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Internship Report
ON BUSINESS PRACTICES AT THE BANK OF PUNJAB
SUBMITTED TO:
MADAM AYESHA AZIZ
SUBMITTED BY:
RAO ISHFAQ AHMAD
CIIT/SOO4-MBA-028/LHR
ACKNOWLEDGEMENT
I am really pleased here to acknowledge the sheer efforts and extreme of numerous
people, those who have provided me their relentless service in the completion of my
internship report on “Business practices at The Bank of Punjab”.
I would like to express my gratitude to my advisors in The Bank of Punjab who support
me to under stand the working in the bank, during my internship. They really helped me
a lot to gain practical knowledge about general banking and corporate banking. I am
also grateful to Mr. Mazhar (Manager) and all my supervisors during internship period.
Without their guidance, this exercise of internship would not have resulted in a success.
Secondly I would like to thank my advisor Madam Ayesha for her assistance and
inspiring attitude. I am highly obliged to my respectable advisor and state my gratitude
for her valued guidance and her concern about my internship.
DEDICATION
Table of Content
EXECUTIVE SUMMARY
This report is about The Bank of Punjab, its history, and the functions of the bank.
This report contains detail about what I have learned in my eight-week internship in
The Bank of Punjab. It starts with the short history and background and brief
introduction about the management of The Bank of Punjab. The vision of the bank
along with its mission and existing status has also been discussed. This report
contains detail about “business practices in The Bank of Punjab.
The purpose of this exercise was to learn while working in the practical field.
Specially, the knowledge related to the General Banking, foreign exchange and
advances. It has really helped me observe to what extent the bookish knowledge is
being practiced in real field.
This report contains the Comparison of other banks with the bank of Punjab, current
financial position of the bank, the business process of the bank and all my learning,
during the internship period.
The Bank of Punjab is working as a scheduled commercial bank with its network of 254
branches at all major business centers in the country. M/S PACRA has awarded the
Bank with the credit rating AA- for Long term and A1+ for Short term, based on its
financial results for the year ended as on 31st December 2004. The Bank provides all
types of banking services such as Deposit in Local Currency, Client Deposit in 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. Attractive rates of profit on all
types of deposits, opening of Foreign Currency Accounts and handling of Foreign
Exchange business such as Imports, Exports and Remittances, Financing, Trade and
Industry for working capital requirements and money market operations are some
facilities being provided by the Bank. The lending policy of Bank is not only cautious and
constructive but also based on principles of prudent lending with maximum emphasis on
security. As agriculture is considered as backbone of our economy the Bank of Punjab
has introduced "Kissan Dost Agriculture Finance Scheme" to small farmers.
HISTORY
Established in 1989, in pursuance of The Bank of Punjab Act 1989 and was given the
status of scheduled bank in 1994. It is principally engaged in commercial banking and
related services with its registered office at 7-Egerton-road Lahore.
VISION
MISSION STATEMENT
OUR VALUES
Bank Profile
Chairman
President
Director
Director
Director
Director
Director
Director
Director
Director
MANAGEMENT
President Secretariat
Mr. Hamesh Khan President
Mrs. Anjum Amir Principal Staff Officer
Information Technology Division
Mr. Anis Iqbal E.V.P. / General Manager
Mr. Abdul Rashid Khan S.V.P. / In-charge
Administration Division
Mr. Aamir Iftikhar AhmedGeneral Manager
Mr. Riaz Akhtar E.O.C. / Chief Manager
Operation Division
Mr. Javed Ahmed
E.V.P. / General Manager
Khawaja
Mr. Athar Aziz Dogar O.O.C. / Chief Manager
Mr. Sajid Arif Nomani E.O.C. (Consultant)
Finance Division
Mr. Nadeem Amir Officiating General Manager
Mr. Rashid Mehboob Financial Analyst
Mr. Nadeem Amir A.V.P. / Chief Manager
Law Department
Sirdar Ahmed Jamal Legal Consultant / Coordinator
Sukhera
Ms. Zubia Ramzan In-charge
Shares Department
Mr. Muhammad Iqbal A.V.P. / Assistant Secretary
Compliance Cell
Qazi Muhammad Latif E.O.C. / Chief Compliance Officer
ORGANIZTIONAL CHART
Managing Director
GM
GM GM Admin GM GM GM GM SME Country
Special GM IT.
Finance Operation Liability Treasury Div. Risk Mgr.
Mgt. Div.
Regional
Regional Regional Regional Regional Regional
Office
Office Lahore Office Multan Office FSD. Office RWP. Office Karachi
Gujranwala
254
Branches
COMSATS Institute of Information Technology Lahore
The Bank of Punjab 15
LAHORE REGION
In Lahore region The Bank of Punjab have 65 branches out of which 11 branches are
dealing in foreign exchange. In Lahore region regional office is at 7 Egerton roads
Lahore.
FAISALABAD REGION
In Faisalabad region The Bank of Punjab have 38 branches, out of which 4 branches
are dealing in foreign exchange.
GUJRANWALA REGION
In Gujranwala Region, there are 45 branches. In this region 5 branches are providing
foreign exchange banking facility.
RAWALPINDI REGION
MULTAN REGION
In Multan region Bop have 60 branches, out of which 7 branches are providing the
foreign exchange services facility.
KARACHI REGION
There are only four branches in this region. All these branches are dealing in foreign
exchange.4 branches
Branch hierarchy
Main Branch Lahore
Chief
Corporate
Manager Branch
Forex. Manager
Advances Manager
Acc.
Cash/Dep Accounts Advances Remittanc Consumer Forx.
opening
osit Dept. Dept. Dept. es Dept. Finances Dept.
Dept.
Comparative Analysis
Banking Industry
Banking is one of the most sensitive businesses all over the world. Banks play very
important role in the economy of a country and Pakistan is no exemption. Banks are
custodian to the assets of the general masses. The banking sector plays a significant
role in a contemporary world of money and economy. It influences and facilitates many
different but integrated economic activities like resources mobilization, poverty
elimination, production and distribution of public finance. It is purchase of car or building
of a home, banks are always there to provide the services. It is playground or any
educational or healthy societal activities the money of banks nurtures them. It is an
industrial project or agricultural development of the country the sponsor-ship of banks is
very much involved. Banks play very positive and important role in the overall economic
development of the country.
The government of Pakistan permitted small private sector banks to operate, which
indulged in doubtful policies to promote business. The public sector banking, which
constituted the backbone, thus continued to suffer because of their approach, size and
carried over liabilities. Mehran Bank is the prime example of that kind of lax banking in
the country, which ultimately merged into National bank of Pakistan i.e. last resort of
domestic banking industry.
In the meanwhile, western banks started entering into the business. They, with the
support of ruling elite, concentrated on the big business, leaving the routine business to
the local banks. This reduced the profitability of the local banks.
Foreign Banks
Special Banks
Bank
Saudi Pak Commercial 0.92 0.36 -61%
Bank
Soneri Bank 0.60 1.21 102%
Union Bank 0.54 0.62 13%
ACB
Growth Rate (earning per share)
BAH
BOP
500%
BB
400% FCB
KB
300%
MCB
200% MB
Metro
100%
PICIC
0% PCB
SPCB
-100%
SB
UB
Above chart show the growth of all local banks. The bank of Punjab has highest growth
among its local competitors.
Director’s Report
During six months period under review, Pakistan’s economy has gained significant
momentum with broad based economic growth in all sectors, which can be attributed to
consistent application of wide-ranging structural reforms, prudent macro economic
policies, confidence in private sector and financial discipline. Resultantly, the country
economic growth rate has exceeded eight percent and the economy has positioned
itself as the second fastest growing economy in Asia.
Manufacturing & agricultural sectors exceeding their targeted growth rates denote that
positive affects of growth in these important sectors of our economy shall be transferred
to other sectors of the economy augmenting their growth in periods to come.
It gives me immense pleasure to inform you that your bank has achieved an un-
precedented results for the six month period under review by earning highest ever profit
(both before & after tax) & EPS for any half yearly period since its operations. Profit
(before tax) of Rs.1,908 million indicates growth of Rs.791 million (71%) from last year
corresponding period figure of Rs.1,117 million. While Profit (after tax) of Rs. 1,531
million shows increase of Rs.644 million (73%) resulting in EPS of Rs.8.47. This
impressive performance is essentially ascribable to increase in net markup income of
Rs.789 million (101%) showing consistence in banks reliance on earning from its core
activity. Total asset base of the bank has risen by Rs.19,229 million to Rs.85,548
million. Advances have reached a level of Rs. 46,840 million, signifying growth of 19%
in high return asset of the bank from the figure on December 31, 2004, while deposits
have increased to Rs.70, 481 million showing growth of 29%. Bank.s determined focus
on improving its deposits base has resulted in phenomenal rise in deposits, which apart
from providing much required liquidity also lowered bank.s advances to deposits ratio to
a healthy & satisfactory %age of 66%.
Owing to splendid performance & sound financial footing M/s PACRA have upgraded
long term credit rating of your bank from A+ to AA- (double A minus) and short term
rating from A1 to A1+ which is the highest benchmark in short term rating scale. Your
bank is in compliance with all regulatory rules & regulations including compliance with
recommendations of Basel-II Committee. Keeping in view excellent results the Board of
Directors of your bank have approved an interim dividend for its shareholders in the
form 30% stock dividend. Apart from remunerating stakeholders this bonus issue shall
make your bank in compliance with minimum paid-up capital requirement of Rs. 2,000
million well before specified date.
Management is consistently in pursuit of opportunities to improve the Bank.s
performance and improve operational aspects of the bank, both qualitatively and
quantitatively, benefits of which shall accrue in future.
We extend our utmost appreciation to the management for their record performance.
The Board of Directors is also grateful to the Government of Punjab for its consistent
support, State Bank of Pakistan for its guidance, valued customers for their patronage
and business and to its staff for their untiring effort to make the organization a success.
June December
30, 2005 31, 2004
ASSETS Note (Rupees in thousand)
Sub-ordinated loans - -
REPRESENTED BY
Profitability Ratios
2004
10
8 2003
6 2002
4 2001
2 2000
0
Income/ Earning Average 1999
Expenseper share toatal
Ratio assets
turnover
60000
50000
40000
Rs. in m 30000
Advances
20000
Deposits
10000
0
2004 2003 2002 2001 2000 1999
Years
80
70
60
50
40
%
30
20
10
0
2004 2003 2002 2001 2000 1999
20
15
10
%
0
2004 2003 2002 2001 2000 1999
B u s i n e s s p ro c e s s a n a l y s i s
SERVICES
ATM Facility
The Bank of Punjab provides ATM Card facility to its customer, using M net system, giving
to customer 24-hour access to their accounts from any ATMs.
Safety Tips
Guard Your Card
To avoid any damage keep your Online Cash ATM card in a safe place.
Sign on the back immediately after receiving your ATM card.
Never write your PIN or share it with anyone including the bank staff.
Don’t use your phone number or other personal information’s like your date of
birth etc. as PIN.
You can make maximum of three PIN entries (i.e. two entries in case you
enter the wrong PIN first time) after which your card will be captured by the
ATM machine.
Be Bright
In case you need to use an ATM after dark always choose an ATM, which is
well lit.
It is advised to retain the receipts until you match them against your account
statement.
Stay Alert
It is safe to check your surrounding before using ATM. Visit another ATM if
the machine is obstructed or poorly lit.
Shield the screen and keypad so anyone waiting to use the ATM cannot see
your PIN or transaction.
On realizing anything or someone suspicious in the area cancel your
transaction and leave right away.
Count your cash before leaving the ATM. Don’t try to count your money after
leaving the ATM or at any other insecure place.
Make sure to keep your money, receipt, and card safe in the wallet after
making a withdrawal.
Act Immediately
Pick your cash or reclaim your card in 20 seconds otherwise the ATM
machine will capture your card.
Remove your card immediately because the ATM will only dispense cash
after you remove the card.
ATM Charges
Online banking
The Bank of Punjab provides the Online Banking Facility to its account holders at 147
branches all over Pakistan. Cash may be accepted at a branch for crediting accounts at
another branch; a branch can also pay the Cheques by debiting the customer’s account at
another branch. There are 147 branches, which are providing online facility at this time.
Following facilities are available at Bank of Punjab’s Online Program for its customers:
1. Payments of Cheques.
2. Cash Receipts.
3. Transfer of Funds through Cheques or Cash between Branches.
Consumer Financing
Consumer financing department of The Bank of Punjab is offering loans under the following
schemes
The Bank of Punjab QUICK CASH is a running finance facility provided to salaried
individuals through their bank accounts with the Bank for purchase of consumer items or
personal needs. The facility is an alternative to consumer financing offered by other banks
except it is R/F instead of Demand finance, which is more favorable to the borrower.
ELIGIBILITY CRITERIA
Loan amount/Limit
Tenure of Loan
Loan is available for one year, further renewable subject to satisfactory conduct of account.
Mark-up Rate
Most competitive rate in the market, which will be calculated on daily product basis, which
is
For senior Bureaucrats & Executive Average six months KIBOR+ 600BPS of
Corporate Client with floor rate of 14.5% p.a.
For all other client Average six month KIBOR + 600 BPS
With Floor rate of 16% p.a.
Other Charges
Non-refundable fee Rs.450/
Processing Fee Rs. 1,850/
Documentation charges Rs. Actual
Application Form
Copy of CNIC
2 recent photographs
Latest Salary Slip/Salary certificate on Company's letterhead
Latest Copy of utility Bills
Copy of service ID card
6 months A/C statement showing salary being credited
Product
The Bank of Punjab Aasaish Loan is Demand finance facility for purchase of consumer
durable goods like TV, Refrigerators, Mobiles, Microwave Ovens, and Fans, Audio/Video
system
ELIGIBILITY CRITERIA
Salaried Person
Private Employees
Application form
Copy of NIC/CNIC
Customer Consent Form, if loan is Rs. 50,000/- OR above
The Govt. employees will submit the following two documents in addition to
documents mentioned in Serial # 1, 2 & 3
The Private employees will submit the following three documents in addition to above
documents mentioned.
Financing Agreement
D.P. Note
Letter of hypothecation
Post Dated Cheques
White Documents
I. Letter Of authority
II. Authorization /consent
III. Letter of Arrangement
IV. Debit Authority
V. Letter of Installment
Product
BOP car loan is a Demand Finance Facility to Purchase Brand new locally manufactured/
Assembled Cars for Personal Use
ELIGIBILITY CRITERIA
Salaried Person
Self-employed
Loan Amount
Tenure of Loan
Down Payment
Down payment is (10 to20%) of the value of the car
For all customers average six moths KIBOR+ 375 BPS with
With Floor rate 10% p.a.
Other Charges
BOP has arranged insurance facility from its approved list of companies at discount rates
for the convenience of its customers. Insurance premium for the first year will be paid in full
up front with down payment and for subsequent years along with installment
L oan will be repaid in equal monthly installments through postdated cheques. Total monthly
installment includes principal, mark up and insurance amount.
We can easily calculate monthly installments by multiplying the loan amount with the
pricing factor:
3 Years 0.03111
4 Years 0.02418
5 Years 0.02004
DOCUMENTS REQUIRED
Copy of NIC
2 Recent Photographs
Latest Salary Slip / Certificates on Comp. Letterhead
Bank Statement for last 6 months
Latest Copy of Utility Bills
Copy of CNIC
Two recent photographs
Bank statement for the last I year of business account
If not banking with us Banking certificate from branch manager stating Title,
Account number, Business entity, Maintained since, Authorized signatory
Copy of Latest utility bills
ELIGIBILITY CRITERIA
Loan amount/Limit
Tenure of Loan
Mark-up Rate
Most competitive rate in the market, which will be calculated on daily product basis, which
is
For all other client Average six month KIBOR + 550 BPS
With Floor rate of 14% p.a.
Other Charges
Non-refundable fee Rs.450/
Processing Fee Rs. 1,850/
Documentation charges Rs. Actual
Copy of CNIC
Latest Salary Slip/Salary certificate on Company's letterhead
Two personal guarantees with CNIC (exemption of BOP staff)
Employer Certificate on company’ letter head with joining date, current
designation, length of service, gross salary & certificate from HR department
for perks
Departmental Undertaking regarding salary rout though
Data check
Undertaking Regarding Payment of post dated cheques.
HOUSE LOAN
Product
The Bank of Punjab house loan is long-term finance facility for purchase of house/flat or
construction of house on self-owned plot or for renovation/ home
ELIGIBILITY CRITERIA
Salaried Person
Self-employed
Loan Amount
Minimum Maximum
Purpose Bank Rate
Amount Amount
Bank financing up
Purchase of House/Flat&
Rs. 300.000/- Rs. 7,500,000/- to 70% of
Construction
assessed value
Bank financing up
Home Improvement/
Rs. 300.000/- Rs. 3,000,000/- to 20 % of
Renovation / Addition
assessed value
Most Competitive rate in the market, which will be calculated on daily product basis, linked
with Average six months KIBOR +300 BPS; it will be reviewed every quarter.
(For each year new amortization schedule will be provided to the customer in case of any
change in mark up)
Other charges
Loan will be repaid in equal monthly installments through postdated cheques. Total monthly
installment includes principal, mark up and insurance amount.
Monthly installment can easily be calculated for e.g. .if, you take a loan for Rs. 1,000,000
for 15 years. Simply multiply the 15-year factor by your amount Rs. 1,000,000 * 0.00985 =
Rs. 9850 will be your monthly installment payable excluding insurance (Life & Property).
Financing
Pricing Factor
period
3 0.03157
4 0.02465
5 0.02052
6 0.01778
7 0.01584
8 0.01439
9 0.01328
10 0.01240
11 0.01169
12 0.01110
13 0.01061
14 0.01020
15 0.00985
(Insurance premium for the first year will be paid in full up front with down payment and for
subsequent years along with installments.)
House/flat purchased
Plot on which construction is to be carried out
House on which renovation is to be carried out
Copy of CNIC
Two recent photographs
Last three Salary slips/ salary certificate on company's letter head with joining
date Current designation, length of service, gross salary & certificate from HR
department for perks.(for salaried individuals)
Bank statement for last six months for salaried individuals and for the last I
year incase of self-employed businessperson
Copy of utility bills
Fee slip of children if applicable
Income tax return / wealth statement
Copy of Rent agreement if living in rented house
Business proof (for a business person)
Agriculture Financing
Basic requirement for all these schemes are same. But there is little bit difference
according to the scheme and amount of the loan. In most of the schemes the requirement
is that the Brower should be resident of cultivated area and own a minimum 5-acre and
maximum 50-acre area. Amount of loan is different for different loans. For all these loan
there must be some security for bank. Mark up rate is different according to scheme.
Corporate Financing
bank of Punjab is offering different types of loan facilities, like Demand Finance, Cash
Finance, Running Finance over draft etc.
For corporate financing bank the financing limit for client on the basis of its asset and
bossiness exposure. The Corporate Banking Group manages a high quality asset portfolio
being an active player in many sectors including textile, sugar, leather, pharmaceutical,
fertilizer, petrochemical, power, automotive, oil and gas distribution, marketing and refining
and fast moving consumer goods industries.
In the dynamics environments of business bank provide the short-term and long-term
funding needs in the most efficient manner, drawing from the full range of our resources
and capabilities. To provide finances bank must look at the affectivity and efficiency of the
business. The bank of Punjab is offering the variety of working capital financing facilities.
The bank of Punjab is also providing the structured finance syndicate to its clients.
Trade Services
The foreign exchange department of bank of Punjab is offering the trade service to clients.
The bank of Punjab offers a full range of documentary letter of credit services as well as
discounting and reimbursements to support any or every part of the customer trade
transaction. Experienced personnel use their specialized expertise to innovatively structure
trade transactions and process daily trade transactions, and have end-to-end responsibility
for your letters of credit, reimbursements, negotiation of documents, and inquiries. They
also handle export guarantee transactions and government donor flow intermediation.
The bank of Punjab can provides trade related facilities, for an appropriate period, in line
with working capital cycle of client, to assist client in financing their imports/exports. There
are two types of LC, sight LC and usance LC. In sight LC bank pay the amount when it
receive the Bill Lading from Correspondent bank. In usance LC, there is limit of payment
normally 90 days. For providing these facilities bank have following charges schedule.
Sight Bills
a) At Negotiation end: Negotiation commission @ 0.50% - Min Rs.
200/-+ Courier Charges Rs.50/-
I)
b) Collection charges for restricted
L/C (where negotiation is restricted Rs. 250/- (Flat) Per Bill + Courier Charges
to some other Banks and Rs.50/-
presented to us for forwarding).
NOTE:
* No Mark-up will be charged from the date of negotiation till the date of lodgement of
documents received under Inland L/Cs, where the payment as per reimbursement
arrangement is made to the negotiating bank only on receipt of documents.
2 Usance Bills
1) Negotiating End Negotiating commission Rs.200/-Flat+Courier
charges Rs.50/-
i) Markup on documentary Bills (I) In case of Sight L/Cs Mark-up is to be
Purchased /Negotiated recovered/charged as per approval of
under Inland L/C Sanctioning Authority.
(II) In case of Usance L/Cs Mark-up is to be
recovered/charged
as per approval of Sanctioning Authority.
(III) In case of Usance LCs of our own Bank,
Mark-up is to be recovered/charged as per
approval of Sanctioning Authority
At Collection End
These all facilities are provided on the specific limit maintained by the corporate bank. The
bank of Punjab is offering FIM, FATR facilities to its clients.
For foreign trade, The Bank of Punjab has collaboration with following foreign bank for
correspondent.
CORRESPONDENT BANK
AG (HYPO
VEREINSBANK)
UNITED NATIONAL 18 Finsbury Circus NBPAGB2L 0051- 0001-000063-
GBP
BANK London, EC2M 7BJ U.K 884892 001
STANDARD 37 Grace Church Street SCBLGB2L 0051-
GBP 01 7087888 01
CHARTERED BANK London, EC3V OBX U.K 885951
3F, 7-4, 2-Chome, Nishi
NATIONAL BANK OF
Shimbashi, Minato-KU, NBPAJPJT 0072-23830 JPY 21067
PAKISTAN
Tokyo 105, Japan
New York Branch,
P.O.Box 4555/Grand
ABN AMERO BANK ABNAUS33 0023-62734 USD 574073243541
Central Station, New
York, N.Y 10017 USA
HABL, 99 Madison Ave.,
HABIB AMERICAN HANYUS33 0023-
New York, NY. 10016- USD 20729586
BANK 275859
7419 USA
MASHERQ BANK , 255 Fifth Ave. New MSHQUS33 0023-
USD 70120078
PSC York, NY 10016 USA 239881
Banque Nationale du
Canada 600,rue de la
NATIONAL BANK OF BNDCCAMMINT 00210- 097613-240-002-
Gauchetiere Quest USD
CANADA 525181 001-01
Montreal H3B 4L3,
Canada
100 Wall Street, 21st
NATIONAL BANK OF NBPAUS33 0023-
Floor, new York, N.Y. USD 55804561
PAKISTAN 232455
10048 USA
1 Madison Ave., New
STANDARD SCBLUS33 0023- 3582-040168-
York N.Y 10010-3603, USD
CHARTERED BANK 420117 001
U.S.A.
UBAF, 18th Floor Far
U.B.A.F.
East Finance Centre, 16 UBAFHKHX 00802- 60 030000 001
(HONGKONG) USD
Harcourt Road, G.P.O. 75386 03 0/96
LIMITED
Box 9917 Hong Kong
111 Wall Street, 5th
CITIBANK N.A Floor / Zone 9 New CITIUS33 USD 36208954
York, NY 10005
UNITED BANK 30 Wall Street, New
UNILUS33 USD 040-0498-5
LIMITED York, U.S.A.
OBECTIVES OF INTERNSHIP
This internship was the part of my study course, so objective of this internship was to
learn and gain some practical experience. During the MBA program, I studied many
courses about finance, management etc. Here my aim was to see the application of this
bookish knowledge and its practical implementation. How it is useful in practical life. I
saw the differences in bookish knowledge and its application.
In all jobs related to finance, there is involvement of banks. So my aim was to learn how
banks deal with corporate and general information about rules and regulation of banks.
My second objective of this internship was to learn about general banking, as customer
I tried to get experience, how to work with people of different age, different educational
background, and different interests. How I can be a best team player, how to interact
with officer and deal with subordinates.
Duties
to 5 department.
September
As this was my first experience in any bank, so all working of bank was new for me.
After the completion of these requirements, bank will open the account and sends letter of
thanks to its customer. When account holder comes with letter of thanks bank will issue
chequebook to account holder. If chequebook is lost the account holder has to give written
application for the stop payment of cheques of that chequebook and fill a form for issuance
of new chequebook.
Remittance
Banks offers different types remittance having different specification. These remittances are
demand draft, for out station payment. Mail transfer is to transfer the amount by mail in any
account of same bank. Telegraphic transfer is same like the MT but here fax machine is
use instead of mail. Pay order is used for intercity payment. This is main difference
between Demand Draft and Pay Order. Call deposit receipt is used in case of tender or
auction.
CLEARING
Clearing is used to pay or receive payments to other banks. There are 2 types of clearing
Inward clearing
Outward clearing
Inward clearing
Cheques of our branch that are deposited at other banks are brought to us by NIFT. This is
called inward clearing. In inward clearing we DEBIT a/c of our a/c holder and CREDIT other
branch.
Outward clearing
In outward clearing cheques of other banks are presented in our branch. In it we check
certain factors such as words and figure difference, date of cheque etc.3 stamps are
stamped in these cheques
Clearing stamp
Crossing stamp
Payees a/c credited stamp
In outward clearing we DEBIT suspense a/c and CREDIT a/c no. of our a/c
holders.
CASH
Cash department perform the responsibilities to deal with cash, transfer amounts from one
account to other accounts and calculate the profit for different types of accounts. When
cheque is presented to bank, officer match the word and figure of cheque. If words and
figure is correct then officer verify the signature and check the date. A cheque can be
converted in to cash within six month. After six month cheque expires. For PLS account
bank calculate the profit on the minimum balance in account from 6th to 29th of the month.
Bank pays this profit after six moth or transfer in account of account holder after six month.
For corporate account profit is calculated on daily basis. Profit is credited after a moth in the
CPA account. Formula used to calculate the profit is
FOREIGN TRADE
Export
Export is just like imports but here we act as exporter bank. In export we perform all that
activity which foreign banks perform in case of import. Exporter provides the documents
like bill of exchange, AWB, certificate of origin, packing list and all other document required
in contract or LC with E form. Bank sends these documents to foreign bank. On receiving
these documents, bank pays the amount according to conditions in LC. Or Contact. In
export bank provides the refinancing and purchasing facility to customers. When customer
has relied on foreign importers then bank take risk and purchase the exports after
shipment. Exporter receives payment from bank, now whole risk of this trade is converted
to bank. This facility is called negotiation or purchasing. In refinancing bank finance the
local exporter according to prudential regulation of state bank.
Advances
Main working of Advances is department is to provide loan to corporate client. This main
job of this department is to maintain the credit limit of client, offer loan, approve loans and
like other work related to corporate loan. Normally banks offer the loan in form of Demand
finance, cash finance, running finance and other schemes according to customer
requirements. Running finance facility is to meet the day-to-day expenses. In running
finance bank debit the account of corporate client and issue the chequebook. Client can
cash the require amount from this account. Cash finance facility is to meet seasonal
requirement of cash. For example in cotton season, textile related companies require cash
to buy cotton. Bank provide loan and cotton remain in custody of bank, to provide different
loans banks require different securities like Lien, Pledge, Hypothecation and Mortgage.
Lien is marked on liquid assets; mortgage is for the assets like land or building. Pledge is
offered for cash finance or seasonal finance.
Documentation Require
Generally for all types of loans, bank of The Bank of Punjab require following documents.
Document For
Accepted Facility offer letter “FOL” All facilities
Letter of arrangement All facilities
SWOT ANALYSIS
Strengths
I. The Punjab government is supporting to “The Bank of Punjab”. It builds trust of client
on Bank.
II. M/S PACRA has awarded the Bank with the credit rating AA- for Long term and A1+
for Short term, based on its financial results for the year ended as on 31st December
2004
III. The Bank of Punjab has a large network of branches. There are 254 branches all
over the Pakistan
V. The Bank of Punjab provides the online Banking facility to its customer.
VI. To train its employees Bank of Punjab have training center. There are different
training session are held for new and old employees.
VII. Financial position of The Bank of Punjab is growing every year. The Bank of Punjab
has highest earning per share.
Weaknesses
I. The Bank of Punjab has only few branches out of province Punjab. Other banks
have competitive edge.
II. As Bank of Punjab has extensive branches within the Punjab province. It is difficult
to manage large number of branches, further it increase the cost.
III. The staff members of The Bank of Punjab are not satisfied with the pay scale
increments and promotion criteria as compare to other banks.
V. The bank is offer regular product line. There is need to enhance the product line.
VI. Turn over rate of employees is increasing, as they are not satisfied with the pay
structure.
Opportunities
III. With the threat of WTO SMEs require more funds to enhance their infrastructure to
improve the quality. Banks are the source of these funding.
IV. The number of salaried persons is increasing with the economy structure of the
country. This creates opportunity in consumer financing.
Threat
I. The Bank of Punjab has major GOVT. deposits. With change of government policies
it may affect the bank
II. Entrance of foreign bank in competition with local bank is great threat for bank of
Punjab
III. The State Bank of Pakistan often imposes various restrictions on banks. Therefore,
none of banks is independent in policy making and can launch any product without
the permission of the State Bank of Pakistan.
RECOMMENDATIONS
Last five year performance of The Bank of Punjab shows that the bank of Punjab is
increasing its profitability and its deposits. Being the bank of government, the bank of
Punjab has major government accounts.
CONCLUSION
The bank of Punjab is the one the best bank in local banking sector. Its growth rate is
highest among all local banks. There are some flaws like the small product range, have
two are three major GOVT accounts and like others. The bank of Punjab has potential to
become top ranking bank in Pakistan banking industry.
My basic purpose of this internship is to learn about the working of bank. During my
internship I got knowledge about general banking, foreign exchange and advances. Staff
member of bank of Punjab are cooperative with me and really help me to achieve my
objective.
Bibliography
http://www.bop.com.pk
http://www.sbp.org.pk
http://www.business-standard.com
http://www.sheshunoff.com
Glossary
Capital Adequacy Capital adequacy means having enough capital funds to protect it
from the risk that customer could lose their deposits as a result of
trading losses, e.g. from bad debt by the bank.
Credit rating A measured judgment, or formal opinion, about the likelihood that
Interst payments on particular issue of bonds or other debt security
will be paid full and on time, and that debt principle will be repaid in
full at maturity. Ratings are by specialist agencies. The highest
credit rating for long-term debt is AAA.
Commercial banks An authorized institutions and perform four functions. They accept
deposits, make loans, arrange payment of bills and provide a
number of customer services
Data Check Data check is a document has records of all loan of customer
form all banks
DD Demand draft
Earning per Share the portion of a company's profit allocated to each outstanding
share of common stock
Hypothecation
Markup The charge you pay if you borrow money or the income you get if
You invest it.
MT Mail transfer
Pledge Pledge is the bailment of goods for security. In pledge goods are
in possession of bank.
documents.
Stock dividend A payment by the corporation in share of stock rather than cash
Appendix