Fmfb Intrnship Report

FMFB- Internship Report

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INTERNSHIP REPORT

The First Micro Finance Bank Ltd

Saba Khan

MBA V

2011-MBA-144

[email protected]

Submission Date: Monday, October 21, 2013

Fatima Jinnah Women University Rawalpindi


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PREFACE

Currently I am completing a Master’s degree in Business Administration at Fatima Jinnah Women

University Rawalpindi. I am in my 5th semester and therefore I have to conduct a 6 weeks

internship. The reason I choose to do my internship in audit department of FMFB is because I

wanted to benefit from the experience and audit includes all the fields. After getting theoretical

education in business field from last two years, I wanted a new challenge to work in corporate

world. I wanted to do my internship in Islamabad to experience the developed business world and

to learning, improve and develop new sets of skills. One of my main goals is to improve my English

and observation skills. Another goal is that I’m planning to work after completing studies so it can

add some good skills. This is why I choose to follow my internship there; to learn and develop

new sets of skills and to experience working in corporate world.

In this internship report I will describe my experiences during my internship period. The internship

report contains an overview of the internship organization First Micro Finance Bank and the

activities, tasks and projects that I have worked on during my internship. Writing this report, I also

will describe and reflect my learning objects and personal goals that I have set during my internship

period. During my internship tenure I have gained a lot of knowledge about audit under the

supervision and guidance of my Internship Supervisor and Audit Department staff.


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ACKNOWLEDGMENT

Praise be to Allah, Lord of the Worlds, The Beneficent, and the Merciful.

First of all, In the name of Allah the most merciful who blessed me to learn and gain knowledge?

He is the beneficent, gracious to all mankind, who has given me power, abilities and blessed me

to complete all works in my whole life.

After that I submit my earnest thank to my affectionate parents, who pray for my success and

always been a source of encouragement for me. Secondly, I am grateful to my prestigious institute

that made this learning opportunity a part of my education, especially I would like to thank my

Professors as the knowledge imparted by them enable me to gain knowledge and learning exposure

of the organization in the best way.

After that I would like to extend gratitude to Fatima Jinnah Women University Rawalpindi and

my supervisors who afforded me the opportunity to intern at The First Micro Finance Bank Ltd.

Also I express my appreciation to all staff members of First Micro Finance Bank for their

cooperation.


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Table of Contents

PREFACE ........................................................................................................................................................ 2

Acknowledgment .......................................................................................................................................... 3

SECTION 1 ..................................................................................................................................................... 6

EXECUTIVE SUMMARY .............................................................................................................................. 6

SECTION 2 ..................................................................................................................................................... 7

Introduction of the Organization .............................................................................................................. 7

VISION ....................................................................................................................................................... 7

MISSION .................................................................................................................................................... 7

Brief History of Organization .................................................................................................................... 7

Nature of the Organization ....................................................................................................................... 8

Mission of Organization ............................................................................................................................ 9

OBJECTIVE ................................................................................................................................................ 9

Outreach:‐ ............................................................................................................................................. 9

Sustainability:‐ ....................................................................................................................................... 9

Impact: ‐ ................................................................................................................................................ 9

Transparency:‐ ...................................................................................................................................... 9

SECTION 3 ................................................................................................................................................... 10

Position: .................................................................................................................................................. 10

Bank Information: ................................................................................................................................... 10

Departments of Bank: ............................................................................................................................. 10

Internal Audit Department: .................................................................................................................... 10

Audit Rating Methodology: ..................................................................................................................... 11

Detailed Tasks in Audit Department: .......................................................................................................... 11

Week wise Detailed Tasks: ...................................................................................................................... 11

Week 1 ................................................................................................................................................ 11

Week 2 ................................................................................................................................................ 12

Week 3 ................................................................................................................................................ 12

Week 4 ................................................................................................................................................ 12

Week 5 ................................................................................................................................................ 12


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Week 6 ................................................................................................................................................ 12

Week 7 ................................................................................................................................................ 13

Week 8 ................................................................................................................................................ 13

SECTION 4 ............................................................................................................................................... 14

SWOT Analysis: .................................................................................................................................... 14

Strengths ............................................................................................................................................ 14

Weaknesses ........................................................................................................................................ 14

Opportunities ..................................................................................................................................... 14

Threats ............................................................................................................................................... 14

SECTION 5 ............................................................................................................................................... 15

Recommendation & Suggestion ........................................................................................................... 15

Marketing: ......................................................................................................................................... 15

Customer Relationship: .................................................................................................................... 15

Financial Methodology: .................................................................................................................... 15

Cost-effectiveness: ............................................................................................................................. 15

Micro-deposits: .................................................................................................................................. 15

Diversification ................................................................................................................................... 16

Capital Market .................................................................................................................................. 16

Job Training: ..................................................................................................................................... 16

SECTION 6 ............................................................................................................................................... 17

Learning Outcomes: ............................................................................................................................. 17

Conclusion: ................................................................................................................................................. 17

REFERENCES .......................................................................................................................................... 19

ANNEXURE .............................................................................................................................................. 20


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SECTION 1

EXECUTIVE SUMMARY

Praise be to Allah, Lord of the Worlds, The Beneficent, the Merciful.

I am Saba Khan student of MBA V in Fatima Jinnah Women University, I have done eight week

internship in First Micro Finance Bank Head Office Islamabad to gain some practical experience

which is mandatory for every individual pursuing MBA degree.

During my internship I learnt about Micro finance banking, audit procedures and how things work

there. It was quite a good experience working there in real environment. The staff at FMFB

Islamabad was kind enough to accommodate me and teach me with their work. I started with

branch audit and ends with proof reading of audit reports. This was all I could learn being an

internee due to some restrictions.

In this report, I have given an introduction and overview of the FMFB as the organization. Then

the detailed overview of audit department how they work. I have discussed the detailed tasks done

by me during the internship program. Then to explain the organization in better manners I have

written SWOT analysis of FMFB on the base of my observation and knowledge.

Then there is a small conclusion of the report which covers various factors of the organization and

suggestions which I felt to be given to the top management of the organization which could have

an impact on performance of the company and it can perform their operations in good way.


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SECTION 2

Introduction of the Organization

The First Microfinance Bank Limited (FMFB) has been in operations for the last 12 years. The

bank was incorporated as a public limited company under the Companies Ordinance, 1984 in

November 2001 and commenced business in February 2002.FMFB operates under the

Microfinance Institutions Ordinance, 2001. The current legal status of the institute is Non-Bank

Financial Institution.

VISION

“To enable the disadvantaged population to build a sound and secure future with dignity and pride

and not merely survive; alleviation of poverty through sustainable economic development.”

MISSION

To help strengthen the entrepreneurial base of the economically disadvantaged populations across

the country by seeking to marry entrepreneurship with capital formation in not only rural areas,

but also the major population centers. Also, provide people scope to expand their economic base,

and over time, to support diversification beyond traditional small enterprises. The Bank will

endeavor to introduce good practices, ethical precepts and the highest standards of rectitude in the

conduct of business and will remain respectful of the needs of the poorest segments of society.

Brief History of Organization

Poverty has been steadily rising in Pakistan; the provision of financial services to the poor is an

important component of the government’s poverty alleviation program. The Aga Khan Rural

Support Programmer’s (AKRSP) highly successful micro credit and saving’s initiative has been

serving some of the country’s poorest populations since 1982. Since 1990, the AKDN was trying

to institutionalize this program; however there was no regulatory ordinance under which the entity

could be created. Perseverance paid off and a new ordinance was promulgated in October 2001 to

promote the provision of the Microfinance by private sector institutions. It is in this context that

the Aga Khan Development Network has established The First Micro Finance Bank Ltd as a way

forward to provide an array of financial services to the neglected segments of society across

Pakistan by expanding the scope and product range of a micro-credit program.


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The Bank has been established as a non-listed public limited company under the provisions of the

Companies Ordinance (1984) in November 2001 and licensed as a Micro Finance institution under

the provisions of the Micro Finance Institutions ordinance 2001 in January 2002. The principal

sponsors and shareholders are the Aga Khan Rural Support Program (AKRSP) and the Aga Khan

Fund for Economic Development (AKFED). The initial paid-up capital of Rs. 500 million has now

increased to Rs. 660 million, after IFC (a member of the World Bank Group) has invested Rs. 160

million and become a partner. The authorized Capital is Rs. 1.0 billion to allow for growth. The

Bank will reach out to disadvantaged populations throughout the country not currently able to

access financial services in rural and urban areas. The Bank aims to serve these people with dignity

and respect. Specific emphasis on vulnerable groups, women in particular, is a governing principle

of the institution. To ensure its sustainability, the Bank aims to fully cover its inflation-adjusted

costs with its revenues and will lend to individuals and through them to groups. Savings will be

mobilized from individuals, groups and institutions

Nature of the Organization

In order to maintain its vision The First Micro Finance Bank is committed to:

To improve the living standards and promote the concept of micro-credit and other

financial services for underserved, neglected groups, particularly women.

Be an institution to promote habit of savings amongst the under privileged and optimize

return on their resources.

Be a bank, which adopts best practices in all its endeavors.

Treat each employee fairly and with mutual respect. The Bank does not tolerate

discrimination of any kind and encourages all managers and supervisors to involve

employees in the creativity process. If problems arise, the facts should be analyzed to

determine ways to avoid similar problems in the future. Foster an open door policy,

which encourages interaction, discussions and ideas to improve the work environment, thus

increase our productivity.

Deliver competitive, impeccable service to our customers.

Make “Do it Right the First Time” Bank commitment as a team will assure continued

growth and prosperity.


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Mission of Organization

The mission of the organization is to provide adequate financial services to the ignored or deprived

population of the country in both rural and urban areas to help them to strengthen their business or

to carry on economic activities. Not only provide them with finances but also support them over

time until they establish themselves as enterprises. They will reach out to the poor of the country

who are living under the poverty and especially women. And the institute will strive to follow

good ethical practices of highest standards.

OBJECTIVE

Outreach:‐

To fulfill multi-dimensional needs of the extreme and moderate poor population that is residing in

Pakistan whether in urban or rural areas and particularly women.

Sustainability:‐

To cover the inflation-adjusted costs through revenues and to generate a modest surplus that can

contribute to expanding the range of services and geographical coverage

Impact: ‐

Through careful targeting, monitoring and evaluation; the bank works to maximize the impact on

poor communities.

Transparency:‐

To introduce good practices, ethical precepts and the highest standards of rectitude in the conduct

of business. The annual audit is conducted regularly and report is being issued to the keep the

funds transparent. FMFB has won couple of transparency awards as well.


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SECTION 3

Position:

Interne

Bank Information:

Following are the related information about bank.

City: Islamabad

Branch: Head Office.

Address: HBL Tower, 3rd Floor, China Chowk, Blue Areas, Islamabd Tel: 051-2811064-9

Duration of my Internship:

It was eight weeks internship program.

Starting date of internship: 11th July, 2013

Ending date of internship: 11th September, 2013

Departments of Bank:

There are following departments working in the head office.

Finance

Admin

Product

Human Resource

Information Technology

Operations

Internal Audit Department

Internal Audit Department:

Audit department play a very key role in every organization. FMFB independently appraises

activity within an organization for the review of operations as a service to management. The major

role of FMFB audit department is as:

To ensure compliance with the process and guidelines

To add value to the process and system


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Offer advice at every stage of implementation of policies especially compliance with the

rule of the game.

I have done my internship specifically in audit department of First Micro Finance Bank Head

Office Islamabad.

The name of department head is Nawroz Mohammad Ali having excellent personality and a keen

observer.

Audit Rating Methodology:

CLEAR evaluation addresses financial & operational function being performed at the

branches/units and the rating is summarized as follows:

Cash Collection, Deposits and Fund Transfers

Loans and Advances

Effective Internal Control

Administration

Reporting

Each of the above elements would be rated based on the marks awarded to the functions/activities

covered under the same and adequate risk weightage assigned to it.

Detailed Tasks in Audit Department:

Documentation and filing

Risk rating

Follow ups

Vouchering

Synopsis

Proof reading of audit reposts

Week wise Detailed Tasks:

Week 1

List of TMFO

Branch Audit in Branch Report


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Disbursement Schedule and Graphical Representation

Product wise Disbursement Analysis and Graphical representation

Week 2

Expense Sheet of audit department 2013

Name wise

Assignment and region base

Unit Cost and Average Cost

Audit rating form

ECIB (Term loan and Evergreen loan)

Week 3

Risk Rating Details

Performa of Interview Candidate (Accepted and Rejected)

Synopsis of Insurance Policies

Week 4

Difference in Previous and Renewed Schedule Bank charges

Screening and Maintaining Files

Follow ups of audit observation

Week 5

Vouchering

Screening of Vouchers and making required lists

List Investment deals Information (Repo , Rev repo , TDR )

Filing and Achieving

Week 6

Follow ups of Audit Reports


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Risk Rating Observation Sheets

Expense Sheet (Hotel Bills)

Proof reading of audit report

Week 7

Time Sheet (Consolidated)

Audit plan 2013 Graphical Representation

In progress

Progressed

Remaining

Review of HR Manual (Documentation)

Audit risk rating

Week 8

Track changes in audit ratings

Follow ups of Audit reports

Follow ups of High risk Observation

Proof reading of audit report


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SECTION 4

SWOT Analysis:

SWOT analysis is a strategic planning method used to evaluate the Strengths, Weaknesses,

Opportunities, and Threats involved in a business venture

Strengths

Micro financing

First bank on concept of micro financing in Pakistan

Branches and sub units in remote areas

Easy term and conditions of disbursements

Good Organization culture

Weaknesses

New in industry

Less exposure

Less no of branches in urban areas

Not efficient marketing

Biasness in hiring related to religion

Opportunities

Technology Advancement

ATM introduction

Enhance product range

Increase services offered

Urban areas can be served

Economic condition

Threats

High rate of employee dissatisfaction

Political environment

Insufficient pay of employees

Stiff competition because of new micro finance banks


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SECTION 5

Recommendation & Suggestion

Marketing:

Brochures, handouts, pamphlets and other printed reports must be provided to customers, which

should provide all the information necessary to attract and retain customers and to satisfy the

customer’s need for more Personal contacts with the customers can help in providing information

to customers.

All the customers must be provided a chance to get the desired information by personal contact

with the Bank staff.

Customer Relationship:

Complaint and suggestion box should be maintained at the door of the Bank where the customers

can point out drawbacks in the customer’s services and put forward their suggestions on his

improvement of the services quality of the Bank.

Financial Methodology:

Banks need to acquire an appropriate financial methodology to service the micro- enterprise sector

– financial innovations that permit a cost-effective analysis of creditworthiness, the monitoring of

a large number of relatively poor clients, and the adoption of effective collateral substitutes.

Cost-effectiveness:

The First Micro Finance lending program is costly because of the small size of their loans and

because banks cannot operate them with their traditional mechanisms and overhead structures, so

I recommend that bank adopt cost effective strategy.

Micro-deposits:

The First Micro Finance Bank relatively little about deposit mobilization methodologies that reach

the low income and micro-enterprise client. I recommend following activity for deposit

mobilization:

Open Liquid passbook savings accounts and low minimum balances.

Depositories conveniently located


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Real, positive interest rates on deposits

Incentive for saving such as lotteries

Diversification

The First Micro Finance Bank should diversify its portfolio into housing, health, education,

transport and security products.

Capital Market

The First Microfinance Bank is still in earlier stage of its development, and the financial

sustainability is also not satisfactory. In such situation, I recommend that bank raise funds at

economical cost either through debt or equity instruments of capital markets.

Job Training:

Although the bank is providing on job training to the fresh employees but bank should organize

seminars and other behavioral classes to its employees to increase the effectiveness of the

organization


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SECTION 6

Learning Outcomes:

Here I have got a chance to conclude what I have learnt during my internship and while preparing

this report. It was a nice experience working in a real environment and I was quite excited for it. I

have tried to learn whatever I could, including Audit reports and procedure of getting all the

information about the report. How to observe and analyze the documents, vouchers, reposts made

by the different departments and check their perfections. I have assist in working of risk rating

sheets and observation follow ups and go through the audit reports of different branches, by them

I learn what is the reason of carelessness of employees and what are the mistakes and frauds can

be done in financial reports and banking sectors

Overall it was a nice experience and FMFB as an organization is certainly at a higher position in

micro finance banking sector. Their financial highlight shows us its growth in very less time and

future prospects. With all the strengths FMFB own there are certain threats as well which FMFB

should address to avoid any downfall and keep its position.

Office grade employees in FMFB are not well paid and dissatisfied with their jobs but one thing I

felt was very good environment for women and no gender discrimination. Work experience is an

important factor in any organization and promotions, bonuses and increments are work based. But

in FMFB I found a bit of discrimination with low grade employees and ones who don’t possess a

relevant degree are neglected irrespective of the plenty of work experience. There are also some

conflicts of hiring because of their Ismaili religion, well it is only my observation.

Conclusion:

During my internship in First Micro Finance Bank, I came to know that how practically the work

is done in formal as well as informal environment. FMFB is now growing rapidly and achieving

its targets on time. The management plays a vital role in conducting all sorts of operations. The

organization is working efficiently and effectively.


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•They are committed to maintain long term customer relationship.

•There employees are fully committed to their work.

•The bank is doing its best to provide maximum satisfaction to the customers.

•They are striving to provide the maximum facilities to the poor and deprived population of the

area


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REFERENCES

Google.com

Wikipedia

Personal Observation

Information from Bank Staff


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ANNEXURE

Fmfb Intrnship Report

Documents

Transcript of Fmfb Intrnship Report