ACKNOWLEDGEMENT

All praises to almighty ALLAH and our holy prophet Muhammad PBUH who gave me the courage and patience for completion of this final report. I wish to acknowledge my gratitude to my inspiring Teachers for their endless their persistence, support and encouragement, and for providing me a lifetime opportunity to work with House Building Finance Corporation I am also very thankful to House Building Finance Corporation Chauburji Branch, Lahore and the Branch Manager Mr. Zahir Ahmad who gave me opportunity to work with experienced persons in their organization. I am also thankful to my parents, family and friends that continually offered encouraging support

Muhamma d shoaib irshad alvi

1

PREFACE
As a requirement of the degree, each student has to go to go to some business organization to get practical experience. In fact, for the student of M.B.A 6-8 week internship is a golden chance to develop their capability and skill of administration and management in the practical environment of different business organization. In this contest, I selected the House Building Finance Corporation. I have selected this organization, as it is the premium institution in the sector of housing finance In Pakistan. Moreover, particularly being a student of business, it is necessary for me to get practical knowledge of the managerial and financial activities of the organization. This work is collection of my observation and experience during the internship period and afterward. The source of my information for the preparation of this report also includes the written notes and verbal discussion with staff of House Building Finance Corporation. In the preparation of this report, I have received valuable assistance from employees of House Building Finance Corporation. I am thankful to them from the core of my heart and appreciate their interest in the accomplishment of this report

TABLE OF CONTENTS

PART 1

Introduction
History of HBFC Introduction of HBFC Objective / Mission & Vision statement 05 06 07

PART 2

profile of the organization&

Branch network Major projects Credit rating Management 08 09 10 11

Part 3

Products of the organization

GAS (flexi) 15

Part 4

My Internship at HBFC
First two weeks Third and fourth week Fifth and sixth week 21 64 71 3

Seventh week Last week

73 74

Part 5

Financial analysis
Vertical analysis of B/S Horizontal analysis of B/S Horizontal analysis of P&Loss 80 75 78

Part
82

Recommendations
Recommendations

HISTORY

OF

HOUSE

BUILDING

FINANCE

CORPORATION
Since housing is one of the fundamental requirements of a living being but at the time of partition, the economic and individual circumstances were not supporting enough for every one to construct and purchase their own house. So keeping in mind this background, government of Pakistan decided to establish a House Building Finance Corporation so those who cannot buy or construct their own houses can benefit from this organization. The House Building Finance Corporation (now incorporated under companies ordinance 1984 as "HBFC Ltd." since July, 2007) was established in the year 1952 as a Statutory Federal Body with the object of providing financial assistance for construction and purchase of houses to the people of Pakistan in urban as well as rural areas. With its establishment, the concept of institutionalized housing finance was introduced for the first time in Indo-Pak sub-continent for providing long-term finance for house building. The government of Pakistan and state bank of Pakistan jointly hold the share capital of the corporation The primary objective of the Corporation is to provide financial facilities for the construction, re-construction, repair and purchase of houses, particularly to the low and middle-income groups of the economy. HBFC has a large network of 80 offices spanning across the country, managed through 12 zones with headquarters at Karachi

After a substantial delay, Mr. Syed Azhar Abbas Jaffri has been appointed as the new MD recently. Mr. Jaffri possesses significant work experience in the financial industry, mainly at banks both local and international

INTRODUCTION CORPORATION

OF

HOUSE

BUILDING

FINANCE

The House Building Finance Corporation (HBFC) has historically provided housing finance in Pakistan, a government entity originally established in 1952 to provide housing finance to the public. Banks have not historically been major providers of housing finance. From 1952 to 1972, HBFC made loans only to (prospective) home owners for construction of homes in urban areas. During this period, HBFCs origination activities were quite modest, averaging PRs 18 million (US$300,000) annually. In 1972, HBFCs mandate was expanded to allow it to provide construction financing to housing projects, finance to housing authorities and housing corporations, and rehabilitation loans; and to undertake real estate development projects. Following this expansion of scope, HBFCs volume of originations increased significantly, averaging around PRs 500 million (US$8.3 million) between 1972 and 1979. In the 1980s and 1990s HBFC was averaging around PRs 1.5 billion (US$25 million) in annual disbursements/originations. In 1994, the government decided that HBFC should operate as a market-oriented financial institution, and in that year SBP stopped lending to HBFC. Since then, HBFC has been relying on repayments

from its loan portfolio as its main source of funding new loans. In June 1999, the Supreme Court of Pakistan ruled that all financial institutions in Pakistan should be Islamized. This effectively shut down HBFCs retail lending program while they retooled to offer Sharia-compliant housing finance programs. It was not until February 2002 that HBFC returned to the retail market with a new Islamized housing finance program (Ghar Aasan). HBFCs originations during the past two quarters have been running at an average monthly rate of PRs 175 million (US$2.92 million) and are expected to run approximately PRs 2 billion (US$33.34 million) for the year.

Vision

Statement

of

House

Building

Finance

Corporation
To be the prime housing finance institution of the country, providing affordable housing solutions to low and middle income groups of population by encouraging new constructions in Small & Medium Housing (SMH) sector

Mission

Statement

of

House

Building

Finance

Corporation
To be a socially responsible and commercially sustainable housing finance institution. Target market Low income and middle income groups of populations Target areas No negative list, all legalized residential locations

Responding to housing needs of low-income groups is a social responsibility, beyond that everything has to be 100% commercially viable and sustainable to ensure an on going housing finance entity

Profile of the organization

House Building Finance Corporation, the oldest housing

finance institute of Pakistan, was established as a statutory federal body in 1952 with the objective of providing financial assistance for the construction of houses. Ensuingly HBFCs scope also branched out into diverse dominions like purchase, repair and renovation of houses. Later on HBFCs mission was evenmore reformed to specifically target the needs of the low and middle income strata of the country by providing costs. Small and Medium Housing (SMH) Solutions, hence successfully providing skilled and user friendly service at affordable

BRANCH NETWORK OF HBFC

Over the years HBFCs operation has flourished and is now spread over a network of 3 Regional, 12 Zonal and 58 District Offices, 4 camp offices and

25 Representative Offices/Service Agents and 21 more such offices will be opened very soon. HBFC towns. HBFCs Head office is situated in Finance & Trade Centre Karachi. HBFC,s FINANCING Since inception to date, the corporation has financed over one and half million units for Rs. 41.437 billions, provided housing finance facility to 28 corporate clients for Rs. 1.7 million, made recoveries of Rs. 51.368 billions and has outstanding portfolio of Rs. 19.6 billion. today has its presence in 80 cities and towns all over Pakistan and is targeting to expand its business to 150 cities and

DISBURSEMENT AND RECOVERIES

HBFC disbursed Rs. 600 millions flood loans to over Rs 0.4 million affected families granted remissions to Widows, Orphans and retired Government Servant of Rs. 1.23 billion on Federal Governments directive. Its Average annual disbursements and recoveries are around Rs. 2-1/2 to 3 billions. It has contributed Rs. 17.149 billion in shape of payment of interest, profit and income tax to Government and State Bank of Pakistan.

MAJOR PROJECTS
In 1984-85, the corporation launched Faisal Town Housing Project, at Lahore consisting of 312 bungalows and also constructed 19storeyed Office Building named HBFC House Islamabad. HBFC owns prestigious Office Buildings/Premises

at Karachi, Lahore and Hyderabad. at Lahore, Islamabad, Arrangements are Hayatabad afoot to

It

also on

owns these

valuable plots

plots

(Peshawar)

and Hyderabad. modern

construct

commercial-cum-residential buildings, estimated to cost over Rs. one billion. Design concept of 12-16 storeyed Flat Project consisting of 208 apartments at Lahore and 12-storeyed office building at Islamabad conceptualized by M/S NESPAK stands approved by HBFC Board of Directors

SHAREHOLDING PATTERN OF HBFC

HBFCs paid up capital is Rs. 3.001 Billion (62.5 percent ownership by the Ministry of Finance and the balance of 37.5 percent by the State Bank of Pakistan).

CREDIT RATING
The Pakistan Credit Rating Agency Limited (PACRA) has maintained the long-term and short- term entity ratings of House Building Finance Corporation Limited (HBFC) at 'A' (Single A) and A1 (A One), respectively. The rating of secured TFC issue of PKR 1,500mln has also been maintained at A+ (Single A Plus). The ratings denote a low expectation of credit risk emanating from a very strong capacity for timely payment of financial commitments. HBFCs ratings reflect its ownership structure fully owned by the Government of Pakistans (GoP) through State Bank of Pakistan (SBP) and Ministry of Finance and given HBFCs pivotal role in GoPs

10

commitment in expanding the housing stock in the country, wherein the government is likely to continue supporting the Corporation. Meanwhile, the ratings recognize the Corporations adequate equitybase and strong liquidity position. The ratings also take into account the on going restructuring process of the entity aimed at bringing the requisite level of efficiency in operations.

GENERAL ADMINISTRATION AND MANAGEMENT

The general directive and administration of the corporation and its affairs is entrusted to a Board of Directors and the Managing Director, who together with the assistance of Board Committee manages and controls the affairs of the corporation. The Government of Pakistan appoints the Board of Directors. Under its new mission, HBFC aims to be the housing bank for small and medium Housing finance

CEO/MD Profile Management Profile Mr. Azhar

A.

Jaffri

Chief Executive Officer / Managing Director Mr. Azhar A. Jaffri joined House Building Finance Corporation Limited in January, 2009 as CEO and MD. Mr. Jaffri has 30 years of experience in the Banking /Financial Services Industry. Mr. Jaffri has worked in Southeast Asia and the Middle East for over 18 years of his career, and in Pakistan for about 12 years. He has worked with multinational banking and

11

CEO/MD Profile financial services companies like American Express, Citibank, MasterCard International etc. His latest assignment was SEVP and Group Chief for consumer banking with one of the top five local banks in Pakistan. He holds a Masters degree in International Management & Business from American Graduate School of International Management(Thunderbird) in USA.

Board of Directors

Mr. Azhar A. Jaffri Chairman Chief Executive Officer / Managing Director House Building Finance Corporation Ltd. (HBFC), Karachi

12

Mr. A. Akbar Sharifzada Director Joint Secretary(IF) Finance Division, Ministry of Finance Government of Pakistan Islamabad

Mr. Tariq Iqbal Khan Director Retired Chairman & Managing Director National Investment Trust Ltd Karachi

13

Mr. Tasneem Ahmed Siddiqui Director Retired Director General Sindh Katchi Abadis Authority Karachi

Director Executive Member Association of Builders & Developers (ABAD) Karachi

Mr. Tahir Siddiqui Secretary

14

Executive Director House Building Finance Corporation Ltd. (HBFC) Karachi

PRODUCTS

OF

HOUSE

BUILDING

FINANCE

CORPORATION
HBFC Ltd.s main aim has remained to serve its consumer market. HBFCs financing schemes have also evolved over its 58 years of establishment to acquiesce with this aspiration. These schemes have propelled HBFC towards the fulfillment of its Business Focus which is to accommodate the low and middle income groups housing needs. Thus HBFC offers a wide range of products for the ministration of its consumers. House Construction Financing, financing for purchase of house/flat, renovation of House (Home improvement financing), loan transfer and Balance transfer fund is the range offered by this organization. Since its evolution, HBFC has introduced many schemes for its valued target customers. I am here briefly describing all its schemes since 1952. Interest bearing scheme (IBS) was the first product(scheme) introduced by HBFC. This scheme entertained the customers

15

from its very beginning till June 1979. Under this scheme one was not eligible to get loan for Renovation purpose.

After IBS, HBFC launched a new scheme known as Profit and loss scheme. This remained implemented from July 1979 to June 1987.

Under this scheme one was not eligible to get loan for renovation purpose Next innovation in this context was Simplified Scheme (SS) which remained from July 1987 to June 1989. Again there was no room for the renovation. SS was further improved and it was renamed as New Simplified Scheme. It remained the premium product of HBFC from July 1989 to onward upto 2000. From 2000, HBFC started their most popular schemes GHAR ASAN SCHEME (GAS) and SHANDAR GHAR SCHEME (SGS) 1. SGS ( A/C NO# 108 ), HBFC invested only for renovation 2. In GAS ( A/C NO# 808 ), HBFC invested only for house construction and also for purchase of house. In Feb 2008, HBFC introduced GAS flexi ( A/C NO# 908 ) which includes loan for construction, purchase and renovation

16

At present HBFC Ltd. have following housing finance schemes in operation: 1. Ghar Aasan Scheme based on diminishing Musharka, a Shariah

compliant scheme under which credit for construction and purchase of houses is allowed. 2. Shandar Ghar Scheme under which credit for repairs,

renovation/up-gradation is available. 3. Loan facility for Small Builder for construction and sale of

small houses/flats 4. Ghar Aasan Scheme (Flexi) for construction, purchase and

renovation for houses/flats

GHAR AASAN SCHEME ( GAS ) FLEXI

This product is based on the concept of Diminishing Musharaka and has four modules for the following purposes:(i) (ii) a. b. (iii) (iv) Facility) Purchase of a residential property Construction of residential property Residential construction on Applicants owned land; Residential construction on applicants owned house (on

advance stage of Construction i.e. up to lintel level or Roofed) Renovation of an existing residential property Replacement of an existing housing finance (Balance Transfer

17

This scheme facilitates customer for purchase/construction/renovation of houses/flats. The salient features of the scheme are:-

Maximum Ceiling:
1Financing facility up to Rs.10 million for purchase/construction or

Balance Transfer Facility subject to the customers eligibility & location of house/flat. For renovation maximum financing limit up to Rs.2.5 million. 2The investment is repayable in affordable installments over a

maximum period of 20 years depending upon the customers age and repayment ability. 3The overall cost in acquiring housing under the scheme is moderate as compared with other banks. 4- Early unit purchase option, customer can purchase as many number of units as the customer wishes, subject to prepayment charges. By making advance payment, the customer will avail two benefits i.e Get and reduced his/her monthly installment on lower side or get reduced the period of loan. 5- Security: equitable/registered mortgage in favour of House Building Finance Corporation 6- Sharia compliant scheme. Approved by the prominent Islamic 18

scholars. This scheme is based on the concept of mutual sharing and rent is hired for the time period till the ownership transfers. 7- Hassle free repayment facility. Post dated cheques are collected by the HBFC so the customers are not required to come. They can also make an account on the HBFC,s website and can update their account from anywhere in the world In short, this was the brief review of all the schemes introduced by the House Building Finance Corporation. These schemes were updated time to time keeping in view the changing circumstances and needs of the customers.

MY

INTERNSHIP

AT

HOUSE

BUILDING

FINANCE

CORPORATION
As a part of my degree, practical training known as internship is of core importance. For my internship, I applied in various organizations and few of them responded positively out of which I chose House Building Finance Corporation. My decision in favour of HBFC was based on many facts some of which I would like to share with you people. It is a government institution and almost has a monopoly in housing finance

19

Its customer base is huge due to its large network all around the country Its area of operations were well synchronized with my majors in M.B.A Its status as a Govt. institution is now changing as a semi govt or an autonomous body. So, radical changes were being observed by me in this context.

Due to its large operations and related financial activities, there was a lot to learn for me which was my pre requisite for joining any organization as an internee

Summary of my internship
My internship at HBFC was approved for 8 weeks and I tried my best to learn more and more with in this specific time period. My allocation of time in various departments of HBFC was as follows guiding and I spent my first two weeks as a front desk officer educating customers about the HBFC policies and satisfying their queries. My next two weeks were also spent as a front desk officer but now my nature of work was changed. I spent these two weeks in case studies. I went through various

20

files and learn a lot about the policies and functioning of HBFC. In these 4 weeks I learnt 75 % of my practical knowledge, l gained from HBFC. My next two weeks were spent in an audit department where I was engaged in checking of files and reconciling their balances of disbursement and recoveries. My 7th week was spent in a recovery department. It was the most entertaining part in my internship. this week will always be in my memory. In this week I learnt how to take your money back. My 8th week was spent in doing miscellaneous work. I type office letters for 2 days. I engaged in a PDC department for 2 days and my 5th and last day of last week was spent in meeting and receiving farewell comments from all my respected seniors Now I will explain all my work activities in HBFC in detail in terms of weeks. This will include all my findings, my observations and my conclusions

My first two weeks at House Building Finance Corporation

My internship at House Building Finance Corporation started on 12th of July 2010. i went to HBFC office ( choburgi branch ) with my uncle ( who is manager admin in HBFC ). He introduced me with Mr. Zaheer Ahmad (branch manager) and told him about my status as an internee.

21

Mr. Zaheer Ahmad warmly welcomed me and hand over me to Mr. Abdur RAHMAN (MANAGER grade two) who was a front desk officer and was responsible for customer handling and customer guiding. He was a very interesting man and I learnt a lot from him. I immediately started observing him how he handles the customer and what did he reply to their queries. Under his supervision I learnt the general loaning procedure and customer dealing. This all can be summarized in the following heads. 1. General precautions 2. list of property documents 3. How to complete property documents 4. list of documents required by HBFC 5. Procedure of getting finance from HBFC. 6. How to purchase land and property Now I will explain all this one by one in detail.

1. General precautions
Since I was the front desk officer and I was responsible for educating and guiding customers, so first I was supposed to teach myself general precautions to be taken while purchasing property so that I may better guide them. Generally, we can summarize all these precautions as follows.

Precautions to be taken before purchasing a valid property (Land or House/flat)

22

Since the procedure of buying residential property is usually intricate in nature .More-so, it differs from area to area, thus it is imperative to make sure before entering into any deal about purchase of property, that it is free from all encumbrances. Here are a few checks by applying that one can protect his/her interest up to a maximum limit: 1. Ensure that the property is mortgaged neither with any bank nor under litigation in a court of law. {This can be ascertained by obtaining Non-encumbrance certificate from the office of the Sub-Registrar of the area concerned where the property falls.} 2. Ensure that seller has genuine title to the property.

3. Ensure that seller has no defective title to land, that might put into jeopardy the Seller under the law to dispose-off the property.{ This can be ascertained from the land allotting agency} 4. To avoid legal complications, make sure that all the original documents with complete chain of title are in order and handy available with the Seller. 5. If the owner lives abroad, a power of attorney, duly certified by the Embassy or the Consulate General of Pakistan and registered with the area registrar is required. Normally documentation varies from area to area and city to city, hence, is subject to the requirement of local authorities, such as the Clifton Cantonment Board, Defense Housing Authority (DHA), LDA in Lahore, CDA in Islamabad, Karachi Development Authority, and the other societies, functional in the area where the property is being purchased. 23

So, you must check the following documents before handing over token money or signing Sale Agreement:1. 2. 3. 4. 5. 6. 7. 8. Registrar Concerned In case the property under consideration is in territorial jurisdiction of DHA Karachi, specific documents required include Allotment letter Possession order Site Plan and sub-divided site plan All paid utility bills and challans Approval and completion of the building plan Completion certificate Transfer/Mutation Order [In case where sale deed is executed subsequent to Lease Deed Power of Attorney, duly executed in the office of the Sub-

Approval letter for water connection, Assessment of property, Sui Gas and KESC installation sketch and test report

You also must take all original documents of the property from the seller, from acquiring the vacant plot up to completion certificate of the building at the time of making the final payment with peaceful vacant physical possession of the property

2. List of property documents

List of documents required for execution of lease Deed:
24

1. 2. 3. 4. 5. 6. 7. 8.

Five copies of Site Plan (Blue Print) Attested photo copies of CNIC Attested paid copy of Challan Attested paid copy of allotment order Possession Order Acknowledgement of Possession Site Plan Transfer Order

Issuance of allotment order: 1. 2. 3. Affidavit on Rs.10/= non judicial stamp paper duly attested. Attested photo copy of CNIC Attested photo copy of all paid challans.

Mutation by registered Sale Deed: 1. paper 2. 3. 4. Attested photo copy of CNIC of Attorney Press notification Deed of Redemption/Noc from loan giving agency in cases where permission to Mortgage/Assign has already been issued by Authority. 5. An Affidavit in cases where permission to Assign/Mortgage issued by Authority has not been utilized. 6. 7. Indemnity Bond on Rs.30/= non Judicial Stamp paper from the vendee/purchaser Proof of construction 25 2nd copy of Registered Sale Deed on Rs.10/= non Judicial stamp

a. b. c. 8. 9. 10. 11. 12. 13. 14.

Completion certificate of Building Control Authority OR Certificate from XEN concerned OR Paid copy of Challan of Property Tax Photo copies of all paid challans Attested photo copy of allotment order Attested photo copy of possession order Attested photo copy of Acknowledgement of Possession Attested photo copy of Site Plan Attested photo copy of Transfer order Attested photo copy of Registered Lease Deed

Pre-lease transfer by Joint declaration:

1. Original Copy of Agreement to Sell on Non-Judicial Stamp Paper as directed by the govt. on different size of plot. 2. attested photocopy of N.I.C of Transfer/Transferee/Attorney (if any) 3. Press Notification (Specimen A) 4. Attested photo copy of Power of Attorney (if any) 5. Indemnity Bond on Rs.50/= non judicial Stamp paper for the Transferee/Seller and Transferee/Purchaser within (Specimen B & C). 6. a. b. 7. Proof of Construction Completion Certificate of Building Control Authority OR Paid copy of oldest challan of Property Tax, PT-1, PT-10. Attested Photo copies of all Paid Challans (Give No. of Challans

along 26

with original. 8. 9. Attested Photo copy of Allotment Order, along with original. Attested Photo copy of Possession Order, along with original original 11. Attested photo copy of Site Plan along with original 12. Attested photo copy of Transfer order along with original 13. Attested colour Photograph of Seller and Purchaser Note: (All Originals will be returned after scrutiny.

10. Attested photo copy of Acknowledgement of Possession along with

Transfer by Gift:
In case of transfer of property by gift, following documents are required by the HBFC. 1. Declaration of Gift on Rs.100/= Non-Judicial Stamp paper (in original) duly attested by Magistrate/Notary Public (in case of attestation by the Notary public Notary Stamps to be affixed) OR Second copy (on Rs.100/-Non Judicial Stamp) of the Regd.Gift Deed. 2. Press 3. notification inviting objections to the proposed mutation/transfer on the basis of Gift. Indemnity Bond on Rs.50/= non-Judicial papers from Donor and Donee 4. Attested Photo copies of National Identity Cards of both donor and Donne. 5. Search Certificate (in cases of Leased plot) from the date of lease up-to-date. 6. in case Permission to Mortgage has already been issued, either both copies of Permission to Mortgage/Assign be surrendered, or NOC 27

form the Loan Giving Agency for the proposed mutation be submitted or an affidavit to the effect that the Permission to Mortgage/Assign was not utilized (specimen E) or Deed of Redemption be submitted. 7. proof of construction i.e. a. b. c. 8. 9. Completion Certificate of Building Control Authority. or Certificate from XEN concerned. or Paid copy of challan of Property Tax. Photo copies of all paid challans (Give No. of Challan) Attested Photo copy of Allotment Order, along with original

10. Attested Photo copy of Possession Order, along with original 11. Attested Photo copy of Acknowledgement of Possession along with original 12. Attested photo copy of transfer orders along with original 13. Attested Photo copy of transfer orders along with original 14. Photographs of Donor, Donee

How to complete property documents

This is the most important part. Mostly customers are unaware of its significance. With out proper documentation you can not establish a relationship with HBFC. During my stay at HBFC, I observed that there was no room for flexibility in this area and every one was very strict about it.

How to become titleholder of land

28

Scenario 1 If you have a piece of land in your possession by virtue of allotment letter

Step-by-step procedure involved

The allotment is not reckoned as title documents to land. The plot against allotment order is transferable after completion of the legal formalities of the Housing Authorities in the name of my other person, who is interested to purchase the land from the allottee/transferee of land from the open market. The plot is transferable from one person to another person till execution of the Sub-Lease/Lease. The procedure for transfer of plot is different in all the Housing Authorities. Lease Deed is a title document therefore, if you are holding allotment of land in your name and want to became a titleholder of the land then you should contact with the Authorized Officer of the scheme for execution of Lease Deed/Sub Lease/Lease A & Lease B ( as the case may be )

Steps involved
1. 2. 3. Under the rules, the allottee of land will be required to deposit The concerned agency i.e. KDA/KMC/DHA/CDA/LDA/ LDA etc will Having cleared the outstanding dues of land the allottee will

the dues of the land (if any); issue a bill of the due amount against land in favour of allottee; obtain prescribed blank file, on payment of required amount of fee, from the nominated branches of the commercial bank and after completing the required formalities , as mentioned in the file, apply to

29

the authorized officer of the body for execution of the Lease Deed/ Lease A & Lease B in his favour; 4. The Authorized Officer, after observance of required procedure will issue three blank Lease/Sub Lease and Lease A & Lease B to the allottee for the stamping of prescribed value of Rs on the first page of Lease/Sub Lease and License from the Treasury Office of the Government; 5. After stamping on the Lease/Sub Lease and Lease A & Lease B, the applicant will request the concerned officer for the execution of the Lease/Sub Lease and Lease A & Lease B, in the Sub Registrar Office. 6. The Authorized Officer of the department will fix date for execution of the Lease/Sub Lease and Lease A & Lease B, in favour of the applicant before the Sub Registrar. 7. After registration of the Lease/Sub Lease ad Licensee A, the Registrars Office will issue a slip for obtaining the Registered Lease/Sub Lease and Lease A & Lease B, after one month or so. Once the Lease/Sub-Lease and Lease A & Lease B is executed /issued by the department concerned you become the titleholder of the property/land for a specified period of time mentioned therein

Scenario 2
If you have purchased the land/ property simply on allotment letter through a Sale Agreement

Step-by-step procedure involved

30

The allotment is not reckoned as title documents to land. The plot against allotment order is transferable after completion of the legal formalities of the Housing Authorities in the name of my other person, who is interested to purchase the land from the allottee/transferee of land from the open market. The plot is transferable from one person to another person till execution of the Sub-Lease/Lease. The procedure for transfer of plot is different in all the Housing Authorities. Lease Deed is a title documents for availing loan from loan giving agency, therefore, if you have purchased a piece of land comprising simple on allotment and the transaction of sale/purchase is made through a simple sale agreement and you intend to become a titleholder of the land then you are required to contact with the Authorized Officer of the scheme for execution of Lease Deed/Sub Lease/Sub Lease A( as the case may be. The allotment is not reckoned as title documents to land. The plot against allotment order is transferable after completion of the legal formalities of the Housing Authorities in the name of my other person, who is interested to purchase the land from the allottee/transferee of land from the open market. The plot is transferable from one person to another person till execution of the Sub-Lease/Lease. The procedure for transfer of plot is different in all the Housing Authorities. Lease Deed is a title documents for availing loan from loan giving agency, therefore, if you have purchased a piece of land comprising simple on allotment and the transaction of sale/purchase is made through a simple sale agreement and you intend to become a titleholder of the land then you are required to contact with the Authorized Officer of the scheme for execution of Lease Deed/Sub Lease/Sub Lease A( as the case may be )

Steps involved
31

1. 2. 3.

Under the rules, the purchaser of land will be required to The concerned agency i.e. KDA/KMC/DHA will issue a bill of the Having cleared the outstanding dues of land the purchaser will

deposit the dues of the land (if any); due amount against land in favour of allottee/ purchaser; obtain prescribed blank file, on payment of required amount of fee, from the nominated branches of HBL and after completing the required formalities , as mentioned in the file, will apply to the Authorized officer of KDA/KMC/DHA Scheme for transfer of land in his favour; 4. The Authorized Officer, after observance of required procedure will issue transfer letter in favour of the purchaser; 5. The next step which is required to follow after the issuance of

Transfer Order, by the purchaser is to apply to the concerned Authorized Officer of KDA/KMC/DHA for execution of lease deed in his favour. 6. The purchaser will be required to obtain prescribed blank file, on

payment of required amount of fee, from the nominated branches of HBL and after completing the required formalities , as mentioned in the file, will apply to the Authorized officer of KDA/KMC/DHA Scheme in the for execution of the Lease Deed/License in his favour; 7. The Authorized Officer, after observance of required procedure will issue three blank Lease/Sub Lease and Lease A & B to the allottee for the stamping of prescribed value of Rs on the first page of Lease/Sub Lease and License from the Treasury Office of the Government;. 8. After stamping on the Lease/Sub Lease and Lease A & B, the applicant will request the concerned officer for the execution of the Lease/Sub Lease and Lease A & B in the Sub Registrar Office. 32

9.

The Authorized Officer of the department will fix date for

execution of the Lease/Sub Lease and Lease A & B in favour of the applicant before the Sub Registrar. 10. After registration of the Lease/Sub Lease ad Lease A & B, the Registrars Office will issue a slip for obtaining the Registered Lease/Sub Lease and Lease A & B after one month or so. Once the Lease/Sub-Lease and SubLease A & B is executed /issued by the department concerned you became the titleholder of the property/land for a specified period of time mentioned therein

How to get approved building plan and why it is necessary

Raising construction without having a building plan approved from the concerned agency is a violation of rules of the concerned Building Control Authority and can lead to demolition of construction. Therefore, for all practical purposes i.e. before raising construction, approved building plan and its approval letter is mandatory

Steps involved
1. 2. The individual should contact a licensed architect for the The required amount of fee of the Controlling authority should

preparation of building plan of the property; be deposited in the designated branches of the bank before submission of building plan for obtaining approval of the concerned Authority 3. 4. days; Having deposited the fee, the Architect shall submit the Currently in Karachi KBCA is approving building plan within three proposed plan in the Controlling Authority office for its approval;

33

How

to

obtain

permission

to

assign

or

No-objection

certificate and why it is necessary

It is mandatory for availing loan from any loan giving agency that prior permission should be obtained by the intending borrower from the concerned land allotting agency to the effect that the agency has no objection in assigning the land for availing loan. For the issuance of NOC; 1. You should approach the concerned Department for obtaining the Permission to Assign or NOC (as the case may be on the prescribed form by attaching the required documents mentioned in the form. 2. 3. 4. The concerned department after examination of the documents After deposit of the fee, submit the challan in the concerned The concerned department after checking the documents the will issue a challan in your favour for deposit in any authorized Branch department for issuance of permission to assign. concerned department is issued the above documents within one month. 5. If you have purchased the plot/flat and acquired the title from any Cooperative Housing Societies / Builders then permission to assign will be issued by the concerned Cooperative Housing Society and Builder in their own letter head

NEC(Non Encumbrance Certificate

1. The Sub Registrar concerned issues NEC (Non-encumbrance

certificate) to the titleholder of land showing therein the history/event

34

of Lease Deed/Sub Lease/ License and subsequent since inception todate; 2. For obtaining the above documents, you should apply on the

prescribed form alongwith a photo copy of Lease Deed and a nominal fee of Rs.for the NEC through challan in the Treasury Department; 3. In case there is any subsequent transaction then photo copy of Sale Deed/Conveyance Deed and photo copy of Mutation should also be attached with the application; 4. The Sub Registrar Office on receipt of the documents & payment

of fee will normally issue the NEC within one week

Mutation certificate
Mutation is in fact a document which forms basis for transformation of proprietary rights in the record of concerned land allotting agency. Mutation is conventionally involved in case a Leased property is purchased by an individual through a Sale Deed/Transfer Deed, executed in the office of the Sub-Registrar .The prime purpose for issuance of Mutation certificate is to bring change of ownership in the record of land allotting agency.

Steps involved
1. 1. 3. 4. For issuance of mutation certificate, apply on prescribed form in Photo copy of Lease Deed; Photo copy of CNIC of the seller; Photocopy of Sale Deed/ Transfer Deed the concerned department with the following documents:-

35

5.

The concerned Department on receipt of the above documents

and examination of case will issue payment challan of the prescribed fee in your favour; 6. You should deposit the challan fee in the authorized branch of Bank; 7. On receipt of the payment challan, the concerned department will issue mutation certificate in your favour with a copy endorsed to the old owner

List of documents required by HBFC

LIST OF TITLE DOCUMENTS OF ALL DISTRICT OFFICES 1) KARACHI DIVISION Lease hold properties
1. 2. 3. 4. Lease/Sub-Lease/Sub-License Sale Deed (if there is subsequent transaction) Gift Deed (If property is gifted) Exchange Deed (if Property is acquired in exchange).

Free hold properties

1. 2. 3. 4. 5. 6. 7. 8. Registered Sale deed Last Jama Bandi OR Certified copy of City Survey extract OR Deh Form (II) Gift Deed (If property is gifted) Exchange Deed (if Property is acquired in exchange). Mutation/Transfer Permission to Assignment NEC / (Search Certificate) Site Plan Building Plan duly approved alongwith approval letter 36

9. 10. 11. 12.

Mutation/Transfer NEC Site Plan Building Plan duly approved along with covering letter

2) ISLAMABAD (CAPITAL ISLAMABAD ZONE

1. 2. 3. 4. 5. 6. 7. 8. (a) 1. 2. 3. 4. 5. 6. 7.

AREA)

&

OTHER

CITIES

OF

Allotment Letter/Transfer order Permission to Assign Site Plan/ Layout Plan Demarcation Certificate Up to date NEC Approved/Revised Building plan along with approval letter Certificate of soundness/value of building for house purchase Possession order/slip

Free hold properties (Urban)

Registered Sale deed/Gift Deed Last Jamabandi, or city survey record Mutation or sakni certificate from Tehsildar if plot is Shamile Akse Shajra duly demarcated Site Plan Up to date NEC Approved Building Plan

Abadi Area

(b) Free hold property (Rural)

The following documents are required in addition to above documents: -

37

1) 2)

L-20 from Tehsildar Co-sharer Affidavit (in case of co-sharer)

(c) Lease hold property

1) 2) 3) 4) 5) 6) 7) 8) Lease deed/Sub Lease duly registered GLR (General Land Register) Permission to Assign Possession order Site Plan of Plot Up to date NEC Approved Building Plan Letter of approval of the building plan

(d) Allotted Land (in Government Scheme)

Allotment order/transfer order

(e) Evacuee Property:

1. 2. 3. 4. 5. 6. Permanent Transfer Deed PT-1 Subsequent Transfer Upto date NEC Site Plan Original Approved Building plan with approval letter

3) (a)
1. 2. 3. 4.

MULTAN/BAHAWALPUR DIVISION Free hold properties (Urban)

Sale Deed/Gift Deed/Exchange Deed/Court Decree Court certified copy of Mutation Copy of record of Right (Fard Malkiyat) Aks-e-Shajra 38

5. 6.

N.E.C. for last 12 years Approved Building plan + Approval letter

(b) Urban area land where no record is available in Revenue Department:

1. 2. 3. 4. 5. 6. 7. P.T.D. Confirmation of P.T.D. PT-I N.E.C (for the last 12 years) Clearance certificate from Excise & Taxation Department Building plan + Approval letter Indemnity Bond regarding finality of P.T.D.

(c) Lease Hold Property:

1. 2. 3. 4. 5. 6. Lease Deed/Sub Lease Deed Extract from GLR Permission to Assign Building Plan + Approval letter N.E.C. from the date of Lease Deed Approved Building Plan

(d) Government Colonies/ Lease Hold Properties:

1. 2. 3. 4. 5. 6. 7. Sale Agreement duly registered Allotment order Possession Slip Site Plan Permission to Assign N.E.C. (from the date of Sale Agreement) Building Plan + Approval Letter

39

(e)
1. 2. 3. 4. 5. 6. 7.

Rural Area property:

Oral Mutation (Court Certified Copy) Building Plan + Approval Letter Mutation (Court Certified Copy) Copies of Record of Right (Fard Malkiyat) for the Last 12 Years L-20 (HBFC Ltd./Certificate of Assurance) by tehsildar (Sakni Certificate) Aks-e-Shajra N.E.C. (for the last 12 Years)

4) QUETTA / BALUCHISTAN (a)

1. 2. 3. 4. 5. 6. 7. 8.

Lease hold properties

Lease Deed Sale Deed (in case of subsequent transaction) Mutation Fard Jamabandi Record Sale Deed (in case there is subsequent transaction (Registered) Permission to assign N.E.C. from the date of lease deed Approved Building Plan

(b)
1. 2. 3. 4. 5. 6.

Free Hold Property (Rural & Urban Area)

Sale Deed (Registered) Mutation in Favour of Applicant Fard Jamabandi Record for last 15 years Building Plan with Building Permit N.E.C.

40

7. 8.

Akse Shajra Sakni Certificate

(c)
1. 2. 3. 4. 5. 6. 7.

Free Hold Property (with no sale deed):

Mutation in Favour of applicant Fard Jamabandi Record L-20 (Certificate of Assurance) Building Plan with Building Permit N.E.C. Akse-Shajra

(d)
1. 2. 3. 4. 5. 6.

Lease Hold cases of Cantonment Area

Lease Deed (Registered) Sale deed (In case of a subsequent Transaction) Site Plan Non Encumbrance Certificate Permission to Assign (L-19) Building Plan with Building Permit

(e) Lease Government .

1. 2. 3. 4. 5.

Hold

cases

where Local

land Govt.,

leased

by

Municipal/Town Committee,

Provincial

Lease deed (Patta) Registered Site Plan N.E.C. Permission to Assign (L-19) Building Plan with Building Permit

41

(f)
1. 2. 3. 4.

Quetta Development Authority Cases (where still the

Sale/Purchase Agreement Site Plan Permission to Assign (L-19) N.E.C. Building Plan with Building Permit

cost of land has not yet been paid fully)

(g) Quetta Development Authority Cases (where the cost of Land has completely been paid
1. 2. 3. 4. Final Transfer Deed (Registered). Site Plan N.E.C. Building Plan with Building Permit

(h)

Quetta Development Authority Cases (where the house

has been constructed and investment is required for further construction):

1. 2. 3. 4. 5. 6. 7. Sale Deed (Registered) Fard Jamabandi Record for last 15 year N.E.C. Site Plan Building Plan with Building Permit Permission to Assign

5) LAHORE/GUJRANWALA DIVISION (a) Free Hold Properties:

42

1. 2. 3. 4. 5. 6. 7.

Registered Sale Deed Certified copy of Mutation Jamabandi L-20 (In case of rural area) Akse-Shujra N.E.C. Building plan with approval letter

(b) Government Schemes:

1. 2. 3. 4. 5. 6. 7. Registered Sale Agreement/Sale Deed Transfer letter/Allotment letter Permission to assign Possession order Site Plan N.E.C. Building Plan with approval letter

(c) Lease Hold & Contentment Schemes

1. 2. 3. 4. 5. 6. Registered Lease deed/Sub-Lease General Land Register (Certificate) Permission to assign N.E.C. Site Plan Building Plan with approval letter

6) SUKKUR/ LARKANA/ JACOBABAD/ DADU/ KHAIRPUR Urban Area

43

1. 2. 3. 4. 5. 6. 7. 8. 9.

Sale Deed P.T.D. F.T.O. Gift deed Lease Deed/Sub-lease deed City Survey Extract Deh Form-II Deh Form-VII Mutation

10. Site Plan 11. N.E.C. 12. Permission to Assign 13. Approved Building Plan with approval letter

Rural Area
1. 2. 3. 4. 5. 6. Owner Ship Certificates issued by Union Council Authorities Owner Ship Certificate issued by Mukhtiarkar concerned Deh Form II N.E.C. Approved Building Plan Development Certificate issued by Union Council

7) FAISALABAD/SARGODHA DIVISION (a)

1. 2. 3. 4. 5. 6.

Free Hold property (Urban Area)

Sale deed, Gift deed (Regd) Mutation Fard Jamanbandi Aks-e-Shijra N.E.C.

44

7.

Approved Building Plan with approval letter

(b)
1. 2. 3. 4. 5.

Evacuee Property (Urban Area)

PTD/PTO Confirmation of PTD (Permanent Transfer deed) N.E.C. Approved Building Plan with approval letter Permission to Assign

(c)
1. 2. 3. 4. 5. 6. 7.

FDA/Punjab Govt. Housing Scheme (Urban)

Sale Agreement (Regd) Allotment order Transfer letter (in case if applicable transfer of plot) Possession slip N.E.C. Permission to Assign Approved Building Plan with approval letter

(d)
1. 2. 3. 4. 5. 6.

Cantonment Board (Urban Area)

Lease deed MEO letter Copy of G.L.R. Permission to assign N.E.C. Approved Building Plan with approval letter

(e) Rural Area:

1. 2. 3. Sale Deed Mutation or Oral Mutation Jamabandi

45

4. 5. 6.

L-20 (Assurance certificate)/Demarcation Certificate N.E.C. Approved Building Plan with Approval letter from District

Council/Union Council concerned

8) ABBOTTABAD/HAZARA DIVISION/NORTHERN AREAS (a) Lease Hold Properties:

1. Lease deed or agreement for sale/Sale deed 2. Site plan of the plot 3. Permission to Assign 4. N.E.C. 5. Approved Building Plan with approval letter

(b)
1. 2. 3. 4. 5. 6. 7. 8.

Free Hold Property:

Mutation Last Jamabandi Sale deed (in case property is purchased by applicant) Aks-e-Shajra Site plan Assurance Certificate (L-20 in case of Rural Area) N.E.C. Approved Building Plan with approval letter.

(c) Un-Settled Area of Northern Areas:

1. 2. 3. 4. Un-settled area form (designed by HBFC Ltd. Management) L-20 N.E.C. Approved Building Plan with approval letter

(9) HYDERABAD/ MIRPURKHAS DIVISION

46

(a)
1. 2. 3. 4. 5. 6. 7.

Free hold properties (Rural Areas):

L-20, Ownership Certificate duly issued by the Taluka Mukhtiarkar or Sanad Deh Form-VII Deh Form-II (Mutation) N.E.C. for last 12 years Approved Building Plan with approval letter Approved Site Plan Akse-Shajra

(b) Free Hold Property (Urban Areas):

1. 2. 3. 4. 5. 6. P.T.O./P.T.D/Sale Deed/Gift Deed City Survey Extract/Deh Form-II (Mutation) Statement issued by the Legal Heirs along with copy of N.E.C. for last 12 years Approved Building Plan with approval letter Approved Site Plan

statement from City Survey in cases of heirship

(c ) Lease Hold Property:

1. 2. 3. 4. 5. 6. 7. 8. Lease Deed/Sub-Lease Deed/Sale Deed/Gift Deed Deh Form-II (Mutation) Allotment order Permission to Assign (L-19) N.E.C. from the date of execution of lease deed Approved Building Plan with approval letter Approved Site Plan

47

(d) Cantonment Areas:

1. 2. 3. 4. 5. 6. Lease Deed Extract of the Property Clearance Certificate from MEO Permission to Assign (L-19) Approved Building Plan with approval letter Approved Site Plan

(10)
1. 2. 3. 4. 5. 6. 7. 8.

PESHAWAR DIVISION/ NWFP

Sale Deed Lease Deed Gift Deed Permanent Transfer Deed in case of Evacuee Property (PTD) Mutation Certificate Permission to Assign Approved Building Plan with approval letter Approved Site Plan

(a) Lease Hold Properties:

(b)
1. 2. 3. 4. 5. 6. 7.

Free Hold Properties:

Last Jamabandi or City Survey Extract Sale Deed (in case of purchase) Mutation Certificate of Assurance by Collector N.E.C. Aks-e-Shajra Building Plan

Procedure of getting finance from HBFC.

48

(For construction cases only)

STEP -1 (PREi.
REGISTRATION/ VERIFICATION PROCESS)

Please obtain an application form and brochure from any of the same from our website (www.hbfc.com.pk). The

HBFC Ltd.s district offices/ HBFC Ltd. representative offices or download addresses/telephone numbers of our District Offices/representative offices are also available on web site as well on the back of the brochure ii. iii. Detail of documents to be attached with the application form Deposit application fee in H.B.L. as per following schedule: is available on the brochure.

Fee Payable Application Application Application Application Applications for Houses / s Up tos Above s to & 0 Above s up AboveAbove Flats Located Rs.300,000 Rs.300,000Rs.500,000 Rs.1,000,00 Rs.2,500,00 & up to 0 & up to 0 0 Rs.500,000Rs.1,000,00 Rs.2,500,00

Within Munic Rs.5,000/- Rs.7,000/- Rs.10,000/- Rs.15,000/- Rs.25,000/ipal (within Cantonment Area) iv. 1 2 Under HBFC Ltd. Ghar Aasan scheme, you can avail :Financing on the basis of rates of your plot given in the collector In case you do not agree with the rates of your plot given in the limit

index; and collector index, you may have the market value of your plot assessed 49

from an approved valuer of Pakistan Bank Association. For this purpose please follow (a) to (d) below:a) b) c) List of the approved valuer is available in our offices/web site The fee payable to the valuer would range between Rs.1500/- to Submit a pre-drafted application, mentioning therein the name and in the Guidelines (see annexure) Rs.2500/- payable directly to the valuer. of the valuer of your choice from the list of approved valuers available in the Guidelines (see annexure) d) Attach photo copies of the sale/lease deed /allotment letter and building plan.

Verification procedure
Submit complete set of the title documents mentioned and marked ( ) in the brochure with following additional papers. (the original papers are to be submitted for the attestation purposes only). Proof of income of the applicant or guarantor, as the case may be: 1 For salaried persons. (Salary certificate) 2 For businessmen /professionals (Tax payers) (Income tax assessment order for the last two years) 3 For businessmen/professionals (non tax payers) (Affidavit on prescribed value stamp paper duly attested by the notary public) 4 For Agriculture Income (Proof of landholding, income certificate from the Revenue Officer) 5For overseas Pakistanis. i) ii) Income proof certificate duly attested by Pakistan Embassy; Copy of all pages of Passport attested by Pakistan Embassy; 50

iii) iv) v)

Copy of CNIC attested by Pakistan Embassy; Undertaking by applicant attested by Pakistan Embassy; General Power of Attorney attested by Pakistan Embassy;

Computerized National Identity Card: (CNIC) 6 Copies of the CNIC of the applicant and guarantor both. Please bring original CNICs for attestation purposes

Guarantors documents:
If investment is applied on the basis of guarantors income then please submit Guarantor s questionnaire form and letter of guarantee, on prescribed formats ,duly filled in and signed by the guarantor.

Medical Examination
In case the financing amount exceeds Rs.3 Million, medical examination of the applicant/guarantor from SLICs approved doctor is required. The list of SLICs approved panel of doctors can be obtained from our offices. The fee and cost of tests to be paid to the doctor directly. The overseas Pakistanis can have medical examination from a government hospital of the country of residence and submit after having it attested from embassy of Pakistan. You will be informed once valuation /verification of your case is completed.

STEP 2 (REGISTRATION
i. ii.

AND

SANCTION)

Please obtain NEC from the office of the sub Registrar, Submit original receipt of application fee deposited and

where your lease deed is registered.

51

NEC iii. iv. Obtain Account number. and receipt of documents. Wait for the sanction, you will be informed telephonically

and through mail.

STEP -3 (DISBURSEMENT
I.

AND REGISTRATION OF ASSIGNMENT DEED)

PROCEDURE

FOR RELEASE OF

1 CHEQUE
ST

When you receive call/letter from the District Office that your investment has been approved, please immediately visit the office along with original title documents. Following formalities are to be completed before release of Ist cheque:1 2 3 4 Sign the repayment schedule & obtain copy whereof. Submit original title documents and obtain receipt. Deposit advance insurance premium @ Rs.0.50/- per thousand Submit application for the inspection of site (copy is available at

per month in HBL annexure of the Guidelines) if the construction is complete upto the required level as mentioned in Acceptance letter against 1sttrench. 5 6 Submit one copy each of the prescribed letter of continuity & Submit post-dated cheques (as per schedule of payment). (Please note if investment has been sanctioned on guarantors income post-dated cheques are to be issued by the guarantor of his own bank a/c). 7 the Obtain three blank copies of the deed of assignment and get adhesive stamps (equivalent to the rate mentioned in promissory note, duly typed on stamp paper of Rs.100/- each.

the schedule* below) affixed, on one of the copies, from the treasury office of the District. Please do not fill the deed yourself to avoid mistakes.

52

Once the above work is complete, make an appointment

with the concerned officer of HBFC Ltd. to accompany you to the office of the concerned Sub-Registrar where your agreement will be registered and cheque of Ist installment will be delivered in the presence of the Sub-Registrar. Please do not forget to bring your original I.D. Card and cash amount equivalent to the registration fee given in the following schedule Province Baluchistan NWFP Sindh Punjab Cost of adhesive stamp* Registration Fee** 2% of the sanctioned1% of the sanctioned amount 4% of the amount sanctioned0.5% of the sanctioned

amount amount 0.2% of the sanctioned1% + 5 rupees per page of amount the sanctioned amount 0.25% of the sanctioned0.25% of the sanctioned amount amount

PROCEDURE TO RELEASE 2ND CHEQUE

1 Submit application for site inspection if construction is complete up to the required level mentioned in the acceptance letter against 2nd trench. 2 3 Submit one copy each of the prescribed letter of continuity & Collect letter from HBFC Ltd. for getting the lien marked in the promissory note, duly typed on stamp paper of Rs.100/- each. office of the concerned authority, cooperative society or cantonment board and in case of free hold property for mutation in Revenue record in favour of HBFC Ltd. (This should be submitted in the district office at the earliest possible.). 4 Collect your cheque from the office Next day of the submission of the above documents

53

iii.

PROCEDURE TO RELASE 3RD CHEQUE

1 Submit application for site inspection if the stage of construction is complete as mentioned in the acceptance letter against 3rd trench. 2 Submit letter confirming marking of lien in Society/Authority/Cantonment Board record/Revenue record.(if not already submitted). 3 Submit one copy each of the prescribed letter of continuity & promissory note, duly typed on stamp paper of Rs.100/- each. 4 Collect your cheque from the office Next day of the submission of the above documents

iv. 1 2

PROCEDURE TO RELEASE 4TH & FINAL CHEQUE

Submit application for site inspection if the stage of construction is Submit one copy each of the prescribed letter of continuity &

complete as mentioned in the acceptance letter against last trench. promissory note, duly typed on stamp paper of Rs.100/- each. 3 Collect your cheque from the office Next day of the submission of the above documents

(For Purchase cases only) Pre- registration step:

1 After finalizing the purchase of the selected property enter into a Sale Agreement with the seller with the condition that you will obtain investment/financing facility from the HBFC Ltd. ( Draft of the sale agreement is available in Guidelines at annexure 2 ( ) Request the owner of the property to provide you a complete

set of the photo copies of all the original documents of the house to be purchased.

54

Along with the Seller visit our District Office for attestation of

the original documents. The District Manager after attestation of the original documents will return the same to the owner of the house and based upon the photo copies of the title documents, process the case under the rules.

MAIN DOCUMENTS REQUIRE FOR CONSTRUCTION OF HOUSE

1) Application form duly filled in 2 3 4 5. Fee payment receipt from the Bank. Photo copies of Computerized National Identity Card duly attested Approved Building Plan with approval letter. Three coloured passport size photographs of the

on both sides for CIB purpose

applicant/guarantor

The following documents will be required in addition to the documents mentioned above:
1) 2) Joint application of the seller and purchaser Sale agreement between seller and the purchaser on stamp

paper of existing prescribed value duly attested by Notary public or Oath Commissioner 3) Draft of sale deed (which should be got examined by the Manager (Law) of the zone or legal advisor/panel advocate as the case may be. 4) Soundness and valuation certificate from any approved valuer of Pakistan Banks Association. (Download list of approved valuers from HBFC Ltd. website). 5) In case of purchase of house the valuation must be done by two valuers. However, in case of purchase of a flat, the valuation will be done by single valuer only;

55

6) 7)

The applicant shall pay the valuation fee to the valuers through Sale Deed will be executed on the face value thereof according

pay order drawn in favour of the Company. to the valuation table provided by the Provincial Government under Section 27-A of the Stamp duty Act or on the amount sanctioned by HBFC Ltd. for the investment whichever is higher. 8) In case the intending partner is not interested to avail Investment for house/flat purchase at the debt equity ratio based on the market value his/her request will be considered at the debt equity ratio based on the total cost of house/flat as assessed by the HBFC Ltd. on Collector Index rates, subject to adequacy of repayment capacity. 9) Subject to adequacy of age, income and maximum limit of investment the admissibility of investment will not exceed 80% of the forced sale value determined by the valuer or District Manager (whichever is lower). 10) Under House purchase cases the original documents will be submitted by the purchaser at the time of execution of Sale Deed and Assignment Deed simultaneously. 11) 12) The approved investment under house purchase/flat will be The moratorium period in house purchase case will be 24 disbursed in one installment; months during which the purchaser will pay only Corporations share in monthly rent. (It is at the option of the partner). 13) In House Purchase Case, payment of rent will commence from the very next month of the release of first and final installment.

House Purchase (restriction):

1 House Purchase facility will be available only in Urban areas of District and Tehsils.

56

For the purpose of house purchase no transaction will be

allowed between blood relations such as father, son, brother, sister, wife and husband etc. 3 Houses facing coastal areas where age of the house exceeds 20 years shall not be eligible for investment.

Procedure for valuation of the house as per market value:List of the approved valuer is available in our offices as well as on web site or in guidelines a) b) c) Submit a pre-drafted application ( see in guidelines at annexure Attach photo copies of the Sale Deed/Lease Deed/Allotment The fee payable to the valuer would range between Rs1500/You will select the name of the valuer from the list of approved valuers. Letter and Building Plan. to Rs.2500/-. It is payable through Pay Order to be drawn in favour of the Valuer and is required to be handed over to the District Manager who will deliver the same to the Valuer on receipt of Valuation Report from him.

Proof of income of the applicant or guarantor, as the case may be:1 2 3 4 For salaried persons. (Salary (income tax (affidavit on certificate) For businessmen /professionals (Tax payers) For businessmen/professionals (non tax payers) For Agriculture Income assessment order for the last two years) prescribed stamp paper duly attested by the notary public)

57

(Proof of landholding, income certificate from the Revenue Officer) 5 For overseas Pakistanis. 6 Income proof certificate duly attested by Pakistan Embassy; 7 Copy of all pages of Passport attested by Pakistan Embassy; 8 Copy of CNIC attested by Pakistan Embassy; 9 Undertaking by applicant attested by Pakistan Embassy; 10 General Power of Attorney attested by Pakistan Embassy;

Computerized National Identity Card: (CNIC)

Copies of the CNIC of the applicant and guarantor both. Please bring original CNICs for attestation purposes

Guarantors documents:
If investment is applied on the basis of guarantors income, please submit Guarantors questionnaire form and letter of guarantee, on prescribed formats, duly filled in and signed by the guarantor.

Medical Examination for investment exceeding Rs. 3 Million:

In case the financing required exceeds Rs. 3 Million, medical examination of the applicant/guarantor from approved doctor is required. The list of SLICs approved panel of doctors can be obtained from our offices. The fee and cost of tests to be paid to the doctor directly. The overseas Pakistanis can have medical examination from a government hospital of the country of residence and submit after having it attested from embassy of Pakistan.

58

STEP 2 (REGISTRATION
deed is registered.

AND

SANCTION)

1 Obtain NEC from the office of the sub Registrar, where your lease 2 Obtain Account No. and receipt of documents. 3 Wait for the sanction, you will be informed telephonically and through mail.

PROCEDURE CASE:

FOR

RELEASE

OF

APPROVED

INVESTMENT IN PURCHASE

As soon as you receive the call/letter that your investment has been approved by HBFC Ltd., visit the HBFC Ltd. District office and complete the following formalities for the release of cheque:1. The District Manager will hand over the copy sanction letter & repayment schedule and will obtain your signature for receipt of the above papers. 2. 3. Deposit 24 months advance insurance premium @ Rs.0.50/- per Submit application (on pre-drafted specimen is available in for the inspection of site to the District thousand per month in HBL. guidelines at annexure report/completion report. 4. 5. Submit letter of continuity & promissory note on Stamp paper of Submit 25 post-dated cheques (as per Schedule of payment) and Rs.100/-& 200/- (as the case may be). the Debit Authority. (Please note if investment has been sanctioned on guarantors income post-dated cheques are to be submitted by the guarantor of his/her own bank a/c) (only HBL account). 6. Obtain from the District Manager three blank copies of the Deed of Assignment and get the adhesive stamps from the treasury office of

Office for inspection of the site and drawl of site inspection

59

the District. Do not fill the Deed yourself to avoid mistakes. It is advisable to first get the draft of sale deed duly approved by the Manager (Law) of the zone or the Panel Advocate, and get the same typed on the stamp paper of prescribed value. 7. After completion of the above, submit the above documents in the concerned District Office. District Manager will depute a HBFC Ltd. Authorized Officer to accompany you to the office of the concerned Sub-Registrar where Deed of Assignment and Partnership as well as Sale Deed will be registered simultaneously and cheque of approved investment will be handed over to you in the presence of the SubRegistrar. 8. HBFC Ltd.s authorized officer will obtain the original documents of the property to be mortgaged. You must bring the original I.D. Card and cash amount equivalent to the registration fee as per schedule How to purchase land and property This is of key importance to know how to purchase land and building. At the HBFC we were supposed to guide customers about purchasing of land or any kind of property. Now I will describe what I learnt from HBFC about purchasing land and property. First I will describe you the parameters on which we should focus while purchasing the land.

Guideline how to purchase the piece of land from the open market
1. 2. Select the locality/areas as well as the price range for purchase After selection of the area, first survey the area and assess that of the land/plot; the necessary infrastructure i.e. water, sewerage, Electric, Gas and transport are easily available;

60

3. 4. 5.

The area you are interested to purchase the plot should be After selection of the plot enter into a sale agreement with the If you are purchasing the plot, you should pay 10% of the total and obtain receipt of token money on prescribed

leased hold; seller on a stamp paper of Rs. 100/- duly attested by Notary; value of the plot as token money to the seller at the time of the agreement 6. revenue receipt value; Obtain the photo copies of all the documents and contact the concerned departments/offices for verification of the genuineness of the documents. 7. Ensure to publish notice in News papers that you have entered agreement with the seller and if any person(s) have into an days: 8. After the expiry of the period given in the public notice, approach the concerned Department i.e. KDA/DHA/KMC/MDA/LDA/CDA etc. or Private Cooperative Housing Societies for the transfer of plot in your name with the following documents:a. b. c. d. e. f. g. h. i. j. Original copy of agreement to sell on non Judicial Stamp paper; Attested photo copy of NICs of Transferor/Transferee/Attorney; Press notification Indemnity Bond on Rs. 50/- non judicial stamp paper for the Paid copy of oldest challan of property tax PT-I and PT-10 Attested photo copies of all paid challans; Attested photo copy of allotment order; Attested photo copy of Possession order; Attested photo copy of acknowledgement of Possession; Attested photo copy of Site plan; 61

any objection he may inform to the concerned department within 15

transferee/Seller and Transferee/Purchaser;

k. l. 9.

Attested photo copy of transfer orders; Attested color photograph of seller and purchaser: The concerned department after examination of the above

documents will issue a challan for transfer of plot in your name. 10. You should pay the challan issued by the concerned department in the authorized Branch within due date; 11. After payment of the challan in the authorized Branch of Bank, you should submit the duly paid challan in the concerned department with the application for the issuance of transfer letter in your favour 12. The authorized Officer of the department under the existing rules will fix the date for recording of the statement of seller and you before him; 13. After recording of the statement of seller and you, the authorized officer will process the case for transfer of plot in your name. 14. The concerned department will issue the transfer letter within the prescribed period in your favour

Guideline for how to purchase a house/flat

1. 2. Select the locality/areas as well as the price range for purchase After selection of the area first survey the area and assess that

of the house/flat the necessary infrastructure i.e. water, sewerage, Electric, Gas and transport are easily available; 3. 4. The area where you are interested to purchase the house/flat should be leased hold; Trace out the house/flat through Estate Agency or through personnel level;

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5.

After selection of the house/flat enter into a sale agreement

with the seller on stamp paper of Rs. 100/- duly attested by Notary with two witnesses; 6. For purchase of house/flat you may pay 10% of the total value of the house/flat as token money to the seller at the time of the agreement and should obtain receipt of token money on prescribed revenue receipt value and photo copy of the following documents for verification of the genuineness of the documents from the concerned department:a. b. c. d. e. f. g. h. 7. Allotment letter Possession order Site and sub-divided site plan All paid utility bills and challans Approval and completion of the building plan Completion certificate Transfer/Mutation Order (In case where sale deed is executed Power of Attorney, duly executed in the office of the SubAlso ensure to publish notice in News papers that you have

subsequent to Lease Deed) Registrar concerned. entered into an agreement with the seller of the property and if any person(s) have any objection he/they may inform the concerned department within period mentioned in the notice. 8. During the intervening notice period get prepared the draft of Sale Deed to be executed between you and seller, through an Advocate. 9. After expiry of period mentioned in the public notice, get prepared through an Advocate the original Sale Deed and purchase the adhesive revenue stamps from the Treasury Department on the

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prescribed rate of the Provincial Government for affixing on the Sale Deed before execution of the same. 10. Ensure that the photos of the seller and yourself is pasted on the first page of Sale Deed 11. The Advocate should also prepare the 2nd copy Sale Deed on stamp paper of Rs.100/- for mutation after execution of the Sale Deed. 12. Get prepare the Pay order in favour of the seller of the balance amount (Price of the house/flat agreed minus the token amount paid) so that the same may be handed over to the seller at the time of execution of the Sale Deed. 13. The procedure requires that the Seller along with you shall appear on the fixed date before the Sub Registrar for execution of the Sale Deed. Do not forget to bring the Original Identity Card and some money for payment of registration fee and advocate fee. 14. After execution of the Sale Deed, ensure to collect all the original documents of the property from the seller and vacant possession of the house/flat with keys of the locks before the Registrar and then hand over the pay order to the seller. 15. The Registrar Office will also issue a receipt for obtaining the registered original Sale Deed on due date The original receipt of the Registrar office may be kept in safe custody and on due date ensure to collect the same from the Registrar Office. 15. On receipt of the original Sale Deed from the Sub Registrar Office you should apply the concerned department for Mutation So, in short with in first two weeks I basically learnt a lot about the documentation and loaning procedure of HBFC along with some general knowledge regarding the property and its transactions. Besides, I also gained a valuable experience in respect of customer relations and customer satisfaction. 64

My third and fourth week at HBFC:

My third and fourth week were spent in studying files and it was a very good practice as I practically found out what they ( HBFC ) do while establishing a relationship with the customer and what happens with that file when the relationship has been established. While doing the case studies, I found the practical application of various documents. My most significant finding in this context was the sequence in which all the documents were piled up and their reason of being there. Since contents of every file differ a little bit due to the specific circumstances of every case or customer, the overall contents generally remain the same. Now let me share with you some of the general contents of each file

1. Journey file.
It is a printed paper in which the journey of the file is explained i.e. when the customer came when the case was registered who was the dealing officer when were the documents of property received when was the case sent to higher authorities for review when the relevant higher authority gave the approval and when the amount was disbursed to the client

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This paper is always placed in the start of the file. So that when ever any one sees the file he may update his basic information about the case, client and progress made by the HBFC in the specific time period. 2. Credit proposal. It is just like a feasibility report in which we account for his request of credit by comparing his request with his repayment capacity. It is also a printed format in which his demand of credit is written his income is listed and based on his income his repayment capacity is calculated and considering his repayment capacity loan sanctioned is mentioned on the credit proposal. 3. Partner collection detail report. It is a report in which the detail of all collection from the client is written. Whenever he will pay his monthly installment, it would be entered into the report 4. Schedule of payment. When the agreement between HBFC and client is finalized, HBFC gives the customer sechedule of payment in which all payments to be made by the client are recorded periodically. This sechedule is given to the customer for his guidance and to let him know the pattern and sequence of payment in advance

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5. Receipt of original documents. It is a list of all documents received from the customer. It is signed by both the customer and the authority. It is meant for keeping record and acknowledgement of receipt of clients documents. 6. Audited partner collection detail report. While going through HBFC,s client file one will come across this document number of times. Any time to time changes or its reviewing and rechecking will lead to the generation of new partner collection detail report. 7. HBFC,s inspection report. When customer comes to HBFC for the purpose of getting loan for construction and renovation of their houses, HBFC has to ensure that the loan is solely used for the purpose of construction or renovation of house. To ensure this HBFC regularly inspects the site of construction or renovation and after each inspection, HBFC places the report of inspection in the file of the customer 8. Copy of property documents. The photo state copy of every document is placed in the file. It is the compulsory ingredient of every file 9. Mutation in favor of HBFC. You can not get a loan from HBFC until you put a mutation in favor of HBFC. It is a security i.e. you have to transfer your property in the name of HBFC.

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10. Mortgage deed. Since in HBFC, relationship between the customer and HBFC is based on mortgage, so all the terms and conditions of the mortgage are written and signed by both the parties commonly known as mortgage deed. 11. Borrowers basic fact sheet. In this paper all the basic facts about the customer and his property are written for the information of authority. 12. Investment disbursement vouchers. After the clearance of all the stages, finally HBFC issues the cheque to the customer and copy of each cheque is put in the file. 13. Acknowledgement of disbursed cheques. Each cheque,s acknowledgement is pasted in the file for record so that customer can not deny the fact. 14. List of agreements between client and HBFC. In this part of file all the agreements between the customer and HBFC are placed. These agreements include Promissory note Letter of continuity Islamic house financing agreement Undertaking to purchase musharka units Letter of guarantee to HBFC Undertaking by the guarantor

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and Proposal of investment 15. Monthly payment agreement. It is also an agreement between HBFC and client in which client agrees with the monthly payment schedule of HBFC 16. Site plan or naqsha. An approved site plan or naqsha of building is put in the file as it is mendatory. 17. Pre audit check list. It is a check list which tells us the name of documents that must be audited or checked whether they have been placed in the file or not? If present a tick should be marked on the name of specific document or if not then state the reason. 18. Client personal detail. Is also mentioned in the file as an introduction of the client. In this page, usually following information about the client is mentioned Name of the client Age of the client His annual income His address His reason of HBFC,s client Purpose of his loan taken Name of his/her guarantor Amount of loan

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Duration of loan No. of dependants Age of guarantor Income of guarantor Relationship with the guarantor And Area and worth of house mutated in favor of HBFC 19. Employment/business detail. In this Performa the detail of clients current and previous employment or full detail of his business is listed. It is placed in the file due to the fact that the loan is given to the customer on the basis of his income 20. Property information. In this document all the information regarding the property of the client is given for the purpose of information and record 21. Estimations by the HBFC. In this part evaluation of the income of the client and the evaluation of the property by the hbfc itself through independent evaluators is written. 22. Audit proposal. In this part the auditors of the HBFC proposes the amount of loan sanctioned based on their study of all documents and circumstances of the customer. 23. PDC.

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Stands for post dated cheques. In this document the list of all the post dated cheques given by the client to the HBFC is included 24. Collection report. This paper shows all the cheques of the client cleared by the bank in the account of HBFC on behalf of the customer. 25. Indemnity bond In this bond customer undertakes that all the information provided by him is correct and if HBFC suffers a loss due to the inaccurate information provided by the client then the client will be held responsible for such loss. 26. Declaration of no default. In this declaration customer declares that he has never been declared as a defaulter by any means 27. Undertaking Finally an undertaking is given by the customer that all the information and documentation provided by him is true and fair in every sense to the best of his knowledge. So, in short in third and fourth week I learnt about the documentation and the construction of the file. It was a good learning experience for me.

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My 5th and 6th week in HBFC.

My 5th and 6th week were spent in the audit department where I was engaged in the various activities under the supervision of Mr. Sajjad saeed ( manager audit ). In these two weeks there was not a significant challenge posed to me. I was engaged in routine work and there was not a wide scope of learning in these circumstances. The nature of my work in this department was of checking and reviewing whether all the formalities have been fulfilled or not. So let me brief you about my activities at the audit department. 1. File reviewing The first step, I was taught was the file reviewing. It includes checking of

Pre audit list

It is a check list which tells us the name of documents that must be audited or checked whether they have been placed in the file or not? If present a tick should be marked on the name of specific document or if not then state the reason.

Property documents.
I had to ensure that all the property documents had been received and signed and acknowledged by the relevant authorities.

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Customer collection report.

I was also responsible to ensure that the latest and accurate customer collection report duly signed by the manager accounts was there for the audit.

2. Reconciliation
Besides file reviewing, the major task in the audit department was to reconcile the bank collection report with the customer collection report. steps. To get the latest ledger account and the customer collection report from the accounts department. To check the customers cheques given to HBFC for the purpose of repayment and mtching it with the deposit slips presented to the HBFC by the client. Next step was to verify the collection by reconciling the HBFC record, Customers presented deposit slips And banks statement. This reconciliation involves the following

3. Verification
Another task I performed frequently in the audit department was the verification of the cheque numbers and amount

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sent to the bank by the HBFC for clearing with the bank collection report (which shows the list of cheques cleared and the amount transferred to the HBFC,s bank account)

4. Observations.
Means objections. When the higher authorities ( zonal auditor ) sees any discrepancy, he puts an objection over it. So it was our duty to remove that objections or observations and report back to zonal or head office.

My 7th week at HBFC.

My 7th week was spent in recovery department it was the most entertaining week in my internship. Here I was under the supervision of Mr. Shaukat ali (manager recovery). He was very nice and kind to me. Here I learnt how to recover your money and what are the tools and tactics recovery department use to recover their amount. Since it is required by the HBFC that every cheque should be cleared by the 10th of that month. In case it is not cleared by the 15th of that month, recovery procedure starts. Here is the brief description of my all work activities in the recovery department. To make a list of current month not cleared cheques. To make a list of non-cleared cheques of all previous month. Now make a single list of all cheques along with the addresses and contact numbers of that individuals. Now start reminding people by calling them on their contact numbers

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This was the summary of my work activities at the recovery department.

My final week at HBFC.

My last week in HBFC was just like a mixture. I was eager to learn more and more and due to this burning desire, I just performed couple of activities in the last week. My first two days were spent in the Post Dated cheque department also known as the PDC. In PDC, I learnt about How to arrange the chequebooks And how to make a list of current month due cheques and previous month due cheques. Since, HBFC receives cheque book in advance so we have to take care that if the cheque book is going to finish we have to intimate the customer about this fact. So that he can lodge a new cheque book in time. Muhammad Rashid (a former hockey player) was the incharge of PDC department and he was very kind to me. I will remember him in my good words always. My next two days of last week were spent in typing. Since an audit team from head office was there to audit all the files and operations and our manager was liable to answer all their queries and

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observations so he just dictated me and I was there to write it on the electronic official pad of HBFC. Finally it was my last day in the HBFC and I just met my seniors and thanked them for their guidance and support through out my internship, in response they wished me very good luck in my future and blessed me with their prayers.

FINANCIAL ANALYSIS OF HBFC

This section comprises of vertical and horizontal analysis of balance sheet and horizontal analysis of profit and loss along with their interpretation. Since, it is not a public organization so I faced many problems in finding its financials. Now let me show you my work on the financials of house building Finance Corporation.

Vertical analysis of Balance sheet.

Assets with respect to total assets 2009 Cash and balance with treasury Banks Balance with other banks Lending to financial institutions Investments Advances Operating fix assets .91% 8.18% 19.26 % 65.01% 1.21% 3.58% 1.03% 13.53% 71.19% 1.33 % 1.46% .901% 19.1% 61.32% 1.32% .27% 2008 .277% 2007 .197%

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Defer tax assets Other assets 5.15% 100% 9.05 % 100% 13.44% 100%

INTERPERTATION:
Overall, The weightage of assets with respect to total assets remained the same. Advances form the major part of total assets, as we know it is a financial institution and its survival very much depends on the disbursement of amount. Major change in 2009 comes in the form of lending to financial institutions, which increased in 2008 from 0.90% to 1.03% of total assets and in 2009, it jumped to 8.18% of total assets, which is a significant increase. It shows that in 2009, HBFC vested more amount in form of lending to financial institutions i.e. it has utilized its idle money. From the balance sheet, we can see that HBFC,s balance has been decreased significantly with other banks as it dropped from 3.58% of total assets in 2008 to 0.91% in 2009 that shows HBFC has withdrawn its money and invested them . Another worth noting change was gradual decrease in other assets which were 13.44% of total assets in 2007 and they decreased to 9.05% of total assets in 2008 and finally to 5.15% in 2009. This shows that the organization is trying to fully utilize their resources and converting any idle or non-wanted asset into functional part may 77

be by converting them to cash and then investing that money in the form of disbursement or lending to financial institution.

LIABILITIES WITH RESPECT OF TOTAL LIABILITIES

2009 Share capital Borrowings Reserves Accumulated loss Other liabilities 16.28% 69.13% 2.63 % -5.78 % 17.73 % 100% 2008 15.71% 70.84% 2.67% -5.69% 15.71% 100% 2007 15.51% 67.58% 2.88% -3.86% 17.79% 100%

INTERPERTATION:
House Building Finance Corporation was very much consistent with the percentage weightage of the liabilities in all the respective years. There was no significant change in any of the liability. However, we can notice the nominal changes among the borrowings and the accumulated loss. Borrowings form the major part of the liabilities and they increased in 2008 as they became

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the 70.84% of total liabilities, however borrowing showed a slight decrement in 2009 by becoming the 69% of liabilities. Apart from borrowings, accumulated loss also suffered some minor changes in these years. It was 3.86% of total liabilities in 2007 increasing up to 5.69% of liabilities in 2008 and then finally to 5.78% in 2009 subsequent increment in the accumulated loss in the subsequent years is worth worrying for the HBFC. Instead of accumulating this loss should be set off

HORIZONTAL ANALYSIS OF BALANCE SHEET.

HORIZONTAL ANALYSIS OF ASSETS. 2009-2008 2008 Cash and balance with treasury Banks Balance with other banks Lending to financial institutions Investments Advances Operating fix assets Defer tax assets Other assets -42.44% -27.28% -74.24% 703.42% 44.13% -7.54% -7.75% 165.82% 23.52% -23.54% 25.31% 8.37% 0.19% 2008-2007 2007 51.60%

INTERPRETATION:

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Horizontal analysis faced drastic changes when compared the assets of HBFC with that of previous years. Cash and balance with treasury bank remained almost same in 2008 and 2009 however, it increased 51.6% in 2008 as compared with that of in 2007. These abrupt changes with in three years show new managements radical changes in their policymaking. Same is the case with the balance with other banks which increased 165.82% in 2008 and then decreased up to 74.24% in 2009. it shows that company has withdrawn their idle money from the bank and utilized them in the form investment and lending which increased 703.42% in 2009. Investment also increased 44.13% in 2009 However, advances and other assets faced the declining trend in 2009 depicting the organizations focus on the lending.

HORIZONTAL ANALYSIS OF LIABILITIES

2009-2008 2008 Borrowing Share capital Reserves Accumulated loss Other liabilities -1.19% --------2.73% -1.19% 2008-2007 2007 13.15% --------59.16% 13.15%

INTERPRETATION
The trend of abrupt and irregular changes was also obvious in the horizontal analysis of liabilities. Share capital and

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reserves remained the same in 2007, 2008 and 2009.Whereas, borrowings decreased in 2009 that were increased in 2008 by 13.15%. Decrease in other assets and decrease in borrowing can be related in a way that organization is trying to fulfill its monetary need from its own resources. Accumulated loss increased in 2009 by 2.73% putting a doubt on the organizations ability to recover its loss, which is growing regularly. Remaining items were not listed here because just like share capital and reserves there were no changes in them in these years.

HORIZONTAL ANALYSIS OF PROFIT AND LOSS.

2009-2008 2008 Markup interest earned Markup interest expensed Net interest income Reversals made against non Performing loans Reconciliation adjustments Reversal of rental income Net mark up interest income after Provision Dividend income Other income Total non-mark up interest income Admin expenses Other provision -----87.57% -86.58% -5.52% -98.57 81 -94.33% -13.19% -14.18% 8.00% -66.90% -18.03% 21.04% 76.79% 38.26% 188.72% 15.83% 6.38% 42.43% -46.45% 2008-2007 2007 9.73% 381.33% 4.06% 127.02%

Other charges Total non-mark up interest expense Profit and loss before tax Total tax loss after tax Earning per share

61.57% 5.78% 56.22% -92.07% -92.64% -92.97%

-8.75% -5.00% 101.17% -14.25% -32.61% -32.98%

INTERPRETATION:
Just like the balance sheet, profit and loss is no longer exception. Mark up interest earned in 2009 increased by 15.83% which shows HBFC,s positive impact of increased lending to financial institutions. This also led to the 42.43% increase in net interest income in 2009. Mark up interest expense which increased 381.33%in 2008 was too much too bear. It made the management to decrease their borrowing, which we can see from the balance sheet as they decreased in 2009 by 1.19%. This also made an impact on the profit and loss account and net mark up income after provision increased 21.04% in 2009. However, total non-mark up income decreased in 2009 mainly due to decrease in other income (-87.57) of the organization. Similarly, total non-mark up interest expense increased 5.78% in 2009 despite of despite of decrease in admin expenses (-5.52%) in 2009. this increase in total non-mark up expense can be best explained by the drastic increase (61.57%) in other charges of the organization 82

Loss after tax decreased significantly in 2009 (-92.97%) mainly because of payment of all defer tax which resulted in the reduction of tax by 92.07% in 2009. Earning per share also dropped to -.09 from -1.28 of 2008.

Suggestions for Improvements

Proper working environment should be provided Strictly fixed timings for launch, prayer and tea breaks There should be job rotation among the employees to remove
the bore side of work

There should be dead line for each job assigned to every

employee

Payment procedure should be fast in order to get maximum

consumer satisfaction

Get together and informal meeting should be there in the

department where all the employees could share their views with not only one another but also the GM

Friendly competition should be created between the employes some motivational activities should be adopted like nominating
the employee of the week

Separate procedure

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Steps should be taken for improving coordination and removing barriers of productive communication among the employees

employees should be offered some promotions in designations

on the basis of extra qualification and experience for motivation purpose

environment should be made sophisticated instead of disgusting

behaviors among the employees

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