S Qaim HBL Final Report

7/30/2019 S Qaim HBL Final Report

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PREFACE

After studying so much about management, accounting and banking

theoretically, one always develops a desire to work in a bank. After

completion of my course-work , I had a chance to work as an internee at

Habib Bank, Main Branch Punjabi Bazaar Kurram Agency Parachinar.

Banking is both a sacred and sophisticated profession. In Pakistan Habib

Bank has always been in the forefront of this profession.

During my stay at Habib Bank I tried my best to acquaint myself with the

operations of the bank and as a result learned a lot. What I have learned

during my stay at the bank is being presented here for the reader.

Banking industry has always played a vital role in the success of

economies. The practice is carried out since primitive ages. Multinational

banks are now dealing in money and are laying the foundations for

countries to stand on their own feet. The internship proved to be extremely

helpful in learning about the functions and operations of a bank and how

different kinds of procedures at bank are carried out. Although eight weeks

internship is not enough time to know delicately about every aspect, but

somehow it had the initial touch of being in a practical world.

I owe very much too so many people whose help and support at different

stages of my work enabled me to write this report. First of all I would like

to thank Mr. Muhammad Habib whose help made it possible for me to

have an internship in HBL Main Branch Punjabi Bazaar Kurram Agency,

Parachinar. I am also grateful to my supervisor Mr. Mussarat Hussain who

always taught and corrected me in very loving manner whenever I needed

him.

SAYED QAIM

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ACKNOWLEDGEMENTS

Most humbly I express my thanks to the supreme

Ruler, the ALLAH Almighty, the most Benevolent, ever

Merciful, Whose divine helped me to complete my

Internship and this report Successfully.

I am also thankful to the staff of HBL Main Branch

Punjabi Bazaar Parachinar Kurram Agency, for their co-

operation during the collection of required data.

In the end I am more than grateful to my parents

whose prayers, moral and financial support is always

with me as guiding lights in the struggling ways of my

life.

SAYED QAIM

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LIST OF CONTENTS

PREFACE...................................................................................i

Acknowledgements....................................................................ii

list of contents...........................................................................iii

LIST OF ACRONYMS...........................................................vi

EXECUTIVE SUMMARY......................................................vii

CHAPTER 1..............................................................................................................1

Introduction................................................................................1

1.1 BACKGROUND OF STUDY..........................................................................1

1.2 PURPOSE OF THE STUDY............................................................................1

1.3 SCOPE OF STUDY..........................................................................................2

1.4 RESEARCH METHODOLOGY......................................................................2

1.5 LIMITATIONS.................................................................................................3

1.6 SCHEMEOFTHESTUDY...........................................................................................3

CHAPTER-2 ................................................................................................................5

Evaluation of Banking...............................................................5

2.1 FORMATION OF BANKING.........................................................................52.2 BANKING IN PAKISTAN..............................................................................7

2.3 HISTORYOF HABIB BANKLIMITED..........................................................................8

TENTH PHASE/PRESENT.....................................................10

2.4 ROLE OF HABIB BANK IN PUBLIC SECTOR DEVELOPMENT...........10

2.5 ROLE OF HABIB BANK LIMITED IN PRIVATE SECTORDEVELOPMENT.................................................................................................11

2.6 FUNCTIONS OF HABIB BANK LIMITED.................................................12

2.7 DISCOUNTING BILL OF EXCHANGE......................................................14

2.8 AGENCY SERVICES TO CUSTOMER.......................................................14

CHAPTER-3...............................................................................................................17

OBJECTIVES AND POLICIES..............................................17

A. MISSION..............................................................................................................17

B. OBJECTIVES...........................................................................................................17

3.1 OBJECTIVES OF HABIB BANK LIMITED................................................17

3.2 POLICIES OF HABIB BANK LIMITED......................................................18

3.3 VARIOUS SCHEMESAND PRODUCTSOF HABIB BANKLIMITED ..................................21

CHAPTER 4............................................................................................................26

ORGANIZATIONAL STRUCTURE......................................26

4.1 FORMAL ORGANIZATIONS......................................................................26

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Sohail Malik.............................................................................29

Zafar Aziz Osmani...................................................................29

Jamil Iqbal................................................................................29

Sima Kamil..............................................................................29

Nauman K. Dar........................................................................29

Abid Sattar...............................................................................29

Mudassir H. Khan....................................................................29

Faizan Mitha............................................................................29

Salim Amlani...........................................................................29

Aslam.......................................................................................29

Tulu Islam................................................................................29

Mirza Salim Baig.....................................................................29

Kashif Shah..............................................................................294.2 ORGANIZATIONAL CHANGES IN HABIB BANK..................................30

CHAPTER 5............................................................................................................34

FUNCTIONS OF HABIB BANK LIMITED..........................34

5.1 FUNCTIONS OF CENTRAL OFFICE..........................................................34

5.2 DOMESTIC OPERATIONS..........................................................................36

CHAPTER -6 .............................................................................................................39

GENERAL BANKING AND departmentation........................39

6.1 DEPOSIT DEPARTMENT.........................................................................................39

6.2 CLEARING DEPARTMENT.........................................................................43

6.3 INLAND REMITTANCE DEPARTMENT...................................................45

6.4 BILLS DEPARTMENT..................................................................................47

6.5 ADVANCES DEPARTMENT.......................................................................48

6.6 CASH DEPARTMENT..................................................................................50

6.7 CD DEPARTMENT.......................................................................................51

CHAPTER-7...............................................................................................................52

ANALYSIS OF HABIB BANK LIMITED.............................52

7.1 SWOTANALYSISOF HABIB BANKLIMITED ..............................................................52

7.2 ANALYSIS

OF

KEY

AREAS

OF

HABIB

BANK

LIMITED

...............................................567.3 ANALYSIS OF ORGANIZATIONAL STRUCTURE..................................57

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7.4 BRANCH LEVEL ENVIRONMENTOF HABIB BANKLTD...............................................59

7.5 PROCEDURAL ANALYSIS.........................................................................60

CHAPTER-8...............................................................................................................62

FINANCIAL ANALYSIS ......................................................628.1 INDEX ANALYSIS OF HBL............................................................................63

8.2 COMMONSIZEANALYSIS.......................................................................................63

8.3 RATIO ANALYSIS........................................................................................64

8.4 HABIB BANKLTD. BALANCE SHEET FORTHE YEARENDEDDEC, 2009, 2010...........65

8.5 HABIB BANKLTD. INCOME STATEMENT FORTHE YEARENDED DEC, 2009, 2010.....65

8.6 HABIB BANK LTD. BALANCE SHEET, INDEX ANALYSIS, FOR THE YEAR ENDED DEC,2009- 2010............................................................................................................66

8.7 HABIB BANK LTD. INCOME STATEMENT, INDEX ANALYSIS, FORTHE YEARENDED DEC,2009, 2010.............................................................................................................67

8.8 HABIB BANK LTD. BALANCE SHEET, COMMON SIZE ANALYSIS, FORTHE YEAR ENDED

DEC, 2009-2010.....................................................................................................678.9HABIB BANK LTD. INCOME STATEMENT, COMMON SIZE, FOR THE YEAR ENDEDDEC, 2009-2010.....................................................................................................68

8.10 FINANCIAL RATIO..............................................................................................70

8.11 LIQUIDITY RATIOS.............................................................................................70

8.11.1 CURRENT RATIO...............................................................................70

8.12 LEVERAGE RATIOS.............................................................................................70

8.12.1 DEBT-TO-EQUITY..............................................................................71

8.12.2 DEBT-TO-TOTAL-ASSETS..................................................................71

8.13 PROFITABILITY RATIOS.......................................................................................72

8.13.1 NET PROFIT MARGIN........................................................................72

8.13.2 RETURNON EQUITY...........................................................................73

CHAPTER 9............................................................................................................74

conclusion and RECOMMENDATIONS ...............................74

9.1 CONCLUSION...............................................................................................74

9.2 RECOMMENDATIONS ............................................................................................74

References ...............................................................................78

Bibliography ...........................................................................79

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LIST OF ACRONYMS

A/C Account

ATM Automated Teller Machine

DD Demand Draft

DFIs Developmental Financial Institutes

FCY Foreign Currency

FTS Funds Transfer System

HBL Habib Bank Limited

IBTS Inter Branch Transaction services

LCY Local Currency

MDI Management Development Institutes

MT Mail Transfer

RF Running Finance

SSC Special Savings Certificate

SBP State Bank of Pakistan

SVP Senior Vice President

SME Small & Medium Enterprise

TT Telephonic Transfer

US $ United States Dollar

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EXECUTIVE SUMMARY

Habib Bank is the largest and oldest bank among Pakistani Banks.Founded in 1941 it emerged as a Muslim Bank in undivided India. In

1947, when Pakistan came into being Habib Bank shifted its operations

from India to Pakistan. Since then it is carrying on its operations with more

than 1459 local and 52 foreign branches.

The purpose of this report is to evaluate the performance of Habib Bank

Limited (HBL), Main Branch Punjabi Bazaar Kurram Agency Parachinar.

The internship experience in the form of an internship report also carries

an attempt to explain domestic as well as international banking operations of

Habib Bank.

The report aims at appraising the working of Habib Bank Limited, its

functions and operation and also attempts to assess its performance.

Certain recommendations are presented for the potential areas of

improvement. An implementation plan of the recommended steps is given

at the end of the report.

Habib Bank Limited is the oldest & the first bank in Pakistan. Its name is

generally considered for quality and reputation. It offers a broad range of

products to target different market segments.

Main problems identified during the course of internship are as following

a) Absence of proper information technology tools

b) Lack of efficiency of employees.

c) Presentation styles of bank especially at retail level are not good.

d) Management style is centralized.

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The recommendations are as follow:

a) Establishment of Data bank at Zonal office, so that information can

be obtained in time.

b) Proper designing of the jobs should be performed similarly clear-

cut division of work to increase efficiency.

c) Special attention should be given to exterior/interior layouts,

cleanliness and office furniture.

d) Decentralization of authority at different level to fasten the

decision making process.

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Chapter 1 Introduction of the Report

CHAPTER 1

INTRODUCTION

1.1 BACKGROUND OF STUDY

esides the bookish knowledge, every student especially a

student of management must have an understanding that how

theory is practically implemented. Hailey institute of

management studies university of Peshawar requires every student of

master of public administration to undergo an internship Program of Eight

Weeks in a recognized organization. The internship is to serve the purpose

of acquainting students with the practice of knowledge of the discipline of

business administration.

BFor this reason I carried out my internship at Habib Bank Limited,

Main Branch Punjabi Bazaar Kurram Agency Parachinar. I prepared this

report on the basis of knowledge, which I previously had, and especially

from working in HBL during my internship. Habib Bank Limited is the

premier bank of the country, established in 1941. Its registered head office

is in Karachi. Habib Bank played a memorable role in credit handling at

the time of independence.

Habib Bank was nationalized in 1974, but now the Government has

privatized the bank again.

1.2 PURPOSE OF THE STUDY

The main purpose of the study is to increase my knowledge and

skill in preparation of report and collection of relevant data and

information about Habib Bank Limited to compile internship report more

completely, precisely and more effectively.

Internship Report on HBL 1


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Other purposes are listed below:

To observe, analyze and interpret the relevant data completely and

in a meaningful manner.

To judge my abilities and skill.

To gain experience.

To apply my theoretical knowledge.

To work practically in an organization.

To improve my communication skills.

1.3 SCOPE OF STUDY

Habib Bank Limited being an established busy and big

organization it was difficult to cover all the departments in such a short

period of time. Being a HR student, I chose to work in HR related

departments, including record keeping,asistant record, accounts/deposits,

account opening, Remittances, and to some extent CD Department.

Various other functional areas of Habib Bank Limited are also

covered in this report.

1.4 RESEARCH METHODOLOGY

For the completion of this report, I used both primary and

secondary sources. Formally developed Questionnaire, interviews and

discussion with bank personnel and my co-internees helped me greatly

while preparing the report.

i. Primary Data

Personal observation

Interviews

Questionnaire

Discussion with my co-internees.

ii. Secondary Data

Annual reports



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Magazines

Manuals

Journals

Various HBL publications

1.5 LIMITATIONS

During the internship, I had faced certain limitations and problems,

first being the time duration; only two months are not sufficient to

understand the functions of all the departments of the bank. Another

problem was scarcity of written material and the element of secrecy, due to

which; I could not get access to all areas. Lastly the busyness of bank

personnel they used to be so busy in their official work that they could not

had time for us to make us understand on certain phenomenon. Although

they were very helpful but still I faced great hardship in gathering

information and understanding of procedures. For this purpose I studied

few previous reports on HBL to complete my report.

1.6 SCHEME OF THE STUDY

The scheme of the report is as follows:

Section I

In this section background of the study, purpose of the study, scope

of the study, methodology performed, limitations and scheme of

the report are given.

Section II

In this section there are five chapters that contain detailed material

regarding the Evaluation of Banking, Introduction and History of

Habib Bank Limited, Role of HBL in Public and Private Sectors,

Functions of HBL, Objectives and Policies, Organizational

Structure some features of the branch in which I made my

internship and Departmentation are discussed.



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Section III

This section of the chapter consists of two chapters, first one is

about the Critical Analysis of Key Areas of HBL and SWOTanalysis, second chapter of the section is all about financial

analysis of HBL.

Section IV

It contains few recommendations and conclusion for the betterment

and improvement of HBL.



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Chapter-2 Evaluation of Banking

CHAPTER-2

EVALUATION OF BANKING

2.1 FORMATION OF BANKING

The history of banking can be traced back to the early days of

recorded history when goldsmiths used to store the valuables of people in

their safe custody. People use to store their valuables because of the

danger of theft of money being transported or stored.

In the 17th century, English goldsmiths provided the model for

contemporary banking. Gold was stored with these artisans for

safekeeping, and was expected to be returned to the owners on demand.

The owners of these valuables became the first depositors of the banking

history.1

i. Issuance of NotesThe goldsmiths soon discovered that the amount of gold actually

removed by owners was only a fraction of the total stored. Thus,

they could temporarily lend out some of this gold to others,

obtaining a promissory note for principal and interest. In time,

paper certificates redeemable in gold coin were circulated instead

of gold. Consequently, the total value of these bank notes in

circulation exceeded the value of the gold that was exchangeable

for the notes.

ii. Fractional Reserve Banking

The second stage in banking history was the birth of the concept of

fractional reserve banking through which goldsmiths were

transformed from mere custodians of valuables into bankers.



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According to this system the bankers were allowed to keep only a

fraction of the valuables actually deposited with them and the rest

could be lend out

This system continued to exist because it was to the advantage of

both the goldsmiths and public. The public was convinced that the

fractional reserve system is to the mutual benefit of both. The

banker provided safety, convenience, ease of transfer, and

bookkeeping services at a little or no charge to the public.

iii. Money Lenders

Third stage in the development of modern banking was that the

banker was allowed to use the public deposits as reserves against

lending activity. As is the case in most communities of interest, a

way to achieve their mutual advantage was found. Any moral or

ethical implications of holding less than 100% reserve in order to

increase profits have been rationalized.

Two characteristics of this fractional-reserve banking remain the

basis for present-day operations. First, the banking systems

monetary liabilities exceed its reserves. This feature was

responsible in part for Western industrialization, and it still remains

important for economic expansion, though a risk of creating too

much money is a rise in inflation. Second, liabilities of the banks

(deposits and borrowed money) are more liquid that is, more

readily convertible to cashthan are the assets (loans and

investments) included on the banks balance sheets. This

characteristic enables consumers, businesses, and governments to

finance activities that otherwise would be deferred or cancelled; at

the same time, it opens banks to the risk of a liquidity crisis. When

depositors rush to request for payment, the inability of a bank to

respond because it lacks sufficient liquidity means that it must

either renew on its promises to pay or pay until it fails.



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2.2 BANKING IN PAKISTAN

At the time of independence, the areas, which now constitute

Pakistan, were producing only food grains and agricultural raw material

for Indo-Pakistan subcontinent. There were practically no industries, and

whatever raw material was produced was being exported from Pakistan.

However, commercial banking facilities were provided fairly well here.

There were 487 offices of scheduled banks in the territories now

constituting Pakistan.

As a new country without resources it was very difficult for

Pakistan to run its own banking system immediately. Therefore, in

accordance with the provision of Indian Independence Act of 1947, an

Expert Committee was appointed to study the issue. The committee

recommended that the Reserve Bank of India should continue to function

in Pakistan until 30th September 1948, so that the problems of time and

demand liability, coinage, currencies, exchange etc are settled between

India and Pakistan. It was also stipulated that Pakistan would take over the

management of public debt and exchange control from Reserve Bank of

India on 1st April 1948, and that Indian Notes would continue to be legal

tender in Pakistan till 30th September, 1948 following the announcement of

Independence Plan in June 1947, the Hindus residing in the territories now

comprising Pakistan started transferring their assets to India. Moreover,

the banks including those having their registered offices in Pakistan

transferred them to India in order to bring a collapse of the new State. By30th June 1948, the number of offices of scheduled banks in Pakistan

declined from 487 to only 195.

Consequently the governor-general of Pakistan and the Father of

the Nation, Quaid-i-Azam Mohammad Ali Jinnah, inaugurated the State

Bank of Pakistan on July 1, 1948, after the State Bank of Pakistan Order

was promulgated on May 12, 1948. Thus a landmark was made in the

history of banking when the State Bank of Pakistan assumed full control ofbanking and currency in Pakistan.



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As the Central Bank of the country, the State Bank addressed itself

with the equally urgent task of creating a national banking system. In

order to attain this goal it provided every help and encouragement to Habib

Bank to expand its network of branches, and also recommended to

Government the establishment of a new bank which could serve as an

agent of the State Bank. As a result, The National Bank of Pakistan came

into being in 1949 and by 1952 it became strong enough to take over the

agency function from the Imperial Bank of India.

In order to develop sound banking and weeding out weak

institutions, the Banking Companies (Control) Act was promulgated in

1949, empowering the State Bank to control the operations of Banking

Companies in Pakistan, including preparation of the required trained man-

power. Further, the State Bank restricted the opening of new branches by

foreign banks in port towns or in big cities from where trade was being

carried out with foreign countries, where Pakistani banks were allowed to

open as many branches as possible within the country.

2.3 HISTORY OF HABIB BANK LIMITED

Habib Bank is a commercial bank according to the definition given

by Professor Dr. Harts a bank can be defined as A banker is one who, in

the ordinary course of his business, receives money which he repays by

honoring Cheques of persons from whom or on whose account he received

it.

Four Habib brothers, Mr. Ahmad Habib, Dawood Habib,

Muhammad Ali Habib and Ghulam Ali Habib formed Habib Bank.

In 1941 the bank had only Rs.1.03 core by way of advance and

invested Rs.12 lacs in government securities. But with the passage of time

and by the efforts of Habib brothers Habib Bank Limited grew in size and

its deposits increased to 2.40 crore by the end of 1942.

Due to certain difference between the Governments of India and

Pakistan, when India withheld the transfer of funds in 1945, Habib Bank



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readily came forward and subscribed heavily to the Government of

Pakistan, to overcome the crisis. The loan to the Government was made at

a very nominal rate of interest.

The history of Habib Bank can be divided into different phases.

FIRST PHASE

The first phase in the history of Habib Bank Limited comprises

seven years from 1941 to 1947 it was the most crucial time with a

humble beginning, the bank mastered a formidable challenge and

overcame depredate prejudices against business talents of the

Muslims of South Asia.

SECOND PHASE

This phase in the history of Habib Bank was a new beginning when

the bank shifted its head quarters in Bombay to Karachi according

to the wishes of founder of the nation in order to meet new

responsibilities and to face great challenges.

THIRD PHASE

This phase in the history of the Bank is characterized by setting

certain standards of services such as increasing of facilities,

extending banking hours and improving the physical appearance of

the branches. These steps popularized banking among people from

all walks of life.

FOURTH PHASE

This phase marked by the tremendous achievement of the

construction of banks first head office building at Habib square,

Karachi along with continued solid business and profitability.

FIFTH PHASE

This phase witnessed the consolidation and the beginning of

mechanization and modernization of branches.



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SIXTH PHASE

This was the year of silver jubilee celebrations. It has a tremendous

impact on the common man that the bank emerged throughout

Pakistan and wherever its branches operated abroad, with a new

image of a Best example of better service.

SEVENTH PHASE

On the occasion of its 30th anniversary marked the shifting of head

office from Habib Square to Habib Bank Plaza.

EIGHTH PHASE

This phase was generally characterized by heralded nationalization

of Pakistani banks on 1st January 1974. The whole concept of

commercial banking in Pakistan was changed to offer all the

necessary help to small industrialists, traders and farmers.

NINTH PHASE

This phase begins with the 50th year of its existence totaled Golden

Jubilee year, it is the largest Pakistani bank operating round the

globe with a great futuristic outlook and planning recognized and

acclaimed both nationally and internationally at highest levels.

TENTH PHASE/PRESENT

Currently the bank has been privatized by the government and

Agha Khan has taken most of the share. Now Habib Bank has more

than 1400 branches and operating in more than 36 countriesinternationally.

2.4 ROLE OF HABIB BANK IN PUBLIC SECTOR

DEVELOPMENT

Habib Bank is playing very important role in the public sector.

Immediately after partition, the first major association of Habib Bank with

the government was the sponsoring of the Pakistan Finance Corporations



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Ltd., jointly with the central and provincial governments for financing of

cotton industry. Furthermore, the bank not only provided capital but also

provided technical advice for different projects. Some of which are large-

scale projects such as Warsak Dam Project, WAPDA, Thal Development

Authority, by providing finance and other facilities.

2.5 ROLE OF HABIB BANK LIMITED IN

PRIVATE SECTOR DEVELOPMENT

Habib Bank can also be considered as the first to open branches all

over Pakistan in order to provide finance and other facilities to the

business community.

During the half century of its existence, Habib Bank has proved to

be leader all the way in many respects, which have been introduced for the

first time in the history of commercial banking sector in Pakistan. It was

the first commercial bank to import the electronic machines to have made

it easier for the bank to cope with its expanding business and fast growing

clientele.

Another innovation introduced by Habib Bank is the evening

banking cash long after the crossing of normal banking hours.

The Habib Bank have also the first in making available such new

facilities as Gift Cheques, Rupee Travelers Cheques, Credit Card System,

Short term and Long term Schemes for small businessmen. For the benefit

of investors it publishes weekly stock exchange price averages. It also

issues monthly publication with a title of Business News Service. It also

brings out a House journey. We of Habib Bank with superb research

data and facilities at its command, Habib Bank is fully geared to monitor

the nations economy and play its due role in its brining prosperity to the

country.



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2.6 FUNCTIONS OF HABIB BANK LIMITED

There are two most important and basic functions of any

commercial bank. Being a commercial bank, Habib Bank also performs

these two functions which are listed below:

a. Accepting deposits

b. Making Loans and Advances.

a. Accepting Deposits

The primary function of Habib bank is to accept and receive

surplus money from the people, which they willingly deposit with

the bank. Like all other banks Habib bank also tries hard to attract

as much deposits of the people as it can. It is therefore it offers

different types of deposit schemes to its clients, which includes the

following types.

i. Current Deposits

Current deposits are those deposits on which bank offers no interest

but it allows the account holders to withdraw their money at any

time they want without giving any prior notice to the bank. This

type of account is often maintained by the business community,

which requires large sums of money very often for their business

transactions.

ii. Profit and Loss Sharing Account (Saving)

Saving deposits or PLS is those accounts on which bank offer a

lower rate of interest and on such deposits, the bank pays very low

interest to its customers. After the Islamization of the banking

system in the country it has been given the name of PLS saving

account. The bank undertakes to repay deposits on demand up to a

certain limit.



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iii. Fixed Deposits

Fixed deposits are those which can be withdrawn only after the

maturity of the account. In this type of deposits the bank allow highrate of interests depending on the time period of deposits. The

shorter the period of deposits, the less will be the interest and vice

versa.

Currently HBL has offered a new type of fix deposit called Habib

bank munafa scheme. Its summary is

Deposit from 10,000 to 1, 00,000 interests at the rate 7%

Deposit from 100,000 to 10, 00,000 interests at the rate 7.5%

b. Making Loans and Advances

The second most important function of HBL is to provide financing

facility to its clients. These loans and advances are usually made

against document of title to goods, marketable securities, and

personal securities of borrowers. Habib Bank charges different

interest rates on these loans and advances depending on the terms

and conditions settled with the customers. Following types of loans

and advances are made available to the clients.

i. Demand Finances

Demand finance are those finances, which are given to the

borrowers for specified period and can be called back without any

prior notice demand. It is a single transaction. It can be long term,

medium term and short term. Mark up is also charged. Here the

amount can be withdrawn once at the time of disbursement.

ii. Running Finances

Habib bank provides such loans against the security of current

assets like shares, bond, cash crops like cotton and other cashable

commodities. The borrowers account is opened with the bank with

the amount of the total loan provided or allowed to the borrower.

The borrower is allowed to withdraw any amount from his account



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within the specified limit and interest is charged only on the

amount actually withdrawn.

iii. Over Draft

Over draft is a kind of facility given to the account holders of the

bank. This type of facility is given usually to very loyal type of the

customer. This allows them to withdraw over and above the

amount held by them in their accounts. And interest is charged only

on the amount, which is withdrawn in excess of the amount

actually held in their account.

2.7 DISCOUNTING BILL OF EXCHANGE

Discounting bills of exchange can also be considered as a type of

form of loan because it allows the holder of the bill to get the bill encashed

before the maturity of the bill. A bill of exchange is usually issued by the

importer of goods to the exporters, which allows them to be paid in their

own currency after three months time. If the exporter needs the money

before the maturity of the Bill of Exchange he can get his money from the

bank by discounting the bill of exchange. The bank utilize their surplus

funds by discounting the bills of exchange at their market worth i.e. they

pay to the holders of the bill on amount equal to their face value after

deducting interest at the current rate for the period of the bill to mature.

2.8 AGENCY SERVICES TO CUSTOMER

Habib Bank also provides agency services to its customer. Some of

which are as follow:

i. Collection of Cheques

Habib bank pays and collects Cheques on behalf of their

customers, and for this it receives commission from their account

holders.



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ii. Collection of Dividends

The bank provides a very useful service by acting as an agent for

its account holders. It arranges for the collection of dividends onshares and securities held by its account holders. The customer is

simply to inform the issuer of the securities that the interest on the

securities is to be credited to his account in the bank. Bank charges

commission for the collection of the dividends on behalf of account

holders.

iii. Purchase and Sale of Securities

Habib bank if authorized by the customers also makes purchases

and sale of securities on the behalf of its account holders. Bank

charges commission for the purchase or sale made by it on behalf

of its customers.

iv. Transfer of Funds

HBL also transfer funds of the customers from one bank to another

bank. If the transfer is within one station. They dont charge anycommission and even if they charge, they charge on reduced rates.

v. Acts as an Agent

HBL also acts as an agent, correspondent or representative of his

customers at home and abroad.

General Utility Services

HBL also performs a number of generally utility services to hisclient which are as follows:

1. Foreign Exchange Business

HBL transacts foreign exchange business by discounting

foreign bills of exchange and thus provides facilities for

financing the foreign trade.



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2. Acts as a Referee

Habib bank provides a useful service to its customer by

acting as a referee for his credit worthiness. Theinformation is supplied in utmost secrecy and is based

financial standing of the client.

3. Acceptance of Bills of Exchange

HBL also undertake acceptance business connection with

bills of exchange and thus enable its customers to obtain the

desired credit.

4. Issue of Travelers Cheques

Habib Bank also issues travelers Cheques. These Cheques

can be issued to anyone whether an account holder or not

and charges no commission on issuance of such Cheques.

Habib bank also recently introduced Muhafiz Rupee

traveler Cheques with enhanced features.

5. Collection of Utility Bills

Electricity, telephone and other such bills can also be

deposited with HBL.

6. Locker

HBL also provides locker facility to its clients where

valuables of peoples can be kept.



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Chapter 3 Objectives and Policies

CHAPTER-3

OBJECTIVES AND POLICIES

A. MISSION

Mission is the organizations reason for existence. The mission

describes the organization values, aspirations, and reason for being. The

formal mission statement is a broadly stated definition of basic business

scope and operations that distinguishes the organization from others of

similar type. The contact of mission statement often focuses on the market

and customers and identifies desired fields of endeavor. The mission of

Habib Bank Limited can be obvious from its engagement in the business in

which it is engaged.

B. OBJECTIVES

Objectives are the ends towards which organizational and

individual activities are directed or it can be defined as the specific short-

term target for which measurable results can be obtained. The goal of

every manager is to create a surplus and a clear and verifiable objective

facilitates the measurement of the effectiveness and efficiency of

managerial actions.

Objective state the end desired, and major objectives are supported

by sub objectives. Thus, objectives form Hierarchy as well as network.

3.1 OBJECTIVES OF HABIB BANK LIMITED

Following are some of the main objectives of Habib Bank Limited.

i. To earn profit for the bank itself and for its shareholders.

ii. To promote and boost business sector inside the country.

iii. To provide employment opportunities to people.



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iv. To help in development and industrialization of the country.

v. To provide loan and advances to help in self-employment

schemes.

3.2 POLICIES OF HABIB BANK LIMITED

Policies are general guidelines for decision making throughout the

organization. Policies serve as a link between the formulation of strategy

and its implementation. Now all policies are explicit statements they are

often implied from the actions of managers.

Policies define the area, which in a decision is to be made, and

ensures that the decision will be consistent with, and contribute to an

objective. Policies help decide issues before they become problems; it

makes it unnecessary to analyze the same situation every time it comes up

and unify other plans. Thus policies provide opportunity to managers to

delegate authority and still maintain control over what their subordinates

do. Policies limit an area within which a decision is to be made and

assure that the decision will be consistent with and contribute to

objectives

Some of the policies of Habib Bank are described below.

i. Managerial Policies

Affairs of Habib Bank Limited are controlled through president

and members of Executive Committee who are normally Senior

Executive Vice President of the bank based at head office. Each

province has a provincial headquarter headed by Provincial Chief

and assisted by regional General Managers. Each provincial

headquarter controls branches in their area of their jurisdiction

through circle offices. Each circle office supervises various zones

headed by Zonal Chief comprising 25-40 branches in each zone.

ii. Requirement and Selection Policy

The bank advertises the vacancies available to be filled through

press under the Pakistan banking and finance services commission.



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The requirement for the selection depends upon the post to be

filled.

iii. Promotion PolicyPersons career is a highly personal and extremely important

element of life. Both productivity and morale are facilitated if these

personal decisions are based on objective assessments of present

and potential capability. Promotion is a term which covers a

change calls for greater responsibilities and usually involves higher

pay and better terms and conditions of service and therefore, a

higher status or rank. The purposes of promotion are:

To provide satisfaction to the employee who are working

hard

To improve training, skill and experience ability

To provide organization with a competent worker

To find out the most competent and suitable candidate

Promotion is based on personal performance of an individual, the

evaluation of overall performance comprises of the following

elements.

Educational qualification

Professional qualification

Service in grade

Operating performance

Experience in different disciplines

Posting faraway placed

iv. Training

The staff college curses receives junior most officers for further

training in banking, the courses lasting from six to nine weeks with

about twenty five candidates in each course. The college is



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residential one and provides a measure of the collegiate

atmosphere, which helps to impart a sense of camaraderie, which is

of great value. It is also of great interest to record that the staff

colleges receives trainees from abroad as well as helps to create

worthwhile reference to banking business.

The staff college courses are designed not to impart technical

instructions, but to develop qualities of judgment, decision,

leadership and management. The college is one of the most

important institution setup by the bank, students are likely to be

drawn those men who may expect to rise to the senior most

executive position the bank has to offer. It is the business of the

staff college to keep in touch with all that is going on in the world

of banking and finance and to raise its instructions as to keep pace

with the developments in Pakistan and with changes in the world

outside. The methods, procedures, routines and even outlook

change so much in banking and the staff college must be able to

turn out men trained with up-to-date knowledge and thoroughly

modern approach.

v. Marketing Policy

Marketing is a business function that identifies customer needs

and wants, determines which target market the organization can

best serve, designs appropriate product, services and programs to

serve these markets and call upon everyone in the organization to

think and serve customers. From a social viewpoint market linksa societys material requirements and its economic pattern of

response. Thus, marketing is a key factor in business success.

Habib bank also adopts certain marketing techniques to enhance

the image of the bank. Most of the marketing takes place through

various mobilization of deposit schemes and there is more

emphasis on offering efficient service to the clients in order to

better satisfy them, so that they recommend the bank to their

friends and relatives.



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vi. Operational Policy

The Operational policies of Habib Bank Limited deal with the

method of provision of better services to its customers. Through

the introduction of new schemes as means of satisfaction for their

customers. The operational policy of Habib Bank can be divided

into two sectors.

a. Domestic operations

b. International operations

a. Domestic Operations

Habib bank is quite successfully operating its domestic business.

Facilities at the door step across the length and breadth of the

country also in conformity with the governments socio-economic

objectives. The number of domestic branches totaled 1459.

b. International Operations

Habib banks overseas branches are continuously rendering

satisfactory services and are also contributing to the channeling

home remittances of Pakistanis working abroad. HBLs

international network comprises of 60 offices in 26 countries,

operating in USA, Europe, UK, Middle East, Asian Pacific Region

and Africa. It is also the largest banking in financial services

Provider in Pakistan.

In order to improve the operations, the bank has introduced various

schemes and services. Which are listed in the following.

3.3 VARIOUS SCHEMES AND PRODUCTS OF

HABIB BANK LIMITED

i. Tele-printer Service

Introduced in 1952, this system helped the bank to improve its

services



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ii. Rupee Travelers Cheque

It was introduced in 1957. Here the customers were provided the

facility of encashment of their travelers cheque through anybranch of the bank.

iii. Evening Banking Services

After launching evening banking service system in 1959 customers

were enabled to deposit their money at evening in specified

branches of the bank.

iv. Small Factory Owner Scheme

In 1959 the bank offered loans to small scale producers under the

small factory owner scheme in order to boost the economy of

Pakistan.

v. Foreign Teleprinter Service

It was introduced in 1961. The idea behind this scheme was to

provide quick and prompt banking services to customers in foreigncountries.

vi. Gift Cheque Schemes

It was launched in 1962. Under this scheme, the bank provided

customers with pre-printed cheque of various denominations which

could be used to sent gifts to their loved one on various occasions.

vii. School Banking This scheme was introduced in 1962 to provide banking services to

children in a number of schools throughout the country.

viii. Drive in Banking

Habib Bank Limited established Drive in branches in 1962 at

various major cities of the country where the customer could avail

banking services without getting down from their vehicles.



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ix. Mobile Banking

It was introduced in 1962. The feature of this scheme is to provide

banking services to the customers residing in the rural areas.

x. Night Safe Scheme

In 1962 the bank offered facility to their customers to deposit their

valuables at night in specified branches of the bank.

xi. Computer Accounts

In 1962 the bank introduced computer accounts through which

most of the accounts in head office were computerized.

xii. Computer Prize Bond

It was introduced in 1966. It is a scheme through which prize could

be declared for prize bond scheme.

xiii. Credit Card Scheme

It was introduced in 1966 through which customers could get

certain sum of money from specified branches. Many business

organizations accepted payments through valid credit cards.

xiv. Infant Saving Scheme

In 1968 the bank offered infants to open saving accounts operated

by their parents/ guardians.

xv. Courtesy Card

It was launched in 1968 through which the customer could be

introduced to other branches in the country.

xvi. Foreign Currency Accounts

It was introduced in 1973.

xvii. Deposit Growth Certificate

This scheme was introduced in 1975 with increase rate of interest



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xviii. Special Five Years Deposit Certificate

This scheme was introduced in 1975 where the major emphasis is

on increased rate of interest.

xix. Dollar Traveler Cheque

Introduced in 1976, the scheme was more helpful and safe for the

travelers than carrying foreign currency notes.

xx. Haj Accidental Death Scheme

Introduced in 1983, according to this insurance scheme, if a Haji

who has submitted his Haj application through Habib Bank

Limited died while he was away for performing Hajj, his family

was to be provided a certain sum of money.

xxi. Auto Cash Teller Machine

Auto cash machine were installed in 1988 at various branches

which allows customers to withdraw cash round the clock and on

all days of the week.

xxii. Transport Finance SchemeIn 1989 the bank in order to decrease unemployment in the country

introduced owner, driver taxi finance and scooter loans. According

to this scheme they were provided loans on soft terms.

xxiii. Gold Card System

In 1991 HBL introduced the scheme with the features of offering

card holders to get up to Rs.10,000 at a time.

xxiv. Muhafiz Rupee Traveler Cheque

It was introduced in 1998. A cheque available in denomination of

Rs.10,000, 25,000, 50,000 and 100,000, with the advantage of

100% free purchase and encashment.

Distinct Properties of Muhafiz

a. It can be issued from more than 700 branches all over

Pakistan.



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b. Muhafiz provide the facility of payment in all branches of

HBL

c. There is no commission and fee charge for purchase ofMuhafiz. Habib Bank keeps alive the tradition of Serve you

better charges nothing for the purchase and sale of Muhafiz.

xxv. Habib Bank Flexi Loan

HBL had introduced a unique loan system for the middle income-

serving people in various public sectors. It is basically meant for

those in service people who earn more than Rs. 5,000 per month.

This loan meets the petty requirements of the salaried class. Sincethe introduction of this scheme Rs. 6 billion is advanced

throughout the country. The maximum limit of this loan is

Rs.3,00,000.



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Chapter-4 Organizational Structure

CHAPTER 4

ORGANIZATIONAL STRUCTURE

4.1 FORMAL ORGANIZATIONS

For the smooth and successful operations of any organization, a

well-developed and properly coordinated structure is an extremely

important requirement. It provides the basic framework within which

functions and procedures are performed. This is not the end in itself, rather

a mean with which to achieve certain objectives. The organizational

structure of HBL is descried bellow:

At present, the bank operates through four provincial head quarters,

26 circle offices, 77 Zonal offices, and more than 1450 branches all over

Pakistan. The affairs of the bank are controlled through president and

members of executive committee who are normally senior vice president

of the bank based at Karachi Head Office (HOK). Each province has a

provincial head quarter headed by provincial chief and assisted by regional

general manager. Each provincial head quarter controls branches and their

area of jurisdictions through circle offices. Each circle office supervises

various zones headed by zonal chief comprising 25 40 branches in each

zone.



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Chart 1: ORGANIZATIONAL CHART

Table 1: Board of Directors

Name Designation

Sultan Ali Allana Chairrman

Zakir Mahmood President and CEO

Iain DonaldCheyne Director

Ahmad Jawad Director

Mushtaq Malik Director

Sajid Zahid Director

Source: Habib Bank Annual Report 2010

Internship Report on HBL

Chief ExecutiveOfficer

Corporate

Banking Group

RetailBanking Group

InternationalBanking Group

Asset RemedialManager

SEVP SEVP

SEVP SEVP SEVP SEVP

Credit PolicyAudit andFinance

27


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Chart-2: Organizational Hierarchy in Habib Bank Limited


President

Senior Executive

Vice President

Executive VicePresident

SeniorVice President

VicePresident

Assistant VicePresident

OfficerGrade-III

OfficerGrade-II

OfficerGrade-I

28


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Table 2: Management Committee

Name Designation Functional responsibilities

Zakir Mahmood President and CEO

Khaleeq Kayani S.E.V.P & group executive International and overseasbanking

Khayyam Mahmood S.E.V.P & group executive Information Technology

Sohail MalikS.E.V.P & group executive Risk Management

Zafar Aziz OsmaniS.E.V.P & group executive Human Resource and

organizational Development

Jamil Iqbal General Executive Chief compliance Officer

Jamil A. Khan General Executive Administration and servicesgroup

Afsheen Ahmad Company Secretary& head Law division

Sima KamilGroup Executive Corporate Banking

Nauman K. DarGroup Executive International Banking

Abid Sattar

Group Executive Retail And Consumer

Banking

Mudassir H. KhanGroup Executive Global Operations

Faizan MithaGeneral Executive Global Treasurer

Salim AmlaniGeneral Executive Audit, BRR&Investigation

AslamGeneral Executive Asset Remidial Managment

Tulu IslamGeneral Executive I.T. and System

Mirza Salim BaigGeneral Executive Communication Banking

Kashif ShahGeneral Executive Investment banking

Source: Habib Bank Annual Report 2010



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4.2 ORGANIZATIONAL CHANGES IN HABIB

BANK

In 1997, the Banks Nationalization Act amended with a view to

inculcates a commercially oriented culture. In the nationalized commercial

bank, two major changes brought about by amendment were the

introduction of an independent board of directors by federal Government,

with total representative from the private sector and of professional senior

management. This change was a break from the past and was carried out

recognize that the Government owned bank need to be run based on

commercial and market driven parameters, to improve the operations and

to prepare the bank for privatization in the shortest possible period of time.

In September 1997, the bank recognized its domestic and overseas

operation on functional line creating desecrate business groups, to focus

against the customer profile available to the bank. Through this process the

following business groups have been created;

i. Retail banking group

ii. Corporate banking group

iii. Asset remedial banking group

iv. International operation management group.

v. Finance and audit group.

i. Retail Banking Group

The creation of business group has allowed the bank to focus and

develop products within these business groups for its customers. In

the retail, banking group the bank successfully launched five

different products which are:

a. Muhafiz Rupee Traveler Cheque

b. Crore Rupee Saving Account

c. Crore Pati Deposit Certificate

d. P. M Small Business Loan Scheme

e. New Foreign Currency Accounts



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ii. Corporate Banking Group

The corporate and institutional banking group have been successful

in establishing significant relationship with some of the top ten

industrial groups and various multinationals, which includes Engro,

Alkaram, Siddique Sons, Gul Ahmad, Nestle, Level Brothers and

ICI.

iii. Asset Remedial Banking Group

As the bank was facing problems in addressing the recovery of

classified portfolio, an asset remedial management group was

created (ARM). The total classified portfolio has been consolidatedunder this group including these loans that were incorrectly

rescheduled or restructured in the past. This unit has been staffed

with some best executive within the bank and its primary goal is

speedy recovery and resolution of classified portfolio.

iv. International Operations Management Group

The overseas operations have been consolidated under international

operation group. During the year, local market in the larger

operations, e.g. UK, Oman, and U.A.E were reviewed and the

country specific strategies have been put in place, in order to build

these important franchises. In addition, emphasis has been placed

in improving the bank operation in important money centers, e.g.

New York, London, Hong Kong, Singapore, and Bahrain.

The finance and audit group is independents of business groups and

looks after the financial, regulatory and management reporting of

the bank. The audit process is being improved taking into

consideration the nature, sophistication, and level of risk within the

business groups.

Historically the risk management, which includes approval of

credits, was being carried out through an executive committee.

This approval process lacked the very basics of accountability andthis committee was therefore immediately disbanded and replaced



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by credit until process, which is widely used by international

banks. Credit initials are given to those experienced bankers, who

have adequate credit training and credit experience. Furthermore it

was essential that the centralized approval process was delegated to

ensure greater efficiency, responsibility and accountability at

various level of management. Within this aspect of mind, approvals

of credit were delegated down to heads of corporate centers,

regional chief executive and zonal chiefs.

In order to further straighten risk management procedures, and

separate credit policy group and industry specialist have been

introduced which now oversea and provide independent input and

expert knowledge to the credit process. Furthermore at the

corporate center level credit administration is being introduced.

v. Finance and Audit Group

The main functions of finance and audit groups are:

a. Develop and introduce financial controls and procedures on

a bank wide basis based on internally accepted accounting

and banking standards and practice.

b. Establish financial groups for all business groups in order to

ensure an acceptable return to shareholders.

c. In consultation with the business groups, develop and

monitor the banks annual and long-term business plan for

each business.

d. Provide the management and the board of directors on a

periodical basis, the banks business plan together with

various Analysis.

e. Develop and implement an independent audit structure with

focus on activities, which provide senior management

timely and proactive information, in order to protect the



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bank incurring losses of frauds, forgery, defalcations,

penalties, etc

f. To carry out planning of the bank and manage it tominimize incidence of taxation for the bank.

g. To assist the persistent in managing the regulatory affairs of

the bank in Pakistan overseas.

h. As corporate secretary, meet all legal requirements of the

bank under the company law ordinance 1984 and banking

companies ordinance 1962 and to assist the chairman and

the board of directors in preparation for the conferring of

meeting so the board and other statuary meetings in an

orderly.

Chart-3: Financial and Audit Group


Financial ControlDivision

AuditDivision

Pak.Reconciliation

Division

Investigation Division

CorporateDivision

RegulatoryUnits

PlanningUnits

BusinessFinance

Control

Business RiskReview

InternationalAudit

CorporateAudit

33


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Chapter 5 Functions of Habib Bank Limited

CHAPTER 5

FUNCTIONS OF HABIB BANK LIMITED

Offices can be divided into five levels according to the functions

performed by them.

5.1 FUNCTIONS OF CENTRAL OFFICE

Central offices perform the following functions:

a. Central office provides leadership and guidance to the

field force.

b. Implements the polices of State Bank and Pakistan Baking

Council.

c. It ensures co-ordination between central officer, Circle

Office Zones and branches.

d. It performs the function of planning side in management.

e. Makes sure the efficient and continued service to

customers.

f. Motivates the field force and other staff.

g. Try to build the image of the bank inside and out of country

at international level.

i. Functions of Provincial Head Quarter

Provincial head quarter performs the following functions.

a. Processing and monitoring of project financing by project

appraisal department.

b. Post sanctioning of finances approved by circle office.

c. Critical analysis of information received from the field and

comparative analysis of facts and figures.



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d. Approves finances according to the powers delegated to it.

e. Controlling and supervising of branches and working sure

its smooth functioning.

f. Supervision and implementation of the policies.

g. Keeping contacts with Government and notables of the

areas.

ii. Functions of Circle Office

The functions of the circle offices include:

a. Control and supervision of branches and field offices.

b. Sanctioning advances within its powers.

c. Scrutiny and comment on various periodical statements

received from the Zonal Chief.

d. Reporting and compiling of reports to Zonal head quarters

are well as to head offices.

iii. Functions of Zonal Offices

The functions performed by zonal offices are as follows.

a. Controls the operation of branches within their

jurisdiction.

b. Advances to the extent of delegated powers.

c. Consolidates the periodical reports regarding the branches

and other field offices and reports to Zonal Chiefs.

vi. Functions of the Branches

All the actual banking functions are performed by the branches of

the Bank, which includes the following.

a. To accept deposits.

b. Channelizes the deposits into productive channels through

the sanction of proper authority.



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c. It deals with public matters regarding the provision of

financial services to them.

d. And finally deals all General banking functions.

5.2 DOMESTIC OPERATIONS

Habib Banks Limited Comprises the following division through

which it conducts the domestic operations.

i. International Division

It controls and supervises the operations of various overseas

branches all over the world and also monitors the performance of

the subsidiaries of Habib Bank.

ii. Project Appraisal Division

This division is to look into the feasibility of various projects on

behalf of their clients.

iii. Financial Division

This division monitors the fiscal and financial polices of the Bank.

iv. Advances Division

It looks after various advance portfolios of the bank.

v. Personnel Division

This division takes care of matters related to Human Resource

Development.

vi. MIS Division

The main aim of MIS Division is the computerization of the daily

banking in various branches.

vii. Recovery Division

This division takes care of bad debts and takes essential steps torecover it.



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viii. Agriculture Finance Division

The basic function of this division is related to the matters

regarding the provision of financial support to Agriculture sector..

ix. Cash Investment Division

This division explores the ways and means for investment

opportunities.

x. Sports Division

Sports divisions encourage sports inside the country and contribute

the talent of its own players to National teams.

xi. Law Division

This division is mainly concerned with the legal aspects of Banks

operations its documents and other papers related to the bank.

xii. Customer Service Division

This division is responsible to introduce new schemes.

xiii. Maintenance Division:

Its responsible for the maintenance of the building owned by Habib

Bank Limited. This division comprises of technical staff and

engineers.

xiv. Auditing and Inspection Division

This division is charged with the responsibility of the auditinginspection of domestic and international branches.

xv. Haj and Zakat Cell

This division deals and supervises the policies of the government

relating to Haj and Zakat.



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xvi. Investigation Division

Investigation division supervises the mall practices within the bank

and also investigates any frauds and forgeries within the bank.

xvii. Publicity and Public Relation Division

The main aim of this division is the publicity of the bank and

replying contacts with the masses through print and electronic

media.

xviii. Printing and Stationary Division

Provides the branches with necessary paper and stationary for their

routine business.

xix. Training Division

Training division arranges and imparts the basic and specialized

training to the staff of Habib Bank Limited.

xx. Market and Business Division

The main aim of this division is to develop business and attract

depositors.

xxi. Micro Enterprises Division

This division deals with small enterprises and is responsible for

provision of advances to small and medium size enterprises for

their development and encouragement.

xxii. Organization and Method Division

It develops new methods and techniques for the improvement of

bank.

xxiii. Syndicated Loan Division

It deals with provision of advances and banking services to

specialized types of clients.



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Chapter-6 General Banking and Departmentation

CHAPTER -6

GENERAL BANKING AND

DEPARTMENTATION

General banking means the day-to-day business of bank, under the

supervision of Vice President, Zonal Head Office of the main branch.

General or day-to-day banking of HBL consists of various departments,

which are explained below.

1. Deposit Department

2. Clearing Department

3. Inland Remittances Department

4. Bills Department

5. Advances Department

6. Cash Department

7. CD Department.

6.1 DEPOSIT DEPARTMENT

The basic function of a bank is to accept the surplus of individuals,

public sector, and public institution and to honor Cheque drawn upon

them.

How to Open an Account

The applicant is provided with a copy of rules and an application

form along with the KYC to open an account. The applicant in a manner

prescribed and duly singed by the applicant fills this form. An existing

account holder of the bank must introduce the application. A copy of ID

card is attached with the specimen signature card. The application is

presented at the branch with the initial amount of deposit for credit of hisaccount. Minimum amount to open an account is Rs. 1000. The amount is



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entered in the passbook and is singed by the responsible officer of the

bank. The documents are sent for scrutiny to main office and ID card to

NADRA. After approval of the documents account opener fills another

form for chequebook. Printed chequebook is allotted to him within one

week. He can withdraw money using this chequebook. Online branches

also fill a separate form for credit card if the customer demands.

Classification of Deposits

The deposits can be classified under three main heads.

i. Current Account

ii. Saving Account

iii.Fixed Deposit

i. Current Account or Demand Deposits

Current account or demand deposit can be withdrawn by Cheque or

transferred to someone else by the depositor at any time without prior

notice to the bank. This account can be opened with a minimum ofRs.1000/. In such case the bank does not allow any interest on it, because

such deposits are meant for short period and can be withdrawn without any

prior notice. Current account best suits with businessmen. Current account

can be opened by or through.

a. Partnership

b. Limited Companies Account

c. Welfare Accountd. Individual Account

a. Partnership Account

The assets of partnership are held partners of the firm, or by one of

its member acting on behalf of all members as trustees for all of them. A

partner has an implied power by law to open an account on behalf of his

partnership firm, but not on his individual name. The bank only honors

that Cheque which confirms to the mandate given to it by all the partners.



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Procedure and Requirements for Opening Partnership Account

a. Names of all partners are taken with their specimen

signature.

b. Instructions for operation are obtained from each partner.

c. Signature of authorized partner is obtained.

d. A letter of partnership, signed by all partners is obtained.

e. In case all partners now authorize a partner who was not

authorized to operate the account. Thus the authority letter is

obtained.

b. Limited Companies Account

Before opening an account for a limited company the following

documents are obtained.

i. The true copy of the certificate of incorporation.

ii. True copy of the certificate of commencement of business

(only in case of public limited company).

iii. Three copies of the memorandum and article of Association.

iv. True copy of the resolution of the Board of Director regarding

conduct of the account.

Procedures and requirements for opening a Limited Company

Account

i. The certificate of incorporation and commencement certificate

of business should be called in original which are returned after

inspection.

ii. The specimen signature of the director named in the resolution

authorized should be obtained on specimen card.

iii. In case the company is taken-over by the Government fresh

instruction are obtained from the managing director appointed by

the government.



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c. Welfare Account

The Associations and welfare unions open such accounts.

Requirements for Opening Welfare Account

No registration certificate is needed but only a paper containing

registration of the Association is sufficient.

d. Individual Account

Any individual can open individual account. Following are some

requirements to be fulfilled by the individual in order to be able to open an

account with a bank.

Requirements for Opening an Individual account:

i. National ID Card

ii. Introducers reference

iii. Rs.1000/- as initial amount to be credited to his account.

Procedure is the same as explained earlier in this chapter.

ii. Saving Account

In saving account the basic purpose is to mobilize the saving trend

in the lives of people and to enable people to draw money within certain

limits.

In saving account all HBL the customers are not allowed to draw a

big amount at once without any notice. The customer is bound to follow

the rules and regulations of the bank. Saving account can be opened with a

minimum amount of 1000. Saving accounts can be opened in following

shapes.

Individual account

Joint account



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iii. Fixed Deposit Account

In case of fixed deposit account the time period of the account is in

accordance of the different fixed deposit schemes offered by the bank and

according to wishes of the customers. The customers cannot withdraw

money from his/her account in accordance and compliance of terms

decided by the bank and the customer.

Currently HBL is offering two types of fix deposit accounts. These

are called Habib bank munafa certificates. These are divided into two

types on the basis of income groups

1) Deposit of Rs.10, 000 to1, 00,000 @ 7% per anum

2) Deposit of Rs.1, 00,000 to10, 00,000 @ 7.5% per anum

6.2 CLEARING DEPARTMENT

Clearing

Every bank performs the function of paying and collecting. The

cheque drawn on other bank by the customers of the bank is collected by

the bank for or without charging fee is called clearing. The bank through

the clearinghouse (State Bank of Pakistan) performs the function of

clearing.

Clearinghouse

A clearinghouse is a place where the representative of all banks get

together to settle the payment and receipts of Cheques drawn on eachother.

Functions of Clearing Department in Branch

i. To accept transfer, transfer delivery and clearing Cheques from

the customers of the branch and to arrange for their collection

ii. To arrange the payment of Cheque drawn on the branch and

give Cheque for collection to any other branch of Habib Bank Ltd.or any other member or sub-member of local clearing house.



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iii. To collect amounts of Cheques drawn on members of local

clearing house sent for collection by Habib Bank Ltd. branches, not

represented at the local clearing house.

Types of Clearing

a. Outward clearing

b. Inward clearing

OUTWARD CLEARING

It includes those Cheques and other instruments which are sent by

the bank to other banks for payment on behalf of its own clients.

Cheques are sent to clearing house through local main branch.

Procedure for Outward Clearing

(i) Account number of payee/endorsee is written on

backside of the Cheques.

(ii) The investment and paying-in-slips are separated.

(iii) The instruments are sorted bank wise and branch

wise.

(iv) Schedules are prepared.

(v) Jottings of all the schedules are taken in the

clearinghouse statement. Amount of Cheques is written in

delivered and to pay columns.

(vi) After balancing the outward clearing, the pay-in-

slips are released to the C.D. Department.

(vii) After balancing a transfer debit voucher is prepared.

(viii) The instruments, schedules etc. are delivered to the

message from the main branch.

INWARD CLEARING

This includes the cheques drawn on the bank presented by other

banks for payments.

Procedure of inward clearing at the Drawer Branch



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(i) Numbers of instruments noted in the schedule are verified

immediately on receipt.

(ii) The amounts of all the instruments are jotted down and totaled. It

should be equal to the amount mentioned in the IBDA from the

local main branch.

(iii) The IBDA is responded crediting the account in the IBDA from the

main local branch.

(iv) The IBDA is responded crediting the account of the main branch.

(v) The amounts are released to the concerned department.

Types of Cheques Collected by Clearing Department

Transfer Cheques

These are the cheques, which are collected and paid by the same

branch of Habib Bank. For example Mr. A is a customer of Habib Bank,

Turi Bazar Branch and draws a Cheque in favor of Mr. B who is also the

customer of the same branch.

Transfer Delivery Cheques

The Cheques that are collected and paid by two different branches

of a bank situated in the same city. e.g. a person draws a Cheque on Habib

Bank Ltd. Punjabi Bazar Branch, Parachinar in favor of another person

who maintains an account in Turi Bazar Branch, Parachinar.

Clearing Cheque

When the payee/endorsee and the drawer of the Cheque maintain

account with different banks, the collecting bank can receive the amount of

cheque from the paying bank in any of the following manner.

a. The bank can maintain an account with paying banks.

b. The Cheques can be exchanged in clearing house through

their representatives.

6.3 INLAND REMITTANCE DEPARTMENT



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Inland remittance can be defined as the transfer of money payable

at certain place within the country. Inland remittances can be classified

into following.

(i) Within locality

(ii) Outside locality

i. WITHIN LOCALITY

When a branch situated in Parachinar is required to send draft to

other branches within the same city, the process is known as within the

locality.

ii. OUTSIDE LOCALITY

Out side locality means the transfer of money payable outside the

city. For example some Parachinar branch sends a draft to Kohat branch.

This can be done through following means.

(i) Telegraph transfers T.T.

(ii) Mail transfer MT.

(iii) Demand Draft DD.

i. Telegraphic Transfer (T.T.)

In T.T. the order to pay is sent by cable.

a. Government draft

b. Bank draft

a. Government Draft

It is concerned with the government business and only authorities

can issue such type of draft.



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person to whom it is addressed to pay on demand or at a fixed or future

determinable future time, a sum certain in money to the order of a certain

person or to bearer.

Bills of Exchange are of two types:

i. Inland Bills

ii. Foreign Bills

i. Inland Bill:

These are generally used inside Pakistan. Inland can be further

divided into two:

(a) Out ward bills collection (OBC)

(b) Inward bills collection (IBC)

a. Outward Bill:

Outward bills are sent to the banks outside the city.

b. Inward Bill:

Inward bills are those that other bank sent to any Habib Bank Ltd.

ii. Foreign Bills for Collection (FBC):

This type of bills are related to foreign drafts these are first sent to

foreign exchange branch which collects these instruments from the

concerned branches and banks are then valued in foreign currency.

6.5 ADVANCES DEPARTMENT

This department is mainly concerned in dealing with loans given to

people/customers on their request. These customers can get loans in a

specified manner. The loan can be of any domination and nature in

accordance to the request made by the customer.

TYPES OF ADVANCES (LOANS)

Advances can be classified into three types.



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(i) Overdraft

(ii) Cash credit

(iii) Demand loan

(i) OVERDRAFT

The over draft facility is given to the already existing worthwhile

proven loyal customers. This is actually a facility that allows the

account holder to draw over and above the amount, which he

maintains in his account. The duration of this facility provision is

up to one year, which can be extended. This facility requires nosecurity to be placed with the bank.

(ii) CASH CRED

S Qaim HBL Final Report

Documents

Transcript of S Qaim HBL Final Report