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CONTENTS
Introduction of Habib Bank...........................................................................3History:.........................................................................................................3
FIRST MUSLIM BANK OF THE SUB-CONTINENT..........................................3Company Management.................................................................................4Management Hierarchy................................................................................6ORGANOGRAMME.........................................................................................6
DEPARTMENTS OF HABIB BANK.......................................................................7DEPOSIT DEPARTMENT.................................................................................7
i. Current deposit..........................................................................................7ii. Saving bank deposit..................................................................................7iii. Profit and loss saving account.................................................................7iv. Fixed deposit...........................................................................................7v. Call deposit................................................................................................7vi. Short notice term deposit.......................................................................7vii. Foreign currency deposit........................................................................7viii. Cumulative deposit certificate (other).................................................7
GROUNDS FOR CLOSING THE CUSTOMER’S ACCOUNT.............................8i. Notice by a Customer................................................................................8ii. Death of a Customer.................................................................................8iii. Customer’s Insolvency............................................................................8iv. Customer’s Insanity................................................................................8v. By order of court.......................................................................................8vi. Unsatisfactory operation.........................................................................8
CLEARING DEPARTMENT...............................................................................8i. Paying Bank...............................................................................................8ii. Collecting Bank..........................................................................................8
ADVANCES DEPARTMENT.............................................................................91. Guarantees............................................................................................92. Mortgage...............................................................................................94. Pledge....................................................................................................9
FOREIGN EXCHANGE DEPARTMENT............................................................10BILLS DEPARTMENT....................................................................................10
a. Inward Bills for Collection (IBC)...............................................................10b. Outwards Bill for Collection (OBC)...........................................................10
INWARD BILLS FOR COLLECTION (IBC)....................................................10OUTWARDS BILL FOR COLLECTION (OBC)...............................................10
ACCOUNTS DEPARTMENT...........................................................................11a. Journal System........................................................................................11
Project report on Habib Bank Ltd
b. Vouchers System.....................................................................................11INCOME INCLUDES..................................................................................11
1. Brokerage (A bank sells and buys share, stocks, debentures, other securities and receives payment for these services).....................................112. Discount..................................................................................................113. Service Charges......................................................................................114. Rent (On building)...................................................................................115. Commission (from utility services)..........................................................11
EXPENDITURES INCLUDES.......................................................................111. Salaries, allowances and provident fund.................................................112. Rent, taxes, insurance, lighting etc.........................................................113. Profit paid on deposits and borrowings...................................................114. Postage, telegram and stamps................................................................115. Stationary, printing and advertisement charges etc...............................116. Auditor’s fee and legal charges...............................................................12
REMITTANCE DEPARTMENT........................................................................12i. Mail Transfer (MT)....................................................................................12ii. Telegraphic transfer (TT).........................................................................12iii. Demand Drafts (DD).............................................................................12WORK DONE AT THE BRANCH........................................................................12Financial Analysis..........................................................................................14
RATIO ANALYSIS.............................................................................................19Recommendations.........................................................................................26
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Project report on Habib Bank Ltd
Introduction of Habib Bank
History :
On 25th of August 1941, Habib Bank inaugurated its operations with the bank’s first branch in Bombay. In 1947 Karachi saw its first commercial bank of the newly formed Islamic Republic of Pakistan, when the bank shifted its head office there. Throughout the decades, HBL has held the mantle of a dynamic leader, by adding value to the lives of its customers.
It was HBL that introduced products such as Credit Cards, ATMs, Travellers Cheques, etc., to the Pakistani market. We at Habib Bank cater to the needs of millions with our quality products & services. Today, Habib Bank is truly the bank of the people, providing its customers convenience and satisfaction all over the world. Habib Bank Plaza, the tallest building in Pakistan, is the proud symbol of HBL’s leadership in Pakistan’s corporate arena.
Today, HBL has more than 1,700 branches all over Pakistan and presence in 26 countries across five continents. With a revamped customer oriented philosophy, we are pursuing new avenues of leadership through innovation, as we gear up to face the challenges of the new millennium.
FIRST MUSLIM BANK OF THE SUB-CONTINENT
Habib Bank Limited was established by Mr. Ismail Habib (Late) on August 25, 1942 at Bombay. It was the first Muslim Bank of the sub-continent. It was established with a paid up capital of Rs. 2.5 million. At an early stage, the number of its branches was only 12.
In 1973, all the commercial banks were nationalized under the Bank Nationalization Act 1974. Now Habib Bank Limited is the largest commercial bank of Pakistan comprising 9 Regional Head Quarters, 42 Zones, 1198 branches in the country on 31st December 1999. Overseas operations of Habib Bank Limited are comprising 65 branches, 2 affiliates, 2 representative offices and 2 subsidiaries. These branches are in U.S.A, U.K., Belgium, France, Netherlands, Turkey, Kuwait, Lebanon, Iran, Bangla Desh, Bahrain,
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Project report on Habib Bank Ltd
Egypt, U.A.E., Hong Kong, Oman, Y.A.R, Sudan, Nigeria, Malaysia, Sri Lanka, Singapore, Kenya, Seychelles, Maldives, Indonesia, Mauritius and Australia.
Company Management
Corporate Information:
Registered Office:-
Habib Bank LimitedHabib Bank PlazaI.I. Chundrigar RoadKarachi – 75650Pakistan.
Head Office:-
Habib Bank LimitedHabib Bank PlazaI.I. Chundrigar RoadKarachi – 75650Pakistan.Phones: 2418000Fax: 21-2411647Telex: 20086-20751 HBANK-PK
Board of Directors
Sultan Ali AllanaChairman
Iain Donald CheyneDirector
Mushtaq MalikDirector
Yasin MalikDirector
R. Zakir MahmoodPresident & CEO
Sajid ZahidDirector
Ahmed JawadDirector
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Project report on Habib Bank Ltd
Auditors:Taseer Hadi Khalid & Co.(a member firm of KPMG International)Sh. Sultan Trust Bldg. No. 2Beaumont RoadKarachi – 75530Pakistan.
A.F. Ferguson & Co.(a member firm of PriceWaterhouseCoopers)State Life Building 1 – CI.I. Chundrigar RoadKarachiPakistan.
Audit Syed Mazhar Abbas ChairmanCommittee Ali Raza D. Habib Member
Anwar Haji Karim MemberShameem Ahmed MemberMurtaza H. Habib Member
CompanySecretary A. Saeed Siddiqui
Statutory KPMG Taseer Hadi & Co.Auditors Chartered Accountants
Legal Liaquat Merchant AssociatesAdvisor Advocates and Corporate Legal Consultants
Registered 126-C, Old Bahawalpur Road,Office Multan
Principal 2nd Floor, Mackinnons Building,Office I.I. Chundrigar Road,
Karachi
Share M/s. Gangjees Registrar Services (Pvt) Ltd.
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Project report on Habib Bank Ltd
Registrar 516, Clifton Centre, Khayaban-e-Roomi,Block - 5, Clifton, Karachi-75600.
Management Hierarchy
PRESIDENT
BOARD OF DIRECTOR
MEMBER EXECUTIVE BOARD
REGIONAL CHIEF
ZONAL CHIEF
BRANCH MANAGERS
ORGANOGRAMMEPRESIDENT
SENIOR EXECUTIVE VICE PRESIDENT
CONSISTING CONSULTING BOARD OF DIRECTORS
EXECUTIVE VICE PRESIDENT
SENIOR VICE PRESIDENT
ASSISTANT VICE PRESIDENT
OFFICERS GRAD I, II, III
CLERKS
PEONS
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Project report on Habib Bank Ltd
DEPARTMENTS OF HABIB BANK
DEPOSIT DEPARTMENT
CLEARING DEPARTMENT
ADVANCES DEPARTMENT
FOREIGN EXCHANGE DEPARTMENT
DEPOSIT DEPARTMENT
The function of deposit department is to collect deposits from customers. Following type of deposits are offered by Habib Bank.
i. Current deposit
ii. Saving bank deposit
iii. Profit and loss saving account
iv. Fixed deposit
v. Call deposit
vi. Short notice term deposit
vii.Foreign currency deposit
viii. Cumulative deposit certificate (other)
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Project report on Habib Bank Ltd
GROUNDS FOR CLOSING THE CUSTOMER’S ACCOUNT
The banker may close the account of the customer due to following reasons:
i. Notice by a Customer
ii. Death of a Customer
iii. Customer’s Insolvency
iv. Customer’s Insanity
v. By order of court
vi. Unsatisfactory operation
CLEARING DEPARTMENT
Every bank acts in two way i.e.
i. Paying Bank
ii. Collecting Bank
Here in theory no legal obligation on a banker to collect cheques, drawn up to other banks for a customer. It is, however, an important function of crossed cheques. A large part of this work is carried out through the bankers clearing house wherever it is established.
A clearing house is the place where representatives, of all the banks get together for the purpose of off setting the inter bank indebtedness arising from the transfer of deposits by a customer of a particular bank to another bank.
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Project report on Habib Bank Ltd
ADVANCES DEPARTMENT
The function of advances department is to lend money in the form of clean advances, against pr9omissory notes, as well as secured advances against tangible and marketable securities. The bankers prefer such securities that do not run the risk of general depreciation due to market fluctuations.
Common Securities for the banker’s advances are as under:-
SECURITIES
1. Guarantees
When an application for advance cannot offer any tangible security, the banker may rely on personal guarantees to protect himself against loss on advances or overdraft to the applicant.
2. Mortgage
A mortgage is the transfer of an interest in specific immovable property for the purpose of security the payment of money advanced or to be advanced by way of loan, and existing or future debt, or the performance of an engagement which may rise to a pecuniary liability. The transfer is called a mortgagor, the transferee a mortgage.
4. Pledge
In a pledge the ownership remains with pledge, but the pledge has the exclusive possession of property until the advance is repaid in full. While in case of the default the pledge has the power of sale after giving due notice.
.
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Project report on Habib Bank Ltd
FOREIGN EXCHANGE DEPARTMENT
International trade is growing and with the development of international trade it has become more imperative.
For countries to devote more and more attention to the complicated mechanism of Foreign Exchange. It is more important in case of developing countries. It is need of time, that a country should conserve its foreign exchange resources.
I.
BILLS DEPARTMENT
Bills department performs the following functions.
a. Inward Bills for Collection (IBC)
b. Outwards Bill for Collection (OBC)
INWARD BILLS FOR COLLECTION (IBC)
These are bills or cheques etc. which are collected locally. They are received from outstation branches banks and parties.
DEMAND DRAFT:
If refers to the payments of money on demand of the holder of draft. Demand draft includes DD issues and DD payable.
OUTWARDS BILL FOR COLLECTION (OBC)
These are negotiable instruments, drawn on outstation branches, bills sent for collection on behalf of the customers i.e. cheques, drafts or treasury bills etc.
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Project report on Habib Bank Ltd
ACCOUNTS DEPARTMENT
Usually Accounts are maintained in two ways:
a. Journal System
b. Vouchers System
Journal system is adopted by some commercial industrial institutions. In journal system entries are reported in Journal Books and then posted to ledger.
Voucher system is used for every transaction. Voucher has to be prepared either in cash or in transfer or in clearing, the Sheet upon which these vouchers are summarized transactions-wise and consolidated into a figure is called supplementary.
INCOME INCLUDES
1. Brokerage (A bank sells and buys share, stocks, debentures, other securities and receives payment for these services).
2. Discount
3. Service Charges
4. Rent (On building)
5. Commission (from utility services)
EXPENDITURES INCLUDES
1. Salaries, allowances and provident fund
2. Rent, taxes, insurance, lighting etc.
3. Profit paid on deposits and borrowings
4. Postage, telegram and stamps
5. Stationary, printing and advertisement charges etc.
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Project report on Habib Bank Ltd
6. Auditor’s fee and legal charges.
REMITTANCE DEPARTMENT
Remittance department performs following functions:
i. Mail Transfer (MT)
ii. Telegraphic transfer (TT)
iii. Demand Drafts (DD)
WORK DONE AT THE BRANCH
As every body knows that "Knowledge without practice is sterile "In
order to give vent to this idea an Internship program of two months has been
arranged in different esteemed organizations during M. Com. In this regard
on 1th of July 2000, I was asked by my principal to go to Habib Bank to have
an internship of two months there. So as per standing order of my Zonal
Chief I was assigned to work under the supervision of AVP/Manager of Main
Branch, Daska. On my first day of Internship, Manager handed me over the
charge of Assistant to Accountant.
As three departments namely Accounts, Cash and Billing, and Clearing
were being managed by the Manager in this particular branch. I started my
practical training by tockening the cheques for withdrawals and entering
them into token book. This was the routine work that I had to daily and, at
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Project report on Habib Bank Ltd
the time of closing exact position of cash in hand, Receipts and Payments
was evaluated. The Manager and the Accountants duly signed this
evaluation.
Secondly I was advised by my Manager to be remained vigilant about
the fake cheques giving some instructions for the scrupulous examination of
cheques like signature verification from specimen card. Unfortunately the
branch where I got my Internship was not computerized, all the things were
to be done manually. Right after two weeks, the date of balancing came.
Here balancing means balancing of ledgers of Current Deposit and Saving
Deposits. The balancing of Current Deposit Ledgers was done on weekly
basis while Saving Deposits Ledgers were balanced on semi monthly basis.
Then I collected bills of LESCO, PTCL and SNGPL during period of my
internship. I also used to write scrolls, which are written to keep record of
bills collected by the branch and one copy of them is sent to the concerned
organization.
After one month I came under the supervision of the Cashier who got
me to know, how the books of cash are balanced at the closing of each day. I
too learnt to prepare General Ledger which is called as the mother of all
books used in the branch. It was really a tough and daunting task. I
consumed lot of my time in scrolling the Utility bills of WAPDA, TELEPHONE,
and SUIGAS, the collection from these bills were to be performed by me and
after the proper vouchering of these bills, a copy of collections was sent to
respective departments.
After Six Weeks My Manager tells me about the transfer book which
keeps the record of the transfer of funds between clients of bank.
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Project report on Habib Bank Ltd
Financial Analysis
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Project report on Habib Bank Ltd
Financial AnalysisHabib Bank Limited
Balance sheetAs on 31 December 2008
Assets 2008Rs.(000)
2001Rs.(000)
2000Rs.(000)
Cash and balances with treasury bank
27,449,292 27,669,276 12,869,044
Balances with other banks 26,870,767 25,087,525 24,474,658
Lending to financial institutions 10,001,123 22,843,841 766,674
Investments 142,877,930 57,592,325 72,525,352
Advances 167,523,299 167,225,401 173,822,905
Other Assets 18,137,931 21,256,518 30,246,684
Operating fixed assets 7,184,623 5,874,422 5,923,411
Deferred tax asset-net 2,967,570 6,001,297 -
Net Investment in finance lease - - 267,359
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Project report on Habib Bank Ltd
Capital work in progress - - 30,246,684
Total Assets 403,012,535 333,750,605 320,926,758
Habib Bank LimitedBalance sheet
As on 31 December 2008
Liabilities 2008Rs.(000)
2001Rs.(000)
2000Rs.(000)
Deposits and other accounts 328,182,054 283,444,680 265,751,324
Borrowings from financial Institutions
38,045,541 23,443,322 23,923,589
Bills payable 5,834,673 5,419,260 5,376,924
Other liabilities 11,243,342 8,629,175 13,340,485
Deferred tax liabilities - - -
Subordinated loans - - -
Minority Interest 208,665 203,520 -
Share Holder Equity
Share Capital 12,178,495 12,178,495 12,178,495
Other tier1 capital 8,000,000 8,000,000 8,000,000
Capital Reserves 1,027,348 985,942 6,468,385
Accumulated loss and other reserves
(8,931,643) (11,662,155) (17,876,069)
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Project report on Habib Bank Ltd
Surplus on revaluation of fixed assets
7,224,050 3,108,366 3,763,625
Total Liabilities and Owner equity
403,012,535 333,750,605
320,926,758
Habib Bank Limited Profit and Loss Account
For the year Ended Dec 31-2008
Description2008
Rs.(000)2001
Rs.(000)2000
Rs.(000)Mark-up\revenue\Interest earnedMark-up\Return\Interest expensed
Net mark-up interest IncomeProvision against non performing loans and advancesProvision against Diminution in value of investmentsBad Debts written off directly
Net mark-up\Interest Income after provision
Non mark up Interest Income
Fee, Commission and brokerage IncomeIncome\Gain on InvestmentsIncome from dealing in foreign currenciesOther IncomesJoint Venture
Total Non mark up and Interest Income
23,956,11411, 580,431
12,375,683
2,512,207
9,863,476
6,188,357
16,051,833
26,738,44615,434,544
11,303,902
2,636,707
8,667,195
5,483,999
14,151,194
24,271,79217, 385,761
6,886,031
1,364,722
5,521,309
7,699,684
13,220,993
17
2,656,361
(144,154)
-
2,096,8711,795,3851,144,3501,151,751
-
2,632,960
3,747
-
1,827,6851,099,9471,453,5221,102,845
-
1,222,172
142,550
-
1,855,324385,912
1,135,3432,813,8421,509,213
Project report on Habib Bank Ltd
Non markup\ Interest ExpensesAdministrative expensesOther provision\write off-NetOther Charges
Total Non mark up and Interest expenses
Staff Welfare Fund
Profit before taxation
Taxation – current – Deferred
Profit after taxationShare of Loss attributable to minority Interest
Profit attributable to share holder
Basic earning per share
11,748,6484,303,185(215,159)
4,088,026
2,054,0662,033,960
9,449
2,043,409
1.68
11,809,7202,341,474(117,244)
2,224,230
1,111,888 1,112,342
3,410
1,115,752
0.92
12,146,4681,074,525
-
1,074,525
465,000609,525
(121,905)
487,620
0.50
18
842,6311,211,435
11,724,44372,89612,381
1,111,82662
12,071,5316,013
68,924
465,000-
11,807,129(62,542)
4,061
Project report on Habib Bank Ltd
RATIO ANALYSIS
2000 2001 2008
current Ratio
1.2742 1.3218
1.0205
Liquid Ratio -
-
Loan to Deposits Ratio 51.0458
58.9975
65.408
1
Loans to Assets Ratio 41.5678
50.1049
54.162
8
Return on Assets
0.5046 0.3333
0.1899
Return on Shareholder's Fund 10.3210
8.6806
4.8667
Return on Equity Capital 16.7012
9.1337
5.0049
Earning per Share
1.6800 0.9200
0.5000
Rate of Return on loans 14.3002
15.9895
13.963
5
Net Profit Ratio
8.4904 4.1601
2.5112
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Project report on Habib Bank Ltd
Return on Equity Ratio
2008 2001 2000
Net Profit after tax X 100Owner EquityNet Profit after tax 2,033,960 1,112,342 609,525
Owner Equity 19,706,925 12,814,168 12,534,436
Return on equity 10.32 8.68 4.86
Return on Equity Ratio
The past three years data shows an
improvement in the return on equity
which is a positive sign. The Bank should
have to continue its policies. By
observing the audited account we find
that the this improvement is due to
increase in the Net profit which is good
sign.
Return on equity capital
-
2.0000
4.0000
6.0000
8.0000
10.0000
12.0000
2002 2001 2000
years
%ag
e
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Project report on Habib Bank Ltd
Return on Assets
2008 2001 2000
Net Profit after tax X 100Total AssetsNet Profit after tax 2,033,960 1,112,342 609,525
Total Assets 403,012,535 333,750,605 320.926.758
Return on Assets 0.50 0.33 0.19
Return on Assets
Return on assets ratio shows
an improving trend. This ratio shows that
the both the Net profit and Total Assets
has improved in the previous years.
Return on assets
-
0.1000
0.2000
0.30000.4000
0.5000
0.6000
2002 2001 2000
years
%ag
e
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Project report on Habib Bank Ltd
current Ratio 2008 2001 2000
Current AssetsCurrent LiabilitiesCurrent Assets 395,827,912 327,876,183 314,705,317
Current Liabilities 310,646,613
248,053,807
308,392,322
current Ratio 1.2742
1.3218
1.0205
Current Ratio
Current ratio has decreased in
comparison to 2001 but it is still above
than 1.1 . The data shows that this is due
to both increase in current assets and
current liabilities but the current liabilities
raises more rapidly than current Assets.
2008 2001 2000
current Ratio
-0.20000.40000.60000.80001.00001.20001.4000
2002 2001 2000
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Project report on Habib Bank Ltd
Loan to Assets ratio
LoansAssets
Advances 167,523,2
99 167,225,40
1 173,822,90
5
Assets 403,012,535 333,750,605 320.926.758
Loan to Assets ratio 41.5678 50.1049 54.1628
Net Profit Ratio
2008 2001 2000
Net profit / Interest Income X 100
Net profit 19,706,9
25 12,814,16
8 12,534,43
6
Interest Income 23,956,1
14 26,738,44
6 24,271,79
2
Net profit ratio 8.4904
4.1601
2.5112
Loan to Asset Ratio
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Project report on Habib Bank Ltd
Loan to Asset Ratio is
continuously decreasing in the previous
years. The figures reveals that this trend
was due to decrease in Advances of the
bank but on the other hand the Asset of
the Bank increases rapidly.
Net Profit Ratio
Net profit Ratio is giving upward
trend. This trend is observed due to
increase in Net profit but on the other
hand the expenses decreases which
shows a efficient management.
Loan to Deposit Ratio
Loans to Assets Ratio
-
10.0000
20.0000
30.0000
40.0000
50.0000
60.0000
2002 2001 2000
Net Prof it Ratio
-
2.0000
4.0000
6.0000
8.0000
10.0000
2002 2001 2000
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Project report on Habib Bank Ltd
Loans to deposit ratio show a
decreasing trend in the previous years.
This trend is observed as The advances
of the bank decreases but on the other
hand total Deposits of the bank increases
which result in decrease in this ratio.
Rate of Return on loans
2008 2001 2000
Net profit / Loans
Net profit 19,706,925
12,814,168
12,534,436
Loans 167,523,299
167,225,401
173,822,905
Rate of Return on loans 14.3002
15.9895
13.9635
Recommendations
As we seen from the previous analysis of the financial statements we have realized that that Habib Bank is performing very well since its inception. It is quite difficult to give suggestion to improve the banking conditions Habib Bank Limited. As we know that nothing is perfect, there is always a room for
Loan to Deposti Ratio
-10.000020.000030.000040.000050.000060.000070.0000
2002 2001 2000
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Project report on Habib Bank Ltd
improvement, so I have found during my internship can be made up taking into account the following suggestions.
HBL is in the process of providing the services of Automated Teller Machine. In order to complete with the other banks ATM services must be provided throughout the country as this service is becoming very popular in bank customers. The bank is also in process of computerizing its records which is good sign but it is going on with small progress Computerization must be done on early basis. This will help in increasing efficiency of work don, customers satisfaction decrease the stationary cost and resultantly it will increase profits. In Past Habib Bank Limited has always being suffered from bad Government policies. Government intervention should avoided completely.
Employees Training programme must be introduced on continuous basis so that Employees have understanding with the latest developments especially with the customers.
Bank should introduced incentive plans for employees on regular basis so that if employees may work whole heartedly for the welfare of their organization. While giving incentives qualification, work, experience, hard work and such other factors must be considered.
Mismanagement of resources must be avoided as much as possible as it decreases profit but also discourage hard worker and honest employees.
Fresh graduates must be recruited. As the combination of Experienced and fresh can produce better results and it will improve the efficiency of management.
Habib Bank is going towards mobile banking but the problem is that a common client has no idea of its usage due to lack of marketing. I think that a proper marketing programme must be launched for client’s awareness.
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Project report on Habib Bank Ltd
Banks different schemes must be conveyed to the targeted customers so that to have a reasonable share in market.
Bank should help the society by providing interest free loans to the Talented Students.
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