MADE BY: RIZWAN KHALID.

BBA -5- (B).

PRAYER
OTHER THEN WHOME THER IS NO GOD,ONE OF YOU MAY BEHAVE LIKE THE PEOPLE OF PARADISE UNTIL THERE IS BUT AN ARMS LENGTH BETWEEN HIM AND IT,AND THAT WHICH HAS BEEN WRITTEN OVERTAKES HIM ANS SO HE BEHAVES LIKE PEOPLE OF HELL FIRE AND THUS HE ENTERS IT; AND ONE OF YOU BEHAVES LIKE THE PEOPLE OF HELL FIRE UNTIL THER IS BUT AN ARMS LENGTH BETWEEN HIM AND IT,THAT WHICH HAS BEEN WRITTEN OVERTAKES HIM AND SO HE BEHAVES LIKE THE PEOPLE OF PARADISE AND THUS HE ENTERS IT. (RELATED BY AL BUKHARI & MUSILM)

AKNOWLEDGMENTS
Many people have contributed in the successful completion of this internship report. My great appreciation goes to the whole team of Askari commercial bank ltd (personal loan department), who provided me every kind of help in completion of my report. Let me also thank the management sciences facality of Bahria Institute of Management and Computer Sciences (BIMCS), for their guidance in every field. Last but not least I would like to thank my respected parents who provided me love, support, patience & good humor.

TABLE OF CONTENTS

EXECUTIVE SUMMARY
By the grace of almighty God, I have successfully completed my 6 weeks internship as per requirement of BBA (hors) course. I was appointed at Askari Commercial Bank Ltd, Retail Banking (Asset Team North). I was lucky to work in a new department of Askari Commercial Bank ltd, i.e. Personal Load Department. I feel my self lucky to have worked with such a cooperative, dedicated, result oriented team. They all helped me in every possible way they can. I was happened to work with all four departments i.e. Sales Department, Credit & Processing Department, Collection Department, Verification Department & Marketing Analysis Department. I was also send in the Main Branch of Askari Commercial Bank ltd, (AWT Plaza) and was provided with the information about the working over there. I also worked with the Credit Card Department for a short period of time. In Sales Department I worked with the Sales Executive officer. I went with the sale officer on daily sale calls; there I was happened to meet with the people of different business areas (salaried, armed forces and other salaried). I also assist the sales executive in making the mail shots of the customers. In the credit department I worked with the Credit Analyst mainly on computer where I learned how to make a borrower basic fact sheet (BBFC), both for the individuals and the customers. I also learned how to make a profile of a borrower & how is it added in the system which includes (name, address, phone number, fax etc), then his references (name, address, phone number, fax etc), then it also includes the nature of business / profile ( industrial, commercial, agriculture, service or any other ), his exiting limit and status ( fund based or non- fund based), and other important regarding the detail of payments and other documentation for further processing. Then I also learned from the credit analyst how to make a scoring of the customer i.e. weather the particular customer is eligible for the loan or not. I was also

happened to visit the auditing department which is situated in General Head Quarters (GHQ) Rawalpindi, and saw the proceedings there. In Collection Department I was happened to work with collection officer, who was basically responsible for the collection of installments due from the customers. I went along with him in different areas of Rawalpindi / Islamabad for the collection purposes. I also assist him in making the customer database (regarding the installments due). I also worked along with him on the computer and learned how to make a reminder for the installments due. In Collection Department I worked with the verification officer, whose responsibility was to verify the customers business / residence. I along with the verification officer went to different areas of Rawalpindi / Islamabad saw the procedure of verification. I also worked with the marketing analyst and learned how to verify a check list of the customer and make a MIS report (daily & monthly basis). I also worked as a telemarketer in the personal loan department where I was engaged with the sale calls, reminder call, and customer service calls, and I fell very proud that I handover about 15 cases to the sales executive and personally brought about 7 cases of armed forces with a loan amount of 30,00045,000 each. I was also happened to work in the credit card department for a very short period of time and saw their mode of work. At the end of my internship I was given a major project / presentation on the features and mode of personal loans along with the recommendations. As the product was a new one so the presentation and the new techniques helped the product in a long way. I feel very proud; because few of my suggestion were given an excellent response and the Manager Asset North took great notice few of the concerned areas and reduced the stepping of the personal loans. At the end I would conclude that the internship had helped me a lot in the areas like (management, marketing, finance, business communication) and other concern areas of my study. I also learned how to work in tough situations which would help me in a long way. And it wouldnt be possible without the assistance of the team with whom I had spent 6 weeks.

CENTRAL BACKGROUND
1. BANKING SECTOR IN PAKISTAN

State Bank of Pakistan (SBP) which is the Central Bank of the country has been entrusted with the responsibility for an ongoing effective supervision of the financial sector. The relevant provisions of law which vest powers in State Bank of Pakistan (SBP) to carry out inspection of banks are contained in the Banking Companies Ordinance, 1962. Besides, State Bank of Pakistan Act, 1956 and the Banks Nationalization Act, 1974, The Banking Companies (Recovery of Loans, Advances, Credits & Finances) Act, 1997 (Act No. XV of 1997), Companies Ordinance, 1984 and Statutory Regulatory Orders (SROs) are the relevant legislations which cover the activities . The financial sector in Pakistan comprises of commercial banks, non-banking financial institutions (NBFIs), leasing companies, modarabas, mutual funds, stock exchange and insurance companies. Under the prevalent legislative structure the supervisory responsibilities in case of banks and non-banking financial institutions falls within legal ambit of State Bank of Pakistan while the rest of the financial institutions are monitored by other authorities such as Securities and Exchange Commission and Controller of Insurance. Under the WTO commitments the operational status of branch network of foreign banks operating in Pakistan as on 12-12-1997 has been protected and frozen. However, existing foreign banks having less than 3 branches can have branches to the extent of maximum number of 3 only. New foreign banks desirous of entering banking business in Pakistan will now be required to incorporate as domestic bank under the local laws. Equity participation of foreigners can be up to 49% in the total minimum capital of US concerning financial areas.

$ 11.5 million, subject to the principle of reciprocity. The branches of foreign banks operating in Pakistan can also be converted into a local commercial bank by incorporating under the local laws and subject to a minimum paid up capital of Rs. 500 million provided foreign share holding is restricted to a maximum of 49%. At present there are 45 commercial banks and 36 non-banking financial institutions (NBFIs) operating in Pakistan whose activities are regulated and supervised by State Bank of Pakistan. The commercial banks comprise of 4 nationalized banks, 2 privatized banks, 15 private sector banks, 20 foreign banks, and 4 specialized banks. The non-banking financial sector comprises of 10 Development Financial Institutions, 16 Investment Banks, 4 Housing Finance Companies, 2 Venture Capital Companies and 4 Discount Houses. Under the Banking Companies Ordinance, 1962 the State Bank of Pakistan is fully authorized to regulate and supervise banks and financial institutions. During the year 1997 some major amendments were made in the banking laws which gave autonomy to the State Bank in the area of banking supervision. Under Section 40(A) of the said Ordinance it is the responsibility of State Bank to systematically monitor the performance of every banking company to ensure its compliance with the statutory criteria, and banking rules & regulations. In every case in which the management of a bank is failing to discharge its responsibility in accordance with the applicable statutory criteria or banking rules & regulations or is failing to protect the interests of the depositors or for advancing loans and finance without due regard for the best interests of the bank or for reasons other than merit the State Bank is empowered to take necessary remedial steps. The State Bank of Pakistan can, interalia, exercise the following powers vested upon it under the Banking Companies Ordinance Prohibiting the bank from giving loans, advances & credits. Prohibiting the bank from accepting deposits. Cancel license of a bank. Give directions to the bank as it deem fit. Remove

chairman, directors, chief executive or other managerial persons from the office and appoint a person as chairman, director or chief executive. Supersede the Board of Directors. Direct prosecution of directors, chief executive or other officer. Caution or prohibit bank against entering into any particular transaction(s). Require bank to make changes in management. Appoint its officers to observe the manner in which affairs of bank/its branches/office are conducted. Winding up the bank through high court. Apply to Federal Government for an order of moratorium in respect of a bank and to prepare scheme of reconstruction or amalgamation. Impose penalties including civil money penalties. The State Bank has framed Prudential Regulations for banks and Rules of Business for NBFIs that present a prudent operating framework within which banks and NBFIs are expected to conduct their business in a safe and sound manner taking into account the risks associated with their activities. These regulations incorporate the spirit and essence of BIS regulations and are constantly watched for possible improvement so that their enforcement yields the best results to promote the objectives of supervision The State Bank is empowered to determine Statutory Liquidity and Cash Reserve Requirements for banks/NBFIs. Presently the Cash Reserve Requirement is 5% on weekly average basis subject to daily minimum of 4% of Time & Demand Liabilities. In addition to that banks are required to maintain SLR @ 15% of their Time & Demand Liabilities. Similarly, NBFIs are required to maintain SLR of 12% and Cash Reserve of 1% of their specified liabilities. Additionally, the Banking Companies Ordinance has been recently amended which empowers the State Bank to prescribe capital requirements for banks. In exercise of these powers the State Bank has laid down Minimum Capital Requirements for banks based on Basle capital structure. Effective from 31st December, 1997 banks are now required to maintain a minimum capital level of 8% of their risk weighted assets. Additionally, they were required to

achieve a minimum paid-up capital level of Rs 500 million by 31st December, 1998. Both these requirements have strengthened capital base of the banks. While the off-site monitoring aspect is looked after by the State Bank of Pakistans Banking Policy & Regulations Department the responsibility for the on-site examination of the banking system in Pakistan lies on the shoulders of the Banking Supervision Department. This has been designed to ensure that institutions operate in a safe and sound manner. The focus of the supervisory efforts by the State Bank of Pakistan is on the health and stability of the banking system in Pakistan. The on-site function performed at the State Bank of Pakistan is carried out by the three departments namely Banking Supervision Department-I, II and III (BSD-I, II & III). The supervision of commercial banks is done by BSD-I & II divided equally between them. The supervision of NBFIs is done by the BSD-III. The methodologies adopted for supervision are as under:i. ii. Off-Site Surveillance On-Site Examination

The objectives of off-site surveillance over the banking system are:to monitor the condition of individual banks, as well as condition within the banking system; to provide early identification of problems so that corrective action can be effected; to target scarce on-site supervisory resources to areas or activities of greater risk; and to assess the risk management of the bank and see its viability over the long run. Off-site surveillance system revolves around receipt, review and analysis of periodic financial statements and statistical returns submitted to the State Bank. The off-site analysis facilitates monitoring of each banks performance and its observance of

supervisory requirements over time, so that problems may be identified as soon as these emerge. The process thus assists in making the most effective use of scarce onsite inspection resources. The system also works as an early warning to identify those areas which reflect high probability of financial difficulties so that policies and corrective actions can be designed and implemented accordingly. In consonance with the responsibilities envisaged under the Core Principles recommended by the Basle Committee, the On-Site examination capabilities at the State Bank of Pakistan have been substantially augmented to bring them at par with the expected international standards. While regulations have existed for some time aimed at convergence of the essential industry indicators to the globally accepted criteria, a risk-based approach to evaluations has been adopted by the bank in all its assessments. Periodic On-Site examinations of the financial condition of institutions falling within its jurisdictions remains the most effective supervisory tool in support of maintaining a proactive approach in discharge of the statutory responsibilities at the Banking Supervision Departments. The State Bank of Pakistans policy for frequency of inspection of banks and non-bank financial institutions (NBFIs) is designed to provide flexibility in scheduling inspections consistent with the need to maintain safety and soundness. The policy provides a framework within which supervisory ratings, surveillance and financial monitoring results, and other appropriate indicators of banks soundness, are to be considered in carrying out the State Bank of Pakistans fundamental policy of subjecting each bank and non-bank financial institution under its supervision to a periodic on-site inspection. With a view to streamline the approach and the underlying procedures for effective and efficient banking supervision State Bank of Pakistan has very recently embarked upon a major overhauling of its own capabilities so as to bring them at par with international

practices. This entailed hiring of services of consultants of world repute (M/s. Arthur Andersen) under the FSID Project of the World Bank. These Consultants have compiled extensive on-site and off-site manuals. Besides qualified and professional trained human resource have been recruited and rigorous theoretical and hands-on training has been provided to them. With the shift in supervisory focus from compliance oriented to Risk Assessment Approach State Bank of Pakistan has developed a uniform bank rating system in conformity with international standards/benchmarks. Now each bank is appraised under the CAMELS/CAELS Rating System. In order to portray a legitimate and true financial condition of a bank the off-site surveillance system and the on-site inspection functions of banking supervision work extremely close together. As a result of these close coordination bank ratings reflects as accurately as possible, the true financial condition of a bank and the banking system a as whole. .

BRANCH HIERARCHY

Area manager (svp)

In charge recoveries
(Grade 2)

Manager asset (n) Credit in charge

(Grade 2)

Regional sales manager

(Grade 3)
Sales executive officer Sales executive officer Sales executive officer

Recovery officer Recovery officer Recovery officer

Credit analylist(OG2)
Credit processor (OG2)

Sales processor
Verification officer Verification officer

MISSION STATEMENT
To be the leading private sector bank in Pakistan with an international presence, operating in niche markets, delivering quality service to the clients, through the use of advanced information technology and effective Human Resource Management in the modern and progressive organization culture of Meritocracy, while maintaining the highest level of ethical and professional standards and providing enhanced value to all our stakeholders, with a commitment to good corporate citizenship.

HISTORY & ADVANCMENTS

Askari Commercial Bank ltd. was incorporated on October 09th 1991 as a public limited company and is listed on the Karachi, Lahore & Islamabad. The bank obtained business commencement certificate on February 26th 1992 and started operation from April 01st 1992. 1. COMMITMENT BANKING Askari commercial bank ltd maintained its commitment to provide most effective and personalized service to its customers. It recorded sound growth in its clientele located in all the major cities of Pakistan. Management placed strong emphasis on diverse base stable customer deposits. In the ever increasing competition business environment, an institution will prosper if it stays ahead in technological advancements and constant systems up gradation to help improve the quality of service to its valued customers. The management of the bank continued to lay strong emphasis on enhancing its abilities to offer premier financial products to its clients. The bank had already installed its first ATM (automatic teller machine) in the year 1995 at Rawalpindi, which is fully operational. The bank has also already entered into communication networking arrangements where by all the branches will be on live - via satellite on real time basis. This will enable the client to use the cheque facility at any of the banks branches in the country. The facility would also strengthen the banks management information system (MIS), which will have instant access to the financial and operational data of the country wide branch networks. The bank has already being engaged in providing international visa MasterCard & co branches providing diners club credit card. The bank is also aware of its corporate activities, it had already expended, its operational network in line

with its corporate strategies to have its presence all major cities of the country to enable it to respond promptly and effectively to customer needs. Despite a really turbulent political condition in the year 1996 and under the low performance of the economy ACBL continued to scale new peaks in all areas of its operations. The safety and security of depositors funds, customer service excellence, high productivity, and optimum use of the technology are the hallmarks of ACBL corporate strength. The bank has continued to strive hard to maintain a unique position in the market. Domestic and international financial institutions, prestigious national and international publications continued to the strong position of ACBL. Askari Commercial Bank is one of the first local private banks to offer innovative products and services to its valued customers like 24 hours ATMS (automated teller machines), telephone banking, and electronic banking etc. Electronic cash dispensing facilities are now available at major centre like Karachi, Lahore, Rawalpindi and Islamabad. All these ATMS and branches in the major urban centers are linked through stare-of-the-art satellite based communication system offering real time 24 hour service. ACBL is the only private sector bank that has been approved by the World Bank as a participating financial institution for the US $ 200 millions line credit sanctioned to the Government of Pakistan for the financial sector deepening and intermediations project. In 1996 the process of expanding ACBL network of international correspondent continued on the global basis with the aim of providing efficient foreign trade and exchange related services to the clients. In 1996 with effect, relationships with some 414 reputed banks were established, taking the total number of correspondents to 159. A financial institution has to give due emphasis to its networks expansion because with the passage of time the graph of growth through existing network attains the point of saturation. In the year 1997 the banks most emphasis area was foreign trade business. To remain one step forward of the compotators ACBL has launched several new

products during the year 1999 including credit card in the consumer banking segments. The whole credit card operations is being carried out prudently and ACBL is proud to report that it has been successful in establishing a solid foundation on which to base future growth. To meet the challenges of 21st century ACBL is planning particular application in the development of information technology. In this regard the bank continued its emphasis on employing the latest technological tools to improve the operations and customer services. ACBL is proud to be the first bank to have established countywide communication network based on VSSA & Radio Modems Technology. This communication network has enabled the bank to provide on-line real time banking facilities to its customers, presently at 11 different cities of country which is expected to increase to the other cities as well. The on-line communication system allows the customers the facility of carrying out their normal banking transactions through the nearest convenient branch irrespective of where their account is placed. This on-line banking facility has been made most sophisticated due to the high speed electronic transfer of signatures, for verification purposes, throughout the country. In the year 1999 the condition of the foreign exchange markets were remained unfavorable for the bank. In such a situation, the bank had to react decisively to minimize the impact of these adverse market conditions on its treasury operations. Investments in T-bills were gradually reduced and alternative avenues, with in and outside the money and foreign exchange market, were explored with a view to diversity and broaden the assets base of the bank. 2. BRANCH NETWORKS Askari Commercial Bank ltd had its wide network of branches in every part of the county. In 1995 there were 18 branches of ACBL .Askari Commercial Bank ltd in very particular in opening the branches at appropriate time and in the area where the bank found the feasibility & profit. During the year 1996 ACBL added 5

new branches and the tally reached up to 23.The bank continued to consolidate its operation during the year 1999, and did not went for any major expansion in the branch networks. However, the booth I the GHQ Rawalpindi was converted in to branch which increased the number of branches to 28. ACBL had currently 29 branches which are widely spread over the major cities of Pakistan. During the year 2000 a new branch opened in Quetta cantt. Work is underway to open further new branches. The Peshawar road branch in Rawalpindi had already stated its operating activities (which was opened on 11th Sep 2001). Apart from tapping new sources business and deposits, the new branch would also reduce the heavy load on the main AWT plaza branch, thereby enabling the bank to improve further standards of services and customer satisfaction.

3.

CREDIT RATINGS ACBL gained recognitions by the bank at national as well as international level. In the year 1997 Askari Commercial Bank not only managed to maintain the short term rating of A+1 given by PACRA (Pakistan credit rating agency) , which is the highest rating given to any bank in Pakistan in this category but also able to improves its rating AA- in the long term category. The bank has also been given Asia money (1994 & 1996) and Euro money (1995) awards as the Commercial Bank of the Year and Best Domestic Bank respectively. In addition, The South Asia Federation of Accountants (SAFA) gave Askari Commercial Bank ltd, the award of 2nd Best Reporting Company. In the sector of SAARC region which speaks volume about the banking professionalism. In short the bank is full aware of the market dynamics and is implementing the necessary changes in the strategies to maintain the growth momentum for meeting the expectations of its valued customers and stake holders.

4. LOAN FACILITY Askari Commercial Bank Limited has arranged a syndicated loan facility of Rs.4 billion for National Database & Registration Authority (NADRA) for the creation of a national data warehouse. In this connection, on November 0l, 2000, a syndicate signing ceremony was held at the NADRA, Islamabad, attended among others by Mr. Kalim-ur-Rahman, President & Chief Executive, ACBL & Maj. General Zahid Ihsan, Chairman, NADRA. This is a medium term loan and is repayable over a period of 5 years through quarterly payments. This financing is reportedly the second largest syndication in the history of Pakistan and the first to be arranged and led by Askari Commercial Bank Limited. The facility is parked at ACBL's Blue Area Branch, Islamabad. Standard Chartered Bank is the co arranger. Other syndicate members are NBP, Bank Alfalah, Soneri Bank, Union Bank, Bank of Khyber, Pak Libya Holding Company and Employees Old Age Benefits Institution.

OPERATIONAL & FINANCIAL HIGHLIGHTS OF THE BANK (95-2000)

Askari Commercial Bank Ltd has continued in his progress of sound footing. Here is a view about the operational and the financial activities of the Askari Commercial Bank Ltd. The data is taken from the annual reports & from internet. The bank had continued to a steamy progress and had ground footed in the world of banking. In the year 1995 the bank enjoyed a pre-profit of Rs: 450 millions. With the well-defined and strong strategy of the bank is aimed at to maintain high level of professional standards and also to optimize the human and financial resources to respond effectively to the rapidly changing changes in the financial sector. The bank registered 40 % growth in its deposits base which increased to Rs: 9.8 billions, with a growth of 36 % in its assets. The graphical representations of financial highlights are as under:

35 30 25 20 15 10 5 0 2000 1999 1998 1997 1996 DEPOSITS

60 50 40 30 20 10 0 2000 1999 1998 1997 1996 EXP&IMP

Risk is inherent in the financial services business, and managing risk is the key to success. The bank has made reasonable investments both in information -technology and human resource to support its risk management process. The banks guiding philosophy towards risk management is to make it an integral part of the bankers decisions. During the year 1995, the bank made significant headway in enlarging the size of its assets base to build up its quality earnings while maintaining adequate liquidity and ensuring the quality of assets. Funded advances of Rs: 7.03 billions were outstanding, sartorial composition of which were:

MAN EXP SER IMP RET TRA

i. ii. iii. iv. v. vi.

Manufacturing sector Export financing Service sector Import Retail sector Trading sector

39 % 37 % 11 % 8% 3% 2%

As a matter of policy, the focus of the assets portfolio is on short term trade related financing on a secured and self liquidity basis where by major portion of credit portfolio has a maturity pattern of less then one year. The management lays due emphases on diversification of its assets to avert industry and group exposure.
40 35 30 25 20 15 10 5 0 2000 1999 1998 1997 1996 ASSETS

The bank continued to enhance its correspondent banking relationship to effectively respond to customer needs. In the year 1995 the bank has correspondent banking arrangement with115 banks of repute al over the world. The bank transacted export & import business of Rs: 17.9 billions during the year, as against Rs: 11.7 billions in the year, posting a growth of 53 %. Management

believes that a strong capital based is critical to enhance its ability to execute its strategic plans. The amount of 90.5 millions as compared to 75.1 millions in 1994, has been transferred to the saturatory reserve fund, Rs: 12.0 millions to the general reserve fund and appropriation of Rs: 74.3 millions, as compared to Rs: 67.5 millions in 1994, towards the bonus share of issue @ 10 % to its shareholders. The second right share issue holders of the bank, the payment date which was extended to Jan 1996, which will be entitled to reduce the bonus. The share holder equity increased from Rs: 720 millions to Rs: 893 millions.

20 15 10 5 0 2000 1999 1998 1997 1996

ADV

(1996) Askari commercial bank ltd. earned a pre-tax profit of Rs: 582 millions, higher by 29 % over the last year profit of 450 millions. The share holders equity increased from Rs: 893 millions in the year 1995 to Rs: 1581 millions in the year 1996, this shows a rise of over 77 %. This enhanced capital equity ratio.Thus placing the bank in a comfortable position to expand its balance sheet. The balance sheet footing of the bank attained the level of Rs: 30.7 billions a rise of 35 % over 1995. The assets gross are 40 % over previous year of Rs: 17.9 billions at the end of 1996. The stimulus to the assets base was provided by customer deposits which went up by 45 % from Rs: 9.9 billions in 1995 to Rs: 14.1 billions in 1996. The performance in export sector, the bank transected exports and import business to the tune of Rs: 19.3 billions as against last year

business of Rs: 17.9 billions and secured guarantee business of more than Rs: 4.7 billions in the year 1996 as against Rs: 2.8 billions in 1995. (1997) The earned the pretax profit at Rs: 755 millions recorded impressive growth rate of 30 % over 1996. By the end of the year the assets base of the bank expended to the level of Rs: 24 billions registering an increase of 35 % over the previous year. The net worth of the bank in the year 1997 was further expended to Rs: 1.8 billions which enabled them to expand the balance sheet, and enhance the credit exposure against the blue-chip corporate clients. The banks deposits grew by 38 % to attain the level Rs: 19.2 billions at the end of year 1997. In 1997, bank total advances at Rs: 9.5 billions recorded growth of 27 % over the previous year. The investment portfolio of the bank soared to Rs: 11.8 billions registering an increase of 91 % over the last year. The bank in the year emphasized on further broadening core foreign trade business translated in to the handling of higher volume of export and import business of Rs: 26 billions registering a growth of 34 % over the previous year. (Note: 1998 The annual report was not provided due to certain reasons.) (1999) As a result of banks profitability came under tremendous pressure, the previous strategy had to change quickly to achieve marketing for more loan business. The aggressive, but prudent policy led to an increase of over 35 % in the advances portfolio, from Rs: 10.1 billions to Rs: 13.6 billions, during the year 1999. At the same time, total investments in government paper were reduced from 13.4 billions to 8.0 billions. Theses two measures cushioned the negative impact of the drastic reduction in the treasury bill rate on the banks portfolio, but were not enough to offset the entire impact because the lending rate for advances also came down by an average of 2 % p.a.(due the liquid market and low credit demand). As

a result the bank achieved a pre-tax profit of Rs: 712 millions as against Rs: 854 millions in the previous year. Under the circumstances, this portfolio level can be termed as satisfactory. In the view of the prevailing market conditions, the bank discouraged mobilization of high cost deposits and surrendered over Rs: 2 billions of government funds because they also feel in this category. Even so, the banks deposits increased from Rs: 23.4 billion to Rs: 24.4 billions during the year, and total assets rose to 2.3 billions from Rs: 28.7 billions to 31.0 billions, registering a growth of over 8 %. The expansion of the credit portfolio was done on a prudent basis, and all necessary measures were taken to ensure the quality of the new loan booked. The evaluation system, comprising of well designed credits appraised procedures, and a committee based sanctioning and review mechanism, was further strengthened for the purpose of ensuring safety in the lending activities. The bank posted a healthy increase by improving its market share. Exports business handled during 1999 increased by 14 % over the previous year, from Rs: 20 billion to Rs: 22.8 billions, while the imports business increased from Rs: 11.6 millions to Rs: 17.5 billions registered an increase of 51 %. (2000) Despite the challenges facing by the economy the banks pre-tax and preprovision profits increased from Rs: 814 millions in 1999 to Rs: 887 millions in the year 2000. To off set the much reduced market spreads / margins arising from the intense competition between banks for limited good risk business available, the bank had to market aggressively for additional business to increase volumes. Consequently the deposits grew by Rs: 6.002 billions (24.6 %) to cross the barrier of Rs: 30 billions mark, loan and advances increased by Rs: 4.836 billions (37 %), from Rs: 13.056 billions, to Rs: 17.838 billions, total balance sheet footing crossed Rs: 37 billions, there by registering a healthy growth of 20.1 % over the preceding

year. Hence the bank recorded a substantial growth during the year 2000, under very difficult circumstances. The net fund based earning increased by 6.7 % from Rs: 864.3 millions in the year 1999 to Rs: 921.9 millions in the year 2000. This was achieved despite the rate volatility, by an effective management of and a reduction in the cost of funds, to off set the impact of the reduced gross fund based earnings arising from the reduced mark up rate during the year. The bank tried to maximize the fee based earnings and opportunities, in order to proactively reduce margin / spreads. Consequently, the non fund based earnings of the bank increased by 19.7 % from Rs: 538.7 millions in 1999 to Rs: 644.7 millions in 2000. Despite provisions against non-performing advances decreased, as a percentage of total loans and advances, from 0.78 % last year, to 0.75 % for the year 2000. As a result, the portfolio before tax increased from 712.4 millions for 1999 to Rs: 751.6millions for the year 2000. After accounting the taxes, the profit for the year stood at Rs: 315.6 millions, an increase o 11.8 % over the preceding year (1999.> Rs: 284.4 millions). Consequently the earning per share increased from Rs: 2.86 per share in 1999 to 3.20 per share for the year 2000.The bank import business grew by 49.7 % from Rs: 17.5 billions during 1999 to Rs: 26.7 billions in the year 2000. At the same time, the export business increased by 34.2 % from Rs: 22.8 billions to Rs: 30.6 billions. Note: (The branch of personal loan department was officially opened on 11th Sep 2001, so the information was not developed, so the over all bank is being discussed).

PERFORMANCE HIGHLIGHTS

Business Volumes
ASSETS LIABILITIES NET ASSETS 2000(Rupees in '000) 37,249,355 35,094,800 2,154,555 1999 (Rupees in '000) 31,026,845 28,980,424 2,046,421

Profitability
Net Interest Income Fee Based Income Net Profit Taxation Payout (Cash Dividend) Earnings Retained 2000 (Rupees in '000) 921,925 644,667 315,588 436,000 147,439 168,174 1999 (Rupees in '000) 864,335 538,733 282,446 430,000 172,590 110,420

HUMAN RESOURCE MANAGEMENT & MARKETING HIGLIGHTS OF THE BANK

1. HUMAN RESORCE MANGEMENT The competitive arena of banking is changing fast banks have to identify the contemporary needs of the customers in order to equip and train the staff to meet those requirements. The bank regards talent and professional competency as the major function for the development of banks corporate culture. Human resource development and training is also integrity of the

banks corporate policy. Management trainees and executives of the bank participated in number of trainee courses, workshops and seminars to enrich their professional knowledge and to keep them abreast of the latest market development. Human resource development & management is put in a high priority in our bank (ACBL).The bank is armed with the talented professionals, and as a part of business commitment to the development of human resources, the bank has instituted its own training facility under the management of a senior banker, who has a vast experience in the area of training and development. The training area of the bank organized and arranges the training courses in the areas of: i. ii. iii. iv. v. vi. General banking. Foreign trade. Credit analysis. Treasury management. Management information system. Export & imports. The executives and the officers of the bank were also nominated to programs offered other agencies with in Pakistan and abroad. Numbers of development are also taking place in the human resource policies. The policies were aimed at introducing modern management concepts and achieving a high level of staff satisfaction and motivation. One of these policies change is the introduction of the modern performance appraisal system which replaced the previous annual confidential, reporting system. Under the new system introduced, the appraise is also involved in the appraisal exercise. The system hoped will go a long way in motivating the staff and improving their performance, while at the same time developing a progressive and dynamic corporate culture for (ACBL), In order to strengthen the operational and

technological capabilities of the employees. ACBL has also introduced inhouse training courses and seminars. In the year 2000 the bank increased its focus on providing in-house training and staffing. The training and research wing has been beefed up and now is in the process of actively conducting training secessions all year round to enhance professionalism and employee development. The increase of job rotation and job enrichment and other initiatives are underway to enhance the staff satisfactions which will no doubt translate in to better customer service. 2. MARKETING Executive efforts have been made to increase the press coverage and advertising to create and market the banks corporate, as well as product / brand image. Now the banking products offered by the bank are being increasingly branded in order to emphasize product (brand) differentiation create brand recognition, enhance branch demand and ensure brand loyalty. Anonymous checks of customer service standard at brands are being done and now almost each brand has a customer service, in order to identify area which requires improvement, particularly in customer service standards and to identify the staff training needs. In case of the personal loan department where I done my internship there was no as such marketing department the extensive marketing plan was about to implement. The department uses the mail shots & telemarketing as a tool for marketing. The sale executives were given the responsibility to send the mail shots the target customers along with the phone calls. When the replies comes the sale executive visit the customer and record the particular information about the customer and provide him with the loan of his category. Another way of marketing is through the telemarketers who gives daily calls to the customer and inform them about the salient features of the product (personal loans). The telemarketer is being provided with the data base of the customers he just pick-up the names and make

daily calls. The products advertisement was successfully launched at internet (www. Askaricommercialbank.com.pk), but there is very information about the product. Now the branch is planning to spend more on marketing and they were about to launch a shop-to-shop campaign to introduce the product to the people. The target markets of the product are being divided in to: i. ii. iii. iv. Armed Forces. Government. Other Salaried. MNC, S.

MARKET, INDUSTRY & COMPETATORS ANALYSIS

1. PRODUCT LINES Askari commercial bank has already looking forward in introducing new and more innovative products t its valued customers. And also engaged in bringing significant changes in the redesigning of already available products, to make it more feasible and attractive for the customers. The major product line of the bank can be described as under:

a.

ASKCASH

Ask cash offers convenient Automated Teller Services, which is easy to use and readily available where ever you need it. The ask cash card is the key to 24 hours banking facility extended by the bank. This card is the electronic purse which provides you easy access to your cash requirements wherever and whenever you need it, all over the country through the ASKCASH ATMs. ASKCASH is Askari commercial banks commitment to provide convenient banking to its customers. The procedure of the borrowing from ATMs is as under: There is a 4 digit pin number which is confidential and should be kept secret. The pin can be changer at anytime at the request of the owner. First of all insert the ASKCASH CARD in the slot. Be sure to keep the black strip down and to the right follow the arrow mark. When the message displays, enter your personal ID NO (PIN) by using the keyboard press one of the selection key from

the menu of available transaction and withdraw the amount. Remove the card with in 15 seconds otherwise it will be captured or retired by the machine.
b. FINANCIAL INTITUTION SPECIAL DEPOSIT ACCOUNT

Askari commercial bank has not only provided the account facility to the customers, but also it is providing a high yield chequry accounts to the financial institutions. Through this practice the financial institutions would not only be able to meet the short term debt requirements, but also would reduce the risk profile.

c.

ASKARI BANKS MASTER CARDS

Askari banks master card had world wide acceptability. It is engaged in providing its customer with the services over a thousand of location in Pakistan and over 14 millions of establishments world wide. As a convenience, the customers are provided with the benefit of receiving the monthly billing in Pakistani rupee, regardless of the currency of purchase. There would be no joining fee for getting the card. Askari master card provides with the facility of revolving the spending at comparatively less service charges. In addition, the same ratio also applies to cash advances obtained on Askari master card. Whenever you purchase a ticket for your air traveling for the international flights on Askari master card, you would get the following compensation which is as under:

i. ii. iii.

Up to Rs 10,000/- insurance cover for flight/ delays exceeding 6 hrs. Up to Rs 10,000/- insurance cover for baggage delays exceeding 6 hrs. Up to Rs 20,000/- as baggage loss claim. Askari master card has a 24 hours customer service. In case of loss/ stolen card there would be no liability against its fraudulent use and a new replacement is made with in 48 hours.

d.

ASKARI BANK VALUE PLUS

Askari commercial banks value plus deals with the innovative saving account, which is also one of the hallmark of the bank in the year 2000. This is a new deposit product which was offered in the year 2000 and it is going smoothly up till now.
e. ASKARI ADVANTAGE

Another important product in the Askari bank portfolio is Askari advantage which deals with the highest yield of one month deposits along with the roller over facility, which had not only come up with one the innovative product but also had reduced the monthly deposits.
f. MERCHANT BANKING DIVISION

Merchant banking division became independent in April 1999, with a portfolio of about Rs 2.5 billions, and had its approved limit and disbursement in excess of Rs 7.5 billons and Rs 6.3 billions respectively, as at the end of 2000. It has a now a unit operating in Karachi, to market service based customers more effectively. During the year one more success of the merchant banking division

was a syndicated loan facility of Rs 4 billions for National Data Base and Registration Authority (NADRA) for creation of national database workhouse. This is reportedly the second largest syndicated in the history of Pakistan and first in which the bank as an agent as well as head.

g.

ASKNET

The bank is also engaged in on-line inter bank facilities, in which the branches of the bank are interlinked with one another through (net). It would provide a better facility to the customers of remote areas and they can have an easy access to their cash. Through the ask net facility the customer can withdraw the money from any area of the country. This reflects not only the banks commitment toward its customers but also shows the banks advancement in the field of banking.
h. ASKARI SPECIAL DEPOSIT ACCOUNT

Askari commercial bank also provides with the special deposit account with the high yield of checking facility for the customers.
i. ASKARI LINKS

Askari commercial bank ltd is also providing the automated telephone facility, which is opened 24 hours. The facility provides the necessary assistance

& guidance to the customer around the clock. This would help the customers in getting easy and round the clock access the needed information whenever they need it.

j.

ASKARI BANKS PERSONAL FINANCE

Askari commercial bank had recently opened a new branch at Peshawar road and where the personal finance department has been opened successfully .The main objective of the department is to provide loan to the low income consumers at very easy installments. The loan amount ranges from (30,000-3000, 000) respectively. The basic eligibility for the borrowing of loan is described as under: i. ii. iii. iv. v. vi. vii. viii. ix. The age of the borrower must be in between 21-57. The borrower had a verified min gross monthly income of Rs 15,000/-. A resident Pakistani, residing in Karachi, Lahore, Rawalpindi & Islamabad. Salaried, employed for last 6 months, with 3 month in current position. If self The borrower had to provide last 6 month bank sheet. The amount will be given as per grid. The borrower must be having a land line office & residence. The borrower must be living in the positive area. The borrowers debt burden must not exceed 35 %.

employed, in business for the last 1 year.

If the borrower fits in to the criteria he would be eligible for the loan, if so the further documentation would be carried out. (The documents for the personal loan are attached at the end). The whole processing is described as under: First of all the sales executive visits the consumer and collect the necessary documents from him, if documents are completed, the file is put forward to the verification officer for business / residence verification purposes. After the verification is done the file is checked by the sales processor, and after getting it approved from the sales processors the file is send to the credit analyst, who had a basic borrowers fact sheet with him, he made scoring of the consumer and then at last the file is singed by the assets manager and the senior vice president of the branch. Then the file is send to the main branch where the cash is collected on other day. The installment for the loan ranges from 1-3 years depends upon the grid. The collection officer is then responsible to make sure that the installments are paid in time or not.
k. RETAIL BANKING DIVISION

During the year 200 the bank organized a retail banking division group, and by the end of year was successfully launched innovative consumer banking products developments to meet individuals customer needs. This business is expected a high growth in the year 2001, and will add a new dimension to the banks business portfolio. It will also improve the sustainability of the banks earnings, by increasing our focus on generating relatively low-cost deposits and new high yielding personal finance products.

l.

ASKAR

Askari leasing offer its consumers the most effective and affordable vehicle financing scheme ASKAR to help the buyers to buy a brand new car. Askars no eligibility clause automatically qualifies you to own a new car of your own choice. All you have to do is to submit the complete application form along with the copy of NIC & a passport size photograph. The new vehicle of any brand valued up to 100,000 will be financed, and the financing period can be 36, 48, 60 months with the findings up to 75 % of the vehicles cost. Insurance will made by the company which will be mandatory, where the first years insurance will be taken front. Documentation charges would be Rs 3,000/- inclusive of Rs 1000/- non-refundable process charges. The registration cost, CVT (CAPITAL VALE TAX), and other costs will be borne by the borrower. All rentals would have to be paid in advance on the first day of every month, and the disbursement would be made after the completion of all legal documentation. And the company reserves the right to disapprove lease request, without assigning any reason whatsoever.
ELOCTRONIC TECNOLOGY DIVISION

The electronic division has been constantly striving to provide enhanced value added features in the existing and new products and services to the customers.

2. TARGET MARKET Market basically consists of the buyers & buyers differ in one or more respect. Askari commercial bank is fully aware of its competitors and is engaged in offering the innovative and better products & services to its values customers. The market segmentation also depicts the wants of buyer, their purchasing power, geographic locations, buyers attitude and buying practices. All of the above mentioned variables are under the observation of the bank. The main emphasized area of Askari commercial bank ltd. Is identifying the wants of the buyer and then make strategies accordingly. For this purpose Askari commercial bank has divided the market in to 3 different areas: i. ii. iii. Salaried personals. ( 30 % ) Armed forces. ( 40 % ) Multi- national companies. ( 30 % ) Askari commercial bank has also spread its area geographically in different areas of the country and is still carrying on the good work. It had branches in Lahore, Rawalpindi, Islamabad, Hyderabad, and many other cities of the country. And many new projects are underway. 3. GROWTH RATE (entire industry) The financial structure of Pakistan can be broadly recognized in to scheduled banks and non-banking financial institutions (NBFIs) _. There are 45 private commercial banks, 15 privatized commercial banks, 9 nationalized commercial banks and 20 foreign banks. The NBFIs are composed of investment banks, leasing companies, mutual fund, modarbas, development financial institutions (DFIs) and housing finance companies. The commercial banks along

with all the NBFIs for modarbas and leasing companies are governed by the state bank of Pakistan (SBP), through its prudential regulations. The banking sector has been growing an average rate of 20 % per annum over the last five years and comprises of the followings:
Bank: - (Data as of end June 1999 (in Billions of Rupees)
Bank Deposits NCBs 468.2 Privatized Banks 204.0 Specialized Banks 16.1 Private Sector Banks 151.6 Total 839.9 FOREIGN BANKS 231.8 GRAND TOTAL 1071.7 Institution Bank Advances 261.8 93.1 98.0 77.3 530.2 113.9 644.1 Investments Total Assets 172.8 655.1 86.8 246.0 5.6 138.1 60.9 255.3 326.1 1294.3 75.9 293.2 402.1 1587.6 Bank Branches 4772 2201 534 542 8049 81 8130

Source: State bank Annual Report 1998-99

The average return on ROE from 1997-98 for foreign banks was 23 % p.a. and 20 % p.a. for private local bank. However, during 1998-99 sector of ROE reduced considerably due to a downturn in the economy. By the late 80s it was apparent that policies of nationalization, particularly in the context of the financial and banking sector, had failed. The processes, which generate economic growth, were slowing down. What was even more worrying was the state of the financial sector. The social sector uplifts driven policies of the state controlled financial institutions were unsuitable for efficient resources allocation, pricing and prudent lending. In the early 90s the government took bold steps to reform the financial & banking sector. It was decided to deregulate the financial market and to allow the new private sector entities to setup financial institutions and private domestic were set up under the initiative. The major privatization goal of the government for the financial and bank sector are mainly to develop a sound and efficient banking system with the capacity to mobilize saving effectively and allocate them to the most economically

productive uses. The NBFI s cater to long medium term financing requirements with the investment banks barred from short term financing activities that continue to be the domain of the commercial banks. However the boundaries will blur a bit as the SBP has allowed commercial banks to undertake long-term financing as well. Infect, most of the nationalized commercial banks, since nationalization have used as vehicles for targeted sect oral development aberrant with little success. Historically spreads have remained between 5to 8 % until 1998. Theses have come down to about 4 % in 1999 primarily due to the economic pressure. However, efficient players have maintained high profitability to improve the operational efficiency and overall performance of Nationalized Commercial Banks. To foster competition and innovation in the banking system to reduce intermediation costs and promotes the introduction of new financial products & services. These measures includes strengthening the SBP, introducing new prudential regulations and information disclosure requirements, strengthening legal and judicial processes and removing subsidies and distortions to create a more efficient market based capital pricing and allocation system there by reducing the cost of financial intermediations. Privatization is thus pursed in Pakistan as part of a coordinated strategy integrating deregulation, privatization and good governance under the broader umbrella of financial and banking sector reform.

4.

MAJOR COMPETATORS

Askari commercial bank is fully aware of its competitors. The bank had to consider the areas including (product design, segmentation, target market, advertising, time to launch a new product, time for necessary changes & constant over view). The major competitors in case of offering the personal loans are:

a. CITI BANK

Citibank Personal Loans, a simple solution for your short term financing needs. Whether you want to go for an overdue family vacation or get the ultimate in home entertainment or simply renovate your home. Citibank Personal Loans presents the perfect solution. The core program of Citi bank is as under: i. ii. iii. iv. v. vi. vii. viii. ix. x. xi. Loan amount from Rs. 25,000 to Rs. 500,000. 12, 24, 36 and 48 months financing period. Mark up rates vary from 20 % - 30 %. Processing fee is Rs. 2,000. No end-use defined i.e. you can use the loan for absolutely any purpose! Loan disbursal in 10 days! You have been employed or self-employed for the last one year. Your verifiable gross monthly income is Rs. 12,000. You reside in Karachi, Lahore or Rawalpindi/Islamabad. Your age is 21 Years or above at the time of financing (25 years for self employed businessman). Your age is less than 60 years at the time of loan maturity (65 years in case of self employed businessman).

b. HABIB BANK

With the rising cost of living, it is becoming increasingly difficult to make expensive purchases or meet unexpected expenses. We can help you finance them with Habib Bank Flexi Loans. You may avail a personal loan of up to SIX TIMES of you net take-home salary subject to a maximum of Rs.300,000/- provided you work for an organization approved by HBL. The features of the opportunity are as under: i. ii. iii. iv. v. vi. vii. viii. ix. x. Flexible tenure: 12, 24, or 36 months. Low rates. No processing fee. Credit Life & Disability Insurance. Repayment installments. Credit Life & Disability Insurance. Repayment through easy and affordable monthly. Installments. You determine the need, we help you finance. Fill in an application form. Submit it to the designated branch. through easy and affordable monthly

c. ABN AMBRO BANK

ABN AMRO Pakistan boasts an extremely diverse and demanding corporate and financial institutions customer base. And as such, they have developed products and services that focus on meeting these specific needs of our customers. In essence, the bank believes that these products and services have been a direct outcome of years of interaction with and feedback from our customers in Pakistan and around the glob. The local and regional product management units meet regularly to improve upon and introduce state of the art products and services to help keep in line with the changing needs of our customers. The bank have also developed strong strategic liaisons with other external solution providers (local banks, couriers, security companies, etc.), and are able to extend our domain into areas where we feel niche suppliers provide advantages which we can extend to our corporate customers. The salient features of the banks personal loan are stated as under: i. ii. iii. iv. v. vi. A maximum of Rs: 400,000 and minimum of Rs: 50,000 can be provided. The payback period is over 1, 2, 3 & 4 years. A free current account at ABN AMBRO and access to the loan through the ATMs and non-stop banking centre. Home finance loans are also provided. A maximum of Rs: 7,000,000 to buy a dream house with a payback of 3-15 years. A maximum of Rs: 7000,000 to build a dream house with a payback of 3-15 years.

MAIN PROBLEMS
Although Askari Commercial Bank Ltd. (personal loan department) is progressing smoothly, but there are few problem areas facing by the department, which can be solved be solved through complete coordination, dedication. The main problem areas of the department are stated as under: i. The marketing plan of the product (personal loan department) is perhaps not as

effective as it must have been. ii. iii. iv. The sale volume of the product is not picking up. The daily office work is not completed under the office hours. The employee attitude, perception & behavior towards the top management are not

healthy. v. vi. vii. effectively. viii. There are too much steps involved in getting the loan. The feed back process from the customers is lacking in the personal loan department. There is lack of coordination among the employees. The research and development department is not performing its job

RECOMMENDATIONS

Following alternatives could be adopted in order come up with the problems, the recommendations are as under: i. The bank must lays a great emphases on the over all marketing strategy, the

competitors are faraway head in marketing department. The bank should use the electronic & print media as much as it can, because its one source through which people would come to know about the particular product. ii. The bank should look new systems processes, procedures, to get a desired result in the

sales area. The department can cut cost in one area and spend this extra cost on sales. Extensive research is also important in this regard. iii. The office should be closed at 5; 00 which the official closing time, the over work

reflects that the particular organization is not efficient and effective. iv. The attitude, perception & behaviors not only toward the organization but also toward

the management should be productive one; only then the organization could achieve its short term and long term objectives. The management had to look at the nature of work, the workflow inter- dependencies, superiority in the organization, participation in decision making, client systems, coworkers, rewards provided by the organization, opportunities of advancements, involvements in community, civic and other social groups & view on taking time of the job. v. There should be a proper coordination between the coworkers, so that the desired

results could be achieved. Like in case of personal loan there should a proper coordination between the telemarketer and the sales executive for the daily sale calls, and also there must coordination among the sale executive and the collection officer, who is responsible to collect the monthly installments.

vi.

The R & D department should perform its job effectively in order to boost up the

performance of personal loan department. vii. There should be a decrease in the stepping, the (bank statement) point could be

reduced form 12 months to 6 months, and the copy of tax return should also be overlook. The reduction in the stepping would definitely increase the force of customers.

FINAL WORDS

I started my report from the executive summary where I discussed about my position in the personal loan department. Then I gave the introduction of the banking sector and the organization. Then I focused on the companies operational, financial, marketing & financial

areas. Then I did the market, industry & competitors analysis. At the end I came up with few problems and their recommendations.

BIBLIOGRAPHY
i. The financial information is being provided by Mr. Tariq javed guman (manager asset

team north).
ii.

The information about the Reforms of Banking Sector in Pakistan is being

downloaded from an article by Mr. Nadeem Malik of Islamic data communication limited.
iii.

The information regarding the Growth for Entire Banking Industry is being

collected from the privatization commotion site.

iv.

The information regarding the Banking Supervision is being downloaded from the

official site of state bank of Pakistan. (Www. Sbp.org.pk). v. The information regarding the competitors is being collected from the respective

branches of Citi Bank, Habib Bank & ABN Ambro Bank.

THE END.