MONEY & BANKING MGT411

Practical knowledge of banking AAMIR RAZA MBA-08-012 University of Sargodha

PREPARED BY: MC070400829 NOORUDDIN

TEACHER: DR. TALAT AFZA

Executive Summary______________________________________________ Soneri Bank Limited (the Bank) is engaged in banking services, and operates 118 branches, including four Islamic banking branches in Pakistan. The Bank operates in four segments: corporate finance, trading and sales, retail banking and commercial banking. Corporate finance includes syndicated financing and services provided in connection with mergers and acquisitions, underwriting, privatization, securitization, research, debt, equity, syndication, initial public offering (IPO) and secondary private placements. Trading and sales segment includes fixed income, equity, foreign exchanged, commodities, credit, funding, own position securities, brokerage debt and prime brokerage. Retail banking segment includes retail lending and deposits, banking services, private lending and deposits, trust and estates investment advice and merchant/commercial/corporate cards. Commercial banking includes projects finance, real estate, export finance, trade finance, factoring and leasing.

The essence of business philosophy is to cater to the banking requirements of small & medium sized entrepreneurs, providing them qualitative & competitive services with emphasis on encouraging exports. Nearly forty percent of our credit portfolio is related to export financing and credit decisions are taken within 48 hours that is why we say:

We have more time for you

Table of Contents___________________________________________________

Executive Summary.2

1) 2) 3) 4) 5) 6) 7)

Bank Introduction & History .4 Organizational Structure of Bank.7 Product & Services Offered...9 Balance Sheet Analysis..16 Central Bank Role..23 Conclusion.28 Bibliography..29

Appendix30

1.1 BANK INTRODUCTION & HISTORY Incorporated on September 28, 1991 the first Branch of Soneri Bank Limited formally opened doors for operations in Lahore on April 16, 1992 followed by Karachi Branch on May 09,1992. The bank now operates with 117 branches spread all over Pakistan including the Northern Areas of the country where no other private bank has ventured so far. Expansion of branches is based on a policy of maintaining a balance between the urban and rural areas with a view to offering services even in the remote areas of Pakistan. Pleasant and sophisticated atmosphere has been provided in the branches which are all fully airconditioned and computerized. The bank is looking forward to attain further growth through activating the areas of SMEs and Agricultural Credit. The Pakistan Credit Rating Agency Limited (PACRA) has maintained banks credit rating at AA- for the long term and A1+ for the short term and A+ for the Term Finance Certificates reflecting banks well maintained risk profile with preserved sound asset quality. We take this opportunity to thank the Ministry of Finance and State Bank of Pakistan for their continued support and guidance.

Registered Office Rupali House 241-242, Upper Mall Scheme Anand Road, Lahore 54000

HEAD OFFICE: 87, Shahrah-e-Quaid-e-Azam,

4

P.O. Box No. 49, Lahore. Tel: 6368142-48 Fax: 6368138 Swift: SONEPKKALHR E-mail: main.lahore@soneribank.com CENTRAL OFFICE: 5th Floor, Al-Rahim Tower, I.I. Chundrigar Road, P.O. Box No. 5856, Karachi. Tel: 2439562-67, 2444401-05 Fax: 2439561 2446661 Swift: SONEPKAXXX E-mail: info@soneribank.com 1.2 CORPORATE INFORMATION Chairman Mr. Alauddin Feerasta Chief Executive Officer Mr. Safarali K. Lakhani Directors Mr. Nooruddin Feerasta Mr. Inam Elahi Mr. S. Ali Zafar Mr. Abdul Hayee Mr. Shahid Anwar (NIT Nominee) Mr. Manzoor Ahmed (NIT Nominee) Company Secretary Mr. Abdul Hayee Audit Committee Mr. Nooruddin Feerasta (Chairman) Mr. S. Ali Zafar (Member) Mr. Shahid Anwar (Member)
5

Mr. Abdul Hayee (Member & Secretary) Auditors A.F. Ferguson & Co. Chartered Accountants Legal Advisor Manan Associates, Advocates Registrar and Share Transfer Agent THK Associates (Private) Ltd. Ground Floor, State Life Building No. 3 Dr. Ziauddin Ahmed Road, Karachi-75530 UAN: +9221-111-000-322 Fax: +9221-5655595 STOCK EXCHANGE : SNBL PRESENT PRICE :

2.1 ORGANIZATIONAL STRUCTURE

TOP LEVEL MANAGEMENT

MR ALAUDDIN FERMR. ALAUDDIN FEERASTA

MR. SAFAR ALI K LAKHANI CEO

MR. NOORUDDIN FEERASTA DIRECTOR

MR. IMAM ELAHI DIRECTOR

MR. S. ALI ZAFAR DIRECTOR

MR. ABDUL HAYEE DIRECTOR

MIDDLE & LOWER MANAGEMENT

DIRECTORS

AUDITORS

SECRETARY

SEVP

EVP

VP

AVP

GRADE I

GRADE 2

GRADE 3

3.1 PRODUCTS & SERVICES OFFERED

The following are the services and products offer by the bank to facilitate customer in providing them their savings in order to make future investment and growth for the organization SPECIAL NOTICE DEPOSITS Period Minimum investment of Rs. 10,000/- Profit payment on maturity as well as rollover of profit 7 days 30 days PLS SONERI SAVINGS ACCOUNTS DESCRIPTION Minimum balance of Rs. 5,000/- must be maintain per month on daily basis other wise Incidental Charge of Rs. 50/- will be deducted. Profit payment is on half yearly basis. Balance Upto Rs. 100,000 Balance Over Rs. 100,000 but upto Rs.1.0 Million Balance Over Rs. 1.0 Million but upto Rs. 10.0 Million Balance Over Rs. 10.0 Million PLS TERM DEPOSITS DESCRIPTION Minimum investment of Rs. 10,000 Profit payment according to term, Profit rollover facility available. Term 1 month Term 3 month Term 6 month Term 1 year Term 2 years Rate of Return p.a Rate of Return p.a Rate of Return

6.00% p.a 8.00% p.a

5.00 %. 8.00 %. 10.00 %. 12.00 %.

8.00 %. 9.00 %. 10.00 %. 11.00 %. 12.50 %.

9

Term 3 years CERTIFICATES OF DEPOSITS DESCRIPTION Pre mature encashment will be made on the return of PLS Term Deposit. Minimum period after which encashment will be made is 90 days Soneri Savings Certificates (3 Years Term - New Scheme) Profit Payment on Half Yearly basis, minimum deposit start from Rs. 10,000/Golden Deposit Certificates (5 Years Term) Profit Payment on monthly basis, minimum deposit start from Rs. 10,000/Diamond Deposit Certificates (New Scheme ef 1.1.2009)1 Year Profit Payment on monthly basis, minimum deposit start from Rs. 10,000/Diamond Deposit Certificates (New Scheme ef 1.1.2009)2 Year Profit Payment on monthly basis, minimum deposit start from Rs. 10,000/Diamond Deposit Certificates (New Scheme ef 1.1.2009)3 Year Profit Payment on monthly basis, minimum deposit start from Rs. 10,000/Diamond Deposit Certificates (3 Years Term - Old Scheme) 1 Year Profit Payment on monthly basis, minimum deposit start from Rs. 10,000/Diamond Deposit Certificates (3 Years Term - Old Scheme) 2 Year Profit Payment on monthly basis, minimum deposit start from Rs. 10,000/Diamond Deposit Certificates (3 Years Term - Old Scheme) 3 Year Profit Payment on monthly basis, minimum deposit start from Rs. 10,000/Soneri Premium Deposit (12 Months Period) NEW Profit Payment on maturity, minimum deposit start from Rs. 10,000/-

13.00 %.

%age

11.50%

10.25%

12.00%

13.00%

14.00%

11.50%

12.00%

13.00%

15.00%

10

NOTE ANNUALISED RATES OF EXPECTED PROFIT FOR DIFFERENT TYPES OF PLS DEPOSITS

CURRENT ACCOUNTS Term Current Deposit Account Free Statement of Account Every Six Month Minimum balance requirement Rs.10,000/FREE ATM Card, Online Banking, T-Banking etc Basic Banking Account Free Statement of Account Every Six Month No Minimum, 4 Cheques Issuance any additional will be charge FREE ATM Card, Online Banking, T-Banking etc Rate of Return p.a NIL

NIL

ISLAMIC BANKING PRODUCT DESCRIPTION Soneri Jari Account (Islamic Banking Product) Free Statement of Account Every Six Month No minimum or maximum limit FREE ATM Card, Online Banking, T-Banking etc Soneri Bachat Account Free Statement of Account Every Six Month Initial starting investment of Rs. 100, Profit payment on quarterly basis.fFREE ATM Card, Online Banking, TBanking etc Soneri Munafa Account Free Statement of Account Every Six Month No minimum or maximum limit FREE ATM Card, Online Banking, T-Banking etc Soneri Meaadi Account Minimum deposit of Rs.10,000/- for period 1, 2,3,4,5 years and quarterly and halfyearly. Fund utilize on the basis and in accordance with the Shariah Principle Profit p.a NIL

Profit calculated on monthly average

Profit calculated on daily product Profit payment at the quarterly after deduction of exp and management fee

E BANKING & CARDS DESCRIPTION Charges

11

Simple ATM Card Free for the first time, Issuance Charges Rs. 200 + Ex. Duty Rs. 15 charges on 1Link ATMs and Rs. 5 on Balance Inquiry on M Net, POS Transaction allowed, Rs. 25,000/- daily limit for withdrawing cash and 250,000 on Fund transfer facility Visa Classic Card Free for the first time, Issuance Charges Rs. 200, 3% on purchase on POS terminal, Can be used outside the country (conversion rate applied), 2 Year Expiry from the date of Issue, Daily limit for withdrawing cash is Rs. 35,000/- and for Fund transfer Rs. 250,000/ Visa Gold Card Minimum Balance requirement for issuance of card is Rs. 50,000/- for the last six month, Rs. 500, 3% on purchase on POS terminal, Can be used outside the country (conversion rate applied), 2 Year Expiry from the date of Issue, Daily limit for withdrawing cash is Rs. 50,000/- and for Fund transfer Rs. 250,000/. Running Finance Facility available (condition applied). Easy to use every where Online Banking Free for all the customer, no charges applied. Simple Balance Inquiry, Fund Transfer Fund transfer within the same bank is Free upto 250,000/- . 1Link member banks the charge per transaction is Rs. 50/Utility Bills Payment Utility bills can be paid through bank ATM Machine, KESC, SSGC, PTCL, Warid etc Telephone Banking 24 Hour Telephone Banking Service available for national and international customer Cheque Free Banking Now customer can withdraw money from their account without having cheque. All they need to do is to give there atm card to the online banking teller at bank can cash upto 300,000

NIL

150 p a

500 p.a

NIL

NOTE WITHDRAWL ABOVE RS 25,000/- PER DAY WILL LEVY WITHHOLDING TAX.

CONSUMER FINANCING
12

DESCRIPTION Soneri Car Finance For Cars upto 1800 CC Rs. 1.0 M For Cars exceeding 1800 CC Rs. 2.0 M Down Payment On finance of upto Rs. 1.0 M : Minimum 15% of Car Price.On finance exceeding Rs. 1.0 M but not more than Rs. 2.0 M : Minimum 20% of Car Price. Payment Period Payment period upto 5years Processing Fee Rs. 2000/- per application up front (Refundable) Prepayment Penalty 2% on outstanding principal Soneri Ghar Finance Financing Amount: Purchase / Construction of residential property up to Rs. 5,000,000/Extension / Renovation on own property up to Rs. 2,000,000/Fee and Legal Charges Processing fee Rs. 2,500/- or 0.50% of the finance amount which ever higher Eligibility: Confirmed Permanent Employee/ Self Employed Professionals / Business person. Minimum length of confirmed service with present employer must be at least for 5 years. Minimum length of practice by Self Employed Professionals / Business person must be at least for 2 years. Applicants age must not be more than 60 years at the time of maturity of the finance being applied for. Monthly repayment installments not to exceed 40% of the net take home salary / 40% of declared monthly income. Should have no over due track record from any bank in Pakistan Life insurance cover for the loan amount. Soneri Personal Finance Eligibilty Salaried persons in permanent employment with legal entities approved by the Bank who meet our other conditions to qualify for the finance.

Markup Rate

17%

Floating markup rate @4.5% prevailing SBP discount rate @ 16.5%

19.00% p.a

13

Maximum Amount of Finance Rs. 500,000/- or Five times of applicants one month gross salary

DOMESTIC BANKING CHARGES Term Charges Upto Rs. 10,000/ 0.20 Min or Rs. 30/- Rs.10,001/= to Rs.100,000/0.15% Minimum Rs.50/= Over Rs.100,000/= 0.055% Minimum Rs.200/= Intercity upto 500,000/- Rs.100/and over Rs 200/In Town Rs. 250/Other branches Rs. 150/- instrument 0.40 per quarter Minimum Rs. 400 per quarter Rs 50/Rs. 50/Rs. 100/0.20 or Rs.25/plus courier 0.35 or Rs.45/plus courier

REMITTANCE Drafts, MTs and TTs drawn & payable on our own branches: Telex Charges = Rs, 50/Postages = Rs. 30/-

Payorders Cancellation Charges = Rs. 25/Issuance of Duplicate = Rs. 50/Same day outward clearing Cheque return charge due to Inland LC Advising Rs. 500/Duplicate Statement of Account Issuance of Bank Account Certificate Issuance of Bank Balance Confirmation Certificate BILLS Through own branches Through branches of other banks

14

4.1 BALANCE SHEET ANALYSIS

ITEMS ASSETS Cash and Balance with Treasury Banks Balances with Other Banks Lending to financial and Other Institutions Investment net Advances net Operating fixed assets Deferred tax assets Other assets net Total assets LIABILITIES Bills payable Borrowings Deposits and other accounts Sub-ordinated loans Liabilities against assets subject to finance lease Deferred tax liabilities net Other liabilities Total liabilities Net assets (Total assets Total liabilities) REPRESENTED BY: Share Capital Reserves Unappropriated profit Surplus on revaluation of assets net of tax

2007 (000s)
1 2 3 4 5 6 5,861,205 4,349,673 3,175,009 19,181,562 40,154,449 2,150,955 1,981,207 76,854,060 1,640,514 5,865,471 60,150,128 1,198,800 425,398 963,270 70,240,581 6,610,479 4,114,222 1,876,669 238,775 6,229,666 380,813 6,610,479

2006 (000s)
5,551,302 6,603,003 3,193,405 16,724,253 35,412,248 1,929,885 1,315,578 70,729,674 957,576 8,916,437 53,000,647 1,199,280 338,698 705,133 65,117,771 5,611,903 3,116,835 1,676,602 400,853 5,194,290 417,613 5,611,903

15

ASSETS Use of Funds

CASH & BALANCES WITH TREASURY BANKS 1 In Hand, Local currency (Including NPB of Rs. 12,514 (M) Foreign currency In Transit, Local currency Foreign currency With State Bank of Pakistan Local currency current account (SBP Act, 1956 U/s 36: banking companies to maintain a local currency reserve) Foreign currency current account (Represent foreign currency maintained with SBP) Foreign currency deposit account against foreign currency deposits mobilized (Foreign currency cash reserve maintain with SBP under FE-25 scheme. The foreign currency cash reserve comprises of an amount equivalent to at least 5% of Banks foreign currency deposit) With National Bank of Pakistan Local currency current account 2007 (000s) 1,145, 416 320,153 8,425 5,991 3,921,377 176,509 165,663 2006 (000s) 988,046 234,429 4,915 3,499,831 166,039 509,376

117,671 5,861,205 2 2007 (000s) 1,139,420 2,000,000 1,210,253

148,666 5,551,302 2006 (000s) 1,242,424 4,100,000 1,260,579

BALANCES WITH OTHER BANKS In Pakistan, On current account (Markup 10 to 10.75% with maturity 3 months) On deposit account Outside Pakistan, On current account

16

LENDING TO FINANCIAL & OTHER INSTITUTIONS Call money lendings (Markup 9.75% - 10.25% maturity upto 3 months) Repurchase agreement lendings (Markup 11.18% - 11.20% p.a ordinary shares) INVESTMENTS Available for sale (Market T-bills, Pak Investment bond, Fed. Investment bonds, Fully paid-up ordinary shares, Units of mutual funds, Fully paid-up preference shares Held by maturity Investment at Cost Less: Provision of diminution in value of invest. Investment (net of provision) Surplus/(deficit) on revaluation of available sale securities Total investments at market value ADVANCES Loan, cash credits, Rfs etc in Pakistan Bills discounted and purchased Payable in Pakistan Payable outside Pakistan Advances gross Provision of non performing advances Advances net of provision

2007 (000s) 1,500,000 1,675,009

2006 (000s) 1,750,000 1,443,405

2007 (000s) 13,576,889

2006 (000s) 10,915,744

5,687,141 19,264,030 (5,700) 19,258,330 (76,768) 19,181,562 5 2007 (000s) 37,218,507 298,483 3,288,234 40,805,224 (650,775) 40,154,449

5,892,884 16,808,628 (5,700) 16,802,928 (78,675) 16,724,253 2006 (000s) 32,287,262 585,220 2,955,877 35,828,359 (416,111) 35,412,248

17

OPERATING FIXED ASSETS Capital work-in-progress Advances to suppliers and contractors Intangible assets

2007 (000s) 184,256 1,949,595 17,104 2,150,955

2006 (000s) 71,026 1,858,859 1,929,855

LIABILITIES SOURCE OF FUNDS Bills Payable Bills Payable - In Pakistan 7 2007 (000s) 1,640,516 2006 (000s) 957,576

Borrowings In Pakistan Outside Pakistan

2007 (000s) 4,895,707 969,764 5,865,471

2006 (000s) 8,498,663 417,774 8,916,437

18

Deposits & Other Accounts Sub Ordinated Loans Unsecured Customers Listed Term Finance Certificates Fixed deposits Savings deposits Current Accounts Call deposits Margin deposits Special exporter account Others Total customers Financial Institutions Fixed deposits Savings deposits Current accounts Total financial institutions Total deposits & other accounts

9 9

2007 (000s) 2007 (000s) 1,198,800 18,498,298 28,610,361 10,377,688 127,181 524,604 117,334 58,255,466 1,675,959 218,425 278 1,894,662 60,150,128

2006 (000s) 2006 (000s) 1,199,280 16,205,806 21,132,755 9,503,116 178,556 391,239 3,273 83,914 47,498,659 4,867,758 634,003 227 5,501,988 53,000,647

Deferred Tax Liabilities Accelerated Tax depreciation Surplus on revaluation of fixed assets Other Liabilities Prov. For diminution in the value of investments Markup /return/interest payable in local Prov. Against non-performing advances currency Markup /return/interest payable in Deficit on revaluation of securities foreign currency Unearned commission and income on discounted bills Accured expenses Current taxation (provision less payments) Branch adjustment account Provision for employees compensated absences Others

10

2007 (000s) 222,339

2006 (000s) 186,074 250,791 2006 (000s) 1,995 536,250 65,639 1,585 30,533 17,630 338,698 27,469 54,350 37,770 30,079 705,133
19

11

231,922 2007 (000s) 1,995 577,809 1,068 26,868 19,155 425,398 47,109 238,329 55,583 24,217 963,270

Share Capital Authorized Capital (Ordinary shares of Rs. 10/ each) Issued Subscribe Paid up Capital Opening Balance Shares issued during the year Closing Balance Major Share holders as at 31st

12

2007 (000s) 500,000,000 3,116,835 997,387 4,114,222

2006 (000s) 500,000,000 1,653,494 1,463,341 3,116,835

Major share holders National Investment (Unit) Trust Trustee Alauddin Feerasta Trust Trustee- Feerasta Senior Trust Trustee- Alnu Trust

Number of Shares held 96,669,576 83,427,820 81,320,110 40,669,629 302,087,135

% of Shareholding 23.50% 20.28% 19.77% 9.89% 73.44%

20

Surplus/(Deficit) on Revaluation of Assets Fixed Assets Securities Surplus of revaluation of fixed asset - net of tax Surplus on 1st Jan Transfer to unappropriated profit & Related deferred tax liability As on dec 31st Less: related deferred tax liability

13

2007 (000s) 430,713 (49,900) 716,546 (53,911) 662,635 (231,922) 430,713

2006 (000s) 465,755 (48,142) 770,457 (53,911) 716,546 (250,791) 465,755

21

5.1 CENTRAL BANK ROLE

Regulation R-1 LIMIT ON EXPOSURE TO SINGLE PERSON The total outstanding exposure (fund based and non-fund based) by a bank / DFI to any single person shall not at any point in time exceed 30% of the banks / DFIs equity (as disclosed in the latest audited financial statements), subject to the condition that the maximum outstanding against fund based exposure does not exceed 20% of the banks / DFIs equity. Soneri Bank adhere the Regulation R-1 not to expose its fund and non-fund based exceed to 30% Regulation R-2 LIMIT ON EXPOSURE AGAINST CONTINGENT LIABLITIES Contingent liabilities of a bank / DFI shall not exceed at any point in time 10 times of its equity. Following shall not constitute contingent liabilities for the purpose of this regulation: (a) Bills for collection. (b) Obligations under Letters of Credit and Letters of Guarantee to the extent of cash margin retained by the bank / DFI. (c) Letters of credit/guarantee where the payment is guaranteed by the State Bank of Pakistan / Federal Government or banks / DFIs rated at least A by a credit rating agency on the approved panel of State Bank of Pakistan or Standard & Poors, Moodys or Fitch-Ibca. (d) Non-fund based exposure to the extent covered by liquid assets. (e) Claims other than those related to provision of facilities (fund based or non-fund based) to the banks / DFIs constituents, where the probability of conversion of these claims into liabilities are remote. Soneri Bank adhere the Regulation R-2 and maintained banks credit rating at AA- for the long term and A1+ for the short term and A+ for the TFC.
22

Regulation R-3 MINIMUM CONDITIONS FOR TAKING EXPOSURE While considering proposals for any exposure (including renewal, enhancement and rescheduling / restructuring) exceeding such limit as may be prescribed by State Bank of Pakistan from time to time (presently at Rs 500,000), banks / DFIs should give due weightage to the credit report relating to the borrower and his group obtained from Credit Information Bureau (CIB) of State Bank of Pakistan. Soneri Bank adhere the Regulation R-3 and all the branches requires to obtain CIB from SBP before disbursing any loans. Regulation R-4 MINIMUM CONDITIONS AGAINST UNSECURED FINANCING FACILITIES
Banks / DFIs shall not provide unsecured / clean financing facility in any form of a sum exceeding Rs 500,000/- (Rupees five hundred thousand only) to any one person. For the purpose of this regulation, following shall be excluded / exempted from the per party limit of Rs 500,000/- on the clean facilities: (a) Facilities provided to finance the export of commodities eligible under Export Finance Scheme. (b) Financing covered by the guarantee of Pakistan Export Finance Guarantee Agency. (c) Loans / advances given to the employees of the banks / DFIs in accordance with their entitlement / staff loan policy. (d) Investment in COIs / inter bank placements with NBFCs, provided the investee NBFC is rated A+, A or A- for long-term rating and at least A2 for short-term rating or equivalent by a credit rating agency on the approved panel of the State Bank of Pakistan or Standard & Poors, Moodys and Fitch-Ibca.

Soneri Bank adhere the Regulation R-4 and all the branches providing running finance or personal finance unsecured loan amount does not exceed the required figure i.e Rs.500,000/-

Regulation R-5 MINIMUM CONDITIONS AGAINST UNSECURED FINANCING FACILITIES While taking any exposure, banks / DFIs shall ensure that the total exposure (fund-based and / or non-fund based) availed by any borrower from financial institutions does not exceed 10 times of borrowers equity as disclosed in its financial statements It is expected that at the time of allowing fresh exposure / enhancement / renewal, the current assets to current liabilities ratio of the borrower shall not be lower than 1:1. However, in exceptional cases, banks / DFIs may relax this ratio upto 0.65:1 Soneri Bank adhere the Regulation R-5 and all the branches before disbursing loans checks the borrower equity does not exceed 10 times
23

Regulation R-6 EXPOSURE AGAINST SHARES /TFCS AND ACQUISITION OF SHARES (a) take exposure against the security of shares / TFCs issued by them. (b) provide unsecured credit to finance subscription towards floatation of share capital and issue of TFCs. (c) take exposure against the non-listed TFCs or the shares of companies not listed on the Stock Exchange(s). However, banks / DFIs may make direct investment in non-listed TFCs. (d) take exposure on any person against the shares / TFCs issued by that person or its subsidiary companies. For the purpose of this clause, person shall not include individual. take exposure against sponsor directors shares (issued in their own name or in the name of their family members) of banks / DFIs. (f) take exposure on any one person (whether singly or together with other family members or companies owned and controlled by him or his family members) against shares of any commercial bank / DFI in excess of 5% of paid-up capital of the share issuing bank / DFI. (g) take exposure against the shares / TFCs of listed companies that are not members of the Central Depository System. (h) take exposure against unsecured TFCs or non-rated TFCs or TFCs rated below BBB or equivalent. Exposure may, however, be taken against unsecured / subordinated TFCs, which are issued by the banks / DFIs for meeting their minimum capital requirements, as per terms and conditions stipulated in BSD Circular No. 12 of August 25, 2004. B) ACQUISITION OF SHARES: i) Banks / DFIs shall not own shares of any company / scrips in excess of 5% of their own equity. Further, the total investments of banks in shares should not exceed 20% of their own equity. i) The banks/DFIs may also take exposure in future contracts to the extent of 10% of their equity on aggregate basis. Soneri Bank adhere the Regulation R-6 Regulation R-7 GUARANTEES The requirement of security can also be waived by the banks / DFIs in cases of guarantees issued to Pakistani firms and companies functioning in Pakistan against the back to back / counter guarantees of branches of guarantee issuing bank / DFI or banks / DFIs rated at least
24

A or equivalent by a credit rating agency on the approved panel of State Bank of Pakistan or Standard & Poor, Moody's, and Fitch-Ibca. Soneri Bank adhere the Regulation R-7 and maintain US$250,000 subject to internal credit control and providing SBP with FE-25 statement frequently REGULATION R-8 -CLASSIFICATION AND PROVISIONING FOR ASSETS In addition to the time-based criteria prescribed in Annexure-IV, subjective evaluation of performing and non-performing credit portfolio shall be made for risk assessment and, where considered necessary, any account including the performing account will be classified, and the category of classification determined on the basis of time based criteria shall be further downgraded. Such evaluation shall be carried out on the basis of credit worthiness of the borrower, its cash flow, operation in the account, adequacy of the security, inclusive of its realizable value and documentation covering the advances. Soneri Bank adhere the Regulation R-8 and provide necessary information to SBP on time to time basis regarding performing and non-performing credit portfolio REGULATION R-9 -ASSUMING OBLIGATIONS ON BEHALF OF NBFCs The total amount of guarantees issued by an NBFC, and accepted by the banks, on the strength of which the exposure will be allowed by the commercial bank / DFI, will not exceed per party limit of the bank / DFI as mentioned in Regulation R-1. Before taking exposure against the guarantee of NBFC, banks / DFIs shall ensure that total guarantees issued by an NBFC in favour of banks / DFIs do not exceed 2.5 times of capital of the NBFC as evidenced by the latest available audited financial statements Soneri Bank adhere the Regulation R-9 and doesnot exceed 2.5 times of capital of NBFC REGULATION R-10- FACILITIES TO PRIVATE LIMITED COMPANY Banks / DFIs shall formulate a policy, duly approved by their Board of Directors, about obtaining personal guarantees of directors of private limited companies. Banks/DFIs may, at their discretion, link this requirement to the credit rating of the borrower, their past experience with it or its financial strength and operating performance. Soneri Bank adhere the Regulation R-10 and make sure proper documents should be obtain before facilitating private limited company REGULATION R-11- PAYMENT OF DIVIDEND Banks / DFIs shall not pay any dividend on their shares unless and until: (a) they meet the minimum capital requirements as laid down by the State Bank of Pakistan from time to time;
25

(b) all their classified assets have been fully and duly provided for in accordance with the Prudential Regulations and to the satisfaction of the State Bank of Pakistan; and (c) all the requirements laid down in Banking Companies Ordinance, 1962 relating to payment of dividend are fully complied. Soneri Bank adhere the Regulation R-11 provide its shareholder regular dividend as well as right shares according to the banking companies ordinance, 1962 REGULATION R-12- MONITORING While extending fund based facilities to borrowers against hypothecation of stock and / or receivables on pari-passu basis, banks / DFIs shall obtain monthly statements from borrowers that contain a bank-wise break-up of outstanding amounts with the total value of stocks and receivables there-against. Soneri Bank adhere the Regulation R-12 and provide provide necessary statements on monthly basis which contains the information as per laid down under this regulation REGULATION R-13- MARGIN REQUIREMENTS Banks / DFIs are free to determine the margin requirements on facilities provided by them to their clients taking into account the risk profile of the borrower(s) in order to secure their interests. However, this relaxation shall not apply in case of items, import of which are banned by the Government. Banks / DFIs are advised not to open import letter of credit for these items in any case till such time the lifting of ban on any such item is notified by the State Bank of Pakistan. Soneri Bank adhere the Regulation R-13 and before opening any LC it will obtain special code from SBP and follow the instructions as laid under.

26

6.1 CONCLUSION
Soneri Bank was incorporated in 1992 as a public limited company with paid up capital of Rs.300(M). Over the last 16 years the bank has achieved sustained growth with a network of 117 branches across the country. The equity stands at Rs. 6.610(bn) and total assets of PKR Rs. 76.854 (bn) at the close of the year 2007. My personal experience with the bank is that when I visited Soneri Bank head office which is located at 5 th Floor, Central Office, Al Rahim Tower , 1.1 Chundrigar Road, Karachi, I have being overwhelmed by the staff and when I request them to assist me in my report assignment of my Virtual University they offer me with great help. Firstly, I have being introduced by different department of the bank i.e The General Managers office of the South region is on the 2nd Floor of the same building than they have Soneri Bank Data Center at 7 th Floor alongwith is the HR Department on the same floor and than they have other miscellaneous department on different floor. For more detail they asked me to visit any branch manager which will help in this context further. So, I visited Senior staff member of Soneri Bank Limited Garden Branch he assist me with all the necessary information on the part of the bank.

27

6.1 BIBLIOGRAPHY
Money and banking , Dr Talat Afza, Lecture Notes Soneri Bank, Annual Reports o Year 2005 (Audited) o Year 2006 (Audited) o Year 2007( Audited)
o

Year 2008 3rd Quarter (Unaudited)

State Bank of Pakistan Prudential Regulation for Corporate and Commercial Banking State Bank of Pakistan BPRD Circulars PACRA Rating for Banking and Other Financial Institutions How to write Annual Report By Joane Fritz, About.com Writing on the Job: A Norton Pocket Guide By John C. Brereton & Margaret A. Mansfield. Effective Writing, Stunning Sentences, Powerful Paragraphs and Riveting Reports By Bruce and Ross-Larson Dawn Newspapers for updated information Instruction Circulars of Soneri Bank Limited Economic Reviews for Banks and their activities. State Bank of Pakistan, Website, http://www.sbp.gov.pk Soneri Bank website, http://www.soneribank.com

28

7.1 APPENDIX
Soneri Bank Annual Report for the Year 2007 is available at the following link. Due to the size and requirement it will not appended with this report Direct Link to Download http://www.soneribank.com/soneribank/html/anualreport2007.pdf

State Bank of Pakistan Prudential Regulations for Commercial Banking can be download as follows. Direct Link to Download http://www.sbp.org.pk/publications/prudential/PRs-Corporate.pdf

The Pakistan Credit Rating Agency Limited (PACRA) banking rating methodology can be download as follows Direct Link to Download http://www.pacra.com/RMethodology/Bank%20Rating%20Methodology.pdf

The Pakistan Credit Rating Agency Limited (PACRA) bank loan and recovery rating can be download as follows Direct Link to Download http://www.pacra.com/RMethodology/BLR%20Methodology.pdf

29