Beruflich Dokumente
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www.rbs.com.pk
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First I would like to thank my mighty ALLAH. After that I would also like to thank my
respected advisor Tayyab Iftikhar (Area manager RBS) who guided me in different
phases of this report. And last but not the least is the special mention of all the
family members of my family and friends who have contributed the peace of our
mind to accomplish this report.
PREFACE
Page
no.
TABLE OF CONTENTS:
Executive Summary
5
7
Vision, Mission and Core Values
8
Classification of departments
Remittances and clearing 9
Customer services 12
SWOT analysis 14
Financial Details 18
Ratio analysis 23
33
Imports
34
Imports flowchart
38
Exports
38
Exports flowchart
Types of financing 42
43
Import financing& Export financing
45
Collection and advance payments
46
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Research problem
Abeerah Zaidi, Roll no-540
Learnings 48
References 52
EXECUTIVE SUMMARY
RBS is rapidly gaining ground in the global financial market and considering this rapid growth; RBS is
the formerly NO 1 bank in the world before selling their operations in Asia. In Pakistan, banking giant
MCB purchases RBS last month & ANZ takeover RBS in rest of Asia.
Given the identical positioning of both the banks in the market, the combined entity of MCB
and RBS will deliver economies of scale, a more complete product set, a stronger operating
platform and a wider distribution network. This acquisition will make MCB stronger and have
the opportunity to make their image better.
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During the 1980s the Group diversified, setting up an innovative car insurance company. During the
early 1990s the Royal Bank refocused on its core business of retail banking. In 2000 the Royal Bank
acquired National Westminster Bank which was the biggest takeover in the history of British banking.
Now in 2008 RBS took over Aljameen Bank of Netherlands, Amstardamsche Rotterdamsche (ABN
AMRO), which is considered the number one bank in Asia. RBS has proved itself one of the best bank
RBS has 75 branches in various cities of Pakistan. Few of them are in the following cities:
• Karachi
• Lahore
• Islamabad
• Peshawar
• Quetta
• Rawalpindi
• Faisalabad
• Multan
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RBS Vision…
“Contributing to profit generating by reducing the amount of time employees spend on training activities
and enabling employees to spend more time on revenue generating activities.” (The Royal Bank of
Scotland, 2008)
Our Mission…
“To create maximum economic value for our shareholders through a constant relationship
focus on the financial services needs of our chosen clients segment and a strict adherence to
our financial target.” (The Royal Bank of Scotland, 2008)
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Customer Focus
Relentless focus on understanding and fulfilling customer needs through superior
service.
Innovation
Continually generate, validate and implement creative solutions to business challenges
Integrity
Uncompromising financial and intellectual honesty to the organization and oneself with
relationships based on mutual trust and openness. Team-work
Willingness to share the glory of achievements as well as for responsibility for failure.
Classification of departments:
CONSUMER BRANCH STRUCTURE:
PBC Manager
Branch Manager
VG ARM / RM
Floor Manager
Asset Sales
Area manager
Regional Manager
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Consumer banking
1. Remittances
2. Customer services
Commercial banking
1. Trade
2. Commercial services
Consumer banking:
1. Remittances and Clearing:
Types of Cheques
A. Self or Bearer
A self or bearer cheque is a type of cheque that can be cashed. The person who
presents the cheque is paid the amount written on the cheque.
B. Crossed Cheques
Crossed cheques can only be transferred into an account. They cannot be cashed.
There are two types of crossed cheques.
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In Special Crossing, account title and account number are mentioned and the cheque
can be deposited only in the payees account.
C. Order cheque
In order cheques, the name of person is mentioned who is eligible to get cash, the person has
to show NIC to get the cash.
D. Stale Cheque
A cheque is stale if it has completed its six months limit and it sort of expires and cannot be presented
for withdrawal.
E. Post-Dated Cheque
A cheque is post dated if it is presented but it faces date is some future date.
Clearing Process
Clearing is a process that is carried out in order to verify that the cheque presented is collectable and
the account holder of that cheque maintains the balance that is written on the cheque. This process
involves
Outward billing collection is the same as clearing except that the cheques are received from other RBS
bank's branches located in different cities so that they can be launched in clearing locally.
If a transaction cannot be carried out for a cheque presented, because of any reason, the cheque is
returned along with an attached memo attached at the end of report. The memo contains the reason for
return of that cheque.
Dishonored cheque
If account holder gives a person a cheque, such that the person cannot draw it due to insufficient
balance and the cheque returns with memo, it is the right of that person to register FIR against that
account holder. However, to register FIR, he/she must provide at least three consecutive memos.
Transferring funds:
Funds can be transferred through following security leaves
A. Pay order
To transfer funds within the city, an account holder can make use pay order. The advantage of
pay order against cheques is that the bank gets involve at two points. At first the pay order has
to be made from bank and the second point where the pay order will be presented for
withdrawal. Pay order is used to transfer funds in the account of the beneficiary however, if the
account does not exist then the signatures of two bank officers are required to cancel the effect
of payee's account only.
The difference between pay order and DD is that, DD is used to transfer funds between cities.
Telegraphic transfer is a fast way to complete transaction. To make TT, .1 % of the amount
transferred or 200, which ever is higher, is charged to the customer. The customer fills out funds
transfer request form and pays cash. Suppose a person who has to receive the cash (TT)
resides in Islamabad, the RBS BWP will make a call to RBS Islamabad to give a specified
amount on funds transfer form to the person whose name was mentioned on the funds transfer
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D. Traveler’s cheque
If a person needs to travel and he does not want to carry a heavy cash amount, he/she can
make a traveler cheque from a bank. This cheque can then be cashed from any branch in
another city of the same bank
E. Stamp Paper
Proprietorship deed is taken on stamp paper. There are different worth of stamp papers. Before 1999
the deed was taken on stamp paper worth Rs. 150. After 1999 it is taken on Rs. 500 worth paper. This
is so because of government act.
F. Advice
In some banks, to make payments against demand draft to the beneficiary, advice is required. Advice is
a sort of code that is posted by the bank who issues the DD in first place. Any one does not know this
code. The receiver matches the advice and if matched, makes the payment to the customer. Unless
advice is not received, payment cannot be made.
2. Customer services:
A. Deposit Facility
According to (RBS, 2008) the followings are the main type of deposit accounts being offered by RBS for
various categories of people:
B. Locker Facility
“If your jewelry has been given you sleepless nights, and the prize bonds tucked in the bottom drawer
make you feel tense, it is time to discover peace of mind.”
According to (Lockers, 2008) the lockers at RBS are safe, convenient and private. As a customer, you
can enjoy personalized service and operate your locker in a friendly and pleasant environment.
C. Credit Cards
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D. ATM facility
Through RBS ATM network you can have access to money 24 hours a day, 7 days a week.
This facility gives you the flexibility of withdrawing money from your account any time. The
RBS ATMs are located inside the premises of the bank.
Any customer can make one to five transactions in a single day, by withdrawing 20,000 of
amount in a single transaction, so the customer having the credit card can withdraw 100,000 in
a day. If some one wants more than 100,000 then he can use his cheque book.
E. Online banking
In (RBS online banking, 2009) RBS is offering the facility of online banking to its customers through the
country wide network of branches. If the customer is interested in sending the money in any other
branch of RBS then he / she can use this facility. Customers can use ATMs or banking counters of any
branch for day to day banking needs, irrespective of branch where they maintain their accounts. It is
fast and secure access to any of your private accounts via Internet.
1. Robbery
2. Fire
3. Natural Calamity
4. Vandalism
5. Terrorism
6. Applicable on each locker.
7. Only events that take place in the locker area are covered under this scheme.
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SWOT ANALYSIS
A SWOT analysis is used as a framework to help the firm develop its overall corporate, marketing or
product strategies. Strengths and Weaknesses are internal factors, which are controllable by
the organization. Opportunities and threats are external factors, which are uncontrollable
by the organization.
During My internship period, I closely studied the SWOT of RBS and is described below
A. STRENGHTS
1. RBS is the first multinational bank which has started the concept of Islamic banking and so rapidly
expanded its products of Islamic banking. The launching of Islamic credit cards and auto financing
on basis of Mudarabah is expected to provide positive growth opportunities to the bank.
2. RBS formerly ABN AMRO, was at number five with respect to its assets but now it is at number
one.
3. It enjoys better position than the other banks of Pakistan because RBS maintains big accounts of
highly profiled businessmen as compared to other banks.
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B. WEAKNESSES
1. One of the weaknesses of this bank is that some of its branches have not even started its
operations like its Peshawar branch is not functioning because of lack of employees in that
area.
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C. OPPORTUNITIES:
1. RBS has started NSBC there is opportunity of growth in this field.
2. There are growth trends in Islamic Banking sector of Pakistan which will further enhance the
working condition of Islamic banking in near future.
3. The bank should employ the best courier companies and keep in touch with them, for resolving
the problem of dispatching customers’ goods.
4. The bank management should use the modern ways of communicating with staff and staff in
return to the customers, so that flow of information leads to rapid and positive results.
5. As employees have the habit of working with ABN AMRO, but now with RBS take over there are
chances of further growth in productivity of employees and improved banking environment.
D. THREATS
1. Due to present government and the instability of the policies RBS may face a lot of problems in
future.
2. The religious class emerging from the Pakistani society, which hates working with the foreign
banks and prefers local banks, can disturb the working of the bank in future.
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Conclusion
The biggest strength of RBS is that it is the first multinational bank which has started the concept of
Islamic banking. It enjoys better position than the other banks of Pakistan because world wide it is at
number five with respect to its assets The department of FRM is giving good results as compared to
other banks of Pakistan. The main weaknesses are that some of its branches have not even started its
operations so they should be in the working condition, lack of proper rotation among the departments
and customers dissatisfaction arising about changes going on in bank. But the bank has opportunity of
growth in Islamic Banking sector. On the other hand the biggest threat is the instable economic position
of Pakistan and the depreciation of Pakistani rupee by which it will earn less profit than its other foreign
branches.
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Extraordinary items - - -
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Advances
LIABILITIES
Bills payable 3,811,284 2,975,910 1,832,981
Deposits and
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95.50%
95.00%
94.50%
94.00%
93.50%
93.00%
92.50%
Earning Assets to Total Assets is increasing trend. In 2008 it becomes almost double of 2006. Which
shows that bank is investing in earning asset rapidly. From 2006 to 2008 the total assets and earning
asset in amount also increased which show bank’s strength.
2.00%
1.50%
1.00%
0.50%
0.00%
2008 2007 2006
Return on Earning Asset is in increasing trend. Banks strategy about to increase its earning asset
becomes successful. But the proportion of increasing of return on earning assets is lesser than the
increase of earning assets to total assets. If bank concentrate to increase the return of earning asset, it
can increase.
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7.50%
7.00%
6.50%
6.00%
5.50%
Equity Capital to Total Asset is increase 2006 to 2007 little bit but it becomes decrease in 2008 but this
decrease is lesser than the proportion of increase. In 2007 the Total Equity was higher than the 2006
and 2008. It may be call back its shares or its profit become low in 2008 due to which this ratio become
decrease
5.00%
4.00%
3.00%
2.00%
1.00%
0.00%
40.00%
30.00%
20.00% Page | 24
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• Imports
• Exports
The guidelines for trading and foreign exchange operations are published in state bank of Pakistan
manual in chapter 12 and 13th.
It is linked with us it’s a type of foreign bank, credits it and it credits us, simply it’s our account with you.
We credit the vostro account for payment, we check coming and delivered payments.
3. HS-code:
There are specific HS-codes related to every traded item, these codes are published in a manual.
The INCOTERMS was first published in 1936 --- INCOTERMS 1936 --- and it is revised periodically to
keep with changes in the international trade needs. The complete definition of each term is available
from the current publication --- INCOTERMS 2000. Under INCOTERMS 2000, the international
commercial terms are grouped into E, F, C and D, designated by the first letter of the term, relating to
the final letter of the term. E.g. EXW—ex-works comes under grouped ‘E’.
The purpose of Inco terms is to provide a set of international rules for the interpretation of the most
commonly used trade terms in foreign trade. Thus, the uncertainties of different interpretations of such
terms in different countries can be avoided or at least reduced to a considerable degree. The scope of
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Ex means from. Works means factory, mill or warehouse, which are the seller’s premises. EXW
applies to goods available only at the seller’s premises. Buyer is responsible for loading the goods on
truck or container at the seller’s premises and for the subsequent costs and risks. In practice, it is not
uncommon that the seller loads the goods on truck or container at the seller’s pre4mises without
charging loading fee. N the quotation, indicate the named place (sellers premises) after the acronym
EXW for example EXW Kobe and EXW San Antonio.
The term EXW is commonly used between the manufacturer (seller) and export-trader (buyer), and the
export-trader resells on other trade terms to the foreign buyers. Some manufacturers may use the term
Ex Factory, which means the same as Ex Works.
2. FCA {+the named point of departure} Free Carrier: The delivery of goods on truck, rail car or
container at the specified point (depot) of departure, which is usually the sellers premises, or a
named railroad station or a named cargo terminal or into the custody of the carrier, at seller’s
expense. The point (depot) at origin may or may not be a customs clearance centre. Buyer is
responsible for the main carriage/freight, cargo insurance and other costs and risks.
In the air shipment, technically speaking, goods placed in the custody of an air carrier are considered
as delivery on board the plane. In practice, many importers and exporters still use the term FOB in the
air shipment. The term FCA is also used in the RO/RO (roll on/roll off) services
In the export quotation, indicate the point of departure (loading) after the acronym FCA, for example
FCA Hong Kong and FCA Seattle. Some manufacturers may use the former terms FOT (Free on
Trucks) and FOR (Free on Rail) in selling to export-traders.
3. FAS {+the named port of origin} Free Alongside Ship: Goods are placed in the dock shed or
at the side of the ship, on the dock or lighter, within reach of its loading equipment so that they
can be loaded aboard the ship, at seller’s expense. Buyer is responsible for the loading fee,
main carriage/freight, cargo insurance, and other costs and risks In the export quotation,
indicate the port of origin(loading)after the acronym FAS, for example FAS New York and FAS
Bremen. The FAS term is popular in the break-bulk shipments and with the importing countries
using their own vessels.
4. FOB {+the named port of origin) Free on Board: The delivery of goods on the board the
vessel at the named port of origin (Loading) at seller’s expense. Buyer is responsible for the
main carriage/freight, cargo insurance and other costs and risks. In the export quotation,
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Under the rules of the INCOTERMS 1990, the term FOB is used for ocean freight only. However, in
practice, many importers and exporters still use the term FOB in the air freight. In North America, the
term FOB has other applications. Many buyers and sellers in Canada and the USA dealing on the open
account and consignment basis are accustomed to using the shipping terms FOB Origin and FOB
destination.
FOB Origin means the buyer is responsible for the freight and other costs and risks. FOB Destination
means the seller is responsible for the freight and other costs and risks until the goods are delivered to
the buyer’s premises which may include the import custom clearance and payment of import customs
duties and taxes at the buyer’s country, depending on the agreement between the buyer and seller. In
international trade, avoid using the shipping terms FOB Origin and FOB Destination, which are not part
of the INCOTERMS (International Commercial Terms).
5. CFR {+the named port of destination} Cost and Freight: The delivery of goods to the named
port of destination (discharge) at the seller’s expenses. Buyer is responsible for the cargo
insurance and other costs and risks. The term CFR was formerly written as C&F. Many
importers and exporters worldwide still use the term C&F.
In the export quotation, indicate the port of destination (discharge) after the acronym CFR, for example
CFR Karachi and CFR Alexandria. Under the rules of the INCOTERMS 1990, the term Cost and
Freight is used for ocean freight only. However, in practice, the term Cost and Freight (C&F) is still
commonly used in the air freight.
6. CIF {+named port of destination} Cost, Insurance and Freight: The cargo insurance and
delivery of goods to the named port of destination (discharge) at the seller’s expense. Buyer is
responsible for the import customs clearance and other costs and risks.
In the export quotation, indicate the port of destination (discharge) after the acronym CIF, for example
CIF Pusan and CIF Singapore. Under the rules of the INCOTERMS 1990, the term CIFI is used for
ocean freight only. However, in practice, many importers and exporters still use the term CIF in the air
freight.
7. CPT {+the named place of destination} Carriage Paid To: The delivery of goods to the
named port of destination (discharge) at the seller’s expenses. Buyer assumes the cargo
insurance, import custom clearance, payment of custom duties and taxes, and other costs and
risks. In the export quotation, indicate the port of destination (discharge) after the acronym CPT,
for example CPT Los Angeles and CPT Osaka.
8. CIP {+ the named place of destination) Carriage and Insurance Paid To: The delivery of
goods and the cargo insurance to the named place of destination (discharge) at seller’s
expense. Buyer assumes the importer customs clearance, payment of customs duties and
taxes, and other costs and risks.
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9. Delivered Ex Ship: The delivery of goods on board the vessel at the named port of destination
(discharge) at seller’s expense. Buyer assumes the unloading free, import customs clearance,
payment of customs duties and taxes, cargo insurance, and other costs and risks.
In the export quotation, indicate the Port of destination (discharge) after the acronym DES, for example
DES Helsinki and DES Stockholm.
10.Delivered Ex Quay: The delivery of goods to the Quay (the port) at the destination at buyer’s
expense. Seller is responsible for the importer customs clearance, payment of customs duties
and taxes, at the buyers end. Buyer assumes the cargo insurance and other costs and risks. In
the export quotation, indicate the Port of destination (discharge) after the acronym DEQ, for
example DEQ Libreville and DEQ Maputo.
• LC contract issuance
• LC contract amendment
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• Discount/negotiation
• Advance payment
• Export refinance
E-form/I-form:
These are the forms issued to parties willing to engage in the export and import through our banking channel. It
contains 4 copies i.e.
1. Customer record,
2. (2). Bank.
3. (3).SBP.
Letter of credit:
It is a document issued by the importer’s bank for the security of goods of the exporters. The buyer bank
undertakes to make payment on behalf of the buyer provided the seller fulfills certain conditions i.e. submission of
documents that comply with terms mentioned in the undertaking.
1) Revocable
2) Irrevocable
3) Unconfirmed
4) Confirmed
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9)
Conditions:
Documents should be presented to the bank within 21 days from the verification and 14 days from
shipment date.
Imports
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Documents
Imp Exporte
orte r
r
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Doc(s)
port goods
Shipment release
Shipment
Pakistan China
Import of goods into Pakistan is regulated by the Ministry of Commerce, Government of Pakistan, under
the Imports and Exports (Control) Act, 1950 and the notifications issued there under. No import is
permissible from Israel or from any other country, which may be notified by the Ministry of Commerce.
Import of goods originating from any of these countries/ sources is also prohibited. Imports from India
are regulated as notified by the Ministry of Commerce, Government of Pakistan from time to time
Registration of Importers.
No person can import goods into Pakistan unless he is registered with the Export Promotion
Bureau, under the Registration (Importers and Exporters) Order, 1993 or exempted from the provisions of
the said Order. Authorized Dealers should, therefore, verify that the importer is registered or otherwise
exempted before any letter of credit is opened/contract registered or remittance made on his behalf for
imports into Pakistan. Authorized Dealers should ensure that the registration number of the importer is
invariably furnished on Form 'I'. Where the importer has been granted an exemption, a suitable mention of
this fact should be made on Form 'I'.
Classification of Imports.
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Terms of Imports.
Subject to the provisions of this Chapter, imports can be made on FOB basis, CFR liner terms basis or
CFR free out basis. However, prior permission of the State Bank shall be obtained for import of sugar
and food grains (cereals) on CFR free out basis.
(i) Letters of credit may be established providing for payment to beneficiary either in the country of
origin of goods or in the country of shipment of goods.
(ii) Authorized Dealers may also establish letters of credit providing for payment to the
beneficiary in a third country, not being the country of origin of goods or the country of shipment
provided they are satisfied that the payment to the beneficiary in a third country does not involve extra
expenditure. This facility is, however, not admissible for the import of goods which are directly shipped
from the ACU member countries.
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Bilateral key/swift (if both parties have the keys then they can transact with each other)
Contract
Payment
Shipment
Documentation
Whichever is earlier?
Performa invoice
Usance.
LC contract issuance:
Contact is generally between the parties but there can be intermediaries’ e.g.
• Performa invoice
• Advising bank
• Reimbursing bank
Exports
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Doc(s)
HSBC
(U.K)
RBS
General.
The Government of Pakistan have, by their Notification Nos.I(6)-ECS/48 and I(7)ECS/48 both dated
the 1st July, 1948 issued in pursuance of Section 12 of the Act, prohibited the export by post and
otherwise than by post, of any goods either directly or indirectly, to any place outside Pakistan, unless
a declaration is furnished by the exporter to the Collector of Customs or to such other person as the
State Bank may specify in this behalf that foreign exchange representing the full export value of the
goods has been or will be disposed of in a manner and within a period specified by the State Bank.
This chapter deals with the regulations governing exports from Pakistan.
The prohibition mentioned above does not apply to exports to Afghanistan, exports to Iran by
land route under special arrangement and to the export of:
i) Bonafide trade samples of articles exported as such by an exporter registered under the
Registration (Importers and Exporters) Order, 1993 as amended from time to time, or who has
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Exchange policies regarding exports cover all goods exported from Pakistan irrespective of whether
they are subject to license under the Export Trade Control Regulations or not. Similarly, nothing in the
Exchange policies relieves the exporters from the necessity of complying with the Export Trade Control
Regulations as laid down by the Government from time to time, including the necessity of obtaining an
export license wherever necessary. The Government of Pakistan has under the Export Trade Control
Regulations banned exports to Israel.
3. Registration of Exporters.
Under the Registration (Importers and Exporters) Order, 1993, as amended from time to time,
no person can export any goods from Pakistan unless he is duly registered as an exporter with the
Export Promotion Bureau. Authorized Dealers should, therefore, ensure before certifying any export
form 'E' as required in Para 8 ibid that the person is so registered. The registration number should be
quoted on the relative export forms
As required under the Federal Government Notification Nos.I(6)-ECS/48 and I(7)ECS/48 both dated the
1st July, 1948 the exporters are required to declare their exports to the Customs/Postal authorities in
form 'E' (Appendix V-11).
(i) Full export value of goods exported from Pakistan and declared to the Custom authorities
should be received in an approved manner, as embodied in State Bank's Notification No. F.E. 3/2001-
SB dated the 28th September, 2001 on the due date for payment or within six months from the date of
shipment/posting, whichever is earlier, or within a period as may be prescribed by the State Bank
through specific or general instruction, through an Authorized Dealer either in convertible foreign
currency in which the Authorized Dealer maintains accounts or in U.S. Dollar or in Pakistan rupee from
a non-resident bank account. However, where the terms of sale/irrevocable letter of credit provide for
payment on 180 days’ usance/270 days' Usance in the case of Hand Knotted Carpets, from the date of
shipment/posting, it shall be permissible for the exporter to repatriate the export proceeds within
195/285 days from the date of shipment/posting shipment.
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It is permissible for exporters to retain the export proceeds including ‘Advance Payments’ in
foreign currency with an Authorized Dealer in Pakistan for three working days and to sell the same
within this period to any Authorized Dealer. The foreign currency so retained shall be kept by the
Authorized Dealers in ‘Special Exporters’ Account’ outside their ‘Exposure’ limits.
i) Before the export forms are lodged by the exporters with the Customs/Postal authorities
all the copies thereof are required to be certified as under by the Authorized Dealers:-
a) Certified that the above exporter(s) is/are known to us, that he/they is/are bonafide
businessman/businessmen in Pakistan and that he/they has/have made arrangements with us
for the realization of the export proceeds, of the goods declared on this form on the due date for
payment or within six months from the date of shipment/posting, whichever is earlier, in
accordance with the State Bank’s Notification No. FE. 3/2001-SB dated the 28th September,
2001 and that we are satisfied with said arrangements. We have also satisfied ourselves about
the bonafides of the importers/consignees abroad and their credentials etc.
b) We undertake to ensure that export proceeds against shipment on firm contract shall be
received by us on the due date for payment or within six months from the date of
shipment/posting, whichever is earlier, in accordance with the State Bank’s Notification No. FE
3/2001-SB dated the 28thSeptember, 2001. In the event of non-compliance due to reasons beyond
our control we shall furnish to the State Bank of Pakistan a full explanation as to the reasons and
circumstances resulting in our inability to comply.
c) We undertake that in the event of non-realization of export proceeds against shipment on
consignment sale within the stipulated period of six months, we shall obtain from the exporter(s)
and furnish to the State Bank of Pakistan a full explanation as to the circumstances resulting in
non-realization. We further undertake that in the event of short realization, we shall obtain from the
exporter(s) and furnish to the State Bank of Pakistan a fully documented account sale certified by
the consignees/Chamber of Commerce of the country of import.
E-form request:
trade relationship should be maintained with the customer
Types of financing:
1. Term Financing: This type of loan is availed by the borrower to acquire fixed assets
(immovable
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3. Overdraft (OD):
This is a short term facility which is granted to the borrower to enable him meeting his day to day
funding needs; like payment of salaries, utilities and purchases of inventories etc. An agreed limit is
sanctioned by the bank and the borrower is allowed to draw that amount through his current account.
4. Revolving Credit:
This type of loan is also short-term in nature and is used to meet short-term funding requirements of the
borrowers. This type of loan does not have a fixed number of payments, as in the case of installment
loan. Cash Finance and Running Finance are types of revolving loans. Once the loan limit is approved,
then the borrower is free to withdraw amounts to the extent of that limit. The borrower can withdraw and
repay the amount as many times as he wishes to; but he has to pay mark-up on the amount which he
has actually used.
5. Letter of Credit (LC) or Documentary Credit(DC):
Letter of Credit is a written undertaking by a financial institution in favor of the supplier/seller to pay him
the amount of imported/purchased goods, in case the actual importer/buyer fails to pay the liability. It is
a facility which enables a customer to import/purchase goods without making advance or immediate
payment from his own resources; i.e. the payment is made by the
Importer only on receipt of documents and actual goods.
6. Bills of Exchange Purchased (BEP):
A short term facility that is provided to exporters against purchase of export bills on discounted price.
7. KIBOR:
It stands for Karachi Interbank Offered Rate. It is a daily reference rate based on the interest rates at
which banks offer to lend to other banks in the money market (or interbank market).
8. Finance against Imported Merchandize (FIM):
This is a short term facility which is granted by banks normally to the importers against the security of
Trust Receipt (Letter of Trust). Through signing the Trust Receipt, the borrower undertakes to repay the
loan as soon as the he sells the goods. It is noteworthy that the
Default by the borrower is treated as breach of the trust, and is considered as criminal offense
Under the law.
9. Clean/unsecured financing:
Unsecured/clean loans are those where the banks do not demand tangible securities such as
Land, building, fixed/current assets, tradable inventory etc. as security; whereas, in secured
Financing, the banks demand any of the security as mentioned above. Secured financing is also
Called collateralized financing.
10. Demand Finance:
Demand Finance may either be short term or long term; however, its repayment is done normally
through installments.
Working in trade department I saw a fairly considerable problem that management and customer both
encounter very much.
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Documents are given to customer i.e. trust receipt, he sales out his goods to pay off the liabilities and
proceeds are given to bank.
Documents are not give to customer instead of it we create liability against customer.
It is related to merchandize, goods are in the possession of bank so after sale the bank receives its
payment.
Export finance:
1. FAFB:
2. FAPC:
It is the finance against the packing credit, its own source credit by bank itself. It is against the contract.
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There is a limit for getting export refinancing. Past 1year export performance are evaluated .customer
needs this limit for DTR, it is required by him to receive state bank’s verified statements.
Difference of limits
There is a difference in limits for consumer and commercial customer’s i.e.
Commercial…. Above 50 million but it should not exceed 150 million. These are for SMEs
2. Post shipment…negotiation
Refinance:
Part1: transaction based
Financial year’s performance is evaluated and then limit of party is formulated by taking half of the
amount of performance.
Example:
Export performance=40M
Limit =20M
7.5% is the rate of which 6.5% is of SBP’s share and 1% is spread for the bank.
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Half of the export performance for the year is taken as new amount of finance for that period.
Mark up is paid quarterly which is deducted after uniform defined intervals according to no. of days.
Cheques are drawn separately for principal amount and for mark up.
a) EB form
b) Schedule of EB form
d) Form DE3
e) Mark up letter
g) Undertaking (UT-DE-11)
Collection by bank:
It is not LC itself but some of its requirements are same. it is a payment method, the bank provides a
service acting as an agent of the seller, drafts drawn on the buyer accompany documents, which are
forwarded through seller’s bank to the buyer’s bank (or a correspondent bank in the buyer’s country)
documents are only released upon receipt of funds or the promise to play as evidenced by the buyer’s
acceptance of the draft. It is minimum loss coverage by the exporter
It takes place when importer refuses to open LC due to any reason e.g. high risk zone or charges.
Contents of collection:
Checklist for collection documents undertaking
Shipping request
Commercial invoice
e-form
bill of lading
packing list
shipping bill/g-d
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Advance payment:
Process:
Customer wants to export something and he don’t have the sufficient funds for it so his importer sends
advance payment to him to fulfill the order
This payment should be endorsed to some e-form issued against the party prior to that advance so the
advance payment can’t be misused. Amount should be adjusted against any e- form.
Problem definition:
There is a time lag between receiving and dispatch of export documents from CPU that causes
customer dissatisfaction.
Problem description:
CPU is the central entity for execution of the banking transactions. When export documents are sent to
CPU by bank for lodgment i.e. creating liability on the customer’s behalf, the processing becomes slow
and there is a delay in dispatch of documents of one day which is not appreciable by customer.
Process flow:
Data collection:
During my internship in the trade department, I saw this problem in almost every export transaction
when documents are sent to CPU for lodgment.
I used observation method for data collection and this problem proved to be genuine.
Data analysis:
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Conclusion:
Almost every export transaction is delayed which is for document lodgment to CPU .and this process
flow is wrong and need to be changed.
Recommendations:
The change in process flow is highly recommended.
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The core of my internship was the knowledge I acquired. Being Business post graduate and
completely supported and helped by my family, I never felt the need to even step into a bank
and open an account. I was entirely ignorant of a bank’s business processes. But this
internship program has made me aware of most of bank’s business processes and hence it
has built in me, immense confidence to step into bank and carry out the routine banking tasks.
New exposure
My internship experience has given me a completely new industry exposure in the banking
sector, which includes both the consumer banking and branch banking. After graduation, I
strived to have some professional experience so that I could overcome my weakness of
hesitation from social circle. I can say that for me the best thing about MBA was this social and
professional exposure that I longed to have.
People Diversity
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From this internship program, I have realized that the skill to communicate tactfully is the thing
we should learn and polish, especially in dealing with customers. It is not the most important if
you don’t have the required skills at this moment. Rather, being creative in problem solving and
being a quick learner are the keys to success in the fast growing banking sector.
Another important thing regarding communication that I have learnt is; no matter how far we
go in adopting English language; practically and within organizations, staff prefer to
communicate in their mother language i.e. Urdu, because their priority is to efficiently complete
the work to attain the corporate goal of the organization in minimum time and they simply do
not let formalities come in their way because actions speak louder than words.
During my internship, in the last weeks, I started to feel part of that organization. I actually felt
working for that organization though I was merely an intern. Techniques like how to work
towards the corporation goal, tackle a problem, are not something that can be taught in
classrooms and this internship has definitely trained me in it.
I have come to know and be respected by a number of professionals who are lending their
services to the banking sector for more than a decade. I feel honored that I have worked with
such seasoned professionals and have experienced broader social awareness.
Self-discoveries
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Career Awareness
This program was a career awareness program as well in the sense that it helped me in
identifying my interests. What I have identified is that I want to do some thing dynamic and not
an assembly line kind of job. Moreover, I have found that in Pakistan, it doesn’t matter what is
your field of education meaning that as long as you have the slightest idea of job in hand and
you are an active learner, you can work wonders.
I must admit that such interaction in that respectable professional community will help me in
seeking out job opportunities. All this experience has transformed me into a mature person
with multiple perspectives and has put me one step forward to a better career, and also
broadened my horizon.
Confidence building
One thing I lacked and strived for was the lack of confidence in interacting in a professional
environment. RBS Bank’s supportive and multinational culture made me feel comfortable talking to my
superiors regarding problems encountered at work. I learnt to always be responsible and have the
sense of ownership when problems appear. This all has definitely
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(2). Mr.Ajmal
(Branch Manager)
(Manager Operations)
(www.sbp.org.pk)
(www.rbs.com.pk)