Usman Final

1USMAN BIN MAHMOOD (MBA) DEPARTMENT OF MANAGEMENT SCIENCES UNIVERSITY OF LAHORE 1

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Cphapter

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INTRODUCTION

OVERVIEW OF BANKING SYSTEM IN PAKISTAN

BANKS IN PAKISTAN

HISTORY OF THE BANK OF PUNJAB

CONSTITUTIONAL BASE

SCOPE OF THE BANK OF PUNJAB

MANAGEMENT OF THE BANK

CORPORATE INFORMATION (BANK OF PUNJAB)


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MISSION STATEMENT

YEAR 2011 & FUTURE OUTLOOK

REGIONAL NETWORK

REGIONAL OFFICES

WORLD WIDE WEB

ORGANIZATIONAL STRUCTURE

FUNCTIONS OF DIVISIONS

OVERVIEW OF BANKING SYSTEM IN PAKISTAN (SBP

Report)

The year under review added further strength to the soundness of the banking system.

This is in line with trends witnessed over the past couple of years. Indicators of financial

soundness have shown significant improvement and the industry structure presents a

robust picture. The major developments during the year are summarized as follows:

A few more banks with low capital base, which could have posed a

systemic risk to the sector, merged and became part of more resilient

and consolidated institutions, better placed to withstand any adverse shocks.

Profitability and earnings showed a remarkable improvement, thereby contributing

significantly towards strengthening the capital base and resilience of the banking

system.

Credit to the private sector picked up significantly, after showing years of

sluggishness.


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The flow of non-performing loans has been stemmed and their stock came down

substantially during the year, as did the NPL indicators. Along with the creation of

additional provisions, this led to a considerable reduction in the burden of the

infected portfolio on capital base.

The system continued to have abundant liquidity. The

recent upward movement in the interest rates, however,

has increased the market risk.

The average intermediation cost came down as a result of cost controls and

expanding business volumes. This reflected an increased efficiency in financial

intermediation.

The privatization of Habib Bank Limited, a post-review development, has increased

the share of private sector in the banking system to around 80 percent. This will

further promote competition and efficiency in the system.

While these improvements owe much to financial sector reforms and improved

corporate governance in banks, the regulatory and macro-economic environment

have also contributed towards this:

The economy preformed well and remained on the projected growth trajectory. The

demand for bank credit by the private sector picked up. The key indicators of the

corporate sector showed robust earnings and debt servicing capacity.

Workers’ remittances, though decelerated as compared to the last year, remained in

the projected growth brackets. Consequently, the flow of funds to the banking sector

remained intact and was sufficient to maintain a comfortable liquidity position in the

market.


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Fiscal position of the government as well as inflationary trends was in favorable

shape, thus enabling the easy monetary regime during the year.

To support a vibrant financial system, the State Bank took a number of policy

initiatives. This included issuing guidelines on corporate governance to strengthen

the culture of accountability and transparency, change of ownership and

consolidation of weak institutions, encouragement of consumer financing, and

cleaning up of balance sheets through incentive-based recovery drives. Guidelines

were also issued to banks on risk management to provide the banks a broader

framework to identify measure, monitor and control/mitigate various risks in their

business. The State Bank also took a major leap forward shifting from a “one-size-

fits-all” approach of regulation to more risk-focused supervision by categorizing and

instituting separate sets of prudential regulations for corporate/commercial banking,

SME financing and consumer financing. Realizing the importance of much needed

expansion in the scope of business and the due risk management thereof, the SBP

issued guidelines in various areas and liberalized its exchange policy in respect of

trade financing.

The banking sector is sensitive to developments in the economic and political

sphere. The country’s political scene saw the resolution of some key issues, which

had a salutary impact on its economic condition. Improvement in relations with India

also helped restore investor confidence and as the process continues, prospects of

boosting regional trade become bright. Despite these improvements, some irritants

continue to haunt the geo-political environment. The western border continues to

pose problems and, despite some progress, will remain in the limelight considering

its potential impact on the state of law and order in the country. However, the

government’s resolve to address the issue generates hope for better days ahead.


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The results for the first half of the fiscal year paint a positive economic outlook and

promise achievement of major growth targets. Strong and robust growth in the

manufacturing sector and consistent surge in credit demand further support this

belief.

There are, however, some subtle concerns that may increase stress both on the

economy as well as the banking system. Higher level of economic activity is placing

pressures on the external account, despite satisfactory export performance, in form

of higher increase in imports, while there is a slowdown in capital repatriation and

official inflows, prepayments are being made on external debt. Its intensity will

depend upon the future terms of trade – oil prices have witnessed a sharp increase

recently. The comfort of substantially large foreign exchange reserves and an under-

pressure US Dollar (barring sporadic moments of strength) presents the SBP with

some significant maneuvering space.

Creeping inflation, along with an anticipated global rate hike, is generating

sentiments for a similar response in the local market. The magnitude and impact of

such a rate hike (as and when it comes) is likely to remain modest as much of the

prevalent liquidity is likely to remain in the system. This contributes to the continued

strength of the corporate sector over banks, which have already built up significant

cushions on the back of robust performance over a couple of years. The debt and

liquidity related indicators for corporate have continued their upward trend, giving it

the essential robustness for sustaining an upward march even in a changed interest

rate environment. This said, the recent string of anti dumping measures taken

against Pakistani exports, formation of new trade alliances and a continued influx of

cheap foreign imports in the local market have the potential of stalling the recent

corporate performance. The household paying capacity could come under strain in

the changed rate scenario but given the present leverage margins, it is unlikely to

result in growing defaults in the short run.


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The banking sector’s persistent robust operating performance over the last couple of

years is a healthy sign. But, the overwhelming portion of trading gains presents a

caveat, and this may not be sustainable on long-run basis. The recent upturn in

credit demand, if it is to sustain, has the potential of making up much of the lost

gains. Another caveat is the continuous drain on depositors’ wealth; they are at

present in a disadvantageous position as they have to settle at a negative real rate of

return.

Other than the depressing yields, the specter of massive liquidity has not had any

adverse impact on the system. Banks’ adventures in the booming stock market has

been capped at twenty percent of their equity. Along with upcoming margin rules for

stock trading (as against a highly leveraged badla trade, in which the banking system

is an important player) is likely to further solidify the banking system’s inherent

strength.

Credit disbursement at an exponential rate has, at last, broken the protracted spell of

sluggishness. However, it has also at the same time, increased the level of credit risk

for the banking system. Crucially important is the substantial increase in loans to

SMEs, agriculture and consumer finance. This may have helped in diversification of

loan portfolios of the banking system but at the same time have enhanced the risk

profile, as banks are still going through an evolutionary phase in developing risk

appraisals and mitigating techniques in these areas. The future expansion of credit to

these new sectors will largely depend upon the extent to which the banks are able to

develop internal procedures and controls in risk appraisals and mitigation.


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BANKS IN PAKISTAN

There is the list of Banks and Financial Institutions, servicing in Pakistan

Sr# Name of Bank Web Site of Bank

NATIONALIZED COMMERCIAL BANKS

1 First Women Bank Ltd

http://www.fwbl.com.pk/

2 Habib Bank Limited

www.habibbankltd.com

3 National Bank of Pakistan

http://www.nbp.com.pk

4 United Bank Limited

www.ubl.com.pk

DE-NATIONALIZED BANKS

5 Allied Bank of Pakistan Ltd

www.abl.com.pk

6 Muslim Commercial Bank Ltd

www.mcb.com.pk

SPECIALIZED SCHEDULED BANKS

7 Agricultural Development Bank of Pakistan

www.adbp.org.pk/adbp

8 Federal Bank for Co-operatives Nil

http://www.habibbankltd.com/

http://www.adbp.org.pk/adbp

http://www.mcb.com.pk/

http://www.abl.com.pk/

http://www.nbp.com.pk/

http://www.nbp.com.pk/


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9 Industrial Development Bank of Pakistan

www.idbp.com.pk

10 Punjab Provincial Co-operative Bank Ltd

PRIVATE SCHEDULED BANKS

11 Askari Commercial Bank Ltd

http://www.askaribank.com.pk/

12 Bank Alfalah Limited

http://www.bankalfalah.com/

13 Bank Al-Habib Limited

http://www.bankalhabib.com/

14 Bolan Bank Li

http://www.bolanbank.com.pk/

15 Faysal Bank Limit

http://www.faysalbank.com.pk/

16 Meezan Bank Limited

http://www.meezanbank.com/

17 Metropolitan Bank Limited

www.metrobank.com.pk

18 PICIC Commercial Bank Ltd

http;//www.picicbank.com.pk

19 Platinum Commercial Bank Ltd

http://www.platinumcommercialbank.com/

20 Prime Commercial Bank Ltd

www.primebank.com.pk

21 Soneri Bank Limited

http://www.soneri.com/

22 Union Bank Limited Nil

PROVINCIAL BANKS

23 The Bank of Khyber

www.bankofkhyber.com.pk

24 The Bank of Punjab http://www.punjabbank.com/

MICRO FINANCE BANKS

25 The First Micro Finance Bank Limited

www.khushhalibank.com.pk

FOREIGN BANKS

26 ABN Amro Bank N.V. http://www.abnamro.com/

http://www.abnamro.com/

http://www.khushhalibank.com.pk/

http://www.punjabbank.com/

http://www.bankofkhyber.com.pk/

http://www.soneri.com/

http://www.primebank.com.pk/

http://www.platinumcommercialbank.com/

http://www.sbp.org.pk/about/banks_nbfis/http;/www.picicbank.com.pk

http://www.metrobank.com.pk/

http://www.meezanbank.com/

http://www.faysalbank.com.pk/

http://www.bolanbank.com.pk/

http://www.bankalhabib.com/

http://www.bankalfalah.com/

http://www.askaribank.com.pk/

http://www.idbp.com.pk/


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27 Al-Baraka Islamic Bank B.S.C.(E.C.)

www.albaraka.com.pk

28 American Express Bank Limited

http://www.aexp.com/

29 Bank of Cylon

Nil

30 Credit Agricole Indosuez

www.ca.indosuez.com

31 Citibank N.A.

www.citigroup.net

32 Deutsche Bank AG

www.db.com

33 Doha Bank

Nil

34 Habib Bank A.G. Zurich

www.habibbank.com

35

International Finance Investment & Commerce

Bank Limited (IFIC) Nil

36 Mashraq Bank psc

www.mashreqbank.com

37 Oman International Bank S.O.A.G.

www.obioman.com

38 Rupali Bank Limited

Nil

39 Standard Chartered Bank

http://www.scb.com/

40

Standard Chartered Grindlays Bank Limited www.scb.com

41 The Bank of Tokyo-Mitsubishi Limited http://www.btm.co.jp/

(this web site is maintained by their HO, Tokyo Japan)

42 The Hongkong and Shanghai Banking Corporation Limited

www.hsbc.com.pk

DEVELOPMENT FINANCIAL INSTITUTIONS

http://www.sbp.org.pk/about/banks_nbfis/www.hsbc.com.pk

http://www.btm.co.jp/

http://www.sbp.org.pk/about/banks_nbfis/http;/www.scb.com

http://www.scb.com/

http://www.bobioman.com/

http://www.habibbank.com/

http://www.habibbank.com/

http://www.db.com/

http://www.citigroup.net/

http://www.ca.indosuez.com/

http://www.aexp.com/

http://www.albaraka.com.pk/


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43 Investment Corporation of Pakistan Nil

44 National Investment Trust Limited

In development phase

45

Pak Kuwait Investment Company(Pvt) Limited www.pkic.com

46

Pak Libya Holding Company (Pvt) Limited http://www.paklibya.com.pk/

47 Pak Oman Investment Company (Pvt) Limited

www.pakoman.com

48 Pakistan Industrial Credit & Investment Corp. Ltd.

http://www.picic.com/

49 Saudi Pak Industrial & Agricultural Investment Company (Pvt) Limited

www.saudipak.com

50 SME Bank Limited http://www.smebank.org/

INVESTMENT BANKS

51 First Standard Investment Bank Limited

Nil

52 Asset Investment Bank Limited Nil

53 Atlas Investment Bank Limited In development process

54 Crescent Investment Bank Limited www.cresbank.com

55 Escorts Investment Bank Limited Nil

56 Fidelity Investment Bank Limited www.fidelity.com.pk

57 First International Investment Bank Limited

www.interbank.com.p-k

58 Islamic Investment Bank Limited www.iibl.com

59 Jehangir Siddiqui Investment Bank Limited www.jahangirsidiqui.com

60 Orix Investment Bank (Pak) Limited

www.orixbank.com

http://www.orixbank.com/

http://www.jahangirsidiqui.com/

http://www.iibl.com/

http://www.interbank.com.p-k/

http://www.fidelity.com.pk/

http://www.cresbank.com/

http://www.smebank.org/

http://www.saudipak.com/

http://www.picic.com/

http://www.pakoman.com/

http://www.paklibya.com.pk/

http://www.pkic.com/


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61 Prudential Investment Bank Limited

Nil

62 Security Investment Bank Limited

Nil

63 Trust Investment Bank Limited

www.trustbank.com.pk

VENTURE CAPITAL

64 Pakistan Venture Capital Limited

Nil

65 Pak Emerging Venture Limited

Nil

DISCOUNT HOUSES

66 First Credit & Discount Corporation (Pvt) Limited Nil

67 National Discounting Services Limited

http://www.ndsl.com.pk/

68 Prudential Discount & Guarantee House Limited

69 Speedway Fondmetal (Pak) Limited

Nil

HOUSING FINANCE COMPANIES

70 Asian Housing Finance Limited

Nil

71 Citibank Housing Finance Co. Limited*

Nil

72 House Building Finance Corporation

www.hbfc.com.pk

73 International Housing Finance Limited www.ihfl.com.pk

http://www.ihfl.com.pk/

http://www.hbfc.com.pk/

http://www.ndsl.com.pk/

http://www.trustbank.com.pk/


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HISTORY OF THE BANK OF PUNJAB

The Bank of Punjab started functioning with the inauguration of its first branch of 7-

egerton road, Lahore on November 15, 1989. The architect of the bank was Mr. Nawaz

Sharif Chief Minister of Punjab at that time performed the inauguration.

The emergence of new bank on the national scene in the early

1990s has done two important services to the nation.

The savings base of the economy has effectively enlarged and

hence the investment opportunities have increased.

The services of the banks in the fact of severe competition have improved

considerably so that now consumer are left with extensive choice to do or undo their

business relations with these banks keepings in view of the services.

The Bank of Punjab is working as a scheduled commercial bank with its network of 260

branches at all major business centers in the country. The bank

provides all types of banking services such as deposits in local

currency, client deposits in foreign currency, remittances, and

advances to business, trade, industry and agriculture. The Bank of

Punjab has indeed entered a new era of science to the nation under

experience and professional hands of its management. The Bank of Punjab plays a vital

role in the national economy through mobilization of hitherto untapped local resources,

promoting savings and providing funds for investments. Attractive rates of profit on all

types of deposits, opening of foreign currency accounts and handling of foreign

exchange business such as imports, exports and remittance, financing, trade and

industry for working capital requirements and money market operations are some

facilities being provided by the bank. The lending policy of bank is not only cautious and

constructive but also based on principles of prudent lending with maximum emphasis on

security. As agriculture in considered as backbone of our economy the Bank of Punjab


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has introduced “Kissan Dost Agriculture Finance Scheme” to small farmer and

cultivators.

The Bank of Punjab has the privilege to discharge its responsibilities toward national

progress and prosperity. Within the couple of years of its scheduling, the bank has not

only carved out for it self prominent niche in the mainstream banking of the country but

in certain areas it has the distinction of taking the lead. In the short span of time the

bank has been able to evolve a distinct corporate culture of its owned-based policies,

which are realistic and are on highly professional footings.


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CONSTITUTIONAL BASE

The Bank of Punjab was established under the provisions of section 28 of Federal list

included in the 4the schedule of the constitution of the Islamic Republic of Pakistan

1973.

The bank was established under the Act of Punjab Assembly viz. the Bank of Punjab Act

1989. The bill to this effect was passed by the provincial assembly on July 3, 1989 and

was passed to, by Governor Punjab in accordance with the provisions of the constitution

on July 26 1989.

The act provided for the foundation on which the edifice of the bank was erected. It also

included and provided for various modalities concerning the structure, the organization

and scope of the bank laying down its objective share capital and principle of lending.

The act defines rules for the following:

Short title, extent, and commencement

Establishment and incorporation of the Bank

Share capital

Register of shareholders

Qualification of shareholders

Government to be shareholders

Head Office of the Bank

Board of director

Managing director

Qualification and disqualification of the directors

Removal of directors

Terms of office of directors

Vacancies

General and special meetings


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Votes of the shareholders

Business, which the bank is authorized to transact

Business, which the bank is not authorized to transact

Auditors / Governments auditors

Right and duties of the auditors

Liquidations of the bank

Powers of the board to make bye law


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SCOPE OF THE BANK OF PUNJAB

eing a commercial bank, the Bank of Punjab performs all such functions as are

attributed to commercial banking institution both in the area of resources

mobilization, loans, and investment. The bank is thus providing all type of

advances to business, trade and commerce on seasonal and annual basis, and is

ensuring, through the prudent policy, the safety and protection of its loan portfolios, as

the resources base of the bank expands, projects financing will also be brought into its

fold.

B


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MANAGEMENT OF THE BANK

At the level of decision-making and implementation, senior management of the bank is

drawn from highly accomplished bankers with rich experience in the banking profession

both domestic and international.

The entire responsibilities of policy formulation and management have been placed,

under the law, the board of director. Furthermore it will be heartening to know that Mr.

Nawaz Sharif, during his CM-ship of the province of Punjab issued special instructions to

the political and executive echelons not to interfere in The Bank of Punjab, thereby

ousting the possibility any pressure which may be put on the management of the bank in

respect of recruitment of staff or provision of credit. These instructions have become an

essential part of the culture of the bank.


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CORPORATE INFORMATION ( BANK OF PUNJAB)

Name BANK OF PUNJAB

Registration # 00000013054/19891102

Registration Date 15-11-1989

CRO Lahore

AUDITORS

A. F. Ferguson $ Co. Chartered Accountants

REGISTERED OFFICE

7-Egerton Road, LahorePakistan

MOVEDHERE


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Pattern of other share holders

Shareholder Category Total No. of Shares Held %

PHYSICAL CDC TOTAL

Directors/CEO/Spouse 3611 10893 14504 0.01

Provincial Government 51781427 -------- 51781427 51.57

Foreign Funds 274063 169908 443971 0.44

Individuals 3422622 16721839 20144461 20.06

NBFI/FIN.INST/Insurance Co./Mudaraba 22935 17860878 17883813 17.81

NIT -------- 147500 147500 0.15

ICP 4075 3606042 3610117 3.60

Others 5224351 1165182 6389533 6.36

Total 60733084 39682242 100415326 100.00

Catagories of Shareholders

0.01

51.57

0.44

20.06

17.81

0.15 3.66.36

Director/CEO/Spouse Provincial Government

Foreign Funds Individuals

NBFI/FIN. INST./Insurance Co. /Modaraba's NIT

ICP Others


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Integrity

Integrity

DedicationDedication

TransparencyTransparency

Team workTeam work

MISSION STATEMENT

“To exceed the expectations of our stakeholders by leveraging our relationship with the

Government of Punjab and delivering a complete range of professional solutions with a

focus on programme driven products & services in the Agriculture and Middle Tier

Markets through a motivated team.”

Vision statement

"To be a customer focused bank with service excellence"

CORE VALUES


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YEAR 2011 & FUTURE OUTLOOK

Year 2011 raises expectation of growth in the major sectors of economy with large-scale

manufacturing, agricultural and services sector leading from the front.

Continuity of the focused economic reforms and policies of the Government together

with positive developments on the geo-political front has really placed the Country in a

position where the investors and the business community should start gaining comfort to

embark upon the much needed investment activity.

The prevailing economic scenario indicates that the GDP growth target of 7% plus is

very much achievable. Although, the prevailing money market scenario with low

spreads and almost stable interest rates suggest that the Banking sector will be facing

tough time ahead yet they believe that effective mobilization of resources and efficiently

utilizing them shall help the Banks to maintain their performance levels already achieved

while focused efforts to increase volumes in retail based consumer finance products and

services shall ensure growth and strengthening of the Bank’s earnings. Keeping the in

view the management of the BOP, during the year under review, Development and

growth of agricultural sector has always been given priority by the bank owing to its

importance and contribution to our economy. In this respect a large number of schemes

have been introduced by the bank to provide financial support and assistance to the

farmers in all sub sectors of agriculture.

Realizing the growth potential and huge exploration opportunity in SME and consumer

financing the bank has introduced variety of products and has enhanced its exposure in

These modes of financing to ensure market penetration and build market share.

Undoubtly, concentration on agricultural, SME and Consumer financing will strengthen

the backbone of the economy and maximize bank’s profits.


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Year 2012 will prove to be another challenging year for the bank with scattered

opportunities and tough competition in the offing. Diversification, innovation and mission

driven approach are the key to success.

The Bank of Punjab has launched electronic banking services like ATMs and online

banking for clients. The Bank of Punjab is now equipped with ‘e-banking technology’

and launched market products like house loan, car loan, small medium enterprise loan

and Bank of Punjab ready cash.

The Bank of Punjab Managing Director said that as a step forward towards our

mission to become an I.T. oriented Bank we have successfully installed 6

ATMs while we plan to add 25 more ATMs at our various branches. This year

our focus will be on connectivity to provide real-time online banking services

to our customers at all more than 260 branches of our Bank.

REGIONAL NETWORK


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There are 273branches of the BOP in all over Pakistan; the detail of the network is described

Below.


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Bahawalpur15

Bahawalpur15

Multan16

Multan16

Rawalpindi12

Rawalpindi12

Karachi12

Karachi12

Gujranwala10

Gujranwala10

Faisalabad20

Faisalabad20

H. O.The Bank of

PunjabLahore

H. O.The Bank of

PunjabLahore

These are some regions along numbers of branches contains


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WORLD WIDE WEB

http://www.bop.com.pk

This is the official website of The Bank of Punjab-established in 1989, in pursuance of

The Bank of Punjab Act 1989 and was given the status of scheduled bank in 1994. The

Bank of Punjab is working as a scheduled commercial bank with its network of 273

branches at all major business canters in the country. The Bank provides all types of

banking services such as deposit in local currency, client deposit in foreign currency,

remittances, and advances to business, trade, industry and agriculture. Information

regarding the share holder, foreign currency rates, branch networks, balance sheet etc

can be accessed through links on this website.


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ORGANIZATIONAL STRUCTURE

MANAGEMENT HIERARCHY

BOARD OF DIRECTORSBOARD OF DIRECTORS

CHAIRMANCHAIRMAN

SENIOR EXECUTIVE VICE PRESIDENTSENIOR EXECUTIVE VICE PRESIDENT

EXECUTIVE VICE PRESIDENTEXECUTIVE VICE PRESIDENT

VICE PRESIDENTVICE PRESIDENT

ASSISTANT VICE PRESIDENTASSISTANT VICE PRESIDENT

CASH OFFICERCASH OFFICER

OFFICER GRADE-IIIOFFICER GRADE-III

OFFICER GRADE-IIOFFICER GRADE-II

OFFICER GRADE-IOFFICER GRADE-I


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CATEGORIES OF SERVICES

BB CC DDAA

PresidentExecutive Vice PresidentSenior Vice PresidentVice PresidentAssistant

officer Grade Officer-IOfficer Grade-IIOfficer Grade-IIICash Officer

Clerical Staff DriverGuard/GunmanGate KeepersTea Boys


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CHAIRMANCHAIRMAN

GENERAL MANAGERGENERAL MANAGER CHIEF MANAGERCHIEF MANAGER

ADMINISTRATIONADMINISTRATION ORGANIZATION & METHODSORGANIZATION & METHODS

OPERATIONSOPERATIONS

BUSINESS DEVELOPMENTBUSINESS DEVELOPMENT

CREDITCREDIT

INTERNATIONALINTERNATIONAL

FINANCEFINANCE

RECOVERYRECOVERY

AUDIT & INSPECTIONAUDIT & INSPECTION

TREASURYTREASURY

INFORMATIONAL & TECHNOLOGY

INFORMATIONAL & TECHNOLOGY

OFFICERS TRAINING INSTITUTE

OFFICERS TRAINING INSTITUTE

SHARESSHARES

LAWLAW

STATIONERYSTATIONERY

PLANNING RESEARCH & PUBLICATION

PLANNING RESEARCH & PUBLICATION

* DIVISIONS AND DEPARTMENT

* Division Headed by General Manager, Departments Headed by Chief Manager


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FUNCTIONS OF DIVISIONS

ADMINISTRATION/HUMAN RESOURCE DIVISION

This division deals with the problems

related to the staff administration. The

main function of this department is to

arrange a comprehensive training program

for recruited staff. Others function

includes:

Recruitment

Staff remuneration

Placing the staff

Providing and defining the

opportunities for career development

and growth

Devising and implementing services

rules.

Promotion and demotion

Suspension and termination

Transportation

Security, health and benefits

GENERAL MANAGERGENERAL MANAGER

ADMINISTRATION & ESTABLISHMENT

ADMINISTRATION & ESTABLISHMENT

OFFICER’S TRAINING INSTITUTEOFFICER’S TRAINING INSTITUTE


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OPERATIONS DIVISIONS

This division is concerned with the

operational working in general banking,

which is concerned with the routing

working of the bank. Any problem or

ambiguity arise in any branch working are

rectified and suggested for correction by

this division. This Division usually takes

technical procedures involved the

decisions like commissions and

Maintenance of the existing building

owned by the bank

Opening new branches and their

maintenance

Stationery of the bank


COMPUTER DEPARTMENTCOMPUTER DEPARTMENT

ENGINEERING & MAINTENANCEENGINEERING & MAINTENANCE

O & M DEPARTMENTO & M DEPARTMENT


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BUSINESS DEVELOPMENT DIVISION

It is the other name of marketing division.

It promotes the bank cause i.e. deposits

and work for the over all development of

the bank. Deposits are the lifeblood of

any. Without deposits bank cannot

perform any function of banking. This

division fixes the deposits target of every

branch by keeping and eye over the

potential customers in the area. It gives

motivation to branches to achieve their

targets through different campaign and

schemes like cash prizes and special

increments. It publishes an bulletin in

which those branches are encouraged

who achieves their monthly targets. The

main function is to develop and attract the

customers and depositors. It also manage

Advertising policy

Sales promotion

Schemes offered by the ban


MARKETING CELLMARKETING CELL PRP DEPARTMENTPRP DEPARTMENT


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CREDIT DIVISION

This division control over all credit

operations like sanction of loans, inland bill

purchased (IBP) and also keeps check

over securities mortgage, hypothecating or

pledge. It also fix the rate of mark-up and

other decisions concerning with the credit.

There is a credit committee,

which consists of senior

officers; branches send the

credit proposal to head office

credit division. Credit committee

approves it after making a

through analysis. It also perform

Prepare the policies regarding the

sanctioning loan

Monitor loans and credit

Look after the portfolio of the bank

Define credit limits against specified

securities


AGRICULTURE CREDIT WINGAGRICULTURE CREDIT WING


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INTERNATIONAL DIVISION

This division is providing important

services tot the bank regarding the

matters of international trade, import

export, letter of credit etc., it

develops correspondent relationship

with other commission basis and this

helps to deal with the clients having

import export business. It handles

treasury operations.

The marketing and spot inspection

cell, which were introduced by the

bank, are showing positive results in

terms of achieving foreign currency

deposit targets and other foreign

related businesses.


INTERNATIONAL WINGINTERNATIONAL WING

FOREX MONEY MARKET INVESTMENT

FOREX MONEY MARKET INVESTMENT

ENGINEERING & MAINTENANCE

ENGINEERING & MAINTENANCE


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FINANCE DIVISION

It controls the routing financial matters.

The permission of special expenditure

Incurred in the branches, and other

such cases. The daily position and HO

extracts are daily sent to this division

by all the branches.

This division not only estimates the

profit and loss of every branch but

also prepare over all income

statement and balance of the

complete bank. It also keeps record of

total deposits of the bank and then

their classification in the form of loans

into different sectors of economy.

The basic functions are

Monitoring the fiscal and financial

policies of the bank

Deals in exploring means for investing

bank’s surplus funds

Maintenance and investment of

gratuity and pension funds of the

employees.


BALANCE SHEET RESULTSMONITORING SBP AFFAIRS, AND

COMPLIANCE

BALANCE SHEET RESULTSMONITORING SBP AFFAIRS, AND

COMPLIANCE

SHARES DEPARTMENTSHARES DEPARTMENT

COMPANY AFFAIRSCOMPANY AFFAIRS


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RECOVERY DIVISION

The recovery division, which was

established in 1994 to assist in

regularizing the difficult loan accounts, has

rendered valuable services in this respect.

To affect recoveries in an efficient manner,

a policy has been framed in accordance

with the guidelines issue by the SBP;

moreover recovery cells at regional levels

have been setup to assist

the head office. This division looks after

the matters of recovery of loans with the

assistance of legal advisors.


LAW DEPARTMENTLAW DEPARTMENT


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AUDIT AND INSPECTION

This department ensures appropriate

system of check and balance. It

checks all the irregularities, errors,

and forgeries if any, under the rules

and regulations formed by the

Government of Punjab. For this

purpose it doesn’t only keep and eye

on the branches in their vicinity but

also conduct surprise and

comprehensive audits of the

branches.

This strategy has improves working

at the branch level. It not only points

out the discrepancies but also tries to

solve it. Surprise audit maintain a

good check on the over all working of

the branch especially of the side of

finance.


AUDIT OFBRANCHESAUDIT OF

BRANCHES

RECTIFICATION ANDPERSUASION

RECTIFICATION ANDPERSUASION


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Chapter 2

AREA OFFICE

INTRODUCTION

TEAM

BRANCHES UNDER AREA

FUNCTIONS OF AREA OFFICE

INTRODUCTION


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There is regional office in MULTAN. There is 11 branch in Multan. To cover all these

problems the area office/the regional chief of Multan covers all the threats faced by the

branches

TEAM

The team of regional office in the supervision of an experienced and highly qualified

person

Mr. RANA ZUBAIR is an excellent and very nice combination of young, intelligent and

energetic and TUHEED AHMED serving as a R.O.H, are hardworking, motivated, and

professional and committed with their duties. They are working strictly with the core

values of the Bank of Punjab

Mr. RANA ZUBAIR REGIONAL Chief

Mr.TUHEED AHMED R.O.H

FUNCTIONS OF REGIONAL OFFICE

Monitoring of branches business and helped them to expand the same.

Collection of daily, weekly and monthly reports from branches.

Coach and trained the staff.

Sanction salary loan,

Meet with present and prospective clients.

Transfer and posting of staff in the area.


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Chapter 3

BRANCH INTRODUCTION

BRANCH TEAM

BRANCH HIERARCHY


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INTRODUCTION Ahmed Pur East(APE) is historical city of south Punjab/NAWAB Sir Sadiq Muhammd

Khan, and branch of BOP is situated at the Kathery road APE.The team of branch in the

supervision of an energetic, highly qualified person Mr. Muhammad ARSHAD BHATTI is

an excellent and very nice combination of an

experienced persons (Muhammad Arshad Bhatti(BR MGR), Muhammad

Imran(Operational Manager) and young and energetic, all are hardworking, motivated,

professional and committed with their duties. They are working strictly with the core

values of the Bank of Punjab and have been appreciated by the Head Office and

Regional Office.

APE is famous about its cotton growing sunflower and the back bone of the south

Punjab and having the largest grain market. There is lots of factories in the surrounding

areas of APE city.

BOP branch is dealing in cash financing, demand financing, running financing and also

newly introduced consumer financing schemes for salaried and non salaried persons;

that are BOP Car Loan, BOP SME Loan, BOP Aasaish Loan, BOP House Loan and

Quick Cash.


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Punjab Development Fund (PDF tickets) collecting funds for the development of Punjab

through various banks including Bank of Punjab and BOP main branch at Bahawalpur

has best selling record for the sale of those tickets in Bahawalpur.


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BRANCH TEAM OF SHAH RUKN-E-ALAM

The branch manager of APE having a dayinamic personialty and he gave he is devoting

his experience to the branch whole heartedly truly a proud banker for the bop.and the

operational manager Muhammad Imran is young energetic and create magic in working.

he is leading his team from the front and he is the truly a motivating factor for his team

mates it is not wrong to say that he is deserving what he got

And the officer grade-i Malik Shoaib is a man of principal and working hard for the bank

and for the team always backing up his juniors he is a true example for the new comer

banker and the cash officer Mr. Irfan doing a great work with cash he is young and

energetic and know his work quite exceptionally well and the last but not the least Mr.

Arshad Bhatti is the most experienced person of the branch giving a rich experience to

Bop

Mr. Muhammad Arshad Bhatti Officer grade-i Manager

Mr. Imran Manager(op)

Mr. Ahmed Manager Agri

Mr. Shahid Raza Manager Advances

Mr.Shoaib Officer grade-ii

Mr. Tahir Ali Officer grade-i

Mr. Irfan Cash officer

Mr. Muhammad Asif Messenger


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BRANCH HIERARCHY

BRANCHMANAGERBRANCH

MANAGER

OfficerGrade IIOfficerGrade II

OfficerGrade IIIOfficer

Grade III

CashOfficerCash

Officer

Manager OperationsManager

Operations

CashOfficerCash

Officer

CashOfficerCash

OfficerMessengerMessenger MessengerMessenger

ManagerAdvancesManager

Advances

ManagerAgri-loansManager

Agri-loans


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Chapter 4

BANKING SERVICES

BOP CONSUMER FINANCING

AGRICULTURE AND ECONOMY

AGRICULTURE FINANCE SCHEME

BANKING SERVICES

ACCOUNTS OF SPECIAL CUSTOMERS


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BOP CONSUMER FINANCING

Aasaish Loan

For specified consumer goods of LG, PEL, Haier, Philips,

Samsung, Super Asia, Daikin and Daikool, Raffles.

19% mark-up for 12 months

Free Home Delivery

Tenure 6, 9, 12, 18 and 24 Months

Minimum PRs 20,000 Max PRs.500,000

House Loan

Salaried person of 5 years experience and min Rs. 20,000/- per month salary

Age limit 25-60 year at the end of loan term

For purchase of house / flat or construct house or renovate existing house.

Limit for purchase / construction Rs. 0.3M to Rs. 25M, for renovation Rs. 0.2M

to Rs. 10M

Banking financing for purchase / construction – up to 70% of

assessed value for renovation – up to 20% of assessed value

Markup- 1/2/3 Years ask side KIBOR+ 375 bps with floor of

17%p.a. (KIBOR of respective tenure of 1,2 &3 years shall be

used)

Non-refundable fee Rs. 450

Processing Fee Rs. 2,950

Tenure for purchase / construction 3 to 25 years, for renovation 3 to 25 years

Valuation charges / stamp duties and legal charges as per actual

Car Lease Salaried person of 3 years experience and min Rs. 20,000/- per month salary

Age limit 25-59 years at the end of loan term

For purchase of Suzuki and other motor cars

Limit of Rs. 0.2M to Rs. 50M

Down payment 10% to 20%

Markup- 1/2/3 Years ask side KIBOR+ 400 bps with floor of 17%p.a. (KIBOR of


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respective tenure of 1,2 &3 years shall be used)

Tenure of 1 to 5 years

Non-refundable fee Rs. 450/-

Processing fee Rs. 3,750/-

Registration charges – actual, payable directly to the dealer by customer

SME Loan

For small and medium enterprise

3 years of self business experience

Age between 25-55 years

Monthly income of min Rs. 36,000/-

Member of trade body, chamber of commerce or

anjuman-e-trajiran for at least 3 years

Taxpayer

Limit Rs. 1.0 m to Rs. 7.5 m

Non-refundable fee Rs. 450

Processing fee for loans up to Rs. 3.0 m is Rs. 4,950/- for loans over Rs. 3.0 m

Rs. 8,950/-

Valuation charges, all stamp duties, legal and documentation charges will be

charged at actual and will be borne by the applicant

Quick Cash

All kind of personal needs

Salaried person of 3 years experience and min Rs.

15,000/- per month salary

Age between 25 and 55

Limit Rs. 50 thousand to Rs. 0.2 m

Min repayment per month 5% of utilized amount


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AGRICULTURE FINANCE SCHEMES

Kissan dost Agricultural finance

scheme

Purpose:

Eligibil ity :1. Resident Self Cultivator having

Agriculture maximum 50 acres 2. Owner-cum tenant having

minimum land 5 acres under cultivation

3. Tenant having valid lease agreement for reasonable tenure (minimum area of subsistence land holding)

Amount:Maximum Rs.500, 000/- according to per acre limit of the crop.

Security:Charge on Agriculture Land through Agri. Pass Book.

ORRegistered / Equitable mortgage of Urban property assessed by PBA’s approved surveyor and cleared by Bank’s legal counsel.

ORLiquid security in the shape Bank’s Fixed Deposited Receipts/DSC/NSC or Regular Income Certificates.One personal guarantee of reputable person. ACO along with Regional Chief can waive this condition if they deem the borrower to be very credit worthy. Two written satisfactory market checking reports must be obtained before disbursement.

Margin on Security:50% Margin on Agri land or Urban property.25% margin on liquid security.

Insurance:The borrower will have to arrange life assurance under the Bank‘s charge .

Mark-up:9% per annum .


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Repayment:Once in a year along with mark up.

Renewal:Automatic renewal upon adjustment of entire principal with full markup within one year. Fresh documents will be obtained after three years.

Kissan dost

Tractor

Finance

Scheme

Purpose:Provision of financial facility to the farmers and non farmers (those who provide tractors to farmers on rental basis for various tractor related operations), for purchase of Tractor on Lease Finance Basis.

Eligibility:Resident Self Cultivator having Agriculture Land minimum 5 acres and maximum 50 acres OR Persons providing their tractors to farmers on rental basis for their various Agriculture and Farming activities.The persons who are related with the business of providing services for tractor related farming practices to the farmers on rental Basis.

Amount:Maximum Rs.500, 000/-.

Equity:The borrower on case-to-case basis will pay 10% to 20% of the cost of Tractor.

Security:Farmers:

1. Lease Tractor (to be registered in the name of Bank) 2. Charge on Agriculture Land through Agri. Pass Book

3. One personal guarantee of reputable person. ACO along with Regional Chief can waive this condition if they deem the borrower to be very credit worthy. Two written satisfactory market checking reports must be obtained before disbursement

Non Farmers:


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1. Lease Tractor (to be registered in the name of Bank) 2. Charge on urban immovable property through

equitable/registered mortgage


Insurance:The Lessee will arrange comprehensive insurance of tractor life assurance of lessee under the Bank’s charge.

Mark-up:11% per annum.

Repayment:10 equal half yearly installments (within five years).

KISSAN DOST

AABIARI SCHEME

PurposeProvision of financial facility to the farmers for purchase of Tube well.

EligibilityResident Self Cultivator having Agriculture Land minimum 5 acres and maximum 50 acres.

AmountMaximum Rs.500,000/-.

EquityThe borrower will pay 20% of the cost of project.

Security:Farmers


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1. Lease Assets i.e. Engine, Tube well and other related implements (The vendor will issue receipt in the name of Bank)

2. Charge on Agriculture Land through Agri. Pass Book


InsuranceThe Lessee will arrange comprehensive insurance of implements/assets life assurance of lessee under the Bank’s charge.

Mark-up11% per annum.

Repayment8-10 equal half yearly (within four to five years).


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Kissan Dost Mechanization

Support Scheme

Purpose:Provision of financial facility to the farmers for purchase of Agricultural Implements e.g. Trolley, thresher, plough, richer etc.

Eligibility :Resident Self Cultivator having Agriculture Land measuring 5 acres to maximum 50 acres.


Equity:20% of the cost of machinery tool and implements.

Security:Farmers:

1. Lease Assets/implements (The vendor will issue receipt in the name of Bank)



Insurance:The Lessee will arrange comprehensive insurance of assets life assurance of lessee under the Bank’s charge.


Repayment:

8 equal half yearly installments (within four years).


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Kissan Dost Farm

Transport SCHEME

Purpose:Provision of financial facility to the farmers for purchase of Farm Transport Vehicles e.g. Small Pickups, VP/Vans and small chillers.

Eligibility:Resident Self Cultivator having Agriculture Land minimum 5 acres and maximum 50 acres.


Equity:The borrower will pay 20% of the cost of Vehicle.

Security:Farmers:

1. Leased Vehicle (to be registered in the name of Bank) 2. Charge on Agriculture Land through Agri. Pass Book


Insurance:The Lessee will arrange comprehensive insurance of Vehicle life assurance of lessee under the Bank’s charge.


Repayment:10 equal half yearly installments (within five years).


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KISSAN DOST

ISLAH-E-ARAZI

SCHEME

Kissan Dost Live Stock

Development Scheme

Purpose:Provision of financial facility for purchase of animals (Milk & meat production, cattle farming, Poultry Farming and Fish farming) to the farmers and non farmers (those who have their own live stock farm/fish farm for commercial purposes).

Eligibility:Sufficient experience to handle Dairy Farm, Cattle Farm, Goat Farm, Poultry and Fish Farming. The persons who have their self owned Dairy Farms for production of milk on commercial basis).The applicant should be having adequate arrangements to sell out the products properly e.g. supply contract with milk processing company.

Amount:80% of cost of animals (Maximum facility can be granted upto 50% of forced sale value of property).

Security:1. Leased Animals (receipt will be issued in the name of

Bank)


ORCharge on urban immovable property through equitable/registered mortgage. The property will be cleared by Bank’s approved legal counsel and will be assessed by Bank’s and PBA’s approved surveyor.Liquid security in the shape Bank’s Fixed Deposited Receipts/DSC/NSC or Regular Income Certificates.


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Margin on Security:

1. 50% margin on landed property (Agri /Urban).

2. 25% margin in case of l iquid securi ty Insurance:The Lessee will arrange comprehensive insurance of Animals. In case of Poultry and Fish farming Borrower will have to arrange comprehensive insurance of poultry and fish stock himself form Bank’s approved A rated company life assurance of lessee under the Bank’s charge.

Mark-up:Average 6 month’s KIBOR + 600bps with floor of 11% per annum.In case of written assurance for recovery from DCO/Nazim mark-up will be KIBOR + 6% with floor of 8%.

Period:5 years (including one year dry period).

Repayment:16 equal quarterly installments within four years excluding one year dry period.

Kissan Dost Live Stock

Scheme

Finance for live Stock breed improvement through village veterinary workersPurpose:

Provision of financial facility to the Village Veterinary Workers (trained by Live Stock and Dairy Development Department) for purchase of Artificial Insemination kits on lease finance basis.

Eligibility:Village Veterinary Workers having diploma certificate and recommendations from Live Stock and Dairy Development Department Govt. of Punjab)

Amount:Maximum Rs.45, 000/- or 90% of purchase price of kit and bicycle .


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Security:

1. Lease Assets (Receipt will be issued in the name of Bank).

2. Two personal guarantees of reputable persons having fixed assets equivalent or more to value of advance.

Insurance:Comprehensive Insurance of Leased Assets life assurance of lessee under the Bank’s charge.


Repayment:Equal monthly or quarterly installments (within five years).

Kissan Dost

Commercial

AgroServicesScheme

Purpose:Provision of financial facility to the commercially viable entities with immaculate track record for acquisition of Agri implements and equipments i.e. tractor trolleys, harvesters e.t.c. for providing Agri services to farmers.

Eligibility:Commercially viable entities with immaculate track record with the Bank/Other financial institutions.

Amount:To be decided on case-to-case basis keeping in view the financial/commercial viability of the transaction. Not to exceed 80% of the value of equipments/implements.

Mode of FinanceI Shall be demand finance/lease finance.

Security:


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1. Lease Assets (Vehicles/Tractors will be registered in the name of Bank or Receipt of equipments will be issued in the name of Bank)

2. Bank charge on Agri Land through Agri Pass Book Or Bank’s Charge on urban property through registered and equitable mortgage


Insurance:Comprehensive Insurance of Leased Assets life assurance of lessee under the Bank’s charge.

Mark-up:9% per annum .

Repayment :

Equal quarterly installments (within five years).

.


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Kissan dostAgri mallScheme

Purpose of Finance:

Four renowned companies of the country such as M/S Ali Akbar Group, Millat Tractors, PSO and Angro Services have established a joint venture company in the name of the Agrimall (Pvt) Ltd to provide agro services under one roof through its Franchisees.

The Agrimall (Pvt) Ltd has approached our Bank to provide financial help to their franchisees to establish and run these Agrimalls under their specialized management through out the country.We have launched a Kissan Dost Agrimall Finance Scheme. All facilit ies required by the Franchisees of the Agrimall (Pvt) Ltd will be provided through this scheme. The farmers who will be the clients of Franchisees, will also be provided production loans through Bank’s Kissan Dost Agriculture Finance Scheme (For purchase of inputs).

Amount of Finance:The amount of Finance will be 9.5 (M) maximum for all package of facilit ies mainly as under: Demand Finance:Maximum Rs.2.5 (M) for construction of site.

Lease Finance:Maximum Rs.1.50 (M) for purchase of tractors and machinery.

Running Finance :Maximum Rs.3.0 (M) for stocks of seed, ferti l izers, pesticides and oil etc .

L/C Limit:Maximum Rs.2.5 (M) for import of pre-engineered construction material for construction of site one time transaction.


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BANKING SERVICES

There are the following services being provided to the claims:

Acceptance of deposits

Granting of loans

Transaction Foreign Exchange Services

Remittance—Collection

SPEDFAX—instant Fund Transfer Service

Lockers facility

Utility Services

The Bank of Punjab attaches special importance to the fee earning business and

business base remuneration. As part of diversification of the banks utility services, it

established collection arrangements for WAPDA, SUIGAS, WASA, PTCL, and PAKTEL.

By using bank’s extensive branch network, effort have been to made to maximize the

exploitation of this source in view of its rich potential of yielding business and deposit

direct earning of commission.

DEPOSIT SECTION

In modern times very few business enterprises are carried out solely with the capital of

the owners. Borrowing funds from different sources has becomes an essential feature of

today business enterprise. But in the case of an entire banking system is based on it.

The borrowed capital of the bank is much greater then their own capital. Banks

borrowing is mostly in the form of deposits.

These deposits are lent out to different parties. The larger the difference between the

rate at which the depositors are borrowed and the rate at which they lent out the greater

of the profit margin of the bank. Furthermore, the larger the deposit the larger will be the


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funds available for employment; larger the funds lent out the greater will be the profit of

the bank.

To receive the deposit is the basic function of all commercial banks. The bank does not

receive these deposits for save keeping purpose only, but they accept deposits as debts.

When banks receive deposit from a customer, the relationship of a debtor and creditor is

established where by the customer become the creditor and the bank a debtor. When

the bank receives amount of deposit as a debtor, it becomes the owner of it. It may,

therefore use it as deems appropriate. But there is an implicit agreement that the

amount owned would be paid back by the bank to the depositor after a specified period.

NATURE OF DEPOSITS

Current deposits

Profit and loss sharing account

Short notice term deposits (SNTDR)

Call deposit

Term deposit receipts (TDR)

Current Deposits

In this type of account the customers allowed to deposit or withdraw cash as and when

one likes. Because of their nature, these deposits are treated as the current liabilities of

the bank. There is no profit on such deposits. Usually this type of account is opened by

the business community.

Profit and Loss Sharing Account

This type of account is one step toward the Islamic Banking in Pakistan, but the actual

theme of this account has been dead, this is being treated as markup/interest base

account now. There are two types of PLS accounts:


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PLS saving account

PLS -TDR (Profit and Loss Sharing Term Deposit Receipts)

PLS saving accounts can be opened with the minimum sum of Rs. 500/- and PLS-TDR

account can be opened for a sum of Rs. 5000/- or above. Profit is paid on both types of

accounts on half yearly basis.

Under PLS saving account the depositor undertakes to share profit or loss on the

deposits earned or sustained by the bank. Secondly the bank is at the liberty to invest

the funds of the deposits in any industry, it deems fit. The PLS deposits are invested in

non-interested channels.

Short Notice Term Deposits (SNTD)

This kind of deposit is for a short period. The depositor may withdraw his deposit at any

time by giving seven days notice to the bank. This type of deposit facilities the depositor

to withdrawn his amount with interest of the deposited period.

Call Deposit

Call deposits are the also the kind of deposits, which are deposited with banker against

any tender. This is without interest deposit. This may be with interest provided the

depositor has agreed to keep this amount with the bank for some fixed period.

Term Deposit Receipts (TDR)

This type of deposit is same as the SNTD. The difference is that SNTD is for the short

period (7-30 days) while TDR is for long period (1 month up to 5 years).


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ACCOUNT OPENING SECTION

Account opening is the first step towards establishing a relationship between the

customer and the bank. The Bank of Punjab is offering basically FIVE type of account in

this section:

Current Deposit Account

Profit and Loss Sharing Account

BTA(business tijarat account)

BBA(basic business account)

YLS(young lions savings account)

The necessary condition for a customer, who wants to open an account with the bank, is

introduction, which is preferably by the bank officers or any account holder of the bank.

The different categories of the accounts that are available are as under:

Individual Account

Joint Account

Partnership Account

Limited Company Account

Clubs, Society, Association, or Trust Account

SNTD (short notice term deposits)

TDR (term deposit receipts)

Foreign Currency Deposits

CLEARING SECTION

Clearing is the most important department of the bank performing various functions.

Clearing House

A clearing house is an organization of the member banks, working under SBP and which


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is for the purpose of setting inter banks claim resulting from transmission of funds from

one bank to another. The branch cheque/instruments are credited in the account of the

customer. The clearing can be:

Outward

Inward

Outward clearing

The instrument collected or stored bank wise and a schedules is prepared separately for

each bank mentioning the total number of instruments and the amount of the

instruments. Then these are recorded in a register called “OUTWARD CLEARING

REGISTER” then a main schedule is prepared showing the total number of cheque and

their aggregate amount being presented in the clearing.

The cheque/instruments are handed over the clearing branch. Central clearing branch

issue CREDIT ADVICE to the branch for passing credit to its customer immediately the

branch on receiving credit advice debits the clearing account and credit the respective

customer account.

Inward Clearing

On receiving cheque/instruments from central clearing branch, the Incharge checks the

number and amount of cheque received in clearing must tally with the main schedule

received from central clearing branch.

These cheque/instrument are enter in “INWARD CLEARING REGISTER” for the

cheque/instrument passed in clearing is a credit advice for the aggregate amount of

cheque passed in clearing is prepared, drawn on central clearing branch.


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RESERVE AT STATE BANK OF PAKISTAN

Deposit held by the bank at SBP serves as cheque clearing and collection balances.

Rather than physically transferring funds between banks, cheque clearing and collection

can be done by simply debiting or crediting a bank’s account at SBP.

REMITTANCE SECTION

Remittance is a major function of the bank. It is the transfer of money from one place to

another place. The need for remittance is commonly felt in commercial life particularly

and in everyday life generally.

By providing this service to the customers the Bank of Punjab earns a lot of income in

the form of service charges.

The Bank of Punjab deals with the following type of remittance:

Demand Draft (DD)

Mail Transfer (MT)

Telegraphic Transfer (TT)

Pay Order

Demand Draft (DD)

Demand draft is a written order given by the one branch of a bank on behalf of customer

to another branch of the same to a certain amount to the certain person.

Procedure to prepare demand draft

1. A draft voucher is filled which contains the following information

Name of the parties involved

Date

Amount to be sent

Account number (if DD is crossed)


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2. A credit voucher is filled in order to get the excise duty and exchange commission.

3. The sender deposits the total amount of the two vouchers i.e. the debit and credit

voucher.

4. Then the cashier sends the cash receipt voucher to the accounts section where the

officer records the amount paid in his cash scroll.

5. Accountant gives the DD leaf along with the DD voucher to his assistant who records

the sender’s name, amount the receiver’s name. After writing all the information in

the DD register he gives it to the officer along with the DD for authentication.

6. After authentication the DD is handed over to the sender and bank sends the advice

to the concerned branch. So when the part presents the DD in the concerned branch

it payment could be made.

Parties involved in the Demand Draft

There are the following parties involved in demand draft:

1. Purchaser or Sender

The purchaser is the person who sends the money to a particular person

payable at a certain branch.

2. Issuing or Drawing Branch

The branch from where the demand draft is issued to another branch of

the same bank.

3. Drawer Branch

Branch in which the draft has drawn and called upon to pay the amount.

4. Payee

The person who is entitled to receive the amount after presenting the

demand draft in the drawer branch


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Mail Transfer (MT)

It is the transfer of money from branch to another branch of the same bank through mail

service. In mail transfer there is no need of advice as the amount is directly credited to

the receiver’s account.

Procedure to prepare mail transfer

1. First a voucher is filled in which the sender writes the amount to be sent, name,

account number of the receiving person with the branch name and date.

2. A credit voucher is filled in order to deduct exchange, postage charges according to

the amount of the mail transfer.

3. Then sender deposits the total amount in the cash section.

4. The cash officer gives the voucher to the officer after affixing received cash stamp

and writing the amount in red ink.

5. Then the officer writes the amount paid in the cash scroll and gives the MT to his

assistant.

6. MT leaf is filled according to the information provided in credit voucher. He also

writes the same information in the MT register. Then he gives the MT leaf and MT

register to the officer for authentication.

Telegraphic Transfer (TT)

This is the most urgent method of remitting the money from one place to another place.

This method is used when the sender desires to send urgently, in this case the sender

request the manager of the branch to issue TT.

Procedure to prepare telegraphic transfer

1. For sending the TT, the manager and officer apply a test. In this test the manager

and officer uses a coding technique. They write their own code numbers, which is


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allotted to them as the bank branch code.

2. After making all the confirmation, the concerned branch makes the payment to the

receiver.

3. If sender wants to convey the same message through telephone then he has to pay

the charges of telephone along with the TT charges.

4. First the person deposit the TT amount along with the charges through the credit

voucher then this TT sent to the relevant branch.

Pay order (PO)

A pay order is written order issued by the bank on its own branch, drawn upon and

payable by itself to pay a specified sum of money to the person. The purpose of a pay

order is to transfer the fund from one place to another. It is usually not issued in favor of

the parties of other cities. Usually the pay order is issued for the local transfer of money

from one person to another or from the person to any other department. It is used fro

different purposes. The purpose may be the repairs by the repairs of the branch or

renovation of the branch.


REPORTINTERNSHIP

ADVANCES/CREDIT SECTION

It is the loan function, which produces the major portion of bank’s income, and as such it

is the major areas of professional banker’s concern and attention.

Principles while advancingBasically there are five principles that must be duly observed while advancing money to

borrowers.

Safety

Liquidity

Disposal

Remuneration

Suitability

Forms of Lending

Mainly there are two types of advances:

Short-term Lending (maturity with in one year)

Long-term Lending (maturity with the period of more than one year)

How ever they are further classified as

Running Finance

Demand Finance

Cash Finance

Letter of Guarantee

Running Finance

This form of finance was previously known as “overdraft”. When a customer requires the

temporary accommodation, his bank allows withdrawal his account in excess of credit

balance, which the customer has in its account, a running finance occurs. The

accommodation is thus allowed collateral security. When it is against collateral


REPORTINTERNSHIP

securities, it is called a “Secured Running Finance” and when the customer cannot offer

any collateral security except his personal security, accommodation is called a “Clean

Running Finance”. The customer is in advantageous position in running finance

because he has to pay the mark-up on the balance outstanding against him on daily

product basis.

Demand Finance

This is common form of financing to commercial and industrial concerns and is mad

available either against pledge or hypothecation of goods produce or merchandise. In

demand finance the party is financed up to a certain limit either at once or as and when

required. They party due to facility of paying mark-up only on the amount it actually

utilizes prefers this form of financing.

Securities of Advances

There are the following securities for advances:

Pledge

Hypothecation

Guarantee

Indemnity

Charge

Advances against Stock Exchange Securities

Advances against immovable property

Pledge

Pledge is defined as “The bailment of goods as security for the payment of the debt and

the performance of a promise is called pledge”. Pledge is the characteristics mode of

taking goods as the security and the pledge occurs when the goods or document of the

title thereto or the securities are delivered by the customer to his banker to be held as


REPORTINTERNSHIP

security for the repayment of the advance.

In a pledge, the ownership remains with the pledger but the pledge has the exclusive

possession of the property until the advances in repaid in full, while in case of default the

pledge has the power of sale after giving due notice. People with the safe custody of

goods, when entrusted with the goods for the specific purpose may not make the valid

pledge.

Hypothecation

Hypothecation is defined as “A legal transaction where by goods may be made available

as the security for a debt without transferring either the property or the possession to the

ledger”. When the property in goods is in charged as the security for a loan from the

bank but the ownership and the possession is left with the borrower, the goods are said

to be hypothecated. The essence of the hypothecation is that neither the property in the

goods nor the possession of them passes to the lender, but the security is guaranteed

by means of letter of hypothecation, which usually provides for a banker’s charge of the

hypothecated goods.

Guarantees

Guarantee is defined as “A contract to perform the promise, or discharge the liability of

the third person in case of his default”. This is so when an application for the advances

cannot offer any tangible security, the banker may rely on the personal guarantees to

protect himself against loss and advances or overdraft to the applicant. There fore a

guarantee may be either written or oral. The guarantee is a promise by one person

called the guarantor or security to another for answering the present or future debt if a

second person called the Principal Debtor.


REPORTINTERNSHIP

Indemnity

Indemnity is defined as “A contract by which one party promises to save the other from

loss caused to him by the conduct of the promisor him self or by any other person is

called the contract of indemnity”. Thus in an indemnity, the promisor is the only person

who becomes liable to the promise if the latter suffers a loss on account of his doing

something at the express desire of the former.

Charge

When immovable property of one person is by act of parties, or operation of law,

made security for payment of money to another, and the transaction does not

amount to mortgage, the latter person is said to have the charge on the property,

and all the provisions herein before contained which apply to a simple mortgage

shall, so far as may be apply to such charge.

This means that a charge is a right of payment out of certain property. The

charge can be created by the act of parties or by the operation of the law and

although the property is made a security the payment of loan, is still not the

mortgage.

Advances against stock exchange securities

A stock exchange security is the vast term which covers all gilt-edged securities such as:

Federal and provincial government bonds

Post trust or municipal bonds

Shares and debentures

Banker, as security for advances to the customer, frequently accepts these securities.

Advances can be against


REPORTINTERNSHIP

Preference shares

Ordinary shares

Preferred shares

It can be

Quoted or unquoted

Registered

Bearer

Inscribed


REPORTINTERNSHIP

Advances against immovable property (Mortgage)

A mortgage is the transfer of interest in specific immovable property of r the purpose of

securing the payment of the money, advanced or to be advanced. By way of loan, and

existing debts or the performance of the engagement this may raises the pecuniary

liability. The transferor is called the mortgager and the transferee the mortgagee the

principal money and interest of which payment is secured for the time being and

instrument, by which the transfer is affected, is called the letter of the mortgage deed.


REPORTINTERNSHIP

ACCOUNTS OF SPECIAL CUSTOMERS

Though every person, legally capable of

becoming a party to a contract, can open

an account with BOP, yet the capacity of

certain classes of persons to make valid

agreements are subject to well recognized

restrictions, as in case of agents, trustees,

executors, administrators, firms and joint

stock companies.

PARTNERSHIP ACCOUNT

Account opening form is duly signed by all the

partners

Account opening form is duly signed by all the

partners

Specimen signature cards containing the specimen signatures of the persons authorized to operate the

account.

Specimen signature cards containing the specimen signatures of the persons authorized to operate the

account.

All the partners assume the liability of the firm to

the bank as joint and several.

All the partners assume the liability of the firm to

the bank as joint and several.

This letter is obtain from both registered and non-

registered firms accordance with the

section 25 of Partnership Act1932

This letter is obtain from both registered and non-

registered firms accordance with the

section 25 of Partnership Act1932

A partnership letter duly signed by all the partners

in their personal capacity is also obtained.

A partnership letter duly signed by all the partners

in their personal capacity is also obtained.


REPORTINTERNSHIP

JOINT STOCK COMPANY ACCOUNT

Account of the company is opened on the resolution of the Board of Directors, which nominates the persons authorized to operate upon the account.

Account of the company is opened on the resolution of the Board of Directors, which nominates the persons authorized to operate upon the account.

Must take the specimen signatures of the authorized persons and allow the operations on the account under those signatures as long as the authority is not terminated.

Must take the specimen signatures of the authorized persons and allow the operations on the account under those signatures as long as the authority is not terminated.

The banker may open the account of a newly floated public ltd company without the certificate of commencement of business in order to receive the amount of issued capital from the prospective shareholders; but he should not allowed any withdrawal from the account till the certified copy of Certificate of Commencement of Business is submitted to him.

The banker may open the account of a newly floated public ltd company without the certificate of commencement of business in order to receive the amount of issued capital from the prospective shareholders; but he should not allowed any withdrawal from the account till the certified copy of Certificate of Commencement of Business is submitted to him.

Failure to obtain this certificate necessitates the refund the amount to the prospective shareholder by the promoters.

Failure to obtain this certificate necessitates the refund the amount to the prospective shareholder by the promoters.

When bankers receive a notice of death, retirement of dismissal of the authorized person, he should stop the operation on the account and wait for the fresh resolution authorizing another person before his death, retirement of dismissal, should be honored by the banker because they were valid instruments before the termination of his authority.

When bankers receive a notice of death, retirement of dismissal of the authorized person, he should stop the operation on the account and wait for the fresh resolution authorizing another person before his death, retirement of dismissal, should be honored by the banker because they were valid instruments before the termination of his authority.


REPORTINTERNSHIP

ACCOUNTS OF CLUBS, SOCIETIES AND ASSOCIATIONS

The resolution of the Governing Body/Managing Committee authorizing the opening of the account with the Bank of Punjab.

The resolution of the Governing Body/Managing Committee authorizing the opening of the account with the Bank of Punjab.

The resolution should name the persons authorized to operate upon the account, clearly specifying the powers of the authorized persons. The resolution should be signed by the Chairman of the meeting at which the resolution was passed and countersigned by the Secretary of the Governing Body/ Executive Committee.

.

The resolution should name the persons authorized to operate upon the account, clearly specifying the powers of the authorized persons. The resolution should be signed by the Chairman of the meeting at which the resolution was passed and countersigned by the Secretary of the Governing Body/ Executive Committee.

.

The account-opening form duly signed by the authorized person(s) who would operate on the account

The account-opening form duly signed by the authorized person(s) who would operate on the account

An undertaking signed by all the authorized persons on behalf of the institution, expressly mentioning that as and when any change takes place in the persons authorized to operate on the account, the banker will be informed immediately.

An undertaking signed by all the authorized persons on behalf of the institution, expressly mentioning that as and when any change takes place in the persons authorized to operate on the account, the banker will be informed immediately.

Certified copy of the bye-laws or rules and regulations, clearly showing the limitations of the Managing Committee or the Governing Body.

Certified copy of the bye-laws or rules and regulations, clearly showing the limitations of the Managing Committee or the Governing Body.


REPORTINTERNSHIP

Chapter 5

FINANCIAL ANALYSIS OPERATING HIGHLIGHTS

BALANCE SHEET

PROFIT AND LOSS ACCOUNT

STATEMENT OF CASH FLOW

RATIO ANALYSIS

PROJECTED ANALYSIS


REPORTINTERNSHIP

BALANCE SHEETAS ON DECEMBER 31, 2005

(Rs. in million)2005 2004 2003 2002 2001

ASSETS Cash and balances with treasury banks 8788 5,580 3,625 2,814 4,448

Balances with other banks 9368 2,118 3,192 3,17

0 433 Lending to financial institutions 7594 1019 5,662 7,480 6,776

Investments 1803 16,198 11,45

8 8,295 5,970

Advances 6362 39,439 18,34

4 6,621 5,772

Other assets 2041 1,27

7 864 751 943 Operating fixed assets 1715 689 407 394 276

Deferred tax assets - - 6

8 - 185

111,155 66,320 43,620 29,525 24,803

LIABILITIES Bills payable 478 267 345 250 163 Borrowings from financial institutions 6791 2,832 2,684 1,290 2,509 Deposits and other accounts 88465 54,724 34,938 23,767 19,035 Subordinated loans - - - - - Liabilities against assets Subject to finance lease

5581 53

64

19

Other liabilities 1474 568 393 732 686 Deferred tax liabilities 220 9 - 117 -

97484 58,481 38,413 26,220 22,412 NET ASSETS 13671 7,839 5,207 3,305 2,391 REPRESENTED BY

RATED BY PACRA

Short term A1+Long term AA-


REPORTINTERNSHIP

Share Capital 2349 1,506 1,004 1,00

4 980Reserves 4257 2,770 1,946 1,368 1,275

Un-appropriated profit 169 144 1

02 1 - 6776 4,420 3,052 2,363 2,255

Surplus on revaluation of assets 6893 3,418 2,1

55 942 136Contingencies and commitments - - - - -

13670 7,839 5,207 3,305 2,391


REPORTINTERNSHIP

PROFIT AND LOSS ACCOUNTFOR THE YEAR ENDED DECEMBER 31 2005

(Rs. in Million) 2005 2004 2003 2002 2001

Markup/return/interest earned 6125 2,555 1,664 2,070 2,173 Markup/return/interest expensed 2668 719 484 998 1,113 Net Markup/return/interest income 3456 1,835 1,180 1,072 1,060 Provision against non-performing advances 32737 46 7

76

39

Provision for diminution in the value of investment - - - (23) - Bad debts written off directly 362 1 1 1 -

330,99 8 54 39 Net Markup/return/interest income after provisions 3125 1,778

1,172

1,018

1,021

Non markup/interest incomeFee, commission and brokerage income 255 173 97 60 52 Dividend income 753 554 279 189 110 Income from dealing in foreign currencies 93 41 13 20 19 Other income 228 328 442 105 59 Total non markup/interest income 1329 1,096 831 374 240

4455 2,885 2,003 1,392 1,261 Non markup/interest expensesAdministrative expenses 1275 1,116 999 900 837 Provision against claim for recovery of shares - -

-

39 -

Provision against excise duty recoverable - 32

-

16 -

Provision against off balance sheet items 4 1 1 - - Other charges 11 1 2 5 1 Total non markup/interest expenses 1290 1,150 1,002 960 838 Profit before taxation 3165 1,736 1,001 432 423 TaxationCurrent 668 225 285 123 161 Prior years - - - - 3 Deferred 143 141 27 25 21

811 367 312 148 185 Profit after taxation 2351 1,368 689 284 238


REPORTINTERNSHIP

STATEMENT OF CASH FLOWFOR THE YEAR ENDED 31ST DECEMBER, 2005

(Rs. in Million)2005 2004 2003 2002 2001

Cash flow from operating activities

Profit before taxation 3165 1,735 1,00

1 432 423

Less: Dividend income (754) (554) (279

) (189) (110)

(Gain)/loss on sale of fixed assets (5) (1) (1) (13) (3)

Compensation for delayed assessedincome tax refund - (29) (95) - (15)(Gain) on sale of investment (3) (102) (294) (57) -

2401 1,049 332 185 285 Adjustment for non-cash chargesDepreciation and amortization 78 71 55 34 21 Provision for employee benefits 12 9 (8) 25 8

Reversal for provision for diminutionin value of investment - 32 - (23) - Provision for excise duty recoverable - - - 16 - Provision for claim for recovery of shares (12) (7) - 38 -

Provision against non-performing advances 327 46

8

76

39

Provision against off balance sheet items - 1 1 - -

405 152 56 166 68 2806 1,201 388 351 353

(Increase)/decrease in operating assets

Landings to financial institution /Govt. Securities (6174) 3,593

(283)

(604)

1,512

Advances (24516)(21,142

) (11,73

1) (926) 333

Other assets (excluding advance taxation) (1053) (375) 5 108 4

(31743)(17,924

)(12,009

) (1,422) 1,849

Increase/(decrease) in operating liabilitiesBills payable 211 (77) 95 88 32 Borrowings from financial institutions 3959 147 1,395 (1,218) 1,108


REPORTINTERNSHIP

Deposits 33740 19,786 11,171 4,732 2,006

Liabilities against assets subject to finance lease (26) (25)

(15) (9)

-

Other liabilities (excluding current taxation) 620 165 (331) (155) (32)

38503 19,996 12,315 3,438 3,114 9566 3,273 694 2,367 5,316

Income tax paid (68) (254) (301) (235) (224)Net cash flow from operating activities 9498 3,019 393 2,132 5,092

Cash flow from investing activities

Net investment in held to maturity securities 1099 (2,035)

(876)

(1,020)

(2,003)

Net investment in available for sale securities (328) (1,373)

(994)

-

-

Dividend income (44) 549 272 189 109

Investment in operating fixed assets (2) (338) (74

) (99) (34)

Sale proceeds of property and equipment disposed-off 725 40 11

3

14

Net cash flow from investing activities 1450 (3,87) (1,661

) (927) (1,914)

Cash flow from financing activitiesBorrowing from other banks - - - - - Net cash flow from financing activities - - - - -

Increase in cash and cash equivalents 10948 (168) (1,268

) 1,205 3,178

Cash and cash equivalents at the beginning of the year 7797 7,966

9,236

8,031

4,853

Cash and cash equivalents at the end of the year 18745 7,798

7,968

9,236

8,031


REPORTINTERNSHIP

RATIO ANALYSIS

The re la t i onsh ip o f one i t em to ano the r exp ressed i n s imp le

ma thema t i ca l f o rm i s known as a ra t i o . A s i ng le r a t i o i n i t se l f i s

mean ing less because i t does no t f u rn i sh a comp le te p i c t u re . A ra t i o

becomes mean ing fu l when compared w i t h some s tanda rd . So we

have t aken ra t i os and pe rcen tage o f t he BOP based i n i t s r eco rd o f

t he pas t f i nanc ia l and ope ra t i ng pe r f o rmance . On t he f o l l ow ing

pages , I make t he ana l ys i s o f t he f i nanc ia l s t a temen ts o f BOP by

us ing re l a ted i t ems f o r t he l as t f i ve yea rs .

Liquidity Ratios:

Current Ratio

Year 2005 2004 2003 2002 2001

Ratio (Times)

1.14 1.13 1.14 1.13 1.11


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CURRENT RATIO

1.14

1.13

1.14

1.13

1.11

1.09

1.1

1.11

1.12

1.13

1.14

1.15

2005 2004 2003 2002 2001

YEARS

RA

TIO

This ratio measures the firm’s ability to meet its short-term obligations. In 2001

this ratio was 1.11 and in 2005 it was 1.14. In 2002 there is an increase in this ratio and

here ratio is reached to 1.13 and it is due to increase in Lending to financial institutions

and decrease in current liabilities such as borrowing from financial institutions and a

minimal decrease in bills payable. After that this increase in 2003 and then decrease in

2004. In 2005 with some increase in present year of 2005 it is 1.14. So overall the firm’s

position is strong because the standard ratio of current ratio is 2.

Quick Ratio:

Year 2005 2004 2003 2002 2001

Ratio 1.16 1.19 1.06 0.68 0.7


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QUICK RATIO

1.16 1.191.06

0.68 0.7

00.20.40.60.8

11.21.4

2005 2004 2003 2002 2001

YEARS

RA

TIO

A quick ratio of 1.0 or greater is occasionally recommended, but as with current ratio, an

acceptable value depends largely on the industry. There is an increasing trend in the

quick ratio of the bank. In the starting 2 years this ratio was below from the standard

ratio of 1.0 but in the next 3 years it is increases and reaches above of standard 1.0.

This increasing trend is due to increase in cash balance with other banks and increase in

lending to financial institutions A/R.

Networking Capital:

Year 2005 2004 2003 2002 2001

Rs. 13670114 7839083 14051008 10057601 10625831


REPORTINTERNSHIP

NET WORKING CAPITAL

13670114

7839083

14051008

10057601 10625831

02000000400000060000008000000

10000000120000001400000016000000

2005 2004 2003 2002 2001YEARS

Rs

Net Work ing cap i t a l , a l t hough no t ac tua l l y a r a t i o , i s a common

measu re o f a f i rm ’ s ove ra l l l i qu id i t y . Th i s r a t i o i s ve ry use fu l f o r

l ende r because when t hey l end o r depos i t s i n t he bank t hey check

i t s f l ows o f ne t wo rk ing cap i t a l . The re i s a i nc reas ing t r end i n t he

ne t wo rk ing cap i t a l o f t he bank wh i ch i s ve ry bene f i c i a l f o r t he bank

because i t can ra i se more l oans o r a t t r ac t s more depos i t s f r om the

cus tomers .

Analyzing Debt:

Debt Ratio:

Year 2005 2004 2003 2002 2001

Ratio 88 89 90 89 90


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DEBT RATIO

88

89

90

89

90

8787.5

8888.5

8989.5

9090.5

2005 2004 2003 2002 2001

YEARS

RA

TIO

The Debt ratio measures the proportion of total assets financed by the firm’s creditors.

The higher this ratio, the greater the amount of other people’s money being used in an

attempt to generate profit. In the Bank of Punjab the outsider’s contribution is nearly

about 90% of the total assets. There is nominal increase and decrease in this ratio of the

Bank of Punjab.

Debt Equity Ratio:

Year 2005 2004 2003 2002 2001

Ratio (%) 14.38 13.2 12.6 11.1 9.9


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DEBT EQUITY RATIO

14.3813.2 12.6

11.19.9

02468

10121416

2005 2004 2003 2002 2001YEARS

RA

TIO

The debt equity ratio is another computation that determines him entity’s long-term debt-

paying ability. From the perspective of long-term debt-paying ability, the lower this ratio

is, the better the company’s debt position. In 2005 there is a increase in this ratio and it

is due to increase in the bank’s total liabilities as compare to increase in the total

equities of the bank.

Efficiency Ratios:

Total Assets Turnover:

Year 2005 2004 2003 2002 2001

Ratio (Times)

0.45 0.33 0.31 0.62 0.91


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TOTAL ASSETS TURNOVER

0.450.33 0.31

0.62

0.91

0

0.2

0.4

0.6

0.8

1

2005 2004 2003 2002 2001

YEARS

RA

TIO

(TIM

ES

)

The total assets turnover indicates the efficiency with which the firm uses its assets to

generate sales. Generally, the higher a firm’s total assets turnover, the more efficient its

assets have been used. In the bank of Punjab this ratio shows a decreasing trend, which

shows that the bank cannot utilize its assets more efficiently.

Fixed Asset Turnover:

Year 2005 2004 2003 2002 2001

Ratio (Times)

0.173 0.267 0.378 0.272 0.462


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FIXED ASSET TURNOVER

0.173

0.267 0.272

0.462

0.378

00.05

0.10.15

0.20.25

0.30.35

0.40.45

0.5

2005 2004 2003 2002 2001

YEARS

RA

TIO

(TIM

ES

)

The fixed assets turnover indicates the efficiency with which the firm uses its fixed

assets to generate sales. Generally, the higher a firm’s fixed asset turnover, the more

efficiently its fixed assets have used. This ratio is continuously decreasing which means

the fixed assets are not used at optimum level of generating sales revenue.

Profitability Ratios:

Gross Profit Margin:

Year 2005 2004 2003 2002 2001

Ratio (%) 56.43% 71.85% 71% 52% 48.78%


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GROSS PROFIT MARGIN

48.78%

71.85%

56.43%52.00%

71.00%

0.00%10.00%20.00%30.00%40.00%50.00%60.00%70.00%80.00%

2005 2004 2003 2002 2001

YEARS

RA

TIO

The gross profit margin measures the percentage of each sales /service revenue rupee

remaining after the firm has paid for its services cost. The higher the gross profit margin,

the better the firm and vice versa. When we analyze the previous five years data of the

bank of Punjab it shows a very strong increasing trend. This is due to decrease in the

services cost.

Operating Profit Margin:

Year 2005 2004 2003 2002 2001

Ratio (%) 27.38% 14.34% 15.11% 13.48% 4.60%


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OPERATIN PROFIT MARGIN

4.60%

13.48%15.11%14.34%

27.38%

0.00%

5.00%

10.00%

15.00%

20.00%

25.00%

30.00%

2005 2004 2003 2002 2001

YEARS

RA

TIO

The operating profit margin measures the percentage of each sales/service revenue

rupee remaining after all costs of services and expenses other than interest and taxes

are deducted. It represents the pure profit earned on each service revenue rupee. This

ratio also has an increasing trend, which is due to decrease in cost of sales as well as in

operating expenses.

Net Profit Margin:

Year 2005 2004 2003 2002 2001

Ratio (%) 38.41% 53.54% 41.41% 13.71% 10.95%


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NET PROFIT MARGIN

38.41%

10.95%13.71%

53.54%

41.41%

2005 2004 2003 2002 2001

YEAR

RA

TIO

The net profit margin measures the percentage of each sales revenue rupee remaining

after all services costs and expenses, including interest and taxes, have been deducted.

The higher the firm’s net profit margins, the better. The net profit margin is a commonly

cited measure of the firm’s success with respect to earnings on service revenue. So

when we analyze the previous 5 years data of the bank of Punjab it shows a strong

increasing trend. But in 2005 the percentage of net profit margin decreases at very point

as compared to previous years, it means the firm’s is going to very positively side in

respect to increasing trend.


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Return on Total Assets:

Year 2005 2004 2003 2002 2001

Ratio (%) 1.58 0.96 0.95 0.7 0.15

1.58

0.96 0.95

0.70

0.15

0

0.2

0.4

0.6

0.8

1

1.2

1.4

1.6

RA

TIO

(%)

2005 2004 2003 2002 2001

YEARS

RETURN ON TOTAL ASSETS

The return of total assets also called the return on investment. Measures the firm’s

overall effectiveness in generating profits with its available assets. The higher the firm’s

return on total assets the better. There is a increasing trend of the bank of Punjab return

on total asset which shows a effectiveness in generating profits with its available assets


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Return on Shareholder’s Equity:

Year 2005 2004 2003 2002 2001

Ratio(%) 22.58 12.01 9.88 7.2 1.54

Return on share holder equity

22.58

1.54

7.209.88

12.01

2005 2004 2003 2002 2001

Years

Ra

tio

(%)

The return on equity measure the return earned on the owner’s investments in the firm.

Generally, the higher this return, the better off is the owners. There is a increasing trend

in the return in equity of the bank of Punjab.

Price Earning Ratio:


REPORTINTERNSHIP

Year 2005 2004 2003 2002 2001

Ratio (Times)

3.12 3.95 3.18 8.58 99.57

PRICE EARNING RATIO

99.57

8.583.12 3.95 3.18

020406080

100120

2005 2004 2003 2002 2001

YEARS

RA

TIO

(TIM

ES

)

The price-earning ratio is commonly used to assess the owner’s appraisal of share

value. The P/E ratio measures the amount investors are willing to pay for each rupee of

the firm’s earning. There is a decreasing trend in the P/E ratio of the bank of Punjab, and

it is due to more proportionate increase in EPS as compare to market price per share.

Earning Per Share:


REPORTINTERNSHIP

Year 2005 2004 2003 2002 2001

Rs. 6.87 2.85 2.36 1.84 0.35

6.87

2.85 2.36 1.840.35

0

2

4

6

8

YEARS

2005 2004 2003 2002 2001

RATIO(%)

EARNING PER SHARE

The firm’s earning per share is generally of interest to percent or prospective

stockholders and to management. The earning per share represents the number of

rupees earned on behalf of each outstanding share of common stock. There is a

increasing trend in earning per share of the bank of Punjab which is very attracting for

the prospective stockholders and for management.

Dividend Payout Ratio:

Year 2005 2004 2003 2002 2001


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Ratio (%) 0 0.61 0.63 0 0

0

0.61 0.63

0 00

0.2

0.4

0.6

0.8

RATIO(%)

2005 2004 2003 2002 2001

YEARS

DIVIDEND PAYOUT RATIO

The dividend payout ratio measures the portion 0f current earning per common share

being paid out in dividends. The bank of Punjab declared dividend only in 2003 and

2004. In 2003 the dividend payout ratio is .63 and in 2004 this ratio is .61.

Dividend Yield Ratio:


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Year 2005 2004 2003 2002 2001

Ratio (%) 0 0.11 0.095 0 0

0

0.110.095

0 00

0.05

0.1

0.15

RATIO

2005 2004 2003 2002 2001

YEARS

DIVIDEND YIELD RATIO

The dividend yield indicates the relationship between the dividends per common share

and the market price per common share. If the firm successfully invests the money not

distributed as dividends, the price should rise; this situation is with the bank of Punjab.

That is why the bank of Punjab declared dividend only in 2003 and 2004.


REPORTINTERNSHIP

Chapter 6

CONCLUSION & SUGGESTIONS STRENGTHS

WEAKNESSES

OPPORTUNITIES

THREATS

CORPORATE PORTFOLIO ANALYSIS (THE BCG MATRIX)

AREAS OF IMPROVEMENTS FOR BOP

CORPORATE OBJECTIVES FOR BOP

SUGGESTIONS TO IMPROVE

SUGGESTION TO CHANGE

OBSERVATIONS ON BEST PRACTICES


REPORTINTERNSHIP

NOTE: These are my own studies and suggestions for the improvement and upgrading

of the Bank of Punjab, may be the management of the bank not agreed upon on these.


REPORTINTERNSHIP

STRENGTHS

The major shares of BOP are owned by the Government of the Punjab, so it can

develop a good image & trust among its customers.

Stability of Bank is strength of any bank. The Bank of Punjab has growth since its

establishment.

The Bank of Punjab provides the loan facility on sound basis that is very crucial for

any bank to recover the loan. The Bank of Punjab has conservative policy for

advances. So there are very few bad debts.

Personal selling has key role in banking services. The officers of the Bank of Punjab

go to the potential customers to develop the business. By the relationship with

customers, they achieve the deposit targets.

The promotion criteria of the bank are on the basis of the efficiency and passing the

diploma examination of Institute of Bankers, Pakistan.

It is the policy of the management that requirements are made according to the

principles of merit.

There is no union in the Bank of Punjab.

Working environment is good. Managers and Officers work together as a team.

They are very cooperative with each other.

The officers are really cooperative, supportive and helpful, in my experience during

internship in shah rukn-e-aIam branch noted their involvement to prepare each case

of loan.


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The bank has very spanned network of branches in Punjab as well as in other

provinces also.

Profit rate is high as compare to other banks.

It provides courteous services to its customers.

WEAKNESSES

The Bank of Punjab is centralized organization. The authority is not given to the

branch level. Branch Managers have to take permission from the Regional office or

Head office for credit except Quick Cash. Managers had to get permission if they

have to given more rate of profit to the customers. So the customers have to wait for

days, which may cause the change of customers. Managers cannot negotiate with

customers without the permission of Head office.

The Bank of Punjab has less modern technology. Most of branches are

computerized but not online. Due to lack of online facility, the bank’s services are

low and foreign banks and other online banks have large market share. In this era

modern technology like Online and ATM are very necessary for competition.

Salaries of the officers and staff members are less as compared to other private

banks.

The Bank of Punjab has very less promotional activities. Their advertising campaign

is very weak. They only use personal selling and some newspapers advertisements.

The Bank of Punjab has less staff members in the branches of Southern Punjab as

compared to Upper Punjab. This deviation creates problem for the employees, they

spent most of their time in the bank to complete even their daily routine work. They

have to sit till 7:00 or 8:00 pm before going back to their homes. For this reason their

normal life is disturbing which create the irritation in the behavior of employees.


REPORTINTERNSHIP

The bank’s expenses are increasing at very high rate.

The Bank of Punjab has less interest in foreign exchanges, and very few branches

are involved in the business of foreign exchange business.

Mostly small branches are running in loss.

The bank of Punjab has only six regional offices in whole Pakistan. It is very difficult

to control all branches.

The Bank of Punjab is deviating from the basic banking principles, because the basic

function of bank is to accept the deposit and advance loans. But analysis of financial

statement of Bank of Punjab showing the advances are less as compared to

investment.

BOP is not taking keen interest in the marketing of traveler’s cheque than other

banks. So, BOP is loosing its share due to the less interest.

Duty Hours Are not Properly followed the working hours are from 9:00 A.M to 5:00

P.M. this is because of extra burden of work on them and desire to fulfill the goal of

the branch

It has been observed that most of the staff member knowledge is limited. They only

know their routine duties. If any thing other than normal routine occurs, they are

confused.

It has a non-professional management.

There is Lack of modern banking techniques like ATM’s, online banking, credit cards,

and traveler cheques.

Employees are unsatisfied due to unfair promotion system. There is not a right

criterion for promotion; many of vacancies are filled at approach basis.

Employees have Lethargic attitude especially in main branches.


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OPPORTUNITIES

Although commercial banks have launched may products but a gap existing between

the customer’s want and what the banks are providing. This is an opportunity for the

Bank of Punjab to move in and fill the gap between the ideal bank and the current

service offerings by aggressive advertising, consumers’ friendly attitude products and

service for attracting customers.

The bank has opportunity to expand the branch network all over the county, and it

would be able to develop business and can start many other schemes for

investment.

The Bank of Punjab has opportunity to use latest technology for providing good

services to customers.

There is an opportunity for more businesses if the BOP opens its branches in foreign

countries.

There is an opportunity for more businesses if the BOP offered credit cards.

Different multinational are establishing their business in Pakistan. So there is a lot of

potential for future businesses.

Providing advance technologies through out the country in its branch network should

do modernization of bank. It will attract customer’s attention. Deposits and advances

rates will increase hence profit rate increases.

Steps should be taken to increase bank’s deposits and advances, as these are less

than other competing banks. Such policies should be adopted by bank that can

attract customers and rate of deposits and advances can increase.


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The presence of more technical and professional staff can help out the bank in

making progress especially in marketing department which should have effect on

Bank’s policy making, making schemes of bank successful and can stabilize down its

position.

BOP should concentrate more industrial sector and agriculture sector. They should

provide finances to the farmers both on short term and long term basis.

New schemes for deposits and finances should be introduced regularly.

Proper advertising of the products of the bank.


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THREATS

The salaries of the officers and staff members are less as compared to other banks.

It may cause experts’ drain from the Bank of Punjab to other banks.

Expansion of newly establishing banks like Faysal Bank, PICIC Commercial Bank,

Union Bank, Bank Alfalah, Askari Commercial Bank etc., and their better

performance may cause loss of the market share of the BOP. According to the

World Bank report, the Pakistan has become an “over banked” economy. With the

cutthroat competition for deposits in the industry, the battle is on for the market

share. The concept of 24 hrs banking, telephone and online banking, ATM and

credit card are a direct result of the intense competition. But BOP is far behind the

above mentioned services and will not provide better services as compared to other

banks; it will lose its market share.

The Bank of Punjab is also forced to give loans on potential basis. Due to this the

recovery of such loans may become very difficult.

Promotional activities of the BOP are not sufficient. Due to this it may lose market

share.

Due to low entry barriers, there are more competitors; also the global competition

has increased.

Because of unfair promotion system and absence of proper recruitment techniques

competent persons may move to o Financial environment is changing day to day,

new technologies are introduced by foreign banks that provide customer efficient and

quick services.

There is a need of proper marketing because certain schemes face failure due

ignoring marketing of the product. Failure of the schemes or products is a threat

because it becomes a cause of decrease in profits.


REPORTINTERNSHIP

Financial environment is changing day by day, new technologies are introduced

by foreign banks that provide customers by efficient and quick services.

Employees are involving so much in internal politics & lobbies among them,

which disturb working conditions & goodwill of the bank.

Lack of customization.


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CORPORATE PORTFOLIO ANALYSIS (The BCG Matrix)


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HIGH LOW

AN

TIC

IPA

TE

D G

RO

WT

H R

AT

E Star

MARKET SHARE

dogs

CASH LOW

QUESTION MARKS

HIGH


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AREAS OF IMPROVEMENTS FOR BOP

STRUCTURE> Work specialization> Departmentalization> Chain of command> Span of control > Centralization> Formalization> Job redesign

PEOPLE> Attitudes> Expectations> Perceptions> Behavior

TECHNOLOGY> Work processes> Methods> Equipments


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SUGGESTIONS TO IMPROVE

The banks overall objectives and strategies should be formulated.

Major objectives should be allocated among divisional and departmental units.

Regional chiefs collaboratively set specific objectives for their units with their

branch managers.

Specific objective must be collaboratively set with all department members.

Defining how objectives are to be achieved, are specified and agreed upon by

branch managers and employees.

The action plans should be implemented.

Progress toward objectives must be periodically reviewed, and feedback is

provided.

Successful achievement of objectives must be reinforced by performance based

rewards.


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CORPORATE OBJECTIVES FOR BOP

Strategic Objective

A bigger market share

A higher, more secure industry rank

Higher service quality

Lower cost relative to key competitors

Broader or more attractive product line

A stronger reputation with customer

Superior customer services

Recognition as a leader in technology and/or product innovation

Increased ability to compete n international markets

Expanded growth opportunities

Financial objective

Faster revenue growth

Faster Earnings growth

Higher dividends

Wider profit margin

Higher returns on invested capital

Stronger bond and credit ratings

Bigger cash flow

A rising stock price

A more diversified revenue base

Stable earnings during recessionary periods


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SUGGESTIONS TO CHANGE

Education and Communication

Communicate with the employees to help them see the logic of change.

Educate employees through one-on-one discussion, memos, group meetings, or

reports.

Appropriate if source of resistance is either poor communication or

misinformation.

Must be mutual trust and credibility between branch managers and employees.

Participation

Allow those who oppose a change to participate in the decision.

Assume that they have expertise to make meaningful contribution.

Involvement can reduce resistance, obtain commitment to seeing change

succeed and increase quality of decision.

Facilitation and support

Provide supportive efforts such as employee counseling or therapy, new skills

training, or short paid leave of absence.

Negotiation

Exchange something of value to reduce resistance.

May be necessary when resistance comes from a powerful source.

Potentially high costs and likelihood of having to negotiate with other resisters.

Coercion

Using direct threats or force.

Inexpensive and easy way to get support.

May be illegal, even legal coercion can be perceived as bullying.


REPORTINTERNSHIP

Chapter 7

APPENDIXES

Usman Final

Documents

Transcript of Usman Final