Habib Bank Ltd

INTERNSHIP REPORTINTERNSHIP REPORT HABIB BANK LIMITED HABIB BANK LIMITED

THE BANKThe te rm “BANK” i s der ived f rom an I ta l ian word “BANKO” which means “ Bench” tha t i s where people were meet and so lve the i r f inanc ia l mat te rs .

The te rm bank i s be ing used for a long t ime ye t i t has no prec ise def in i t ion . The bas ic reason i s tha t the banks per form not jus t one but many types of func t ions or ig ina l ly the banks were supposed to make shor t t e rm loans to the t raders on ly . The banks now not on ly make shor t t e rm loans to the formers , t raders , indus t r ia l i s t e tc . But a l so inves t in a wide var ie ty of long te rm earn ing asse t s .The commerc ia l banks a l so under take and execute t rus t , dea l in s tock , shares and debentures , i s sue guarant ies and indemni t ies underwr i te and se l l new secur i t i es , and dea l in fore ign exchange e tc .However some of the def in i t ions of bank f rom di f fe ren t au thors a re as fo l lows .

According to Dr . Har t 1


“ B a n k e r o r b a n k i s a p e r s o n o r c o m p a n y c a r r y i n g o n b u s i n e s s o f r e c e i v i n g m o n e y a n d c o l l e c t i n g d r a f t s f o r t h e c u s t o m e r s s u b j e c t t o t h e o b l i g a t i o n o f h o n o u r i n g c h e q u e s d r a w n u p o n t h e m f r o m t i m e t o t i m e b y c u s t o m e r s t o t h e e x t e n d s o f t h e a m o u n t s a v a i l a b l e o n t h e i r c u r r e n t s a c c o u n t s ”

In the words of G W Gi lbert

“ A b a n k e r i s a d e a l e r i n c a p i t a l o r m o r e p r o p e r l y a d e a l e r i n m o n e y . H e i s a n i n t e r m e d i a t e p a r t y b e t w e e n t h e b o r r o w e r a n d l e n d e r . H e b o r r o w s o n e p a r t y a n d l e n d s t o t h e a n o t h e r ”

2


TYPES OF BANKS

1. Central bank or state bank.

2. Commercial bank.

3. Exchange bank.

4. Industrial bank.

5. Agriculture bank.

6. Investment bank.

7. Saving bank.

CENTRAL BANK E v e r y c o u n t r y h a s i t s c e n t r a l b a n k o r s t a t e b a n k . I t s m a j o r f u n c t i o n i s t o c a r r y o u t a c o u n t r y ’ s m o n e t a r y p o l i c y w i t h a n a i m t o s a f e g u a r d i t s f i n a n c i a l a n d e c o n o m i c s t a b i l i t y . I t h a s t h e m o n o p o l y o f n o t e i s s u e . I t i s a l s o t h e c u s t o d i a n o f m o n e y m a r k e t . S t a t e b a n k i s t h e B a n k s b a n k a n d l e n d e r t o t h e g o v e r n m e n t .

COMMERCIAL BANK C o m m e r c i a l b a n k s a r e p r o f i t e a r n i n g c o n c e r n s . T h e y r e c e i v e d e p o s i t s a n d a d v a n c e l o a n s t o t h e b o r r o w s . T h e y g r e a t l y h e l p i n f i n a n c i n g f o r i n t e r n a l a n d e x t e r n a l t r a d e o f t h e c o u n t r y .

3


EXCHANGE BANK

T h e m a i n f u n c t i o n o f t h e e x c h a n g e b a n k i s t o f i n a n c e t h e f o r e i g n t r a d e b y t h e p u r c h a s e a n d s a l e o f f o r e i g n c u r r e n c i e s i n t h e f o r m o f d r a f t s , b i l l s o f e x c h a n g e , t e l e g r a p h i c t r a n s f e r s . T h e y a l s o p e r f o r m t h e f u n c t i o n o f c o m m e r c i a l b a n k . R e c e i v i n g d e p o s i t s a n d a d v a n c i n g l o a n s .

INDUSTRIAL BANKS

C o m m e r c i a l b a n k c a n n o t a f f o r d t o b l o c k t h e i r f u n d s i n l o n g t e r m i n v e s t m e n t s . T h e i n d u s t r i a l b a n k s r e c e i v e l o n g t e r m d e p o s i t s a n d f i n a n c e t h e i n d u s t r i e s b y p r o v i d i n g t h e m l o n g t e r m c r e d i t s . I n P a k i s t a n t h e I n d u s t r i a l b a n k n a m e d a s I n d u s t r i a l D e v e l o p m e n t B a n k o f P a k i s t a n ( I . D . B . P ) w a s e s t a b l i s h e d i n 1 9 6 1 f o r t h i s p u r p o s e .

AGRICULTURAL BANK

A g r i c u l t u r a l b a n k p r o v i d e s s h o r t a n d l o n g p e r i o d l o a n s f o r f i n a n c i n g a g r i c u l t u r e . T h e a g r i c u l t u r i s t s n e e d s h o r t a n d l o n g t e r m l o a n s f o r m e e t i n g t h e i r d a y t o d a y a n d l o n g t e r m r e q u i r e m e n t s f o r m a k i n g p e r m a n e n t i m p r o v e m e n t i n t h e l a n d . I n P a k i s t a n A g r i c u l t u r a l B a n k i s n a m e d a s A g r i c u l t u r a l D e v e l o p m e n t b a n k o f P a k i s t a n ( A . D . B . P ) a n d i t w a s e s t a b l i s h e d i n 1 9 6 1

4


INVESTMENT BANK

T h e m a i n f u n c t i o n o f i n v e s t m e n t b a n k t h e m e r c h a n d i s i n g o f s h a r e s a n d o t h e r s e c u r i t i e s , m a n a g i n g a n d d i s t r i b u t i n g t h e i s s u e o f s h a r e s a n d o t h e r s e c u r i t i e s .

SAVING BANKS

T h e s e a r e t h e i n s t i t u t i o n s w h i c h a r e s p o n s o r e d b y t h e g o v e r n m e n t f o r h a v i n g f a c i l i t i e s t o t h e p e o p l e a n d s m a l l m e a n s . T h e s e b a n k c o l l e c t s m a l l s a v i n g o f p e o p l e a n d a l l o w t h e m t o w i t h d r a w i n s m a l l a m o u n t s . A l s o a n o t h e r i n s t i t u t i o n i . e . N a t i o n a l S a v i n g s i s w o r k i n g i n t h e s a m e c a p a c i t y .

5


HABIB BANK LIMITED

T h e w o r k i n g o f t h e H a b i b B a n k L i m i t e d w a s c o m m e n c e d o n 2 5 t h A u g u s t 1 9 4 1 i n B o m b a y a n d i n 1 9 4 8 i t w a s e s t a b l i s h e d i n P a k i s t a n . I t w a s t h e f i r s t M u s l i m B a n k i n t h e S u b c o n t i n e n t ,

N o w t h e r e a r e 1 7 7 3 b r a n c h e s i n s i d e t h e P a k i s t a n a n d a b o u t 6 6 B r a n c h e s o v e r s e a s p r o v i d i n g f i n a n c i a l s e r v i c e s t o i t s w o r t h y c u s t o m e r s .

H a b i b B a n k i s w o r k i n g f o r t h e l a s t 5 0 y e a r s a n d b e c o m e t h e l a r g e s t c o m m e r c i a l b a n k i n t h e c o u n t r y . I t h a s t h e A u t h o r i z e d c a p i t a l o f R S 5 0 0 0 M i l l i o n w i t h a p a i d u p c a p i t a l a n d r e s e r v e s o f R S 8 5 8 M i l l i o n a n d i t s d e p o s i t s a r e m o r e t h a n R S 2 1 3 b i l l i o n i n a p p r o x i m a t e l y 1 0 . 7 M i l l i o n a c c o u n t s . I t h a s t h e a d v a n c e s o f 1 3 1 M i l l i o n . H a b i b B a n k h a s i n n o v a t e d a n u m b e r s o f f i n a n c i a l s c h e m e s l i k e t e r m d e p o s i t s , S p e c i a l n o t i c e t e r m d e p o s i t s , A . T . M . e t c . A s g o v e r n m e n t s a r e h o p i n g t o b e l i b e r a l a n d t h e i r p o l i c i e s a r e i n n o v a t i v e a n d l i b e r a l t h e s c o p e o f b a n k i n g i s i n c r e a s i n g a n d H a b i b B a n k i s o n s t e p a h e a d i f t h e g r o w t h a n d p a r t i c i p a t i n g v e r y m u c h i n t h e e c o n o m i c g r o w t h o f P a k i s t a n .

6


H a b i b b a n k H E A D Q U A R T E R i s s i t u a t e d i n K A R A C H I t h a t b u i l d i n g h a s h i g h e s t n u m b e r o f s t o r i e s i n P a k i s t a n .

H a b i b b a n k h a s b a s i c a l l y 9 R e g i o n s a l l o v e r t h e c o u n t r y t h o s e c o n t r o l t h e e n t i r e a c t i v i t y o f H a b i b b a n k o p e r a t i o n i s c o u n t r y w i d e .

7


REGIONAL HEAD QUARTERS

ZONES BRANCHES

1 Lahore Region 13 313

2 Faisalabad Region 10 263

3 Islamabad Region 10 274

4 Multan Region 13 261

5 Karachi Region 15 204

6 Hyderabad Region 06 163

7 N.W.F.P. Region 10 261

8 Balochistan Region 02 46

9 Azad Kashmir Region 03 98

8


MISSION OF H.B.L.

To inherence the corporate culture in business society through quality oriented banking services.

To increase the profitability of our shareholders through investing in financially sound and profit earning projects.

To maintain and increase the reliability and quality services to our accounts holders.

To strengthen the status economy through financing the export under control of state bank of pakistan.

To provide funds for increasing environmentalism, cultural and sociological thinking in society .

9


Lahore Region

1. Lahore Zone

2. Sheikhupura zone

3. Gujranwala zone

4. Gujrat zone

5. Hafiz Abad zone

10


DIVISION AT HEAD OFFICE KARACHI

1. Agriculture and small loan division .

2. Audit and inspection division

3. Cash and investment division

4. Computer service division

5. Customer service division

6. Corporate credit division

7. Engineering and Maintenance.

8. Finance division

9. General administration division

10. International division

11. Law division

12. Marketing and development division

13. O and M division

14. Planning development division.

15. Printing and stationary division.

16. Syndicated loans divisions.

17. Trade information division.

18. Training division.

11


1 AGRICULTURE AND SMALL LOANS IVISION

Divisional HeadSmall loans department

2 AUDIT AND INSPECTION DIVISION

Divisional Head Management Audit

Circle Audit circle audit implementation A & B Karachi (Karachi B & c) WingCircle Chiefs Circle Chiefs inspection team

3. CASH & INVESTMENT DIVISION

Divisional Head (SVP)

Vice President.

4. COMPUTER DIVISION:

Divisional Head (AVP)

Lahore Hyderabad Quetta Peshawar Islamabad Faisalabad Multan

12


5. CUSTERMER SERVICES DIVISION:

Divisional HeadSP & VP

Branch Opening Cell Haij Cell Deptt for T.J Cell Overseas Pakistan

6. CORPURATED CREDIT DEVISION:

Divisional Head (SVP) (EVP) (AVP)

7. ENGINEERING AND MAINTENANCE DIVISION:

Divisional Head (EVP)

8. FINANCE DIVISON :

Divisional Head (SVP) (EVP)

13


9. GENERAL ADMINISTRATION DIVISION:

Divisional Head|

Purchase and Insurance security war Housing Deptt. Expenditure cell cell Control deptt.

10. INTERNATIONAL DIVISION:

Division Head (SVP) (A.P)

11. LAW DIVISION :

Executive Incharge (AVP)|

Divisional Head (SVP) (VP)|

Litigation Non interest Recovery Zakat Cell Banking deptt. Cell Cell

12. MARKITING AND DEVELOPMENT DIVISION :

Public relation Protocol/Travel Sports & Credit card Department.

13. O & M DIVISION :

Divisional Head (SVP &VP)

14


14. PERSONAL DEVISION :

INVESTGATION CENTERAL HOUSE Overseas personnelDepartment finance committee Cell

15. PRINTING AND STATIONARY DIVISION:

Divisional Head (SVP &VP)

16. SYNDICATED LOAN DIVISION :

Divisional Head (SVP & VP)

17. TRADE INFORMATION DIVISION :

DIVISIONAL HEAD (SVP &VP)|

Centeral Main Deptt School Banking

18. TRANING DIVISION:

Divisional Head

Trg. Institute Trg. Institute Trg. Institute Trg. Instute Lahore Islamabad Karachi Multan

15


PRESIDENT

1. To implement the polices chalked out and decision made by the

board of directors

2. To look after the affairs of the whole origination

3. To maintain good relation with the big Clint of bank in the interest of

the origination

4. To promote the business activities of the bank

5. To find new areas for investment

6. To make liaison with the government and state bank

17


BORD OF DIRECATORS1. To make the policies in order to promote the business of bank.

2. To declare the profits on deposits.

3. To announce the rate of interest on advances and loans.

4. To make the policies for the welfare of bank employees.

18


ZONAL CHIEF

1. To make visit at the branches in order to promote the business

activities and make the discussion at the spot under his discriminatory

powers.

2. To promote the business activities.

3. To make the relation with the industrialist business man Agriculturist

etc. for the promotion of banking activities.

4. To solve the union problems.

5. To approve loans for heavy industries i.e. big amount of loans.

19


BRANCH MANAGER

1. To look after the affairs of the branch.

2. To meet the depositor and borrowers and solve their banking

problems.

3. To make try for increasing the profitability of the branch by capturing

low cost/cost free deposits and giving the secured advance to the

valued clients.

4. To reduce the expenses of the branch.

5. To make relation with the industrial business man agriculturist,

industrialist of the branch.

6. To sanction small amount of loans and judge whether the client is

genuine.

7. To solve the problem of the bankers working under him.

20


HABIB BANK LIMITED NOSHERA VIRKAN BRANCH

H.B.L branch is situated at NOSHERA VIRKAN which is the

center of cotton and grain business. According to its location majority of

its accounts holders are Cotton Broker , Traders and other business

concerns. This branch is working under the experience hand of Mr.

Mubashir Iqbal he is very hardworking and friendly to subordinates. He

is used to go to his subordinate himself quires and other matters however

a complete system of intercom is also installed in the branch in order to

make the coordination .As the working of the branch is organized so

different are made in order to make the working easier and error free.

The bank also issues creation form for the television license,

account opening , deposit slip etc are also available at this place. Cheque

books are also made by the persons at the counter.

21


GENERAL BANKING

Account opening department

This department is under the supervision of Mr. Mubashir Iqbal an ambitions young officer. Applications are received here and after the scrutiny of all the requisites the account is opened. There are mainly two types of accounts.

1-CERRENT DEPOSIT ACCOUNT. (CD)

2-PROFIT AND LOSS ACCOUNT. (PL)

3-CALL DEPOSITS

Now profit and loss (PL) is divided into four types:

1-Profit and Loss Saving Account (PLS).

2-Short Notice Term Deposits Account (SNTD)

3-Term Deposit Account.

4-Golden Investment Scheme.

Now Short Notice Term Deposit (SNTD) is further divided into two:

1-Ordinery Term Deposit Receipt (TDR).

2-Khas Term Deposit Receipt (Khas TDR).

22


EXPLANATION:

1.CURRENT DEPOSIT:

There accounts are opened by Rs. 500. No profit or interest is given on these accounts. These types of accounts are mostly maintained by the businessmen who may draw money at any time. Zakat is also not deducted on these accounts and no any notice is required for the withdrawal of money.

23


2-Profit and loss account : A. PROFIT AND LOSS SAVING ACCOUNT(PLS)

This account may be opened by RS. 500. After every six months profit/interest is given on this account and the rate of profit is declared by the Head Office Habib Bank Limited. This year the management of the Habib Bank has decided to give the profit of 8.10% on their saving depositors . A 7days notice is required to draw the money exceeding RS. 15000, However bankers are used to give the relaxation of two, three thousands to their customers. A cheque book containing 10 leaves is given to the account holder which costs to him for RS 10 Mostly persons on jobs maintain these types of accounts. Zakat is also deducted on these accounts on the first of the Ramzan. A new tax i.e. with holding is also levied on the profit of the saving account. The rate of the with holding tax is 10%.

24


B. SHORT NOTICE TERM DEPOSIT :

Short notice term deposit accounts are categorized into three

categories That are as under:

1. 7-Days notice.

2. 15-Days notice.

3. 30-Days notice.

These accounts are opened for 7, 15,or 30days. But these

can be encashed at any time. The rate of interest on these accounts is

lesser ordinary PLS. Saving account. If it is encashed before its maturity

the rate of profit is further reduced. With holding tax is also deducted on

the profit .

This year the rate of interest on SNTD offered by the Habib bank is

From 7 to 29 days 6.00% For 30 days and above 6.60%

25


C. TERM DEPOSIT RECEIPT :

These accounts are opened for 1 month, 3 months, 6 months,

1year and so on. The rate of interest/profit goes on increasing as the time

/period of the deposit is increased. These accounts can also be encashed

at any time and ordinary PLS rate is given if these are encashed before

its maturity. With holding tax of 10% is also deducted on the profit of

TD RS. The of

Profit/interest announced this years are as under:

PERIOD RATE 01 month 8.60%

02 month 9.00% 03 month 9.40% 06 month 10.50% 01 year 11.00%

02 year 11.60%

26


GOLDEN INVESTMENT SCHEME:

A Golden investment scheme is offered by the Habib Bank which offers you a rate of 14.50% per annum and the time limit for the said scheme is five years or seven and a half years or so . This scheme doubles the amount after 5 years and in years the amount is three times. But if the amount is drawn before its maturity no such profit is given on this behalf.

27


CALL DEPOSITS:

These are another type of accounts opened by the Government or companies. Construction companies/organizations require some percentage of total amount of the total contract to be deposited by the contractors as a security. Like when applications for shares are called or when some plots in a housing colony is to be allotted certain amount is called as a security that the applicant is genuine, these accounts are called call deposits. These accounts are refundable and no profit or deduction is made on this account.

FOREIGN EXCHANGE ACCOUNT:

As the Pakistani currency accounts are opened the requirements are same for the foreign currency accounts. All the transactions are made in the foreign currency in which the account is opened.

28


REMITTANCEDEPARTMENT:

As it is the function of the bank to remit the money to any place where there is a bank. It is the most easiest and safest way to send money to any place. Bank charges menial amount as a commission for the remittance. Here in the Habib bank Branch there is also remittance department. There are mostly four methods to remit the money. They are:

1. Demand Draft (DD).

2. Mail transfer (MT).

3. Telegraphic Transfer.(TT)

4. Pay Order (PO)

Now these all are discussed here separately in detail:

29


1. DEMAND DRAFT (DD).

It is the most commonly method used for the remittance of money. It is very simple, firstly a form is to be filled in , in which all details are specified that where and in which branch the draft is to be sent then the money is deposited which is called draft and money can by drawn after showing to the bank of the specified branch of the bank. Only specified person can draw the money on that draft. Another method to secure the payment of the draft could be the crossing of the draft which means that it will only be deposited in the payee’s account.

To make it more secured and safe the bank has coded the amount exceeding Rs.15000. Only the banker or the person knows the actual amount of the draft. In return bank gets a commission which is its mode of earning.

The bank’s commission rate is as under:

Rupees Min. amount %ageUp to 10,000 15 20%10,001-100,000 20 15%100,001 of above 150 07%

Now with holding tax is also levied, so bank also gets 20% with holding

tax on the sum an excise duty of RS. 1 per leaf.

Now if the draft is to be canceled or duplicate of the draft is to be needed

in case of misplacement Rs.20 is to be paid.

30


2. MAIL TRANSFER (MT)

The money is transferred through mail. One branch of the bank sends

advice to the branch of the same bank to credit the account of payee. In

this type of transfer the payee must have the bank account . For example,

now a days PTV’s licensees are made all over the Pakistan. The cash is

deposited in the banks and after a week the bank mail transfers the

amount to the PTV’s Islamabad account. Bank also gets commission on

the mail transfers, the commission rate is:

Rupees Min amount %age

Up to 10,000 15 20%

10,001- 100,000 20 15%

100,000 or above 150 .075%

The bank also charges the postage expenses of Rs.12 on it.

31


TELEGRAPHIC TRANSFERS (TT)

It is a good safe and fast method of transferring money from one place to another. The advice is sent through the telegram and the bank to which the advice is made reconfirms that whether the advice is made or not. After the confirmation the money is paid to the payee. Telegraphic Transfer could be made by giving the name and the telephone number of the payee but account number is considered good and sage . The amount exceeding Rs.15000 is coded in order to keep security.

Bank charge commission on TT’s and the rate is as under.

Rupees Min. amount %age

Up to 10,000 15 20%

10,001-100,000 20 15%

100,001 or above 150 .075%

The bank also charge the telegram expenses of Rs.20 TT

32


PAY ORDER ( PO ) Pay order is less expensive method of transfer money. Normally this method is used to transfer money inside the city. If it is used city wide, it takes a long time.

The bank charge Rs.10 which is flat foe the pay order and an excise duty

of Rs.1 per leaf. With holding tax of 20% on the sum is also taken from

the party.

Now if the pay order is to be canceled or duplicate of the pay order is to

be needed is case of misplacement Rs.20 is to be paid.

33


LOCKERS AND BILLS DEPARTMENT:

Lockers are also available at Habib bank limited NOSHERA VIRKAN. The procedure to get a locker is same as of account opening and RS 600 is to be deposited as a security fee which is refundable. There are three types of lockers available i.e. small, medium, and large. The bank charges Rs.300 per annum for the small locker, RS 500 the medium and Rs.800 per annum for the large size locker.

People get the lockers for the security of precious items which include

jewelry, bonds, documents etc. To ensure safety and security two key

system is used. Firstly the lock holder is verified and then in the

presence of banker the locker is opened with the help of the key which is

in the custody of lock holder and is closed with the banker’s key.

Without these two keys it couldn’t be opened or closed.

Bills here doesn’t mean the utility bills like electricity bills or gas bills,

but in the bills section those cheque are presented that are for the

outstation or in station of any branch of any bank.

34


Now the procedure of collection is different for in both the cases, the

outstation cheques are called the OBC cheque. Which stands for outward

bills for collection or these are the collections inside the country or city

wide and the in station cheque are those which belongs to the Lahore,

may be from the Habib bank or any other bank.

Of the cheque is of Habib Bank, the cheque is sent to the HBL main

branch GUJRANWALA the HBL GUJRANWALA branch sent those

cheque to the branch where the cheque belongs. And after confirmation,

in return, sent the IBCO inter Branch Credit Order. After the reception

of the IBCO the HBL NOSHERA VIRKAN branch credit the account of

the customer.

Now if the cheque belongs to the GUJRANWALA but the bank is other than

the Habib Bank i.e. UBL, MCB, NBP, etc, those cheque are sent to the

HBL main branch GUJRANWALA and from GUJRANWALA the banker will go to

the collection cell which is located at main branch GUJRANWALA.

35


Here all the representative from all the banks met and settled their inter

bank transaction after the confirmation from the respective bank. The

amount will be credited in the account of the Habib Bank at State Bank

and from their IBCO will be issued in the name of GUJRANWALA main

branch and further main branch will issue the IBCO to the NOSHERA VIRKAN branch.

Now for the outstation cheque the procedure is different. These cheque

are sent to the Habib Bank main branch of that city where the cheque

belongs. That main branch collects the money and sends a document

which is name as IBCO which stands for inter branch credit order to the

Habib bank NOSHERA VIRKAN Branch. Bank after the reception of

the IBCO credits the account of the person who presented these cheques

for collection. Now there are two types of outstation bills for collection,s

. These are as under.

36


CLEAN

Clean OBC includes those instrument,s which do not need any

documentation to be attached with it for the purpose of collection. This

includes cheque draft etc. The bank charge commission on the clean

OBC as .20% of the amount of the cheque or a minimum of Rs, 10. An

additional amount of Rs, 30 for the Courier or Rs, 12 for the postage as

instructed by the customer credit order to the Habib Bank Chowk Azam

Branch and bank after the reception of the IBCO credits the account of

the person who presented those cheques for collection. Now there are

two types of Outstation Bills for Collection. These are as under.

CLEAN

Clean OBC includes those instruments which do not any

documentation.To be attached with it for the purpose of collections. This

includes cheque Drafts etc.

37


DOCUMENTARY

Documentary includes those instruments which includes an additional

documentation attached with that instruments for the collection. The

bank charge commission on documentary OBC as 35% of the amount of

that instrument or a minimum amount of Rs 25 an additional Amount of

Rs 30 for the courier or Rs 12 for the postage as instructed by the

customer .

If the instrument is dishonored or returned handling charges of Rs. 25/=

per cheque or any instrument will be charged by the bank.

38


TRANSIT DELIVERY AND CLEARING DEPARTMENT.

This department deals in those cheque and draft,s which are drawn upon

the Habib Bank Branch.

The transit delivery section received those cheque and drafts which are

through any branch of Habib Bank after proper verification of the

genuine of the draft or cheques , this branch transfers the inter branch

credit order IBCO to the main branch which further transfers the IBCO

where the cheque or draft was presented the clearing section deals in

those cheque and drafts which are drawn on Habib Bank. From other

banks like UBL, MCB, NBP, etc.

The procedure is same that after proper verification the IBCO is transfer

to the main branch which sends the credit note to the State bank,

And State bank credits the account of that bank with the specified

amount the bank charge noting on those cheque which belongs to Habib

Bank but if the other bank is involved the bank will charge the

commission and courier charges.

39


CURRENT DEPOSIT & PLS SAVING DEPARTMENT

Current deposit and profit and losses department at Habib Bank branch

is working for the maintenance of the account holder’s record. This

department maintains all the record regarding the account of the account

holders, specimen signature card is with them and the verify the

signature of the account holders.

All cheque drawn of Habib Bank branch are sent to this department and

they properly judge and verify the validity of the cheque and after

verification they sent it to the cash department. Firstly that verify for the

signature then they see whether the cheque is within the due date, is

there a balance in the account of the account holder. After the

verification of all these pre-requisites the cheque is cleared. It is also the

function of this department to maintain the record of all transactions of

the day certain calculation of interest of profit is also made by them.

They also prepare the statement of account holders. All the records of

the account holders their transactions, their profit on PLS accounts

interest on SNIDS, TDRs etc. is maintain by this department.

40


CASH SECION

Like all the banks there is cash counter is the Habib bank branch

working two or three bankers. They pay the cash to the cheque, which

are properly verified from the CD & PLS, Department. People cashier

returns a counterfoil of the deposit slip by stamping it with cash receipt

stamp.

Cashier also maintained a register in which all the transactions at the

cash counter is maintained. At the end of the day cash in hand must tally

with the balance in the register.

41


TOKEN DEPARTMENT

All the cheque holders go to this department. They present the cheque to

the person at the department. He checks that whether the cheque belongs

to the same branch, the amount in words and figures is same, cheques is

not outdated, there signatures are there etc. Then he allots a number to

the cheques and a token is given to the cheque holder and the cheque is

sent to the CD & PLS Department. After the proper verification the cash

is paid to the cheque holder from the cash counter after taking token

from him.

Transfer book is a book in which all the transactions of the day is written

and the balance is tally with the cash book. The translator book is also

maintained by the said department.

42


ADVANCES / LOANS SECTION

This dept. has been working under the supervision of

knowledgeable experienced & well qualified banker Mr. Saleem Mirza

who has been serving this bank for last 20 years.

This Dept. has boon playing one of the primary functions of the bank

because a bank is the organization that accept deposits & give advances.

There are basically two types of loans:

a) Fund base

b) Non fund base

a) in fund base the cash is involved.

b) While is non fund base cash is not involved.

These are following types of advances those are given by the BANK.

1. Cash Finance (CF)2. Running Finance (RF)3. Machinery Loan.4. International Development Agency Loan(IDA)5. Transport Loan.6. Staff Loan.

43


1. CASH FINANCE (CF )

Cash Finance is the biggest loan given to the businessmen, industrialists,

its limit is in crores and bank do require security for this purpose. After

the proper investigation and documentation these finances are given and

genuine property is pledged as a matter of security.

These loans are taken for the purchase of stocks etc. The bank appoints

its staff of two or three persons at the place where that stock is lying.

Bank also keeps the record of the stock and current position too. A

notice is also written at the place that the stocks are pledged with the

bank. To get these types of loans prior permission from the zonal office

of the Habib bank is also required. The bank gets back its principal

amount and also markup for the loan. The rate of markup is

Rs.0.52/1000 per day and to calculate the markup for finance period as

per formula is:

Amount of Amount of Finance + One installmentMARK UP=------------------------------------ Rate of Mark-up

2Mo. of Period of Installment one installment

44


Documents Require for the Loan.

1.Demand Promissory Note(DP Note)

This document is filled in by the party

that they promise to pay the amount whenever it is demanded.

2. Facility Letter:

This is the requisition of the finance facilities to the bank By

the party.

3. Balance Confirmation :

After the approval of the loan this letter is written by the Party

that such amount is in the account of the party.

4. Letter of pledge (IB26)

For the getting of the cash finance a letter of Pledge

is to be given to the bank that such property is to be pledged with the

bank as a security.

5. Letter of Guarantee(IB29)

A letter for the personal guarantee is also required in

which the guarantee from a sound person to the party is attached with

the application

6. Agreement for Financing(IB6)

This agreement for the short term medium term/long

term on the mark up basis. At most these are the documents required

in attaining of the loan.

45


2. RUNNING FINANCE:

Running Finances are also given for the purchase of stock etc. But its

limit is not too much. Normally upto RS 15,00,000 is given as a

Running Finance and no staff is appointed. This is termed as

Hypothecation, which means that party is wholly liable for the stock

and payment of the principal amount and markup. The procedure is

almost same as for the cash finance and the loan is given to those

parties which are able to prove its genuineness and satisfies the bank.

The bank also pledges the genuine security of the party which

normally more valuable then the amount of loan. To get this type of

loan prior permission of the zonal office is necessary.

The rate of mark up is RS 0.52/1000 per day and to calculate the

mark up for the finance period as per formula is:

Amount of Amount of

Finance + one installment

Mark Up----------------------------- Rate of Mark up

2

No. of Period of

Installments One Installment.

46


Document Required for the Loan:

1. Demand Promissory Note(DP Note)

The party that they promise to pay the amount whenever it is demanded

fills this document.

2. Facility Letter.

This is the requisition of the finances to the bank by the third party.

3. Balance Confirmation

After the approval of the loan the party writes this letter that such

amount is in the account of the party.

4. Letter Of Equitable Mortgage (IB24 )

For the getting of the running finance a letter of equitable mortgage is to

be given to the bank that such property is to be mortgaged with the bank

as a security.

5. Letter Of Guarantee (IB29)

A letter for the personal guarantees is also required is which the

guarantees from a sound person to the party is attached with the

application.

6. Agreement for Finances (IB6 )

This agreement for the snort term /medium term/long term on the mark

up basis. At most these are the documents required in attaining of the

loan.

Letter of Hypothecation (IB25)

This letter that for all types of stock the party is liable and bank not

needs to appoint any person.

47


3. MACHINERY LOAN

Certain loans are given for the purchase of machinery. These loans

are called Local Machinery Manufacturing Loan (LMM LOAN). The

bank finances for the machinery, which is manufactured in Pakistan.

Like other loans after the proper verification and proper

documentation and

With the prior approval from the zonal office, these loans are given.

The bank pledges some genuine property as a security. Personal

security is also required in the getting of this loan. The loan is to

repay in certain installments which includes the mark-up also.

Normally these loans are for the period of five years and first six or

three months are exempted from the installments as the ease or as the

terms and conditions may be. The rate of the interest to be paid by the

party is 8% per annum.

48


DOCUMENTS REQUIRED FOR THE MACHINERY LOAN:

1.Demand Promissory Note(DP Note )

These documents filled in by the party that they promise to

pay the amount whenever it is demanded.

2.Facility Letter.

This is the requisition of the finance facilities to the bank

by the party.

3.Balance Confirmation .

After the approval of the loan the party writes this letter

that such amount is in the account of the party.

4.Letter Of Pledge.(IB26)

For the getting of the machinery loan a letter of Pledge is to

be given to the bank that such property is to be pledged with the bank

as a security.

5.Letter of Guarantee (IB29)

A letter for the personal guarantee is also required, in which

the guarantee from a sound person to the party is attached with the

Application

6. Agreement For Financing(IB6)

This agreement for the short term medium term/long term on

the

Mark up basis. at most these are the documents required in attaining

of the loan.

49


INTERNATIONAL DEVELOPMENT AGENCY LOANS.

These loans are given for the purchase of foreign machinery ,

stocks, etc.

Though these loans are not in practice but there is a provision for this

loan. The cause of in practicing of the loan may be the unawareness

of the people about the provision.

The rate of interest on these loans is 11% per annum.

These finances are provided by the World Bank.

50


DOCUMENTS REQUIRED ON/AFTER THE

APPROVAL OF LOAN.

1.In respect of the applicant.

a. Sole Proprietorship

b. Partnership Concern Copy of registered partnership deed.

c. Limited Company.

- Copy of the Memorandum and Article of Association.

- Copy of the certificate of Incorporation

- Copy of the certificate of Commencement of Business.

- Resolution of the Board of Directors authorizing the

management to obtain the loan from the Bank specifying the

purpose of the loan required for.

51


MODERN BANKING

1- A.T.M.

2- MASTER CARD

1-AUTO TELLER MACHINE

Now a days banks are going to inter in the world of Computer &

technology, Each & every mark which was done by the men is being

done through computer

H.B.L. is innovators to introduce A.T.M. facility to its customer first

time in Pakistan A.T.M machine basically provide 24 hours cash service

To its customer you just have to enter your code & amount requirement

you could get it when ever you want in throughout 24 hours. A.T.M.

card facility can be given to all those who are the customer of the bank

But having certain average balance.

For getting A.T.M. card simple procedure is adopted.

-Filling of Application for A.T.M. card

-Attestified from two bankers.

-All kind of necessary related documents are also required.

52


WITHDRAWL OF CASH

a- On daily bases RS 2000/-

b- On weekly bases Rs.9000/- can be drawn.

c- Normally on deposit of 25000/- the limit of with drawl on deposit and

RS 3000/- per 30 days

d- It is limited on the city only card of some city can’t be used in other

city.

e- There are total 20 A.T.M machines working in Pakistan,

Karachi 8Lahore 4Islamabad 3Multan 1Faisalabad 1Peshawar 1Quetta 1A.j.k. 1

53


TERMS & CONDITION

1) Individuals personal current and PLS saving account holder can

get A.T.M Card.

2) The HBAC shall allow the card holder access to the bank auto

cash terminal to

- Obtain cash up to previously arranged limit

- Request a new cheque book

3) The HBAC is not transferable and shall be used exclusively by the

card holder.

4) The cerd holder further undertakes to maintain sufficient funds to

meet with drawls and he/ she undertakes not to overdraw the

account unless over draft arrangements have previously been

agreed to by the bank.

5) In the event of the card holder at any time drawing amount in

excess of the credit balance the bank a will be entitled to create an

overdraft in his account and card holder agrees to repay.

6) The card holder irrevocably authorized the bank to debit his/her

A/C with the amount of withdraw.

7) The HBAC issued to the card holder shall remain at all times the

property of the bank and shall surrounded to the bank on demand.

54


MASTER CARD

Master Card is another modern facility, which is given by H.B.L.

Master Card is having following benefits & privileges

1) H.B.L. master card is accepted at over 123 Million establishment’s

word wide.

2) Free air travel accident insurance is provided.

3) This is the card having a photograph & signature of the cardholder,

which gives the security against misused.

4) On this card cash withdrawal are available over 29000 outlets all

over the world.

5) H.B.L. give an essay to manage monthly statement to keep track of

your transaction.

55


TERMS AND CONDITIONS

1) The card can be used to individuals on their request having current

/PLS saving Accounts.

2) The card must be signed by the card holder immediately upon

receipt

3) The card is not transferable & shall be used exclusively by the

card holder name.

4) All possible steps shall be taken to safe guard the card.

5) The cardholder irrevocably and unconditionally authorizes the

bank to debt his/her account with the amount of withdraw/

purchase effected through the use of his/her card.

6) While using the caed, the cardholder should sign the establishment

bills and charges slips with the same signature as that on the card.

7) The cardholder should promptly notify the bankin knitting of any

changes in detail of employment/ bussiness or any change in

address office/ Residence.

8) The joining fee, annual and other payments made by the card

holder to the bank shall be non refundable

9) The card remains the property of the bank at all times and has to

be returned by the cardholder on the bank’s demand.

56


CURRENT ISSUE

World trend has been changing very rapidly and competition is

becoming more & more stiff. Our country is the tendency towards the

privatization now a days.

As we know H.B.L. is an Govt.

organization and one of those organization those

one suffering loses due to heavy operational &

management expenses H.B.L. is bearing of its

extra employee those are real cause of heavy

management expenses. These expenses are making

H.B.L weaker & weaker day by day. Now the Govt.

has decided to privatize this org also along

with other big organization.

If we technically examine the reason behind the down sizing then we

could see that H.B.L. is increasing 5% operational & management

expenses against the deposit while it 2% all over the world. In down

sizing employees of H.B.L regardless grade designation are offered a

golden shake hand scheme in which people are inviting to great benefits

against taking retirement from the job.

This Golden handshake scheme has following

main features.

57


GOLDEN HANDSHAKE SCHEME

The employees may excise their

option during the period from

25th August 1997 to 10th Sep 1997.

This scheme is a one time offer . when that much

expenses will be incurred these will also add up

in loan those are given an normally 18% to 20%

when

They will become of 20% to 25% those will be

more expensive then that of any other bank which

has expenses less than the Habib Bank does.

So now-a-days H.B.L. has been passing through the downsizing process president H.B.L. Mr.. Shasta Tarn has made several refers and it is one of more significant reform.

58


INCENTIVES

1)Three months basic pay for each completed

years of service.

2)An account equivalent to 10 years normal post

retirement medical facility will be paid in

lump sum to retiring employees.

3)Benevolent fund grant equipment to 10 years

will also be paid in lm sum in advance at the

time of settlement dues as a final payment.

4)The residential facilities for six (6) months

after retirement and sale of can if already

provided, furniture shall be allowed as a

special case to all those executives, who

accepts this scheme.

59


BALANCE SHEET as At 31st December, 1998

1998 1998

(U.S $000) (Rs.000) ASSETS Cash 328,672 14,478,010 Balance with other Banks 372,820 16,422,727 Money at call and short notice 75,566 3,328,669 Investment net of provision 1,262,669 55,620,567 Loans and advances (Less loan loss provision) 2,712,554 119,488,013 Operating fixed assets 122,282 5,386,508 Capital work in progress civil works 8,022 353,373 Other assets 920,935 40,567,215 ------------ ---------------- 5,803,520 255,645,082

LIABILITIES

Deposits and other accounts 4,800,264 211,451,635 Borrowing from other Banks 431,816 19,021,509 Bills payable 100,334 4,419,732 Other liabilities 284,393 12,527,502 -------------- --------------- 5,616,807 247,420,378 --------------- --------------- Net Assets 186,713 8,224,704 --------------- ---------------

60


Cash Flow Statement For The Year Ended December 31, 1998 1998 1998 (U.S $000) (Rs.000)CASH FLOW FROM OPERATING ACTIVITIES

Loss before taxation (71,150) (3,134,140)Add: Dividend income ( 2,273) ( 100,134)Profit on sale of fixed assetsProfit on sale of shares of Habib Creditand ExchangeBank Limited (currently Bank Alfalah Ltd) (27,650) (1,218,000) ----------- -------------- (101,462) (4,469,416)

Adjust for non-cash itemsDepreciation 4,191 184,627Provision for diminution in value of investments 306 13,480Provision against non-performing loansand advances 8,289 365,131Exchange gain on translation of assets and liabilities of foreign branches 23,168 1,020,549Provision for gratuity 9,848 433,800Amortisation of deferred cost 6,581 289,909 ------------ -------------- 52,383 2,307,496 ------------ -------------- (49,079) (2,161,920)

(Increase)/decrease in operating assetsGovernment securities 22,517 991,897Loans and advances (43,067) (1,897,090)Other assets (excluding taxation, voluntarygolden handshake scheme cost and amountpaid on behalf of Funds) (77,930) (3,432,816) ------------ -------------- (98,480) (4,338,009)

61


Increase /(decrease) in operating liabilities

Deposits and other accounts 134,350 5,918,076Bills payable 11,991 528,244Other liabilities 51,715 2,278,036 ---------- ------------ 198,056 8,724,356 ---------- ------------ 50,497 2,224,427

Cash inflow/(outflow) before tax and other adjustments

Payment to employees on account of voluntary golden handshake scheme cost (164,534) (7,247,705)Payment of retirement benefits on behalf offunds (63,308) (2,788,743)Taxes paid (40,192) (1,770,415) ------------ --------------Net cash outflow from operating activities (217,537) (9,582,4360) ------------ --------------

62


CASH FLOW FROM INVESTING ACTIVITIES

Investments (excluding Government Securities ) 21,443 944,575Sale proceeds on disposal of subsidiary 9,535 420,000Dividend income 2,273 100,134Fixed capital expenditure (11,084) (488,250)Sale proceeds of fixed assets 804 35,385 ----------- -------------Net cash inflow from investing activities 22,971 1,011,844 ----------- -------------

63


CASH FLOW FROM FINANCING ACTIVITIES

Borrowing from other banks, agents etc. 77,512 3,414,391 ----------- -------------

(Decrease)/increase in cash and cash equivalents for the year (117,054) (5,156,201)

Cash and cash equivalents at the beginning of the year 894,112 39,385,607 ------------ ------------Cash and cash equivalents at the end of theyear 777,058 34,229,406 ------------ -------------Cash and cash equivalents at the end of the year Cash 328,672 14,478,010Balance with other banks 372,820 16,422,727Money at call and short notice 75,566 3,328,699 ------------ -------------

777,058 34,229,406 ------------ -------------

64


FIVE YEAR PROGRESS1994 1995 1996 1997 1998

Paid-up-capital 2,478 2,478 2,478 2,478 2,478

Reserve funds 4,308 4,508 4,844 4,862 5,835

Total Assets 288,919 306,851 336,573 328,830 320,634

Total Deposits 166,834 178,647 194,661 213,595 211,383

Advances 102,811 105,502 119,256 121,909 119,758

Investment 57,024 64,874 63,148 60,929 55,445

Total Income 18,752 19,582 22,873 27,714 25,156

Total Expenses 17,986 18,916 22,164 31,121 28,282

65


INTERPRETATION

1) Paid –up- capital remained same during the last four year no minor

change has been observes.

2) Reserves has remained same in 1996 & 1997 but these are increased

as compared to 1995 & 1996 the purpose may be was to retain more

funds in hand for the planning & development of the bank.

3) In total assets smooth change can be observed the reason may be the

increase of clients of banks because in only 1997 3 million clients

bank with H.B.L. within the country & overseas branches.

4) Total Deposit of the bank has increased in each previous year the

main reason of this increase is Bank’s foreign currency deposits in

Pakistan have increased.

5) Advances increased through all four years because banl has continued

its policy of supporting the priorities established by Govt. and

rendering services to all sectors of the economy with specific

emphasis.

6) THE investment slightly declaimed due to increased diversion of

bank’s resources for financing the requirement of priority sectors of

the economy.

7) Total Income & Total expenditure remained slightly unfavorable due

to increasingly competitive environment and structural problems of

public sector Financial institution continued to put sever strain on the

bank’s operation.

66


STATUS OFH.B.L. IN BANKING SECTOR OF

PAKISTAN

Total Bank H.B.L. Acquiring Acquiring

Total Schedule 8718 1773=Domestic Branches

Total Assets 1540.69 362.33 (Billion) (Billion)

Advances 583.68 131.805 (Billion) (Billion)

Deposits 963.73 213.491 (Billion) (Billion)

Note:

On the bases of this Analysis H.B.L. is rated among the top 7 banks

in

Financial set up of Pakistan.

67


SWOT ANALYSIS

STRENGTH

H.B.L. has very effective Network of branches all over the

country. Every 10th Pakistani is A/C holder of H.B.L. has made huge

investment in almost all the important economic sectors of Pakistan.

H.B.L. not only has made investment in industry but also in small scale

industry as well. H.B.L. has efficient & less bureaucratic set up H.B.L.

has introduced monthly income scheme that provides almost highest

interest rate .A.T.M. Was introduced in Pak. By H. B. L. master card

facilities is also available to the clients.

WEAKNESS

No consumer banking has offered by the H.B.L. to its

clients like phone banking evening banking etc.

- Bed Debt rate is very high no special effort has been made to recover

the bed amounts.

- No marketing set up or structure is there. Most of people do not know

how they have to promote their activities.

68


OPPORTUNITIES

H.B.L. is oldest bank in the country people do rely on this

bank with some additional efforts bank can attract high deposit from

Pakistan and overseas.

Instead of emphasizing on big & long term projects bank should

concentrate on small scale investments heaving small maturity period.

Now-a-days H.B.L. has been investing almost 18% of its total

investment on cotton business, along with investment in cotton it should

invest in other cash crops, i.e. Rice, Sugar Cane, Tobacco, Wheat etc and

there related agro based industry.

THREATS

First threat that bank has to face is the Privatization, down

sizing & restructuring these changes could make drastic effects as well.

New incoming local & specialy foreign banks those are main

cause of stiff competition in the market

DFI’s are going very well in financial set up of Pakistan. So,

these are also effecting on the operations of bank. Along with other

threats the threat of corruption has vital importance.

69


CONCLUSION

Habib Bank limited was rated among first 500 banks of the world but

now it is in among 1000 banks in the world, H.B.L. is not progressing

due to political influence, in efficient management & corruption. If these

draw backs have removed then bank will not only join its previous

position rather we hope it will be rated among world top ten banks.

70

Habib Bank Ltd

Documents

Transcript of Habib Bank Ltd