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FMFB- Internship Report

INTERNSHIP REPORT

The First Micro Finance Bank Ltd

Saba Khan MBA V 2011-MBA-144 Sabahkhan94@gmail.com Submission Date: Monday, October 21, 2013

Fatima Jinnah Women University Rawalpindi

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FMFB- Internship Report

PREFACE
Currently I am completing a Masters degree in Business Administration at Fatima Jinnah Women University Rawalpindi. I am in my 5th semester and therefore I have to conduct a 6 weeks internship. The reason I choose to do my internship in audit department of FMFB is because I wanted to benefit from the experience and audit includes all the fields. After getting theoretical education in business field from last two years, I wanted a new challenge to work in corporate world. I wanted to do my internship in Islamabad to experience the developed business world and to learning, improve and develop new sets of skills. One of my main goals is to improve my English and observation skills. Another goal is that Im planning to work after completing studies so it can add some good skills. This is why I choose to follow my internship there; to learn and develop new sets of skills and to experience working in corporate world. In this internship report I will describe my experiences during my internship period. The internship report contains an overview of the internship organization First Micro Finance Bank and the activities, tasks and projects that I have worked on during my internship. Writing this report, I also will describe and reflect my learning objects and personal goals that I have set during my internship period. During my internship tenure I have gained a lot of knowledge about audit under the supervision and guidance of my Internship Supervisor and Audit Department staff.

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FMFB- Internship Report

ACKNOWLEDGMENT

Praise be to Allah, Lord of the Worlds, The Beneficent, and the Merciful.

First of all, In the name of Allah the most merciful who blessed me to learn and gain knowledge? He is the beneficent, gracious to all mankind, who has given me power, abilities and blessed me to complete all works in my whole life. After that I submit my earnest thank to my affectionate parents, who pray for my success and always been a source of encouragement for me. Secondly, I am grateful to my prestigious institute that made this learning opportunity a part of my education, especially I would like to thank my Professors as the knowledge imparted by them enable me to gain knowledge and learning exposure of the organization in the best way. After that I would like to extend gratitude to Fatima Jinnah Women University Rawalpindi and my supervisors who afforded me the opportunity to intern at The First Micro Finance Bank Ltd. Also I express my appreciation to all staff members of First Micro Finance Bank for their cooperation.

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FMFB- Internship Report

TableofContents
PREFACE........................................................................................................................................................2 Acknowledgment..........................................................................................................................................3 SECTION1.....................................................................................................................................................6 EXECUTIVESUMMARY.............................................................................................................................. 6 SECTION2.....................................................................................................................................................7 IntroductionoftheOrganization.............................................................................................................. 7 VISION.......................................................................................................................................................7 MISSION....................................................................................................................................................7 BriefHistoryofOrganization.................................................................................................................... 7 NatureoftheOrganization....................................................................................................................... 8 MissionofOrganization............................................................................................................................ 9

OBJECTIVE................................................................................................................................................9
Outreach:.............................................................................................................................................9 Sustainability: .......................................................................................................................................9 Impact:................................................................................................................................................9 Transparency:......................................................................................................................................9 SECTION3...................................................................................................................................................10 Position:..................................................................................................................................................10 BankInformation:...................................................................................................................................10 DepartmentsofBank:............................................................................................................................. 10 InternalAuditDepartment:.................................................................................................................... 10 AuditRatingMethodology:..................................................................................................................... 11 DetailedTasksinAuditDepartment:.......................................................................................................... 11 WeekwiseDetailedTasks:...................................................................................................................... 11 Week1................................................................................................................................................11 Week2................................................................................................................................................12 Week3................................................................................................................................................12 Week4................................................................................................................................................12 Week5................................................................................................................................................12 4|P a g e

FMFB- Internship Report


Week6................................................................................................................................................12 Week7................................................................................................................................................13 Week8................................................................................................................................................13 SECTION 4...............................................................................................................................................14 SWOT Analysis:....................................................................................................................................14 Strengths............................................................................................................................................14 Weaknesses........................................................................................................................................14 Opportunities .....................................................................................................................................14 Threats...............................................................................................................................................14 SECTION 5...............................................................................................................................................15 Recommendation & Suggestion........................................................................................................... 15 Marketing:.........................................................................................................................................15 Customer Relationship:.................................................................................................................... 15 Financial Methodology:.................................................................................................................... 15 Cost-effectiveness:............................................................................................................................. 15 Micro-deposits:..................................................................................................................................15 Diversification...................................................................................................................................16 Capital Market..................................................................................................................................16 Job Training:.....................................................................................................................................16 SECTION 6...............................................................................................................................................17 Learning Outcomes:............................................................................................................................. 17 Conclusion:.................................................................................................................................................17 REFERENCES..........................................................................................................................................19 ANNEXURE..............................................................................................................................................20

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FMFB- Internship Report

SECTION1
EXECUTIVESUMMARY
Praise be to Allah, Lord of the Worlds, The Beneficent, the Merciful. I am Saba Khan student of MBA V in Fatima Jinnah Women University, I have done eight week internship in First Micro Finance Bank Head Office Islamabad to gain some practical experience which is mandatory for every individual pursuing MBA degree. During my internship I learnt about Micro finance banking, audit procedures and how things work there. It was quite a good experience working there in real environment. The staff at FMFB Islamabad was kind enough to accommodate me and teach me with their work. I started with branch audit and ends with proof reading of audit reports. This was all I could learn being an internee due to some restrictions. In this report, I have given an introduction and overview of the FMFB as the organization. Then the detailed overview of audit department how they work. I have discussed the detailed tasks done by me during the internship program. Then to explain the organization in better manners I have written SWOT analysis of FMFB on the base of my observation and knowledge. Then there is a small conclusion of the report which covers various factors of the organization and suggestions which I felt to be given to the top management of the organization which could have an impact on performance of the company and it can perform their operations in good way.

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FMFB- Internship Report

SECTION2
IntroductionoftheOrganization
The First Microfinance Bank Limited (FMFB) has been in operations for the last 12 years. The bank was incorporated as a public limited company under the Companies Ordinance, 1984 in November 2001 and commenced business in February 2002.FMFB operates under the Microfinance Institutions Ordinance, 2001. The current legal status of the institute is Non-Bank Financial Institution.

VISION
To enable the disadvantaged population to build a sound and secure future with dignity and pride and not merely survive; alleviation of poverty through sustainable economic development.

MISSION
To help strengthen the entrepreneurial base of the economically disadvantaged populations across the country by seeking to marry entrepreneurship with capital formation in not only rural areas, but also the major population centers. Also, provide people scope to expand their economic base, and over time, to support diversification beyond traditional small enterprises. The Bank will endeavor to introduce good practices, ethical precepts and the highest standards of rectitude in the conduct of business and will remain respectful of the needs of the poorest segments of society.

BriefHistoryofOrganization
Poverty has been steadily rising in Pakistan; the provision of financial services to the poor is an important component of the governments poverty alleviation program. The Aga Khan Rural Support Programmers (AKRSP) highly successful micro credit and savings initiative has been serving some of the countrys poorest populations since 1982. Since 1990, the AKDN was trying to institutionalize this program; however there was no regulatory ordinance under which the entity could be created. Perseverance paid off and a new ordinance was promulgated in October 2001 to promote the provision of the Microfinance by private sector institutions. It is in this context that the Aga Khan Development Network has established The First Micro Finance Bank Ltd as a way forward to provide an array of financial services to the neglected segments of society across Pakistan by expanding the scope and product range of a micro-credit program.

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The Bank has been established as a non-listed public limited company under the provisions of the Companies Ordinance (1984) in November 2001 and licensed as a Micro Finance institution under the provisions of the Micro Finance Institutions ordinance 2001 in January 2002. The principal sponsors and shareholders are the Aga Khan Rural Support Program (AKRSP) and the Aga Khan Fund for Economic Development (AKFED). The initial paid-up capital of Rs. 500 million has now increased to Rs. 660 million, after IFC (a member of the World Bank Group) has invested Rs. 160 million and become a partner. The authorized Capital is Rs. 1.0 billion to allow for growth. The Bank will reach out to disadvantaged populations throughout the country not currently able to access financial services in rural and urban areas. The Bank aims to serve these people with dignity and respect. Specific emphasis on vulnerable groups, women in particular, is a governing principle of the institution. To ensure its sustainability, the Bank aims to fully cover its inflation-adjusted costs with its revenues and will lend to individuals and through them to groups. Savings will be mobilized from individuals, groups and institutions

NatureoftheOrganization
In order to maintain its vision The First Micro Finance Bank is committed to: To improve the living standards and promote the concept of micro-credit and other financial services for underserved, neglected groups, particularly women. Be an institution to promote habit of savings amongst the under privileged and optimize return on their resources. Be a bank, which adopts best practices in all its endeavors. Treat each employee fairly and with mutual respect. The Bank does not tolerate discrimination of any kind and encourages all managers and supervisors to involve employees in the creativity process. If problems arise, the facts should be analyzed to determine ways to avoid similar problems in the future. Foster an open door policy, which encourages interaction, discussions and ideas to improve the work environment, thus increase our productivity. Deliver competitive, impeccable service to our customers. Make Do it Right the First Time Bank commitment as a team will assure continued growth and prosperity.

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MissionofOrganization
The mission of the organization is to provide adequate financial services to the ignored or deprived population of the country in both rural and urban areas to help them to strengthen their business or to carry on economic activities. Not only provide them with finances but also support them over time until they establish themselves as enterprises. They will reach out to the poor of the country who are living under the poverty and especially women. And the institute will strive to follow good ethical practices of highest standards.

OBJECTIVE
Outreach: To fulfill multi-dimensional needs of the extreme and moderate poor population that is residing in Pakistan whether in urban or rural areas and particularly women. Sustainability: To cover the inflation-adjusted costs through revenues and to generate a modest surplus that can contribute to expanding the range of services and geographical coverage Impact: Through careful targeting, monitoring and evaluation; the bank works to maximize the impact on poor communities. Transparency: To introduce good practices, ethical precepts and the highest standards of rectitude in the conduct of business. The annual audit is conducted regularly and report is being issued to the keep the funds transparent. FMFB has won couple of transparency awards as well.

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FMFB- Internship Report

SECTION3
Position:
Interne

BankInformation:
Following are the related information about bank. City: Islamabad Branch: Head Office. Address: HBL Tower, 3rd Floor, China Chowk, Blue Areas, Islamabd Tel: 051-2811064-9 Duration of my Internship: It was eight weeks internship program. Starting date of internship: 11th July, 2013 Ending date of internship: 11th September, 2013

DepartmentsofBank:
There are following departments working in the head office. Finance Admin Product Human Resource Information Technology Operations Internal Audit Department

InternalAuditDepartment:
Audit department play a very key role in every organization. FMFB independently appraises activity within an organization for the review of operations as a service to management. The major role of FMFB audit department is as: To ensure compliance with the process and guidelines To add value to the process and system

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Offer advice at every stage of implementation of policies especially compliance with the rule of the game. I have done my internship specifically in audit department of First Micro Finance Bank Head Office Islamabad. The name of department head is Nawroz Mohammad Ali having excellent personality and a keen observer.

AuditRatingMethodology:
CLEAR evaluation addresses financial & operational function being performed at the branches/units and the rating is summarized as follows: Cash Collection, Deposits and Fund Transfers Loans and Advances Effective Internal Control Administration Reporting Each of the above elements would be rated based on the marks awarded to the functions/activities covered under the same and adequate risk weightage assigned to it.

DetailedTasksinAuditDepartment:
Documentation and filing Risk rating Follow ups Vouchering Synopsis Proof reading of audit reposts

WeekwiseDetailedTasks:
Week1 List of TMFO Branch Audit in Branch Report
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Disbursement Schedule and Graphical Representation Product wise Disbursement Analysis and Graphical representation Week2 Expense Sheet of audit department 2013 Name wise Assignment and region base Unit Cost and Average Cost

Audit rating form ECIB (Term loan and Evergreen loan) Week3 Risk Rating Details Performa of Interview Candidate (Accepted and Rejected) Synopsis of Insurance Policies Week4 Difference in Previous and Renewed Schedule Bank charges Screening and Maintaining Files Follow ups of audit observation Week5 Vouchering Screening of Vouchers and making required lists List Investment deals Information (Repo , Rev repo , TDR ) Filing and Achieving Week6 Follow ups of Audit Reports
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Risk Rating Observation Sheets Expense Sheet (Hotel Bills) Proof reading of audit report Week7 Time Sheet (Consolidated) Audit plan 2013 Graphical Representation In progress Progressed Remaining

Review of HR Manual (Documentation) Audit risk rating Week8 Track changes in audit ratings Follow ups of Audit reports Follow ups of High risk Observation Proof reading of audit report

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SECTION 4

SWOT Analysis:
SWOT analysis is a strategic planning method used to evaluate the Strengths, Weaknesses, Opportunities, and Threats involved in a business venture Strengths Micro financing First bank on concept of micro financing in Pakistan Branches and sub units in remote areas Easy term and conditions of disbursements Good Organization culture Weaknesses New in industry Less exposure Less no of branches in urban areas Not efficient marketing Biasness in hiring related to religion Opportunities Technology Advancement ATM introduction Enhance product range Increase services offered Urban areas can be served Economic condition Threats High rate of employee dissatisfaction Political environment Insufficient pay of employees Stiff competition because of new micro finance banks

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SECTION 5

Recommendation & Suggestion


Marketing: Brochures, handouts, pamphlets and other printed reports must be provided to customers, which should provide all the information necessary to attract and retain customers and to satisfy the customers need for more Personal contacts with the customers can help in providing information to customers. All the customers must be provided a chance to get the desired information by personal contact with the Bank staff. Customer Relationship: Complaint and suggestion box should be maintained at the door of the Bank where the customers can point out drawbacks in the customers services and put forward their suggestions on his improvement of the services quality of the Bank. Financial Methodology: Banks need to acquire an appropriate financial methodology to service the micro- enterprise sector financial innovations that permit a cost-effective analysis of creditworthiness, the monitoring of a large number of relatively poor clients, and the adoption of effective collateral substitutes. Cost-effectiveness: The First Micro Finance lending program is costly because of the small size of their loans and because banks cannot operate them with their traditional mechanisms and overhead structures, so I recommend that bank adopt cost effective strategy. Micro-deposits: The First Micro Finance Bank relatively little about deposit mobilization methodologies that reach the low income and micro-enterprise client. I recommend following activity for deposit mobilization: Open Liquid passbook savings accounts and low minimum balances. Depositories conveniently located
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Real, positive interest rates on deposits Incentive for saving such as lotteries Diversification The First Micro Finance Bank should diversify its portfolio into housing, health, education, transport and security products. Capital Market The First Microfinance Bank is still in earlier stage of its development, and the financial sustainability is also not satisfactory. In such situation, I recommend that bank raise funds at economical cost either through debt or equity instruments of capital markets. Job Training: Although the bank is providing on job training to the fresh employees but bank should organize seminars and other behavioral classes to its employees to increase the effectiveness of the organization

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FMFB- Internship Report

SECTION 6

Learning Outcomes:
Here I have got a chance to conclude what I have learnt during my internship and while preparing this report. It was a nice experience working in a real environment and I was quite excited for it. I have tried to learn whatever I could, including Audit reports and procedure of getting all the information about the report. How to observe and analyze the documents, vouchers, reposts made by the different departments and check their perfections. I have assist in working of risk rating sheets and observation follow ups and go through the audit reports of different branches, by them I learn what is the reason of carelessness of employees and what are the mistakes and frauds can be done in financial reports and banking sectors Overall it was a nice experience and FMFB as an organization is certainly at a higher position in micro finance banking sector. Their financial highlight shows us its growth in very less time and future prospects. With all the strengths FMFB own there are certain threats as well which FMFB should address to avoid any downfall and keep its position. Office grade employees in FMFB are not well paid and dissatisfied with their jobs but one thing I felt was very good environment for women and no gender discrimination. Work experience is an important factor in any organization and promotions, bonuses and increments are work based. But in FMFB I found a bit of discrimination with low grade employees and ones who dont possess a relevant degree are neglected irrespective of the plenty of work experience. There are also some conflicts of hiring because of their Ismaili religion, well it is only my observation.

Conclusion:
During my internship in First Micro Finance Bank, I came to know that how practically the work is done in formal as well as informal environment. FMFB is now growing rapidly and achieving its targets on time. The management plays a vital role in conducting all sorts of operations. The organization is working efficiently and effectively.

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They are committed to maintain long term customer relationship. There employees are fully committed to their work. The bank is doing its best to provide maximum satisfaction to the customers. They are striving to provide the maximum facilities to the poor and deprived population of the area

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REFERENCES Google.com Wikipedia Personal Observation Information from Bank Staff

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FMFB- Internship Report

ANNEXURE

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