Académique Documents
Professionnel Documents
Culture Documents
Roll # : W 587101
Project # : 6378
1
The Bank Of Punjab Internship Report
I have done my internship at The Bank of Punjab, Chunian Branch. There are four departments in the
branch, and I worked as an assistant in that branch. For the first two weeks I worked in deposit department
under the supervision of Muhammad Boota Jahangir (Cash Officer), where I have to perform following
tasks:
• Inform customer of essential conditions under which the account will be operated.
Afterwards I have learnt about vouchers, checking of vouchers is essential to confirm that correct
calculation has been done. Vouchers are properly bind sealed, and checking by the manager. I have
checked the following things:
• Cash paid stamps (with dates) are duly affixed in case of cash cheques and in case of clearing
stamps is affixed.
Then another task for me was “issuing of cheques books”. It is one of the most interesting works that I
have learnt in the bank. Cheques books should be issued only after all the formalities of the account
opening forms, which have been checked by the branch manager.
Maintaining Dispatch register and Inward Mailing register was also included in duties assigned to me.
I also used to help different employees in their work.
4. Study the facilities provided by the organization to common public in various forms.
5. To study the terms & conditions for fringe benefits provided to employees of the organization at the
age of superannuation.
Pakistan came into being on 14th August, 1947; sufficient banking services were available in the areas
forming Pakistan. Out of the total branches of the nearly 3,500 in the undivided India, as many as about 1,500
branches were existing in these areas.
It was agreed between the two countries that reserve bank of India shall continue to function in the
Pakistan territory until 30th September 1948 and that Indian notes would continue to be legal tender at Pakistan
until 30th September 1948. Unfortunately, relationship between the two countries became most strained
immediately after independence; banking was mostly in the lands of Hindus who immediately started
transferring their offices and assets into India. As a result most of the banks in Pakistan were closed down and
even those which were open were not doing any effective business.
The number of banking office in Pakistan came down to about 200 on 30th June 1948. Branches of
some European banks were also functioning in a limited manner, financing in export of crops, and their number
was limited to about 20.
It was only the Habib bank, which transferred its office from Bombay to Karachi Austral Asia bank
was another bank, which was in existence in the Pakistan territory at the time of independence. Despite of best
efforts on the part of government of Pakistan, no heady way could be made on this behalf and reserve bank of
India was in no mood to help the new country. Imperial bank of India, agent of the reserve bank of India also
started closing down its branches in Pakistan.
The principle of nationalization of banks is to stream line the operation of commercial banks in such a
way that it may be conductive to the development activities in process in the country.
Since the commercial banks were owned controlled by big business groups of the country it was
feared that these banks would not maintain uniformity in their operational and would be instrumental to
inflationary pressure. However, the considerations behind nationalization are
1. To form uniformity in the policy of the commercial banks so they may serve the best national interest.
2. To make the operation of commercial banks highly sensitive and responsive to the policy of the
government relation to financial matters.
3. To make the credit policy of the commercial banks more purpose full and effective especially in the
development of economic sectors of the country. It acts as an agent of the State Bank of Pakistan
4. To make the best use of the funds available at the disposal of these banks for the economic
development of the country.
6. To development strong money banks market in the country so that the value of currency may be
maintained at stable level both in national facilities to exporter and agriculturists which have not been
satisfactory in the past years.
The Bank of Punjab is working as a scheduled commercial bank with a network of almost 280 branches at
all over major locations in the Punjab. The Bank provides all types of banking services such as Deposits in
Local Currency and client foreign currency, remittances, and advances to business, trade, industry and
agriculture. The Bank of Punjab has indeed entered a new era of science to the nation under experience and
professional hands of its management. The Bank of Punjab plays a vital role in the national economy
through mobilization of hitherto untapped local resources, promoting savings and providing funds for
investments. The bank offers attractive rates of profit on all deposits, opening of foreign currency accounts
and handling of foreign exchange business for example imports, exports and remittances, financing, trade
and industry for working capital requirements and money market operations. The lending policy of bank is
Allama Iqbal Open University Islamabad
MBA(Banking & Finance)
The Bank Of Punjab Internship Report
not only cautious and constructive but also based on principles of prudent lending with maximum
emphasis on security.
The Bank of Punjab Receives Rs. 10 Billion from Government of The Punjab
Lahore: Thursday, June 04, 2009
The Board of Directors of The Bank of Punjab, in its meeting held on June 04, 2009, has approved the
audited financial statements for the year ended December 31, 2008. The delay in release of the financial
statements mainly attributed to completion of arrangements to support equity of the Bank by the
Government of Punjab being majority shareholder. The most significant and reassuring feature, that the
Government of the Punjab has not only pledged its unequivocal enduring support but has also contributed
Rs.10.00 billion as advance subscription money, prior to release of financial statements, towards proposed
increase in the Bank’s paid up capital, is, indeed, a happy indication.
This lends more stability and resilience to the Bank’s financial health that portends promising prospects of
rejuvenated operations, robustness in business continuity and much strengthened capacity for achievement
of sustainable growth, diversity and all-round progress in every facet of banking. The Board and the
management of the Bank have reiterated their firm resolve and unwavering commitment to customer focus,
service excellence and enhanced value creation for the stakeholders to transform BOP into one of the
premier financial institutions in the Country, devoted to economic progress and prosperity.
Source: http://www.bop.com.pk/
Business Volume in terms of Investment, Current & Fixed Assets, Share Capital, Revenues, Deposits,
Advances, Income, and EPS for the last 5 years is as under:
• Over last five years, Pakistan economy grown with real pace. Because of which record growth in
banking sector.
700000
600000 ROI
EPS (Rs/share)
500000
Income
400000 Advances (net)
300000 Deposits
Investment
200000
Shareholder'sEquity
100000 Revenue
0 Total assets
2004 2005 2006 2007 2008z
Staff Strength
The total number of employees in the organization is 3859. Which is increasing? Regular hiring’s are taking
place.
SECRETARY
01 Mr. Raza Saeed
TO THE BOARD
Total number of employees in Chunian branch where I did my internship is eleven. The branch was headed by
Branch manager Mr Ijaz Ahmed. The flow of responsibilities and designations are shown in management’s
hierarchy which will discussed in Annexes.
1.4.3 Products
CONSUMER PRODUCTS
1. Saving Accounts
3. Fixed accounts
1. SAVING ACCOUNTS(PLS)
These types of accounts are designed to encourage the saving habit of the customer and
lead to long term or invest relationship. Bank saving account are in the nature of deposit accounts and are not
normally available for drawings.
Rates of interest are typically ahead, by a small margin. Savings accounts with the banking sector represent a
very small proportion of total deposits. Customer can make withdrawals from this type of account. The cash
reserve ratio is typically low then the current account because the withdrawals against this account are very
low.
The rate of interest given to depositor varies with the length of deposit, i-e. It is higher for longer
period and lower for shorter period.
The rate of this type of deposits is higher the saving bank accounts. The cash reserve against this deposit are
very low because there no fear of with draw of a month before the stipulated of time.
FINANCE PRODUCTS
1. Agriculture Schemes
1. Agriculture Schemes
Such type of schemes provides farmers a real plate form to accelerate. Some facilities given by Kissan Dost
Agricultural finance scheme are:
- Purpose
Provision of financial facility to farmers for purchase of inputs (Seed, fertilizer, pesticides, fungicides etc).
- Security
- Insurance
The borrower will have to arrange life assurance under the Bank’s charge.
- Mark-up
BOP car loan is a demand financing facility to purchase brand new locally manufactured/Assembled cars for
personal use. This facility can be availed by salaried person of different nature and by the business persons. All
must have the holdings of NIC.
BOP Aasaish loan is demand finance facility for purchase of consumer durable goods like TV, Refrigerators,
Mobiles, Microwave Oven, Fans, Audio/Video system etc with no down payment, in addition with the free
home delivery. The financing tenure of this product is max 36 months. The nature of employment should be
salaried or the business man.
1.5 SERVICES
• ATM Facility
• Letter of Credit
• Pay Order
• On-Line Banking
• E-Banking
• Debit Card
• Consumer Financing
• Agriculture Financing
• Corporate Financing
• Demand Drafts
• Collection of Utility
• Lockers Facility
Through the ATM’s Customers have access to the various services such as withdrawal, balance
enquiry and mini statement? Complete security is ensured because access to the account is only possible by
entering a four digit personal identification number (PIN) known only to the account holder. Cash withdrawal
limit is up to Rs.20, 000 per day. Annual charges of ATM is Rs.250/- per card.
BOP is currently offering window-based online banking to its customers, which gives access to
information on their accounts and the liability to act on the latest information received over the net.
3.3. Lockers
It is one of the utility services that BOP provides to their customers for keeping jewellery,
important documents and other valuables.
BOP provides safe, speedy and reliable way to transfer money at vary reasonable rates. Any
person whether an account holder of the bank or not, can purchase a Demand Draft from a bank branch.
BOP is offering its business customers the widest range of option in the area of money
transfer. BOP’s letter of credit service is with competitive rates, security, and ease of transaction, BOP Letter of
credit is the best way to do the business transactions.
BOP provides transfer of money using different facilities. Its pay orders are a secure and easy
way to move the money from one place to another. The charges for this service are extremely competitive.
Moves money safely and quickly from BOP Mail Transfer service. The rates for this service
is quiet impressive as compare to the market.
BOP offers excellent rates of profit on all its short term investment accounts. The packages
are starting from 3 months. BOP’s rates of profit are extremely attractive, along with the security and service
only BOP can provide.
It help farmers utilize funds efficiently to further develop and achieve better production.
Provides farmers an integrated package of credit with supplies of essential inputs, technical knowledge, and
supervision of farming.
• Educational Institutes
• Agriculturists
• WAPDA
• Pharmaceutical Companies
• WASA
• MDA
Organizational Structure
1.7 Main Offices
Head Office and the main branch of BOP is in Gulberg 3, Lahore & Egerton, Lahore Respectively.
• Lahore Region
• Faisialabad Region
• Gujranwala Region
• Rawalpindi Region
• Karachi/Quetta Region
• Multan Region
• Peshawar Region
Rest are the branches working under these regions. Which are almost 270 in all over Pakistan.
Through this top level management is able to decide which product should be taken into course for
further level or which should stop.
Electronic data make management able to take decision at any point of time.
• Public Source
As the largest regional bank of Pakistan according to asset base with specialized in Agriculture has a
large deposits with 80% from the rural areas of the Punjab. The Banks major source of funds is from the
Public.
• Money Market
Figurative expression for the informal network of dealers and investors over which short-term debt
securities are purchased and sold. Money market securities generally are highly liquid securities that
mature in less than one year, typically in less than ninety days.
Corporate sector is one of the major sources of funds in all types of Banking. All major organisations,
financial institutions and government & private organisations are the major sources of the funds e.g.,
WAPDA.
1. SME Division
2. Agriculture financing
3. Consumer financing
4. Corporate financing
The distribution of funds to these departments are Banks internal matter and they avoid to disclose.
Through Financial Statements it is only possible to analyze long term and short term financing.
1.11.4 E-Banking
The bank has a centralized database that is web-enabled. All the services that the bank has permitted on
the internet are displayed in menu. Any service can be selected and further interaction is dictated by the nature
of service.
1.11.6 Lockers
Commission charged on lockers provided by bank for customers, is also a source of inflow for the
bank.
Critical Analysis
1.12 Critical Analysis of the practical exposure relating to theoretical concepts
This part of report is the essence of the internship, as this will help other students to better understand the
working environment of the bank by finding the relationship between what is written in the books and what is
actually going on in fields. The theory written in the books in cases is not implemented as it is. In some cases
theory is implemented with a little modification but in other cases theory has nothing to do with practice. In
accounting, banks don’t prepare worksheet, but part of worksheet is prepared like trial balance, but little
differences, theory and practice has substantial relationship. The securities for the loans are handled in the same
way as theory says like mortgage, pledge, hypothecation, advances against insurance policies or liquidation
procedure is the same. The difference is there in the case of loans. Theory talks about four or five terms of
loans that is cash finance, overdraft, loans etc., but in practice there are some more terms used like running
finance, demand finance etc. All other concepts of remittances, bills, foreign exchange deposits, letters of credit
are in accordance with theory almost. So for a internee it is more important to learn new things which he/she
has never heard about in his/her course book.
To me, Theory gives you the direction to understand the processes and the terminologies going across the
World using best business practices in a broader view covering each and every aspect of possible business
scenarios. On the contrary practical life is specific, enclosed in a jar. In practical professionalism and firm’s
environment is each and every thing. Professional life only builds on the knowledge based on books even
though it may only use 1% of the theoretical knowledge.
The balance sheet summarizes the assets, liabilities, and owner’s equity of a business at a point in time, while
the income statement summarizes revenues and expenses of a firm over a particular period of time. A
conceptual framework for financial analysis provides the analyst with an interlocking means for structuring the
analysis.
1 Balance Sheet
Balance Sheet
As of DEC 31, 2007
June 30, 2008 December
31,2007
(Unaudited) (Audited)
Rupees in ‘000
Assets
Cash and balances with treasury banks 19,254,331 14,210,302
Balances with other banks 2,106,677 1927662
Lendings to financial institutions 3,301,023 2450000
Allama Iqbal Open University Islamabad
MBA(Banking & Finance)
The Bank Of Punjab Internship Report
Investments 38,397,713 73461693
Advances 142,845,006 133899143
Operating fixed assets 3,375,469 3252759
Deferred tax assets - - 2,513,297
Other assets 6,072,781 5759116
217,866,297 234,990,675
Liabilities
Bills payable 958,927 937,647
Borrowings 17,006,557 17,842,915
Deposits and other accounts 180,823,474 181,968,377
Sub-ordinated loans - -
Liabilities against assets subject to finance lease 35,635 40,321
Deferred tax liabilities 2,205,530 2,983,977
Other liabilities 202,717,966 215,978,767
2 Income Statement
Income Statement
As of the year ended Dec 31, 2008
2007 2008
Rupees in ‘000
Mark-up/return/interest earned 11,579,036 17,539,094
Mark-up/return/interest expensed 7,508,795 13,939,377
Net mark-up/ interest income 4,070,241 3,599,717
Provision against non-performing loans and advances 340,626 1,616,421
Provision for diminution in the value of investments 33,000 24,479
Bad debts written off directly 100 246,869
373,726 1,887,769
Net mark-up/ interest income after provisions 3,696,515 1,711,948
Non Mark-up/interest Income
Fee, commission and brokerage income 473,212 653,512
Dividend income 1,385,875 1,804,878
Income from dealing in foreign currencies 239,804 377,233
Gain on sale and redemption of securities 389,063 2,039,535
Unrealized gain / (Loss) on revaluation of investments
Balance Sheet
164,85
Total Assets Rs in m 43,621 66,320 111,154 5 234,974
101,32
Advances (net) Rs in m 18,344 39,439 63,624 0 133,894
Investments Rs in m 11,458 16,198 18,026 28,233 73,462
BorrowingsfromFIs
100%
Deposits
80%
Revaluation Reserve
60%
Shareholders’ Equity
40%
20% Investments
0% Advances(net)
Total Assets
Balance Sheet
• BOP’s income statement for the last five years represents a high growth in it.
• It’s all due to the increase in equity , and increase in the deposits of the bank.
• Rise in the Markup Interest earning income results rise up in the profit of bank represents increase
in lending by the bank.
60%
40% Unappropriated profit
20%
0% Reserves
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Share capital
MBA(Banking & 2Finance)
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The Bank Of Punjab Internship Report
• Deposits are almost rose upto around 300% in last 5 years.
• As last 5 years were really good for banking sector. Assets of the banks are risen upto 400%
particularly in 2007 just because of crescent towers.
1 Horizontal Analysis
This type of analysis represents the percent change in specific line item of the Income statement or the balance
sheet from the last year. This analysis is used to comment on the growth of specific line item in the industry or
the firm.
Operating Results
Provisionagainst NPLs
0%
-50% Non-markupbased
expenses
Non-markupbasedIncome
Net markupincome
• Total earnings mark-up & non mark-up were rising 33% from last year. As deposits and the lending’s
of the banks are rising up.
• Administrative expenses are increased with a great pace in last few years because of high rate of
inflation.
• Rise in expenses results decrease in the 22% percent profit from last year.
Balance Sheet
Balance Sheet
Total Assets % 32.2964 34.22648 40.33503 32.57469 29.84117
Advances (net) % 63.9065 53.48766 38.01239 37.2049 24.3282
Investments % 27.6052 29.26287 10.14091 36.15273 61.56789
Shareholders’
Equity % 22.5754 30.95023 34.7794 36.41993 29.45731
Revaluation
Reserve % 55.9165 36.96987 50.39896 -26.0838 -40.7207
Deposits % 31.9738 36.15598 38.14051 35.76833 28.25508
Borrowings
from FIs % 51.9374 5.225989 58.29775 2.833023 60.83058
BorrowingsfromFIs
100% Deposits
80%
RevaluationReserve
60%
Shareholders’ Equity
40%
Investments
20%
Advances(net)
0%
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Total Assets
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MBA(Banking & Finance) Balance Sheet
The Bank Of Punjab Internship Report
• Total assets were increased in last few years. 22% increase in the assets from the last year represents
growth in the Bank.
• As bank increase their paid up capital because of which SOE increase at the end of 2006.
• BOP is grabbing the confidence of their customers results increase in the deposits.
2 Vertical Analysis
It represents the percent of a line item (expenses, tax, interests, dividends) impacts on total revenues.
2007
• Markup interest earned is increased because of increase in 30% lendings from the last year.
• Net profit before and after tax is decreased because of huge rise up in the admin expenses.
Graphical Depiction
60%
Equity/ Assets
40%
20% Total revenue
0%
Net Interest Margin
Net margin
• Gross spread ratio defines the total spread of interest between borrowing and lending.
• Spread: Difference between funded revenue as a percentage of average earning assets and the cost of
funds as a percentage of average paying funds.
• The higher the spread the higher will be the profit margin.
• GSR= Rev/CGS
• GSR of the bank is decreasing because of the decrease in margin, a SBP rise up the interest rates on
the deposits.
• BOP has a high value of profit before tax to total income and they are decreasing after 2006 because
of increase in admin expenses and righting off the bad debts.
• The main reasons for reduction in the profitability were additional provision against NPL due to the
elimination of benefit of FSV and downturn in consumer and individual banking.
• This ratio tells what percent of interest is covered from the total income of a firm or a bank.
• This ratio analysis tells profitability of a firm after paying all the taxes to total income.
• Profitability of BOP is increased because of decrease in the tax paid to the govt and of high spread
ratio.
• BOP negotiated their taxes with the government and only paid 20% tax in 2006 and only 8% in 2007
instead of 35%
• This ratio is increased during last few years which represent increase in the turnover by assets.
• This ratio gives an idea of returning net profit generated by the bank in comparison with assets.
• This ratio is decreasing in the last year because of decrease in Profit as expenses raised up.
• The decrease was mainly due to increased equity as a result of increase in minimum capital
requirements and additional provision due to withdrawal of benefit of FSV for most types of advances.
• From this ratio it is analyzed what % of EPS is the part of MPS. What percent earned from a share
equivalent to the worth of 1 RS MPS by the bank or a firm.
• Through this ratio it can be analyzed what percent of 1RS share is earned.
• Difference between funded revenue as a percentage of average earning assets and the cost of funds as
a percentage of average paying funds.
11 Return on equity
• The decrease was mainly due to increased equity as a result of increase in minimum capital
requirements and additional provision due to withdrawal of benefit of FSV for most types of advances.
12 Cost/Income
• Operating cost includes all expenses charged to arrive at profit before tax excluding cost of funds,
provisions and head office expenses. Head office expenses are not considered since all banks do not
account for head office expenses in their financial statements.
• Operating income means funded and non-funded revenue less cost of funds and provisions.
• As administrative costs are increased because of which results decrease in the cost to Income ratio.
• With every 10% change in credit costs, fair value would change by 3.3%.
• For every 10% change in NIM, BOP’s fair value Market value per share
140
would change by 7.5%.
125
120
•
102.45
A100bp change in loan growth estimates for 100 97.8
101.25
Rs/ Share
2007, 2008, and 2009 would cause a 80
65.9
60
Change of 1.0% in fair value.
40
34.95
The calculations made in sensitivity of changes in the cost of 20
Terminal growth rate. The cost of equity is based on a 10.2% Market value per share
growth assumption implies a dividend payout ratio of 25%. For every 50% change in
the cost of equity, and the terminal growth rate the bank’s fair value
It can be confirmed by looking at share price performance. BOP’s share price has performed well in the last
year. It is up 31.2% in the past 12 months, and is up 21.1% YTD. The stock has outperformed the local
benchmark KSE-100 by 5.0%. Performance is quiet amazing.
Industrial Analysis
1.15 Overview on the Major Players of Bank Industry
The brief overview on the bank industry and the major players involved on it. The combined values of all
major players are collected from their financial statements of 2007.
900,000 900,000
Cash & bank
800,000 800,000
Rs In Millions
500,000 500,000 Depos its
Rs in M
Advances
SubOrdinated Loans
400,000 400,000 Other Liabilities
Op Fixed Assets &
300,000 Intangible Assets 300,000 Equity
Other assets Total
200,000 200,000
Total
100,000 100,000
0 0
NBP HBL UBL MCB BAF ABL SCB BOP
L
P
P
L
CB
UB
BA
HB
AB
SC
BO
NB
M
• As graphical shows NBP (National Bank of Pakistan) is the key player and the leader in the industry
with total assets and liabilities of RS. 764,609. While BOP is RS. 234,991.
• Major Player Includes NBP, HBL, UBL, BAF, ABL, SCB and BOP.
• Total Assets of the major players in the industry are RS. 3,561,195 (M).
• Like major Player NBP has the largest Profit before and after Tax i.e., 28,452(M) and 19,405 (M)
respectively. While BOP has PBT RS. 4,856 (M) and PAT RS. 4,454 (M) only
• The total Profit before and after tax of the major players are RS. 99,835 (M) and RS. 70,045 (M)
respectively.
Income Comparison
50,000
45,000 Spread
40,000 Provision
35,000
Non Markup Interst
30,000 Income
Rs In Million
Operating Income
25,000
15,000
PBT
10,000
Tax
5,000
4000000 4,000,000
3500000 3,500,000
3,000,000
3000000
2,500,000
Rs. In Millions
500000 0
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0
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s
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B o ble
To
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Total
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Advances
Lendin To
Cash &
Op Fixed
Assets &
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Other
Pa
assets
ia
bank
d
rL
te
ls
ina
Bi
Ot
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bO
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• Major Players in the Medium category of the Banking industry are AB, NIB, ABN, Citi, SB BAH,
FB.
• This level is giving a tough competition to the major players and trying to grab there share.
• Few mergers are taking place and in future it is expected to be more because to maintain SB Standard
reserve ratio.
200,000
150,000
Major Players
Rs in Million
100,000
Medium Players
50,000 Small Players
x
ad
Ta
PB
ax
e
es
-50,000
s
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• Major Players in the Small category of the Banking industry are ATLAS KASB, JS etc.
n
No
• Total Assets and liabilities of this level comprised on RS. 411,077 (M)
• These Banks are going in loss overall in 2007. Since they are new players in Pakistani Market. It is
expected that they will give return in future.
To me the major and the most important flaw in the BOP is lack of internal controls and inter communication
between different branches of the bank. As far as financial aspect is concerned there is no proper system is
configured that’s why there is always a risk of big frauds within the bank. I during my internship also pointed
BOP staff lacks professionalism. They lack the necessary training to do the job efficiently and properly.
Although staff colleges are in all major cities of the Punjab but they are not performing well. For this purpose
these staff colleges should be reorganized and their syllabus should be made in such a way which can help the
employee understand the ever-changing global economic scenario.
Banking council of Pakistan should also initiate some programs to equip the staff with much needed
professional training.
Employees of the bank should be given a task and authority and they should be asked for their responsibility.
The sense responsibility in employees mind is one of the most important factors in the success of any
organization.
During Internship I felt that there is no or very less appraisal of any ones cool performance. The manager
should strictly monitor the performance of every staff member. All of them should be awarded according to
their performance and result in the shape of bonuses to motivated and incite them to work more efficiently.
In the critical analysis this, problem is discussed. To overcome this problem it is suggested that a special
section should be made inside the branch. Which should only handle the treasury function, salaries and
pensions of federal personnel or the bank should do these functions in the evening time. Also management
should purchase more furniture and arrange them in such a way which provides maximum space and
convenient especially in deposit department and there should also be convenient sitting place for customers.
1.16.6 Transfer
There should not be any abrupt policies change by the upper management, as this practice hurts the customer
confidences in the bank. Government should make long-term policies
Required, qualified staff should be provided to branch in order to improve the functioning of the branch.
Especially a telephone operator should be appointed.
Bank gets Rs. 2 to 3 to processes a utility bill, and it is very tire, tough and hard job despite this working
resulting in a loss to then Rs 3 to5 per transaction. These charges should be increased to RS 10 per bill to
enable the branch to cover their handling costs and make some profit.
100 major branches of BOP should established a direct link with the, head quarter in Lahore, through Internet
or Intranet. This will make the functions and decision making of the management easier and convenient.
Though management has a plan to connect all branches via WIMAX technology. Which would really bring a
great future aspects.
BOP should start its operation in credit card. These cards are very helpful for the ordinary customer in general
and the business people in particular. To make it mores secure and to eliminate the misuse of it, the
management is required to keep proper security against the card.
In this mode of financing the amount of credit not utilized by the borrower is remained tax-free. It is
recommended that a small amount of interest should be charged on this amount as well because the bank gas
kept-aside the amount for that borrower and cannot advance it anywhere.
Bank should decrease their administrative expenses. This was Rs 2.25 billion in the year 2007. That can be
done by lying off the surplus pool of employee with golden handshakes scheme. The branches that are not
much used could also be closed. That will give positive results in the future.
As mentioned earlier, BOP is very conservative in advances and loans policy. It reduces the investment
opportunities. Also loans should be given to the small businessmen and the other businesses on large scale like
in agriculture sector at the low mark-up rate. It should adopt flexible credit policy while giving credit to the
agriculture sector.
I would like to suggest that at least all the main branches of BOP should be fully computerized in order to
expedite the dealing process among bankers and their customers. Every department should be provided a
computer with adequate training (especially Advances, Deposits and Foreign Exchange departments). Daily
records should be entered directly into these computers, (instead entering the overall daily transactions after the
banking hours). It will not only reduce transaction time, will increase accuracy but will also be efficient as well.
Not only it will be economical but will also reduce the extra burden of work of the bank. It will also help in
reducing the use of excessive paper work.
Proper distribution of work leads to success in every organization. Proper distribution of work prevents the
employee from over and under work situation. So for a smooth running of an organization proper distribution
of work is the hint to be followed.
During my internship I observed that there was no proper distribution of work in the bank. I saw that some of
the employee worked like ants other sat idle staring here and there. So this created a lot of over work situation
for while relaxation for other.
In the Main branch during my internship I saw that when some of the employees are transfer to other places,
due to their relation with influential people and with top management they can cancel their transfer in few
weeks, when they are unsatisfied at that place.
So I suggest that in the organization there should be no favouritism, nepotism and politics and their transfer and
promotion should be made on merit and according to the rules and regulations of the bank and provided
favourable environment to the employee to show their performances.
I watched during my internship that, there employees who have worked on one seat for many a year. It can
have negative effects motivation of employee who is hard working and intelligent. Take the example of
advances section. In advance section if the employee is transfer after sixth month or seven month, how can he
be able to show his performances and how can he be able to know the bank customer in a short period of time.
The most important in my opinion is personal marketing; it is the most effective of all when you think in term
of branch level. But on the whole organization level, they should arrange the seminar with in the bank and
outside the bank. They should introduce various prizing schemes just like Allied Bank. Karamad Scheme, Bank
Al-Fallah (monthly income earning scheme) and various others.
They should do more advertising through newspaper and media and through channel of personal contacts.
There should be an information desk to provide the information and to receive the complaints of the customer
in the bank.
There is no complaint box available in the branch and not any person appointed to hear the complaints.
Every person cannot go to the manager for the complaint because most of the people are hesitant. So I suggest
management to install a compliant box in the branch, and recruit a special person for that guidance of the
customer when they are unable to manage some difficulties in banking matters.
It is suggested that employees working on daily wages basis should be given some benefits, which the other
employees are getting. Their salaries must increase according to efficiency, performance and service this will
increase their commitment to the organization.
The credit department of the bank should carry out vigilant credit monitoring. They should ensure the proper
payment of instalments and the mark-up by the borrower.
The staff members who have done all the paper work of the loan extension should perform the monitoring, as
he/she will be having more information about the borrower.
The banking hours may be extended up to six, as being practiced by UBL opposite to it. Some of the business
community due to law and order situation are now reluctant to keep the fund in their premises and would want
Allama Iqbal Open University Islamabad
MBA(Banking & Finance)
The Bank Of Punjab Internship Report
to depart with it. Therefore, Main Branch may extend the night banking to cater to demand of this business
community. The branch could also be opened to cater the requirements of this business community
Bank should initiate these loans because most of bank’s customers are middle class and they cannot afford to
buy house or household goods at once by their own.
Great care should be taking while extending the loan. Loans should be awarded against reasonable securities,
where market value should be equal to the loan granted.
Policies should be crafted in a way to ensure that no loan is extended on political pressure. SBP regulation for
loan approval should be strictly followed. According to which the current ration of borrower’s business must be
1:1 and the debt to equity ratio should be 60:40, means the liquidity position of business should be healthy.
In this section some recommendations for those students who are planning for an internship at BOP particularly
and in any other bank generally. The most important of all is the difference between what we learn from the
books i.e. the theory and what actually is done i.e. in practice. This difference is described in detail below:
During my internship I observed that other internees in the bank use to stick with one department only. An
internee with specialization in Finance was of the view that he should be in Finance department same was the
case with other specialized Internees. But I would suggest that one must work in every department for some
time to gain a hand on experience of all the departments. As in real working environment employee have to
coordinate with other departments, so he/she must know what the other departments operations are and how
they work.
This part of report is the essence of the internship, as this will help other students to better understand the
working environment of the bank by finding the relationship between what is written in the books and what is
Allama Iqbal Open University Islamabad
MBA(Banking & Finance)
The Bank Of Punjab Internship Report
actually going on in fields. The theory written in the books in cases is not implemented as it is. In some cases
theory is implemented with a little modification but in other cases theory has nothing to do with practice. In
accounting, banks don’t prepare worksheet, but part of worksheet is prepared like trial balance, but little
differences, theory and practice has substantial relationship. The securities for the loans are handled in the same
way as theory says like mortgage, pledge, hypothecation, advances against insurance policies or liquidation
procedure is the same. The difference is there in the case of loans. Theory talks about four or five terms of
loans that is cash finance, overdraft, loans etc., but in practice there are some more terms used like running
finance, demand finance etc. All other concepts of remittances, bills, foreign exchange deposits, letters of credit
are in accordance with theory almost. So for a internee it is more important to learn new things which he/she
has never heard about in his/her course book.
To me, Theory gives you the direction to understand the processes and the terminologies going across the
World using best business practices in a broader view covering each and every aspect of possible business
scenarios. On the contrary practical life is specific, enclosed in a jar. In practical professionalism and firm’s
environment is each and every thing. Professional life only builds on the knowledge based on books even
though it may only use 1% of the theoretical knowledge.
Conclusions
By analyzing the financial statements of the bank, I came across to know that it is one of the most growing
bank in the subcontinent. Now they should carry on with the present management which too k it from one of
the ordinary bank to this level. No doubt professionalism and internal controls of the bank are one of the major
issues which may results some major losses to the bank. Bias in hiring and between colleagues should be
removed.
Annexes
Branch
Manager
Operational
Manager
Account
Foreign Opening
Credit Remittances Advances
Trade
Short-term
Import
loans
Mortgage
Export
Loans
Organizational Analysis
Hieratical Flow
BOARD OF DIRECTORS
PRESIDENT
REGIONAL HEADS
BRANCH
BRANCH
References
Reference material used for compiling this report is gathered from these sites.
• www.bop.com.pk
• www.jpmorgan.com
• www.kpmg.com.pk
• www.sbp.gov.pk
• www.globalbanking.com