Académique Documents
Professionnel Documents
Culture Documents
My prime objective of studying the Askari Bank is to get actual experience and find
position of the Bank in the Banking market. The other objectives of studying the Askari
Bank are as follows:
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Analyzing the role of Finance Department in the development of
Banking sector.
To suggest the ways for strengths and how to improve the Banking
sector for future.
2
7. Overview of the organization
Here, the Banking sector is defined in its complete shape that how it works. This chart
depicts the complete picture of the organization that how many functions are performed
with and through Banking sector and by which department.
When the partition plan was announced on 3rd June 1947 the non-Muslim, who
monopolized Banking business, started shifting their head offices and capital to places,
which were to form part of India. By the 14th August 1947 most of the Head Offices and
Capital had been shifted.
Simultaneously, the non-Muslim staff began leaving Pakistan the gravity of the situation
can be judged that is 409-branches were abruptly closed. Out of this total number of
195-branches 23 branches were of Pakistani Banks, 153 of Indian Banks and 19 of non-
Indian foreign Banks, also known as exchange Banks.
Pakistani Banks, branches were mostly newly born and weak transacting very normal
business. Indian Banks were functioning only in name pending winding up their business.
The non-Indian foreign Banks were engaged almost totally in foreign exchange
transitions and had little interest in the welfare of newly born state of Pakistan.
At the time independence the only Pakistani Banks were HBL set of in 1941 and
Australasian Bank Limited setup in 1942. The MCB was setup 1947. The imperial Bank
of Indian functioned both for Indian and Pakistan till November 1949, when it was
replaced by the NBL the reserve Bank of India performed central Banking functions both
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for India and Pakistan until the establishment of the state Bank of Pakistan on 1st July
1948.
An important player in Pakistan’s financial services industry, Askari Bank is now leading
the way to the most modern and dynamic Banking in the country.
Incorporated in October 1991, Askari Bank commenced its operations in April 1992, and
has since expanded into a nation wide presence of 155 branches, including 15 dedicated
Islamic Banking branches connected online and supported by a shared network of over
2,670 online ATMs covering all major cities in Pakistan supports the delivery channels
for customer service. Askari Bank also has an wholesale Banking Unit in Bahrain.
ASKARI BANK is the leading private sector Bank in Pakistan, delivering quality service
through innovative technology.
In the success story of ASKARI BANK, one of the most important factors, apart from its
dynamic management and prudent approach, is the QUALITY of its SERVICES, which
gives it a great edge over its competitors. ASKARI BANK has always strived to facilitate
its customers by introducing various high quality hi-tech services for the first time in
Pakistan.
We are proud of our pioneering role in providing the most modern and technologically
advanced services to 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.
Technology has played a pivotal role in meeting customer expectations, particularly with
respect to the speed and quality of services.
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and service delivery systems, such as ATM networking, Internet Banking, Mobile ATM,
Credit Cards, Debit Card, Prepaid Card, utility bills payment through ATMs & Internet
which have brought about cost-effectiveness, timesaving and safety.
Askari Bank has also achieved another milestone with the launch of Askari Bank Zari
Credit Card. This is the first ever credit card offered to the farmers in Pakistan with
complete product features and service benefits. It aims to meet farmer’s production and
development needs and to supplement cash flows, whenever required.
It is also a matter of satisfaction that ASKARI BANK has been the first Bank to
introduce PTCL and WAPDA utility bills payment electronically through ATM and
Internet on an Online-Real-Time Basis. For the first time in Pakistan, we have introduced
Mobile ATMs to provide Banking facilities at the doorsteps of our customers. Askari
Bank’s mobile ATMs first in the Banking history of Pakistan, now four in number,
continue to serve customer needs.
Our Phone Banking and Internet Banking Facility allows our customers, to access their
accounts from anywhere in the world, and effect transactions.
Bank has established its Data Warehouse and Customer Care Centre, a dedicated
customer call center to provide one window service to our valued customers in terms of
their telephonic enquires.
Askari Bank remains focused on using technology for improving customer service
standards and expanding the range of products being offered and other technology based
solutions.
Since its inauguration, Askari Commercial Bank Limited engaged in share the
development of the country. Its basic mission is to be the leading private sector Bank in
Pakistan. During its very few years of life, AKBL has a high regard for its ‘Best
Banking’. No Bank achieved such fame in a short time period. In this age of tough
competition, AKBL plays a role of responsible corporate citizen.
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“THE BEST BANK IN PAKISTAN”
Askari Commercial Bank honored with this award by the Prestigious Global Finance
Magazine in the year 2001. It has been selected by the above magazine as the “BEST
CONSUMER INTERNET BANK IN PAKISTAN” for the year 2002.
Askari Commercial Bank Ltd. awarded as the ‘Commercial Bank of the year’ for the year
1994 and 1996 by the Asia money.
PACRA awarded Askari Commercial Bank as A1+, the highest possible credit rating for
short term obligations.
Askari Commercial Bank’s long term rating stands at AA asserted by the PACRA.
AKBL won the prestigious award from the Institution of Chartered Accountants in
Pakistan, and the Institute of Cost and Management Accountants, Pakistan, for the
services sector, for 2000.
“OTHER PRIZES”
AKBL also received prizes during last four years from the South Asian Federation of
Accountants (SAFA) for the “Best Presented Annual Accounts” for the financial sector,
in the SAARC region.
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Entity Ratings
Askari Bank has the following Entity Ratings from the Pakistan Credit Rating Agency
Limited (PACRA):
Definitions by PACRA
A1+:
AA+:
Very high credit quality. 'AA' ratings denote a very low expectation of credit
risk. They indicate very strong capacity for timely payment of financial
commitments. This capacity is not significantly to foreseeable events.
A plus (+) appended to a rating denotes relative status within major rating categories.
It is located on High Street Jinnah Road Sahiwal. The location is connected to all the
main trade centers in Sahiwal. It is a prosperous branch streaming towards great
achievements.
At the time of its establishment the factored that were considered are as follows
Educational Institution
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The total strength of staff in AKBL Sahiwal is 33. They are dedicated their work. The
branch is progressing rapidly. Under the dynamic leadership of Vice President Mr. Adnan
Asghar and Operational Manager Mr. Muhammad Shafique
Now, AKBL sahiwal branch has the importance of backbone for Askari Bank. It has high
volume of deposits and has led to huge profits.
So, I have been much lucky that I got an opportunity for working in concerned branch for
six weeks from 05-10-2009 to 20-11-2009, and confronted with enough exposure and
opportunities to learn.
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7.2 Nature of organization
Deposit Banking
Remittance facilities
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7.3 Organization Business Volume
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Total Assets
The total assets of the bank include cash and balances with treasury, balances with other
banks, investments, advances, operating assets and other assets. The total assets of the
bank are gradually increasing from 2004 to 2008.
Deposits
Deposits of the bank are directly linked with the prosperity of the bank. A bank can only
survive in the market if its deposits are increasing day by day. It has become very
essential for the banks to increase its deposits to compete with its competitors. ACBL is
also focusing on enhancement of its deposits. As a result their deposits are increasing
from 2004 to 2008.
Advances
Earning per share of ACBL continuously increased from 2004 to 2008 due
to efforts and efficiency of the management of the bank.
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7.4 Number of employees
In Askari Bank, total 6808 employees are working are working. In Askari
Bank Limited every branch has a Brach Manger, MIS person, Operational
staff and field staff. Cadre wise break up of employees working in Askari
Bank Limited is as under:
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Twenty nine employees are working in Askari Bank Limited, Sahiwal
Branch. The names and their cadre are mentioned below:
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The Corporate Banking Division (CBD) was streamlined on the basis of clear criteria
under which the categorization of existing Banking relationships was identified and
accordingly relationship management was consolidated from various branches into three
regional corporate centers.
Products
During 2007, the consumer services offered by the Bank were reorganized by combining
the consumer financing and credit card businesses under one umbrella and were renamed
as the Consumer Banking Services Group (CBSG). The reorganization is aimed to bring
in business synergies and to enable a more active sale of different products within the
same market segment
Products
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• Askari Bank's Personal Finance
• Smart Cash (running finance facility for consumers)
• I-Net Banking (internet Banking solutions)
• Askcar (auto loans)
• Askari Touch 'N' Pay (on-line utility bill payment services)
• Cash Management Services
• Rupee Traveler Cheques
The detail of few of these product is given as under:
Personal Finance is a parameter driven product for catering to the needs of the general
public belonging to different segments. One can avail unlimited opportunities through
Askari Bank's Personal Finance. With unmatched finance features in terms of loan
amount, payback period and most affordable monthly installments, Askari Bank's
Personal Finance makes sure that one gets the most out of his/her loan. Once a good
credit history is established, the door to opportunity opens much wider.
In pursuance of the National objectives to revive the economy of the country, AKBL is
providing loans to small and medium size business enterprises under Askari Bank's
Business Finance Scheme. Our goal is to offer a loan, which enables business community
to receive the financing required by them based on their cash flows. Our valued
customers can enjoy the convenience of getting financing on attractive terms with the
minimum processing turnaround time
ATM Network:
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Askari Bank Ltd took the initiative to sign a strategic partnership with ABN Amro Bank, Habib
Bank, Soneri Bank for ATM sharing arrangements, the first of its kind in Pakistan. The
countrywide network of automated tellers machines (ATMs), carrying the brand name of
ASKCASH, is further enhanced and as of date the Bank is operating 16 ATMs. Being the first
inter-Bank ATM switch in Pakistan, with ABN Amro, Soneri Bank and Habib Bank, AKBL
customers now have access to about 90 ATMs throughout the country. These achievements
undoubtedly are the result of its consistent hard-work and honest efforts to be the best.
The State Bank of Pakistan in line with a tighter monetary policy during the year
discreased the discount rate from 14% to 13% and CRR, SLR requirement in Pak Rupees
5% and 9% respectively. To give incentives to the Banking sector to mobilize long term
deposits, the State Bank waive the requirement of CRR on deposits of one year and
above.
Products
Askari Bank's funded credit portfolio increased by 28% in 2008 to close at Rs. 128.818
Billion as compared to an increase of 2% in 2007 as the Bank remained watchful of the
impact of growth of risk assets on its capital adequacy.
Products
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• Running Finance
• Cash Finance
• Term Finance
• Ask Card
• Staff Finance
• Finance Against Foreign Bills (FAFB)
• Finance Against Packing Credits (FAPC)
• Payment Against Documents
• Finance Against Trust Reciept
• Finance Against Imported Merchandise
• Letters of Credit (local/international)
• Letter of Guarantees
In its fourth year of launching the Bank's Agriculture Credit Finance programme
continued to receive an overwhelming response from the farming community. The
positive outlook was the reflection of credit quality, expertise, and impressive
performance in outreach and lending volumes. The customer base increased by 70% and
overall portfolio size by 50% as compared to last year.
Products
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• Model Dairy Finance.
• Gold Fish Finance.
• White Pearl Finance.
• Murghban Finance.
• Samar Bahisht Finance.
• Gulban Finance.
• Asan Mali Sahulat
• Zarai Credit Card.
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8.1 MANAGEMENT HIERARCHY
PRESIDENT
VICE PRESIDENT
PEONS
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ORGANIZATIONAL STRUCTURE
BOARD OF DIRECTORS
PRESIDENT
Country Heads
Regional Managers
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8.2 Structure of Askari Bank Limited, Sahiwal Branch
BRANCH MANAGER
OPERATIONS
MANAGER
Import Export
FCA
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8.2.1 Comments on the organizational structure
Span of Administration
Unity of Command
Objective Setting
Span of administration
Unity of Command
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Objective setting
Management by objective approach has been adopted to define and set the
objective of each and every individual in the organization. Askari Bank
Limited, Sahiwal as adopted the management by objective as a tool for
performance management and appraisal. During the assigning objectives it
is ensured that these objectives are in line with the organization policy
and are not harming the specific interest of the organization.
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8.3 Functions & Responsibilities of Various Departments
ATM Department
Account Department
Credit Department
Remittance Department
Cash Department
IT Department
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8.3.1 Account Opening Department
Borrowing funds from different sources has become an essential feature of today's
business enterprises. But in the case of a Bank borrowing funds from outside parties is all
the more vital because the entire Banking system is based on it. The borrowed capital of a
Bank is much greater their own capital. Banks borrowing is mostly in the form of
deposits. These deposits are lent out to different parties. Such deposit creation is done
through opening an account in the Bank.
In AKBL Sahiwal Mr. Abdul Rehman is operating the account opening department along
with performing some auxiliary functions of Check Book Issuing and receiving IBC’s
(incoming Bank Cheque for Collection).
Types of Account
In AKBL, there are the following types of accounts:
• Current account.
• Saving Account.
• Askari Special Deposit Account.
• Unique Account
• Term Deposit.
• Mahan Bachat Certificate
• Value Plus CD
• Value Plus SB
Current Account
In current account there is no interest on it. It is for only transaction purposes. They are
paid on demand. When a Banker accepts a demand deposit, he incurs the obligation of
the paying all cheques drawn against him to the extended of the balance in the account.
As there is no profit paid on this account it is also called chequing account because
cheques can be drawn on it. Current account is mostly opened for business.
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Saving Account
The purpose of this account is to induce the habit of saving individuals in the
neighborhood. The profit is on the basis of 5% per 6 month. The minimum deposit for
opening the account is Rs.2500/-
Though individuals open such accounts for saving purpose, persons belonging to Armed
forces and different military institutions are free to use this account on current basis.
ASDA account is an interest bearing current account interest is paid. The payment of
return is monthly, where as the rate of return with aspect to the amount of minimum
deposit clear from deposit schedules in following table). It is also chequing account
because cheques can be drawn on it. It is necessary for this account that the client must
maintain a minimum balance of Rs. 50,000 at the end of the month. That’s why it is
similar to current account. It is mostly opened by Business but individuals too open this
account.
ABCs are long term fixed deposit for 3 and 5 years. Theses are not term deposits because
payment of return is on monthly basis rather than on maturity of deposits. The minimum
balance requirement is Rs. 25000/- and maximum balance requirement is Rs. 1.0 Million.
If ABC is for 3-years, the rate of return for 3-years is 7.0 % if ABCs is for 5-years the
rate of return is 8.0 %. Because in such account the balance is kept for either '3' or '5'
years within the Bank no cheque is drawn on it. That’s why it is not a chequing account.
Return is made monthly.
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Term Deposit
A term deposit is a deposit that is made for a certain periods of time at the end of the
specific period. the customer is allowed to with draw the principle amount .
AKBLs Term deposits are of types clear in the deposit scheme in the table). One of them
is "Askari" Advantage one month. The rate of return on this account is 4.0 %. The term
deposit account vary one month to 5 years and the min balance requirement is Rs.5000/-
for all following accounts (as clear from Deposit Scheme in the table ).
Following are the salient features of Askari Value Plus Current Account:
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Free issuance of debit card at the time of account opening.
Free On-Line funds transfer facility.
Free internet Banking facility.
Free accidental insurance.
Free travel insurance.
Free accidental insurance coverage for all Askari debit card holders.
Free ATM cash withdrawal insurance against snatching or armed hold up, for all Askari
debit card holders at all Askari ATMs.
For the checking accounts (C/A, ASDA , SAVING) , there are different types of account
holders are required for all these types of account holders. The operation /procedure
requirement that is needed for " Individual Account " differ greatly from " Joint account "
proprietorship "Partner ship “, "Limited Company" and "Club society or Association " as
explained below.
Individual Account
When a single man or women opens an account in his/her own name and has the right to
operate it is called individual Account.
Documentation Required
For literate person copy of National Identity Card is required as a primary requirement.
For illiterate person and Veiled Women, along with the copy of National Identity Card
requirement he or she must come in person for opening the account.
Operation
• The person place a "Check Mark " in the type of account and type of operation
required
• He/She fills in part-I of the form , a fix his /her either two or four similar signature
(or thumb expression in the signature space and get it introduced and signed by a
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person who already has an account with the Bank and write his account no in the
specific rows in a specific space.
• The person fills in "next of Kin " position where he/she father, mother, husband/wife
or any other relative's name, his /her address, phone no and affix his/her signature to
certify this requirement. This requirement is needed because in his/her absence Bank
can have correspondence with the specific person.
• The person put her /his signature (" or thumb expression) on the signature Specimen
Card (SS CARD) similar in the area on the form. One the back of S.S card mailing
address, telephone no, Person to contact and introducer space is filled in. All these
requirement are necessary for future
• The person deposits the initial amount for opening account on to the cash counter.
The person put his signature on form -A (check book requisition) on two places in
"authorized signature" and fills in the "Title of Account space by writing his name.
• If the person put his signature in Urdu or any language other than English, he signed a
"Vernacular form" where under take that affixed signature are original and his own
signature and two postal size photos are needed.
The next day is the opening of account.
Joint Account
When two or more persons, neither partners, nor trustees, open an in their name is called
joint Account. Husband and wife or two persons of same sex can open joint account.
Documentation
For joint account copy of National Identity Card of all the persons is obtained other
things remaining same as in individuals account.
Operation
• The person checks the type of amount and type of operation required in the respective
box on the form.
• The persons fill in the Part-I and part-II in the form.
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• Signatures of both persons are obtained on the form in the area specified for signature
and S.S Card.
• In the title of account space names of all the persons are mentioned.
• Accounts holder specified in the form that they will operate the form singly or jointly.
Proprietorship Accounts
When an owner of a firm operating singly, opens an account in his firm name, this
account is called a proprietorship Account the proper himself liable for all his acts.
Documentation
For this kind of account, an application for opening the account on the firm letter -pad
(having the firm name) is required along with the N-I-C- Card of proprietor.
Operation
All operation remains the same except that the firm name is written in the "Title of the
Account” area and signature of the proprietor are affixed in the S.S. Card and the area
specified for signatures on the form.
Partnership Account
The account is opened in the firm name and all partner designate one two persons to act
on behalf of the partner ship firmer all acts on behalf of firm. The partners in the
partnership firm are liable for the acts of the firm jointly and severely. Every partner has
in a firm has an implied authority bind his co. partners by drawing and enclosed cheques.
Documentation
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• Letter showing the implied Authority of one or more partners to act on behalf of the
firm.
• Name, address of all partners is written on the pad.
Operation
All other requirement remain same except that the form is dully signed by all partners
cards are signed by all those partners who will act on behalf of the firm and along filling
part-I , Part-Iv is also filled.
This account is for limited companies. In order to facilitate their transaction with outside
parties, Bank provides many facilities.
Documentation
• Memorandum of Association.
• Articles of the Association
• Resolution of the Board of Director.
• Certificate of Incorporation.
• Certificate of commencement of business
• N-I-C
Operation
The persons authorized in the Resolution of the Board of Directors put their signatures on
S.S Cards. Next of kin "requirement "is not need in case of a Limited Company. After
completing each and every formality, introducer signature is verified by S.S card and is
stamped "Verified" customer signatures are admitted by stamping "Admitting" near
signature and again signatures on S.S card are admitted in the same way. The same
process of verification and admission of the signatures is repeated on Form-A and next of
Kin area.
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After completing each and every formality, Accountant is open in the computer by
writing name, address, A/C Number etc
For opening of account either Current, Saving or ASDA the following technique is
adopted.
When the customer comes to open an account the first thing is to ensure about the type of
account. The Bank requires the following information about the customer:
1 Personal information
2 Introduction of existing A/C holder
3 Amount to be deposited
After satisfying regarding the above information the authorized officer hands over the
Account Opening Form to fill up in his presence. This Form contains the following
information relating to the customer:
Account No.
Nature of the Account
Name
Father’s/husband’s name
N.I.C. No
NTN(optional)
Address
Nature of profession
Telephone
Telex/fax
Nationality
Mailing address
Currency of account
Operation of account
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Next of kin
It is the responsibility of the officer to check all the particulars carefully to ensure that
there is no error here.
Along with the Account Opening Form, the officer staples the S.S.Card. This card
contains the following information:
Account No.
Title of Account
Name
Signatures
Operation of A/C
On the Back of the Card;
Address
Tel no.
Person to contact
Introducer
This card after fully completed is placed in the cardex in the numerical sequence, which
is kept locked when not in use after business.
Letter of Thanks
At the start of the 2nd day, AKBL issues letter of thanks to "Account opener" for the trust
the have on AKBL.
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Statement of Accounts:
Customers are normally been provided statement of their accounts once in every 6
months as on June 30th and December 31s.
For opening of A/C through UNIBANK, account computerization Form is used and all
required and relevant information and codes thereof is fed into the computer system
including applicable flags of Zakat
Cheque books are issued only for checking account such as current Account, saving
Account and ASDA Account. They are not issued for other fixed and term deposits
because of their Long term Accounts “nature.”
Issuance Procedure
Cheque – book leaves number, account number, account holder’s name are
mentioned in the cheque- book is made by mentioning the and the total of sum of
excise duty and provincial tax.
The name of A/c holder and date of cheque – book issuance is written on cheque
– book requisition the account-opening officer puts his initials on requisition
leave.
A/c number is stamped over the leaves of cheque – book and finally authorized
person affix his signature over the debit voucher and he voucher is attached from
the cheque book and is handed over to the customer.
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Receiving Inward Cheques
Account closing
Account is closed on the written request of the customer. The account holder with draws
the all amount by writing a cheque. But to surrender the cheque book yet if some leaves
are yet to be write to the Bank as a necessary requirements for closing the account.
Procedure
1. The customer for individuals account write an application to the manager of the Bank
an a simple paper about the closing of his account with the Bank (In case of
proprietor ship partnership and limited company account the application should be
written an firm or company letter –head)
2. The individual or in case of other type- proprietor firm and company surrender the
cheque book to the Bank.
3. The cheque book is then torn from one side and is attached with the application.
4. In case of Ltd. Company account resolution of the board of directors is also obtained
to attach it with the application.
5. The account opening form of the account holder is taken from the account-opening
file, and the application, cheque book, and resolution of board of directors in case of
limited company account are attached with the form.
6. Lastly, it is written in “Red Ink on the form that account closed” and “Date of account
closing.”
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Everyday Posting
This department deals in issuing ATM-Card, term deposits and Askari Bachat Certificate.
Mr. Abdul Rehman deals this department.
ATM Card
Issuing Procedure
2. Then he fills the ATM application form in which name of account holder, Fathers
name account number and N.I.Card number are mentioned.
4. After completing this process, the application package is sent to head office
5. AKBL head office takes a period of 3-4 weeks for preparing and processing of ATM
– cards. First, list of card holder is issued and then after 15 days cards are send to
AKBL’s issuing branch. The card and list are not sent simultaneously in order to
avoid any mishandling.
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Askari Bachat Certificate
The ABC application form is filed and signed. All the requirements are properly fulfilled.
The details are written. The credit voucher is made against the cash that the customer
deposits to the Bank. The certificate is filled according to the specification. The
certificate is then handed over the customer. The entry is made in the ABC register. The
application is then posted in the file.
Term Deposit
Any person can open a term deposit. he needs not have an account in the Bank.
Procedure
• The customer comes to the Bank and specifies the number of days for which he wants
to Deposit hid money in term deposit.
• The credit voucher is made for the amount of cash to be deposited. The presence of
account is not necessary.
• The term deposit form is then filled by the officer. The date of opening, the period,
the name of the customer, the signature etc is all written on the form.
• The term deposit Receipt is filed according. All the requirements are carried out, the
signature of the customer and the authorized officer, the stamp of the Bank etc.
• The number of the term deposit form and term deposit is noted receipt is then given to
the customer.
• The number of the term deposit form and term deposit receipt is noted in the term
deposit Register.
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• A 0.2% tax on the provincial amount is taken while issuing the receipt.
• A credit voucher made and the amount is credited to the tax on TD.
Exports
Imports
There are not hard and fast rules for becoming the Foreign Currency Account holder.
Bank wants only introduction of the Client and very little about the background. I.D card
is also not necessary, if someone has; well and good, otherwise no restriction will be
there for him.
According to foreign exchange rules and regulation every citizen of Pakistan, either
within the Pakistan or outside the Pakistan, can open the foreign currency account.
Resident firms and Resident Companies including investment Banks can open Foreign
Currency Accounts.
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All foreign nationals and foreign Companies in Pakistan or abroad can open Foreign
Currency Accounts.
There will be no restriction and questioning to him about the currency, which he wants to
deposit that from where he got that money.
No Zakat will be deducted on these accounts; no Income Tax deduction, no Wealth Tax
deduction will be there.
These incentives reinforce and motivated the people to invest in foreign currency
accounts rather to keep the foreign currency idle.
Foreign currency accounts can easily be transferred from one person to another, one place
to another, with in the AKBL Branches or in other Bank.
The account holder can transfer the funds freely, in any currency to any part of the world.
Foreign currency Accounts can be used for payment of purchases at Duty Free shops.
Facilities
Export
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Mainly export deals in:
Negotiation of documents
Pre-shipment financing
Post-shipment financing
Handling the documents for negotiation according to the UCP 600 (uniform
custom and practices)
Handling the documents for collection according to URR (uniform rules for
collection).
Import
Scrutinize the documents receive from flowing Bank under letter of credit
Account to UCP 600 and extending the credit facility to the importer informs FIM
(finance against imported merchandise) FATR (finance against trust receipt).
Also arrange forward cover booking for letter of credit open other then AKBL
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Submission of monthly returns to SBP regarding the import prescribed reporting
forms.
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8.3.3. Credit Department
Credit department works on the basis of following rules, which are provided by State
Bank of Pakistan.
2. exposure limit of 30% shall be calculated on the basis of their assigned capital
maintained under section 13 (3) of the Banking companies ordinance, 1962
free of all losses and provision, provided that maximum exposure on the basis
of fund-based facilities shall be 20% the capital maintained under section 13
(3) of the Banking companies ordinance, 1962, or Rs. 12 million which ever is
higher.
(a) Make any loans or advance against the security of its own shares; or
(b) Grant unsecured loans or advances to, or make loans and advances on
the guarantee of,
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company or any of the persons referred to in (i) or (n) is interested as
director, proprietor or partner; or
5(five) percent or more of the share capital of the Bank. Including their
spouses, parents, and children or firms and companies in which they
are interested as partners, directors or shareholders holding 5 (five)
percent or more of the share capital of that concern;
5. For the purposes of pars 1 & 2 above accommodation shall mean and include
(a) Any form of loans and advances or credit facilities including bills
purchased and discounted:
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paper by whatever name called (at book value) issued or
guaranteed by the persons;
(f) Any obligation undertaken on behalf of the person under any other
guarantees;
(a) deposits of the party with the Bank under lien and
(i) Loans and advances given to the federal or provincial governments or any of
their agencies under the commodity operations programme of the government.
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(j) Loans and advances (including bills purchased and discounted) given to
federal / provincial government or guaranteed by the federal government.
(l) Letters of credit established for the import of plant and machinery.
(m) Obligations under letters of credit and letters of guarantee to the extent of the
cash margin retained by the Bank.
(n) Letters of credit, which do not create any obligation on the part of the Bank to
make payments on account of imports.
(o) The single person limit does not apply to facilities provided to Banks.
45
2. A guarantee which does not appear in the books maintained in Pakistan by
a foreign Bank and if invoked does not require the said Bank in Pakistan to
honor the same, shall not be counted towards determining exposure for the
purpose of this regulation.
No Bank shall provide financing, facility in any for of sum exceeding Rs. 100,000/-
(Rupees one hundred thousand only) to any one individual or person with out obtaining
realizable securities of the value not below the outstanding amount. Financial facilities
granted without securities including those granted against personal guarantees shall
deemed as clean for the purpose of credit regulation. Provided further that:
(a) At the time of granting a clean facility, Banks shall obtain a written
declaration to the effect that the borrower in his own name or in the name of
his family members, has not availed of such facilities from other Banks so as
to exceed the prescribed limit of Rs. 100,000/- in aggregate.
(c) The purpose for which a clean facility is sanctioned shall be expressly stated
in the sanction letter.
Clean facilities granted to finance the export of commodities eligible under export of
commodities eligible under export finance scheme shall be exempt from the per party
limit on clean facilities.
financing covered by export credit guarantee insurance scheme may also be excluded
from per party limit of Rs. 100,000/- on clean facilities.
46
The aggregate exposure of a Bank against all its clean facilities shall not, at any point of
time, exceed the amount of the Bank’s capital and general reserves (free of losses).
Any violation or circumvention of the above regulation shall render the Bank liable for
penalties under the Banking companies’ ordinance. 1962.
2- No Bank shall allow financing facilities whether fund based or non-fund based
against the shares of companies not listed on the stock exchange.
3- Facilities against the shares of listed companies shall be subject to the following
minimum margins.
a) Where the market value does not exceed the preceding 12 months 20% market
about.
b) Where market value exceeds the preceding 12 months average market 40%
market value.
c) Where the market value exceeds twice the preceding 12 months 50% average
market value.
4. While the Banks are free to set higher margin requirements keeping in view other
factors, the margin of 40, or 50 percent as prescribed above shall apply only.
a) Where the market value exceeds the preceding 12 months average value but does
not exceed twice the preceding 12 months average market value.
47
b) Where the market value exceeds twice the preceding 12 months average market
value.
Now coming towards the facilities which the Askari Bank Sahiwal provides to its
customers, these are:
i. Running Finance
ii. Cash Finance
iii. Term Finance
iv. Ask Card
v. Staff Finance
vi. Finance Against Foreign Bills (FAFB)
vii. Finance Against Packing Credits (FAPC)
viii. Payment Against Documents
ix. Finance Against Trust Reciept
x. Finance Against Imported Merchandise
xi. Letters of Credit (local/international)
xii. Letter of Guarantees
Running Finance
Clean: where the over drawing is allowed only against a Demand Promissory Note signed
by the account holder.
Security: in case of R/F clean the Promissory Note act as security for the extension of
Credit.
Cash Finance
48
The inventory pledged/ hypothecated operates as a security for the advances. It is
important that a pledge/ hypothecation agreement with regard to the pledge/hypothecated
goods should be executed with the customer. Additional security may also be obtained
depending upon the risk element.
Term Finance
Loan repayable with the fixed repayment programme these may be clean but they are
generally secured and are further classified into Clean and Secured.
This is a term finance provided under the ASKCAR Scheme of the Bank for the purchase
of Car and is repayable in monthly installments.
Staff Finance
Facility is allowed to staff members under different schemes of the Bank and categorized
accordingly.
A loan advance against Foreign Bill Payable and a campaign by “Documents of title to
goods at a Sight and Usance”
The loan is advance against a security of the Foreign Bill. The Bank has documents of
title to goods which operates an additional security. The loan is adjusted on receipt of
proceeds from the drawee Bank. If however the bill the is not honoured by the drawee,
the Bank can have recourse against the customer to whom the loan is extended.
Credit granted to the exporter to facilitate purchase of raw material for the purpose of
manufacturing and exporting finish goods. Credit is ordinarily granted after evidence of
letter of credit or firm contract in favour of borrower. The loan is advance against the
49
security of inventory purchase by the borrower. It is important that hypothecation
agreement with respect to such inventory be executed by the customer.
The Bank being the issuing Bank on the customer behalf of L/C, pays the advising Bank,
and debits the PAD Account till its payment by the customer.
Documents of title to the goods imported through the L/C may be handled over to the
customer against the trust receipt to be signed by the latter signified that the customer
holds the goods in trust for the Bank. The objective being that the customer shall
discharge the from the sale proceeds of the goods.
Documents of the title received under the L/C issued by the Bank are handeled over the
clearance to an approved clearing agent who after clearance and until repayment of loan
hold them as a agent of Bank. Goods are realesd against payment by the borrower. The
imported goods comprise securities for the loan advanced. The Bank can have recourse to
these goods if the customer fails in the discharge of its obligation.
Government Securities
Letter of Credits
50
The sight Letter of Credits call for the draft to be drawn at sight. Document negotiated
and received against sight are held as security till their retirement. Drafts drawn under
usnace are for a tenor specified in the L/C are payable by the customer on due date.Credit
line proposal must clearly state the type of credit the branch is intended to issue.
Letter of Guarantee
Guarantees issued by the Banks can be classified under two broad categories.
I. Financial guarantee:-
-.Bid Bonds which are issued lieu of deposit of earnest money while biding for a
tender.
Under these guarantees, the Bank is called unpon to pay in the event of a breach
of terms on the part of the customer.
-. Under which the Bank issues guarantees in favour of the shipping company to
enable the importer to obtain delivery of the goods with out production of bill of
lading
51
52
8.3.4 IT Department
Mr Kashif Yaqoob is the IT incharge in the branch, after closing the all working of the
day and after balancing the cash registered with computer. Mr Kashif run the end of day
at the time of end of day all programmed are run and reports printed
Transfer Reports
At the morning time Mr Kashif Yaqoob starts the system and initialized the system date
in which the working has to done. Then he uploads the balances from head offices
53
8.3.5 Human Resource Department
Hierarchy of HRD
Hierarchy of
HUMAN RESOURCES
President
Country Head
Head of Human Resource
HRIS
Officers
Risk Management
Officers
54
Human resource planning and forecasting
HRP is a forward looking function and an organizational tool to identify skill and
competency gaps and subsequently develop plans for development of deficient skills and
competencies in human resources to remain competitive. HRP ensures benefits to the
organizations by creating a reservoir of talent, preparing people for future cost cutting
and succession planning besides creating a back –up in case of diversification and
expansion
HRP is a planning of Askari Bank is to move from its current manpower position to its
desired manpower position
HRP Process
The organization human resource plans is a shared task between top management line
managers and HR department
3.1. To assists, counsel and pressurize the operating management to plan and
establish objectives;
55
3.2. To collect and summaries data in total organizational terms and to ensure
consistency with tong-term objectives and other elements of the total elements of
the total business plan;
3.3. To monitor and measure performance against the plan and keep the top
management informed about it
5. Inventorying present manpower resources and analyzing the degree to which these
resources are employed optimally;
6. Anticipating manpower problems by projecting present resources into the future and
comparing them with the forecast of the requirements, to determine their adequacy,
both quantitatively and qualitatively and
Forecasting HR requirements
What is certain is the uncertainty of the future. As time passes, the working environment
changes internally as well externally. Internal changes in the organizational environment
include product mix and capacity utilization, acquisition the external environment include
government regulations, consumerism, and competence levels of employees, among a
host of other factors.
56
Forecasting The Overall Human Resource Requirements
The existing job design and analysis may thoroughly be reviewed keeping in view the
future capabilities, knowledge and skills of present employees. Further the jobs should be
redesigned and reanalyzed keeping in view the organizational and unit wise plans and
programmes, future work quantum, future activity or task analysis, future human
resources and based on future organizational plans, Job analysis and forecasting. One on
the important aspects of demand forecasting is the forecasting of the quality of human
resources (skill, knowledge values, capabilities etc.) in addition to quantity of human
resources
Requirements of HR forecasting
1. Reduces HR costs
57
8.3.6 Remittances Department
Remittance department provides services to the customer of the Bank. The main function
of this department is transfer of funds.
The instruments that are handled in the B & R department are as follows:
Demand Draft.
Telegraphic Transfer.
Mail transfer.
Pay order.
Pay slip.
OBC.
IBC.
Demand Draft
A demand draft is an instrument, which is drawn by one Bank upon another Bank for a
specific sum of money payable on demand. It is made by the Bank and given to the
purchaser against cash or cheque. If two Banks are involved, then one Banks sends a DD
to another Bank. But in customer - Bank case the customer sends his DD to the receiver.
Issuance Procedure
58
The charges such as commission, excise duty, postage is charged as per effective
schedule of charges. Tax is exempted if he is taxpayer & knows his No.
In case of cash deposit the cashier counts he amounts & signs the DD application and
enters it in the register.
The cash received equals the amount of remittance & the cheques there on.
Then the officer of the bills & remittance department signs it and operation manager
counter signs it.
Commission charges. Cr
The vouchers and the DD form given for posting at the computer.
The DD advises are printed at the computer and mailed to the respective branch.
NOTE
On the contra, when a DD is received i.e. a customer comes to us with the DD, the
procedure is as follows.
The DD credit advice is received through mail. The No’s are checked & signatures
are verified.
An entry is made on the DD payable register, and the vouchers are made.
59
MO Account Dr
DD payable Cr
The DD credit is attached with the vouchers and given for the posting at the
computer.
When DD is received, the test No’s are checked, and the payment is made.
The vouchers are given for posting. And the entry that was made in register is closed.
i.e. DD payable is Nil.
Telegraphic Transfer
A telegraphic transfer is a fastest & safest way to transfer money. The message is fixed.
Issuance
The request for maintenance through T.T is taken on the standard printed form.
The Head & remittance department checks it, the charges such as commission, tax,
telex as per effective schedule and signs it.
Then a neat T.T is made on the white slip. There are 3 copies. The original faxed to
the Branch, one to the Head Office and one is kept as record.
Commission Charges Cr
Fax charges Cr
W.H. Tax. Cr
60
When commission bill is received, it is attached to the T.T office copy in the file.
Payments
When a T.T arrives, the test numbers are checked and the signatures are verified.
Head Office Dr
T.T Payable. Dr
Party A./C. Cr
If there is no a/c then the T.T receipt needs revenue stamps and then the payment is
made. The T.T receipt is strictly non negotiable.
Pay Order
It is a cheque drawn by a Bank on itself. Pay order is an instrument in which the parties
are involved the purchase, the Bank and the receiver. It can he purchased by any
customer. It is usually made by govt. Bodies. A single Bank is included in this case.
Issuance
The standard form is given to the customer; he fills in the detail and signs it.
61
A cost memo is signed, stamped and handed over to the applicant as a receipt.
Then the authorized office after checking the pay order signs it.
The pay order is then handed over to the application after obtaining his signature on
the P.O form.
A voucher is also made and posted at the computer Cr bills payable account P.O issued.
Payment
On representation of the pay two authorized officers of the branch sign order receipt
the receipt.
Then the amount is credited to the account of the customer or paid in cash.
Pay Slip
It is an instrument used by the Bank s for its payment. The slips are issued to the
employees of the Banks their bills & invoices. The bills are transferred payments. In this
case only one Bank is involved .He is the issuer as well as the payer.
62
Procedure prescribed for P.O for issuance and payment is followed for payment is
followed for pay slips with the following expectations.
1. Pay slips are the issued by the Bank for the settlements of this own payment.
Issuance
A credit voucher is sent from the accounts dept. to the b debt. According to the b
debt.
The P.S books is taken out & filled according to the credit voucher.
If Askari branch is in that city, the OBC forwarding schedule in sent to that Askari
Branch. Otherwise it is addressed to the particular Branch to whom the cheque belongs.
The bills, which are sent to their cities Banks for the local clearing in that city, are called
outward bills for collection.
63
Procedure
They are entered in the OBC register, the number is written on the stamps.
The OBC forwarding schedules / (Annexure) are prepared for the different branches.
On clearance the respective Banks send back the OBCS along with IBCA. Inter
branch credit advice.
The OBC no are checked for the OBC register and the received any entry is made.
Charges i.e. commission charges and postages charges are deducted from the A/C.
Party A/C Dr
Commission Charges Cr
Postage charges Cr
OBC collection Dr
OBC lodged Cr
OBC collection Dr
OBC lodged Cr
64
Inward Bills for Collection
The bills are received from other Banks out of city for the local clearing are called
inward bill for collection.
Procedure
The OBC of the other branches will be the IBC’s of this branch. So an OBC
forwarding schedule is received by mail.
The cheques are entered in the IBC register. The IBC numbers are allotted to them.
At the end of the day two contra vouchers are made & posted.
OTHER FUNCTIONS
At the end of the day, all the registers are balanced with the computer balances. The
heads and checked are as follows.
DD payable
IBC collection.
OBC lodged.
OBC Collection.
TT payable.
65
IBC lodged.
If the payables are not cleared for a lot of days, a reminder is sent to the respective
branches.
Branch
Manager
Operations
Manager
Incharge Accounts
66
Record Keeper
Accounts department is a department which deals and checks all the activity of all the
department .It also deals in expression of finance of the Bank. Salary payment is also one
function of the Bank.
Accounts department deals and checks the entire working of the Branch; all the vouchers
that have been posted at the computer are scrutinized in accounts department. The “End
of Day” i.e. computer print is also received from the computer. The next day the activity
is separated some statements from the “End of Day”. Then next day activity separated
some statements from the “End of Day”. The vouchers are sorted out head wise. The
vouchers are matched with the entries in the statements.
Any abnormality if occurs, is immediately dealt with. All the vouchers and instruction are
checked individually are checked individually against the computer printouts. After
checking they are signed by Ms. Sobia Irfan Butt and Mr. Malik Saeed Ahmed.
Other Activities
Payment of salaries
67
Depreciation calculation
The chief financial officer is one of the most important positions in any
organization. While it might be known under a variety of names- budget
officer, comptroller, controller, vice-president for financial affairs, or
some other described as staff, and since all organizations depend on the
resources available to them, the person who fills this top financial
position in an agency is extremely important to the organization as a
whole.
In government, both at the federal and state level, the position of chief
financial officer is usually filled by someone who has been trained in the
skills of public administration, said in another fashion, when selecting a
chief financial officer, the head of an agency chooses not among those
individuals who have been involved in operations engineering, marketing,
or other operational areas on an organization where a specific knowledge
of the product or service is required. Instead, the selection of a financial
manger is usually made from among those candidates for the position who
have received academic training in the various areas.
68
Financial manger has many responsibilities and much may be expected
from them. A variety of skills are requires of them and these vary
depending on the need of the organization.
Those in the public service are well aware that the source of future funds
is ordinarily the legislature. But this does not mean that there are no other
sources of needs monies. Funds can often be moved from one
appropriation to another, or are available at times from other agencies.
The financial manger should be aware of program needs as they occur and
also aware of ways of satisfying them. He must estimate all sources of
income, including any potential borrowing authority (such as the issuance
of bounds). Thus, at all times, the financial manger must be well informed
of the organization’s financial status and health - - as well as the
condition of the money markets and other matters relating to fiscal
stability.
69
Historically, the financial manger is the “Keeper of the budget.” This
means being well aware of the ways that money is used. The task is not so
much to give approval to everything that is spent as much as to be assured
that spending is generally carried out in accordance with the stipulations
approves by legislators and political executives. The cavalier fashion in
which may program administrators may have used the funds made
available to them suggests the “Chain of command” has mot always
worked in the fashion intended. Someone must be alert to what is really
happening. That person is the financial manger.
70
The fact that so many of the transactions of the modern organizations
involve contributions from the outside means that large sums of money are
needed in the life of the organizational system. This reaffirms the
requirement that the modern financial manger be by those people with the
procurement process. Again, the major work needs to be done considered
as part of the financial manager’s domain.
For all these purposes, the financial manager must have skills
considerably removed from the budget officer of old. He or she is, of
course, the advisor to the chief elected / executive officer. But more than
that, the financial manager and staff are advisors as needed to those on the
line. The financial manger is also a trainer. Those who are at the
operational levels face. It is the financial manager’s responsibility to
convey these problems to others in the organization.
First of all we must know about the electronic Banking. It is also known
as virtual Banking and on line Banking or E-Banking but the use of
electronic data in decision making provides us a lot of benefits. With the
use of electronic data Askari Bank Limited, Sahiwal making following
decisions in the area of cost reduction expansion of market, eliminating of
paper work, quick provision of services and expanding the customers.
71
ASKARI BANK LIMITED is using the eight steps for decision making.
These steps are very helpful for electronic decision making. Those are
these.
1- Identifying the problem
2- Making alternatives
3- Making criteria for alternatives
4- Weight to alternatives
5- Analysis of alternatives
6- Selection of alternatives
7- Implementation of alternatives
8- Evaluation of alternatives
Sources of funds reveal the organization needs for funds when required and for what
purpose these funds are needed. These are the main elements to carrying out the
operations of business. It involves the analysis of capital use by the Bank i.e debt and
equity financing.
Askari Bank during the financial year 2008 got debt Rs.4070800 in thousands and
Rs.1200400 in thousands. This is 239% higher than 2007 and also increasing year to year
from 2004.This shows that Bank has increased its debt financing for the last five years to
overcome its accounts payable.
9.5.2 Equity Financing
The basic purpose of financing is to get funds from different ways depending upon
capital structure mentioned by the top management during a period of time. But to
finance with lower interest rate and invest higher return is the business of Banks.
72
Years 2004 2005 2006 2007 2008
Total equity 1255848 1507018 2004333 3006499 4058774
Values are in thousands.
From following figures Bank’s equity level is going high from year to year 2007 and
2008 is at boom position amongst preceding years. This shows that top management
wants to financing at equity level than debt financing.
Askari Bank offers different products to generate funds. Deposits are the main head of
generation of funds. The Banks receive from public and invest it for the sake of return.
Banks receive fees, commission on services offering; get interest of investments and
dividend etc.
Years 2004 2005 2006 2007 2008
Interest income 3213 4251 4858 4074 4487
Total income 3840 5047 5704 5028 6121
Net profit 316 551 687 1103 1923
Values are in thousands
All these figures show upward trend of Bank according to total income and net profit.
Bank has gain much income through interest factor than by providing services. So it also
shows that rate of return on financing is going higher from year to year. Again 2007 and
2008 are at boom position.
The most important functions of the Bank are to allocate funds and make a portfolio of
funds to profitability. Askari Bank allocates resources from different ways i.e Fixed
assets and Reserves
Years 2004 2005 2006 2007 2008
Property, Plant, Eqp 2595023 3192862 3810331 5128428 8266458
Deprecation 281700 335100 385500 342300 396300
Property, Plant, Eqp 2313323 2857762 3424831 4786128 7870158
Values are in thousands
73
Fixed assets are immoveable assets of the organization. Financial year ended on
December 31, 2008 shows that property, plant and equipment are Rs.8266458 in
thousands before deprecation and after deprecation Rs.7870158 in thousands. The
investment in fixed assets is gradually increasing from 2004 to 2008. It is also a
comparative figure to show a bright future of the Bank.
Now moving towards the critical analysis of ASKARI BANK LIMITED SAHIWAL.
Criticism is bad if it is to be done in a wrong way to discourage the working capabilities’
am going to do the analysis as a part of my assignment and to give my humble
suggestions regarding some problems which I think if overcome, it will make the
excellent ASKARI`S working exceptionally good.
The software being used by Askari Bank Limited is “UNI BANK”. At the time when
Askari had acquired this software it was the best software for Banking sector, but the
technology changes very rapidly. Some of the competitors such as UNITED BANK
LIMITED acquires more updated and user friendly software. However the management
told me that they are going to replace the existing software in span of time with new one
which will be not only more user friendly but also overcomes the flaws of existing
software
The effort of every management is to improve the services of their organization as there
is always certain room available in services. Though the services of the Bank are
excellent but I think that there is one place where certain improvement may be made i-e
at cash counter. In Sahiwal branch, the cash officer are just dealing in cash payment and
74
receipts and have no concern with instrument presented for payments and receipts, while
they deliver the instrument being presented to an other employee who after verifying the
instrument pass the entry in system and ask the cash officer to make payments or deliver
receipts of deposit to the clients. Hence some Banks are using “TELLERS” instead of
cash officers who are not only deals in cash payments\receipts but also check the validity
of presented instruments and in such way the clients feel more relieve. The management
told me that gradually they are giving proper “TELLERS” training to existing cash
officers.
Centralized economic and financial data on different industries should be available online
in order to check trends in different industries.
Going towards another alarming thing, this branch is “over employed”. It is beyond my
thoughts why the extra employees are being hired when earlier employees are working
good with full devotion and are satisfied with their work load.
Weak marketing strategies are also serving as a hindrance in the way of success of Askari
in this competitive world when marketing becomes a necessity for all organizations
Askari Bank is not focusing on its marketing strategies, although it has many unique and
excellent products to offer. Now Askari Bank is making an effort to overcome this thing
and is going to establish its marketing department.
75
11. Financial Analysis of Organization
76
ASKARI BANK LIMITED
INCOME STATEMENT
77
To evaluate a firm’s financial condition and performance, the analyst needs to perform
“check ups” on various aspects of a firm’s financial health. It involves methods of
calculating and interpreting financial ratios to analyze monitor the firm’s performance.
Ratio
Importance of Ratios
78
Series Ratios Formula 2004 2005 2006 2007 2008
1 ROA Net profit after tax .295% .379% .183% 1.47% 1.35%
Total assets
2 ROE Net profit after tax 25.16% 36.6% 37.95% 40.79% 55.14%
Share holders equity
3 Rate of lending Mark up / Return income 11.83% 11.52% 10.88% 9.79% 9.24%
Investments+advances+lend
ing to financial institution
4 Rate of deposits Mark up /Return expense 6.12% 5.9% 5.7% 5.3% 4.65%
Borrowings+Deposits
5 Admin cost of Admin cost *100 4.0% 3.7% 3.5% 3.3% 2.5%
deposits Deposits
6 Avg cost of funds Rate of deposits+ Admin cost 10.2% 9.8% 9.3% 8.7% 7.25%
7 Spread Rate of lending –Avg cost of 1.25% 1.55% 1.58% 1.09% 1.99%
funds
8 Advances to Advances * 100 79.85% 74.23% 76.82% 70.45% 75.22%
deposits Deposits
9 Classified NPLs*100 12.26% 11.42% 8.35% 6.33% 3.6%
Advances to total
Gross Advances
advances
10 Provisions to Provision aginst classified 57.82% 45.37% 32.72% 56.75% 3.08%
classified advances advances/NPLs
11 CRR Cash and balances with 10.54% 10.27% 9.55% 9.33% 11.28%
treasury Bank*100 /deposits
12 Mark up income to Net markup income .65 .52 .57 .35 .68
total income Total income times times times times times
13 Debt Equity Ratio Total Liabilities 3.68 2.64 3.20 1.34 1.61
Share Holer Equity
14 Debt Ratio Total Liabilities 94.4% 93.9% 93.3% 93.2% 94%
Total Assets
15 Gross Profit Gross Profit .59 .48 .52 .41 .58
Margin Net Sales
Return on Assets
79
1.6
1.4
1.2
1 Rate of Return
0.8
0.6
0.4
0.2
0
2004 2005 2006 2007 2008
This ratio shows that how efficiently management use assets of the Bank according to the
condition. Return on assets during 2005 is higher than 2004 but during the 2006 the
Return on assets were increased. Its value is higher during 2007 than 2008 as much
investment was made in assets during 2008.
Return on Equity
60
50
40
Return on Equity
30
20
10
0
2004 2005 2006 2007 2008
It is a relationship between net profit and share holder’s equity. Its value gradually
increased from 2004 to 2008 as profit was also increased. Year 2008 is considered as
golden year as return on capital is concerned. So that Bank has only need to repeat its
year 2008 again to show its stability in market. But overall all figures shows about the
bright future of the Bank. .
Rate of Lending
80
12
10
8
Rate of Lending
6
4
2
0
2004 2005 2006 2007 2008
Rate of lending is the relationship of mark up income and investment, advances and
lending to financial institutions. It value is decreasing from 2004 to 2008 which shows
the prosperity of the Bank.
Rate of Deposits
7
6
5
4 Rate of Deposits
3
2
1
0
2004 2005 2006 2007 2008
Rate of deposits shows relationship between Mark up / Return expense to borrowings and
deposits of the Bank. Rate of deposits of Askari Bank are decreasing from 2004 to 2008
as borrowings and deposits of the Bank are increasing year to year.
81
4
3.5
3
2.5 Adm in Cost of Deposits
2
1.5
1
0.5
0
2004 2005 2006 2007 2008
This ratio shows the cost of deposits of the Bank that how much expenses are occurred on
deposits. The Admin cost of deposits of Askari Bank is decreasing from 2004 to 2008
which shows the efficiency of the management.
12
10
8
Avg. Cost of funds
6
4
2
0
2004 2005 2006 2007 2008
Average cost of funds is the sum of rate of deposits and Admin cost. The management of
Askari Bank is using effective policies due to which the average cost of funds decreased
which is plus point for the Bank to compete with the other Banks in the market.
Spread
82
2
1.5
Spread
1
0.5
0
2004 2005 2006 2007 2008
Spread is the difference of rate of lending and average cost of funds. It is shows a mixed
trend but during 2008 its value is at highest level as compare to the previous years.
Advances to Deposits
80
78
76
74 Advances to deposits
72
70
68
66
64
2004 2005 2006 2007 2008
This ratio shows a relationship between advances and deposits. This ratio is showing a
mixed trend but during 2004 its value was at highest as compare to next four years. Its
value is greater during 2008 as compare to 2007 which shows that much portion of
advances was given as advances.
83
14
12
10 Classified advances to
advances
8
6
4
2
0
2004 2005 2006 2007 2008
This relates NPL to gross advances. Its value is decreasing from year to year i.e from
2004 to 2008 as management adopted the policy to decrease the classified advances.
60
50
Provision to classified
40 advances
30
20
10
0
2004 2005 2006 2007 2008
Provision to classified advances is showing a mixed trend but during 2008 its value is
lowest as the management decided not to provide much advances as the management
wants to increase its efficiency and profit.
84
12
10
8
CRR
6
4
2
0
2004 2005 2006 2007 2008
Cash rate of return is a relationship of cash and balances with treasury to deposits. This
ratio is showing a mixed trend. Its value is highest during 2008 as the cash and balances
with treasury have been increased in 2008.
0.7
0.6
0.5 Mark up incom e to total
incom e
0.4
0.3
0.2
0.1
0
2004 2005 2006 2007 2008
This ratio shows the relationship between mark up income and total income. There is a
mixed trend in this ratio. During the year 2008, its value is highest as mark up income has
been increased during 2008.
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4
3.5
3
2.5 Debt Equity Ratio
2
1.5
1
0.5
0
2004 2005 2006 2007 2008
This ratio relates total liabilities and share holder equity. It is showing a mix trend.
During the year 2004, its value was highest as the bank had not much assets.
Debt Ratio
94.5
94
93
92.5
92
2004 2005 2006 2007 2008
Debt ratio shows a mixed trend but at the final year it climbs than last three years which
shows management planning about future aspects that Bank wants to do business at debt
criteria.
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0.6
0.5
0.4
Gross Profit Margin
0.3
0.2
0.1
0
2004 2005 2006 2007 2008
Gross Profit Margin is the relationship of gross profit and net sales. There is a mixed
trend in this ratio. The value of gross profit increased during 2008 therefore the value of
Gross Profit Margin was also increased.
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FOR THE YEAR ENDED 31st DECEMBER, 2008
TREND ANALYSIS
(Horizontal Analysis)
Trend Analysis, is also called Horizontal Analysis of the financial statements is one
directional- upward or downward analysis and involves the computation of the
percentage relationship that each statement item bears to the same item in the base year
The operating expenses of the bank have been increased with sharp margin, the ACBL is
newly born bank of only 14 years old and is growing rapidly so, we can say that
the reason behind the rapid increase of its operating expenses may be the
expansion of business. In order to get handsome profit the expenses are necessary as it is
shown by the fact that if the bank’s operating expenses have been increased then,
there is also an increase in the profit before income tax and profit after income tax.
SHAREHOLDER’S FUNDS
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Surplus on ROA (60) 22 1146 1145 443
TREND ANALYSIS
The shareholder’s fund of the bank is continuously increasing, as the bank is running on
profit. Therefore, the business takes interest in this project and wishes to participate in it.
The bank’s share capital and reserves are also increasing with the expansion of business.
LIABILITIES
TREND ANALYSIS
New if we analyze the liability side of the bank we see that the bank’s deposits are going
on increasing since its birth which is a very healthy sign for the bank as the bank’s basic
business is to deal in money. The increase in deposits show that the people have interest
in the bank and deposit their fund in the bank without any hesitation. However it has not
been mentioned here that how many of the deposit are current and how many of them
have fixed nature but we can say that it is a very important source of the bank to earn
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profit. As the banks usually earn through interest or mark ups imposed on the deposits
they keep with themselves.
ASSETS
Now we will discuss the assets side of the bank. The liquidity position is essentially
important for the bank, as it must have all the time sufficient funds to meet the demands
for the money that may be made on it. It is the protection against the risk that losses may
develop if banks are forced to sell or liquidate creditworthy assets in an adverse market.
The current liquidity position of the bank has improved as indicated by the percentages
shown in the table below.
TREND ANALYSIS
An upward trend in deposits accompanied by a upward trend in advances too, and mark
up revenues means in effective credit policies, efficient credit collection resulting
in healthy financial development. The property plant and equipment is the kind of asset,
which is required by the service business only to increase its network therefore the
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ratio of the bank’s plant and equipments as compared with the other important
particulars of the assets is high. But here one thing should be mentioned that it is
the policy of the bank not to start the business on the rented premises. The bank
has mostly started business on its own premises. The other assets of the bank are also
showing a good amount that means that bank is in position to earn money from every
available source.
BUSINESS TRANSACTED
Now we will discuss the business transacted opt the bank in terms of import and exports
we see that imports and exports through ACBL are continuously on increase which is a
very health sign for the banking business as the banks earn major portion of their profit
through imports and exports. It shows the efficiency of the credit department. The
reasons for this improvement may be
Careful scrutinizing of all the documents
Intelligent corresponding with the customer
True 7 C’s analysis of the customer such as his business and moral character.
This improvement in imports and exports is extremely large if we compare it with the
figures of 2000.
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(VERTICAL ANALYSIS)
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INTERPRETATION
The most important component of any profit and loss account of a banking concern is its
mark up expenses it has to pay for servicing the depositors. The foregoing data shows
that the markup expenses absorb about 85% of the revenues (a favorable position). This
shows that the bank has been successful in
Selling larger volumes of higher profit items.
Increasing economy in procurement
Adopting other effective and more profitable deposit raising policies at a
lower lost.
The interest expense of the ACBL is 18.2% of the total revenue of the bank in
2004, which is remarkable as the bank is earning about 85% of the revenue as interest
income. We have handsome margin between the interest income and the interest expense
of the bank. The data shows that the bank’s other income %age is not as much high rather
it is very low which shows that the bank does not rely on other sources for its profit
but it earns major portion of its income through its basic business. The bank seems to
have increased control over its operating expenses, i.e. non-mark up expenses as these
now absorb only 30% on average of the total revenues, that is a very healthy sign for the
bank. In the net shell, it would not be wrong to say that the bank has improved its
financial position and operating efficiency over the last years. The profit after tax is
showing about 31.4% of the total revenues of the bank although the margin of profit is
not too much high but it is shown from the data that the bank is going on increasing its
profit after tax over the year.
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Total 100 100 100 100 100
INTERPRETATION
The liabilities and owner’s equity are side components of the bank showing the
relationship as compared with the total of the liabilities and owner’s equity. The bank’s
shareholders fund is showing percentage more than the share capital, which shows that
the bank own capital is lees than the shareholders capital. However it is also evident from
the data that the %age is decreasing of the overall %age of the share capital over the last
two or three years. But it is also seen that the share capital %age as compared to the total
liabilities of the bank has also been decreased. So we can say that the same conditions are
prevailing regarding the share capital and the shareholders fund. Among the assets of the
bank the highest %age is of the customer deposits. The bank’s management seems to
have adopted a very effective marketing policy, as the deposits of the bank constitute
about 75% of the total assets of the bank. In the last year, this figure stood at 69% of the
total resource. This shows the high level of products and associated services provided by
the bank.
ASSETS
(Vertical Analysis)
2004 2005 2006 2007 2008
Assets (Vertical Analysis)
Advances 46.5 45.7 42.7 52.4 65.2
Investments 22.4 22.9 38.0 25.8 16.1
Cash, short funds and
statutory deposits with SBP 26.1 26.3 14.3 17.6 14.8
Operating fixed assets 1.67 1.42 2.36 2.32 2.42
Other assets 3.15 3.57 2.58 1.67 1.36
Total assets 100 100 100 100 100
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INTERPRETATION
On one hand Advances have also increased from 52% in the previous year to 65% in the
current year which may indicate that the bank utilize the funds raised in the other
activities primarily lending to the financial institutions as it is the most secure source of
financing available in the economy. Cash, short term funds and statutory deposits with
SBP are also increasing. The property plant and equipment of the bank is showing a little
portion of the bank’s total assets. In the last the bank is over all showing a good financial
health and is going on healthy tracks in near future it has no risk of bankruptcy.
Although the bank is showing good results but we can’t say that these are the best
conditions prevailing in the bank as we are unaware of the market conditions and can’t
compare it with other banks.
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11.8 Organizational analysis with reference to the industries
Askari Bank is facing a strong competition by its major competitors; Faysal Bank and
Bank AL-Falah. Business of these Banks is also growing with very high pace.
• So Askari Bank has been performing very well in the presence of unstable
political and economic situation but this uncertainty is a continuous threat for the
Bank.
• Bank is facing intense competition from other private commercial and foreign
Banks. Although it is ahead of many Banks but Banks like Alfalah are a constant
threat to Askari Bank.
• All Banks are facing immense competition as well as challenges to provide better
customer services and to serve their customers for derivative Banking products
and services.
• Mostly Banks have threat of mergers and acquisitions due to capital less then RS
1billion.
• The restriction of 200 hundred branches for all Banks to exist in market is also a
great threat.
• Frauds are also a great threat, like recently a great fraud happened with The Bank
of Punjab.
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11.9 Future Prospects of the organization
In the future prospects of Askari Bank Limited, Sahiwal are very well,
with the passage of time it is introducing the new method in Banking
sectors they are transforming the data into the electronic format and now
they are using the E-Banking. They are enhancing the branches and using
the decentralized formation of decision making and introducing the new
marketing strategies for their business.
Askari Bank Limited, Sahiwal will use the different types of data and new
vast information for future purpose and will introduce the new ways of the
marketing expansion. The Askari Bank Limited, Sahiwal use the online
Banking systems and new e-Banking systems according to the marketing
circumstances and adopted new latest technology for Banking purpose.
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12. SWOT Analysis
12.1 Weaknesses
Perfection is only the claim of Allah Almighty. No other being living or dead can say this
for itself. Similarly, Askari Bank Sahiwal also has some shortcomings that need to be
mentioned:
Some of the employees working in Askari Bank were burdened with over work.
Sometimes they have to perform additional duties due to which their own work suffers
and they have to sit late night to dispose off their work. There is uneven distribution of
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work and promotions are not very timely. Bank has no grievance-handling department
for the internal problems of the employees.
Bank is providing credit facilities only to the urban areas not too much attention is paid to
the rural areas. There is enormous difference between the bank-lending rate and
return on deposits. The procedure and documentation while sanction loan is thorny
which is a barrier for advances.
Pakistan is an agriculture country but no special schemes are launched for the agri- loans.
Pakistan is a developing country therefore most of the people are doing small scale
business. Bank is not giving emphasis on the small-scale businesses which are
large in number in Pakistan.
Bank gives targets to employees for deposits due to this reason they pay more
attention to fulfill these targets to save their jobs. This distracts their attention from their
duties. Reasonable care is not taken while opening new accounts one of the reason
is because employees want to introduce more and more depositors to achieve their
deposit target.
There is no job security for the employees specially working on contract basis and no
union exits to secure them.
Bank has not adequate number of branches as compared to its competitors like MCB,
UBL, ABL, NBP etc. Due to small number of branches at greater distance potential
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customers may go to other more feasible options. ACBL has only agency arrangements
with the foreign banks, no branch exists outside the Pakistan while their main
competitors have their own branch network outside the Pakistan.
A good number of facilities are only for the army persons, not for the general
public.
As every person in the bank has his/her own computer in the branch but they are not well
equipped with the knowledge of using the computer efficiently.
Limited locker facility is available which do not fulfill the requirements of customers and
charges of lockers are also very high.
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12.2 Opportunities
Askari Bank has grown up its business with a very high pace and it has got tremendous
popularity, even with in a very short span of time. There are many opportunities for the
Bank and by availing that it can stand amongst the top Banks.
All the opportunities of the 21st century are to be availed in the information technology.
Information technology is the future. Therefore AKBL Sahiwal should emphasize much
on IT, especially the E-Banking. Bank can design a universal account like other foreign
Banks to enhance online facilities.
AKBL has introduced a number of financial schemes including special royal accounts.
These accounts have their unique features (discussed earlier). During the last three years,
AKBL Sahiwal branch`s deposits have been increasing @ 50%, which is a very healthy
sign. Therefore, with the commencement of new schemes there can even be a greater
increase in its deposits. Now they are focusing to have much more low cost deposits.
Another opportunity that is going to be availed by this branch is now it is trying to make
investment in diversified sectors because it has to suffer an previous years as most of the
investment is made in textile sector and the textile sector collapsed. Now its manager is
going to make investments in diversified sector.
• Power looms
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• Shop owners
• Goldsmiths
• Cutlery
• There is a huge potential for housing finance in Pakistan which has a shortage of
1.5 million housing units. The central Bank should work with law ministry to
bring suitable changes in foreclosure laws so that AKBL Sahiwal could play its
due role in developing this important industry which will boost economic activity
in the country.
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12. Conclusion
One of the most important aims of the student life is to express him her correctly and
adequately. This was believed in my mind when I first decided to go to Askari Bank
Limited to complete my internship programme.
The company has been growing both in size and profit for past few years and has a
good credibility and repute in the market. The employee turnover is very high which
they have to cut down as they are losing a number of good trained employees due to
its poor policy. The year 2010 is expected to offer increased competition in the
secured assets business as more Banks are in the market. With their focused strategy
and product development initiatives planned for the year, Askari Bank is strongly
positioned to meet these challenges. The Bank has very well repute in the market
overall Bank is going well and doing a good business but there are few problems for
that I have tried to give few recommendations that might help company to improve.
So finally this internship has helped me a lot in gaining practical knowledge of job
that will help me in the real job once I complete my MBA.
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13. Recommendations
I spent six weeks of my internship in Askari Bank Sahiwal Branch. During these six
weeks, I felt myself to be a part of Askari Bank. Even, this was my second experience of
working in a Banking organization, but I learned a lot from this experience. Based on my
experience & observation regarding the operations and policies of Askari Bank, I have
tried to stipulate some recommendations for further improvement.
The Bank should emphasize much on computer technology. Like other Banks, AKBL
should enhance its on-line services. Bank, also should concentrate on E-Banking and use
of ATM. Moreover, Bank should also emphasize on enhancing its website information.
Askari Bank business has grown with a tremendous pace. There have been considerable
profits just with in a short span of time. Therefore, due to the expanding business
requirements, AKBL should expand its branch network to capture other business
markets.
Human resource constitutes the most valuable asset for an organization. To improve the
professional skills and quality, AKBL has started comprehensive training program that is
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really a commendable step taken by AKBL. Bank, apart from this program, conduct some
training programs for existing employees to improve their proficiency.
Also, Askari Bank should arrange some seminars to make its visions and objectives, clear
to every one.
One major & alarming drawback that I observed in Sahiwal Branch, is the inferiority
complex faced by some employees. Sahiwal Branch, for being situated in business and
commercial hub, has its unusual importance and has foreign trade business. But I
observed some employees to be the victim of complex. So, to avoid such discrepancies,
seminars should conduct to signify the importance of each branch.
AKBL Sahiwal Branch has huge business volume, whereas the staff is not enough to
meet these requirements. I found that some employees were burdened with overwork,
even some client’s complaint for the slow service. Therefore, more staff should be
recruited. Also, there should be an expansion in the area of branch to meet the
requirements of growing business transaction.
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References
106
Annexes
107