HISTORY OF BANKING IN PAKISTAN

Pakistan came into being on 14th August, 1947; sufficient banking services were available in the areas forming Pakistan. Out of the total branches of the nearly ,!"" in the un#ivi#e# $n#ia, as many as about 1,!"" branches were e%isting in these areas. $t was agree# between the two countries that reserve bank of $n#ia shall continue to function in the Pakistan territory until "th &e'tember 194( an# that $n#ian notes woul# continue to be legal ten#er at Pakistan until "th &e'tember 194(. )nfortunately, relationshi' between the two countries became most straine# imme#iately after in#e'en#ence; banking was mostly in the lan#s of *in#us who imme#iately starte# transferring their offices an# assets into $n#ia. As a result most of the banks in Pakistan were close# #own an# even those which were o'en were not #oing any effective business. +he number of banking office in Pakistan came #own to about ,"" on "th -une 194(. .ranches of some /uro'ean banks were also functioning in a limite# manner, financing in e%'ort of cro's, an# their number was limite# to about ,". $t was only the *abib bank, which transferre# its office from .ombay to 0arachi Austral Asia bank was another bank, which was in e%istence in the Pakistan territory at the time of in#e'en#ence. 1es'ite of best efforts on the 'art of government of Pakistan, no hea#y way coul# be ma#e on this behalf an# reserve bank of $n#ia was in no moo# to hel' the new country. $m'erial bank of $n#ia, agent of the reserve bank of $n#ia also starte# closing #own its branches in Pakistan. 2eserve bank also refuse# to a#vance money to Pakistan to make essential 'ayments such as salaries etc, also Pakistan3s share of 2s.7! billion in cash balance was with hel# by bank, causing har#shi's to the newly born state. $n view of these ho'eless state affairs it was

agree# between the two countries that reserve bank woul# serve as monetary authority in Pakistan only u' to "th -une 194(.

NATIONALIZATION OF BANKS
+he 'rinci'le of nationali4ation of banks is to stream line the o'eration of commercial banks in such a way that it may be con#uctive to the #evelo'ment activities in 'rocess in the country. &ince the commercial banks were owne# controlle# by big business grou's of the country it was feare# that these banks woul# not maintain uniformity in their o'erational an# woul# be instrumental to inflationary 'ressure. *owever, the consi#erations behin# nationali4ation are +o form uniformity in the 'olicy of the commercial banks so they may serve the best national interest. +o make the o'eration of commercial banks highly sensitive an# res'onsive to the 'olicy of the government relation to financial matters. +o make the cre#it 'olicy of the commercial banks more 'ur'ose full an# effective es'ecially in the #evelo'ment of economic sectors of the country. $t acts as an agent of the &tate .ank of Pakistan +o make the best use of the fun#s available at the #is'osal of these banks for the economic #evelo'ment of the country. +o eliminate unhealthy an# uneconomic com'etition among commercial banks. +o #evelo'ment strong money banks market in the country so that the value of currency may be maintaine# at stable level both in national facilities to e%'orter an# agriculturists which have not been satisfactory in the 'ast years.

Public Sector Commercial Bank

5ational .ank 6irst 7omen .ank 8imite# +he .ank of 0hyber +he .ank of Pun9ab Local Pri!ate Bank

5.P 67. 0. .OP

Askari :ommercial .ank 8imite# .ank Al;6alah 8imite# .ank Al *abib 8imite# <ee4an .ank 8imite# 6aysal .ank 8imite# &ilk .ank 8imite# &oneri .ank 8imite# )nion .ank 8imite# <uslim :ommercial .ank 8imite# Allie# .ank of Pakistan )nion .ank 8imite#

Forei"n Bank

A.5 Amro .ank :$+$ .ank *abib .ank A. =. >urich <ashre? .ank P-&: Oman .ank .arclays .ank &tan#ar# :hartere# .ank

S#eciali$e% Bank

>ari +ar?iati .ank 8t#. $n#ustrial 1evelo'ment .ank of Pakistan Pun9ab Provincial :oo'erative .ank 8imite#

$t has not so far been #eci#e# as to how the wor# @.ank3 originate#. &ome author3s o'inion is that, this wor# is #erive# from the wor# @.ancus3 or @.an?ue3, which means a bench. Others authors hol# the o'inion that the wor# @.ank3 is #erive# from the =erman wor# @.ack3, which means 9oint stock fun#. $t is therefore so much #ifficult to #eci#e as to which o'inion is correct. .anking in fact is 'rimitive as human society, forever since man came to reali4e the im'ortance of money as a me#ium of e%change, the necessity of a controlling or regulating agency or institution was naturally felt. Perha's it was the .abylonians who #evelo'e# banking system as early as ,"""bc. $t is evi#ent that the tem'les of the .abylon were use# as @.anks3 because of the 'revalent res'ect an# confi#ence at the clergy. At the time of in#e'en#ence there were A 1 offices of the sche#ule# banks in Pakistan, of which 4(7 were locate# in 7est Pakistan alone. As a new country with resources it was very #ifficult for Pakistan to run its own banking system imme#iately. +herefore the e%'ert committee recommen#e# that the 2eserve .ank of $n#ia shoul# continue to function in Pakistan until ", &e'tember 194(, so that 'roblems of time an# #eman# liability, coinage currencies, e%change etc, coul# be settle# between $n#ia an# Pakistan. +he non <uslims starte# transferring their fun#s an# accounts to $n#ia. .y the en# of -une 194(, the number of officers of sche#ule# banks in Pakistan #ecline# from A 1 to ,!!. +here were 19 foreign banks

with the status of small branch offices that were engage# solely in e%'ort cro' from Pakistan, while there were only two Pakistani institutions, *abib .ank, an# Australasia .ank, the customers of the banks are not satisfie# with the uncertain con#ition of banking. &imilarly the 2eserve .ank of $n#ia was not in the favor of =ovt. of Pakistan. +he =ovt. of Pakistan #eci#e# to establish a full;fle#ge central bank. :onse?uently the =overnor =eneral of Pakistan Buai#;e;A4am inaugurate# the &tate .ank of Pakistan on -uly 1,194( +hus a lan#mark was ma#e in the history of banking when the &tate .ank of Pakistan assume# full control of banking an# currency in Pakistan.

TH& BANK OF P'N(AB

)ISION STAT&*&NT

C+o be a customer focuse# bank with service e%cellence.D

*ISSION STAT&*&NT

+o e%cee# the e%'ectations of our stakehol#ers by leveraging our relationshi' with the =overnment of Pun9ab an# #elivering a com'lete range of 'rofessional solutions with a focus on 'rogramme# #riven 'ro#ucts E services in the Agriculture an# <i##le +ier <arkets through a motivate# team.

COR& )AL'&S Our Cu tomer As our first 'riority. Pro+itabilit, 6or the 'ros'erity of our stakehol#ers that allows us to constantly invest, im'rove an# succee#.

Cor#orate Social Re #on ibilit, +o /nrich the 8ives of community where we o'erate Reco"nition an% Re-ar% 6or the talente# an# high 'erforming em'loyees &.cellence $n every thing we #o. Inte"rit, $n all our #ealings. Re #ect 6or our customers an# each other.

HISTORY OF BOP

+he .ank of Pun9ab was establishe# in 19(9 an# was given the status of sche#ule# bank in 1994. +he .ank of Pun9ab is working as a sche#ule# commercial bank with a network of almost ,7 branches at all over ma9or locations in the Pun9ab. +he .ank 'rovi#es all ty'es of banking services such as 1e'osits in 8ocal :urrency an# client foreign currency, remittances, an# a#vances to business, tra#e, in#ustry an# agriculture. +he .ank of Pun9ab has in#ee# entere# a new era of science to the nation un#er e%'erience an# 'rofessional han#s of its management. +he .ank of Pun9ab 'lays a vital role in the national economy through mobili4ation of hitherto unta''e# local resources, 'romoting savings an# 'rovi#ing fun#s for investments. +he bank offers attractive rates of 'rofit on all #e'osits, o'ening of foreign currency accounts an# han#ling of foreign e%change business for e%am'le im'orts, e%'orts an# remittances, financing, tra#e an# in#ustry for working ca'ital re?uirements an# money A

market o'erations. +he len#ing 'olicy of bank is not only cautious an# constructive but also base# on 'rinci'les of 'ru#ent len#ing with ma%imum em'hasis on security. +he .ank 'rovi#es al lty'es of banking services such as 1e'osit in 8ocal :urrency, :lient 1e'osit in 6oreign :urrency, 2emittances, A#vances to .usiness, +ra#e, $n#ustry an# Agriculture A wholly owne# subsi#iary of .OP 6irst Pun9ab <o#araba F6P<G was establishe# in 199, an# is being manage# by Pun9ab <o#araba &ervices FPvtG 8t# , a wholly owe# subsi#iary of +he .ank of Pun9ab. 8en#ing un#er $slamic mo#e of finance, main vehicles are <orabaha, $9arah E <usharika to encom'ass re?uirements of cor'orate, commercial an# in#ivi#ual customers. 8iability generation through :O<3s F:ertificate of <usharika G offers attractive returns to in#ivi#uals an# institutional #e'ositors for fi%e# tenure instruments. 6P< is working to intro#uce new an# innovative 'ro#ucts to enhance its range of services.

A/AR0S AN0 ACHI&)&*&NTS

&.cellence A-ar% b, t1e Central Boar% o+ Re!enue +he :entral .oar# of 2evenue 'resente# H/%cellence Awar#H to the .ank of Pun9ab in recognition of the contribution ma#e by the bank towar#s =overnment e%che?uer. 2r% Ki an Time A-ar% $n recognition of .ankIs contribution in #evelo'ment an# growth of agricultural sector, the .ank honoure# with H+o' .ank for Agriculture 8oansH an# H.est .ank :ro' $nsuranceH un#er r# 0issan +ime Awar#s year ,""A. Be t Cor#orate Re#ort A-ar%

Annual 2e'ort of the .ank for the year ,""! won !th 'osition for H+he .est :or'orate 2e'ort Awar#H for the 6inancial sector, a#9u#icate# 9ointly by the $nstitute of :hartere# Accountants of Pakistan an# the $nstitute of :ost an# <anagement Accountants of Pakistan. 34t1 Bolan &.cellence A-ar% +he .ank was awar#e# .est .ank Awar# un#er 1!th .olan /%cellence Awar#s #istribute# in ,""A. Ac1ie!ement A-ar% +he 8ahore :hamber of :ommerce E $n#ustry F8::$G awar#e# the .ank H8::$ Achievement Awar#H ,""A.

*A(OR C'STO*&RS OF BOP

&ome of the ma9or customers of .ank of Pun9ab areJ /#ucational $nstitutes Agriculturists Pakistan +elecommunication Private 8imite# 7AP1A Pharmaceutical :om'anies 7A&A <1A +own <unici'al :ommittees an# local governing bo#ies

P'N(AB GO)&RN*&NT SHO/S FAITH IN BOP

Pun9ab =overnment wishes to state that being the ma9or stake hol#er in the .ank of Pun9ab it has full faith in the new management an# o'erations of the .ank. +he government further 'le#ges its une?uivocal su''ort to the .ank an# firmly believes that the affairs of the .ank are soun# an# its financial health robust.

6inance 1e'artment =overnment of the Pun9ab.

BRANCH N&T/ORK

8ahore 2egion 6aisialaba# 2egion =u9ranwala 2egion 2awal'in#i 2egion 0arachiKBueta 2egion <ultan 2egion =u9rat 2egion

H&IRARHICAL FLO/

1"

G&N&RAL BANKING OF TH& BANK OF P'N(AB

0&POSIT 0&PART*&NT
$n mo#ern times very few business enter'rises are carrie# out solely with the ca'ital of the owners. .orrowing fun#s from #ifferent sources has becomes an essential feature of to#ay business enter'rise. .ut in the case of a entire banking system is base# on it. +he borrowe# ca'ital of the bank is much greater then their own ca'ital. .anks borrowing is mostly in the form of #e'osits. +hese #e'osits are lent out to #ifferent 'arties. +he larger the #ifference between the rate at which the #e'osits are borrowe# an# the rate at which they is lent out the greater of the

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'rofit margin of the bank. 6urthermore, the larger the #e'osit the larger will be the fun#s available for em'loyment; larger the fun#s lent out the greater will be the 'rofit of the bank. +o receive the #e'osit is the basic function of all commercial banks. +he bank #oes not receive these #e'osits for save kee'ing 'ur'ose only, but they acce't #e'osits as #ebts. 7hen banks receive #e'osit from a customer, the relationshi' of a #ebtor an# cre#itor is establishe# where by the customer become the cre#itor an# the bank a #ebtor. 7hen the bank receives amount of #e'osit as a #ebtor, it becomes the owner of it. $t may, therefore use it as #eems a''ro'riate. .ut there is an im'licit agreement that the amount owne# woul# be 'ai# back by the bank to the #e'ositor after a s'ecifie# 'erio#.

NAT'R& OF 0&POSIT

:urrent or #eman# 1e'osits &aving 1e'osit &hort 5otice +erm 1e'osit :all 1e'osits 6i%e# or +erm 1e'osits

C'RR&NT 0&POSIT :urrent #e'osit are those which are 'ayable to bank whenever #eman# by the customer. .ank #oesn3t 'ay any 'rofit on current #e'osits. +here are of #ifferent scheme of saving #e'osits, which are classifie# un#er #ifferent #uration 'ur'ose an# rate of interest. 6i%e# #e'osits are those which are by the bank un#er the con#itions that will not be 'ayable on #eman# but will be 'ayable un#er fi%e# or #eterminate future time #ate.

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SA)ING 0&POSIT +his ty'e of accounts is one ste' towar#s the $slami4ation of banking system in Pakistan. +here are two ty'es of P8& Accounts. P8& &aving Account P8&;+12 FProfit E 8oss &haring +erm 1e'osit 2ecei'tsG. P8& saving accounts can be o'ene# with the minimum sum of 2s. 1"" an# P8&;+12 account can be o'ene# for a sum of 2s. 1""" or above. Profit is 'ai# on both ty'es of the P8& account on half yearly basis. )n#er P8& saving account the #e'ositor un#ertakes to share 'rofit or loss on the #e'osits earne# or sustaine# by the bank. &econ#ly the bank is at the liberty to invest the fun#s of the #e'osits in any avenue, it #eems fit. +he P8& #e'osits are investe# in non;intereste# channels.

SHORT NOTIC& T&R* 0&POSITS +his kin# of #e'osit is for a short 'erio#. +he #e'ositor may with#raw his #e'osit at any time by giving seven #ays notice to the bank. +his ty'e of #e'osit facilitates the #e'ositor to with#rawn his amount with interest of the #e'osite# 'erio#.

CALL 0&POSIT :all #e'osits are the sorts of #e'osits, which are #e'osite# with the banker against any ten#er. +his is without interest #e'osit. +his may be with interest 'rovi#e# the #e'ositor has agree# to kee' this amount with the bank for some fi%e# 'erio#.

T&R* 0&POSIT R&C&IPTS

This type of deposit is same as the SNTD. The difference is that SNTD is for short period (7- 30 days) while TDR is for long period ( month !p to " years).

ACCO'NT OP&NING Account o'ening is the first ste' towar#s establishing a relationshi' between the customer an# the bank. +he .ank of Pun9ab is offering basically two ty'es of accountJ

:urrent 1e'osit Account Profit an# 8oss &haring Account

+he necessary con#ition for a customer, who wants to o'en an account with the bank, is intro#uction, which is 'referably by the bank officers or any account hol#er of the bank. +he #ifferent categories of accounts that are available are as un#er.

$n#ivi#ual Account -oint Account Partnershi' Account 8imite# :om'any Account :lubs, &ociety, Association, or +rust Account &5+1 +12 6oreign :urrency 1e'osit

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ACCO'NT OP&NING PROC&0'R& +he general banking #e'artment 'erforms various functions among them the first an# most im'ortant function is Account O'ening. +he bank reserves the right to o'en any account, which in its o'inion is suitable as a customer. +he 'rocess of o'ening an account is very sim'le an# any bo#y that woul# like to o'en his account coul# #o it easily without any #ifficulty. +he 'erson woul# like to o'en his account is re?uire# to meet with the manager or secon# officer, who will give him an A''lication form s'ecifically use# for account o'ening. Along with the form a car# for s'ecimen signature is also su''lie# to the customer. <anager has every right not to acce't this contract if he is not satisfie# with the #etails 'rovi#e# by the customer. .ut in case the contract is acce'table to both, the ne%t ste' is official account o'ening. +his begins with the Account O'ening 2egister which can be thought as a customer3s master file. +he manager recor#s the necessary #etails into this register! an# allots an CAccount 5umberD from this account o'ening register. +his register is maintaine# for each ty'e of accounts an# the account numbers are allotte# serially. After o'ening the account every a''licant3s #ate is entere# in the com'uter to maintain the safe recor# an# a''lication form is also safely 'ut off, so that it can be available whenever it is nee#e#. :hecking officer is res'onsible to tally the manual #ata with com'uteri4e# account o'ening file. 6or fi% #e'osit only the a''lication form is nee#e#, which is 're'are# manually, because most of the 'roce#ures of fi% #e'osit is #one manually. &ignature s'ecimen car# contains three

signatures of the a''licant, a''licant account number, account ty'e, branch co#e, an# title of account. $t will be attache# with the account o'ening form. .anker uses this car# when he

1!

receives the che?ue, he com'ares signature on the che?ue with the &'ecimen car#, for avoi#ing the frau#s.

CL&ARING 0&PART*&NT
+his #e'artment receives the che?ue an# other negotiable instruments #rawn on local branches of other banks. &tate bank of Pakistan has clearing house, in which che?ue, an# other negotiable instruments are brought by each local bank re'resentatives an# the mutual claims of each bank on other an# offset an# a settlement is ma#e by the 'ayment of #ifference. :learing system is hel' full for both the customer an# saving currency, time an# labor. $nvestments which are collecte# :he?ues 1eman# 1rafts +elegra'hic transfers <ail +ransfers Pay Or#er 1ivi#en# 7arrants

CL&ARING Any instruments which #rawn on .OP branches an# other banks in same city that3s instruments are calle# clearing. A clearing an# #ate stam' is a fi%e# on these instruments these are two ty'es of clearingL Outwar# :learing $nwar# :learing

1A

$nwar# clearing means the che?ue #rawn on .OP an# outwar# clearing means the :he?ues #rawn on others

O'T/AR0 CL&ARING

+he instrument collecte# or store# bank wise an# a sche#ules is 're'are# se'arately for each bank mentioning the total number of instruments an# the amount of the instruments. +hen these are recor#e# in a register calle# CO)+7A21 :8/A2$5= 2/=$&+/2D then a main sche#ule is 're'are# showing the total number of che?ue an# their aggregate amount being 'resente# in the clearing. +he che?ueKinstruments are han#e# over the clearing branch. :entral clearing branch issue :2/1$+ A1M$:/ to the branch for 'assing cre#it to its customer imme#iately. +he branch on receiving cre#it a#vice #ebits the clearing account an# cre#it the res'ective customer accounts.

IN/AR0 CL&ARING On receiving che?ueKinstruments from central clearing branch, the in charge checks the number an# amount of che?ue receive# in clearing must tally with the main sche#ule receive# from central clearing branch. +hese che?ueKinstrument are entere# in C$57A21 :8/A2$5= 2/=$&+/2D for the che?ueKinstrument 'asse# in clearing is a cre#it a#vice for the aggregate amount of che?ue 'asse# in clearing is 're'are#, #rawn on central clearing branch.

R&S&R)&S AT STAT& BANK

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1e'osit hel# by bank at &.P serves as check clearing an# collection balances. 2ather than 'hysically transferring fun#s between banks, check clearing an# collection can be #one by sim'ly #ebiting or cre#iting a bank3s account at &.P.

R&*ITTANC& 0&PART*&NT
2emittance is a ma9or function of the bank. $t is the transfer of money from one 'lace to another 'lace. +he nee# for remittance is commonly felt in commercial life 'articularly an# in every#ay life generally. .y 'roving this service to the customers the .ank of Pun9ab earns a lot of income in the form of service charges.

TYP&S OF R&*ITTANC&

+he .ank of Pun9ab #eals with the following ty'e of remittances 1eman# 1raft F11G <ail +ransfer F<+G +elegra'hic +ransfer F++G Pay Or#er 5ow we #iscuss all these in #etailJ

0&*AN0 0RAFT 50067 1eman# #raft is a written or#er given by the one branch of a bank on behalf of customer to another branch of the same bank to a certain amount to the certain 'erson.

PROC&0'R& 1(

36 A #raft voucher is fille# which contains the following information 5ame of the 'arties involve# 1ate Amount to be sent Account number Fif 11 is crosse#G 86 A cre#it voucher is fille# in or#er to get the e%cise #uty an# e%change commission. 26 +he sen#er #e'osits the total amount of the two vouchers i.e. the #ebit an# cre#it vouchers. 96 +hen the cashier sen#s the cash recei't voucher to the accounts #e'artment an# the account recor#s the amount 'ai# in his cash scroll. :6 Accountant gives the 11 leaf along with the 11 voucher to his assistant who recor#s the sen#er3s name, amount an# receiver3s name. After writing all the information in the 11 register he gives it to the officer along with the 11 for authentication. 46 After authentication the 11 is han#e# over to the sen#er an# bank sen#s the a#vice to the concerne# branch. &o when the 'arty 'resents the 11 in the concerne# branch its 'ayment coul# be ma#e.

PARTI&S IN)OL)&0 +he following 'arties are involve# in #eman# #raft;

36 Purchaser or &en#er +he 'urchaser is the 'erson who sen#s the money to a 'articular 'erson 'ayable at a certain branch. 86 $ssuing or 1rawing .ranch

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+he branch from where the #eman# #raft is issue# to another branch of the same bank. 26 1rawer .ranch .ranch in which the #raft has #rawn an# calle# u'on to 'ay the amount. 96 Payee +he 'erson who is entitle# to receive the amount after 'resenting the #eman# #raft in the #rawer branch.

*AIL TRANSF&R $t is the transfer of money from one branch to another branch of the same bank through mail service. $n mail transfer there is no nee# of a#vice as the amount is #irectly cre#ite# to the receiver3s account.

PROC&0'R& 36 6irst a voucher is fille# in whish the sen#er writes the amount to be sent, name, account number of the receiving 'erson with the branch name an# #ate. 86 A cre#it voucher is fille# in or#er to #e#uct e%change, 'ostage charges accor#ing to the amount of the mail transfer. 26 +he sen#er #e'osits the total amount in the cash #e'artment. 96 +he cash officer gives the vouchers to the officer after affi%ing receive# cash stam' an# writing the amount in re# ink. :6 +hen the officer writes the amount 'ai# in the cash scroll an# gives the <+ to his assistant.

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46 <+ leaf is fille# accor#ing to the information 'rovi#e# in cre#it voucher. *e also writes the same information in the <+ register. +hen he gives the <+ leaf an# <+ register to the officer for authentication.

T&L&GRAPHIC TRANSF&R +his is the most urgent metho# of remitting the money from one 'lace to another 'lace. +his metho# is use# when the sen#er #esires to sen# urgently, in this case the sen#er re?uest the manager of the branch to issue ++.

PROC&0'R& 6or sen#ing the ++ the manager an# officer a''ly a test. $n the test the manager an# officer uses a co#ing techni?ue. +hey write their own co#e numbers, which is allotte#, to them as the bank branch co#e. After making all the conformation the concerne# branch makes the 'ayment to the receiver. $f the sen#er wants to convey the same message through tele'hone then he has to 'ay the charges of tele'hone along with the ++ charges. 6irst the 'erson #e'osit the ++ amount along with the charges through the cre#it voucher then his ++ sent to the relevant branch.

PAY OR0&R A 'ay or#er is a written or#er issue# by the bank on its own branch, #rawn u'on an# 'ayable by itself to 'ay a s'ecifie# sum of money to the 'erson. +he 'ur'ose of a 'ay or#er is to transfer the fun# from one 'lace to another. $t is usually not issue# in favor of the 'arties of other cities. )sually the 'ay or#er is issue# for the local transfer of money from one 'erson to another or from the 'erson to any other #e'artment. $t

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is use# for #ifferent 'ur'oses. +he 'ur'ose may be the re'airs of the branch or renovation of the branch.

PROC&0'R& +he 'roce#ure of a 'ay or#er varies with the nature of the 'ur'ose. $f the work is of huge amount then first the manager writes a letter to the >onal :hief in or#er to get sanction of the work. +hen the a#vertisement of the work is given in the news'a'er in or#er to invite the contractors. .ut if the work is small then the branch manager has #iscretionary 'ower to select the 'arty whose rate is lowest. After finishing the work the contractor submits the bill of work on his stam' 'a#. +hen the bank issues a 'ay or#er, against the 'ay or#er the contactor gets the amount from the issuing branch.

.ACCO'NT 0&PART*&NT

Account #e'artment is the backbone of a bank. $t 'lays a vital in 'erforming #ifferent functions of a bank. +he account #e'artment of is com'uteri4e# as well as manual. Accounting books of #ifferent #e'artments are maintaine# un#er this #e'artment an# with the hel' of these, accountant 're'are the monthly ?uarterly, semiannually an# yearly financial statement an# or#er statement of the whole bank. All the transaction taking 'lace is recor#e# #aily in the books of accounts an# in com'uteri4e# le#gers. 6or every transaction there is Moucher 're'are# an# through these vouchers contra entries are 'asse# un#er #ifferent hea#. =oo# working of accounts mainly #e'en#s on the voucher system. Accounts #e'artment is res'onsible for 'ro'er han#ling an# maintenance of vouchers of #ifferent #e'artment ,,

*AN'AL F'NCTIONS OF ACCO'NTS 0&PART*&NT

Accountant 're'ares vouchers for all #aily activities of #ifferent #e'artments. :hecking officer checks an# tallies these vouchers with their #aily transactions an# 'osts their entries un#er 'ro'er hea#s.

TYP&S OF )O'CH&RS 1ebit Moucher :re#it Moucher +hese two ty'es of vouchers are again classifie# un#er following ty'esJ ; :ash voucher +ransfer voucher :learing voucher All the #aily transaction in cash, transfer an# clearing is #one through these vouchers. A sheet is 're'are# on which all the vouchers 'asse# #uring one #ay are consoli#ate# an# summari4e#. +his sheet is calle# su''lementary sheet. +here are two ty'es of su''lementary sheet.

1aily 'ai# voucher sheet 1aily recei't voucher sheet

Pai# sheet is use# for all #ebit vouchers an# recei't sheet is use# for all cre#it vouchers.

CASH BOOK

:ash book is 're'are# #aily to kee' the recor# of #aily 'ai# vouchers. :ash book contains the o'ening balance an# the closing balance of a working #ay. .efore writing an# balance the cash book firstly there is nee#e# to 'ro'erly arrange all the vouchers of that #ay.

*AINTAINING ; 'P0ATING L&0G&RS One of the functions of accounts #e'artment is to maintain an# u'#ate the term #e'osit le#gers an# books manually. +erm #e'osit recei't or +12 le#ger is u'#ate# after every month for estimating 'rofit on customer3s accounts. Accountant 're'ares #ifferent le#ger for all schemes of term #e'osit. 7ith the hel' of +12 le#ger accountant 're'ares C'rovisional le#gerD. 6rom this le#ger accountant calculate the monthly 'ro#uct of each account an# estimate the 'rofit for a half;year. +he semiannual 'rofit on each account will be the e%'enses of branch.

CO*P'T&RIZ&0 F'NCTIONS OF ACCO'NTS 0&PART*&NT

<ost of the #aily working is #one through le#gers. $n .OP all the #aily transaction in #e'osit, cash, clearing, transfer, remittance an# a#vance are 'erforme# these #aily le#gers; accounts #e'artment receives the following out'ut of general le#ger.

1aily general le#ger e%'ense 1aily general le#ger income 1aily general le#ger assets 1aily general le#ger liability 1aily general le#ger circle e%'ense 1aily general le#ger au#it e%'ense

,4

+he formats of all these le#gers are same. +hey contain the following hea# account no. #escri'tion, 'revious balance. :o#es are assigne# to all these items. $ncome will be cre#ite# in the branch account an# e%'enses will be #ebite# $ the branch at the month en#. All the e%'enses of circle, regional, au#it, ins'ection office is #ebite# in the hea# office account, because it is the res'onsibility of the hea# office to bear the e%'enses of its offices. 6or all the hea#s of general le#ger there is closing balance an# o'ening balance. +hese le#gers are hel'ful in 're'aring the #aily, monthly, semiannually an# yearly statements. &ome of these statements are 're'are for the 'ur'ose of recor# kee'ing of branches an# some are 're'are# to sen# to the circle office, hea# office an# state bank of Pakistan. &ome of these statements are

&tatement of 'rovisional income &tatement of 'rovisional e%'ense &tatement of hea# office account &ummary of income an# e%'ense &tatement of 'rofit an# loss on P8& account &tatement of 'rofit an# loss P8& A! account .alance confirmation re'ort &tatement of affairs

,!

BILLS 0&PART*&NT

+his #e'artment #eals in bills for collection for all kinks such as che?ue, #raft, an# 'ay or#ers, call #e'osits etc. with outstation branches of .OP or with other banks. $t 'rovi#es service to their customer to get 'ayment from the nearer bank at nominal charges. +he four main hea#s of bill #e'artment is. Outwar# .ill for :ollection FO.:G $nwar# .ills 6or :ollection F$.:G Outwar# 1ocumentary .ills 6or :ollection $nwar# 1ocumentary .ills 6or :ollection FO1.6:G F$1.6:G

O'T/AR0 BILLS FOR COLL&CTION

.ills #e'artment receive che?ue or other of bills from its kinks client whose account must be o'ene# in that branch. +he branch forwar#s the check with sche#ule or covering letter to that branch on which bills is #rawn. +he checking officer of bills #e'artment will cross the che?ue with s'ecial bank stam' before forwar#ing the che?ue. O.: register is also maintaine# for 'ro'er recor# kee'ing of outwar# bills. +his register is u'#ate# two times once at the time of receiving bill from clients an# the other when the confirmation a#vice of this che?ue is receive# from the 'ayable branch. .ank gets a commission 2s. ,!K; an# courier charges 2s. 4"K; on the service.

,A

IN/AR0 BILLS FOR COLL&CTION +he branches which receive bill have to verify these bills for 'ayment. +he 'arty account must be o'ene# in that branch. +he res'onsibility of this branch is to verify the bills for collection with in three #ays an# sen# the a#vice to the originating branch. $n case of verification of bills is a''rove#, banks #ebit the account of the res'ective account hol#er an# sen# a #ebit a#vice to the originating branch an# at the same time cre#it the hea# office account for inwar# bills $.: register is maintaining for kee'ing the 'ro'er recor# of the bills.

O'T/AR0 0OC'*&NTARY BILLS FOR COLL&CTION Originating branch receives the #ocumentary bills from their clients an# sent them to out station branches of the same bank or other bank. :ustomer account must be o'ene# in that branch. +he #ocumentary bills are i.e. trust recei't, railway recei't, sales invoice, recei'ts of courier service etc. bank gets as commission ". !N 'lus 'ostage charges 'lus courier service charges of this service. &eller an# 'ro#ucer both can avail the facility of bank in case of selling an# 'urchasing their 'ro#uct or goo#s.

IN/AR0 0OC'*&NTARY BILLS FOR COLL&CTION .ank receives the #ocumentary bills from the other outstation branches of the same banks or other banks for collection the amount from 'urchaser. $n this case back acts as a buyer3s bank, when bank receives the #ocumentary bills they sen# intimation to buyer about his arrival of goo#s. $f the buyer is the account hol#er then bank will #ebit his account otherwise 'urchaser #e'osits the amount of the bills. .ank han# over

,7

these #ocuments to 'urchase, on behalf of which buyer receives the goo#s. .ank also charges commission.

A0)ANC&S<CR&0IT 0&PART*&NT
$t is the loan function, which 'ro#uces the ma9or 'erson of bank3s income, an# as such it is the ma9or areas of 'rofessional banker3s concern an# attention.

PRINCIPL&S /HIL& A0)ANCING .asically there are five 'rinci'les that must be #uly observe# while a#vancing money to borrowers. &afety 8i?ui#ity 1is'osal 2emuneration &uitability

FOR*S OF L&N0ING <any there are two ty'es of a#vancesJ &hort;term Fmaturity within one yearG 8ong term Fmaturity with the 'erio# of more than one yearG

*owever they are further classifie# asJ 2unning 6inance 1eman# 6inance :ash 6inance ,(

8etter of =uarantee

R'NNING FINANC& +his form of finance was 'reviously known as Cover#raftD. 7hen a customer re?uires the tem'orary accommo#ation, his bank allows with#rawal his account in e%cess of cre#it balance, which the customer has in its account, a running finance occurs. +he accommo#ation is thus allowe# collateral security. 7hen it is against collateral securities, it is calle# a C&ecure# 2unning 6inanceD an# when the customer cannot offer any collateral security e%ce't his 'ersonal security, accommo#ation is calle# a C:lean 2unning 6inance.D +he customer is in a#vantageous 'osition in running finance because he has to 'ay the mark;u' only the balance outstan#ing against him on #aily 'ro#uct basis.

0&*AN0 FINANC& +his is common form of financing to commercial an# in#ustrial concerns an# is ma# available either against 'le#ge or hy'othecation of goo#s 'ro#uce or merchan#ise. $n 1eman# 6inance the 'arty is finance# u' to a certain limit either at once or as an# when re?uire#. +he 'arty #ue to facility of 'aying mark;u' only on the amount it actually utili4es 'refers this form of financing Or#inary &hares Preferre# &hares Buote# or )n?uote# 2egistere# .earer $nscribe#

,9

A0)ANC&S AGAINST I**O)ABL& PROP&RTY

A mortgage is the transfer of an# interest in s'ecific immovable 'ro'erty for the 'ur'ose of securing the 'ayment of the money, a#vance# or to be a#vance#. .y way of loan, an# e%isting #ebts or the 'erformances of the engagement this may rise the 'ecuniary liability. +he transfer is calle# the @mortgager3 an# the transferee the @mortgagee3 the 'rinci'al money an# interest of which 'ayment is secure# for the time being an# instrument by which the transfer is effecte#, is calle# the letter of the mortgage #ee#. Availability of a#e?uate flows of cre#it for in#ustry an# agriculture are a sine ?ua non for the growth an# #evelo'ment of an economy. +his ac?uires a##e# im'ortance when agriculture is the mainstay of the economy as also the sector where the bulk of the 'oor are concentrate#. =rowth an# 'ro#uctivity in PakistanIs agriculture has slowe# #own in recent years an# is, therefore, of serious concern given its im'ortance for the economic 'ros'erity of the country. A'art from various other weaknesses in the infrastructural su''ort of the agricultural sector, ina#e?uacy an# lack of efficacy of cre#it, flows to su''ort agriculture relate# activities has been a ma9or constraining factor. Agriculture is the largest sector of the economy. $t contributes ,! 'ercent to =1P, 'rovi#es raw materials to (" 'ercent of in#ustry an# em'loyment to over !" 'ercent of the 'o'ulation. +his is a sector that has the shortest gestation 'erio# for investments an#, therefore, a remarkable ca'acity to bring about a turn aroun# in the economy. +his im'ortant sector in Pakistan is suffering from a number of mala#ies an# is conse?uently witnessing stagnation in 'ro#uctivity. 0ue to 'olicy an# a#ministrative e%igencies, the savings in the agriculture sector remain low an#, therefore, the sector has 'er'etually remaine# ca'ital starve#. +he 'ricing of in'ut an# out'ut in agriculture over the years has force# the ma9ority of farmers in Pakistan to 'lough

"

back their incomes into agriculture an# non;institutional cre#it, an# has more often than not serve# to sa' their 'otential earnings. 5ee#less to say, that shortage of savings an# lack of availability of ca'ital is one of the ma9or reasons for 'overty in the country. +he agricultural an# rural sectors in Pakistan in general an# in Pun9ab in 'articular are, therefore, suffering from severe un#er;#evelo'ment. )n#er a #esirable #evelo'ment mo#el, Pun9ab canJ

$ncrease agricultural 'ro#uction to meet the countryIs re?uirement of essential foo#s items an# in#ustrial raw materials.

1evelo' agro;base# in#ustry in the rural sector for economic value a##ition; =enerate a##itional em'loyment o''ortunities in rural as well as a#9acent small townsKcities

:ontrol massive migration to the urban centers that in turn is causing a number of social, a#ministrative Fi.e. law an# or#erG an# economic 'roblems for the urban areas

/levate 'overty an# im'rove the income generating ca'acity of the agri;base# 'o'ulation.

AGRIC'LT'R& SCH&*& +here are many agriculture 'romotion schemes 'rovi#e# by .OP.

=reen +ractor 8ease 6inance &cheme Agri 6inance .ranches Agricultural 6inance &cheme 0issan 1ost +ractor &cheme &econ# *an# +ractor 8ease 6inance &cheme 0issan 1ost Aabiari &cheme 0issan 1ost <echani4ation &u''ort &cheme 0issan 1ost 6arm +rans'ort &cheme 1

0issan 1ost /slah;/;Ara4i &cheme 0issan 1ost 8ive &tock 1evelo'ment &cheme 8ivestock .ree# $m'rovement +rough MM7 0issan 1ost :ommercial Agro &ervices 0issan 1ost Agri <all 6inance &cheme :or'orate 6arming 6inance &cheme :ommercial 8ease 6inance +ractor &cheme 1eman# 6inance;&he#s :onstruction an# :ivil 7orks 8ease 6inance 6acility for <ilch Animals 2unning 6inance;8ivestockKPoultry an# 6ish 6arms 0issan 1ost <o#el 1airy 6arms FP11:G 0issan 1ost <o#el <ilk :ollection :enter FP11:G 0issan 1ost =reen *ouse 6inance 6acility 0issan 1ost :ol# &torage 6inance 6acility &cheme for :ontrolle# &he#s 8ease 6inance 6acility for $nstallation of .iogas Plant =rou' 6inancing to &mall 6armers :lean :re#it 6acility through &yngenta 6ranchisees >arkaashat 1ri' $rrigation &ystem <arku' of &chemes

B'SIN&SS PRO*OTION SCH&*& .OP Buick :ash .OP :ar 8oan .OP *ouse 8oan ,

.OP &</ 8oan .OP Assaish 8oan .OP *ouse 8oan 6or 6e#eral =ovt

S&R)IC&S
Commercial Bankin" Cor#orate ; In!e tment Ca 1 *ana"ement Ser!ice 'tilit, Bill Locker CO**&RCIAL BANKING +he :ommercial .anking =rou' has been forme# to cater the nee#s of small E me#ium si4e customers for increasing .ank3s business significantly with clear focus, re'ositioning of resources an# active marketing to im'rove .ank3s 'rofitability. :ommercial .anking will #eal with customers having sales turnover an# aggregate cre#it e%'osure as 'er benchmarks 'rescribe# in the &.P3s Pru#ential 2egulations.

+his =rou'3s em'hasis will be to meet necessary business nee#s of customers which are numerous as com'are# to :$. clients but their in#ivi#ual cre#it re?uirements are relatively much smaller. $n view of this 'eculiar nature of this business segment that involves a higher turn over a much wi#er network is nee#e#. +he &</ will concentrate on rebuil#ing its set u' which suits to its 'eculiar nee#s on all locations.

CORPORAT& ; IN)&ST*&NT BANKING Cor#orate Bankin" +he .OP :or'orate .anking en#eavors to market new clients an# retain the e%isting relationshi's an# buil# market share by offering su'erior services, com'etitive 'ricing an# wi#e 'ro#uct range to value# cor'orate clients inclu#ing Public &ector /ntities an# <ulti 5ational :om'anies. .OP facilitates its customers for all sorts of their banking nee#s inclu#ing working ca'ital, tra#e finance, .<2 an# 'ro9ect financing etc. .OP has worke# on some of the local markets3 largest an# most com'le% transactions an# infrastructure 'ro9ects. +he .OP :or'orate .anking =rou' com'rises of seasone# relationshi' management team to meet the #eman#ing service stan#ar#s of large cor'orations. +he grou' #elivers a full range of high ?uality a#visory, financing an# o'erational service solutions tailore# accor#ing to customers3 nee#s. In!e tment Bankin" +he investment .anking =rou' is entruste# with the 'rime res'onsibility of #evelo'ing an# e%ecuting investment banking strategy to enhance an# ma%imi4e sharehol#er value an# customer confi#ence. $.= s'eciali4es in 'rovi#ing innovative an# uni?ue a#vice to its clients to assist them in meeting challenges in an ever;changing market. +he team of ?ualifie# 'rofessionals o'erates un#er a strict risk management framework, following best 'ractices within their fiel#s an# continuously striving for e%cellence. $nvestment .anking )nit offers full s'ectrum of services, which inclu#e +6:s, &yn#icate# 6inances, &tructure# 6inances, 8everage# .uyouts, Pro9ect 6inance,

Buasi;/?uity Pro#ucts, $n#e'en#ent A#vice, /?uity Placements, $POs, /?uity )n#erwriting, <ergers, :or'orate 2estructuring, Ac?uisitions an# other 'ro#ucts. $.) also works on an# come u' with 'rovi#ing 6un# <anagement 6acilities CASH *ANAG&*&NT S&R)IC& :ash <anagement is a 'rocess of collections E 'ayments on behalf of the :ustomers using the .ank 5etwork.+he ob9ective is to faciliate organi4ations with multi'le collection 'oints in gathering :ash K 6un#s an# making them available in the customer o'erating Account. &imilarly it facilitates #isbursement of fre?uent an# or .ulk 'ayment to multi'le locations. +his shoul# be accom'lishe# with minimal su'ervision by the customer, su''orte# by an automate# system to 'rovi#e timely an# re?uisite <$& K 2econciliation un#er agree# &ervice 8evels 'TILITY S&R)IC& :ustomers can 'ay their utility bills e.g. electricity, water gas, tele'hone, mobile, at any of our ,7, branches across Pakistan. 6or your convenience bills are collecte# on all working #ays from 9J"" am to !J"" 'm F<on#ay to 6ri#ayG e%ce't lunch E 'rayer breaks an# from 9J"" am to 1J " 'm on &atur#ay. Oou can also 'ay your bills by availing our #ro' bo% facility. -ust #ro' your :he?ue along with bill at your branch an# collect the recei't in the evening, avoi# the hastle of stan#ing in ?ueues an# save your 'recious time BOP LOCK&R 1iscover 'eace of min#, en9oy 'ersonali4e# service an# o'erate your locker in a frien#ly an# 'leasant environment at +he .ank of Pun9ab. !

Locker Si$e

Annual Fee

&mall <e#ium 8arge /%tra 8arge

2s.1,,"" 2s.1,("" 2s. ,""" 2s.A,!""

+hese are the other services 'rovi#e# by the .OP.

A+< 6acility On;8ine .anking 8ockers 6acility 1eman# 1rafts 8etter of :re#it Pay Or#er <ail +ransfer 1ebit :ar# :ollection of )tility

A'TO*AT&0 T&LL&R *ACHINH&

+hrough the A+<3s :ustomers have access to the various services such as with#rawal, balance en?uiry an# mini statementP :om'lete security is ensure# because access to the account is only 'ossible by entering a four #igit 'ersonal i#entification number FP$5G known

only to the account hol#er. :ash with#rawal limit is u' to 2s.,", """ 'er #ay. Annual charges of A+< is 2s.,!"K; 'er car#.

ONLIN& BANKING .OP is currently offering win#ow;base# online banking to its customers, which gives access to information on their accounts an# the liability to act on the latest information receive# over the net.

LOCK&RS $t is one of the utility services that .OP 'rovi#es to their customers for kee'ing 9ewellery, im'ortant #ocuments an# other valuables.

0&*AN0 0RAFT .OP 'rovi#es safe, s'ee#y an# reliable way to transfer money at vary reasonable rates. Any 'erson whether an account hol#er of the bank or not, can 'urchase a 1eman# 1raft from a bank branch.

L&TT&R OF CR&0IT .OP is offering its business customers the wi#est range of o'tion in the area of money transfer. .OP3s letter of cre#it service is with com'etitive rates, security, an# ease of transaction, .OP 8etter of cre#it is the best way to #o the business transactions.

PAY OR0&R 7

.OP 'rovi#es transfer of money using #ifferent facilities. $ts 'ay or#ers are a secure an# easy way to move the money from one 'lace to another. +he charges for this service are e%tremely com'etitive.

*AIL TRANSF&R <oves money safely an# ?uickly from .OP <ail +ransfer service. +he rates for this service is ?uiet im'ressive as com'are to the market.

0&BIT CAR0 .OP A'na :ash :ar# is an A+< 'lus 1ebit :ar#. 1. +he front of the car# will have the following matter on itJ :ar# *ol#er3s 5ame $nternational .in 5umber FA 1igits ; QQQQQQG <agnetic &tri' &ignature Panel :on#itions of )sage <;5et an# <;5et logo

LI*ITATIONS Any non;'ersonal account i.e. :om'anies, Organi4ations, +rust Account, =overnment account an# :ollection account etc. 1ormant, ino'erative, blocke# or restricte# accounts. Accounts with C5$8D balance. +erm 1e'osit Accounts.

5$16 Accounts. F5on $nterest 1eman# 6inance AccountsG Accounts re?uiring thumb K 'hoto for o'eration Filliterate accountsG R A+<K1ebit car#s can only be issue# on local currency accounts.

FINANCIAL ANALYSIS
To analyse the financial position of #$%& different tools are !se& which incl!des Ratio 'nalysis& (ommon si)e 'nalysis of the last fi*e years. +mportance of ,inancial 'nalysis

I*PORTANC& OF FINANCIAL ANALYSIS 6inancial analysis involves the use of various financial statements. +hese statements #o several things. 6irst the balance sheet an# the secon# is income statement. +he balance sheet summari4es the assets, liabilities, an# owner3s e?uity of a business at a 'oint in time, while the income statement summari4es revenues an# e%'enses of a firm over a 'articular 'erio# of time. A conce'tual framework for financial analysis 'rovi#es the analyst with an interlocking means for structuring the analysis

BALANC& SH&&T
2008 -007 (R!pees in .000)

A et :ash an# balances with treasury banks .alances with other banks 8en#ings to financial institutions $nvestments A#vances O'erating fi%e# assets 1eferre# ta% assets Other assets
10,685,057 2,178,455 633,333 22,711,980 131,731,158 3,471,838 8,388,162 6,109,137 185,909,120 /&- 0&30&0-7&11-&/"0&000 73&/1 &10" 33&203&"2" 3&-"-&7"0 "&20"&007 -3"&00 & 00

Liabilitie .ills 'ayable .orrowings 1e'osits an# other accounts &ub;or#inate# loans 8iabilities against assets sub9ect to finance lease 1eferre# ta% liabilities Other liabilities Net A et Re#re ente% B, &hare ca'ital 2eserves FAccumulate# lossG K )n;a''ro'riate# 'rofit F1eficitG K &ur'lus on revaluation of assets ; net
1,219,801 12,278,773 164,072,532 -30,632 4,564,257 182,165,995 3,743,125 037&1/7 7&2/-&0 " 0 &012&000 /0&3-&-0"&"30 3&000&02/ - 1&00"&301 2&00"&70/

5,287,974 7,427,232 (7,658,686) 5,056,520 (1,313,395) 3,743,125

/&-30&370 7&/-7&-33&/"-&2/"& 0&/"3 3&22"&3/ 2&00"&70/

Contin"encie an% Commitment

4"

INCO*& STAT&*&NT
2008

8==>

(R!pees in .000)

<ark;u'KreturnKinterest earne# <ark;u'KreturnKinterest e%'ense# 5et mark;u'K interest income Provision against non;'erforming loans an# a#vances Provision for #iminution in the value of investments .a# #ebts written off #irectly 5et mark;u'K interest income after 'rovisions Non *ark?u#<intere t Income 6ee, commission an# brokerage income 1ivi#en# income $ncome from #ealing in foreign currencies =ain on sale an# re#em'tion of securities )nreali4e# gain K F8ossG on revaluation of investments Other income +otal non;marku'Kinterest income Non *ark?u#<intere t &.#en e A#ministrative e%'enses Provision against other assets Provision against off balance sheet items Other charges +otal non;marku'Kinterest e%'enses /%tra or#inaryKunusual items 5Lo 6 < Pro+it Be+ore Ta.ation +a%ation ; :urrent ; Prior years ; 1eferre# 5Lo 6 < Pro+it A+ter Ta.ation )na''ro'riate# 'rofit brought forwar# +ransfer from sur'lus on revaluation of fi%e# assets ; net FAccumulate# lossG K 'rofit available for a''ro'riation Ba ic 5lo 6 < earnin" #er 1are 5a+ter ta.6 ? Ru#ee 0ilute% 5lo 6 < earnin" #er 1are 5a+ter ta.6 ? Ru#ee

17,752,969 16,614,000 1,138,969 18,863,580 366,387 19,229,967 (18,090,998) 577,630 2,020,896 324,328 733,787 526,185 4,182,826 (13,908,172) 2,799,933 10,101 114,700 2,924,734 (16,832,906) (16,832,906) 207,600 1,052,000 (8,033,001) (6,773,401) (10,059,505) 3,452,842 5,572 3,458,414 (6,601,091) (19.02) (19.02)

7&"30&00/ 3&030&377 3&"00&7 7 &1 1&/-/&/70 -/1&210 &227&710 &7 &0/2

1"3&" &20/&272 377&-33 -&030&"3" "/7&13" "&/--&703 7& 3/&7/ -&-"0&777 -037&0"0 -&-20&0 0 /&2/"&7-/&2/"&7-10&-"( 0&0- ) -"0&77/00& 03 /&//"&1 0 3&- 0&-/1 "&211 3&--"& 2./ 2./ 7&170&73

41

FINANCIAL B'SIN&SS S'**ARY

8==9
O'erating 2esults <arku'K returnK interest earne# <arku'K returnK interest e%'enses 5et marku' income 5on;marku' base# $ncome 5on;marku' base# e%'enses Provision against 5P8s 5et 'rofit before ta% 5et 'rofit after ta% Balance S1eet +otal Assets A#vances FnetG $nvestments &harehol#ers /?uity 2evaluation 2eserve 1e'osits .orrowings from 6$s 2s in m 2s in m 2s in m 2s in m 2s in m 2s in m 2s in m AA, ," 9,4 9 1A,19( 4,4," ,419 !4,7,4 ,,( , 2s in m 2s in m 2s in m 2s in m 2s in m 2s in m 2s in m 2s in m ,,!!! 719 1,( A 1,"97 1,1!" 47 1,7 A 1, A(

8==:

8==4

8==>

8==@

A,1,! ,,AA9 ,4!A 1, 1

11,!79 7,!"9 4,"7" ,,9!4 1,((, 74 4,7A9 ,("4

17,! 9 1 ,9 9 ,A"" !,4, ,,,(9 1,((( 4,(4A 4,44A

17,7! 1A,A14 1,1 9 4,1( ,,9,! 1(,(A4 F1A,( G

1,,91 1 ,1A! ,, !

F1","A"G

111,1!4 A ,A,4 1(,",A A,777 A,(9 ((,4A! A,791

1A4,(!! 1"1, ," ,(,, 1",A!9 !,4A7 1 7,7,( A,9(9

, 4,974 1 ,(94

1(!,9"9 1 1,7 1 ,,,71, !,"!7 F1, 1 G 1A4,"7 1,,,79

7 ,4A, 1!,11" ,((! 191,9A9 17,(4

4,

RATIO ANALYSIS
2atio analysis is use# to calculate the 'rofitability, li?ui#ityKleverage etc. of the firm. 6rom ratio analysis it is 'ossible to 're#ict future variances. 6ollowing ratios of .OP has been calculate#J Ratio Gro #rea% ratio N N times N times times 2s.Kshare 2s.Kshare 2s.Kshare N Pro+it be+ore ta. to total income *arku#< Intere t co!er ratio Pro+it a+ter ta. to total income Total a et turno!er Price earnin" ratio &PS 5Non %iluti!e6 0i!i%en% #er 1are *arket !alue #er 1are Ca#ital a%eAuac, Ratio GROSS SPR&A0 RATIO =ross s'rea# ratio #efines the total s'rea# of interest between borrowing an# len#ing.&'rea#J 1ifference between fun#e# revenue as a 'ercentage of average earning assets an# the cost of fun#s as a 'ercentage of average 'aying fun#s. +he higher the s'rea# the higher will be the 'rofit margin. =&2S 2evK:=& =&2S F<ark;u' earne# T <ark;u' /%'enseGK<ark;u' earne# =&2 is ,n# highest all over the globe in Pakistan. =&2 of the bank is #ecreasing because of the #ecrease in margin, a &.P rise u' the interest rates on the #e'osits. 4 8==9 7, !9.19 !."( 4A.A! "."A ,.49 7.,! 9."( 4 A!.9 1,.( 8==: !A AA.11 ,.79 49.1A "."7 ,.A! 1"., 1"."1 !., 1",.4! 1,.7( 8==4 ! A7.(9 1.94 !4.1A "."9 ,.7A 7.71 1 .14 .,! 1"1.,! 1"."9 8==> ,1 ! .71 1.A! 49.,7 ".1 ,.,, 9. 1 1".!1 .! 97.( 9.A9 8==@ A.4, F 1A.,9G 1. , F1(9." G ".1, F"."!G F".A"G F19.",G ; 11.!" 1.9,

Return on a!" total a et 5a+ter ta.6 N

3 20 70 10 "0 /0 30 -0 0 0 -00/ -00" -001 -007 7"1 3" 1./-002 3

PROFIT B&FOR& TAB TO TOTAL INCO*& O'erating income less o'erating cost F'rofit before ta%G. +his ratio tells what 'ercent of total income is earne# before 'aying all the ta%es. .OP has a high value of 'rofit before ta% to total income an# they are #ecreasing after ,""A because of increase in a#min e%'enses an# righting off the ba# #ebts. +he main reasons for re#uction in the 'rofitability were a##itional 'rovision against 5P8 #ue to the elimination of benefit of 6&M an# #ownturn in consumer an# in#ivi#ual banking

3 00 "0 0 -"0 - 00 - "0 --00 --"0 -300 -3"0 -3 1.-0 -00/ -00" -001 -007 -002 3 "0. 0 11.

17.20

"3.7

44

INT&R&ST CO)&RAG& RATIO <PK$nterest cover ratioS /.$+K<ark;u' +his ratio tells what 'ercent of interest is covere# from the total income of a firm or a bank.$t tells the ability of a bank to 'ay its mark;u' to the #e'ositors..

times 1 " / 3 -.70 .0/ .1" .3times ".02

0 -00/ -00" -001 -007 -002

PROFIT AFT&R TAB TO TOTAL INCO*& +his ratio analysis tells 'rofitability of a firm after 'aying all the ta%es to total income. Profitability of .OP is increase# because of #ecrease in the ta% 'ai# to the govt an# of high s'rea# ratio. .OP negotiate# their ta%es with the government an# only 'ai# ,"N ta% in ,""A an# only (N in ,""7 instea# of !N

4!

3 00 "0 0 -"0 - 00 - "0 --00 --"0 - 20.03 -00/ -00" -001 -007 -002 3 /1.1" /0. 1 "/. 1 /0.-7

TOTAL ASS&T T'RNO)&R Asset turnoverS 5et $ncomeK +otal assets +his ratio tells the turnover of the asset to generate income. +his ratio is increase# #uring last few years which re'resent increase in the turnover by assets.
tim es 0. / 0. 0. 0.02 0.01 0.0/ 0.00 -00/ -00" -001 -007 -002 0.01 0.07 0.00 0. tim es 0. -

R&T'RN ON TOTAL ASS&T +his ratio gives an i#ea of returning net 'rofit generate# by the bank in com'arison with assets. 2eturn on assetsS Profit after ta% K +otal Assets

4A

+his ratio is #ecreasing in the last year because of #ecrease in Profit as e%'enses raise# u'.+he #ecrease was mainly #ue to increase# e?uity as a result of increase in minimum ca'ital re?uirements an# a##itional 'rovision #ue to with#rawal of benefit of 6&M for most ty'es of a#vances.

3 3 -." ." -./0 -.1"

-.71 -.--

0." 0 -0." -00/ -00" -001 -007 -0.0" -002

PRIC& &ARNING RATIO Price /arning 2atioS <arket 'rice of a shareK /P& 6rom this ratio it is analy4e# what N of /P& is the 'art of <P&. 7hat 'ercent earne# from a share e?uivalent to the worth of 1 2& <P& by the bank or a firm

times 0 2 1 / 0 --00/ -00" -001 -007 -0.1 -002 7.-" 0.-3 7.7 tim es 0.3

47

&ARNING P&R SHAR& /P& S 5et $ncomeK total shares +hrough this ratio it can be analy4e# what 'ercent of 12& share is earne#.

-0 00 20 10 /0 -0 0 --0 -/0 0.02 / -00/ 0.0 ".-00" 3. / 3.-" -001 0." 3." -007 ." 0 -002 - 0.01".0 4% S D+5+D4 NT 5' 674 0-./" 0 .-" 07.2

CAPITAL A0&C'ACY RATIO :a'ital a#e?uacy ratio informs len#ing u' to a certain ratio of e?uity. +his ratio is set by the &tate .ank of Pakistan.
(.' / 0 2 1 / 0 -00/ -00" -001 -007 -002 .0-.23 -.72 0.00 0.10 (.'

A0)ANC&S ; 0&POSITS

4(

S/OT ANALYSIS
&7O+ analysis is an acronym that stan#s for strengths, weakness, o''ortunities, an# threats &7O+ analysis is careful evaluation of an organi4ation3s internal strengths an# weakness as well as its environment o''ortunities an# threats. C&7O+ analysis is a situational which inclu#es strengths, weaknesses, o''ortunities an# threats that affect organi4ational 'erformance.D C+he overall evaluation of a com'any strengths, weaknesses, o''ortunities an# threats is calle# &7O+ analysis $n &7O+ analysis the best strategies accom'lish an organi4ation3s mission by J /%'loiting an organi4ations o''ortunities an# strength. 5eutrali4ing it threats. Avoi#ing or correcting its weakness. 49

&7O+ analysis is one of the most im'ortant ste's in formulating strategy using the organi4ation mission as a conte%t; managers assess internal strengths #istinctive com'etencies an# weakness an# e%ternal o''ortunities an# threats. +he goal is to then #evelo' goo# strategies an# e%'loit o''ortunities an# strengths neutrali4e threats an# avoi# weaknesses.

STR&NGTH

+he .ank officers of .OP are consi#ere# as one of the most able 'rofessionals in the banking worl#. *owever, they have a##e# some local flavour in accor#ance with their targete# segmente#. $n my observation that they interact with their clients as if they are their 'ersonal frien#s an# #iscuss about their 'roblems as their own.

As a result of the com'assionate an# 'ersonali4e# services of the officers, the clients3 'erce'tion for .OP is very high. +hey have trust an# feel themselves to be secure while #ealing with .OP.

.OP has o'ene# all its branches at commercial areas so that the customers or clients face no 'roblems in reaching to the bank.

.OP has got a reliable an# easy to use internal com'uter system./very information regar#ing the transactions in customers3 #e'osits has been com'uteri4e#. 1ata are 'ro'erly maintaine#.

=oo# security system 5ot e%cellent but goo# facilities are given to em'loyees

/&AKN&SS&S

!"

8ack of 'ro'er internal controls is one of the ma9or weakness of .OP. $t is also 'ointe# by the au#itor in his review.

.OP has formuli4e# a lot of 'ro#ucts an# services for its customers, even more than other commercial banks, but any a#vertisement on electronic me#ia has not been seen.

$ observe# #uring my internshi' that some of the em'loyees were bur#ene# with over work. &o $ think that the work shoul# be #istribute# accor#ing to their 'ost an# ca'abilities.

.iase# selection of em'loyees.

OPPORT'NITI&S &atisfy #ynamic consumer nee#s, .OP has ma#e significant in roa#s in its entire service s'ectrum. A lot of 'ro#ucts have been intro#uce# es'ecially in 2etail .anking FAgriculture si#eG an# 'eo'le are increasingly becoming loyal to the bank an# because of feasible transactions. O'timum 'ricing an# bran#ing strategies of the bank are hel'ing to make customer feel secure an# convenient. All the o''ortunities of the ,1st century are to be availe# in the information technology. $nformation technology is the future of this #ynamic worl#. +herefore .OP shoul# em'hasi4e much on $+, es'ecially on /;.anking. .ank can #esign a universal account like other foreign banks, to enhance online facilities. .OP has intro#uce# a number of financial schemes inclu#ing s'ecial @1e'osit Accounts3. +hese accounts have their uni?ue features. 1uring the last three years,

.OP #e'osits have been increasing U 4"N, which is a very healthy sign. +herefore, with the commencement of new schemes there can even be a greater increase in its #e'osits

!1

THR&ATS 1es'ite the #ifficult circumstances that confronte# the banking sector in 'articular an# the country in general, .OP has been still highly 'rofitable. .ut, the facts can3t be #enie# an# there might be an a#verse im'act of such situation. .OP is facing a strong com'etition by its com'etitors, .usiness of all these .anks are growing at very high 'ace.

P&ST ANALYSIS

P/&+ analysis of any in#ustry investigates the im'ortant factors that affect the in#ustry an# influence the com'anies o'erating in the sector. P/&+ stan#s for Political, /conomic, &ocial an# +echnological analysis. +he P/&+ Analysis is a tool to analy4e the forces that #rive the in#ustry an# how those factors can influence the in#ustry.

PO8$+$:A8 /:O5O<$:A8 &O:$O :)8+)2A8 +/:*5O8O=$:A8

!,

&CONO*ICAL =1P <O5&OO5 $568A+$O5 &AM$5=& E A::O)5+& A=2$:)8+)2/ :2/1$+ $5+/2/&+ 2A+/& 2A$&$5= 8$M$5= &+A512/1 1$&PO&A.8/ $5:O</ SOCIOC'LT'RAL Or"ani$ation :*A5=/& $5 8$6/ &+O8/ 8$+/2A:O 2A+/ 1/<O=2AP*$: O6 8A2=/ POP)8A+$O5 &*$6+ +O7A21& +*/ 5):8/A2 6A<$8O

POLITICAL =OM/25</5 + PO8$:O E .)1=/:+ .)1-/:+ </A&)2/& <O5A+O2O PO8$:O 61$ 8$<$+

POLITICAL FACTORS
=overnment 'olicies affect the banking sector. &ometimes looking into the 'olitical a#vantage of a 'articular 'arty, the =overnment #eclares some measures to their benefits like waiver of short;term agricultural loans, to attract the farmer3s votes. .y #oing so the 'rofits of the bank get affecte#. Marious banks in the coo'erative sector are o'en an# run by the 'oliticians. +hey e%'loit these banks for their benefits. &ometimes the government a''oints T&CHNICAL various chairmen of the banks. Marious 'olicies are frame# by the &.P looking at the 'resent +/:*5O8O=O $5 situation of the country for better control over the banks .A50& :O2/ .A50$5= &O8)+$O5& OF A+< FOC'S ON R&G'LATIONS GO)&RN*&NT $5+/25A+/ $.+ &/2M/& A51 =overnment affects the 'erformance of banking sector most by legislature an# framing 'olicy <O.$8/ .government through its bu#get .A50$5= affects the banking activities securiti4ation act has given more 'ower to banking sector against #efaulting borrowers.

!4

*ON&TARY POLICY .ank 2ateJ +he .ank 2ate has been retaine# unchange# 2e'o 2ate $t has been re#uce# un#er the 8i?ui#ity A#9ustment 6acility F8A6G 2everse 2e'o 2ate J $t has been re#uce# un#er 8A6 by ,! basis 'oints from .!N to .,!N with imme#iate effect. 2.$ has retaine# the o'tion to con#uct overnight or longer term re'oKreverse re'o un#er the 8A6 #e'en#ing on market con#itions an# other relevant factors.

F0I LI*IT +he move to increase 6oreign 1irect $nvestment 61$ limits to 49 'ercent from ," 'ercent #uring the first ?uarter of this fiscal came as a welcome announcement to foreign 'layers wanting to get a foot hol# in the $n#ian <arkets by investing in willing $n#ian 'artners who are starve# of net worth to meet :A2 norms. :eiling for 6$$ investment in com'anies was also increase# from ,4." 'ercent to 49." 'ercent an# have been inclu#e# within the ambit of 61$ investment

&CONO*IC FACTORS
.anking is as ol# as authentic history an# the mo#ern commercial banking are traceable to ancient times., banking has e%iste# in one form or the other from time to time. /very year &.P #eclares its A monthly 'olicy an# accor#ingly the various measures an# rates are im'lemente# which has an im'act on the banking sector. Also the )nion bu#get affects the banking sector to boost the economy by giving certain concessions or facilities. $f in the .u#get savings are encourage#, then more #e'osits will be attracte# towar#s the banks an# in turn they can len# more money to the agricultural sector an# in#ustrial sector, therefore,

!!

booming the economy. $f the 61$ limits are rela%e#, then more 61$ are brought in $n#ia through banking channels

GRO/ING &CONO*Y < G0P $t is great news that to#ay the service sector is contributing more than half of the $n#ian =1P. $t takes PA0$&+A5 one ste' closer to the #evelo'e# economies of the worl#. /arlier it was agriculture which mainly contribute# to the =1P. +he Pakistani government is still looking u' to im'rove the =1P of the country an# so several ste's have been taken to boost the economy. Policies of 61$

LO/ INT&R&ST RAT&S &.P controls the $nterest rate, which is base# on several monetary 'olicies. 2ecently &.P has re#uce# the interest rate which stimulates the growth rate of banking in#ustry. :all money rates Fborrowing E len#ingG were in the range of 1.!"K .47 'er cent as com'are# with !.,!K11."" 'er cent on the corres'on#ing #ate of last year

INFLATION RAT&S $nflation re'resents a rise in general level of 'rices of goo#s an# services over a 'erio# of time. $t lea#s to erosion in the 'urchasing 'ower of money. 2esultantly, each unit of currency buys fewer goo#s an# services. 1ifferent fiscal an# monetary 'olicies have curbe# the $nflation rate. +o fight against the slow#own of the /conomy, =overnment of Pakistan E &.P took many fiscal as well as !A

monetary actions. :lubbe# with fiscal E monetary actions, #ecreasing commo#ity 'rices, #ecreasing cru#e 'rices an# lowering interest rate, we e%'ect that $n#ian /conomy coul# again register a robust growth rate in the year ,""9;1"

SA)INGS AN0 ACCO'NTS As state# earlier Pakistan continues to remain one of the high savings economies among the emerging market economies. =ross 1omestic &avings F=1&G of the Pakistan economy constitutes savings of 'ublic, 'rivate cor'orate an# househol# sectors. $n the recent 'erio# the high growth 'erformance of the Pakistan economy is #riven by rise in savings

AGRIC'LT'R& CR&0IT Agriculture has been the mainstay of our economy with 7"N of our 'o'ulation #eriving their sustenance from it. $n the recent 'ast, the sector has recor#e# a growth of about 4N 'er annum with substantial increase in 'lan allocations an# ca'ital formation in the sector. +he target for agriculture cre#it flow for the year ,""9;1" is being set at 2s. ,,!,""" crore. +o achieve this, $ 'ro'ose to continue the interest subvention scheme for short term cro' loans to farmers for loans u'to 2s. lakh 'er farmer at the interest rate of 7N 'er annum. 6or this year, the government shall 'ay an a##itional subvention of 1N as an incentive to those farmers who re'ay their short term cro' loans on sche#ule

SOCIO C'LT'R&AL FACTORS

!7

&ocio culture factors also affect the business. +hey show in which 'eo'le behave in country. &ocio;cultural factors like taboos, customs, tra#itions, tastes, 'references, buying an# consum'tion habit of 'eo'le, their language, beliefs an# values affect the business. .anking in#ustry is also o'erates un#er this social environment an# it is also affect by this factor. +hese factor are changing continuously 'eo'le3s life style, their behavior, consum'tion 'attern etc. is changing an# also creating o''ortunities an# threat for banking in#ustry. +here are some socio;culture factors that affect banking in $n#ia have been analy4e# below.

SHIFT TO/AR0S N'CL&AR FA*ILY Attitu#e of 'eo'le of Pakistan is changing. 5ow, younger generation wants to remain se'arate from their 'arents after they get marrie#. -oint families are breaking u'. +here are many reasons behin# that. .ut banking sector is 'ositively affecte# by this tren#. A family nee# home consumer #urables like free4e, washing machine, television, bike, car, etc. so, they #eman# for these 'ro#ucts an# borrow from banks. 2ecently there is boost in housing finance an# vehicle loans. As they #o not have money they go for installments. &o, banks satisfy nuclear families wants.

CHANG& IN LIF& STYL& 8ife style of Pakistan is changing ra'i#ly. +hey are #eman#ing high class 'ro#ucts. +hey have become more a#vance#. Peo'le want everything car, mobile, etc.. what their fore father ha# #reame# for. 5ow teenagers also have mobile an# vehicle. /ven mi##le class 'eo'le also want to have well furnishe# home, television, mobile, vehicle an# this has o'ene# o''ortunities for banking secter to ta' this change. /very thing is available so it has become easy to 'urchase anything if you #o not have lum' sum.

!(

POP'LATION $ncrease in 'o'ulation is one of the im'ortant factor, which affect the 'rivate sector banks. .anks woul# o'en their branches after looking into the 'o'ulation #emogra'hics of the area. Percentage of #e'osit in any branches of banks #e'en#s u'on the 'o'ulation #emogra'hic of that area. About 7"N of 'o'ulation is below ! years of age. +hey are in the 'rime earning stage an# this increase the earning of the banks. 1e'osits showe# a sub#ue# growth #uring ,""4;"!.$ncome #istributions also affects the o'erations an# overall business of 'rivate sector banks.

LIT&RACY RAT& 8iteracy rate in Pakistan is very low com'are# to #evelo'e# countries. $lliterate 'eo'le hesitate to transact with banks. &o, this im'acts negatively on banks. .ut there is 'ositive si#e of this as well i.e. illiterate 'eo'le trust more on banks to #e'osit their money; they #o not have market information. O''ortunities in stocks or mutual fun#s. &o, they look bank as their sole an# safe alternative

T&CHNOLOGICAL FACTORS

T&CHNOLOGY IN BANKS +echnology 'lays a very im'ortant role in bank3s internal control mechanisms as well as services offere# by them. $t has in fact given new #imensions to the banks as well as services that they cater to an# the banks are enthusiastically a#o'ting new technological innovations for #evising new 'ro#ucts an# services.

AT* !9

+he latest #evelo'ments in terms of technology in com'uter an# telecommunication have encourage# the bankers to change the conce't of branch banking to anywhere banking. +he use of A+< an# $nternet banking has allowe# @anytime, anywhere banking3 facilities. Automatic voice recor#ers now answer sim'le ?ueries, currency accounting machines makes the 9ob easier an# self;service counters are now encourage#. :re#it car# facility has encourage# an era of cashless society. +o#ay <aster:ar# an# Misa car# are the two most 'o'ular car#s use# worl# over. +he banks have now starte# issuing smartcar#s or #ebit car#s to be use# for making 'ayments. +hese are also calle# as electronic 'urse. &ome of the banks have also starte# home banking through telecommunication facilities an# com'uter technology by using terminals installe# at customers home an# they can make the balance in?uiry, get the statement of accounts, give instructions for fun# transfers, etc.

IT S&R)IC&S ; *OBIL& BANKING +o#ay banks are also using &<& an# $nternet as ma9or tool of 'romotions an# giving great utility to its customers. 6or e%am'le &<& functions through sim'le te%t messages sent from your mobile. +he messages are then recogni4e# by the bank to 'rovi#e you with the re?uire# information. All these technological changes have force# the bankers to a#o't customer; base# a''roach instea# of 'ro#uct;base# a''roach. +echnology a#vancement has change# the face of tra#itional banking systems. +echnology a#vancement has offer ,4Q7 banking even giving faster an# secure# service.

COR& BANKING SOL'TIONS

A"

$t is the bu44wor# to#ay an# every bank is trying to a#o't it is the centrali4e banking 'latform through which a bank can control its entire o'eration the a#o'tion of core banking solution will hel' bank to roll out new 'ro#uct an# services.

S'GG&STIONS FOR R&*O)ING /&AKN&SS&S

INT&RNAL CONTROL +o me the ma9or an# the most im'ortant flaw in the .OP is lack of internal controls an# inter communication between #ifferent branches of the bank. As far as financial as'ect is concerne# there is no 'ro'er system is configure# that3s why there is always a risk of big frau#s with in the bank. $ #uring my internshi' also 'ointe# out that 'oint but no one bothere#. +o me the bank shoul# install some 'ro'er resource 'lanning an# controlling systems like other banks #o i.e., oracle financials etc.

A1

PROF&SSIONAL TRAINING .OP staff lacks 'rofessionalism. +hey lack the necessary training to #o the 9ob efficiently an# 'ro'erly. Although staff colleges are in all ma9or cities of the Pun9ab but they are not 'erforming well. 6or this 'ur'ose these staff colleges shoul# be reorgani4e# an# their syllabus shoul# be ma#e in such a way which can hel' the em'loyee un#erstan# the ever; changing global economic scenario. .anking council of Pakistan shoul# also initiate some 'rograms to e?ui' the staff with much nee#e# 'rofessional training. 0&L&GATION OF A'THORITY /m'loyees of the bank shoul# be given a task an# authority an# they shoul# be aske# for their res'onsibility. +he sense res'onsibility in em'loyees min# is one of the most im'ortant factors in the success of any organi4ation. P&RFOR*ANC& APPRAISAL 1uring $nternshi' $ felt that there is no or very less a''raisal of any ones cool 'erformance. +he manager shoul# strictly monitor the 'erformance of every staff member. All of them shoul# be awar#e# accor#ing to their 'erformance an# result in the sha'e of bonuses to motivate# an# incite them to work more efficiently. TRANSF&RS +ransfer is not 'ro'erly carrie# out. &ome of the em'loyees are continually serving at the same 'ost. +hey are sim'ly rotate# at the same branch. +herefore it is recommen#e# that evenly rotation of every em'loyee shoul# take 'lace after every three years in #ifferent braches of the bank.

A,

N&&0 OF C'ALIFI&0 STAFF 2e?uire#, ?ualifie# staff shoul# be 'rovi#e# to branch in or#er to im'rove the functioning of the branch. /s'ecially a tele'hone o'erator shoul# be a''ointe# CR&0IT CAR0 FACILITY .OP shoul# start its o'eration in cre#it car#. +hese car#s are very hel'ful for the or#inary customer in general an# the business 'eo'le in 'articular. +o make it mores secure an# to eliminate the misuse of it, the management is re?uire# to kee' 'ro'er security against the car#. 0&CR&ASING A0*INISTRATI)& &BP&NS& .ank shoul# #ecrease their a#ministrative e%'enses. +his was 2s ,.,! billion in the year ,""7. +hat can be #one by lying off the sur'lus 'ool of em'loyee with gol#en han# shakes scheme. +he branches that are not much use# coul# also be close#. +hat will give 'ositive results in the future SHO'L0 B& AGGR&SSI)& IN CR&0IT POLICY As mentione# earlier, .OP is very conservative in a#vances an# loans 'olicy. $t re#uces the investment o''ortunities. Also loans shoul# be given to the small businessmen an# the other businesses on large scale like in agriculture sector at the low mark;u' rate. $t shoul# a#o't fle%ible cre#it 'olicy while giving cre#it to the agriculture sector. T&CHNOLOGICAL I*PRO)&*&NT $ woul# like to suggest that at least all the main branches of .OP shoul# be fully com'uteri4e# in or#er to e%'e#ite the #ealing 'rocess among bankers an# their customers. /very #e'artment shoul# be 'rovi#e# a com'uter with a#e?uate training Fes'ecially A#vances, 1e'osits an# 6oreign /%change #e'artmentsG. 1aily recor#s shoul# be entere# A

#irectly into these com'uters, Finstea# entering the overall #aily transactions after the banking hoursG. $t will not only re#uce transaction time, will increase accuracy but will also be efficient as well. 5ot only it will be economical but will also re#uce the e%tra bur#en of work of the bank. $t will also hel' in re#ucing the use of e%cessive 'a'er work. STAFF R&LATIOSHIP =oo# relationshi' among staff member lea#s to the 'eak 'erformances in any organi4ation. $ observe# that the staff relationshi' was normal other wise but some time $ notice# that there e%ists little conformity among the staff members. Another syn#rome from which the staff suffere# was that all of them consi#ere# themselves more im'ortant than others. FA)O'RITIS* ; NIPOTIS* $n the branch #uring my internshi' $ saw that when some of the em'loyees are transfer to other 'laces, #ue to their relation with influential 'eo'le an# with to' management they can cancel their transfer in few weeks, when they are unsatisfie# at that 'lace. &o $ suggest that in the organi4ation there shoul# be no favouritism, ne'otism an# 'olitics an# their transfer an# 'romotion shoul# be ma#e on merit an# accor#ing to the rules an# regulations of the bank an# 'rovi#e# favourable environment to the em'loyee to show their 'erformances. *ARK&TING POLICY +he branch shoul# a#o't various marketing strategy an# 'romotion strategy to 'romote the bank an# its 'ro#uct. +he most im'ortant in my o'inion is 'ersonal marketing; it is the most effective of all when you think in term of branch level. .ut on the whole organi4ation level, they shoul# arrange

A4

the seminar with in the bank an# outsi#e the bank. +hey shoul# #o more a#vertising through news'a'er an# me#ia an# through channel of 'ersonal contacts. A)OI0ING BA0 0&BTS =reat care shoul# be taking while e%ten#ing the loan. 8oans shoul# be awar#e# against reasonable securities, where market value shoul# be e?ual to the loan grante#. Policies shoul# be crafte# in a way to ensure that no loan is e%ten#e# on 'olitical 'ressure. &.P regulation for loan a''roval shoul# be strictly followe#. Accor#ing to which the current ration of borrower3s business must be 1J1 an# the #ebt to e?uity ratio shoul# be A"J4", means the li?ui#ity 'osition of business shoul# be healthy.

R&CO**&N0ATIONS FOR ST'0&NTS

$n this section some recommen#ations for those stu#ents who are 'lanning for an internshi' at .OP 'articularly an# in any other bank generally. +he most im'ortant of all is the #ifference between what we learn from the books i.e. the theory an# what actually is #one i.e. in 'ractice. +his #ifference is #escribe# in #etail belowJ /ORKING IN 0IFF&R&NT 0&PART*&NTS 1uring my internshi' $ observe# that other internees in the bank use to stick with one #e'artment only. An internee with s'eciali4ation in 6inance was of the view that he shoul# be in 6inance #e'artment same was the case with other s'eciali4e# $nternees. .ut $ woul# suggest that one must work in every #e'artment for some time to gain a han# on e%'erience of all the #e'artments. As in real working environment em'loyee have to coor#inate with other #e'artments, so heKshe must know what the other #e'artments o'erations are an# how they work.

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R&LATIONSHIP B&T/&&N TH&ORY ; PRACTIS& +his 'art of re'ort is the essence of the internshi', as this will hel' other stu#ents to better un#erstan# the working environment of the bank by fin#ing the relationshi' between what is written in the books an# what is actually going on in fiel#s. +he theory written in the books in cases is not im'lemente# as it is. $n some cases theory is im'lemente# with a little mo#ification but in other cases theory has nothing to #o with 'ractice. $n accounting, banks #on3t 're'are worksheet, but 'art of worksheet is 're'are# like trial balance, but little #ifferences, theory an# 'ractice has substantial relationshi'. +he securities for the loans are han#le# in the same way as theory says like mortgage, 'le#ge, hy'othecation, a#vances against insurance 'olicies or li?ui#ation 'roce#ure is the same. +he #ifference is there in the case of loans. +heory talks about four or five terms of loans that is cash finance, over#raft, loans etc., but in 'ractice there are some more terms use# like running finance, #eman# finance etc. All other conce'ts of remittances, bills, foreign e%change #e'osits, letters of cre#it are in accor#ance with theory almost. &o for a internee it is more im'ortant to learn new things which heKshe has never hear# about in hisKher course book. +o me, +heory gives you the #irection to un#erstan# the 'rocesses an# the terminologies going across the 7orl# using best business 'ractices in a broa#er view covering each an# every as'ect of 'ossible business scenarios. On the contrary 'ractical life is s'ecific, enclose# in a 9ar. $n 'ractical 'rofessionalism an# firm3s environment is each an# every thing. Professional life only buil#s on the knowle#ge base# on books even though it may only use 1N of the theoretical knowle#ge.

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CONCL'SIONS
.y analy4ing the financial statements of the bank, $ came across to know that it is one of the most growing bank in the subcontinent. 5ow they shoul# carry on with the 'resent management which too k it from one of the or#inary bank to this level. 5o #oubt 'rofessionalism an# internal controls of the bank are one of the ma9or issues which may results some ma9or losses to the bank. .ias in hirings an# between colleagues shoul# be remove#.

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Biblio"ra#1,
Book an% Ot1er Stu%, *aterial 6un#amentals of 6inancial <anagement by -ames :. Man *orne an# -ohn <.

7achowic4, -2 +he Analysis an# use of 6inancial &tatement by =eral# 7hite, Ashwin'aul :.

&on#hi an# 1ove 6rie# $nternational 6inancial &tatements Analysis byJ +homas 2. 2obinson, *ennie Man

=reuning, /laine *enry, <ichael A. .roihahn A(

6inancial &tatement Analysis :ase V1J 1ow :hemical :om'any $rsha#, <. F,""7G. <oney .anking an# 6inance, 5ayyar Asa# Printers. &i##i?ui, A. *. F199(G. Practice an# 8aw of .anking in Pakistan F,n# /#.G, 0arachiJ 1ecent Print /nter'rises P. 7ebster3s Pocket .usiness 1ictionary. F,"",G, F'';17G, )nite# &tates Of America, +ri#ent Press $nternational.

Annual re'orts of the .ank of Pun9ab F,""7;"(G

Online Re+erence htt'JKKwww.bo'.com.'k htt'JKKwww.sb'.org.'k htt'JKKwww.business;stan#ar#.com htt'JKKwww.sheshunoff.com htt'JKKwww.blurtit.comK?7,A4 !.html

Per onal Re+erence <uhamma# $mran 0han <anagerJ +he .ank of Pun9ab <all 2oa# .ranch <urree. &hahi# =ul4ar O'erational managerJ +he .ank of Pun9ab <all 2oa# .ranch <urree.

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