Lecture # 20

Branch Banking in Pakistan

• A branch, banking centre or financial centre is a retail location where a bank or financial institution offers a wide array of face to face service to its customers.

Utility Bills

Deposits

ATM Internet Banking

Advances

CreditCard

Remittances

Branch

National financial institution providing personal and business services.

Bank Structure

Branch Offices

Regional Offices

Circle Offices

Divisions & Field

PresidentGroup Heads

Remittances

Remittances Department

• Demand Draft • Pay Order• Telegraphic Transfer• Mail Transfer

•Travelers Cheque•Fund Transfer through

Internet•Home Remittances

Demand Draft

Demand Draft

Its a written order, drawn by one branch of a bank upon another branch of the same bank, upon other bank under special arrangement to pay a certain sum of money to or to the order of a specified person”

Parties Involved• Purchaser

• Issuing Branch

• Drawee Branch

• Payee/ Beneficiary

Pay Order

A Pay Order is a written authorization for Pmt , Made in a receipt from issued & Payable by the bank, to the person named & addressed therein on his giving a proper discharge thereon “

Parties InvolvedPurchaserIssuing / Paying BranchPayee

Telegraphic Transfer

“T.T instructions regarding PMT are sent to Drawee branch in a coded language and under confidential number known as TEST Number”

Parties InvolvedApplicant Remitting or Drawing Branch Drawee BranchBeneficiary /Payee

Mail Transfer

Like T.T funds can be remitted by MT for the Cr of the payee a/c or the Beneficiary can be advised to receive the PMT from Drawee branch either in cash on proper identification or through his banker”

Parties Mail Transfer

Applicant Drawing BranchDrawee BranchBeneficiary

Online Fund Transfer

Its also a fund transfer but only by Online within the Branches.

Parties InvolvedApplicant (a/c in Bank)Beneficiary (a/c in Bank)2 Branches of Bank (online)

Account Opening Department

Types of Account Individual Joint Account Sole Proprietorship Club & Societies Joint Stock Companies Agents

Operations & Status Of Accounts

Nature Of Accounts

Current AccountProfit & Loss Sharing Current foreign currencySaving Foreign CurrencyTerm DepositsBBA “Basic Banking Account”

Deposit

• Commercial Bank deposit products offer you an array of privileges and services. Designed with your banking needs and comfort in mind, these convenient accounts prove that, at Commercial Banks, banking is about a shared long-term relationship between bank and you.

• Current Account

The Current Account allows you the facility of unlimited withdrawals up to the extent of the balance in your account. Sometimes There will be no tax deducted on the funds that you choose to keep in these accounts.

• Savings or PLS Account

The Savings Account allows you the facility of unlimited withdrawals (up to the extent of the balance in your account), while accruing profit on your deposit everyday. You can have the profit paid to you monthly, quarterly, annually or as per your requirement.

• The passbook is the traditional document to keep track of earnings in a savings account .

• Term Deposit

The Term Deposit offers you the dual benefit of attractive returns with high liquidity, with options to take your profit monthly, quarterly, annually or at maturity.

• A time deposit (also known as a term deposit, particularly in Canada, Australia and New Zealand) is a money deposit at a banking institution that cannot be withdrawn for a certain "term" or period of time.

• When the term is over it can be withdrawn or it can be held for another term. Generally speaking, the longer the term the better the yield on the money. A certificate of deposit is a time-deposit product.

A deposit of funds in a savings institution under an agreement stipulating that

(a) the funds must be kept on deposit for a stated period of time,

b) the institution may require a minimum period of notification before a withdrawal is made

• Foreign Currency

You have the option of opening Current, Savings and Term Deposit accounts in different foreign currencies – Like US Dollar, Pound Sterling, Japanese Yen, and Euros. This entitles you to avail all the convenience of local currency accounts including:

• Unlimited cash withdrawals up to the balance in your account

• Deposits facility

• Profit accrued on a daily basis

• Automatic rollover of deposits

As per State Bank of Pakistan circulars/regulations

Demand account • The cheque is the traditional mode of

payment for a demand account. • A demand account or demand

deposit (North America: checking account, UK and Commonwealth: current account) is a deposit account held at a bank or other financial institution,

• For the purpose of securely and quickly providing frequent access to funds on demand, through a variety of different channels.

Commercial Banks:

Loan Facilities

Loan• A loan is a type of debt. All material

things can be lent but this article focuses exclusively on monetary loans. Like all debt instruments, a loan entails the redistribution of financial assets over time, between the lender and the borrower.

• The borrower initially receives an amount of money from the lender, which they pay back, usually but not always in regular installments, to the lender. This service is generally provided at a cost, referred to as interest on the debt.

• A borrower may be subject to certain restrictions known as loan covenants under the terms of the loan.

• Legally, a loan is a contractual promise of a debtor to repay a sum of money in exchange for the promise of a creditor to give another sum of money.

• Secured Loan

A mortgage loan is a very common type of debt instrument, used by many individuals to purchase housing. In this arrangement, the money is used to purchase the property. The financial institution,

• however, is given security - a lien on the title to the house - until the mortgage is paid off in full. If the borrower defaults on the loan, the bank would have the legal right to repossess the house and sell it, to recover sums owing to it.

• In some instances, a loan taken out to purchase a new or used car may be secured by the car, in much the same way as a mortgage is secured by housing. The duration of the loan period is considerably shorter often corresponding to the useful life of the car.

• There are two types of auto loans, direct and indirect.

• A direct auto loan is where a bank gives the loan directly to a consumer.

• An indirect auto loan is where a car dealership acts as an intermediary between the bank or financial institution and the consumer

Other Types of Loans

• Credit card debt

• Personal loans

• Bank overdrafts

• Corporate bonds

Personal finance• Personal finance is the application of

the principles of finance to the monetary decisions of an individual or family unit. It addresses the ways in which individuals or families obtain, budget, save and spend monetary resources over time, taking into account various financial risks and future life events.

• Components of personal finance might include checking and savings accounts, credit cards and consumer loans, investments in the stock market, retirement plans, social security benefits, insurance policies, and income tax management.

• Personal Finance is a parameter driven product for catering to the needs of the general public belonging to different segments. One can avail unlimited opportunities through Bank's Personal Finance.

• With unmatched finance features in terms of loan amount, payback period and most affordable monthly installments, Bank's Personal Finance makes sure that one gets the most out of his/her loan. Once a good credit history is established, the door to opportunity opens much wider.

Mortgage Finance

• Offers the convenience of owning a house of choice, while living in it at its rental value. The installment plan has carefully designed to suit both the budget & accommodation requirements.

• It has been designed for enhancing financing facility initially for employees of corporate companies for purchase/ construction/ renovation of house.

Business Finance

• In pursuance of the National objectives to revive the economy of the country, Bank is providing loans to small and medium size business enterprises under Bank's Business Finance Scheme.

• Goal is to offer a loan, which enables business community to receive the financing required by them based on their cash flows. Valued customers can enjoy the convenience of getting financing on attractive terms with the minimum processing turnaround time.