Faysal Bank Ltd.

Supervised By: Submitted to: Submitted By: Name. Roll No. Class. Session. Date.

Miss Nafees Akhtar Miss Nafees Akhtar

Sajida Hafeez 39 Msc Applied Psychology 2010-2012 01-10-2012

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Faysal Bank Ltd.

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Contents

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PREFACE
Internship training programme provides a chance to students to make themselves Familiar with the actual business environment. It also provides an opportunity to study the theories of book in practice. This is the reason why the students of IMS are required to complete internship programme at any recommended organization. After completing the internship, it is required to write an internship report, covering all aspects of that organization This report is written on Faysal Bank Limited, which is divided into seven parts covering all the working and behavior of organization

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Faysal Bank Ltd.

ACKNOWLEDGMENT
By the grace of Allah the almighty, who has enabled me to do this entailing hard work. It is a matter of great pleasure and privilege for me to write this internship report on Faysal Bank Limited, Chistian Branch., I am pleased to acknowledge the help which I received in write this report. I express my special thanks to following persons, working in Faysal Bank Limited, Chistian Branch for their kind cooperation in completing this report. -----------------I am also to acknowledge Miss Nafees Akhtar -, the Director of our internship program, has always patronized the internship training programmes & without his inspiring teaching & guidance, I would not have been able to write this report. I am indebted to my class fellows who gave their Valuable suggestions at the time when they were most needed.

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BANKING SECTOR IN PAKISTAN

WHAT IS BANK?
In Simple words we can say that bank is a pipeline through which money moves into and out of circulation. Bank accepts deposits and repays cash to its customers on demand. The bank borrows money at a lesser rate of interest and lends it to the borrower at a higher rate.

HISTORY OF BANKING IN PAKISTAN

At the time of independence, there were 487 offices of scheduled banks in the territories now constituting Pakistan. Following the announcement of independence plan in June 1947, the Hindus residing in the territories now comprising Pakistan started transferring their registered offices in Pakistan, transferred them to India in order to bring a collapse of the new state. By 30th June 1948, the number of offices of scheduled banks in Pakistan declined from 487 to only 195.

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BANKING IN PAKISTAN
Pakistan has indeed unique banking history commencing as were from scratch at the time of Pakistan of this subcontinent. However it soon comes over its extra ordinary banking problems and by grace of Allah we have a stable banking sector.

INTRODUCTION
Faysal Bank Limited (Bank) was incorporated in Pakistan on October 03, 1994 as a public quoted company listed on Karachi & Lahore stock Exchanges. The six Pakistan branches of Faysal Islamic Bank of Bahrain E.C. amalgamated with the Bank when it commenced business operations effective January 01,1995. The year 2002 is the 15th year for Faysal Bank serving the Pakistani economy and market. Similarly, Al Faysal Investment Limited was incorporated in Pakistan in 1991 as the investment arm of the group and make valuable contributions in the public and private sectors based on Shariah approved modes of funding. As of January1,2002, the two entitles of the group in Pakistan, Faysal Bank Limited and Al Faysal Investment Bank Limited, merged into one and today only Faysal Bank Limited remains as a larger, stronger and much more versatile institution among private banks in the country. In fact it is amongst three largest in terms of quality, which after the merger stands at over Rs.4.0 billion. The total balance sheet size of Faysal Bank after the merger is in excess of Rs. 40 billion

SHAREHOLDERS

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Faysal Bank Ltd.

The Bank has been incorporated with an authorized share capital of Rs. 1.5 billion of which Rs.1.1 billion is issued and paid-up. As 31st December, 1995 the Bank share capital was held by: Faysal Islamic Bank of Bahrain E.C.(FIBB) including its nominee directors NIT, general public and employee FIBB is a Bahrain based bank; established in 1982 and is a subsidiary of Dar Al-Mal Al Islamic (DMI), Geneva with H.R.H.Prince Mohammad Al Faisal Al Saud as its chairman

MISSION STATEMENT
OVERALL VISION
Faysal Bank derives its mission statement from its principals Shamil Bank Bahrain E.C and its holding company DMI Trust. The overall mission being: The introduction of a just and equitable financial system by being a world class multi-purpose financial institution, providing a range of specialized services, working on Shariah principles.

VALUES
Training the spirit of Shariaa into modern financial services Maintaining a high reputation for prudence in the financial community Reflecting high standards of integrity, propriety, goodwill and teamwork in its conduct, within the family and its marketplace. products and

HISTORY AND BACKGROUND

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Faysal Bank Ltd. Faysal Bank Limited as incorporated as a public limited company

8 under the

Companies Ordinance,1994 on October 3,1994 in Lahore vide Certificate of incorporation No,LO7391 of 1994-95 with an authorized capital of Rs.1,500 million ordinary shares of RRRs.10/-each.The Ban has been established by Faysal Islamic Bank of Bahrain E.C.,pursuant to the federal Government permission/sanction letter no.F 8(23) Bkg.IV/92-5443 dated April 7,1993 ,as amended, for establishment of a commercial bank The state Bank of Pakistan-SBP, vide its letter no . BRD (NBFI)676/625-E-93 dated September 16, 1993 has also agreed in principle to the setting up of the Bank in term of the governments aforementioned permission letter. SBPs said letter also contains interalia, its agreement in principle for they merger (amalgamation) with the Bank of the existing branches of Faysal Islamic Bank of Bahrain E.C. (hereinafter referred to as FIBB- Pakistan Branch) subject to meeting with the requirements of the law, in particular section 48 of the Banking companies Ordinance, 1962 & on the condition that the transfer of assets &liabilities shall be on the basis of the break-up value or net- worth of the FIBB-Pakistan Branch as per the books. The FIBB- Pakistan branch will merge with the Bank on a going concern basis.

The entire under taking of FIBB in Pakistan scheme of amalgamation are as follows: The entire undertaking of FIBB in Pakistan, including all it s assets & liabilities & all the rights & obligations, etc as at the effective data (data of approval of the scheme by the state Bank), shall with out any future act, action or deed, stand transferred to, & vest in the Bank . As a consequence, the FIBB Pakistan branch shall stand merged with the Bank.

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A consideration for the transfer, the Bank shall pay to FIBB, a sum equal to the non-worth of its branches in Pakistan, as per the books, as on the amalgamation date, the net-worth will be certified by the auditors of FIBBPakistan Branch. Notwithstanding the effective date, the cut-off date i-e the date as of which the amalgamation of FIBB- Pakistan Branch with the Bank shall be deemed to have taken place as envisaged to be the close of business on December 31, 1994. After approval by the shareholders of FIBB &the Bank the scheme would be presented to the SBP for approval in terms of section 48 of the banking companies ordinance, 1962. Bank was incorporated as a public limited company. Its shares are quested in Pakistan. 60% of the capital is held by Faysal Islamic bank of Bahrain E.C & 40% by the general public. The Faysal Islamic Bank of Bahrain E.C merged into the Bank when it commenced business operations on January 02, 1995.

CONFORMITY TO ISLAMIC SHARIAA

The Holy Quran outlines for Muslims a complete code of life for dealing individually or collectively. This is future amplified by saying and practice of Holy Profit(May be upon him) From these guidelines , an Islamic economic system can be elaborated upon, aimed at creating a socially, economically and politically viable and just environment supporting the universal well being of humanity In this context all functions of the bank are performed in strict adherence to the principles of Islamic Shariaa. In order to ensure such conformity of Shariaa, the Bank operations are checked and monitored by its Religion Supervisory Board to

whom the management reports periodically. In case of new operations and activities

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prior approval of Religious Supervisory Board is invariably obtained by the bank management. The Religious Supervisory Board of the bank itself comprises eminent scholars of Islamic Shariaa from Bahrain, Egypt, Saudi Arabia, Turkey, and Pakistan possessing in-death knowledge of the conditions in which the Bank operates. The Groups Religion Board, composed also of many internationally renowned Islamic Scholars, provides advice from time on issue that pertain to Group level implementation

ACTIVITIES OF THE BANK

Its activities include act as a manager, on a trustee basis of a series of Modaraba investments funds and private portfolio investments accounts in accordance with Islamic laws and principles particularly with regard to the prohibition of receiving or paying interest.

SOUND MANAGEMENT
Its sources are largely due to the management style and polices of senior manager. It sees Modaraba syndications as a major growth area and there are possibilities that the bank will arrange such syndications for corporations and companies in these countries especially in the high growth economics of South East Asia in particular Malaysia and Indonesia. There have been suggestions that this type of specialist facility could be intended to other regions such as the Middle East, North Africa and the Muslims Central Asia Republics where commodity export and import finance is in big demand.

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SYSTEMS DEVELOPMENT
Faysal bank ltd. (FBL) provides a unique mix of services to its customers. That is why off the shelf software packages and third party vendours are not successful in providing a complete range of software packages to fully meet the operational needs of its wholesale and retail banking operations, customers services support and sophisticated MIS. The Bank has succeeded in completing in house development of software for meeting all of its requirements. This results in interlining all the operational units of the Bank to allow fast exchanges of data and information.

PURPOSE OF OPERATIONS IN PAKISTAN

The following are the main objectives of the establishments of FBL in Pakistan. 1. 2. 3. To extend Islamic financial services to the people of Pakistan. To enhance trading relations between Islamic countries. To support market opening in Pakistan by diversion and mobilization of surplus funds available from within and from other Islamic nations.

SERVICES OFFERED
FBL offers a wide range of banking services to public and private sector corporations, partnerships, individuals, professional, and expatriate Pakistan working abroad . These services include:

Deposits

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Faysal Bank Ltd. Current Accounts Profit and loss sharing deposit Saving account Call/notice/term deposit accounts

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Foreign Currency
Current and saving accounts Call/notice/term deposit accounts.

Documentary Credits/Guarantees
Import letter of credit Negotiation and collection of export documents Issuance of letters of guarantee Performance bonds, etc.

Financing Short Term

Modarba (Financing resale of goods) Working capital

Short/medium term
Syndicated financing

Medium/long term Modaraba Moshakara Ijara

Other Services
Remittances Demand drafts, pay orders, telegraphic and mail transfers.

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Faysal Bank Ltd. Foreign exchange bearer certificate NIT units. Foreign exchange and travelers cheques.

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SOURCES OF FUNDS
The banks main sources of funds are: a. b. Demand deposits (current accounts balances) Investment deposits (funds under management) Within theses two basic categories, the bank is able to offer differently structured accounts to provide a range of deposit series such as

current, saving, call term, modaraba etc.

SHARIAS IMPLEMENTATION
Bank continues to meet the liquidity requirements by making investments in Shariaa compatible instruments. Steps have been taken to bring operations of the bank in greater conformity with Shariaa operations are under review to evaluate their compatibility with the shariaa and to refine them in consolation with Maulana Mohammad Taqi Usmani, Deputy Chairman, Islamic Fiqah Academy (OIC).

BOARD OF DIRECTORS
H.R.H Prince Mohamed Al Faisal Al Saud Mr. Farook Bengali Mr. Khalid Abdulla Janahi Dr.Said Saad Al-Martan Mr. Mahmood A. Faruqui Mr. Nasir Ali shah Bukhari Chairman President & CEO Director Director Director Director

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Faysal Bank Ltd. Mr. Ziad H.Rawashdeh Mr. Tariq Iqbal Khan Director Director

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EXECUTIVE COMMITTEE
Mr. Khalid Abdullah Janahi M. Farook Bangali Mr. Ziad H. Rawashdeh Chairman Member Member

MANAGEMENT
Mr. Farook Bangali Mr. Khalid Tirmizey President&CEO Country General Manager, Commercial Banking Mr. M. K. Hoti Country General Manager, Investment Banking Mr. Bashir A. Sheikh General Manager Commercial Banking Central Mr. Mohammad Saleem Head of Country Operations & Information Technology Mr. Ahmed Kamran Regional Manager, Corporate Banking Mr.Mansoor Hamdani Mr. Arif Hasan Khan Head of Internal Audit Head of Human Resources& General Services Mr. Ejaz Rahim Deputy General Manager,

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Faysal Bank Ltd. Investment Banking Mr. Zubair Gilani Area Manager, Investment Banking North Mr. Hasan Imam Mr. Mohammad Iqbal Mr. Mohammad Siddique Memon Country Risk Manager Head of Finance Company Secretary & legal Advisor Mr. Sohail Nawaz Mr. Richard Rath Branches Mr. Saleem Shafi Area Manager, North Area Manager,

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Southern

Head Corporate Communications

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ORGANIZATIONAL BEHAVIOUR
ANALYSIS OF ORGANIZATIONAL BEHAVIOUR
Some of the characteristics of the bureaucracy are present in the organizational structure of FBL. These include 1. 2. Positions arranged in hierarchy. In all the departments, excluding the Credit Marketing and Accounts, comparatively higher degree of the set procedures and rules exist.

VERTICAL ANALYSIS
1. Centralization Versus Decentralization Geographical
FBL has its branches in main cities and countries of the world show that it is geographically decentralized.

Functional
and procedures All the seventeen branches of FBL have their own personal
Departments. But, at the same there is a personnel Departments of all other branches in Pakistan Within Multan branch, there is centralization to a greater extent. Up to the level of Assistant Vice President and Grade 2 officers (only in the Credit Marketing Department), there is decentralization and there is too within the rules, polices, of the

State Bank of Pakistan and Head Officers of the Bank in Bahrain.

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2 Flat Versus Tall Structure

The structure of the organization is tall with a few members at each level. As a result there is a narrow span of control and supervisors have close control over their subordinates

HORIZONTAL ANALYSIS
1. Departments
FBL has a functionally departmentalized structure. As the organization chart shows, various functional departments are further departmentalized on the basis of their services.

2. Line and Staff Concept of Organization

Persons at the management level (Senior vice President, Assistant Vice President, and Regional Vice Presidents) are in line while others persons are in staff.

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TYPES OF MANAGEMENT POLICIES

The following main types of managerial polices have been discussed here:

1. Personnel Policies
Personnel polices cover the major problems of providing and maintaining an efficient work force.

2. Marketing Policies
Marketing polices deal with the problems of planning for sales activities.

3. Financial Policies
Financial polices are concerned with the problems of providing and handling capital That is required for the business.

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ARRANGEMENT FOR WORK

1. HOURS OF WORK
Timing of the Job
9.00 a.m to 5.00 p.m Days: with one hour break for lunch and Zuhar prayer 5 days a week

2. VACATIONS
After Causal leaves:
Privilege leaves: 15 per anum 30 per anum

Privilege leaves are given to the employees for relaxation and recreational purposes after continuous work. Such leaves help the employees in mental and physical relaxation. During one month of privilege leaves, employees are also given the pay for that month so as to compensate for the recreational charges he has to bear during that period.

Employees are encouraged to take the leaves allowed to them by the Bank so that they can get some time out of their busy routines. This practice has shown that the employees feel more fresh, enthusiastic, and energetic when return to their jobs vacation.

Medical leaves are also provided to the employees if an employees is not feeling fit and needs for getting well properly. Bank also reimburses the medical expenses and

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their dependents i.e. Bank pays 100% medical free payables on the behalf of its employees.

3. WORKING CONDITIONS
Working conditions both physical and environment is very crucial for employees working in any organization since it is the organization where they spend most of their day. Working conditions can both motivate and de-motivate the employees depending upon whether proper or improper working conditions have been provided. From the environment maintained in, even a person FBL who enters the Bank for the first time can realize that the management of Bank is well aware of the important impact of working conditions on the efficiency and morale of employees.

4. SAFETY
Safety is the main concern for manager, officers and employees. The money and other valuables in vaults and lockers in banking business are more then any other business. Therefore, management of FBL has taken special measures to safeguard the life and property of both their employees and the customers. Many of these measures were decided and taken at the time of the construction of the building while others short term decision were taken after the bank started proper functioning. Some of the salient features of such safety measures are discussed here:

a)

The walls of the lockers area and the cash vault are made up of concrete which makes them non-drillable. Moreover the lockers and the vault are made up fire-proof steel. These measures help preserve the loss and cash either by some human being or by an accident such as fire.

b)

Two gunmen have been appointed at the entrance that makes sure that no suspicious person enters the Bank. These are responsible for safeguarding the

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life and property of Banks employees and customers. One guard is also present at each floor. Shifts of guards change with time. After banking hours, one guard remains in the Bank over night.

c)

Doors are made up of heavy wood so that it becomes difficult for a running person both to enter and leave the Bank. This makes sure that in case of robbery, the person to open the door quickly.

d)

In order to safeguard against fire, special alarm system has been installed in the Bank. Smoke detecting instruments, present on the roof, start ringing the alarm bell whenever they detect smoke. In case of fire, this system will help saving the life of the persons in the Bank who can leave the Bank immediately through special exit door.

5. PHYSICAL CONDITIONS
The following physical facilities have been provided by the Bank:

a) Light
There is a proper arrangement of light in the Bank. The whole bank is illuminated with lights, which makes the working conditions pleasant. Moreover, there is also suitable arrangement for daylight in the entire building.

b) Temperature
Central heating/cooling system ensures the moderate temperature necessary for proper working of the employees. Some other facilities provided to the customers include: calm and quit working environment, modernly designed washrooms, fully carpeted.

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FINANCIAL POLICIES
SOURCES OF CAPITAL
Deposits are the major source of capital for FBL. Deposits are mostly obtained from customers. However, Head Office also invests a certain amount of money as deposit from time to time to earn money on his investment.

MONEY AT CALL
In case the Bank needs capital and deposits with it are not sufficient to its requirements, the Bank goes to the inter Bank market for finances. From this local market Bank can obtain both long and short term finances. Such money is called the Inter Bank Call Money and is obtained at Inter Bank Call rates decided by the SBP.

Investment
Another source of obtaining capital for the Bank is the profits which it earns on Investment Portfolio The amount invested in various projects.

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SERVICE FACILITIES
Faysal Bank continues to strengthen its position in consumer banking. For extending quality service to retail customers, the bank offers attraction local and foreign currency deposit schemes. FBL launched its first branded liability product Rozana Munafa Business Account in July 1995, targeted toward large corporate and personal business. The bank has also redesigned and refurbished most of its branches, having a constant identity in terms of design, dcor and colour. FBL realizes the importance of customer found services. That is why it has commenced evening banking at all seventeen branches. FBL is divided in to following departments, which provide different facilities to different customers: Customer Service Department Documentary Credit Department Credit Administration Department Credit Operations Department Corporate Banking Group Department Accounts & general Services Department Customer Service department is further divided in to two sections which include Account Opening section and Cash dealing section To provide better and accurate service the Bank has computerized the bank accounts which results in saving the time along with greater speed, accuracy and neatness in accounts.

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MANAGEMENT INFORMATION SYSTEM

MANAGEMENT INFORMATION SYSTEM
Information system is the life blood of any firm especially the financial institution. In FBL, managers make use of it to formulate polices, make decisions, and resolve problems. Management and other employees of FBL together with the use of sophisticated computers and carefully planned and designed procedures are able to achieve the maximum pay-offs for the Bank within the special goals. Information is the major ingredient of the success of the bank especially in the credit department where the credit officers get all the pertinent data, organize it in a form suitable for the managers and to obtain necessary information and to base their decisions upon some logical and sound footings. In FBL management Information System is the responsibility of the Account Department. All the information generated in various departments is routed to the Accounts Department where it is presented in a form usable for the managers at different levels and other users of information.

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INFORMATION
SOURCES OF INFORMATION
Patterns of communication exist to ensure that the manager get right information at right time. Some sources of getting information include; telephone, personal communication with employees, public, etc. other banks, and clients. Upper management is also one important means of providing information to the credit officers who organize these into useful form.

PLACE
Location
Keeping in view the customer group, target market, and resources of the Bank, it has the possible location (so far as Multan branch is concerned). FBL is neither a saving bank nor it has a very huge target market consisting of all types of customers from small to large, therefore, the present location i.e. at Abdali road a very clean and open area of Multan is more than suitable for the Bank. Beautifully designed and decorated building with neat and clean surroundings, and pleasant colour combination in the interior just matches the tastes and appeals of its customers. Area surrounding the bank is also inhabited by those people who fall under the target market of the Bank.

Distribution
Most of the offerings other Bank are of an intangible nature. As a result of the lack of a physical product, there is no need for the distribution and the middlemen. The bank has its ten branches in Pakistan where services are created and offered to the customers without the intervention of any middlemen.

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PRICE
SBP has an important role to play in formulating policies regarding the commission rates, charges to be taken, tax to be deducted, etc. from the customers. All the commercial banks have to operate within in those prescribed limits and FBL is no exception. It follows and charges the rates as issued by SBP from time to time. There are, however, certain services for the provision of which SBP has given maximum and minimum limits to be charged from the customers. In such situation, FBL does offer confessional rates to certain customers for competing in the market. The above discussion makes it clear that there are not very significant changes in the prices of services offered by FBL and other bank. FBL does not charge anything to the customers for their statements. Customers can come to Bank many times in a month and can get their statements within minutes. This is the additional edge that the Bank has over many other Banks.

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PROMOTION
Customers satisfaction is the major policy of the Bank along with many other policies. It is because of this policy that Bank provides best services, best6 environment, and courteous behaviour to its customers. As a result, customers not only themselves remain loyal to the Bank but also speak good to others about the bank. Since a satisfied customer is more powerful means of promotion than both advertising and personal satisfaction, therefore, FBL pays more attention for the satisfaction of the customers. The Bank. thus, do not need to spend huge amount on promotional medias.

Sales Appeals
Sales appeals used by the bank primarily consist of promptness and accuracy of services. Other things that help the bank in establishing itself in the market are quality of services, personality and ability of officers, and sincere attitude for the well being and financial help of the customers.

Sales Promotions
FBL uses newspapers, journals and magazines for advertising purpose with the objective of telling public about the services provided by the Bank. The share of advertisements in total expenditures is, however, very less. The reason is that the bank management believes in promoting the good name through personal solicitation. Moreover, for existing set up, a satisfied customer and a happy employee are sufficient for necessary promotion.

Effect of Incorporation

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The Bank has gone in to public from January 1995, so managers have, therefore, planned to increase the expenditures for advertisements. Advertisements will become important because general public want to know and hear about the company in which they invest or plan to invest money.

ACCOUNTING PROCEDURES
The accounting system followed by Faysal Islamic Bank is completely tailored to its own individual needs and to the needs of modern banking. Accounting system has been designed not only to record post facto information but also to cope with the needs of forward- looking decision making. A good information system should be capable of generating all information for planning, organizing and controlling the activities of an organization from a common database.

COSTING
Quite clearly no meaningful plan can be established without the fullest possible information. An efficient costing system is needed so that the cost of different services and of running different parts of the system can be established as precisely as possible. Accuracy of accounts is desirable and essential for the success of the Bank. Bank neither buys nor sells goods and commodities. It renders certain services to his constituents, the cost of which it finds out in order to see whether or not a certain customer account is a paying one.

MOST ESSENTIAL REQUIREMENT OF SOUND BANK BUSINESS

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Bank keeps accounts not only for the purpose of finding the cost of an article, or certain services, but also for finding the exact amounts owing to and by industrial and commercial concerns. In this regard, FBL is very careful because failure to keep proper accounts not only affects its credit, but it may also land it in difficulties. Sometimes even businessmen depend upon their bank records in the matter of their financial dealings. Bank cannot afford to be careless in the, matter of accounting, and therefore, this department has been placed under a competent senior officer of the Bank.

OBJECTS OF KEEPING PROPER ACCOUNTS BY BANKS

The chief objects with which bank accounts are kept, are the following: To have a chronological account of all transactions done by the Bank, as it must be able to produce sufficient proof of what it does from day to day. These running accounts are very important. To know the exact amounts owing to and by the Bank. Unless the Bank knows what are exact amounts due from various customers, it cannot possibly make demands upon them. Similarly, unless a Bank knows what are the amounts owing by him to his customers, it cannot honour their cheque and make other payments required by them. To know its exact position at all times and, thus, to find whether or not the business is making progress.

OBJECTS OF KEEPING PROPER ACCOUNTS-IN SYSTEM TERMS

Main functions of record keeping, in system term are the provision of information and implementation of control.

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BAD DEBTS
Multan branch does not have any bad debts. Accounts Department has, however, created a general provision for bad debts.

CURRENT ACCOUNTS
Under the Islamic financial system as governed by the glorious Sharias, clients wishing to deposit funds with an Islamic financial institution and seeking their guaranteed return do not receive any income or benefit. Such funds are indicated as current accounts and Bank treat these as loans from the customer to the Islamic financial institution repayable on first demand. Bank chooses to make use of such funds for investment purpose on its own risk. Current account funds are treated as the Banks liability and are reported above the line in the Banks balance sheet.

DEPOSITS ACCOUNT
An investor can deposit his amount in the Deposit Account in FBL if he wants to receive benefits, if accruing, from the investment of his funds. The depositor assumes all the risks inherent in the investment of such funds. Faysal Islamic Bank guarantees the return of the principal only not profit. Only in the case of gross negligence on the part of the Bank, which is proved as such, the Bank is liable for making good losses incurred owing to such proved gross negligence.

BASIS OF ACCOUNTING FOR CASH

FIFO basis is used for the cash in the main safe.

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ACCOUNTING CONVENTIONS
Bank record of savings accounts shows all deposits, withdrawals, and dilly balance in account. Rank record of current accounts shows all deposits and withdrawals.

EXPENDITURES
CAPITAL EXPENDITURES
Separate budget is made for capital expenditures on which only depreciation can be charged. Estimated cost for the purchase of capital asset is included in the budget and depreciation is also charged to the asset to show the exact value of the assets after certain period.

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REVENUE EXPENDITURES
Proper budgeting of each and every revenue expenditure is done. For example, an important item in the overhead charges is the employee cost. To prepare the budgeted figure of this expenditure, the bonus that is expected to be given to employees, any increment that is expected to be given to the employees, and the pay of the employees for that year are added together to find the employee cost. Moreover, any chances of increases or decreases in the employee cost, depending upon the plan, to hire new employees or to terminate an employee are also taken into consideration while making budgets, likewise, each item of expenditure and income is taken into consideration to find out the budgeted figure of it. Theses amounts are then presented in the form of profit and loss account to calculate the net income for the years.

POLICY
Any expenditure-capital or revenue is treated as revenue expenditure if it is up to Rs. 5,000. Above this level, capital expenditures are treated in capital account.

REVALUATION
Heavy expenses are amortized over the period for which these will remain in use.

ENTERING RATES INTO SYSTEM ON DAILY BASIS

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New rates are fed into the computer on daily basis. These rates are then used for finding the daily position of balances. Whenever a new rate is fed, an evaluation entry is generated that automatically debits or credits the accounts (according to the increase in FCY rates) to keep the total balance according to new rates.

ACCRUAL REVERSE
Bills of electricity, gas, etc. consumed during a month come next month. Therefore, provision for taxes are kept for the month. At the time of receipt of actual bill, entries made are reversed and entry for actual expense is entered.

CUSTOMER SERVICES DEPARTMENT

Mr. Kamran Ashraf is the head of this department. Customer Services Department of Faysal Bank Ltd. Can further be divided into following sections: Customer Services Section Cash Dealing Section It started its function on the very first day of operation of the bank in Multan. Mr. Kamran Ashraf is operating this department.

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CUSTOMER SERVICES SECTION

Mr. Kamran Ashraf is dealing with this department. In customer services section, the customers are provided the following services: Opening the Accounts Special Deposits Remittances Collections Issuance of Travelers Cheques (T/CS). Issuance of Foreign currency (USD, Pound, DM) Receipts of T/CS. Receipts of Foreign currency. Some of these are described below:

ACCOUNT OPENING
It is the most important department of bank Mr. Kamran Ashraf deals in this department. Following procedure is adapted for this purpose.

PROCEDURE OF ACCOUNT OPENING

It is very simple and quick procedure. A person who wants to open FBL provides the facility of opening the accounts according to open an account must has the introduction of banks staff or any existing account holder of the bank. The customer is required to fill an opening form. AOF is very standard and up to the mark which contains almost all information about the customers. Customer is guided to fill to fill

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all columns of AOF.All formalities and requirements are completed and verified, and all supportive documents are taken and checked according to the nature of account. If any formality is incomplete, cheque book is not issued until it is fulfilled. Account number is allotted to the customer and all particular such as nature of account, opening date, initial deposit, title of accounts are written in register Account is opened in the system by putting all the particulars of the customer in the system. The letter of thanks is sent to the customer for confirmation of address. After complete procedures finally the manager of the Bank signs the AOF and these forms are filed in proper sequence.

TYPES OF ACCOUNTS
There are following types of accounts:

Individual Account
Any individual or proprietor of a business can open an individual account at FBL Following requirement has to be fulfilled for this account. Signature of the customer Name of the customer N.I.C photocopy attached Name and account no of the introducer Verified sign of the introducer Joint Account When more than one person opens a single account it is called it is called joint account. The names of persons are written on title of A/C

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Joint A/C cannot be opened by single person. Both persons have to sign on cheques. Following requirements has to be fulfilled for this account Sign of both customers on the back of AOF Sign on joint A/C # mandate NIC copies of both members Mode of operation Name and account number of introducer

Third Party Mandate

In this type of account A/C holder can authorize any person to draw his account. He is authorized to run that title of account. Title of account will be in the name of account holder. Following are the requirements for this type of account: Copy of NIC Power of attorney

Company Account
In order to open an account of accompany there are following requirements: An up-to-date copy of the companys memorandum & articles of association The companys certificate of incorporation The Companys certificate to Commerce Business (Public company only) Also following documents are required: Copy of certificate of Incorporation Memorandum & articles association

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Faysal Bank Ltd. List of directors Copy of board resolution Certificate to Commerce of business (if required) Signature cards Copy of NIC

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CLUB, SOCIETY, ASSOCIATION OR TRUST

The opening of this account require:
Copy of NIC of all society or Trustee members Stamp of society or club Certified copy of resolution Copy of rules List of office Bearers

Partnership Account
Account title will be the name of the partnership firm. Following are the requirements for opening this account: Sign of customers on back of AOF NIC copies of all partners Partnership deed (certified copy) Partnership mandate (prescribed format) Companies rubber stamp

Foreign Currency Account

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Faysal Bank Ltd. For opening of this type of account Copy of NIC Copy of Passport

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Closing Of Account
When a customer wants to close an account he has to give a hand written application to the head of the operations department to close his account plus remaining leaves of check book. The manager first verifies the sign of A/C holder then closing is done from the register on the computer where the account was opened. In the File of the A/C holder his account opening form is crossed.

Cheque Book Issuance

When the account is opened, then the customer is given a customer is given a cheque book sign upon and encash money. It proceeded as included:

PROCEDURE
The account opening formalities must be completed before issuance of check book. Particulars of the check book requisition should be completed containing title of account, account number, type of currency and signature of the customer Signature of the customer are verified on the requisition.

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The check book is taken from safe/locker. It is assured that series of check. Particulars are entered in the cheque book issuance register. Account number is stamped on every leave of the check book and those leaves are counted. Name of the account holder is written on the cover of the cheque book. And requisition on the check book for further issuance is properly filled, stamped and signed by office of the bank. Cheque book is delivered to the customer and his signature are taken on cheque book issuance register. Check book serial number entered in the system. Stock of cheque book are balanced at the end of each day and kept under safe custody. FBL issues the following cheque books Saving account25 leaves Current account - 50 leaves

TYPES OF ACCOUNTS
FBL deals with the following types of accounts: Faysal Sahulat Account (Current) Rozana Munafa Account Rozana Munafa Plus Faysal Premium Account FCY Saving FCY Current Faysal Sahulat Account

TYPES OF CUSTOMERS

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FBL open accounts for the following types of accounts depending on the type of the customers: Individual Personal Account Joint Account Sole Proprietorship Account Partnership Account Public Limited Private Limited Association, Clubs, Charitable Institutions, etc. Account. Attorney Accounts Autonomous Accounts

DORMANT ACCOUNT
Current and Saving Accounts, which remain inactive for the following periods are classified as Dormant Accounts: Current Accounts L.CY. 06 months Current Accounts F.CY. 12 months Savings Accounts F.CY. 06 months Savings Accounts F.CY. 12 months

PROCEDURE
The EDP unit provides daily a list of those accounts, which did not have any customer, oriented transaction for the last six months and have now been transferred

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to Dormant section. The ledgers of such accounts in marked as CAUTIONDORMANT ACCOUNT. The specimen signature cards of Dormant accounts are taken away from Tellers area and are kept in the custody of the officer who has been designated to approve operations in the Dormant accounts. When an account has been placed on Dormant status, a letter is sent to the account has been inactive for sometime and it is appreciated if he continues to use it. Upon reclassification of the Dormant account, the accounts are transferred to active are with the prior approval of the incharge of the Customer Services Department.

CASH SECTION
Mr. Manjoka deals with this department. Cash section of FBL works under the operation department. This department is given the complete responsibility of cash, as result of transaction in touch local and foreign currencies. It is also responsible for safe custody of cash. This department performs the two main functions: Cash Receipts Cash Payments

CASH RECEIPTS
Mr. Manjoka deals cash receipts in this department depositor uses deposit slip for depositing the amount in to their accounts. The officer cheeks if the deposit slip is properly filled up containing title of account, A/C number, date and amount in words

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and figures and figures. Detail on both counter files and cash receipt voucher should be the same. Cash is receipt by cash receipt officer, twice counted and matched with the deposit slip. The cash details are written on the back of the deposit slip and also entered in the cash receiving register. Cash received stamp is affixed on the face of the deposit slip along with the signatures of the cash receiving officer. Deposit slip and cash receiving register is given to the officer in the cash.

PAYMENT OF CHEQUE
Mr Manjoka deals with the payment of the cheques .First the cheque is presented by the customer or holder to the cash payment officer. He confirms that it is drawn on the same branch and particulars of the cheque are properly filled in. One signature of the holder is taken on the back of the cheque. Cheque is handed over to the officer of the cash department. For scrutiny where the officer checks the amount in the words, figure, date, payees name crossing if any account number cheque serial no and signature of the customer. It is posted in the System And posting stamp and number is affixed on it.Cheque is handed over the cash payment officer for the payment and the cash paid stamp is written on the back of the cheque. Enteries passed in the cash payment register

SPECIAL DEPOSITS
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SPECIAL DEPOSIT INCLUDE

a) CDR (Call Deposit Receipt)
These Deposits operated on no profit no loss basis. Money deposited with the bank this head is exempt from Zakat. Customers who deposit their money under this head can get money when they need it. CDR can be made Open as well i.e. the person who deposits the money does not need to do signature for getting the deposited money back.

USES
CDRs are used by the customers for making the payments of bills. 2) DRs are used for keeping the money temporarily in the Bank without involving the procedure of writing cheques because cheque is a legal document of the money deposited by the customer, which he has to show to the tax authorities

NDR (NOTICE DEPOSIT RECEIPT

The following are the period for which these terms deposits are issued: 07 days 30 days Profits are given on theses deposits and Zakat is also deducted from these deposits.

TDR (TERM DEPOSIT RECEIPT)

The following are the period for which these terms deposits are issued: 1 month

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Faysal Bank Ltd. 2 month 3 month 6 month 1 year 2 year 3 year

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FUNDS TRANSFER APPLICATIONS

For the transfer of funds the following applications are required here: Telegraphic Transfer (local/foreign) Pay Order Demand Draft (local/foreign) SBP check

PAY ORDER
Pay order is issued for local station. Application form is given to the customer to fill. Two signatures are taken on the form .One for request and otter for receiving the instrument. All the particulars of the application form are checked and bank commission charges and with holding tax is written on the top of the application. If the customer is maintaining his account with the branch he can give cheque for the total amount of instrument plus bank charges. Cheque and application form is then given to the officer cash department for payment ,post the cheque and signs the application .If the customer wants to pay cash, cash is deposited on cash counter Cash receiving officer receives cash on the application form along with the bank charges and withholding tax. Application form is given to the remittances incharge for

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issuance of instrument. He enters all the particular of the application form in the system and computer gives the auto control number to the instrument.

DEMAND DRAFT
Demand draft is issued for some outside station. It is the instrument that is used to transfer amount from one city to another city. It can be made on cash as well as on the cheque. If it is made through cheque, then it is necessary that the person must be account holder. While in the case of cash, it consist of the three copies. Original copy which is given to the account holder DD advice is sent to the central branch Copies for reconciliation. Its photocopy is kept with bank while original is sent to the head office for reconciliation.

PROCEDURE
The client who wants to transfer his funds from one city to the other fills a form requesting the bank to prepare a DD.DD application form contains columns requiring information for the preparation of DD. e.g. Beneficiary name Applicants name Address Amount to be sent etc Bank deduct charges against DD.

TELEGRAPHIC TRANSFER

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It is another mode of transfer of the funds. It is the quickest mode of the transfer of funds from one city to the other city. For TT, client has to submit the application on prescribed form of the Bank. Client can deposit money in the bank or can request the bank to deduct the amount. Against the TT along withy the charges against the issuance of TT from his account. The charges against the issuance of TT charged by Faysal Bnak.

Call Deposit
When the party wants to give payment itself to another party then it makes call deposit. The bank keeps it with itself unless it does not receive instruction from other bank. Normally it is made on cash and goes on party account.

PAY SLIP
It is used when Bank itself pay for any type of transaction e.g. purchase of stationary.

COLLECTIONS
All the cheques under collection are called cheques under collection in FBL.There are two types of bills for collection: Outward Bills for Collection Inward Bills for Collection Outward Bills for Collection

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All the cheques are received on one counter along with the paying slips duly filled in properly containing particulars of cheques and account holder. Counter folio of paying slip is handed over to the customer by putting stamp for cheque received for collection of FBL on it duly signed by officer. Theses cheques are scrutinized and cheques for local clearing are separated from OBCs. Cheques for local clearing are entered in clearing register, whereas cheques for collection are entered in OBCs register and handed over to the bills department for Collection. OBC number is allotted to the cheque from OBC register. Special crossing and Bank endorsement stamps are affixed to the main branch of that city for collection.

RESERVE CASH
Cash left with the Bank at the end of the day Reserve cash is divided in to two parts: is known as the Reserve Cash.

CASH IN HAND
It is the cash which is not kept in vaults but is kept in special boxes. There are two tellers in the Bank and each of them has a separate box for putting cash in hand. As per policy, Cash in hand should not be greater than Rs. 1500000 . Any amount greater than this amount is transferred to the vault at the end of each day.

CASH IN VAULT

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Any amount (in whole numbers not in paisas) greater than the Cash in hand and which cannot be kept in tellers boxes is placed in vaults.

CREDIT DEPARTMENT
The credit department comprises of following three departments in FBL. Credit operations Credit Administration Corporate Banking Group

CREDIT OPERATIONS DEPARTMENT

Mr. Kazmi deals with this department. It also started its function from the very first day of the bank. Following facilities are accommodated by this department.

1) FUNDED FACILITIES
LPO (Local Purchase Order) Ore-shipment Post shipment

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Faysal Bank Ltd. T/R (Trust Receipt PAD (Payment against Documents)

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2) NON- FUNDED FACILITIES

a) Sight LC b) Guarantees

DOCUMENTS AND FORMALITIES FOR APPROVAL OF FACILITY

Following are the documents and formalities, which are to be submitted by the customer in favour of FBL Request Letter Board resolution Signature of customer/partner /director Visiting card NID card (NIC) Certificate of incorporation Certificate of commencement of business Import/Export Registration Number Financial of last three years + Audit reports Commitment if required In case a new customer comes to FBL and asks for approval of facility (Project Financing), the concerned bank officer asks him, to submit following documents to him. Request Letter

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Faysal Bank Ltd. Feasibility Report Background Information sheet

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And all other documents which he thinks must be submitted. In Feasibility report, the concerned bank officer observes the following points before he makes the decision of FAF.

INTRODUCTION
Sponsors Project cost details Debt Equity ratio Implementation or construction schedule If the (officer) is satisfied he will make the proposal of facility.

A) LOCAL PURCHASE ORDER

Definition
It is a short term provided by the bank through its own sources to the customers for the following purposes: To purchase the stock of raw material To meet expenses of production To meet the expenses other than production

Rate
Profit is charged on it after 90 days or quarterly Rate of profit is different for different customers

Period

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Faysal Bank Ltd. PAF of LPO is available for only one year

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After one year if the customer wants to renew this facility, bank will see if the (customer) had fully utilize the credit facility in the previous year. If he has fully utilize the credit facility and paid the profit satisfactory, he will be given this facility again. But if he has made satisfactory repayment of profit but has not fully utilized his credit facility, he must give solid reasons acceptable to the Bank if he wants to renew his credit facility for the new year Bank will either hypothecate or pledge the stock of the customer Bank is more secure in case of pledge because items pledged are placed in covered godowns, watchman is appointed by the Bank, Banks Board on godown, and register record is maintained for amount of items containing in or going out of godown. In case of hypothecation, goods may be placed in uncovered godowns, So Bank is not very much secure. b) Equitable Mortgage property (i.e. customer cannot sell property or rent it, if the Bank does not agree). c) Personal Guarantee of Directors

B) PRE-SHIPMENT (OWN SOURCE)

A customer comes to bank and asks it to provide him credit facility so that he can produce items which he can ship (export). Securities (For PAF) 1. Personal guarantee of directors 2. Charge on Export bill sent in collection 3. 4. Lien on property. (Sometimes) Hypothecation

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Rate
Different rate of profit is charged on this credit facility, from different customers. Usually 16-20%

Period
Maximum period for which this loan can be provided is 180 days but PAF is prepared for 1 year and can be renewed each year.

DOCUMENTS: Required from Customer

LC or Contact Request letter Demand promissory note

C) POST SHIPMENT (OWN SOURCE)

This is the credit facility required by the customer after he has made shipment and needs funds for carrying on his production of goods. Documents Required from Customer (By C.O Dept) LC or Contact E Bills of Lading Bill Exchange Invoice Other documents

SECURITIES
Required for Proposal raising or PAF Personal guarantee of Directors Lien on Export Bills sent in collection

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Faysal Bank Ltd. Property under lien

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Rate
This credit facility is provided at different rates to different customers. Usually 1014%

Period
It can be provided for maximum of 180 days but PAF is prepared for 1 year (it can be renewed each year).

D) CREDIT FACILITY AGAINST SIGHT L/C

1. Trust Receipt (very near to LPO)
When a customer has imported goods but cannot make payment against the Draft Bill of Exchange then Bank his signature on T.R documents and pays for imported goods on customer behalf. Then Customer must pay the amount for which goods were imported on the date as agreed as well as Profit to the Bank on T.R facility.

2. Securities
All those securities as per LPO. If Credit operations Department prepares PAF under sight LC Bank retains a certain amount of CASH MARGIN on imported goods amount (Not less than 30% under new policy). Lien on imported goods.

E) CREDIT FACILITY AGAINST USANCE LC

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Acceptance
Customer signs an acceptance in favour of Bank that he will make payment of imported goods up to a certain date, so bank pays the amount of imported goods. Securities required Lien on imported goods.

NON-FUNDED FACILITIES F) BANK GUARANTEES

Customer obtains bank guarantees to give to different institutions e.g Sui Gas Corporation.

Securities
Cash margin of guarantees Personal guarantee of the director Equitable mortgage of required value of property

G) FINANCIAL GUARANTEES
When the Bank(e.g FBL)is not in a position to give credit facilities to the customer it will issue a financial guarantee to customer.

LONG TERM CREDIT FACILITIES

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It means FBL provides long term finance to the project. Project financing facility is normally given in case when new project has to be set up. All its details are given below:

Securities
All the stocks, properties and assets are in the charge of the bank, i.e Bank advances finance on the security of whole project.

Period
This PAF is prepared or renewed every year.

Profit Rate
Profit rate is different for different customers.

Types of Project Financing

Foreign Currency Credit facility (for import of machinery) LMM (Credit for Local Machinery Manufactured) FAPC (Finance Against Packing Credit) Most of the Banks (Foreign) avoid giving credit facilities to the customer and also FBL does not prefer to offer these credit facilities.

Period
5 to 10 years but PAF renewed every year.

LEASING
FBL makes two agreements with the customer. Lease Agreement Sale and Lease Back Agreement

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Procedure
Customer opens LC for the import of machinery but the Bank pays for it. Then Bank acts as the lesser and the Customer as a lessee, and machinery is given to Customer under lease agreement.

Bank calculates and notes the following:

Principal amount of item to be leased. Say 50,00 Million. Residual value (say 10%)(at the start of lease period) 5.00 Million. Documentation fee Suppose Rs. 300. Front-end fee (1% of principal amount) Rs.500, 000. Then concerned Bank officer prepares Authorization Schedule. Name of the customer is (single party or customer or company is mentioned on the top of the page. Background Date of registration Authorization Capital + experience Chief executive name +experience Line of business Nature

PAST PERFORMANCE
Availability of Facilities: Facilities sanctioned and if under utilized then solid reasons for utilization. Nature of facilities

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Adjustment of facilities: How much of facilities has been adjusted or satisfied Operation of current account: What is the average balance, minimum balance (maintained or not) Profitability: Banks earning on customers current account during previous year Expansion of business Charges in corporate set up

DOCUMENTARY CREDIT DEPARTMENT

Mr. Zaidi deals with this department.

TYPES OF FACILITIES
There are two types of facilities: Non-funded Facilities Funded Facilities

NON FUNDED FACILITIES

FBL gives guarantees on the behalf of its customers to pay the principal in case of any mis- happening on: Customer Guarantees Sui Gas Guarantees Wapda

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Faysal Bank Ltd. Excise Financial Institution

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When one client goes to a financial institution for loan, that institution does not believe on customer and demand for Bank guarantee. Then financial institution gives his guarantee to another financial institution. There are non funded facilities in which Banks own finances are not utilized. Other non-funded facilities include: Letter of Credit L/c at Sight L/s Usance

FUNDED FACILITIES
Funded Facilities are those which are related with the flow of Finances. In funded facilities Banks own finances are involved. Theses are of many types:

Export Facilities
Pre Shipment Post-Shipment Long Term Financing

Import Financing
Financing Against Imported Merchandise (FIM) Trust Receipt Foreign Bills Purchased

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Provision of non funded facilities is the responsibility of Documentary Credit Department, while the provision of Funded facilities is the task of Credit Operation Department.

DETAILS REQUIRED ON GUARANTEE

FBL generally asks for the following details on guarantee: Name and address of the applicant Name and address of the beneficiary Currency and amount of guarantee Terms of guarantee Expiry date of guarantee

ENTRY IN GUARANTEE REGISTER

A separate register known as guarantee register is maintained for recording guarantees issued by the Bank. Date, letter of guarantee number, name of the applicant, name of the beneficiary, commission, amount of LG and date of expiry are recorded in it and a running serial number is allotted to the guarantee there from.

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MAINTENANCE OF RECORDS
Pricing And Distribution of Export Forms: FBL maintains a complete record of all export forms printed by the Bank and of their distribution to their branches and customers. For this purpose, it maintains a Stock Register which shows branch-wise distribution of the export forms.

MAINTENANCE OF PARTY WISE RECORD OF CERTIFIED EXPORTS FORMS

Bank maintains another for recording therein the particulars of export firms issued and certified by it in respect of each exporter. In this register it records against each form, the date of submission the export documents when shipments have been made.

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ACCOUNTS DEPARTMENT
Mr. Nadeem deals with this department. Accounting department is the running blood of the Faysal Bank. It handles almost all the problems occurring in the bank. The important activities preformed by accounts department are as follows:

TREASURY
A special officer in FBL performs a portion of this operation.

CLEARING
Mr. Liaqat Ali deals with clearing. Before discussing it is necessary to what is clearing? The process by which cheques exchanged between the collecting and paying bank and the ensuring financial settlement is called clearing This is facility is provided by the state bank of Pakistan for offsetting of cross obligations between the different banks. Clearing is of two types.

Inward Clearing
When cheques drafts, etc, of our branch presented to us for clearing by the SBP. Cheques to be honored be bank.

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Outward Clearing
The cheques of other banks which the account holder deposits in their accounts are send for collection. Clearing process (inward/outward). Here the local cheques are received that are drawn on FBL. All the cheques are received on one counter along with the paying slips duly filled in properly containing particulars of cheques and account holder. Counter folio of paying slip is handed over to the customer by putting stamp for cheque received for collection for Faysal bank limited on it duly signed by officer. These cheques are scrutinized and cheques for local clearing are separated from OBCs. These are then entered in clearing register and cheques for collecting are entered in OBC register and handed over the Bills Department of Collection. Clearing officer checks and verifies titles of all the cheques deposited by the customer to confirm the good title of the cheques. Cheques are scrutinized proper and paying slips are separated from cheques. Special crossing, endorsement and clearing stamps are affixed on the cheques. Cheques of each bank are sorted and arranged branch wise. All the cheques are then entered into the clearing system of bank. Print out of the clearing is taken and details are attached. With the cheques of each bank. Details of these banks are then entered into the clearing schedule containing number of cheques presented and their total amount against the name of each bank. Then total number of cheques presented to all banks and their total amount is written on the foot of the schedule, which is tallied with the clearing register. Next morning these cheques are delivered to the respective banks in clearing house of the SBP between 9:00 to 9:30 AM. In the same manner, other banks present their clearing drawn on Faysal Bank. Total number of cheques and their amount delivered

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to other banks are received from them are written on the clearing House schedule and handed over to the Officer Clearing House SBP. Cheques/DD received in clearing are given to the Officer Cash Department of the branch for their payment. After proper scrutiny of cheques, verification of signatures and confirmation of balance in the account Officer Cash Department pays these cheque by canceling and posting them in the system.

ADVANTAGES TO FBL
Foreign currency is purchased at a certain rate. During the period if rate increases to a higher rate, the difference between the two rates is the source of income for Bank. In case of any mis-happening, Banks risk is minimum because foreign deposits are backed up by SBP. Receipt of Foreign Currency By law, the branch of any bank cannot keep foreign currency. It has to sell this currency at spot rates to its Head Office. Therefore, whenever the Bank receives Foreign Currency through cheques, it sells this amount on the same day to Karachi branch.

BUDGETING
Accounts department in the bank is responsible for making all the plans for the bank. These plans range from yearly to daily plans.

Five Yearly Budget

Bank first of all makes a plan for five years. This plan include the budgetary figure for five years, new avenues to search, new customers to find, etc. Such a plan gives only

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the broad guide to mark the direction in which the bank wants to move in the near future.

Yearly Budget
Next step is that the account head makes a very accurate yearly budget incorporating all factors like increase in tariff rates, rules and regulations of SBP, dollar fee, charges in profit rates, etc. The annual budget is made for the year on quarterly basis. The budget, this shows the targets for the bank, e.g. target deposits to be achieved, targets expenditures, target profit, etc. After the approval of the budget by the top management, it is communicated to all levels.

Comparison
Bank employees, management, etc. try their best to achieve the targets. After each quarter to access the performance of the bank in terms of established objective, the actual figure for income, expenditure and profits are compared with budgeted figures. The quarter-wise analysis is done for control purpose. It helps in finding out whether the expense have increased beyond the targets and whether the objectives set by the management have been achieved. The answer to these questions help in finding out the areas wherever the performance was not up to the desired level.

Revised Budget
Revised budget is sometimes necessary in order to incorporate the new policies introduced by SBP or to show the effect of new changes in rates, etc. Budgets made by the accounts department are flexible budget to readily incorporate the rates of uncontrollable factors.

Monthly Review
Officers in accounts department makes profit and loss accounts both at the end of the each quarter and at the end of each month. The advantages of monthly review is that

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the management comes to know about any deficiencies which are hindering the way of achieving the targets and then can try to overcome these in the subsequent months. For example, if the income earned from the investments made by the bank falls below the budgeted figure, the bank management can start looking for new avenues so that the gap between the budgeted and actual figures can be minimized during the subsequent months. The advantages of these budgets is that at the end of the year, management has the annual, quarter-wise as well as monthly figures for review purpose.

Variances
Any variances resent in the actual amount and budgeted amount is probed into all the factors; internal, cultural, social economical and political are taken into consideration. If for example, the expenditure increases as compared to budgeted figure as it happened last year when the printing expenditures had increased because of increase in the cost of paper, the true causes of the increases are found out. If the causes are out of control as in the above mentioned case and are expected to prolong, appropriate adjustments are made in the budgets. If , however, the causes are in the control, then the appropriate policies are made to encourage the employees and the concerned persons to curtail the expenditures

SWOT ANALYSIS
STRENGTHS

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Faysal Bank Ltd. Faysal Bank limited has strong belief on customer services Manager and EVP Mr. Safdar Qureshi has good coordination with staff members The environment of Faysal Bank Limited is very friendly FBL is Fully computerized, each department has its own PC The products of FBL are very excellent

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Customers are allowed to give suggestion for the improvement of Bank and these suggestions are listened carefully

WEAKNESSES
Faysal Bank Limited has no ATM facility Faysal Bank Limited has no Credit card facility The building of FBL is small

OPPORTUNITIES
Information technology Credit card facility ATM card facility Establishing foreign branches

THREATS
There is great competition in the market

RECOMMENDATIONS AND SUGGESTIONS

Faysal Bank Limited is the first bank which has come under listing in Pakistan. Faysal Bank Limited has been active in Pakistan since the last seven years and has been in the forefront in Islamic mode of financing. Faysal Bank Limited has a clear advantage

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over other new banks as the bank did not have to start from scratch, it has access to already established international network and has mobilized sizable deposits. Faysal Bank Limited is successful in employee retention, customer satisfaction and high profit generation because of good services. Happy employees help create happy customers, which, in the next cycle, reinforce the happy employees, and so on. Faysal Bank Limited is more than satisfied with its customers. The track record of the customers is excellent and the repayment procedure is satisfactory. The bank is fully aware of the financial strength as well as the market repute of all of its customers. Much of the good reputation of Faysal Bank Limited, is because of the good behavior and response of the employees of the bank. Good and friendly attitude on part of workers is the result of excellent management of the bank who believe that people are the central case of any organization, especially those engaged in providing services to their customers. As a result of customer oriented policy of the management, employees have been trained to behave in a very friendly manner with customers. Environment of the bank also plays an important role in customers satisfaction. Employees always talk very politely on the telephone because telephone, if not used properly, can be a cause of spoiling the good name of the organization. The entire environment of the bank gives the impression that customers are very important to the bank. They are offered seats even when they come for very small task. However, there are some suggestions for improvement. Establishment of more branches in Pakistan More advertisement on electronic media. Introduction of more credit schemes like Rozana Munafa.

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OBSERVATION & CONCLUSION

I observed Faysal Bank Limited a financially sound bank. Its profits are increasing year by year. Its staff is very good and sincere with bank. Faysal Bank views specialization and service excellence as the cornerstone of its strategy. The people at Bank realize that innovation, creativity, reliability, customized services and their execution are the key ingredients for their future growth They are aware that they have stepped into 21st century and they must meet its challenges by acquiring the highest level of technology. They will thus be accelerating their technological advance to enable them to distribute their products and services through most efficient and high technology means. Online banking services and introduction of ATMs at strategic locations have been firmed and wi ll be fully operational during the year 2003.

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