CHAPTER #1

INTRODUCTION

1
 1. INTRODUCTION

HABIB BANK LIMITED

History of the Organization

Habib Bank Limited was established by Mr. Ismail Habib on August 25, 1942 on the

desire of Quaid-e-Azam Muhammad Ali Jinnah, father of the nation. It was established

with paid up capital of Rs. 2.5 million. It was the first Muslim bank of sub continent.

Quaid-e-Azam first of all opened his personal account.

The first branch of HBL started functioning on 30th August, 1942 at Muhammad Ali

Road Bombay, In 1942, on the desire of Quaid-e-Azam, Habib family migrated to

Pakistan and later on shifted the Bank's Head Office from Bombay to Karachi on 7 th

August, 1947 just one week prior to independence, to play its pivotal role in the

development of this newly born country.

At the time of independence, the areas which now constitute Pakistan were producing

only agricultural products raw material for indo-Pak subcontinent. Partially no industries

were there to process the raw material; therefore the raw material was exported from

Pakistan. There were 19 non-Indian foreign Banks which were engaged in the export of

crops from Pakistan with only two Pakistani Banks i.e. HBL and the Australia Bank. The

circumstances were completely un-certain. The confidence of the people had been shaken

by the un-friendly environment and till the time peace had not been restored, people

would naturally have been interested in other things. The nation was quite young with

extreme scarcity of resources and these definitely added to the difficulties of the govt., to

run its own Banking system immediately.

2
Following the announcement of the independence plan in June, 1947, the Hindus residing

in the territories now comprising Pakistan started transferring their assets to India and

vice versa. The Banks included those having their registered offices in Pakistan,

transferred them to India in order to bring a total collapse of the new state. It had been

decided that the Reserve Bank of India would continue to function in Pakistan so that the

problem of demand and time liabilities, coinage, currencies, exchange rate etc be settled

between India and Pakistan and the Indian Notes would continue to be legal tender in

Pakistan till 30th September, 1948. Again due to certain differences between Indian

Pakistan, the India government withheld Pakistan's share of Rs.75 core in forward and

subscribed heavily to the government of Pakistan to the tide over the crises.

At a time when this newly born country was at whirlwind of crises, it was HBL which

fulfilled generously the financial needs of all its sectors, paid salaries to the employees of

all Govt. departments, helped in the establishment of State Bank of Pakistan which the

Quaid-e-Azam inaugurated on July 1st, 1948. HBL after partition opened its branches

throughout Pakistan to provide finance and other facilities to the business community. In

association with HBL, the Govt. sponsored Pakistan Finance Corporation Limited for

financing of cotton. The Bank helped handsomely in the construction of WARSAK DAM

PROJECT, WAPDA, & K.D.A. by provided finance and other facilities.

3
 CORPORATE INFORMATION

NATURE OF ORGANIZATION

 Mission & Objectives

Mission

“To make our customers prosper, our staff excel and create value for shareholders”

Vision

“Enabling people to advance with confidence and success”

Branches

Numbers of branch of HBL 1437.in the form of 1408 retail Banking branch 18

commercial banking divisions 10 corporate center 1 Islamic banking.

Objectives of HBL

Following are some of the main objectives of HBL.

 To earn profit for the Bank itself and for its shareholders.

 To promote and boost up business sector inside the country.

 To provide employment opportunities to people.

 To help in development and industrialization of the country.

 To provide loan and advances to help out in self employment schemes.

4
Symbol of HBL

Symbol depicts

Bismillah ============Islamic Culture and Values

Sword ============== Power

Lion================ As a symbol of strength

Core values of HBL

HBL is firmly grounded with a corporate philosophy that incorporates five solid values

which each individual associated with the bank abides by.

Humility

HBL encourages a culture of mutual respect and treats both their team members and

customers with humility and care.

Integrity

For them, integrity means a synergic approach towards abiding their core values. United

with the force of shared values and integrity, they form a network of a well-integrated

team.

Meritocracy

At every level, from selection to advancement, they have designed a consistent system of

human resource practices, based on objective criteria throughout all the layers of the

5
organization. HBL is therefore, able to achieve a specific level of performance at every

layer of the organization.

Teamwork

Their team strives to become a cohesive and unified force, to offer the customer, a

service beyond his expectations. This force is derived from participative and collective

endeavors, a common set of goals and a spirit to share the glory and the strength to face

failures together.

Culture of Innovation

Their aim is to be proactively responsive to new ideas, and to respect and reward the

agents, leaders and creators of change.

Competitors

The competitor of the Habib Bank Limited are given below

 Askari Commercial Bank Limited

 United Bank Limited

 Allied Bank Limited

 Muslim Commercial Bank

 Bank Al Habib

 Bank Al-Falah

6
 ORGANIZATIONAL STRUCTURE & HIERARCHY

President &
CEO

Board of
Directors

Head of
Department

Regional General Controller of

Manager operations

Branch
Manager

Operational
Manager

Officers

Guards &
lower staff

7
 A brief introduction of the branch

Habib Bank limited branch where is did my internship is situated near Bhoun chok

Chakwal. The branch was established in 7, November 2006. Its location is very ideal in

the center of city. There is online banking system and latest technologies are being used

in banking system. Banks provides all services to its customers. All the staff is hard

working and efficient. Profit of the branch is growing with time.

HOERARCHY OF THE CHART BRANCH

Branch
Manager

Customer
Service Manager

Officers
(Departments
Heads)

Internees

8
 DEPARTMENTS

Habib Bank is performing its activities through the following functions

ACCOUNT DEPARTMENT

 Prepare Financial statements of branch

 Administration of branch

 Maintain book’s of accounts

 Branch budget

CUSTOMER’S SERVICES

In customer services department there is customer services representative officer. Who

solve the customer’s problems and make them satisfy. Working of account opening and

bringing new account come under customer services. Customer services representative

officer is the permanent employee of the bank where as account bringing employees are

not permanent employee of the bank. They receive commotion from the bank on the

account that they bring to the bank.

DEPOSITS DEPARTMENT

The function of deposit department is to collect deposits from customers. Following type

of deposits are offered by Habib Bank.

1. Current deposit

2. Saving bank deposit

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 3. Profit and loss saving account

4. Fixed deposit

Current Deposits

In the type of account the client is allowed to deposit or withdraw money as and when he

likes. He may, thus, deposit or with draw several times in the day if he likes. Usually the

bank allows this and service chargers are deducted by the bank and current deposit

account.

Saving Bank Deposits

This type of account is for those persons who want to make small savings. This type of

account is opened with Rs. 100. In this case deposits can be made only up to a costing

amount and with drawls are allowed twice a week. If the depositors wants to withdraw

more than Rs. 15000 a seven days notices is required before the withdrawal.

Profit and Loss Sharing Deposits

These types of accounts are one step towards the Islamisation of Banking system in the

Pakistan. Under such types of accounts the bank allows no interest to the customers. The

executive board of the bank declares profit or loss every year. PLS saving account having

a running minimum credit balance of Rs. 100 would be eligible for sharing profit/loss of

the bank. The rate of profit or loss on PLS saving accounts shall be determined by the

10
bank at the close of each half year, in its sole discretion and the banks decisions shall be

final and binding on the PLS account holder.

Fixed Deposits

In the type of account a certain amount is deposited for a certain, period such as six-

month, two years or longer. A fix deposit receipts is issued in the same of the depositor.

The receipt is signed by the officer incharge and the bank manager. A notice is given to

the depositor requesting the depositor to withdraw his money or to renew this deposit.

The interest allowed on fixed varies with the period for which the deposits are made.

Call Deposits

Call deposits are the sorts of deposits, which are deposited with the banker against any

tender. This is without interest deposits, this may be with interest provided the depositor

has agreed to keep its amount with the banker for some fixed period.

Short Notice Term Deposits (S.N.T.D)

This kind of deposit is for a short period. The depositor may withdraw his deposit at any

time by giving seven days notice to the banker. In this type of deposit facility the trader is

allowed to withdraw his amount with interest of the deposited period.

Certificate of Deposit (COD)

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Now you can earn a higher income on your surplus cash by investing it in Certificate of

Deposit which helps you earn extra income with your hard earned money, while

providing absolute trust and security

ADVANCES DEPARTMENT

The function of advances department is to lend money in the form of clean advances,

against promissory notes, as well as secured advances against tangible and marketable

securities. The bankers prefer such securities that do not run the risk of general

depreciation due to market fluctuations.

Common Securities for the banker’s advances are as under:-

Securities:

Guarantees

When an application for advance cannot offer any tangible security, the banker may rely

on personal guarantees to protect himself against loss on advances or overdraft to the

applicant.

Mortgage

A mortgage is the transfer of an interest in specific immovable property for the purpose

of security the payment of money advanced or to be advanced by way of loan, and

existing or future debt, or the performance of an engagement which may rise to a

financial liability. The transfer is called a mortgagor, the transferee a mortgage.

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FOREIGN EXCHANGE DEPARTMENT

 International trade is growing and with the development of international trade it has

become more imperative.

 For countries to devote more and more attention to the complicated mechanism of

Foreign Exchange. It is more important in case of developing countries. It is need of

time, that a country should conserve its foreign exchange resources.

Meaning of Foreign Exchange

The foreign exchange term refers to the principles that determine the rate of exchange. It

covers following three senses:

 The mechanism or system by which international obligations or indebtedness are

fulfilled.

 The currency of one country is exchanged for that of another.

 The principles on which the people of the world settle their debts to one another.

Foreign Exchange Transactions

The foreign exchange transactions are usually of two types.

Merchandise Transaction

These consist of visible imports and exports, i.e. the purchase of goods for abroad and

sale of goods to abroad.

Service Transaction

13
These represent inward and outward payments in respect of shipping, insurance, banking

and travel services. It includes payments in respect of interest, dividends, rents and profits

etc.

Unrequited Transfers

In indicates the payments and receipts from of reign countries in shape of such items as

home remittances by workers abroad, gifts, aids etc.

Capital Account Transactions

These are further divided into two classes:

Long Term Capital Transfers

Those transfers whereby residents of one country acquire securities (stocks and bonds)

and tangible assets (land etc.) in foreign countries with the purpose of earning profits in

future.

Short Term Capital Transfers

Those transfer which move relatively quickly from country to country;

1. Fore speculative purposes

2. To take advantages of differences in interest rates

3. As balancing items where a country has a debit or credit balance on current

accounts.

14
The important examples are:

1. Money Gold, and

2. Holdings of commercial credit, bills, cheques etc.

3. Transactions with I.M.F

BILLS DEPARTMENT

Bills department performs the following functions.

 Inward Bills for Collection (IBC)

 Outwards Bill for Collection (OBC)

Inward Bills for Collection (IBC)

These are bills or cheques etc. which are collected locally. They are received from

outstation branches banks and parties.

Outwards Bill for Collection (OBC)

These are bills or cheques etc. which are collected out of city. They are received from

outstation branches banks and parties.

Clean Bills

These are negotiable instruments, drawn on outstation branches, bills sent for collection

on behalf of the customers i.e. cheques, drafts or treasury bills etc.

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REMITTANCE DEPARTMENT

Remittance department performs following functions:

 Mail Transfer (MT)

 Telegraphic transfer (TT)

 Demand Drafts (DD)

 Tazeraftar

Mail Transfer (M.T)

Customers can transfer money from one city to other through mail transfer. Customer

fills the form given by bank. If the customer has an account with that amount as

mentioned in the application form then concerned officer will undertake the following

procedure to make the mail transfer complete.

 Branch Mail Transfer form

 Issuing Branch register copy

 Beneficiary advice and Advice to Customer

In case where the customer is not account holder of the bank then the customer will have

to deposit the amount which he wants to transfer under Mail. Then the above said

procedure will be done.

Telegraphic Transfer (T.T.)

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This type of transfer is simple. After filling the application form the concerning officer

shall fill the telegraphic transfer form. Then it is sent to the required bank which on

receiving it immediately makes the payment to the customer and after wards the voucher

is sent to that bank by ordinary mail.

Demand Draft (D.D.)

Demand draft is just like cheques and issued when the customer wants to take cash with

him personally. The idea behind it is to avoid the risk and burden of currency notes in

huge quantity. Demand draft can easily be handled whatever amount it has and the

money can easily be taken from the bank when it is presented. In fact, the bank persuades

the customer to transfer money by drafts and avoid the risk of frauds involves in M.T and

T.T. D.D Draft is only issued when the bank knows customer and bank has the

confidence in him.

Tazerafftar

Tazerafftar is pay order from one person to another, from one country to another country

free of cost within no time. The sender of money just has to fill the form and give the

name, ID card number and phone number of the receiver and himself. A unique transition

number is given to customer. Then he or she has to present the ID card. And tell the

sender name. Then concerning officer give the customer a computerized print page.

Then customer takes the paper and fills the voucher and submit it the cash officer. And

get the money.

17
 CHAPTER # 2

FINANCIAL ANALYSIS

18
 HORIZONTAL ANALYSIS

HABIB BANK LIMITED

Profit and Loss Account
For the year 2007-2009

Increase(Decrease)
ITEMS 2009-2008 2008-2007
%age %age

Mark-up / return / interest earned 20.04 25.54

Mark-up / return / interest expensed 25.94 38.49

Provisions (1.06) 13.43

Non mark-up / interest income (1.09) 12.57

Non mark-up / interest expense 6.11 21.58

Profit before taxation 26.28 11.80

Taxation 31.53 19.90

Profit after taxation 23.35 7.74

Earning per Share 24.26 (10.24)

Interpretation:

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Above profit and loss table shows a comparison of profit and loss per year, by analyzing

above table we conclude that profit margin and earning per share is increasing.

HORIZONTAL ANALYSIS

HABIB BANK LIMITED

Balance Sheet
2007-2009

Increase(Decrease)
ASSETS 2009-2008 2008-2007
%age %age
Cash and balances with treasury banks 41.23 1.88
Balances with other banks 2.55 43.87
Lendings to financial institutions (13.58) 280.42
Investments 66.73 (25.89)
Advances (0.37) 19.41
Other assets 18.87 34.08
Operating fixed assets 13.66 7.04
Deferred tax asset (24.46) 60.82

LIABILITIES
Bills payable 2.17 (36.26)
Borrowings from financial institutions 11.89 (20.40)
Deposits and other accounts 14.35 12.38
Sub-ordinated loans 6.50 27.58
Liabilities against assets subject to finance lease - -
Other liabilities 16.36 27.58
Deferred tax liability - -

NET ASSETS 27.34 28.63

Shareholder’s equity
Share capital 20 10
Reserves 16.36 20.78
Unappropriated profit 20.56 24.80
Total equity attributable to the equity holders of the 18.92 21.33
Bank
Minority interest 28.44 (7.82)
Surplus on revaluation of assets – net of deferred tax 261.41 (68.90)

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Interpretation:

Above balance sheet table shows increase in liabilities and decrease in assets and a decent

Increase in shareholder’s equity.

VERTICAL ANALYSIS
HABIB BANK LIMITED
Balance Sheet
2007-2009
Assets 2009 % 2008 % 2007 %
Rs.(000) Age Rs.(000) Age Rs.(000) Age
Cash and balances 79,839,836 9.24 56,533134 7 55,487,664 8.05
with treasury banks
Balance with other 40,366,687 4.67 39,364,297 5.25 27,361,486 3.97
banks
Lendings to 5,352,873 0.62 6,193,787 0.83 1,628,130 0.24
financial institutions
Investments 216,467,53 25.0 129,833,44 17.3 175,197,07 25.43
2 6 6 2 5
Advances 454,662,49 52.6 456,355,50 60.8 382,172,73 55.47
9 4 7 6 4
Other assets 41,116,582 4.76 34,588,444 4.61 25,795,962 3.74
Operating fixed assets 16,766,668 1.94 14,751,252 1.97 13,780,555 2.00
Deferred tax asset 9,205,944 1.07 12,186,848 1.62 7,577,776 1.10
Total Assets 863,778,62 100 749,806,71 100 689,001,38 100
1 5 2

Liabilities
Bills payable 10,041,542 1.29 9,828,082 1.44 15,418,230 2.45
Borrowings from 52,542,978 6.74 46,961,165 6.87 58,994,609 9.38
financial institutions
Deposits and other 682,750,07 87.6 597,090,54 87.3 531,298,12 84.50
accounts 9 0 5 6 7
Sub-ordinated loans 4,212,080 0.54 3,954,925 0.58 3,100,000 0.49
Liabilities against assets - - - - - -
subjects to finance lease
Other liabilities 29,862,144 3.83 25,663,411 3.75 19,951,112 3.17
Deferred tax liability - - - - - -
Total Liabilities 779,408,82 100 683,498,12 100 628,762,07 100
3 8 8

Shareholder’s

21
 equity
Share capital 9,108,000 10.8 7,590,000 11.4 6,900,000 11.45
0 5
Reserves 27,527,380 32.6 23,656,044 35.6 19,585,359 32.51
2 8
Unappropriated profit 38,498,335 45.6 31,933,178 48.1 25,587,627 42.48
3 6
Minority interest 1,143,241 1.36 890,099 1.34 965,642 1.60
Surplus on 8,092,842 9.59 2,239,266 3.38 7,200,676 11.95
revaluation of assets
Total
Shareholder’s 84,369,798 100 66,308,587 100 60,239,304 100
Equity

Shareholder’s
No of years Assets Liabilities
equity
2007 689,001,382 628,762,078 60,239,304
2008 749,806,715 683,498,128 66,308,587
2009 863,778,621 779,408,823 84,369,798

Interpretation

Above table shows a increase in the assets, liabilities and shareholder’s equity.

22
 VERTICAL ANALYSIS

HABIB BANK LIMITED

Profit and Loss Account
2007-2009

2009 % 2008 % 2007 %

Rs.(000) Age Rs.(000) Age Rs.(000) Age
Mark-up /return / interest 76,076,34 100 63,376,04 100 50,481,02 100
income 7 7 1
Mark-up /return / interest 33,405,81 43.9 26,525,55 41.8 19,153,95 37.94
expensed 3 1 6 5 7
Net mark-up / interest 42,670,53 56.0 36,850,49 41.8 31,327,06 62.06
income 4 9 1 5 4
Provision 9,089,659 11.9 9,187,404 14.5 8,099,291 16.04
5 0
Non mark-up / interest 11,159,61 14.6 11,282,69 17.8 10,023,16 19.86
income 2 7 5 0 4
Non mark-up / interest 23,358,85 30.7 22,013,85 34.7 18,106,32 35.87
expenses 1 0 0 4 0
Profit before Taxation 21,381,63 28.7 16,931,93 26.7 15,144,61 30.01
6 1 2 1 7
Taxation 7,980,887 10.4 6,067,820 9.57 5,060,580 10.02
9
Profit after Taxation 13,400,74 17.6 10,864,11 17.1 10,084,03 19.98
9 1 2 4 7

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 Interpretation

Above table shows a vertical analysis of profit and loss account, by analyzing

above table we conclude that mark up return is increased up to hundred percent and

overall profit shows an increase in profit before taxation and decrease in profit after

taxation.

Ratio Analysis

2009 2008 2007

Current Ratio 1.16 1.14 1.18

Advance to Deposit Ratio 67% 76% 72%

Advance to Asset Ratio 53% 61% 55%

Return on Loan Ratio 2.95% 2.38% 2.64%

Return on Asset Ratio 1.55% 1.45% 1.46%

Return on Equity Ratio 15.88% 16.38% 16.74%

Total Asset Turnover 5.18% 5.19% 4.83%

Net Profit Ratio 30% 28% 30%

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 Current Ratio

2009 2008 2007

Current Assets

Current Liabilities

Current Asset 837,806,009 722,868,615 667,643,051

Current Liabilities 722,653,765 632,582,038 566,667,469

Current Ratio 1.16 1.14 1.18

GRAPHICAL REPRESENTATION

25
 Current Ratio

1.19 1.18
1.18
1.17 1.16
1.16
1.15 1.14
1.14
1.13
1.12
2009 2008 2007
Years

Interpretation:

The data shows that both current assets and current liabilities are increases but current

assets is more rapidly increases than current liabilities so the current ratio in increase as

compare to the last year.

Advance to Deposit Ratio

2009 2008 2007

Advances
*100
Deposits

Advances 454,662,499 456,355,507 382,172,734

Deposits 682,750,079 597,090,545 531,298,127

Advance to Deposit Ratio 67% 76% 72%

GRAPHICAL REPRESENTATION

26
 Advance to Deposite Raio

78% 76%
76%
74% 72%
72%

%age
70%
68% 67%
66%
64%
62%
2009 2008 2007
Years

Interpretation:

Loan on deposit ratio show decrease trend in the previous year. This trend is observe as

the advances is bank decrease but on the other hand, total deposits of the bank increase

which result show decrease in the ratio.

Rate of Return of Loan

2009 2008 2007

Net Profit after tax * 100

Loan

Net Profit 13,400,749 10,864,112 10,084,037

Loan 454,662,499 456,355,507 382,172,734

Rate Return on Loan 2.95% 2.38% 2.64%

GRAPHICAL REPRESENTATION

27
 Return on loan

3.50% 2.95%
3.00% 2.64%
2.38%
2.50%

%age
2.00%
1.50%
1.00%
0.50%
0.00%
2009 2008 2007
Years

Interpretation:

The rate of return at loans of the company is increasing. This show that the bank is in

good position. When we compare the interest income of the company with the loan. The

rate of return is increasing with the amount of total loan. This shows that the bank is

earning favorable interest income on the loans.

Return on Asset Ratio

2009 2008 2007

Net Profit after tax *100

Total Assets

Net Profit after tax 13,400,749 10,864,112 10,084,037

Total Assets 863,778,621 749,806,715 689,001,382

Return on Assets 1.55% 1.45% 1.46%

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GRAPHICAL REPRESENTATION

Return on Assets

1.60%
1.55%
1.55%
%age
1.50%
1.45% 1.46%
1.45%

1.40%
2009 2008 2007
Years

Interpretation:

Return on asset ratio shows an improving trend. This ratio shows that both the net profit

and total assets has improved in the previous years.

RETURN ON EQUITY RATIO

2009 2008 2007

Net Profit after tax * 100

Owner Equity

Net Profit after tax 13,400,749 10,864,112 10,084,037

Owner Equity 84,369,798 66,308,587 60,239,304

Return on Equity 15.88% 16.38% 16.74%

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GRAPHICAL REPRESENTATION

Return on Equity

17.00%
16.74%
16.80%
16.60% 16.38%
16.40%
%age

16.20%
16.00% 15.88%
15.80%
15.60%
15.40%
2009 2008 2007
Years

Interpretation:

The return on equity ratio shows negative trend. Both net profit and equity is increases

but equity is more than net profit so return on equity is low.

TOTAL ASSET TURNOVER

2009 2008 2007

Interest income *100

Total Asset

Interest Income 44,740,487 38,945,782 33,250,937

Total Assets 863,778,621 749,806,715 689,001,382

Total Asset Turnover 5.18% 5.19% 4.83%

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GRAPHICAL REPRESENTATION

Total Asset Turnover

5.30% 5.19%
5.18%
5.20%
%age 5.10%
5.00%
4.90% 4.83%
4.80%
4.70%
4.60%
2009 2008 2007
Years

Interpretation:

The increasing total asset turnover shows positive trend and both interest income and

total assets are increases and the total asset turnover is high. This is a good sign for the

bank.

NET PROFIT RATIO

2009 2008 2007

Net profit after tax *100

Interest Income

Net Profit 13,400,749 10,864,112 10,084,037

Interest Income 44,740,487 38,945,782 33,250,937

Net Profit Ratio 30% 28% 30%

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GRAPHICAL REPRESENTATION

Net Profit Ratio

31%
30% 30%
%age 30%

29%
28%
28%

27%
2009 2008 2007
Years

Interpretation:

The increasing net profit trend shows the managements Efficiency to control the

operating cost and to maximize the profit.

32
 CHAPTER # 3

INTERNSHIP EXPERIENCE

33
 INTERNSHIP EXPERIENCE

Duties & Responsibilities

In this part of the report I am going to share the skills, which I gained during my

internship at HBl Bhoun Chok Branch. These tasks are related to different departments of

the bank branch. The bank Manager told me about the rules and regulation and a brief

history of the bank. I performed duties assigned to me in the following departments:

How to open a new bank Account.

 Precedure of issuing Cheque Book to customer after Account opening

 Customer Dealing.

 Deal with Bills for Collection.

 Maintain Cash Ledgers at bank branch.

 Local Bills for Collections.

Open a new Bank Account

The opening of a new account is the establishment of customer banker relationship.

Everyone is not allowed to come and open an account in the bank, for this purpose there

should be an introducer who himself and all basic things about open a new account in

bank. The relationship of is the account holder in the same branch. He has to introduce

the new client by signing the opening account form and then his signatures are verified.

Followings are the basic necessities for opening the account.

 Introduction (Existing Account Holder of HBL)

 NIC (original and copy) not expired

 Personal data

34
  Proof of the source of income

 Details of dealing with other banks

Procedure for account opening

Application from for Opening of Account

A person who wishes to open a bank account is required to complete this from the

personal information is to be furnished. The application signs the declaration to effect

that he has understood the rules and regulation of the bank.

Introduction

As required by the banking law the new customer needs to be introduced by the

account holder of the same branch where the account is being opened. The manager or

any other bank officer may introduce the new customer if they know them personally.

Signature card

At the time of opening an account a specimen signature card containing two

signature of the customer is required which the manager of the branch attache with

application form. During the operation of account the signature is verified when the

cheque is presented for payment.

After opening an account check book is issued by the bank to the customers for

further transactions.

35
 Cheque Book

After completing formalities for opening saving and current a cheque books

issued to the customer for withdrawing cash from his or her account at the time of need.

The cheque contains minimum 25 pages & maximum 100 pages. The bank also charges

excise duty on cheque book.

If customer is unable to collect his chequebook, then he can give authority to the

third person to collect his cheque book on his behalf by signing on the back of the

requisition, in such case, the particulars of the third person are required like name of the

person NIC number and signature of that person on requisition and cheque book issuance

register.

Customer Dealing

By dealing with people having different behavior and mentality, provided me a lot

of confidence. This gave me the opportunity to improve my communication skills. In

HBL I also got chance to directly deal with customer. My duty was to guide customers

regarding different products and services of the bank. I helped clients in filling different

deposits, draft and other slips as well as accounts opening forms.

Clearing Bills for Collection

This department is a back bone of the bank. In this department I have learn that

how the cheques are cleared of different bank and through different channels. In this

department I learned that how the inward and out ward clearing is made and what is the

procedure of bill collection.

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 Clearing is the process by which cheques exchanged between the collecting and

paying bank and the ensuing financial settlement. In this department I have learn about

what is clearing, clearing procedure, stamps for clearing and advice preparation. Clearing

process start when bank receive cheque of other bank from its customer.Cheques are send

back to that bank for ensuring of the check and if that bank clear the cheque then bank

accept cheque from customer.

The clearance of cheque is informed through advice. Some cheques are not

cleared so 200 Rs. are deducted from the customer account. And if the cheque is of rural

branches then 500 is deducted from the account when cheque is not clear. For this

purpose the Debit & Credit voucher is used. Records of cheques are maintained in

clearing register.

Following are the stamps are required on the cheques

 Branch stamp

 Clearing stamp

 Payee account credit

 Intercity clearing(when cheques are out of city)

Clearing may be performed through the following channels:

 National Institutional Facilitation Technology (PVT) Limited NIFT

 State bank of Pakistan SBP

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 Functions of clearing department

 To accept transfer & clearing cheques from the customers of the branch &arrange

their collection.

 To collect amount of cheques drawn on members of the local clearing house sent

for collection by The Bank of Punjab

There are two following types of clearing:

Inward clearing

When the cheques of other banks are deposited in our bank these cheques are

verified from the issuing bank first after due verification these are credited into the

account holder’s account. This is called inward clearing.

Outward clearing

When the cheques of our banks are deposited in other banks and those banks are

send these cheques to us for verification. It is called outward clearing. After due

verification we debit the account of client with same amount.

Bills for Collection

The two types of cheques that are deposited in the HBL are of following types:

 Cheques of the other banks

 Cheques of the other branches of HBL

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Outstation cheques mean different cities cheques are deposited and local means HBL’s

other Branches are deposited. All cheques account numbers on the computer and these

figures go to SBP. The cheques are cleared in 5-6 days. Because "NIFT" receives and

delivered to SBP where these cheques are cleared in 3 days and deliver to the banks,

which mention on the cheques.

Maintain Cash Ledgers at the Bank Branch

Cash ledger deals with cash transactions held in the bank. All the entries related to the

receipt and payment of cash recorded in cash ledgers.

Whenever the accountant receives a cheque from a customer for the purpose of

encashment or deposit, first of all the accountant checks the status of account and after

clearing it is recorded in the cash ledger. My work was not directly related to encashment

or deposit of cheques but I was given the task to recheck all the entries in cash ledger

with the help of vouchers to see all entries are being made correctly.

Skills Used

Implementation of Knowledge Gained

I am a student of MBA whereas this practical training enhanced my knowledge of

management and administration that came during my studies. This helped me a lot in

understanding and learning banking comprehensively. I also used my knowledge of

management practically.

Interpersonal skills

I used my interpersonal skills while communicating to my seniors, colleagues and my

customers.

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Conceptual skills

I used my conceptual skills to understand the working of bank. Like how do they work,

what is their relative contribution to the overall working of the organization.

Analytical skills

I gained at first, the concept of my duty and then used to analyze the best possible way to

perform it.

Use of Stress management skills

I have studied during my MBA, how to deal with stress. So during my internship, with

pressure of work I used my stress management skills to list priorties and work

accordingly.

Managerial skills

Sometimes, there is workload and one has to perform multitasking. In such situation, one

has to manage the tasks, And so , I did.

Use of problem solving skills

I used problem-solving skills during internship in HBL. For example dealing with a client

who has comes with complaints and problem.

How to work in Teams

At times, I had to work in form of small group. Then, I had to use my abilities and skills

to properly work within teams.

Skills, I gained

The following are the skills that I gained during my internship period.

Time management

40
During my internship, I have learnt punctuality and importance of the time. During my

work I have realized that time management is very important. I also gained the skill of

setting my work according to the time schedule.

Technical Skills

I had to go through computations a number of times. So, I gained good technical ability

during my internship.

Office Environment

I had to maintain vouchers and performs some other documentation. Doing so, Igained

the office working skills.

Corporate know how

Before my internship, I had no experience of corporate working. I related the practical

corporate working environment with the one present in the bookish world. But having

completed my internship, I realized that the true scenario is different. The practical field

is somewhat diffenent from the bookish field.

How to cope up with stressful situations

In course of my internship I got chance of learning how to handle difficult tasks.

Coordination Skills

Success of the companies largely depends upon the coordination of its workforce,

because, the taks of the company are interrelated. I gained knowledge of how to

coordinate while working in an interrelated environment.

Client Relationship Management

41
In my internship period I learnt importance of good client relations and how customer

relations can be enhanced and made strong. My experience of dealing with clients

enhanced my interpersonal skills.

More Professionalism

My internship provided me with opportunity of more professionalism. There in bank,

while working I learnt that how a mature person has to behave while he is doing a job.

CHALLENGES

Following are the challenges that I faced during my internship.

Practical v/s Bookish

Studies teach students theoretical aspects of practical field that is why students feel quiet

difficult in adjusting in real environment of organization. Because of that, being a fresh

student I faced different sort of problems, that was challenges for me.

Unawareness of Corporate Culture

Giving the right response at the right time, especially to the boss, is really difficult in the

beginning Because at the time, no one is aware of the corporate culture and its values. I

had to observe others to learn in the initial stage then react accordingly.

How to respond to heavy workload assignment

I, sometimes, had to face burden of work any my seniors continued to assign me tasks

even futher. So, I had to learn how to say NO nicely because saying NO is very easy but

saying it nicely iss very difficult.

42
CONCLUSIONS AND RECOMMENDATIONS

43
COCLUSIONS

 Employees are not well trained according with latest computer skills.

 Employees don’t take much interest in their duties; they are not paid according to

their work.

 Their must be an easy way out for people to access their account for paying their

bills and also for their other concerning matters.

 Manually voucher system and manually book keeping is still practice by HBL.

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RECOMMENDATIONS

 Employees Training programs may introduced on continuous basis so that

Employees have understanding with the latest developments especially with the

customers.

 Bank introduced incentive plans for employees on regular basis so that if

employees may work whole heartedly for the welfare of their organization. While

giving incentives qualification, work, experience, hard work and such other

factors must be considered.

 Online Banking should be introduced in all the branches.

 Manually voucher system and manually book keeping may convert into an

automated one so that there is an ease of access for bank employees.

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 APPENDIX
HABIB BANK LIMITED
Profit and Loss Account
2007-2009

2009 2008 2007

------------ ----- (Rupee in ‘000)
----------------
Mark-up / return / interest earned 76,076,347 63,376,047 50,481,021
Mark-up / return / interest expensed 33,405,813 26,525,556 19,153,957

Net mark-up / interest income 42,670,534 36,850,491 31,327,064

Provision against non-performing loans 8,794,560 6,904,919 8,238,227

and advances – net
Provision against off-balance sheet obligations (51,396) 372,598 (54,626)
Provision against diminution in the value of investments 346,495 1,909,887 (84,310)
Bad debts written off directly - - -

9,089,659 9,187,404 8,099,291

Net mark-up / interest income after provisions 33,580,875 27,663,087 23,227,773

Non mark-up / interest income
Fee, commission and brokerage income 5,316,479 4,518,408 3,420,051
Income / gain on investments 597,018 1,300,975 2,472,663
Income from dealing in foreign currencies 1,913,115 2,374,318 1,487,374
Other income 3,333,000 3,088,994 2,643,076

Total non-mark-up / interest income 11,159,612 11,282,695 10,023,164

44,740,487 38,945,782 33,250,937

Non mark-up / interest expense
Administrative expenses 22,745,955 21,425,361 18,297,279
Other provisions / write offs – net 210,190 200,163 (276,111)
Other charges 3,540 64,751 85,152
Workers welfare fund 399,166 323,575 -

Total non mark-up / interest expenses 23,358,851 22,013,850 18,106,320

Profit before taxation 21,381,636 16,931,932 15,144,617
Taxation
- current 8,095,642 8,308,611 7,220,717
- prior years (1,095,355) 233,100 1,668,562
- deferred 980,600 (2,473,891) (3,828,699)
7,980,887 6,067,820 5,060,580
Profit after taxation 13,400,749 10,864,112 10,084,037

Attributable to:
Equity holders of the Bank 13,389,452 10,774,584 10,000,231
Minority interest 90,230 79,009 83,806
Minority investor of HBL Funds (78,933) 10,519 -

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 13,400,749 10,864,112 10,084,037

Basic and diluted earnings per share 14.70 11.83 13.18

HABIB BANK LIMITED

Balance Sheet
2007-2009
2009 2008 2007
-----------------(Rupee in’000)----------------
-------- (Restated)-----------
ASSETS

Cash and balances with treasury banks 79,839,836 56,533,134 55,487,664

Balances with other banks 40,366,687 39,364,297 27,361,486
Lendings to financial institutions 5,352,873 6,193,787 1,628,130
Investments 216,467,532 129,833,446 175,197,075
Advances 454,662,499 456,355,507 382,172,734
Other assets 41,116,582 34,588,444 25,795,962
Operating fixed assets 16,766,668 14,751,252 13,780,555
Deferred tax asset 9,205,944 12,186,848 7,577,776
863,778,621 749,806,715 689,001,382
LIABILITIES

Bills payable 10,041,542 9,828,082 15,418,230

Borrowings from financial institutions 52,542,978 46,961,165 58,994,609
Deposits and other accounts 682,750,079 597,090,545 531,298,127
Sub-ordinated loans 4,212,080 3,954,925 3,100,000
Liabilities against assets subject to finance leas - - -
Other liabilities 29,862,144 25,663,411 19,951,112
Deferred tax liability - - -
779,408,823 683,498,128 628,762,078

NET ASSETS 84,369,798 66,308,587 60,239,304

REPRESENTED BY:

Shareholders' equity
Share capital 9,108,000 7,590,000 6,900,000
Reserves 27,527,380 23,656,044 19,585,359
Unappropriated profit 38,498,335 31,933,178 25,587,627

Total equity attributable to the equity holders 75,133,715 63,179,222 52,072,986

of the Bank

Minority interest 1,143,241 890,099 965,642

Surplus on revaluation of assets – 8,092,842 2,239,266 7,200,676

-net of deferred tax
84,369,798 66,308,587 60,239,304

47
REFERENCES

Published Reference

 Weihrich.H & Kootz(1997).Management A Global Prospect.10th Edition .New

York M.C Craw Hill.

 Siddique A.A (1998).Practice and law of banking in Pakistan.6th Edition .Royal

Book Company.

 Horn V(2002).Financial Management.12th Edition .New York M.C Craw Hill.

 Irshad M (2007).Money, Banking and Finace.2nd Edition .Majeed Publisher

Online Reference

 http://www.ishrathusain.iba.edu.pk/speaches/BANKING_SECTOR_REF

ORMS.pdf

 www.encyclopedia.com/doc/1G1-61864366.html

 www.hbl.com

 www.habibbankltd.com

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