Report Title

Car Financing and Cheque Clearance

Submitted to:

Mr.Farhan
Submitted by:

Submission Date:

12-06-2014

Acknowledgments
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I would like to express my gratitude to the department of

management sciencesfor giving me the opportunity to visit the
bank.
I would also like to acknowledge my debts to those officers of
Askari bank who have been extremely helpful for me.
First of all I would like to thank my teacher. They have been a
permanent source of encouragement and guidance. Their helpful
nature did not restrict them to the promises to the branch but
extended to any place and any matter I needed their support on.
They give me a comprehensive summarization of the
documentary credit procedure.
I would also acknowledge my debt to all the staff of Askari bank
limited at Bahawalnagar branch for the knowledge they provided
in a very frank and casual manner. Due to their gift of wittiness
the time of my work that spent with them was most interesting
and memorable one for me.

Dedication:
For Allah, Who gave everything well in life
Including family, teachers and guiding staff of bank

Askari Bank
Chairman of the Board of Directors

Muhammad Mustafa Khan is the Chairman of the Board of Directors.

History:
Incorporated in Pakistan on October 9, 1991, as a public limited company. It
commenced operation on April 1, 1992, and is principally engaged in the
business of banking, as defined in the Banking Companies Ordinance, 1962.
The Bank is listed on Karachi, Lahore and Islamabad Stock Exchanges.

Work:
Since inception, the bank has concentrated on growth through improving
service quality, investment in technology and people, utilizing its extensive
branch network which includes Islamic and Agricultural banking.

Network:
Askari Bank has expanded into a network of 265 branches, including 31 dedicated
Islamic banking branches, and a wholesale bank branch in Bahrain. A shared
network of 4,173 online ATMs covering all major cities in Pakistan.

Awards and recognitions

The Asian Banker awarded twice as Best Retail Bank in Pakistan in 2004
and 2005.
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 Askari Bank also has been given the Best Consumer Internet Bank award
by Global Finance magazine for the years 2002 and 2003

Vision:
To be the bank of first choice in the region.

Mission:
To be the leading private sector bank in Pakistan with an
international presence delivering quality service through
innovative technology and effective human resources
management in a modern and progressive organization culture of
meritocracy, maintaining high ethical and professional standards,
while providing enhanced value to all our stake-holders, and
contributing to society.

Core values:
We are caring about customer.

Askari Bank Car Financing:

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Car Financing Products:

ASK4Car is Askari banks car leasing solution and can be used to
finance new and used cars.
Askari Bank car financing is a service for its valued customers as
well as to the customers which are outside the bank or that are
not the bank customers. By availing the car financing service,
customer can purchase new as well as used car as per his/her
requirement. Car finance is required by both private individuals
and businesses. The banks charge some interest rate for car
financing and it depends on certain terms and conditions.
Car financing is a complete subsector of personal finance with
numerous different products available. These include a straight
forward car loan, personal contract (car leasing). Therefore car
finance is not limited to vehicle leasing. These different types of
car financing are possible because of the high residual value of
cars and second hand cars market.

Criteria and Conditions for car financing:

Criteria for car financing include all the standards which are
determined by the bank. Different banks have different criteria for
its customers. Askari banks criteria include the following points.

Customer should have its own business or corporation

Business or corporation should be registered
Customer should have bank account
If customer is job holder then he should earn Rs. 50,000 per
month
Customer should not be involved in bank fraud
Customer should not be using any other loan
Pakistan citizenship
Six months bank account statement
Fresh copy of utility bills (phone, gas, electricity)
Customer should not be a criminal
Salary slip required
Business ownership documents

Amount of financed loan:

The amount of financed loan varies from person to person. If

the person is an established businessman then he is eligible
for a heavy loan and if the person is a job holder then he can
take small loan for the car. One more point is that the
amount of interest is based on the amount of loan which is
being granted by the bank to the customer, bigger the loan
big will be the interest and vice versa. There is no specified
limit for the loan.

Interest rate:
Interest rate is the amount of extra money which the banks
charge on financed loan. Usually the Askari bank charges 1415 % of the total amount which is exclusive of all the taxes,
by adding all taxes it reaches upto 17 % of the total amount.
The interest rate depends on the amount of the loan and the
time duration for which the loan is being taken by the
customer. The interest rate varies from customer to
customer, if customer is outsider then he will be charged
15% and if customer is bank employee then he will be
charged 5%. Interest rate also depends on the down
pavement if the customer wants to make.

Approval method:
Approval method for the car financing is very simple.
Customer should visit the bank and provide the required
documents and then his request will be

entertained by the branch manager and after verification of

documents the request will be forwarded to the regional
head who will make final decision.

Legal documentation:
The legal documents which are required by bank are as
follows.

Police clearance report

Completely filled signed application form
Attested photocopy of CNIC of applicant and references
Attested photographs
Fresh copy of utility bills
Specimen signature verified by the bank
Six months bank statement
Undertaking form
Proof of business or Ownership documents
Wealth statement
Verified CNIC of guarantor
Guarantor worth statement
Salary slip

Time period to return loan:

Time to return loan is not specified. The customer can return
loan in monthly installments depending upon the amount of
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loan. Time to return loan can be 3, 4, 5, 7 or 10 years

depending on the customer.
If the customer is bank employee then the installments will
be deducted from his salary on monthly basis.

Services given
customers:

by

the

bank

to

Easy installments
Built in insurance
Built in tracking system
Valued customers are offered low markups

What is cheque?
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car

financed

Cheque is an instrument in writing containing an unconditional

order, addressed to a banker, sign by the person who has
deposited money with the banker, requiring him to pay on
demand a certain sum of money only to or to the order of certain
person or to the bearer of instrument

Types of cheque
1. Bearer Cheque
When the words "or bearer" appearing on the face of the cheque
are not cancelled, the cheque is called a bearer cheque. The
bearer cheque is payable to the person specified therein or to any
other else who presents it to the bank for payment. However,
such cheques are risky; this is because if such cheques are lost,
the finder of the cheque can collect payment from the bank.

2. Order Cheque

When the word "bearer" appearing on the face of a cheque is

cancelled and when in its place the word "or order" is written on
the face of the cheque, the cheque is called an order cheque.
Such a cheque is payable to the person specified therein as the
payee, or to any one else to whom it is endorsed (transferred).

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3. Uncrossed / Open Cheque

When a cheque is not crossed, it is known as an "Open Cheque"

or an "Uncrossed Cheque". The payment of such a cheque can be
obtained at the counter of the bank. An open cheque may be a
bearer cheque or an order one.

4. Crossed Cheque
Crossing of cheque means drawing two parallel lines on the face
of the cheque with or without additional words like "& CO." or
"Account Payee" or "Not Negotiable". A crossed cheque cannot be
encashed at the cash counter of a bank but it can only be credited
to the payee's account.

5. Anti-Dated Cheque
If a cheque bears a date earlier than the date on which it is
presented to the bank, it is called as "anti-dated cheque". Such a
cheque is valid up to three months from the date of the cheque.

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6. Post-Dated Cheque
If a cheque bears a date which is yet to come (future date) then it
is known as post-dated cheque. A postdated cheque cannot be
honored earlier than the date on the cheque.

Cheque Clearing Cycle

Define:
The money is not release until the cheque is verified by the bank
in all respect. Then first exchanged by banks after withdrawing
from cheque issuer's account, the receiving bank pays the
depositor in its account.
This process is call cheque clearing process.
In simple terms if more than one bank is involved then it has to go
thru clearing house.
In case of dealing with, out of the country bank it needs to go thru
reserve bank of both the countries, besides going thru clearing
house.
If you do not get the money after depositing the cheque then it
comes back to you as unclear check with reason, such as no such
account or insufficient fund or signature cannot be verified or
stopped payment initiated by issuer.
Most banks will release the money immediately if you are in good
standing

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with them, subject to clearing of check, if it does not clear you are
required to pay back the money plus the interest on the money
for using it, if you do not have an account with that bank, if you
have an account then money is taken from that account and you
are notified with unclear check notice.

How long does a cheque take to clear in

other banks and other states?

If the cheque belongs to another bank but belongs to the same

city - 2 days (Max)
If the cheque belongs to another bank but belongs to a different
city but same state - 2 to 3 days (Max)
If the cheque belongs to another bank and belongs to a different
state - 3 to 5 days (Max)
All the durations above are under the assumption that the cheque
issuing account has cash to pay for it. The bank may not clear the
cheque if the account doesn't have funds for it.

Memorandum of cheque
clearance

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A document that is used if the cheque is dishonor it is given to the

person who is the holder of that cheque it is signed by the bank
manager and that person show that memo in the court. It is a
legal document that has value in the court.

Reasons for not clearing cheque

Insufficient balance.
Payment stopped by drawer.
Exceeds arrangement.
Amount in words and figure differs.
Cheque is postdated.
Crossed cheque must be presented by a bank.
Drawers signature required differs.
Drawer deceased.
Cutting requires drawers full signature.
Crossing stamps require cancellation.
Crossing bank endorsement stamp required.
Not drawn on us.

Reasons for Cheque bouncing

A check that cannot be processed because the writer has
insufficient funds. A bounced check will often be returned to the

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writer along with a penalty fee for non-sufficient funds. "Passing"

bad checks is illegal.

My bank you'd have to pay the bad check fee which at my bank is
35.00 per bad check, and then the service fee for covering which
is 12.00, plus the amount of the check!!!

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