Faysal Bank Ltd.

PREFACE
Internship training programme provides a chance to students to make themselves Familiar with the actual business environment. It also provides an opportunity to study the theories of book in practice. This is the reason why the students of IMS are required to complete internship programme at any recommended organization. After completing the internship, it is required to write an internship report, covering all aspects of that organization This report is written on Faysal Bank Limited, which is divided into seven parts covering all the working and behavior Of organization

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ACKNOWLEDGMENT
By the grace of Allah the almighty, who has enabled me to do this entailing hard work. It is a matter of great pleasure and privilege for me to write this internship report on Faysal Bank Limited, Multan Branch., I am pleased to acknowledge the help which I received in write this report. I express my special thanks to following persons, working in Faysal Bank Limited, Multan Branch for their kind cooperation in completing this report. Mr. Safdar Qureshi Mr.Kamran Ashraf I am also to acknowledge Prof. Muhammad Rizwan, the Director of our internship program, has always patronized the internship training programmes &without his inspiring teaching & guidance, I Would not have been able to write this report . I am indebted to my class fellows who gave their Valuable suggestions at the time when they were most needed.

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BANKING SECTOR IN PAKISTAN

WHAT IS BANK?
In Simple words we can say that bank is a pipeline through which money moves into and out of circulation. Bank accepts deposits and repays cash to its customers on demand. The bank borrows money at a lesser rate of interest and lends it to the borrower at a higher rate.

HISTORY OF BANKING IN PAKISTAN

At the time of independence, there were 487 offices of scheduled banks in the territories now constituting Pakistan. Following the announcement of independence plan in June 1947, the Hindus residing in the territories now comprising Pakistan started transferring their registered offices in Pakistan, transferred them to India in order to bring a collapse of the new state. By 30th June 1948, the number of offices of scheduled banks in Pakistan declined from 487 to only 195.

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BANKING IN PAKISTAN
Pakistan has indeed unique banking history commencing as were from scratch at the time of Pakistan of this subcontinent. However it soon comes over its extra ordinary banking problems and by grace of Allah we have a stable banking sector.

INTRODUCTION
Faysal Bank Limited (Bank) was incorporated in Pakistan on October 03, 1994 as a public quoted company listed on Karachi & Lahore stock Exchanges. The six Pakistan branches of Faysal Islamic Bank of Bahrain E.C. amalgamated with the Bank when it commenced business operations effective January 01,1995. The year 2002 is the 15th year for Faysal Bank serving the Pakistani economy and market. Similarly, Al Faysal Investment Limited was incorporated in Pakistan in 1991 as the investment arm of the group and make valuable contributions in the public and private sectors based on Shariah approved modes of funding. As of January1,2002, the two entitles of the group in Pakistan, Faysal Bank Limited and Al Faysal Investment Bank Limited, merged into one and today only Faysal Bank Limited remains as a larger, stronger and much more versatile institution among private banks in the country. In fact it is amongst three largest in terms of quality, which after the merger stands at over Rs.4.0 billion. The total balance sheet size of Faysal Bank after the merger is in excess of Rs. 40 billion

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SHAREHOLDERS
The Bank has been incorporated with an authorized share capital of Rs. 1.5 billion of Which Rs.1.1 billion is issued and paid-up. As 31st December,1995 the Bank share capital was held by: Faysal Islamic Bank of Bahrain E.C.(FIBB) including its nominee directors NIT, general public and employee FIBB is a Bahrain based bank; established in 1982 and is a subsidiary of Dar AlMal Al Islamic (DMI), Geneva with H.R.H.Prince Mohammad Al Faisal Al Saud as its chairman

BRANCH NETWORK
The Bank has seventeen branches, five at Karachi, one at Quetta, three at Lahore, one at Faisalabad, one in Multan, one in Sialkot, two in Islamabad, one in Rawalpindi, one in Peshawar, one at Mirpur Azad Kashmir

LOCATION MULTAN BRANCH

Faysal Bank Ltd. Multan is located at 66-B Abdali road The Bank is very close to PIA office

STAFF OF THE BRANCH

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MISSION STATEMENT
OVERALL VISION
Faysal Bank derives its mission statement from its principals Shamil Bank Bahrain E.C and its holding company DMI Trust. The overall mission being: The introduction of a just and equitable financial system by being a world class multi-purpose financial institution, providing a range of specialized services, working on Shariah principles.

VALUES
y Training the spirit of Shariaa into modern financial products and services y Maintaining a high reputation for prudence in the financial community y Developing operational infrastructure, system architecture and business

strategies focused to customer needs, with whom the bank endeavors to share its success y Practicing the culture that each staff member is not a mere personal number, but part of one family, treating each other with respect. The management insist on quality training and management development programmes y Reflecting high standards of integrity, propriety, goodwill and teamwork in its conduct, within the family and its marketplace.

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HISTORY AND BACKGROUND

Faysal Bank Limited as incorporated as a public limited company under the Companies Ordinance,1994 on October 3,1994 in Lahore vide Certificate of incorporation No,LO7391 of 1994-95 with an authorized capital of Rs.1,500 million ordinary shares of RRRs.10/-each.The Ban has been established by Faysal Islamic Bank of Bahrain E.C.,pursuant to the federal Government

permission/sanction letter no.F 8(23) Bkg.IV/92-5443 dated April 7,1993 ,as amended, for establishment of a commercial bank The state Bank of Pakistan-SBP, vide its letter no . BRD (NBFI)676/625-E-93 dated September 16, 1993 has also agreed in principle to the setting up of the Bank in term of the governments aforementioned permission letter. SBPs said letter also contains interalia, its agreement in principle for they merger (amalgamation) with the Bank of the existing branches of Faysal Islamic Bank of Bahrain E.C. (hereinafter referred to as FIBB- Pakistan Branch) subject to meeting with the requirements of the law, in particular section 48 of the Banking companies Ordinance, 1962 & on the condition that the transfer of assets &liabilities shall be on the basis of the break-up value or net- worth of the FIBB-Pakistan Branch as per the books. The FIBB- Pakistan branch will merge with the Bank on a going concern basis.

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The entire under taking of FIBB in Pakistan scheme of amalgamation are as follows:  The entire undertaking of FIBB in Pakistan, including all it s assets & liabilities & all the rights & obligations, etc as at the effective data (data of approval of the scheme by the state Bank), shall with out any future act, action or deed, stand transferred to, & vest in the Bank . As a consequence, the FIBB Pakistan branch shall stand merged with the Bank.  A consideration for the transfer, the Bank shall pay to FIBB, a sum equal to the non-worth of its branches in Pakistan, as per the books, as on the amalgamation date, the net-worth will be certified by the auditors of FIBBPakistan Branch.  Notwithstanding the effective date, the cut-off date i-e the date as of which the amalgamation of FIBB- Pakistan Branch with the Bank shall be deemed to have taken place as envisaged to be the close of business on December 31, 1994.  After approval by the shareholders of FIBB &the Bank the scheme would be presented to the SBP for approval in terms of section 48 of the banking companies ordinance, 1962.  Bank was incorporated as a public limited company. Its shares are quested in Pakistan. 60% of the capital is held by Faysal Islamic bank of Bahrain E.C & 40% by the general public. The Faysal Islamic Bank of Bahrain E.C merged into the Bank when it commenced business operations on January 02, 1995. 8 INTERNSHIP REPORT

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CONFORMITY TO ISLAMIC SHARIAA

The Holy Quran outlines for Muslims a complete code of life for dealing individually or collectively. This is future amplified by saying and practice of Holy Profit(May be upon him) From these guidelines , an Islamic economic system can be elaborated upon, aimed at creating a socially, economically and politically viable and just environment supporting the universal well being of humanity In this context all functions of the bank are performed in strict adherence to the principles of Islamic Shariaa. In order to ensure such conformity of Shariaa, the Bank operations are checked and monitored by its Religion Supervisory Board to whom the management reports periodically. In case of new operations and activities prior approval of Religious Supervisory Board is invariably obtained by the bank management. The Religious Supervisory Board of the bank itself comprises eminent scholars of Islamic Shariaa from Bahrain, Egypt, Saudi Arabia, Turkey, and Pakistan possessing in-death knowledge of the conditions in which the Bank operates. The Groups Religion Board, composed also of many internationally renowned Islamic Scholars, provides advice from time on issue that pertain to Group level implementation

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GROUP OBJECTIVES
1. To put before all Muslims, contemporary Islamic financial services, helping to executive their financial dealing in strict respect of the ethical individual and social values of Islamic Shariaa, without contravening the heavenly imposed prohibition of dealing in riba (interest or usury). 2. To serve all Muslims communities in mobilizing and utilizing the financial resources needed for their true economic development and prosperity with the principles of Islamic justice assuring the rights and obligations of both the individual and community . 3. To serve the Ummat Al Islam and other nations by strengthening the fraternal bonds of common belief in Allah through mutually beneficial relationship for economic development and enhanced environment for peace. The above objectives are to be fulfilled in economically viable conditions of profitability, Insha Allah, for clients and shareholders. To implement these objectives, the Group has embarked on a long term plan to establish a worldwide plan-Islamic network of Islamic financial institutions comprising banking (massacre), investment, takefol (insurance), services and business development companies.

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ACTIVITIES OF THE BANK

Its activities include act as a manager, on a trustee basis of a series of Modaraba investments funds and private portfolio investments accounts in accordance with Islamic laws and principles particularly with regard to the prohibition of receiving or paying interest.

SOUND MANAGEMENT
Its sources are largely due to the management style and polices of senior manager. It sees Modaraba syndications as a major growth area and there are possibilities that the bank will arrange such syndications for corporations and companies in these countries especially in the high growth economics of South East Asia in particular Malaysia and Indonesia. There have been suggestions that this type of specialist facility could be intended to other regions such as the Middle East, North Africa and the Muslims Central Asia Republics where commodity export and import finance is in big demand.

SYSTEMS DEVELOPMENT
Faysal bank ltd. (FBL) provides a unique mix of services to its customers. That is why off the shelf software packages and third party vendours are not successful in providing a complete range of software packages to fully meet the operational needs of its wholesale and retail banking operations, customers services support

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and sophisticated MIS. The Bank has succeeded in completing in house development of software for meeting all of its requirements. This results in interlining all the operational units of the Bank to allow fast exchanges of data and information.

PURPOSE OF OPERATIONS IN PAKISTAN

The following are the main objectives of the establishments of FBL in Pakistan. 1. To extend Islamic financial services to the people of Pakistan. 2. To enhance trading relations between Islamic countries. 3. To support market opening in Pakistan by diversion and mobilization of surplus funds available from within and from other Islamic nations.

SERVICES OFFERED
FBL offers a wide range of banking services to public and private sector corporations, partnerships, individuals, professional, and expatriate Pakistan working abroad . These services include:

Deposits
Current Accounts Profit and loss sharing deposit Saving account Call/notice/term deposit accounts

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Foreign Currency
Current and saving accounts Call/notice/term deposit accounts.

Documentary Credits/Guarantees
Import letter of credit Negotiation and collection of export documents Issuance of letters of guarantee Performance bonds, etc.

Financing

Short Term
Modarba (Financing resale of goods) Working capital

Short/medium term Syndicated financing

Medium/long term Modaraba Moshakara Ijara

Other Services

Remittances
Demand drafts, pay orders, telegraphic and mail transfers.

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Foreign exchange bearer certificate NIT units. Foreign exchange and travelers cheques.

SOURCES OF FUNDS
The banks main sources of funds are: a. b. Demand deposits (current accounts balances) Investment deposits (funds under management) Within theses two basic categories, the bank is able to offer differently structured accounts to provide a range of deposit series

such as current, saving, call term, modaraba etc.

STRATEGIC INITIATIVES
Significant risk management initiatives have been taken to ensure ongoing health of the banks financing portfolio. These initiatives include risk rating of the entire portfolio on a predetermined risk scale, monitoring of industry concentration, classification of credits against State Bank of Pakistan as well banks own in house developed guidelines. A Risk Assets Review Unit (RAR) has also been established. PARs primary responsibility is to perform independent audit of the Banks financing and investment portfolio on an ongoing basis.

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CORPORATE AND INVESTMENT BANKING

Corporate banking business of the bank has been streamlined along target marketing approach. As a starter, cluster of industries strategically important to the economy and the country have been identified for doing business with. This target market identification effort is supported by full length studies of theses industries. Target Market criterion and minimum Risk Acceptance Terms have been established. Total portfolio has been scanned against these standards. As a result the Bank customers base is composed mainly of top tier namess and the exposure well diversified in all the strategic industries. On the investment banking side, Faysal has already been involved in a few significant roles it was one of the 9 sub underwriters of the PTC voucher sale last year, it is one of the main underwriters of the trend setting Rs.500 million TFC issues for Sui Southern which is due to be floated in the couple of months, and just recently it has been declared, in conjunction with Natwest Market and Shoaib Capital, as the lower bidder for the financial advisor ship position to the privatization of KESC. Using its big global network if contacts, including a strong position in the Middle East, Faysal intend to further develop this side of its business.

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CONSUMER BANKING
Faysal Bank continues to strengthen its position in consumer Banking. While extending quality service to retail customers, the Bank Offers attractive local and foreign currency deposit schemes. FBL Launched its first branded liability product Rozana Munafa Business Account in July 1995, targeted towards large corporate and personal business. The Bank has also redesigned and refurbished most of its branches, having a consistent identify in terms of design, dector and colour. FBL realizes the importance of customer focused services, having commenced Evening Banking at all nine branches. Personal Services Centers have also been established at most of the retail Branches Where Personal Service Officers are available to provide personalized service to individual customers and business. The Bank Plans to launch ATMs and telephone banking as a self service banking Concept available 24 hours on a countrywide basis in the near future. Priority banking for up scale customers will also be introduced during 1996.

HUMAN RESOURCE
Hiring and retention of talented and qualified personnel will Continue to receive priority attention. The recent trend in the financial sector calls for specialized training in the fields of credit, operations transactions banking,

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treasury and corporate finance. The bank is committed to providing the best needed training to its staff and to upgrade their skills.

SHARIAS IMPLEMENTATION
Bank continues to meet the liquidity requirements by making investments in Shariaa compatible instruments. Steps have been taken to bring operations of the bank in greater conformity with Shariaa operations are under review to evaluate their compatibility with the shariaa and to refine them in consolation with Maulana Mohammad Taqi Usmani, Deputy Chairman, Islamic Fiqah Academy (OIC).

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BOARD OF DIRECTORS
H.R.H Prince Mohamed Al Faisal Al Saud Mr. Farook Bengali Mr. Khalid Abdulla Janahi Dr.Said Saad Al-Martan Mr. Mahmood A. Faruqui Mr. Nasir Ali shah Bukhari Mr. Ziad H.Rawashdeh Mr. Tariq Iqbal Khan Chairman President & CEO Director Director Director Director Director Director

EXECUTIVE COMMITTEE
Mr. Khalid Abdullah Janahi M. Farook Bangali Mr. Ziad H. Rawashdeh Chairman Member Member

MANAGEMENT
Mr. Farook Bangali Mr. Khalid Tirmizey President&CEO Country General Manager, Commercial Banking Mr. M. K. Hoti Country General Manager, Investment Banking 18 INTERNSHIP REPORT

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Mr. Bashir A. Sheikh

General Manager Commercial Banking Central

Mr. Mohammad Saleem

Head of Country Operations & Information Technology

Mr. Ahmed Kamran

Regional Manager, Corporate Banking

Mr.Mansoor Hamdani Mr. Arif Hasan Khan

Head of Internal Audit Head of Human Resources& General Services

Mr. Ejaz Rahim

Deputy General Manager, Investment Banking

Mr. Zubair Gilani

Area Manager, Investment Banking North

Mr. Hasan Imam Mr. Mohammad Iqbal Mr. Mohammad Siddique Memon

Country Risk Manager Head of Finance Company Secretary & legal Advisor

Mr. Sohail Nawaz Mr. Richard Rath Mr. Saleem Shafi

Area Manager, North Area Manager, Southern Branches Head Corporate Communications

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COMPANY SECRETARY & LEGAL ADVISOR

Mr. Mohammad Siddique Memon Vice President

AUDITORS
A. F. Ferguson & Co. Charted Accountants

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ORGANIZATIONAL BEHAVIOUR
ANALYSIS OF ORGANIZATIONAL BEHAVIOUR
Some of the characteristics of the bureaucracy are present in the organizational structure of FBL. These include 1. 2. Positions arranged in hierarchy. ?In all the departments, excluding the Credit Marketing and Accounts, comparatively higher degree of the set procedures and rules exist.

VERTICAL ANALYSIS
1. Centralization Versus Decentralization Geographical FBL has its branches in main cities and countries of the world show that it is geographically decentralized. Functional All the seventeen branches of FBL have their own personal Departments. But, at the same there is a personnel Departments of all other branches in Pakistan Within Multan branch, there is centralization to a greater extent. Up to the level of Assistant Vice President and Grade 2 officers (only in the Credit Marketing Department), there is decentralization and there is too within the rules, polices, and procedures of the State Bank of Pakistan and Head Officers of the Bank in Bahrain. 21 INTERNSHIP REPORT

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2 Flat Versus Tall Structure The structure of the organization is tall with a few members at each level. As a result there is a narrow span of control and supervisors have close control over their subordinates

HORIZONTAL ANALYSIS
1. Departments FBL has a functionally departmentalized structure. As the organization chart shows, various functional departments are further departmentalized on the basis of their services. 2. Line and Staff Concept of Organization Persons at the management level (Senior vice President, Assistant Vice President, and Regional Vice Presidents) are in line while others persons are in staff.

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INTER SE RELATIONSHIPS
RELATIONSHIP AMONG THE EMPLOYEES OF ONE DEPARTMENT
Relationships among the employees are congenial and friendly. They take personal interest in each others joys as well as problems. They like to share the work of each other. Whenever an individual comes in the morning he, before going to his seat, visits other departments to keep himself in touch with other persons in the bank.

RELATIONSHIP AMONG THE EMPLOYEES OF DIFFERENT DEPARTMENTS

All the departments of bank are interrelated. They depend upon one another for the proper functioning of the among. All the departments keep full information of their department required it. This resulted in connecting all the departments of the bank like a chain, whose strength depend upon the strength of individual circle of the bond upon them.

RELATIONSHIP BETWEEN EMPLOYEES AND THEIR SUPERVISORS

Supervisors of FBL are the supporters, consultant, and above all the teachers of their subordinates. Whenever any worker faces any problem due to any reason, his supervisor is always ready to help him out, Additionally, the Open Door Policy relations between the managers and their subordinates. 23 INTERNSHIP REPORT

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GROUPS
Employees working in one department or related departments e.g. Credit Marketing, Credit Administration, are more close to none another because according to George Homans theory, the more numerous will be their interactions, and stronger will be their sentiments.

COMMITTEE ORGANIZATION
In FBL the committees are present at the top levels of the management pyramid. Theses committees include: 1. Branch Credit committee (BCC); This committee exists at the branch level. Every branch of the Bank has its own committee. The functions of these committees are to approve the credit up to a certain limit which has been allocated are to them by the Head Office in Bahrain. 2. Regional Credit Committee (RCC) This committee exists at the regional level.

JOB DESIGN
Job design is an important work area for work motivation and the study of organizational behaviour. It includes the specification of the tasks and activities associated with a particular job.

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JOB ROTATION
Management of FBL always try to adopt the modern management practices to improve further the efficiency its human resource. It continues to design new methods to make the job more interesting and acceptable to the workers.

JOB ENRICHMENT
This concept states that the job must be designed to provide opportunities for achievement, responsibility, advancement, and growth. The concept of job enrichment is very much applied in FBL. Because of the introduction of computer technology, the prospects of job enrichments has further increased.

GOAL SETTING
Goal setting is an effective tool for the practice of human resource management and an overall performance system approach in the form of management by objective (MBO).

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MANAGERIAL POLICIES
PRODUCTION FOR THE FORMULATION OF POLICIES
FBL. Policies are formulated at the three levels discussed below;

1. AT HEAD OFFICE LEVEL

At the head office (in Bahrain level policies are formulated to the BOD. A meeting is called upon between the members of BOD and the CGM from regional Head offices. Together they formulate the policies in the light of the main objectives of the Bank. Moreover, they also consider the economic, political, geographic, and social circumstances of each country analyzing with the Rules and Regulation of FEDERAL banks of these countries.

2. AT THE REGIONAL HEAD OFFICE LEVEL

At the Regional head office (for example in Karachi, the CGM calls upon the meeting of all the SVPs of theses meetings, the CGM put before SVPs all the polices agreed upon by the BOD and religious Board and, then, they together formulates the polices to be implemented within Pakistan.

3. AT THE BRA NCH LEVEL

At the branch level SVPs of each branch call upon the meetings of all the managers in the branch and communicate to them the polices agreed upon by the BOD and at the Regional Head Office. Along with the implementation of the polices decided in Regional Head Office, SVPs and the managers formulate polices at the branch level. 26 INTERNSHIP REPORT

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IMPLEMENTATION OF POLICIES
Managers, officers, and workers, at each level, try to follow the polices set up at various levels. Any failure in following up the polices are immediately brought to the notice of the corresponding management along with the reason, either proposes solutions for the implementation of polices or makes amendments in the polices, if reasons for non-compliance are genuine.

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TYPES OF MANAGEMENT POLICIES

The following main types of managerial polices have been discussed here:

1. Personnel Policies
Personnel polices cover the major problems of providing and maintaining an efficient work force.

2. Marketing Policies
Marketing polices deal with the problems of planning for sales activities.

3. Financial Policies
Financial polices are concerned with the problems of providing and handling capital That is required for the business.

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PERSONNEL POLICIES
Banking is a business of trust. It is only on the basis of trust that people deposit their money and other valuables in the bank. Moreover people also believe that their money will be best taken care of. The image and efficiency of the banking is conditioned largely by the quality and expertise of banking personnel. Fresh university graduates are selected and imparted theoretical and practical training. On completion of practical training, bank managers absorbs the trainees in their organization

THE TOOLS OF PERSONNEL MANAGEMENT

Selection of Employees
Educational background of the persons wishing to get job in FBL are primarily taken in to consideration. Integrity of the person is also important. For this purpose, references are required so that the person giving the references can be contacted in case of any lose to the institution by that person. Bank policy is to take such references in writing. At the lower level, Bank has mostly hired young staff and fresh graduates. However, some employees have also been transferred from other institutionsboth banking and non banking. At the management level, mostly experienced staff is working and has been hired from other banking institutions.

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Individuals, once selected by the Selection Committee, are kept under observation in the beginning. During that period their capabilities, IQ, ability to do various jobs, behaviour and many other things are checked. When selection committee

gets satisfied with their performance their appointed as training officers. This is one step before the selection of the individual as an officers.

Selection Criteria
Bank management is very particular while recruiting and including in their work force. The suitability of the individual is always checked by the method shown above in order to avoid any complications in the future. Before recruiting any individual management makes sure that the person has capabilities to work for achieving targets of the organization. It is because of this policy and practice employed while recruiting the employees that till now, no man has been asked to quit the job. However, Bank does not stop the employees from leaving the jobs themselves if new job is more suitable to them.

PROMOTION FROM WITHIN THE ORGANIZATION

Bank, as discussed previously, is very choosy for hiring employees. Fresh graduates hired at the lower level are trained to move up various levels in the organization. They are developed for higher jobs and higher responsibilities. Till 1989, all the officers working at the upper levels have been promoted from within the organization.

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Training
Training has become a pre-requisite for advancement in the profession. In FBL, employees are provided training according to the requirements of the individuals. Training programmes attended by the Bank employees are mostly sponsored by Pakistan Institute of Management and Institute of Bankers in Pakistan. Management accesses the development and training needs of each individuals and enrolls the employees accordingly. Along with these formal training programmes, employees are given informal training regularly by their immediate superiors according to individual needs and deficiencies. In short, training is a continuing in FBL. If the people are hired from outside for higher jobs and the already working employees remain working in their grades, it becomes difficult to maintain the desired levels of performance. Moreover, such a practice also results in creating unrest among the employees, and as a result the cannot wok up to their maximum capabilities.

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COMPENSATION FOR OVERTIME

In banking business employees have to clear their wok daily. Whenever there is extra work in a day, it has to be cleared up the same day so that work can be started for fresh next day. For this purpose, employees some times at the end of month or at the end of year have to do extra work. It is job of Selection Committee to see what is the level of extra work done by employees and from time to time they compensate them according to the contribution of the employees.

PROCEDURE FOR GETTING SALARY

All the employees of the bank have maintained an account with the Bank. In the beginning of each month, the accounts department credits the salary in the accounts of the individuals.

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ARRANGEMENT FOR WORK

1. HOURS OF WORK
Timing of the Job
9.00 a.m to 5.00 p.m With one hour break for lunch and Zuhar prayer Days: 5 days a week

2. VACATIONS
Causal leaves: Privilege leaves: 15 per anum 30 per anum

Privilege leaves are given to the employees for relaxation and recreational purposes after continuous work. Such leaves help the employees in mental and physical relaxation. During one month of privilege leaves, employees are also given the pay for that month so as to compensate for the recreational charges he has to bear during that period. Employees are encouraged to take the leaves allowed to them by the Bank so that they can get some time out of their busy routines. This practice has shown that the employees feel more fresh, enthusiastic, and energetic when return to their jobs after vacation. Medical leaves are also provided to the employees if an employees is not feeling fit and needs for getting well properly. Bank also reimburses the medical 33 INTERNSHIP REPORT

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expenses and their dependents i.e. Bank pays 100% medical free payables on the behalf of its employees.

3. WORKING CONDITIONS
Working conditions both physical and environment are very crucial for employees working in any organization since it is the organization where they spend most of their day. Working conditions can both motivate and de-motivate the employees depending upon whether proper or improper working conditions have been provided. From the environment maintained in, even a person FBL who enters the Bank for the first time can realize that the management of Bank is well aware of the important impact of working conditions on the efficiency and morale of employees.

4. SAFETY
Safety is the main concern for manager, officers and employees. The money and other valuables in vaults and lockers in banking business are more then any other business. Therefore, management of FBL has taken special measures to safeguard the life and property of both their employees and the customers. Many of these measures were decided and taken at the time of the construction of the building while others short term decision were taken after the bank started proper functioning. Some of the salient features of such safety measures are discussed here:

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a)

The walls of the lockers area and the cash vault are made up of concrete which makes them non-drillable. Moreover the lockers and the vault are made up fire-proof steel. These measures help preserve the loss and cash either by some human being or by an accident such as fire.

b)

Two gunmen have been appointed at the entrance who make sure that no suspicious person enters the Bank. These are responsible for safeguarding the life and property of Bank s employees and customers. One guard is also present at each floor. Shifts of guards change with time. After banking hours, one guard remains in the Bank over night.

c)

Doors are made up of heavy wood so that it becomes difficult for a running person both to enter or leave the Bank. This makes sure that in case of robbery, the person to open the door quickly.

d)

In order to safeguard against fire, special alarm system has been installed in the Bank. Smoke detecting instruments, present on the roof, start ringing the alarm bell whenever they detect smoke. In case of fire, this system will help saving the life of the persons in the Bank who can leave the Bank immediately through special exit door.

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5. PHYSICAL CONDITIONS
The following physical facilities have been provided by the Bank:

a) Light
There is a proper arrangement of light in the Bank. The whole bank is illuminated with lights, which makes the working conditions pleasant. Moreover, there is also suitable arrangement for daylight in the entire building.

b) Temperature
Central heating/cooling system ensures the moderate temperature necessary for proper working of the employees. Some other facilities provided to the customers include: calm and quit working environment, modernly designed washrooms , fully carpeted.

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MARKETING POLICIES
SERVICES POLICIES
Introducing a Service in the Market: FBL considers multitude of factors while introducing a new service in the market.

a)

The primary aim and objective and the basic reason of establishment of the Bank is the promotion of Islamic Banking System. This, therefore, service as the main guiding force for all of the activities of the Bank. This factor is taken in to consideration every time Bank introduces a new service. Religious Supervisory Board makes sure that every instrument, which the Bank is planning to use, meets the requrement of Islamic Shariaa.

b)

FBL has introduced rupee deposits product, Rozana Munafa, whose main features (no account charges, a high yield as well as transaction convenience etc.) and even its name, was developed in close collaboration with a focus group of actual and potential customer of the bank.

c)

Bank is largely under the expansion and is planning to open many new branches in Pakistan, Recently there are nine branches operating in Pakistan and two other branches in Sialkot and Gujranwala are going to start their operation.

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PROMOTIONAL POLICIES
ADVERTISING
FBL spends relatively less on advertising than mutual savings banks and savings and loan associations, its main competitors FOR deposits. However, the Bank is spending more of its attention on Rozana Munafa Scheme through newspapers.

DIRECT CUSTOMER SOLICITATION

Management FBL believes in promotion through direct customer solicitation. They believe that direct personal contacts produce more spectacular result.

FINANCIAL POLICIES
SOURCES OF CAPITAL
Deposits are the major source of capital for FBL. Deposits are mostly obtained from customers. However, Head Office also invest a certain amount of money as deposit from time to time to earn money on his investment.

MONEY AT CALL
In case the Bank needs capital and deposits with it are not sufficient to its requirements, the Bank goes to the inter Bank market for finances. From this local market Bank can obtain both long and short term finances. Such money is called 38 INTERNSHIP REPORT

Faysal Bank Ltd.

the Inter Bank Call Money and is obtained at Inter Bank Call rates decided by the SBP.

Investment
Another source of obtaining capital for the Bank is the profits which it earns on the amount invested in various projects.

Investment Portfolio
1. FBL is very particular while investing its money . It never invested its money in Treasury Bills with SBP through such n investment promises highest returns. But since, such investment is based on interest, it is not used by the Bank. 2. FBL has very conservative portfolio policy. It mostly gives loan to very established customers. Moreover, its investment in shares is very small.

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REPAYMENT OF LOANS
Delay on the part of customers for the repayment of loan is a big problem for other banks. In Islamic system, Morabaha transactions provide a sort of protection against such risks because the maturity period of Modaraba transactions very short. Only 60,120,180 days are required for the liquidation of the transaction. Within such a short period , the management evaluates the customers on the basis of whether he is paying the due amount or not. Bank has never given any loan whereby customers has to pay the installment after three years and has never allowed the customers to continue taking the profits while doing adjustment once a year.

RESERVE WITH SBP

Every bank has to maintain 25%of its capital with SBP. This amount can either be kept in PLS or in Treasury bills on. On T-bills, the rate of return is 11% which is more than on PLS. But since treasury bills are non-Islamic, therefore, FBL does not keep the deposit in Treasury bills.

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OTHER POLICIES
1 There are no restrictions on advising letters of credit received from any bank favoring customers or other beneficiary (lies) who does not have dealings with FBL. 2 If the beneficiary of the letter of credit is an FBL customer, he is advised immediately over telephone about the receipt of credit. When the customer or his authorized representative visits the3 Bank, the officer hands over the letter of credit along with a covering letter. The officer retains a photocopy of the credit in the file. 3 If the beneficiary of the letter of credit is not the Bank customers, over telephone followed by a mail advice. Before delivering the letter of credit to the beneficiary or his representative, the officer obtains an authority letter. The signature on this letter is verified by the beneficiaries banker, which, in turn is verified by Bank designated employee/officer. The letter of credit is then delivered to the beneficiary or his authorized representative after retaining a photocopy in the file.

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DEPRECIATION
Depreciation is provided on the straight line method at rates intended to write off the cost of various assets over their estimated useful of three to ten years, freehold buildings over their estimated useful life of fifty years and leasehold buildings over the life of the lease. Land and capital work in progress are not depreciated.

SIGNIFICANT ACCOUNTING POLICIES

PREPARATION OF FINANCIAL STATEMENTS
Foreign Currency Translation Foreign currency transactions are translated into US dollars at the approximate rates of exchange prevailing at the transaction date. Fee and other Income Fees arising from the management of Modaraba investment funds and private portfolio investment accounts are accrued as income on the basis of Banks entitlement to achieve such revenue as defined in the Banks contract with the investor. Commissions earned on letter of credit and letter of guarantee issued are taken to income in full when earned.

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Amount Allowable as Increase in Expenses

During one year while making the budget, overall expenditures can be increased only up to 10% of the expenses of the base year. Some expenditures can show an increase of 20%, some 5% etc. But overall increase should be less than or equal to 10%.

Short Term Investments and Islamic Securities

Parallel sales and purchase of currency transactions with major financial institutions are carried at cost, and income is accrued on the straight line method over the period of related transactions. The statutory with the State Bank of Pakistanis stated at cost and income is recognized on the basis of profit declared Investments in Modarabas, trade pools, commodities pools and Islamic marketable securities are stated at cost and changes in unit valuation are dealt within the statement of income.

Islamic Financing
Islamic financing consists of mainly trade financing agreements (Modaraba) or investments in joint ventures (Musharaka) which are stated at cost. Where the ultimate income is both contractually determined and quantifiable at the commencement of transaction then such income is accrued at straight line basis over the period of transaction. Where the income from a contract is not

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contractually determined or quantifiable, it is recognized when reasonably certain on realization.

Provision for losses on Islamic Financing

Bank maintains two types of provisions: Specific and General. Specific provisions are made for losses arising on Islamic financing advances where the directors consider that loss is probable.

Deferred Taxation
Deferred taxation is provided using the liability method.

Approval Requirements for L/C

If the documents contain discrepancy (ies), if the L/C opening bank name is not included in the Global list of 500 Rated banks compiled and published by the Banker, if the beneficiary of the letter of credit is not FBLcustomer and the documents have been represented through another bank, and if the signature on the letter of credit could not be verified or if the letter of credit was received by telex that could not be authenticated then negotiation of export documents is done with the approval of Branch Manager.

Processing Under Reserves

Negotiations/purchases of export documents containing discrepancy(ies) is handled under reserve after obtaining approval on a case by case basis from the Branch Manager.

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Documents Presented Under L/C of Non-Rated Banks

The documents/drafts under letter of credit of banks outside the list of 500 rated banks compiled and published by the banker are negotiated/paid against customer indemnity with the approval of the branch manager. The indemnity requirement can be waived the branch manager.

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Faysal Bank Ltd.

SERVICE FACILITIES
Faysal Bank continues to strengthen its position in consumer banking. For extending quality service to retail customers, the bank offers attraction local and foreign currency deposit schemes. FBL launched its first branded liability product Rozana Munafa Business Account in July 1995, targeted toward large corporate and personal business. The bank has also redesigned and refurbished most of its branches, having a constant identity in terms of design, dcor and colour. FBL realizes the importance of customer found services. That is why it has commenced evening banking at all seventeen branches. FBL is divided in to following departments, which provide different facilities to different customers:  Customer Service Department  Documentary Credit Department  Credit Administration Department  Credit Operations Department  Corporate Banking Group Department  Accounts & general Services Department Customer Service department is further divided in to two sections which include Account Opening section and Cash dealing section To provide better and accurate service the Bank has computerized the bank accounts which results in saving the time along with greater speed, accuracy and neatness in accounts.

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MANAGEMENT INFORMATION SYSTEM

MANAGEMENT INFORMATION SYSTEM
Information system is the life blood of any firm especially the financial institution. In FBL, managers make use of it to formulate polices, make decisions, and resolve problems. Management and other employees of FBL together with the use of sophisticated computers and carefully planned and designed procedures are able to achieve the maximum pay-offs for the Bank within the special goals. Information is the major ingredient of the success of the bank especially in the credit department where the credit officers get all the pertinent data, organize it in a form suitable for the managers and to obtain necessary information and to base their decisions upon some logical and sound footings. In FBL management Information System is the responsibility of the Account Department. All the information generated in various departments is routed to the Accounts Department where it is presented in a form usable for the managers at different levels and other users of information.

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INFORMATION
SOURCES OF INFORMATION
Patterns of communication exist to ensure that the manager get right information at right time. Some sources of getting information include; telephone, personal communication with employees, public, etc. other banks, and clients. Upper management is also one important means of providing information to the credit officers who organize these into useful form.

CLASSIFICATION OF INFORMATION
The information needed by the bank can be classified in the following two broad categories.

1 INTERNAL INFORMATION
Internal information is always available within an organization in one form or another. It may be in the mind of an employee or manager, in accounting records, in filling cabinets, or on computer. Internal information tells the management about actual performances as against delegation of authority, responsibility budgetary controls and future targets and enables it to take appropriate decisions to plan, organize, and control the operations.

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2. EXTERNAL INFORMATION
External is collected from outside the organization. It relates to the environment in which an organization operates. Such as fiscal policies and political, social and the economic trends on the one hand and the information regarding the competitors as to their past performance, present activity and future plans, on the other.

EXTERNAL USERS OF INTERNAL INFORMATION

 Government  Regulatory agencies  Financing Institution Bank, etc.  Customers & employees.

EXTERNAL INFORMATION
 Government and fiscal policies:  Social trends:  Economic trends:  Competitive Information:  Customer information:

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PRESENTATION OF INFORMATION
In the Bank, the information is presented in the form of reports. It is also

presented orally and in writing. The selection of form and means depends on the nature of information, purpose, and the level of user. The purpose of information is an important factor in determining the form and means of presentation. SVP is mainly concerned with overall information and not detailed analysis. Therefore, information is presented to him in a concise form for the purpose of saving his time and instant understanding. The middle management needs detailed information for the purpose of monitoring and controlling. The traditional form of presentation in columnar statements or narratives is used at middle management is normally action oriented and can best be conveyed in plain language for the purpose of clear understanding and getting the required action.

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BANK

AS A SYSTEM

A bank is a system established for a particular reason. It has inputs and outputs. The input of one system is frequently derived from the outputs of others and its own output then becomes the input of yet another system in the chain. A bank system is one, which provides a financial service and earns profits.

COMPUTERS- A TOOL FOR MIS

As opposed to some other banks whereby information is obtained manually from the books and records, reproduced on prescribed formats and supplied to central data processing centers for processing, storing, and retrieving in the form of computer printout, FBL uses a systems whereby entire records and transactions go into the main database file from where it can be extracted in any format needed by the management.

COMPUTERIZATION OF BANK ACCOUNTS

FBL is making an efficient use of information. One factor that is contributing towards this efficiency is the presence of fully computerized processes and procedures. Computers are being used optimally in all the departments for data processing.

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The following are some of the important advantages, resulting from the computerization of Bank accounts:  Saving in staff, space and stationery:  Saving in time:  Greater speed, accuracy, and neatness in accounts:  Accurate information:  Better training and more liquidity of the staff:  Analysis of large volumes of data:

MARKETING MIX
FBL is a marketing- oriented Bank. It offers the marketing mix to attract customers from business and corporate sector. Marketing mix offered by the Bank is in accordance with its target customers and its policies and objectives. It is due to practical marketing mix provided by the Bank that it has built its good name within a short span.

MARKETING MIX
There are number of different description of mix elements. Probably the most popular is McCarthys the four Ps: service (for service industry) place, price, and promotion. 52 INTERNSHIP REPORT

Faysal Bank Ltd.

SERVICES
Services offered by FBL are meant to attract customers from corporate sector. Marketing mix includes services such as financings, account handling, facilities of import and export. Services mix provided by indicates that the objective of FBL management of FNL is to encourage big clients and to discourage small ones.

Marketing Services
FBL is one of the organizations in the service sector that goes far beyond offering the physical product into offering aboard array of need satisfaction. Everyone in the bank is producing and selling some element of service, which may or may not require the use of tangible goods. Financing provided by the credit department, cheque books, travelers cheques etc. issued by customer service department are the services which require the use of tangible goods like papers, documents, money, etc. while some services like consultancy provided to the clients do not require the use of tangible goods.

Management Services Offered

Every individual in the bank starting from the SVP to the office boy are dedicated to provide the best services to the customers of the bank. They provide the direction and much of the motivation behind its development and success. People Dimension in the bank have also gained added power from the lack of a tangible product offering (Basic Marketing).

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Those operating at the point of sale have an especially important role to play, possibly the most important of all. The main contact with customers is over the bank counter, by telephone, and in the manager room. Management realizes this and, therefore, Bank recruitment, promotion, and training policies are all geared to this situation.

Specialization
It is the requirement of SBP that commercial banks cannot restrict themselves to the provision of few services only. All those primary functions, which are laid down by SBP bye-laws, have to be performed and operated on the prescribed lines by the Bank. Therefore, Faysal Bank, being a commercial bank, cannot adopt the policy of providing and specializing in only a few services. It has to perform all the functions. FBL has been operating on the policy of providing the best of all the operations. The management believes that especially in the banking industry, it is not possible for an organization to specialize in one field only and to provide average services in others. When a customer enters the bank and starts dealing with the bank, he expects to enjoy the base facilities. Once he opens the account, he would start using other facilities like import, export, financing on Islamic lines etc. provided by the Bank. Unless the entire functions are on strong footings, he will get objected and discouraged. Therefore, the Bank management tries to improve upon and specialize in all the subsequent functions right from opening the accounts to provision of functions. 54 INTERNSHIP REPORT

Faysal Bank Ltd.

Quality of Services
The most thing about FBL is that it provides very prompt services to its customers. Promptness is important because any customer who enters the bank wants his job to be done first. Quick services provided by, therefore, is an important factor FBL offers for customers satisfaction. However, it is not only the quickness that attracts and has kept the customers loyal to the Bank. It is, in fact, quickness with accuracy that has helped the bank in earning a good repute in a short span of time.

Style and Design of Services

All the services provided by FBL have been designed according to principles of Islamic Shariaa. The designing of services on Islamic lines is the major objective of the Bank and a driving force behind all policies of the bank. Another major part of the design of the services offered by is Staff Management. Managers of the bank FBL therefore, are very careful for the selection, recruitment, training and management.

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PLACE
Location
Keeping in view the customer group, target market, and resources of the Bank, it has the possible location(so far as Multan branch is concerned). FBL is neither a saving bank nor it has a very huge target market consisting of all types of customers from small to large, therefore, the present location i.e. at Abdali road a very clean and open area of Multan is more than suitable for the Bank. Beautifully designed and decorated building with neat and clean surroundings, and pleasant colour combination in the interior just matches the tastes and appeals of its customers. Area surrounding the bank is also inhabited by those people who fall under the target market of the Bank.

Distribution
Most of the offerings other Bank are of an intangible nature. As a result of the lack of a physical product, there is no need for the distribution and the middlemen. The bank has its ten branches in Pakistan where services are created and offered to the customers without the intervention of any middlemen.

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PRICE
SBP has an important role to play in formulating policies regarding the commission rates, charges to be taken, tax to be deducted, etc. from the customers. All the commercial banks have to operate within in those prescribed limits and FBL is no exception. It follows and charges the rates as issued by SBP from time to time. There are, however, certain services for the provision of which SBP has given maximum and minimum limits to be charged from the customers. In such situation, FBL does offer concessional rates to certain customers for competing in the market. The above discussion makes it clear that there are not very significant changes in the prices of services offered by FBL and other bank. FBL does not charge anything to the customers for their statements. Customers can come to Bank many times in a month and can get their statements within minutes. This is the additional edge that the Bank has over many other Banks.

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PROMOTION
Customers satisfaction is the major policy of the Bank along with many other policies. It is because of this policy that Bank provides best services, best6 environment, and courteous behaviour to its customers. As a result, customers not only themselves remain loyal to the Bank but also speak good to others about the bank. Since a satisfied customer is more powerful means of promotion than both advertising and personal satisfaction, therefore, FBL pays more attention for the satisfaction of the customers. The Bank. thus, do not need to spend huge amount on promotional medias.

Sales Appeals
Sales appeals used by the bank primarily consist of promptness and accuracy of services. Other things that help the bank in establishing itself in the market are quality of services, personality and ability of officers, and sincere attitude for the well being and financial help of the customers.

Sales Promotions
FBL uses newspapers, journals and magazines for advertising purpose with the objective of telling public about the services provided by the Bank. The share of advertisements in total expenditures is, however, very less. The reason is that the bank management believes in promoting the good name through personal solicitation. Moreover, for existing set up, a satisfied customer and a happy employee are sufficient for necessary promotion.

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Effect of Incorporation
The Bank has gone in to public from January 1995, so managers have, therefore, planned to increase the expenditures for advertisements. Advertisements will become important because general public want to know and hear about the company in which they invest or plan to invest money.

CRITIQUE
Of all the elements in the marketing mix, FBL needs to pay more attention to the promotion part. Though it is true that personal solicitation and satisfied customers are a good means of promotion, yet Bank should try to create its name recognition among the public. Management of FBL always tries its best to carry out the business according to the pride lines provided by Shariaa. people do not have this view of FBL. They think it to be like other banks operating on interest free banking. Management should try to promote this positive point of the bank through media. A gradual promotional policy educating will result in increasing the deposits of the bank that is why they have launched a new scheme (Rozana Munafa), which is going very popular.

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ACCOUNTING PROCEDURES
The accounting system followed by Faysal Islamic Bank is completely tailored to its own individual needs and to the needs of modern banking. Accounting system has been designed not only to record post facto information but also to cope with the needs of forward- looking decision making. A good information system should be capable of generating all information for planning, organizing and controlling the activities of an organization from a common database.

COSTING
Quite clearly no meaningful plan can be established without the fullest possible information. An efficient costing system is needed so that the cost of different services and of running different parts of the system can be established as precisely as possible. Accuracy of accounts is desirable and essential for the success of the Bank. Bank neither buys nor sells goods and commodities. It renders certain services to his constituents, the cost of which it finds out in order to see whether or not a certain customer account is a paying one.

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MOST ESSENTIAL REQUIREMENT OF SOUND BANK BUSINESS

Bank keeps accounts not only for the purpose of finding the cost of an article, or certain services, but also for finding the exact amounts owing to and by industrial and commercial concerns. In this regard, FBL is very careful because failure to keep proper accounts not only affects its credit, but it may also land it in difficulties. Sometimes even businessmen depend upon their bank records in the matter of their financial dealings. Bank cannot afford to be careless in the, matter of accounting, and therefore, this department has been placed under a competent senior officer of the Bank.

OBJECTS OF KEEPING PROPER ACCOUNTS BY BANKS

The chief objects with which bank accounts are kept, are the following: To have a chronological account of all transactions done by the Bank, as it must be able to produce sufficient proof of what it does from day to day. These running accounts are very important. To know the exact amounts owing to and by the Bank. Unless the Bank knows what are exact amounts due from various customers, it cannot possibly make demands upon them. Similarly, unless a Bank knows what are the amounts owing by him to his customers, it cannot honour their cheque and make other payments required by them.

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To know its exact position at all times and, thus, to find whether or not the business is making progress.

OBJECTS OF KEEPING PROPER ACCOUNTS-IN SYSTEM TERMS

Main functions of record keeping, in system term are the provision of information and implementation of control.

BAD DEBTS
Multan branch does not have any bad debts. Accounts Department has, however, created a general provision for bad debts.

CURRENT ACCOUNTS
Under the Islamic financial system as governed by the glorious Sharias, clients wishing to deposit funds with an Islamic financial institution and seeking their guaranteed return do not receive any income or benefit. Such funds are indicated as current accounts and Bank treat these as loans from the customer to the Islamic financial institution repayable on first demand. Bank chooses to make use of such funds for investment purpose on its own risk. Current account funds are treated as the Banks liability and are reported above the line in the Banks balance sheet.

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DEPOSITS ACCOUNT
An investor can deposit his amount in the Deposit Account in FBL if he wants to receive benefits, if accruing, from the investment of his funds. The depositor assumes all the risks inherent in the investment of such funds. Faysal Islamic Bank guarantees the return of the principal only not profit. Only in the case of gross negligence on the part of the Bank, which is proved as such, the Bank is liable for making good losses incurred owing to such proved gross negligence.

BASIS OF ACCOUNTING FOR CASH

FIFO basis is used for the cash in the main safe.

ACCOUNTING CONVENTIONS
Bank record of savings accounts shows all deposits, withdrawals, and dilly balance in account. Rank record of current accounts shows all deposits and withdrawals.

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EXPENDITURES
CAPITAL EXPENDITURES
Separate budget is made for capital expenditures on which only depreciation can be charged. Estimated cost for the purchase of capital asset is included in the budget and depreciation is also charged to the asset to show the exact value of the assets after certain period.

REVENUE EXPENDITURES
Proper budgeting of each and every revenue expenditure is done. For example, an important item in the overhead charges is the employee cost. To prepare the budgeted figure of this expenditure, the bonus that is expected to be given to employees, any increment that is expected to be given to the employees, and the pay of the employees for that year are added together to find the employee cost. Moreover, any chances of increases or decreases in the employee cost, depending upon the plan, to hire new employees or to terminate an employee are also taken into consideration while making budgets, likewise, each item of expenditure and income is taken into consideration to find out the budgeted figure of it. Theses amounts are then presented in the form of profit and loss account to calculate the net income for the years.

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POLICY
Any expenditure-capital or revenue is treated as revenue expenditure if it is up to Rs. 5,000. Above this level, capital expenditures are treated in capital account.

REVALUATION
Heavy expenses are amortized over the period for which these will remain in use.

ENTERING RATES INTO SYSTEM ON DAILY BASIS

New rates are fed into the computer on daily basis. These rates are then used for finding the daily position of balances. Whenever a new rate is fed, an evaluation entry is generated that automatically debits or credits the accounts (according to the increase in FCY rates) to keep the total balance according to new rates.

ACCRUAL REVERSE
Bills of electricity, gas, etc. consumed during a month come next month. Therefore, provision for taxes are kept for the month. At the time of receipt of actual bill, entries made are reversed and entry for actual expense is entered.

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TRANSACTION JOURNAL (LONG OR SUPPLEMENT BOOKS)

This journal gives the overall picture of all the transactions made in a day. This effect is then shown in the General Ledger. In other words, it can be said that the transaction journal is the difference between the General Ledger of two consecutive days.

INTER BANK DEPOSITS

Bank store funds in other commercial banks. Those inter bank deposit disappear from the total reserves of the entire banking system when the reserves of all banks are aggregated according to conventional accounting practices. The Bank to which an inter bank deposit is due has an asset exactly equal to the deposit liability of the bank from which the deposit is due. The inter bank deposit liabilities exactly cancel the inter bank deposit assets for the banking system as a whole.

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RATIO ANALYSIS
For 2001 Current Ratio Current Ration Current Assets Current Liabilities 6625432 22492887 .30 times

= For 2002 Current Ratio Current Ration =

7142337 21787882 .33 times

Current ratio has been decreased in year 2001.

For 2001 Networking Capital = = = For 2002 NWC = = = Current assets Current liabilities 7142337 2178711 - 14645545 Current assets current liabilities 6625432 22492887 - 15867455

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For 2001 Debt Ratio

! Total Liabilities x100 Total Assets 23,588,466 x100 2440736

= For 2002 Debt Ratio

!

996%

22483907 x100 2399647

= DEBT EQUITY RATIO For 2001 Debt Ratio Debt Equity Ratio

937%

Long Term Liabilitie s Stock Holder Equity 23,588,466 2441000

= For 2002 Debt Equity Ratio

!

9.6 times

22483907 2400,000

9.37 times 68 INTERNSHIP REPORT

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For 2001 Ratio on Equity

! Net Pr oft After Taxes StockHolder Equity NPAT x100 SHE 275,718 x100 2441,000

! !

.11%

For 2002 Ratio on Equity

! 207, 298 x100 2400,000

9%

For 2001 Ratio on Assets

! Net Pr oft After Taxes x 100 Total Assets

275,718 x100 26029000

1%

For 2002 Ratio on Assets

! Net Pr oft After Taxes x 100 Total Assets 207,298 x100 24,725,000

.8%

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CUSTOMER SERVICES DEPARTMENT

Mr. Kamran Ashraf is the head of this department. Customer Services Department of Faysal Bank Ltd. Can further be divided into following sections: Customer Services Section Cash Dealing Section It started its function on the very first day of operation of the bank in Multan. Mr. Kamran Ashraf is operating this department.

CUSTOMER SERVICES SECTION

Mr. Kamran Ashraf is dealing with this department. In customer services section, the customers are provided the following services:  Opening the Accounts  Special Deposits  Remittances  Collections Issuance of Travelers Cheques (T/CS). Issuance of Foreign currency (USD, Pound, DM) Receipts of T/CS. Receipts of Foreign currency. Some of these are described below: 70 INTERNSHIP REPORT

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ACCOUNT OPENING
It is the most important department of bank Mr. Kamran Ashraf deals in this department. Following procedure is adapted for this purpose.

PROCEDURE OF ACCOUNT OPENING

It is very simple and quick procedure. A person who wants to open FBL provides the facility of opening the accounts according to open an account must has the introduction of banks staff or any existing account holder of the bank. The customer is required to fill an opening form. AOF is very standard and up to the mark which contains almost all information about the customers. Customer is guided to fill to fill all columns of AOF.All formalities and requirements are completed and verified, and all supportive documents are taken and checked according to the nature of account. If any formality is incomplete, cheque book is not issued until it is fulfilled. Account number is allotted to the customer and all particular such as nature of account, opening date, initial deposit, title of accounts are written in register Account is opened in the system by putting all the particulars of the customer in the system. The letter of thanks is sent to the customer for confirmation of address. After complete procedures finally the manager of the Bank signs the AOF and these forms are filed in proper sequence.

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TYPES OF ACCOUNTS
There are following types of accounts:

Individual Account
Any individual or proprietor of a business can open an individual account at FBL Following requirement has to be fulfilled for this account.  Signature of the customer  Name of the customer  N.I.C photocopy attached  Name and account no of the introducer  Verified sign of the introducer

Joint Account
When more than one person opens a single account it is called it is called joint account. The names of persons are written on title of A/C Joint A/C cannot be opened by single person. Both persons have to sign on cheques. Following requirements has to be fulfilled for this account  Sign of both customers on the back of AOF  Sign on joint A/C # mandate  NIC copies of both members  Mode of operation  Name and account number of introducer

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Third Party Mandate

In this type of account A/C holder can authorize any person to draw his account. He is authorized to run that title of account. Title of account will be in the name of account holder. Following are the requirements for this type of account:  Copy of NIC  Power of attorney

Company Account
In order to open an account of accompany there are following requirements: An up-to-date copy of the companys memorandum & articles of association The companys certificate of incorporation The Companys certificate to Commerce Business (Public company only) Also following documents are required:  Copy of certificate of Incorporation  Memorandum & articles association  List of directors  Copy of board resolution  Certificate to Commerce of business (if required)  Signature cards  Copy of NIC

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CLUB, SOCIETY, ASSOCIATION OR TRUST

The opening of this account require:
 Copy of NIC of all society or Trustee members  Stamp of society or club  Certified copy of resolution  Copy of rules  List of office Bearers

Partnership Account
Account title will be the name of the partnership firm. Following are the requirements for opening this account:  Sign of customers on back of AOF  NIC copies of all partners  Partnership deed (certified copy)  Partnership mandate (prescribed format)  Companies rubber stamp

Foreign Currency Account

For opening of this type of account  Copy of NIC  Copy of Passport

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Closing Of Account
When a customer wants to close an account he has to give a hand written application to the head of the operations department to close his account plus remaining leaves of check book. The manager first verifies the sign of A/C holder then closing is done from the register on the computer where the account was opened. In the File of the A/C holder his account opening form is crossed.

Cheque Book Issuance

When the account is opened, then the customer is given a customer is given a cheque book sign upon and encash money. It proceeded as included:

PROCEDURE
The account opening formalities must be completed before issuance of check book. Particulars of the check book requisition should be completed containing title of account, account number, type of currency and signature of the customer Signature of the customer are verified on the requisition. The check book is taken from safe/locker. It is assured that series of check. Particulars are entered in the cheque book issuance register. Account number is stamped on every leave of the check book and those leaves are counted. Name of the account holder is written on the cover of the cheque book. And requisition on

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the check book for further issuance is properly filled, stamped and signed by office of the bank. Cheque book is delivered to the customer and his signature are taken on cheque book issuance register. Check book serial number entered in the system. Stock of cheque book are balanced at the end of each day and kept under safe custody. FBL issues the following cheque books Saving account25 leaves Current account - 50 leaves

TYPES OF ACCOUNTS
FBL deals with the following types of accounts:  Faysal Sahulat Account (Current)  Rozana Munafa Account  Rozana Munafa Plus  Faysal Premium Account  FCY Saving  FCY Current  Faysal Sahulat Account Under the Islamic financial system as governed by the glorious Sharias, clients wishing to deposit funds with an Islamic financial institution and seeking their guaranteed return do not receive any income or benefit. Such funds are indicated

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as current accounts and Bank treat these as loans from the customer to the Islamic financial institution repayable on first demand. Bank chooses to make use of such funds for investment purpose on its own risk. Current account funds are treated as the Banks liability and are reported above the line in the Banks balance sheet.

Rozana Munafa Account

An investor can deposit his amount in the Rozana Munafa Account in FBL if he wants to receive benefits, if accruing, from the investment of his funds. The depositor assumes all the risks inherent in the investment of such funds. Faysal Bank guarantees the return of principal only not profit. Only in the case of gross negligence on the part of Bank, which as such, the Bank is liable for making good losses incurred owing to such proved negligence. The relationship is governed by the dictates of Sharias, which is contractual between the client and the Bank in

order that the parties are fully aware of all risks, rewards and their respective rights and obligation.

TYPES OF CUSTOMERS
FBL open accounts for the following types of accounts depending on the type of the customers:  Individual Personal Account  Joint Account

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 Sole Proprietorship Account  Partnership Account  Public Limited  Private Limited  Association, Clubs, Charitable Institutions, etc. Account.  Attorney Accounts  Autonomous Accounts

DORMANT ACCOUNT
Current and Saving Accounts, which remain inactive for the following periods are classified as Dormant Accounts:  Current Accounts L.CY. 06 months  Current Accounts F.CY. 12 months  Savings Accounts F.CY. 06 months  Savings Accounts F.CY. 12 months

PROCEDURE
The EDP unit provides daily a list of those accounts, which did not have any customer, oriented transaction for the last six months and have now been transferred to Dormant section. The ledgers of such accounts in marked as CAUTION-DORMANT ACCOUNT.

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The specimen signature cards of Dormant accounts are taken away from Tellers area and are kept in the custody of the officer who has been designated to approve operations in the Dormant accounts. When an account has been placed on Dormant status, a letter is sent to the account has been inactive for sometime and it is appreciated if he continues to use it. Upon reclassification of the Dormant account, the accounts are transferred to active are with the prior approval of the incharge of the Customer Services Department.

TREATMENT OF MORE THAN 10 YEARS OLD DORMANT ACCOUNT

If no transaction has taken place in Dormant Account and no statement of Account has been requested or acknowledged by the account holder during a period of 10 years reckoned from the day an account holder initiated transaction was last

taken place, the account holder gives three months notice in writing by registered post acknowledgement due on the last known address. If no acknowledgement or reply is received the balance amount is paid to the State Bank of Pakistan and the Bank is discharged from the liabilities of such as account. The specimen signature cards and other documentation of such account continue to be preserved till such time as intimation from the State Bank of Pakistan is received in writing advising that such documentation need not be preserved any longer.

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CASH SECTION
Mr. Manjoka deals with this department. Cash section of FBL works under the operation department. This department is given the complete responsibility of cash, as result of transaction in touch local and foreign currencies. It is also responsible for safe custody of cash. This department performs the two main functions:  Cash Receipts  Cash Payments

CASH RECEIPTS
Mr. Manjoka deals cash receipts in this department depositor uses deposit slip for depositing the amount in to their accounts. The officer cheeks if the deposit slip is properly filled up containing title of account, A/C number, date and amount in words and figures and figures. Detail on both counter files and cash receipt voucher should be the same. Cash is receipt by cash receipt officer, twice counted and matched with the deposit slip. The cash details are written on the back of the deposit slip and also entered in the cash receiving register. Cash received stamp is affixed on the face of the deposit slip along with the signatures of the cash receiving officer. Deposit slip and cash receiving register is given to the officer in the cash.

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PAYMENT OF CHEQUE
Mr Manjoka deals with the payment of the cheques .First the cheque is presented by the customer or holder to the cash payment officer. He confirms that it is drawn on the same branch and particulars of the cheque are properly filled in. One signature of the holder is taken on the back of the cheque. Cheque is handed over to the officer of the cash department. For scrutiny where the officer checks the amount in the words, figure, date, payees name crossing if any account number cheque serial no and signature of the customer. It is posted in the System And posting stamp and number is affixed on it.Cheque is handed over the cash payment officer for the payment and the cash paid stamp is written on the back of the cheque. Enteries passed in the cash payment register

SPECIAL DEPOSITS
SPECIAL DEPOSIT INCLUDE
a) CDR (Call Deposit Receipt) These Deposits operated on no profit no loss basis. Money deposited with the bank this head is exempt from Zakat. Customers who deposit their money under this head can get money when they need it. CDR can be made Open as well i.e. the person who deposits the money does not need to do signature for getting the deposited money back.

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USES
CDRs are used by the customers for making the payments of bills. 2) DRs are used for keeping the money temporarily in the Bank without involving the procedure of writing cheques because cheque is a legal document of the money deposited by the customer, which he has to show to the tax authorities

NDR (NOTICE DEPOSIT RECEIPT

The following are the period for which these terms deposits are issued: 07 days 30 days Profits are given on theses deposits and Zakat is also deducted from these deposits.

TDR (TERM DEPOSIT RECEIPT)

The following are the period for which these terms deposits are issued:  1 month  2 month  3 month  6 month  1 year  2 year  3 year

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FUNDS TRANSFER APPLICATIONS

For the transfer of funds the following applications are required here: Telegraphic Transfer (local/foreign) Pay Order Demand Draft (local/foreign) SBP check

PAY ORDER
Pay order is issued for local station. Application form is given to the customer to fill. Two signatures are taken on the form .One for request and otter for receiving the instrument. All the particulars of the application form are checked and bank commission charges and with holding tax is written on the top of the application. If the customer is maintaining his account with the branch he can give cheque for the total amount of instrument plus bank charges. Cheque and application form is then given to the officer cash department for payment ,post the cheque and signs the application .If the customer wants to pay cash, cash is deposited on cash counter Cash receiving officer receives cash on the application form along with the bank charges and withholding tax. Application form is given to the remittances incharge for issuance of instrument. He enters all the particular of the application form in the system and computer gives the auto control number to the instrument.

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DEMAND DRAFT
Demand draft is issued for some outside station. It is the instrument that is used to transfer amount from one city to another city. It can be made on cash as well as on the cheque. If it is made through cheque, then it is necessary that the person must be account holder. While in the case of cash, it consist of the three copies. Original copy which is given to the account holder DD advice is sent to the central branch Copies for reconciliation. Its photocopy is kept with bank while original is sent to the head office for reconciliation.

PROCEDURE
The client who wants to transfer his funds from one city to the other fills a form requesting the bank to prepare a DD.DD application form contains columns requiring information for the preparation of DD. e.g.  Beneficiary name  Applicants name  Address  Amount to be sent etc  Bank deduct charges against DD.

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TELEGRAPHIC TRANSFER
It is another mode of transfer of the funds. It is the quickest mode of the transfer of funds from one city to the other city. For TT, client has to submit the application on prescribed form of the Bank. Client can deposit money in the bank or can request the bank to deduct the amount. Against the TT along withy the charges against the issuance of TT from his account. The charges against the issuance of TT charged by Faysal Bnak.

PROCEDURE FOR TELEGRAPHIC TRANSFER ISSUANCE

Application form is given to customer to fill. Two signatures are taken on the form one for the request and otter for receiving of the instrument. All the particulars of the application form are checked and bank commission charges along with holding tax written on the top of the application form. If customer is maintaining the account wit the bank, he can give cheque for total amount of instrument. for total amount of the instrument plus bank charges .Cheque and application form is given to the officer cash department for the payment of the cheque .After proper scrutiny officer cash department post cheque and signs the application form to assure that the payment is received. If the customer wants to pay cash it is deposited by the customer on the cash counter. Cash receiving officer receives cash on the application form is then given to the remittance incharge for issuance of instrument .He enters all the particulars of the application form in the system and 85 INTERNSHIP REPORT

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computer gives the auto control number to the TT message of receiving branch. This message is then sent through Telex to the receiving branch followed by the TT advice. The customer is confirmed that TT has been sent

PROCEDURE FOR T.T. PAYABLE

When TT message is received, tested number on TT is checked and verified. Tested number is then written in the register and signed by the holder of the test keys for office record. All the particulars of the tt payables then entered in the system. Payment instruction on the TT message are followed it if is pay and advice it will be paid through TTR on the cash counter or through clearing and if it is credit an advice ,it will be transferred in the account mention ed in the TT message. Printout of voucher (TT are taken. if TT is presented for payment ,signature of the authorized officer are verified on TTR and after proper scrutiny ,it is posted .

PROCEDURE FOR FOREIGN DEMAND DRAFT ISSUANCE

Application form is given to the customer to fill the same. Two signatures are taken on the form, one for request and otter for receiving the instrument. All the particulars of the application form are checked and bank commission which is US$5/- for each amount of FDD. Cheque is received from the customer for total

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amount of FDD plus the ban commission. Cheque and application form then given to the officer cash department for payment cheque After proper scrutiny, officer cash department posts the cheque and sign the application form, to assure that payment is received. Then cheque and application form is given to incharge. Remittances, ho will enter the particulars of the application in the FDD issuance register. if the customer wants to pay the cash. it is deposited by the customer on cash counter. Cash receiving officer receives cash on the application form along with the bank charges. Application form is then given to the remittance in charge for the issuance of the instrument. A control number is allotted to the instrument for FDD register. Instrument is completed by putting all the particulars in it and signed by two attorney holders. Instrument is then handed over to the customer. FDD advice is sent to the responding foreign bank. Where they are maintaining the Dollar account through registered mail. Exchange transaction credit advice is sent to the Head office for reimbursement .Copies of the FDD and ETCA are kept in the record of bank

PROCEDURE FOR FOREIGN TELEGRAPHIC TRANSFER ISSUANCE

Application form is given to customer for filling the same. Two signatures are taken on the from one for request and other for receiving the instrument. All the

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particulars of application form are checked and bank commission are charged, which is US $15/- that rate for each amount of FTT. If the cheque is received from the customer, it is taken for total amount of FTP plus bank charges. Cheque and application form is then given to the officer cash department for payment of cheque After proper scrutiny, officer cash department posts the cheque and signs the application to assure that payment is received. If the customer wants to pay cash, it is deposited by the customer on the cash counter, cash receiving officer receives cash on the application form along with the bank charges. Application form is then given to the remittance incharge for the issuance of the instrument. He enters all the particulars for the application form in the FTT register and control number is allotted to FTP.TT message is written in the telex containing name of the transferring branch, name of the receiving branch ,date, amount, currency, page name and account number. A test number is given to FTP message for receiving branch. This message is then sent through telex to receiving branch. Customer reconfirmed that FTT has made . Exchange transaction credit advice is sent to the head office .Copies of the advice and FTR are kept in record for bank

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CALL DEPOSIT
When the party wants to give payment itself to another party then it makes call deposit. The bank keeps it with itself unless it does not receive instruction from other bank. Normally it is made on cash and goes on party account.

PAY SLIP
It is used when Bank itself pay for any type of transaction e.g. purchase of stationary.

COLLECTIONS
All the cheques under collection are called cheques under collection in

FBL.There are two types of bills for collection:  Outward Bills for Collection  Inward Bills for Collection  Outward Bills for Collection All the cheques are received on one counter along with the paying slips duly filled in properly containing particulars of cheques and account holder. Counter folio of paying slip is handed over to the customer by putting stamp for cheque received for collection of FBL on it duly signed by officer. Theses cheques are scrutinized and cheques for local clearing are separated from OBCs. Cheques for local clearing are entered in clearing register, whereas cheques for collection are entered

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in OBCs register and handed over to the bills department for Collection. OBC number is allotted to the cheque from OBC register. Special crossing and Bank endorsement stamps are affixed to the main branch of that city for collection.

FBL A CUSTODIAN OF VALUABLES

Bank is responsible for a large sum of money and other valuable things kept with it with the view that it will prove to be a safer place for these things than the homes of the people. Bank has special rooms for the safe custody of these valuables etc. These vaults are kept in special room known as Vault Rooms Or Storing Rooms.

TELLERS
Tellers play a major role in establishing the good will of the Bank. Tellers perform the task in which customers are more sensitive i.e. depositing and withdrawing money. For the convenience of customers, the tellers are not provided irrelevant functions. This is a great factor in minimizing the customers waiting time and inconvenience

RESERVE CASH
Cash left with the Bank at the end of the day Reserve cash is divided in to two parts: is known as the Reserve Cash.

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CASH IN HAND
It is the cash which is not kept in vaults but is kept in special boxes. There are two tellers in the Bank and each of them has a separate box for putting cash in hand. As per policy, Cash in hand should not be greater than Rs. 1500000 . Any amount greater than this amount is transferred to the vault at the end of each day.

CASH IN VAULT
Any amount (in whole numbers not in paisas) greater than the Cash in hand and which cannot be kept in tellers boxes is placed in vaults.

CREDIT DEPARTMENT
The credit department comprises of following three departments in FBL.  Credit operations  Credit Administration  Corporate Banking Group

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CREDIT OPERATIONS DEPARTMENT

Mr. Kazmi deals with this department. It also started its function from the very first day of the bank. Following facilities are accommodated by this department.

1) FUNDED FACILITIES
 LPO (Local Purchase Order)  Ore-shipment  Post shipment  T/R (Trust Receipt  PAD (Payment against Documents)

2) NON- FUNDED FACILITIES

a) Sight LC b) Guarantees

DOCUMENTS AND FORMALITIES FOR APPROVAL OF FACILITY

Following are the documents and formalities, which are to be submitted by the customer in favour of FBL  Request Letter  Board resolution 92 INTERNSHIP REPORT

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 Signature of customer/partner /director  Visiting card  NID card (NIC)  Certificate of incorporation  Certificate of commencement of business  Import/Export Registration Number  Financial of last three years + Audit reports  Commitment if required In case a new customer comes to FBL and asks for approval of facility (Project Financing), the concerned bank officer asks him, to submit following documents to him.  Request Letter  Feasibility Report  Background Information sheet And all other documents which he thinks must be submitted. In Feasibility report, the concerned bank decision of FAF. officer observes the following points before he makes the

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INTRODUCTION
 Sponsors  Project cost details  Debt Equity ratio Implementation or construction schedule If the (officer) is satisfied he will make the proposal of facility.

A) LOCAL PURCHASE ORDER

Definition
It is a short term provided by the bank through its own sources to the customers for the following purposes:  To purchase the stock of raw material  To meet expenses of production  To meet the expenses other than production

Rate
Profit is charged on it after 90 days or quarterly Rate of profit is different for different customers

Period
PAF of LPO is available for only one year After one year if the customer wants to renew this facility, bank will see if the (customer) had fully utilize the credit facility in the previous year. If he has fully

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utilize the credit facility and paid the profit satisfactory, he will be given this facility again. But if he has made satisfactory repayment of profit but has not fully utilized his credit facility, he must give solid reasons acceptable to the Bank if he wants to renew his credit facility for the new year Bank will either hypothecate or pledge the stock of the customer Bank is more secure in case of pledge because items pledged are placed in covered godowns, watchman is appointed by the Bank, Banks Board on godown, and register record is maintained for amount of items containing in or going out of godown. In case of hypothecation, goods may be placed in uncovered godowns, So Bank is not very much secure. b) Equitable Mortgage property (i.e. customer cannot sell property or rent it, if the Bank does not agree). c) Personal Guarantee of Directors

B) PRE-SHIPMENT (OWN SOURCE)

A customer comes to bank and asks it to provide him credit facility so that he can produce items which he can ship (export). Securities (For PAF) 1. Personal guarantee of directors 2. Charge on Export bill sent in collection

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3. 4.

Lien on property. (Sometimes) Hypothecation

Rate
Different rate of profit is charged on this credit facility, from different customers. Usually 16-20%

Period
Maximum period for which this loan can be provided is 180 days but PAF is prepared for 1 year and can be renewed each year.

DOCUMENTS: Required from Customer

 LC or Contact  Request letter  Demand promissory note

C) POST SHIPMENT (OWN SOURCE)

This is the credit facility required by the customer after he has made shipment and needs funds for carrying on his production of goods. Documents Required from Customer (By C.O Dept)  LC or Contact  E  Bills of Lading  Bill Exchange  Invoice  Other documents

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SECURITIES
Required for Proposal raising or PAF Personal guarantee of Directors Lien on Export Bills sent in collection Property under lien

Rate
This credit facility is provided at different rates to different customers. Usually 1014%

Period
It can be provided for maximum of 180 days but PAF is prepared for 1 year (it can be renewed each year).

D) CREDIT FACILITY AGAINST SIGHT L/C

1. Trust Receipt (very near to LPO)
When a customer has imported goods but cannot make payment against the Draft Bill of Exchange then Bank his signature on T.R documents and pays for imported goods on customer behalf. Then Customer must pay the amount for which goods were imported on the date as agreed as well as Profit to the Bank on T.R facility.

2. Securities
All those securities as per LPO. If Credit operations Department prepares PAF under sight LC 97 INTERNSHIP REPORT

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Bank retains a certain amount of CASH MARGIN on imported goods amount (Not less than 30% under new policy). Lien on imported goods.

E) CREDIT FACILITY AGAINST USANCE LC

Acceptance
Customer signs an acceptance in favour of Bank that he will make payment of imported goods up to a certain date, so bank pays the amount of imported goods.

Securities required
Lien on imported goods.

NON-FUNDED FACILITIES F) BANK GUARANTEES

Customer obtains bank guarantees to give to different institutions e.g Sui Gas Corporation.

Securities
 Cash margin of guarantees  Personal guarantee of the director  Equitable mortgage of required value of property

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G) FINANCIAL GUARANTEES
When the Bank(e.g FBL)is not in a position to give credit facilities to the

customer it will issue a financial guarantee to customer.

LONG TERM CREDIT FACILITIES

It means FBL provides long term finance to the project. Project financing facility is normally given in case when new project has to be set up. All its details are given below:

Securities
All the stocks, properties and assets are in the charge of the bank, i.e Bank advances finance on the security of whole project.

Period
This PAF is prepared or renewed every year.

Profit Rate
Profit rate is different for different customers.

Types of Project Financing

 Foreign Currency Credit facility (for import of machinery)  LMM (Credit for Local Machinery Manufactured)  FAPC (Finance Against Packing Credit)  Most of the Banks (Foreign) avoid giving credit facilities to the customer and also FBL does not prefer to offer these credit facilities.

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Period
5 to 10 years but PAF renewed every year.

LEASING
 FBL makes two agreements with the customer.  Lease Agreement  Sale and Lease Back Agreement

Procedure
Customer opens LC for the import of machinery but the Bank pays for it. Then Bank acts as the lesser and the Customer as a lessee, and machinery is given to Customer under lease agreement. Bank calculates and notes the following:  Principal amount of item to be leased. Say 50,00 Million.  Residual value (say 10%)(at the start of lease period) 5.00 Million.  Documentation fee Suppose Rs. 300.  Front-end fee (1% of principal amount) Rs.500, 000. Then concerned Bank officer prepares Authorization Schedule. Name of the customer is (single party or customer or company is mentioned on the top of the page.  Background  Date of registration

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 Authorization Capital + experience  Chief executive name +experience  Line of business  Nature

PAST PERFORMANCE
 Availability of Facilities: Facilities sanctioned and if under utilized then solid reasons for utilization.  Nature of facilities  Adjustment of facilities: How much of facilities has been adjusted or satisfied  Operation of current account: What is the average balance, minimum balance (maintained or not)  Profitability: Banks earning on customers current account during previous year  Expansion of business  Charges in corporate set up

PURPOSE OF FACILITY PROFITABILITY

Profitability of the facility advanced e.g on LPO @20%P.A

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BANK CHECKING
I.e. bank while preparing PAF obtains confidential opinions about the customers from other Banks and Companies.

MANAGEMENT
Number of Directors Manpower-Skilled and Unskilled

MARKETING OUTLOOK
Companys business position in the market.

RELATIONSHIP
Relationship of the customer (Company), its directors with the Bank preparing PAF.

Approval
When approval of facility is prepared it is sent for approval.

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CREDIT ADMINISTRATION
Mr. Ihtishan deals with this department. The main function of this department is to critically examine the securities given by the client against credit facilities. For through checking they may need a check list of following documents.

CHECK LIST OF DOCUMENTS

1. Facility Acceptance Letter This is the letter on which Credit Administration officer mentions the credit facility provided to the client and their amount. The client must accept this letter. 2. Corporate Resolution Corporate Resolution showing that company is to obtain financing facilities from the Bank. 3. Application for Morabaha Facility Application for Morabaha facility submitted by the customer to the Bank 4. Authorization to Debit the Account Customer authorizes the Bank that it can debit his account if he defaults or for payment of some charges. 5. Demand Promissory Note It is a legal document; Bank can sell the customers security if he does not pay the credit (loan) by pressing its documents in the court. 103 INTERNSHIP REPORT

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6. Agency Agreement This document is prepared by the Banks lawyers on behalf of the Bank and it is accepted by the Customer. 7. Morabaha Financing Agreement This document shows that the parties (FBL and Customer) have agreed on some Purchase and Resale financing agreement. 8. Personal Guarantee Personal guarantee given by some person (Director in cases of limited company) to the Bank (FBL that customer will pay the loan he has received according to the terms and conditions he has agreed on). 9. Letter of hypothecation of Movables In favour of FBL 10. Letter of hypothecation of Receivables In favour of FBL 11. Letter of Lien and Authority to Set off In this document customer agrees that all the sums of money deposited in his bank account will be the security for the payment of financial activity availed by him and all other costs or charges in terms of financing agreement between the customer and Bank. The customer also agrees not to withdraw the already agreed amount of money from the deposit

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12. Memorandum of Agreement Bearer Securities Customer deposits Bearer securities with the Bank and the Bank agrees to grant financial facility to customer at his request. 13. Memorandum of Deposit of Title Deed This document confirms that the customer has deposited original documents of the property with the Bank and thereby creating an equitable Mortgage in favour of the Bank. 14. Affidavit It is submitted by the customer and he declares on that he is the sole owner of the property (title documents of which are submitted to FBL as security against the credit facility). Customers also authorizes that the can proceed against him in the court if he fails to repay the amount due. 15. Letter of Lien on Marketable Securities Customer agrees that all the shares, stocks and securities are under lien (charge) of the Bank. 16. Agreement of Pledge A customer agrees to pledge some movables, a security for the payment of amount due. 17. Letter of Pledge 18. Deed of Mortgage Agreement of mortgage of property 19. Letter of arrangements for Bills purchase All theses above mentioned documents are prepared by the lawyer of the Bank. The customer has to read them and accept them in favour of the Bank.

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DOCUMENTARY CREDIT DEPARTMENT

Mr. Zaidi deals with this department.

TYPES OF FACILITIES
There are two types of facilities:  Non-funded Facilities  Funded Facilities

NON FUNDED FACILITIES

FBL gives guarantees on the behalf of its customers to pay the principal in case of any mis- happening on:  Customer Guarantees  Sui Gas Guarantees  Wapda  Excise  Financial Institution When one client goes to a financial institution for loan, that institution does not believe on customer and demand for Bank guarantee. Then financial institution gives his guarantee to another financial institution.

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There are non funded facilities in which Banks own finances are not utilized. Other non-funded facilities include:  Letter of Credit  L/c at Sight  L/s Usance

FUNDED FACILITIES
Funded Facilities are those which are related with the flow of Finances. In funded facilities Banks own finances are involved. Theses are of many types: Export Facilities  Pre Shipment  Post-Shipment  Long Term Financing Import Financing Financing Against Imported Merchandise (FIM)  Trust Receipt  Foreign Bills Purchased Provision of non funded facilities is the responsibility of Documentary Credit Department, while the provision of Funded facilities is the task of Credit Operation Department.

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DETAILS REQUIRED ON GUARANTEE

FBL generally asks for the following details on guarantee:  Name and address of the applicant  Name and address of the beneficiary  Currency and amount of guarantee  Terms of guarantee  Expiry date of guarantee

ENTRY IN GUARANTEE REGISTER

A separate register known as guarantee register is maintained for recording guarantees issued by the Bank. Date, letter of guarantee number, name of the applicant, name of the beneficiary, commission, amount of LG and date of expiry are recorded in it and a running serial number is allotted to the guarantee there from.

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EXPORT SECTION
All exports from Pakistan, which are subjected to exchange control regulations, are required to be declared on form E to one of the authorized dealer for certification only after it has been completed and signed by the exporter himself or bank. While certifying form E bank ensures that exports give only one address. After the form E has been certified by the bank, it is submitted to customer/personal authorities at the time of shipment .The customer authorities detach original copy and after filling in portion related to them and affixing there seal and signature thereon forward it to the State Bank.

FORM-E
Government has provided facility to exporter in taking E-form from any bank and he can present it to any bank for negotiation. Export proceed realization certificate SBP gives rebate to exporter against export after realization. It is paid according to commodity wise and bill wise.

SCRUTINY OF DOCUMENTS
On receipt of the bills of lading along with the for E and the export documents, officer compares the and/or documents with the relative export form and satisfies

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himself that theses confirm in all respects to the declaration made on the relative export forms.

RECEIPT OF L/C
Bank receives L/C from the Opening Bank in the following ways  By mail  By telex/Cable In both cases, the officer checks the authenticity of L/C. If it has been received by the telex, he confirms its test and if it has been received by mail, he matches its signature with the signature already present on signature cards. After the confirmation of the authenticity of the L/C, the exporter is handed over the original L/C. If the authenticity of the L/C cannot be proved, Original is kept with the Bank and a photocopy is handed over to the exporter.

VERIFICATION OF L/C
The signature on a letter of credit is verified from the available record of specimen signature of the concerned bank. If the specimen signature record is not available, the obtains a tested telex confirmation from the letter of credit opening bank.

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EXPORT L/C ADVISING REGISTER

After verification of test or signature the following information are recorded in export L/C advertising Register:  Date  Reference number of FBL  L/C No.  Exporters name  Opening Bank  Amount  Expiry date of L/C  Description of Goods  Remarks

SCRUTINY OF DOCUMENTS
Officer, departmental Supervisor and then Branch Manager at the time of approving negotiations/ Purchases of Export Bills for his satisfaction, scrutinize the export documents.

ADVISING DISCREPANCIES TO THE ADVERTISING BANK

In case of discrepancies that violate the condition of letter of credit FBL advises the opening bank. A covering schedule containing a list of discrepancies is sent of

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opening along with documents. Asks the opening branch to send authority for the FBL acceptance discrepancies if the seller agrees. If the opening sends authority for acceptance. If opening fails to reply within 10 days, Bank send.

TRANSFERENCE OF L/C
Sometimes the word transferable is written on the L/C. This word shows that if the exporter, who has original made contract with the importer, is not in a position to send the goods, he is allowed to give this L/C to other exporter provided the new exporter will send the same goods as mentioned in the L/C.

METHOD AND PERIOD OF PAYMENT

Full export value of the goods exported from Pakistan and declared to the Customer authorizes should in an approved manner within a period of four months from the date of shipment/position. Sometimes State Bank also mentions some period during which the payment has to be received. The payment is received through an Authorized Dealer either in convertible foreign currency in which the Authorized Dealer maintains accounts or in U.S dollar or in Pakistani rupees from a non resident bank account.

RECEIPT OF PAYMENT
Upon the receipt of payment from the importer, the Bank commission to the agents of foreign importer up to allowable limit.

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MAINTENANCE OF RECORDS
Pricing And Distribution of Export Forms: FBL maintains a complete record of all export forms printed by the Bank and of their distribution to their branches and customers. For this purpose, it maintains a Stock Register which shows branch-wise distribution of the export forms.

MAINTENANCE OF PARTY WISE RECORD OF CERTIFIED EXPORTS FORMS

Bank maintains another for recording therein the particulars of export firms issued and certified by it in respect of each exporter. In this register it records against each form, the date of submission the export documents when shipments have been made.

IMPORT SECTION
Import section deals in letter of credit. But before opening of letter of credit it is necessary the importer is license holder.

INTRODUCTION OF LETTER CREDIT

The fundamental function of commercial letter of credit is to facilitate the making of merchandise.

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TYPE OF LETTER OF CREDITS OFFERED BY THE BANK

FBL offer the following types of letter of credits to its customers: Irrevocable Documentary Letter of Credit (Where beneficiary does not require another banks confirmation) which may be any one or combination of the following:  Sight Credit  Acceptance Usance Credit  Negotiation Credit  Deferred Payment Credit Customers are required to deposit the appropriate deposit margin before opening L/C. the amount to be deposited are either laid down in Customer Facility Form.

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PROCEDURE FOR OPENING L/C

Customer seeking to open L/C fills an application form. This application form is Banks s own form and customer has to adequately and thoroughly fill it. Bank ensures that the outstanding liabilities against the letter of credit limit plus the amount of new letter of credit are with in the established limit. Officer, then prepare offering sheet showing details of all outstanding. The Department head reviews and approves it if within established limits.

CONDITIONS FOR OPENING L/C

FBL does not open letter of credit unless it is covered with an import license. The following details in the import license are checked before opening a letter of credit. 1. It is issued in the name of importer. 2. It is registered with the State Bank of Pakistan and registration number and date are mentioned. Also it should be signed by an official of the State Bank of Pakistan. 3. Any cutting should be authenticated under the signature and seal of the issuing officer. No erasing is allowed. 4. It is duly embossed with the seal of the office of the controller of Imports and Export.

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5. It is valid for import from all permissible countries. If it is restricted to one country, the good should be imported from the country only. 6. Date of issue and date of expire are mentioned in the import license. 7. Place of issue of import license is given but the issuing office. 8. Signature of the official of the registration Branch of SBP is verified. 9. Letters of credits are established only against Exchange Control copy of the import license.

DETAILS REQUIRED IN L/C APPLICATION

The letter of credit application agreement should contain the following details.  Name and address of the advising Bank  Name and address of the application  Name and address of the beneficiary  Currency and amount of letter of credit  Country of origin  Details of document required  Import license and registration number  Requirements about packing list  Requirements about bills of lading  Port of shipment  Port of destination

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 Partial shipment allowed or not  Details off any other documents required

VERIFICATION OF SIGNATURES
A designated officer verifies the signature of the customer on Application Agreement for genuineness as well as to ensure that the owner of the signature has the authority to issue the instructions.

PROCESSING TIME FOR L/C APPLICATIONS

On receipts of completed application for opening a letter of credit, the credit department ensures that the letter of credit is opened and dispatched without undue delay. The letter of credit can be opened within maximum period of two working days.

PROCESSING THE L/C

Bank issues identification number for control purpose to each issued credit. At the end of working day, completed applications are held overnight in a fireproof cabinet in a special room.

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MARKETING DEPARTMENT
Mr. Amjad and Mr. Mubashir deals with this department. Nowadays marketing of products is prime importance for any organization. This dynamic organization has its own marketing department, which is responsible for creating the demand for goods and services. Faysal Bank Limited has its own marketing department at the head office, Karachi. This department operates different deposit schemes for its customer time to time in order to increase the business of the Bank. At FBL the marketing people make customer calls and personally visit the potential customers and convince them to invest in FBL. They make phone to customers and inform them about their schemes, profit rates etc.

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ACCOUNTS DEPARTMENT
Mr. Nadeem deals with this department. Accounting department is the running blood of the Faysal Bank. It handles almost all the problems occurring in the bank. The important activities preformed by accounts department are as follows:

TREASURY
A special officer in FBL performs a portion of this operation.

CLEARING
Mr. Liaqat Ali deals with clearing. Before discussing it is necessary to what is clearing? The process by which cheques exchanged between the collecting and paying bank and the ensuring financial settlement is called clearing This is facility is provided by the state bank of Pakistan for offsetting of cross obligations between the different banks. Clearing is of two types.

Inward Clearing
When cheques drafts, etc, of our branch presented to us for clearing by the SBP. Cheques to be honored be bank.

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Outward Clearing
The cheques of other banks which the account holder deposits in their accounts are send for collection. Clearing process (inward/outward). Here the local cheques are received that are drawn on FBL. All the cheques are received on one counter along with the paying slips duly filled in properly containing particulars of cheques and account holder. Counter folio of paying slip is handed over to the customer by putting stamp for cheque received for collection for Faysal bank limited on it duly signed by officer. These cheques are scrutinized and cheques for local clearing are separated from OBCs. These are then entered in clearing register and cheques for collecting are entered in OBC register and handed over the Bills Department of Collection. Clearing officer checks and verifies titles of all the cheques deposited by the customer to confirm the good title of the cheques. Cheques are scrutinized proper and paying slips are separated from cheques. Special crossing, endorsement and clearing stamps are affixed on the cheques. Cheques of each bank are sorted and arranged branch wise. All the cheques are then entered into the clearing system of bank. Print out of the clearing is taken and details are attached. With the cheques of each bank. Details of these banks are then entered into the clearing schedule containing number of cheques presented and their total amount against the name of each bank. Then total number of cheques presented to all

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banks and their total amount is written on the foot of the schedule, which is tallied with the clearing register. Next morning these cheques are delivered to the respective banks in clearing house of the SBP between 9:00 to 9:30 AM. In the same manner, other banks present their clearing drawn on Faysal Bank. Total number of cheques and their amount delivered to other banks are received from them are written on the clearing House schedule and handed over to the Officer Clearing House SBP. Cheques/DD received in clearing are given to the Officer Cash Department of the branch for their payment. After proper scrutiny of cheques, verification of signatures and confirmation of balance in the account Officer Cash Department pays these cheque by canceling and posting them in the system.

ADVANTAGES TO FBL
Foreign currency is purchased at a certain rate. During the period if rate increases to a higher rate, the difference between the two rates is the source of income for Bank. In case of any mis-happening, Banks risk is minimum because foreign deposits are backed up by SBP. Receipt of Foreign Currency By law, the branch of any bank cannot keep foreign currency. It has to sell this currency at spot rates to its Head Office. Therefore, whenever the Bank receives

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Foreign Currency through cheques, it sells this amount on the same day to Karachi branch.

BUDGETING
Accounts department in the bank is responsible for making all the plans for the bank. These plans range from yearly to daily plans.

Five Yearly Budget

Bank first of all makes a plan for five years. This plan include the budgetary figure for five years, new avenues to search, new customers to find, etc. Such a plan gives only the broad guide to mark the direction in which the bank wants to move in the near future.

Yearly Budget
Next step is that the account head makes a very accurate yearly budget incorporating all factors like increase in tariff rates, rules and regulations of SBP, dollar fee, charges in profit rates, etc. The annual budget is made for the year on quarterly basis. The budget, this shows the targets for the bank, e.g. target deposits to be achieved, targets expenditures, target profit, etc. After the approval of the budget by the top management, it is communicated to all levels.

Comparison
Bank employees, management, etc. try their best to achieve the targets. After each quarter to access the performance of the bank in terms of established objective, the

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actual figure for income, expenditure and profits are compared with budgeted figures. The quarter-wise analysis is done for control purpose. It helps in finding out whether the expense have increased beyond the targets and whether the objectives set by the management have been achieved. The answer to these questions help in finding out the areas wherever the performance was not up to the desired level.

Revised Budget
Revised budget is sometimes necessary in order to incorporate the new policies introduced by SBP or to show the effect of new changes in rates, etc. Budgets made by the accounts department are flexible budget to readily incorporate the rates of uncontrollable factors.

Monthly Review
Officers in accounts department makes profit and loss accounts both at the end of the each quarter and at the end of each month. The advantages of monthly review is that the management comes to know about any deficiencies which are hindering the way of achieving the targets and then can try to overcome these in the subsequent months. For example, if the income earned from the investments made by the bank falls below the budgeted figure, the bank management can start looking for new avenues so that the gap between the budgeted and actual figures can be minimized during the subsequent months. The advantages of these budgets is that at the end of the year, management has the annual, quarter-wise as well as monthly figures for review purpose. 123 INTERNSHIP REPORT

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Variances
Any variances resent in the actual amount and budgeted amount is probed into all the factors; internal, cultural, social economical and political are taken into consideration. If for example, the expenditure increases as compared to budgeted figure as it happened last year when the printing expenditures had increased because of increase in the cost of paper, the true causes of the increases are found out. If the causes are out of control as in the above mentioned case and are expected to prolong, appropriate adjustments are made in the budgets. If , however, the causes are in the control, then the appropriate policies are made to encourage the employees and the concerned persons to curtail the expenditures.

OTHER SERVICES PROVIDED BY ACCOUNTING DEPARTMENT

Another important task of the accounting department is the provision of various types of information needed by the management for decision making. In this area, it acts as a centre of MIS whereby all the information needed by management is processed and given proper format.

Advantages
With the use of computers in MIS, the complete record of each account holder can be obtained for full one year in the form of report. This shows the total transactions does with each customer along with the amount of income the bank has earned on his account, the number of LCs he has opened during the month, the 124 INTERNSHIP REPORT

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amount of commission his account has earned, the total amount present in the savings account, current and deposits accounts, etc. It is one of the management to judge the overall performance of the customer during one year. Information thus obtained can also be used for control purposes. Wherever a customer comes to the bank to take any facility, management use the information maintained his account to decide whether to provide him the facility or not. In cases the management sees that the customer has not maintained good record with the bank. The tip management negotiates with him to find out the causes and the provide assistance if needed.

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SPECIAL FEATURES OF FBL

Faysal Bank Limited is an established bank. It has some special features with the help of those it is growing rapidly.

GOOD WORKING ENVIRONMENT

As the working environment plays a great role in this competition age, So the FBL has good working environment. All the people work with great cooperation managers are so kind that each problem can be discussed with them.

EFFICIENCY
Employees at FBL are quite efficient. As Multan branch is new one. Its employees have to bring their bank among the list of good banks. Therefore, they work more than their working hours and it is all according to their will. It also shows their loyalty to organization.

CUSTOMER SERVICE
All the customers are entertained individually. Same kind of behavior and attention is given to all customers.

PRODUCTS
Prioritizing its product! Portfolio in the line with its corporate and consumer needs and wants, the bank is committed to develop products that give more value to its customers in both sectors. 126 INTERNSHIP REPORT

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SWOT ANALYSIS
STRENGTHS
Faysal Bank limited has strong belief on customer services Manager and EVP Mr. Safdar Qureshi has good coordination with staff members The environment of Faysal Bank Limited is very friendly FBL is Fully computerized, each department has its own PC The products of FBL are very excellent Customers are allowed to give suggestion for the improvement of these suggestions are listened carefully Bank and

WEAKNESSES
Faysal Bank Limited has no ATM facility Faysal Bank Limited has no Credit card facility The building of FBL is small

OPPORTUNITIES
Information technology Credit card facility ATM card facility Establishing foreign branches

THREATS
There is great competition in the market

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RECOMMENDATIONS AND SUGGESTIONS

Faysal Bank Limited is the first bank which has come under listing in Pakistan. Faysal Bank Limited has been active in Pakistan since the last seven years and has been in the forefront in Islamic mode of financing. Faysal Bank Limited has a clear advantage over other new banks as the bank did not have to start from scratch, it has access to already established international network and has mobilized sizable deposits. Faysal Bank Limited is successful in employee retention, customer satisfaction and high profit generation because of good services. Happy employees help create happy customers, which, in the next cycle, reinforce the happy employees, and so on. Faysal Bank Limited is more than satisfied with its customers. The track record of the customers is excellent and the repayment procedure is satisfactory. The bank is fully aware of the financial strength as well as the market repute of all of its customers. Much of the good reputation of Faysal Bank Limited, is because of the good behavior and response of the employees of the bank. Good and friendly attitude on part of workers is the result of excellent management of the bank who believe that people are the central case of any organization, especially those engaged in providing services to their customers. As a result of customer oriented policy of

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the management, employees have been trained to behave in a very friendly manner with customers. Environment of the bank also plays an important role in customers satisfaction.  Employees always talk very politely on the telephone because telephone, if not used properly, can be a cause of spoiling the good name of the organization.  The entire environment of the bank gives the impression that customers are very important to the bank. They are offered seats even when they come for very small task. However, there are some suggestions for improvement.  Establishment of more branches in Pakistan  More advertisement on electronic media.  Introduction of more credit schemes like Rozana Munafa.

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OBSERVATION & CONCLUSION

I observed Faysal Bank Limited a financially sound bank. Its profits are increasing year by year. Its staff is very good and sincere with bank. Faysal Bank views specialization and service excellence as the cornerstone of its strategy. The people at Bank realize that innovation, creativity, reliability, customized services and their execution are the key ingredients for their future growth They are aware that they have stepped into 21st century and they must meet its challenges by acquiring the highest level of technology. They will thus be accelerating their technological advance to enable them to distribute their products and services through most efficient and high technology means. Online banking services and introduction of ATMs at strategic locations have been firmed and will be fully operational during the year 2003.

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