Internship Report

INTRODUCTION OF ASKARI COMMERCIAL BANK

FORMAL DEFINITION OF BANK

Bank is an institution which revives money from one party and lends to
another party.
These are the following types of banks
 Central Bank
 Commercial Bank
 Industrial Bank
 Exchange Bank
 Saving Bank
Evolution of Banking
Bank Origin

There are different views about origin of the world “Bank”. According to some
people the word “Bank” is derived from the world “Bancus” which
means a “Bench”. They argue their point by this transacted their
business of money exchange on the benches. If the business of any
businessman failed, his bench was destroyed by the people. Due to
this practice the word “Bankrupt” was also used.

On the other hand some people say that the world “Bank” is derived from
German time the word “Bank” was replaced by the word “Bank” which
is called “Banco” in Italian language.

EVOLUTION OF BANKING
The history of banking evolution is very interesting. In the early ages human
like and wealth was not secure. Due to fear of loot-mar and theft people
buried their wealth under land but this method was not satisfied. People

1
Internship Report

started to search the custodians of wealth. The evolution of banking started

and it has crossed the following stages.

FIRST STAGE OF EVOLUTION.

After a great struggle people succeeded in finding the reliable persons to
deposit their money and valuable goods for safety. These people were
goldsmiths. These were considered the most trusted persons due to their
sounds financial position. On the other hand they had a very strong iron safes
for keeping gold, money and other valuable items. People started depositing
their gold and cash in the safe of goldsmiths. Goldsmiths charged something
for this purpose and they returned the depositors their money whenever they
needed banking evolution and goldsmith were the early bankers.

SECOND STAGE.
During this period those receipts which were issued by the goldsmiths against
the valuables goods were being used as a medium of exchange by the
merchants. People purchased the various things from the traders against
their receipts against the payments. So the receipts were used like the bank
cheque of the modern age.

THIRD STAGE OF EVOLUTION.

This period started at that time when goldsmiths came to know by the
experience that people are using their receipts as medium exchange and very
few people demand their deposits. So they reach to the conclusion that they
may lend some pro9tion of their total deposits to some other people and they
can earn profit. Goldsmith started the business of lending. They also started
paying interest to attract the depositors of net cash. Now this business
became very profitable, so the traders and money lenders also jumped in this
field.

2
Internship Report

FOURTH STAGE OF EVOLUTION.

It was started at that tie when people were tempted to deposit more and
more cash to the traders, money lenders and goldsmiths to earn maximum
interest. On other hand number of borrowers also increased borrowing the
money. So for the borrowing and lending business regular institutions came
in to being.

In the present age bank is modernized shape of those institutions. But to

earn more profit every bank started issuing overdraft facility without
maintaining adequate cash reserves to meet the demands of the depositors.
This inability created the financial crises. Now to maintain the good will of the
banks perform their duties. All the commercial banks perform their duties
keeping in view the instructions of the Central Bank.

Keeping in view the above discussion about the evolution of bank we can say
that it is the result of the different activity of goldsmiths, merchants and
money lenders. They are the real founders of modern banking business. All
the basic functions of modern bank like accepting are similar with the
founders. Now with the changing business requirements the secondary
functions of banks have been changing with the passage of time.

GROWTH OF BANKING IN PAKISTAN.

The entire banking business was controlled buy the non-Muslims before the
partition of the sub-continent. When Hindues became sure about the divisions
of the sub continent, they secretly began to transfer their capital to the safe
places in India. The funds and other valuables were transferred to India.

TIME OF INDEPENDENCE.
Hindues migration from Pakistan to India also caused drain on the bank
deposits. In order to ruin the economy of Pakistan. Hindues closed down

3
Internship Report

most of the head offices and branches of the scheduled and non scheduled
banks in Pakistan.

At the time of independence there were only two Pakistani banks, that is
Habib Bank and Australasia Bank. At the time, Pakistan had 631 branches of
scheduled banks and 411 of no-scheduled banks. The total deposits of
Pakistan banks were Rs. 800 million and advances were 198 million, the non-
scheduled banks number reduced from 411 to 106 over the same period.

The mass scale withdrawal of deposits closure of branches and migration

caused a deadlock in the banking business in Pakistan.

Keeping in view the above situation government, of Pakistan took various

steps to provide all kinds of facilities to they non-Muslim bankers for restoring
normal banking facilities but response was not encouraging.

Establishment of State Bank.

After independence it was not possible Sc-r Pakistan to set up the Central
Bank immediately. The Reserve Bank of India acted as a Central Bank of
Pakistan till 30th September. 1948 But it could not protect the interests of
Pakistan.

To remove the financial difficulties and to establish sound banking system

Govt. established the State Bank on 1st July 1948. In the development, to
banking system it played very important role as a Central bank of the
country.

DEVELOPMENT OF COMMERCIAL BANK

New branches were opened in the country with the development of banking
system. These banks also extended their branches to foreign countries.

4
Internship Report

SPECIALIZED FINANCIAL INSTITUTIONS.

Government of Pakistan established the specialized financial institutions like
ADBP. IDBP. NDFC, PICIC, HBFC. These financial institutions financed the
particular sectors like agriculture, industry and housing.

NATIONALIZATION OF COMMERCIAL BANKS

In 1974 Government of Pakistan nationalized all the banks. The weaker
banks were merged with the strong banks. It was argued that these were
nationalized So provide fair distribution of Credit to all the classes of people
and remove the monopoly of few Capitalists over the banking industry.

PRIVATIZATION OF COMMERCIAL BANKS.

Now government has decided to privatize the Commercial Banks. The banks
are in the process of privatization like other units of the economy since 1990.
This step is taken to provide better banking facilities lo the public. It was also
argued that loans were used as a political bribe and it destroyed our banking
system. People are not willing to repay the loans despite of all Govt. efforts.
So after privatization private banks will not accept the political pressure and
loans will be issued on merit.

In January. 1991, a privatization Commission was set up and two

Commercial banks namely MCB and ABL were transferred to private sector.
While other banks like HBL and UBL are under the process of privatization.

In August 1991 government has also allowed the establishment of new

private banks. Now new like Askari Bank, Platinum Bank, Indus Bank.,
Mehran Bank, Soneri Bank, Union Bank and Al-Habib Bank are established.
These banks have established their branches in all the important cities of the
country.

5
Internship Report

COMMERCIAL BANKS
Commercial banks are companies “which transact business of banking in
Pakistan Commercial banks have constituted the most important source of
institutional credit in the economy of Pakistan.

COMMERCIAL BANKING SCENARIO IN PAKISTAN

At the time of independence in 1947, there were 38 scheduled banks with
195 offices in "Pakistan. But by December 31, 1973 there were 14 scheduled
Pakistani Commercial Banks with 3,233 offices all over Pakistan and 74 offices
in the foreign countries.

Nationalization of Banks was not done 1st January, 1974 under the
Nationalization Act 1974 due to certain objectives. But it had negative effects
on the efficiency of the banking sector. The commission transferred many
banks to the private sector i.e. MCB and ABL.

ASKARI COMMERCIAL BANK

The government approved and the established private scheduled bank in
1990. It is a branch of Army Welfare Organization. (AWT).in 1992. It has
total 30 Branches and spread all over the Pakistan. Now it is no. 1 private
commercial bank. It is so successful only due to its safe portfolio of lending.
It provides a lot of facilities to its honorable customers. The main cause of its
success is its main concern on quality of services not quantity of service. Its
registered office or head office is at AWT Plaza. The Mall, Rawalpindi
Pakistan.

CORPORATE FLOW
It the corporate body consists of 12 Board of director including one chairman
1. President
2. Chief Executive

6
Internship Report

3. Secretary
4. NIT Nominees

ASKARI COMMERCIAL BANK LIMITED MULTAN

Askari Commercial Bank Limited D.I.Khan was inaugurated on December
28,1994.

It is located at Dera Ismail Khan Circular Road. The location is connected to

all the main trade centers in Multan. It is a prosperous branch streaming
towards great achievements.

At the time of its establishment the factored who were considered are as
follows

 Multan is zone covering a large population.

 Multan City is linked to many big cities.
 Agro based area constituting growers and gainers
 Army Offices & Fort Colony
 Educational Institution

The total strength of staff in ACBL D.I.Khan is 35. They are dedicated their
work. The branch is progressing rapidly. Under the dynamic leadership of
Operational Manager Mr. Javad

DEPARTMENTS
The bank has following department:

 Account Opening department

 ATM Department
 Credit Card Department

7
Internship Report

 Account Department
 Credit Department
 Remittance Department
 Foreign Trade Department
 Cash Department

ACCOUNT OPENING DEPARTMENT

Borrowing funds from different sources has become an essential feature of
today's business enterprises. But in the case of a bank borrowing funds from
outside parties is al l the more vital because the entire banking system is
based on it. The borrowed capital of a bank is much greater their own capital.
Banks borrowing is mostly in the form of deposits. These deposits are lent
out to different parties. Such deposit creation is done through opening an
account in the Bank.

In ACBL D.I.Khan Mr. Javed Ahmad is operating the account opening

department along with performing some auxiliary functions of Cheque Book
Issuing and receiving IBC’s (inward Bills for Collection).

TYPES OF ACCOUNTS
In ACBL, there are the following types of accounts:
 Current account.
 Saving Account.
 Askari Special Deposit Account.
 Askari Bachat Certificate.
 Term Deposit.

8
Internship Report

CURRENT ACCOUNT
In current account there is no interest on it. It is for only transaction
purposes. They are paid on demand. When a banker accepts a demand
deposit, he incurs the obligation of the paying all cheques drawn against him
to the extended of the balance in the account. As there is no profit paid on
this account it is also called chequing account because cheques can be drawn
on it. Current account is mostly opened for business.

SAVING ACCOUNT
The purpose of this account is to induce the habit of saving individuals in the
neighborhood. The profit is on the basis of 8.5% per 6 month. The minimum
deposit for opening the account is Rs.100/- (as obvious in the Annexure).
Though individuals open such accounts for saving purpose, persons belonging
to Armed forces and different military institutions are free to use this account
on current basis.

ASKARI SPECIAL DEPOSIT ACCOUNTANT

ASDA account is an interest bearing current account interest is paid. The payment of
return is monthly, where as the rate of return with aspect to the amount of minimum
deposit clear from deposit schedules in following table). It is also checking account
because cheques can be drawn on it. It is necessary for this account that the client
must maintain a minimum balance of Rs. 50,000 at the end of the month. That’s why
it is similar to current account. It is mostly opened by Business but individuals too
open this account.

Amount in Rs. Interest Rate

50,000 – 499,999 8%
500,000 – 4.99 million 9%
5 million – 20 million 10%
ASKARI BACHAT ACCOUNT
ABCs are long term fixed deposit for 3 and 5 years. Theses are not term
deposits because payment of return is on monthly basis rather than on

9
Internship Report

maturity of deposits. The minimum balance requirement is Rs. 25000/- and

maximum balance requirement is Rs. 1.0 Million. If ABC is for 3-years, the
rate of return for 3-years is 12% if ABCs is for 5-years the rate of return is
13%. Because in such account the balance is kept for either '3' or '5' years
within the bank no cheque is drawn on it. That is why it is not a checking
account. Return is made monthly.

TERM DEPOSITS
A term deposit is a deposit that is made for a certain periods of time at the
end of the specific period. The customer is allowed to with draw the principle
amount.

ACBL Term deposits are of types clear in the deposit scheme in the table).
One of them is "Askari" Advantage one month. The rate of return on this
account is 9.75%. The term deposit account vary one month to 5 years and
the min balance requirement is Rs.5000/- for all following accounts (as clear
from Deposit Scheme in the table ).

Period Interest Rate

One month 9.5%
2nd 9.75%
3rd 10%
6th month 10.5%
One year 11%
2 year 11.5%
3 year 13%
The amount of profit is given to depositors in three ways:
 By cash
 By sending a bank Draft to depositors Home address or Officers or
whichever is specified as mailing Address.
 The amount is credited in any one of the checking Accounts of the
depositor.

10
Internship Report

ACCOUNT OPENING PROCEDURE

For the checking accounts (C/A, ASDA, SAVING), there are different types of
account holders are required for all these types of account holders. The
operation /procedure requirement that is needed for " Individual Account "
differ greatly from " Joint account " proprietorship "Partner ship “, "Limited
Company" and "Club society or Association " as explained below.

INDIVIDUAL'S ACCOUNT
When a single man or women opens an account in his/her own name and has
the right to operate it is called individual Account.

DOCUMENTATION REQUIREMENT
For literate person copy of National Identity Card is required as a primary
requirement. For illiterate person and Veiled Women, along with the copy of
National Identity Card requirement he or she must come in person for
opening the account.

OPERATION
 The person place a "Check Mark " in the type of account and type of
operation required
 He/She fills in part-I of the form , a fix his /her either two or four similar
signature (or thumb expression in the signature space and get it
introduced and signed by a person who already has an account with the
bank and write his account no in the specific rows in a specific space.
 The person fills in "next of Kin " position where he/she father, mother,
husband/wife or any other relative's name, his /her address, phone no
and affix his/her signature to certify this requirement. This requirement is
needed because in his/her absence bank can have correspondence with
the specific person.

11
Internship Report

 The person put her /his signature (" or thumb expression) on the
signature Specimen Card (SS CARD) similar in the area on the form. One
the back of S.S card mailing address, telephone no, Person to contact and
introducer space is filled in. All these requirement are necessary for future
 The person deposits the initial amount for opening account on to the cash
counter.
The person put his signature on form -A (check book requisition) on two
places in "authorized signature" and fills in the "Title of Account space by
writing his name.
 If the person put his signature in Urdu or any language other than
English, he signed a "Vernacular form" where under take that affixed
signature are original and his own signature and two postal size photos
are needed.
The next day is the opening of account.

JOINT ACCOUNT
When two or more persons, neither partners, nor trustees, open an in their
name is called joint Account. Husband and wife or two persons of same sex
can open joint account.

DOCUMENTATION
For joint account copy of National Identity Card of all the persons is obtained
other things remaining same as in individuals account.
OPERATION
 The person checks the type of account and type of operation required in
the respective box on the form.
 The persons fill in the Part-I and part-II in the form.
 Signatures of both persons are obtained on the form in the area specified
for signature and S.S. Card.
 In the title of account space names of all the persons are mentioned.

12
Internship Report

 Accounts holder specified in the form that they will operate the form
singly or jointly.

PROPRIETORSHIP ACCOUNT
When an owner of a firm operating singly, opens an account in his firm
name, this account is called a proprietorship Account the proper himself liable
for all his acts.

DOCUMENTATION REQUIRED
For this kind of account, an application for opening the account on the firm
letter -pad (having the firm name) is required along with the N-I-C- Card of
proprietor.

OPERATION
Al l operation remains the same except that the firm name is written in the
"Title of the Account" area and signature of the proprietor are affixed in the
S.S. Card and the area specified for signatures on the form.

PARTNER SHIP ACCOUNT

The account is opened in the firm name and all partner designate one two
persons to act on behalf of the partner ship firmer all acts on behalf of firm.
The partners in the partnership firm are liable for the acts of the firm jointly
and severely. Every partner has in a firm has an implied authority bind his co.
partners by drawing and enclosed cheques.

DOCUMENTATIONS
 Copy of N.I. card of all partners
 Application to open the account on the firm letter pad.
 Partner ship deed in case registered partnership firm.

13
Internship Report

 Letter showing the implied Authority of one or more partners to act on

behalf of the firm.
 In case of non -registered partnership firm, understanding on behalf of
the firm to remain liable for all acts of the firm.
 Name, address of all partners is written on the pad.

OPERATION
All other requirement remain same except that the form is dully signed by all
partners cards are signed by all those partners who will act on behalf of the
firm and along filling part-I , Part-Iv is also filled.

LIMITED COMPANY ACCOUNT

This account is for limited companies. In order to facilitate their transaction
with outside parties, bank provides many facilities.

DOCUMENTATION REQUIRED
 Memorandum of Association.
 Articles of the Association
 Resolution of the Board of Director.
 Certificate of Incorporation.
 Certificate of commencement of business
 N-I-C

OPERATION
The persons authorized in the Resolution of the Board of Directors put their
signatures on S.S Cards. Next of kin "requirement "is not need in case of a
Limited Company. After completing each and every formality, introducer
signature is verified by S.S card and is stamped "Verified" customer
signatures are admitted by stamping "Admitting" near signature and again
signatures on S.S card are admitted in the same way. The same process of

14
Internship Report

verification and admission of the signatures is repeated on Form-A and next

of Kin area.
After completing each and every formality, Accountant is open in the
computer by writing name, address, A/C Number etc.

LETTER OF THE THANKS

At the start of the letter 2nd day, ACBL issues letter of thanks to "Account
Opener" and "Account Introducer" for the trust they have on ACBL.

OTHER RESPONSIBILITIES
CHEQUE BOOK ISSUING
Check books are issued only for checking account such as current Account,
saving Account and ASDA Account. They are not issued for other fixed and
term deposits because of their Long term Accounts “nature.”

ISSUING PROCEDURE
 Signatures on cheque – book requisition are verified by matching with
signatures on SS.
 Cheque – book leaves number, account number, account holder’s
name is mentioned in the cheque- book is made by mentioning the
and the total of sum of excise duty and provincial tax.
 The name of A/c holder and date of cheque – book issuance is written
on cheque – book requisition the account-opening officer puts his
initials on requisition leave.
 A/c number is stamped over the leaves of cheque – book and finally
authorized person affix his signature over the debit voucher and
cheque book is handed over to the customer.

15
Internship Report

RECEIVING INWARD CHEQUES

Another responsibility and function of account Opening Department is to
receive Inward cheques for collection of other Banks as well as of
ACBL. Then these cheques are sent to clearing official who clears
these checks at SBP from other banks. Inward bills from collection
opposite are IBC number, their OBC number. Lodge in clearing
cheques pending on realization. Cleared cheques are credited in the
bank account.

ENCASHMENT OF CHEQUE
Issuance of Token
After scrutinizing the apparent tenor of cheque a token is issued to the
account holder.
Verification of Signature
After affixing the two stamps i.e. paid stamp and branch stamp, a cheque Is
sent to the accountant for the verification of signature from signature
specimen card. After authentication a cheque is sent to cash department

Encashment of Cheque
Cashier pays the amount to token holder after getting back the token from
him.

16
Internship Report

Deduction of Zakat
Form the profitable accounts zakat is deducted at the rate of Rs. 2.5 %
.annually on the outstanding balance of accounts on the first day of every
valuation dale i.e. first day of Ramzan. The Central zakat Authority (CZA)
fixes minimum balance for the deduction of zakat before the valuation date

Exemption from Zakat

The accounts of foreigners (including Muslims of other nations) and Pakistani
non-Muslims arc exempted from (lie compulsory deduction of Zakat. The
accounts of the followers of Fiqah-e-Jafria sect are also exempted from the
deduction of Zakat after the submission of affidavit on a legal stamped paper.

Withholding Tax
Whenever a profit is paid on any deposit it is subjected to the withholding tax
@ 10% annually.

Closing of Accounts.
There are many reasons for closing of account. Some of the more common
reasons are as follows: -
1- Account holder's own request
2- Death of account holder
3- Bankruptcy of account holder
4- Closing of account due to bad demeanor of account holder etc.
An account is .closed at the request of an account holder or as a result
of improper conduct of the account holder or because of nil balance of
the account. In first case account holder’s request the manager of the
Bank to close his account in black and white.

Account is closed on the written request of the customer ACBL debits Rs.
100/- as charges for closing the customer account from that account. The

17
Internship Report

account holder with draws the amount by writing a cheque and just leaves
Rs. 100/- in his account. But to surrender the cheque book yet if some leaves
are yet to be write to the bank as a necessary requirements for closing the
account.

PROCEDURE
1. The customer for individuals account write an application to the manager
of the bank an a simple paper about the closing of his account with the
bank (In case of proprietor ship partnership and limited company account
the application should be written an firm or company letter –head)
2. The individual or in case of other type- proprietor firm and company
surrender the cheque book to the bank.
3. The cheque book is then torn from one side and is attached with the
application.
4. In case of Ltd. Company account resolution of the board of directors is
also obtained to attach it with the application.
5. The account opening form of the account holder is taken from the
account-opening file, and the application, cheque book, and resolution of
board of directors in case of limited company account are attached with
the form.
6. Lastly, it is written in “Red Ink on the form that account closed” and “Date
of account closing.”

EVERYDAY POSTING
Following transaction of cheque book is posted:-
Dr_____________ party A/c 25(for 10 leaves)
Cr______________ excises duty on cheque book 20
Cr______________ provincial tax on cheque book 5

18
Internship Report

ATM- CARDS DEPARTMENT

This department deals in issuing ATM-Card, term deposits and Askari Bachat
Certificate. Mr. Kamran deals this department.

ATM CARD
ATM – Cards are only issued to Account Holder. Any account holder of ACBL
(current “Saving Value plus Saving Account”) can obtain ATM card from ACBL
with in 15 days. Maximum limit of daily cash withdrawal is Rs. 10000.

ISSUING PROCEDURE
1. The person, first open the account within the blank.
2. Then he fills the ATM application form in which name of account holder,
account number, address, phone number are mentioned.
3. Then on the same application form bank officer guides branch code,
application number and signatures are verified by the bank. Bank
manager puts his signatures.
4. After completing this process, the application package is sent to card
centre.
5. Card along with pin code is sent to the branch from the head office. ACBL
head office takes a period of 3-4 weeks for preparing and processing of
ATM – cards. First, list of card holder is issued and then after 15 days
cards are sent to ACBL issuing branch. The card and list are not sent
simultaneously in order to avoid any mishandling.
6. ACBL takes Rs. 200/per year or Rs. 100/semi annual as charges for a
card.
You can deposit money “withdraw” get balance inquiry “transfer the fund” 24
hours a day at any branch of ACBL which has ATM facility. ACBL ha shared
ATM network with ABN AMRO and HBL.

19
Internship Report

ASKARI BACHAT CERTIFICATE

The ABC application form is filed and signed. All the requirements are
properly fulfilled. The details are written. The credit voucher is made against
the cash that the customer deposits to the bank. The certificate is filled
according to the specification. The certificate is then handed over the
customer. The entry is made in the ABC register. The application is then
posted in the file.

TERM DEPOSIT
Any person can open a term deposit. He needs not have an account in the
bank.

PROCEDURE
 The customer comes to the bank and specifies the number of days for
which he wants to Deposit hid money in term deposit.
 The credit voucher is made for the amount of cash to be deposited. The
presence of account is not necessary.
 The term deposit form is then filled by the officer. The date of opening,
the period, the name of the customer, the signature etc is all written on
the form.
 The term deposit Receipt is filed according. All the requirements are
carried out, the signature of the customer and the authorized officer, the
stamp of the bank etc.
 The term deposit Receipt is then given to the customer.
 The number of the term deposit form and term deposit is noted receipt is
then given to the customer.
 The number of the term deposit form and term deposit receipt is noted in
the term deposit Register.
 After completion of the form, it is posted in the term deposit file.

20
Internship Report

 A 0.2% tax on the provincial amount is taken while issuing the receipt.
 A credit voucher made and the amount is credited to the tax on TD.

ACCOUNTS DEPARTMENT
Accounts department is a department which deals and checks all the activity
of all the department .It also deals in expression of finance of the bank.
Salary payment is also one function of the bank. Mr. Kamran and Miss.
Shagufta deal this department.

CHECKING BANK’S DAILY ACTIVITY

Accounts department deals and checks the entire working of the Branch; all
the vouchers that have been posted at the computer are scrutinized in
accounts department. The “End of Day” i.e. computer print is also received
from the computer. The next day the activity is separated some statements
from the “End of Day”. Then next day activity separated some statements
from the “End of Day”. The vouchers are sorted out head wise. The vouchers
are matched with the entries in the statements.

Any abnormality if occurs, is immediately dealt with. All the vouchers and
instruction are checked individually are checked individually against the
computer printouts. After checking they are signed by Mr. Kamran and the
internal auditor Mr. Shafiq.

OTHER ACTIVITIES
 Preparation of daily bank positions statement
 Payment of salaries
 Preparation of the statements
 Depreciation calculation

21
Internship Report

REMITTANCES DEPARTMENT
Remittance department provides services to the customer of the bank. The
main function of this department is transfer of funds. Incharge of the
department is Mr. Ahmad Feroz.

INSTRUMENTS OF BILLS & REMITTANCE DEPARTMENT

The instruments that are handled in the B & R department are as follows:
 Demand Draft.
 Telegraphic transfer.
 Mail transfer.
 Pay order.
 Pay slip.
 OBC.
 IBC.

DEMAND DRAFT
A demand draft is an instrument, which is drawn by one bank upon another
bank for a specific sum of money payable on demand. It is made by the bank
and given to the purchaser against cash or cheque. If two banks are involved,
then one banks sends a DD to another bank. But in customer - Bank case the
customer sends his DD to the receiver.

ISSUANCE PROCEDURE
A demand draft application (Annexure--) to given to the customer, he fills in a
relevant information and signs it.
 The Officer in charge then checks the information form.
 The charges such as commission, excise duty, postage is charged as per
effective schedule of charges. Tax is exempted if he is taxpayer & knows
his No.

22
Internship Report

 In case of cash deposit the cashier counts he amounts & signs the DD
application and enters it in the register.
 The cash received equals the amount of remittance & the cheques there
on.
 Then the officer of the bills & remittance department signs it and
operation manager counter signs it.
 The entry is made in the DD issuing register.
 It is given to the customer.
 Vouchers are passed.
Commission charges Cr
Excise duty Cr
 The vouchers and the DD form given for posting at the computer.
 The DD advises are printed at the computer and mailed to the respective
branch.

NOTE
On the contra, when a DD is received i.e. a customer comes to us with the
DD, the procedure is as follows.
 The DD credit advice is received through mail. The No’s are checked &
signatures are verified.
 An entry is made on the DD payable register, and the vouchers are made.

The Branch Dr
DD payable Cr
 The DD credit is attached with the vouchers and given for the posting at
the computer.
 When DD is received, the test No’s are checked, and the payment is
made.
 The vouchers are given for posting. And the entry that was made in
register is closed. i.e. DD payable is Nil.

23
Internship Report

TELEGRAPHIC TRANSFER
A telegraphic transfer is a fastest & safest way to transfer money. The
message is fixed.

ISSUANCE
 The request for maintenance through T.T is taken on the standard printed
form.
 The customer fills it & signs it.
 The Head & remittance department checks it, the charges such as
commission, tax, telex as per effective schedule and signs it.
 If he fills the tax exemption from then no tax is levied.
 Then a neat T.T is made on the white slip. There are 3 copies. The
original faxed to the Branch, one to the Head Office and one is kept as
record.
 The entry is made in the TT issuing register.
 The following vouchers are posted.
Commission Charges Cr
Fax charges Cr
W.H. Tax. Cr
 When commission bill is received, it is attached to the T.T office copy in
the file.

PAYMENTS
 When a T.T arrives, the test numbers are checked and the signatures are
verified.
 The entry is done in the T.T pay able register.
 The following vouchers are prepared & given for posting.
Head Office Dr
T.T Pay able Cr
T.T Payable. Dr

24
Internship Report

Party A./C. Cr
 If there is no a/c then the T.T receipt needs revenue stamps and then the
payment is made. The T.T receipt is strictly non negotiable.

PAYORDER
It is a cheque drawn by a bank on itself. Pay order is an instrument in which
the parties are involved the purchase, the bank and the receiver. It can he
purchased by any customer. It is usually made by govt. Bodies. A single bank
is included in this case.

ISSUANCE
 The standard form is given to the customer; he fills in the detail and signs
it.
 The concerned staff checks the form.
 Charges as per effective schedule are applied.
 The cash of the pay order is received.
 A cost memo is signed, stamped and handed over to the applicant as a
receipt.
 Then the pay order receipt is filled accordingly.
 Counter foil is also filled.
 An entry is made in the pay order issued register.
 Then the authorized office after checking the pay order signs it.
 The pay order is then handed over to the application after obtaining his
signature on the P.O form.

A voucher is also made and posted at the computer Cr bills payable account
P.O issued.

25
Internship Report

PAYMENT
 On representation of the pay two authorized officers of the branch sign
order receipt the receipt.
 The P.O entry is made in the P.O issued register.
 Then the amount is credited to the account of the customer or paid in
cash.
 The P.O is posted at the computer.

Dr bills payable A/C P.O issued.

PAY SLIP
It is an instrument used by the bank s for its payment. The slips are issued
to the employees of the banks their bills & invoices. The bills are transferred
payments. In this case only one bank is involved. He is the issuer as well as
the payer.
Procedure prescribed for P.O for issuance and payment is followed for
payment is followed for pay slips with the following expectations.
1. Pay slips are the issued by the bank for the settlements of this own
payment.
2. No excise duty is applicable on P.S.

ISSUANCE
 A credit voucher is sent from the accounts dept. to the b debt. According
to the b debt.
 The P.S books is taken out & filled according to the credit voucher.
 It is entered in the P.S. /P.O register.
 It is signed by, an authorized officer, Operational Manager Mr. Zubair
Sheikh.
 The pay slips is handed to the customer.
 A voucher made and posted payment.

26
Internship Report

 The P.S. is received on the counter, clearing or transfer.

 On receiving the P.S. if it is transferred in the P.S. register.
 The payment is made and the P.O. is posted at the computer.
 Dr. Bills payable P.S. issued.

If Askari branch is in that city, the OBC forwarding schedule in sent to that
Askari Branch. Otherwise it is addressed to the particular Branch to whom
the cheque belongs.

OUTWARD BILLS FOR COLLECTION

The bills, which are sent to their cities banks for the local clearing in that city,
are called outward bills for collection.

PROCEDURE
 The cheques that are banks in other cities are separated.
 They are entered in the OBC register, the number is written on the
stamps.
 The OBC forwarding schedules / (Annexure) are prepared for the different
branches.
 The respective cheques are attached with the schedule.
 Two authorized officers sign the schedule.
 The office copy is filled and the original schedule is mailed.
 On clearance the respective banks send back the OBCS along with IBCA.
Inter branch credit advice.
 The OBC no are checked for the OBC register and the received any entry
is made.
 Charges i.e. commission charges and postages charges are deducted from
the A/C.

Vouchers of following entries are made.

27
Internship Report

Party A/C Dr
Commission Charges Cr
Postage charges Cr
At the end of the day the contra vouchers are.
OBC collection Dr
OBC lodged Cr
OBC collection Dr
OBC lodged Cr

INWARD BILLS FOR COLLECTION

The bills are received from other banks out of city for the local clearing are
called inward bill for collection.

PROCEDURE
 The OBC of the other branches will be the IBC’s of this branch. So an OBC
forwarding schedule is received by mail.
 The cheques are entered in the IBC register. The IBC numbers are
allotted to them.
 The cheques are lodged for clearing.
 After realization, an IBCA is prepared and mailed to the branch.
 At the end of the day two contra vouchers are made & posted.

IBC collection Dr
IBC logged Cr
IBC Collection Dr.
IBC lodged Cr

28
Internship Report

OTHER FUNCTIONS
BALANCING THE REGISTER
At the end of the day, all the registers are balanced with the computer
balances. The heads and checked are as follows.
 DD payable
 IBC collection.
 MT payable.
 OBC lodged.
 OBC Collection.
 TT payable.
 IBC lodged.
 Bills payable. P.S. issued.
 Bills payable P.O. issued.
If the payables are not cleared for a lot of days, a reminder is sent to the
respective branches.

FOREIGN TRADE DEPARTMENT

Incharge of the department is Mr. Noor. Foreign trade department deals in:
 Foreign currency account
 Exports
 Imports

FOREIGN CURRENCY ACCOUNT

Mainly this account deals in individual, personal and companies account

CRITERIA FOR OPENING FOREIGN CURRENCY ACCOUNT

There are not hard and fast rules for becoming the Foreign Currency Account
holder. Bank wants only introduction of the Client and very little about the
background. I.D card is also not necessary, if someone has; well and good,
otherwise no restriction will be there for him.

29
Internship Report

FEATURES OF FOREIGN CURRENCY ACCOUNTS

There will be legal protection for the account holders.
According to foreign exchange rules and regulation every citizen of Pakistan,
either within the Pakistan or outside the Pakistan, can open the foreign
currency account.

Resident firms and Resident Companies including investment Banks can open
Foreign Currency Accounts.

All foreign nationals and foreign Companies in Pakistan or abroad can open
Foreign Currency Accounts.

Opening of Foreign Currency Accounts in the joint names of residents/non-

residents is permissible. Foreign Currency can be deposited by:
 Remittance received from abroad
 Foreign Currency Notes
There will be no restriction and questioning to him about the currency, which
he wants to deposit that from where he got that money.
No Zakat will be deducted on these accounts; no Income Tax deduction, no
Wealth Tax deduction will be there.
These incentives reinforce and motivated the people to invest in foreign
currency accounts rather to keep the foreign currency idle.
Foreign currency accounts can easily be transferred from one person to
another, one place to another, with in the ACBL Branches or in other Bank.
The account holder can transfer the funds freely, in any currency to any part
of the world.
Foreign currency Accounts can be used for payment of purchases at Duty
Free shops.

30
Internship Report

FACILITIES
This account provides following facilities:
1) Traveling quota
2) Out ward remittances
3) In ward remittances receiving
4) To make remittances procedure flexible

EXPORT
Mainly export deals in:
 Negotiation of documents
 Sending the documents for collection
 Pre-shipment financing
 Post-shipment financing
 Remittance against agent commission
 Forward covered booking
 Handling the documents for negotiation according to the UCP 500
(uniform custom and practices)
 Handling the documents for collection according to URR (uniform rules
for collection)
 E form.
 Internal transactions are through Nostro and Vostro accounts.

This section helps the exporters to settle the financial affairs

Registration
Who so ever desires to export the goods first of all he has to get his name,
name of firm, or his limited company registered with the export promotion
bureau. After getting registration, the exporter will be allowed to export his

31
Internship Report

commodities. In order to get his name registered with EPB, he has to submit
the following documents.
 Bank certificate, showing that the exporter is account holder and have a
good dealing with us.
 Income tax certificate.

Documentation.
The exporter must submit the following documents to the negotiation bank.
 Bill of exchange
 Invoices
 Insurance documents
 Bill of loading

As an evidence of dispatch of goods the shipping documentary bill are

indispensable part of documents. It is essential for the shipping documents to
clearly sale the parties. The name and address of the shipper, the name of
consignee. Shipping documents must be drawn out in prescribed from by
valid shipping or airlines.

The quantity, description, weight and packing of the goods should agree
with the invoices documents must also clearly sale the route that the vessel
or airline shall take. The route must be signed and initials should be appears
on it.

Sometimes the buyer through the documentary credit requests the sellers to
certificate of origin and packing list.

After submission of the documents to the negotiating bank seller is bound to

receive his payment. The bank on its part to also duly bound to make the

32
Internship Report

payment however it is only reasonable to allow the bank sufficient time to

scrutinize the documents that exporter has submitted.

If the bank finds the documents correct then the bank will make payment to
the exporter after confirming with the buyer’s bank. The necessary
documents includes the L/C form normally directly comes to the exporter and
not to the bank. The exporter brings all these documents comes from foreign
banks either through telex or courier service then the documents are sorted
and test is applied and if it is correct, then stamp of test corrected without
engagement on our part is affixed. After examining the documents, the
advising bank made a scrutiny sheet to check the amount of L/C as well as
amount of bill of exchange etc.

The advising bank certifies From-E after checking the invoices, L/C and the
contract attached with From –E. after certification from the bank the exporter
then goes to the custom authorities and makes certify form there and finally
goes to the port for shipment.

E-Form.
Every exporter is required 10 furnish a declaration to customs authorities for
goods exported. This deceleration is submitted on a prescribed Form-E in
quadruplicate which is certified by the authorized Dealers.

1. Maintenance of Record of E-Form:

The Stock of E form is provided by the authorized dealers Head Office to the
Exchange dealing branches and the proper record is maintained in the E-form
Stock Register the dealing branches maintained two registers one for the
purpose of issuance of 'E' form and the other for certification of E-Form.

33
Internship Report

2. Issuance of E-Form:
Blank 'E' form in quadruplicate is issued to the exporter having an account
with the branch against little request. In case the exporter maintains his
account at a branch other than the exchange dealing branch, the request is
routed through his branch. Before issue E-Form it is ensured that the
exporter has tendered the attested photocopies of required documents e.g.
valid export registration corticated, N.I.C., NTN, Challan Copy of renewal few
paid. Credit report of the exporter is also obtained to ensure the credit
worthiness of the exporter. The set of E-Form after completion of all
formalities is then entered in the E-Form issuance register and
acknowledgement is obtained from the exporter or any authorized person of
the exporter.

3. Certification of E-Form
Before lodgment of E-Form to custom authorities is requested to be certified
by the authorized dealers. When the quadruplicate set of E-Form is
presented for certification the same is very minutely scrutinized and following
details are checked
1. Export registration number is correctly mentioned on the E-
Form
2. Signatures of the exporters or his authorized signatory are duly
verified at the counters.
3. E-Form should be correctly and properly filled in withiest any
overwriting unauthentic corrections etc.

The following columns should be properly filled

a) NTR NUMBER, Income Tax Circle, and CCI & E Register number
and date.
NIC number with dale and place of issue.

34
Internship Report

I) Name and complete address of the exporter along with

Telephone number.
II) Item of export showing quantity and that it is not a banned item.
III) Value of the: invoice mentioning the currency.
IV) Terms of payment e.g. C+F, C1F or FOB.
V) Country of export (destination) to ensure that the country where
export is made is not a restricted one e.g. Israel.
VI) Term of sale e.g. against Letter of Credit, firm contract or consignment
safe. Whether on sight basis or on usance basis. It terms is of usance
are beyond i20 days, .Stale Bank of Pakistan permission is also
required to be obtained.
i) Mode of transportation.
j) Name and address of the foreign buyer (Importer).
Advance Payment
Sometimes the exporter may receive the payment for the item to be exported
in advance without waiting for documents in such a case the advance
payment received for this purpose is required to be declared by the exporter
on the prescribed form. Advance payment voucher. A proceed certificate is
issued to the exporter. For such payments which is required to be produced
at the time of presentation of documents for negotiation.
Advance payment is certified on the reverse side of ‘E’ from under the seal
and signatures of the authorized dealer which is required for reporting to the
state bank of Pakistan.

CERTIFICATION
After certifying the correctness of the E-' Form certification register in the
folio allocated to each exporter separately. Bank / branch stamp is filled
beneath the duly certified are delivered to the exporter or his authorized
person.

35
Internship Report

Submission of 'E* Form:

After certification of 'E' form all the four copies are submitted by the exporter
along with shipping bill to (he customs authorities for clearance
(^'consignment. Three copies of ‘E' form are returned by the custom
authorities retaining the original after endorsement of shipment on relative
portion on 'E' form. The duplicate copies retained by the exporter while the
duplicate and triplicate copies are submitted to the authorized dealers along
with other documents for negotiation within 14 days from the date of
shipment. The bank retains the quadruplicate copy for its record while the
duplicate coy is surrendered to State Bank of Pakistan or realization proceeds.

Utilization of ‘E’ Form

‘E’ form should invariably be utilized and received within 21 days from the
date of certification for 14 days from the date of shipment failing which the
exporter is persuaded to submit without further delay. In case the exporter
does not respond to the requests, the matter is reported to State Bank of
Pakistan.

Cancellation of form ‘E’

‘E’ form is canceled is 2 ways.
1. If goods are not exported and ‘E’ form is not presented to the
customs the authorities, the same is surrendered to the
cancellation which is recorded in the separate file duly marked
‘canceled’.
2. If ‘E’ form has been tendered to customers authorities but the
goods could not be shipped due to non – availability of space in
shop or due to any other reason, the exporter is required to
submit three copes of ‘E’ form along with original.
Shut out notice duly stamped and certified by customs to the bank. The
bank submits all the three copies along with shut out notice to the state

36
 Internship Report

bank of Pakistan under a covering letter for cancellation and record at

their end.
Collection mechanism explained diagrammatically.

COLLECTION MECHANISM

Sales Contract IMPORTER

EXPORTER

Goods Bill
Bill paid/ Presented
Proceeds Documents acceptance
Credit to and paid
exporter’s a/c

REMITTING Documents COLLECTIONG

BANK BANK

Proceeds
Remitted

Collection Mechanism Step by Step

Step 1. Exporter and importer conclude sales contract.

Step 2. The exporter ships goods to the importer’s country.
Step 3. The exporter through a covering letter and lodgment form
forwards his bill of exchange along with the supporting
commercial and transport documents to the remitting bank.
Step 4. The remitting bank forwards the documents to its branch or
correspondent bank in the importer’s country called
COLLECTING BANK, under cover of its collection schedule called
the COLLECTION BANK.
Step 5. The collecting bank if it is not the importer’s bank will forward
the documents to the importer’s bank for presenting them to
the importer of payment or acceptance of the bill of exchange,
as the case may be.

37
Internship Report

Step 6. The importer pays the sight bill o9r accepts if it is a usance bill.
Step 7. The collecting bank (or the presenting bank if it is other than
the collecting bank) presents the accepted bill to the drawee
(importer) on the maturity of the bill for making payment.
Step 8. The collecting bank remits proceeds to the remitting bank.
Step 9. The remitting bank credits the proceeds to the exporter’s
account.

IMPORT
 Opening the letter of credit
 For issuing the L/C bank requires sufficient funds in the account of
importer.
 Scrutinize the documents receive from flowing bank under letter of
credit. Account to UCP 500 and extending the credit facility to the
importer informs FIM (finance against imported merchandise) FATR
(finance against trust receipt).
 Arrange forward cover booking regarding import payments
 Also arrange forward cover booking for letter of credit open other then
ACBL
 Submission of monthly returns to SBP regarding the import on form I

CREDIT DEPARTMENT
Credit department deals with the extension of advances to individuals,
companies etc. basic function of credit department is to extend advances by
checking carefully all the documents, securities necessary for fulfilling the
requirements which are necessary, for extending advances. Incharge of the
department is Mr. Shaukat Babar.

38
 Internship Report

Types of Advances.
i) funded advances
ii) non funded advances

Funded Advances
Funded advances are those advances in which funds of banks are involved.

Funded Advances

Term Finance Revolving Facility

Term Finance.
Main features of term finance are
i) It is for proper time period. May be of one year, two year, and
three year. House building finance is including in term finance.
ii) Account will be debited only once adjustments are possible further
but account will be debited only once.

Term Finance

Clean Secured

Secured Finance.
Financing against Govt. securities i.e. price bonds, defense saving certificate.
Documents Required.

39
Internship Report

L/C, demand promissory note, L/G.

Clean Finance.
These funds are extended against personal guarantee for salaries people.
Documents Required.
LC of Govt. salaries personal, letter of guarantee.

Revolving Facilities.
Proper limit is facility is called summing.

Types of Revolving Facility.

i) Running finance
ii) Cash finance.

Running Finance.
It is extended the business community and Govt. enterprises.

Cash Finance.
Cash finance against tangible securities.

Non Funded Advances.

Non funded advances in which bank funds are not involved e.g. L/C, L/G.

Credits policies & contract guidelines

 Directors determine the commercial credit activity of ACBL
 Delegation of authority to credit committee
Policies are as follows
 Credit principles
 Credit portfolio limits

40
Internship Report

 Credit approval
 Credit administration
 Credit monitoring

Objectives
 Provision of suitable credit services and products
 extension of credit is out compromising the rules and regulations

Performance
The advancement shall focus on the development enhancement of customer
relationship

Administration
Administration should insure compliance that is all laws and regulations of
regulatory authorities loans / facilities and related security shall be closely
and regularly monitored and reviewed at the branch level. By a separate unit
unconnected it credit approval.

 Total facilities
They must confirm it to the regulatory requirements.

 Term facilities
Aggregate term facilities in excess of one year should not exceed 30% of
the total credit portfolio

 Exposure to customer group

Credit facilities extended any one or group must not exceed the guidelines
currently inforce by the regulatory authorities.

41
Internship Report

 Unsecured facilities
Similarly the aggregate of all advances to a single person should not exceed
the guideline. Exposure against none funds based facilities. The aggregate of
contingent or non-funds based facilities should not exceed ten times paid up
capital and open all resources.

 Financing against shares

Unsecured credit facilities will not be extended towards floatation of share
capital listed companies.

 Conditions
Borrowers liquidity ratio. The current ratio of the borrowers must be equal to
or less then one. The debt to equity ratio should not exceed 60:40.

 Credit reviews
All limits shall be subject to at least an annual review.

 Credit Approval.
The primary individual factor determining the quality of the bank’s credit
portfolio is the ability of each individual authority. Credit will be extended in
accordance to the authority levels. Approved by the BOD from time to time.

 Credit risk assessment

Prevention of criminal use of banking channels. Efforts should be made to
determine the true identity of a customer and in case of cash transactions the
source of funds is established.

 Credit administrations
The principle amount of credit add are as follows
 Credit approval

42
Internship Report

 Credit file maintenance

 Facilities evidence

 Credit monitoring and review

 Bank ACBL
 Capital funds
 Credit facilities / extensions

It means granting of financial accommodation or considerations to a

customer, which incur the back in monitory loss in the case of non payment
or non performance by the customer.

 Secured Advances
Pledges, hypothecation, charges or mortgages on tangible readily realizable
assets.

 Security is often an additional security over & above the assets. For
example advance allowed against stock in trade.

 Unsecured / clean
Which are not covered by any tangible security.

 Credit committee
Head office credit committee only

43
Internship Report

Objectives of Lending
In the modem economics, more than 90% business concern raises their
funds from various financial institutions to meet their multifold transaction.
Actually it is very difficult for the modem businessman to run his business on
a huge scale solely. He has to float his shares to the public or knock the
doors of financial institutions, for example Bank. The most easy way to make
fund available to seek assistance by such agencies including Banks which
have got surplus funds and will to come to the assistance of producing units,
and distributing units, and exchanging units. This is the primary factor which
toads towards lending of money by Banks. No doubt, we cannot neglect the
second factor profit orientation while running the credit business, the single
way for the bank to earn profit lies in lending money to the customer on
comparatively higher rate to mark-up that it gives to the depositors.

Principles of Lending
Apart from the instructions and directives sent by the state Bank of Pakistan,
Muslim commercial Bank, Ltd. Guided by three basic principles of profitability,
safety, and dispersal.

1. Profitability
The management of Muslim Commercial Bank, ltd. Is very careful to seek
advances where advances can generate a higher return. Bank has to spend
huge amounts on establishment, payment of profit to depositors, salaries of
the staff, other variable expenditure and to provide a fair return to the share
holders, it must therefore, earn profit.

2. Safety
Safety principle is very important. No one will take a risk of losing the
principle in order to earn profit. So bank will prefer to lend at lower rates than

44
Internship Report

to risk his money for higher rates. For making his advances safe, a bank
select his borrowers cautiously. Safety does not necessarily means the taking
of security. It would be wise, not to lend however, good the security be if it is
clear that it will have to be realized for clearance the debt. Safety also
employs the borrower's ability to reply without difficulty. Another aspect of
safety is the lenders legal right to claim repayment from the borrower.

3. Liquidity and Disposal

In its simple definition liquidity means the easy convertibility of an asset into
cash. But when we speak of liquidity in relation to advances, it is rather
different, It means the adjustment of advances at a short notices. Bank
advances are made in such a manner that they are repaid in reasonable
period so that the bank can make new advances. Dispersing the advances in
reasonable amount over a large number and types of borrower is necessary
to avoid bid debt, stick up by single or few borrowers. It is therefore,
necessary to advance moderate sums to a large number of customer
engaged in different types of industries.

Selection of Borrowers
The selection of a reasonable and trustworthy borrower is complicated and at
the same time very sensitive task which requires decision-making power from
the bank employees. In the words of the manager of a branch of Muslim
Commercial Bank, Ltd. "Good selection of borrowers does the half task in the
profit of the Bank. 'Bank do not through money away but every application is
tested carefully before being sanctioned.
To assist the Branch manager in this test, bank provides a performed,
outlining the manner in which a proposal should be put forward for
consideration. If any specific information that is required is not mention, it
affects the proposal as a whole, making it appear weak or inconvenience, it is

45
Internship Report

therefore, necessary for credit officers to see that all relevant questions
following are, as far as possible completely and exhaustively answered.
Following are 6'C, S and 3P's, which are considered before lending:

1. Character
The bank get to know the customer we!! and be able to judge his intentions,
for the bank shall be entering into a contract with him involving the financing
of his business. It is, therefore, common and business senses to make sure
that the other party to this contract will live up to his obligations, this factor,
therefore, contributes significantly to the safety of the advances, as it relates
to the willingness to repay under all circumstances. Particularly adverse
circumstances. Are the partners or directors of the business unit, which is
seeking finance, persons who can be relied upon as regards details of their
proposal as will as promise of repayment? What is their reputation in the
market place for meeting their commitments in respect to prices & delivers to
purchasers and timely payment to their trade creditors? Confidential and
tactful inquiries from wholesalers, suppliers and other bankers are necessary
to obtain this essential information.

2. Capacity
This factor relates to the ability of the borrower to manage his business
successfully. Do they have the necessary management, accounting and
technical skills? And the degree of experience, in the particular line of
business for which the finance is required, to utilize the advance productively
and profitably, so that repayment is possible, along with our share of the
profits? This ability can be judge from the trading results. A study of the
company's audited financial statements for the past few years would real
whether sales have deep growing, stagnating or declining or declining.
Similarly, the trends of gross & net profit margins indicate the profitability or
other wise of the business. The efficiency of the management can be Judge

46
Internship Report

from the turn-over ratios, collection of receivable and management of

accounts payable.

3. Capital
The proportion of the borrower's own resources to the amount of finance is
requested, is the next point to receive the branch manager's attention.
Is the amount required in proportion to the borrower's capital and
contribution to the project? Is it within the powers of the borrower? In the
case of a corporate customer, a check on the memorandum & articles of
association is necessary to ensure it is within prescribed limits. If the amount
describe to be borrowed is too large. Under the circumstances, can it be
sagely reduced to an acceptable & practicable level? Past experience has
taught bank that it is unwise to lend more than is actually required, as it
sometimes has led to speculative uses of the surplus.

4. Cash Flow
The source of repayment should be ascertained at the beginning. As
commercial banks, bank advances must, be largely confirmed to provide
short" term finances to business customer. Hence financing the current assets
of traders and manufactures. Would ensure that repayment would normally
come from the sale of inventory and the realization of account receivable of
our customers. If we are confident of the customer's ability to buy the right
materials, at right markets and be able to produce finished goods which can
be readily sold, at a satisfactory profit, there should be no doubt about
repayment. Therefore, cash flow statements and profit projections need to be
submitted by the borrower and carefully evaluated by the credit officers.

5. Conditions
From quantitative and qualitative information the bank need, to examine the
conditions which the firm is operating. This requires identification of the

47
Internship Report

factors that have up to now contributed to the success of .the business, and
to

Examine factors change has recently occurred or is likely to occur in the near
future which will adversely affect the profitability and prospects of the
customs. Accordingly to nature and prospects of the customers' business
need to examine will it continue to prosper, or will additional competitors or
new competitors with the latest technology result in reduced profit margins?
Is the product essentially required, in a wide market with continued demand?
The industry conditions and the firm's place in industry and its market share
need to be examined demand? The industry conditions and the firm's place in
the industry and its market share need to be examined. An important quality
here is the management's tendency to look and think ahead to anticipate and
adapt to change by diversification or otherwise, which will instill confidence in
the banker. For this purpose, it is necessary to maintain & update at the time
of renewing the advances.

6. Collateral
Since the bank is lending money, which it has, received form depositors, the
bank must ensure that there is a second way out. Security is, therefore, taken
as a form of insurance. In case the business plans of the borrower, do not
work out, due to circumstances or developments beyond his control.
It is the final safe and credit officer should be able to identify appropriate
assets, which would most suitably serve as security, in the given
circumstances. The qualities which constitutes a good banking security are
transferability i.e. whether a valid charge should be created by the borrower
over his asset in favor of the bank should be such that the bank can obtain a
good title with minimum formality and expense. Its value should be easily
ascertainable and stable. It should be easily realized, in case of nee. Finally
security be obtained & formalities completed before the finances is disbursed.

48
Internship Report

7. Purpose
Credit resources are scarce but have alternate uses- The unity's needs
demand that banks put them to the best possible for which the finance will
be used, within the credit policy the bank? In conformity with the country's
laws, credit control and exchange control requirements. Is it a desirable one
from the economic and banking viewpoint? Is it for productive of emulate
purpose?
In short, they're in need to ensure mat the purpose is conductive & within the
borrower's normal sphere of business activities and scale operations.

8. Period
Short-term advances are favored that is for not more than a year, renewable
each year, if still justified. Accordingly the most usual purpose is to assist
manufacturing and trading customers in their need to purchase current assets
in line with their production or trading cycle, and seasonal loans for
agricultural purposes.
Being a developing country, EBI do grant medium-term loans but to a limited
extent, for the fixed- asset financing need industrial customers.

CREDIT CARD DEPARTMENT

Mr. Ali Gardezi deals this department. Credit card is also called Plastic Money.
In modern world it is modern mode of money transaction because it is easy
to carry. There are two procedures for issuing credit cards. One for the
existing customers and other for new customers.
PROCEDURE FOR ISSUANCE OF CREDIT CARD.
1. Essential documents are obtained from the customer which are:
a. National ID Card
b. Statement of Accounts of last 3 months.
c. Three Photographs

49
Internship Report

d. Hypothecation agreement
e. Prove of income.
f. Letter of Lien.
g. Letter of set off.
h. Direct Debt Authority
i. Latest Financials of the Company.
j. Customer Guarantee.
2. American companies are Visa Card and Master Card. ACBL has the
facility of master card only. They have to sent their credit cards, they
have given the authority of master cards to two banks. First is City
Bank and second is Bank of America. ACBL has the agreement with
City Bank. ACBL takes master card from city bank and then issue to
the customer.
3. ACBL takes the yearly fee, interest fee, late payment fee, credit sale
fee for issuance of the card. ACBL also pays certain percentage to City
Bank.
4. City Bank has the authority for the master cards for applying credit
cards, master cards certain limit is mentioned.

ASKARI MASTER CARDS.

1. ACBL is incorporated under the companies ordinance 1984. Card
means applicable master card, visa card issue by the bank to the
account holder. But ACBL is issuing only master cards.
2. Card center means credit division which is in Rawalpindi.
3. Card holder means primary card applicant.
4. Card account means master card and visa card accounts opened by
the bank for the purpose entering debt.
5. Credit advances means an include any amount sanctioned and
advance by the bank. On the request of card holder the determination
of such cash advance shall however be at the discretion of the bank.

50
Internship Report

6. Credit limit means the maximum limit permitted by the bank on the
card account for the applicable card. In ACBL limit is for 40 days and
after 40 days the card holder must have to pay 10% of the total
expenditures. 5 days are grace period.

He told me that the bank is authorized to issue the credit card of two
companies, which are under bank of America.
 Master Card
 Visa Card
But due unavailability of visa card machine in Multan, ACBL Multan branch
deals n only Master Card.
There are following types of master card.
 Silver card
 Gold card
These are different due to their credit amount limit. For example for silver
card, cardholder can take the maximum amount ranging between Rs.
30,000 to Rs, 200,000. For gold cardholder this limit has been extended to
Rs. 300,000.

ISSUING CHARGES
When the card is given to cardholder, there are certain fee charges to by
the bank, which is different for different cards.
 Local cardholder is charged Rs. 1200 but if the cardholder is Army
officer there is special discount for him. And he is special charged
Rs. 750.
 Silver cardholder is charged Rs. 2500.
 Gold cardholder is charged Rs. 3500.
ISSUING PROCEDURE
Credit card is issued to three types of parties.
 Professional (Govt & private officers)

51
Internship Report

 Business man
 Landlord.

PROFESSIONALS
For professionals bank require
 Authorized letter from the concerned organization in which he works.
This letter shows all particulars about the person, on the basis of these
particulars; bank open on account and some feasible amount is
required.

BUSINESS MAN
In the case of businessman bank need
 Balance sheet of businessman.
 Type of business.
 Turnover of 5 years.
And then when it is sured that the business has the ability to cover the
expenses of credit card and to pay it at any time, the bank issues the credit
card.

Land Lord
In the case, the person is totally new, and the bank doesn’t know anything
about him. For this bank need an account having the amount over and above
the credit card limit of that credit card. Usually, there is more chance of
default in this case; so, the bank avoids issuing credit card to that person.

PAYMENT PROCEDURE
The cardholder should have to pay all the amounts what he has consumed.
But in order to facilitate the cardholder, 5% is the minimum limit that the
bank requires and that should be paid monthly. If you paid only 5% then 2%

52
Internship Report

interests will be charged on remaining amount and it is added into the next
month payments.

If that 5% is not paid then Rs. 100 are the additional charges charged to the
next month payment apart form the 2% interest.

53
Internship Report

TODAY’S POSITION OF BANK

54
Internship Report

RECOMMENDATION
During my internship, what I feel should be there are:
 Human Resources Department should be there in order to motivate
and trained the employees. I have noted some dissatisfaction among
the employees, due to in efficient promoting system. So the bank
should provide clean and on the merit basis promotion system.
 The bank is now over staff. The building under operation is in
adequate for such a large staff. So the building should be extended
LATTER

55