CONTENT

Page noCHAPTER ONE 3ZTBL INTRODUCTION 3

1.1 BACKGROUND OF THE BANK 3

1.2 AGRICULTURAL DEVELOPMENT BANK OF PAKISTAN (ADBP) 31.3 CONVERSION OF ADBP INTO ZTBL 41.4 NATIONAL OPERATION 51.5 ORGANIZATION 51.6 MANAGEMENT 51.7 CORPORATE VISION 61.8 AIM 61.8.1 Aim of the Bank 61.9 MISSION STATEMENT 61.10 NATURE OF BUSINESS 71.11 IMPORTANCE OF AGRICULTURE IN THE ECONOMY 71.12 ZTBL ROLE IN POVERTY ALLEVIATION PROGRAM 71.12.1 Credit Program for Women 81.12.2 Micro Credit Scheme 81.13 CONTEMPORARY BUSINESS CONDITIONS 81.14 BOARD OF DIRECTOR 9

CHAPTER TWO 10DEPARTMENTS 102.1 PERSONAL POLICY DEPARTMEN 102.1.1 AIM 102.1.2 OBJECTIVES 102.1.3 STATEMENT OF FUNCTIONS 102.1.4 TRAINING POLICIES 112.1.5 TRAINING IN STAFF COLLEGES 122.1.6 RECRUITMENT POLICY 122.1.7 PROMOTIONAL POLICY 13POLICY 2.1.8 PLACEMENT 132.1.9 HEALTH POLICY 132.2 CENTRAL INFORMATION DEPARTMENT 142.2.1 AIM 142.2.2 OBJECTIVES 142.2.3 FUNCTIONS 142.3 CREDIT OPERATIONS DEPARTMENT 152.3.1 AIM 15 152.3.2 OPERATIONAL OBJECTIVES 152.3.3 FUNCTIONS 162.3.4 TERMS OF LOAN (AS PER ADBP RULES 1961 162.3.5 GENERAL CREDIT DISBURSEMENT 172.3.6 LOAN TO SMALL FARMERS 172.4 CORPORATE FINANCE DEPARTMENT 172.4.1 THE AIM OF CFD 182.4.2 OBJECTIVE 182.4.3 FUNCTIONS 182.4.4 WING WISE FUNCTION 192.5 CENTRAL ACCOUNT DEPARTMENT 202.5.1 AIM 202.5.2 OPERATIONAL OBJECTIVES 202.5.3 STATEMENT OF FUNCTIONS 212.5.4 WING WISE FUNCTION OF THE DEPARTMENT 21

1

CHAPTER THREE 243.1PERFORMANCE OF ZTBL 243.2RESTRUCTURING OF ZARAI TARAQIATI BANK LIMITED 283.2.1 HUMAN RESOURCE DEVELOPMENT 29

CHAPTER FOUR 31SWOT ANALYSIS OF THE ZTBL 314.1 STRENGTHS 314.2 WEAKNESSES 32

4.3 OPERATUNITIES 334.4 THREATS 33

CHAPTER FIVE 34RECOMMENDAITON & CONCLUSION 34

2

EXECUTIVE SUMMARY

ZTBL is one of the largest financial institutions which provide credit

facilities to the farmer for the agriculture purpose throughout the Pakistan.

The ZTBL is a single largest institution in the country catering to be viable

credit needs of the agriculturist and disbursing over Rs. 5000 million per

annum for the development and modernization of agriculture.

The new status of Zarai Taraqiati Bank as a limited company will go a long

way in exploring the new dimensions in agriculture and rural financing for

poverty alleviation and development of agriculture sector through good

governance delivering high quality, viable and timely financial services to

greater number of clients. The operation of the Zarai Taraqiati bank

Limited are external to whole Pakistan and also apply to the business of

the bank transacted outside. The bank has 49 regional offices and 343

branches throughout Pakistan including (FATA) and (FANA) and Azad

Jammu and Kashmir.

This project report mainly consists on five chapter in which the brief

introduction of ZTBL, back ground of the bank. The performance and the

restructuring of ZTBL, personal analysis and observation, SWOT Analysis

and Recommendation. In the first chapter of there is brief introduction of

ZTBL in which the background of the bank, the conversion of ADBP into

ZTBL which have been made to improve the performance of the bank.

ZTBL has 49 regions and 343 branches which spread through out the

Pakistan. The head office of the bank is in Islamabad in which 9 division

and 33 department are working. Mr. Istaqbal Mehdi is a president of the

bank. The role of ZTBL in the poverty alleviation, as well as the

importance of agriculture and contemporary business conditions have

briefly described.

1

In the second chapter there is a brief explanation of the departments, their

aims objects and function in which I have worked these are personnel

policy department, central information department, credit operation

department, corporate finance department and central account

department.

The third chapter consists on the performance of ZTBL, in which the

disbursement and recovery from 1995 to 2002 have been mentioned, the

budget of 2002-2003, the import and export of agriculture items, data of

institutional agricultural credit 2001-2002. The restructuring of ZTBL,

which aimed at uplifting the agriculture and rural sector by raising from

productivity, streaming the institutional credit and performance of the

bank, and the steps are taken in the restructuring process are given.

The fourth chapter consists of SWOT analysis of the overall organizational

setup. The fifth and last chapter consist of recommendation and

conclusion on the basis of above study.

The whole information given in this report based on throughly study during

the internship at ZTBL head office.

2

CHAPTER # ONE

ZTBL INTRODUCTION

1.1 BACKGROUND OF THE BANK

Pakistan is basically an agricultural country and finance was need for its

rapid development. With a view to meet this basic need the Agricultural

Development Finance Corporation was set up in 1951, and was entrusted

with the last of providing financial facilities for the development and

modernization of agriculture, including forestry, fisher, animal husbandry,

poultry and dairy farming.

Later on the Agriculture Development Bank of Pakistan was also

established in September 1957 under the Agricultural Development Bank

Act. The bank was to provide credit in cash or in kind, warehousing and

storage facilities to agriculturists, co-operation societies and other bodies,

of which the majority of members were agriculturists. As the function of the

Agricultural Development Finance Corporation and the Agricultural

Development Bank were similar and since both were working with the

capital provided by the government, they were merged into one

organization known as Agricultural Development Bank of Pakistan on

February 18, 1961.

1.2 AGRICULTURAL DEVELOPMENT BANK OF

PAKISTAN (ADBP)

Agricultural Development Bank of Pakistan was established through the

ordinance in February 1961 by merger of Agricultural Bank of Pakistan

(BP) 1957, and the Agricultural Development Finance Corporation (DFC)

1952. The ordinance and its subsequent amendments define in

corporation, functions, share capital and management of the organization.

3

The ordinance is supplemented by board operational rules framed by the

federal government. These rules spell out the conditions for the supply of

loans, security of lending and recovery of dues. The rules further

supplemented by sets of regulations drawn by the board of directors of the

bank.

The ADBP had than become the single largest institution in the country

catering to be viable credit need of the agriculturists and in disbursing over

Rs. 5000 million per annum for the development and modernization of

agriculture.

1.3 CONVERSION OF ADBP INTO ZTBL

The Federal Government has converted the Agriculture Development

Bank of Pakistan (ADBP) into Zarai Taraqiati Bank Ltd (ZTBL) and the

new venture has started its operation with immediate effect. The new

corporate structure redefines the banks statue as a public limited company

with the independent board of directors. Promulgated under the

presidential ordinance which aims at ensuring good governance,

autonomy, delivering high quality, viable and timely financial services to a

greater number of client in the agricultural and rural segment of the

country with adequate return to the stake holder. Zarai Taraqiati Bank

(ZTBL) has been registered with SECP as a public limited under the

companies ordinance, 1984 and by virtue of finance order, all assets,

liabilities proceeding undertaking of the ADBP stands transferred to and

vested in Zarai Taraqiati Bank with effect from December 14, 2002.

The restructuring of ADBP and is conversion into ZTBL basically aims at

extending swore credit to the needy segment of productive and yielding

agri and non-farm activities. It is hoped that this step shall greatly enhance

the credit distribution mechanism. The quintessence of the initiative is

basically aimed at increased functional autonomy, improved services,

4

enhanced farm productivity, streamling institutional credit & increase

outreach in term of small farmers and women folk.

1.4 NATIONAL OPERATION

The operations of the Zarai Taraqiati Bank Limited are external to whole of

Pakistan and also apply to the business of the bank transacted out side

Pakistan and the persons conducting such business. The bank has 49

regional offices and 343 branches through out the Pakistan including the

Federally Administered Tribal Area (FATA), Federally Administered

Northern Area (FANA) and Azad Jammu and Kashmir.

The total manpower is 7665 having 4515 officers and 3150 staff. ZTBL

has completed its 42 years operational activities. During this period the

bank has tried to serve the forming community through the country for

their medium and long-term development credit needs.

1.5 ORGANIZATION

The head office of the bank was located in Karachi and was shifted to

Islamabad during 1973. Presently there are 9 division and 33 departments

in the head office. The field organization is spread over 49 regional offices

and 343 branch offices apart from 8 audit directorates in the field, two staff

colleges at Islamabad and Karachi. Number of MCOs (Mobile Credit

Officers) are 1496, total officers are 4515 and total staff is 3150. Account

department at Karachi and legal cell at Lahore.

1.6 MANAGEMENT

5

During the last 42 years, the bank has been managed by 23 chairman’s as

the chief executive.

1.7 CORPORATE VISION

Develop and operate ZTBL as a commercially viable bank with focus on

Rural and Agricultural Finance.

1.8 AIM

1.8.1 Aim of the Bank

“Technology for Agriculture”

Objectives of ZTBL: The main objective ZTBL are as follows:

Sound loaning

Substantial increase in loaning

Emphasis on small farmers

Broad technology spread

Substantial increase in recovery.

1.9 MISSION STATEMENT

Being the largest financial institution for giving credit to the farming

community in Pakistan, the ZTBL is to achieve self sufficiency in food

through increase agriculture productivity. This is to be achieved by

improving the quality of credit throughout Pakistan under supervised credit

scheme. Poverty reduction is to be achieved through identifying poor living

below poverty lien and giving them micro credit loans to generate

household income without collateral.

ZTBL has five mission statement which are as follow:

6

a. To develop agriculture sector of the country so that it plays its

role in the turn round of the economy.

b. To develop water resources so as to bring more land under

cultivation.

c. To increase yield per area of cotton, wheat and rice.

d. To develop orchards, livestock fisheries and poultry to bring a

correlation between protein food and the population growth.

e. To grow tea, canola, sunflower and the palm oil seeds for

substitution of high value imports.

1.10 NATURE OF BUSINESS

The nature of bank is to provide credit facilities, including hiring and

renting of any thing which it may advance way of loan and the provision

for ware hosing facilities of such terms and subject to such conditions as

may be prescribed by its rule to agriculturists for the purpose of agriculture

and to persons engaged in cottage industries in rural areas.

1.11 IMPORTANCE OF AGRICULTURE IN THE

ECONOMY

Agriculture is the main stay of our economy. It accounts for 26% of the

GDP and employ about 44% of the country’s labor force. This sector is the

largest source of foreign exchange earning over 75% besides providing

input for textiles, sugar, and vegetable ghee industries of the country.

More than 67.5% of the population is directly or indirectly dependent for

their livelihood on agriculture. Average size of land holding is 3.8 hectors

and 93% the total farms upto 25 acres.

7

1.12 ZTBL ROLE IN POVERTY ALLEVIATION

PROGRAM

ZTBL is extensively contributing in the poverty alleviation program. In

order to support the governments program for poverty alleviation, ZTBL is

contributing its huge efforts by providing loans to rural poor under the

following credit programs.

1.12.1 Credit Program for Women

The bank started lending to women since 1987 under IFAB assisted

Gujranwala Agriculture Development Project.

The aim of the program is to access of credit to women at their doorstep

enabling them to under take income as well as loan under micro credit

scheme.

1.12.2 Micro Credit Scheme

Under the micro credit scheme, credit facilities are provided to the

neglected sectors of the society. Minimum credit limit under the program is

Rs. 5000 while the maximum limit is 25000. The scheme is operative

through all 343 branches of the bank, assisted by 1353 mobile credit

officers.

The Zarai Taraqiati Bank Limited (ZTBL) which provides most formal loans

in Pakistanis rural areas, lends to large holders for more than small

holders, although the impact of credit scheme more cost effective.

1.13 CONTEMPORARY BUSINESS CONDITIONS

8

Zarai Taraqiati Bank Limited (ZTBL) disbursed around Rs. 29.27 billion

among the country’s farming community during the fiscal year 2002-03, as

against over Rs. 29.10 billion disburse in 2001-02 sharing one percent

growth, whole on the recovery side the bank collected a recovered Rs.

34.282 billion during the fiscal year ended on June 30, 2003 showing 3%

growth when compared with around Rs. 33.38 billion recovered during the

previous fiscal.

The performance show that ZTBL’s restructuring plan, started last year in

a bid to revap its operations, has started showing visible change in the

bank’s institutional capacity and efficiency. Realizing the bank’s pivotal

role as the largest source of agricultural credit, a credit allocation of over

Rs. 34 billion for the year 2003-2004 has been made for the sectoral

growth and uplift of organization.

1.14 BOARD OF DIRECTOR

Chairman

Sultan ail chaudhry

President

Muhammad zaka ashraf

Secretary EAD

Dr. Waqar Masood

Additional Finance Secretary

M. Tahseen Khan Iqbal

Joint Secretary Finance (Member)

Rana Wajid Ali

9

President HBC (Member)

Zaker Mehmood

Khushaly Bank Member

Ghalib Nistar

Private (Nestle)

Syed Yawar Ali Bukhari

Company Secretary

Vacant

10

CHAPTER # 2

DEPARTMENTS

This section which consists of the over view of the department, their aims

and objects their functions and working environment. There are 9 division

and 33 departments at ZTBL Head Office, from them I have practically

worked at 5 departments which are explained below.

i. Personnel policy department.

ii. Credit operation department

iii. Central information department

iv. Corporate finance department

v. Central account department.

2.1 PERSONAL POLICY DEPARTMENT

2.1.1 AIM

The aim of this department is to utilize efficiently the human resource

ability to reach the organizational objective.

2.1.2 OBJECTIVES

The objective of the personnel policy department is to select right

employee for the right job, compensation, performance evaluation,

promotion, separation, training, retirement policy and services regulation

etc.

2.1.3 STATEMENT OF FUNCTIONS

i. To frame personnel policies for the employee of the bank.

11

ii. To update personal manual.

iii. To arrange delegation of administrative and financial power of

various executive of the bank and preparation of hand book of

these powers.

iv. To declare bonus and arrange formation of various committee.

v. To issue necessary instruction regarding observance of office

house, holiday and office procedure.

vi. To implement pay package and direction of federal government

or SBP relating to bank.

vii. To implement decision taken in various meeting with unions or

association and their follow up.

viii. To analyze the operation of the bank for identifying the problem

and locate weak areas.

ix. To conduct operation and management studies.

x. To circulate consolidate monthly/quarterly position of

arculars/circulars letter issue by various division of head office.

xi. To deal with the services matter cases in federal services

tribunal/high court/supreme court.

xii. To frame/update and interpret services regulation.

xiii. To conduct study of various laws having bearing on personnel

policy.

There are mainly four policies made by personnel policy department at

ZTBL, head office which are as under:

i. Training policy.

ii. Recruitment policy

iii. Promotion policy.

iv. Placement policy.

2.1.4 TRAINING POLICIES

12

The aim of the training is to provide new technical now how to the staff or

various level of employee. The bank has establish two staff college one at

Islamabad and other at Karachi, training of employees arranged in various

institution both within the country and abroad.

2.1.5 TRAINING IN STAFF COLLEGES

i. Top management (Chairman and ED).

ii. Senior management (Director & Regional Manager).

iii. Middle Management (Joint Director & Deputy Director)

iv. Operational Management (Staff Officers and Staff)

v. Clerical Staff

vi. Subordinate Staff.

2.1.6 RECRUITMENT POLICY

There are no any recruitment at ZTBL since 1996 because of over staffing

in the bank. The procedure of the recruitment is as under:

The recruitment of grade 16 or above is made through the

Pakistan Banking and Finance Service Commission.

Recruitment shall be made in the month of February and August

of the vacancies are available.

Rarely appointed in grade 17 and above.

In case of employee die during the services his widow or one of

this eligible children should provide employment in the bank at

appropriate level.

Provincial quotas shall be strictly followed in making

appointment.

Oversea Pakistan & Jammu and Kashmir are eligible.

There is quota for orphan & disable.

The medical examination is necessary.

13

2.1.7 PROMOTIONAL POLICY

Annual promotion policy was approved by BOD. Then with the passage of

time, the promotion are given on the basis of seniority, qualification and

competness.

Objective

The promotion policy aims to ensuring the advancement of the employee

in carrer on the basis of achievement and experience. The policy will

ensure that all employees are motivated to perform to the optimum and

are treated justly and equitably.

Eligibility

Promotion are made on the basis of seniority 95%.

Promotion are made in January each year against budgeted

and clear cut vacancies.

Promotion against 5% vacancies shall be made on accelerated

basis with the approval of BOD.

2.1.8 PLACEMENT POLICY

If any one who full fill the criteria for promotion shall be promoted in the

higher scale, of there is no vacancy then he will work on the lower post

with higher scale.

2.1.9 HEALTH POLICY

The bank has its health policy which bank is responsible for the health of

its employee and their families. There is a separate medical department at

the head office, which treat their employee free of cost.

14

2.2 CENTRAL INFORMATION DEPARTMENT

The Zarai Taraqiati Bank Limited is the country's premier development

financial institution providing financial and technological services to

agriculturists at their door step.

As ZTBL is a huge organization in Pakistan availability of adequate and

timely information and ability to use it productively are essential ingredients

for planning and decision making. Informations is the Key to success of any

modern institution.

2.2.1 AIM

To provide essential statistical data comes from the branches or region to

the management for the decision making relating to any department.

2.2.2 OBJECTIVES

1. To get the necessary statistical data through the modern techniques

efficiently.

2. To provide new or modern data need of the bank along with

improvement in concept, design and requirement.

3. To enhance and strength the external and internal capabilities of the

central information department.

2.2.3 FUNCTIONS

15

1. To keep or maintain the past or present statistical data on

disbursement or recovery of the bank at branch, region, province and

country level.

2. To provide or prepare management information for weekly review

meetings.

3. To provide all the necessary information needed by all the divisions of

the bank.

4. To collect, Stronger and more certain and spread data on lending and

recovery operations under the special schemes of the bank.

5. To provide all needed information to outside agencies regarding to

bank operation including federal ministries. State Bank of Pakistan,

World Bank, Federal Bureau of Statistics, Provincial Bureau of

Statistics, Provincial Government etc.

6. To provide essential data to the government or various committees

made by government on Bankers performance for presentation.

7. To make and spread out regional performance indicators on monthly

basis.

8. To collect the data books/general/reports from other institutions within

Pakistan and outside for discuss macro economic factors.

9. Together, maintain time series data on prices of major item of

agricultural inputs and out puts and its publication.

10. Collect and spread out inter-country data on various dimension of

agricultural development.

2.3 CREDIT OPERATIONS DEPARTMENT

2.3.1 AIM

The aim of credit operation department is to sanction and exercise control

over processing of general loans consistent with leading policy and credit

plan.

16

2.3.2 OPERATIONAL OBJECTIVES

Appraise and sanction loan cases beyond the sanctioning power or regional

manager.

1. Guidance to Regional Manager for proper and expeditions sanction

of loans under the general credit.

2. Exercise control over sanctioned by Regional managers.

3. Watch over the supply position of the tractors with manufacturers

suppliers.

2.3.3 FUNCTIONS

1. Condemnation for delayed repayments beyond the powers of

regional managers.

2. Deal with hypothecation already sanctioned to the registered growers

for sugarcane, oil seed and cotton crops under guarantee of the

processors of the crops.

3. Enlistments of principle manufacture /supplier if tractors.

4. Pursue the claim of the borrowers with manufacture or suppliers of

tractors for compensation of late delivery and delivery of defective

tractors.

5. Circulation of tractors prices of various makers for the information of

the branches.

6. Formulate and review the procedure for booking and disbursement of

tractors loan.

7. Prepare agenda paper on all matters related to credit operation

department for board of directors.

8. Compile data / information supplied by the branch regarding

Automated Performance Applied System (APAS) and submit

consolidate statement to the credit policy department for onward

submission to state bank of Pakistan.

17

2.3.4 TERMS OF LOAN (AS PER ADBP RULES 1961)

A loan may be short term, medium term or long term according to the period

in which it is required to be full repaid.

a. A short term loan is a loan in which is to be fully repaid within

eighteen (18) months of payments by the bank of the amount of loan

or its first installment to the borrower.

b. A medium term loan is a loan which is not a short term and is to be

fully repaid within five (5) years of payment by the bank of the amount

of loan or its first installment to the borrower.

c. A long term is a loan which is to be fully repaid in any period

exceeding than five years from the date of payment by the bank of

the amount of loan or its first installment to the borrowers.

2.3.5 GENERAL CREDIT DISBURSEMENT

General credit disbursement to farmers is taken place for various purposes.

Like, seed, fertilizer, pesticides/insecticides, poultry/animal feed, chicks. All

the loans operations are being managed under well established credit,

dispensing mechanism of supervised credit system of the bank.

2.3.6 LOAN TO SMALL FARMERS

Small farmers constitute the vast majority 90% of the farming population of

the country. They are operating 64% of the total cultivated farms area. The

bank continued its efforts to pursue its policy of increased financial

assistance to small farmers to enable them to exploit the potential of their

land to the optimal level.

The latest technology suited to small farmers were financed with the main

objective to increase productivity of farms and income of small farmers. The

18

credit needs of small farmers fro mechanization of small farm were given

due preference.

2.4 CORPORATE FINANCE DEPARTMENT

The corporate finance department is a main department of Zarai Taraqiati

bank limited. Because it keep the records or maintain the financial position of

the bank and all the branches or regions are firstly concerned to this

department send the information to the management for the decision

making.

2.4.1 THE AIM OF CFD

The aim of corporate finance department is to check the application given to

them from branches or regions about credit and availability of funds to them

and planning for the banks credit limit.

2.4.2 OBJECTIVE

The main object of the corporate finance department is arrangement of

resources for the bank's operation.

2.4.3 FUNCTIONS

1. To arrange government guarantee for loans sanctioned by the State

Bank of Pakistan.

2. To arrange adequate resources for bankers operations i.e. credit

disbursement, capital and operational expenditure.

3. To ensure maintenance of adequate liquidity in all the units of the

organization in accordance with the requirement.

19

4. To reconcile bank account with the State bank of Pakistan and other

commercial bank.

5. To provide funds to needy branches and receive cash back from the

branches have surplus them through telephonic transfers.

6. To make / prepare withdrawal applications watch reimbursement

position and account of receipt to pursue settlements of withdraw in

respect of foreign loan.

7. To prepare monthly progress of utilization of foreign loans.

8. To plan, design and launch deposit mobilization.

9. To prepare circulars to region-wise and branch wise deposit target.

10. Other miscellaneous assignment of senior management of the bank,

ministry of finance and state bank of Pakistan.

2.4.4 WING WISE FUNCTION

There are three wings in corporate finance department which are:

* Internet Resource wing

* External Resource wing

* Remittances and cash management wing

The daily operations of these three wings are controlled by Joint Director or

Deputy Director who are the incharge of the wings. To help the J.D or D.D

there are assistant of them as (EAD) extra Assistant Director and (A.D)

Assistant Director.

Internal Resource Wing

The duties and responsibilities of this wing is to manage all the resources

given to them from the government or customer. The other main

responsibility of this wing is to maintain or kept the day to day record of

these funds in order to meet the customer need in coming day. The other

duty is the collection and policy related to the resources collected from the

internal sources.

20

External Resources Wing

The duties and responsibility of this department is the collection, allocation,

and also properly organize and monitoring of these funds. The external

resources are collected from foreign donor agencies. These are:

1. World Bank

2. Oversea Economic Corporation Fund (OECF)

3. International fund for Agricultural Development

4. International Bank for Restructuring and Development (IBRD)

5. Asian Development Bank (ADB)

6. International Monitoring Funds (IMF)

The funds are provided by these foreign agencies for the different types of

projects and the external resource wing is responsible for proper allocation

of these funds to the different task.

Remittances and Cash Management Wing

The duties and responsibilities of this department is the cash collection from

the branches all over the Pakistan. The branches have to report in this

department and this wing is to prepare the reports from given information

and provided to the management.

The branches have to report to this department with regards of daily

operation and in response of these information this department forecast the

situation about how much fund is need to the particular branch for the

operation.

2.5 CENTRAL ACCOUNT DEPARTMENT

21

Central Account department deal with the accounting practices at Head

Office. It mostly deal with the income statement, balance sheet, cash flow

statement and other accounting practices.

2.5.1 AIM

The aim of this department is to prepare or formulate the accounting policies

and procedure in order to show the true financial position of the bank.

2.5.2 OPERATIONAL OBJECTIVES

The main object of central account department is proper accounting of the

assets and liabilities of the bank as well as timely preparation of financial

accounts and submission of statutory return to the State bank of Pakistan.

2.5.3 STATEMENT OF FUNCTIONS

The central account department performs the following functions.

- Issuances of instructions relating to accounting policies and

procedures.

- Reconciliation of inter branch transactions / suspense account.

- Preparation of balance sheet and profit and loss account of the bank.

- Compilation of the returns / Statement for submission to the State

bank of Pakistan.

- Preparation of weekly statement of position for management

information and reporting to the State Bank of Pakistan.

- Preparation of the payroll and salary slips for head office.

2.5.4 WING WISE FUNCTION OF THE DEPARTMENT

22

Central accounts department has one wings which perform their own

function and coordinate with each other to achieve the overall objectives of

the department. These wings and their function are below.

Returns and Review Wing

- Compilation of weekly operational activities of the bank.

- Compilation Statement of affairs of head office and branches

preparation of balance sheet and profit and loss accounts.

- Preparation of data for computer, clearance of credits and checking

of outputs procedures by computer.

Finance Computer Cell

- Ensure timely production of reports or statement.

- Develop and implement software system of the IBM system 36.

- Identification of jobs of finance division to be computerized.

23

Central Account and Reconciliation Wing

- Control the operation of inter-branch transaction.

- Checking of inter-branch transaction statement.

- Reconciliation of central accounts.

Policy and Coordination Wing

- Issuances of procedural instruction relevant to accounts and financial

accounts.

- To deal with all policy matters pertaining to account system of interest

based and Islamic Banking.

- Top act as coordination wing for accounting policy and procedures

relating to department of finance division.

- Permission to release the amount of decrease account holder to the

legal heirs.

- Maintenance of loan balancing record and persuasion thereof.

- Up-dating of specimen signature booklet.

- Circulation and adoption of safety measure in respect of loss security

documents.

- To deal with excise / Taxation matters related to bank.

Prudential Regulation Wing

- Supply of monthly and quarterly position of recovery of classified

loans to SBP, after receipt from MIS division.

- Issuances of instruction to branches for revisal of income / provision

in budget under prudential regulation.

- To prepare balance sheet and profit and loss account of the bank. On

Tuesday the data is collected from the regional offices in the form of

soft copy and the compile it in two days and the profit and loss

account. the balance sheet is prepared and send it to the SBP on

Wednesday.

24

- Supply of monthly and quarterly position of recovery of classified loan

to SBP after receipt from MIS division

- Receive of progress made by the bank regarding recovery of

classified and suggest ways and means of improve banks

performance.

Tax Wing

- To issue necessary instruction to the branches to keep the record of

with holding case dedicated from the bank and submission thereof to

head office. For claiming adjustment against the final liability of the

bank.

- Collection of tax payment documentary evidence from the branches

for submission, to tax department along with the income tax return.

- Issuance of instruction regarding tax deduction at the time of

issuance demand drafts, cheque and pay order etc.

- To coordinate with tax consultant and income tax authorities.

- To issue necessary instruction regarding sales tax, excise duty etc.

25

CHAPTER THREE

3.1 PERFORMANCE OF ZTBL

The table-1 shows disbursement and recovery position of ZTBL during the

past seven years.

According to the source the year 1995-96 the disbursement of ADBP loan

was Rs. 10.34 billion which increase to 11.69 billion in 1996-97, in 1997-

98 the disbursement jumped to Rs. 22.36 billion is almost double the

amount advanced during the preceding year.

In year 1998-99 disbursement further rose to unprecedented level of Rs.

30.18 billion rupees but suddenly dropped to Rs. 24.42 billion during 1999-

2000 and target has been fixed at Rs. 35 billion for the fiscal 2002-2003.

Deposit higher disbursement of agriculture loans the off-lake of fertilizers

and production of tractors and other agricultural implements have not

shown any reasonable improvement to prove the real disbursement of

loans. According to the State Bank of Pakistan latest report the off-take of

fertilizer increased by 9.7 percent in fiscal 1999-2000 compared to the

previous year and 4.7 percent during 2000-2001 while during the year

2001-2002 it showed a negative growth of minus –9.1 percent. The report

suggests that the production and sale of tractors remains stagnant during

fiscal 2000-2001 and 2001-2002.

26

Table-1 Disbursement and Recovery from 1995-2003

(Billion Rupees)

Year Disbursement Recovery

1995-96 10.34 12.78

1996-97 11.69 15.14

1997-98 22.36 32.74

1998-99 30.18 25.85

1999-2000 24.42 30.13

2000-2001 27.61 NA

2002-2003 (Target) 35.00 39.00

Table-2 The performance of agriculture sector from 1995-96 to 2001-2002

Year Percent growth Major corps Minor crops

1995-96 11.7 6.0 4.9

1996-97 0.1 4.3 0.9

1997-98 3.8 8.3 3.3

1998-99 2.0 -0.2 4.2

1999-2000 6.1 15.1 -9.1

2000-2001 -2.6 -9.8 0.1

2001-2002 1.4 -0.5 1.0

27

Composition of Agriculture sector FY 2002

Constant factor cost

ZTBL at a Glance 2001-2002

(Rupees Million)

Description Pakistan Punjab Sindh NWFP Balochistan AK FANA

Total outstanding

94546.242 64680.013 19012.410 4081.634 6156.514 95.209 520.902

Agri credit disbursement

29108.015 21123.3 5865 1367.4 493 128 132

Loan to substance farmers

18904.869 13623.5 3375 1234 415 128 131

Tractor financial No.Amount

12744

3501.2

12249

3369.4

108

28.7

232

63

147

39

0

0.00

8

1.9Total recovery

33545.930 25046 6075 1654 476.4 132.3 163

Cumulative recovery

90% 91% 86% 93% 85% 98% 94%

No. of MCOs 1496 795 362 196 91 30 22No. of regional offices

49 21 12 9 5 1 1

No. of branches

343 160 87 50 34 5 7

Total manpower

7665 4385 1678 888 520 105 89

Officers 4515 2579 997 544 280 61 54Staff 3150 1806 681 344 240 44 35

28

Budget 2002-2003

(Rs. Billion)

Resources 741.958 Expenditure .741.958

Internal resources 563.033 Current expenditure 607.958

External resources 198.063 Development expenditure 134.000

Bank borrowing (-)31.138

Privatization

proceeds

12.000

Foreign trade 2001-2002

(Agricultural Items)

(Rs. Billion)

Export Import

Commodity Quality (000 tones)

Value Commodity Quality (000 tones)

Value

Cotton fabrics

1957 69.411 Edible oil 1185 23.787

(million Sq. M)

Wheal 267 3.056

Cotton yarn 544 57.9 Tea 99 9.593

Rice 1645 27.1 Sugar 86 1.485

Fish & fish preparation

85 7.74 Fertilizer 1187 10.851

Fruits & vegetable

429 6.332 Insecticides 31 5.265

Wheat 602 4.158 Dry fruits 86 1.873

Raw cotton 35 1.493 Milk & cream

7 0.995

Other export

386.166 Other import

577.483

Total 560.291 Total 634.388

29

Institutional Agricultural Credit 2001-2002

(Rs. Million)

Institution Production Development Total Share(%)

Zarai Taraqiati

Bank

22010.843 7097.172 29108.015 55

Commercial Banks 15752.00 1734.00 17484.00 33.3

Domestic private

Banks

184.00 404.00 588.00 1.1

Provincial

Cooperative Banks

5080.00 194.00 5274.00 10.1

Total 43026.843 9429.172 52456.015 100

3.2 RESTRUCTURING OF ZARAI TARAQIATI

BANK LIMITED

The new status of Zarai Taraqiati Bank as Limited Company will go a long

way in exploring the new dimensions in agriculture and rural financing for

poverty alleviation and development of agriculture sector through good

governance, delivering high quality, viable and timely financial services to

greater number of clients.

The restructuring is aimed at uplifting the agriculture and rural sector by

raising farm productivity, streamling the institutional credit and increasing

income generating capacity of the farming community.

The main aspect of the restructuring plan is aimed at alleviating the poor

performance of the bank which had not aided the agricultural and rural

sector to the optimum level.

30

The restructuring exercise which started last year has turn around the

institution to assets the declining recovery to avert of any possible default

and to redesign institutional architecture for facilitating provision of more

agriculture credit boost the agriculture produce.

Zarai Taraqiati Bank (ZTBL) has announced voluntary Golden Hand

Shake Scheme for its regular employees of less than the age of 59 years

and with services of 10 years or more as on 05-09-2003. The scheme is a

part of restructuring exercise being carried out in ZTBL which

strengthening the financial health of the ZTBL and to make it a

commercially viable institution.

3.2.1 HUMAN RESOURCE DEVELOPMENT

Human Resource skill Development is vital to increase the efficiency and

effectiveness of any institution. Zarai Taraqiati Bank Limited (ZTBL) is

giving greater emphasis upon the training and improvement of the human

skill in its restructuring programmes.

They are more emphasis on training to employees already working and

give them incentives for good performance to ensure improved services.

Streaming institutional credit and increase outreach.

The training of accounts officers is even more important to bring financial

discipline in the organization, which is one of the factors indispensable for

good governance.

The restructuring of ZTBL has yield positive results with decrease in share

for non performing loans (NPLs) in total out standing and higher resources

availability disbursement and financial services to small farmers at

affordable cost.

31

The first benefits of restructuring of ZTBL has been that it has now

announced a 3% reduction as incentive to farmers who pay their two

consecutive loan installments in time. This incentive has been possible

due to enhanced financial viability of ZTBL, through the restructuring.

The bank has reduced the mark up rate from 14% to 11% in accordance

with the governments policy to provide maximum benefits to farmers and

to inculcate timely repayment behavior.

In this regard ZTBL has to play an enhanced role to develop the

agricultural sector of the country keeping in view the challenges facing

their sector in the wake of new global developments.

32

CHAPTER FOUR

SWOT ANALYSIS OF THE ZTBL

This chapter is concerned with the Strength, Weaknesses, Opportunity

and Threats as well as the conclusion and recommendation regarding

Zarai Taraqiati Bank Limited.

4.1 STRENGTHS

1. Pakistan is basically an agricultural country, and ZTBL is one of the

large institution which provide the credit to the farmer for agriculture

purpose.

2. Professional and experienced team is available in all the

department at Head Office.

3. New technologies are introducing by ZTBL for the agriculture

purpose.

4. There is expensive machinery and technology available at Head

Office.

5. So many fringe benefits is given to the employee of the bank or all

the facilities are available for them.

6. The substantial loan is given by the bank to their employee for any

purpose.

7. The bank provide its services almost whole the Pakistan.

8. ZTBL has a proper training institute for their MCO (Mobile Credit

Officers) in order to make then updated with the changing policies

and programs of the bank.

33

9. The information is flow systematically as branches to the regions

and regions provide information to the head office.

10. Through the restructuring process the over staff have highly

decrease by Golden Hand Shake scheme.

11. All the branches and regions are interrelated with head office

through the computerized system.

12. The head office Audit Department also checks the whole payment

process. So proper system of check and balance for the payment is

there.

13. Performance of all the branches are controlled and evaluated on

the basis of monthly operations reports (MRO) received and

checked by the branches development and control department.

14. No competitor in the field of loaning to agriculture sector.

15. For the proper training and development to the staff, the staff

colleges are available at Karachi and Islamabad.

16. One window operation are announced time to time to facilitate the

farmer.

17. Data are properly maintained.

18. Government launches different scheme or packages to the farmers

like relief packages, tractor scheme etc.

19. Playing a greater role in the poverty alleviation program.

4.2 WEAKNESSES

1. The recovery system is very much low.

2. There is expensive technological machinery like in hard ware and

networking department but no is there to use properly.

3. There is still much over staff at the head office.

4. Non-payment attitude and default culture.

5. There is nothing much work to do for upper and lower staff.

6. Political base loaning.

34

7. Old staff, unqualified and un-skill persons are also working over

there.

8. No proper efforts for the promotion and advertising for the latest

agricultural technology is order to motivate farmers to use these

technologies.

9. They are not concentrating on small farmers.

10. The loan is not properly utilized for the agriculture purpose.

11. The rule and regulation are not strictly followed like late coming etc.

12. Seniority based promotion.

13. There is no any new recruitment since 1996 because of overstaff

so there is lack of new talent.

14. The accountability system is in very bad condition.

4.3 OPERATUNITIES

1. Present government is more emphasizing on the accountability. So

this is a golden change for ZTBL for Recoveries of the political

loaning.

2. Present government has also introduce micro credit scheme which

enhance the operations and profit ability of the bank.

3. This is a time to reduce the over staff and new recruitment should

be done.

4.4 THREATS

1. Interference in the posting and transferring by those personalities

whom are related with the operation of the bank.

2. Large no of un-viable branches.

3. Delay in the finalization of the cases field in the banking

tribunals/special banking courts.

35

4. Recovery of the loan depends upon the crops the farmer have

maintained, flood and drought made causes destruction of the

crops which will make the farmer defaulters.

5. Due to shortage of water the agricultural land is going to be expired

in Pakistan.

6. Also the rate of the agricultural crops are decreasing season by

season.

36

CHAPTER FIVE

RECOMMENDAITON & CONCLUSION

1. The ZTBL has to improve its recovery system in order to meet the

future credit requirements.

2. The efforts have been taken to enhance timely disbursement to

small farmers with greater outreach through efficient governance

which will alleviate poverty in the rural sector.

3. Providing cheaper and timely funds to activate the entire value

chain of agriculture.

4. Branches and Mobile Credit Officers have to direct contact with the

farmers and rural people therefore both are playing an important

and vital role for the development and uplift of agriculture sector.

5. ZTBL has to eliminate the seniority base promotion.

6. Un-viable branches of the bank should be closed. This will reduce

the expenses of the bank.

7. New energic and capable recruitment have been made in order to

meet the future challenges.

8. ZTBL is also involved in political base loaning. To reduce the bad

debts ZTBL has to close the chapter of the political base loaning,

posting and transferring.

9. ZTBL should take steps in order to motivate the farmer for using the

latest technology in order to increase the agricultural production.

There should be a proper program for this purpose keeping the

illiterate farmer in mind.

10. Concentrate on small farmers instead of large farmers.

11. A strong research and training cell should be established at country

level to overcome the hurdles conform that textile exporters as well

as agriculture export.

12. The branches, regions and the head office must connect with each

other through computer system.

37

13. To over come the losses of the bank and to properly and efficiently

utilize the assets of the bank.

38