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INTRODUCTION
Banking System
Banking services are extremely important for both economies developed and developing economy such as Pakistan. Banking services serve two primary purposes. First, by supplying customers with the basic mediums-of-exchange (cash, current accounts, and credit cards), banks play a key role in the way goods and services are purchased. Without these familiar methods of payment, goods could only be exchanged by barter (trading one good for another), which is extremely time-consuming and inefficient. Second, by accepting money deposits from savers and then lending the money to borrowers, banks encourage the flow of money to productive use and investments. This in turn allows the economy to grow. Without this flow, savings would sit idle in someones safe or pocket, money would not be available to borrow, people would not be able to purchase cars or houses, and businesses would not be able to build the new factories the economy needs to produce more goods and grow. Enabling the flow of money from savers to investors is called financial intermediation, and it is extremely important for the growth of economy.

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Advantages of banking system for economy

The deposit and loan services provided by banks benefit an economy in many ways. First, Current account, because they act like cash, make it much easier to buy goods and services and therefore help both consumers and businesses, who would find it inconvenient to carry or send through the mail huge amounts of cash. Second, loans enable consumers to improve their standard of living by borrowing money to purchase cars, houses, and other expensive consumer goods that they otherwise could not afford. Third, loans help businesses finance plant expansion and production of new goods, and therefore increase employment and economic growth. Finally, since banks want loans repaid, banks choose borrowers carefully and monitor performance of a companys managers very closely. This helps ensure that only the best projects get financed and that companies are run efficiently. This creates a healthy, efficient economy. In addition, since the owners (stockholders) of a company receiving a loan want their company to be profitable and managed efficiently, bankers act as surrogate monitors for stockholders who cannot be present on a regular basis to watch the companys managers.

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HISTORY OF BANKING IN PAKISTAN

After the emerging of Pakistan our entire Banking System collapsed because Hindus who migrated to India owned most of the banks in Pakistan. Pakistan received only 631 branches of scheduled Banks out of 3496. Immediately after the birth of Pakistan the numbers reduced to 231 branches due to shut down of banks in Pakistan by the Hindu owners. Realizing the necessity of Banks, attention was soon given to this sector in Pakistan. In 1947, in Pakistan there were only two Muslim Banks, namely, Habib Bank Limited and Australasia. State Bank of Pakistan was set up in 1st July 1948.In 1948 other banks were made by the Government to fulfill the needs of consumer banking. In 1957 PICIC was established. In 1959-60 four banks were established namely, United Bank, Commerce Bank, Standard Bank, And Eastern Mercantile Bank. In late 1960s some foreign banks started financial services. In 1971 local private banks were nationalized. Till the end of 1980s, Pakistans banking sector was heavily regulated in most of the areas of activities. The regulated and nationalized banking system created an industry structure where competition was unknown to management of the banks. Forced by the structural reforms agenda and the desire to strengthen its financial system, Pakistan moved towards liberalization and financial sector deregulation in 1990. It started with the privatization of state-owned commercial banks and induction of new ones from private sector to establish a market-based banking system. The government seems to be conscious about improving the efficiency of banking sector in Pakistan. Few considerable efforts have been made in this regard which include enhanced capital adequacy, strengthening asset quality, improving management and increasing earnings. Furthermore, interest rate deregulation, abolition of credit controls and further developments in capital market have also led towards a more competitive banking environment. The market for banks is diverse in Pakistan comprising of nationalized commercial banks (NCBs), Private Banks and foreign banks. In 1993, there were 33 commercial banks in Pakistan 14 being local and 19 foreign. By the end of 2001, the number of banks had increased to 43, 24 being local and 19 as foreign. The deregulated and increasingly competitive environment poses a challenge in terms of efficiency, as the most efficient banks would survive while the less efficient will be driven out of the market During early 1990s government encouraged private sector to enter in the banking sector. The Government including Muslim Commercial Bank (MCB), Allied Bank Limited (ABL), United Bank Limited (UBL), National Bank of Pakistan (NBP) and Habib Bank Limited (HBL) has privatized all nationalized commercial banks.

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History of United Bank Limited (UBL)

The history of UBL can be divided into four main phases 1. 2. 3. 4. Formulation Nationalization Privatization Today

1. Formulation
In June 1957, Mr. Agha Hassan Abedi decided to open a Bank different from others, to provide modern facilities to trade and industry and to promote thrift and habit of saving amount common thereby stimulating the economy as a whole. Necessary were formalities completed for obtaining registration certificate from State Bank of Pakistan to perform business activities. After passing through all these formalities on 7th November, 1959 United Bank Ltd came into existence as a Schedule bank. The Head office of the Bank was established in the New Jubilee Insurance House, 1.1 Chandrigar Road Karachi. It was registered as a joint stock company. The bank was incorporated with an Authorized Capital of Rs. 20,000,000 and issued and subscribed and paid up capital of Rs 10, 00,000. Saigol family owned it and Agha Hassan Abedi was its first managing Director. It had posted a profit of 0.7 million in its first year of operation with just eight branches at Karachi.

2. Nationalization
As a policy of nationalization fourteen commercial banks were merged into five big banks. So consequently on 21st December 1974 Commerce Bank and Union bank were merged with the UBL. Mr.Mushtaq Ahmed khan Yousafi took over the charge of UBL. Now, there are six directors, a secretary and a president.

3. Privatization of UBL
UBL was the largest privatization attempted by the government of Pakistan, launched in June 2001, and with 21 interested parties. It was impacted by the adverse developments of the September 11, 2001 and was finally concluded in October 2002, which left stage only three bidders. The consortium comprising Bestway Group (BG), out of the UK and Abu Dhabi Group (ADG) from the UAE were finally the winners at a record price.

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Sale proceed was Rs 12350 million. This signaled the strong confidence reposed by these investor groups, in the improved governance of the country, the economic potential, the banking opportunity and the existing management of the bank.

4. UBL Today
Today they bank has taken progressive steps.

Changed the logo

The United Bank Limited (UBL) management has launched its new corporate identity and changed its 44 year-old-logo following its privatization.

UBL online
Internet and mobile banking has been introduced.

Islamic banking UBL (Ameen)

UBLs has introduced (Ameen) Islamic banking in December 19, 2006

UBL wallet
UBL wallet has been introduced to facilitate users to get immediate cash.

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MISSION STATEMENT
Vision
To be a world class bank dedicated to excellence and to surpass the highest expectations of Our customers and all other stakeholders

Mission statement
United Bank is going on the road of progress very successfully. Assessment of the needs and wants of consumers is an ongoing process at United Bank, which helps it to continually develop new products and services. At UBL, the philosophy is that the bank should go to all possible limits to satisfy the customer needs. The bank is continuously formulating new products and services for the growing and diversified needs of its everexpanding client base. The banks commitment to its customers is evident from its mission statement:

To provide innovative and high quality products to its customers at the lowest possible rates. To achieve all set goals regarding service, performance and goodwill.

Departments of UBL
The following are the main department of UBL: 1. 2. 3. 4. 5. 6. 7. 8. Deposit Department Lending Department Clearing Department Cash Department Remittance Department Account Department Bills Collection Department Internal Audit Department (only in HUB Branches)

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Competitors
Major Competitors

Habib Bank Limited MCB Bank Limited Allied Bank Limited

Other Competitors

Askari Bank Bank Alfalah Bank AL Habib Barclays Bank Pakistan First Women Bank Habib Metropolitan Bank Habib Bank AG Zurich JS Bank KASB Bank Ltd Silk Bank Limited (formerly Saudi Pak Commercial Bank Limited) Soneri Bank Samba Bank Limited

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MANAGEMENT
Over view of UBL
UBL has assets of over Rs. 550 billion and a solid track record of forty eight yearsin addition to the convenience of over 1000 branches serving you throughout the country and also at several overseas locations.

Date Established
November 7, 1959

Chairman
His Highness Sheikh Nahayan Mabarak Al Nahayan

Deputy Chairman
Sir Mohammed Anwar Pervez OBE

President & CEO

Mr. Atif R. Bokhari

Branches
1079 Domestic, 17 Overseas Branches

Representative Offices
Tehran, Kazakhstan, China

Subsidiary
United Bank A.G. Zurich, Switzerland United National Bank Limited, UK (Joint venture with NBP) UBL Fund Managers Limited

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Associated Company
Oman United Exchange Company, Muscat

No of branches
1121 branches

Total Market share

9% share

Overseas branches
15 braches

Total asset
300 billion assets

Head Office
State Life Insurance Corp. Building #1, I.I. Chundrigar Road, Karachi, Pakistan P.O. Box No.: 4306 Phone: (92-21) 111-825-111 Gram: "UNITED" Fax: (92-21) 2413492

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BOARD OF DIRECTORS
Chairman
His Highness Sheikh Nahayan Mabarak Al Nahayan

H.H Sheikh Nahayan Mabarak Al-Nahayan is an important and prominent member of the ruling family of Abu Dhabi. After the culmination of his studies at Oxford he returned to shoulder important responsibilities in the state administration. In 1988 he was appointed the President of the higher colleges of Technology comprising of eight colleges throughout the UAE a responsibility he fulfilled with distinction. In 1990 he was appointed Minister of Higher Education and Scientific Research. Presently he also holds the presidency of the Society of the Natural History and National Heritage. In 1992 he became the Chairman of the Union National Bank and has since remained involved in strategic management of the institution.

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Deputy Chairman
Sir Mohammed Anwar Pervez OBE

President & CEO

Mr. Atif R. Bokhari

Directors
1. Director Mr. Omar Ziad Safari Al Askari

2. Director

Mr. Zameer Mohammed Choudrey

3. Director Mr. Ashfaq hassan khan

4. Director Mr. Muhammad Sami Saeed

5. Director Mr. Aqeel Ahmed Nasir

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SENIOR MANAGEMENT President and C.E.O

Mr. Atif R. Bokhari

Others
Mr. Nauman Hussain Director Operations & Utilities Mrs. Rukhsana Asghar Global Head Human Resources Mr. Aameer Karachiwalla Chief Financial Officer / HCA Mr. Muhammad Ejazuddin Audit Chief Mr. Mansoor M. Khan Head Corporate Banking Group Mr.Ali Sameer Chief Special Assets Management Risha Mohyeddin Global Head, Treasury & Capital Markets Tariq Mohar Global Head, Establishment & Branch Operation

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BRIEF PROFILE OF MANAGEMENT

Sir Mohammed Anwar Pervez, OBE, HPk Deputy Chairman
Sir Mohammed Anwar Pervez, OBE, HPk first hit the headlines in 1992 when he became the proud recipient of the order of the British Empire. He was also awarded a Knights Bachelor in the Queen's Birthday Honors list for services to business and the world of charity in the UK and internationally. The president of Pakistan conferred the highest civil award Hilal-e-Pakistan on him in March 2000.

Mr.M.A. Mannan

Deputy C.E.O
UBL has always adopted the policy to induct qualified people from different source available from home or abroad. Mr.M.A. Mannan was inducted by UBL from Citibank New York as the Dy. Chief Executive officer UBL. An MBA from IBA Karachi. Mannan started his career from Citibank Pakistan in 1991 where for the first nine years he worked in sales, distribution and marketing launching most of Citibanks new credit and depositor products during the nineties. He rose to become the Director of Marketing, Sales and Distribution at Citibank Consumer bank. He was then transferred to the U.S.A, the most matured and competitive consumer market in the world and was promoted to Senior Vice President, Cross Self Division covering a comprehensive array of customers and products. With his reputatation as a great team- builder and achiever, UBLs management firmly believes that Mannan will prove to a great institutional and national asset.

Ms. Rukhsana Asghar

Global Head Human Resources
Ms. Rukhsana Asghar holds a BA (Hons) Degree in International Relation * a Bachelor of Law Degree from University of Karachi. She further enriched herself professionally by attending many senior level training courses seminars & conferences of Leadership, Strategic Management, Career Counseling, Marketing of Financial Services & Human Resource Development in the U.S.A, Europe, Middle East & the Far East.

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Till recently Director HR Citibank Pakistan, she was instrumental in developing the talent base for Citibank, which led the institution to emerge as a major player on the financial scene. She served as a Vice President HR Citibank, Assistant manager Personnel at Lever Brothers Pakistan Ltd. Rated amongst the few HR specialists in the country the feather in the cap is Rukhsanas selection as one of the twelve members out of 101 countries to work on a global initiative relating to the paradigm shift in the role of human resources. The result were applied and implemented globally.

Mr. Nauman Hussain

Director Operations & Utilities
Mr. Nauman Hussain did his Master in Economics from the Punjab University Lahore. He possesses 24 years of International Banking (Retail & Corporate) experience in the Middle East, Asia and the Far East. Prior to joining UBL he served as Vice President & Head of Operations at Mashreqbank UAE, Senior Director & Chief Administrative Officer, American Express Bank Ltd Karachi & Lahore included Assistant Vice President& Manager Operation, Assistant Treasurer & Financial Controller, Head Country Treasury/ Correspondent banking & relation Manager.

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Organizational Hierarchy of UBL

Chairman

Deputy Chairman Board of Directors

Executive Committee Managing Director

SEVP EVP

VP

Officer Grade-I

Non Clerical Staff

Clerical Staff

Officer Grade-II

Officer Grade-III

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Organizational Structure
Head Office
Provisional Head Quarters

Zonal office

Hub branches

Branches

Provisional Headquarters
Province

Punjab Sindh N.W.F.P Baluchistan

H.Q Lahore Karachi Peshawar Quetta

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MANAGEMENT STRUCTURE
President and Chairman of Board of Director Executive vice President General manager of

Deptt 1

Deptt 2 Deptt 3

Deptt 4

Deptt5

Zonal Incharge

Area Manager

Branch manager

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FIELD OF ACTIVITIES
Functions
In modern time commercial banks play a very important role and their functions are manifold. Primary functions of the banks are to take deposit and lending. They take deposits from different persons and lend to others. Beside this they undertake agency services and general utility functions. Some of the important functions are listed below.

1. 2. 3. 4. 5. 6. 7. 8. 9.
10.

Transfer money from one place to another. Accepting bills of exchange on behalf of customers. Purchasing shares for the customers. Collecting cheques and bill of exchange for its customers. Undertaking foreign exchange business Acting and executor, trustees or attorneys for the customers. Providing safe custody and facilities to keep jewellery, documents or securities. Furnishing trade information and tendering advice to customers Issuing of Travelers cheques and letters of credit to give credit facilities to travelers. Collecting interests due, dividend pensions and other sums due to customers.

Types of Banking
UBL perform almost all types of banking. 1. 2. 3. 4. 5. 6. Consumer Banking Commercial Banking Corporate Banking Investment Banking Relationship Banking Treasury

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PRODUCTS AND SERVICES

UBL offer wide range of products and services to all types of customers such as individual/ Consumer, Commercial, Corporate etc. Following are some of important products and services that UBL now offers to its Customers.

Deposit
Deposits are called the lifeblood of Banks. To generate more deposit the UBL has offered the following attractive deposit Schemes. 1. 2. 3. 4. 5. Current Account PLS Saving PLS term Deposit (TDR) Notice Deposit Unisaver (daily Profit) 6. Unizar (foreign Currency Deposit)

Lending
1. 2. 3. 4. 5. 6. 7. Cash Credit Overdraft Loans (both short Term and long Term) Agricultural Loans Commercial Loan Corporate Financing Import Export Financing

Remittances
1. 2. 3. 4. Tez Raftar Money Gram Click n Remit (sending money from USA) UBL Money Direct (Sending money from UK)

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Rupee Travelers Cheque

1. UBL Humrah Rupee Travelers Cheque

Lockers Facilities Utility Bills Collection TV/VCR Dish fee Collection Hajj and Umrah Services Uni remote
(All the above products and facilities will be analyzed in the next Sections)

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SERVICES OF UBL
After the privatization of UBL, the bank has taken progressive steps and introduced many new products and services for its valuable customers. The following are some of the important services:

1. 2. 3. 4. 5. 6. 7.

Cheque Encashment Facility UniCash Lockers Facility Hajj and Umrah Services Uni Remote Utility Bills Collection Dish TV fee collection

1.Cheque Encashment Facility

UBL has now provided facility to its customer to encash cheque at any designated branch in addition to the branch where the customer has maintained the account. In Karachi you need money and you do not possess traveler cheque but you possess Cheque book issued by UBL branch Sheikhupura. You can encash money.

Features
this facility is available for UBL valued customers maintaining their Rupee PLS saving or Rupee Current accounts at any of the designated branch of UBL. personal UBL account cheques, whether favoring you or a third party can be encashed at any of the designated branch of UBL. the maximum amount per cheque can be Rs. 25,000 (at present) This facility is FREE OF COST if the balance in the customer's Rupee PLS Saving or Rupee Current account stays constantly at Rs. 100,000 or above and the cheque is encashed by the customer personally. In other cases the following charges will be applicable.

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i. Rs. 50 for a cheque presented for payment in different branch of the same city, where the customer holds his/her account ii. Rs 150 for a cheque presented for payment in a branch of a different city.

2. UniCash
Like other banks UBL has also ATM card, which has been given the name of UNICASH CARD. Now the customer can withdraw money from any ATM machine installed by UBL at different cash point. You can avail the following self-service banking facilities Balance Inquiry Mini Statement Cash Withdrawal

Features
1.Personal Identification Number (PIN) ensures that only you can use your ATM Card. 2.The PIN protects you against misuse in case your card is lost. 3.You can change your PIN anytime you want. 4.You can specify flexible weekly withdrawal limits. 5.You can withdraw your weekly limit in one go, or in multiple installments.

USAGE
You can use UNICASH Cards at UBL Cash Point located in the following cities
City Islamabad Rawalpindi Karachi UAE Bahrain Doha, Qatar Cashpoints 5 2 1 8 3 1

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ATM BRANCHES
For instant cash at any time of the day or night, without the hassle of queues and tokens, use one UBL ATMs in Pakistan or Overseas. In the UAE UBL have connected all its Automatic Teller Machines (ATMs) to the UAE ATM Switch, giving access to over 550 third party ATMs throughout the region to all our customers. UBL has signed with 1 Link ATM Switch Network, which comprises of 11 leading banks of the country. The signing ceremony was held on April 25, 2003 at ABN AMROs Head Office in Karachi. UBLs customers can use 165 ATMs on the Switch. The bank is also in the process of installing its own ATMs to facilitate its valuable customers.

Lockers Facility
UBL also provides its valuable customers with lockers facility for keeping their valuables in safe custody at very reasonable rate.

Hajj and Umrah Service

UBL is also performing hajj and Umrah services. Every year a special counter is opened to facilitate hajjis. In this counter hajj form is filled and other information relating to Hajj is provided.

Hajj schemes
The following hajj schemes have been started by Government during the year 2003.

Regular Hajj Scheme.

According to Policy for Hajj 1424 Hijri (2004 A.D.) Sponsorship Scheme has been merged into the Regular Scheme. Intending Hajjis in this Scheme can opt for government accommodation or for private accommodation. All the pilgrims under Regular Scheme will deposit full amount of Hajj dues in Pak Rupees along with the Hajj Applications Forms. This year 120,000 pilgrims will be allowed to perform Hajj under Regular Hajj Scheme.

Open Hajj Scheme

This year the Ministry of Religious Affairs has decided to provide Hajj passport to those intending to perform Hajj under Open Hajj scheme also. There will be no need of an International Passport. 10,000 pilgrims will be allowed for Hajj under Open Hajj Scheme this year.

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Balloting
In case the number of applicants exceeds the prescribed quota, balloting will be held to determine successful applicant.

ELIGIBILITY
Only Pakistani NATIONALS are eligible to apply for Hajj. THE FOLLOWING ARE NOT ELIGIBLE Ladies in an advanced stage of pregnancy. Medically unfit & handicapped people without a helper or assistant Those infected by contagious diseases Ladies without Mehram (other than Ahle Tashee)

6.Utility bills collection

UBL has over 1000 branches collecting electricity, gas, telephone and other utility bills during business hours. Special bills collection counter in every bank Separate booths for utility bill collection are available at all major cities for the convenience of the public. Branches in all major cities have electronic bill collection machines. For your convenience, UBL accepts cheques for payment of utility bills. Drop box facility.

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ACTIVITIES OF THE BANK

1.Receiving Deposits
Deposit department has the responsibility to create deposit as much as possible. The officer of that department is given the target to take deposit, and then the officers induce the person to open the account with the bank. Deposit is also important because more the deposit of the bank the more the bank can lend and make money in the form of mark up. All the deposit that UBL maintains can be covered under the following types of deposit. The main difference is the period and customer convenience to withdraw the deposit. General role is that the greater the period of deposit more the return and greater the customers convenience to withdraw deposit lesser the return. Because of this golden rule bank pay no interest on Current account, customer can withdraw money at any time. So the following are the main types of Deposits

Current Deposits:
Current deposit account can be opened with the minimum amount of Rs.5000. In this type of account the client is allowed to deposits or withdraw money as and when hi likes. Usually the businessmen open this type of account. No interest is allowed by the bank and no service charger is deducted by the bank on current deposits account.

Profit and Loss Account

Under such types of accounts the bank allows no interest to the customers. Profit of loss is declare every by the executive Board of the Bank. Profit and loss account has two types 1. 2. Profit and loss Sharing Term Deposit Account Profit and loss Sharing Saving Account

PLS Term Deposit is that type of deposit that is maintained for a fixed period of time. Minimum period is 3 months and maximum is 5 years. PLS Saving Account can be opened with the minimum amount of RS 200. Minimum amount of Rs 10000 must be maintains in order to earn profit. No profit will be allowed below Rs 10000 and bank will charge Rs 200 service charges below Rs. 10000.

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 Fixed Deposits
In this type of account a certain amount is deposited for a certain period such as six months, two years or longer. It is also called time liabilities of a banker. They are called so because the money is payable on expiry of a fixed period of time only. The terms and condition of this deposit are regulated by central bank for this purpose. Fixed deposits are two types 1. Notice Deposit Receipt 2. Term Deposit Receipt

Foreign Currency Account

The UBL also maintain Foreign Currency account. But it can only opened in specific currency such as Dollar, pound sterling etc. In case of dollar the foreign currency account can be opened with 1000 US$ and in case of Pound Sterling 750 pounds.

2. Lending
The bank is an intermediate party between the borrower and the lender. It borrows from one party and lends to another. The difference between the rate of interest it borrows and lends is called the spread, and is the income of the bank. Lending is the main source of income.

Principles of Lending
The following are the principles, which the bank follows while advancing loans. 1. 2. 3. 4.
5.

Safety Liquidity Dispersal Remuneration Suitability

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6. 7. 8.

BUSINESS SEGMENTATION

UBLs credit process is built around the following basic customer constituencies: Corporate Commercial/Small & Medium Enterprise (SME) Consumer Investment Banking Treasury and Capital Markets International Division Financial Institutions Division Islamic Banking Group Business group heads will prepare their annual plans with projected financial results and strategies, and manage actual transactions and portfolios consistent with their asset writing strategies. These groups are also responsible for monitoring their performance for continual improvement.

Corporate Banking & Cash Management Group (CBG)

The Corporate Banking Group has endeavored to be the market leader in their area and builds market share through offering superior service, competitive pricing, and a wide product range to valued corporate clients. The group caters to the needs of multinational companies and medium to large corporate clients, which include private and public sector entities. This group will continue to remain a major contributor to UBLs earnings by taking advantage of tremendous growth potential of corporate accounts. The group requires talented, qualified, and proactive human resources. Front line relationship managers require a complete grasp of UBLs credit policies and procedures as they directly affect existing and future credit portfolio handling. The group is presently operating in major business centers and industrial cities of the country with specialized corporate centers to provide services and facilities to its clients and shall grow in other geographical areas with the passage of time.

Commercial Banking/SME (CB)

The Commercial Banking Group caters to the needs of commercial entities and small and medium enterprises, as defined in the State Bank of Pakistans Prudential Guidelines. This group deals with commercial clients of small to medium size in both private and public sectors. It operates in almost every city of the country with qualified and dedicated staff.

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This group aims to fulfill necessary business needs of its customers, which are more numerous than corporate clients. However, their individual requirements are relatively much smaller than those demanded by corporate clients. In view of the peculiar nature of this business segment, which involves a higher turnover, a much wider network is needed.

Consumer Banking Group

The Consumer Banking Group provides financial facilities to individuals through a diverse product line. Its success depends on the design of versatile and effective products and comprehensive communication and marketing strategies. Agility in monitoring the portfolio and following up with its customer base, which is wholly comprised of individuals, is also an essential requirement. This group operates in nearly all major cities of Pakistan, and also in some international locations through UBLs network of branches and trained sales force. This group offers products such as home loans, personal loans, auto loans, business loans, and credit card facilities, etc. Consumer Banking requires regular training of its workforce and the need for imparting basic product knowledge to sales staff is highly pronounced in this group as they are in direct contact with the customer base. This group conducts business based on structured products that fit into the needs of its target market. Product Process Manuals are developed for these products and are provided with the Credit Policy and Procedure guidelines. Risk management for the consumer has to play a dominant role in formulation and revision of credit policies, monitoring of portfolio quality and devising effective strategies aimed at minimizing the inherent risks. The Consumer Banking Group Credit Policy is in effect and has been approved by the Board of Directors (see Annexure II).

Investment Banking Group (IBG)

The Investment Banking Group specializes in providing innovative and unique advice to its clients, assisting them in meeting challenges in an ever-changing market. The group is equipped with adequately experienced professionals. This group will either lead or participate in major Term Finance Certificates in the market. It offers a full spectrum of services, including Term Finance Certificates, Syndicated Loans, Structured Finance, Leveraged Buyouts, Project Finance, Quasi-Equity Products, Independent Advice, Equity Placements, IPOs, Equity Underwriting, Mergers, Corporate Restructuring, Acquisitions and other products.

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Although the Corporate Banking Group supports the product line of the Investment Banking Group, the special nature of these products demands a more active involvement of risk management. Transactions such as Project Finance offer limited recourse and such transactions need to be structured in a way as to mitigate inherent risks. Risk management is to be proactively involved in Investment Banking Group transactions, right from the time of initiation until the time of execution.

Treasury & Capital Markets Group

The major roles of the Treasury and Capital Markets Group include: Managing the banks liquidity and balance sheet requirements as per UBL and State Bank of Pakistan guidelines, Dealing in foreign currencies on behalf of its customers, and Providing treasury and foreign exchange related financial services to its clients. This Group consists of highly qualified and experienced human resources who are actively involved in dealing with other banks and financial institutions to execute transactions in various currencies. In performing these tasks, it undertakes credit risk, which is identified, monitored, and managed by the middle office.

International Division
The International Division manages overseas operations including credits handled by the network of overseas branches. With careful planning and detailed surveys of the market, the International Division will explore better quality businesses and products and manage them efficiently to enhance UBLs profitability and turn the overseas branch network into a highly profitable unit of the Bank. The Global Credit Risk Management Division monitors and manages the risk, credit process and procedures at overseas branches.

Financial Institutions Division (FI)

This is an independent division operating as a profit center and is responsible for catering to all financial business requirements of banking and non-banking financial institutions. This division caters to the financing needs of all local banks, foreign banks, and other financial institutions including leasing companies, investment banks, DFIs, insurance companies, mutual funds, etc. INTERNSHIP REPORT ON UBL Page 33

Like the Corporate Banking Group, the Financial Institutions Division also operates with a structure of relationship managers, providing comprehensive solutions to its clients. In order to strengthen the divisions credit analytic capabilities, the Financial Institutions Risk Management Unit oversees the risk related to financial institution related transactions. The Financial Institutions Risk Management Unit is part of the Risk Group.

Islamic Banking Group (IB)

The roles and functions of the Islamic Banking Group shall be: To manage and be responsible for the operations of Islamic Banking Business (IBB), including policy and procedural matters; To liaise with other departments in the bank and the Shariah Advisor to ensure smooth operations of IBB(s); To ensure that all funds pooled into the Islamic Banking Fund (IBF) are channeled into Shariah-compliant financing and investment activities; To arrange training of staff of Islamic banking; To arrange for compilation and submission of such returns, as may be required to be submitted to the State Bank of Pakistan from time to time; To ensure that all directives and guidelines, particularly those applicable to Islamic banking, issued by the State Bank of Pakistan are strictly complied with; To maintain the Statutory Cash Reserve and Liquidity Requirements with the State Bank as prescribed from time to time by the State Bank of Pakistan; and To assume other roles and responsibilities as determined by the bank or the State Bank of Pakistan from time to time.

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TARGET MARKET AND PRODUCTS

Objective
Optimum utilization of available skills and resources will allow UBL to: build strong customer relationships through a diversified product portfolio in targeted markets; provide financial services to customers in an effective manner; and achieve strong market position and adequate returns on capital Understanding a target market involves business discipline and selectivity. The critical aspects of this process include identifying business potential, defining desirable opportunities, and adhering to resultant marketing objectives and strategies. An unfocused approach to the market may lead to unplanned asset concentration of uneven quality. It is a continuous and evolutionary process involving the development and listing of alternative business strategies. It focuses on: Product identification Only through a comprehensive survey of the market, can a potential business opportunity be identified. The existence of earning opportunities with associated risks is reviewed. Screening A workable and appropriate Risk Acceptance Criteria is used to screen the market in a structured manner. The Criteria defines the basic level of acceptability for a risk asset. Business should preferably be restricted to managing clients meeting the minimum score. For any industry sector where an appropriate Risk Acceptance Criteria has not been developed, Business Groups and Risk Management will decide how to assume additional risk in that industry sector. The responsibility for developing Risk Acceptance Criteria rests jointly with the Research Department and Credit Policy Division. Industry concentration while developing target markets and Risk Acceptance Criteria, Business Group Heads and the Credit Policy Division must also review industry concentrations in order to establish optimal exposure limits.

Policy
Business groups will formulate target markets in coordination with the Credit Policy division for all business segments as well as for new products. Target market formulation will be conducted through utilization of industry studies. Product Process Manuals will be prepared to facilitate marketing and quick approvals for standard products. Target market studies and Product Process Manuals are subject to continuing refinement as business units mature, information accumulates on risks and/or products, and environments change. Therefore, they must be revised periodically. Target markets will be approved on a minimum of an annual basis. This will form part of Business Groups Plans. INTERNSHIP REPORT ON UBL Page 36

 Credit presentation must clearly indicate that it conforms to the relevant target market plan, and is consistent with the relevant Risk Acceptance Criteria. Any exceptions to the target market plan and/or Product Process Manuals should be reasonable in amount and number, addressed logically, and adequately approved and documented.

Responsibilities
Each business group will prepare its own target market plan that applies to its own business. Guidelines will be submitted to the Credit Policy Division and approved on an annual basis. Product Process Manuals will be originated and recommended by respective Business Units and will be approved by respective Group Heads including Group Executive (Risk & Credit Policy). For matters relating to the Credit Administration Division, Operations, and Treasury, relative Division Heads and/or Group Heads will also be consulted. Development of Product Process Manuals is an ongoing process, made all the more necessary as more innovative products come on line. A list of currently approved Manuals is shown in Annexure No. III. Credit Proposals need to be in line with target market screens. Risk Acceptance Criteria screen scoring and respective hurdle scores become effective for those industries where industry studies have been completed and Risk Acceptance Criteria are in place.

Products
Development of products at UBL is need based and is market dependent. Innovative products will continue to be formulated as and when required. Apart from the below, Policy Credits may be allowed in such cases where policy considerations are preferred over normal credit standards. On the recommendations of Credit Committee, the approval of such credits is allowed, on an exceptional basis, by the President. All politically sensitive credits as well as credits linked with persons holding public offices, above Rs. 10 million, shall be approved by the highest Credit Committee.

SHORT TERM CREDIT FACILITIES

Short-term credit facilities will be used to meet identified short-term needs of clients having satisfactory relationship and will be defined as those credit facilities with a tenor or validity of one year or less. Included in this category are the following lines of credit with a view that orderly liquidation is likely to take place within one year.

Non Interest Cash Finance (NICF)

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Under this type of financial accommodation, the borrower is allowed withdrawal in the current account to the extent of the sanctioned limit. The facility is generally provided against pledge or hypothecation of goods or any other tangible security acceptable to the Bank. The customer would be required to adjust the advance periodically or within a specified period. In the International Division, this facility is also known as Clean/Secured Overdraft (COD/SOD).

Export Finance (FAPE I,II,G / LAPC)

UBL may provide facility against pre-shipment exports at an agreed rate of return, as per guidelines established by the State Bank of Pakistan or respective Central Banks in the case of the International Division.

Foreign Bills Purchased on account (FBP A)

This is a post shipment facility, known as Finance against Foreign Bills. It is allowed to exporters against export bills drawn under usance letters of credit, on sight letters of credit and letters of credit not approved by the Financial Institutions Risk Management Unit and/or Export Sales Contracts. This facility remains on customer risk until realization of proceeds from the Bill of Exchange. Occasionally exporters prefer to avail post shipment financing against export bills drawn by them for exports made under usance letters of credit and/or Exports Sales Contracts. In such cases, UBL may provide finance to its valued customers having a good track record. While financing against clean export documents under collection, a certain percentage of cushion is maintained to allow for exchange cover, interest and other incidental expenses. For these finances, a letter of undertaking must be obtained from the client to indemnify the bank for non-receipt of funds against the accepted bill of exchange. Collateral securities should be held by UBL.

Foreign Bills Purchased against L/C (FBP) & FBP (Disc)

UBL may extend financial accommodation through negotiation and/or discounting at the prevailing exchange rate, of a foreign documentary bill accompanied by relevant documents of title to goods. For financing of export bills drawn under a letter of credit it should be ensured that:

The document has been drawn strictly as per the terms of the letter of credit; All direct bank expenses i.e. foreign correspondents charges, claimed by the opening/reimbursing bank, if any, shall be recoverable from the exporters unless it is expressed in the letter of credit that the charges are on the openers account; INTERNSHIP REPORT ON UBL Page 38

 Due care and necessary precautions are exercised before negotiating/discounting of documents, as per instructions issued by the relevant authority from time to time. Reimbursement instructions in letters of credit shall be carefully studied before negotiating/discounting of documents; and If the bill of exchange is accepted by a Bank approved by the Financial Institutions Risk Management Unit, the associated risk for discounting will be considered Bank Risk. A letter of indemnity is to be obtained from the client.

Payment Against Documents under sight L/C (PADs)

Import documents received under sight letters of credit are lodged in PAD, and are released upon payment from the party. Import documents shall be checked strictly in terms of the letter of credit to ensure that there is no discrepancy. In case of a discrepancy in the documents, the negotiating bank must be immediately advised by telex/cable regarding such discrepancy and dealt with accordingly. In case of import documents received free of discrepancies, the amount of the bill plus charges, if any, claimed by the negotiating bank, would be converted into Pak Rupees at the exchange rate prevailing on the date of lodgment, or at the booked rate where exchange was booked at the time of opening of the letter of credit as advised by the Treasury Division from time to time.

Inward Foreign Documentary Bills for Collection under usance (DA) L/C (IFDBCs)
Import documents received under DA letters of credit are lodged in IFDBC and released against: Acceptance of bill of exchange and execution of Trust Receipt. Pledge of imported goods. In case goods are pledged with the Bank, goods will be cleared through Banks approved clearing & forwarding agent and delivery orders issued against cash receipts. Collateral security against mortgage of property, pledge of Government Bonds, Postal Deposit Certificates, Banks own Deposit Certificates etc. duly assigned in Banks favor. For relaxation in obtaining collateral security, approval of Credit Committee will be required prior to opening of DA letter of credit.

Finance / Loan against Trust Receipt (FTR / LTR)

UBL may at the request of its customers, at the time of opening of a letter of credit or at a later stage, release import documents of related goods received under the letter of credit or against bills under collection both inland or foreign, to enable the party to obtain delivery of the goods and arrange to retire the documents out of the sale proceeds of goods or from other sources. The documents of title are delivered against the customers signature on the prescribed Trust Receipt form or related security documents covering hypothecation of goods.

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Finance / Loan against Imported Merchandise (FIM/LIM)

Facility for financing imported goods against import letters of credit established through UBL may be made available at a partys request on the basis of mark-up for a short period not exceeding ninety (90) days. The facility may be repaid within the validity period either in part or in lump sum. RMs are required to inform their customers and Heads of TPC accordingly to ensure that documents are released to C & F agents only after arrangement of funds for custom duty and other charges has been secured.

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WORK DONE BY ME
At my first day in UBL club road Sargodha , Mr. Mubashar hassan Head RCAD (Regional credit administration department) had introduced me with different persons and department of the bank. After that I had personally visited every department one by one and observed what was happening there. All the officials cooperated me very much and provided me information, which I needed. They also provide me, various information about bank affairs, which I have not known previously. Some of my observations and experience are discussed below.

Types of financing
Agri- financing
In agri financing, funds will be provided for agricultural purpose .

Commercial financing
In commercial financing, funds will be provided for business purpose up to limit of fifty million.

Corporate financing
In corporate financing, funds will be provided for meeting needs of large organizations above fifty million. Corporate financing is controlled by RCAD (Regional credit administration department).

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Here are some functions of RCAD

REGIONAL CREDIT ADMINISTRATION FUNCTIONS

Composition of Credit Functions:

Credit & Marketing Credit Administration

Brief Job Description of Departments:

Credit & Marketing:
1. Market new relationships to increase banks asset based portfolio.

2. Financial Analysis, Evaluation and Processing of Credit Line Proposals. 3. Monitoring of Credit portfolio through Client visits, Factory visits, Inspections and prepare Call Reports, Visit Reports in this regard. 4. Responsible for the compliance of all Pre-approval instructions I regulations issued from time to time by Head Office Credit Policy, SBP and other regulatory bodies including obtaining CIB, Borrower Basic Fact Sheet, Compliance of ratios as required under Prudential Regulations, Per party limit etc.

Credit Administration:
1. Disbursement of Credit Facilities including Preparation of Security / Charge documents,

2.

3. 4. 5. 6.

perfection of collateral, Ensure compliance of SBP regulations I Credit Policy, HO Circulars & Issuance of Disbursement Authorization Certificate (DAC). Regular Monitoring of Collateral & Asset based portfolio through Weekly Roosters / Diaries, CARS Reports, Credit Maintenance, Identify exceptions and follow for the rectification of the same. MIS related to Credit & Credit Admin. Department. Monitoring of Markup accruals, recoveries thereof. Liaison with various outside agencies (RCAD Head). Miscellaneous Jobs.

Disbursement of Credit Facilities

1. 2. Preparation / Filling of Charge / Security Documentation as per Credit Approval Perfection of Securities and identification of exceptions, if any. Scrutiny of Charge I Security Documents after Execution and identification of exceptions / observations, if any. Limit Feeding. INTERNSHIP REPORT ON UBL Page 43

Types of Collateral currently used

Readily Encashable Registered Securities Defense Saving Certificates (DSC) Special Saving Certificates (SSC) Regular Income Certificates (RIC) Special U.S. Dollar Registered Bonds Readily Encashable Bearer Securities WAPDA Bearer Bonds Special U.S. Dollar Bearer Bonds Foreign Exchange Bearer Certificates Shares of Limited Companies CDC Only NIT Units Deposits held in any other Financial Institution Deposits held With United Bank Limited Saving Deposit Current Deposit Term Deposits Deposits held With any other Bank Saving Deposit Current Deposit Term Deposits

Pledge of any Commodity Financial Guarantee Hypothecation of Assets Movables Current Assets Receivables Plant & Machinery INTERNSHIP REPORT ON UBL Page 44

Mortgage of Properties Equitable Mortgage Equitable Mortgage with Token Register Mortgage Registered Mortgage

Clean (SBP has allowed Clean financing upto Rs.500,000- ) Personal/Corporate Guarantee Counter Guarantee

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Steps for Perfection of Collateral and its Security Documents.

Bearer Securities such as U.S. Dollar Bearer Bonds / WAPDA Bearer Bonds / Foreign Exchange Bearer Certificates (FEBC)
Ensure that all blank fields of letter of Lien & Set Off and Schedule of Securities are properly filled in with all detail of the instruments including Sr. No., Denomination, No. of Pieces and Total amount. Make sure that amount of face value of the instruments be specified in the Schedule of Letter of Lien & Set Off. Letter of Ownership should be obtained where the bearer securities are involved. Genuineness of the Bearer Securities to be confirmed from the issuing bank in writing. It is advisable to have a physical verification also from the issuing institution.

Shares
Ensure that all blank fields of Letter of Lien and Schedule of Securities are properly filled in with all detail of the instruments including CDC Account Ensure that shares are in marketable lots and is on CDC. Obtain CDC Activity Report from Treasury Middle Office before disbursement. Daily monitoring of share prices at Stock Exchange is the responsibility of Treasury Middle Office, and margin calls to be generated as and when advised by the Treasury Middle Office in case of short fall arise.

NIT Units
Ensure that all blank fields of Letter of Lien & Set Off and Schedule of Securities are properly filled in with all detail of the instruments including Sr. No., Denomination, No. of Pieces mid Total amount. Amount of face value of the instruments be specified in the Schedule of Letter of Lien & Set Off. INTERNSHIP REPORT ON UBL Page 46

Ensure that shares are in marketable lots. Blank transfer deeds I Surrender Deed duly executed by NIT Unit holder for each lot have been obtained. Signature of NIT Unit holder must be verified by the company on each Transfer deed! Surrender Deed.

Saving Deposits / TDR

Ensure that all blank fields of Letter of Lien & Set-Off and Schedule of Accounts are properly filled in with complete account number(s) under lien. Authority to mark lien in favour of the Bank is also be obtained and the same should be kept in security bag. Account must be blocked with the amount under lien and the proof of such blocking be kept in security bag along with the letter of lien & set off.

Pledge of any marketable Commodity

Ensure that all blank fields of Letter of Pledge and Schedule thereof are properly filled in with complete description of the commodity. In case the goods are pledged in godowns of third party, Letter of Access & Disclaimer duly executed by the third party should also be obtained. Visit the factory premises to ensure that stocks offered are in good condition, properly stacked, adequate fire fighting system available in the godowns area, Board mentioning Under Pledge with United Bank Limited, Branch Address are properly nailed inside and outside of each godowns, Godowns are in good condition and our stocks can be kept under proper lock & key etc. In case of Open pledge, make sure that pledged stocks arc surrounded by barbed wire, fully covered by tarpaulin and placed on wooden sleeper / Platform. Stock report for the pledge stocks duly signed by the Muccadam Company and the Borrower must be obtained prior to disbursement and at the time of any transaction I movement in the pledge. Adequate insurance policy in original with the risks specified under Credit Approval must be obtained prior to disbursement of the facility. Also ensure that the amount of insurance policy remain under per party exposure of Insurance companies as advised by Head Office from time to time. Original Premium Payment Receipt should also be kept alongwith the policy and the amount of the same must correspond with the policy. INTERNSHIP REPORT ON UBL Page 47

 Financing against Financial Guarantee

Text of the financial guarantee should be vetted from the approved lawyer / CLC. Guarantee should be signed by at least two authorized signatories along with their PA. # of issuing institution and signature of the same persons be verified by an officer of United Bank Limited. Confirmation regarding genuineness of the guarantee must be obtained from the issuing bank. It is also advisable that alongwith the genuiness confirmation in writing, physical verification should also be obtained from the issuing bank.

Hypothecation of Movables & Receivables / Plant & Machinery:

Ensure that all blank fields of Letter of 1-Iypothecation are properly filled with complete description of hypothecated assets and its location of storage etc. List of Plant & Machinery (if any) duly signed by the customer should also be attached with Letter of hypothecation. Obtain Search Report (in case of Limited Company) to determine the ranking of the existing banks and Obtain necessary NOC from existing bank (if applicable). Make sure that in case of Limited Companies, Hypothecation Charge alongwith NOC (if applicable) must be registered with the concerned office of SECP within 21 days from the execution of the document. In case of Joint Pari Passu Charge, text of the agreement should be vetted from the lawyer and also obtain approval from 1-10K. Obtain Search report to verify that our charge has been duly registered and ranking correspond with the terms of Credit Approval. Adequate insurance policy in original with the risks specified under Credit Approval must be obtained prior to disbursement. Also ensure that the amount of insurance policy remain under per party exposure of Insurance companies as advised by HO from time to time. Original Premium Payment Receipt should also be kept alongwith the policy and the amount of the same must correspond with the policy.

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Task assigned by the supervisor

Major task
note the different values from the ALAP of agri causes of all the hubs which includes

joharabad about 600 causes,multan about 500 causes and Sargodha about 1200 causes and assist the MIS OFFICER in the uploading in the ubl networking software SYMBOLS.

Other task
arrange all the vouchers of expenses 2012 in the expense file in ascending order such that the most recent voucher comes first in the file Update all the expense file data in the MS Excel sheet prepare the check list of quarterly call reports of all the commercial clients. Understand him CA of commercial clients and assist Documentation officer in noting different important values. Help the processing officer in uploading different values of property causes in SYMBOL

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SWOT ANALYSIS
An analysis indicating towards the organizations strengths, weaknesses, opportunities and threat is termed as SWOT Analysis. Such an analysis is very important for the management in retaining the strength, overcoming the weaknesses, capitalizing over the emerging market opportunities, and carving ways to successfully tackle with the threats and ultimately converting them in the strengths for the organization.

STRENGTHS:
Strong financial backing Internal services assessments and timely review of employees performance. Providing the secure, safe and reliable services to the customers 9:00 to 5:00 non-stop banking Electronic banking Telephonic banking. Expansion in branch network Friendly working environment International Branches Excellent credit rating

Weaknesses:
High employee turnover Lack of research & development Slow career advancement Lack of proper advertising like sponsoring of any festival or event like sports etc. Less job security Decision making process is slow and time consuming. Lack of research and development. Decision making process is slow and time consuming. Lack of research and development

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OPPORTUNITIES:
More innovative products and services The role of personal bankers and relationship managers may increase its market share High salaries and bonus opportunities for attracting employees of other banks Global Expansion

Threats:
SBP prudential regulations for banks Market Saturation Slow industrial development Lack of Promotion and Advertisement Increased competition

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Recommendation
During my internship in United Bank Limited, I got some knowledge about banking system. Here, I deeply observed the functioning of the branch. In the light of these observations, I suggest the following recommendations for further progress.

1) Branch Premises
Branch working environment should be improved and renovated with latest furniture. Sufficient car parking for customers is not available here, so sufficient service area and seating arrangements must be provided for customers.

2) Staff Behavior
Staff behavior in term of customer dealing should be uniform for all customers, without any favoritism that discourages the other clients.

3) Lengthy Procedure
The book keeping system and filling system of the bank is so lengthy and time taking. So staffs document processing time, should be reduced to improve working efficiency through proper training.

4) Proper Check
The cheques payment service and other bills receiving service is very slow, In this way they deliberately waste time of their customers. Therefore, there should be a proper check of manager on them so that they can recognize and understand their responsibilities.

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5) To Be Conscientious
It is usually observed that staff members waste lot of valuable time while performing their duties. During my training period, I felt that all staff members make a lot of unnecessary telephone calls while dealing with their customers. In this way they not only waste a very precious time of their customers, but also waste the wealth of the country.

6) No Proper Security System

During my training, I felt that security system to safeguard the cash deposits of bank is not good. The gunman of the bank is often busy in doing some irrelevant job. So bank should take steps to improve its security system.

Other Suggestions

New blood should be injected and young professionals should be recruited on merit to induce
enthusiasm in the bank. Customers should be focused of all activities to boost up the business.

New marketing strategies should be developed to attract new customers. Maximum automated machines should be used. Security should be strengthened to minimize the chances of decoities. The workers should be given a sense of teamwork and the manager should be trained to
manage the team as good leader.

There should be a proper check on staff members so that they become punctual and
conscientious.

Business promotional activities should be increased to enhance the business.

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CONCLUSION
Steady growth and development of business over the last few years have placed United Bank in a very good competitive position. A strengthened capital base will enable it to expand in new areas while core products will continue to be strengthened/ developed to contribute towards higher profitability. The key to success in this competitive environment is innovation and foresight. I feel compelled to say that working as an internee has truly been a remarkable experience. It was only during the course of this practical training that I got to discover its real meaning.

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REFERENCES
Web sites
www.ubl.com.pk www.google.com www.wikipedia.com www.merapakistan.com www.allfreeassays.com www.marketingteacher.com

News papers
BANKING JOURNAL www.dawn.com www.nation.com.pk

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http://www.docstoc.com/docs/12164051/UBL-Bank

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