,787,538
9,194,186
102,100,063
152,784,254
10,084,422
14,264,476
24,435,422
8,865,303
6,341,474
145,354,253
143,727,835
8,901,522
15,585,465
26,168,206
6,236,116
1,613,584
133,655,387
150,712,556
9,451,033
16,028,838
314,780,129 353,211,274
343,865,720
3,089,984
25,554,777
255,908,149
5,992,500
3,700,156
8,376,740
306,929,729
6,987,300
2,756,032
17,274,979
291,499,395
6,990,100
5,556
85,507
8,111,431
1,018
83,139
7,305,811
2,893
46,908
7,413,555
298,747,904 333,383,893
325,983,862
Assets
Cash and balances with treasury banks
Balances with other banks
Lendings to financial institutions
Investments
Advances
Operating fixed assets
Deferred tax assets
Other assets
Liabilities
Bills payable
Borrowings
Deposits and other accounts
Sub-ordinated loans
Liabilities against assets subject to finance
lease
Deferred tax liabilities
Other liabilities
Net assets
16,032,225
19,827,381
17,881,858
6,427,440
7,712,855
679,638
8,130,711
8,541,776
1,114,869
7,070,184
8,135,795
1,380,018
Non-controlling interest
14,819,933
28,728
17,787,356
29,441
16,585,997
28,377
14,848,661
1,183,564
17,816,797
2,010,584
16,614,374
1,267,484
16,032,225
19,827,381
17,881,858
Represented by
Share capital
Reserves
Unappropriated profit
Page 106
MBA
Internship Report
2010
2012
2011
27,331,702
32,404,345
32,768,950
17,931,715
22,973,385
22,699,089
9,399,987
9,430,960
10,069,861
2,319,280
382,764
267,873
65,808
2,342,473
148,575
201,265
1,043
1,630,123
122,421
(15,775)
34,702
-
3,035,725
2,693,356
1,771,471
6,364,262
6,737,604
8,298,390
1,329,477
209,922
730,693
213,735
1,173,558
1,036,249
884,724
688,424
1,297,332
289,470
772,495
310,384
(3,799)
377,279
986
532,275
80
348,009
2,857,307
4,316,216
3,017,770
9,221,569
11,053,820
11,316,160
Administrative expenses
Other provisions / write offs
Other charges
7,937,367
30,136
42,453
9,226,563
8,633
80,381
8,787,381
86,784
8,009,956
9,315,577
8,874,165
1,211,613
38,014
1,738,243
27,814
2,441,995
12,949
1,249,627
1,766,057
2,454,944
329,824
342
840,813
(363,901)
833,523
(83,786)
330,166
476,912
749,737
919,461
1,289,145
1,705,207
920,996
(1,535)
1,288,081
1,064
1,705,558
(351)
919,461
1,289,145
1,705,207
Page 107
MBA
Internship Report
Rupees in 000
Profit after taxation
2010
2011
919461
2012
1,705,207
1,289,145
40,723
(94,085)
2790
19,783
7,363
975613
Total comprehensive income
1,765,713
1,202,423
1,766,064
1,201,359
(351)
1,064
1,765,713
1,202,423
Attributable to:
Equity holders of the Bank
Non-controlling interest
977148
1535
975613
Page 108
MBA
Internship Report
CONSOLIDATED CASH FLOW STATEMENT
For the year ended December 31, 2012
Rupees in 000
2010
2012
2011
1,766,057
1,249,627
(209,922) (1,036,249)
729,808
1,039,705
2,454,944
(289,470)
2,165,474
875,462
2,342,473
148,575
201,265
8,633
830,848
1,630,123
122,421
(15,775)
34,702
-
3,799
(2,311)
989
30,136
(38,014)
(986)
(9,598)
1,306
(27,814)
(80)
(2,216)
335
(12,949)
3,725,416
4,765,121
3,539,316
4,269,124
2,587,409
4,752,883
(4,723,935) (4,727,890)
(161,393)
118,082
3,743,856
(12,384,995)
2,061,910
(1,133,164)
7,545,900
(1,418)
(864,640)
(281,603)
(18,124,012)
916,483
6,398,239
144,314
5,138,995
42,543,579
2,715,040
944,124
(8,898,239)
15,430,334
(106,958)
(333,952)
(8,279,798)
35,591,246
(697,657)
50,541,928
37,183,037
7,369,261
12,554,868
26,279,839
37,430,961
(1,393,681) (1,556,450)
(958,118)
10,998,418
36,472,843
(31,930,877)
430,746
(18,285)
282,447
(217,554)
18,108
(35,382,050) (11,917,171)
(578,498)
1,201,888
991,331
13,000
(399,407)
233,710
20,748
(1,612,780)
22,523
(37,304,095) (10,102,611)
(2,800)
(3,181)
(786)
(6,767)
(9,669)
7,363
2,790
896,403
(1,521,618)
27,895,490 32,426,322
33,322,725
26,374,728
997,600
(2,998)
(219)
994,383
19,783
6,051,594
26,374,728
32,426,322
695,092
2,319,280
382,764
267,873
65,808
35,789,356
(2,400)
(6,976)
(293)
(31,435,415)
Page 109
MBA
Internship Report
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the year ended December 31, 2012
Exchange
Rupees in 000
Share capital
6,427,440
translation
Share
premium Statutory
reserve
account reserve
Revenue Reserves
Un
CapitalGeneral appropriated
reserv
e
reserve
profit
Non
controlling
Subtotal interest
Total
53,362
28,728 14,848,661
- 1,705,558 1,705,558
(351) 1,705,207
- (30,969)
- (30,969)
- (30,969)
71,692
71,692
71,692
19,783
19,783
19,783
19,783
40,723
- 325,540
-
- (325,540)
679,638 (679,638)
(642,744)
94,085
28,377 16,614,374
- 1,288,081 1,288,081
1,064 1,289,145
Transfer to:
Statutory reserve
General reserve
7,070,184
- 1,705,558 1,766,064
(351) 1,765,713
- (94,085)
- (94,085)
- (94,085)
7,363
7,363
- (94,085)
- 251,072
-
1,302,158 (1,302,158)
(1,060,527)
Bank Branch
Transfer to:
Statutory reserve
General reserve
8,130,711
7,363
- 1,288,081 1,201,359
- (251,072)
7,363
1,064 1,202,423
29,441 17,816,797
Page 110
MBA
Internship Report
FINANCIAL STATEMENTS OF ALLIED BANK
STATEMENTS OF FINANCIAL POSITION
For year ended december,2012
Rupee in 000
Assets
Cash and balances with treasury banks
Balances with other banks
43,351,703
1,029,292
10,720,935
Investments
267,682,679
Advances
271,115,683
19,882,246
18,519,168
632,301,706
Bills payable
6,203,051
Borrowings
38,916,192
514,702,444
5,490,400
65,419
15,660,646
581,038,152
51,263,554
Represented by
Share capital
9,463,421
Reserves
10,906,250
Unappropriated profit
22,906,178
43,275,849
7,987,705
51,263,554
Page 111
MBA
Internship Report
Rupee in 000
49,512,005
31,180,990
18,331,015
1,273,901
(623,341)
650,560
17,680,455
2,942,192
8,433,249
598,480
1,929,474
69,700
271,802
14,244,897
31,925,352
14,686,046
342,384
369,480
323,042
57,959
15,778,911
16,146,441
3,812,352
1,073
450,649
4,264,074
11,882,367
31,028
20,426,745
32,309,112
12.56
Page 112
MBA
Internship Report
2012
58,044,054
26,720,993
876,870
189,486,762
233,933,358
13,747,520
384,601
13,272,536
536,466,694
LIABILITIES
Bills payable
Borrowings
Deposits and other accounts
Sub-ordinated loans
Liabilities against assets subject to finance lease
Deferred tax liabilities
Other liabilities
8,430,910
21,227,834
457,118,723
5,874,742
13,567,083
506,219,292
NET ASSETS
30,247,402
REPRESENTED BY
Share capital
13,491,563
Reserves
5,636,549
Unappropriated profit
6,561,628
25,689,740
4,557,662
30,247,402
Page 113
MBA
Internship Report
STATEMENT OF PROFIT AND LOSS ACCOUNT
As at december 31, 2012
PARTICULARS
Mark-up / return / interest earned
2012
46,079,918
27,500,056
18,579,862
1,708,833
1,164
3,558,532
15,021,330
2,536,717
349,061
1,309,703
1,328,000
1,511
Other income
1,756,348
7,281,340
22,302,670
15,204,036
(22,005)
130,504
Other charges
Total non mark-up / interest expenses
206,933
15,519,468
6,783,202
6,783,202
Taxation
- Current
3,141,909
- Deferred
(754,828)
- Prior years
(160,000)
2,227,081
4,556,121
5,248,059
29,695
3.38
Page 114
MBA
Internship Report
PROPOSED FINANCIAL PLANS
A financial plan will be highly scrutinized for business plan reader. All the ideas, concepts
and strategies discussed throughout the entire business plan form the basis for, and should
flow into, the financial statements and projections in some manner.
This presentation contains forwardlooking statements. Forwardlooking statements are
statements that are not historical facts; they include statements about our beliefs and
expectations and the assumptions underlying them. These statements are based on plans,
estimates and projections as they are currently available to the management of Askari bank.
By their very nature, forwardlooking statements involve risks and uncertainties. A number of
important factors could therefore cause actual results to differ materially from those
contained in any forwardlooking statement
FINANCIAL ASSUMPTIONS
These are critical to properly convey the "reasons behind the numbers" for outsiders
reviewing your financial projections. Explain how you calculated the numbers you used in
your financial statements.
To provide proposed plan I calculate
Proposed Financial Statements
Statement of Financial Position
Profit And Loss Statement
KEY ASSUMPTIONS
In order to forecast about the projected financial statements I analyze the trend in its Five
years financial pattern. By analyzing the pattern I figure out change analysis ,and made
expectation for the financial year 2013.
Page 115
MBA
Internship Report
ASKARI BANK
STATEMENTS OF FINANCIAL POSITION
ASSETS
2013
Increase by16%
Increase by 4%
Decrease by20%
Investments net
Increase by 15%
Advances - net
Increase by 5%
Increase by 3%
Increase by 17%
Other assets
Increase by 11%
LIABILITIES
Bills payable
Increase by 10%
Increase by 7%
Increase by 11.5%
Increase by 15%
Increase by 110%
lease
Deferred tax liabilities
Other liabilities
Increase by 6%
Share capital
Unchanged
Reserves
Increase by 16%
Unappropriated profit
Decrease by 2%
Increase by 10%
Page 116
MBA
Internship Report
ASKARI BANK
Profit And Loss Statement
2013
Increased by 9 %
Increased by 7%
Decrease by 2%
advances net
Provision for diminution in the value of
Increase by 24%
investment
Bad debts written off directly
Decrease by 25%
Increase by 4%
Increased by 15%
Dividend income
Increased by 16%
Increased by 16%
Increased by 35%
Increased by 8%
Increased by 10%
Administrative expenses
Increased by 12%
Decreased by 90%
Page 117
MBA
Internship Report
Provision against other assets
Increased by 22%
Other charges
Increased by 20 %
No changed
Decrease by 3.6%
- Deferred
Increased by 24%
- Current
Increased by 80%
Increased by 19%
Unchanged
Increase by 35%
SHARE
Page 118
MBA
Internship Report
TRAINING PROGRAMME
Page 119
MBA
Internship Report
METHODOLOGY
There are mainly two methods that are used for collection of data.
Primary Data
Secondary Data
PRIMARY DATA
Observation of functions of branch opration on the spot
Observation of different processes of Branch on the spot.
SECONDARY DATA:
Internet is very helpful for me to study more about banking sector of Pakistan.
Different type of booklets of the Bank
Annual Reports
Journals
Newspapers
Page 120
MBA
Internship Report
Page 121
MBA
Internship Report
1. ACCOUNT OPENING DEPARTMENT
Functions of Account Opening Department
TYPES OF ACCOUNTS
CURRENT ACCOUNT:
The code, which represents this account, is 01010
No low balance charges
No Interest paid
No Zakat deductions
Initial deposit is Rs.5000
SAVINGS ACCOUNT:
The code, which represents this account, is 0110
Low balance charges apply (100 per month)
UNIVERSITY OF EDUCATION, LOWER MALL CAMPUS, LAHORE
Page 122
MBA
Internship Report
Interest paid 5%
Zakat applicable
CLASSIFICATION OF ACCOUNTS
Personal
Minor
Less than 18 years of age. Needs a guardian who is legally responsible for the care
and management of the person, or the estate, or both of the child during its
minority.
Illiterate person
He cannot issue cheques in favor of any other person. Thumb impressions for the
operation of the account are required. Left hand thumb impression for male while
right for women. Accounts of such persons are also known as photo account
which means their presence is mandatory to operate an account.
Joint account
These are the accounts of two or more persons who are neither partners nor
trustees. Title of the account should mention the names of all the joint account
holders.
Blind
A blind can also open an account. He needs to have two witnesses and he needs to
have them with him in order to operate his account.
Page 123
MBA
Internship Report
Impersonal
Proprietorship
A sole proprietorship concern is a business carried on by an individual owner in
his own name. Title of the account must be in the name of proprietorship concern.
A letter of request to open the account on letter head of proprietorship is required.
Also declaration of proprietorship is needed.
Partnership
Partnership is a relation between persons who have agreed to share profits of the
business. Partnership account can be opened with 3 members but are required to
make it at least 7; however the partners should not exceed 20 in number.
Partnership deed is required and if its a registered entity then the registration
certificate is also required.
Limited companies
Memorandum of Association, Articles of Association, Certificate of
Commencement of Business, Certificate of Incorporation and the list of company
directors are required.
Trusts
A trust is an obligation annexed to the ownership of property and arising out of a
confidence proposed in and accepted by him for the benefit of another. Resolution
of the trustees is required. Also prior approval of regional /area office is needed.
This account should not be treated as a joint account.
Executors& administration
An executor is a person to whom execution of will is entrusted by the testator. The
executor drives his authority from the will.
An administrator is a person appointed by a court of law to look after the estate of
the deceased without leaving a will or the person appointed are incapable of acting
as executors. Letter of probate, in case of executors account and letter of
administration, in case of administrators account.
Liquidators
A liquidator is a person appointed by the court or by the company to realize the
assets and to collect what may be due from its members and after payment of the
companys debts to distribute any balance to the members in proportion of their
share of holding. Letter of appointment is required to open the liquidators account.
Clubs & societies
These are non-trading /nonprofit organizations. Copy of regulations is
required. All the operations must be in accordance with the clause of
resolution.
UNIVERSITY OF EDUCATION, LOWER MALL CAMPUS, LAHORE
Page 124
MBA
Internship Report
DOCUMENTS REQUIRED FOR ACCOUNT OPENING
The following forms are necessary to be filled up while opening a new account
Account opening Form
For Individual Account
For Sole Proprietor Account
For Partnership Account
For Company Account
Account Opening checklist
Cheque Book Request
Know Your Customer Form
Specimen Signature Card
Letter of indemnity from the customer who signs in language other than English with
infirm/shaky handwriting.
ATM Card Request (if required)
For Individuals/Joint account
CNIC (original)
Specimen Signature Card (SSC)
Self-Presence
Source of income proof
Employee ID
Non- Employed (letter from mayor)
Letter of Employee
For Sole Proprietor
CNIC
Specimen Signature Card (SSC)
NTN Certificate
Visit of Staff
For Partnership
Registered Partners
Deed of Partners
CNIC
Form C (registered from registrar of Co.)
NTN certificate of all Partners
For Companies:
Certificate of Incorporation
Memorandum of Association
Articles of Association
UNIVERSITY OF EDUCATION, LOWER MALL CAMPUS, LAHORE
Page 125
MBA
Internship Report
Resolution passed b Board of Directors with Embossed Seal (sign b
at least two directors)
Form 29(which is registered with SECP)
Account opening Request
Letter Head, which represents the company
CNIC of all the directors
Specimen Signature Card
Certificate of Commencement of Business attested from SECP (in
case of Public Company)
For Clubs &Societies:
Registration Certificate
Cop of By Laws
Account opening Request
List of Managing Committee
Members of Management/Executives committee
CNIC
Approval by regional
Operational Head (ROH)
For Trust:
For Association:
Articles of Association
Memorandum of association
List of office bearers on letterhead
Resolution Regarding operation of account passed b managing
committee
List of Managing Committee
CNIC of Managing Committee
Page 126
MBA
Internship Report
Customer name:
Enter complete name as mentioned in original ID card /other business documents.
Nature of business /profession: if customer is of salaried class enter his employer name. If the
customer is a businessman, traders, sole proprietor, enter the business name, for example
Jamil Tradersetc.also enters the customers title/position and address of the
business/employer. Address with P.O.BOX is not acceptable. Similarly remarks like
Private Service, business are not acceptable, rather specify what type of
company/business the customer is associated with for example Manager Philips Electrical
Company.
Address:
Enter the complete business/residential address. Within the brackets you may also provide
prominent address identification marks for ease of physically locating the address.
Contact Numbers:
Enter home, official, mobile, fax number and e-mail address (if available). Banker can verify
the number by giving the customer a courtesy call or by sending him a e-mail.
Other/ secondary/ mailing address:
Some customer may volunteer their parents or siblings addressor second home address or a
mailing address other than a permanent address.
Special instructions:
Clear-cut special instructions must be obtained from customers. If the customer has not given
any special instruction specified column must be cancelled by drawing a line, as this column
must not be left blank in any circumstance.
Existing/other bankers:
Almost most all the bankers usually have a banking relationship with another bank. In case of
customer who does not have an existing banking relationship, or does not want to disclose the
existing relationship, then it is strongly recommended that at least for some time this
particular account must be kept under observation.
DECEASED ACCOUNT
If an account holder dies then following procedure is adopted by the bank for the remaining
balance in the account of the bank:
Upto Rs 10,000 all legal heirs should present a indemnity certificate with all of their
names mentioned on it.
Above Rs 10,000 succession certificate is required from court (for all the legal heirs).
CNIC of all legal heirs is also required in both cases
If after 10 years no such legal heirs have contact the bank, then bank is liable to
transfer these funds to SBP as unclaimed funds.
UNIVERSITY OF EDUCATION, LOWER MALL CAMPUS, LAHORE
Page 127
MBA
Internship Report
ACCOUNT CLOSURE
If a person wishes to close his account with tile bank he should adopt the following
procedure:
Give a written application to close the account.
Surrender the cheque book to the bank / ATM (if used)
No charges or stationary fees to close the account.
The bank will close the account and will pay the amount to the customer.
2. ATM
Functions of ATM
Cash withdrawals
Balance Inquiry
Mini Statement
Funds Transfer
Utility Bills Payment
Password Change
Credit Card bills Payment
Miscellaneous
Page 128
MBA
Internship Report
3. REMITTANCE DEPARTMENT
REMITTANCES
Remittances mean transfer of funds from one place to another. Now a days remittance is
considered as one of the important functions of commercial banks. The transfer of money is
required, not only by the business community but also needed by general public. Commercial
banks not only earn a reasonable amount of commission, through providing remittances
facility to public but they can also increase the number of their account holders.
Inland remittances i.e. Transfer of funds within the country may be affected freely and
liberally by the branches of commercial banks. In our Bank following products are available
for the transfer of funds.
Demand Draft
Pay Order
Rupee Travelers Cheques
Online Transfer of Funds
Telegraphic Transfer
PRODUCT
USE
Telegraphic Transfer
Within countries
Page 129
MBA
Internship Report
ADVANTAGES OF REMITTANCES
Due to availability of bank's branches in every nook and corner of the country, inland
remittances may be easily affected anywhere.
There is no limit fixed on the amount in case of remittances through banks.
Risks of wrongful payments are lass in case of banks transfer of funds.
Risks involved in physical transportation of money are eliminated.
ELIGIBILITY CRITERIA
Can be issued to the individuals.
Business concerns.
Cannot be issued to the minors, insane & illiterate non-account holders.
Page 130
MBA
Internship Report
ISSUANCE OF DD AGAINST CASH
We usually discourage of issuance of DD against cash, and prefer that the purchaser
should be an account holder. However, before making the DD it must be ensured that the
purchaser has deposited the cash and it can be verified from the deposit slip on which he has
deposited the cash on the counter of the bank
Page 131
MBA
Internship Report
DELIVERY OF DEMAND DRAFT
The Purchasers signature is again obtained on the lower specified portion on application
form as an acknowledgement of having received the DD.
Page 132
MBA
Internship Report
CANCELLATION OF DEMAND DRAFT
Sometimes purchaser returns back the demand draft purchased by him earlier and
requests for refund of its amount. The refund is made to purchaser after completion of
following procedures:
o Written application: The purchaser has to give an application in writing duly
signed by him. The original DD must be surrendered together with this
application
o Checking DD: The original DD is checked on the following- points:
It is not a fake or counterfeit DD.
Duplicate of the same has not been issued.
o Verification of Signatures: Signatures of the purchaser are verified through DD
application form.
o Refund of amount: The amount of DD is refunded; commission and other
charges recovered at the time of issuance are not refunded. For refund of money
following procedure is applied:
Dr:
Cr:
Partys Account
CHARGES
Minimum charges on
PO
Rs 60
DD
Rs 125
Cancellation
Rs 275
Re-issue
Rs 275
Page 133
MBA
Internship Report
FOREIGN TELEGRAPHIC TRANSFER (FTT)
FTT is another mode of remittance. It is used when we want to send the funds to beneficiary
in foreign country. e.g. if Askari customer wants to send funds to USA to any of his relative
or any business client then bank officer shall enquire the reason of sending and further
details:
Recipient name
Recipient bank
Account #
Account Title
SWIFT CODE
SWIFT CODE = Society for Worldwide Interbank Financial Telecommunication is the
method used to transfer funds electronically to banks outside the UK clearing system.
Charges for FTT is $30 if FTT in pounds then charges equivalent to the amount of $30. After
that banker send the fax to CFTU and they send swift to the corresponding bank in that
country. Correspondent bank DR Askaris account (Nostro account) and CR the beneficiary.
Transfer of funds confirmation is sent to Askari bank and credit is made available to the
recipient on the same day.
LETTER OF CREDIT
A letter of credit is a financial instrument issued by a bank on behalf of one of its customers,
which authorizes individual or business firm to which it is addressed to draw drafts on the
bank for its account under certain conditions as set forth in the document. In a letter of credit
the financial strength or the credit of the bank is substituted for the banks customer simply
known.
Page 134
MBA
Internship Report
TYPES OF LETTER OF CREDIT:
REVOCABLE L/C
A revocable credit is the one which can be amended or cancelled at any time without prior
notice to seller but before the authorized draft is presented for acceptance or payment.
IRREVOCABLE L/C
An irrevocable letter of credit can be amended or cancelled only with the agreement of all the
parties to it. It obligates the issuing bank to accept and pay the bills drawn upon it so long as
the terms and conditions of the credit are complied with.
All L/Cs should clearly indicate whether they are revocable or irrevocable. In case, there is
no indication the L/C is treated as revocable.
CONFIRMED L/C
A confirmed credit is the one which ahs been confirmed by the advising bank. By confirming
the bank agrees to take on the liability of making payment to the seller if the issuing bank
defaults for any reason.
TRANSFERABLE L/C
A transferable credit is the one, which can be transferred by the original first beneficiary to
one or more second beneficiaries. These are used where the supplier of goods is other than
the beneficiary of the L/C.
SIGHT L/C
If the exporter of goods is to obtain payment immediately on presentation of stipulated
documents, provided all the terms of L/C have been complied with, it is sight letter of credit.
Importer ---Buyer
Issuing Bank --- Buyers bank
Exporter --- seller
Beneficiarys bank --- Sellers bank
Page 135
MBA
Internship Report
A customer
It is on his account and on his request and according to his instruction that the LC is opened.
Usually he is importer of goods from a foreign country. He is also known as importer or
accountee.
Bank
The bank which opens or issues LC at the request of the customer is known as the issuing
bank .The issuing bank is granting the facility of opening the LC, to the customer for
importing goods from abroad. Therefore, this bank is also known as importer's bank.
Third party
The person whose favor the LC is opened is a third party who is an exporter in a foreign
country. He is also known as beneficiary as it is he who drives the benefit of the LC.
Another bank
Which may be a branch office of the issuing bank or agent or correspondent or the
beneficiarys own banker if the paying banker has not been named in the LC. This bank is
situated in the exporter country and is also known as "paying" or "negotiating bank".
Advising bank
In this connection, another term notifying or advising bank is also used. When the issuing
banker opens a LC then it informs the beneficiary of such a facility through its branch or
some correspondent bank in the beneficiarys country by a letter or cable telex. This bank or
correspondent in the exporter's country is known as the advising or notifying bank.
IMPORT DEPARTMENT
ISSUANCE OF IMPORT REGISTRATION CERTIFICATE
The importer applies to the Export Promotion Bureau through the Bank, to get Import
registration Certificate. Following documents are needed along with the application.
Page 136
MBA
Internship Report
Performa Invoice:
It is the first document initiated between the importer & exporter. Every L/C is established on
the basis of a Performa Invoice. It is issued by the exporter and contains the consent of
exporter to sell goods. All the conditions of the contract of sale & purchase are settled in this
Performa Invoice.
Quantity:
The quantity of the commodity and its specifications are given in the Performa invoice.
CONDITIONS OF L/C
FOB: Free on Board
Under this arrangement, the importer has to bear the expenses of freight & Insurance etc.
C&F: Cost and Freight
Under this arrangement the exporter has to bear the expenses of the shipment and the freight
charges.
CIF: Cost, Insurance & Freight
Under the CIF arrangement, the exporter bears the cost, Insurance and freight charges of the
goods. This condition is not permitted in Pakistan.
Packaging Description
Part shipment or Trans shipment:
Part shipment refers to shipment in installments. When two or more different modes or/and
ports of shipment are used, it is called Trans shipment.
Currency:
The currency in which payment is to be received is mentioned.
Validity:
Performa Invoice is valid up to a specified date. An L/C established on an invalid Performa
Invoice is invalid. Validity of L/C may be renewed.
Page 137
MBA
Internship Report
Cash Margin:
Also referred to as L/C margin, is a security against the Letter of Credit. Some percentage of
the L/C amount is kept with the bank as security in a non-interest bearing account. At times it
is a compulsion by the SBP, as it discourages imports & the outflow of foreign exchange
from the country.
When documents are retired, the importer pays L/C amount less cash margin.
I-Form:
I-Form is submitted to SBP at the end of each month and prepared on the date of transaction
with the importers bank. This is intimation to the SBP that the specified amount of foreign
exchange has gone out of the country, on control rates. SBP checks for the authenticity of the
outward remittances because the inter branch exchange rate is less than the open market rate.
A copy of invoice is attached; sometimes a copy of Bill of lading is attached for proof of the
transaction.
Letter of undertaking:
The bank takes a letter of undertaking from the importer that when documents are received
by bank, importer shall purchase the documents within seven days of such notice, at the
marked up price prescribed by SBP.
Payment against documents (PAD):
In the case of sight L/C, the day our Nostro account is debited & payment is made to the
exporter, by the correspondent bank, PAD facility is created. Markup per day accumulates
until the documents reach the importers bank & are being retrieved by the importer. Importer
might not want to retire the documents unless the shipment arrives, in that case he has to pay
markup for the days, the documents lie with the bank.
Finance against imported merchandise (FIM):
This is the extension of SLC; in case the importer is not able to pay against L/C, he goes for
financing against the sight LC. He can take loan against pledge of his imported merchandise.
Finance against trust receipt (FATR):
Trust receipt is a mutually agreed contract between buyer and seller. In this bank advances
loan against trust receipt signed by an importer. Bank takes some collateral against this loan
to secure its risk.
EXPORT DEPARTMENT
REGISTRATION OF EXPORTERS
Under the Registrations (Importers & Exporters) Order 1952, no person can export any gods
from Pakistan unless he is duly registered as an Exporter with the Chief Controller of imports
& Exports. Bank should ensure before certifying any export Form E, that the person is so
registered.
Page 138
MBA
Internship Report
Issuance of Form E:
Form E is issued by Bank to bonafide exporters. It is not issued to any exporter unless he
undertakes that full export value of the goods or will be disposed of in a manner and within
time specified by the State Bank of Pakistan.
E Form Certification:
The bank undertakes that in event of non- realization of export proceeds against shipment on
consignment sale within the stipulated period of 4 months, we shall obtain from the
exporter(s) and furnish to the SBP a full explanation as to the circumstances resulting in nonrealization. The Bank also undertakes that in the event of short realization, it shall obtain
from the exporter(s) and furnish to SBP a fully documented account sales certified by the
consignees/ chamber of commerce of the country of import.
Certificate of CIF/C&F:
In case of CIF& C&F, this certificate is issued. The purpose of this certificate is to remove
the confusion of charges.
No objection certificate:
This certificate is issued in case of L/C & advance payment. When importer has specified
some shipping company then bank issues this certificate for the preparation of bill of lading.
By Sea shipment certificate:
This certificate is addressed to the shipping company, by the bank giving it a written
authorization.
Functional Utility of the Copies of Form E:
All exports from Pakistan, which are subject to Exchange Control Regulations, are required
to be declared on Form E which is in set of four copies each. The exporter should submit
the full set of Form E to the bank for certification only after it has been completed and
signed by the exporter himself or his authorized agent.
UNIVERSITY OF EDUCATION, LOWER MALL CAMPUS, LAHORE
Page 139
MBA
Internship Report
After the Bank certifies the Form, it should be submitted to the Customs/ Postal Authorities at
the time of shipment along with the shipping bill. The Customs Authorities will detach the
original copy and after filling in the portion relating to them and affixing their seal and
signature thereon forward it to the State Bank. The Customs Authorities will return the
Duplicate, Triplicate & Quadruplicate copies to the exporter or his authorized agent who will
retain the quadruplicate copy for his own record and submit the Duplicate & Triplicate copies
to the Bank, along with the shipping documents within 14 days from the date of shipment.
The Bank will forward the Triplicate copies of the export forms to SBP, along with the
monthly return in which realization of export proceeds is reported, retaining the duplicate for
its record.
5. ACCOUNTS DEPARTMENT
FUNCTIONS OF ACCOUNTS DEPARTMENT
The main functions of the accounts department of Askari Bank are as follows:
Budgeting
Test Application
Daily reports
Maintenance of Fixed assets Record & Depreciation
Activity Checking
Head office extract/ H.O. Reconciliation
Reconciliation Statement of SBP
Maintaining the vouchers record
Processing and maintaining record of staff salary
Page 140
MBA
Internship Report
There are many other important functions performed by accounts department of Askari Bank
Limited. These include:
VOUCHER SYSTEM
The following points are of importance explaining voucher system:
Voucher is a written authorization issued in approving a transaction for recording and
payment.
Voucher is a system, which is generally designed to provide strong internal control
over the transaction, which takes place during the business hours.
Whenever a transaction takes place in any department of the bank a voucher is
prepared which serves as a record of that transaction.
One debit and one credit voucher is prepared. At the start of the day, all the vouchers
of the previous day are collected and sent to the accounts department.
Accounts department sorts and arranges these vouchers. The vouchers are then tallied
with the reports generated by the system. This process id called as ticking and the
whole process is called as activity. The purpose of all this activity is to compare the
system generated reports with the actual evidence of the transaction.
DEBIT VOUCHERS
Debit vouchers are used in three cases:
Whenever any expense is incurred.
When a depositor withdraws some amount from his account.
Page 141
MBA
Internship Report
When the account of the customer is debited with the amount, a debit voucher is
prepared.
Format of the debit voucher:
Name of branch
Date
Branch No
Account No
Transaction Code
CREDIT VOUCHERS
There are two types of transaction in which credit vouchers are used.
When a depositor deposits any amount in his account because the liability of bank is
created.
Any income received by the bank e.g. commission, various charges etc. Askari Bank
uses different types of credit vouchers for different types of transactions.
EXPENSE VOUCHERS
All the expense vouchers passed by each department are routed through accounts department.
These expenses include:
PREPARATION OF STATEMENTS
Another function of accounts department is the preparation of various statements. These
include weekly statements, monthly statements showing the movements in various accounts.
Accounts department also prepare the statements required by operations manager from time
to time.
Page 142
MBA
Internship Report
Foreign currency related transactions
Fixed deposits transactions
6. CREDIT DEPARTMENT
Credit Is Bankers Stock-In-Trade, Which Does Not Belong To Him.
In fact this is depositors money and by investing this money the banker has to earn his living
and a return for the depositor. The banker therefore has to be at his wits in the process of
extending credit. Sound bank lending is based on the assumption that the borrower will repay
the debt from business receipts and profits or from other sources in a reasonable period of
time. But prudence requires that collateral should be taken as a form of security in case there
may be any un-expected development which could disturbs this normal sequence and
jeopardizes the banks money.
The money received as deposits, if just kept in the bank safe, would ensure safety and
liquidity, but then, these idle funds do not earn any surplus. Bank has to meet deposits and
non-profit expenses such as establishment expenses and other expenses. These will have to be
recovered from the borrowers mainly by way of mark-up and by way of commission and
bank charges for the various services rendered such as collection and remittances, safe
custody, lockers, trustee and taxation, payment of insurance, taxes, rents etc as per standing
instructions of clients, incidental charges on account of warehouse inspection, appraisal fees,
supervision charges, etc. as depositor expects reasonable surplus for the deposits made, the
bank also expects a reasonable surplus from the credits and investments. Therefore, it is a
question of recovering not only the principal from the borrower but also the markup.
For the bank as a whole, there should be a proper match between the composition of deposits
and credits.
The role of the modern banker is that he should be a catalyst for social change as lending is
very much related with the growth cycle as
Lending leads to growth
Growth contributes to surplus
Surplus creates savings
Savings brings deposits
Deposits create credits and credits create deposits.
UNIVERSITY OF EDUCATION, LOWER MALL CAMPUS, LAHORE
Page 143
MBA
Internship Report
SUB-DEPARTMENTS
The function of Advances or Credits Department is to lend money in the form of clean
advances or against tangible, intangible, movable or immovable securities. The bankers
prefer such securities, which do not run the risk of general depreciation due to market
fluctuations. Credit department further sub-divided into three more departments which
includes the following departments:
CREDIT MARKETING
This department is responsible for capturing the client and client applies for the
grant of loans to this department. Their work is to prepare credit line proposal.
CREDIT ADMINISTRATION
This department approved or disapproved the case of client. They sent credit
sanction advice to credit operations.
CREDIT OPERATIONS
This department after receiving the credit sanction advice starts work on it and
they are responsible for the completion of required documentation.
Page 144
MBA
Internship Report
proprietors/partners/directors and managers should be persons of undoubted integrity. They
should have sufficient experience in their line of business and should be competent to run
their business in a profitable manner. It shall also be ensured that none of the concerns in
which they have been actively engaged has been liquidated or has not a bad reputation.
iv) Purpose & Amount of Facility:
The purpose of advance shall be within the policy of the bank and in accordance with SBP
directives and exchange control requirements. It shall be ensured that the advance is not to be
used for any speculative purpose. In case of limited liability companies it shall be established
that the purpose of the facilities is within the scope of the business of the company as set out
in the Memorandum and Articles of Association.
The amount requested for finance from the bank shall be in reasonable proportion to the
purpose for which it is required. It shall also be in proportion to borrower's own resources.
Transactions which do not apparently exhibit adequate commercial consideration will not be
undertaken except where authorized by the Credit Committee/President.
v) Period:
The repayment schedule shall be definite and should not normally be in excess of one year
for term facilities. Any proposal for facility in excess of one year shall be subject to prior
approval of the respective Credit Committee.
vi) Security:
To protect the interest of the bank against any risk by granting credit facilities proper security
shall be obtained. The facilities shall be adequately secured. Security accepted should be
properly valued by approved surveyors of the bank and shall be effected in accordance with
the laws and practice of the country. Appropriate margins should be taken in accordance with
not only local regulations and practice but such margins should also reflect disposal costs and
potential price movements of the underlying assets. Only those surveyors have to be engaged
who are on the approved panel of Pakistan Banks Association (PBA) for purposes of
Valuation of any security.
The credit requests shall be weighed initially in the light of above principles and before
considering grant or recommendation to the request the manager should seek answers to
following questions:
a)
Who are the borrowers? Are they of undoubted integrity & competent/experienced
to run their business?
b)
What is the purpose of borrowing? Is the purpose genuine, business related &
within the policy of the bank? In case of a company whether the purpose of
Page 145
MBA
Internship Report
borrowing is consistent with the objectives of the company?
c)
The amount required is reasonable in relation to the purpose for which it is required?
d)
What will the facilities mean to the borrower and the bank from the view point of
profit?
LENDING AUTHORITIES
The structure for lending organization in our Bank has five levels.
Branch Credit Committee.
Area / Regional Office Credit Committee
Head Office Credit Committee.
Executive Committee
Board of Directors.
Each approved limit (BCC/AOCC/ROCC/HOCC/EC) will be subject to Risk Asset Review
by Risk Management Division, Head Office.
RUNNING FINNANCE
It is allowed to the borrower under a pre-sanctioned limit. A Current Account is opened and
the conduct of this account is kept under review for a period of three to six months. The
borrower can draw cheques from his Current Account but maximum ally up to the amount of
limit sanctioned to him. The amount outstanding against the borrower is shown as debit in the
'Balance' column of the running finance account. The borrower may draw cheque on this
account for a partial amount. In case a Running Finance Account is fully adjusted on
particular date before the expiry of the stipulated period, the limit will have to be got renewed
if a letter of continuity is not obtained from the borrower at the time of sanction. RF can be:
Temporary/Regular: Depending on whether running finance is allowed to continue
beyond seven days from the date of sanction.
Clean: Where the overdrawing is allowed only against a demand promissory note
signed by the account holder.
Security: In cases of R.F Clean, the Promissory Note acts as security for the extension
of credit.
Secured: where the facility is secured additionally against deposits/tangible assets.
CASH FINNANCE
This type of finance is allowed to the borrower against the hypothecation or pledge of
moveable property/stock of the borrower. In majority of cases this finance is allowed against
Page 146
MBA
Internship Report
pledge of stock. The amount of finance is credited to borrower CD account and he/she
utilizes it for business purposes.
TERM FINNANCE
It is a loan account opened in the name of the borrower. The amount of finance is credited to
borrower's personal account by debiting the Term Finance Account. The amount of Finance
is disbursed in lump sum. Partial transactions are not allowed in the Term Finance account.
The repayment of Term Finance is usually in installments and besides other documents a
letter of installments is taken from the borrower at the time of disbursement. By that letter,
the borrower binds himself to pay the installments at regular intervals. The amount of
installments includes principal plus markup for repayment period.
STAFF FINANCE:
Facilities allowed to Staff members under different schemes of the bank and categorized
accordingly.
Page 147
MBA
Internship Report
PAYMENT AGAINST DOCUMENTS(PAD):
The Bank, being the issuing Bank on the Customer's behalf of a Letter of Credit, pays the
negotiating or advising Bank, and debits the PAD account, till its payment by customer. Until
the realization of the amount a full set of documents representing title to the goods shipped by
the Foreign Exporter, is held by the Bank as Security.
IMPORTANT DOCUMENTS
These are some important documents required for the approval of any credit. Now below a
list of further documents required for each facility is as follows:
FOR CF / STF: Promissory Note
Letter of Continuity
Buy Back Agreement
FOR TERM FINANCE (LONG / MEDIUM TERM LOAN) DF:
Promissory Note
Term Financing Agreement with Schedule of Repayment
FOR FAPE (I & II):
Promissory Note
Letter of Continuity
Buy Back Agreement
Letter of Hypothecation for stocks and machinery and receivables
FOR FATR (Finance against Trust Receipt):
Promissory Note
Letter of Continuity
Page 148
MBA
Internship Report
Buy Back Agreement
Trust Receipt
FOR FBP-A / FBP-N (Foreign Bill Purchased):
Promissory Note
Letter of Continuity
Buy Back Agreement
Agreement of Discount / Purchase of Bills
Letter of Buy Back Cum Indemnity
FOR FIM (Finance against Imported Merchandise)
Promissory Note
Letter of Continuity
Letter of Pledge
Buy Back Agreement
FOR IBP
Promissory Note
Letter of Continuity
Buy Back Agreement
Agreement of Discount / Purchase of Bills
FOR LC (Sight)
LC Application
Credit Report of Exporter
Insurance and Recovery of Margin etc.
FOR LC (Usance)
LC Application
Credit Report of Exporter
Insurance and Recovery of Margin etc.
Trust Receipt & Accepted Bills of Exchange
COLLATERAL/SECURITIES
Collateral is the amount of assets the applicant has available for use in securing the credit.
The larger the amount of the available assets, the greater the chance that a bank will recover
its funds if the applicant defaults, A review of the applicants balance sheet and any legal
claims filed against the applicants assets can be used to evaluate the collateral.
Page 149
MBA
Internship Report
TYPES OF SECURITIES
The following are the types of securities are generally accepted for advances.
BANKER LIEN
A lien is the right to retain property in its possession till its (bankers) dues are cleared. Lien
gives a person only a right to retain the possession of the goods and not the power to sell.
GUARANTEE
When an application for advance cannot offer any tangible security, the banker may rely on
personal guarantee to protect himself against loss on advances or overdraft to the applicant.
MORTGAGE
A mortgage is a charge which a borrower gives to a lender upon part or the whole of his
property. A mortgage is the transfer of an interest in a specific immovable property for the
purpose of securing the money advanced by way of loan, an existing or future debt or the
performance of an engagement which may give rise to a pecuniary liability.
The transferor is called a mortgage and the transferee a mortgagee. The principal money and
the interest of which the payment is secured is called the mortgage money and the instrument
by which transfer is effected is called the mortgage deed.
HYPOTHECATION
An agreement to give a charge to goods or documents of title thereto without conferring
possession is called HYPOTHECATION. The goods are charged as security for a loan from
the bank but ownership and possession remains with the borrower. The security is granted by
the borrower to the lender by a letter of hypothecation which contains the terms and
conditions of the hypothecation agreement.
PLEDGE
A pledge is a contract whereby a good is deposited with the lender as security for repayment
of the loan. The delivery of goods may be made by transferring the goods from the owners
godown to a bankers godown or the keys of the owners godown be handed over to the
lender. The delivery of documents of title relating to goods also creates a valid pledge. The
person delivering the goods as security is called pledger and the person to whom the goods
is delivered is known as pledgee
The difference between hypothecation and pledge is that in hypothecation storing of goods in
the godown of borrower to which the bank may have access whenever it desires. The
borrower furnishes periodical returns of stocks to the bank. The stocks that are hypothecated
remains at the disposal of the borrower. The pledge on the other hand means that the stocks
are placed in the custody of the bank with its name on the godown where they are stored.
The borrower has not right to deal with the stocks. So in hypothecation possession and
ownership is left with the borrower and in pledge ownership remain with the pledgee but the
UNIVERSITY OF EDUCATION, LOWER MALL CAMPUS, LAHORE
Page 150
MBA
Internship Report
pledgee has the exclusive possession of property until the advance is repaid in full. While in
case of the default the pledgee has the powers of sale after giving due notice.
PROMISSORY NOTE
Sometimes the promissory note is also accepted as a security. A promissory note is an
instrument in writing containing an unconditional undertaking signed by the maker, to pay on
demand or at a fixed or determined future time a certain sum of money only, to or to the order
of certain persons or the to the bearer of the instrument.
STATEMENTS
There are some monthly credit statements which must be sent to the Area office at the start of
each month.
Page 151
MBA
Internship Report
7. ONLINE BANKING DEPARTMENT
Online banking means that the customer of Askari Bank can deposit / withdraw funds in /
from other branches of Askari Bank. Askari bank provides online facility to all its branches.
Online Banking is normally a single person department where entries in online system are
made.
Facilities Provide by Askari Bank through Online Banking
CASH DEPOSITS
The customer can deposit any sum of amount, through any branch of Askari Bank Limited, of
any sum in its account of any branch. The cash when deposited online to any other branch of
the Askari Bank Rs. 300/- will be deducted by the bank from the customer. These charges
vary from location to location the above charges are of the AWT Plaza, Rawalpindi Main
Branch of Askari Bank
CASH WITHDRAWALS
The customer can withdraw any sum of amount, through any branch of Askari Bank Limited,
of any sum in its account of any branch.
DEPOSIT CHEQUE
Customers can deposit their cheques of in other branches of Askari Bank through online
banking facility.
Page 152
MBA
Internship Report
8. CLEARING DEPARTMENT
The process, by which cheques are exchanged between the collecting and the paying bank,
and the ensuing financial settlement, is called clearing.
Clearing is actually an arrangement for the speedy and economic collection of cheques, bills
and other documents payable or deliverable at or through offices of members of Clearing
House, clearing services are provided in all the big cities by State Bank of Pakistan or
National Bank of Pakistan, where State Bank has no office.
CLEARING PROCESS
Clearing is done for within city transfers. The Clearing System is very advantageous both for
banks and customers at large. In fact, it is an essential adjutant of a developed banking
system. In Pakistan, State Bank of Pakistan acts as Clearing House and where there is no
branch of this bank the Clearing House Function is performed by the National Bank of
Pakistan. All member banks (only scheduled banks can be full-fledged members of the
Clearing House) have their accounts with the State Bank.
Working
All cheques of some other bank presented at ACBL are collected by NIFT from each bank.
They then distribute the cheques to their respective banks. ACBL also receives cheques from
NIFT which were presented at other banks. This whole procedure takes two days to clear a
cheque. All banks which are members of clearing house maintain account s with SBP by
debit and credit to which the clearing settlements are made. If on a particular day a bank
Page 153
MBA
Internship Report
delivers cheuqes worth more than the total amount of cheques received by it that banks
account with the SBP is credited with the differential amount and vice versa.
TYPES OF CLEARING
Clearing can be divided into two types.
Outward clearing
Inward clearing
OUTWARD CLEARING
The cheques delivered to the representatives of other banks (via NIFT) for clearing are
outward clearing.
Page 154
MBA
Internship Report
The schedules are prepared in triplicate, two copies which are attached with the
relevant instrument and the third is kept as office copy.
The house page is prepared from schedules in triplicate.
The schedules and house pages are signed by the house in charge with branch
stamp.
The grand total of the house page is taken and agreed with that of the outward
clearing register.
The instrument along with duplicate schedule and house page are sent to the main
office.
However the amount is kept in float till final status of various instruments is known from
respective paying banks in second dealing. The entry of the instrument returned unpaid is
made in Cheques returned Register. If the instrument is not to be presented again in clearing
then a covering memo is prepared. The covering memo along with returned instrument and
objection memo is sent to the customer who sent the same to his account.
INWARD CLEARING
The cheques received from the representatives of other banks (via NIFT) for payments are
called inward clearing.
PROCEDURE OF SETTLEMENT
Presume that AKBL got the cheques which are drawn on HBL, NBP, and MCB, for amount
Rs. 50,0000/-, Rs. 30,0000/-Rs. 15,000/- respectively, its total being Rs. 95,000/-. It means
that this amount is to be credited to ACBL account with SBP.On the other hand the cheques
drawn on AKBL are from HBL, NBP & MCB of Rs. 15,000/-Rs. 75,000/-and Rs. 30,000/respectively, its total being Rs. 120,000/-. It means that this amount is to be debited from
AKBL account .The difference between Rs. 95,000/- credit and Rs. 120,000/- debit is Rs.
25,000/-debit, which means the house, is against AKBL for Rs. 25,000. This is called as
debit and credit rule. The amount and number of instrument received are entered in the
House Book from the main schedules of the respective banks.
Page 155
MBA
Internship Report
INSTRUMENTS COLLECTED BY CLEARING DEPARTMENT
Pay orders
Inter-branch cheques
Cheque drawn by other banks
Rupees traveler cheques
Outstation cheques drawn by other banks
DISHONERED CHEQUE
Cheques presented for payment at the counter or through clearing transfer and collection
must be scrutinized properly if any irregularly found the same must be return along with the
CHEQUE RETURN MEMORENDUM. The charges must be recovered according to the
schedule of bank charges.
Refer to drawer
Exceed arrangements
Full cover received (i.e. in respect of date, signature)
Payment stopped by the drawer
Drawers signature is incomplete/differ/required.
Cheque is multi-dated/post dated/out of dated.
Amount in words & figures differs
Revenue stamp required
Acceptor/ Drawer deceased
Acceptor/ Drawer bankrupt
Account closed
Crossed to two banks
Date incomplete
Insufficiently stamped
No-account, etc.
STOP PAYMENT
The instructions received by the bank in writing signed by the account holder requesting there
into stop the payment of a cheque issued by him due to certain reasons are called as stop
payment instructions. Such instructions must be in writing and signed by the account holder.
SPECIAL CLEARING
In addition to the normal clearing function at Clearing house it is mutually agreed to hold an
extra clearing at the clearing house on the particular day and time which is known as special
clearing it is arranged due to the rush of work arising out of say, more Holidays declared by
Page 156
MBA
Internship Report
the Central Govt. at a time, but normally special clearing is held on last working day of our
half yearly and yearly closing i.e. 30th June and 31st Dec every year.
BILLS COLLECTION
Major objective of this department is the collection of the outwards bills and clearance of the
inwards bills. In collection the banks undertakes to collect the proceeds of outstation cheque
for their customers from drawee banks.
OUTWARD COLLECTION
In outward collection, bank receives the cheque from customers. These cheques are called
outward bills for collection OBC. At this time, banker passes an entry in books in which
customers liability is debited and bankers liability is credited. This entry is reversed on
realization. After realization, bank gives credit to customers account. There may be two
cases in outward collection.
The bank has its own branch in a city
In this case, bank sends the cheque to its branch in other city. If the person issuing the
cheque has account in the same branch, branch simply gives debit to his account and
sends credit advice to the branch sending the cheque. But if the person has account in
another bank, cheque is sent in clearing and after realization amount is transferred in
the same way as described above.
The bank has not its own branch in a city
In this case, bank sends the cheque to bank on which it is drawn by post. This bank
sends a D.D to bank sending the cheque.
INWARD COLLECTION
In inward collection, bank receives the cheque drawn on it from banks in other cities. These
are called inward bills for collection. Bank debit to the party who issued the cheque and
gives credit according to the procedure discussed in outward collection.
Page 157
MBA
Internship Report
9. CASH DEPARTMENT
All physical movement of cash in the bank is made through the cash department. Normally
cash department performs following functions
Receipt
Payments
Act according to any standing instructions
Transfer of funds from one account to another
Handling of ATM (Charges Deductions)
Verification of signatures
Posting
Handling of prize bond
Page 158
MBA
Internship Report
10. LOCKERS DEPARTMENT
Lockers open only account holder. The charges of locker charge annually basis .the amount
of charges deduct from the customer account.
In Askari, there are three types of locker
Small
Medium
Large
Application form
SS card
ID card
Account holder of the bank
1100 Rs
1600 Rs
2700 Rs
Page 159
MBA
Internship Report
TRAINING PROGRAMME
I was determined enough to learn each an every task of a bank job, as Because it is so
important that you learn most of the tasks of a job where you are willing to work in future. As
an intern you realy need to grab most of the knowledge about the specific job where you will
be working in future, because when you enter into your practical life.There might be very few
mouths giving you right information or there are very few hands suggesting you, right
directions, where you should ahead Because as they say competetion is tough once you are
in the race, and every one wants to win so you dont meet a lot of people who realy helps you
out there regardless of their on interests . So once you are given an opprtunity go for it and
excel. And that is the only reason that I was determined enough to learn as much as I could .
Being determined, Confident and persistent in the pursuit of knowledge and learning, I was
on my way to Askari Commercial Bank.
FIRST WEEK
I started my internship from "General Banking" in the first week. The General banking is
basically divided into the following sub departments, which are as follows:
Account opening
Bills and remittances
Clearing
Term deposit
Cash department
The first day of exposure to the practical field was at the (sub department) Account opening.
The relationship of customer starts with this department. Every one is not allowed to come
and open an account in the bank, for this purpose there should be an introducer who himself
is the account holder in the same branch. He has to introduce the new client by signing the
opening account form and then his signature are verified. Applicant's fills the account
opening form and provides it to the bank with photocopy of I.D. card and signatures card.
Then the banker inquires the about the option of opening a joint account or individual. If the
customer wants to open joint account then either it is "either or survivor" (i.e. Only one
persons signature is sufficient) or jointly (i.e. Both should sign the cheque).
OPENING ACCOUNT
The procedure of opening an account is not as easy as it seems. Ther is a whole separate
process that you have to go through. Basic necessities which are required for opening an
account are as follow.
Introduction of individuals or companies who are willing to open an account.
National ID Card
Personal data, a copy of utility bill or electricity bill etc.
UNIVERSITY OF EDUCATION, LOWER MALL CAMPUS, LAHORE
Page 160
MBA
Internship Report
ISSUANCE OF CHECKBOOK
Once the account is opened, ACBL issues the chequebooks to the customer so that they could
withdraw their money whenever they like. The producer of issuance of the chequebook is as
follows:
For the customer who already has an account with the bank, the lastly consumed
chequebook requisition slip with the help of which a new chequebook is issued. And the
person who is going to open a new account for the first time gets the chequebook free without
any requisition slip.
For the new depositors the cheque book is not issued at the time of opening of account,
rather it is issued after three days but, as the most of the customers are from the armed forces
so the usually get the cheque earlier. ACBL issues the chequebooks for both the local and
foreign currency accounts.
I remained there in the account-opening department for one week and daily I learnt a new
thing. I come to know about the details of the account opened by the banks, which I have
explained in previous portion of "Departments".
In the start I have stated the account opening procedure and issuance of cheque book in a
very comprehensive way, now let me tell u the further related detail of account opening.
First of all a customer come and gets the information regarding the opening of account. After
getting the proper information he gets an introducer and goes for opening an account of any
kind whatever he wants
He fills the from regarding the opening of account which is in fact a request.
S.S card is filled which contains the signature that will be used in future in order to
identify that you are the same particular person who perfectly eligible for receiving
the benefits.
The S.S card and the application form is verified and the verification stamp is
imposed on it.
After verification the application forms are pasted in the file with the serial, no which
is actually the account no. Allocated to thanks.the respective customers.
The chequebook is issued to the customer after three days.
A letter of thanks is posted to the customer as well as the introducer. The introducer is
thanked for the two perspectives. First he should be thanked that because of him the
bank get another customer and the second reason behind sending the letter to him is
that if the customer had fraudulently get the signature of that person as an introducer
then he should come to know that some one has used his name as well as signature for
his personal benefit and without the consent of him (introducer).
The procedure for opening the account comes to an end after sending the letter of
UNIVERSITY OF EDUCATION, LOWER MALL CAMPUS, LAHORE
Page 161
MBA
Internship Report
ACTIVE AND INACTIVE ACCOUNT
The account becomes Inactive if there is no debit transaction. Account becomes active if
there is credit transaction.
SECOND WEEK
In the second week of my training I was shifted to TDR( Term Depots Receipts) department.
It was again a good experience, working there with professionals who initialy taught the
basics of the TDR.
In the second week I was shifted to the TDR (Term Depots Receipts) department. It was
again a good experience to work with the officer here. First of all he told me about the basics
of the TDR.
Deposit is lifeblood of a commercial bank. The main function of a commercial bank is to
channelize the saving from the savers to the ultimate users of the funds. This process of
collecting saving is called "deposit mobilization".
Deposits are of two types one is the demand deposit and the other one is time deposit (these
have been explained in detail in the "department" portion). As the name signifies the demand
deposit is payable on demand so no interest or benefit is given on such deposits but the time
deposit is a kind of deposit, which gives you a benefit in terms of cash. Most of the people
who have surplus money with them especially the landlords deposit their money in such
accounts.
Term deposits are payable on demand with certain maturity. Different percentages of profit
are given in the time deposit (the detail is given in the Marketing Mix)
These are called fixed deposit because they are fixed and no transaction is allowed till
maturity. In fix deposit you can open an A/c of the same title only than A/c number will be
changed. While in other accounts the A/c can't be opened under the same title even in other
branch of the same Bank.
RECORD KEEPING
The record of the TDR is although feed in the computer but there is also a hard copy of the
record. The verified TDR forms are pasted with serial number of receipt given to the
customer (the receipt of the form regarding the deposit of the amount).
Askari Bachat Certificates are attached or pasted in the file according to the date. The date
may be of any month and any year i.e if there is a card of the 8th then on this card you will
find the only 8th date of any month and any year in which the card was issued.
PROFIT CALCULATION
The Head office determines the provisional rates of the Profit. Every bank has its own interest
rate; usually established banks have low interest rates then the non-established banks as the
have to attract the Customers.
UNIVERSITY OF EDUCATION, LOWER MALL CAMPUS, LAHORE
Page 162
MBA
Internship Report
There are different types of accounts, which are shown in provisional rates of profit on PLS
deposit and rate of return minimum balance, and maturity is also shown in it. After every six
months the rates are revised on PLS deposit
On fixed deposit the interest is given on the Principle amount only while on other profit and
loss deposits the interest is given on profit an principle amount (provided that the interest has
not been received in the given time). On fixed deposits the month is started from the day from
which you deposit the amount.
As the interest rates vary frequently you will calculate the interest on the rate which is
applicable during that particular duration. It happens that sometimes the interest rate remains
the same. But during the year 2004 the interest rates were changed two times within six
months. First of all the interest rates were changed at the start of the year and then these rates
were changed again in the month of the February i.e. these were changed twice in the six
months. The changing in the interest rate depends upon the will of the Head office, which has
the power to change them at any time.
Zakat is deducted on the first of Ramdan. However, the Bank can't deduct the Zakat if you
have given Affidavit (declaration regarding not to deduct Zakat on Stamp paper).
Tax is deducted which is known as withholding tax only at the time of deposit e.g. When you
will deposit Rs.100,000 you will have to give additional money of Rs. 300/- as the
withholding tax. (The rate of withholding tax is 0.3%). If you have National Tax Number
NTN then 0.3% withholding tax is exempt.
The rate of withholding tax on profit is 10% i.e. if you are going to get a benefit of Rs. 10,000
then you will receive the cash of Rs. 9,000 as the remaining amount will be deducted as the
tax.
For non-residents the tax and Zakat is exempt (visa is required as the proof that the particular
person is really a non-resident).similarly Christians has not to pay the tax, they have to pay
the tax only.
Askari Bachat Certificates are tax-free.
THIRD WEEK
In the third week of my internship I was shifted to the Clearing section.
CLEARING
This is an "Inter-city clearing" i.e. the cheques of Lahore city from different banks like
National Bank of Pakistan, Standard Chartered Bank, Muslim Commercial Bank are
deposited here. The deposited cheque is received carefully by checking the title of cheque,
date, amount, and signature on the cheque. All the cheques go to the State Bank of Pakistan.
Everyday NIFT receives all cheques and arranges them. By establishment of NIFT a lot of
UNIVERSITY OF EDUCATION, LOWER MALL CAMPUS, LAHORE
Page 163
MBA
Internship Report
time, cost and labor is saved. The cheques are stamped carefully. Two stamps are required on
the cheques.
Clearing stamp
Payee's account will be credited
If any stamp is missed or unclear, SBP returned one the cheque with reason. When the
cheques are deposited they enter all the cheques on the computer with account number and
these figures go to SBP.
There are four types of Balances in the computer
Available balance
Float amount
Block amount
Ledger balance
NIFT collects all the cheques at 2:00 pm. After that the computer department give clearing
sheet that is checked in clearing.
CLEARING HOUSE
It is a place where representatives of all scheduled banks sit together and interchange their
claim against cash other with the help of controlling staff of "state Bank of Pakistan" where
there is no branch of State Bank of Pakistan, the designated branch of State of Pakistan.
So, system by which banks exchange cheques and other negotiable instruments drawn on
each other within specific area and there by secure payment for their clients through the
clearing house at specific time In an efficient way.
FORTH WEEK
In the fourth week of internship I was transferred to the "Remittances department". I met
there with a quite sophisticated personality, she tells me about the issuance, procedure and the
entries of the demand drafts and pay orders.
DEMAND DRAFT
It is an instrument payable on demand for which value has been received, issued by the
branch of the bank drawn. Demand draft is payable at some other branches of the same bank.
But Askari Bank contract with MCB so ACBL's demand draft is payable at MCB also.
Page 164
MBA
Internship Report
Demand draft is very useful because there is no chance o fraud. The person deposit cash and
get demand draft. It is used for outstation payment.
TYPES OF DEMAND
DDs are of the following types:
Crossed DD: In the case of crossed DD the amount is deposited to the A/c of the benificiary.
Open DD: Incase of open DD the amount is handed over to the benificiary at the cash
counter.
Name of beneficiary
Amount
Mode of payment
The place where DD is drawn
Signature
Name and address of the beneficiary
Request shall be made on standard application form. The customer writes his name, address,
I.D number, and phone number on the backside of the application form. Commission is
charged as per schedule of charges. The issuance of DD is computerized and the amount is
automatically protect graphed drawing printing for the avoidance of forgery. The withholding
tax and excise duty is deducted as per schedule. when the customer depots cash in the cash
department, he got voucher from the cash department and gave it to the person who makes
the DD.
PAYMENT OF DD
When a person brings DD (which have been drawn on you), you will check it from your DD
payable record and ask the customer to sign twice at the back of the DD so that it could be
confirmed that he is the eligible person for receiving the benefit, along with this you obtain
the ID of that person verify it and then make the payment. After making the payment entry is
made in the register that this DD has been paid.
FIFTH WEEK
In the second last week of my internship I worked for two days in the "Accounts section".
ACCOUNT SECTION
I worked three days in accounts department but as it is a confidential department so they did
not give me enough information regarding their working. First day I sorted out the cheques of
ACBL with the help of the serial number and the nature of the account and arrange them in
UNIVERSITY OF EDUCATION, LOWER MALL CAMPUS, LAHORE
Page 165
MBA
Internship Report
sequence. After that i checked the activity which contains the title of the cheque, amount,
date etc. Accounts department maintains the record of expenses of all the departments, it also
maintain the record of all the employees regarding their basic salary, increment, benefits etc.
It is the backbone of ACBL
On the next day Is worked in the mail dispatch section, the person appointed here asked me to
arrange the letters and to write the mailing address on the envelopes and then to put the letters
into the envelops. It was an interesting job but, the single thing which I learned from here was
that, I learnt by heart the addresses of many branches of the ACBL, which helped me to
complete the Marketing Mix portion of the same report where I have given the detail of the
Place of the ACBL. On the following day I repeated the same job and did nothing else.
SIXTH WEEK
In the last week I was shifted to the "foreign exchange" department. For the first three days I
worked there but in the last three days I was shifted again to the account-opening department
due to the absence of one of the Account opening officer. Therefore I was sent back to the
account-opening department.
Page 166
MBA
Internship Report
PROBLEMS AND SUGGESTIONS
THE PROBLEM I FACED
Doing the internship was a wonderful experience for me but as far as preparation of the report
is concerned it was the most difficult part of the project. Preparing for report become most
difficulty and tedious as most of the information was not available not only on net but also
from the bank also. I was unable to get the following material.
History of the bank
Career ladder
Job description
I was fortunate to have a wonderful Annual report of the bank. Especially it was rested
according to the circular of the State Bank of Pakistan, therefore, it was quite easy for me to
analyse the income statements of the bank. There are some other necessary requirements for
doing the financial analysis of the income statements i.e.,
Information about the trends prevailing in the market,
And information regarding the positions of the competitors of the bank that is
the reason that I was unable to depict the true picture of the financial position
of the bank.
We are also unaware about the off balance sheet finance of the bank so, can
say nothing regarding the true liabilities of the bank
Anyhow, it was a very learning experience for me that I will never in my entire life.
SUGGESTIONS
After spending six weeks at different departments of the bank, interacting with the
employees, getting their views, observing the organizational structure and design, I have
come up with the following suggestions that in my view, will definitely improve a few
weaknesses observed in the bank by me.
FLEXIBLE POLICIES:
The Bank should adopt flexible policies, especially in the areas of the recruitment,
promotions, evaluation of the employees otherwise the high turnover observed in the bank
will continue to create problems for the bank now and in the future.
JOB SECURITY:
The employees in the organization should be insured job security so that there is no pressure
on the employees while performing their tasks.
Page 167
MBA
Internship Report
PERMANENT HIRING:
The Bank should recurit staff and after there training and evaluation they should be given a
permanent job on the basis of their education, ability and skills so that they feel more
satisfied and comfortable. And thus the bank can also reduce trunovers.
DECENTRALIZATION
The higher authorities should form team-based management rather than centralized
management. It would result in improvement in uplifting the morale of the employees. They
will be more motivated and involved in all their operations resulting in overall effectiveness
of the organization.
Page 168
MBA
Internship Report
In the Askari Bank I have spend six week for internship programme and try to understand the
working of different departments. I come up with some areas to improve like customer
facilitation, recruitment, rotation of staff between the branches. To capture more market share
bank has to be introducing new facilitation plan for the customer satisfaction. There are some
flaws in the recruitment policy and need to be hire staff with banking related qualification
which will give the better out come.
Over all bank performance is good as we look its age because it has to cover long distance to
become first choice for customer in the banking sector. During policy formation must keep in
mind that how customer will involve with the policy and what kind of benefits and problems
have to be faced by the customer through this policy.
New products & Services will have to be introduce in the bank by analyzing the customer
needs and market demands which will build the image and prestigious among the customers.
Bank has lot of potential to become a leader in the banking sector.
Page 169
MBA
Internship Report
Askaricards.com/default.asp
Dawn.com
Pakistaneconomist.com
Sbp.org.pk/index.asp
En.wikipedia.org/w/index.php
www.askaribank.com/index.php
www.sbp.org.net.pk
scribd.com
http://www.askaribank.com.pk/Reports/Askari
Bankalfalah.com
Alliedbank.com
Books
Financial Statement Analysis(Charles H. Gibson)
Askari bank annual report 2012,2011 & 2010
Page 170
MBA
Internship Report
GLOSSARY
ACCEPTANCES:
Promise to pay created when the drawee of a time draft stamps or writes the words
accepted above his signature and occurrence of a designated payment date.
ACCRUAL BASIS:
Recognizing the effects of transactions and other events when they occur without waiting for
receipt or payment of cash or its equivalent
CASH EQUIVALENTS
Shortterm highly liquid investments that is readily convertible to known amounts of cash
and which are subject to an insignificant risk of changes in value.
CONTINGENCIES
A condition or situation existing at Balance Sheet date where the outcome will be confirmed
only by one or more future events
Page 171
MBA
Internship Report
CORPORATE GOVERNANCE
The process by which corporate entities are governed. It is concerned with the way in which
power is exercised over the management and direction of entity, the supervision of executive
actions and accountability to owners and others.
CAGR
An abbreviation for Compound Annual Growth Rate.
DEFERRED TAXATION
Sum set aside for tax in the Financial Statements that will become payable in a financial
year other than the current financial year.
DERIVATIVES
Derivative is a financial instrument or other contract which has the following
characteristics:
(a) its value changes in response to the change in a specified interest rate, financial
instrument price, commodity price, foreign exchange rate, index of prices or rates, credit
rating or credit index, or other variable, provided in the case of
a nonfinancial variable that the variable is not specific to a party to the contract
(sometimes called the underlying);
(b) it requires no initial net investment or an initial net investment that
is smaller than would be required for other types of contracts that would be expected to
have a similar response to changes in market factors; and it is settled at a future date
EQUITY METHOD
A method of accounting whereby the investment is initially recorded at cost and adjusted
thereafter for the post acquisition change in the investors share of net assets of the investee.
The Income Statement reflects the investors share of the results of operations of the
investee.
FINANCE LEASE
A contract whereby a lessor conveys to the lessee the right to use an asset for rent over an
agreed period of time which is sufficient to amortise the capital outlay of the lessor. The
lessor retains ownership of the asset but transfers substantially all the risks and rewards of
ownership to the lessee.
UNIVERSITY OF EDUCATION, LOWER MALL CAMPUS, LAHORE
Page 172
MBA
Internship Report
FORWARD EXCHANGE CONTRACT
Agreement between two parties to exchange one currency for another at a future date at a
rate agreed upon today.
GROSS DIVIDENDS
The portion of profits distributed to the shareholders including the tax withheld.
GUARANTEES
An agreement involving a promise by a person (the guarantor) to fulfill the obligations of
another person owning debt if that person fails to perform.
INTEREST IN SUSPENSE
Interest suspended on nonperforming loans and advances.
INTEREST SPREAD
Represents the difference between the average interest rate earned and the average interest
rate paid on funds.
LIQUID ASSETS
Assets that are held in cash or in a form that can be converted to cash readily, such as
deposits with other banks, bills of exchange, treasury bills.
MARKET CAPITALISATION
Number of ordinary shares in issue multiplied by the market value of share as at the year end.
MATERIALITY
The relative significance of a transaction or an event the omission or misstatement of which
could influence the economic decisions of users of financial statements.
NET DIVIDENDS
Dividend net of withholding tax.
Page 173
MBA
Internship Report
NET INTEREST INCOME
The difference between what a bank earns on assets such as loans and securities and what it
pays on liabilities such as deposits, refinance funds and interbank borrowings.
PRUDENCE
Inclusion of a degree of caution in the exercise of judgment needed in making the estimates
required under conditions of uncertainty, such that assets or income are not overstated and
liabilities or expenses are not understated.
RELATED PARTIES
Parties where one party has the ability to control the other party or exercise significant
influence over the other party in making financial and operating decisions.
REPURCHASE AGREEMENT
Contract to sell and subsequently repurchase securities at a specified date and price.
Page 174
MBA
Internship Report
RETURN ON AVERAGE EQUITY
Net profit for the year, less preference share dividends if any, expressed as a percentage of
average ordinary shareholders equity.
REVENUE RESERVE
Reserves set aside for future distribution and investment.
SHAREHOLDERS FUNDS
Total of Issued and fully paid share capital and capital and revenue reserves.
SUBSIDIARY COMPANY
A company is a subsidiary of another company if the parent company holds more than 50%
of the nominal value of its equity capital or holds some share in it and controls the
composition of its Board of Directors.
Page 175