Internship Report On RBS

INTERNSHIP REPORT ON
DEPARTMENT OF MANAGEMENT SCIENCES
ABN AMRO is the third largest foreign bank in Pakistan, playing a prominent role in both corporate and retail businesses. They are considered to be a leading bank in bringing new products to the local market and a key player in assisting the Government of Pakistan on various economic and financial matters. ABN Amro Bank (Pakistan) Limited (AABPL) is a newly merged entity, resulting from the merger of ABN Amro N.V-Pakistan branches with and into Prime Commercial Bank Limited effective from September 01, 2007.ABN AMRO was established in Pakistan in 1948. After the amalgamation, AABPL became the second largest foreign bank as it was able to expand its local operations with a network of 82 branches (including 3 Islamic Banking branches) in Pakistan and Azad Jammu and Kashmir. The bank is principally engaged in retail banking, corporate banking and treasury-related activities. And thus, ABN AMRO bank Pakistan Ltd. Formerly Prime Commercial Bank Limited (AABPL) is a banking company incorporated under the laws of Pakistan, having its registered office at 77 Y BLOCK, Commercial Area, DHA Lahore, licensed by the State Bank of Pakistan, pursuant to the Section 27 of the Banking Companies Ordinance 1962. According to the department internship program I completed my six weeks internship at the ABN AMRO Bank, Bahawalpur. The following departments exist here: o Accounts Department o Deposit Department o Advances Department o Clearing Department o Accounts Maintenance Department o Cash Department
o Remittance Department o IT Department The function of deposit department is to collect cash from the customers and to deposit it into the accounts (in whatever the account type they have maintained). ABN AMRO is offering different types of schemes for demand deposits and term deposits. Advances department issues agri loans and SME loans. ABN AMRO is offering two types of loans or finances, fund based finances and non fund based finances. Fund based finances include running finance, demand finance, cash finance, FIM, LBD and FBD. Non fund based finance include letter of credit. Clearing department performs the functions of the clearing of cheques for collection. Cash section performs cash related functions like receipt of cash, payment of cash and collection of utility bills. Remittance department performs transferring of funds from one branch to another or from one account to another. IT department is about the dealing and controlling of the sensitive devices being used by the bank to carry out of the daily operations of the bank and therefore is the most sensitive department of the bank and any problem in this department stops the all operations of the bank.
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But now AABPL has itself fell prey to acquisition, which got completed in the
last quarter of 2007. The bank was acquired by a consortium comprising, The Royal Bank of Scotland Group Plc (RBSG) of Scotland, Banco Santander Central Hispano (Santander) of Spain, and Fortis N.V. (Fortis) of The Netherlands (jointly called the consortium). According to the acquisition plan of the consortium, RBSG, in addition to some other geographical operations of the bank, mainly took over the Asian business, in turn, becoming the new owner of AABPL. The rebranding of AABPL to RBS was done in whole Pakistan on 1st August, 2008. Now it operates through a network of 82 branches in Pakistan and its employees are 2319.
Be the leading bank serving world class services to our clients.
"ABN AMRO's mission is to create maximum economic value for our shareholders through a constant relationship focus on the financial service needs of our chosen client segments and a strict adherence to our financial targets.
1. Creating value for our clients by offering high-quality financial solutions that best
meet their current needs and long-term goals.
2. Focusing on:
- Consumer and commercial clients in our local markets in Europe, North America, Latin America and Asia and globally on: - Selected multinational corporations and financial institutions - Private clients
3. Leveraging our advantages in products and people to benefit all our clients 4. Sharing expertise and operational excellence across the Group 5. Creating fuel for growth by allocating capital and talent according to the
principles of Managing for Value, our value-based management model. We aim for sustainable growth to benefit all our stakeholders: our clients, our shareholders, our employees, and society at large. In pursuing this goal we are guided by our Corporate Values.
Our Corporate Values provide the foundation for the bank's Business Principles. The bank formulated these Corporate Values in 1997. Our values and principles also help us on our journey to sustainable development. By living according our defined Corporate Values and Business Principles we can meet the needs of our organization and stakeholders today, thus protecting, sustaining and enhancing human, natural and financial capital for the future.
Integrity Teamwork Respect Professionalism
Based on our four Corporate Values, we have formulated Business Principles to guide all our employees in their daily work. Defining them clarifies what we stand for and unites us as a group. These Business Principles are:

We are the heart of our organization We pursue excellence We aim to maximize long-term shareholder value We manage risk prudently and professionally We strive to provide excellent service We build our business on confidentiality We assess business partners on their standards We are a responsible institution and a good corporate citizen We respect human rights and the environment We are accountable for our actions and open about them.
Chairman:
Mr. Muhammad Aurangzeb
President and Chief Executive:

Mr. Naved A. Khan
Directors:
Mr. Jawaid A. Mirza Mr. Robert Ralph Davis Mr. James Alexander Brown Syed Naseem Ahmed Lt. Gen. Muhammad Maqbool
Chief Financial Officer:

Mirza Zafar Baig
Company Secretary:
Mr. M. Shahzad Sadiq
Audit committee:
Syed Naseem Ahmed Mr. Jawaid Ahmed Mirza Mr. James Alexander brown Lt. Gen. Muhammad Maqbool
Human Resource Committee:

Mr. Muhammad Aurangzeb Mr. Jawaid Ahmed Mirza Mr. Naved A. Khan Mr. James Alexander Brown
Risk Management Committee:

Mr. Naved A. Khan Mr. Robert Ralph Davis Mr. James Alexander brown Lt. Gen. Muhammad Maqbool
Auditors:
Messers Ford Rhodes Sidat Hyder & Co. Chartered Accountants Progressive Plaza, Beaumont Road Karachi
Legal advisor:
Messers Hassan & Hassan (Advocates) 7-D Kashmir/Edgerton road, Lahore
Registrar:
Messers Hameed Majeed Associates (Pvt) Limited H.M. House, 7-Bank Square The Mall, Lahore
Registered/Head Office:
77-Y Phase III, Commercial Area, D.H.A., Lahore
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There are various views about the origin of the word bank. One view is that it is derived from an Italian word banque which means a bench that is where people were meet and solve their financial matters. The other point of view is that it has originated from a German word banc which means a joint stock firm. According to Bank Companies Ordinance 1962 banker means person transacting the business of accepting for the purpose of lending or investment, of deposits of the money from the public, repayable on demand or otherwise and withdraw able by cheque, draft, order or otherwise and includes any Post Office Savings Bank.
According to Crowther, A bank is a firm which collects money from those who have it spare. It lends money to those who require it. According to Mr. Parking, A bank is a firm that takes deposits from the households and firms and makes loans to other households and firms. According to G.W. Gilbert, A banker is a dealer in capital or more properly a dealer in money. He is an intermediate party between the borrower and the lender. He borrows from one party and lends to another.
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At present the banking structure in Pakistan comprises of the following:
State Bank of Pakistan (SBP)

Every civilized country now has its own central bank. The primary function of the central bank is to regulate the flow of money and credit in order to promote efficiency, stability and growth in the country. In Pakistan, State Bank of Pakistan is the central bank.
Commercial Banks:
Commercial banks have been the most effective mobilizes of saving and have been providing the short term requirement of working capital in trade, commerce and industry. They are profit earning concerns. They receive deposits and advance loans to the borrowers. They greatly help in financing internal and external trade of the country. They also provide agency services and other utility services. In Pakistan, National Bank Of Pakistan, United Bank Limited, Habib Bank Limited etc. are performing the functions of the commercial banks.
Exchange Banks:
The main function of the exchange banks is to finance the foreign trade by the purchase and sale of the currency in the form of the drafts, bill of exchange and telegraphic transfer. They also perform other functions of the commercial banks. In
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Pakistan banks other than Indian banks have been commonly known as exchange banks in the IndoPak, were engaged primarily in finance of the foreign trade.
Cooperative Banks:
Cooperative banks are an integral part of the cooperative movement which aims at the promotion of the thrift, self-help and mutual aid among the agriculturists and others with common economic needs so as to bring about better living, better business and better methods of production etc.
Saving banks:
Saving banks are those banks which collect and keep the small savings of the public. They called thrift promoting institutions. The saving banks invest the funds in the safest government securities. Post Offices and Saving centers perform the business of saving banks in Pakistan.
Agricultural Banks:
Agricultural banks are set up to provide the financial assistance to the agriculturists. The agriculturist banks provide short term credit to the farmers and also make medium term advances. In Pakistan, Agricultural Development Bank of Pakistan (ADBP) was set up in 1981 for meeting the financial requirement of agriculture.
Industrial Banks:
Industrial banks mainly provide medium and long term credit to the industries. Since the industrial banks have long term deposits, they are in a position to permit
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long term investment in industries. In Pakistan the Industrial Development Bank (IDBP) was set up in 1961. The other institutions engaged in providing financial assistance to the industries are NDFC, ICP etc.
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There were only two banks in IndoPak before partition; they were Habib Bank Limited (established in 1941 in Bombay) and Australia Bank Limited (established in 1944 at Lahore). All other banks, at that time, were either owned by Hindus or Foreigners. At the time of partition there were 631 bank branches in area which came under Pakistani control. But due to blood shed and violence at large scale, mostly branches were closed and the disparity can be assessed from the fact that on July 1948 there were 195 branches with deposits of Rs. 88 crore (880 million) only. Also a factor of lagging in Pakistani industry was the absence of central bank of its own, as by that time the Reserve bank of India was acting as Central Bank for both countries and same currency note were used in both territories. But Reserve Bank of India was biased and set down Pakistan on many occasions such as issue of funds transfer etc. In this period drastic steps were taken in government sector for improvement of overall position. The private sector also responded to these changes and some very positive changes were observed. Some of the steps taken by the government in this regard were as under:
1) Inauguration of State Bank of Pakistan (SBP) on 1st July, 1948.
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2) Setting up National Bank of Pakistan in November, 1949 to control the jute export in East Pakistan and to act as agent of SBP. 3) Larger powers were given to SBP through SBP Act (1956) for controlling purposes. 4) Banking Companies Ordinance 1962 for protection and guidance to banks. 5) Establishment of specialized banks, such as ADBP (1952); a. HBFC (Nov. 1952) b. PICIC (Oct. 1975) c. IDBP (Aug. 1961) d. NDFC (Jan. 1973) These were the steps, which built a strong banking sector in Pakistan. This is also obvious from the facts that by 1973 there were almost 10 foreign banks working in Pakistan and all over deposit position were around Rs. 2300 crore (23,00 million).
NATIONALIZATION OF BANKING
On January 01, 1974 all Pakistani banks were nationalized through Nationalization Act 1974. Under this law all Pakistani banks became a public property. All small banks were merged in bigger banks to create 5 major Pakistani banks. These banks were controlled by Pakistan Banking Council. There are still controversies this act of the government as whether it contributed in success or failure of banks.
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POST NATIONALIZATION ERA

In 1990 the government decided to denationalize all the nationalized institutes. Some were also suggested in banking sector. For this purpose, amendments were made to Nationalization Act 1974 and 2 nationalized banks were privatized. Along with this the permission to open banks in the private sector was also granted. The rules regarding the establishment of new banks and for incoming foreign banks were also relaxed. After these changes a large number of foreign and private banks started their operations in Pakistan and presently there are more than 44 scheduled banks working in Pakistan.
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BACKGROUND:
On 29 March 1824 King Willem-I issued a royal decree creating the Nederlandsche Handel-Maatschappij with the aim of reviving trade between the Netherlands and the Dutch East Indies. In 1964, NHM merged with De Twentsche Bank to form Algemene Bank Nederland (ABN), while Amsterdamsche Bank and Rotterdamsche Bank joined to become Amsterdam-Rotterdam (Amro) Bank. In 1991, these two banks merged as ABN AMRO Bank. Today, ABN AMRO Bank has a powerful presence in world markets, building on a tradition of stimulating international trade. ABN AMRO is listed on the New York Stock Exchange and Euro next. It is the largest bank in the Netherlands and Europe's eighth largest with assets of EUR 987 bln (as at 31 December 2006). It operates 4,500 branches and offices in 53 countries and has 110,000 employees worldwide. In Asia, ABN AMRO has been active since 1826 when it opened its first branch in Jakarta to finance business ventures in the Dutch East Indies. The bank has been operating for well over 100 years in a number of countries in the region ABN AMRO was established in Pakistan in 1948. They service their corporate and institutional clients as well as their private banking clients. ABN AMRO is the third largest foreign bank in Pakistan, playing a prominent role in both corporate and retail businesses. They are considered to be a leading bank in bringing new products to the local market and a key player in assisting the Government of Pakistan on
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various economic and financial matters. They are represented in key financial sectors and government policy forums. ABN Amro Bank (Pakistan) Limited (AABPL) is a newly merged entity, resulting from the merger of ABN Amro N.V-Pakistan branches with and into Prime Commercial Bank Limited effective from September 01, 2007. As ABN Amro N.VPakistan branches had been operating in Pakistan since 1948, as a scheduled commercial bank, under a banking license from the State Bank of Pakistan; the Prime Commercial Bank Limited was incorporated on September 30, 1991 as a public limited company. On March 5, 2007, ABN Amro N.V entered into an agreement to buy 93.4% stake in Prime Commercial Bank Limited, later it offered to purchase the remaining stake in the bank. AABPL is a majority owned subsidiary of ABN Amro Bank N.V., Amsterdam. ABN Amro Bank N.V. held a total of 99.22% shareholding of the bank as at December 31, 2007. ABN AMRO is already the third largest foreign bank in Pakistan. The acquisition will add significant scale to ABN AMRO's franchise in Pakistan, making the combined entity the second largest foreign bank and one of the top 10 banks in the country with assets of PKR 124 billion [EUR 1.547 billion] and 82 branches (including 3 Islamic Banking branches) in Pakistan and Azad Jammu and Kashmir. The bank is principally engaged in retail banking, corporate banking and treasury-related activities. So all Prime branches across the
country are now re-branded ABN AMRO, carrying the distinctive green and yellow ABN AMRO shield logo which symbolizes reliability, tradition, protection and security.
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As Year 2007 brought about significant changes both in the local profile and
ownership structure of the bank. In Pakistan, ABN AMRO Bank N.V. (AAB) acquired PCBL in line with its strategy to expand its local operations as well as to diversify its advances portfolio into fast growing SME segment because of the latters strength and established client base in this area of business. Meanwhile, AAB itself fall prey to acquisition, which got completed in the last quarter of 2007. The bank was acquired by a consortium comprising, The Royal Bank of Scotland Group Plc
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(RBSG) of Scotland, Banco Santander Central Hispano (Santander) of Spain, and Fortis N.V. (Fortis) of The Netherlands (jointly called the consortium). According to the acquisition plan of the consortium, RBSG, in addition to some other geographical operations of the bank, mainly took over the Asian business, in turn, becoming the new owner of AABPL. 1 2 Currently AABPLs BoD comprises seven members out of which five hold senior management positions in AABs worldwide operations and two are independent directors. The Chairman, Mr. Muhammad Aurangzeb, is currently serving as Global Head Commercial Client Segment ABN AMRO N.V. at Head Office, Amsterdam. Recently, Mr. Shehzad Naqvi is appointed as CEO of AABPL. Mr. Naqvi has extensive experience with renowned local and multinational financial sector entities. While expediting the integration process would be the main priority, he would be responsible for the re-branding ABN AMRO to RBS in Pakistan. It operates through a network of 82 branches in Pakistan and its employees are 2319. ABN AMRO focuses on four customer segments: o Personal banking o Private banking o Business and commercial clients o Corporate and institutional clients THE PERSONAL BANKING offers a range of products that meet the everyday financial needs of individuals. The wide range of financial services offered enable to build and expand long-term relationships with clients. consumer clients are getting benefits in the areas of Personal loans ,Credit cards, Mortgages, Savings, Retirement planning, ,Education planning, Personal internet banking, Insurance and Online trading.
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THE PRIVATE BANKING offers highly personalized banking for private clients, aiming to structure and enhance their wealth with services like Banking, Investment advisory, Discretionary portfolio management, and Investment funds. BUSINESS & COMMERCIAL BANKING offers a full range of commercial financial and lending services for small to larger-sized businesses. These services can help clients finance their business, manage their cash flow, trade internationally, succeed in e-commerce and find new opportunities. CORPORATE AND INSTITUTIONAL BANKING is active in and gives the scope and global expertise to meet the banking needs of the corporate and institutional clients. It is delivering a full range of high-quality advisory, financing and operational services, tailored to best meet the clients' current needs and long-term goals.
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As an International bank, ABN AMRO has more than 4500 branches in over 55 countries. They cater to the person needs both at home and abroad. They have a clear focus on consumer and commercial clients in local market and provide global reach.
NORTH AMERICA
Mexico Canada United States of America
Venezuela
Russia
ASIA
China Hong Kong India Indonesia Japan
Saudi Arabia
Singapore Taiwan Thailand United Arab Emirates Uzbekistan
SOUTH AMERICA
Argentina Brazil
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Chile Columbia Ecuador Paraguay Uruguay
Kazakhstan South Korea Malaysia Pakistan Philippines
Vietnam
AFRICA
Egypt South Africa
EUROPE
Austria Belgium Channel Islands Czech Republic France Finland Germany Gibraltar Greece Ireland Italy Luxembourg Netherlands Norway Poland Portugal Romania Russia Slovakia Spain Switzerland Turkey United Kingdom
AUSTRALIA
Australia New Zealand
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Karachi Lahore Islamabad Peshawar Quetta Rawalpindi Faisalabad Multan Sialkot
Hyderabad Gujarat Mirpur (Azad Kashmir) Sargodha Gujranwala Vehari Jehlum Turbat Dera ghazi khan
Sukkar Gujar khan Mardan Kharian Bhalwal Bahawalpur
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The purpose of banks is to provide some services to the general public. And for this purpose different banks provide different services to the people in different forms. For proper functioning and the overall bank has been divided in different departments. These departments handle different jobs so that division of work is there for improvement of functions and also it is easy to control the situation. The general divisions in the branch are as follows: 1. Cash Department 2. Deposit Department 3. Advances and Credit Department o SME Loans o Agricultural Loans o Credit Administration Department (CAD) 4. Remittance Department 5. IT Department 6. Sales Department o Treasure Plus o Golden Years 7. Clearing Department
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This is very important department because cash is the most liquid asset and mostly frauds are made in this department. Here the individuals that are authorized to go in this department have to be very careful because when at the end of day the cash is balanced, a little more or little less balance can cause problem and then they have to see where they have made mistake. So extra care is taken in this department and nobody is allowed to enter in this department except authorized persons only. When cash is received in the counter, this entry is recorded in the computer by the cashier. At the close of the day, these entries are balanced with each other. When the cheque or any negotiable instrument is presented at the counter for payment, the cashier at first ask for the photocopy of CNIC of the person who has come with the cheque and then they record the transaction in the computer and then payment is made to the payee. At the end of the day, the entries the cashier has made are balanced with the entries that have been made by the assistant manager. The consolidated figure of the receipt and payment of the cash is entered in the cash balance book (in the computer) and drawn closing balance of cash.
Opening balance + receipts payments = closing balance

Here they have to maintain the cash regulatory requirement (reserve) with the local authority that is 7% while the head quarter holds the reserves of 18% and this equalized the minimum cash reserve requirement that a bank should possess i.e. 25%. In this department the utility bills are also accepted and also here they also accept the sorted, reissuable notes, defective (numbers mismatch) or soiled notes etc. and the bank is also authorized by the State Bank of Pakistan to replace these notes
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with the new ones. Here the online charges are taken from those who want to avail the online facility of online banking and its charges are Rs. 138.
Bank deals in money and they are merely mobilizing funds within the economy. They borrow from one person and lend to another, the difference between the rate of borrowing and lending forms their spread or gross profit. Therefore, we can rightly state tat deposits are the blood of the bank which causes the body of an institution to get to work. These deposits are the liability of the bank so from point of view of bank we can refer to them as liabilities. All types of accounts of customers are managed and maintained in this section. All the money deposited and withdrawn is properly recorded in a specific account number which is allotted to every account holder. Banks has different kinds of deposit schemes in order to induce deposits.
TYPES OF THE ACCOUNTS:

Customers can open the following types of accounts with the ABN AMRO. 1. CURRENT ACCOUNT As the name signifies the depositor can draw or demand amount at any time by presenting the cheque in the bank. Unlike term deposits there is no restriction of withdrawals of money. The bank neither pays any kind of interest nor deducts the Zakat from the deposits of this account. The bank also does not take any service charges up to the minimum balance of account from the depositors. 2. PROFIT & LOSS SHARING SAVING ACCOUNT: In these P.L.S. accounts the bank gives no fixed rate of profit. These types of deposits are designed to encourage the saving habits of the people.
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After every six months a rate of profit is announced by the Head Office and after calculating the amount, it is credited to the depositors account. On 1st day of RAMADAN, Zakat is deducted at the rate of 2.5 %. If any customer does not want to pay Zakat from his account then he must give an undertaking that he will pay Zakat himself. 3. SAVING ACCOUNT: ABN AMRO also offers saving accounts and it is of three types.
Access Account: (Enjoy greater accessibility and reach)

ABN AMRO Access Account provides you the option of earning profit
with a tiered rate structure while ensuring the ease of carrying out your day-today transactions.
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You can open your ABN AMRO Access Account with a
minimum balance of PKR. 50,000.
Anchor Account: (Providing you financial security with high

returns)
ABN AMRO Anchor Account provides you the option of earning
monthly returns on your balance. Profit is paid on the minimum balance you maintain in a month. A tiered rate structure allows you to earn higher returns on higher balances.
o You can open your ABN AMRO Anchor Account with a minimum
balance of PKR. 50,000.
Classic Account:
and high yield!)
(A perfect combination between high liquidity
The ABN AMRO Classic Account is the ideal solution for individuals looking for maximum returns while maintaining their day to day transactional needs. Your profits are calculated on a daily basis ensuring that you get the most out of your deposits. With a tiered structure, ABN AMRO Classic Account provides you transacting freedom and you earn higher returns.
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INTERNSHIP REPORT ON o You can open your ABN AMRO Classic Account with a minimum
balance of PKR. 50,000.
4.
Value Term Account:

For those seeking great returns with great service, ABN AMRO Value Term Account has all the answers. With a minimum balance requirement as low as PKR 100,000, your profits are calculated on a daily basis ensuring maximum mileage on your investments.
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The banking history is full of various examples of fraud largely due to incorrect opening of accounts. These frauds could have been avoided if the branch mangers and other designated officers had taken due care and exercised precautions at the time of opening of accounts. At the time of opening of an account, officers should tactfully obtain as much information as possible about the integrity and character of the person, his correct name and address and occupation. This infect will be the only opportunity they will be able to talk to the prospective customers in a friendly and frank environment. This is the time when they have a slight edge over the customer. He/she at this point in time is willing to divulge as much information about his or her personal status and business etc. to the bank officer. It is therefore necessary that due care and proper procedure be followed for opening of any account for any customer.
ACCOUNT OPENING:
Account opening is an agreement in which customer his funds and bank accepts these funds, therefore the nature of relation between a banker and customer is of contractual one and all the conditions applicable to this contract act are also applicable. Here the customer first gives the application of opening the account which is sent to Karachi (head office) and after approval from the head office, further proceedings are done which are as follows:
Requirements for Account Opening:

The following are the requirements for account opening:
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Bank usually requires that new depositor must be introduced by the person who is known to the bank i.e. the employee of the bank. If the manager is satisfied he will fulfill the following requirements:
o ACCOUNT OPENING FORM:

A person who wants to open an account has to fill an account opening form which is provided by the bank, free of cost. It is the form that contains the account number, date, title of the account introducers name and address, special instruction (if any), information about Zakat Deduction, and any other information about whether the person wants to get online facility or ATM Card etc. Then this filled form is submitted to the bank, the bank admits the signatures of the applicant and verifies the introducers signatures. Then these are sent to the head office which after doing the world check, issues the account number to the applicant.
o SPECIMAN SIGNATURE CARD:

This card contains account number, title of the account and the specimen signatures of the account holder. When this form is submitted in bank, the bank officer admits the signatures of the applicant and keeps this specimen card in record.
o CHEQUE BOOK REQUISITION SLIP:

This is the request made by the client to the bank to issue him a cheque book containing number of leaves mentioned (25_100). It enables a customer to make a withdrawal from their account or make payments of various parties by issue of cheque. In this request, the customer has two options:
1. OUTSOURCE CHEQUE BOOK:

These cheque books are printed from Karachi (headquarter) and these are sent to the bank in 2-3 days.
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2. INSOURCE CHEQUE BOOK:

These are printed inside the banks. But this is in the case of urgency and it is free for some categories like employees, clients avg. balance of more than 1 million etc.
DOCUMENTATION NEEDED:
o Employment verification o CNIC (Computerized National Identity Card) o NTN Certificate o Driving license o Account statements of any other accounts o RAF (Risk Assessment form) o KYC (know your customer) Internal
OPENING OF AN INDIVIDUAL ACCOUNT

Following are the requirements for opening of an individual account: Employment verification certificate CNIC Driving License Filled account opening form Three photographs Along with the above documents, 1. 2. Sole Proprietorship Declaration (in this declaration, the proprietor of the concern will declare that he is the sole proprietor of the concern.) NTN Certificate (NTN = National Taxation Number) If sole proprietor then If employee then
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OPENING OF JOINT ACCOUNT

In this, along with the above said documents CNICs of all the account opening parties are required. And also in the box of special instruction it should be clearly mentioned that which option they select from the following: NOTE: In the above three cases, in case of mishap the account will be stopped and to update the account, the person will have to go to the court. One is authorized (single person can update) Both two jointly update Any one can update Either or survival.
OPENING OF PARTNERSHIP ACCOUNT

Along with the other documents, partnership deed is required. A partnership deed is the document that shows the nature of the business that will be carried out by the partners, number of partners, their share, who will run the business, what will be the loss and profit sharing ratio, what will be the initial investment of each partner, who will be the limited partner and who will maintain the account with the bank etc. According to the bank point of view, the most important thing is the persons name who will maintain the account with the bank. Computerized national identity card of the person who will maintain the account is required.
NOTE:
Partnership in which minor is involved, banks usually avoid opening the accounts of such persons.
OPENING OF ACCOUNT OF A COMPANY

If someone is interested in opening of a company then in addition to the above documents following documents are required:
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o CERTIFICATE OF INCORPORATION:
This is a certificate that the company is registered according to companies act and the nature of the business, which will be carried out by the company.
o MEMORANDUM AND ARTICLES OF ASSOCIATION:

This contain the full name of the company, the location of the registered office, the objectives of the company, information about the liability of the member that whether it will be limited or unlimited, the capital of the company, who will be the director and how he will be selected and what will be the duties and powers of the director.
o LIST OF DIRECTORS:
This list contains the names of the directors of the company.
o RESOLUTION:
This is a document that states that the meeting of directors of the firm has taken place on the place mentioned and these persons have been selected to open and operate the bank account and they can sign all the negotiable documents on behalf of the company. The specimen signatures of the persons are attached. This document is very important with the bank point of view because with the help of this document the bank comes to know that who will operate the account with the bank.
NOTE:
This bank do not open the accounts of the following persons: Money Changer Gold smith Car dealers Hotels
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The reason is that there is no idea of their cash generation.

In case of minor, birth certificate or B-form is required.
In partnership account, when minor becomes mature he has to got maturity certificate from the court and submit to the bank. In case of death of person who has an account with the bank, his heirs has to got the succession certificate from the bank and submit that to the bank after which they will get the amount according to the agreed ratio. Here the customers are required to maintain a limit of Rs. 50,000 in their bank account, otherwise service charges of Rs. 50 will be deducted from the account. In case of some categories like widows, students, govt. employees (the persons who have salaried accounts) or one who have an avg. balance of less than Rs. 1 million/month. If signature is different from CNIC, then a form is being filled i.e. Vernicular Indemnity Form (it is for shaky signatures) If the person is politically exposed or belongs to a political party or on the world check, if that person is shown as doubtful and if the person is the resident of the countries which are considered as high risk, his account will not be opened. If some customers address is not matched with the address given on their driving license and address on the bills then the marketing/sales persons verify this either by calling or by personally visiting that place.
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It includes six things:

o Stop payment of cheques o When account becomes dormant. o Preparing of relationship cards o Cheque books o Recording of mark up of agriculture and commercial loans o Closing of account
STOP PAYMENT OF CHEQUES

Here the bank stops the cheque of their own branch because of following reasons: o The customer does not want to make the payment due to any reason. o If the cheque book is lost. So the bank stops the payment of the cheque on the request of customer.
In this turn around time is 5 minutes and it is not done in the given time, then there will be the problem in the audit committee and its charges are Rs. 200. After the payment is stopped, the concerned client is informed about that through a letter of stoppage of payment.
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WHEN ACCOUNT BECOMES DORMANT

When someone does not operate their account i.e. they do not make transactions in their account for one year then their account becomes dormant. And to make further transactions, the customer has to reactivate the account. So to activate the account, the following things are required: o Application o Original ID card o Transaction in their account ( whether of Rs. 10) o Slip copy o A/c Holder himself (there are no representation in this account so the account holder has to come by itself.)
PREPARING OF RELATIONSHIP CARDS

Relationship cards are used as debit cards/ ATM card. Some banks are using ATM Cards while some banks like Askari Commercial Bank are using debit cards as relationship cards. o Here the differential edge is that the customer can withdraw Rs. 1 lac in one day (limit) while other banks limit is less than this limit. o The bank do not issue ATM Cards until the cheque book from Karachi (head quarter) is received. Once it is received, it is sent to delivery channels which after verification hand it over to the client who is having the letter of authorization (whether the client himself or his /her representative )
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CHEQUE BOOKS
Size of cheque book varies from 25 leaves to 100 leaves. The assistant writes Issuance date, Name of account holder, Account number & Type of account on the title page of the cheque book and cheque book issuance register. After authentication by the authorized officer on the cheque book register, the cheque book is handed over to the account holder. Customers obtain the cheque books from two sources and it depends on them which option they choose.
1. Outsource (printed from Karachi, takes 2-3 days) 2. Insource (customers in urgency, and those whose avg. balance is more than
Rs. 1 million, free of charges)
RECORDING OF MARK UP
Here the mark up of agriculture and commercial loans is recorded. That means that you deduct the interest from the account of the person having loan (whether agricultural loan or SME commercial loan) and thus you debit (bank account) and credit (customer account) the amount.
CLOSING OF ACCOUNT
Here the customer gives the application of closing the account. Its charges are Rs. 500. The bank takes back the cheque book. If there is some money in the account, the bank makes pay order and then courier to that persons address. If the person has left her house and bank is unable to approach that person then the amount is transferred to the unclaimed deposit accounts. Usually those accounts are closed that have a cash balance of Rs. 0.
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The rapid advancement in Information and Communication Technology (ICT) has had a profound impact on the banking industry and the wider financial sector over the last two decades and it has now become a tool that facilitates banks organizational structures, business strategies, customer services and other related functions. The recent IT revolution has exerted far-reaching impacts on economies, in general, and the financial services industry, in particular. Within the financial services industry, the banking sector was one of the first to embrace rapid globalization and benefit significantly from IT development. ABN AMRO is one of the leading banks of the world and it is completely dependent on the use of technology i.e. it is doing the paperless banking. Information Technology Department (ITD) is responsible for management and support of the technology architecture, hardware, software, and the respective resources throughout the country as well as the whole world. The IT department of ABN AMRO is one of the most sensitive departments as the working of the bank is completely dependent on the computer based and the web based technology and any problem at any part can negatively impact the whole working of the bank. Thus, a great care is taken in the management of IT Department. This whole system of ABN AMRO is using two lines of electricity. One is provided by the WAPDA and the other is the use of UPS. In case the electricity is powered of, the UPS is started which causes the computers not turn off and in this
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case there is no case of data loss and in is for 10-15 seconds after which the generators are powered on which provides the electricity to the whole bank.
The IT Department of the ABN AMRO bank consists of the following:
1. CITRIX Web Interface:

It is the software being used in the ABN AMRO and in this there are many other soft wares used for different banking functions e.g. Lotus notes are used to access e-mails TCSS (Total Consumer Services Suite) used for different functions etc. This CITRIX Web Interface is the link which is being operated either from the head office (Karachi) or from the main branch (Lahore). When there comes any blockage in the operating of link from one city then it is operated from the other as because of this the whole working of the bank is stopped.
2. SWITCHES:
This is the device in which the cables of all the computers being operated in the bank are connected. Through this device it becomes visible that which computer is operating and which is not and also if there is any problem in the working of any computer then the switch of that concerned computer shows that there is some problem in the operating of that computer by any light present on the switch depicting the problem in the concerned computer.
3. DTU (Data Traveling Units):

As for the working of the bank the link is operated either from the head office or from the main branch (Lahore) but to access to Lahore there are two routes being used either from Vehari or from Multan. When there is more traffic of signals from one route then the system shifts these data traveling units automatically to the
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other route in order to make the access quicker and this traffic is shown on the computer because it takes more time for data to reach at the desired place.
4. V Set (wireless satellite):

In the V Set device, the communication through the satellite is done. It is used in case the link is failed to be operated both from the head office and from the main branch and thus, the last resort is to use the satellite communication in order to keep the working of the bank going.
5. ROUTERS:
This is a very important device as the switches of the above mentioned devices i.e. V Set, DTUs and Switches are plugged into this device and connected with it.
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Clearing is a system by which bank exchange cheques and other negotiable instruments drawn one each other within specified area and securing the payment for their clients through the clearing house. A clearing house is the place where representative of all banks of the city get together and settle the receipts and payment of cheques drawn on each other for their clearance through their branches in the city. Clearing cheques received from other banks are sent to branches, which will clear the cheques and instruments to respective amount. For a bank, following are the requirement of being a member of clearing house: It must be scheduled Bank i.e. It is registered is State Bank of Pakistan. 50 cheques per day must be drawn on it for continuously three months. It must have account with State Bank of Pakistan. Sufficient balance should be in this account. ABN AMRO is using their own intercity clearing software and collection schedule and they are using the software named TCSS 4(Total Consumer services Suite).While other banks are using the services provided by NIFT (National Institute of Facilitation Technologies) i.e. clearing house. ABN AMRO is also using the services of NIFT but only in the case of same day clearing.
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In the case of same day clearing the maximum amount should of Rs. 200,000 and for this the charges are Rs.300 per instrument. For the cities in which there are branches of the ABN AMRO, for those cities it is using its own intercity clearing software. Other local banks are not using intercity module. For the cities in which there is not any branch of the bank, there the bank uses the collection schedule for clearing. Instead of hiring the services of the NIFT the bank directly contacts with the concerned branch of the other bank. For these services the bank is charging Rs. 400\425\450 (Rs.300 commission +Rs.100 postage +10% excise duty) but these are only for amount up to Rs. 300,000 and for the amount beyond Rs. 300,000 then it will be charged 15%.
PROCEDURE OF CLEARING
At 10:30 am authorized representatives of all the bank of the city get together in State Bank of Pakistan for 1St clearing, where in clearing house register bank wise entry is made and exchange of cheques takes place, here 1st clearing ends. Representatives of ABN AMRO take the cheques drawn on ABN AMRO. These cheques are entered in the inward clearing register and after sorting out these are delivered to respective branches of ABN AMRO. Some cheques are passed and some may be dishonored and a memo showing the reason of dishonor is attached with them. At 12:30 pm all the representatives again get together for second clearing where payment & receipt of passed cheques takes place and dishonored cheques are delivered back to the representatives of respective banks. No physical payment or receipt of cash takes place, actually every clearing house agent (bank) have account with SBP which is debited or credited respectively; with an amount equal to the amount of payments or receipts.
FUNCTINS OF CLEARING DEPARTMENT: DEPARTMENT OF MANAGEMENT SCIENCES

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To accept transfer, clearing and collection cheques from the customers and to arrange for their collection.

Transfer Cheques: are the cheques, which are collected and paid by Clearing cheques: are those cheques which are drawn on the
the same branch of the bank. branches of some other bank of the same city or of another city which are covered by a particular clearing house.
Collection cheques: are those cheques which are drawn on the
branches of other banks for the cities which are not coming in their clearing house.
CLEARING OUTWARD
When the customer deposits cheques and other instruments of other banks for collection, the bank sends the cheques in outward clearing
INWARD CLEARING
In inward clearing the cheques received from other banks are collected and sent to branches for their payment.
ADVANTAGES OF CLEARING
1. Since clearing does not involve cash and all the transactions take place through entries in the computer, the number of transactions can be unlimited. 2. No cash is needed as such the risk of robbery and embezzlement is totally eliminated. 3. Systematic arrangement for collection and clearance of cheques. 4. Speedy and economic collection and clearance of cheques. 5. Clearance of cheques and other instruments of different branches of different banks in a systematic manner without any flaw and mistake.
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One of the major functions of banks all over the world is remittance of funds from one customer to another customer and from one center to another center. Remittance means transfer of funds and the remittance department is mainly concerned with transfer of funds. Remittance is of mainly two types.
1. Inward remittance.
These are in the favor of bank account holders. It includes all the cheques for collection.
2. Outward remittances
These are all the payments made for other people on behalf of account holders of bank. The people who do not have a account in the bank can also apply for remittance by depositing cash in the bank. The bank has predetermined charges on remittances.
Ways for Remittances for Customers 1. Pay order 2. Demand draft
1. Pay Order:
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Pay orders are mostly used within the city when a person wants to pay to any person who is with in the same city and who prefers no cash payment. This PO serves as DD because the PO of ABN AMRO is payable at any branch of this bank within the whole country. In this cheque is required as the supporting document. Its charges are Rs. 200 + 10% excise duty i.e. Rs. 220 Its benefit is that here the risk is minimized and the person can be escaped from tax i.e. 0.3%.
ISSUANCE PROCEDURE
Get the Pay Order application form. Issue pay order after recovering charges. Do necessary vouchering. Make entry in PO register. All Pay Orders shall be crossed Payees Account Only.
Parties involved
o Purchaser o Issuing/purchasing branch o Payee
2. Demand Draft (DD)

Demand draft is a written order drawn by one branch of a bank upon the other branch of another bank to pay certain sum of money to or to the order of some specified person. Demand draft can be issued to customers as well as to non-customers against cash or cheques as well. Its charges are Rs. 300 + 10% excise duty i.e. Rs. 330.
Parties involved:
Following parties are involved in this;
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o Purchaser o Issuing or drawing branch o Drawee branch o Beneficiary or payee.
Advances are the most important source of earning for the banks. Thus the credit portfolio of ABN AMRO is in a very much advanced shape than other financial institutions of Pakistan and the credit goes to the regulatory authority, the management and the staff who are concerned about the quality as well as the quantity. The advances department plays a vital role in the function of the bank. The advances department issues short term and long term loans to the customers. In ABN AMRO the sharing ratio in profits is very high. The main source of its income is its mark up on different types of short term and long term loans. Here the mark up rate is 3.25%+ 3 months KIBOR or 17%. While issuing the loan the advances department makes credit proposal for credit report the following information is required before preparing the credit proposal: o Account number of the borrower and the type of account whether current or PLS. o Nature and structure of the borrower business and its main products. o Name of the borrower, whether proprietor, partners and directors. o Types of ownership whether proprietorship, partnership or company. o Details of all the firms and companies associated with the borrower business.
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o Current financial conditions of the borrower business. o Accurate and up to date financial statement of last five years (if the borrower business life is five year or more). o Market report on borrower when borrower has maintained an account with another bank and in his case the report from this bank is also obtained and whether he/they has already taken any other loan from the bank. In this case the CIB (Credit Information Bureau) Report is also required.
CIB (Credit Information Bureau) REPORT:

This is the report which is provided by the SBP. It contains details about the credit history of the borrower i.e. whether they have taken any loan from any other bank, at what date and how much and if he has then how his repayment behavior was. This information is not told to the customer After collection and fulfillment of all these requirements the bank prepares the credit proposal for the borrower. And if the repayment behavior is not good, or partially good then bank refuses to pay him the advances.
Types of Credit Proposal:

In ABN AMRO two types of credit proposals are made: 1. For SME Loans 2. For Agricultural Loans The requirements for both types of proposals are different which will be described later.
The purpose of the credit proposal should be:

o Starting of new business o Expansion of existing business o Purchase of stock
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The proposal of finance is:

o o o
New: that the borrower has applied first time for the finance. Renewal: that the borrower has applied again for the issuance of finance Enhancement:
existing loans. The credit proposal also reveals that what will be the arrangement for the repayment. The rate of mark up and amount of finance is also mentioned. This loan application will be only for one proposal whether renewal or enhancement. that the borrower has applied for enhancement in the
The things which are taken as collateral are as follows:

Cash Near cash Shares Mortgage of property Hypo of assets Bank guarantee Etc. 90% financing is given against Rs. 100,000 of National Saving Centre Certificate where you have fixed any amount for some years. Bank at first insured the things which are given as collateral e.g. building or stock from earth quake, fire, and floods or against stolen of stock. Here the markup is 17% or 3 months KIBOR + 3.25 chargeable on quarterly/semi annually/annually basis. 50% of loan is advanced on gold jewellery.
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Loans and advances offered are of two types:
FUND BASED FINANCES

In these type of advances or finances there is physical movement of cash from bank reserve to customer who applies and successful in getting loan.
NON FUND BASED FINANCES

In these finances physical movement of cash from bank reserve to the customer does not occur.
FUND BASED FINANCES

1. RUNNING FINANCE:
Running finance is a facility of credit allowed for working capital. In a running finance certain limit is sanctioned to the borrower and then he utilizes the loan facility provided he does not exceed the sanctioned limit. The interest is charged only on the amount of the loan utilized. In running finance, the finances are secured against the hypothecation of stock and in the case of collateral the ratio maintained is 60:40.
DEMAND FINANCE:
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This type of finance is payable on demand for a shorter period of time. The client is bound to repay it in monthly installments where whole amount is supposed to be adjusted along with the mark up within that period.
CASH FINANCE:
The cash finance is offered for short period of time, for some month mostly for seasonal business. The cash finance is commercial loan mostly given to business owners. Cash finance is given against the pledge of goods. On the request of customers goods are pledged and cash is given to them.
TERM FINANCE:
This type of finance is offered for a longer period of time and here in this case the client is bound to repay it whether in monthly, quarterly, semiannually or annual installments.
FIM (Finance against Import Merchandize)

In this type of finance the borrower pledge only imported goods. In this type of finance, when the imported goods came on the site and when borrower is asked for money, then he says to the bank that you pay the money and I will pay that to you. Then bank creates the FIM i.e. the pays on his behalf and take the goods in his custody. In this case the borrower can not use the stocks without the permission from the bank. In case the borrower wants the delivery of the goods then he has to make payment equivalent to the value of pledged stock. And then can take the delivery.
LBD (Local Bills of Discount)

In this type of finance the borrower transfers the local bills into funded facility. It is for same bank customers.
FBD (Foreign Bills of discount)

In this type of finance the LC (letter of credit) is transferred to funds. And it is for different bank customers. This discounting takes 1-2 days.
NON FUNDED FINANCES

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LETTER OF CREDIT:
It is a written undertaking by bank given to seller at the request and on the instruction of buyer to pay at sight or on the stated date within a specified time period, specified amount mentioned in the commercial invoice. It is most widely used mode of settling trade debt on international level. It is the safest way for trade due to method of payment. Through this you can easily placed order to importer and receive goods from importer.
SLC:
In this case the bank issue site letter of credit that money will be given only after the stock has reached the port.
ULC:
Its limit is 30 days. In this the bank on the request of the customer issues ULC i.e. the usance letter of credit in which it allows the borrower to use the material which is in the bank custody and the bank has also placed a person called muqadum to supervise the material and this muqadum allows the borrower to use the material as required after watching ULC.
ILC:
In case of inland LC, two banks of different cities give guarantee of their customers and in this case, the bank also asks for 20% cash margin, commission to be deposited at first in the bank and after that the bank issues the remaining requested credit.
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These are the loans which are given to someone for commercial uses and for the improvement in the SME sector. Actually the minimum limit in this to advance loan is Rs. 2 million and the person who has come for loan less than this will not be able to get the loan. These loans are for 1 year and after 1 year the customer has to renew this loan if he wants.
REQUIREMENTS:
The following are the requirements that make the person eligible for the loan. If the person fulfills the following criteria, he can get the loan. o Net worth statement o BBFS( borrower basic fact sheet)
o ORR* (operational risk rating----- according to the value that has been
derived here the bank decides that to which customer they should forward the loan and to whom not, on the basis of whether the party is [+ve----superior, satisfactory, acceptable] or [-ve----watch, substandard, doubtful, loss]. o SME prudential regulation checklist o Financial statements o Financial analysis ratios o Customer profitability analysis
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INTERNSHIP REPORT ON o Application for the sanction of loan (LAF)
ORR:
It is the operational risk rating and in this the following things are included: o o o o o o o o o o o Net worth Financial conditions (PR compliance & CIB Report) Profitability Relationship with ABN AMRO (new/existing) Security risk Mark up servicing (the behavior to pay the mark up) Restructuring in last 5 years Securities/documents shortfall Constitution (private, public, partnership etc.) Negative comments by bank , internal audit, CAD, SBP inspects Management quality
Then the values assigned to all of these calculated and this is the moment when bank decides whether the person is eligible for loan or not.
NOTE:
o The things which the bank can take as collateral to advance the loan can be cash, near cash, shares, mortgage of property, hypo of assets, bank guarantee etc. o If the person has come with National Saving Centre Certificates where they have fixed some amount for some years to keep them as collateral, he can get loan upto 90% of that. o The things which the bank take as a security the insurance of that from earth quake, fire, floods, stolen of stocks etc is must. o In the proposal, it is also mentioned whether there are different groups or companies within the same company. E.g. Dehkan Traders------Dehkan pesticides, Dehkan seeds, Dehkan fertilizers etc.
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o Here it is also mentioned that whether the documents which are the proof of each and everything the person possess are consolidated and qualified or not.
Agriculture loans are sanctioned either to buy agri. related products or to buy tractor, to buy livestock or to make barren land in use, or for the development of land.
REQUIREMENTS:
o Pass book o CNIC o Fard-e-malkiyat o Khasra girdawarii o Two pictures of the applicant o Two guarantors, their Fard-e-malkiyat and their CNIC o Field visit This loan is given for 3 years but its mark up is taken after 6 months and its rate is 17.5% and this rate changes according to KIBOR. And here the loan is advanced 50% of the total mortgaged land. This agri finance scheme is for the following reasons: o To buy agri related products o To buy tractor
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o To buy livestock o To make barren land in use o Development loans The assets that can be used as a security to get agri loan are as follows: o Automobiles (tractor, car, bike) o House o Animals o All agri implements The bank at first ask the customer to fill the form that is called Appraisal Form in which bank requires each and everything about the person including his/her marital status, children, assets, land etc.
Proposal for Agriculture Related Facilities:

In this proposal the bank at first describes the nature of facilities it is going to offer to its customers and this form is known as AABAFS (ABN AMRO agri finance scheme) and the other details that are required are as follows: Appraisal Form Basic information about the customer 2. 3. o o o o o o Information of the land to be offered as Farm enterprises Farm related activities Dairy activities Livestock development Crops sown during the year (existing) Crops to be sown in the next season Equity contribution and Re-payment security (area, pass book and loan from other bank if any)
(next cropping pattern)
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FINANCE Total Need Own Loan amount Debt/equity ratio contribution recommended
RE-PAYMENT Principal Mark up
4. net income) 5. 6. RM agri finance Manager operations Branch manager 1. 2. be offered as security 3. powers 4. during the year) 5. coming years) 6. agri pass book etc.) Certificate/Security Details
Profit and loss statement (showing farmers Conclusion and recommendations Then all these documents are signed by
Farm Field Visit Report Personal information Information of land to Availability of farm
Current crops (sown Next crop (sown in Others (applicant got Evaluation
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1. 2. 3. 4. 5. offered as security 6. years Oast Baih 7. market price
Land owner Location of land Nature of land Type of irrigation Details of agri land Value of land as per 3 Value of land as per Application for
Agricultural Loan (whether for production or for development purposes. And it is of 2-3 pages and in Urdu)
CIB Report of Customer
(it is provided by the State Bank of Pakistan and it shows whether the person has taken loan from any bank or not)
Oast Baih Report (this is of
3 years and this shows the sale of any part of land in the area where the land which is kept as security is situated within these three years.)
Khasra Report (it is the Aqs-e-Shajra (it shows the
detail of cultivated land or field or farm)
map of location of land and it is not must in agricultural loan but it is must in commercial loans.)
Note:
o The thing which shows whether the pass book is real or fake is the number
that is outside the pass book and also the stamp over that by GPO.
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o In someone wants to cancel the Pass book, they have to give the proper reason for the cancellation. o There is also another thing which is called constitution in which bank writes the letter to the Tehsildar after which he becomes willing to provide all the information of land of that particular person to the bank and also easily signs the documents which are required by the bank.
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1. HYPOTHECATION OF ASSETS 2. MORTGAGE 3. PLEDGE 4. GUARANTEES 5. PROMISSORY NOTE
HYPOTHECATION OF ASSETS
When the properties in goods are charged as the security against the loan obtained from bank but possession and ownership remains with the borrower then the goods are said to be the hypothecated. When the goods are hypothecated then it does not mean that goods will go in possession of bank, ownership will transfer, and rather a security is granted by the mean of the letter of hypothecation.
MORTGAGE
It is the transfer of an interest in specific immovable property for the purpose of securing the payment of money advanced or to be advanced by way of loan, existing or future debt.
PLEDGE
In pledge the ownership remain with the pledger but the pledgee has the exclusive possession of the property until the advance is repaid in full. While in case of default, the pledgee has power to sale this after giving due notice.
GUARANTEES DEPARTMENT OF MANAGEMENT SCIENCES

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When the application for advance cannot offer any tangible security the bank may rely on personal guarantees to protect himself against loss on advance or over draft to the applicant.
PROMISSORY NOTE
Promissory note is also accepted as security. It is an instrument in writing containing an unconditional under taking signed by the maker to pay on demand or at a fixed or determinable future time a certain sum of money only, to, or to the order of certain person or to the bearer of the instrument.
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The main function of this department is to take custody of original as well as replicated documents. The access to them is made on demand (only if auditor/ARM (assistant Relationship Manager)/SBP requires for it). They make two documents of the original.
Credit Files: These are the photocopy of the original documents which are
always in their reach.

Security Files: These are original documents which are placed in lockers
and for special purposes, auditors or ARM can access them. After the proposal for credit is made, then it is sent to the head office which after approval, send it to the CAD. CAD further checks it whether the documents are complete and correct. Thus it checks all the legal and security documents.
Security documents: these are the documents which are in the
ownership of the client i.e. ownership documents.
Legal documents: these are the documents which are made after all the
negotiations and matters that have been done between the client and the bank. For example: letter of continuity, promissory note, memorandum of deposit etc.
DOCUMENTS PREPARATION:
Here the main motive of the department is to save the bank in case the person has defaulted. In this case the bank takes promissory note, letter of guarantee and letter of continuity because if in future, the client becomes default, they can recover their receivables in order to save themselves from court.
Letter of continuity is issued as a guarantee against the promissory note
transaction.
RECOVERY:
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Recovery of the loan is one of the most important things so the recovery is usually made through the following ways: Moral pressures on the borrower or the guarantors With the help of revenue authority By going to court
REQUIREMENTS:
o Credit facilities/ offer letter o BBFS (borrower basic fact sheet) o Request for credit facilities o Promissory note o Letter of continuity o Agreement for finance on the basis of mark up on price o Letter of hypothecation of movables o Irrevocable authority to recover accrued mark up o Memorandum of deposit of title deeds o Personal guarantee o Scrutinizing of documents (legal documents) o Non encumbrance certificate (this shows that the person has not taken loan from any other bank.) o Financial statements o Account statements o Memorandum of deposit of title deed Schedule I: sale deed registered Schedule II: total areas in Kanals and marlas If sale deed is not there and only copy of jamabandi is there, then they will mortgage the property with equal amount + 10% and its govt. charges are almost 8%.
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DEFAULT CLASSIFICATION:
The following are the categories or classifications in case the person becomes default.
OAEM: when the person does not pay the loan for 1-3 months. SS: here SS stands for substandard category and it includes the persons who
do not pay loan for 6 months.

DF: here DF stands for doubtful and it includes those who do not pay loan for
1 year.
Classified: here the bank show the person in balance sheet as defaulter and
here the mark up is gone into the suspense account.
Here when the loan is sanctioned, with every account three accounts are opened which are being opened by the head office which are as follows:

DF account: In this the loan that a person has taken is there and Mark up/ Income/ LSA account: whatever the mark up that the Current account: this is the account in which sanctioned amount is
whatever mark up he has paid is credited from the total amount of loan. person has paid goes into this account. transferred. Here the mark up is charged only on the amount that has been withdrawn and not on the whole mount sanctioned. In this two eye principle, four eye principle up to twelve eyes principle is used that means that in case of two eye principle, only one person will look and confirm the documents and so on. All this is done to share or minimize the risk.
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In this department, two things are offered to the clients and these are as follows:
1. Treasure Plus 2. Golden Years
Treasure Plus is an investment plan with an added advantage of an insurance cover aimed at providing for customer childs education needs. ABN AMRO Bank believes in providing the customer with the means and solutions to ensure stability in not just their life but also their familys life. ABN AMRO Bank has tied up with EFU Life Assurance Ltd. to bring to the customer Treasure Plus. Treasure Plus is really very simple. Here the customers have to select the premium amount (in multiples of 12,000) and term of the plan. Minimum annual premium amount for Consumer Banking customers is Rs. 120,000 to Rs. 24 million. The customer has the flexibility of paying the amount on a monthly, quarterly, half yearly or annual basis. When their child reaches the college going age, they will receive a lump sum amount to meet his/ her education needs. In case of untimely death, his/her beneficiary child will receive the sum assured under this plan. In case of an accidental death/ disability, the beneficiary child will receive an additional payment of sum assured which will be over and above the regular sum assured payable under this unique child education insurance plan. So we can say that Treasure Plus also offers a unique School Fee Continuation Benefit. This option would ensure continuity of the
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customer dream to give his/her child the best education in case of their untimely death. Example: If the customer age is 35 years and he/she buy Treasure Plus for their child for an annual premium of Rs.60, 000 for a term of 15 years. The above feature would enable their child to receive Rs.6, 000 (1% of the sum assured) as monthly school fee, till the expiry of the term of the plan in case of an unfortunate eventuality.
Academic Excellence Scholarship

Being a valued Treasure Plus policyholder, the beneficiary child will automatically be enrolled for EFU Lifes Academic Excellence Scholarship Program. This program offers lump sum scholarship if the customers nominated child gets first-class-first from a recognized panel of institutions in Pakistan so that he/she can fulfill his/her dreams of completing his/her Masters. So, Treasure Plus is not just an attractive investment option, its a protected and secure investment that makes sure that the money the customers have earmarked for there child stays there even if they dont.
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Give Your Future a Present.

Its true life truly begins at 60, when the person can watch their children and grandchildren growing up and see their investments bearing fruit. Planning for this stage of their life makes it so much easier to relax; knowing that tomorrow is well taken care of. Give yourself the gift of a secure future look forward to the Golden Years of life. ABN AMRO Bank has tied up with EFU Life Assurance Ltd., to bring to their customer Golden Years. Golden Years is an exclusive, tailor-made life insurance and investment plan which ensures that the person have a sufficient stream of monthly pension after their retirement. It offers: The choice of either taking a lump sum amount at retirement or receiving a monthly pension for life Built in life insurance 10 year pension payment guarantee Preparing for your future with this investment plan is very simple. The annual premium for Consumer Banking customers is Rs.180, 000; 192,000; 204,000 - increasing by increments of 12,000. Choose the payment mechanism: Automatic debit from your ABN AMRO bank account. The customers have the flexibility of paying the amount on a monthly, quarterly, semi-annual or annual basis. Golden Years guarantee monthly pension payment for up to 10 years after their chosen retirement age which means that the pension payment will not stop under any circumstances.
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At the end of the 10 year guarantee period, the monthly pension will continue to be paid to the customer till they are alive. In the unfortunate event of the death of the policy holder during the 10 year period, the pension will continue to be paid to their family and will only stop at the expiry of the 10 year guarantee period.
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1. Current Ratio:
Current ratio = Current assets/ Current liabilities
Years 2004 2005 2006 2007 Total current assets (Rs. In 000's) 55603386 56859607 118642212 102038500 Total current liabilities (Rs. In 000's) 54216092 54466549 112716056 99240249 Current ratio 1.02% 1.04% 1.05% 1.03%
1.05% 1.04% 1.03% 1.02% 1.01% 1.00% Current ratio
2004
2005
2006
2007
INTREPRETATION:
As compared to the previous years the current ratio in the year 2007 has decreased to 1.03% because of a huge increase in the payables. But the whole picture is showing the satisfactory results.
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2. Net working capital:

Net working capital = current assets current liabilities
Years 2004 2005 2006 2007 Total current assets (Rs. In 000's) 55603386 56859607 118642212 102038500 Total current liabilities (Rs. In 000's) 54216092 54466549 112716056 99240249 Net working capital 1387294 2393058 5926156 2798251
6000000 5000000 4000000 3000000 2000000 1000000 0 2004 2005 2006 2007 Net working capital
INTREPRETATION:
As compared to the previous years the net working capital in the year 2007 has decreased to Rs.2798251 because of a huge increase in the payables. This is showing the decrease in the liquidity position of the bank.
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3. Debt ratio:
Debt Ratio = Total liabilities/Total assets
Years 2004 2005 2006 2007 Total liabilities (Rs. In 000's) 54714310 55475733 115160399 102469768 Total assets (Rs. In 000's) 57506092 59593135 123772840 107535563 Debt ratio 95.15% 93.09% 93.04% 95.29%
95.50% 95.00% 94.50% 94.00% 93.50% 93.00% 92.50% 92.00% 91.50% 2004 2005 2006 2007 Debt ratio
INTREPRETATION:
Debt ratio of 2007 has increased to 95.29% as compared to the previous years. This figure is showing that ABN AMRO has financed 95.29% of the total assets with debt.
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4. Equity to asset ratio:

Equity to assets ratio = shareholders equity/total assets
Years Total equity (Rs. In 000's) 2791782 4117402 8612441 5065795 Total assets (Rs. In 000's) 57506092 59593135 123772840 107535563 Equity to assets ratio
2004 2005 2006 2007
4.85% 6.91% 6.96% 4.71%
7.00% 6.00% 5.00% 4.00% 3.00% 2.00% 1.00% 0.00% 2004 2005 2006 2007 Equity to asset ratio
INTREPRETATION:
As compared to the previous years the equity to assets ratio has declined to 4.71% which is not good for the company and it is mainly due to a huge negative decline in the revenue.
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5. Equity to deposit ratio:

Equity to deposits ratio = shareholders equity/total deposits
Years 2004 2005 2006 2007 Equity (Rs. In 000's) 2791782 4117402 8612441 5065795 Deposits (Rs. In 000's) 48212800 47004987 93742339 90288654 Equity to deposits ratio 5.79% 8.76% 9.19% 5.61%
10.00% 8.00% 6.00% 4.00% 2.00% 0.00% 2004 2005 2006 2007 Equity to deposit ratio
INTREPRETATION:
As compared to the previous years the equity to deposits ratio has declined to 5.61% which is not good for the company and it is mainly due to a huge negative decline in the revenue and a large increase in the deposits in the year 2007.
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6. Return on equity (ROE):

Return on Equity = (net profit/total equity)*100
Years 2004 2005 2006 2007 Net profit (Rs. In 000's) 714020 7701 2394309 -1564764 Total equity (Rs. In 000's) 2791782 4117402 8612441 5065795 ROE 25.58% 31.76% 27.80% -30.88%
40.00% 30.00% 20.00% 10.00% 0.00% -10.00% -20.00% -30.00% -40.00% 2004 2005 2006 2007 ROE
INTREPRETATION:
As the ROE is showing a huge negative decline as compared to the last years so this is portraying a bad profitability position of the company.
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7. Debt equity ratio:

Debt equity ratio= long term debt/(long term debt+ owners equity)
Years 2004 2005 2006 2007 Total debt (Rs. In 000's) 4981218 1009184 2444343 3229519 Long term debt + owner equity (Rs. In 000's) 3290000 5126586 11056784 8295314 Ratio 15.14% 19.68% 22.11% 38.93%
40.00% 35.00% 30.00% 25.00% 20.00% 15.00% 10.00% 5.00% 0.00% 2004 2005 2006 2007 Debt equity ratio
INTREPRETATION:
As the debt equity ratio has increased to 38.93% from 22.11% in the year 2007 and this is mainly due to a huge decline in the reserves of the company and thus this is not very good for the company at all.
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8. Price-earning ratio:
Price-earning ratio= mkt. price per share/ EPS
Years 2004 2005 2006 2007 Market price per share 19.7 25.7 48.6 47.95 Earning per share 0.79 1.34 1.78 (1.16) Price-earning ratio 25% 19.17% 27.30% (41.33)%
30% 20% 10% 0% -10% -20% -30% -40% -50% 2004 2005 2006 2007 Price-earning ratio
INTERPRETATION:
The price earning ratio for the 2007 is showing a huge decline as compared to the previous years and this is mainly because of very huge losses in the 2007. Thus, it is showing the poor profitability of the company.
9. Advances to deposit ratio:
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Advances to deposit ratio=total advances/total deposits

Years 2004 2005 2006 2007 Advances 32088043 32926623 71843307 64468394 Deposits 48212800 47004987 9374339 90288654 Ratio 68% 70.05% 76.64% 71.40%
78% 76% 74% 72% 70% 68% 66% 64% 62% 2004 2005 2006 2007 Advances to deposit ratio
INTERPRETATION:
The advances to deposits ratio is showing a decrease in 2007 as compared to the previous year and it is mainly due to a small decrease in the advances while a very large increase in the deposits.
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10.
Earning yield:
Earning yield=EPS/ mkt. price per share
Years 2004 2005 2006 2007
EPS 0.79 1.34 1.78 (1.16)
Market price per share 19.7 25.7 48.6 47.95
Earning yield 4.01% 5.21% 3.66% (2.42)%
6.00% 5.00% 4.00% 3.00% 2.00% 1.00% 0.00% -1.00% -2.00% -3.00%
Earning yield
2004
2005
2006
2007
INTREPRETATION:
The earning yield of 2007 is showing a big decrease mainly because of huge losses in the year 2007. Thus again this is revealing the bad profitability position of the company.
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11.
Earning assets to total assets:
Earning assets to total assets= avg. earning assets/avg. total assets

Years 2004 2005 2006 2007 Earning assets 39408868 47428282 100993797 87888672 Total assets 57506092 59593135 123772840 107535563 Earning assets to total assets 68.53% 79.58% 81.60% 81.73%
85.00% 80.00% 75.00% 70.00% 65.00% 60.00% 2004 2005 2006 2007 Earning assets to total assets
INTREPRETATION:
As the earning assets to total assets ratio is showing a slight increase which is good for the company.
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12.
Return on earning assets:

Return on earning assets= net income/ av. earning assets
Years 2004 2005 2006 2007
Net income (Rs. In 000s) 714020 1307701 2394309 (1564764)
Average earning assets (Rs. In 000s) 39408868 47428282 100993797 87888672
Return on earning assets 1.81% 2.76% 2.37% (1.78)%
3.00% 2.50% 2.00% 1.50% 1.00% 0.50% 0.00% -0.50% -1.00% -1.50% -2.00%
Return on earning assets
2004
2005
2006
2007
INTRPRETATION:
The Return on earning assets of 2007 is showing a big decrease mainly because of huge losses in the year 2007. Thus again this is revealing the bad profitability position of the company.
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13.
Interest margin to average earning assets:
Interest margin to avg. earning assets= Interest margin/av. earning assets

Years 2004 2005 2006 2007 Interest margin (Rs. In 000s) 1695228 2829621 5939118 6225244 Average earning assets (Rs. In 000s) 439408868 47428282 100993797 87888672
Interest margin to average earning assets 4.30% 5.97% 5.88% 7.08%
8.00% 7.00% 6.00% 5.00% 4.00% 3.00% 2.00% 1.00% 0.00% 2004 2005 2006 2007 Interest margin to average earning assets
INTREPRETATION:
As the interest margin to average earning assets ratio is showing an increase in the year 2007 of 7.08% as compared to the previous year thus, this is positive sign for the company.
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14.
Equity capital to total assets:

Equity capital to total assets=equity capital/total assets
Years 2004 2005 2006 2007
Equity capital 2791782 4117402 8612441 5065795
Total assets 57506092 59593135 123772840 107535563
Equity capital to total assets 4.58% 6.90% 6.96% 4.71%
7.00% 6.00% 5.00% 4.00% 3.00% 2.00% 1.00% 0.00% 2004 2005 2006 2007 Equity capital to total assets
INTERPRETATION:
As the equity capital to total assets is showing a decrease of 4.71% in the year 2007 as compared to the previous year thus, this is negative sign for the company and mainly because of a huge decline in the revenues in the 2007.
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15.
Net Profit margin:

Net Profit Margin=profit after taxation/net interest income
Years 2004 2005 2006 2007
Profit after taxation 714,020 1,307,701 2,394,309 -1,564,764
Net mark-up / interest income 1,695,228 2,829,621 5,939,118 6,225,244
Net profit margin 42.12% 46.21% 40.31% -25.14%
50.00% 40.00% 30.00% 20.00% 10.00% 0.00% -10.00% -20.00% -30.00% 2004 2005 2006 2007 Net profit margin
INTERPRETATION:
As the net profit margin of the bank is showing a huge decrease to -25.14% as compared to the previous years which is indicating the poor profitability of the bank.
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t is always the desire of every banking corporation to lunch stable, long lasting and fluctuating strategies to compete and compare their competitors. Banks regulate the economy of country through self and market based monetary and
credit polices, strong corporate governance, liberalization of foreign exchange regime and effective control through prudential and other regulations. Strict compliances and competitiveness also enable to improve the quality of Information Technology, Human Resource Development, Statement of Internal Control, Credit Rating, Service Standards and automation of services. All strategies must of capable, acceptable, flexible, compatible, reliable, stable, and bearable for borrowers of that that specific institution. The strategies should work for improvement of assets, profitability, financial ratio, funds creation, long & short-term advances, shareholders, capital adequacy ratio standards and for reflection of the expanding network of branches. Strategies show the significant improvement in focus on the banks core business. All these important indicators show excellent base for the banks growth. Regular operational strategies ploughing back of profits, strong position and make capable of taking up increasingly complex and large transactions. Deliberation for implementing potential synergies is a desire of management to create a very strong organization, which will be able to compete with the leading players in the financial sector. As for as concern to ABN AMRO Bank Pakistan Limited, the banks performance is outstanding, highlighting steady and continues growth is due to prolong and strict compliance of regulations and its own standards. Few strengths, weaknesses, opportunities and threats of the bank is appended hereunder:
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Every Minute calculated ABN AMRO Bank Pakistan Limited is as: 116
Online Banking transactions are made, 131 customer calls are answered. We serve 352 customers in our branches and 2390 withdrawals are made from our ATMs.
ABN AMRO Bank Pakistan Limited is proud of the pioneering role in
providing the latest modern technological services to its customer base which today exceeds 40 Million customers in more than 50 countries. Banks client relationship managers are well equipped and well trained to provide most efficient and personalized services to each and every customer.
Bank enjoys a strategic competitive advantage over all domestic players by
virtue of the leadership in technological innovations. Staff welfare has always been a priory. New initiative like hospitalization plan, car buy-back facility and home loan insurance have added new dimensions to the staff care policy and motivated them to out perform competition. Banks qualified and experience technology team is now focusing on data warehousing to enhance the customer relationship management (CRM) program.
ABN AMRO Bank Pakistan Limited has a countrywide and global net work
of online branch banking business and ATMs in all major cities of all countries and a person can withdraw Rs. 1 lac by its ATM Card in one day .
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INTERNSHIP REPORT ON ABN AMRO Bank Pakistan Limited Master Card / Visa Cards are accepted
worldwide and in Pakistan. Bank has honored with the The Best Foreign Bank in Pakistan award by the global finance magazine. Bank achieved A1+, the highest possible credit rating, for the short term obligations and its long term rating stands at AA. As a part of banks growth strategy bank is now exceeding its banking service to the remote and rural areas. Bank has well developed intra-net and internet communication network.
The human resource philosophy at ABN AMRO Bank Pakistan Limited
focuses on multi talent hiring, professional grooming, on the jobs well as off site training and meritocracy based reward system.
With a wide network of branch correspondents spread over 50 countries
worldwide, the bank continued to reinforce its leadership position in trade finance, transecting business.
Loan profile of ABN AMRO Bank Pakistan Limited is very selective and
conservative, but they offer loan services of short to medium term and mainly to finance the foreign trade. Contribution to the NGOs dedicated to the treatment and welfare of the blind in the ray of hope in the darkness.
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Bank is not giving more emphasis on the small scale businesses which are large number in Pakistan. A good number of facilities are only for the big businessman, not for the small businessman.
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. Advertising in both Medias print and electronic Medias is also to be
improved in ABN AMRO Bank Pakistan Limited. After its re-branding to RBS, establishment of an advertising program to introduce RBS all over the Pakistan is a need of the age. Bank has no grievance department for the internal problems of employees. The Bahawalpur branch has no lockers facility for their customers.
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ABN AMRO Bank Pakistan Limited can get the opportunities to increasing
its branch network. To increase its advances bank should focus on small scale business and choose one among them and then special scheme of lending should be introduced for that particular small scale industry. Bank can offer special financing schemes for farmers especially in agrarian cities. Facilities like financing of housing should also be offered to general public especially in urban areas.
After its re-branding, ABN AMRO Bank Pakistan Limited can increase its
operations by proper promotional campaigns of its new innovative services. Because now our brand is RBS and at the heart of this brand is our essence Make it happen.
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As bank is not big branch network so customer feels inconvenience in dealing with the bank in Pakistan. Now the world is a global village so competitors may arise from anywhere in the world at any time. Law and order situation in Pakistan is shoddier that is why people are not confident to invest anywhere.
Responding to the SBP prudential regulatory, management takes too much
care while granting loans. This thing, in future can be hindrance for advancing policies of the bank. The market rate are now of extremely low-level; with very little chance of their going up. The low interest rate means low profit for the bank. High rate of taxes on banking companies. In new future the world is going to be free trade zone so the concept of survival of fittest will be in action.
Due to terrorist activities in Pakistan the economy is moving very slow. It
means less investment and as a result low loan demand.
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To increase the efficiency, more effective corporate structures
should be setup. The House Loan facility can be flexible for customers. Instead of filling the vacancies from outside the bank promotions
with in the bank should be done. This will increase the commitment of the employees and will also motivate them. Returns on the term and fixed deposits should be increased to the
level of competitors if not more then those. Job security should be increased. Promotion should be made on merit. There should be marketing department in each branch. Although it
will increase the expenses but benefits will be greater than expenses. Although bank has agency relations with the foreign banks but it
should open its own foreign branches to compete with the competitors.
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Credit policy should cover both the rural as well as urban areas. Credit facilities should be enhanced to small scale business. Instead of preferring the old employees of the other banks
management should hire new and well educated talent. Bank can increase its advances to earn greater profit by financing
small scale businesses. More and more facilities should be offer to general public instead
of a special group of society. The lockers facility should be introduced in Bahawalpur branch. The bank should introduce new investment schemes with
reasonable margin. Time period of the loan procedure should be reduced.
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After the completion of my overall analysis and studies of ABN AMRO Bank Pakistan Limited performance and banking system, I come to the conclusion: ABN AMRO Bank Pakistan Limited is a leading bank of world. It wins the rewards like: THE BEST FOREIGN BANK IN PAKISTAN From the opinion of international organization the overall strong standing of the Bank is very clear. It won a certificate from Pakistan Credit Rating Agency (PACRA) A1+. The bank is fully equipped with the modern technology and it is also providing all the latest banking services like online banking, Internet banking, ATM cards, traveler cheque, and credit cards etc., the bank is trying to introduce latest techniques on regular basis. Combined with ABN AMRO, RBS will further strengthen its position as one of the worlds leading service groups because the acquisition of ABN AMRO has dramatically accelerated RBSs plans for organic growth in new markets, and very importantly given them a foothold in new markets which RBS would otherwise have had to wait some years to enter. Pakistan is an example of that. Pakistan is a strong customer franchise, a well managed business with an excellent team. It is a strong economy and with the combined strength of RBS and ABN AMRO product offerings in retail, wealth and corporate banking they are well
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positioned to benefit from this. In order to reflect the relevant franchise and compliance with all regulatory requirements the name of AABPL will be changed to The Royal Bank of Scotland Limited with effect from August 01, 2008.
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INTERNSHIP REPORT ON

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Be the leading bank serving world class services to our clients.

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Integrity Teamwork Respect Professionalism

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President and Chief Executive:

Chief Financial Officer:

Human Resource Committee:

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Risk Management Committee:

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At present the banking structure in Pakistan comprises of the following:

State Bank of Pakistan (SBP)

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POST NATIONALIZATION ERA

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Chile Columbia Ecuador Paraguay Uruguay

Kazakhstan South Korea Malaysia Pakistan Philippines

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Karachi Lahore Islamabad Peshawar Quetta Rawalpindi Faisalabad Multan Sialkot

Sukkar Gujar khan Mardan Kharian Bhalwal Bahawalpur

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Opening balance + receipts payments = closing balance

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TYPES OF THE ACCOUNTS:

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Access Account: (Enjoy greater accessibility and reach)

You can open your ABN AMRO Access Account with a

minimum balance of PKR. 50,000.

Anchor Account: (Providing you financial security with high

balance of PKR. 50,000.

(A perfect combination between high liquidity

DEPARTMENT OF MANAGEMENT SCIENCES

balance of PKR. 50,000.

Value Term Account:

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Requirements for Account Opening:

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o ACCOUNT OPENING FORM:

o SPECIMAN SIGNATURE CARD: