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The Bank of Khyber

DEPARTMENT OF MANAGEMENT SCIENCES

University of Haripur

BACHELOR OF BUSINESS ADMINISTRATION

(2010-2014)

Internship Report On
THE BANK OF KHYBER
HARIPUR BRANCH

Internship Report submitted to the University of


Haripur in partial fulfillment of the requirements
for the degree of
BACHELOR OF BUSINESS ADMINISTRATION
2014

APPROVAL SHEET
It is certified that Mr. Malik Arslan Ali Student of BBA (HRM) has submitted report to department
of Management Sciences, University of Hairpur as required by the university.

Internal Supervisor
___________________________
Tariq Iqbal Khan
(Lecturer)

External Examiner
___________________________
Name: ___________________________
Designation: ______________________
Organization: _____________________

Head of Department
___________________________
Dr. Aurangzeb Khan

ACKNOWLEDGMENT
IF YOU GIVE THANKS, I WILL GIVE YOU MORE.
(AL-QURAN)
Everything is possible with the help of ALLAH and our kind effort. Thanks to
Allah for giving me the strength for the task of writing this internship report.
Apart from this I would like to express my gratitude to Mr. Zeeshan Gul Khan
Credit officer at the Bank of Khyber (BOK) who guided me about the banking
structure and procedure. My special thanks to Mr. Sadaqat operational manager,
for his guidance and co- operation who provided me all the requisite information,
And thanks to Mr. Muhammad Saleh at Staff Administration Department, who
kindly referred me for internship in BOK.
At last but not the least, my high gratitude is to my supervisor, Mr. Tariq
Iqbal Khan because it was her supervision and full support and encouragement of
my parents and friends that I got successful in the completion of this report.

EXECUTIVE SUMMARY
Banking is one of the most sensitive businesses all over the world. Bank play very
important role in the economy of a country and Pakistan is no exception. Banks are
custodians to the assets of the general masses. The banking sector influences and
facilitates many different but integrated economic activities like resources
mobilization, poverty elimination, production and distribution of public finance. This
report is concerned with the banking functions/operations in the Bank of Khyber. The
internship is to serve the purpose of acquainting with the practice of knowledge of
business administration
The section two is about the evolution and growth of BOK, the core objectives
and establishment of the Bank of Khyber. This chapter also discusses organizational hierarchy
of the Bank of Khyber. Various departments and their operations are also discussed in this
section. Section four includes some recommendations for the problems observed during
internship period. Existence of effective internal control, technological improvements, better
career planning for employees, training sessions, advance ways of marketing the products and
bringing new ideas for the attracting the customers are some of the recommendations discussed
in this section.

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Table of Contents
Chapter 1

1.1Objective ....................................................................................................... 1
1.2Purpose of study..1
1.3Scope of Work.2
1.4Research methodology2
1.4.1Secondary Data Source.2
1.4.2Primary Data Sources:..2
1.5Overview of the Organization..3
1.5.1Brief Histore.3
1.6Vision ............................................................................................................ 3
1.7Mission Statement3
1.8Nature of Organization3
1.9Main Offices4
1.10Products ....................................................................................................... 4
1.10.1Current Deposit Account (Rupees)4
1.10.2Saving deposit account (rupees).4
1.10.3Types of saving deposit accounts..4
1.10.4Term deposit account (rupees)4
1.10.5Khyber monthly scheme (KMS).5
1.10.6Security deposit receipts (SDRS)..5
1.10.7ATM services...5
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1.10.8Western Union. .5
1.10.9Express money and Malik Exchange6
1.11Competitors ................................................................................................. 6
CHAPTER 2

2.1Main objectives of Establishing Bank of Khyber7


2.2Organization Directors.7
2.3Organizational Chart (hierarchy wise).8
2.4Departments Name..9
2.5Structure of HR Department..11
2.6No of employees in the Department.11
2.7Functions of the HR Department..12
2.7.1Human Resource Planning (HRP) and Forecasting12
2.7.2Employees Recruitment and Selection.13
2.8Training and development.13
2.9Recruitment ................................................................................................. 13
2.10Employee Development..14
2.11Employee Performance Evaluations14
2.12Performance Management..15
2.13Promotion .................................................................................................. 15
2.14Transfer ..................................................................................................... 15
Chapter 3

3.1Introduction of the Branch16


3.2Departments of BOK Haripur16
3.3Departments in which I worked during my internship16
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3.3.1Accounts Department..16
3.3.2Cash Department.17
3.4Remittances Department17
3.4.1Types of Remittances.18
3.5Credit Department.18
3.5.1Facilities Provided by Credit Department.19
3.5.2Letter of credit (LC)20
3.5.3Letter of Guarantee (L/G)20
3.5.4Head office..21
3.6IT Department23
3.7Task which I perform During My Internship23
3.7.1Account-opening23
3.7.2Current Accouning.24
3.7.3Profit& Loss Saving Account24
3.7.4Basic Requirements for Account Opening ..........................................24
3.7.5Cheque book issuance24
3.7.6Credit Department..25
3.7.7Clearing..25
Chapter 4

4.1Critical Analysis.26
4.2PESTEL Analysis..26
4.2.1Political Analysis26
4.2.2Economic Analysis. 26
4.2.3Social Analysis 27
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4.2.4Technological Analysis.. 27
4.2.5Environment Analysis 27
4.2.6Legal Analysis. 27
4.3Future Prospects of the Organization27
Chapter 5

5.1SWOT ANALYSIS OF BANK OF KHYBER28


5.1.1Strategies for SWOT Analysis.28
5.2STRENGTHS .............................................................................................. 28
5.2.1Relaxation in Governmental Regulations..28
5.2.2Member of SWIFT.29
5.2.3Attractive Compensation Packages29
5.3WEAKNESSES........................................................................................... 29
5.3.1Over-Loaded Staff. 29
5.3.2De-motivated Employees..30
5.3.3Space Shortage 30
5.3.4Absence of Marketing Department30
5.3.5Limited Employees Training Facility.30
5.3.6Lack of Foreign Branch. 30
5.3.7Limited ATM Facility 30
5.4 ........................................................................................................ OPPORTUNITIES:
.......................................................................................................................... 30
5.4.1Entering Development Banking Sector.31
5.4.2Adopting Strong Promotional Strategies. 31
5.4.3Expanding Branch Network 31
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5.4.4Opening Foreign Exchange Departments.31


5.4.5Obtaining Customer Feedback.. 31
5.4.6Creating both Islamic and Conventional Branches .31
5.5THREATS: .................................................................................................. 31
5.5.1Political / Legal Instability 32
5.5.2Higher Interest Rates.. 32
5.5.3Stagnation of Industry and Economy.32
5.5.4Increasing Competitors in Islamic Banking Sector .32
5.6RECOMMENDATIONS ............................................................................ 32
5.6.1Business Development Centre.. 32
5.6.2Training Academy32
5.6.3Promotional Activities. 33
5.6.4Hiring more Staff 33
5.6.5Friendly and Conducive Work Environment.33
5.6.6Network Expansion. 33
APENDICES ............................................................................................................ 34

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CHAPTER 1
INTRODUCTION OF THE REPORT
The study is focused on the Bank of Khyber (BOK) Haripur
branch Khyber Pakhtunkhwa and is based on theoretical and practical
learning of the internee. Selection of the organization depends upon the
convenience and interest of the student as well as the field of
specialization.

1.1

Objective

The main objective of studying the BOK Human Resource

Management practice in bank in order to observe the practical approaches


being applied in this organization and I want to get practical exposure
and experience of what I have study during my course work. Some other
micro objectives are as under

To get the review of Human Resource Department.

To analyze the working and functionalities of the HR Department.

To find out what are the weaknesses and strengths of the HR

Department of the organization and how they can be improved.

To give some suggestions and recommendations for the

betterment and growth of the human resource Department.

1.2

Purpose of study

The main purpose of the study is to work in an organization and

to compare the theory and application of management and accounting


knowledge in the real life situation and more specifically to have work
experience in a corporate environment.

To study the overall functions and operations of the bank.

To analyze the financial performance of Bank of Khyber using

ratio analysis of financial statements.

To develop analytical skills by analyzing the working of the organization


through financial analysis.

1.3

Scope of Work
Main emphasis of this study is on the working operations of

accounts, cash, clearing, credit, IT and remittance sections and the


financial analysis of the Bank of Khyber, Haripur branch, KPK. Also,
possible recommendations are given to the problems observed during
internship.

1.4

Research methodology

1.4.1

Secondary Data Sources:

Available published records

The website of the bank and other sources

Different types of written information such as banks policies,

procedures, and rules were obtained from organizations records and


documents.
1.4.2

Primary Data Sources:

Personal observation.

Sitting and observing the work of various staff members

Discussion with staff members

Interviewing staff members

1.5

Overview of the Organization

1.5.1

Brief History

The Bank of Khyber was established in 1991 as a provincial commercial


bank through an act of the KPK Assembly. Since 1994, the bank of
Khyber has come under the regulatory framework of State bank of
Pakistan and operates as a scheduled Bank at the National level.
Currently the bank has a total branch network of 100 Branches plus 4 sub
branches throughout the country with head office in KPK. At present, 21
of its branches functioning as dedicated Islamic Banking Branches,
whereas 29 branches are conventional banking branches. Compliance
with reserve requirement and other regulatory restriction has a negative
impact on the Banks profitability in 1995. However, the ensuring growth
in business expands the profits of the bank reaching Rs. 85 million in the
year 1997.

1.6

Vision

To become Leading Bank providing efficient and dynamic services in


both Islamic and Conventional banking through expanded nationwide
network.

1.7

Mission Statement

To increase shareholders value and provide excellent service and


innovative products to customers through effective corporate governance,
friendly work environment and contributing towards an equitable
socioeconomic growth.

1.8

Nature of Organization

Commercial Bank/ Finical Institution

1.9

Main Offices

Islamabad

Karachi

Peshawar

Lahore

Quetta

1.10 Products
1.10.1 Current Deposit Account (Rupees)
The BOK current deposit account allows the facility of unlimited
withdrawals up to the extent of the Balance in account. There will be no
tax deducted on the funds that someone chooses to keep in these
accounts.
1.10.2 Saving deposit account (rupees)
The BOK saving deposit account allows the facility of multiple
withdrawals up to the credit Balance, while accruing profit on deposits.
1.10.3 Types of saving deposit accounts:
1.

Profit and Loss Sharing (PLS saving) account

2.

Special Deposit Account (SDA)

3.

PLS 7 days Notice Deposits

4.

PLS 30 days Notice Deposits

1.10.4 Term deposit account (rupees)


The BOK Term Deposit Account offers the dual benefit of attractive
returns with highly liquidity. There is option to take profit monthly,
quarterly, bi-annually, annually or at maturity. Profit is accrued on a daily
Balance basis. There is no penalty for premature encasement. However,
in case of an early encasement the rate of the previous tender will be

applied. The option of partial liquidity is allowed i.e. withdrawal to a


certain percentage from the fixed deposit without disturbing the
remaining deposit.
1.10.5 Khyber monthly scheme (KMS)
On KMS, the BOK gives monthly interest on amount deposited with the
bank. This is a sort of fixed deposit and the customers will have to keep
the deposit for the five years.
1.10.6 Security deposit receipts (SDRS)
This is a receipt by the bank, at the instructions of the depositor,
confirming that the amount of the SDR is held by the bank to be paid
whenever called upon to do so by the beneficiary named in the SDR.
1.10.7 ATM services
In order to keep pace with advancements in the field of technology, BOK
has joined the electronic platform of M-Net switch. This will facilitate
consumers by providing them access to their funds through the existing
ATM network of the country. In BOK university road branch ATM was
installed few months later in August 2010 to facilitate their customers.
1.10.8 Western Union
Through western union people send their money from one country to
another country. BOK university road branch also has the facility of
western union.
Following requirements are necessary for western union.
1.

The receiver of the money must have the photocopy of his/her

original computerized National I.D card.


2.

The MTCN (Money transfer control number).


There are three parties in western union.

1.10.9 Express money and Malik Exchange


BOK has also provided the facility of Express money and Malik
Exchange through which money is transferred from one country to
another. All other requirements are same as that of western union. There
are no charges on western union, Malik Exchange and express money
.The bank provided this facility free of cost because money transferred
from other countries increases foreign reserves of the country it offers the
dual benefit of attractive returns with highly liquidity. There is option to
take profit monthly, quarterly, bi-annually, annually or at maturity. Profit
is accrued on a daily Balance basis. There is no penalty for premature
encasement. However, in case of an early encasement the rate of the
previous tender will be applied. The option of partial liquidity is allowed
i.e. withdrawal to a certain percentage from the fixed deposit without
disturbing the remaining deposit.

1.11 Competitors

The Bank of Punjab

Allied Bank Limited

Habib Metro Bank

Bank Al Falah

Askari Bank

Faisal Bank

CHAPTER 2
Literature Review

2.1 Main objectives of Establishing Bank of Khyber:


To mobilize private savingsand public funds or
delivering the same into productive channels and
ensuring their availability.To promote industrial,
agricultural and socio-economic processes through
the active participation of private and public sector
in the province.To help under-developed areas and
create employment opportunities especially in the
rural areas of the province. Further, to guide and
assist the people of KPK, serving overseas, too
effectively and profitably invest their foreign saving
in the province as well as in other parts of the
country. To create a diversified and sound portfolio
for utilization of idle funds and their investment in
the existing and new ventures especially in the
pioneering of high-tech agro based export oriented
and engineering projects to ensure maximum
returns. To participate and seek the share of
province in the capital market of Pakistan by the
way of subscription through local pools resources in
the loading stock exchanges of the country and
eventually paving the way for establishing a stock
market in the province.

2.2 Organization Directors

Mr. Khalid Pervez (chairman)

Syed Said Badshah Bukhari

Mr. Assad Muhammad Iqbal

Mr. Sajjad Ahmad

Mr. Maqsood Ismail


2.3

Organizational Chart (hierarchy wise)

Chart 2-1
Organization

Board of Directors

Managing Director
Long term Projects

Managing Committee
Resident Directors AUDIT

Personnel establishment division


Banking Operation Division

Branch Operation dept.

Investment

Accounts & treasury dept.

Computers

Foreign
Branches
Exchange
29 dept.

P & E dept.

Credits dept.

Monitoring & recovery dept.

M.B.D

Public Relation dept.

8
Branches 100

2.4

Departments Name

Marketing Department

Branch Banking Operations Department

Taxation & Budget

Consumer & Micro Finance Department

Shariah Compliance Department IBG

Payroll & Staff Advances

Compliance & Internal Control Department

Agriculture Finance Department

Finance Department

Services and Maintanance Department

Litigation & Legal Department, SAMD, HO

Market & Liquidity Risk Management, Department

Accounts Department

Islamic Treasury

SME Credit Department

Monitoring Department (CAD)

Business Risk Review Department (Audit Division)

Field Audit Department

ATM Department

Inspection Department

Shares Department

Operational Risk Management

Training Department

Front Office, Treasury (Conv) Division

Treasury Back Office

Monitoring & Collection Department, SAMD, HO

Collateral Monitoring Department, CAD

Purchases & Disposal Department

Audit Compliance & Implementation Department

Stationary Unit

I.T. Operations Department

Syndicate & Corporate Credit Department

Facilities Approval Department

Law Department

Staff Administration

Constructions & Renovations Department

I.T. Development Department

I.T. Support Department

Complaints Cell

SBP Compliance Department

Incharge Legal Cell HRDG

Banking Operations & Support(Islamic)

MIS CAD

Personnel Department

Credit Risk Management Department

Sharia Audit Department

10

2.5

Structure ofHR Department

Chart 2-2
2.6

No of employees in the Department

There are 10 employees in the HRD and they directly under the
CEO.

11

2.7

Functions of the HR Department

Human resource department is the main hub to manage the Banks


human capital in order to meet the Organizational goals and Objectives
by forecasting HR needs and to plan and implement accordingly. A
thorough and comprehensive study of the process has been described
below

Human Resource Planning (HRP) And Forecasting

Employees Recruitment And Selection

Training and development

Recruitment

Employee Development

Employee Performance Evaluation

Performance Management

Promotion

Transfer

2.7.1

Human Resource Planning (HRP) andForecasting

HRP is the process of systematically reviewing human resource


requirement to ensure that the required number of employees, with the
required skills, is available when they needed. After organizations
strategic plans have been formulated, human resource planning can be
undertaken.

Human resourcePlanning has TWO components i.e.


Requirements
Availability

Human resource planning includes;


Short Term HR Planning
Intermediate HR Planning
Long Term HR Planning

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2.7.2

Employees Recruitment and Selection

The job market has become increasingly competitive over the last
decade. An agencys human resources are what provide a
competitive advantage to the organization. This fact cannot be over
emphasized as public safety agencies (PSAs) address their
recruitment and selection challenges. The dynamics of the working
world have changed dramatically: Baby Boomers are retiring,
Generation X is moving into positions of leadership, and the Y
Generation is entering the workforce. The days of finding a single
employer and retiring from it are a thing of the past. As the
workforce changes, agencies must find a way to appeal to and
regain the trust of employees or risk losing potentially dynamic
employees. An additional consideration to generational changes
when addressing recruitment and selection strategies is the ethnic
stratification found in an agencys local labor market. The local
labor market may actually have a significant demographic shift
towards a younger population from diverse cultures.
2.8

Training and development

In the field of human resource management, training and development is


the field concerned with organizational activity aimed at bettering the
performance of individuals and groups in organizational settings. It has
been known by several names, including employee development, human
resource development, and learning and development. Training and
development encompasses three main activities: training, education, and
development
2.9

Recruitment

BOK has multiple dimensional recruitment policy in accordance with its


objective to meet the requirements of different functional areas to cope
with the day to day activities. Recruitment is the activity that links the
employers and the job seekers. A process of finding and attracting

13

capable applicants for employment. The process begins when new


recruits are sought and ends when their applications are submitted. The
result is a pool of applications from which new employees are selected. It
is the process to discover sources of manpower to meet the requirement
of staffing schedule and to employees effective measures for attracting
that manpower in adequate numbers to facilitate effective selection of an
efficient working force. Recruitment of candidates is the function
preceding the selection, which helps create a pool of prospective
employees for the organization so that the management can select the
right candidate for the right job from this pool. The main objective of the
recruitment process is to expedite the selection process.
2.10

Employee Development

Employee development is a joint, ongoing effort on the part of an


employee and the organization for which he or she work to upgrade the
employees knowledge, skills, and abilities. Successful employee
development requires Balance between an individual's career needs and
goals and the organizations need to get work done. Employee
development programs make positive contributions to organizational
performance. A more highly skilled workforce can accomplish more and
a supervisors group can accomplish more as employees gain in
experience and knowledge.
2.11

Employee Performance Evaluations

BOK has an ACR system in the past which was neither transparent nor
objective based and furthermore the employees were subject to the
supervisors confidential report. To mitigate the negativity of these
practices the management by objective (MBO) system was introduce as
part of Pay for Performance practice. Through this employee
performance was categorized into four parts-6%, 8% and 10% 12% to
form a bell curve. Rates and rewards were also revised ranging from 0%
to 12% which is significant increase as compare to past percentages. All
thisLeading to the strengthening of the pay for performance culture.

14

2.12

Performance Management

Performance Management is a process for establishing a shared


understanding about what is to be achieved and how it is to be achieved.
In BOK it is an approach to managing people that increases the
probability of achieving success. A process that significantly affects
organizational success by having managers and employees work together
to set expectations, review results, and reward performance. To
encompass all activities related to improving employee performance and
effectiveness in order to meet the organizational goal and it is the same
case at BOK.
2.13

Promotion

All promotions shall be made on merit and no employee shall have a


claim to be promoted to any particular post or grade by virtue of seniority
and /or qualification alone at BOK. The President is authorized to finalize
promotions in accordance with the laid down promotion policy.
2.14

Transfer

For the transfer BOK H.R. Dept serves primarily in a coordinative


capacity. When employees are moved from one department to another
either because of the needs of the business or because of individual
requests, the personnel records may be studied to ascertain that they
possess the requisite skills. Transfers are also used by the BOK
management to give prospective employees broader job experiences as
part of their development and to fill vacancies as they occur. The higher
management also takes these initiatives as promotion ladder to keep
individuals motivated and interested in the work. The period of transfer
usually at least three years from one branch of BOK to another within the
city. However management may transfer the employee any time without
giving any notice.

15

CHAPTER 3
BANK OF KHYBER (HARIPUR BRANCH)

3.1

Introduction of the Branch


BOK Haripur branch is one of the important branches of BOK. Because
it is one of the commercial places, it performs all the functions of the
commercial bank, from deposits to advances, remittances etc. The
Haripur branch of BOK is widely acclaimed as the busiest branch in the
region. The site of the branch is very suitable. New Building of the
branch is big enough to accommodate the staff and clients comfortably.
The staff of the bank is so active that they deal the clients.

3.2

Departments of BOK Haripur

1. Accounts Department
2. Cash Department
3. Credit Department
4. IT Department
5. Clearing Department
6. Remittances

3.3 Departments in which I worked during my internship


The departments in which I worked are,
3.3.1

Accounts Department
This department coordinates all the banking activities there by keeping
track of each activity in a sequential manner and provides up-to-date
data. The accounts department is also responsible for proper accounting
of assets and liabilities of the branch. This department is the backbone of

16

the entire banking system. All the banking activities are placed through
this channel. The main functions of this department are:

Maintenance of books of accounts.

Preparation and disbursement of salaries of banks staff

Maintenance of superannuating funds and investment of the staff

Dealing with the disposal of commercial and external audit

Reports.

Preparation of budget and other financial statements

Supervisors name: Ahsan Shah


Job title: Account Officer

3.3.2

Cash Department:

Cash department owes its importance to the fact that it is a major point
of contract between the bank and the customer, the banks most valued
relationships. This department is the showcase of the bank and conveys
the first impressions about the banks commitment to professionalism in
its system and procedures and to courteous and efficient customer
service. This department performs the function of receipts and payments.
Efficient cash management is needed to execute payments, collect
receivables and maintain liquidity.
All the activities of the cash department are divided into two i.e.
Cash Collection and Cash Payment.
Supervisors name: Mukthar Shah
Job title: CTIncharge
3.4

Remittances Department

Funds transfer facility or remittances of funds are one of the functions of


the banks all over the world. Remittances through banking channels save

17

time, costs less and eliminate the risks involved in physical;


transportation of money from one place to another.
3.4.1

Types of Remittances
Remittances can broadly be classified as outward and inward
remittances.

Outward Remittance
When a bank / branch instruct another bank/branch to affect a
remittance or payment, it is said to be affecting an outward remittance.
1. Inward Remittance
When a bank/branch is itself affecting a payment/ disbursement at
the instructions of another bank/branch, it is said to be handling an
inward remittance.
3.2.4.2 Modes of Remittances
Different modes and means of remittance are discussed below.
BOK transfers money in the following ways:
1.

Demand draft (DD)

2.

Telegraphic transfer (TT)

3.

Mail transfer (MT)

4.

Pay order (P/O)

Supervisors name: Ehsan Shah


Job Title: Account Officer

3.5

Credit Department

The bank is profit- seeking organization. It attracts surplus balance from


the customer at low rate of interest and makes advances at a higher rate
of interest to the individual and business firms. Credit and extensions are

18

the most important activity of all the financial institutions, because it is


the main source of the earning. Credit department is one of the most
sensitive and important department of BOK. About 75% of the profit is
usually earned through this department. The job of this department is to
make proposals about the loans; the credit management division of HO
directly controls all the advances.
3.5.1

Facilities Provided by Credit Department

The facilities that are being provided by credit department are,


3.5.1.1 Fund based facilities:
Fund based facilities are those which involved a cash
disbursement at the time of allowing the facility.
Fund based facility provided by BOK are:
3.5.1.1.1

Running finance

This is a working capital finance facilities available for one year


and renewed subject to satisfactory utilization thereof. BOK charged
mark up on outstanding Balance. The BOK allows withdrawals on his
account in excess of the Balance with the borrowing customer in credit
and a running finance thus occurs.
3.5.1.1.2

Demand finance

An account is created in the name of borrower. Advance is disbursed in


lump sum. Repayment is made in installments. Amount of installments
include principal plus markup for the repayment period.
3.5.1.1.3

Advance against salaries:

This facility is available to the Government and Semi


Government employees up to five gross salaries.
3.5.1.1.4

Non-fund based facilities

The non-fund based facilities are those in which the bank does not
invest its own funds rather its commitment is involved against which the
bank charges a certain amount in shape of commission. These facilities

19

are available in BOK in the form of letter of credit and letter of


guarantees.
3.5.2

Letter of credit (LC)


Letter of credit is required in the settlement of international trade,

sometime local transaction are also done through the letter of credit
which are termed as inland L/Cs. Usually there are four parties involved
in L/Cs:

Importer

Exporter

Importers bank

Exporters bank
L/Cs may be on sight or issuance basis. In sight based L/Cs, the

importer has to pay the amount upon payment of the value. In case of
issuance L/Cs, the exporter extends credit to importer. The documents are
handed over to the importer against his acceptance of the bill and
assurance of payment of the maturity date of acceptance.
3.5.3

Letter of Guarantee (L/G)


The BOK provides assurance to beneficiary of the guarantee

about the satisfactory performance of a certain act by the applicant of the


guarantee.
In the letter of guarantee, three parties are involved i.e.

Bank (provider of guarantee)

Applicant of the guarantee (Bank customer on whose behalf the

banks issue a guarantee)

Beneficiary (in whose favor the guarantee is issued)


The bank at the request of applicant issues the guarantee and

charges commission for its commitment from the applicant at exposure is


secured against some security.

20

3.5.3.1 Processing of Loan


When the client requests the bank for advancing him loan the
banker must be careful that the depositors money must be in safe hands.
When the client first accesses BOK credit officer, the credit officer first
checks the credibility of customer and the market condition. The
satisfaction of these elements helps the banker in arriving at a conclusion
regarding the safety of advances.
BOK has two levels of authorities involved in credit proposal
processing:
3.5.4

Head office

Concerned branch
Following things should be undertaken while preparing a credit

proposal:
1.

Customer background, his relationship with the bank (if he is an

existing customer), his relationship with other banks.


2.

Purpose of facility and terms and condition regarding the client.

3.

Nature of his business and opportunities for that business.


The customer sends the written request to the credit department

which contains amount of loan and which facility to be obtained. The


title documents are then sent to head office (credit administration
division) for approval.
Title documents include:

Borrower basic fact sheet

Preliminary approval

Stock report

Visit report

21

Manager certification

Pre-mortgage legal opinion

CIB checking

Composite credit proposal


Some other documents required are;

CNICs copies of all partners

Partnership deed on stamp paper(in case of partnership)

NTN number of business

Application on letter head signed by all partners.

Rubber stamp to be affixed on all documents

Company common seal(in case of company)

Memorandum and article of association(in case of company)

Form 29,form A(if company is limited by shares)

Joint resolution of a company


CAD writes its recommendation whether to accept or reject the

proposal. When the regular facility is granted for whatever period, the
CAD will prepare and send the original sanction advice to the concerned
branch, which upon receipt should file the original advice in the
respective customer credit file and photocopy field in master file in head
office. These documents are then sent back to concerned branch about the
approval or rejection of the requested loan and if accepted, loan is
granted to the customer after taking security. The sanction advice sent to
the branch consists of clauses regarding the loan. The credit department
keeps relation with the customer and in case of default this department
takes step to recover it.
After the approval of the loan the credit officer must obtain the
following documents:

22

Legal documents(original documents)

Charge documents

Charge documents include:

Agreement of finance

Letter of hypothecation

Undertaking

Personal guarantees

Promissory note

Supervisors name: Zeeshan Gul Khan


Job Title: Credit Officer

3.6

IT Department

The BOK has appointed some qualified software and hardware engineers
in IT department. The senior most is deputed as In-charge of the IT
department. Software engineers/programmers are not only responsible for
application development in BOK and to fulfill requirements of the bank,
but also act like trouble shooters, whereas, installation of the hardware in
the branch set up is the responsibility of hardware engineers. In each
branch, they have assigned a systems administrator to look after jobs
related to the computing system.
Supervisors name: Sadaqat Ali
Job Title: Manager Operation

3.7

Task which I perform During My Internship

Tasks that I have performed during internship are:


3.7.1

Account-opening

Accounts opening department is one of the departments that come under


the retail/generalbanking facilities provided by Bank of Khyber. Some of
the major deposit Accounts opened by Bank of Khyber are as follows:

23

3.7.2

Current Account

Current Accounts are non-interest bearing accounts that have a minimum


account opening Requirement of Rs 10,000. No zakat is deducted on the
accounts balance. Furthermore all current account holders receive a Hilal
debit card and there are no restriction on the number of withdraws or
deposits made to and from the account.
3.7.3

Profit& Loss Saving Account

Profit& Loss saving accounts can be opened with a minimum balance


requirement of Rs 5,000 and profit is credited on a half yearly basis.
There are no restrictions on the number of deposits and withdrawal made
to and from the account and all account holders receive
3.7.4

Basic Requirements for Account Opening

The basic requirements to open an account for individuals/self-employed


are as follows:
CNIC
Source of income (salary slip etc)
NTN certificate (optional)
Company letterhead or authorization (as required)
The basic requirement to open an account for a partnership
Partnership Deed
Partners CNIC
Company Letterhead
NTN certificate (optional)
The basic requirement to open an account for companies:
Memorandum of Association
Article of Association
Directors CNIC
Company Letterhead
NTN certificate (optional)
3.7.5

Cheque book issuance

It is issued to those customers whose accounts are operated by the


concern bank. I have also learned to make Cheque book request by filling
its different contents like serial number, date, account number, account
type and account title. I also issued cheque books to customers as well.
Then I used to record its entry in the register and signatures were taken
from customer as a proof. Record had been entered on separate pages for
current and savings account.

24

3.7.6

Credit Department

In my internship, I have also worked in credit department where I


seekedwhat kind of loans BOK provides to its customers
1.

Types of customers to whom it provides loans

2.

Criteria for providing credit

3.

Interest rate

4.

Procedure for verifications of customers

5.

Duration of loans granted

6.

Procedure in case the customer defaults

3.7.7

Clearing

I got the experience to know about the cheque clearance process. My


clearing department officer told me the procedure of both the inward and
outward clearing, software usedandrole of NIFT.I used to fill these
cheques by filling its contents. In this regard, I have also learned about
techniques to check the scrutiny of check by checking name, date and
sign and also came to know that three stamps are needed for it; clearing
stamp, cross stamp and endorsement stamp.
I was advised by my sir to be remained alert about the fakecheques,
giving some instructions for the careful examination of cheques like
signature verification from specimen card. For the time of receiving
cheques I had to consider the following instruction,
1.

Date of the cheque mean post/ out dated cheque must not be

received.
2.

Amount in figure or wording must be same.

3.

Signature must be authorized.

4.

If cheque amount in above of 100000 than supervision must be

necessary.

25

CHAPTER 4
Analysis

4.1

Critical Analysis

During my short stay at the BOK Haripur Branch. I spent around one
week in each department of the bank and this short span of time is not
sufficient for getting all the information about the organization. During
this short period of time, I personally observed and experienced few
problems along with those narrated by concerned personnel of the
branch. I do admit that these problems may or may not be present in
other branches of the bank
1.

Communication Problems at the Branch

2.

Limited Number Of Staff

3.

Unequal Distribution Of work Load

4.

Manual System

4.2

PESTEL Analysis

4.2.1

Political Analysis

Government encourages a sound financial industry Inconsistent


Government Policies because of instability in the country.
4.2.2

Economic Analysis

As far as the economic conditions goes than we all know that the
economic conditions look like that they are getting favorable in Pakistan.
Pakistan is the country that is benefiting best from the Afghanistan
Crisis, as it is having Aids that is favorable for the economic conditions
as well as the industries. As far as the rate of profit is concerned it is

26

declining than it was in the past so people are reluctant to deposit their
money in banks.
4.2.3

Social Analysis

The social environment in this regard is always favorable because the


businesses in which the banks are involved do not have any side effects
on the society. Majority of the people in Pakistan have faith in the banks
and feel that their money is safe in the banks.
4.2.4

Technological Analysis

The overall technological environment for this industry is favorable.


Technological advancements constantly bring new machines, which have
the ability to produce more. It makes the process of the faster than before.
The technological change in the computer industry is favorable for us.
The reason for that is that because of rapid growth in the computer
industry which will encourage online banking.
4.2.5

Environment Analysis

It has the so deep effect on the environment and the economy of the
country Because of its largest branches in the country and their finance
system it has very good effect on the environment.
4.2.6

Legal Analysis

They provide the legal protection to their customer because they fallow
the legal rules and regulation. And there are so few chances of any
mishaps. People feel secure to have account with them.
4.3

Future Prospects of the Organization

The further prospects for the organization is that they have to increase
their branches all over the country and have to adopt the new technology
so that they can provide the more facility to their customers and so that
the number of customers can be increase and on the other hand they have
to start more loan and provides them on time.

27

CHAPTER 5
SWOT Analysis

5.1

SWOT ANALYSIS OF BANK OF KHYBER

SWOT is an acronym for Strength, Weaknesses, Opportunities and


Threats. SWOT analysis is a careful evaluation of an organizations
internal strengths, weaknesses as well as its environmental/external
opportunities and threats.
5.1.1

Strategies for SWOT Analysis

Exploiting opportunities and strengths.

Neutralizing its threats

Avoiding its weaknesses.


SWOT analysis is based on the assumption that if management is

careful then it ensures organizational success. SWOT analysis is an


important tool in analyzing the overall situation in which organization is
conducting its business affairs; each issue remains relevant and useful of
corporate strategy formulation.

5.2

STRENGTHS

Strengths are the internal capabilities of the organization that promote


organizational objective in a competitive industry.
5.2.1

Relaxation in Governmental Regulations

BOK major stake holder is the Government of KPK so it is provincial


government bank, so it has a say in the provincial government and are not
facing as many difficulties in regulations etc. as faced by another banks
which boosts banks profitability.

28

5.2.2

Member of SWIFT

The BOK also obtained membership of SWIFT (Society for World Wide
Inter-Bank

Financial

Telecommunication),

which

facilitates

the

settlement of cross border transactions pertaining to international trade


and foreign exchange business. That is why most of the importers and
exporters are availing the facility of letters of credit from BOK.
5.2.3

Attractive Compensation Packages

BOK has best optional policies and attractive compensation packages for
employees.
5.2.3.1 Compliance with Shariah
BOK deals both in Islamic and Conventional banking, and major
decisions are made in the light of Shariah Supervisory Committee (SSC),
i.e. they review each decision in compliance with Shariah.

5.3

WEAKNESSES

Organizational weaknesses are deficiencies and in-capabilities that do not


enable an organization to choose and implement strategies that support its
mission.
The major weaknesses of BOK are:
5.3.1

Over-Loaded Staff

The banks staff is over worked and over loaded with responsibilities.
The bank needs more staff as the existing staff is trying it hard to cope
with the responsibilities and customer handling at the same time. Though
the working hours of the bank are 9am to 5pm but they have so much
work that they have to work overtime till late and that reduces their
efficiency as well as motivation level.

29

5.3.2

De-motivated Employees

Most of the employees consider themselves to be government employees


and do not take interest in their work, which affects the performance of
the bank (in the long run).
5.3.3

Space Shortage

The space of BOK head office is very limited so the bank has shifted
some of their departments to the State Life Building but still the
departments are overcrowded which affects the employees performance
at the head office.
5.3.4

Absence of Marketing Department

Marketing Department has no value and presence in the bank.


5.3.5

Limited Employees Training Facility

Employees' training is limited, and thus they lack technical knowledge.


5.3.6

Lack of Foreign Branch

BOK has no foreign branch which creates problems for importers and
exporters.
5.3.7

Limited ATM Facility

Most of the branches of BOK have no ATM facilities.

5.4

OPPORTUNITIES:
Organizational opportunity is defined as an area in the

environment that if exploited may generate high profits.


The Bank of Khyber can avail the following opportunities if they
keep a vigil eye on the environment and the recent changes occurring in
the environment.

30

5.4.1

Entering Development Banking Sector

BOK is not only engaged in commercial banking but also acts as a


development bank, so their development banking sector is according to
the current government policies and also in accordance with the policies
of international trade, finance and development, thus they can avail this
opportunity by joining hands with the government and Development
Finance Institutions (DFI) in the investments in development sector.
5.4.2

Adopting Strong Promotional Strategies

Strong promotional strategies can attract huge deposits for the bank.
5.4.3

Expanding Branch Network

They have the opportunity to open new branches in the country as well as
in foreign countries. They should open new branches at least at the
district level.
5.4.4

Opening Foreign Exchange Departments

Foreign exchange departments can be opened in those cities branches


where foreign advocates are developing.
5.4.5

Obtaining Customer Feedback

Customer feedback on different products and accounts has really


improved the bank performance and encourage the atmosphere for other
future products/policies.
5.4.6

Creating both Islamic and Conventional Branches

BOK has an edge in dealing with both Islamic and conventional


banking, so more Islamic and Conventional branches will be fruitful.

5.5

THREATS:
Organizational threat is an area in the environment that increases

the obstacles for an organization achieving high performance.

31

5.5.1

Political / Legal Instability

The unstable political and legal environment of the country and


especially in Khyber Pakhtunkhwa is also a threat to the bank.
5.5.2

Higher Interest Rates

The decreasing confidence of the people over commercial banks offering


low returns and charging high interest rates is also a threat to BOK.
5.5.3

Stagnation of Industry and Economy

Stagnation of the industry and economy in the country in general and in


the province in particular is a serious threat to BOK.
5.5.4

Increasing Competitors in Islamic Banking Sector

Major Banks have started their Islamic banking system which is also a
major threat for BOK.

5.6

RECOMMENDATIONS
On the basis of SWOT analysis and personal observation, the

following recommendations have been made:


5.6.1

Business Development Centre

The overall performance of BOK in terms of profitability and growth has


been declining over the past few years. The reasons for the poor
performance of the BOK are the stuck-up loans, over expenses and
unstable political environment. In order to survive and grow, the bank
might pay more attention to the Business Development i.e. to develop
policies and programs to promote the marketing of tangible goods and
intangible services for profit, growth and survival.
5.6.2

Training Academy

The BOK has no training academy in which different courses are


conducted for officers and new recruits. Moreover, newly hired
employees also need sufficient guidance of trainers to perform their

32

tasks.Proper training programs and refresher courses can be designed to


increase their performance and polish them with new concepts. Such
programs can be organized with the renowned business schools of the
country.
5.6.3

Promotional Activities

BOK relies heavily on personal banking; therefore, it does not give due
and proper attention to the more sophisticated methods of promotion. The
bank should adopt strong strategies for promotion and publicity of the
services they offer.
5.6.4

Hiring more Staff

There is no division of work as such. Functions of clearing, remittances


as well as accounts are performed usually by one person. This creates
burden of work and allowing for errors. To avoid this, the functions of
clearing and remittances should be done in one department and accounts
in another department by another person. So BOK needs to hire more
staff which will add efficiency and effectiveness among employees.
5.6.5

Friendly and Conducive Work Environment

The officers should be supportive and encouraging towards their


subordinates so that their interest in the job increases and a free
conducive atmosphere should exist where problems can be discussed
easily with the supervisors.
5.6.6

Network Expansion

It is also recommended to extend their network of branches both


conventional and Islamic and also to open branches at the international
level to increase its worth.

33

References & Sources Used for Data Collection

NWFP Act No. XIV. (1991)

Koontz, Harold. (1993) Management in Global Perspective; New

York; McGraw Hills, Inc., 10th Edition, p-g.266

Personal working during internship period.

http://www.bok.com.pk/

http://notes-university.blogspot.com/

http://www.scribd.com/

Consulate General of Switzerland, (2011), Pakistan Banking

sector, Karachi.

Bank of Khyber information memorandum. (2009). Information

Memorandum Peshawar Pg.30

http://www.bok.com.pk

Bank of Khyber (2009). Annual Report. Peshawar: Page No. 1

Ibid. Page No. 1

Bank of Khyber (2010). Annual Report. Peshawar: Page No. 9

APENDICES
BOK

Bank of Khyber

BCC

Branch Credit Committee

LC

Letter Of Credit

34

LG

Letter of guarantee

CAD

Credit administration division

NTN

National testing number

CIB

Credit administration bureau

LBC

Local bills for collection

OBC

Outward bills for collection

PLS

Profit and loss account

HO

Head office

DD

Demand Draft

EPB

Export Promotion Bureau

FDD

Foreign demand Draft

NBP

National Bank of Pakistan

PBT

Profit before Tax

SBP

State Bank of Pakistan

TT

Telephonic/ Telegraphic Transfer

P/O

Pay order

IT

Information technology

SS

Specimen signature

AOF

Accounting opening form

NIC

National identity card

MTCN

Money transfer control number

SDR

Security deposit receipt

KMS

Khyber monthly scheme

SSC

Sharia Supervisory Committee

35

36

37

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