Banking Function and Roles

Central Processing Unit - Import

CPU receives the following scanned documents from

branch
a) LC issuance form
b) Pro forma Invoice / Purchase Order
c) Insurance Cover Note
Generation of LC Number through Core
Banking Application

CPU Import
Formation of LC through Swift Message
Once the LC voucher is generated, original LC is created on Swift

and the fields are being filled as per the LC application form, pro
forma invoice and insurance cover note. The important fields are
as follows:
21C:Date of Issue
31D: Date and Place of Expiry
51D: Applicant Bank details
50: Applicant details
59: Beneficiary details

CPU - Import
Lodgment of Documents sent by Exporter
Documents details received by the importers bank is lodged

in the core banking application and are then handed over to

importer so that goods can be released from the port. In the
mean time, payment has been released to the exporters bank
Major documents are:
a) LC
b) Bill of Lading / Airway Bill (Transport Documen)
c) Packing list, Purchase Order (Commercial Document)
d) Insurance Cover Note

Central Processing Unit - Export

E form issuance and certification

E form is the most important document required in exports.

The trade ministry has authorized all the commercial banks
through SBP for the issuance of E form and has made sure
that until and unless its not affixed with a bank authorized
stamp, the desired exports cannot take place. No matter
whichever method is used for settlements in trade, the
exporter in Pakistan has to get E form certify from the bank
in order to export. There are 4 copies of E form. Original
copy is for customs, duplicate for bank, triplicate for SBP
reporting and quadruplicate copy is held with the customer
for his record.

CPU - Export

Collection of documents
After the exporter prepares the good and get them shipped, he/she brings the

documents to the negotiating bank from where those documents will be sent to
the issuing banks. The mandatory documents are transports documents,
commercial documents and insurance cover note. The documents are then
scrutinized as per the following terms:
Date and time stamp on documents received from bank/customer
Bank has mentioned correct LC ref no on documents covering letter
Bank has given clear reimbursement instructions on documents covering letter
Bill of Exchange content
LC is valid for shipment
LC is not overdrawn

Corporate / Commercial Banking

Lends out to business concerns mainly to sole

proprietors, partnership and corporations.

Prepare credit proposals, taking into considerations
the 5 Cs of lending.
Constant correspondence with the customers as a
part of relationship management.
Provide flexibility of liquidity to the clients.

Credit Risk Pre Approval

CR is responsible for receiving credit proposals from branches, which

require financing approval from Head of credit and beyond. CR make

sure that all the CPs fields have been duly filled and complied with the
requirements necessary for further processing as per prudent
regulations. CPs are sent back to the branch if any personnel finds a
shortcoming in its formulation.
CP is forwarded for further processing for assessing the qualitative as

well as quantitative data.

Different slabs are set in CR. E.g. A specific unit is responsible for filing,

processing and corresponding for all CP, which needs an approval for
more than PKR 1 Billion.

Credit Administration Dept. Post Approval

At the time when Credit proposal is being assessed at the

branch level or corporate, the security provided against the

desired loan is evaluated.
This department is responsible for evaluating securities
provided against the desired loan by valuation companies,
which are present on banks panel of selected valuators.
This procedure is conducted so as to make sure that the loan
to be provided can easily be covered by the security offered.
This department is also responsible for conducting
inspection on borrowers current assets which have been
kept as collateral against the loan provided.

Letter of Offer Unit

This is first place in CAD where an approved CP

lands up and the department gets involved in the

formulation of letter of offer, which is perhaps the
most important document in banks lending
functionality.

Documentation Unit
When an approved credit proposal is received by

letter of offer unit, its copy is also given to the

documentation unit which is responsible for making
the legal document like Personal Guarantees and
finance facilities, etc. and send these control
documents along with the offer letter to the branch
for borrowers acceptance.

Limit Authorization Unit

Limits in the core banking application are inputted

after the borrower executes offer letter and control

documents.
The borrower is the allowed to avail financing
facilities.

Custody Unit
This unit is responsible for being custodian of the

securities being offered by the borrower. All the

security documents are kept with the custodian in a
safe.

Market Risk / Treasury Middle Office

Evaluate the fluctuation of banks investments in

each asset class.

It acts as a controlling unit to the treasury and
reports directly to the Risk Head.
Monitors treasury limits

Product Management
Design various products to facilitate the banks

customers.
They are also responsible for the branding, costing
and marketing of the product.
Prepares product papers and identifies
cannibalization of different products within a bank.
It acts as a support function to the business unit of
the bank.

Treasury Front Office

The main role is to manage the liquidity of the bank. Monitoring of
CRR plays the main role in liquidity management. Is also
responsible for conducting asset liability management (ALM)
strategies for the bank.
Money Market

Call borrowing and lending

Repo and reverse repo
Investments in Bonds, Stocks and Mutual Funds.

FX Market

LC Payments
Exporter conversion
Nostro / Vostro Management

Treasury Back Office

Facilitates front office by conducting the operational

activities.
Front office executes the deals, while back office
makes sure that deals have been posted into the core
banking application
Real Time Gross Settlement (RTGS) is also
conducted by BO.

Financial Institutions
Nostro / Vostro management
Correspondent Banking
Trade
Local FI
Assigning Treasury Limits

Compliance
19

Ensuring all policies are

being complied all the regulatory institutions pertaining to the

banking industry.

Previously all the regulatory

reporting to SBP was done by individual departments until

compliance came into existence which made sure that all the reporting to SBP is done
through its channel.

With the establishment of this department, identification of processes and

conducting of risk
control exercises to find out the gaps for each department have been duly performed.
Reporting regulations and risk associated with each department are identified and process
flow for mitigation of those risks gets implemented.

KYC Customer Due Diligence

Internal

controls with monitors for assistance

Unusual transaction run on daily basis
Personal transaction run on daily basis
Cash Deposit run on daily basis

Consumer
Marketing of different products & services
Consumer loans
Personal
Car Financing
Home Loan
Deposit mobilization

Audit
Three types of audit takes place in a bank, namely:
External Audit
SBP Audit
Internal Audit
Branch Audit
HO Audit

Legal Division
Responsible for vetting legal paper
Gives legal opinion where necessary
Represents the bank in the court of law