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The banking sector in Pakistan comprises of the following types: State Bank of Pakistan,
Commercial Bank of Pakistan; Exchange Banks, Saving Banks, Cooperative Banks,
Specialized Credit Institutions. The S.B.P. is the Central Bank if the country and was
established on 1st July, 1948.
On November 7th 1959 United Bank Limited appeared on the banking horizon in Pakistan and
started operations with its first branch namely McLeod Road now I.I Chundrigar Road at
Karachi. Today UBL has 1056 Domestic and 15 Overseas Branches.
UBL was nationalized in 1973 but it is privatized in 2002 as Govt. handed over the
management of UBL, the third largest party of the country, to the successful bidder
-Consortium of Abu Dhabi Group (UAE) & Best way Holding Limited (UK) as they have
purchased 51% shares and have elected H.H.Shaikh Nahayan al Mubarik as Chairman UBL.
On May 18th 2004 Mr. Atif Bokhari was appointed as anew CEO of UBL.
To open an account the customer has to meet the manager with an introducer. Individual, Joint,
Partnership, Private Limited, Public Limited, Sole proprietorship and Minor accounts are the
types of accounts. Different documentation is required for each type of account but the
application form is same for all types of accounts.
In Deposits department actual relationship is started with the bank, that relationship is in the
form of deposits or the accounts that are opened in the bank. At UBL, customers can deposit in
the form of current, saving, call, term and fixed deposits. Main difference between current and
saving is of the profit that is provided only on saving account to the customer.
In Cash department the main activity is of payment and receipt of cash and facility of utility
bills collection is also performed at the counter of cash department. A cash book balance is
maintained at the end of the day that is been provided in the form of statements that can be got
from the computer. Accounts department is responsible for all the activities happening inside
the branch in the form of any transaction whether it is for the customer or for the employees to
provide them with utility services.

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In Remittance Department like any other bank UBL also have instruments for transferring of
money like Pay Order, Demand Draft, Mail Transfer, Telegraphic Transfer. For remittances
UBL provided many services namely TezRaftar, Money Gram and Click N Remit. As for as
there Foreign Exchange Deportment is concerned its activity is handled at the central branch
as they have a department their and they provided the many services to the importers and the
exporters in the trading of products. Preparation of LC on behalf of importer for the exporters
and its bank is the main activity that is perform in the department.
The main activity of the Central Branch, Hussain Agahi Branch is to Advance the money that
was collected in the form of deposits. They deposit money at low rate and advance it at high
rate to earn the margin of profit. Financing can be made in the form of cash finance, demand
finance, bridge finance, consortium finance, agriculture finance etc. Security is of utmost
importance in this area and security can be like mortgage, pledge, hypothecation of stock, raw
material or the guaranties and banker’s lien.
With their step in the field of customer financing like house and car financing and their
services of Hamrah Rupee Traveler check, UBL Wallet (ATM card) and their online system of
UBL-ONLINE it has been viewed that they will make tremendous achievement in the days to
come. In my view UBL has faced some hard time but after its privatization and its response to
the changes in sector they will achieve what their ultimate goal is.

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1 Overview Of Banking


“Bank is a pipeline through which currency moves into and out of circulation.”
Bank accepts deposits and repays cash to its customers on their demand. The Bank borrows
money at a lesser rate of interest and lends it to the borrowers at a higher rate. It is thus a
profit-lending concern. Bank cannot lend all the money that has been deposited with it. It has
to keep a certain portion of the total deposits in cash with them in order to meet the cash
requirements of the individuals and business concern.
Banking History
Word Bank is said to be derived from the words “Bancus” or “Banque”which means bench
Other authorities hold the opinion that the word bank is derived from the German word “Back”
which means ‘joint stock fund’. The history of banking is traced to as early as 2000 BC. The
priests in Greece used to keep money and valuables of the people in temples. These priests thus
acted as financial agents. The origin of banking is also traced to early goldsmiths. They used to
keep strong safes for storing the money and valuables of the people. The persons who had
surplus money found it safe and convenient to deposit their valuables with them. The FIRST
STAGE in the development of modern banking, thus, was the accepting of deposits of cash
from those persons who had surplus money with them.
The goldsmiths used to issue receipts for the money deposited with them. These receipts began
to pass from hand to hand in settlement of transactions because people had confidence in the
integrity and solvency of goldsmiths. When it was found that these receipts were drawn in such
a way that it entitles any holder to claim the specified amount of money from goldsmiths. A
depositor who is to make the payments may now get the money in cash from goldsmiths or pay
over the receipt to the creditor. These receipts were the earlier bank notes. The SECOND
STAGE in development of banking thus was the issue of bank notes.

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Introduction To Banking
The goldsmiths soon discovered that all the people who had deposited money with them did
not come to withdraw their funds in cash. They found that only a few persons presented the
receipt for encashment during a given period of time. They also found that most of the money
deposited with was lying idle. At the same time, they found that they were being constantly
requested for loan on good security. They thought it profitable to lend at least some of the
money deposited with them too the needy persons. This proved quite a profitable business for
the goldsmiths. They instead of charging interest from the depositors began to give them
interest on the money deposited with them. This was the THIRD STAGE, in the development
of banking.
By experience the banks came to know that they could keep a small proportion of the total
deposits for meeting the demands of customers for cash and the rest they could easily lend.
They allowed the depositors to draw over and above the money actually standing to their
credit. In Economics terminology we can say that they allowed the overdraft facilities to their
depositors. This was the FOURTH STAGE, in development of banking.
When every bank issues receipts and most of them allowed the overdraft facilities, there was
then too much confusion in the banking system. The banks in order to earn profits could not
keep adequate reserves for meeting the demands of the customers for cash. The failures on the
part of the bankers to return money caused widespread distress among the peoples.
In order to create confidence among the people, steps were taken to regulate the banking
organization. A conference was held in Nuremberg in 1548. It was decided that a bank should
be set up by the state, which should streamline the banking organization and technique. The
first central bank was formed in Geneva in 1578. Bank of England was established in 1694.
The responsibility of issuing of notes is now entrusted to a central bank of each country.


At the time of partition total number of Banks were 38 only. Out of these Banks the Pakistani
Banks were only 2 , Indian Banks 29 & Exchange Banks were 7. The total of deposits of
Pakistani Banks was Rs.880 Million. & advances were Rs: 198 Million.. According to banking
companies ordinance Banks are the companies, which transacts the business of Banking in

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Commercial Banks have constituted the most important [part of the intuitional credit in the
economy of Pakistan. Being the largest source of credits, Banking Industry is a pivot of whole
the economic activities in Pakistan. Section 37(2A) of State Bank of Pakistan Act 1965 lays
down that the Banks must have paid-up capital & reserve of not less then Rs: 5 Lac & fulfilling
certain other requirements for declaring as “Scheduled Bank”.
At the time of independence Bank services was badly affected. But with the passage of time
these are improving. The government of Pakistan nationalized all Banks in early 1974. This act
was done to minimize control of few hands over banking. But this step was proved e futile for
the Banking in Pakistan. So the Govt. had to revise its decision in1990. Two Banks (Allied
Bank Of Pakistan Limited & Muslim commercial Bank Of Pakistan Limited have been
denationalized. Since then Banks were working well. Now slogan of the Banks is to serve
their customers in the best possible manner.
Professor Berton:
“Banks are the guardian & distributor of money “.
Similarly we can say that it is a pipeline thorough which currency moves into & outside the
circle. Banks accept deposited of money and repay it on demand. Bank borrows money at
lesser rate of interest & lends it at higher rate of interest. In this way Banks earn money. Bank
do not lend all money they collect, they keep certain portion of it as reserve to meet the
uncertain demand of the customer.

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In general terms the functions of a commercial bank can be classified under the
following main heads.
Some people have an excess money and they want to deposits it to some honest man or an
institution which can give them some profit. So the first function of commercial bank is to
receive deposit there are three types of deposits.
1.1 Demand Deposits or Current Deposits
Some people deposit their excess money in the current accounts and they can withdraw their
money deposited in this account at any time during the banking hours, so bank is not ready to
give interest on it.
1.2 Fixed Deposits
These deposits are fixed for a particular period. Commercial banks also pay an interest on these
accounts. An important thing related to it is the varying interest rates for the different period
deposits. Interest rate increases with the increase in the fixed deposit period.
1.3 Saving Deposits
To create the habit of savings, bank accepts the saving deposits and pays an interest on these
deposits. And this rate of interest is greater than the demand deposits.
Bank also advances the loans to the merchants and charges the interest. It is the major source
of its income. It also issues the loan for short term, medium term and for long term. And bank
receives the higher interest from the borrower for the long term loans offered.
Commercial banks also discount the bills and facilitate the business; for example one
businessman purchases anything from another person and promises to pay after one month.
The seller will write a bill to the buyer and there will be an order that after one month the buyer
will pay the amount to the seller. Buyer will sign on the bill. In other words buyer will accept
the responsibility of that amount. If seller is in need of money, he will take it to the bank and
will receive the money by discounting the bills. The commercial bank also may rediscount it

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from the central bank.
By issuing cheques and drafts bank provides cheap, medium of exchange.
The commercial bank is very helpful in transferring the money from one place to
another by issuing the drafts. This is very popular concept in the modern world and
widely used in the business community.
Banks also provide lockers for the safety of precious articles. So now everyone can secure his
precious metals like gold, silver, etc., and bank charges a very nominal charge for this facility.
Commercial Banks also perform the duty of an agent. It collects and pays on the behalf of the
On behalf of the customers all the banks also make an investment in different companies and
industries. And banks receive nominal charge from the customers.
It also creates and extends the volume of credit.
It also provides the finance to the foreign trade. Letter of credits are issued by the commercial
banks for the foreign payments.
The commercial bank purchases and sells the securities, for itself and sometimes on the behalf
of the costumes.
If a client directs his bank to act as a trustee in the administration of a business, the bank
performs this responsibility.

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This type of account offers the facility to the account holder to save money right home and put
in the locker provided by bank. The key of the locker remains with the bank that sends its
officer every week to collect the amount from the locker. Now this facility is no longer in
The plastic cards that can be utilized as money are called the plastic money. For instance,
a. Debit Card
b. Credit Card
c. Charge Card
a. Debit Card
In this card facility the account holder can only utilize his own amount kept in his deposit.
ATM (Auto Teller Machine) card is the example of debit card.
b. Credit Card
In this case the customer has not much amount in his or her account but the Bank gives him
facility to over draft (OD) up to the maximum limit of 5 lacs depending on bank-customer
relationship and the market value of that person. The banks are sole agent of American
Express. Credit Card is the loan facility which is given on only personal guarantee. If a
customer is a salaried person then the bank issue credit card facility up to three times of his or
her salary. Suppose a person’s salary is of Rs. 23,000/-. Then the bank will give him credit card
of Rs. 75,000/-. But each bank has different criteria in issuing any facility.
Annual charges are charged on this facility. And charges are on the basis of limit of credit card.
More the limit of credit card, more would be the charges on it.
If the customer repays the over drafted amount to the bank within a month then the bank does
not charge the mark-up on it except of annual charges. Other wise the bank will charge the
mark-up on daily basis but annual charges are also have to pay.
This is a ‘Clean Loan or Clean Facility’ (a loan without any tangible security). Because here
only personal guarantee is involved.

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c. Charge Card
it is same to the credit card. But the only difference is that the charge card is not a ‘Clean
Facility’. Because the bank gets the property under lien or mortgage against this credit facility.
All these three cards are used in that hotels, shopping malls and transport offices where there is
the facility of Merchant Arrangements. Merchant Arrangements means the shops to which
the bank has online contact. Different banks have the different Merchant Arrangements. The
shop keeper enters the password into the machine and get the account information of the card
holder and debit the amount in card holder account and credit it in the shop’s account.
In mobile banking the customers can do all the transactions sitting in their homes by using
internet. In this type of banking first of all you have to open the website of the bank in which
you have the account. Then you have to give a password to enter in the data base of the bank.


Banks play an important role in the economic development of country. If our Banking system
is not in accordance to the economic requirement then how it can play a vital role in our
developments. The State Bank of Pakistan is at the apex and all the commercial Banks have to
follow the rules of State Bank of Pakistan. Role of the banking sector can be judged by the
following facts:
The commercial Banks namely United Bank Limited Pakistan, Habib Bank Ltd, Allied Bank
Of Pakistan Ltd. & National Bank has opened Branches in urban areas & rural areas to
mobilize savings of people.
Banks & other financial institutions like ADBP, IDBP, and PICIC etc. Advances short &
medium terms loans for financing of the development projects both in the private & public
sectors .So they helping to accelerate the rate of progress (Economic) in the country.

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The credit institutions collect the savings of people & make them available for facilitating the
trade activities both inside & outside the country.
A developed baking system stimulates the growth of economy by creating favorable climate
for capital formation in the Country.


Commercial Banks under the supervision & guidance of the S.B.P help in implementing &
achieving the objective of monetary policy, which vary from time to time.
Commercial Banks are profit-seeking enterprises. In order to maximize profit they have the
incentive from S.B.P to maximize the limit of finance. An organized Banking system keeps
balance between the liquidity * profitability, thus assists in the planed development of the
Commercial Banks receive surplus balance of the households and business & pay interest on
the deposit of client. The depositors instead of having a fixed return on the deposit will share in
the profit & loss of the Bank. The profit & loss scheme arrangement is the alternative to
interest, under an Islamic economic system, which is since on the experimental basis in

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The decision to establish UBL was taken in June 1959 and the company was registered on July
24, 1959. United Bank Limited started the operations on 7 November 1959 with its first branch
namely McLeod Road now I.I Chunrigar Road at Karachi. On 9th November 1959 the Gazette
of Pakistan notified and included UBL in its list of scheduled banks operating in Pakistan. The
first president of the UBL was Mr. I. I. Chundrigar. Most of the branches of Union Bank Ltd.
were merged into UBL to work as UBL’s subsidiary .The head office was at Dhaka.
With its shortest span of time UBL emerged as dynamic and large international organization.
In 1969 the Management of Union Bank Ltd. Incorporated in former east Pakistan, was
handed over to UBL, which was later emerged with UBL in early seventies.
The Bank continued its operations as private banking company until 31st December 1973 when
it was nationalized, in the large nationalization process in the government of Zulfiqar Ali
Bhutto, along with other banks operating in the country and other two banks namely Pak Bank
of former East Pakistan and Commerce Bank Ltd. Were merged with UBL.
A Bank , like the society it serves should be dynamic as banking is about people customers
with their needs and opportunities and staff with skills, experience and resources. UBL has
shown dynamism since its inception. There have been many changes in the structure, functions
and the services provided. These changes reflect the changing requirements of our developing
economy as a whole and those of Industry, Commerce and private Individuals.
On October 19th 2002, biggest event occurred in the history of UBL. As UBL was privatized.
The Government handed over the management of UBL, the third largest bank of the country
to the successful bidder – Consortium of Abu Dhabi Group (UAE) and Bestway Holding Ltd.
(UK). The sales agreement for the transfer of 51% shares was signed by Privatization Minister
Altaf M. Saleem and Bestway Holding, Sheikh Nahayan Mubarak Al Nahayan at a ceremony.
This event was declared as a “New Journey for UBL”.
On May 8th 2004, Atif Bukhari took over the charges as new Chief Executive Officer of UBL
from Amar Zafar Khan, who served UBL for more than seven years. UBL officially announced
the appointment of Atif Bukhari as its CEO. Bukhari was previously Senior Executive Vice

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President (SEVP) and Group Head, Corporate and Investment Division of Habib Bank Ltd. He
was also a member of the HBL Management Committee.
In the view of highly impressive growth and development achieved during its 46 years of
experience, UBL has come to be accepted as one of the most progressive and dynamic
components of the banking industry in Pakistan.
UBL expects its strong customer focus to drive the bank’s future business strategy. On the
domestic side bank has already launched its consumer banking business. Increased investment
is targeted in developing Human Resources ; Infrastructure and internal system support the
aggressive consumer initiative and explorations of new avenue generation. The first step under
this initiative is the launch of the bank’s ATM / Debit Card, branded as UBL Wallet.
Furthermore UBL has plans to introduce a full suite of innovative consumer finance products
designed to capture a significant share of the local consumer financing market and tap into the
current growth in demand of such financing.
Personalized Service and Dynamic Approach
in order to meet its goals and capture the market share the Bank employed professional and
skillful approach to the management, which took a series of successive measures to educate the
people of Pakistan banking and saving minded. Various drives for the mobilization of saving
and other accounts were initiative. The knowledge of customer’s business market research
and business planning, visits to customer at their door steps, development of personalized
relational ship with business community, fixation of seasonal business targets and follow-ups
to achieve these goals attained prominence. Flexibility, delegation of authority to the lowest
possible level and encouragement by initiative were the key factors, with helped the bank, to
achieve the objectives.

UBL emergence proved catalyst and brought changes in the banking sector as a whole. The
Bank-Consumer relationship attained a new dimension and courtesy, politeness and efficiency
gained fundamental importance. Convenience for the customer remained a core and criterion

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for this relationship. UBL initiated the scene in the office and branches redesigned and

After achieving dynamic progress domestically, the Bank took a basic decision to make its
presence felt Internationally and to cater to the needs of importers and exporters as well as its
shares in the international market, foreign trade, UBL opened its first branch in 1963 in
London (UK), the most important center of the international finance and trade.
The UK operations of UBL were closed during the year 2002 and along with the branches of
National Bank of Pakistan a new bank namely Pakistan International Bank has been
incorporated in UK with 55% share holding of UBL.
In Oman the share holding in Commercial Bank of Oman was withdrawn however an
exchange company namely Oman United Exchange Company a joint venture was formed in
1983. The bank has also withdrawn its share holding the United Saudi Commercial Bank,
Saudi Arabia as well as United Bank of Lebanon and Pakistan SAL.
The UBL global network with its strategically located overseas branches and affiliates,
covering almost all major financial markets of the world, is well positioned to act as a
correspondent bank for Pakistan and currency transaction. With its strategy to reach its
customers in various diversified markets across the globe, UBL is progressing fast in the arena
of cross border ventures with an appetite for commercial and country risks. To meet the
required international standards of modern banking UBL is the first Pakistan bank to shift its
international division from Karachi to Dubai.
At present UBL and its subsidiaries are:
United Bank Ltd. Holding Company
Pakistan International Bank Joint Venture
Oman United Exchange Co. Joint Venture
United Bank Ag-Zurich Subsidiary
United Assets Management Co. Ltd. Subsidiary
United Executor and Trustees Co. Ltd. Subsidiary
United Bank Financial Services (pvt) Ltd. Subsidiary

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UBL has stepped into the 21st century with confidence. Know that the bank has been
privatized and 51% share have been purchased by investors i.e. The Best Ways Group UK
and Abu Dhabi consortium electing H.H Sheikh Nahayan Al Mubarak as Chairman UBL.
UBL has geared itself to provide services, which the customers in modern banking expect
from the bank.
The bank has also planned to play its dynamic role in the overall development of the country.
It is now well equipped with latest technologies and professional experience to face the
future with determination and confidence and with its high aims and sense of direction to
serve the nation with zeal and devotion.
In 1986, the organizational structure of domestic operations of the bank was reformed and
decentralized on the basis of provinces. As a result provincial headquarters were established
at Karachi, Lahore, Peshawar and Quetta in order to meet the needs of sanctioning loans and
other facilities to the trade, industry and agriculture of each province. Azad Kashmir was
serrated from NWFP and made separate region.
The quantum of work immensely increased due to the growth of economic activities and
phase of industrialization and other change in Punjab and Sind. It was also considered
necessary to improve the quality of advances and to expedite the recovery process of the
loans and advances. Beside above the economic condition of the country also changed due to
privatization policy, establishment of a number of new private banks as well as expansion for
operations by the foreign trade and banks in major cities.
For above changes, high power committees constituted by the Govt., which recommended
structural, and other reforms, the details of which are received from Pakistan banking council
are follows:
The provincial chiefs of Punjab, Sind, NWFP, and Baluchistan are ceased to function and in
their place nine regional chief executives started functioning in the nine major cities. The
new segmentation of UBL’s branches on the basis of regions can be looked from the

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Province/Area Region Name

Do Hyderabad
Punjab Lahore
Do Faisalabad
Do Multan
Do Islamabad
NWFP Peshawar
Baluchistan Quetta
Azad Kashmir MuzafarAbad

Domestic Network of Multan Region

Multan Region 225Branches

Head Office 1
Multan 48
Bahawalpur 38
Dera Ghazi Khan 36
Rahim Yar Khan 32
Sahiwal 38
Vehari 32

UBL is committed to the welfare of Pakistan. It lends to farmers for the purchase of tractors,

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superior quality seed and fertilizers. UBL further fosters the individual welfare and well
being of the common man by lending house building finance and loans to set up small
businesses. UBL has played a leading role in the dissemination of Computer Technology in
Pakistan and is dedicated to the promotion of sports.
♦Agricultural Loans
♦Small Business Scheme
♦UBL Computer Training Institute
♦Staff Colleges of UBL
♦UBL Sports Complex

UBL’s agricultural loans on easy terms and conditions to small-scale land owning farmers
boost the country’s economy and yield greener harvests. UBL enables farmers to buy good
quality seeds, fertilizers, pesticides and agricultural implements.
Under the Small Business Scheme, UBL is providing loans on easy terms to those who wish
to set up their own small-scale business. This scheme is aimed at spreading prosperity in the
country by reducing unemployment. As more and more people start their own industrial
units, the country will move steadily towards economic self-reliance.
UBL is a pioneer in the computerization of banking in Pakistan, and now plays a leading role
in the dissemination of Computer Technology in Pakistan and is proud to be a part of the
Government’s Computer Literacy Program aimed at preparing the younger generation to
meet the challenges of tomorrow.
UBL, the leading user of Computer Technology in the Banking Sector has set up most
modern facilities at Muzaffarabad, Azad Kashmir, and Sheikhupura for imparting training to
the educated youth under the Government’s Computer Literacy Program. These centers are

equipped with state of the art hardware and audio-visual aids and are manned by experienced

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The UBL has three staff colleges, which are generating banking trained personnel. These
colleges are at Karachi, Lahore and Rawalpindi, established in 1964, 1978 and 1977
respectively. These staff colleges are providing facilities of training to the employees of the
bank so as to meeting the growing need of the banking field and coping with the changing
environment of the country.
In addition to providing professional banking services, the bank continued to play an
important role in the promotion of sports in the country. Towards this end, the bank has
constructed a big sports complex in Karachi, where all types of facilities for sports like
cricket, hockey and flood light courts for tennis and basketball have been provided.

2 Organizational Structure
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Organization Chart at Branch Level

Area Manager (A.M)

Internal Audit Branch Manager or Credit Committee

Area Operational Manager

Customer Cash & Bills & Marketing Advances Accounts

Deposit Clearing Remittances

I.T Foreign

Management Hierarchy

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Senior Executive Vice President (SEVP)

Executive Vice President (EVP)

Senior Vice President (SVP)

Vice President (VP)

Assistant Vice President (AVP)

Officer Grade 1 (OG 1)

Officer Grade 2 (OG 2)

Officer Grade 3 (OG 3)

Operational Staff



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Treasury & Corporate Investment Consumer Human

Capital Banking Group Banking Resource
Market Mgt.

Finance Marketing IT Audit Service

Department Department Department & &
Inspection Quality

Agri Comercial
Loans Banking

Board of Directors are the owners of the bank and governs the Bank’s Affairs, which
currently consists of President Chief Executive Officer & seven directors. The CEO has an

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overall responsibility for the strategic direction, government relations and to manage the
portfolio of business and its functions.

His Highness Sheikh Nahayan Mubarak Al Chairman
Sir Muhammad Anwar Pervaiz, OBE, HPK Deputy
Mr. Atif R. Bukhari President & CEO
Mr. Omar Z. Al Askari Director
Mr. Zameer Muhammad Chaudary Director
Mr. Ahmad Waqar Director
Mr. Javed Saqib Malik Director
Mr. Tehsin Khan Iqbal Director

Chairman Deputy Chairman

His Highness Shaikh Nahayan Mabarak Sir Mohammed Anwar Pervez OBE
Al Nahayan

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President & CEO Director
Mr. Atif R. Bokhari Mr. Omar Ziad Jaafar Al Askari

Director Director
Mr. Zameer Mohammed Choudrey Mr. Ahmad Waqar

Director Director
Mr. Javed Sadiq Malik Mr. M. Tahsin Khan Iqbal

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Mr. Aly Shah
Barrister-at-law, Company Secretary

The Head of the Executive Committee is the President of UBL (Mr. Atif R. Bokhari).

Mr. Atif R. Bokhari

President and C.E.O

Mr. M.A. Mannan Mr. Nauman Hussain

Group Executive Group Operations &
Consumer/Commercial Bank Technology Head

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Mr. Risha Mohyeddin Mr. Aameer Karachiwalla
Group Executive Treasury Group CFO
& Capital Markets

Mr. Ayaz H. Shamsi Mr. Muhammad Ejazuddin

Group Executive Group Audit &
Human Resources Inspection Head

Mr. Tariq Mohar Mr. Mohammad Asghar

Group Business Group Commercial Bank Head
Support / Collections Head

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Mr. Ali Sameer
Group Head SAM

The main purpose of the treasury department. Of any company is to maintain the liquidity for
that company. Same is the case with Banking Industry as well.
The treasury department have to manage the buffer stock (in terms of cash) of the bank and
they have to maintain the liquidity for giving Advances to their customers.
Suppose a company X want to get the loan from UBL. But the UBL has not that much
amount. So it is the responsibility of the treasury department to manage the fund from money
market (private financial institutions like Khanani & Kalia).
The narrowest bid/ask spreads and the fastest quotes Dynamic risk-reducing hedging
strategies for its customers The best relationships with institutional, corporate and retail
clients Year 2003 was a highly lucrative year for the bank with net profits in excess of PKR
4 billion. Treasury and Capital Markets (TCM) contributed to over 65% of UBL's total

returns. This was due to Government Bond Trading, Equity Trading, Structured
Products/Financial Engineering, Corporate Debt Trading, and Double-Count of revenues.
Under the new management, the TCM expedited the launch of Pakistan's first derivative
money market product-the FRA (forward rate agreement) with Quetta Textile Mills Ltd. in
August 2003, and has further closed several similar transactions thereafter.
UBL TCM is a market maker in both the domestic money market as well as the foreign
exchange market. Being one of 11 primary dealers (PD), UBL has one of the largest balance
sheets amongst banks in Pakistan, and hence our Foreign Exchange Exposure Limit (FEEL),
as imposed by the State Bank of Pakistan,. is the highest in the industry.

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Equities is responsible for managing the bank's trading and badla portfolio, and to eventually
develop a global equity trading activity for UBL. Structured Products is responsible for
developing and packaging plain vanilla derivatives as well as more exotic customer specific
products, and pipeline products.
The Strategic Planning and Balance Sheet Management responsibilities include:
Liquidity Management for the domestic balance sheet - This unit is the focal point for all
branch-related liquidity issues and will also be responsible for day-to-day management of
liquidity for UBL.
Overseas Branches Treasury and Capital Markets - they plan to integrate the treasury
activities for all overseas branches, to develop synergies amongst their various treasuries.

2-Corporate Banking
The main objective of the Corporate Banking is to look after the special customers who gives
very much big amount of deposits or take higher amounts of Advances. Because a Hub
Branch can give the Advances up to Rs. 200 Million. And the party who needs a loan more
than Rs. 200 M they have to contact to the Corporate Branch of the UBL. So the cases of
Advances more than Rs. 200 M goes into the Corporate Branches. Let us take the example of
the Hub Branch of UBL, Hussain Agahi Multan and Corporate Branch of UBL cantt. There
are 175 to 200 cases of Advances in the Hub Branch. But in the Corporate Branch there are
hardly 15 to 20 cases of Advances due to so much high amount of Advances. And these types
of customers are called corporate customers. Because they have taken very much big amount

of the Advances it means their business operations and turnover is more frequent. And as a
result drawing and repayment of the loan or from their own account is also more frequent. So
these types of customers need special care and services as well. But mind one thing that the
documentation in case of Advances and Deposits is same in Corporate Branches as well
as in Hub Branches is same. The cases of Advances also approve Credit Administration
Deptt. (CAD) of the Regional Head Quarter (RHQ).


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Our mission is to serve all your corporate needs and ensure your full satisfaction through
product innovation, personalized banking, and top notch service.
The (Corporate Banking Group) CBG focuses on attracting and servicing large portfolio
customers. Our forte is providing exemplary customer service using the "Single Window"
concept and product superiority. The Relationship Management team manned by highly
qualified individuals from the industry has steadily expanded our customer base and
continues to enhance our cordial relations with our esteemed clients.
Despite the sluggish economic growth in recent years, UBL outperformed all the other local
banks in the corporate banking sector primarily due to CBG's emphasis on establishing and
enhancing relationships with foreign/local blue chip and middle market customers thereby
capturing significant market share.

This department supports the Corporate Deptt. When a company wants to install a new
project and require the finance from the bank then it is the responsibility of Investment Deptt.
that they analyze the targets of the project and success or failure of the project. If it is feasible
to loan that party then they pass the loan otherwise not. This is called the Project Finance.
Other responsibilities are offering IPOs, TFCs and following services are performed by this
Deptt. Now UBL is offering its IPOs (Initial Public Offerings) in June
On behalf of the customers all the banks also make an investment in different companies and
industries. And banks receive nominal charge from the customers.

UBL (Investment Banking Group) IBG offers full spectrum of services

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This Deptt. does all the activities related to HR and Personnel Management like Job
Analysis, Job Design, Job Description, Job Redesign, Job Specification, Recruitment (is the
process of finding and attracting capable applicants for employment through Advertising,
Employee Referrals, Private Placement Agencies etc.), Selection by written tests and
interviews, Orientation, Training, Career Planning, Performance Appraisal (employee
performance and accountability), Compensation and Protection, Union-Management
Relations etc. It also involves in the following activities:
 Transfers & Postings
 Scrutinizing bills (Hospital Bill)
 Staff Deceased cases & its Correspondence
 Retired employees Cases & its correspondence

 All staff legal cases & Court at Multan & Lahore.

 Retrenchment cases
 Complaints and its correspondence
 Fraud & Forgery cases
 Mandatory Leaves and its observance.
 Staff leaves and other related staff matters
 Goals of all Staff
 Monthly Statement of Staff

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 Disciplinary Action Cases

The HRM department also gives the facility of LPR to their employees.
Leaves Prior to Retirement (LPR)
These are the leaves at the end of the job period (near to retirement) with pay. If some
employee has the leaves in credit then he or she can avail that leaves at the end of his or her
job. But maximum limit of LPR is one year. And after these leaves he or she will be
automatically retired. But if some employee the leaves in credit less than one year, let
suppose of nine months, then he or she can avail only that credited leaves (nine month) only
but with pay in the facility of LPR.

Information Technology Deptt. is related with all computer activities like to manage the
Central Data Base (CDB) which is placed in Head Office of UBL Karachi in all the daily
transactions in all the branches of the country are up-dated on daily basis. This Deptt. also
makes the web site new news to web site.
The daily transmission process of data is as following:
A spoke branch up-date the daily transactions through computer networking to the its Central
Branch. Suppose all the withdrawing, deposits, remittances, collection and clearing data of
the day is sent to the Central Branch. And when the Central Branch receives the data from all

the spokes branches under it then that Central Branch up-date the data of all the spokes
branches and its own to the Central Data Base (CDB) at Head Office. Corporate Branches
and Regional Head Quarters (RHQs) up-date the daily data directly to the Head Office.


The responsibility of this department is to audit and inspect the operations of the branches.
Whether the operations are compliance by the branches in a right way or not. The CCD

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(Control and Compliance Department) comes under this department. I will discuss about the
CCD in the branch level functions.

You as an individual can gain and benefit the most through UBL Consumer Banking. In UBL
you get friendly, efficient and attentive personalized banking services - a unique banking
relationship experienced by each UBL client. You can utilize the following services:

• UBL Credit Card

• UBL Businessline
• UBL Cashline
• UBL Address
• UBL Drive
• PLS Term Deposits
• PLS Savings Accounts
• Uni-Saver
• Remittances


It is the Pakistan’s 1st Chip Credit Card, that guarantees you both enjoyment and high value.
It assures you global acceptability in more than 22 million establishments worldwide in 130
countries and in more than 12, 000 outlets within Pakistan.

The UBL Credit Card …..Mazay Mein Raho.

This unique high tech CHIP guarantees your security while conducting transactions within
Pakistan and around the world. CHIP based credit cards have proven to be the most secure
way of conducting credit card transactions globally.

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A Choice of Rewards Along with exciting Chip Rewards you have a choice between Free
RoadMiles and Free TalkTime.

Spend Rs 5000 anywhere on your UBL Credit Card and get guaranteed 5 litres petrol free
from any PSO outlet nationwide. If you spend more, you get more. So keep driving, keep

Spend Rs 5000 anywhere on your UBL Credit Card and get guaranteed 30 minutes free.
What’s more, you get a free Mobilink Postpaid Connection with your UBL Credit
If you spend more, you get more minutes. So talk freely, stay connected.

Low Balance Transfer Rate – Save big time

Now you can really save big time with your UBL Credit Card Balance Transfer Facility!.
Your UBL Credit Card offers a low rate for BTF of outstanding balances from other cards at
only 1.5% per month.

Cash Advance
You can now withdraw cash through your UBL Credit Card’s instant cash advance facility
from any designated UBL ‘Cards Payments’ Branch nationwide, and at more than 700,000
ATMs and financial institutions worldwide displaying the VISA/ PLUS logo.
-VISA Global Customer Assistance Service and much more….
Eligibility Criteria*
You are eligible to apply for the UBL Credit Card if you are
-At least 21 years of age

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-A resident of Pakistan
-Employed or managing your own business
Documents Required*
-Copy of the Computerized National Identity Card
-Any one of the following income documents
- Salary slip/ Salary Certificate (in case of the Employed Applicants)

- Personal Bank Statement and / or Company Bank Statement (along with business
proof), in case of Self Employed Applicants



UBL Businessline… a complete solution to all your Business Financing needs. UBL
Businessline is a running Finance facility that not only provides funds for growth but also
enables you to capitalize on profitable opportunities. With UBL Businessline, now you will
surely say: "Ab Hui … Kamiyaabi Meri Manzill'.

What is Businessline?

“It is a ‘Credit Line/ OD Facility’ against Residential Property. It is an evergreen credit line
that the customer can use for his/her business expansion”


Utilize up to Rs.10 million:

Now, UBL Businessline is here to solve all your cash flow problems. You can utilize up to
Rs.10 million with the help of which you can now focus on your business expansion and

Mark up on utilized amount only:

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With UBL Businessline, now you no more need to pay for the entire credit line that you own.
Businessline gives you the facility to pay mark up only on the amount that you utilize.

Faster Processing:

After completion of your documentation requirements, UBL Businessline promises you a

very smooth and fast processing, hence saving you time and frustration.

If you fall in the following criteria, then UBL Businessline is just the right choice for you :
• Minimum monthly income: Rs. 25,000 and above
• Age: 25– 65
• Resident: Pakistani.
• Self Employed Professional / Self Employed Businessman.


Have you ever wished for a loan that was flexible enough to be used anywhere, anytime, and
as many times as you wanted?

UBL introduces Cashline – the most flexible loan, providing you up to Rs. 500,000/- The
perfect solution!


Tired of paying bills yourself?

UBL Cashline can pay them for you!
Wanted to buy appliances for your home?
UBL Cashline can buy them for you!
Maybe even renovate it?
UBL Cashline can provide for your home décor!

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Tired of looking at the same old furniture?
UBL Cashline can get you something you've always dreamt of!
Envious for one of those sleek cars on the road?
UBL Cashline can transform your wheels into a dream car!
Need a vacation?
UBL Cashline can fly you off to a dream destination too!
Short term business needs?
UBL Cashline can send payments to third parties in other cities!
With UBL Cashline you can sit back and relax.
UBL Cashline gives you the convenience of access to cash through multiple options 24 hours
a day, truly setting you free!
With every UBL Cashline account you will get:
Cheque Book
Use your UBL Cashline cheques at any online branch throughout the UBL network! You can
enjoy the convenience of walking into any UBL online branch across Pakistan and use your
Cashline account with ease.
ATM/Debit Card
UBL Cashline comes with an ATM/Debit card so that you have instant access to cash – 24
hours a day, 7 days a week. Wherever you might be, you are never away

from cash. Simply go to any ATM in Pakistan and experience the convenience of UBL
How can you get Cashline?
If you are:

• A salaried person of 21 to 60 years, and your monthly net salary is Rs. 10,000

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• A self employed business person/professional between the ages of 21 to 65 years, and
your monthly net take home income is Rs. 25,000


UBL Address understands your home financing needs and offers you a variety of fixed,
floating & adjustable rate options - because at UBL, you come first.
Fixed Rate for 20 years
Fix your repayments for 20 years today. The fixed markup rate gives you peace of mind and
allows you to plan your cash flows better.
Mark-up Monthly, Principal Annually (20 years)
For the first time in Pakistan, UBL address provides an alternative to high monthly rentals by
offering a flexible repayment option to suit your cash flows:
-Pay only markup for 11 months every year.
- Pay 5% of principal along with the markup in 12th month every year.
Example, on the loan of Rs. 1,000,000 your annual principal repayment will be Rs. 50,000
while you will only pay the markup as monthly installment (as indicated in the grpah below).

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Pay As You Select (PAYS)
In addition to normal financing, UBL Address offers you the facility to design your own
repayment plan to suit your present and future expected cash flows.
PAYS-Up (10 yrs, 15 Yrs)
PAYS-Up allows you to start with low installments that increase every year.
For example, on a 15 year loan of Rs. 1,000,000 your monthly installment will begin from
Rs. 9,270* in year one and will rise to Rs. 15,679 in year fifteen.

Eligibility Criteria
-Minimum monthly income: Rs.15,000
- Age: 23 to 65 years
- Resident Pakistani
- Self-employed businessman/professional or salaried individual
- Minimum loan size: Rs. 500,000

UBL Drive is a unique car financing product which offers you features, options and
flexibility unmatched by any other bank, some for the very first time in Pakistan. Because at
UBL, you come first.
No Documents Required

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UBL Drive gives you the opportunity to get the car of your choice financed with minimal
documentation. You do not have to provide any income related documents - all that is
required is a copy of your NIC and 2 photographs!
Low Down payment Just 10%
In addition to low installments, UBL Drive allows you to drive away in your own car by
making a down payment of just 10% - one of the lowest down payment options in the

UBL offers a wide range of attractive term deposit schemes to suit your requirements.
Deposit period along with projected profit rates of these schemes are given below :

Term Deposit Period Projected Rate Of profit

7 to 29 Days notice
30 Days and above
1 Month
2 Months
Three Months
Six Months Please Contact your nearest UBL Branch.

One Years
Two Years
Three Years
Four Years
Five Years

Corporate customers, besides normal current accounts, are also offered special current
deposit accounts to cater to their specific requirements at very attractive profit and terms.

• You can open a PLS Savings Account with an initial deposit of Rs. 2,000

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• Your share of profit is credited half-yearly and is calculated on monthly balance
• You can withdraw your savings through cheque

UBL UniSaver Account is an innovative way of serving your banking needs. Be it trade,
business or personal finance, the UBL UniSaver allows you maximum flexibility, yet gives
you optimum returns.

Special Features are;

• Daily Profits on your daily balance

• Higher returns on higher balances

• Attractive rate of return

• Backed by the bank awarded AAA Credit Rating

Deposit Category Projected Rate Of profit (p.a)

Over Rs. 100,000 Up To Rs. 3
Rs. 3 Million upto Rs. 5 Million
Over Rs. 5 Million upto Rs. 10
Over Rs. 10 Million upto Rs. 50 Please contact your nearest UBL
Million Branch.

Over Rs. 50 Million upto Rs. 250

Over Rs. 250 Million upto Rs. 500
Over Rs. 500 Million

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Our remittance products are designed to give you maximum flexibility. Currently, you can
send money to almost ANYWHERE in Pakistan by using our popular TezRaftaar
remittance service.
For US residents, UBL offers added flexibility through UBL Click N Remit-- an innovative
online remittance service . Sending money from US to Pakistan is just a click away.

UBL is also a member of SWIFT (Society for Worldwide Interbank Financial

Telecommunications). This enables the Bank to provide secure transmission of foreign
exchange payments for trade, home remittances and other transfers in a fully automated

Our SWIFT Bank Identifier Code is UNILPKKA

Newyork U.K(UNB) U.A.E Bahrain Qatar


Commercial banks also discount the bills and facilitate the business; for example one
businessman purchases anything from another person and promises to pay after one month.
The seller will write a bill to the buyer and there will be an order that after one month the
buyer will pay the amount to the seller. Buyer will sign on the bill. In other words buyer will
accept the responsibility of that amount. If seller is in need of money, he will take it to the
bank and will receive the money by discounting the bills. The commercial bank also may

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rediscount it from the central bank.

3 Commercial Banking

As far as the law is concerned, Banking Companies Ordinance 1962
defines the term banking as following: -
“Accepting for the purpose of lending or investment of
deposits of money from the public repayable on demand or
otherwise and withdrawals by cheque, draft, order or otherwise.”
The commercial banking has been developed into an important sector
economy. It is a service-oriented organization, which performs numerous
functions. The functions, which a commercial bank performs, can be
divided into following categories.
1. Basic Functions
2. Agency Services Functions
3. General Utility Functions
These are classified as following.

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Basic Functions
These include:
1) Accepting of deposits
2) Making advances and loans
1. Accepting of Deposits
a. Current/Demand Deposit
b. Saving Deposits
c. Fixed Deposit
2. Making Advances and Loans
a. Running Finance

b. Term Finance
c. Project Finance
Agency Services
These include:
 Collection of Cheques
 Collection of Dividends
 Purchase and Sales of Securities
 Execution of Standing Instructions
 Collection of Bills
 Acting as trustees or Executors
 Transfer of Funds
General Utility Services
These include:
 Supplying Trade Information
 Issue of Travelers Cheques
 Issue of Credit Cards
 Foreign Exchange Business

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UBL offers the facility of the Rupees Traveler Cheque. UBL Rupee Travelers Cheques are
the ideal and safest way of carrying cash when traveling anywhere in Pakistan.
• Used for conducting day- to-day business.
• No commission is charged from the purchaser.
• No excise duty on purchase.
• Easy to obtain and encash from all designated 350 branches of UBL.
• Acceptable all over Pakistan.
• Good until used and have unlimited life.
• Easily transferable like an order cheque.

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Deposits act as a backbone of bank. It is the lifeblood of every bank. These deposits are
source of generating incomes for the bank and for the general public to meet the financial
needs. The supply of money in circulation is also affected by the amount of loans and
advances issued by the bank. The primary economic function of the commercial bank is to
receive the surplus saving money from the general public, individuals, firm, institutions,
public houses and companies and to pay the cheques drawn upon the bank.

The bank accepts the deposits at a low rate of interest and lends it at higher rate of interest,
the difference between the lending and accepting rate is the Source of income for the bank.
Keeping in view the above factors UBL offers the following types of deposits:
1) Current Deposit
2) Saving Deposit
3) Fixed Deposit
The classification of the deposits in to current, saving and fixed accounts is mainly on the
basis of duration and purpose for which the account is maintained at a bank
Current deposit is running deposit because, customer can withdraw deposited amount at any
time, whenever he feels need. The customer can withdraw without any prior notice to the
bank. The bank has to pay the cheque provided within the limits of the account balance. The
main thing is that bank does not pay any kind of interest on current account. Actually
this deposit is for the business purpose. The bank cannot invest the deposited amount under
current account heading, because of the fear of withdrawal. Bank has to keep with it a higher
reserve ratio to meet the needs of the current account holders.
Saving Account is an important source of funds for the bank. The purpose of this account is
to attract the small saving of the general public. Normally workers, schoolboys and
employees of the organizations use the saving account facility. UBL also provides this
facility to the general

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public against a certain rate of interest. The new name of this account is now a day is PLS-
Saving Account. If a customer wants to withdraw a large sum of money (above 15000), he
will have to give a notice of 7 to 14 days in writing to the bank. Saving account deposits
provide a chance to the bank to invest safely, because customer can withdraw small amount
of balance.
Fixed or Time deposits accounts are the major source of the capital for investment for the
bank and cannot be withdrawn as in case of the current account. The amount deposited can
be received back after a certain specified period of time. The rate of interest paid on fixed
Deposits is normally higher than saving Deposits. The rate of interest also varies due to time
period. More the maturity period of the account more the interest is paid by the bank. After
the expiry of the period the customer presents the receipt to bank and received the amount in
cash or bank added in the customer accounts as agreed between bank and customer.

Q: if the customer withdraw the amount before its maturity period in fixed deposit account
then what would happen?
ANS: Suppose you are the customer of the bank and have fixed deposit in that bank. For
example you have deposited Rs. 100,000/- for the one year at the interest rate of 6.50% per
month. Accidentally after six month you need your amount back and want to withdraw it.
Then it doesn’t mean that you will not get any profit on it at all or you should be charged a
fine. Only and only your profit ratio would be reduced because according to the bank policy
more the period of fixed deposit more the interest would be paid to the customer by the bank.
Suppose that six months fixed deposit rate of interest is 6.00% then it means now you will
get the 6.00% rate of interest instead of 6.50%.
The period of fixed deposit account ranges from three months to ten years. It is usually
operated by widows, retired pensioners, salaried persons etc. to get the regular (monthly) rate
of interest. In Pakistan this account is subject to Zakat deduction.
A customer can open the following three types of accounts:
1) PLS-Saving Account

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2) Current Account
3) Fixed Account
1) Opening of saving Account
Saving account is also divided into two types further,
I. Individual saving account
II. Joint Saving Account
I. Opening of Individual Saving Account
An individual person can open this type of account. UBL has defined the following
procedures for the opening of individual saving account:
Signature specimen card, the bank to get authorized signature of the customer as specimen
for avoiding any future discrepancy gives Customer.
Account opening form, when a customer comes to open the new account in the branch he is
given a printed form, to be filled by him. Account opening form consists of full name,
address, and date of birth, occupation, telephone number, and N.I.D. card number.
Guaranteed by the existing account holder, when the new account holder fulfills all the
requirements then he is asked to give some existing account holder guarantee, so that in
future the new account holder may not fraud with the bank.
II. Opening of Joint Saving Account:
Opening procedure for the joint saving is same as in case of individual saving account. Just
the difference is in the account opening form.
Signature specimen card is also used for the same purpose as for the individual saving
account, to avoid future discrepancy.
Account opening form, joint saving opening from has same information more than one time
because more than one person fills this form to open the account. Briefly is that no one/single
person can open this account, as a result it is called joint saving account.
Rules and Conditions for Saving Account:
The account opening person knows the rules and conditions.
This account can be opened only with initially Rs. 100 not less than this amount.
1) PLS- Saving account may be opened by/in the name of individual or jointly, or by

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2) charitable institutions or provident funds or other funds, associations, societies and
firms or clubs.
3) For opening of this account application has to submit on the prescribed form by the
4) Customers can deposit money in his account by using pay-in-slip.
5) Customer must check the signature of two officer of the bank on the deposit slip.
6) Withdrawal, depositor can’t withdraw more than his balance or one quarter. At least 7
days notice must be given to bank for withdrawal purposes.
7) Bank can’t responsible for a cheque, which has been paid prior to receipt of written
instructions from the drawer countermanding payment.
8) The bank will take care to see that credit and debit entries are correctly adjusted, but if
any mistake is by the depositor/withdrawer than bank will not responsible for the loss.
9) If the account is closed the unused cheques must be returned to the bank for the
cancellation and the balance amount, if any must be withdrawn.
10) The profit or loss on the balance due at the time of death will be paid when bank will
declare its profit/loss for the half year.
11) Death of account holder, in absence of any instructions the credit balance outstanding
in any joint account in the name of two or more persons will be payable to the survivors.
12) The bank to the account holders will supply statement of account every quarter.
13) Amendments of rules, the bank have a right to amend, alter or add to any of these rules
with or without notice to the account holders.
2). Opening Of Current account
A person, businessman and organization can open the following types of current account.
I. Joint Current Account
II. Individual Current Accounts
III. Sole proprietorship Current Account
IV. Partnership Current Account

I. Joint Current Account

More than one person can open joint current account. Minimum balance of this account is
Rs.l0, 000 approx. If a joint holder dies then bank holds the account and refers case to the

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Account opening form, this application form is divided into two sides and both sides have
same information which are details of signatory (A, B), name, occupation, nationality, place
and date of birth, national identity card number, business address, employer no. Etc.

II. Individual Current Account

Only one person can open individual current account. Minimum balance in this case is 2500,
if the balance in the account is less than this limit than bank sends a statement to account
holder to maintain the minimum balance. For withdrawal, checkbook is issued and used no
other instrument is used or accepted by the bank. Procedure for opening this account is also
same as in PLS-Saving account just the difference is in opening form information, required
by the bank.

III. Sole Proprietorship Current Account

In sole proprietorship organization a person invests his capital and devotes full time to his
business. Sole proprietor opens this account. Minimum balance that required in this account
is Rs. 1000. All the profit paid on balance will go to the sole proprietor only.
The account opening form of this account is different than others because this form is filled
in the name of the organization. The name of proprietor. Place and Date of birth, Nationality,
Passport number and National Identity Card number, have to mention on this form.

Documents Required
Following documents certified copies are required with the application:
a) Most recent set of Account
b) Current Municipal Licensee
c) Commercial Registration Certificate.

IV. Partnership Current Account

Partnership current account can be opened with the name of Partnership Company. Before
opening of partnership account shareholders has to decide that how many partners have right
to sign on cheque. The procedure is same for opening such account; the difference is in the
account opening form. Account opening form shows the name in full, nature of business,

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principal place of business, address, location, and telephone number, telex number. After that

this form is divided into four sides with the name of A.B.C.D. and showing the same
information mentioned earlier.
Rules and Conditions
1) Bank can close /down any account at any time upon 48 hours write notice, after the
opening of the account.
2) The account number should be mentioned on all correspondence with the bank
when deposits or withdrawals are made.
3) The account holder must maintain the minimum balance requirement that is Rs:
4) After six-month bank refuse the payment of the cheques (post dated cheques).
5) Bank will not make payment if cheque is made unauthorized.
6) Account holder who is unable to sign, he will affix his left-hand thumb.
7) The cheque amount should not exceed to balance of account.
8) Any person opening a current account is deemed to have read, understood and
bound by the bank rules and conditions of current account.
The manager of the bank is responsible for the SALES in terms of both Deposits as well as
Advances. On the other hand Operational Manager (manager operations) is responsible for
the table work being done within that branch. And same is the difference between Area
Manager (AM) & Area Manager Operations on the area level. AM is under the Regional
Head and is responsible to achieve the targets of Advances as well as Deposits of the Central
Branch with the Spokes Branches under it. Area Operational Manager is responsible that the
table work of the Central Branch and the Spokes Branches should be done in a right way.

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It is said that accounts department is the backbone of the bank. It plays a vital role in
performing different banking functions. The accounts department at UBL Hussain Agahi
branch is performing its function manually. Different books of accounts relating with other
departments are maintained here. With the help of these books of accounts, accountant
prepares monthly, quarterly, semi-annually and yearly financial statements.
The working in accounts department mainly depends upon voucher system. For each and
every transaction-taking place in the bank vouchers are prepared and through these voucher
contra entries are passed under different heads.
The accounts department performs the following functions:
(a) To prepare and maintain the vouchers.
(b) To maintain and update the ledgers for term deposits.
(c) To update general ledger.
(d) To prepare different periods statements.
Each and every transaction in the bank is made through vouchers; the final place is accounts
department for recording these vouchers. Officer in the accounts departments arranges these
vouchers according to heads of accounts. These vouchers are of two types:
1. Debit Vouchers
2. Credit Vouchers
These two vouchers are again classified into three following types of vouchers:
I. Cash Voucher
II. Clearing Voucher
III. Transfer Voucher

All the daily transaction in cash, transfer and clearing is done through these vouchers. A

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sheet is prepared on which all the vouchers, passed during any one working day are
consolidated and summarized. This sheet is called supplementary sheet. It provides help in
preparing Cash Book.
There are two types of supplementary sheets:
Debit Supplementary Sheet:
In which all debit Cash Voucher, Clearing Voucher, Transfer Voucher are included.
Credit Supplementary Sheet:
In which all credit Cash Voucher, Clearing Voucher, Transfer Voucher are included.
Cash Book
It is maintained to keep the record of daily receipts and daily paid vouchers. Cashbook is
consisted on the opening balance and the closing balance of the day. For correct balance of
the cash book there is a need to arrange all the vouchers.
Ledger For Term Deposits
One of the functions of accounts department is to maintain and update the term deposit
ledgers and books manually. Term deposit receipt or TDR ledger is updated after every
month for estimation of profit on customer accounts. Accountant has to prepare different
ledger for all schemes of term deposit. With the help of TDR the accountant prepares
provisional ledger/Summary ledger and also statement of provisional expenses. The profit
after every six-month will be the expense of the branch.
Updating General Ledger
When vouchers are recorded in cashbook then the balance of each head of account is posted
to its ledger account. There are two main heads of the general ledgers, Income account &
Expenditure account. All the accounts fall under one of these two main heads. Separate
ledger register is maintained for every head of account. In UBL all the daily transactions in
deposits, cash, clearing, transfer remittance, foreign exchange; advances are performed
through these daily ledgers. Accounts department Maintains and prepares the following
ledgers and books of accounts:

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I. Daily General Ledger Expenses
II. Daily General Ledger Incomes/Receipts
III. Monthly General Ledger Assets
IV. Monthly General Ledger Liability
V. Daily General Ledger Zonal Expenses
VI. Daily General Ledger Inspection expenses.
VII. Daily General Ledger Regional Expenses
VIII. Daily General Ledger Audit Expenses
The format of the entire above ledger is approximately same. General ledger tells about A/C
No., description, previous Balance, Dr. amount, Cr. amount and running balance.
Preparation of Different Statements
Accounts department prepares these statements,
a) Statement of Affairs
b) Statement of provisional Income
c) Statement of provisional Expenses
d) Statement of Head office A/C
e) Balance confirmation Book/Report
f)Transfer Book
Statement of affairs is prepared yearly, consisting on the details about assets and liabilities of
the branch. This statement provides assistance in budgeting about branch. Statement of
provisional Income and expense is prepared monthly. Statement of account and balance
confirmation is sent to accounts holders.
UBL is also providing lockers facilities to its customers. The account department also
maintains the record about lockers. The basic purpose of locker is to provide safe custody to
client’s valuable ornaments, jewelry or documents. Almost in all branches, Lockers are
available in different sizes at different rates. For availing this opportunity, customer has to
open his account in the same branch/bank.
Locker Operating Procedure:
Bank provides an application form to the applicant who needs to operate a locker in the

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This application form contains all rules and regulation regarding to obtain a locker. Specimen
signature card is also filled in signed by the applicant. Bank assigns a password to their
customer for secrecy. Each locker has duplicate keys. One (master) key is kept by the bank,
and the other by the customer. In case of opening any locker, first of all master key is applied
and then the customer key. If the locker has been obtained jointly then at the time of the
opening, the person signed the application form, should be presented there otherwise, the
bank will not allow to operate the locker. Bank officer has to maintain the following register
for record keeping purposes of locker.
I. Locker Register
II. Operation Register
III. Key Deposit Register
Safe deposit locker fee is recovered in advance or at the start of the year, half-year or
Types of Locker
There are basically three types of locker at UBL that are as under:

Per Annum

Small Rs. 1200

Rs. 1800
Large Rs. 3000

The key deposit fee is Rs. 600. Per locker and it is refundable at the time of closing an
account the breaking charges are Rs. 500 per locker and it is also refundable at the time of
closing of account, provided there is no breaking.

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This department basically deals in bills, which come in bank for collection. The bills are
cheques, call deposit, drafts and pay order. These bills are from outstation branches of UBL
or of other banks. This department provides services to customers at low charges to get their
amounts from the nearest branch.
There are two main heads of the bills i.e.
• Outward Bills For Collection (OBC)
• Inward Bill For Collection (IBC)
Outward Bills for Collection
Bills department receives cheques or other kinds of bills from its clients. The condition under
Outward Bills for Collection is that the customer must have his account in the branch. This
branch forwards the cheque with schedule or covering letter to that branch on which bill is
drawn. The checking officer of bills department will cross the cheque with special bank
stamp before forwarding the cheque to the other branch.
Outward Bills for Collection Register
Outward bills for collection register is maintained in order to deep the records of all bills for
outward collections. This register is updated two times, first at time of receiving the OBCs
and secondly at the time when confirmation advice is received from the other branch, either
the cheque will be paid or not by the other bank branch. After confirmation of the amount,
confirmation advice is transferred to the sender branch. After confirmation of the amount and
bills, the account of the customer is credited against reasonable charges, which is income for
the bank.
Inwards Bill for Collection
These bills come to branch for payments so branch has to verify these cheques, pay orders,
drafts and call deposits etc. The party account must be opened in that branch which sends it
to paying branch .The responsibility under IBCs of the branch is to verify all the bills within
three days, and should send the bank advice to the originating branch.

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Inward Bills for Collection Register
Inward bills for collection register are maintained for future record purposes. Care is made
while posting the amount of bills in the register. Each bill is assigned a number according to
the register series. Every year the number starts from one and continues for the whole year
and next year again from one and so on.

This department welcomes the cheques and other negotiable instruments drawn upon local
branches of other banks. State Bank of Pakistan has a clearinghouse, in which the bank
representative brings cheques and other Institutions and mutual claims of each bank on other
are off set and a settlement is made by the payments. Clearing system is helpful for both the
customers and bank in saving of time, labor and currency involvement.
UBL is a member of SBP and has an account with SBP. The clearinghouse of SBP, through
which branches forward and receive clearing cheques, with a schedule, conducts clearing.
The clerk of forwarding branch prepares the schedule and vouchers of all the clearing
cheque, which he received on that day and sends these cheques to the checking officer.
Checking officer passes these cheques and vouchers by his initials, endorsement stamp and
branch special crossing stamp. Clerk posts the contra entries of these vouchers in the clearing
register. At every day at about 9:05 a.m. Representative of all local banks are in clearing
house of SBP, to receive and forward the cheques.
All the inter-bank adjustments will be effected through HO account, it will be essential for
the branches to advise head office account about every transaction. The SBP will send a
consolidated debit/credit advice to the branches in respect of clearing cheques delivered or
received from the branches. The amount of the advice will agree with total amount appearing
in the schedule of cheques delivered/received. Copies of all advice will be sent to head
office. The other branches will not send any advice to head office.

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Branch receives the cheques and other negotiable instruments drawn on other branches of the
same bank. Main branch of the UBL handles the transfer deliveries of cheques. The same
clearing cheque procedure will be adopted in the transfer delivery case except both availing
the facility of SBP, In case of cheque drawn on one branch and collected by another branch
for the credit of its constituents the branch delivering the cheques will send a consolidated
debit advice to the drawee branch. Clerk maintains the ledger for transfer deliveries, copies
of all the advice will endorse to head office as usual.



UBL Multan UBL Lahore
Mr. Saqlain A/c


SBP Multan Collection
Clearing House


MCB Multan
Mr. Ali A/c

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Suppose Mr. Ali’s A/c (account) is in any MCB Multan Branch. He purchases some products
from Mr. Saqlain who is the party of Lahore. It means Mr. Ali has to pay the amount in
Lahore to Mr. Saqlain. Suppose Mr. Ali’s A/c is in any MCB Multan branch and Mr.
Saqlain’s A/c is in UBL Lahore Kent branch. So, Mr. Ali will make the cheque of his own
account and say to his bank (MCB) to pay it in UBL Lahore branch in Saqlain’s A/c. Then
the MCB Multan branch will send this cheque to UBL Kent branch Lahore where there is
Saqlain’s A/c. the UBL Kent branch Lahore will send this cheque to the main (hub) branch
of UBL (its own bank branch) in Multan for the clearing process. Then main branch of UBL
Multan will send this cheque to the SBP clearing house Multan. The bank sends its own
employee to the clearing house with all the cheques of other banks. And then SBP clearing
House will send this cheque to the MCB branch in which the cheque is made. If the Ali’s A/c
has sufficient amount for the payment then this MCB branch will send the Credit Advice to
the SBP Clearing House. Then SBP will credit this amount in A/c of UBL because the
liability of UBL is increased and debit this amount in the A/c of MCB because their liability
has decreased. Then this cheque will go to the main branch of UBL Multan. At the end, the
main branch of UBL Multan will send proceed fate to the UBL Kent branch Lahore where is
the Saqlain’s A/c and the amount will be credited in the A/c of Saqlain.
In the above example, UBL Kent branch Lahore is the collection agent on the behalf of its
customer (Saqlain). And the clearing process is happening in Multan between UBL main
branch and MCB.
2- If both banks are in the same city then only clearing process would be performed.

Seller’s UBL Multan 2


1 SBP Multan
Clearing House

Buyer’s MCB
A/c Multan 3

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3- If the cheque has to go in different branches of the same bank then there will not be a
clearing process. There will only be the confirmation process.

Proceed Fate
UBL Multan UBL Lahore


The bank that has to pay the amount it goes in the process of Inward (internal) Clearing. He
has to scrutiny (Check) that is the cheque issuer has the sufficient amount or not? In the
above example, MCB is doing inward clearing.
The bank that receives the cheque of another bank it goes in the process of outward clearing.
Because the bank is inspecting about a person who has an account in another bank. In above
example UBL is performing outward clearing.
Cross cheque is a cheque through which the amount is transferred from one account to
another account. No body can withdraw the amount directly by this cross cheque even the
favoree himself until this amount is credited in the his A/c. Then he can withdraw that
amount from his own A/c.

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United Bank Limited PLS ACCOUNT NO.

Hussain Agahi Branch, Multan _______________

DATE ____________

PAY ________________________________________________________ OR BEARER

RUPEES ________________________________________________________________

RS. _______________________

Transfer of money or equivalent to money from one branch to another branch of the same
bank is called remittance. Now it has become an easier and safer method both for the client
and banker to transfer their money from one branch to another within the city or Outside
In case of remittances normally two banks are involved, are as under:
Originating Bank Branch
It is the branch, which issued the instrument for remittance.
Responding Bank Branch
The branch that receives the instruments for remittances, also known as drawee’s branch:
Remittances are classified into the following two types:
1) Inland Remittance
2) Foreign Remittance

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1) Inland remittances
It is a transfer of money from one branch to another branch of the same bank within the same
country. In this case both the parties will be of the same country and same bank.
United bank limited, uses following types for transfers of money:
1) Demand Draft (DD)
2) Pay Order (PO)
3) Mail Transfer (MT)
4) Telegraphic Transfer (TT)
1. Demand Draft (DD)
A bank draft is an order instrument issued for payment of a certain sum of money to a certain
person. It is to transfer the funds from one city to another. There are three parties involved:
Drawer: Issuing Bank.

Drawee: The bank on which the draft is drawn.

Payee: The name of person to whom the payment is to be made.
There are two types of demand draft, which are as follows
a) DD Issued
b) DD Payable
a) DD Issued
UBL has a standard application form that must be filled in by the customer for issuance of
Demand Draft.
The DD Application Form contains:

1. Applicant’s Name

2. Applicant’s Address

3. Signature of Applicant

4. In Favor of (Payee’s or beneficiary’s Name)

5. Drawn on (Name of Drawee Branch)

6. Amount in words and figures.

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7. Amount of commission charged by the bank on providing this facility

8. Cheque No. in case of making a DD against cheque

9. DD No.

10. Stamp of the issuing branch

The Second Officer, Cash Officer and another authorized officer must duly sign this form.
The cheque of the showing the amount of the DD is attached with the application form. The
clerk prepares the demand draft when all the requirements are fulfilled. As a precaution, the
draft should be protecting graphed. In the case protect graph is not available, a sum of the
amount payable must be written in red ink preceded by the words “UNDER” or “NOT
OVER”. It is known as “Protective Crossing” or security notation. Demand draft is then
recorded in the DD issued register and credit advice is sent to the drawer branch.
Bank’s Charges
The bank recovers different types of charges from the applicant on issuance of DD,
I. Central Excise Duty
II. Commission
III. Tax
IV. Postage Charges

b) DD Payable
When the bank branch receives a credit advice issued by another branch and the title of the
advice is demand draft then this is called the Demand Draft Payable or the DD Payable.
Practical procedure regarding to the payment of demand draft, in the United Bank Limited
may be summarized as follows:
1. All drafts drawn on a branch should be routed through the General Ledger Accounts
“Draft Payable” of the Bills Payable Account. This account is credited by the drawer branch
on receipt of the cover in the form of IBCA.
2. Signatures should be verified on all drafts drawn on a branch.

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3. Normally, payment of a draft should be made after receipt of a corresponding credit
advice. In case the advice has not been received, payment should be executed through the
approval of the Manager at the drawee’s branch who should satisfy himself with regard to the
authenticity of the draft in terms of signatures and otherwise.
4. On receipt of advice from the drawee’s branch, signatures should be verified if the amount
of a draft exceeds Rs.5000/-
5. The draft when paid should be marked in the DD payable register.
Essential Precautions at the Time of Payment
I. The instrument should be scrutinized properly with regard to name, Drawee branch,
amount in words and figures protect graphic and signatures of officers.
II. The payment should not be effected unless the payee has been identified to the satisfaction
of concerned officials at drawee branch.
III. Extra care should be exercised if the payee falls in the category of non-customers. It
would be better if an account holder verifies the identity of the payee, in such cases.

2. Payment Order / Pay Order (PO)

A banker’s Payment Order is an instrument drawn by a banker on himself Implicit in a
payment order is an undertaking on the part of the banker to pay, a certain sum of money, on
the presentation of the instrument. The payment orders are generally issued for anyone of the
following practical purposes:
1. To facilitate all locally payable expenses on account of a bank for the reason that such
payments are not executed through cheques.

2. For the sake of inland and foreign remittances in case where the beneficiaries do not
maintain account with the bank.
3. For all local payments under instructions of the customers for sundry purposes like
payment of insurance premium, payments to third parties, club bills, rent and taxes etc.
The following contains stepwise procedural prescriptions pertaining to the issuance and
payment of payment order:

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I. For the issuance of payment orders, an application will be tendered on bank’s standard
form (F-34) by the purchaser giving his name and address thereof In case of request from the
bank’ s customer for the issuance of the payment orders, a letter in this respect, will be
obtained giving full particulars of the payee authorizing the bank to debit the account.
II. The cost of the payment order along with an amount of Rs.5/- as commission plus
excise duty will be paid on the counter.
III. In case of letter of authority, the total amount i.e. payment order amount, commission,
excise duty and postage, if any, will be debited to the customer’s account as per bank
instructions and contra credit will be passed to Bills Payable — Payment Orders Account,
commission, excise duty and postage account.
IV. The application for the issuance of payment order the Manager/Second Officer as the
case shall sign (F-34) may be if it is to be issued on bank account.
V. The particulars of the payment order shall be inserted on the blank payment order leaf
either through a typing machine or shall be neatly hand written using indelible ink. The
account shall also be rounded off through a protect graph machine or by hand on top of the
VI. instrument.
VII. Subsequently, the particulars of each payment order shall be recorded in payment
orders issued register. The payment order shall be signed by two authorized officers of the
bank simultaneously authenticating entry in payment order issued register and after verifying
the following:
a) Name, code & address of the issuing branch.
b) Name of the payee.
c) Amount in words and figures.
d) Date of issue.
The amount is rounded off on top of the instrument either through protect graph machine or
neatly by hand-writing.
VII. A stamp containing the following stipulation shall be affixed on the back of each
payment order at the time of issue:
Received payment from United Bank Limited as over leaf on.

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Account of______________
VIII. The payment order, then, shall be delivered to the purchaser or to the department
concerned against acknowledgment on the reverse side of F-34 as well as on the counter foil
of the payment order.
I. The payee shall be duly identified by a bank customer or by Manager / Second Officer
in case the payment order is presented for cash payment on the counter and it will be ensured
that the payment order is properly receipted on its reverse on appropriate value or revenue
II. The payment order will then be entered in payment orders issued register after marking
the date of payment against the date of issue in the contra columns under authentication.
III. The payment order will then be passed for payment as per bank instructions.
IV. The procedure as given above will be adopted in case of all payment orders received for
payment, except that usual precautions shall be observed to ensure that the bank stands
V. discharged from the payment in due course.
3. Mail Transfer (MT)
Some times a constituent of a bank wants to transfer funds from one account to another or a
non-constituent wishes to remit funds in a particular account maintained at some place with a
branch of the bank or when the accounts are transferred from one branch to another branch,
such amounts / balances are remitted by means of mail transfer. The procedure for issuance
of a mail transfer is the same as discussed for drafts except that the applicant is provided with
a memorandum for money received from him for the issuance of a mail transfer on a
particular branch of the bank. The payee must be an account holder (customer) of the drawee

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The procedure for payment is as follows.
I. On receipt of advice from drawer branch, the test should be verified if amount exceeds
Rs. 5,000.
II. The particulars of MT should duly be entered in MT payable register.
III. Following vouchers should be passed after the test has been verified
Dr. Head Office Account Drawer Branch.
Cr. Bills Payable Account MT payable.
IV. When the customer’s account is to be credited, the following entries are passed:
Dr. Bills Payable Account- MT Payable
Cr. Customer’s Account.
V. If the payment is to be effected in cash, the entries are:
Dr. Bills payable Account- MT payable
Cr. Cash.
Before making the payment of MT, the drawee branch must ascertain the following:
It is drawn on the same branch.
Payee has signed the revenue stamps of adequate amount.
Payee is properly identified.

4. Telegraphic Transfer (TT)

Generally a mail transfer advice reaches the drawee branch the next day, when courier
arrangements exist. However, when it is sent through post offices, it usually takes 2 to 3 days
to reach its destination. But sometimes an individual whether customer or not, demands that
his funds should be transferred from one place to another through the quickest means. In such
cases, transfer of funds message is passed on through a telegram, ordinary or express, to the
drawee branch of the bank. A tested message is sent to the drawee branch followed by the
confirmation copy. In case the payment is immediately required by the payee, the tested
message is given on the telephone.
Besides normal charges as those recovered on issuance of demand draft, the bank charges

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one additional expense i.e. Telephone Charges of amount Rs.100 from the customer.
Payment of TT
A TT facilitates urgent transfer of funds either by a telegram or through telephone. A step-
wise procedure relating to the payment of TT at the drawee branch is as under:
1. The drawee branch receives message either on telephone, or through telegram. In case
of a telegraphic conversation, the concerned official at drawee branch should ask for the
proper identification of the official at the drawer branch. Whereas the message should be
decoded in case of telegram.
2. The particular of the TT should duly be entered in the TT payable register.
3. In case where the customers account is to be credited, following entries be passed:

Dr. TT Account Drawer Branch

Cr. Bills Payable A/C _ TT Payable
Dr. Bills Payable A/C _ TT payable
Cr. Customer’ s Account.
4. In case where the payment is to be effected in cash, the following vouchers shall be
Dr. Bills Payable A/C TT Payable
Cr. Cash

5. TT should be paid after proper identification.

With-in the country or from abroad, UBL offers the most efficient and price competitive
services. With its large network of branches, it is poised to offer service almost at doorstep of
the customers. UBL is a member of SWIFT
(Society for Worldwide Interbank Financial Telecommunications). It is now the privatized
commercial bank to link up with three international points, Dubai, London and New York.
This enables the Bank to provide secure transmission of foreign exchange payments for
trade, home remittances and other transfers in a fully automated manner.

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Money gram service is a person-to-person international money transfer service that allows
consumers to send/receive money around the world in minutes, with no bank account
With money gram your money can be transferred from almost any country in the world
because it is a reliable and trusted way to send/receive money worldwide.
The money gram service is used around the world because it is a reliable and trusted way to
send/receive money worldwide.
More than 50,000 MoneyGram agent locations in more than 150 countries; computer
networked to ensure that your money is transferred within minutes.
Easy: (How to Receive your transfer)
1- Sender abroad goes to nearest MoneyGram representative, fills out a
form, hands in the amount he wishes to send and the send (service) fee**, and shows an I.D.
2- Upon completing the transaction, sender will be given a transaction
reference number.
3- Sender calls the receiver and informs him of the transaction reference
number and the amount of money sent.
4- Receiver can go to any MoneyGram representative, show an I.D, fills

out a simple form mentioning sender’s name and amount expected.

5- Receiving agent hands over the money to receiver.
NOTE: “Currency exchange rate set by MoneyGram or its representatives will be

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This is sensitive department of the branch. No other person is allowed to enter in the
premises of cash department. As obvious from name that this department deals in cash
deposits and payments. Cash department is performing its functions/duties manually. For
payments and receipts, it has to maintain certain sheets, books of accounts and various
ledgers, which are as under:
1) Cash received voucher sheet
2) Cash paid voucher sheet
3) Token register
4) Transaction ledger
5) Pay-In-Slip record
6) Cheque book record
7) Cash balance book
The instrument against which payment is made that is the cheque. Normally the cheques
come for payment in the branch are, cheques received at counter for payment and other
cheques are Clearing or Transfer Cheque. No payment is made against any other monetary

Special Considerations
When cheque is received for payment special care is taken about the signature of the account
holder, date, no cross or cutting in figures, signature at the back of the cheque presented for
payment. If any thing is found wrong then cheque is dishonored and is given to customer for
rectification. If the cheque is found valid in all respect then Token Clerk assigns token to the
cheque at the back. The same Token is given to the customer as a proof. The next step is
forwarding cheque to the accountant for the verification of the signature with specimen card
signature. If signature are not according to specimen card then the cheque is returned to
customer and token is taken back. In token register a note is written that cheque returned
unpaid. If signature are similar with the specimen card than cheque amount is posted in

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Ledger Card/Transaction Ledger. Special care is given to the balance of the account either
favorable or unfavorable.
Overdraft Facility
If the balance in the account is less than the cheque drawn, then bank may extend O/D
facility to its customer but now-a-days this facility is not provided.
Withdraw Limits
If the cheque is up to or less than 10,000 then officer can sanction and in case of greater, than
he has to get approved from his superiors. Finally, after all verifications of the cheque it is
given to the cashier, then payment is made to holder of the cheque. At the same time cashier
maintains the Cash Receive Voucher Sheet. The cashier performs all these duties manually.
For depositing any amount in the account Pay-In-slip is used that is filled by the customer.
The pay-in-slip is consisted on date, A/c No., and particular about the amount to be deposited
in the account. The depositor signs the part of the paying slips, which are retained by the
bank to show acceptance about the entries, made in pay-in-slip. The pay-in-slip serves as a
voucher to Card/Transaction Ledger is only updated with pay in slip. The cashier checks
necessary details provided in the pay-in-slip and count the cash to be deposited and tally with
the figures written in pay in slip and in his hand/counter. If any mistake is found then first
that mistake/error is removed. If there is no one, than cashier fill in Cash Voucher Received
Record Sheet and assigns a voucher no. To both the transactions made in the sheet and to
pay-in-slip. This voucher sheet starts with one and continues for the whole day and next day
again started from one. If all is done well, than accountant authenticates the two by signing
on the two documents posting stamps on the slip. One part of the slip is given to depositor,
and other part is given to clerk for further posting in Ledgers.
The Cashier, at the end of the day has to maintain and balance the cashbook. The cashbook
contains the opening balance, details of payments and receipts. The Manager of the bank
signs the consolidated figures and written in cashbook as closing balance, which will the
opening next day.
Closing Balance = Opening Balance + Receipt - Payments

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“The lending function of the banking for the production purposes is called Advances”.
Types of Advances
There are two main types of advances: Funded , Non-Funded
Funded Loans
Are the loans in the form of physical cash. The interest charged on the funded loans is called
Non-Funded Loans
Are the loans in the form of guarantee. These are also called the Contingent Liability (at the
moment these are not funded but in some future date it may be funded if the person don’t pay
the amount. For example in the case of LG & LC the bank is liable to pay the amount to the
favoree if the customer doesn’t pay it). The rate of interest charged on non-funded loans is
called the commission.

It is major part of the branch. Bank provides this facility to the people who need advance
money to meet their requirements. The function of Advances and Credit Department is to
lend money in the form of clean advances, against the promissory note, as well as secured
advances against tangible and marketable securities.
For getting the advances, the first step is the preparation of credit proposal. Some principles
of lending are considered whenever financing is made. These principles are:

Capital condition

Nature of Products
Running Finance
The lending product which was called overdraft before Islamization of Banking system in
Pakistan has been named Running Finance in the post-Islamization era. This is temporary
facility when drawing is allowed in excess of the credit balance in account.

There are two main types of products of finances:


Non Interest Demand Finance (NIDF)

It is the name of what was previously called Demand loan or Fixed Loan. It is the credit
facility for a fixed amount for a fixed specified period. Usually the period is one year and if
the extension is desired, the limit is renewed on yearly basis. Repayment is made in
periodical installments. The sum of money once credited in the loan cannot be withdrawn as

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the limit is automatically reduced with each deposit made into the account by amount of the
deposit. It means when a customer pays some installment to the bank then he or she
couldn’t withdraw that amount again because reimbursement is used only for the
adjustment in NIDF. And adjustment means when a customer repays some amount of
loan then the bank credit this amount for permanent basis. In this case the markup is
charged from the date of issuance of credit facility to the date of maturity.

Areas of NIDF
NIDF finances in three areas:
1- Commercial
2- Agriculture
3- Industrial


1. For Commercial Area

The purpose of NIDF for commercial area is for running expenses. And running expenses
are the operating expenses of the business other than the fixed expenses. And fixed expenses
are of three types (1-Land, 2-Building, 3-Mechinery & Equipment). So other than these
expenses all the business expenses are called the operating expenses like utility bills, salaries,
purchase of raw material, inventory cost etc.

2. For Agricultural Area

there are two purposes for the loaning of agricultural area.
a- For Inputs
Inputs means the purchase of Seed, Fertilizer and pesticides
b- For Fixed Assets
It is to purchase the fixed agricultural equipments like tube well, tractor etc.

4- For Industrial Area

In industrial area the loaning purpose is to do the fix investment or to purchase the fixed
industrial assets like Land, Building, Machinery & Equipment.


It is the Islamized name of what previously was called Cash Credit. This facility is usually
extended against pledge or hypothecation of goods, products, or merchandise. Markup is
payable on he amount actually utilized bye the customer. The drawing power changes too
frequently as the movement of the pledge goods from and into the godown is the normal
trade activity.

It is also called the Limit Financing. NICF is to meet the working capital (running expenses)
requirements. It has the checquing facility as well which means the bank gives a cheque book
to the borrower through which he or she can withdraw the amount within the approved limit.
Debit / credits are allowed to the extent of approved limit which means the borrower can
withdraw the repaid amount as well.

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Markup is charged on daily product basis (only on utilized amount and period of utilization
of facility )
But in NICF when you credit (repay to bank) some amount of borrowed money then it can
again be withdrawn but before the maturity of facility.


1. No checquing facility. 1. Checquing facility.
2. Withdrawal can’t be made against the 2.Withdrawal can be made against the
Amount credited in the NIDF A/c. Amount credited in the NICF A/c.
3. It is for the fixed investment. 3. It is for the working capital only.
4. Markup is charged on the 4. Markup is charged only the utilized
Facility amount outstanding. Amount and tenor.
5. Here is taken only the collateral as a 5. Primary security is also taken with
Security not the Prime Security. Collateral.

Bills Purchase Facility

Bills are purchased or discounted by the way of making advance against cheques, bills of
exchange etc. received for collection. These are called clean bills. When financial documents
are accompanied by documents of title to goods, such as, bill of lading railway receipt,
carrier’s or airway bill, these are called documentary bills. The discounting bills may be
either inland or foreign.

Bridge Finance
Public limited companies need temporary accommodation to bride up their financial
stringency during the time lag between their incorporation and subscription of share capital
by general public. This accommodation is called bridge finance. It is secured by the mortgage
of company’s assets and is payable as soon as the share capital is paid up.

Consortium Finance
Where funding of huge amount is required to finance a massive project for a considerable
long period, one single bank does not prefer to take the entire risk alone. In this situation two
or more banks join hands and form themselves into a consortium for financing the project
jointly, sharing risk proportion to the funds provided by them. In consortium financing, pari
passu charges on the securities are created in the favor of the, members of the consortium.
These are long-term loans for huge amount.

Types Of Securities
1- Banker’s Lien
(Moveable property possessed to the lender cannot be sold in case of default). Lien is the
banker’s right to hold the property until the claim on the property is paid. The bankers look at
their lien as a protection against loss on loan or overdraft of any other credit facility. In

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ordinary lien, the borrower remains the owner of the property, but the actual or constructive
possession remains with the creditors, though he has no right to sell it.

2- Guarantees
When an application for an advance can offer any tangible security, the banker may rely on
personal guarantees to protect himself against loss on advances or overdraft to the applicant.

3- Mortgage
(Immoveable property, land / building, possessed to the lender can be sold in case of default).
A mortgage is the transfer of an ownership in specific immoveable property for the purpose
of securing the payment of money advanced or to be advanced by way of loan, and existing
of future debt, or the performance of an engagement, which may rise to a particular liability.
The person in whose interest the property is transferred is called mortgagee.

4- Hypothecation
(Moveable property possessed to the borrower can be sold in case of default). When property
in the shape of goods is charged as security for a loan from the bank, the ownership and
possession is with the borrower, the goods are said to by hypothecated. The essence of
hypothecation is that neither the property in goods nor the possession of them passes to the
lender, but the security is granted by means of letter of hypothecation, which usually
provides for a banker’s charge on the hypothecated goods. Muccadum is not imposed in this
case. Insurance of the hypothecated stock is required by the bank. And the premium amount
of the insurance will pay the borrower. Bank is not responsible for that.

5- Pledge
(Moveable property possessed to the lender can be sold in case of default). In a pledge, the
ownership remains with pledge (borrower), but the pledge has the possession of property
until the advance is repaid in full. While in case of defaulter, the pledger has the right of sale
after giving due notice. Bank gets control over moveable assets through Muccadum (is the
person who takes care or keep watch the pledged stock).

NOTE: the person has to get the Delivery Order (DO) from the bank before the sale of
hypothecated or pledged stock. Limit of DO is matched with the amount of repayment of

6- Charge (Control) on Company’s Assets

Assets are of two types Current Assets, Fixed Assets. So, charge may be on current assets or
fixed assets of the company as a security. There are two other types of charge: Ranking
Charge and Pari Passu Charge.
a) Ranking Charge
Suppose there is charge of more than one financial institutions on assets of one company but
on different assets not on the same assets. Then it is over viewed that what financial
institution has provide the facility and charge on the assets of that company as a security
before another financial institution. For example, a company has taken the loan from three

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banks. At first the company got a loan from UBL, then after some period it got a facility from
HBL and then from MCB. So ranking and worth of charged assets is as follows:


1ST Charge UBL 2 Million
2nd Charge HBL 3M
3rd Charge UNION BANK 1M
Total Charge 5M

So, according to Ranking Charge the financial institution, that has first charge on assets of a
company, has first right to set off their amount if the customer becomes bankrupt. In case of
default his assets would be sold and firstly the amount 2 M would be paid to UBL because of
its first ranking. Then to HBL and at the last to the UNON BANK. If at the last the
company’s assets value is less than the facility amount provided by the UNION BANK then
it would get only the remained value of assets.

b) Pari Passu Charge

In this type of charge all the financial institutions have the equal rights to set off their loans if
the customer has become bankrupt. Total charged assets are divided with the proportion of
provided facility by each bank.
In case of Pari Passu charge, the debt is not cleared on the basis of charge ranking. In this
case all banks are given the priority at the same time on the proportion of facility. For
instance, the company has total assets of 4 M at the time of bankruptcy. But he has to give
5 M to the banks according to the previous example. So these 4 M assets would be divided to
the banks in the proportion of facility amount.


2 : 3 : 1

Basic Tenets of Lending

While there is no single right answer to a lending proposal, a banker needs to sure that he has
not overlooked any of the relevant facts before reaching a conclusion.

Seven Step Scale (SSS)

A seven step scale as under tends to cover all the basic tenets of lending. Certain writers on
banking, for brevity, for sake, have reduced this scale to 3-word phenomenon, namely,
safety, liquidity and profitability. All lending proposals irrespective of their nature and size

should be evaluated against this scale to ensure that all the relevant aspects have been

1. Borrower
The first consideration in lending proposition must be borrower himself. The various aspects
of an indenting borrower, which need to be looked into, are as under.

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Connections of an intending borrower, which maybe useful for the bank over a period of time
—such as treasure of a project maintaining huge funds with the bank—may be given due
weigh. However, this should not be an excuse for bad lending. It may at times be preferable
to lose a connection rather to lend where repayment is doubtful.

Length of Association
This means the length of time banker has known the borrower. Longer the association, better
are the chances of having meaningful insight into the affairs of borrower. On the contrary, a
newly introduced client hardly merits any accommodation.

Credit Worthiness
The expression means and includes the integrity—an evidence of effective willingness to
repay promptly—and repaying capacity of the borrower.

Whether facilities have been repaid without problem in the past and whether the borrower
general reputation is good are the two questions to be answered. If any doubt exists in the
mind of the banker concerning the integrity f the integrity of the intending borrower,
obviously he would not lend.

Repaying Capacity:
Stake of the Sponsors
The term refers to the net assets of the borrow. This may be appropriately called worth. It is
obviously confirming to know that sufficient monetary reserves or assets are owned by the
borrower to repay the advance if the repayment cannot be made from the originally agreed
Repaying capacity of the borrower is also linked with the debt-equity ratio in the project. The
fixed debt equity ration falls short to take care of the future cash flow hazards, for example
when projects do not generate enough cash for the number of years resulting in non-servicing
of the debts, equity at the fixed ratio keeps the borrower comfortable at the cost of the
In case of cost overrun also if the banks do not obtain from the sponsors their share of the
cost escalation, the so-called ratio dogma is frustrated, and defacto risks of the owner-
borrower in highly leveraged projects is considerably reduced.
The stake of the sponsors is further reduced to the extent the equity is offered to and
subscribed by the general public.

To lend for 20 years to a person of 70 may not be a proposal worth considering. Again
special conditions apply when lending is to a minor. Similarly in the case of a business
concern, it is of significant value to know for how long it has been trading.

Risk Managing Capability

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An individual setting up is business for the first time will be received with caution, whereas
management of a company, which as been successfully trading for many years, will be duly
Virtually all decisions are made in the atmosphere of uncertainty. Hence there is some risk
inherent in each decision. However, the degree of uncertainty will vary from situation to
situation, and with it the degree of risk. Thus the capability of management to manage risk
plays a very significant role in marking any business venture a success. The evaluation of the
risk-managing capability of the management is, therefore, the most important aspect of the
project evaluation.

2. Purpose of the Advance.

The purpose of the advance must be legitimate and consistent with the bank’s policy.
Generally bankers do not wish to be involved in risky or speculative ventures. Advances may
also be distinguished as those for the purchase of an asset those for the replacement of a

3. Amount
the amount requested must bear a reasonable relationship to the customer’s own resources,
and must be sufficient to achieve the purpose, or the bank will be faced with the necessity of
additional lending to safeguard the outstanding advance. Likewise, the amount asked for may
not be in excess of what is genuinely required to achieve the purpose.

4. Security
a security that bears the following characteristics is considered good. It should be: easy to
value, easy for the bank to obtain the little; easy to control easy to realize; and stable in value.
Moreover it should provide a god margin over the amount lent.
Nevertheless security is 0one of the last considerations in any proposition, and no lending
should be made purely because good security is offered. The proposition should stand on its
own with the security providing a cushion should things go wrong.

Terms of Advance
The longer the term of advance the more risky it becomes as the future’s more uncertain.
Long-term advances therefore need security sufficient to cover the risk.

The term helps also to determine the nature of advance. Running finance is usually repayable
in less than one-year time. Conversely demand finance will be usually granted for longer
period of time. The term of advance must not in any case exceed the life of the asset being

6. Repayment/Liquidity
a realistic repayment program which is commensurate with the term of advance, the liquidity
position of the borrower manifested by the proper cash budget, and the revenue generating
capacity of the project as evidenced by the capital budget, should by evaluated and obtained
as to its viability.

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7. Yield / Return
bankers expect some rewards for the risk they undertake and the funds they spare. They also
need to be remunerated for the work and expenses in taking the administering the security.

Use of Financial Statement in the seven-Step Scale Approach

An essential part of the seven-step approach is the examination of the financial statement to
analyze past performance of the business, and to compare its present operating results with
the overall performance of the industry.

These helps banks to assess the experience and skill of the borrower, the appropriateness of
the sum requested, whether the business is generating enough profit to cover repayment of
the advance and return on it, suitability of the term for advance in the light of the profitability
and growth of the business, the availability of assets as security, and the degree of risk
involved and the ability of the management to effectively manage that risk.

The break-even analysis and the analysis of the financial statements through various ratios
help achieve this objective.

Advances Documentation
Documents relating to credit can perform two functions: they can be the evidence of
underlying credit transaction or they can be the security or support to ensure the full
repayment of the debt. In other words, there are some documents that we necessarily should
have in order to prove our claims against our clients: they are the evidence that client owes us
the money. Instead there are other documents that we choose to take to ensure recovery
through a “First or second way out in case that the customers is unable to pay us back.

The promissory note is however the best example of a documents taken as evidence of debt.
Simply stated, promissory note is written commitment by the borrower to pay bank a sum of
money sometime in the future. The mere existence of the promissory note is sufficient
evident of the validity of the debt.

On the other hand, a bank guarantee or a mortgage on a property or the hypothecation of

stock is not the document that proves the validity of the debt itself. We take them only when

we feel that we want to protect our exposure by having direct access to some specific assets
or to the guarantor in case any thing go wrong with the original credit.

Whether they serve as evidence or security, however, credit documents have one thing in
common: they embody a legal claim of the bank against the client, against certain assets, or
against the guarantor. In other words the protection that we get from our credit documents
based on the law. If the documents do not confirm to the law, we are just not protected.

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Requirement to Meet
In order to be effective not only from the legal point of view but also for our own internal
purpose, all credit documents must meet certain key requirements. For Example:

Credit documents must be appropriate for the nature of transaction involved. They must be
sufficient to provide adequate coverage of the perceived risk. They must be properly
executed (filled in) by duly authorized signers. They must be legally valid so that our rights
will not be impaired by some formal defects. For collateral security the documents must
provide for fairly straightforward access to the pledged assets.

In the case of documents on standard from blanks must be properly filled out. Documents not
on standard firms should be either drawn up or reviewed by our attorney. Credit documents
must be kept current. Some of them such as time promissory notes and insurance policies
have a specific date for expiration or maturity.

Responsibility for the Documentation

Regardless of how you look at it, there is no way to escape the fact that the responsibility for
having the unimpeachable documentation package falls squarely on the shoulders of the RM.
Other departments of the banks or even legal counsel are available to help, but the RM, in the
final analysis, is the person who has to be satisfied that the documentation at hands meet all
the applicable requirements.

To begin with it is RM who based on his analysis of the risks involved, first determines the
kind of security documents that will be required to properly protect the bank.

The RM is also the one who will physically obtain the documents from the client and who
will have to go back to the client if the documents received are defective.
The RM will also have to follow up with the clients to replace expiring documents or to
obtain those that were properly deferred.

The RM is also the one who has to satisfy himself that the documents are in order before
sending them out for safekeeping to CAD and issuance of DAC.

It is like wise the RM who has to review the documentation physically, whenever it is
required. There are at least two instances in which these physical review is mandatory: at the
time of annual review and when the account is adversely classified.

Finally the RM again gets involved when the time comes to return the documents to the
client, to make sure that at no time are we exposed to a break in our protection cover.
Documents may be surrendered to the clients (a) To replace them with new or updated ones
(b) When the credit committee agrees to reduce the security protection (c) when the facilities
have been paid out in full.

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The logic behind making the RM fully responsible for the documentation is quite simple. The
RM’s involvement in an account does not end w\hen he gets the CP approved: from then he
must see to it that the relationship is kept in good shape and free of troubles. We not only
make loans, we live with them. In assuming the responsibility for the adequacy of the
documentation, the relationship manager is simply observing one of the many “C’s” of
credit: the control of the relationship.

To perform these duties the RM can enlist the help of other units both inside and outside the
bank. For Example;

The CAD provides second look at the documents, to make doubly sure that they are indeed
complete, in order, and in accordance with the approved requirements. The CAD has the
obligation to refuse to issue the DAC (in effect blocking the implication of the approved
facility) if the documentation is defective. In addition, the CAD is responsible for getting up
a tickler system to remind the RM’s of the documents still to be obtained. The CAD also is
the focal point to provide the required valuations in accordance with a schedule appropriate
to a volatile type of collateral (shares).

The CAD is basically the department who permits the RM to rest on the assurance that the
documents he obtained from the client are safely tucked away in the vault and available for
his inspection whenever necessary.

The CREDIT COMMITTEE is also valuable source of assistance, not only because of their
shared experience but also because, in certain cases the credit committee may step in if it is
willing to accept the additional risk entailed by a slightly defective documents rather than
going back to the client for correction.

Finally, legal counsel should be consulted in any case of doubt (In some cases, such as term
loan agreements or loans to the government, referral to the attorneys is mandatory). By and
large, the efficacy of the document is more a legal matter than a banking matter.


At start when the customer wants to avail the facility of loan / limit from the bank he has to
submit the “ Request Letter ”. Submission of the request letter is the first step in the
procedure of providing credit facility to the customer. He himself has to visit the bank and
submit this request letter to the bank. Amount of request along with relative information
about the company as well as the purpose for which the company wants to have the credit
facility should be mentioned inside that letter. It is preferable that the letter should be written
on the letter pad of the company and should be stamped and duly signed by the owner / chief
executive. At the time of request the client (who has come to the bank) is been asked some
questions like information about his line of business, about its customers and suppliers, about
its sales and growth, about the reason for the loan / limit and certain questions like that by
which it is initially determined either to invest in the form of loan / limit in that business.

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Borrower’s Basic Fact Sheet (BBFS)

The second step that has to be covered in the filling of the form named “ Borrower’s Basic
Fact Sheet”. This is a sheet that is provided by the bank to the client and he has to fill all the
blanks properly. By this basic fact sheet UBL gets the information about the client and his
The information that is collected through the basic fact sheet is explained as follows:

Borrower’s Profile
Detail of Directors / Owners / Partners
Corporate Status
Nature of Business
Requested Limits
Business Handled / Effected with all the Financial Institutions during the last accounting year
Existing Limits and Status
Any Write-Off, Rescheduling / Restructuring Availed During The Last Three Years
Details Of Prime Securities Mortgaged / Pledged
Credit Rating
Dividend Declare
Share Price of the Borrowing Entity
Net Worth (Particulars of Assets owned by their own name)

Trade Checking
Trade checking is a system at UBL that is implemented to check the credit status of the party
in terms that either the party has already sanctioned loan from other banks or not. And if the
party has already sanctioned a loan from an other bank then either the party is making the
repayment of the installments in well mannered or he is at default. Incase if they are found as
defaulter from any bank or leasing company then their credit worthiness will be checked and
securities requirements will be tightened. UBL Hussain Agahi Branch normally do trade
checking from four banks. These are National Bank Of Pakistan, The Bank Of Punjab, Bank
Al-Habib and Bolan Bank.

CIB Report
CIB stands for Central Information Bureau. CIB is a department at State Bank Of Pakistan
(SBP) that has all the information about the loans /limits that has been sanctioned in that
region to the parties. CIB report also tells us about the write-offs and default cases happened
in the banks and financial institutions. So CIB report is requested by the UBL from the SBP
about particular party, who has requested for loan facility, to check whether they are
defaulters or not of any bank or leasing firm.

Trade Checking and CIB report have same purpose to check the party for default or
write-off previous loan facilities. The question that can be raised here is that if one can get
complete information about the party through SBP then why it is necessary to do trade

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checking? Reason of trade checking is that different banks provide the information of all
defaulters to the SBP. But in some cases it may happen that the party is going to be default
with in 2 or 3 months but still information is not with SBP cause party has not defaulted yet
in that case it is good to have trade checking to minimize the risk.

Report of Financial Statements

For obtaining credit, party has to submit the last two to five years Balance Sheet and Profit &
Loss Statement (Income Statement) duly attested to authorized auditors. It is preferred that
the statements should be properly prepared and audited by Chartered Accountants that gives
the true picture of the business. But in some cases as I observed in UBL most of the clients
who lie in the category of Consumer Banking Client don’t have their Financial Statements. In
Such case UBL has to prepare the financial statement on the behalf of customer and it is
mentioned in other relative documents that the financials submitted are self / un-audited.
There is a high percentage of risk involved in it.

Import and Export Data

if the party is involved in import or export business then the bank also consider the data of
three years about imports and exports.

Evaluation of Property

The property that is been offered as security in the form of any sort of mortgage is been
evaluated by certain authorized company. This evaluation report helps in determining the
actual worth of the property and while keeping the margin of 20% its forced sale value (FSV)
is checked.
“Forced Sale Value” is been referred as the minimum value of a property in any case. This
value is calculated by keeping the margin of 20%. Its formula is like this:

Forced Sale Value = Actual value – Margin Amount

Where “Actual Value” is the net value of the property today where as margin is the 20% of
the actual value and while subtracting this form the actual value gives a forced sale value of
the property. For instance, the actual value of the property is Rs. 100,000. And the 20% of
this value will be Rs. 20,000. So the forced sale value will be Rs.80,000.
FSV = Actual value – margin amount
FSV = 100,000 – 20,000
FSV = 80,000

Call Report

If the party seems to be good enough with whom the relationship can be developed a
Relationship Manager (RM) visits the company and view all the working conditions of the

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company, meet with its management and try to get maximum information about the company
from inside and even from the outside of company from its neighbors. A report that is
prepared in which all the experience of visit to the company is written. The property that is
been provided as security in the form of mortgaged property is also checked for confirmation
either that property exist at that particular place or nor which was mentioned in the report and
either it is been evaluated properly. This property is also checked for pre-mortgage against
the loan from any other firm or bank. All this information is written in the report.

Visit Report / Visit Certificate

Visit report has the same purpose as that of call report. But the main difference between the
call report and visit report / visit certificate is that visit report is just a single statement for the
evidence that RM has visited the place of both working and of security whereas call report is
a short summary of the visit and all information is described briefly in that report so that
CAD make the right decision.

Comparative Statement of Financial Conditions

This form is in tabular form and as the name indicates it helps in analyzing the financial
condition of the firm from all perspectives. In this form bank has to do the RATIO
ANALYSIS of the financial statements submitted.

All the analysis that are covered by this form are described below:
Liquidity Analysis
Activity Analysis
Profitability Analysis
Debt Analysis
Vertical and Horizontal Assessment of Profit & Loss Statement
Vertical and Horizontal Analysis of Balance Sheet

Management Assessment Form

Management Assessment Form is a document in which varied skills regarding the

management prospective of the property are categorized and these skills in each category are
rated with standard rating criteria by RM (Relationship Manager). RM has to fill this form
and requires a complete background and future prospective growth knowledge about the

RM has to give marks to each category out of five. The rating criteria is as follows:
Outstanding = 5, Strong = 4, Acceptable = 3, Weak = 2, Very Weak = 1.

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Rating Concise Qualitative

Board of Directors
Involvement with the company
Experience / Influence
Source of representation

Management Depth
Qualification / Experience
Excise of duties / authority
Back-ups / second level support
Availability of authorized signer

Competence / Reputation of Management

Capability of administrative, strategic planning and
planning decisions
Industry reputation

Management Controls
Organizational / holding parent company
Level of automation
MIS system

Risk Management
Awareness & identification of key risks
Measures implemented to address these risks
Financial risk management

Summary of Rating
Main weakness
Main strength
Steps being taken to improve weakness
Special Features

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Preparation Of Credit Approval (CA)
After having the Trade Checking from the banks nearby, receiving the CIB report from SBP,
having a keen look at the financial reports and evaluation reports the step is the preparation
of “Credit Approval” which was earlier termed as “Credit Proposal”.

CA is document that is to be prepared either by Relationship Manager (RM) or the Area

Manager (AM). In Hussain Agahi Central Branch of UBL RM was the responsible for the
preparation of CA. the main purpose of preparing Credit Approval is that to make the
decision about the sanctioning of loan quite easier.

Credit Appraisal is a six page document at UBL and has a standard format. It covers all the
aspects that are of key importance in making a decision about\ the limit / loan sanction. It is
divided into different segments. Here is a brief summary about CA.

Borrower and Location:

Name of the borrower along with its full address is written in it.

Line of Business:
Work or business of the borrower is written in it.

Legal Structure:
It depicts that either the business is Sole proprietorship, Partnership, Public Limited
Company or Private Ltd. Company.


Credit Approval is prepared at varied time span. Normally it is been categorized into three

Initial Review : At the start when the borrower requests for loan.
Annual Review : Right after one year again CA is prepared for the checking of
Of business conditions and position of loan.
Interim Review : If anything happens unusual during the year then this review is

undertaken to check the condition either borrower is moving in the

right direction and is giving markup or installments regularly.
Originating Unit:
The branch of UBL, where the request for advances was submitted. For example, Shamsabad
Branch, Bosan Road Branch or Hussain Agahi Branch etc.

Facility Type:
The type of facility that is been used by the borrower either it is Fund Based like NICF and
NIDF or Non-Fund Based like LC and LG.

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Description of Credit Facilities:
Every type of facility is being provided with certain format. Like in the format of Running
Finance Facility the accounts that are to be discussed in this format table.

LINE AMOUNT Rs. In Million

1 NICF For Running Finance in CF
Purpose: For working capital
requirement to finance
inventory receivables.
A/c No:
Markup: Existing Nil P.A
(per annum) Quarterly
proposed: 6% P.A or
Cleanup / Adjustment:
Annual for 3 days on or
Outstanding: Fresh Account

This is the most important section from the point of view sanctioning loan to the party. All
the securities against the loan that are provided by the party are discussed in this section.

Its standard format is like this in the CA.

Facility Facility Description of Security/Support Held
No. Type


Documentation: IB-6, IB-12, IB-24, IB-25, IB-29, letter of


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Here Prime securities are those securities that have primary importance and will be sold by
the bank first in case of bankruptcy of the business.
Collateral securities are of secondary importance and will be kept under consideration after
prime ones.
As far as documentation is concerned with every sort of facility and against the security there
is some particular documentation that has to be performed that give the true evidence of the
transaction and will act as security against the loan availed.

This section of the CA contains the financial data about the borrower. This financial data
helps the managers of UBL to make the analysis of the company and their creditability to
determine either it is applicable to sanction them the facility requested or not.

FINANCIALS FY FY 31-12-2002 FY 31-12-2003

Net Income
Days A/c Receivable
Days Inventory
Net Operating Cash Generation
Tangible Net Worth
Working Capital
Current Assets
Current Liabilities
Current Ratio
Debt/Equity Ratio

This is the sample format of financials used in the credit approval.

Import & Export:

Information about export and import is also a part of CA. As the table shows only the trade in
terms of rupees is needed to be mentioned in this area.

Other (Specify)

In the section of comments and recommendations the RM and SRM give their comments
about the party and recommend either to sanction them facility or not.

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Name & Signature Name & Signature Name & Signature

Credit Committee Approval:






1. Purpose
Type of facility along with the purpose and amount of facility is determined in it.

2. Account Status / Strategy

The strategy at UBL is to ascertain that funded line approved is utilized properly and at the
same time ensure that Bank’s collateral position not compromised.

3. Justification for Account Strategy

Following are the terms to justify the account strategy.
Satisfactory financial
Growth potential
Good income/return potential
Established and sought after name in Multan.

(A) Business Strategy

Business background of the party is mentioned in it and the products in which they are
dealing and their relationship with the suppliers and customers is mentioned.

(B) Management Structure / Competence

Type of management is determined either it is sole-proprietorship or partnership concern or
others and their competency to run the business in mentioned.

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(C) Financial Analysis
it is mentioned that all financials submitted meet the requirement of SBP prudential
regulations and either they are self/un-audited or audited by authorized accountants. All the
ratios that were calculated earlier are analyzed in this portion.

4. Trend


It is mentioned that either the business is stable enough or not and its future growth prospect
is mentioned.

5. Risks
All the risks involved in providing the facility and about its recovery are mentioned in this
part. Here is an example of few of the risks involved in providing facility. One-man show (In
case of sole proprietorship).
• Fire
• Stocks become stale/out of date.

6. Mitigate
Mitigates are the solutions to lessen the impact of the risk involved. Here are few in response
of the above-mentioned risks.
The proprietor is running its business with a team of expertise, who are looking after
different aspects of business. Frequency is rotation keeps them away from this risk. Insurance
cover with assignment of UBL as loss payee covers this risk.

7. Ways out
Different ways are mentioned to have recovery from the party against the facility allotted.
Internal cash generation.
Liquidation of collateral

8. Conclusion/Recommendation
Conclusions are provided wither to build long-term relationship with the customer or not.

Basic Information Report

This page is attached with the CA and covers the varied aspects about the party that ahs
applied for the credit facility.

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Originating branch name is Date on which the CA is Date on which the account
mentioned in it. prepared. was opened in the branch.
Name of the company is The business in which the Source through which the
mentioned party is dealing is mentioned. request has come to central
Address of the company is Structure of management
quoted here. either Sole Proprietor or
Partnership or Public/Private

OWNERSHIP Name of the owner(s) is mentioned in it.


Name of directors is mentioned. Top management has depth, skill, vast
experience and strong succession. Aggressive
and able to anticipate and adapt to change.
Historical background of the company is mentioned. The date of its establishment and the
business perspective along with other relative information is a part of this section.





Name of the products that they use in their business is mentioned here.

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Information about their shops, showrooms, warehouses or distribution centers is mentioned
in this portion.

Suppliers and Trade Reputation

Reputation in the market and relation with the suppliers. Relative information from their
suppliers about the settlement of their past obligations.

Distribution & Selling Terms

Cash & credit both depending upon the credibility of the buyer.




All the competitors in the market and their position or standing among them.

Affiliated Companies
Other banks or companies from which they have already taken loan.
funded Non- funded Non-
funded funded
- - - - - - -

Volume of Business routed through UBL during the last 3 years.

Average balance Current Account No.

Future Business Projection

Fairly a stable business segment with good future growth projects.

Customer Revenues (Account Profitability)

Current Year Current Year
Previous Year to date Forecast
Markup-Fund based: - - M

Commission LC’s / LG’s: - - -

Other Income: - - -

Total: - - M

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After obtaining all the information from the client and negotiating the RM will prepare the
draft of credit proposal on the standard format and submit and submit the same to the CAD
for verification of following:
Standard Line Description
Listing of Security or Support
Completion of Document Check Off List
Completion of Prudential Check Off List

After review the draft proposal will be initiated in the pencil and returned to RM for
preparation of final CP/CA. package.
The final CP package will be signed by the RM/SRM and forwarded to RCAD for onward
circulation to the Credit Committee Members.
RCAD will submit the Credit Approval to the available Credit Committee Members within
the marketing units, the other Credit Committee member in the CRM and finally the credit
committee member/SCO with the credit unit. A total of four credit initials are required.
After Approval, RM will be advised along with remarks and additional terms & conditions if
any imposed by Credit Committee members.
The Documentation Check Off List will be updated in the light of credit committee
approval/comments if there is any change in the security/support documentation.
The RM will obtain the required credit documentation from the customer and handover to the
documentation incharge in the CAD for review and safekeeping.
The RCAD (Regional Credit Administration Department) documentation incharge will
review the documentation and will advice CAD Head the status.
The CAD head will authorize disbursement to the concerned branch. Presently disbursement
is authorize through “Sanction Advice” followed by the DAC (Disbursement Authorization
The concerned branch will disburse the credit facilities by obtaining the transaction related
documentation if any as mentioned in the documentation check off list.
In secured advances, the bank takes any security against the loans while in case of unsecured
advance no security is taken by the bank.

Types of Securities
1. Direct Security
When the borrower himself pledge security to convey to the bank a part of his assets e.g., his
heritable property, an insurance policy of his own life, shares of joint stock company in his
own name etc. Such as security can be specifically appropriated against the debt to the bank.

2. Third Party Security

When the security has been provided by third party, either by way of grantee or pledge, its
value does not require to be deducted by the bank in ranking on the borrowers estate.

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3. Good Security
The good security has the following merits:

Liability: The bank should be able to realize its security quickly and without undue

Stability of Value: The value should be easily ascertained and there should not be sudden
fluctuation in value.

Simplicity of Value:The security can be completed easily and cheaply.

Promissory Note (IB-12)
Promissory Note is perhaps the best example of a documentary taken as evidence of facility
provided. It is written communication by the borrower to pay up a sum of money sometime
in the future. He agrees that he is bound to pay the money that has been lent to him.

Letter of Agreement (IB-6)

It is agreement between bank and client, in which the client agrees to pay the amount at
“Payback price”. Payback Price is the amount containing the Principal amount along with
markup charged on that amount.


Letter of Equitable Mortgage (IB-24)

Equitable mortgage is a sort of mortgage in which certain portion of the property is taken as
mortgage by the bank while providing debt facility. So equitable mortgage is a security
against the debt provided and the document as evidence that is prepared to show the value of
property mortgage along with its complete address is letter of equitable mortgage.

Letter of Continuity
Statement regarding letter of continuity is given as follows:
A promissory note payable on demand which is given to you as security for the payment by
us/me to you of any sums now due or which may hereafter be or become the from me to you
under the fiancé agreement(s) entered between ourselves/me and your Bank. The security
shall be a continuing security for the payment of any and all amounts due from me/us to you
under the said finance agreement(s).

Letter of Hypothecation (IB-25)

Like mortgage hypothecation is also a sort of security in which ownership and possession of
the property is left with the borrower and the bank just get the security in the form of this
document which is duly signed by the party that bank has right to sale the property in case

the party defaults. Thus this letter is also a security document that secures the transaction of

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Letter of Pledge (IB-26)
In pledge the ownership remains with the pledge, but the pledge has the exclusive possession
of the property until the advance is repaid in full, while in case of default the pledge has the
power of sale after giving due notice. So the document that is prepared to show that the
property is pledged is termed as letter of pledge.

Personal Guarantee
When an applicant for an advance is unable to offer any tangible adequate or personal
security the banker may rely on personal guarantees to protect himself against loss on
advances or overdraft to the applicant.

Two conditions that are undertaken by the parties are as follows:
1-The duties and or any other levies as declared by Govt. of Pakistan shall exclusively be
born by our company.
2-Our Company shall submit financials conforming to SBP prudential regulations on annual

Letter of Authority
It is an authority that is provided by the party to the bank and its statement is as follows:
“In the event of my/our failure to pay the mark-up, as aforesaid on the due dates. I/We
hereby irrevocable and unconditional authorize you to recover the amount of mark-up and
other charges due and payable by me/us under the agreement by debiting the same to me/us.
Any amount(s) debited to my/our account as aforesaid shall not be questioned or challenged
by me/us, and shall be deemed to discharge to the extent of such deduction, the amount of
mark-up and any other charges falling due on the due dates under the agreement referred

Letter of Disbursement
A request by the client to disburse the amount of finance by crediting the amount to the
account of party.

Letter of Arrangement
Statement written in the letter of arrangement goes like this:
“With reference to the limit allowed to M/S ABC for which we have this day executed
promissory note and other necessary documents. We hereby acknowledge you right to cancel
the facility at any time with or without intimation to us.
In the event of facility being cancelled by you, we undertake to pay you all the money due to
aforesaid documents plus service charges or any and all cost, charges, expenses and
liquidated damages, if any, payable to or incurred by the bank from us immediately on

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Agricultural Finance
Agricultural finance is of great importance in Pakistan. As 65% of the population of the
country is engaged in the business of agriculture. Its is very unfortunate that this profession
does not provide much to the farmers and cultivators to meet even their basic necessities of
life. The uneconomic holding , primitive method of cultivation, natural calamities such as
floods and drought, illiteracy of the cultivators and lack of infrastructure including organized
ware-housing have adversely affected the repaying capacity of the agriculturists.
Therefore financing of agriculture is much more complex as compared to commercial
lending and industrial financing.

Kinds of Loans:
Farmers generally need three types of Loans:
1. Short-term Loans
2. Medium-term Loans
3. Long-term Loans

Short-Term Loans
Short-term loans are normally taken at the most for one crop period, and are fully recoverable
from the proceeds of same crop after its harvest. These loans are needed for seeds, pesticides,
fertilizers and wages of hired labor, which are meant for input for a particular crop.

Medium-Term Loans
Medium term loans are usually taken for a maximum period of three years, and they are
usually taken for the purchase of tractors, tube-wells, agricultural implements, cattle and live-
stocks, dairy farming and poultry farming etc.

Long-Term Loans
Long-term loans are generally taken for the period above three years, and amount is used for
buying land, constructing embankment, improvement of land or for arranging damages etc.
The only security farmer can offer is the charge on agricultural land and hypothecation of his

Commercial Banks and Agricultural Finance.

Commercial banks have all along been playing appreciable and active role in the marketing
of agricultural produce. However, they have not been able to provide long term finance to
agriculture obviously due to structure of bank funds, lack of acceptable securities and the
farmers proprietary rights over the land. Though the State Bank of Pakistan has established
the Rural Credit Fund which was been utilized for agricultural finance through the
agricultural development bank of Pakistan, the commercial banks were quite reluctant to
finance agriculture up to the year 1972, when the Banking Reforms Order was promulgated
by the Federal Government.

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Commercial banks have now been expressly asked to finance agriculture; and well defined
scheme have been introduced for implementation, under which the SBP allocates target to be
achieved bank-wise during the financial year.
Currently target allocation is as under:
Target for small agricultural loans up to Rs. 100,000/- in each case provide for production
and input purpose.

Targets of Farm Credit for development purposes.

Targets of Non-Farm Credits for development purposes.
The commercial banks have been authorized to obtain the registered mortgage of agricultural
land and hypothecation of machinery and equipment as security in all cases except those
under “Small Agricultural Loans to Subsistence Holders” up to Rs. 100,000/- For this
purpose the value of land has been presently fixed at Rs. 400/- per Agriculture Produce Unit
(PIU) while bankers are to hold the margin of 20% of the total value. These Produce Index
Units are calculated in the agriculture Pass Book issued to the land owners as the Document
of Title under the Advances of Agriculture Purpose Ordinance 1973. the salient features of
the Agriculture credit scheme of the commercial banks are as under;

Short-term finance up to Rs. 100,000/- for seeds, fertilizers, pesticides, water, farm power,
hiring of godowns, transport and cost of packing material are provided to farmers holding
cultivating land up to Subsistence Level.
These loans are provided free of any interest or service charge if repaid in full within two
months after the harvesting of crop for which they are granted.

Short-term finance for poultry and fruit farming and fisheries is provided to the borrower at
concessional rate of mark-up. The loans are repayable in 18 to 24 months, through
installments. The repayment starts after a grace period.

Medium-term loans for development purposes, including development of water resources,

farm power, storage and transportation etc. is provided to the farmers. The loans are to be
repaid in five years, with the grace period of 12 months.

Medium-term non-farm finances for the development of livestock, fisheries and farming are
also provide. The loans are to be repaid in seven years with the grace period of 18 months.

Long-term finance for the development of land, water courses, farm construction,
arboriculture, orchard and storage facilities is provided to the farmers. The loans are to be
repaid in seven years in annual installments, with a grace period of 18 months.

Long-term non-farm finance for the development of livestock, poultry farming, forestry and
fisheries is also made available. The loans are to be repaid in seven years in annual
installments with grace period of 18 months.

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1-What is CCD:
It comes under the Audit and Inspection Deptt. Previously it was named as Internal Control
Unit (ICU) and the new name of ICU is CCD. Control and compliance department is an
independent appraisal function established to examine and evaluate the adequacy and
effectiveness of the Business’s system of internal controls and quality of performance in
carrying out assigned responsibilities. It is basically established for performing and
monitoring vital independent as well as departmental control functions that are critical to the
ongoing health of the branch.
Since the unit works interpedently, its reporting or work should be directly supervised by the
Country ICU Head and under no circumstances Branch Management should influence their
day to day work. It is a department in the hub / central branch that keeps in view the activities
of all the branches that lies inside that hub. They normally do internal audit of the branches.
About 14 branches are working under the Hussain Agahi Branch Hub. They check all the
activities of the departments of all the branches inside the hub. Their main work is to pin
point the mistakes and communicate the mistakes from the originating branch in black &
white form. In the form of sheet they let the branches know about their mistakes like low
commission is charged or wrong cheque is passed etc. After pointing out the problem they
want that branch to rectify the problem if immediate action is not taken then they have
authority to inform about the attitude of the branch to the head office Karachi.

2. CCD Objectives
Main objectives of CCD are to:-
1. Ensure the reliability and integrity of financial and operating information and the means
used to identify, measure, classify and report such information.
2. Review the systems established to ensure compliance with all policies and procedures, and
to ensure that all the financials are passed accordingly.
3. Review the means of safeguarding assets and an sap[appropriate, verify the existence of
such assets.
4. Review the operations or programs to ascertain whether results are consistent with the
established objectives and goals.
5. Maintain high quality of work standards in branches.
6. Identify problems that may result in potential losses or damages to customer services.

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Country Operational

Country CCD Head

Branch CCD Staff

A. CCD staff will maintain their independence by not involving in operations (e.g.
processing, supervision and custody functions etc.). They will not have any financial or
maintenance access on the system except for inquiries.
B. CCD staff selection criteria, while selecting CCD staff due weight is given to high
responsibility level, imaginative and having independent judgment, Rich banking experience
and knowledge on laid down policies and procedures.
Followings are the main parts of Internal Control Functions:
♦ Control Verification / Review Charts.
♦ Proof / Balancing Charts.
♦ Departmental Control Function Checklists.
♦ Corrective Action Monitoring.
♦ Work Plan.
A. Control Verification / Review Charts (Departmental & Independent
These documents are the most important records as they list the actual control verifications to
be performed by the CCD and operating departments along with important checkpoints.
They are split between Daily, Weekly, Monthly, Quarterly, and Semi annually and annually.
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B. Proof / Balancing Charts.
In order to check any unusual/unauthorized transaction and to monitor the long outstanding
items, monthly balancing proofs will be prepared by the respective departments for all such
accounts in which transactions are passed manually. The CCD Head has a listing of all
approved General Ledger/Subsidiary Ledger heads against which proofs are to be prepared at
required frequencies. Quarterly the chart will be compared to the General Ledger to ensure
that it is complete and include all accounts.
D. Corrective Action Monitoring.
A memorandum of exceptions if noted during the verification / reviews, will be forwarded to
Branch Manager. Corrective action will be notified to CCD in writing by respective
departments. CCD will monitor the pending file and work closely with the various timely
E. Work Plan
At the beginning of each month CCD Head/staff will prepare his work plan for the month,
proper planning is done, and copy is sent to CCD Head. Planning should be kept confidential
from Branch Manager.
F. Vital Control Functions to be carried out by CCD.
A. Monitoring of Departmental balancing / proofs of General / Subsidiary Ledger heads.
B. Periodical Independent Verifications and Product Reviews.
C. Treasury function Controls.
D. Statement Rendition (mailing statements/balance confirmations to customers).
E. Customers ‘complaints.
F. Management Support Functions:-
♦ Corrective Action Tracking.
♦ Policy / Procedures Deviation Control (where required).
♦ Designations—at the time of changes for keys and other security
stationery custody.

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At the last stage I have been posted in Foreign Exchange Department of the Branch, where I
have experienced for two weeks. During this time what I have learned is as follows:



F.E Dept: Incharge

Deposit Seat Import & Export


Export nce


Import Deposit

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Deposit Section:
The customer must have his account with our branch, because without it we cannot enter into
the foreign exchange transactions. So a depositor opens an Account with the Bank in any
form like:
 Individually
 Jointly
 Partnership
 Corporation
Foreign. Exchange Department of the Bank accepts under noted Foreign Currency
from account holders. State Bank of Pakistan provides exchange rates on daily basis.
And daily transactions are recorded at their current exchange rates.
 US Dollar
 British Pound Sterling
 Japanese Yen
 Dutch Mark
 Saudi Rial, etc.
Opening of Foreign Currency Account.
Like normal account opening form, an account opening form is provided to
prospective customer. At the same time introduction of that customer is important
condition so that provided information by customer may be got authenticated. An
existing account holder may introduce the incoming customer. The Manager takes
new Account holder’s specimen signatures on specimen Card in order to avoid future
problems. At the occasion of withdrawal of funds Accountant compares the signatures
on cheques to the provided Specimen of Signatures so that genuineness of the cheques
may be verified.
 At the time of depositing funds the amount of funds is debited to “Foreign Currency
On Hand Account.” & Credited the Party’s /Account Holder’s A/C.

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 At the time of withdrawal of funds the amount is credited to” Foreign Currency On
Hand Account. & Debited to Party’s /Account Holder’s A/C.

Remittance section:
Foreign Exchange department remits Foreign Currency through under noted Paid Up
1. Foreign Demand Draft
2. Mail Transfer
3. Telegraphic Transfer
The demand draft is a written order is being given by the issuing Bank on it’s own
behalf to it’s other Branch of the same Bank to pay the certain amount to the
concerned person.
1. First of all draft application is filled in by the client. This application contains the under
noted information.
o Name of the party/Person in who favor the FDD is being issued.
o Date
o Amount to be sent
o Account No if DD is crossed
o Amount of Exchange to be charged by the Bank.
o Name of Branch. Where the FDD is drawn.
1. Then cashier sends the cash receipt to the account department. The accountant records
the amount (paid in cash or drawn from the account of the Account Holder) in scroll register.
2. Accountant gives the FDD leaf along with voucher (which was called FDD
application form before the deposit of cash) to Bank’s Assistant who records the particulars
of FDD in FDD register. Thereafter the FDD is issued and handed over to the Party/
Client. Now Bank sends advice of the FDD to the concerned Branch where the FDD is to be

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paid to the Customer OR his Agent OR in favour of whom he insert endorsement of the back
of the FDD.


It is the transferring of money from on place Branch to another place of the same
Bank Cash transaction is not involved. Advice of the MT is sent along with it. The
amount of MT is directly credited to the account of beneficiary’s account. That is why
MT can be used to transfer the amount from one account to the account of other
Branch of the same Bank.
It is proper and pertinent to mention here that procedure of issuance e of MT is same as in
the case of FDD.
This is most rapid method to transfer funds. Coding Message is sent through
Telegraphic message OR on Phone.

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Shipping co. Shipping co.

of exporter of importer
country country



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1- In the very beginning the basic thing is need that drives to foreign trade. So importer
feels the need to purchase some types of goods and contact to the seller at the foreign
country and need the quotations (dealer’s statement of price is called quotation).
2- Then the exporter’s company sends the Pro-forma Invoice (quotation) to the importer’s
3- Then importer takes this Pro-forma Invoice to his bank for the registration of the contract
(which is enforceable at law).
4- Then this registered contract is returned to the importer by his bank.
5- The importer sends this registered contract to the exporter.
6- When the exporter receives the registered contract then he exports the goods by any
transportation way like by road (Forwarding Co.), by sea (Shipping Co.), by Air (air co.)
7- Exporter receives the shipping documents from the shipping company.


a) Bilty {by sea}
b) Bill of Lading (B/L) {by sea}
c) Railway Receipt {by train}
d) Airway Bill {by air}

8- Then the seller gives the three types of documents to his bank with endorsement letter &
that are:
I. Bill of Exchange
II. Shipping Document (that he receives from a shipping company)
III. Other Commercial Documents (invoice, packing list, insurance certificate,
certificate of origin, etc.)
9- Exporters bank sends all these documents to the importer’s bank with endorsement letter
(the letter that certifies the ownership of the goods ). Now the Consignee (is the person
or firm who has the ownership of the goods and can release the goods from port of the
importer’s country).
10- When these export documents arrives in the importer’s bank then these same documents
become the import documents. Then the importer’s bank contact to the importer that he make
the payment and & release all these documents.
11- When the importer make the payment to the bank then bank gives the endorsement
(transfer of title or ownership of goods) and all the import documents to the importer.
12- Now importer himself is the Consignee (who can release the goods from port). So, he
will go to the port and will release the goods from shipping company. And that shipping
company takes the receipt of receival as an evidence.

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Importer has to pay the custom duty and premium of insurance if premium is not paid by the


I. Exporter
II. Importer
III. Exporter’s Bank
IV. Importer’s Bank
V. Shipping Company
VI. Insurance Company
VII. Custom Office
1- Endorsement Letter
Is the transfer letter in which title (ownership) of goods is transferred from one party to
anther one. It moves from exporter to the exporter’s bank and then to the importer’s bank and
the to the importer.
ENDORSER is the person negotiating the instrument (who gives his goods).
ENDORSEE is the person to whom it is transferred.
2- Acceptance
Exporter draws (makes) the bill and send it to the importer. If importer (drawee) accepts it
and make the signatures on it then it is known as acceptance and this acceptance document is
called acceptance letter.
3- Bill of Exchange (Draft)
The bill of exchange (B/E) commonly refers to as the draft or bill, is an unconditional order
in writing, signed and addressed by the drawer (exporter usually) to the drawee requiring the
drawee (importer) to pay the drawer (exporter) a certain sum of money at sight or at a fixed
or determinable future time (usance).
4- Bill of Lading (B/L)
It serves as a receipt for goods, an evidence of the contract of carriage, and a document of
title to the goods.
B/L contains all data pertaining to the merchandise that is shipped. It includes the name of
a) VESSEL on which the goods are loaded
b) The PORT at which the goods are loaded
c) The gross weight of the goods shipped
d) The mark and number of packages loaded
e) The PORT at which the goods are to be discharged, and
f) Clear description of the goods for custom purposes

5- The Certificate of Origin

It is issued by the Chamber of Commerce and Industry certifying that the goods that have
been exported have entirely or largely been manufactured in the country stated on the
certificate. Because some products are made in exporter’s contry and some are made by
another country.

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6- The Insurance Certificate
The goods that are shipped for sale abroad are insured under an Open Policy. The certificate
of insurance contains full description of goods, marks on the packages, weight, port of origin
(export), destination, etc.

7- Commercial Invoices
It is a business document which is made out by the seller containing full information about
the description of goods, the date of sale, the terms on which the goods are sold and full
address of the buyer and seller.
We can summarize the previous trade cycle as follows:


1- Seller and buyer conclude a sales contract, with method of payment by letter of credit
(documentary credit).
2- Buyer applies to his issuing bank, usually in buyer’s country, for letter of credit in favor
of seller (beneficiary).
3- Issuing bank requests another bank, usually a corresponding bank in Seller’s country.
To advise , and usually to confirm, the credit.
4- Advising bank, usually in Seller’s country, forwards letter of credit to Seller informing
about the terms and conditions of credit.
5- If credit terms and conditions conform the sales contracts, Seller prepares goods and
documentation, and arranges delivery of goods to carrier.
6- Seller presents documents evidencing the shipment and drafts (bill of exchange) to
paying, accepting or negotiating bank named in the credit (the advising bank usually),
or any bank willing to negotiate under the terms of credit.
7- Bank examines the documents and draft for compliance with credit terms. If complied
with, bank will pay, accept or negotiate.
8- Bank, if other than the issuing bank, sends the documents and drafts to the issuing
9- Bank examines the documents and draft for compliance with credit terms. If complied
with, Seller’s draft is honored.
10- Documents release to buyer after payment, or on other terms agreed between the bank
and buyer.
11- Buyer surrenders bill of lading to carrier ( in case of ocean freight ) in exchange for the
goods or the delivery order.

International Commercial Terms ( INCOTERMS )

The INCOTERMS (International Commercial Terms) is a universally recognized set of

definitions of international trade terms, such as FOB, CFR, AND CIF , developed by the
international Chamber of Commerce (ICC) in Paris), France. It defines the trade contract
responsibilities and liabilities between buyer and seller. It is invaluable and a cost-saving
tool. The exporter and the importer need not to undergo a lengthy negotiation about the
conditions of each transaction. Once they have agreed on a commercial term like FOB, they

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can sell and buy at FOB without discussing who will be responsible for the freight, cargo
insurance, and other costs and risks.

EXW (Ex Works)

Ex means from. Works means factory, mill or warehouse, which is the seller’s premises.
EXW applies to goods available only at the seller’s premises, and for the subsequent costs
and risks.

FCA (Free carrier)

The delivery of goods on a truck, rail car or container at the specified point (depot) of
departure, which is usually the seller’s premised, 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 center. Buyer is responsible for the main
carriage/freight, cargo insurance and other costs and risks.

FAS (Free Alongside Ship)

Goods are placed in the dock shed or at the side of the ship, on the dock or lighter, with in
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.

FOB (Free On Board)

The delivery of goods on 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.

CFR (Cost and Freight)

The delivery of goods to the named port of discharge) at the seller’s expense 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.

CIF (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

CPT (Carriage Paid To)

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The delivery of goods to the named place if destination (discharge) at seller’s expense. buyer
assumes the cargo insurance, import customs clearance, payment of customs duties and
taxes, and other costs and risks.

CIP (Carriage and Insurance paid To)

The delivery of goods and the cargo insurance to the named place of the destination
(discharge) at seller’s expense. Buyer assumes the import customs clearance, payment of
customs duties and taxes, and other costs and risks.

Sight Drafts Versus Terms Drafts

Sight Draft or Sight Letter of Credit

The Sight draft is most commonly used in international trade. In a sight draft, the payment is
on demand or on presentation of the negotiation documents to the paying bank or the
importer. In practice, the bank may pay within three(3) working days (not instantly) after the
receipt and review of the negotiation documents and id they are in order, that is , the
documents comply exactly to the letter of credit (L/C) stipulation.

In certain countries where the business relationships between the exporter and the bank is
well established the bank may pay the exporter a few hours after the receipt of the
negotiation documents that are in order.

In the sample L/C it was stipulated “available by your draft(S) drawn at sight”, as such the
payment is by sight draft(s).

Term Draft or Usance Letter of Credit

The term draft ---time draft or usance drafts---is used in a deferred payment arrangement.
The payment is on the maturity date determinable in accordance with the stipulations of the
letter of credit (L/C). the maturity date can be at a stated period after sight or after date.

• After sight ---

After the draft is presented to the drawee for acceptance, for example, “at 90 days sight” and
“t 120 days after sight”

• After date
After a specific date, for example, “at 150 days B/L date” (i.e., the maturity date is 150 days
after the date of bill of lading) and “ at 180 days after date” (i.e., the maturity date is 180
days after the date of the draft).

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Unless the maturity date is tied to a specific date, the importer may refuse to accept the draft
until the goods have arrived, such deferred acceptance can extend the maturity date.


The documents that are provided by importer to it’s bank for opening / issuance of L/C are as
• L/C Application IB-8
• Original Indent / Pro-forma Invoice
• Insurance Policy
• Cover Note with Premium Paid
• I-Form
• Copy of Sanction Advice / DAC no.

For the first transaction of received DAC reflecting subsequent charges. Confirmed that
original DAC is held by us and all terms and conditions spelled out. Provided detail of limit.


This document is issued by the buyer’s bank when promises to pay the seller the specific
amount when the bank has received certain documents stipulated in the letter of credit by the
specified time.

Irrevocable Letter of Credit

And irrevocable letter of credit cannot be amended or cancelled without the consent of the
issuing bank, the confirming bank, if any, and the beneficiary. The payment is guaranteed by
the bank if the credit terms and conditions are fully met by the beneficiary. The words “
irrevocable documentary credit” or “irrevocable credit” may be indicated in the L/C.

Revocable Letter of Credit

A revocable letter of credit can be amended or cancelled by the issuing bank at any time
without the consent of the beneficiary, often at the request and on the instructions of the
applicant. There is no security of payment in a revocable letter of credit (L/C). The words
“this credit is subject to cancellation without notice”, “ revocable documentary credit “ or
“revocable credit” usually are indicated in the L/C.

Confirmed Irrevocable Letter of Credit

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An irrevocable L/C opened by an issuing bank whose authenticity has been confirmed by the
advising bank and where the advising bank has added its confirmation to the credit is known
as confirmed irrevocable letter of credit. The words “we confirm the credit and hereby
undertake…” or “we add our confirmation to this credit and hereby undertake …” normally
are included in the L/C.

An exporter whose method of payment is a confirmed irrevocable L/C is assured of payment

even if the importer or the issuing bank defaults. If the letter of credit is not confirmed the
correspondent bank (Seller’s Bank) has no obligation to pay the seller when the seller
receives the documents listed in the letter of credit. Only the issuing bank is responsible.

If the seller wishes to be able to collect from the corresponding bank in its own country, it
will insist that such a bank confirm the credit. Confirmation is generally done by
correspondent bank (exporter’s Bank). When the seller’s bank confirmed the credit, it
undertook an obligation to pay seller if all the documents listed in the letter were presented
on or before the stipulated date.

Letter of Credit Transaction

When the buyer / importer accepts the terms of sales that provide for confirmed and
irrevocable letter of credit, it goes to its bank to arrange for opening the required letter.

The buyer will furnish the bank with the information contained in the pro-forma invoice;
specify the documents that the exporter must present to obtain the payment, and set the
expiration date of credit.

The issuing bank then instructs its corresponding bank in the exporter’s country to confirm
the letter of credit and inform the seller that it has been established. The seller then prepares
the merchandise / goods for shipment and notifies the freight forwarder who books space on
the ship, prepares the export documents, and arrange to have the merchandise delivered to the

The documents together with the sight or usance draft drawn by seller, are presented to the
US BANK which pays the seller and forwards the documents for collection to the issuing
bank. To obtain the documents that give title to the shipment, the buyer in Pakistan must
either pay the sight draft or accept a time / usance draft. Having done so, the buyer receives
the documents, which are given to the Customhouse broker. The Customhouse broker acts as
a buyer’s agent in receiving the goods from the steamship line and clearing them though
Pakistani Customs.

Letter of Credit Application (IB-8)

Application and Agreement for Irrevocable Documentary Credit free negotiated in

beneficiary’s country.

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IB-8 letter is provided with other documents to the bank of importer by the importer. Its is
terms as Letter of Credit Application, which contains almost all the important Information
that the bank requires for preparing letter of credit. Information contained in IB-8 is as

L/C No.
A certain number is been provided to the L/C and that number is assigned by the importer’s
Date is mentioned on which letter of credit is prepared.
Name and full address of opener
Name and full address of the importer is required. This importer is also named as opener
because he is requesting for opening L/C.
Name and full address are beneficiary
Name and full address of the exporter is also written on the IB-8 application.
Description of merchandise / goods
Description of goods is provided normally on this form else it is been referred from pro-
forma invoice.
Price of the product is provided in the foreign currency or the currency of beneficiary’s
country. Per unit price as well as total amount of import is also written.
Terms of Sale
Among the varied terms of sale like CNF, CPT, FOB,CIF,FAS etc. a single one is provided
on which both the parties have already negotiated.
Mode / Method of Transport
Mode of transport is described either product should be delivered through air or by Sea.

Port of Exit and Entry

Name of entry and exit ports are also written on the form. If product is transferred through
shipment then the seaport of exporter’s country is mentioned that is the exit port and also the
importer’s country port is mentioned from where they want to receive the delivery. If air
transport is used then the name of both country’s airport is to be mentioned on the form.

Proposed Method of Shipment

Transshipment and part shipment are the two terms normally used in the form that indicate
either the product can be transferred through other country like Indian and Israillian vessel.

Shipping Time
Last date for shipment is also been mentioned by the importer on the form. So exporter has to
make shipment before this date.


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Tenor indicate the condition that either exporter want payment on sight or he will provide
some time (usance) for payment to the importer.

Pro-forma Invoice
Prior to opening a letter of credit, a buyer frequently requests a pro-forma invoice. Generally
the bank use it when opening a letter of credit.
Pro-forma invoice is exporter’s formal quotations containing following things:

◊ Description of merchandise (goods)

◊ Price
◊ Delivery Time
◊ Shipping Time
◊ Proposed method of shipment
◊ Ports of entry and exit
◊ Terms of sale

Letter of Credit
Letter of credit open by means of SWIFT


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Vouchers are prepared at the time of preparing LC.

Contra Voucher

Customer’s liability LC cash Debit

Banker’s liability LC cash Credit

Narration: amount of LC no. __________ Dated ___________ for USD__________ on

behalf of M/s _____________

LC no. is the number that is assigned by the opener’s bank to the LC.
Dated indicates the date on which LC was opened.

USD is the abbreviation of United State Dollar in case if the Currency is in Dollar otherwise
currency amount of beneficiary’s country is used.

PLS Income Account Commission on LC:

By amount of commission on LC no. ________Dated __________ for USD
_________ on behalf of M/s ____________

Party Debit Voucher

Debit M/S _______________________

To the amount of LC opening charges as per detailed debited for opening LC no.
______________ Dated _____________ for USD ______________

Inward Foreign Documentary Bills Sent for Collection (IFDBC)

In case of IFDBC the documents are sent for collection to the import’s bank by the exporter
bank. Exporter bank will do OFDBC (outward foreign documentary bills sent for the

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collection) against those documents as it is sending the documents for the collection of
money by the importer’s bank. Importer’s bank when receives those documents along with
the commercial invoice that shows the position of payment will do the IFDBC vouchering.

1-Contra Voucher
First of all the liability that was created against the importer will be reserved on contra
voucher with the same rounded figure noted in liability register ledger.

Debit : banker’s liability LC cash

Credit : Customer’s liability LC cash

2- PLS Income Account Exchange and Commission

Narration :
by amount of service charges on account of LC no. ____________ dated ___________ for
USD ____________ on behalf of M/s __________________

3-PLS Income Account Commission on Foreign Bill

Narration :
By amount of Commission charges on LC no. _____________ Dated __________ for USD
______________ on behalf of M/s ___________ received.

4- Income Account Fax/SWIFT Charges

By amount of TELEX charges on LC no.__________ Dated ___________ for USD
_________ on behalf of M/s ___________received

The amount is credited to the corresponding bank or the bank that has sent the documents on
collection bases. Amount credited is mentioned in the covering letter.

6- Party Debit Voucher

All the credit Vouchers are added and is debited to the concerned party’s account.
7- Sundry Deposit Account
amount left over in access in Sundry deposit account after charging all the taxes and amount
debited in foreign bank is credited to the party’s account.

Payment Against Documents

Incase the exporter’s bank has paid the amount to the exporter on the negotiation of the bank
that bank will FDBP and will send those documents for the receipt of payment for the trading
happened between two parties. When the importer’s bank receives the documents he will
make PAD means the vouchers passed will be of PAD. The documents will remain with the
bank and will not be provided to the importer unless he makes his payment that was due on
At the time of lodgment means at the time when the documents are received by the
importer’s bank, entry passed is as follows
Debit : NIPAD

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Credit : HO
Debit voucher passed is of None Interest Payment Against Documents and is narrated as “ to
LC no. _____________ Dated ____________ for USD____________ vide PAD no.
_____________lodged “.
At the time of Retirement when the payment is made following entry is passed
Debit : Party account
Credit : NIPAD

Credit voucher passed is of Non Interest Payment Against Documents because the liability
that was created is reversed as the payment is made and is narrated as “ by amount of LC no.
__________ Dated ________ for USD __________ Retired “.
Debit voucher passed is of the party account as the payment is made from the account of

Bill of Exchange (Drafts)

The bill of Exchange, commonly referred to as the draft or the bill, is an unconditional
order in writing, signed and addressed by the drawer (the exporter usually ) to the drawee
(the confirming bank or the issuing bank usually), requiring the drawee to pay the drawer a
certain sum of money at sight or at a fixed or determinable future time.

Bill of Lading (B/L)

The bill of lading serves as a receipt for goods, an evidence of the contract of carriage, and a
document of title (ownership) to the goods. The carrier issues the B/L according to the
information in a DOCK receipt, or in some cases according to a completed working copy of
the B/L supplied by the custom’s broker.
The B/L must indicate that the goods have been loaded on board or shipped on a named
vessel, and it must be signed or authenticated by the carrier or the master, to the agent on
behalf of the carrier or the master. The signature or authentication must be identified as
carrier or master, and in the case of agent signing or authentication, the name and capacity of
the carrier or the master on whose behalf such agent signs or authenticates must be indicated.

Certificate of Origin

The certificate of origin is a document certifying the country in which the product was
manufactured, and in certain cases may include such information as the local material and
labor contents of the product. The certificate of the origin is the country where the goods are
grown, produced or manufactured.

Beneficiary’s Certificate

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The beneficiary’s certificate, sometimes referred to as the certificate of assurance, is a
certification issued by the beneficiary of the letter of credit showing, unless wording is
specified in the LC, the summary of a consignment and declaring (i.e., assuring the
consignee) that the shipment in question confirms to the specifications in the sales contract.
The exporter can issue a beneficiary’s certificate using company letter head.

Phytosanitary or Plant Health Certificate

The prefix ‘phyto’ means plant. The phytosanitary certificate ---plant health certificate --- is
issued by the Government Agricultural Department or certified Inspector for such
agricultural products as seeds, fruits, vegetables, rice, wheat, soybean, corn, and milled
materials (e.g. flour and soybean meal) , certifying that the goods are free from harmful pests
and diseases.

Commercial Invoice

The commercial invoice is a record or evidence of transaction between the exporter and the
importer. It is similar to an ordinary sales invoice, except some entries specific to the export
– import trade or added.

Outward Foreign Documentary Bills Sent For Collection (OFDBC)

In outward Foreign Documentary Bills Sent For Collection (OFDBC) are the documents sent
for collection by the exporter’s bank. In collection, first the importer’s bank will sent the
collection from the importer’s account to the corresponding bank and then that exporter’
bank will make the payment to the exporter. Time duration is provided as tenor of 3, 6, 9, 12,
15 or 18 months.

Vouchers Prepared for OFDBC

OFDBC stands for outward Foreign Documentary Bills Sent For Collection.

1- Contra Voucher: (at the time of lodgment)

Debit : Foreign documentary bill lodged.
Credit : Foreign documentary bill sent for collection

2- Contra Voucher: (at the time of realization)

Debit : Foreign documentary bills sent for collection
Credit : Foreign documentary bills lodged.

3- Sundry Deposit Account EDS :

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By amount of export development charges on OFDBC # ______________
Amount realized * special rate * 0.25%.

4-Sundry Deposit Account WHT (withholding tax)

By amount of withholding tax charges on OFDBC # _______________ Dated
___________ for USD _________account of M/s ____________

Amount realized * special rate * tax rate (as per refined product)

5-PLS income account Exchange Commission on USD exporters:

By amount of Service Charges on OFDBC no. ___________Dated _____ for USD
_________ Account of M/s __________

6- Income Account Foreign Courier :

income Account is credited with flat rate of Rs. 1000/- for all parties and for the special
parties like Pak Arab Fertilizer it is reduced to Rs.900/- only.

7- Income Account Postage:

Income account is credited with Rs. 100/- as postage charges.

8- PLS Income Account Commission on Export Bills:

Income account is credited with Rs.200/- plus Rs.80/- (for bank in a respect of handling
charges to customer authority for detecting EDS). Total making Rs. 280/- (Rs. 80/-) is earned
on account of providing service / handling for collection EDS to custom authorities.

9- Income Account Trunk Call Charges :

It is flat rate of Rs.100/-

10- Party Account :

It is credited with net amount after deducting all the above noted expenses.

Foreign Documentary Bills Paid

In foreign documentary bills paid the exporter negotiate the documents with the bank.
Negotiation refers to the manner that the payment is made to the exporter by its
corresponding bank and that bank then will contact the importer’s bank to pay on the behalf
of importer. That bank to the importer’s bank along with the receipt that indicates that
payment has been made then sends the documents that are negotiated with the exporter’s
bank. Normally it is written on the commercial invoice either payment has been made or the
payment will be made after collection.


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In the banking sector UBL introduced Computer for the first time. Software that is used in all
the computerized branches of UBL in Pakistan is UNIBANK System + 2000 software.
This software is programmed in ORACLE 9 language earlier this system was in COBOL.
UNIBANK system is only used in Pakistan or it is on National basis because of different
laws of country it is viable only in Pakistan , means in case of Zakat Deduction there is only
law in Muslim Countries.

In this system all the activities that are related to the bank is feeded and this department has
access to all the data that is related to different branches. This department helps in providing
the statements to the different departments of the bank and pass book that is provided to the
customers so that they can have a view of their balance and the activities that they perform
with the bank can also get through this department.

4 SWOT Analysis

Internal Strengths
Ownership Of Strong Group
The UBL is under the ownership of two very strong (financially) group (The Abu Dhabi
Group & The Best way Group). The Chairman of the bank is His Highness Sheikh Nahayan
Mubarak Nahayan who is leading role of Abu Dhabi Group. Abu Dhabi Group has also the
ownership of Al-Falah Bank, and recently launched a GSM Mobile Network company
named WARID TELECOM. In Pakistan the largest FDI (Foreign Direct Investment) is of the
Abu Dhabi Group.
The Deputy Chairman of the UBL is Sir Mohammad Anwar Pervaiz (OBE) who is the
leading role of Best way Group. This group has started its business in England and emerges
in the top ten large business entities of England. This group recently installed the Cement
Plant of Pakistan in Tehsil Chowk Saidan Shah District Chakwal.
Sir Mohammad Anwar Pervaiz got the following Awards in the owner of his business

1) Order Of British Empire (OBE) (1992) British Award

2) Knight (1999) From British Queen Elizabeth
3) Hilal-e-Pakistan (2000)
4) Mir Khalil ur Rehman Husn-e-Karkardgi Award (2000)
5) Best Businessman Of the Year (2001) Pakistan
6) Life Time Achievement Award (2003)

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Huge Deposits

The bank has stable growth in deposits since its emergence. The UBL is the second
largest bank in Pakistan and because of its 45 years long existence it is the
trustworthy bank in Pakistan and outside Pakistan.

Advances on Sound Basis

The loan facility provided by the bank is on sound basis. They have many checks
and documentation that secure their money after advancing. With their strategy
there are very less chances of non-recovery from the debtor.


Because of its 1000 Domestic and 15 Overseas Branches they have very good
infrastructure and are prevailing now outside Pakistan also. UBL continually looks for
ways to become more efficient and to increase their profit margins.


UBL has launched their products and varied services with particular brand names
that is now-a-days a competitive strategy in its own. They are launching same
schemes that are already existent in the banking sector but because of giving them
brand names they are creating unique identity. Their popular brands are UBL Wallet
(ATM Card), UBL Address (house loan), UBL Drive (car financing), UBONLINE
(online banking services), HAMRAH (traveler Cheque), Click N Remit, TezRaftar
(remittance service) etc.

Fast Service

Another very important aspect of UBL is its fast service. Everything goes very
quickly. If you are looking for a loan, or you want to deposit money or you want to
pay your bills their services are so fast that they respond the customers very quickly.
Like other banks customers do not have to wait for the long time.


UBL has financial strength as they are gaining profit from the advances that they
provide to the organizations.


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UBL is providing lot of services to its customers like incase of remittances they have
services like Click N Remit online service, TezRaftar is an other remittance service,
UB-ONLINE is their online service. Money Gram is their service for foreign currency
remittance from outside Pakistan and Hamrah is their service regarding rupee
Traveler Cheque.

Promotion Criteria

The promotion criterion of employees is made up of passing the Diploma

Examination of Pakistan Institute of Bankers (IBP).

Good Reputation

Because of its quality management, marketing, innovation in products and services

they have established a good reputation in the banking sector.



UBL is centralized. It means authority is not delegated to branch level. Manager

cannot take initiative regarding different decisions such that for giving finance.

Low Promotional Activity

The majority of people are not well aware about the products of UBL. It is due to
their very low services of promotional activity.

Low Motivation Level

There is low level of motivation in the employees of the bank

Reactive Approach

UBL Management has opted reactive approach they respond to the market very
slow and are reluctant to take initiative before the problem arise.


Mobile Banking

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Mobile banking is a concept that has started to find its roots in the banking sector.
So it is a big opportunity for UBL to avail this chance at big level.

International Expansion

Opportunities exist for expansion of UBL chains in the International Arena, in

particular in Germany and Europe. Particular Invention must be given to the
individual country’s customs and cultural practices to be successful.

Trade Shows

UBL should organize trade shows for the promotion of export for that they should
finance the companies those who wanted to internationalize and wanted to introduce
their product and services outside Pakistan.


Liberalization is a concept that in under discussion around the world as this is going
to be implemented by WTO in a few years to come. With the liberalization many
industries are expected to be open in Pakistan and with free trading lot of trade
activity is expected. So keeping in view these perspectives there is great opportunity
for UBL to be stronger.


An external opportunity exists in efforts to improve the social environment of local

communities and society in general by offering innovative, community – involvement


Rapid Changes

The rapidly changing environment in the banking sector and the quick response of
the other banks to these changes can be a threat for UBL.

Customer Behavior

What customer really wants is a difficult thing to identify as to identify the customer
perception and its behavior is complex procedure. So the changing needs of the
customer can be a threat for the banks.

Governmental Policies

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Changing Governmental Policies an instability in Politics can be seen as a threat for
the banking sector.


Competition can be the greatest threat for the UBL. As old banks have started
changes and many new banks are emerging as a strong entity so UBL will face a
strong threat from this competition unless the adopt pro – active approach to handle
these threats.

5 Recommendations


SWIFT mechanism is gaining importance for the treatment of LC and it has been
found that UBL has only provided SWIFT facility at its head office not to all the
authorized dealers dealing with foreign exchange in their branches. To save the
precious time of the prestigious for LC in their Central branches inside the country.


During my time period that I spent in foreign exchange department I found in their
registers that many firms were defecting means those who were first loyal to UBL for
the operations of opening LC were not viewed in the list for a longer period of time.
To avoid their defection whether it is partial or full relationship should be created by
giving a phone call. It will make betterment in UBL ‘s goodwill and their profits.


While providing advances the mechanism that is opted by UBL is to provide facility
and renew it after a year. In the renewal whole procedure is followed again that was
opted at the start. Lot of documentation get not only employee confuse but even
customer avoid that. This can be the reason for UBL having low ratio of advances as
compared to their deposits. So UBL should finish the method of renewal but keep
checking the performance of the organization by having relationship.


UBL has internationalized already and is performing very well in its abroad
branches. But UBL has internationalized to few countries. They have big markets

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ahead of them and with their working activity will get simpler with that. In the form of
European countries and markets like CHINA where there is lot of activity related to
banks they can expand their chains.


Mobile banking is actually a banking that you can do yourself. You can perform
various activities of bank through your mobile phones or through your computers.
With just a call you can transfer money from an account to another and similarly
other activities. It is a concept that is gaining importance throughout World Pakistan

is no exception. UBL should start working on this concept to maintain their existence
in the changing banking sector.


UBL management should adopt proactive to survive in this sector. What I have
observed is that UBL management is having reactive approach means that they
react to the situation that their competitors have created. In case of consumer
financing UBL has respond by having same schemes that have been already
launched by their competitive e.g. car financing and housing schemes are
responded but very late by the UBL. UBL should try for new innovative ideas rather
than moving on the same track that their competitive are doing.


Whether the account holders are new or existing bank should provide them with the
initial information about how to deposit and withdraw money from the bank. It will be
beneficial for the bank in a way that lot of time could be saved afterwards with that

Bank must let potential customers know that all attractions for banking exist. This is
done by advertising on Television and obtaining Press coverage, in conjunction with
direct mail, window displays, pamphlet in branches and in appropriate other
locations (such as hostels, shops etc.) and including leaflets in statement of
accounts sent to existing customers in the hope that they will tell potential customers
about the services provided by our bank.

The bank should keep on filling the gap between customer and the bank through
consumer friendly attitude and efficient services. They should work on building
relationship with the customers.

UBL should start thinking about relationship with the parties that are willing to do the
business with the bank. Business in the form of deposits for a longer period of time.
Rather than looking for small parties whose purpose is just to deposit in the morning

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and have withdrawal in the evening should be discouraged. Lot of time in work
activity can be saved by having few but good parties rather than having huge
accounts of small amount and specially those are not for the purpose of long term


Employees inside the branches should change their attitude toward the customer. It
has been observed that customer do not get the same warm welcome and
importance that he wants and he is been provided by other emerging banks like

ALFALAH and UNION BANK. They should start thinking about changing their
attitude from now.
Performance Appraisal & Compensation
Employee appraisal is an major part good and effective HRM. It consist of systematic
evaluation of an individual with respect to his personal traits and characteristics, his on job
performance and his potential for development. In Unite Bank Limited there is no appraisal
system exists. No relationship has so far been established between appraisal and staff
motivation. No weight is assigned to appraisal in making decisions on promotions, postings,
Compensation is a necessary thing for employees satisfaction. And UBL has not any proper
compensation plan when ever management decide to give bonus or extra salary to employees
it is followed. So there should be proper compensation plan.
Product Marketing
This is age of competition and every organization is facing hard competition from not only
domestic organization but also from the international organizations due to globalization. Due
to this competition the marketing department plays a vital role in the success of the
UBL should have a strong marketing department like many other private banks have, for the
publicity of their products and make well inform the customers all the services provided by
the bank and to conduct detailed market researches to find out new opportunities, needs of
the customers and make comprehensive plans to capitalize those opportunities.
Physical appearance of the location and inside the building also matters. It helps a lot to
attract the customer. Some branches of UBL are very attractive but all the branches should be

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well dressed.
Charge Card
UBL should provide the facility of charge card as well.
Recovery Facility
It should also provide the facility of recovering notes payable and accounts payable.


HO Head Office
RHQ Regional Head Quarter
TFCs Term Finance Certificates
CDR Call Deposit Receipts
CEO Chief Executive Officer
COD Certificate Of Deposit
CDR Call Deposit Receipt
MICs Monthly Income Certificates
PLS A/c Profit & Loss Sharing account
DD Demand Draft
MT Mail Transfer
TT Telegraphic Transfer
IBC Inward Bills Collection
IBCA Inward Bills Collection Advice
OBC Outward Bills Collection
OBCA Outward Bills Collection Advice
OD Over Draft
ATM Auto Teller Machine
DA Delivery against Advance
DP Delivery against Payment
LC Letter of Credit
SLC Sight Letter of Credit
ULC Usance Letter of Credit
B/L Bill of Lading
FOB Free On Board
C&F Cost & Freight
C, F & I Cost, Freight & Insurance
B/E Bill of Exchange
E-Form Export Form
KIBOR Karachi Inter Bank Offer Rate (in Pak Rs.)

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LIBOR London Inter Bank Offer Rate (in foreign currency)
T-Bills Treasury Bills
PIB Pakistan Investment bonds (common bonds)
NIDF Non Interest Demand Finance
NICF Non Interest Cash Finance
CAD Credit Administration Department
RCAD Regional Credit Administration Department
DAC Disbursement Authorization Certificate
SME Small & Medium Enterprises
CIB Central Information Bureau (of SBP)
LPR Leaves Prior to Retirement
BBFS Borrower’s Basic Fact Sheet
TC Trade Checking
CRM Credit Risk Management

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