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Report Title

Car Financing and Cheque Clearance

Submitted to:

Mr.Farhan

Submitted by:

Waleed Aslam (51)

Ali Sufian (55)

Izhar Ahmed (56)

BBA 4th Semester

Submission Date: 12-06-2014

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Acknowledgments

I would like to express my gratitude to the department of management sciences

for giving me the opportunity to visit the bank.

I would also like to acknowledge my debts to those officers of Askari bank who

have been extremely helpful for me.

First of all I would like to thank my teacher. They have been a permanent source

of encouragement and guidance. Their helpful nature did not restrict them to the

promises to the branch but extended to any place and any matter I needed their

support on. They give me a comprehensive summarization of the documentary

credit procedure.

I would also acknowledge my debt to all the staff of Askari bank limited at

Bahawalnagar branch for the knowledge they provided in a very frank and casual

manner. Due to their gift of wittiness the time of my work that spent with them

was most interesting and memorable one for me.

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Dedication:

For Allah, Who gave everything well in life

Including family, teachers and guiding staff of bank

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Askari Bank

Chairman of the Board of Directors

Muhammad Mustafa Khan is the Chairman of the Board of Directors.

History:

Incorporated in Pakistan on October 9, 1991, as a public limited company. It

commenced operation on April 1, 1992, and is principally engaged in the business of

banking, as defined in the Banking Companies Ordinance, 1962. The Bank is listed on

Karachi, Lahore and Islamabad Stock Exchanges.

Work:

Since inception, the bank has concentrated on growth through improving service

quality, investment in technology and people, utilizing its extensive branch network which includes Islamic and Agricultural banking.

Network:

Askari Bank has expanded into a network of 265 branches, including 31 dedicated

Islamic banking branches, and a wholesale bank branch in Bahrain. A shared

network of 4,173 online ATMs covering all major cities in Pakistan.

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Awards and recognitions

The Asian Banker awarded twice as “Best Retail Bank in Pakistan” in 2004

and 2005. Askari Bank also has been given the “Best Consumer Internet Bank” award

by Global Finance magazine for the years 2002 and 2003

Vision:

To be the bank of first choice in the region.

Mission:

To be the leading private sector bank in Pakistan with an international presence

delivering quality service through innovative technology and effective human

resources management in a modern and progressive organization culture of

meritocracy, maintaining high ethical and professional standards, while providing

enhanced value to all our stake-holders, and contributing to society.

Core values:

We are caring about customer.

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Askari Bank Car Financing:

Car Financing Products:

ASK4Car is Askari bank’s car leasing solution and can be used to finance new and

used cars.

Askari Bank car financing is a service for its valued customers as well as to the

customers which are outside the bank or that are not the bank customers. By

availing the car financing service, customer can purchase new as well as used car

as per his/her requirement. Car finance is required by both private individuals and

businesses. The banks charge some interest rate for car financing and it depends

on certain terms and conditions.

Car financing is a complete subsector of personal finance with numerous different

products available. These include a straight forward car loan, personal contract

(car leasing). Therefore car finance is not limited to vehicle leasing. These

different types of car financing are possible because of the high residual value of

cars and second hand cars market.

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Criteria and Conditions for car financing:

Criteria for car financing include all the standards which are determined by the

bank. Different banks have different criteria for its customers. Askari bank’s

criteria include the following points.

Customer should have its own business or corporation

Business or corporation should be registered

Customer should have bank account

If customer is job holder then he should earn Rs. 50,000 per month

Customer should not be involved in bank fraud

Customer should not be using any other loan

Pakistan citizenship

Six months bank account statement

Fresh copy of utility bills (phone, gas, electricity)

Customer should not be a criminal

Salary slip required

Business ownership documents

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Amount of financed loan:

The amount of financed loan varies from person to person. If the person is

an established businessman then he is eligible for a heavy loan and if the

person is a job holder then he can take small loan for the car. One more

point is that the amount of interest is based on the amount of loan which is

being granted by the bank to the customer, bigger the loan big will be the

interest and vice versa. There is no specified limit for the loan.

Interest rate:

Interest rate is the amount of extra money which the banks charge on

financed loan. Usually the Askari bank charges 14-15 % of the total amount

which is exclusive of all the taxes, by adding all taxes it reaches upto 17 % of

the total amount. The interest rate depends on the amount of the loan and

the time duration for which the loan is being taken by the customer. The

interest rate varies from customer to customer, if customer is outsider then

he will be charged 15% and if customer is bank employee then he will be

charged 5%. Interest rate also depends on the down pavement if the

customer wants to make.

Approval method:

Approval method for the car financing is very simple. Customer should visit

the bank and provide the required documents and then his request will be

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entertained by the branch manager and after verification of documents the

request will be forwarded to the regional head who will make final

decision.

Legal documentation:

The legal documents which are required by bank are as follows.

Police clearance report

Completely filled signed application form

Attested photocopy of CNIC of applicant and references

Attested photographs

Fresh copy of utility bills

Specimen signature verified by the bank

Six months bank statement

Undertaking form

Proof of business or Ownership documents

Wealth statement

Verified CNIC of guarantor

Guarantor worth statement

Salary slip

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Time period to return loan:

Time to return loan is not specified. The customer can return loan in

monthly installments depending upon the amount of loan. Time to return

loan can be 3, 4, 5, 7 or 10 years depending on the customer.

If the customer is bank employee then the installments will be deducted

from his salary on monthly basis.

Services given by the bank to car financed customers:

Easy installments

Built in insurance

Built in tracking system

Valued customers are offered low markups

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What is cheque?

Cheque is an instrument in writing containing an unconditional order, addressed to a banker, sign by the person who has deposited money with the banker, requiring him to pay on demand a certain sum of money only to or to the order of certain person or to the bearer of instrument

Types of cheque

1. Bearer Cheque

When the words "or bearer" appearing on the face of the cheque are not

cancelled, the cheque is called a bearer cheque. The bearer cheque is payable to

the person specified therein or to any other else who presents it to the bank for

payment. However, such cheques are risky; this is because if such cheques are

lost, the finder of the cheque can collect payment from the bank.

2. Order Cheque

When the word "bearer" appearing on the face of a cheque is cancelled and when

in its place the word "or order" is written on the face of the cheque, the cheque is

called an order cheque. Such a cheque is payable to the person specified therein

as the payee, or to any one else to whom it is endorsed (transferred).

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3. Uncrossed / Open Cheque

When a cheque is not crossed, it is known as an "Open Cheque" or an "Uncrossed

Cheque". The payment of such a cheque can be obtained at the counter of the

bank. An open cheque may be a bearer cheque or an order one.

4. Crossed Cheque

Crossing of cheque means drawing two parallel lines on the face of the cheque

with or without additional words like "& CO." or "Account Payee" or "Not

Negotiable". A crossed cheque cannot be encashed at the cash counter of a bank

but it can only be credited to the payee's account.

5. Anti-Dated Cheque

If a cheque bears a date earlier than the date on which it is presented to the bank,

it is called as "anti-dated cheque". Such a cheque is valid up to three months from

the date of the cheque.

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6. Post-Dated Cheque

If a cheque bears a date which is yet to come (future date) then it is known as

post-dated cheque. A postdated cheque cannot be honored earlier than the date

on the cheque.

Cheque Clearing Cycle

Define:

The money is not release until the cheque is verified by the bank in all respect.

Then first exchanged by banks after withdrawing from cheque issuer's account,

the receiving bank pays the depositor in its account.

This process is call cheque clearing process.

In simple terms if more than one bank is involved then it has to go thru clearing

house.

In case of dealing with, out of the country bank it needs to go thru reserve bank of

both the countries, besides going thru clearing house.

If you do not get the money after depositing the cheque then it comes back to

you as unclear check with reason, such as no such account or insufficient fund or

signature cannot be verified or stopped payment initiated by issuer.

Most banks will release the money immediately if you are in good standing

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with them, subject to clearing of check, if it does not clear you are required to pay

back the money plus the interest on the money for using it, if you do not have an

account with that bank, if you have an account then money is taken from that

account and you are notified with unclear check notice.

How long does a cheque take to clear in other banks and other states?

If the cheque belongs to another bank but belongs to the same city - 2 days (Max)

If the cheque belongs to another bank but belongs to a different city but same

state - 2 to 3 days (Max)

If the cheque belongs to another bank and belongs to a different state - 3 to 5

days (Max)

All the durations above are under the assumption that the cheque issuing account

has cash to pay for it. The bank may not clear the cheque if the account doesn't

have funds for it.

Memorandum of cheque clearance

A document that is used if the cheque is dishonor it is given to the person who is

the holder of that cheque it is signed by the bank manager and that person show

that memo in the court. It is a legal document that has value in the court.

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Reasons for not clearing cheque

Insufficient balance.

Payment stopped by drawer.

Exceeds arrangement.

Amount in words and figure differs.

Cheque is postdated.

Crossed cheque must be presented by a bank.

Drawer’s signature required differs.

Drawer deceased.

Cutting requires drawer’s full signature.

Crossing stamps require cancellation.

Crossing bank endorsement stamp required.

Not drawn on us.

Reasons for Cheque bouncing

A check that cannot be processed because the writer has insufficient funds. A

bounced check will often be returned to the writer along with a penalty fee for

non-sufficient funds. "Passing" bad checks is illegal.

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My bank you'd have to pay the bad check fee which at my bank is 35.00 per bad

check, and then the service fee for covering which is 12.00, plus the amount of

the check!!!