Internship Report

Askari Bank Limited

By Nauman Talat L1s07bbam2021

University of Central Punjab

Lahore, Pakistan 2011

ACKNOWLEDGMENT
Praise to Almighty Allah, who bestowed upon me the potential and ability to accomplish the task of the work. I wish to express deep sense of gratitude to, Mr. Muhammad Rayaz, Director Placement & Internship, who provided me this opportunity to achieve the practical experience and for his valuable supervision and helpful suggestions in the completion of this report. I also wish to acknowledge Shahid Alvi--Branch Manager, for their cooperation and proper guidance given to me from time to time to complete this assignment. Secondly I acknowledge the inspiring guidance, encouraging attitude, valuable comments and technical guidance, received from my respective teachers of University of Central Punjab.

PREFACE

In the name of Allah who Is most merciful and beneficial. Allah give us many abilities with these I would be able to do this report. This is the internship report of Askari Bank Ltd. In it the detail is given of the work I have been done at Bank.

DEDICIATION
I dedicated this assignment to my Parents and Teachers who have always been a source of inspiration to me and to Mr. Shahid Alvi (Branch Manager of Askari Bank) who gave me great knowledge about banking sector.

Table of contents
Executive Summary Industrial Profile Company Profile Organization structure chart Product and services Functions of Askari Bank Departments of Bank Account Opening Department Clearing Department Remittances Department Credit Department Foreign Exchange Department Finance Department HR Heads Responsibilities Recruitment & Selection Human resource planning Transfers, promotions and separation Benefits and services of Askari Bank Human Resource Audit Swot Analysis Identification of plausible problems Recommendations and Suggestions Conclusion Bibliography References 1 2 6 11 12 14 16 16 27 32 36 47 51 56 57 73 76 82 87 89 94 95 96 97 97

Executive Summary
Banks play a significant role in mobilizing savings thus taking great part in capital formation process. Their role in development of a country has increased, with the advent of modern technology. The intense competition, among banks, the privatization of the financial institution and financial liberalization in general are gradually and continuously making the banking sector efficient and effective. To open an account the customer has to meet the general banking manager with an introducer. The procedure begins with the punching of account opening form to the customer file i.e. customers master file. Before closing any account, bank send letter to the account hold for informing him that his account is going to be closed. There is need an approval from higher authority to close any account. Current deposits are those which are payable to bank whenever demanded by the customer. Bank does not pay any profit on current deposits. The following are the financial products/services of PLS Account, Saving Account, Term deposit and Foreign currency accounts. In remittance department Askari Bank have instruments for transferring of money, Telegraphic Transfer, Mail Transfer. In cash department both deposits and withdrawals go side by side. This department works under the CD In charge and deals with cash deposits and payments. This department maintains the following sheets, books, and ledger of account cash received voucher sheet. Bank provides this facility to the people who need advance money to meet their requirement. Party dealing with other banks financial condition of borrower business and as a first step credit proposal is being made. Askari Bank provides advances, which are two types, secured advances & unsecured advances. Askari Bank usually classified advances in to following types Commercial Advances, Corporate/SMEs Advances, Agricultural Advances. Commercial Advances are of following types Demand Finance, In foreign exchange, Askari Bank is dealing Foreign Currency Accounts, Foreign Remittances, and Foreign Bills for Collection, Imports & Exports. Foreign currency accounts & the foreign currency department deals with the following types of accounts, current account, saving bank account, term deposit. Foreign accounts are convertible on floating rate available to the bank. Letter Of Credit facility is being provided by Askari bank in foreign exchange. 1

Industrial profile
Banking is one of the most sensitive businesses all over the world and play important role in the economy of a country and Pakistan is no exemption and in a contemporary world of money and economy. The banking system of any economy is an undeniable determinant of its growth as it provides an efficient channel that routes funds from surplus sectors in the economy towards deficit ones. Banks are custodian to the assets of the general masses. It influences and facilitates many different but integrated economic activities like resources mobilization, poverty elimination, production and distribution of public finance. It is purchase of car or building of a home bank is always there to serve public better. Banks play positive and vital role in the overall economic development of the country. Pakistan has a well-developed banking system, which consists of a wide variety of institutions ranging from a central bank to commercial banks and to specialized agencies to cater for special requirements of specific sectors. The country started without any worthwhile banking network in 1947 but witnessed phenomenal growth in the first two decades. A major achievement of the reforms process has been the transformation of a primarily state owned and weak banking sector into a healthier, market based system, owned by the private sector. This has been facilitated by the restructuring of major banks, ongoing consolidation of the sector through mergers and acquisitions, strengthening of the regulatory regime and improvements in transparency, corporate governance and credit culture.

Classification of Banks
The commercial banks are classified into various types on the basis of their spheres of activities, ownership, domicile etc. The main types of banks are:

Classification on the basis of functions Classification on the basis of ownership Classification on the basis of functions

Central Bank Commercial Banks Exchange Banks Saving Banks Agricultural Banks Industrial Banks Classification on the basis of ownership

Public sector banks Private sector banks Cooperative banks Classification on the basis of domicile

Domestic Banks Foreign Banks

Banks in Pakistan Government Owned Banks: 3

First Women Bank Limited Industrial Development Bank of Pakistan Khushhali Bank Limited National Bank of Pakistan SME Bank Limited The Bank of Khyber The Bank of Punjab The Punjab Provincial Co-operative Bank Limited Zarai Taraqiati Bank Limited Privatized Banks:

Allied Bank Limited Habib Bank Limited MCB Bank Limited United Bank Limited Development Financial Institutions:

House Building Finance Corporation National Investment Trust Limited Pak Kuwait Investment Company (Pvt.) Limited Pak Libya Holding Company (Pvt.) Limited Pak Oman Investment Company Limited Saudi Pak Industrial & Agricultural Investment Company (Pvt.)

Limited Small and Medium Enterprise (PBA subgroup under formation):

First Microfinance Bank Limited Pak Oman Microfinance Bank Limited

Private Banks:

Royal bank of Scotland (RBS) Arif Habib Bank Limited Askari Bank Limited Atlas Bank Limited Bank Alfalah Limited Bank Al Habib Limited BankIslami Pakistan Limited Crescent Commercial Bank Limited Dawood Islamic Bank Limited Dubai Islamic Bank Pakistan Limited Emirates Global Islamic Bank Limited Faysal Bank Limited Habib Metropolitan Bank Limited (Merged with Habib Bank AG JS Bank Limited NIB Bank Limited Meezan Bank Limited Mybank Limited KASB Bank Limited SILK Bank Soneri Bank Limited Standard Chartered Bank (Pakistan) Limited (Re-constituted in

Zurich in October 2006)

December 2006) Foreign Banks:

Citibank N.A., Pakistan Deutsche Bank AG, Pakistan Hong Kong & Shanghai Banking Corporation Limited, Pakistan Oman International Bank S.O.A.G., Pakistan 5

Barclays

Non-Member Banks & Development Financial Institutions:

Bank of Tokyo Mitsubishi UFJ Limited, Pakistan Network Micro Finance Bank Limited

Company Profile
Askari Bank was incorporated on October 09, 1991 as a Public Limited Company and is listed on the Karachi, Lahore and Islamabad Stock Exchange. It started its operations from April 01, 1992. The bank was declared as Best Bank in Pakistan in 2001 in Global Finance. Askari Bank Limited has expanded into a nationwide presence of over a 100 branches, comprising commercial and Islamic banking branches, connected online and supported by a network of Automated Teller Machines (ATMs). It also enjoys an offshore banking unit in Bahrain. Over the years, Askari Bank Limited has proven its strength as a leading banking sector entity with ever increasing commitment to its clients, through a strategic investment in electronic technology. It has A1+, the highest possible credit rating, for short-term obligation, and AA+ for long-term rating. Beside day-by-day banking solutions, Askari Bank Limited has a wide range of Corporate, Consumer, and Islamic Banking products. Askari Commercial Bank Limited was the first bank in Pakistan to offer Internet banking Services and B2B e-commerce (Business to Business electronic Commerce) solutions for merchants looking to purchase on credit. They believe that balanced growth is the key to survive in the todays global banking environment.

Mission Statement:
To be the leading private sector bank in Pakistan with an international presence, 6

delivering quality services through innovative technology and effective resource management in a modern and progressive organization culture of meritocracy, maintaining high ethical and professional standards, while providing enhanced value to all their stakeholders, and contributing to society

Core Values
We understand that our commitment to satisfy customers needs must be fulfilled within a professional and ethical framework. We subscribe to a culture of high ethical standards, based on the development of right attitudes. We believe in our 'core values' as the essential and enduring tenets of our organization - the very small set of guiding principles that have a profound impact on how everyone in the organization thinks and acts. They have an intrinsic value for us and bear significant importance to all our employees. They are the few extremely powerful guiding principles; the soul of the organization - the values that guide all our actions. The intrinsic values, which are the corner stones of our corporate behavior, are:

Commitment Integrity Fairness Team-work Service

Vision To be the Bank of first choice OBJECTIVES:

Deliver solutions that meet customer financial needs. Build and sustain a high performance culture. Build trusted relationships with all stakeholders. 7

 Build and manage the Banks portfolio of business to achieve strong and sustainable shareholder return. Create and leverage strategic assets and capabilities for competitive advantage. To facilitate the bank with modern banking technique. To accelerate commercial activities and capture large market share

Code of Business Principles:

Deliver solutions that meet customers financial needs Build and sustain a high performance culture Build trusted relationships with all stakeholders Build and manage the Banks portfolio of businesses to achieve strong and sustainable shareholder returns Create and leverage strategic assets and capabilities for competitive advantage

Corporate Objectives
To achieve sustained growth and profitability in all areas of business. To build and sustain a high performance culture, with a continuous improvement focus. To develop a customerservice oriented culture with special emphasis on customer care and convenience. To build an enabling environment, where employees are motivated to contribute to their full potential. To effectively manage and mitigate all kinds of risks inherent in the banking business. To optimize use of technology to ensure costeffective operations, strengthening of controls, efficient management information system, enhanced delivery capability, and high service standards. To manage the Banks portfolio of businesses to achieve strong and sustainable shareholder returns and to continuously build shareholder value. To deliver timely solutions that best meets the customers financial needs. 8

 To explore new avenues for growth and profitability.

Strategic Planning
To comprehensively plan for the future to ensure sustained growth and profitability. To facilitate alignment of the Vision, Mission, Corporate Objectives with the business. To provide strategic initiatives and solutions for projects, products, policies and Procedures. To provide strategic solutions to strengthen weak areas and to counter threats to profits. To identify strategic initiatives and opportunities for profit. To create and leverage strategic assets and capabilities for competitive advantage.

Code of Ethics and Conduct

Askari Bank seeks to maintain high standards of service and ethics enabling it to be perceived as impartial, ethical and independent. In addition to the general guidelines, the Following are the salient features of The Banks code of ethics and conduct. Presence of a corporate culture that seeks to create an environment where all employees are treated equitably and with respect. Employees must carry out their responsibilities in a professional manner at all times. They must act in a prudent manner and must avoid situations that could reflect unfavorably on themselves, the Bank or its customers Employees must commit to the continued development of the service culture in which the Bank consistently seeks to exceed customers expectations. Fairness, Truthfulness and Transparency govern our customer relationships in determining the transactional terms, conditions, rights and obligations. Employees must safeguard confidential information which may come to their 9

possession during the discharge of their responsibilities. Respect for customers confidential matters, merits the same care as does the protection of the Banks own affairs or other interests. Employees must ensure that know your customer principles are adhered to by obtaining sufficient information about the customers to reasonably satisfy ourselves as to their reputation, standing and the nature of their business activities. Employees must avoid circumstances in which their personal interest conflicts, or may appear to conflict, with the interest of the Bank or its customers. Employees must never use their position in the Bank to obtain personal advantage or gain. Employees must not enter into an agreement, understanding or arrangement with any competitor with respect to pricing of services, profit rates and / or marketing policies, which may adversely affect the Banks business. Employees must not accept gifts, business entertainment or other benefits from a customer or a supplier / vendor, which appear or may appear to compromise commercial or business relationship. Employees must remain alert and vigilant with respect to frauds, thefts or illegal activities committed within the Bank premises.

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President
Senior Executive Vice President (SEVP)

Organization Structure Chart

Executive Vice President (EVP)

Senior Vice President (SVP)

Vice President (VP)

Additional /Assistant Vice President (AVP)

Manager Assistant Manager Grade -1 Grade -II

Grade -III 11

Assistant, Cashier etc Non Clerical staff

Product and services

Personal finance
Personal Finance is a parameter driven product for catering to the needs of the general public belonging to different segments. One can avail unlimited opportunities through Askari Bank's Personal Finance. With unmatched finance features in terms of loan amount, payback period and most affordable monthly installments, Askari Bank's Personal Finance makes sure that one gets the most out of his/her loan. Once a good credit history is established, the door to opportunity opens much wider.

Mortgage Finance
Askari "Mortgage Finance" offers the convenience of owning a house of choice, while living in it at its rental value. The installment plan has carefully designed to suit both the budget & accommodation requirements. It has been designed for enhancing financing facility initially for employees of corporate companies for purchase/ construction/ renovation of house.

Business Finance

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In pursuance of the National objectives to revive the economy of the country, ACBL is providing loans to small and medium size business enterprises under Askari Bank's Business Finance Scheme. Our goal is to offer a loan, which enables business community to receive the financing required by them based on their cash flows. Our valued customers can enjoy the convenience of getting financing on attractive terms with the minimum processing turnaround time.

Smart Cash
This personal line of credit would be set up with a specified credit limit upto Rs. 500,000/-

Auto Financing
Yet another of our products, Askari offers the most convenient and affordable vehiclefinancing scheme, which provides our valuable customers an opportunity to own a brand new vehicle of their choice. With minimum down payment, lowest insurance rates and widest range of available car makes and models, Askari offers the best value to our esteemed customers

Askari Card
ASKCARD means freedom, comfort, convenience and security, so that you can have retail transactions with complete peace of mind. ASKCARD is your new shopping companion which enhances your quality of life by letting you do shopping, dine at restaurants, pay your utility bills, transfer funds, withdraw and deposit cash through ATM anywhere, anytime.

Type of Credit Card

Silver card Gold card Local card

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* Silver card has limit * Gold card has limit * Local card has limit

upto 2 lac. upto 5-lac. upto 2 lac.

Silver and Gold card can be used internationally for shopping and also can be used for internet shopping. * Local card can be used in Pakistan.

Travelers Cheques
The range of our products and value added services enhances with introduction of Rupee Travelers Cheques (RTCs) launched in March 2002. In spite of our constraint on issuing higher denomination of RTCs against restrictions imposed by the Central Bank of Pakistan we have been striving to attain our shares with sizeable portfolio.

Value Plus Deposits

The first liability product launched by this unit is showing a remarkable acceptability in the market. The growth of this product is witnessed by its share, which has presently reached at Rs. 1,079 Million even after lowering down the profit rates due to sufficient liquidity in the market.

FUNCTIONS OF ASKARI BANK

Accepting Deposits
Cash in the hand of the people is unsafe because it can be lost. moreover, because some people lack entrepreneurial talents and therefore do not make investment in any

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enterprise, but they want income on the amount of money they have. Bank promises to solve these problems of people. Banks receives three types of deposits from the people. Current deposits Fixed Deposits. Saving Deposits.

Advancing Loans
Every bank has learn experience that depositors do not draw whole of their deposits at a time. They only draw a part of it for day to day transactions. Therefore, a bank keeps a part of total deposits as cash reserve to meet the cash demand of depositors and advances the remaining part of deposits to businessmen on interest. A bank gives loans entrepreneurs/businessmen in the following ways: By Opening a loan account. By means of overdraft. By discounting bills of exchange. By purchasing bonds and securities. Creation of the safest medium of exchange: It is neither safe nor easy to make payment in the form of metallic coins or paper notes. Therefore, payments are made by cheques these days.

Agency Services
A commercial bank performs many services as an agent of its clients or depositors. It makes payments on order cheques issued by its depositors. It receives the amount of money on crossed cheques issued in the favor of its clients and deposits the amount in their accounts.

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General Utility Services

A bank provides general utility services to its clients as well, for example it keeps their precious documents, gold ornaments, bonds and shares etc. in safe custody in its lockers.

Financing of Foreign Trade

A commercial bank receives foreign exchange earned by exporters and makes payment also in foreign exchange in foreign countries on behalf of importers. It also advances loans.

DEPARTMENTS OF ASKARI BANK

Deposit & Account Opening Definition of Bankers
As defined in section 3(b) of negotiable instrument act 1881, bankers means the person transacting the business of accepting for the purpose of lending on investment of deposits of money from the public, repayable on demand or otherwise, and withdraw able by cheque, draft, or otherwise, and include the post office savings the bank.

Definition of the Customer

A customer is the person who maintains a regular bank accounts without taking in to consideration the duration and frequency of operation of his accounts it means that the person becomes a customer of the bank as soon as he open his accounts deposit money in the same and the bank accepts the said deposit.

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Qualification of Customer
He should not be a minor because a minor is not competent to contract. According to section (3) of the majority act 1875 a person is deemed to have attained the age of majority when he has completed the age of (18) years. He should be a person of sound mind Section (12) of the contract act says that the person is said to be of sound mind for entering into contract if at the time when he makes it he is capable of understanding it and of forming a rational judgement as to its effects upon his interest. He should have not been debarred from entering in to any contract under the law. There is an offer by the customer and acceptance by the banker. The customer offer the money to deposit and banker offers to accept it.

Rights of A Customer
To draw cheques against his credit balance in the account. To receive pass book or statement of his account. To sue the bank for the cost, loss and damages, when his cheque is wrongfully dishonoured by the banker. To sue when the banker has not maintained the secrecy of his account, except when it is done under compulsion of law in the interest of the bank or as the duty to public. Duties of the Customer Section (72) of negotiable instrument act 1881 lays down that the customer must present the cheques for payment and collection with in the business hours of the bank. To keep his cheque book under lock and key To draw the cheques very carefully so that there is no room for any fraudulent additions or alterations. To see that the cheque issued by him presented to the bank for payment with in a reasonable time.

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Opening of Account The banking history is replete with various instances of fraud largely due to incorrect opening of accounts. These fraud could have been avoided in if the branch managers and other designated officers had taken due care and exercised required precautions at the time of opening of accounts. At the time of opening of accounts, officers should tactfully obtain as much information as possible about the integrate and character of the person, his correct name, address and occupation. This infect will be the only opportunity when they will be able to talk to the prospective customers in a friendly and frank atmosphere. This is the time when they have a slight edge over the customer. He or she at this point of time is willing to divulge as much information about his personal status and business etc to the bank manager. It is therefore necessary that due care and proper procedure be followed for opening different types of accounts for various types of customers. Askari bank limited has the following classifications of accounts, Individuals accounts Partnership firm accounts Joint stock company accounts Agency accounts Clubs, societies & associations accounts Executors and administrators accounts Trusts Proprietorship Joint accounts Other misc accounts When a customer opens an account under the law he enters into a contractual relationship with the bank. At the time of opening the account, intended customer must have the following characteristics: 18

 He must have reached the age of majority In term of section 3 of the Indian majority act 1875 (as adopted in Pakistan) a person is a major if he attain the age of 18 years. However, the age of majority shall be 21 years in case of European nationals and also where guardian is appointed under the guardians and wards act. A person who is under the age specified herein above is considered a minor. in term of section 11 of the contract act, a minor is declared incompetent to enter into a contract. As such, any contract with a minor is a void. However, the banks generally allow the minor to open accounts with a view to inculcate in them the habits of saving. Such account is opened jointly with their guardian and are allowed to be operated by the guardian. The guardian for the purpose will sign the account opening from and the specimen signature card.

He must be of sane mind A person is said to be of sane or sound mind it he understands the terms and the conditions of the contract and is capable enough to form rational judgment as the effects of the contract upon his interest He must not be insolvent and bankrupt. At the time of opening the account, he should not be adjudicated as insolvent. Generally a person is considered as insolvent if his liabilities exceed the assets he is possessing. He must not be debarred under any law from entering into any contract. It is the duty of the banker to make sure that all above criteria is satisfied before he allows the opening of the account. For general guidance of the officers, given below are the essential points that must not escape their attention while opening the accounts.

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Who deal with opening of account?

As for as possible the account opening job should be handled by the branch manager himself. Only in exceptional cases in main branches, the job may be assigned to other officers.

Information:
As much relevant information as possible must be elicited from the prospective customer relating to his means, line and place of business etc.

Forms to be filled in carefully

Each and every column of the account opening form should be neatly and correctly filled in with necessary details.

Introduction of account
Account must be properly introduced. In this concern, the following precautions are to be observed. As for as possible, the person introducing the account should attend the personally with the prospective customer. This would serve the dual purpose. The branch manager shall have the opportunity of eliciting vital information as to the standing, respectability and the means of the person he is introducing. The identity of the customer must be properly established beyond any doubt. Introducing from person having doubtful dealing with the bank should be discretely declined. The staff member generally should not introduce the account. They will introduce accounts only for those persons who are personally known to them and whose credentials are absolutely clean. As for possible, the account opening form should be completed by the prospective customer in presence of the introducer who is then aware of the particulars furnished and can corroborate the same. 20

Specific information concerning the profession should be recorded in the account opening form. The description private Service or Businessman is insufficient. Signature on the account opening form must be put by the customer will attest them properly in presence of introducer. No cheque book should be issued to the new accounts are properly introduced. Account may be opened with cash or cheque. Initial deposits, it is incumbent upon the Branch Manager to satisfy themselves additionally that title of account holder is genuine for the cheque deposited. Prudent bankers avoid opening new accounts with cheque. Letter of thanks should be sent to the introducer the day the account is opened. This precaution would accomplish the purpose of intimating the introducer that the account has been opened on strength of his introduction thereby inviting disclaimer if untrue. A letter of thanks should be sent to the new account holder, preferably through registered mail, to verify his address. In the evening, the officer of the branch should visit the customers area to establish that the address given by the customer is correct and the commands respect and honour in the neighbourhood/vicinity he is living. Number of the customers national identity card should be correctly recorded in the account opening form and copy of it should be kept on record. No account should be opened in the name of an undercharged insolvent.

Types of Accounts
Individual Accounts:
Such account may be classified as follows:

Accounts of literate ladies and gentlemen. Accounts of parade observing ladies

Joints accounts. Minor accounts.

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1. In order to open the account for literate people an account opening form, signature card, form A, and an ID copy are required with Rs. 2500 for opening account and he must fulfil all customer characteristics. 2. In case of illiterate ladies and gents, the following precautions are observed in addition to those provided in the above guideline. a) Two photographs are to be obtained one to be pasted on account opening form and the other specimen signature card. b) Instead of signature left hand thumbs impression to be obtained on the specimen signature card from gents and right hand thumb impression from the ladies. c) Each time such customers should attend the bank personally and will put their thumb impressions on the cheque before the passing officer. d) Such customers should be advised not to issue cheque payable to third parties. e) Cheque should be marked payment in person to ensure even if the cheque is presented through clearing that particular cheque can only be paid in person 3. When account is opened by more than one person but the relationship between them is neither of trustees nor partners it would be termed as joint account. Whenever such accounts are open-end, definite instruction regarding operations on the account and payments of balance in cased of death of any one of them should be obtained. 4. A person who is under the age as specified above is considered as minor, a minor is declared incompetent to enter into a contract. However, the banks generally allow the minor to open accounts with a view to the condition of saving habits. Such account is opened jointly with their guardian and is allowed to operate by the guardian.

Accounts of Partnership Firms

While opening accounts of the partnership firms, the partnership deed from registered firms is required obtained in the addition to account opening form and specimen signature card. The partnership letter is attached with the accounts opening form, which must also be signed by all the partners of the firms whether registered or unregistered. 22

In these accounts, the following points should be remembered. 1. All the partners must sign the account opening form. 2. The names of persons authorised to operate the account must be neatly and correctly given in the account opening form. 3. For partnership concerns carrying on the business under impersonal name it is generally described that the title of accounts should show name of the partners or managing partner. 4. A cheque payable to the firm should not be accepted for credit to personal accounts of the partners without the written authority of all the partners. 5. The maximum numbers of partners in general business 20 and the minimum is 2 for the banking firms the maximum numbers of the partners is 10 in Pakistan however bank cannot be opened by the partnership concern 6. Since these are the business concern they will be allowed to open current accounts. No saving s bank accounts be opened in partnership name. Partnership account opening required following documents: 1) Account opening form (A.O.P) 2) A.O.P should be duly introduced 3) Copy of N.I.C Of all partners 4) Registration certificate (optional) 5) Partnership deed 6) Rubber-stamp on letterhead of the firm 7) Letter Head 8) Official capacity (It means that all the partners will sign and choose the singe for operation of account with the bank. And in account opening form the name of the official capacity is written in special instruction and recommended by all the partners).

Accounts Joint Stock Companies

Joint stock companies include Private limited companies and Public limited companies 23

Private Limited Companies

Private limited companies are those where the share capital is not offered to the general public instead the offer is restricted to particular class of society or within the family members. Generally their share is not transferable. The minimum number of Shareholder is 2 and maximum, is 50 private limited company are not listed on stock exchanges and therefore their shares are not publicly quoted.

Public limited companies

In this case, the promoters and general public contribute share capital. Any Pakistani who is authorised to enter into contract can purchase share. Shares of these Companies are transferable and brought and sold freely in stock exchanges. The minimum number of shareholder is 10 whereas there is no upper limit. The following documents are required for joint stock companies account opening. a). Copy of resolution While opening the companys account, the manager must ensure that board of directors of the company is properly constituted and request for opening the account comes through resolution of the board of directors. The resolution for account opening should bear company seal and signed by the chairman of the meeting where such resolution is passed and counter-signed by the companys secretary or authorised director must be submitted to the bank before an account can be opened. b) A.O.F. duly signed. c) Memorandum of Association & Articles of Association. d) Certificate of Incorporation. e) Certificate of Commencement of Business (only required for public limited companies. f) National identity cards of directors. g) List of director with their shareholding. h) Specimen signature card duly signed 24

Account of proprietor
1. A.O.F should be duly introduced 2. Copy of N.I.C of proprietor 3. Specimen signature card duly signed 4. Proprietorship declaration concerns on firms letterhead.

Accounts of clubs, societies and association

Clubs, societies and associations are non-profit and non-trading in nature. They have their own rules and regulations and committees mention their affairs, which is called Governing Bodies. Documents that are required are: i) ii) iii) iv) v) vi) Account opening form Specimen signature card Resolution to be passed by their governing bodies Certified copy of rules and regulations or Bye-law Letter of registration Letter of undertaking to the effect that as and when change take place they will inform the bank of such changes.

Deposits:
Deposit is the lifeblood of a commercial bank. Main function of a commercial bank is to enhance the savings from the savers to the ultimate user of funds. The process of collecting savings is called Deposit Mobilization.

Forms of deposits
Two broad forms of deposits with reference to time period are: A) Demand deposit: These are payable on demand. They include current account, sundry deposit (e.g. margin account) and deposit receipt. No profit is given on demand 25

deposits. CURRENT ACCOUNT: This type of account is usually opened for businessman or such persons who needs deposits and withdrawals facility without any restriction. Introduction is necessary when opening a current account, the procedure has already been explained else were in this book and account number is allotted and for withdrawals cheque book is issued and a statement of account is provided so that customer can reconcile his account with his own record No interest return is paid on such account is Pakistan, This account can be opened with Rs. 500. Banks usually recover service/incidental charges on current account if the required minimum balance is not maintained. Or when the maintenance of the account becomes expenses e.g. For example too many transactions take place on summing a large number of chequebooks and other stationary not consistent with the average balance. ii) CALL DEPOSIT RECEIPT It is a contract for a specific deposit transaction and is used as a security for bidding etc. It is non-transferable and is payable only to beneficiary or purchaser.

iii) SUNDRY DEPOSIT -MARGIN ACCOUNT At the time of issuance of LG / LC or acceptance the party is supposed to deposit is kept in an account called sundry deposit. Margin account Similarly, at the time of allotment of locker the locker holder is supposed to deposit a certain sum as security, which is kept in sundry deposit account.

LOCKERS: ACBL also offers the facility of lockers of three types to it customer to offer security. Types (Rs) Small Medium 6 inches x 2feet 12 inches x 2feet 1,000 1,500 15,000 20,000 26 Size Annual rent (Rs) or Refundable deposit

Large

2 feet

x 2feet

2,500

35,000

Key deposit is Rs 1,000 per locker. In the case if customer loses the key of locker then breakage fee will be charged about Rs. 2,000 per locker plus actual charge of supplier of locker. DOCUMENTS REQUIRED FOR LOCKER OPENING:

Locker opening form Specimen signature card Copy of NIC

Applicant should be account holder in the bank.

Clearing Department
Clearing is a system by which bank exchange cheques and other negotiable instruments drawn one each other within specified area and securing the payment for their clients through the clearing house. A clearinghouse is an organization where these cheques are brought and the mutual claims of each bank on the other are offset ad settlement is made by the payment of difference. The responsibility of operation for the clearinghouse function lies with the state bank of Pakistan. The function of clearing can be understood with the help of a simple example. Every bank has its account with state bank of Pakistan. Suppose one of the account holder of ACBL brings a cheques of habit bank of (Rs 7000/-). Now in state bank of Pakistan the representatives of both banks will appear for clearing physical payment of cash is not made, but our banks (ACBL) account would be reduced by RS. 7000 and increased by Rs. 10,000 the reverse would be true for habit bank limited the clearing may be for or against if our banks A/C in sbp contains a net debit balance then it would be for and if credit balance then it would be against clearing.

Collection of cheques
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These cheques may be drawn on UBL HBL, or MBP or other banks of Pakistan. The clerk collects all the cheques of different banks and prepares schedule for them. Representatives of all banks will receive the cheques related to their branch either issued by its branch or other banks. If bank transfers funds in the same city, it is called IBC INWARD BILL OF COLLECTION and if bank transfers funds to another city when it is called OBC OUT WARD BILL OF COLLECTION. Bills are of 2 types clean and documentary clean bills include finance instruments and documentary includes documents attached with goods. .

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Advantages of Clearing
Systematic arrangement for collection and clearance of cheques. Speedy and economic collection and clearance of cheques. Clearance of cheques and other instruments of different branches of different banks in a systematic manner without any flaw and mistake. The collection and clearance of Govt. bills, instruments, and cheques. The collection of Govt. revenue through cheques, pay order and drafts payable through the State Bank of Pakistan and National Bank of Pakistan. It avoids the difficulties and cumbrances to be faced by the branches if they collect the instruments directly from branch to branch. Confidence among the clearing members is produced.

Clearing Outward
When the customer deposits cheques and other instruments of other banks for collection, we send the cheques in outward clearing.

Procedure
cheques are received duly entered on pay-in-slip. Counter foil is returned to customer after signatures. Crossing stamp is fixed on the cheque. Clearing stamp is fixed on the cheque and pay-in-slip. Clearing stamp with next date is fixed on the cheque and pay-in-slip. Endorsement stamp is fixed on the reverse of the instruments.

Clearing House
In the clearinghouse the representatives of all the banks gather and exchange their instruments. They enter the total amount of cheques delivered and

29

received in their summary sheets. The total of schedule received tally with the total of summary. Clearing cheques received from other banks are sent to branches which will clear the cheques and instruments to respective amounts. Some cheques are returned un paid with the reasons mentioned in the cheques return memo.IBCA for net amount is sent to main branch. In the 2nd house clearing cheques are return and exchanged by the representative of the banks. A summery is prepared for cheques received and delivered and net position is ascertained. Amounts are settled through SBP accounts. After cheques are returned, the main branch sends IBCAs for net amount to the branches. Computer entries are made for (-) credits for returns and debits to main office A/C.

Inward Clearing
In clearing house the cheques received from other banks are collected & sent to branches for their payment. Crossing stamps, clearing stamps and endorsement are checked. Crossing stamp other than collecting bank is cancelled. Cheques & instruments are posted to the debit of respective accounts. Any instruments returned un-paid shall be returned in the second session of the clearinghouse i.e. 2nd clearing. Cheques & instruments if un-paid are returned along with return memo. IBCA,s for net amount is sent to the main branch.

ENTRIES FOR O/W CLEARING:

Dr. Suspense A/C clearing. Cr. Customers A/Cs.

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FOR I/W CLEARING:

Dr. customers/Cs clearing(for return) Cr. suspense A/C clearing (1/W clg)

Transfer Delivery
This is the arrangement by which instruments of the branches of the same bank with in the city are collected and cleared.

Outward Transfer Delivery

The system is just like outward clearing. In outward clearing branch wise schedule are prepared. The clearing instruments are presented to the branches through main branch of the city. This is more effective & speedy process as compared to LBC because fate is received next date.

Procedure of o/w Transfer Delivery

The customers deposits cheques & instruments of the branches of ACBL at Lahore along with pay-in-slip duly filled in. Crossing stamp is fixed on the instruments. Transfer delivery stamp is fixed for next date. Endorsement stamp is fixed on reverse of the instrument. Payees A/C is credited Askari Commercial Bank Ltd

Inward Transfer Delivery:

Cheques drawn on the branch are received with the schedule. The entries are made in the I/W. TD register and balanced with the summery of T.D.

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cheques are debited to respective account and cheques which are not passed returned with the objection memo. The IBCA is sent for the net amounts for cheques passed.

Internal Clearing
When the customer deposits the cheques in the branch drawn on the account in the same branch. The cheques are received along with the pay-in-slip. The amount is transfer from the account where the cheque is deposited and credited to the account where it is transfer.

Special delivery
SBP conducts special clearing when clearance of special Government revenues is required. Government cheques. Pay order treasury cheques are cleared and paid.

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Remittance Department
Remittance department plays an important an important role in transfer of funds; it includes DD, TT, MT, TC and pay order. It is an instrument payable on demand for which value has been received issued by the branch of the bank drawn i.e. the payable at some other place (Branch) of the same bank.

Travellers cheques (TC)

TC (travellers cheques) is for all branches with no charges. We give the money in cash/cheque/direct debit instructions to the banker and he gives in return the slips of Rs.10,000, Rs. 25,000, Rs.50,000, Rs.100,000, Rs.500,000 which is required. Now government has made some restriction against TC because people have stared it to use in place of money. There are no charges of any type such as postage, taxes, and commission charges.

Telegraphic/mail Transfer (TT/MT)

This is an instrument that is use to transfer the money from one branch to other branch of same bank through bank. The person known as payee, for whom TT is made, TT is only paid to him after seeing his ID card. TT has been made on following modes of payments. On cash On cheques Through debiting account no After issuing TT it is get registered in issuing register. Which required TT/MT no. payee name and address, amount, account no.(if through account payment has been made), cheque no.. Along TT/MT an advice also be send to other branch from where money will be drawn, that advice is called telex message. On the basis of which the other branch will pay the money after tallying serial no. and test no. of TT. TT is made if the client has account in the bank if he has no account then he has to fill the TTR (telegraphic transfer receipt) which is a voucher for the official record in bank. 33

Its form is of blue colour. In DD the person has to take care of DD which is issued to him.

Demand Draft (DD)

The demand draft (DD) is issued to the person who want to draw money from another branch in any other city, then by showing that draft he can easily draw money if he has account there. Demand Draft is issued by one branch of bank payable to other branch of the other bank e.g. DD is issued by ACBL payable by MCB. The person who pays the value and on whose behalf draft is issued is called purchaser. The Branch/Office which issues a draft on another branch or office is called the drawing/issuing branch. The Branch /Office on which draft is drawn is called the drawee branch. The person entitled to receive the payment is called the payee. DD also has been made on three modes of payments. 1. On cash. 2. On cheques. 3. Through debiting account no. ISSUANCE OF DD: Request shall be on the standard DD application form. Fill in all information such as name of beneficiary place where the DD is drawn, amount, mode of payment cash/cheque /debit authority signature with name and addresses. Check the application form. Charge commission as per schedule of charges. Get voucher from cash department. After the customer has made payment by cash /cheque. Prepare the demand draft (Security Stationery) The issuance of DD is computerised and the amount is automatically protected graphed during printing for avoidance of forgery. 34

 Entry is then made in DD issued register, in the DD issued register separate folio is allotted for each draw branch and a serial control number is applied. After issuance of DD, an advice is send to the branch from where client wants the money to be drawn, which confirms the DD. In this aspect cantra is another concept, which is followed in the branch where money is transferred. Payment of DD takes place in two ways: 1. If advice reaches the other branch before the draft then that branch debit the H.O of bank and credit client. 2. If draft reach first then bank open the temporary account called suspense account or red account through which amount is debited for the satisfaction of client and credited the H.O of bank when that branch receives the advice than it debit the H.O of bank and credited the suspense account. There are postage and commission charges.

Cancellation of DD
Obtain application in writing along with original DD. Verify the signature of applicant. This signature should tally with signature on DD application form. Mark cancellation in DD issued register. Payment from suspense account DD cancelled after recovery of cancellation cheques as per current schedule of charges. Inform the drawee branch regarding cancellation and ask for IBCA. On receipt of IBCA adjust amount paid out of suspense account.

Lost/Stop Payment/Issuance Of Duplicate DD.

Get application from purchaser and verify the signatures. Inform the drawee branch of the loss of DD and advise them to mark caution against payment if presented.

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After necessary checking, the drawee branch will inform us about the status of DDwhether it has been paid or is still outstanding. Write on the face of duplicate DD in red ink Duplicate in lieu of original DD. no.____ dated ____ reported lost. The duplicate DD will have the same control number. The printed number and serial control number of DD issued shall be mentioned on the application form.

Signatures of two attorney holders with their attorney number should obtained on the DD. The 2nd signing officer must check all the particulars before signing.

The postage rate is fixed Rs.25and commission rates are as following:

Pay Order
Pay order is also called bankers cheque drawn upon the issuing branch/Office itself. It required account no. and other information about client which mean cross payment is its restriction. Get the application form. Issues pay order after recovering charges. Do necessary vouchering. Make entry in PO issue register. All pay orders shall be crossed payees account only. It may be noted that IBCA is not involved because PO are payable in same branch. Application for cancellation. Surrender of original pay order. Recover cancellation charges.

CANCELLATION OF PO:

Lost and Duplicate Pay Order

Check the record to ensure that payment has not been effected. Get application for issuing of duplicate PO. Recover charges. Issue duplicate pay order.

Pay slip
The banks for settlement of its own payment issue pay slips. There is no excise duty and no commission.

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Credit Department
The major source of banks income
Credit department is most important department of bank to earn her income by lending money to other at different rates as compare to that deposit interest rate. Normally, bank takes money from depositors at rate X and utilize those funds by advancing them at X+1 rate, so X- (X+1)=1 this 1 is the income of the bank. If we say that bank is body then credit is blood of that body. It generates revenue for the bank so credit decisions are to be carefully analyzed.

Different departments are working in SBP to monitor credit. * BCD.................. Banking control Department. * BSD...................Banking supervision Department. * BPRD............... Banking policy and regulation department, Commonly operations regulate credit size, sector and bank. Credit line is given to banks finance the purchase of crops after every six months .

National Credit Plan

Every year economic survey is made and with the help of this survey government patronize certain sectors and also advise banks to give more loans in these sectors. According to this year the agriculture sector is the target for financing.

Credit Regulation 1992

In 1992, certain regulation are made by SBP for credit advancement: Bank cannot lend more than 10% of its reserves. No bank can lend to its directors.

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 No bank can finance its own shareholders. If bank finance to other banks shareholder than it has to take permission from SBP. Bank has to handle its suspense liabilities within 30 days. Advances ratio should not exceed 65%. Bank should check the current ratio of the customer.

PROCEDURE FOR TAKING LOANS:

For taking loan first credit line proposal (CLP) is made In a CLP there are different types of documents: Application form Credit information

Application form:
The customer requests the application form from the bank for the loan. Some documents are also attached with the application, which are of two types: Permanent Information Memo Charge Document

Permanent Information Memo:

These are the documents in which there are permanent information of customer and his business.

Charge Document:
Charge document is made for the security purpose. These document are sign by borrower. Purpose for sign is that if the borrower does not pay the loan in a certain specific period of maturity then these documents can be shown in a court against him.

Credit Information:
For the satisfaction purpose bank also take credit information about the party. Credit information is taken from the Credit Information Bureau (CIB). This type of 38

information is taken when loan of huge amount is taken, above 5 million. Clearance report is checked. All these documents are arranged in a file. This file is called credit line proposal. Every loan is sanctioned after the preparation of CLP.

Discretionary Powers of Advances:

Up to certain limit each level can give orders of advancing loan but for the bigger amount branches have to take permission from upper level of authorities. Credit sanction advice move through these levels.

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Types of Securities
Normally loans are of two kinds. i. Clean loans. ii. Documentary or secured loans. In clean loan no tangible securities are taken from the customer. But in secured loans tangible securities are Different kinds of secure securities are Deposit with bank. Deposit with other banks. Government securities. Account receivable /notes receivable. Inventory. Moveable /immovable property Fixed assets are hypothecating, Pledging or mortgaging. In these three cases tittles charge and control varies among bank and the borrower Type Hypothecation Pledge Mortgage Title Borrowers Borrowers Joint Charge Bank Bank Bank Control Borrowers Bank Bank

Good lending principles

There are five good lending principles, which are kept in mind while considering a credit decision. 1. SAFETY Lending must be safe enough and given to one who already has the ability in the form of cash flows to show and for this purpose some liquidity security should be pledge.

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2. SUITABILITY Lending must fit into the plan and loans are given to a business a growing industry. 3. LIQUIDITY. Business cycle should be complete in one year. The credit will be refunded in liquid form and for debt security bank consider most liquid security. 4. DISPERSAL Loans should be given in diverse sector and should not be concentrated just to one sector to maintenance balance growth of economy. 5. REMUNERATION Lending must be remunerative and ultimate goal is to maximize the profit.

RISK ANALYSIS
We know higher the risk higher the return but risk must be carefully evaluated. There are five Cs, which should be considered. 1. CHARACTER Normal and social character of an individual or organization should be good. He should not be involved in any illegal and unethical business like smuggling or black- marketing. 2. CAPACITY Borrower must have the capacity to take the loan and repay that loan. 3. CASH There must be regular cash flows of business because liquidity is important for refund of loan. 4. COLLATERAL Transaction must be secured by collateral. The applicant should have such amount of asset that can be used as security of credit he has taken from bank. 5. CONDITIONS Different conditions are important to minimize the risk of lending mostly these conditions are two kinds. These conditions relate to industry and country environment.

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Positive condition: Bank does not restrict the applicant to do something but it demand for some paper to be signed. Negative condition: Bank restrict the applicant to invest this credit in pre-specified business.

TYPES OF LENDING:
There are two types of advances: A. Funded finance B. Non-funded finance

A. FUNDED FINANCE
In a fund base loan cash are involved. In these loans cash transaction are made directly. Fund based loans are further divided into five types:

1. Running finance 2. Cash finance 3. Term finance 4. Staff finance 5. Clean finance 6. Mortgage finance 7. Trade finance
1. RUNNING FINANCE This is also known as current finance or hypothecation. Per day mark-up is a charge but customer is flexible to draw within the drawing power. Hypothecation of stock is the prime security. In running finance amount is mentioned clearly. Mark-up is charges on the amount that is drawn not on full amount. Previously this is known as overdraft, in which customer can withdrawal his credit account in excess of credit in it.

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2. CASH FINANCE This is just like in running finance the only distinction in this case security is stock pledged form and the security margin is also charged. Chequebook is not issued. Cash flow must be regular one. Bank issues delivery order if the borrower wants to draw stock equal to money deposited by customer. 3. TERM FINANCE Its time period is fixed. Amount and mark-up rate is mentioned. Mark-up is charged on the full amount of loan because amount is withdrawal at once. Term finance is secured by security. Credit should be given according to the security. It is more profitable than running and cash finance because mark-up is charged on whole amount. There are some cases when long term finance is also provided, these are: * Existing plant is in running and expansion in it is needed * To running plant for replacement of machinery * To running plant for modernization 4. STAFF FINCNE (PERSONNEL) This facility is given to the staff of ACBL. The amount of loan depends upon the rank of staff. * OG iii to OG I the amount of loan is * Above OGI up to SVP * And above SVP Rs,25,000 Rs.50,000. Rs.100, 000

Repayment period is 2 years and instalments are deducted from salary. Mark-up rate is 5% no security is needed it is against GP fund. The eligibility is 2 years or more service. 5. CLEAN FINANCE:

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These are the special types of finance is given without the security. In the ACBL these type of finance are given to the Army officers mostly. The amount of this finance is Rs 25000. The bank should not be given more than Rs. 25000.

6. MORTGAGE FINANCE This I also transacted through Retail Banking Division. as a security simply the mortgage of property is demanded by the bank. this is for three purposes; * Purchase of house * Construction of house * Renovation of house This facility is for individuals. Repayment period is 15 years for construction and purchase of house and for renovation 7 years subject to remaining service. The markup is SBP discounting rate 4% plus with a floor rate 15%. Total service of the applicant should be 3 years and minimum 2 years with the existing employer. no complicated procedure only the recommendation of the employer is needed.

7. TRADE FINANCE:
There are two kinds of the trade finance. 1. Import related finance 2. Export related finance 1). IMPORT RELATED FINANCE: There are two types of import related finance: Finance against trust receipt (FATR) Finance against imported merchandise (FIM) Payment against documents (PAD)

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FATR:
In this type of finance cash is involved between borrower and bank only. This type of loan is given on the basis of trust only. This type of finance is very risky, so the bank charges high interest rates. FATR finance is given to selective persons. The can put signee behind the bars without going to court after 180 days purchase good from exporter.

FIM:
Importer says that he has no money and wants to import goods. Bank then opens LC and pledge all the imported goods. After arrival of goods bank allows him to take away goods as he pays to the bank and charges mark-up to the remaining balance. It is like cash financing.

PAD:
If the importer does not pay with in 3 days of arrival of good then bank converts LC into funding facility and charges mark-up . 2). EXPORT RELATED FINANCE: There are two types of export finance.

1. FAFB (finance against foreign bills) 2. FAPC (finance against packing credit )
2a. Pre-shipment finance 2b. Post-shipment finance

1. FAFB:
This is provided in case of usance LC. The exporter discounts usance LC with bank and bank after taking cushion (check) makes payment.

2. FAPC:
This type of finance is given for the packing purpose. It can be before shipment for purchasing raw material and for packing of shipment and after shipment, for giving the salary of labours and payment of raw material. 45

B. NON FUND BASED It is the commitment and does not involve hard cash. It is normally an obligation of the bank and in case of default of original borrower the bank stands responsible. In this type of facility bank asks the applicant for cash margin and for mortgage of property. Because even though no funds of bank involve but this facility is as risky as funded finance. But it is very lucrative for bank because no funds of bank are involved but bank charges and interest on the cash margin by head office generates revenues for bank.

Types of non-funded finance

There are two types of non-funded finance. 1. 2. Letter of credit (LC) Letter of guarantee (LG)

1. Letter of credit:
There are two types of LCs: Usance LC Sight LC

Usance LC:
It is the LC in which the time period is involved. Time period is 60, 120, 160, days. Bank makes the payment of LC when they received the documents, like transport receipt and invoice.

Sight LC:
It is the LC, opposite to usance LC, in which payment to the exporter is made on the sight of documents.

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Letter of guarantee
Banks issue guarantees when contract is made between two parties. It requires no prime security and only collateral security is taken. The amount of guarantee to be given is calculated after valuation of assets of applicant, which he/she wants to give as collateral. 70% of total property is taken as FORCED SALE value of the assets and after taking 25 %security margin on forced sale value the guarantee is given for remaining value. Normally 25%cash margin is also taken for guarantee. This margin may vary according to the credibility of the applicant. No mark-up is charged but commission is taken. The rates for commissions are: * Up to 5million * 5m-10m * 10m-200m * over200m This commission is charged quarterly. . 4% or minimum Rs 500. . 3% . 25% .2%

* .125% is charged to Govt. and semi-Govt. Organizations

Types of Guarantee
Most of the guarantees are given in case of contracts. Guarantees are allowed for the purchase of fertilizers and for travailing agencies to PIA. Following are the major type of guarantees: 1. Bid Bond Banks give commitment for a bid. Normally 5 % contract amount is kept as bid security to qualify bid. Now bank gives guarantee to beneficiary on behalf of applicant for this amount. If bid is accepted then contractor asks the bank for ADP. 2. Advance Payment Guarantee (ADP) Bank gives this guarantee to beneficiary to provide the contractor the advance payment because he now has to start work

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3. Performance Bond Guarantee That the contractor will perform the task assigned within the specified period of time. 4. Shipping Guarantee This type of guarantee is very rare and given it at 100 % margin.

Foreign Exchange Department

Foreign exchange is one of the important departments of ACBL. It deals with foreign currency and foreign exchange. In a foreign exchange department ACBL deals with Account opening, Withdrawal, deposits and remittance.

Account Opening
There is two type of account opening in foreign exchange.

1. Frozen or Old scheme accounts 2. Incremental or New scheme accounts.

Frozen or old scheme accounts
This type of accounts was frozen on 28, May 1998. In frozen accounts, account holders can withdrawal their amounts only in Pakistani currency. Account holder cannot withdrawal their amount in foreign currency.

Incremental or new scheme accounts

A new scheme was introduced by SBP for foreign currency accounts. In this new foreign currency account, account holder is allowed to open an account in foreign currency. Deposit and its withdrawal both can be done in foreign currency. There will no restoration on foreign remittance. Deposits of foreign currency are easily transfers for investment purpose. State bank of Pakistan does not charge forward coverage fee on new scheme accounts. But the SBP charges forward coverage fee on the old account because Pakistani government holds deposit in these accounts. In the ACBL foreign currency 48

account deposits are also reported in a local currency. Foreign currency deposits are also revalued at the end of each month. Revaluation rate is announced at the end of each month.

Types of services in foreign exchange

ACBL provides two types of services in foreign exchange.

_ Trade Related services _ Travel Related services Trade related services

ACBL provides two types of trade related services.

1. Export related 2. Import related Export Related Trade Services

Export means transfer of goods and services from the home country to another country. There are four methods of payment, that is used in a export trade services.

Cash against documents collection (CAD) Foreign bill purchase Consignment sale basis Advance payment

Cash Against Documents Collection (CAD)

In CAD there is no guarantee and liability of the bank. Bank of the exporter will send shipping document to the advising bank. Then the importers bank transfers the 49

documents to the importer after the payment is received. After completing the assurance that payment has been received than the exporters bank makes the payment to the exporter.

Foreign bill purchased

In this mode of purchase importer will send LC to the advising (importer) bank. After receiving the LC the advising bank will give it to the exporter. After the shipping of goods, exporter will hand-over shipping documents to negotiating bank and they will receive payment from the negotiating bank.

Consignment Sale Basis

In this mode of payment, payment is received within 120 days. Importer will receive the goods after paying the custom duty. The importer makes the payment when he receives the sale proceeds and after the attestation of the sale proceeds receipt from concerned embassy.

Advance payment:
Advance payment means payment of the goods before they are delivered to importer. In the advance payment inward remittances are transferred from the foreign bank to the exporters account.

Import Related Trade Services

Import is receiving goods and services from the foreign country to home country. Four modes of payment are used for imports:

1. Cash against documents (CAD) 2.

Deferred payment

3. Advance payment 4. LC\ documentary credit

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1. Cash Against Documents (CAD):

Bank of the exporter will send shipping document to the advising bank. Then the importers bank transfers the documents to the importer after the payment is received. After completing the assurance that payment has been received than the exporters bank makes the payment to the exporter.

2. Deferred Payment
In this mode of payment, the important thing is the mutual concern of exporter and importer. In this case the seller shipping the good and the buyer makes the payment with a mutual understanding.

3. Advance Payment
In this mode of payment the seller receives advance payment of his goods. The buyer can also take discount benefit for his advance payment. The seller takes the benefit through investing advance in the preparation of goods.

4. LC\ Documentary Credit:

LC means letter of credit. The opening bank on the behalf of the applicant writes letter of credit in the favor of beneficiary. This letter of credit is written for a specified amount against the submission of shipping documents. Applicant requests for the LC through bank, which is called LC opening, bank. In this case beneficiary is exporter and applicant is importer. Other parties of LC are: Advising bank

Negotiating bank

Reimbursing bank

Advising Bank
Advising bank is the bank of importer. Its duty is to transfer LC documents to the exporter bank. 51

Negotiating bank
Negotiating bank is the bank of exporter country bank. It makes the payment to the exporter for his goods, which he exports to the importer.

Reimbursing bank
Reimbursing bank is the foreign bank. This is a bank, which has the Nostro Accounts of the ACBL. The duty of this bank is to make the payment to the negotiating bank.

Finance Department
Finance is the major driving force behind an organization, whatever the business is, it may miss out any other department which will have an effect but if it misses out finance the business can simply not run. The basic thought before doing any business is to earn profits, and it is not possible with the finance personal. If the firm doesnt knows it expenses it wont know its surplus incomes as well. Good finance is the key to a successful business. The role of the support functions in the business management is as of any front line business function as they primarily deal in managing the internal dynamics of the organization to assist in accomplishment of business objective, implementation of strategies and to enforce a sound control environment of harmonizing profitability with governance goals. It is one of the support departments of all the division of the bank. This department is responsible for the following functions. Preparation of financial budget for the annual operation of the bank Recording of transactions pertaining to the annually operations of the bank Calculating and comparing the variances in the actual results with the budgeted amounts Reconciliation of various accounting records with the records for the external entities. 52

Settlement of dues of the acquirer banks and other parties

Scope of Activities of the department

The finance department of the bank is responsible for the budgeting, accounting and reporting of all the operations of the bank.

Reporting line
The finance department of the bank directly reports to the Group head consumer finance and all the reports sent to the head office and other authorities are under approval and authority of the group head Consumer finance. The finance department is of keen interest to the operations department. It further includes different departments, each having a very vital role to play. Payables Reconciliation IP (Item processing) Settlement

B.T.F
Balance transfer facility. Askari Bank offers a balance transfer facility to all its members -an easy and convenient way to transfer and pay the existing balances of their accounts, issued by other banks in Pakistan, through their Banks account.

Marketing Department

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The marketing department handles the activities regarding the promotional activities that are held time to time and making agreements with different retailers for getting factory prices of their products in order to make their products more attractive to the customers by cutting down prices on buying from their credit cards, like special discount on purchase from credit card.

Customer Services
Customer service is a very self explanatory term. Customer services involve services like; after sale service and satisfying customer needs in case they are facing any problems in the service. They also handle the applications declined by verification department, by reviewing them and sending letters to re apply for clients if they are legible.

Operations Department
Survival and success of any organization requires its operations to be tightly monitored and performed well. Askari Bank believes in handling its operations in an efficient way. A department has been specially designed to carry the operations held. The operations department has a hawks eye over all the departments working for the bank but certain departments are made a part of the operations department because of their well known importance. The departments under the Operations department are; Embossing Department Mailing Department Recovery Department Collection Department Authorization

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Designing Department Human Resource & Greeting Department IT department.

Embossing Department
They receive data of clients; their work function is to print the account numbers, it is very easy to say but this department has its own significance.

Mailing Department; Mailing department has a very vital role in the structure their basic tasks are listed below Receive Mails; mail receiving is one of the jobs of this department this

is pretty tedious task, receiving mails for the entire bank, the mail include; billing receipts, new applications, billing applications etc Bills Mailing; The payment of and for the bank also follow the path

which pass the mailing department Besides the above mentioned tasks though they are pretty tedious them self, the mailing department is also responsible for the inventory caretaking for the bank. Collection Department;

These are the people who are always being CURSED by the customers because to pay an amount from your very own pocket is not an easy thing. Plastic money is just like honey when we use it. It gives us a yummy taste because we are not using our own money, but when we receive our bills we 55

feel like having chilly taste with lots of black pepper of this yummy honey. So people in collection department try to give customers black pepper in a very pleasant way. They make calls, calls & calls (bundle of calls) to late payment holders up till 3 months of bill issuance. They make people afraid to collect due payment. Authorization; This department monitors all transactions being made on the accounts through the system. This department also looks for any fraudulent activities. HR & Greeting Department Human resource department has a check on the entire system and make sure that the employees are performing their best. Some activities performed by HR department are: Hiring new employees. Contract Renewals. Performance Appraisals Increment in salaries Bonuses Decisions Leaves Greeting employees are there to greet walk in customers and guide them.

IT Department
IT is one of the most important sectors these days, no organization is complete without the aid from IT department similar is the case with Askari 56

Bank, IT department has the most important role that is joining the departments with each other, every department is linked with the other department by means of networking of Computer and an intercom with about 300 telephone set is laid in the center. The IT department has a lot more to contribute in the center for instance everything nowadays is done on computers and there are different softwares for different business activities, the IT department keeps everything ready for every department. This department though does not have a visible role but can without a doubt be referred to as the back bone of the company.

HR Heads Responsibilities
Human Resource Division of Askari Bank was successful in implementing: 1. 2. 3. 4. 5. 6. 7. 8. 9. Staff Hospitalization Plan; Staff Transport Finance Scheme; Medical Leave of Absence Facility; Privilege Leave of Absence Encashment; Enhancement in Staff House Finance Limit; Insurance of House Finance; Increment in Salaries Up to 15%; Rationalization of Pay Scales; Performance Appraisal System;

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10.

House Rent Facility

Job Analysis and Design Job Analysis

Provide information about jobs currently being done and the knowledge, skills, and abilities that individuals need to perform the job adequately

Steps In Job Analysis

Understand the purpose of job analysis. Managers do the job analysis and assign responsibilities according to the caliber and skill of the employee. Understand the role of the job in the organization. Benchmark positions. Determine how to collect job analysis information Managers collect the information through Observation, technical conference. Seek clarification. Develop draft. Review draft with supervisor

Job Description & Job Specification Job Description

Service manager according to the skills capabilities personality communication skill confidence level has designed Job description.

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Job Specification
Statements indicating the minimal acceptable qualifications incumbents must possess to successfully perform the essential elements of their jobs. In which includes the knowledge, skills, education, experience, certification, and abilities need to do the job effectively. Askari Bank mainly focuses on the communication and confidence level of the candidate as skill can be updated.

Recruitment & Selection

Recruitment is the process of searching for prospective employees and stimulating them to apply for jobs in the organization.

Objective:
Askari Bank believes that by bringing together our collective expertise, insight, and professionalism, we will grow individually and succeed collectively.

Recruitment Criteria
if you want to work for us, and have the right capabilities and experience, our process will ensure that all candidates are provided with equal opportunities to secure a position. You are:

Entry level fresh Induction: At this level, fresh graduates are hired normally in officer cadre of the bank ranging from OGIII to OGI.

Management Trainee Officers: A special batch of qualified, energetic, high caliber and qualified young with good academic records is also hired as Management Trainee Officers (MTOs) on 59

annual basis with an aim to nurture high-talented lot of future executives/managers for the Bank.

Hiring of experienced professionals: At this level, experienced and skilled professionals are hired normally for Senior Slots. Role of hr in recruitment process: HRD of Askari Bank is responsible for designing the selection system and

managing its everyday operation. RECRUITMENT SOURCES: Recruitment of employees, in general the sources of recruitment can be classified into two types. i) Internal Job Posting: Filling a job opening from within the firm has the advantages of stimulating preparation for possible transfer, or promotion and increasing the general level of morale. ii) External Job Posting: Askari Bank also goes to external sources for positions whose specification cannot beam by present personnel. Askari Bank uses following outside sources. Advertising: Employment Agencies: Casual Applications: Leasing:

THE HIRING PROCEDURE FOR NEW/FRESH EMPLOYEES.

RECRUITMENT PROCESS (FRESH/ BATCH PROGRAMS):

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Selection
Our selection processes differ from position-to-position, and are designed to effectively match an individuals knowledge, skills, interests, and experiences to those needed for a particular position.

The hiring process

In the hiring procedure, Askari Bank is following steps to discover significant information about an applicant. 1) Call for application 61

2) Preliminary interview 3) Applications blank 4) Check of References 5) Psychological lest 6) Employment interview 7) Approval by the supervisor 8) Physical examinations 9) Induction or orientation

ASKARI BANk
Job Title: ___________ ___________ Name: ___________ ___________ Place of Domicile: ___________ Available to joining No: _____________________ Expected Salary Rs: ____________________________ Age/DOB ______________ App. Source: Trade: _____________ Department:

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Name of the Interview:

1. (HRD Executive)

2. (Concerned Executive)
3. Supporting Executive) (1) a) b) c) d) e) f) g) Appearance a) Health ABC Potential ABC ABC b) Experience Rating ABC ABC ABC Final Rating:Merit Rating: ________________ ________________ _______________ ABC b) Behaviour ABC c) Observation ABC ABC (2) a) Assignment Knowledge ABC

Education ABC c) Professionalism Experience Skill ABC Confidence Intelligence

d) Verbal/Written Expression ABC

Rating ABC 1. Excellent: 2. Good: 3. Average:

4. below Average: ________________ General Remarks:

_____________ HRD Executive

_____________ Concerned Executive

_____________ Supporting Executive

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Orientation and Placement

Once employees are "on board" their personal growth and development overtime become a major concern. Change is a fact of an organizational life and to cope it effectively. Objectives: The following are the objectives of orientation program of askari bank: 1) to make the employees comfortable 2) to get along with the workers 3) to learn them new culture of the organization

Orientation of new employees

After the selection of successful employees the first step in their introduction to bank policies, practices and benefits is an orientation program.the orientation program in askari bank is completed in three phases.

First phase:
The first phase is usually conducted by the staff personnel unit. Subjects covered include products of the bank, employee benefits, salary schedules, safety, probationary Period, timed recording and absence, holidays equal employment opportunity programs, packing and the grievance procedure.

Second phase:
The second phase of most organized induction program is performed by the immediate supervisor. The inductee is introduced to fellow employees, given a tour of the department, and informed about such details as locker and rest rooms, supply procedures, hours of work overtime, call in procedures, rest and lunch periods, and lunching facilities.

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Third phase: The complete in action program will provide for phase three follow up some week later. The interview, conducted by either the supervisor or a personnel specialist is concerned with 1) 2) Employee satisfaction with the job and organization. Supervisor satisfaction with the employees.

Placement:
In askari bank placement means Right person for a right job A lot of applicants abilities are matched with a specific job requirement and then that person is placed on that position.

Training and development

After the employee has been received, selected and inducted, he or she must next be developed to better fit the job and the organization.

Investment in their assets:

Askari bank is a multinational organization in which importance has been given to training. the management considers the training as an "investment in their asset".

Objective:
The objectives of training and development programs are to enhance and improve the capabilities, efficiency, and productivity of an employee up to the desired standards for current and future assignments and responsibilities. We have our own specialized in-house training facilities in the shape of training academies at rawalpindi and lahore. 65

the employees of askari bank are also sent to attend specialized courses by various banking /non-banking training institutes.

Training needs assessments:

in askari bank there are three level of analysis for determining the needs training can fulfill. 1. 2. Organization analysis: focuses on identifying where within the organization training is needed. Operation analysis: attempts to identify the content of training - what an employee must do to perform competently. 3. Individual analysis: determines how well each employee is performing the tasks that make up his or her job. at this level, training needs may be defined in terms of a simple equation. Desired performance - actual performance = training need.

Operative training:
the development of operative calls for specific increased in skills and knowledge to perform a particular job. In askari bank there is primarily two basic methods in use. 1) on the job training: since most jobs in askari bank can be learned in a relatively short period of time, this method is most widely used. the type of on the job training implemented in askari bank is:

apprenticeship program which include both classroom instructions as well

as on the job training. This type of training is given to the new inductees and usually two years long. 2) I) Ii)

off the job training:

staff training program: Special courses: 66

There are following methods used in askari bank for off the job training.

Iii) Iv)

Selling and technical skills training program: Opportunities for improvement of educational and technical qualification:

Evaluating training programs:

to assess the utility or value of training, in askari bank management seek ensures to four questions. 1. 2. 3. 4. Did change occur? Is the change due to training? Is the change positively related to the achievement of organizational goals? Will similar change occur with new participants in the same training programs?

Measures of change:
In evaluating training programs, measures of change fall into four categories. Reaction: how do participants feel about the training program? Learning: to what extent have trainees learned what was taught? Behavior: what on the job changes in behavior occur because of attendance at the training program? Results: is what extent have cost related behavior outcomes or quality improvement, turn over or accident reduction (productivity) resulted from the training.

Development:
We also focus on providing opportunities and facilitating our executives and officers for developing their managerial and leadership skills through management development programs for present and future responsibilities. Performance appraisal Definition: it is a formal process and structured process through which management measures, evaluates and assesses job related attitudes behavior and out comes. 67

Importance of performance appraisal in askari bank:

It identifies employees current job i.e. What is he doing? It will help in identifying in weak and strength points. It will help an employee to improve his or her performance. Organization compensation and rewards are all based on performance appraisal. It motivates the individual to face constructive criticism when there is negative performance appraisal. It also helps in assessing in training and development needs. It helps in documenting the hr policies. It helps in decision making of retention and termination. It is important for promotion, transfer and termination.

Method used in askari bank for performance appraisal:

A special document is used for performance appraisal in askari bank, which is known as gdd (grade development document) Following are the main things, which are included in document. Assignments Job duties Achievements Audit objectives Complaints

These things are discussed in document with regard to performance of employee. Performance appraisal is done on annually basis.

Some other methods of performance appraisal normally used in askari bank:

Written essay:

Here you write the employee weak and strong points, future potential and past achievement and area for improvement. 68

Critical incident method:

Here the appraisal based on those factors which are very effective and the events where your performance was efficient

Problems with the appraisal:

There is no specific problem is faced in performance appraisal

Job Evolution
Definition: It is a process by which the relative worth of various jobs is determined for pay purpose. It checks the out the amount of employees pay or salary to the contribution made by this job. The job is evaluated according to its importance. Job evaluation: The process of job evaluation involves assessing the relative dollar-worth of each job to the organization to set up internally equitable pay structures. If pay structures are not equitable, employees will be dissatisfied and quite, or they will not see the benefits of striving for promotions. To put dollar values on jobs, it is necessary to get information about different jobs to determine which jobs deserve higher pay than others.

Job evaluation
Askari bank do job evaluations with the help of Manager analysis Mystery shopping Quizzes/snaps Exit interviews Curiously calls

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Training Attitude Relations with customer and employee Targets

Specifies the relative value of each job in the organization.

Health, safety & welfare

Safety awareness
The employees are given a physical environment that is comfortable and healthy. In summer there is adequate air-conditioning and in winter there is central heating. Since askari bank is handling with services and there is no potential danger in the nature of its business, hence the only thing that the hr management needs to ensure a healthy environment.

Health and safety

Monthly health and safety meeting held at askari bank. Chief manager presides this meeting and discuss any accident if happen in preceding month. measures in future to avoid these types of accidents. working hours sick leave casual leave = = = 48 hours per week. 8 days 10days

Features of compensation system and social services: fixed salary overtime is paid according to government rules and regulations i.e. Double on holidays. group insurance scheme is practiced for the compensation of two objectives:

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employees old age benefit scheme. gratuity scheme. bonus is awarded (minimum one bonus in a year) monthly medical allowance social security services are obtained for employees.

Health services
Following are included in the health services of askari bank: Adequate facilities for emergency Pre-employment medical examinations Reasonable first aid to employees for non-occupational illness while on the job. Information and education services for the personal health of employees Advice and supervision, where necessary, to maintain proper company sanitation.

Collective bargaining
It is a process to determine the terms and conditions of employment and regulating employment relationship, which utilizes the process of negotiation between representative of management and employees intending to result in an agreement, which may be applied across the group of employees. Terms of employment: the following are four categories of employment in askari bank limited; 1. 2. 3. 4. 5. Regular employment; Probationer employment; Contractual employment; Temporary employment; and Casual employment.

Regular employment: these are the employees, which are after the final selection employed for a regular period. These employees enjoy all the benefits such as annual gratuity fund, 71

retirement benefit and after the retirement, pension etc. Usually managers and supervisors fall in this category. Probationer employment: when an employee is selected for some post, he or she undergo for the probation period of 6 months normally. However for the management cadre, it can be less than 6 months. When the probation period is completed, the employee signs a contract with Personnel manager. Contractual terms: there are three major considerations; Employment is temporary in nature. The person should be of age 60 or above. Duration of employment contract is one year and renewable.

When the bank management feels that the person retiring from the job have enough capabilities and potential to work more in the benefit of the organization, then sign this type of agreement with the retired employee. Employee form the top to bottom can be included in this type of employment terms.

Temporary workers: Employees of cadre of workers and supervisors are hired for a period of 6-9 months according to government rules on temporary terms of employment.

Casual workers: It is concerned with the daily wages workers. When the company requires the workers urgently, they employ the casual worker to fill the vacancies.

Apprenticeship training: According to government regulation, banks have to hire the apprentices against the regular scheme. Askari bank is not bound to give regular jobs to the apprentice trainees.

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Grievances
Grievance is any dissatisfaction or feeling of injustice in connection with ones employment situation that is brought to the attention of management.

Handling conflict situation:

Obvious sources of conflict range from a difference of opinion, problematic working conditions or unrealistic work expectations through discriminatory behavior, to poor communication or non-compliance with organization norms or values. Conflict can be covert and take the form of resentment or irritation. Such conflict is much harder to detect and easier to ignore.

Advantages of managing conflicts:

Advantages of managing conflict situations for the askari bank management are: Better motivated staff; staff energies are directed to work rather than emotions An organization or staff that presents a positive name to the outside world Improved team work Better personal development of individuals

Different types of disputes in organization:

there are some signs of disaffection with organization such as strikes, confrontation leading to lockouts and various forms of withdrawal of cooperation by staff in furthermore of their claims. And other conflicts such as poor training, turnover, and absenteeism. To solve all disputes askari bank, management take action which are very right and then all the employees are happy ad are more committed to their work.

Role of hr in solving problems:

Hr performs following chief roles.

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Supportive behavior on manager's part. A work group problem solving. To design job techniques in such a way that gives satisfaction for individual and opportunity for improving performance. Letting everyone to have his or her say.

Discipline
Discipline is condition where employees know that what is expected from them and what will be the consequences of violation.

Purpose of discipline in askari bank:

Following are the main purposes of discipline in askari bank: To enforce rules and regulations Smooth running of organization. To ensure efficiency of workers. To improve work relations.

Career development
Askari bank values performances. We have introduced an objective system of performance evaluation based on management by objectives and behavioral competencies. The system allows for mid-year reviews and is 100% open to appraises.

Career planning:
It entails matching an individuals skills and aspirations with opportunities that are or may become available in the organization. This matching process requires that those in charge of career planning know the skill requirements of the various jobs. This allows them to guide individuals into jobs in which they will succeed and be satisfied. 74

Career development in askari bank:

Askari bank limited is one of the most progressive institutions in the country today. currently, askari bank is pursuing an ambitious expansion strategy, which envisions opening a large number of branches throughout the country. Askari bank, besides being the most rapidly expanding bank in the market, is also the choice of many career-focused individuals since it offers some of the following benefits: Stability of career Tremendous growth opportunities Extensive training & development program Motivating work environment Attractive salary packages Nurturing culture

Human resource planning

Manpower planning Askari bank has a progressive and a dynamic human resource (hr) philosophy. The bank believes in transforming its human capital into a key source of competitive advantage for that they believe in human resource planning. Basic purpose: In askari bank basic purpose for which hrd in relation to hrp serves are as under: 1. Balancing the cost between utilization of plant & manpower: this theme involves comparing costs of these two resources in different combinations and selecting the optimum.

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2.

Determining recruitment needs:

It is an essential prerequisite to the process of recruitment. It means that hrd unexpected shortages, wastage, blockages of unexpected shortages, wastage, blockages in promotion flow and needless redundancies. 3. Determining training needs: Hrd plans fundamental training programmes for which it is necessary to assess not only quantity but also quality in terms of the skills required by askari bank. 4. Management development: hrd provides succession of trained and experienced manager that is essential to the effectiveness of the organization and this depends on accurate information about present and future requirements in all management level in askari bank. A system of hrp in askari bank: a system of hrp in askari bank has some specific points on which banking act. 1. 2. 3. 4. 5. Defining or redefining organizational objectives. Determining and implementing the basic requirement to sound planning. Assessing future requirements to meet objectives. Assessing current resources and availability of resources in the future. Monitoring system and amending as indicated.

Reasons for human resource planning

Following are specific reasons for which askari bank management is carrying on systematic human resource planning. 1) 2) 3) 4) 5) future personnel needs: coping with change: high-talent personnel: strategic planning: equal employment opportunity:

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6)

foundation for personnel functions:

The planning process:

planning for human resources is tied in with overall askari bank long range planning. The process of planning in itself forces management to think through objectives of firm and people problem relating to achieving those objectives through planning. 1)

goals and plans of organization:

human resource planning is a part of overall strategic planning for askari bank. A

personnel vice-president and his staff cannot make useful plans for period of one or three or five years, unless they have data on possible corporate expansions new products, new plants, new markets and so on.

Important steps:
Important steps involved in overall planning for askari bank are: 1. To analyze and evaluate environmental influence. a) b) c) 2. 3. 4. 5. political trends and legislation which will have impact upon the business. social trends in leisure time, consumer tastes, work values and retirement. technological advances affecting enterprise.

To identify the values and aspirations of askari bank's directors and executive. To identify and evaluate the internal strengths and weaknesses of the enterprise. To create specific enterprise objectives and plans for achieving these objectives. To evaluate progress toward implementation of plans and take corrective action where necessary.

Planning period:
askari bank's planning period is from 3 years to 5 years. Period for three year is short range and of five years is long-range period.

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2)

current human resource situation:

the second phase of the planning process for askari bank is the preparation of an

inventory of personnel presently within the organization. A skill inventory consists of upto date information regarding the qualifications of the selected categories of personnel.

Important uses of skill inventory:

The skills inventory has several important uses. 1) after preparing human resource forecast, askari bank compare, the number, types and skills specified by forecast with the present baseline or current position given by skill inventories to ascertain what skills must be developed from present personnel via training, up grading and special development efforts. 2. 3. Other use is to identify talent within the organization for specific job opening. An up to date skill inventory is valuable for the preparation of rosters of qualified technical and managerial personnel.

Computerized system:
askari bank along with manually prepared human resource data cards also use computerized system to handle data. The computer can readily provide a printout of the age distribution of all mangers by level, job, and department.

Transfers, promotions and separation

Transfers:
the headquarters of all employees as mentioned in the letter of appointment is subject to change at the discretion of the management in which event an employee will be required to work anywhere in pakistan as headquarters with no extra remuneration and /or allowance or compensation whatsoever in the salary structure. In case of a transfer, an employee will be entitled to the following transfer benefits: I) Air-conditioned coach train fare or air passage as per entitlement for himself and his immediate family to the place of transfer will be provided.

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Ii)

14 days upcountry allowance (boarding & lodging allowance) as per entitlement in the traveling scheme will be provided.

for single employees, reimbursement is at a flat rate. The amount allowed will be specified in the transfer letter served by the management. in cases where the management has initiated the move, it can at its discretion, allow a higher ceiling/additional benefits. Transfers are also being done within the city and outside the city. The purpose is to provide employees a better chance to excel in their area at different locations and in different bank branches. Job rotation is also being done. Traveling and transfer allowances are also given so that employees get settled as soon as they join the duty.

Promotion: Promotions are an integral part of the job. Every employee is looking forward towards its career path. In askari bank the promotions are given on the basis of superior performances. The promotion occurs both in the ranks and in the salary structure.

Separation of service:
a) An employee's service can be terminated on three months notice in case of a manager or level above that and one month's notice in case of a junior officer, senior officer and assistant manager or pay in lieu thereof b) If in the course of an employee's service, the employee suffers from any serious ailment or permanent disability of any kind which in the opinion of the management may or is likely to interfere with the due performance of duties, the employee's service may be terminated at the discretion of the management by giving notice as mentioned above, or payment in lieu thereof as the bank may deem fit.

Salary and incentives

Salary: Askari bank tries it best to keep the staff fully satisfied and provide them with perfect career paths. The employees are paid well so that they can maintain reasonably decent living and are motivated to work as banks employees. 79

The employee compensation at askari bank caters both

direct financial payments indirect financial payments.

the pay scale is determined on the commendable factors and on the decision-making ability for the managers and executives.

Allowances:
Which are given to employees other than the basic pay, are as follows: House rent allowance. Utilities allowance Technical allowance. Traveling allowance and daily allowance.

Fringe benefits: In askari bank, following benefits are offered to the employees. Medical facility. Facilities at residence. Grants of incentives for improving qualification every year. Cash prizes. Increments (annual increase in pay) Bonuses.

Indirect compensations: Askari bank offers three types of indirect compensation to its workers. Employee insurance scheme Providing funds Gratuity scheme. Department shall initiate the case to p & a.

Pay plans and incentives at askari: Establishing pay rates: For establishing the pay rates, first step is to conduct the salary surveys.

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The salary surveys: For the purpose of conducting salary survey, askari bank is taking help of the ferguson firm, which conducts surveys and researches in the field of marketing and finance. Moreover, the banks managers are well informed about the pay and salary structure for the candidates to be hired in case of hiring. This external survey is conducted once in two years. Complete documented information is being delivered to the bank so that the pay scales do not vary from the market rates.

Job evaluation: Evaluation of the job performance is done yearly. The purpose is to see and identify the employees who have done their respective work well through out the year considered and who have not been able to show good performances.

Pay plan at askari: Pay plans at askari are established on the basis of job rating. All jobs are ranked from top to bottom, on the basis of commendable factors. Employee with higher rank gets higher salaries and incentives. Askari bank has its own criteria for establishing pay rates. Hr manager believes that competency and skill based pay can increase motivation and employee commitment. But more often employees are paid on the basis of their jobs. Their pay is based on job or skills.

Skill based pay: Skill based pay is given to employees for the recognition of their knowledge, decision making, problem solving abilities and competency of efficient and effective working in their jobs.

Variable pay: Variable pay is a group incentive plan that ties pay to some measure of an organizations overall profitability. When the bank performs or the branch of the bank Performs spectacularly in terms of profitability for a particular year, the whole branch is given a variable pay.

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Compensation plan: Compensation plan for askari employees involves following things; Basic salary; Bonuses; Allowances; Reimbursements; Short term incentives; Long term incentives.

Basic salary involves fixed compensation paid regularly. Bonus is given two times in a year to managers and professional employees, percentage of which lies from 80% to 100%. Allowances and reimbursements are short-term incentives. Askari bank has also several incentive plans, including individual performance awards and bonuses, team awards.

Incentives for the employees at askari: Employees at askari are paid basic salary as well as some sort of short and longterm incentives. Individual incentive programs are launched at askari to give income over and above basic pay to individual employees who meet specific individual performance standards.

Incentives for managers and executives: Managers and executives play a central role in influencing divisional and corporate profitability. Askari bank limited puts considerable attention towards their rewards. Most managers get short bonuses and long-term incentives in addition to salary. Askari bank offers stock option to its managers as the long-term incentives. The purpose of stock option is to motivate and reward management of the bank for long term corporate growth, prosperity and shareholder value.

Bonus: -

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Along with the basic salary, bonuses are given to managers two times in a year. The percentage of bonus is 80% and sometimes 100% to their pay.

Allowances: House rent and utility allowance are also given to managers. Managers are paid 42.5% and 10% of their incremental pay as house rent and utilities allowance respectively. 10% of the salary is given to as medical facility, and for the general utilities like telephone 10% of the salary is also being given to the utilities. So the overall salary comes to a higher level including all these cash and other benefits.

Reimbursements: Reimbursements for medical, telephone and petrol expenses are also given to managers and executives.

Incentives for middle and lower level employees: Middle level employees and professionals are also paid bonus, allowances, and reimbursements along with their basic pay. Lower level employees like peon, driver, and Technicians are paid dearness allowance, house rent allowance and medical allowance along with their basic salary. The incremental stages for these employees are +30, where as others have +25 stages in their jobs.

Ensuring accuracy & authorization: The following payments shall be made in the routine, with such additional payments as the management may direct from time to time:

Medical reimbursement: Medical reimbursements are made to staff and executives of the bank according to the bills presented by them. What to be done and how to reimburse the medical expenditure is shown in the required action section.

Claims for traveling allowance and daily allowance: -(ta,da)

Allowances are given to the employees for the traveling of the executives from one city to another or abroad, all the expenditure is on the bank, daily expenditure can also be recovered through claims. 83

Fuel and lubricants: The bank also provides free traveling facilities to its employees by paying amount against the consumption of fuel dependent upon their respective ranks. It is of two types; 1. 2. Reimbursement to executives; Official expenditure.

Office expenditure: Ptcl connections. Corporate connections Mobile phones and connections Reimbursements to executives.

Salary disbursement: Payments to regular staff Payments to contractual staff Arrears payments Bonus payments.

Insurance: Life insurance and car insurance are some of the benefits, which are also given to the employees and more precisely to the managers and to the executives.

Benefits and services of askari bank

Leave: entitlements & rules Confirmed employees all confirmed employees are entitled to leave according to the rules and regulations stated below: I.

Casual leave
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ten days with pay in a calendar year, at the discretion of the management. casual leave is meant to meet urgent and/or unforeseen circumstances. Prior approval of the management has to be obtained whenever possible, stating the reason for leave. A) casual leave may be allowed to be availed at one time for a maximum of 3 days and shall not normally be combined with any other leave, holidays and /or public holidays. B) C) Ii. causal leave shall not be accumulated and carried forward beyond a calendar year. casual leave may be allowed in continuation of sick leave in cases where the doctor recommends sick leave is exhausted and further leave.

Sick leave
the entitlement is 14 calendar days in a year. Sick leave if not availed during a

calendar year may be carried forward but the total accumulation of sick leave shall not exceed 28 days at any time. A) B) any application for sick leave which exceeds 3 days should be supported by a medical certificate from a registered practitioner. the management may at its discretion have any employee examined by the bank doctor and the advice of the doctor shall be final, for the purpose of granting leave to the employee. C) if sick leave is availed on thursday and also on the following sunday, such leave will be counted for four days and a medical certificate should accompany the leave application. D) in case of prolonged illness, where the required leave exceeds the entitlement, the adjustment of leave beyond entitlement may be made against c/l or p/l, or be granted as a special sick leave at the discretion of the management. Iii.

Privilege leave
the p/l entitlement for all employees is as follow: For the 1st completed year of service 3 weeks (21 calendar days). for 2nd to 5th completed year of service or part thereof 4 weeks (28 calendar

days). For 6th year onwards- 5 weeks (35 calendar days) 85

A)

an application for p/l shall be submitted to the human resource division duly recommended by the concerned superior, a minimum of 14 days before commencement of leave.

B)

a minimum of 2 weeks p/l pertaining to one year has to be availed in order to receive leave fare assistance for the year. According to the profit of the bank, the management could allow a maximum of 1 months basic salary as lfa subject to approval. However, as minimum lfa, a fixed amount will be paid.

C) D)

leave will always be adjusted first against any remaining balance of a previous year before being adjusted against the current year's entitlement. prefix and suffix of weekly/gazette/other holidays to privilege leave will be allowed and as such will not be counted as privilege leave. However, should any holiday fall during the leave, it will be counted as privilege leave.

E) Iv.

the management reserves the right to refuse any leave if the exigencies of business so require.

Maternity leave
maternity leave will be allowed to the concerned employee for a period of 12

weeks (85 calendar days) for each case. application for the period of leave should be submitted well in advance.

Probationary employees
during the probationary period of any employee there will be no entitlement to any kind of leave, be it casual leave, sick leave, privilege leave or maternity leave. Sick leave if required, will be approved as a very special case only if supported by a medical certificate from a registered medical practitioner. Any other leave if availed, will be treated as without pay. however, on confirmation if the employee so desires, the leave may be adjusted against his entitlement and the deducted amount refunded.

Loan policy
the bank guarantees loans for car and scooter/ motorcycle. 1. Application under the loan policy, which is duly recommended by the concerned division/department head, should be forwarded to human resource division for

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processing. Applications will be approved subject to availability of funds at the concerned banks. 2. 3. As per the bank's policy for financing loans, the vehicle should be jointly registered in the name of the bank and employee. All employees will also have to take out a comprehensive insurance policy for the vehicle in order to avoid monetary loss in case of accidents. These are normally given to employees involved in actual sales only.

Car loan facility

the bank has decided to adopt a policy for granting bank guaranteed loans for purchase of a car to all assistant managers irrespective of whether they are involved in sales. In case a mileage is sanctioned the pick & drop facility presently enjoyed at the head office and regional or zonal office will be withdrawn. this fund will be an interest bearing fund and the rate of interest will be 12% per annum.

Traveling scheme:
all official arrangements for employees whether at karachi or upcountry will be made after prior approval. The concerned employee keeping in mind, the entitlement and the length of stay planned may also take a traveling advance. For this purpose an advance form may be filled in, recommended by the division/department head and forwarded to human resource division for approval.

Breakup of boarding allowance:

breakup 15%, lunch and dinner 30%, each misc. 25%. A) B) 100% boarding will be allowed in case if absence from the headquarters for 12 hours or more. 50% boarding will be allowed in case of absence from the headquarters for 6 to 12 hours.

Foreign travel
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in case of foreign travel, rules and regulations of the state bank of pakistan will apply. Claims can be made according to the daily allowance prescribed for different countries by our principals. the concerned division regarding any planned visit abroad by any employee should inform the administration division and human resource division. The bank will make all official travel arrangements and a traveling advance may also be taken and substantiated as mentioned above.

Maternity
90% of maternity bill will be reimbursed, up to a maximum expenses limit under this head or one basic salary, which ever is hospitalization in those cases where admittance to hospital is required total hospitalization expenses, which include doctor's fees, x-ray charges, medicines, laboratory charges etc. Will be reimbursed by the bank at its description against proper receipts. No payment will be made for nursing charges, diet charges or any non-medical items.

Insurance plan
the bank has made arrangements to provide adequate 24 hour insurance coverage of all its employees in case of death or permanent disability while at work or traveling or at home. I.

Personal accident policy

In the case of death of an injured employee, the bank will pay the amount received from the insurance bank to the employees nominated beneficiary. the benefits of this plan with the limits of compensation are as follows: 1. Death only 100% of sum insured

General
the bank reserves the right to refer any person to the bank doctor as and when deemed necessary to scrutinize all medical bills and to reject payment of factious bills, if any. any misuse of the medical scheme by an eligible employee would be liable to strict disciplinary action. 88

Medical expenses
under this plan employees are covered for the medical expenses incurred on account of hospitalization and treatment, resulting due to accidents only, for a maximum period of 52 weeks after the date of the accident. under this policy it is necessary to report an accident to the insurance bank immediately followed by the claim forms which are filled in to substantiate the claim. All employees Ii. must therefore report any such accident immediately to their division/department, with a copy to h.r.d. Within 24 hours.

Group life insurance policy

all confirmed employees are also covered under this policy. If an employee dies,

while insured under this policy, the insurance bank will subject to provisions of the policy, immediately upon receipt of due proof in writhing of the death of the employee, pay the amount for which the employee is insured, which will be paid by the bank on receipt from the insurance bank to the nominated beneficiary. This is in addition to the accident insurance. 2. I) Ii) Iii) Iv) Permanent disablement: permanent total loss 100% of sum insured of both eyes or of two limbs. permanent total loss 75% of sum insured of one eye and of one limbs. permanent total loss 50% of sum insured of one eye of one limb. permanent total 10% of sum insured of the finger or thumb.

Human Resource Audit

Hr audit is related to examine that how hr managers are performing their hr responsibilities.

Approaches to hr audit:
There are five types of hr audit that are 89

Comparison approach Outside authority approach Statistical approach Compliance approach mbo approach

Askari bank used comparison approach for audit purpose.

Tools for hr audit:

The following are tools of hr audit. Interviews Surveys/ questionnaires Historical analysis Grievance audit Compensation audit

Askari bank used each tool of hr audit for audit purpose but mostly used that tool which suits to the environment of their organization.

Suggestions by employees
suggestions are always encouraged but no extra award or recognition is given to the employees if the suggestion or a creative idea benefits the organization in terms of reduced cost, increase in profit etc.

Conclusion
in this competitive environment, where askari bank is facing tough competition with other multi national companies, hrd has been successful in retaining its employees by offering a clearly defined reward and incentive system.

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Swot Analysis
Strengths
In the bank service quality standards are designed and monitored to ensure a consistent and convenient customer experience. Products and services are as diverse as market segments. Bank has structured and syndicated financing arrangements, working capital finance, financing of international trade, consumer credit, small business loans, credit cards and atm cards. The human resource philosophy at askari bank focuses on multi-talent hiring, professional grooming, requisite training and merit based reward system. Staff welfare has always been a priority. New initiatives like hospitalization plan, home loan insurance have added new dimensions to the staff-care policy and motivated them to out-perform competitors. Bank enjoys a strategic competitive advantage over all domestic players by virtue of its leadership in technological innovations. Different cameras are located at different locations to monitor the working of staff members and outside customers by branch manager. Bank has fully automated transaction-processing systems for back-office support. Bank's branch network is connected on-line real-time and customers have access to off-site as well as on-site atms, all over pakistan. Bank also is pioneer in e-commerce venture in pakistan through a major retail distributor. From a humble beginning with just 10 branches in 1993, today bank enjoys a network of 36 outlets, spread across the country. A network of self-service atms supports these outlets. 91

 Atm card is available with the withdrawal amount about rs. 25000 a day. Bank's total assets now exceed rs.70.9 billion and bank has over 17 products and services to match the individual needs of the customers. Bank has been honoured with the "the best bank in pakistan" award by the global finance magazine. Bank was the first bank in pakistan to offer internet banking services, b2b ecommerce solutions for merchants looking to purchase on credit and e-bill payment system. With a network of 187 correspondents spread over 95 countries world-wide, the bank continued to reinforce its leadership position in trade finance, transacting business of over rs.70 billion, during this year. Bank is now actively involved in the acquisition of business and signed up over 300 merchants national wide which offer-shopping discount to the bank's privilege card members. Askari master card is accepted worldwide and at over 3000 locations in pakistan.

Weaknesses
Bank is providing credit facilities only to the urban areas not too much attention is paid to the rural areas. As pakistan is agriculture country but no special schemes for the agri- loans. Bank is not giving emphasis on the small-scale businesses. Which are large in number in pakistan. There is enormous difference between the bank-lending rate and return on deposits The procedure and documentation while sanction loan is thorny. Which is a barrier for advances Bank gives targets to employees for deposits due to this reason they pay more attention to fulfil these targets to save their jobs. This distracts their attention from their duties. 92

 Reasonable care is not taken while opening new accounts one of the reason is because employees want to introduce more and more depositors. No job security is there for the employees, and no union exits to secure them. The online credit card facility was not secured that is why recently bank has closed its online credit card shopping scheme. Bank has not adequate number of branches as compared to its competitors like mcb, ubl, abl, nbp etc. Due to small number of branches at greater distance potential customers may go to other more feasible options. A good number of facilities are only for the army persons, not for the general public. As every person in the bank has his/her own computer in the branch but they are not well equipped with the knowledge of using the computer efficiently. The return on deposits is very low. Acbl has only agency arrangements with the foreign banks, no branch exists outside the pakistan. While their main competitors have their own branch network outside the pakistan. Bank has no grievance-handling department for the internal problems of the employees. Due to lack of computer specialist at branch level it has to take assistance from the head office. To improve the services and to remove the problems of customer the bank has no customer complaint department. Limited locker facility is there, which do not fulfil the requirements of customer and charges of lockers are also very high.

Opportunities
Bank has a small branch network so it has got the opportunities to increase the number of its branches.

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 Bank has no foreign branches so it should open its branches outside the country especially in u.k, u.s.a and in u.a.e. Facilities like financing of housing should also be offered to general public especially in the urban areas, not only army officers. In agrarians cities like rahim yar khan there is a potential for giving credit facilities to farmers. At least on software and hardware technician should be appointed at each branch. Bank is not yet performing utility services for the utility companies like wapda it can increase its operations also in this direction and so a new source of earning. To increase its advances bank should focus small scale industries and choose one among them and then a special scheme of lending should be introduced for that particular small scale industry.

Threats
Law and order situation in pakistan is faulty that is why people are not confident to invest anywhere. The markets rates are now at extremely low levels, with very little chance of their going up during the rest of the year. The low interest rate means low profits for the banks. Saving rate in pakistan is very low i.e.15% as compared to 30% in china and 40% in malaysia. This is a problem in pakistan. As the banking procedures are complicated that is why general public takes interest into other options of investments like in shares of companies and in term finance certificates. Responding to the sbp's prudential regulations management takes too much care while granting loans. Now other banks are also imitating the modern banking concept of acbl and have started online facility and also have computerized their operations. So there remain less competitive advantage areas for the bank. 94

 Now the world is a global village so competitors may rise from anywhere in the world at anytime. To survive in the industry and to earn profits bank should not rely on its present sources and facilities instead of this it should establish new ways of acquiring, managing and sharing market information. In near future the world is going to be free trade zone so the concept of "survival of the fittest" will be in action. After the 11 september incident and due to terrorist activities in pakistan the economy is moving very slow. It means less investment and as a result low loan demands. High rate of taxes on banking companies. Sbp have a heavy penalties on banks for violating the prudential regulation. So it requires greater care while advancing. Increasing atm trend among the banks also requires attention of the management to this side.

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Identification of plausible problems

The main problem that I think Askari Bank Ltd. facing is the lack of motivated staff. I worked under many people and most of them were not satisfied with what they were being paid. Actually when we compare the salaries being paid by Askari Bank Ltd. with those of other banks, they are far lesser. Another problem is that of favoritism. People here believe that employees, who are favored, get promoted earlier than those who are not. They think that their hard work is not being properly awarded. This is a big problem, which the Askari Bank Ltd. is currently facing because we all know that lack of motivation causes sharp fall in the performance of the employees and thus the organization. One more problem is that they give credit limit to their employees like to deposit 500,000 in the year. But when their employees meet the requirement and even give them far beyond their requirement, they do not award them. Some other problems are mention as following: Bank is facing a high tax rate, which affects its profitability and Middle class and low income group have limited access to bank credit. Weak internal controls, non-merit based recruitments High administrative costs affect the performance of bank. Continuous maintenance is compulsory Favoritisms while promoting employees. 96

attractiveness for new entrants.

Education level of the employees

Recommendations and Suggestions

To survive in the industry and to earn profits bank should not rely on its present sources and facilities but also it should establish new ways of acquiring, managing and sharing market information. To increase the computer specialist at branch level . To improve the services and to remove the problems of customer by making a spread customer complaint department. To increase locker facility and decrease the charges of lockers. Law and order situation in Pakistan is faulty that is why people are not confident to invest anywhere so we must control it. Job description must be clear so that it can define the job related duties and responsibilities To increase the number of branches. Bank should not gives targets to employees for deposits because it distracts their attention from their duties. Keep the up to date information on their web sites. Bank should try to separate the working area and customers visit area. Instead of preferring the old employees of the other banks management should hire new and well-educated talent. This will contribute to the long-term benefits of the bank. Credit policy should cover both the rural and as well as urban areas. Credit facilities should be enhanced to small-scale businesses. 97

 The facilities currently availing by the army persons only, can be extended to general public e.g. house building finance. Employees who perform extraordinary and achieve more than their targets should be given bonuses. There should be separate marketing department in each branch. Although it will increase the expenses but benefits will be greater than expenses. Returns on the term and fixed deposits should be increased to the level of competitors.

CONCLUSION
Overall analysis of the bank leads to the conclusion that bank is performing at satisfactory level. The bank is no doubt the best Modern Bank in Pakistan. And to keep competitive advantage over its existing and potential competitors bank is trying to introduce latest techniques on regular basis. The customers of the bank are increasing every year and that is why not only the deposits of the bank are increasing but also advances by the bank shows a steady growth during the last 5 years. As a result of increasing advances and investment in higher yielding Treasury Bills. Equity base of the bank is also increasing and in year 2000 it showed a positive growth of 20% over the period of last 5 years. Total assets of the bank are also increasing continuously. Similarly the earning per share is also increasing. During last year this ratio was highest in last 5 years. During its short life of operation bank has achieved many awards not only with in Pakistan but also from outside the Pakistan.

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Bibliography
www.askaribank.com.pk www.wikipedia.com www.google.com www.answers.com www.sbp.org.pk Askaricards.com/default.asp Dawn.com Pakistaneconomist.com Sbp.org.pk/index.asp En.wikipedia.org/w/index.php www.askaribank.com/index.php www.sbp.org.net.pk

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References
Web Site: www.askaribank.com.pk
Mr. Ali Waseem (Operations Manager of Askari Bank Ltd.)

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