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The Bank of Punjab


Pakistan came into being on 14th August, 1947; sufficient banking services
were available in the areas forming Pakistan. Out of the total branches of the nearly
3,500 in the undivided India, as many as about 1,500 branches were existing in these
It was agreed between the two countries that reserve bank of India shall
continue to function in the Pakistan territory until 30th September 1948 and that
Indian notes would continue to be legal tender at Pakistan until 30th September 1948.
Unfortunately, relationship between the two countries became most strained
immediately after independence; banking was mostly in the lands of Hindus who
immediately started transferring their offices and assets into India. As a result most of
the banks in Pakistan were closed down and even those which were open were not
doing any effective business.
The number of banking office in Pakistan came down to about 200 on 30th
June 1948. Branches of some European banks were also functioning in a limited
manner, financing in export of crops, and their number was limited to about 20.
It was only the Habib bank, which transferred its office from Bombay to
Karachi Austral Asia bank was another bank, which was in existence in the Pakistan
territory at the time of independence. Despite of best efforts on the part of government
of Pakistan, no heady way could be made on this behalf and reserve bank of India was
in no mood to help the new country. Imperial bank of India, agent of the reserve bank
of India also started closing down its branches in Pakistan.
Reserve bank also refused to advance money to Pakistan to make essential
payments such as salaries etc, also Pakistan’s share of Rs.75 billion in cash balance
was with held by bank, causing hardships to the newly born state. In view of these
hopeless state affairs it was agreed between the two countries that reserve bank would
serve as monetary authority in Pakistan only up to 30th June 1948.

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The Bank of Punjab


The principle of nationalization of banks is to stream line the operation of

commercial banks in such a way that it may be conductive to the development
activities in process in the country.
Since the commercial banks were owned controlled by big business groups of
the country it was feared that these banks would not maintain uniformity in their
operational and would be instrumental to inflationary pressure. However, the
considerations behind nationalization are
 To form uniformity in the policy of the commercial banks so they may serve the
best national interest.
 To make the operation of commercial banks highly sensitive and responsive to the
policy of the government relation to financial matters.
 To make the credit policy of the commercial banks more purpose full and
effective especially in the development of economic sectors of the country. It acts
as an agent of the State Bank of Pakistan
 To make the best use of the funds available at the disposal of these banks for the
economic development of the country.
 To eliminate unhealthy and uneconomic competition among commercial banks.
 To development strong money banks market in the country so that the value of
currency may be maintained at stable level both in national facilities to exporter
and agriculturists which have not been satisfactory in the past years.

Public Sector Commercial Banks

National Bank NBP

First Women Bank Limited FWB
The Bank of Khyber KB
The Bank of Punjab BOP

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The Bank of Punjab

Local Private Banks

Askari Commercial Bank Limited

Bank Al-Falah Limited
Bank Al Habib Limited
Meezan Bank Limited
Faysal Bank Limited
Silk Bank Limited
Soneri Bank Limited
Union Bank Limited
Muslim Commercial Bank Limited
Allied Bank of Pakistan
Union Bank Limited

Foreign Banks

ABN Amro Bank

Habib Bank A. G. Zurich
Mashreq Bank PJSC
Oman Bank
Barclays Bank
Standard Chartered Bank

Specialized Banks

Zari Tarqiati Bank Ltd.

Industrial Development Bank of Pakistan
Punjab Provincial Cooperative Bank

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The Bank of Punjab

It has not so far been decided as to how the word ‘Bank’ originated. Some author’s
opinion is that, this word is derived from the word ‘Bancus’ or ‘Banque’, which
means a bench. Others authors hold the opinion that the word ‘Bank’ is derived from
the German word ‘Back’, which means joint stock fund. It is therefore so much
difficult to decide as to which opinion is correct.
Banking in fact is primitive as human society, forever since man came to
realize the importance of money as a medium of exchange, the necessity of a
controlling or regulating agency or institution was naturally felt. Perhaps it was the
Babylonians who developed banking system as early as 2000bc. It is evident that the
temples of the Babylon were used as ‘Banks’ because of the prevalent respect and
confidence at the clergy.
At the time of independence there were 631 offices of the scheduled banks in
Pakistan, of which 487 were located in West Pakistan alone. As a new country with
resources it was very difficult for Pakistan to run its own banking system immediately.
Therefore the expert committee recommended that the Reserve Bank of India should
continue to function in Pakistan until 30, September 1948, so that problems of time and
demand liability, coinage currencies, exchange etc, could be settled between India and
Pakistan. The non Muslims started transferring their funds and accounts to India. By
the end of June 1948, the number of officers of scheduled banks in Pakistan declined
from 631 to 255. There were 19 foreign banks with the status of small branch offices
that were engaged solely in export crop from Pakistan, while there were only two
Pakistani institutions, Habib Bank, and Australasia Bank, the customers of the banks
are not satisfied with the uncertain condition of banking. Similarly the Reserve Bank of
India was not in the favor of Govt. of Pakistan. The Govt. of Pakistan decided to
establish a full-fledge central bank. Consequently the Governor General of Pakistan
Quaid-e-Azam inaugurated the State Bank of Pakistan on July 1,1948 Thus a landmark
was made in the history of banking when the State Bank of Pakistan assumed full
control of banking and currency in Pakistan.

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The Bank of Punjab



“To be a customer focused bank with service excellence.”


To exceed the expectations of our stakeholders by leveraging our relationship

with the Government of Punjab and delivering a complete range of professional
solutions with a focus on programmed driven products & services in the Agriculture
and Middle Tier Markets through a motivated team.


 Our Customer As our first priority.

 Profitability For the prosperity of our stakeholders that allows us to
constantly invest, improve and succeed.
 Corporate Social Responsibility To Enrich the Lives of community where we
 Recognition and Reward For the talented and high performing employees
 Excellence In every thing we do.
 Integrity In all our dealings.
 Respect For our customers and each other.

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The Bank of Punjab


The Bank of Punjab was established in 1989 and was given the status of
scheduled bank in 1994. The Bank of Punjab is working as a scheduled commercial
bank with a network of almost 273 branches at all over major locations in the
Punjab. The Bank provides all types of banking services such as Deposits in Local
Currency and client foreign currency, remittances, and advances to business, trade,
industry and agriculture. The Bank of Punjab has indeed entered a new era of science
to the nation under experience and professional hands of its management. The Bank
of Punjab plays a vital role in the national economy through mobilization of hitherto
untapped local resources, promoting savings and providing funds for investments. The
bank offers attractive rates of profit on all deposits, opening of foreign currency
accounts and handling of foreign exchange business for example imports, exports and
remittances, financing, trade and industry for working capital requirements and
money market operations. The lending policy of bank is not only cautious and
constructive but also based on principles of prudent lending with maximum emphasis
on security.
The Bank provides alltypes of banking services such as Deposit in Local
Currency, Client Deposit in Foreign Currency, Remittances, Advances to Business,
Trade, Industry and Agriculture A wholly owned subsidiary of BOP First Punjab
Modaraba (FPM) was established in 1992 and is being managed by Punjab Modaraba
Services (Pvt) Ltd , a wholly owed subsidiary of The Bank of Punjab.
Lending under Islamic mode of finance, main vehicles are Morabaha, Ijarah &
Musharika to encompass requirements of corporate, commercial and individual
Liability generation through COM’s (Certificate of Musharika ) offers
attractive returns to individuals and institutional depositors for fixed tenure

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The Bank of Punjab

instruments. FPM is working to introduce new and innovative products to enhance its
range of services.


Excellence Award by the Central Board of Revenue

The Central Board of Revenue presented "Excellence Award" to the Bank of Punjab
in recognition of the contribution made by the bank towards Government exchequer.

3rd Kissan Time Awards

In recognition of Bank's contribution in development and growth of agricultural

sector, the Bank honoured with "Top Bank for Agriculture Loans" and "Best Bank
Crop Insurance" under 3rd Kissan Time Awards year 2006.

Best Corporate Report Award

Annual Report of the Bank for the year 2005 won 5th position for "The Best
Corporate Report Award" for the Financial sector, adjudicated jointly by the Institute
of Chartered Accountants of Pakistan and the Institute of Cost and Management
Accountants of Pakistan.

16th Bolan Excellence Award

The Bank was awarded Best Bank Award under 15th Bolan Excellence Awards
distributed in 2006.

Achievement Award

The Lahore Chamber of Commerce & Industry (LCCI) awarded the Bank "LCCI
Achievement Award" 2006.

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The Bank of Punjab


Some of the major customers of Bank of Punjab are:

 Educational Institutes
 Agriculturists
 Pakistan Telecommunication Private Limited
 Pharmaceutical Companies


Punjab Government wishes to state that being the major stake holder in the
Bank of Punjab it has full faith in the new management and operations of the Bank.
The government further pledges its unequivocal support to the Bank and firmly
believes that the affairs of the Bank are sound and its financial health robust.

Finance Department
Government of the Punjab.

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The Bank of Punjab


• Lahore Region

• Faisialabad Region

• Gujranwala Region
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The Bank of Punjab

• Rawalpindi Region

• Karachi/Queta Region

• Multan Region

• Gujrat Region


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The Bank of Punjab


Name Designation

Mr. Safdar Javaid Syed Chairman

Mr. Naeemuddin Khan President

Mr. Azhar Hameed Director

Mr. Haroon Khawaja Director

Mr. Farooq Ahmed Awan Director

Mr. Naveed Masud Director

Mr. Mujtaba Jamal Chaudhry Director

Mr. Shafqat Ellahi Director

Mr. Shafqat Mahmood Director

Mr. Tariq Mahmood Pasha Director

Mr. Viqar Ahmed Khan Director

Mr. Raza Saeed Secretary To The Board

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The Bank of Punjab



In modern times very few business enterprises are carried out solely with the
capital of the owners. Borrowing funds from different sources has becomes an
essential feature of today business enterprise. But in the case of a entire banking
system is based on it. The borrowed capital of the bank is much greater then their own
capital. Banks borrowing is mostly in the form of deposits.

These deposits are lent out to different parties. The larger the difference
between the rate at which the deposits are borrowed and the rate at which they is lent
out the greater of the profit margin of the bank. Furthermore, the larger the deposit the
larger will be the funds available for employment; larger the funds lent out the greater
will be the profit of the bank.

To receive the deposit is the basic function of all commercial banks. The bank
does not receive these deposits for save keeping purpose only, but they accept
deposits as debts. When banks receive deposit from a customer, the relationship of a
debtor and creditor is established where by the customer become the creditor and the
bank a debtor. When the bank receives amount of deposit as a debtor, it becomes the
owner of it. It may, therefore use it as deems appropriate. But there is an implicit
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The Bank of Punjab

agreement that the amount owned would be paid back by the bank to the depositor
after a specified period.


 Current or demand Deposits

 Saving Deposit
 Short Notice Term Deposit
 Call Deposits
 Fixed or Term Deposits


Current deposit are those which are payable to bank whenever demand by the
customer. Bank doesn’t pay any profit on current deposits. There are of different
scheme of saving deposits, which are classified under different duration purpose and
rate of interest. Fixed deposits are those which are by the bank under the conditions
that will not be payable on demand but will be payable under fixed or determinate
future time date.


This type of accounts is one step towards the Islamization of banking system
in Pakistan. There are two types of PLS Accounts.

• PLS Saving Account

• PLS-TDR (Profit & Loss Sharing Term Deposit Receipts).
PLS saving accounts can be opened with the minimum sum of Rs. 100 and
PLS-TDR account can be opened for a sum of Rs. 1000 or above. Profit is paid on
both types of the PLS account on half yearly basis.

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Under PLS saving account the depositor undertakes to share profit or loss on the
deposits earned or sustained by the bank. Secondly the bank is at the liberty to invest
the funds of the deposits in any avenue, it deems fit. The PLS deposits are invested in
non-interested channels.


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 bank. This type of deposit
facilitates the depositor to withdrawn his amount with interest of the deposited period.


Call deposits are the sorts of deposits, which are deposited with the banker
against any tender. This is without interest deposit. This may be with interest provided
the depositor has agreed to keep this amount with the bank for some fixed period.


This type of deposit is same as the SNTD. The difference is that SNTD is for short
period (7- 30 days) while TDR is for long period (1 month up to 5 years).


Account opening is the first step towards establishing a relationship between

the customer and the bank. The Bank of Punjab is offering basically two types of

• Current Deposit Account

• Profit and Loss Sharing Account
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The necessary condition for a customer, who wants to open an account with the bank,
is introduction, which is preferably by the bank officers or any account holder of the
bank. The different categories of accounts that are available are as under.

• Individual Account
• Joint Account
• Partnership Account
• Limited Company Account
• Clubs, Society, Association, or Trust Account
• Foreign Currency Deposit


The general banking department performs various functions among them the
first and most important function is Account Opening. The bank reserves the right to
open any account, which in its opinion is suitable as a customer. The process of
opening an account is very simple and any body that would like to open his account
could do it easily without any difficulty.
The person would like to open his account is required to meet with the manager
or second officer, who will give him an Application form specifically used for
account opening. Along with the form a card for specimen signature is also supplied
to the customer. Manager has every right not to accept this contract if he is not
satisfied with the details provided by the customer. But in case the contract is
acceptable to both, the next step is official account opening.
This begins with the Account Opening Register which can be thought as a
customer’s master file. The manager records the necessary details into this register5
and allots an “Account Number” from this account opening register. This register is
maintained for each type of accounts and the account numbers are allotted serially.
After opening the account every applicant’s date is entered in the computer to

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The Bank of Punjab

maintain the safe record and application form is also safely put off, so that it can be
available whenever it is needed. Checking officer is responsible to tally the manual
data with computerized account opening file. For fix deposit only the application
form is needed, which is prepared manually, because most of the procedures of fix
deposit is done manually. Signature specimen card contains three signatures of the
applicant, applicant account number, account type, branch code, and title of account.
It will be attached with the account opening form. Banker uses this card when he
receives the cheque, he compares signature on the cheque with the Specimen card, for
avoiding the frauds.


This department receives the cheque and other negotiable instruments drawn on
local branches of other banks. State bank of Pakistan has clearing house, in which
cheque, and other negotiable instruments are brought by each local bank
representatives and the mutual claims of each bank on other and offset and a
settlement is made by the payment of difference. Clearing system is help full for both
the customer and saving currency, time and labor.

Investments which are collected

• Cheques
• Demand Drafts
• Telegraphic transfers
• Mail Transfers
• Pay Order
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The Bank of Punjab

• Dividend Warrants


Any instruments which drawn on BOP branches and other banks in same city
that’s instruments are called clearing. A clearing and date stamp is a fixed on these
instruments these are two types of clearing!
• Outward Clearing
• Inward Clearing
Inward clearing means the cheque drawn on BOP and outward clearing means the
Cheques drawn on others


The instrument collected or stored bank wise and a schedules is prepared

separately for each bank mentioning the total number of instruments and the amount
of the instruments. Then these are recorded in a register called “OUTWARD
CLEARING REGISTER” then a main schedule is prepared showing the total number
of cheque and their aggregate amount being presented in the clearing.
The cheque/instruments are handed over the clearing branch. Central clearing branch
issue CREDIT ADVICE to the branch for passing credit to its customer immediately.
The branch on receiving credit advice debits the clearing account and credit the
respective customer accounts.


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The Bank of Punjab

On receiving cheque/instruments from central clearing branch, the in charge

checks the number and amount of cheque received in clearing must tally with the
main schedule received from central clearing branch.
These cheque/instrument are entered in “INWARD CLEARING REGISTER” for the
cheque/instrument passed in clearing is a credit advice for the aggregate amount of
cheque passed in clearing is prepared, drawn on central clearing branch.


Deposit held by bank at SBP serves as check clearing and collection balances.
Rather than physically transferring funds between banks, check clearing and
collection can be done by simply debiting or crediting a bank’s account at SBP.


Remittance is a major function of the bank. It is the transfer of money from

one place to another place. The need for remittance is commonly felt in commercial
life particularly and in everyday life generally.
By proving this service to the customers the Bank of Punjab earns a lot of income in
the form of service charges.


The Bank of Punjab deals with the following type of remittances

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• Demand Draft (DD)

• Mail Transfer (MT)
• Telegraphic Transfer (TT)
• Pay Order
• Now we discuss all these in detail:


Demand draft is a written order given by the one branch of a bank on behalf of
customer to another branch of the same bank to a certain amount to the certain person.


1) A draft voucher is filled which contains the following information

• Name of the parties involved
• Date
• Amount to be sent
• Account number (if DD is crossed)

2) A credit voucher is filled in order to get the excise duty and exchange
3) The sender deposits the total amount of the two vouchers i.e. the debit and credit
4) Then the cashier sends the cash receipt voucher to the accounts department and
the account records the amount paid in his cash scroll.
5) Accountant gives the DD leaf along with the DD voucher to his assistant who
records the sender’s name, amount and receiver’s name. After writing all the
information in the DD register he gives it to the officer along with the DD for
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6) After authentication the DD is handed over to the sender and bank sends the
advice to the concerned branch. So when the party presents the DD in the
concerned branch its payment could be made.


The following parties are involved in demand draft;

1) Purchaser or Sender
The purchaser is the person who sends the money to a particular person payable at
a certain branch.
2) Issuing or Drawing Branch
The branch from where the demand draft is issued to another branch of the
same bank.
3) Drawer Branch
Branch in which the draft has drawn and called upon to pay the amount.
4) Payee
The person who is entitled to receive the amount after presenting the demand draft
in the drawer branch.


It is the transfer of money from one branch to another branch of the same bank
through mail service. In mail transfer there is no need of advice as the amount is
directly credited to the receiver’s account.


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1) First a voucher is filled in whish the sender writes the amount to be sent, name,
account number of the receiving person with the branch name and date.
2) A credit voucher is filled in order to deduct exchange, postage charges according
to the amount of the mail transfer.
3) The sender deposits the total amount in the cash department.
4) The cash officer gives the vouchers to the officer after affixing received cash
stamp and writing the amount in red ink.
5) Then the officer writes the amount paid in the cash scroll and gives the MT to his
6) MT leaf is filled according to the information provided in credit voucher. He also
writes the same information in the MT register. Then he gives the MT leaf and
MT register to the officer for authentication.


This is the most urgent method of remitting the money from one place to
another place. This method is used when the sender desires to send urgently, in this
case the sender request the manager of the branch to issue TT.

For sending the TT the manager and officer apply a test. In the test the
manager and officer uses a coding technique. They write their own code numbers,
which is allotted, to them as the bank branch code. After making all the conformation
the concerned branch makes the payment to the receiver. If the sender wants to
convey the same message through telephone then he has to pay the charges of

telephone along with the TT charges. First the person deposit the TT amount along
with the charges through the credit voucher then his TT sent to the relevant branch.


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The Bank of Punjab

A pay order is a written order issued by the bank on its own branch, drawn
upon and payable by itself to pay a specified sum of money to the person. The
purpose of a pay order is to transfer the fund from one place to another. It is usually
not issued in favor of the parties of other cities. Usually the pay order is issued for the
local transfer of money from one person to another or from the person to any other
department. It is used for different purposes. The purpose may be the repairs of the
branch or renovation of the branch.


The procedure of a pay order varies with the nature of the purpose. If the work
is of huge amount then first the manager writes a letter to the Zonal Chief in order to
get sanction of the work. Then the advertisement of the work is given in the
newspaper in order to invite the contractors. But if the work is small then the branch
manager has discretionary power to select the party whose rate is lowest. After
finishing the work the contractor submits the bill of work on his stamp pad. Then the
bank issues a pay order, against the pay order the contactor gets the amount from the
issuing branch.


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The Bank of Punjab

Account department is the backbone of a bank. It plays a vital in performing

different functions of a bank. The account department of is computerized as well as
manual. Accounting books of different departments are maintained under this
department and with the help of these, accountant prepare the monthly quarterly,
semiannually and yearly financial statement and order statement of the whole bank.
All the transaction taking place is recorded daily in the books of accounts and in
computerized ledgers.
For every transaction there is Voucher prepared and through these vouchers
contra entries are passed under different head. Good working of accounts mainly
depends on the voucher system. Accounts department is responsible for proper
handling and maintenance of vouchers of different department

Accountant prepares vouchers for all daily activities of different departments.

Checking officer checks and tallies these vouchers with their daily transactions and
posts their entries under proper heads.


• Debit Voucher
• Credit Voucher
These two types of vouchers are again classified under following types: -
• Cash voucher
• Transfer voucher
• Clearing voucher
All the daily transaction in cash, transfer and clearing is done through these
vouchers. A sheet is prepared on which all the vouchers passed during one day are
consolidated and summarized. This sheet is called supplementary sheet. There are two
types of supplementary sheet.

• Daily paid voucher sheet

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• Daily receipt voucher sheet

Paid sheet is used for all debit vouchers and receipt sheet is used for all credit


Cash book is prepared daily to keep the record of daily paid vouchers. Cash
book contains the opening balance and the closing balance of a working day. Before
writing and balance the cash book firstly there is needed to properly arrange all the
vouchers of that day.


One of the functions of accounts department is to maintain and update the term
deposit ledgers and books manually. Term deposit receipt or TDR ledger is updated
after every month for estimating profit on customer’s accounts. Accountant prepares
different ledger for all schemes of term deposit. With the help of TDR ledger
accountant prepares “provisional ledger”. From this ledger accountant calculate the
monthly product of each account and estimate the profit for a half-year. The
semiannual profit on each account will be the expenses of branch.


Most of the daily working is done through ledgers. In BOP all the daily
transaction in deposit, cash, clearing, transfer, remittance and advance are performed
these daily ledgers; accounts department receives the following output of general

• Daily general ledger expense

• Daily general ledger income

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The Bank of Punjab

• Daily general ledger assets

• Daily general ledger liability
• Daily general ledger circle expense
• Daily general ledger audit expense

The formats of all these ledgers are same. They contain the following head
account no. description, previous balance. Codes are assigned to all these items.
Income will be credited in the branch account and expenses will be debited I the
branch at the month end.
All the expenses of circle, regional, audit, inspection office is debited in the
head office account, because it is the responsibility of the head office to bear the
expenses of its offices. For all the heads of general ledger there is closing balance and
opening balance. These ledgers are helpful in preparing the daily, monthly,
semiannually and yearly statements. Some of these statements are prepare for the
purpose of record keeping of branches and some are prepared to send to the circle
office, head office and state bank of Pakistan.
Some of these statements are

• Statement of provisional income

• Statement of provisional expense
• Statement of head office account
• Summary of income and expense
• Statement of profit and loss on PLS account
• Statement of profit and loss PLS 365 account
• Balance confirmation report
• Statement of affairs

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The Bank of Punjab


This department deals in bills for collection for all kinks such as cheque, draft,
and pay orders, call deposits etc. with outstation branches of BOP or with other banks.
It provides service to their customer to get payment from the nearer bank at nominal
charges. The four main heads of bill department is.

• Outward Bill for Collection (OBC)

• Inward Bills For Collection (IBC)

• Outward Documentary Bills For Collection (ODBFC)
• Inward Documentary Bills For Collection (IDBFC)


Bills department receive cheque or other of bills from its kinks client whose
account must be opened in that branch. The branch forwards the check with schedule
or covering letter to that branch on which bills is drawn. The checking officer of bills
department will cross the cheque with special bank stamp before forwarding the
OBC register is also maintained for proper record keeping of outward bills.
This register is updated two times once at the time of receiving bill from clients and
the other when the confirmation advice of this cheque is received from the payable
branch. Bank gets a commission Rs. 25/- and courier charges Rs. 40/- on the service.


The branches which receive bill have to verify these bills for payment. The party
account must be opened in that branch. The responsibility of this branch is to verify
the bills for collection with in three days and send the advice to the originating

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In case of verification of bills is approved, banks debit the account of the respective
account holder and send a debit advice to the originating branch and at the same time

credit the head office account for inward bills IBC register is maintaining for keeping
the proper record of the bills.


Originating branch receives the documentary bills from their clients and sent
them to out station branches of the same bank or other bank. Customer account must
be opened in that branch. The documentary bills are i.e. trust receipt, railway receipt,
sales invoice, receipts of courier service etc. bank gets as commission 0.35% plus
postage charges plus courier service charges of this service. Seller and producer both
can avail the facility of bank in case of selling and purchasing their product or goods.


Bank receives the documentary bills from the other outstation branches of the
same banks or other banks for collection the amount from purchaser.
In this case back acts as a buyer’s bank, when bank receives the documentary bills
they send intimation to buyer about his arrival of goods. If the buyer is the account
holder then bank will debit his account otherwise purchaser deposits the amount of
the bills. Bank hand over these documents to purchase, on behalf of which buyer
receives the goods. Bank also charges commission

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It is the loan function, which produces the major person of bank’s income, and
as such it is the major areas of professional banker’s concern and attention.


Basically there are five principles that must be duly observed while advancing
money to borrowers.
• Safety
• Liquidity

• Disposal
• Remuneration
• Suitability


Many there are two types of advances:

• Short-term (maturity within one year)
• Long term (maturity with the period of more than one year)
However they are further classified as:
• Running Finance
• Demand Finance
• Cash Finance
• Letter of Guarantee


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This form of finance was previously known as “overdraft”. When a customer

requires the temporary accommodation, his bank allows withdrawal his account in
excess of credit balance, which the customer has in its account, a running finance

occurs. The accommodation is thus allowed collateral security. When it is against

collateral securities, it is called a “Secured Running Finance” and when the customer
cannot offer any collateral security except his personal security, accommodation is
called a “Clean Running Finance.” The customer is in advantageous position in
running finance because he has to pay the mark-up only the balance outstanding
against him on daily product basis.

This is common form of financing to commercial and industrial concerns and
is mad available either against pledge or hypothecation of goods produce or
merchandise. In Demand Finance the party is financed up to a certain limit either at

once or as and when required. The party due to facility of paying mark-up only on the
amount it actually utilizes prefers this form of financing
• Ordinary Shares
• Preferred Shares
It can be
• Quoted or Unquoted
• Registered
• Bearer
• Inscribed


A mortgage is the transfer of and interest in specific immovable property for the
purpose of securing the payment of the money, advanced or to be advanced. By way

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of loan, and existing debts or the performances of the engagement this may rise the
pecuniary liability.

The transfer is called the ‘mortgager’ and the transferee the ‘mortgagee’ the principal
money and interest of which payment is secured for the time being and instrument by
which the transfer is effected, is called the letter of the mortgage deed.
Availability of adequate flows of credit for industry and agriculture are a sine qua non
for the growth and development of an economy. This acquires added importance
when agriculture is the mainstay of the economy as also the sector where the bulk of
the poor are concentrated. Growth and productivity in Pakistan's agriculture has
slowed down in recent years and is, therefore, of serious concern given its importance
for the economic prosperity of the country. Apart from various other weaknesses in
the infrastructural support of the agricultural sector, inadequacy and lack of efficacy
of credit, flows to support agriculture related activities has been a major constraining
Agriculture is the largest sector of the economy. It contributes 25 percent to GDP,
provides raw materials to 80 percent of industry and employment to over 50 percent
of the population. This is a sector that has the shortest gestation period for
investments and, therefore, a remarkable capacity to bring about a turn around in the
economy. This important sector in Pakistan is suffering from a number of maladies
and is consequently witnessing stagnation in productivity.
Due to policy and administrative exigencies, the savings in the agriculture sector
remain low and, therefore, the sector has perpetually remained capital starved. The
pricing of input and output in agriculture over the years has forced the majority of
farmers in Pakistan to plough back their incomes into agriculture and non-institutional
credit, and has more often than not served to sap their potential earnings. Needless to
say, that shortage of savings and lack of availability of capital is one of the major
reasons for poverty in the country. The agricultural and rural sectors in Pakistan in
general and in Punjab in particular are, therefore, suffering from severe under-
development. Under a desirable development model, Punjab can:

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The Bank of Punjab

 Increase agricultural production to meet the country's requirement of essential

foods items and industrial raw materials.
 Develop agro-based industry in the rural sector for economic value addition;
 Generate additional employment opportunities in rural as well as adjacent small

 Control massive migration to the urban centers that in turn is causing a number of
social, administrative (i.e. law and order) and economic problems for the urban
 Elevate poverty and improve the income generating capacity of the agri-based


There are many agriculture promotion schemes provided by BOP.

 Green Tractor Lease Finance Scheme

 Agri Finance Branches
 Agricultural Finance Scheme
 Kissan Dost Tractor Scheme
 Second Hand Tractor Lease Finance Scheme
 Kissan Dost Aabiari Scheme
 Kissan Dost Mechanization Support Scheme
 Kissan Dost Farm Transport Scheme
 Kissan Dost Eslah-E-Arazi Scheme
 Kissan Dost Live Stock Development Scheme
 Livestock Breed Improvement Trough VVW
 Kissan Dost Commercial Agro Services
 Kissan Dost Agri Mall Finance Scheme
 Corporate Farming Finance Scheme
 Commercial Lease Finance Tractor Scheme
 Demand Finance-Sheds Construction and Civil Works

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The Bank of Punjab

 Lease Finance Facility for Milch Animals

 Running Finance-Livestock/Poultry and Fish Farms
 Kissan Dost Model Dairy Farms (PDDC)
 Kissan Dost Model Milk Collection Center (PDDC)
 Kissan Dost Green House Finance Facility
 Kissan Dost Cold Storage Finance Facility
 Scheme for Controlled Sheds

 Lease Finance Facility for Installation of Biogas Plant

 Group Financing to Small Farmers
 Clean Credit Facility through Syngenta Franchisees
 Zarkaashat Drip Irrigation System
 Markup of Schemes


 BOP Quick Cash

 BOP Car Loan
 BOP House Loan
 BOP SME Loan
 BOP Assaish Loan
 BOP House Loan For Federal Govt


 Commercial Banking
 Corporate & Investment
 Cash Management Services
 Utility Bills
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The Bank of Punjab

 Lockers


The Commercial Banking Group has been formed to cater the needs of small &
medium size customers for increasing Bank’s business significantly with clear focus,
repositioning of resources and active marketing to improve Bank’s profitability.
Commercial Banking will deal with customers having sales turnover and aggregate
credit exposure as per benchmarks prescribed in the SBP’s Prudential Regulations.

This Group’s emphasis will be to meet necessary business needs of customers which
are numerous as compared to CIB clients but their individual credit requirements are
relatively much smaller. In view of this peculiar nature of this business segment that
involves a higher turn over a much wider network is needed. The SME will
concentrate on rebuilding its set up which suits to its peculiar needs on all locations.


Corporate Banking

The BOP Corporate Banking endeavors to market new clients and retain the existing
relationships and build market share by offering superior services, competitive pricing
and wide product range to valued corporate clients including Public Sector Entities
and Multi National Companies. BOP facilitates its customers for all sorts of their
banking needs including working capital, trade finance, BMR and project financing
etc. BOP has worked on some of the local markets’ largest and most complex
transactions and infrastructure projects.

The BOP Corporate Banking Group comprises of seasoned relationship management

team to meet the demanding service standards of large corporations. The group
delivers a full range of high quality advisory, financing and operational service
solutions tailored according to customers’ needs.

Investment Banking

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The Bank of Punjab

The investment Banking Group is entrusted with the prime responsibility of

developing and executing investment banking strategy to enhance and maximize
shareholder value and customer confidence. IBG specializes in providing innovative
and unique advice to its clients to assist them in meeting challenges in an ever-
changing market. The team of qualified professionals operates under a strict risk
management framework, following best practices within their fields and continuously
striving for excellence.

Investment Banking Unit offers full spectrum of services, which include TFCs,
Syndicated Finances, Structured Finances, Leveraged Buyouts, Project Finance,

Quasi-Equity Products, Independent Advice, Equity Placements, IPOs, Equity

Underwriting, Mergers, Corporate Restructuring, Acquisitions and other products.
IBU also works on and come up with providing Fund Management Facilities


Cash Management is a process of collections & payments on behalf of the Customers

using the Bank Network.The objective is to faciliate organizations with multiple
collection points in gathering Cash / Funds and making them available in the
customer operating Account. Similarly it facilitates disbursement of frequent and or
Bulk payment to multiple locations.

This should be accomplished with minimal supervision by the customer, supported by

an automated system to provide timely and requisite MIS / Reconciliation under
agreed Service Levels


Customers can pay their utility bills e.g. electricity, water gas, telephone, mobile, at
any of our 272 branches across Pakistan. For your convenience bills are collected on
all working days from 9:00 am to 5:00 pm (Monday to Friday) except lunch & prayer
breaks and from 9:00 am to 1:30 pm on Saturday.

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The Bank of Punjab

You can also pay your bills by availing our drop box facility. Just drop your Cheque
along with bill at your branch and collect the receipt in the evening, avoid the hastle
of standing in queues and save your precious time

Discover peace of mind, enjoy personalized service and operate your locker in a
friendly and pleasant environment at The Bank of Punjab.

Locker Size Annual Fee

Small Rs.1,200

Medium Rs.1,800

Large Rs.3,000

Extra Large Rs.6,500

These are the other services provided by the BOP.

 ATM Facility
 On-Line Banking
 Lockers Facility
 Demand Drafts
 Letter of Credit
 Pay Order
 Mail Transfer
 Debit Card
 Collection of Utility

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The Bank of Punjab


Through the ATM’s Customers have access to the various services such as
withdrawal, balance enquiry and mini statement? Complete security is ensured
because access to the account is only possible by entering a four digit personal
identification number (PIN) known only to the account holder. Cash withdrawal limit
is up to Rs.20, 000 per day. Annual charges of ATM is Rs.250/- per card.


BOP is currently offering window-based online banking to its customers,

which gives access to information on their accounts and the liability to act on the
latest information received over the net.


It is one of the utility services that BOP provides to their customers for
keeping jewellery, important documents and other valuables.


BOP provides safe, speedy and reliable way to transfer money at vary
reasonable rates. Any person whether an account holder of the bank or not, can
purchase a Demand Draft from a bank branch.

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The Bank of Punjab

BOP is offering its business customers the widest range of option in the area
of money transfer. BOP’s letter of credit service is with competitive rates, security,
and ease of transaction, BOP Letter of credit is the best way to do the business

BOP provides transfer of money using different facilities. Its pay orders are a
secure and easy way to move the money from one place to another. The charges for
this service are extremely competitive.


Moves money safely and quickly from BOP Mail Transfer service. The rates
for this service is quiet impressive as compare to the market.


BOP Apna Cash Card is an ATM plus Debit Card.

1. The front of the card will have the following matter on it:
• Card Holder’s Name
• International Bin Number (6 Digits - XXXXXX)
• Magnetic Strip
• Signature Panel
• Conditions of Usage
• M-Net and M-Net logo


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The Bank of Punjab

• Any non-personal account i.e. Companies, Organizations, Trust Account,

Government account and Collection account etc.
• Dormant, inoperative, blocked or restricted accounts.
• Accounts with “NIL” balance.
• Term Deposit Accounts.
• NIDF Accounts. (Non Interest Demand Finance Accounts)
• Accounts requiring thumb / photo for operation (illiterate accounts) · ATM/Debit
cards can only be issued on local currency accounts.

To analyse the financial position of BOP, different tools are use, which includes Ratio
Analysis, Common size Analysis of the last five years. Importance of Financial Analysis


Financial analysis involves the use of various financial statements. These

statements do several things. First the balance sheet and the second is income
statement. The balance sheet summarizes the assets, liabilities, and owner’s equity of
a business at a point in time, while the income statement summarizes revenues and
expenses of a firm over a particular period of time. A conceptual framework for
financial analysis provides the analyst with an interlocking means for structuring the

Internship Report - 38 -
The Bank of Punjab

Internship Report - 39 -
The Bank of Punjab


2008 2007
(Rupees in ‘000)
Cash and balances with treasury banks 10,685,057 14,210,302
Balances with other banks 2,178,455 1,927,662
Lendings to financial institutions 633,333 2,450,000
Investments 22,711,980 73,461,695
Advances 131,731,158 133,893,585
Operating fixed assets 3,471,838 3,252,759
Deferred tax assets 8,388,162 -
Other assets 6,109,137 5,805,097

185,909,120 235,001,100

Bills payable 1,219,801 937,647
Borrowings 12,278,773 17,842,915
Deposits and other accounts 164,072,532 191,968,909
Sub-ordinated loans -- -
Liabilities against assets subject to finance lease 30,632 40,321
Deferred tax liabilities - 2,205,530
Other liabilities 4,564,257 3,009,984

182,165,995 216,005,306
Net Assets 3,743,125 18,995,794
Represented By
Share capital 5,287,974 4,230,379
Reserves 7,427,232 7,427,232
(Accumulated loss) / Un-appropriated profit 3,452,842
5,056,520 15,110,453
(Deficit) / Surplus on revaluation of assets - net (1,313,395) 3,885,341

3,743,125 18,995,794

Contingencies and Commitments

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The Bank of Punjab

2008 2007
(Rupees in ‘000)

Mark-up/return/interest earned 17,752,969 17,539,094

Mark-up/return/interest expensed 16,614,000 13,939,377
Net mark-up/ interest income 1,138,969 3,599,717
Provision against non-performing loans and advances 18,863,580 1,616,421
Provision for diminution in the value of investments 366,387 24,479
Bad debts written off directly - 246,869
19,229,967 1,887,769
Net mark-up/ interest income after provisions (18,090,998) 1,711,948

Non Mark-up/interest Income

Fee, commission and brokerage income 577,630 653,512
Dividend income 2,020,896 1,804,878
Income from dealing in foreign currencies 324,328 377,233
Gain on sale and redemption of securities 733,787 2,039,535
Unrealized gain / (Loss) on revaluation of investments
classified as held for trading - -
Other income 526,185 547,635
Total non-markup/interest income 4,182,826 5,422,793
(13,908,172) 7,134,741
Non Mark-up/interest Expenses
Administrative expenses 2,799,933 2,250,777
Provision against other assets 10,101 -
Provision against off balance sheet items - 292
Other charges 114,700 37,950
Total non-markup/interest expenses 2,924,734 2,289,019
(16,832,906) 4,845,722
Extra ordinary/unusual items - -
(Loss) / Profit Before Taxation (16,832,906) 4,845,722
Taxation - Current 207,600 169,252
- Prior years 1,052,000 (19,921)
- Deferred (8,033,001) 250,772
(6,773,401) 400,103
(Loss) / Profit After Taxation (10,059,505) 4,445,619
Unappropriated profit brought forward 3,452,842 3,219,246
Transfer from surplus on revaluation of fixed assets - net 5,572 5,866
3,458,414 3,225,112
(Accumulated loss) / profit available for appropriation (6,601,091) 7,670,731
Basic (loss) / earnings per share (after tax) - Rupees (19.02) 8.41
Diluted (loss) / earnings per share (after tax) - Rupees (19.02) 8.41

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The Bank of Punjab


2004 2005 2006 2007 2008

Operating Results

Markup/ return/ interest earned Rs in m 2,555 6,125 11,579 17,539 17,753

Markup/ return/ interest expenses Rs in m 719 2,669 7,509 13,939 16,614

Net markup income Rs in m 1,836 3,456 4,070 3,600 1,139

Non-markup based Income Rs in m 1,097 1,331 2,954 5,423 4,183

Non-markup based expenses Rs in m 1,150 1,291 1,882 2,289 2,925

Provision against NPLs Rs in m 47 331 374 1,888 18,864

Net profit before tax Rs in m 1,736 3,165 4,769 4,846 (16,833)

Net profit after tax Rs in m 1,368 2,353 3,804 4,446 (10,060)

Balance Sheet

Total Assets Rs in m 66,320 111,154 164,855 234,974 185,909

Advances (net) Rs in m 39,439 63,624 101,320 133,894 131,731

Investments Rs in m 16,198 18,026 28,233 73,462 22,712

Shareholders Equity Rs in m 4,420 6,777 10,659 15,110 5,057

Revaluation Reserve Rs in m 3,419 6,893 5,467 3,885 (1,313)

Deposits Rs in m 54,724 88,465 137,728 191,969 164,073

Borrowings from FIs Rs in m 2,832 6,791 6,989 17,843 12,279

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The Bank of Punjab


Ratio analysis is used to calculate the profitability, liquidity/leverage etc. of

the firm. From ratio analysis it is possible to predict future variances.
Following ratios of BOP has been calculated:

Ratios 2004 2005 2006 2007 2008

Gross spread ratio % 72 56 35 21 6.42
Profit before tax to total income % 59.19 66.11 67.89 53.71 (316.29)
Markup/ Interest cover ratio times 5.08 2.79 1.94 1.65 1.32
Profit after tax to total income % 46.65 49.16 54.16 49.27 (189.03)
Total assets turnover times 0.06 0.07 0.09 0.1 0.12
Return on avg total assets (after
tax) % 2.49 2.65 2.76 2.22 (0.05)
Price earning ratio times 7.25 10.23 7.71 9.31 (0.60)
EPS (Non dilutive) Rs./share 9.08 10.01 13.14 10.51 (19.02)
Dividend per share Rs./share 4 5.2 3.25 3.5 -
Market value per share Rs./share 65.9 102.45 101.25 97.8 11.50
Capital adequacy Ratio % 12.83 12.78 10.09 9.69 1.92

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The Bank of Punjab


Gross spread ratio defines the total spread of interest between borrowing and
lending.Spread: Difference between funded revenue as a percentage of average
earning assets and the cost of funds as a percentage of average paying funds.
The higher the spread the higher will be the profit margin.
GSR= (Mark-up earned – Mark-up Expense)/Mark-up earned
GSR is 2nd highest all over the globe in Pakistan.
GSR of the bank is decreasing because of the decrease in margin, a SBP rise up the
interest rates on the deposits.

70 72

40 %
20 21
2004 2005 2006 2007 2008


Operating income less operating cost (profit before tax).

This ratio tells what percent of total income is earned before paying all the taxes.
BOP has a high value of profit before tax to total income and they are decreasing after
2006 because of increase in admin expenses and righting off the bad debts.
The main reasons for reduction in the profitability were additional provision against
NPL due to the elimination of benefit of FSV and downturn in consumer and
individual banking

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The Bank of Punjab

59.19 66.11 67.89 53.71
-50 2004 2005 2006 2007 2008


MP/Interest cover ratio= EBIT/Mark-up

This ratio tells what percent of interest is covered from the total income of a firm or a
bank.It tells the ability of a bank to pay its mark-up to the depositors..

tim es

5 5.08

3 2.79 times

2 1.94

2004 2005 2006 2007 2008

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The Bank of Punjab


This ratio analysis tells profitability of a firm after paying all the taxes to total
Profitability of BOP is increased because of decrease in the tax paid to the govt and of
high spread ratio.
BOP negotiated their taxes with the government and only paid 20% tax in 2006 and
only 8% in 2007 instead of 35%


50 46.65 49.16 54.16 49.27

2004 2005 2006 2007 2008


-200 -189.03



Asset turnover= Net Income/ Total assets
This ratio tells the turnover of the asset to generate income.
This ratio is increased during last few years which represent increase in the turnover
by assets.

Internship Report - 46 -
The Bank of Punjab

tim es

0.12 0.12
0.1 0.1
0.07 tim es
0.06 0.06
2004 2005 2006 2007 2008


This ratio gives an idea of returning net profit generated by the bank in
comparison with assets.
Return on assets= Profit after tax / Total Assets
This ratio is decreasing in the last year because of decrease in Profit as expenses
raised up.The decrease was mainly due to increased equity as a result of increase in
minimum capital requirements and additional provision due to withdrawal of benefit
of FSV for most types of advances.

2.65 2.76
2.5 2.49



0 -0.05
2004 2005 2006 2007 2008


Price Earning Ratio= Market price of a share/ EPS
From this ratio it is analyzed what % of EPS is the part of MPS. What percent earned
from a share equivalent to the worth of 1 RS MPS by the bank or a firm
Internship Report - 47 -
The Bank of Punjab

tim es


10 10.23
8 7.71
tim es

2004 2005 2006 2007 2008


EPS = Net Income/ total shares
Through this ratio it can be analyzed what percent of 1RS share is earned.


100 102.45 101.25 97.8

9.08 10.01 13.14 10.51 11.5
4 5.2 3.25 3.5
0 0
2004 2005 2006 2007 2008
-20 -19.02



Capital adequacy ratio informs lending up to a certain ratio of equity.
This ratio is set by the State Bank of Pakistan.

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The Bank of Punjab


12.83 12.78
10 10.09 9.69
2 1.92
2004 2005 2006 2007 2008


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The Bank of Punjab

SWOT analysis is an acronym that stands for strengths, weakness,
opportunities, and threats SWOT analysis is careful evaluation of an organization’s
internal strengths and weakness as well as its environment opportunities and threats.
“SWOT analysis is a situational which includes strengths, weaknesses, opportunities
and threats that affect organizational performance.”
“The overall evaluation of a company strengths, weaknesses, opportunities and threats
is called SWOT analysis
In SWOT analysis the best strategies accomplish an organization’s mission by
• Exploiting an organizations opportunities and strength.
• Neutralizing it threats.
• Avoiding or correcting its weakness.

SWOT analysis is one of the most important steps in formulating strategy using the
organization mission as a context; managers assess internal strengths distinctive

Internship Report - 50 -
The Bank of Punjab

competencies and weakness and external opportunities and threats. The goal is to then
develop good strategies and exploit opportunities and strengths neutralize threats and
avoid weaknesses.


• The Bank officers of BOP are considered as one of the most able professionals in
the banking world. However, they have added some local flavour in accordance
with their targeted segmented. In my observation that they interact with their
clients as if they are their personal friends and discuss about their problems as
their own.
• As a result of the compassionate and personalized services of the officers, the
clients’ perception for BOP is very high. They have trust and feel themselves to be
secure while dealing with BOP.
• BOP has opened all its branches at commercial areas so that the customers or
clients face no problems in reaching to the bank.

• BOP has got a reliable and easy to use internal computer system.Every
information regarding the transactions in customers’ deposits has been
computerized. Data are properly maintained.
• Good security system
• Not excellent but good facilities are given to employees


• Lack of proper internal controls is one of the major weakness of BOP. It is also
pointed by the auditor in his review.
• BOP has formulized a lot of products and services for its customers, even more
than other commercial banks, but any advertisement on electronic media has not
been seen.

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The Bank of Punjab

• I observed during my internship that some of the employees were burdened with
over work. So I think that the work should be distributed according to their post
and capabilities.
• Biased selection of employees.


• Satisfy dynamic consumer needs, BOP has made significant in roads in its entire
service spectrum. A lot of products have been introduced especially in Retail
Banking (Agriculture side) and people are increasingly becoming loyal to the
bank and because of feasible transactions. Optimum pricing and branding
strategies of the bank are helping to make customer feel secure and convenient.
• All the opportunities of the 21st century are to be availed in the information
technology. Information technology is the future of this dynamic world. Therefore
BOP should emphasize much on IT, especially on E-Banking. Bank can design a
universal account like other foreign banks, to enhance online facilities.
• BOP has introduced a number of financial schemes including special ‘Deposit
Accounts’. These accounts have their unique features. During the last three years,

BOP deposits have been increasing @ 40%, which is a very healthy sign. Therefore,
with the commencement of new schemes there can even be a greater increase in its


• Despite the difficult circumstances that confronted the banking sector in particular
and the country in general, BOP has been still highly profitable. But, the facts
can’t be denied and there might be an adverse impact of such situation.
• BOP is facing a strong competition by its competitors, Business of all these Banks
are growing at very high pace.

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The Bank of Punjab

PEST analysis of any industry investigates the important factors that affect the
industry and influence the companies operating in the sector. PEST stands for
Political, Economic, Social and Technological analysis. The PEST Analysis is a tool
to analyze the forces that drive the industry and how those factors can influence the
industry. • SAVINGS &


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The Bank of Punjab




Government policies affect the banking sector. Sometimes looking into the
political advantage of a particularTECHNICAL
party, the Government declares some measures to
their benefits like waiver of short-term agricultural IN
• TECHNOLOGY loans, to attract the farmer’s votes.
By doing so the profits of the bank get affected. Various banks in the cooperative
sector are open and run by the politicians. They exploit these banks for their benefits.
• ATMvarious chairmen of the banks. Various policies
Sometimes the government appoints
are framed by the SBP looking• atINTERNATE
the present situation of the country for better control
over the banks MOBILE

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The Bank of Punjab


Government affects the performance of banking sector most by legislature and

framing policy .government through its budget affects the banking activities
securitization act has given more power to banking sector against defaulting


Bank Rate: The Bank Rate has been retained unchanged

Repo Rate It has been reduced under the Liquidity Adjustment Facility (LAF)
Reverse Repo Rate : It has been reduced under LAF by 25 basis points from 3.5% to
3.25% with immediate effect. RBI has retained the option to conduct overnight or
longer term repo/reverse repo under the LAF depending on market conditions and
other relevant factors.


The move to increase Foreign Direct Investment FDI limits to 49 percent from
20 percent during the first quarter of this fiscal came as a welcome announcement to
foreign players wanting to get a foot hold in the Indian Markets by investing in
willing Indian partners who are starved of net

worth to meet CAR norms. Ceiling for FII investment in companies was also
increased from 24.0 percent to 49.0 percent and have been included within the ambit
of FDI investment


Banking is as old as authentic history and the modern commercial banking are
traceable to ancient times., banking has existed in one form or the other from time to
time. Every year SBP declares its 6 monthly policy and accordingly the various
measures and rates are implemented which has an impact on the banking sector. Also
the Union budget affects the banking sector to boost the economy by giving certain
Internship Report - 55 -
The Bank of Punjab

concessions or facilities. If in the Budget savings are encouraged, then more deposits
will be attracted towards the banks and in turn they can lend more money to the
agricultural sector and industrial sector, therefore, booming the economy. If the FDI
limits are relaxed, then more FDI are brought in India through banking channels


It is great news that today the service sector is contributing more than half of
the Indian GDP. It takes PAKISTAN one step closer to the developed economies of
the world. Earlier it was agriculture which mainly contributed to the GDP. The
Pakistani government is still looking up to improve the GDP of the country and so
several steps have been taken to boost the economy. Policies of FDI


SBP controls the Interest rate, which is based on several monetary policies.
Recently SBP has reduced the interest rate which stimulates the growth rate of
banking industry. Call money rates (borrowing & lending) were in the range of
1.50/3.47 per cent as compared with 5.25/11.00 per cent on the corresponding date of
last year


Inflation represents a rise in general level of prices of goods and services over
a period of time. It leads to erosion in the purchasing power of money. Resultantly,
each unit of currency buys fewer goods and services
Different fiscal and monetary policies have curbed the Inflation rate. To fight against
the slowdown of the Economy, Government of Pakistan & SBP took many fiscal as
well as monetary actions. Clubbed with fiscal & monetary actions, decreasing

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The Bank of Punjab

commodity prices, decreasing crude prices and lowering interest rate, we expect that
Indian Economy could again register a robust growth rate in the year 2009-10


As stated earlier Pakistan continues to remain one of the high savings

economies among the emerging market economies. Gross Domestic Savings (GDS)
of the Pakistan economy constitutes savings of public, private corporate and
household sectors. In the recent period the high growth performance of the Pakistan
economy is driven by rise in savings


Agriculture has been the mainstay of our economy with 70% of our population
deriving their sustenance from it. In the recent past, the sector has recorded a growth
of about 4% per annum with substantial increase in plan allocations and capital
formation in the sector. The target for agriculture credit flow for the year 2009-10 is
being set at Rs.3,25,000 crore. To achieve this, I propose to continue the interest
subvention scheme for short term crop loans to farmers for loans upto Rs.3 lakh per
farmer at the interest rate of 7% per annum. For this year, the government shall pay an
additional subvention of 1% as an incentive to those farmers who repay their short
term crop loans on schedule


Socio culture factors also affect the business. They show in which people
behave in country. Socio-cultural factors like taboos, customs, traditions, tastes,
preferences, buying and consumption habit of people, their language, beliefs and
values affect the business. Banking industry is also operates under this social
environment and it is also affect by this factor.

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The Bank of Punjab

These factor are changing continuously people’s life style, their behavior,
consumption pattern etc. is changing and also creating opportunities and threat for
banking industry. There are some socio-culture factors that affect banking in India
have been analyzed below.


Attitude of people of Pakistan is changing. Now, younger generation wants to

remain separate from their parents after they get married. Joint families are breaking
up. There are many reasons behind that. But banking sector is positively affected by
this trend. A family need home consumer durables like freeze, washing machine,
television, bike, car, etc. so, they demand for these products and borrow from banks.
Recently there is boost in housing finance and vehicle loans. As they do not have
money they go for installments. So, banks satisfy nuclear families wants.


Life style of Pakistan is changing rapidly. They are demanding high class
products. They have become more advanced. People want everything car, mobile,
etc.. what their fore father had dreamed for. Now teenagers also have mobile and
vehicle. Even middle class people also want to have well furnished home, television,
mobile, vehicle and this has opened opportunities for banking secter to tap this
change. Every thing is available so it has become easy to purchase anything if you do
not have lump sum.


Increase in population is one of the important factor, which affect the private
sector banks. Banks would open their branches after looking into the population
demographics of the area. Percentage of deposit in any branches of banks depends
upon the population demographic of that area. About 70% of population is below 35
years of age. They are in the prime earning stage and this increase the earning of the

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banks. Deposits showed a subdued growth during 2004-05.Income distributions also

affects the operations and overall business of private sector banks.


Literacy rate in Pakistan is very low compared to developed countries.

Illiterate people hesitate to transact with banks. So, this impacts negatively on banks.
But there is positive side of this as well i.e. illiterate people trust more on banks to
deposit their money; they do not have market information. Opportunities in stocks or
mutual funds. So, they look bank as their sole and safe alternative



Technology plays a very important role in bank’s internal control mechanisms

as well as services offered by them. It has in fact given new dimensions to the banks
as well as services that they cater to and the banks are enthusiastically adopting new
technological innovations for devising new products and services.

The latest developments in terms of technology in computer and
telecommunication have encouraged the bankers to change the concept of branch
banking to anywhere banking. The use of ATM and Internet banking has allowed
‘anytime, anywhere banking’ facilities. Automatic voice recorders now answer simple

queries, currency accounting machines makes the job easier and self-service counters
are now encouraged.
Credit card facility has encouraged an era of cashless society. Today MasterCard and
Visa card are the two most popular cards used world over. The banks have now
started issuing smartcards or debit cards to be used for making payments. These are
also called as electronic purse. Some of the banks have also started home banking
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The Bank of Punjab

through telecommunication facilities and computer technology by using terminals

installed at customers home and they can make the balance inquiry, get the statement
of accounts, give instructions for fund transfers, etc.


Today banks are also using SMS and Internet as major tool of promotions and
giving great utility to its customers. For example SMS functions through simple text
messages sent from your mobile. The messages are then recognized by the bank to
provide you with the required information. All these technological changes have
forced the bankers to adopt customer-based approach instead of product-based
approach. Technology advancement has changed the face of traditional banking
systems. Technology advancement has offer 24X7 banking even giving faster and
secured service.


It is the buzzword today and every bank is trying to adopt it is the centralize
banking platform through which a bank can control its entire operation the adoption
of core banking solution will help bank to roll out new product and services.


To me the major and the most important flaw in the BOP is lack of internal
controls and inter communication between different branches of the bank. As far as

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financial aspect is concerned there is no proper system is configured that’s why there
is always a risk of big frauds with in the bank. I during my internship also pointed out
that point but no one bothered. To me the bank should install some proper resource
planning and controlling systems like other banks do i.e., oracle financials etc.


BOP staff lacks professionalism. They lack the necessary training to do the job
efficiently and properly. Although staff colleges are in all major cities of the Punjab
but they are not performing well. For this purpose these staff colleges should be
reorganized and their syllabus should be made in such a way which can help the
employee understand the ever-changing global economic scenario.
Banking council of Pakistan should also initiate some programs to equip the staff with
much needed professional training.


Employees of the bank should be given a task and authority and they should
be asked for their responsibility. The sense responsibility in employees mind is one of
the most important factors in the success of any organization.

During Internship I felt that there is no or very less appraisal of any ones cool
performance. The manager should strictly monitor the performance of every staff
member. All of them should be awarded according to their performance and result in
the shape of bonuses to motivated and incite them to work more efficiently.

Transfer is not properly carried out. Some of the employees are continually
serving at the same post. They are simply rotated at the same branch. Therefore it is
recommended that evenly rotation of every employee should take place after every
three years in different braches of the bank.

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Required, qualified staff should be provided to branch in order to improve the
functioning of the branch. Especially a telephone operator should be appointed


BOP should start its operation in credit card. These cards are very helpful for
the ordinary customer in general and the business people in particular. To make it
mores secure and to eliminate the misuse of it, the management is required to keep
proper security against the card.


Bank should decrease their administrative expenses. This was Rs 2.25 billion
in the year 2007. That can be done by lying off the surplus pool of employee with
golden hand shakes scheme. The branches that are not much used could also be
closed. That will give positive results in the future


As mentioned earlier, BOP is very conservative in advances and loans policy.
It reduces the investment opportunities. Also loans should be given to the small
businessmen and the other businesses on large scale like in agriculture sector at the
low mark-up rate. It should adopt flexible credit policy while giving credit to the
agriculture sector.

I would like to suggest that at least all the main branches of BOP should be
fully computerized in order to expedite the dealing process among bankers and their
customers. Every department should be provided a computer with adequate training

(especially Advances, Deposits and Foreign Exchange departments). Daily records

should be entered directly into these computers, (instead entering the overall daily
transactions after the banking hours). It will not only reduce transaction time, will
increase accuracy but will also be efficient as well.
Not only it will be economical but will also reduce the extra burden of work of the
bank. It will also help in reducing the use of excessive paper work.
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Good relationship among staff member leads to the peak performances in any
organization. I observed that the staff relationship was normal other wise but some
time I noticed that there exists little conformity among the staff members. Another
syndrome from which the staff suffered was that all of them considered themselves
more important than others.


In the branch during my internship I saw that when some of the employees are
transfer to other places, due to their relation with influential people and with top
management they can cancel their transfer in few weeks, when they are unsatisfied at
that place.
So I suggest that in the organization there should be no favouritism, nepotism and
politics and their transfer and promotion should be made on merit and according to
the rules and regulations of the bank and provided favourable environment to the
employee to show their performances.


The branch should adopt various marketing strategy and promotion strategy to
promote the bank and its product.
The most important in my opinion is personal marketing; it is the most effective of all
when you think in term of branch level. But on the whole organization level, they
should arrange the seminar with in the bank and outside the bank. They should do

more advertising through newspaper and media and through channel of personal


Great care should be taking while extending the loan. Loans should be
awarded against reasonable securities, where market value should be equal to the loan
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The Bank of Punjab

granted. Policies should be crafted in a way to ensure that no loan is extended on

political pressure. SBP regulation for loan approval should be strictly followed.
According to which the current ration of borrower’s business must be 1:1 and the debt
to equity ratio should be 60:40, means the liquidity position of business should be


In this section some recommendations for those students who are planning for
an internship at BOP particularly and in any other bank generally. The most important
of all is the difference between what we learn from the books i.e. the theory and what
actually is done i.e. in practice. This difference is described in detail below:


During my internship I observed that other internees in the bank use to stick
with one department only. An internee with specialization in Finance was of the view
that he should be in Finance department same was the case with other specialized
Internees. But I would suggest that one must work in every department for some time
to gain a hand on experience of all the departments. As in real working environment
employee have to coordinate with other departments, so he/she must know what the
other departments operations are and how they work.


This part of report is the essence of the internship, as this will help other
students to better understand the working environment of the bank by finding the
relationship between what is written in the books and what is actually going on in

fields. The theory written in the books in cases is not implemented as it is. In some
cases theory is implemented with a little modification but in other cases theory has
nothing to do with practice. In accounting, banks don’t prepare worksheet, but part of

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worksheet is prepared like trial balance, but little differences, theory and practice has
substantial relationship. The securities for the loans are handled in the same way as
theory says like mortgage, pledge, hypothecation, advances against insurance policies
or liquidation procedure is the same. The difference is there in the case of loans.
Theory talks about four or five terms of loans that is cash finance, overdraft, loans
etc., but in practice there are some more terms used like running finance, demand
finance etc. All other concepts of remittances, bills, foreign exchange deposits, letters
of credit are in accordance with theory almost. So for a internee it is more important
to learn new things which he/she has never heard about in his/her course book.
To me, Theory gives you the direction to understand the processes and the
terminologies going across the World using best business practices in a broader view
covering each and every aspect of possible business scenarios. On the contrary
practical life is specific, enclosed in a jar. In practical professionalism and firm’s
environment is each and every thing. Professional life only builds on the knowledge
based on books even though it may only use 1% of the theoretical knowledge.


By analyzing the financial statements of the bank, I came across to know that
it is one of the most growing bank in the subcontinent. Now they should carry on with
the present management which too k it from one of the ordinary bank to this level. No
doubt professionalism and internal controls of the bank are one of the major issues
which may results some major losses to the bank. Bias in hirings and between
colleagues should be removed.





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