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ACBL Internship Report
INTRODUCTION
ACCORDING TO BANKING COMPANIES ORDINANCE 1962
“Banking means the accepting, for the purpose of lending, or
investment, of deposits of money from the public, repayable on
demand or otherwise, and withdraw able by cheque, draft, order or
otherwise.”
“Banking companies mean companies which transact the business
of banking in Pakistan.”
COMMERCIAL BANK
“The commercial bank receives surplus money from the public and
lend to others who needs funds. Bank collects cheque, bills of
exchange etc from customers. It transfers money from one place to
another. It provides agency and general utility services. Purpose of
commercial bank is to earn profit.”
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HISTORY OF ASKARI COMMERCIAL BANK
The banking sector has witnessed a dramatic change during
the last ten years with the development of Askari Bank, which is not
only redefining priorities and focus of the banks, but also
threatening the domination of traditional players.
The story begins with the incorporation of Askari Commercial
Bank limited in Pakistan on October 09, 1991, Askari Bank
Commenced (begin) to operations in April 1992, as a public limited
company. The bank is listed on the Karachi, Lahore and Islamabad
Stock Exchanges and the initial public offering was over subscribed
by 16 times.
While capturing the target market share amongst the view
banks, Askari has provided good value to its shareholders. Its share
price has remained approximately 12% higher than the average
share price of quoted banks during the last four years.
Askari Bank has expanded into a nation wide presence of 83
Branches, and an Offshore Banking Unit in Bahrain. A shared
network of over 800 online ATMs covering all major cities in
Pakistan supports the delivery channels for customer service. As on
December 31, 2004, the Bank had equity of Rs. 6.016 billion and
total assets of Rs. 107.168 billion, with over 475,000 banking
customers, serviced by a total staff of 2,118.
Askari Bank is the only bank with its operational head office in
the twin cities of Rawalpindi-Islamabad, which have relatively
limited opportunities as compared to Karachi and Lahore. This
created its own challenges and opportunities, and forced as to
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evolve an outward-looking strategy in terms of Askari market
emphasis. As a result, Askari developed a geographically diversified
assets base instead of a concentration and heavy reliance on
business in the major commercial centers of Karachi and Lahore,
where most other banks have their operational Head offices.
MOTIVATION OF ASKARI COMMERCIAL BANK
While successfully penetrating the key domestic markets
through strategic expansion and business diversification they
remain alive to the challenge emanating from the development in
the global financial markets; the opportunities and threats
engendered by greater deregulation and increased customer
expectations. These provide them the impetus (moment) to make
the best use of available resources, including modern technologies,
to meet the challenges ahead.
Historically, Askari’s core marketing focus for its asset base
has been the middle and upper middle business houses (including
wholesalers and manufacturers) operating in the large urban
centers of Pakistan, which are primarily oriented towards foreign
trade. This segment constitutes significant revenues to the bank.
The liability side remains focused on the middle and upper middle
class retired and serving government and armed forces personal
and mid-size business houses.
Their corporate banking division was established in April 1999
with the primary focus on servicing large corporate and multi-
national companies (MNCs). Benefiting from the bank’s growing
balance sheet size, this division B now gaining momentum and their
long-term aim D to develop it into an independent.
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Strategic business unit (SBU)… This would the bank to
acquire, develop and specialized abilities, and enhance their focus
on serving the emerging needs of the corporate clients.
With this branch network of 75 and further expected increase
in future, the ATM’s facility and internet Banking, Askari Bank’s
reach is ever increasing. In recognition of this reach, they have set
up a retail-banking group in July 2000, the mobile ATM’s facility is
first time started by Askari commercial bank in 2005 dedicated to
serving the urban consumer market; Askari is committed to
aggressively market this segment. The strategy is to provide their
customers with a basket of innovative products to meet their
varying needs.
Askari Commercial Bank is the only Private Sector bank that has
been approved by the World Bank as a Participating Financial
Institution for the US$ 200 million Line of Credit sanctioned
(authorized) to the Government of Pakistan for the Financial Sector
Deepening and Intermediation Project.
Askari's emphasis on further broadening its core foreign trade
business translated into handling a higher volume of Export and
Import business of Rs. 36 billion registering a growth of 42% over
the pervious year. This enhanced foreign trade business was
secured due to excellent customer services and efficient
international settlement arrangements with our correspondent
banks.
Askari Bank is operating throughout Pakistan. Most of the branches
are connected through our State of the Art, On-line Communications
Network, which gives the bank a competitive edge in providing
instant services to its clientele. We also offer direct access to the
latest Foreign Exchange Rates through our Online Communications.
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FIELD OF ACTIVITIES
THE BANK BASICALLY WORKS UNDER THREE GROUPS NAMED AS
1) Corporate banking and financial institutions group
2) Retail banking group
3) Operations and credit group.
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1-CORPORATE BANKING AND FINANCIAL INSTITUTION
GROUP
This Group is responsible for serving the needs of large corporate
clients in public and private sector, managing correspondent
banking relationships and undertaking money market transactions.
The Group is organized in three divisions namely
Corporate and Merchant Banking Division,
International Division
And Treasury.
CORPORATE AND MERCHANT BANKING DIVISION
This Division is engaged in provision of financing facilities to large
corporate clients including multinationals. Principal activities include
syndicated loans, guarantees, and working capital finance,
underwriting and advisory services. The Division has played an
important role in providing development finance for the
modernization and expansion of the country's core industries. Credit
risk is well diversified with exposures in sectors like fuel & energy,
chemicals, textiles and fertilizers. Three units have been set-up at
Karachi, Lahore and Rawalpindi for sales and operations, which are
supported by centralized marketing from the Head Office.
INTERNATIONAL DIVISION
Mainly responsible for managing correspondent banking
relationships and planning overseas operations, the Division plays a
vital role in extending foreign trade transactions support to the
branches. The Bank became a member of SWIFT in the Year 2000
and is also a contributor to the equity of Pakistan Export Finance
Guarantee Agency Ltd With a network of 167 correspondents
spread over 95 countries worldwide, the Bank continued to reinforce
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its leadership position in trade finance, transacting business of over
Rs. 70 billion, during this year. Through the concerted efforts of this
Division, we are a participating Bank under the "Pakistan Trade
Enhancement.
Facility" of the International Finance Corporation, and our customers
are entitled to avail of the "Political Risk Guarantees Scheme"
extended by the Asian Development Bank.
TREASURY
Responsible for managing Bank’s liquidity and foreign exchange
transactions, our Treasury in one of the most active in the market.
Through reported transactions, purchase of Government paper and
foreign exchange trading, the Division adds substantially to the
Bank's sustained earnings.
2-RETAIL BANKING GROUP
Retail banking group was formed in 2000, this group is responsible
for serving the needs of the retail market. Focusing on individual
consumers and small and medium size enterprises, for purpose of
product differentiation, the group is managed in three business
arms.
Investments products unit,
Asset products unit,
And the credit cards division.
INVESTMENT PRODUCTS UNIT
Responsible for developing and managing brands which serve the
investment needs of the consumer market, this unit focuses on
deposit mobilization, provision of value added services based on
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modern technology and undertaking the centralized marketing and
advertising for the Bank. This unit is also actively involved in the
acquisition business and has signed-up over 300 merchants nation-
wide which offers shopping discounts to the Bank's Privilege Card
members.
Askari Bank's Value Plus is a unique deposits account, which offers
handsome monthly profits, accidental insurance cover, partial
liquidity on all time deposits and free Privilege Card membership.
The Unit is also administering the sales and distribution, including
arrangement for strategic partnership alliances for Askari- i-Net
Banking, the first internet banking in Pakistan, which allows routine
banking transactions from any where in the World, round the clock,
over the internet.
ASSET PRODUCTS UNIT
This Unit is engaged in the development and management of retail
credit schemes. The consumer market in Pakistan has not only
grows exponentially over the last decade or so, but the needs of
this segment have become extremely diverse. In order to sustain
competition, it is but imperative to continue offering innovative
consumer credit schemes. With the launch of Askari Bank's Personal
Finance an Askar (auto-loans), this unit is emerging as a significant
contributor to the Bank's loan growth. The unit also administers the
first e-commerce banking solution in Pakistan, under the brand
name ASK-IBL online. This is a b2b automated credit transaction
module, offering merchandise credit to retailers on goods purchased
form one of the largest distributors n the country. Strong collection
and prudent risk management policies have restricted
delinquencies to very low levels.
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CREDIT CARDS DIVISION
This Division manages Askari Master Card brand and is
headquartered at Karachi. With a new fully automated transaction
processing system, the brand was re-launched in 2001, supported
by an aggressive advertising campaign and strong sales team
network. The product now has portfolio of nearly 20,000 cards, in
less than one year. The brand is accepted worldwide and over 3,000
locations in Pakistan.
3- OPERATIONS AND CREDIT GROUP
A support function group mainly responsible for development of
systems and procedures, process re-engineering, automation and
credit management. The group is organized in three divisions,
System and operations division
Electronic technology divisions
And the credit division
SYSTEM AND OPERATIONS DIVISIONS
This group has been instrumental in development of procedures and
manuals for various operating requirements of the bank. After
careful mapping of the existing process flows, the division
recommends automation and re-engineering requirements. To
improve transaction efficiencies. The division is active in providing
equipment procurement support and development of new branches.
The protection of fixed assets of the bank is also managed by the by
this division, as directs function. During year 2001, the division has
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proposed several cost cutting initiatives based upon improvement
of our existing procedures and documentation reduction. Seven new
branches have been opened during this year. The division
successfully implements the model branch concept during 2001,
which has been proved to be a milestone towards improving our
customer service standards and achieving process uniformity with
optimum resource utilization.
ELECTRONIC TECHNOLOGY DIVISION
This division operates as the backbone for all operational functions
in the bank. Responsible primarily for the development of banking
software and provision of computer hardware to all business units,
the division also engaged in the development of technology based
value added customer service products. The division has helped the
bank in playing the pioneering role in offering Internet banking
service e-commerce solution and on-line banking. The division
provides online real time branch connectivity and has full-
automated transaction processing support programmers in the
place. The division is focusing on use of data-warehousing
technology to enhance the relationship management program of
the bank.
CREDIT DIVISION
Providing extensive support to branches for credit administration,
control and monitoring, the division has played a pivotal role in
helping the bank achieve a remarkable loan
Growth of 31%, with well diversified risk exposures. Most of the
loans are of shot -term trade financing on a secure and self-
liquidating basis. The division has a special assert management
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team, which is responsible for ensuring low ratio of bad debts,
effective monitoring of delinquent advances and close follow-up of
recoveries. Bank's head office credit committee, reviews the credit
quality and pricing on regular basis not only to ensure healthy credit
growth but also the management of bank's risk assets in almost
prudent and profitable manner
Taking into account the expanding branch network and the
increasing customer base, credit administration was strengthened
by decentralizing the delegation of lending authorities at the
regional and area management level.
The decentralization has benefited the bank and its customer
tremendously as the new arrangements now provide for faster
credit delivery, focused credit development, and more effective
monitoring and controls. Further steps are being taken to streamline
credit appraisal procedures and training to credit officers at all
levels.
HUMAN RESOURCE DIVISION
Strategically, perhaps the most important division at the head office
is responsible for human resource management, including
recruitment staff training and evaluation. The division also handles
matters relating to administration. This division operates on future
oriented strategy focusing on employee’s personal and professional
growth.
Staff development activities are geared to enhance their capabilities
for applying the knowledge and facts towards development of
practical situations. Under our human resource management policy,
we develop and groom our management personal for positions of
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greater responsibilities analytical, interpersonal, conceptualized and
specialized skills to enable them understand cause-and-effect
relationships and to think logically.
Staff is given on the-the -job as off-site training in diverse areas of
banking and management. Our hiring philosophy is based upon
meritocracy and selecting the right person for the right job. We lay
greater emphasis on employee’s honesty and integrity besides
technical competence. Candidates are selected through well defined
and systematic selection procedure.
FINANCE DIVISION
Responsible for bookkeeping and accounts, this division at head
office, prepare all financial return and the MIS through its
management-reporting wing. The division is actively involved in
preparing market comparative analysis, consolidation of bank's
budgets, its monitoring and constant review of various financial
indicators.
Finance division works as the backbone for the bank's operations.
The division, which reports directly to the president and chief
executive of the bank, has been instrumental in preparation of
banks business plans and future strategies. The budgetary
performance are constantly reviewed and through a sophisticated "
monthly performance report” which is a computer based program,
the division provides feed back to the senior on strategic issue like
reasons for budgetary variance and methods to arrest negative
performance factors.
Preparing the bank's annual accounts and coordinating external
audit is also a direct function of the finance division. Through the
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dedicated efforts of staff at this division, the bank has been winning
various awards foe the best presentation of the annual accounts
and also the management has also been able to monitor and review
the bank's performance in proactive manner.
AUDIT DIVISION
The audit division reports directly to the board through the
executive committee, which is also the audit committee. The audit
division is completely independent of the management and is
responsible for checking and reporting on the management
compliance with the boards policies and directives, as also the
prudential regulations and other directives of the SBP. However
their role is not intended to just that of fault finding; but also
guiding and assisting branches in improving their operations.
The division is responsible for evaluating every aspect of the bank's
operations with the goal of improving the effectiveness of risk
management and internal control. There is also a regional audit
function attached to each area office; the nature of this business is
of more quality assurance rather than strictly audit. The regional
audit report to the area manager, and assist them in ensuring that
there is proper compliance with all the relative directives, and also
that customer service standards are maintained and improved, at
the branches in the area.
The system of regional and area offices has been introduced since
1999 for effective supervision and control of branches. The scope of
the system also spans the development and management of bank's
business and activities, on a regional basis.
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The bank's branch network has been divided into 6 regions:
1) North region
2) Comparison of Islamabad and Rawalpindi area and the north
area.
3) Central region
4) Comprising of Lahore and East area.
5) South region: and
6) West region
A process of effective decentralization has been implemented, with
delegation of authority and greater responsibility and
accountability. Under this system the regional heads have the
primary responsibility for business development, profitability
productivity, operational efficiency and credit quality.
The system helps the customers through quick decision-making and
fast product delivery. It has now enabled the bank to further expand
and diversify its geographical reach and business activities.
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THE MISSION, VISION
&
OBJECTIVE
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THE MISSION STATEMENT:
To be the leading private sector bank in Pakistan
With an international presence,
Delivering quality services
Through innovative technology
An effective resource management
In a modern and progressive organization
Culture of meritocracy, maintain
High ethical and professional standards,
With providing enhance value to all our stakeholders,
And contributing to society
VISION
To be the leading bank in the region...
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CORE VALUES
The intrinsic values, which are corner stones of Askari
corporate behavior, are:
Commitment
Integrity
Fairness
Team-work
Service
OBJECTIVES OF THE ACBL
As Askari Bank looks ahead to the future by moving through the
decade of the 1990's its efforts are guided by a broad framework
of corporate objectives, which are as follows:
Askari is committed to its identity of " security & trust " and
will endure to uphold this image at al the times.
It will endure to provide its customers with as many creative
financial services and products, as is required. As today
customer demands a package of services suited to his
particular business, Askari plans to develop different and new
products to cater to the customer's demand. Askari bank has
they strength to be a market leader.
Bank will keep standing and by and develop, its human capital
base. It is planning to provide all the required training to its
staff towards achieving a higher level of professionalism.
Askari will continue striving to build a strong, motivated and
dedicated work force where total commitment will be towards
customer's satisfaction and wealthy growth of organization.
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Askari bank will endure to provide a competitive return to its
shareholders and will strive to maximize its share value. The
enhancement in its capital and returns will be a continuous
process. Askari bank is interested in being one of the most
financially viable institutions. So it lays great emphasis on
gradual building up to a healthy deposit mix. In the years
ahead, the bank will enhance its focus on growth through
operational efficiency, creating strategic alliances developing
well-structured networking system innovating new products,
enhancing marketing and sales efforts improving customer
service, achieving greater employee motivation and providing
the best value to its stakeholders - will make it a leader in the
corporate world.
HOW CHALLENGE BE DELIVERED
These objectives and guiding mission will be achieved through
Focused objective
Winning as a team
Excellence in delivery
Relentless quality
Upward rising sales
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CODE OF BUSINESS PRINCIPLES
Askari code of business principles is to:
Deliver solutions that meet customers financial need;
Build and sustain a high performance culture;
Build trusted relationships with all shareholders;
Build and manage the bank’s portfolio of businesses to
achieve strong and sustainable shareholder returns; and
Create and leverage strategic assets and capabilities for
competitive advantage.
CORPORATE PHILOSOPHY
“The Challenge... to bring a dream to life”
From knowing Askari customers' requirements to understanding
employee needs, from utilizing modern technology to making
responsible social contributions, from enhancing stake-holders'
value to practicing corporate ethics, Askari is continuously and
consistently striving to address newer challenges with a single
motivation - the power to inspire and be inspired. Organizational
goal and strategy define the purpose and competitive techniques
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that set it apart from others organizations. Goals are often written
down as an enduring statement of company intent.
A strategy is the plan of action that describes the resource
allocation and activities for dealing with the environment and for
reaching the organizational goal. Goals and strategies define the
scope of operations and the relationship with employees, clients
and competitors.
With over 14 years of experience in trade finance and an extensive
international branch network, Askari Commercial Bank is committed
to help the customer succeed in every competitive environment. To
keep pace with changing needs, ACBL constantly review its
comprehensive cash, trade and treasury products and services,
ensuring that a full range of flexible and innovative services is
always available for the customer wherever they trade.
CUSTOMER RELATIONSHIPS
"Before we discover, we must explore"
Knowing Askari customers and their needs is the key to Askari
business success. Askari products and services are structured to
touch and improve the quality of lives of all segments of society.
Service quality standards are designed and monitored to ensure a
consistent and convenient customer experience. Askari client
relationship managers are well equipped and well trained to provide
most efficient and personalized service to each and every customer.
Askari products and services are as diverse as Askari market
segments. Askari have structured and syndicated financing
arrangements, working capital finance, Balancing-Modernization -
Replacement (BMR) facilities, financing of international trade,
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ACBL Internship Report
consumer credit, small business loans, credit cards and unparalleled
investment products for the individual saver. Askari Bank is proud of
the pioneering role in providing the most modern technological
services to its customer base, which today exceeds 150,000
relationships.
EMPLOYEE RELATIONSHIPS
"Unusual effort on part of the employees who are apparently
ordinary workers is one of the key indications of a superior
enterprise"
Askari staff is Askari most valuable asset. The human
resource philosophy at Askari Bank focuses on multi-talent hiring,
professional grooming, requisite training and meritocracy based
reward system. Askari lays great emphasis on the development
and nurturing of "Askari Culture", a cohesive teamwork, where
each relies on the strength of the other and together they achieve
common objectives.
Staff welfare has always been a priority. New initiatives like
hospitalization plan, car buy-back facility and home loan
insurance have added new dimensions to the staff-care policy and
motivated them to out-perform Askari competitors.
Employee productivity enhancement is organized through
extensive in-house and external training programs. Askari
continue to offer opportunities for people to develop their
knowledge, skills and personalities, thus ensuring greater self-
fulfillment and progression in the organization.
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TECHNOLOGICAL INNOVATION
"Modern science is not an option, it is an obligation”
Technology is rapidly changing the way Askari think, act and does
business. It has played a pivotal role in enhancing customer
expectations, particularly with respect to speed and quality of
service.
Askari enjoy a strategic competitive advantage over all domestic
players by virtue of Askari leadership in technological innovations.
Askari have fully automated transaction-processing systems for
back-office support. Askari branch network is connected on-line
real-time and Askari customers have access to off-site as well as
on-site ATMs, all over Pakistan.
Askari Phone Banking service and Internet Banking facility allows
customers to enjoy routine banking services from anywhere in the
world, 365 days a year, 24 hours a day. Askari have also
pioneered commerce venture in Pakistan through a major retail
distributor.
Askari qualified and experienced technology team is now
focusing on data warehousing to enhance the Customer
Relationship Management (CRM) program
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ETHICAL VALUES
"Professionalism without integrity is like a book without
pages"
Because the right may not always be obvious, Askari must be
guided in every action by a set of well-defined values, governing
Askari decisions. Askari understand that its commitment to satisfy
customers’ needs must be fulfilled within a professional and
ethical framework. Askari subscribe to a culture of high ethical
standards, based upon development of right attitudes.
The following primary core values provide the guiding principles
for Askari corporate behavior:
Commitment
Integrity
Fairness
Team-work
Service
As part of Askari internal communications program, these core
values are inculcated in Askari employees through internal
memos, posters and most importantly leading by example.
CORPORATE CITIZENSHIP
"The greatest of life's pleasures are shared"
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Askari role as a responsible corporate citizen is as important
to ACBL as the products and services they offer.
Askari have made useful contributions in the areas of
sports, culture, poverty alleviation, health & medical
sciences, education and scientific research.
Askari was one of the co-sponsors of the 9th South Asian
Federation Games, held at Islamabad in the Year 2003.
Askari have also sponsored various sports tournaments at
both amateur and professional level.
Askari contributions to the NGOs dedicated to the treatment
and welfare of the blind is a ray of hope in the darkness.
Askari have made donations to the drug-addiction control
programs and Askari efforts to help support Aids Awareness
programs and contributions to the mental and social welfare
of women and children have won much acclaim.
Askari participated in IUCN Water conservation initiative and
have helped in creating better understanding about the
country on the international platform by cosponsoring the
first interactive encyclopedia on Pakistan.
GROWTH
"There is no sin punished more implacably by nature than
the sin of resistance to change"
Askari live in a moment of history where everything is
changing so fast that Askari begin to see the present only when it
is already disappearing.
Askari customer needs are changing and their expectations
are growing. Technology is fast proliferating the distribution
channels and now banking services can be accessed from
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multiple contact points. Askari believe that balanced growth is the
key to survival in today's global banking environment.
From a humble beginning with just 7 branches in 1992,
today Askari enjoy a network of 73 outlets in Pakistan, spread
across the country. A network of self-service ATMs supports these
outlets.
Askari total assets now exceed Rs.50.9 billion and Askari
have over 17 products and services to match Askari customers'
individual needs. Bank's equity base stands at Rs. 2.58 billion
with 20% growth over the last 5 years. The human resource
capital of the bank today exceeds 1,200 employees. As part of
Askari growth strategy Askari is now extending Askari banking
services to the remote and rural areas.
CORPORATE ACHIEVEMENT
"Winning isn't everything, it's the only thing.”
Amidst tough competition, Askari efforts to go an extra mile
in providing superior services to Askari customers have been
acknowledged at the national as well as international levels.
These acknowledgements serve as a great source of
encouragement and appreciation at one hand and inspire ACBL to
perform even better, on the other.
The Global Finance Magazine has honored Askari with the
“The Best Bank in Pakistan” award. Askari won the Euro money
and Asia money awards as early as 1994, 1995 and 1996. Askari
have Al+, the highest possible credit rating, for the short-term
obligations, and Askari long-term rating stands at AA. Askari won
the prestigious "Best Presented Annual Accounts" award from the
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Institute of Chartered Accountants in Pakistan, and The Institute
of Cost and Management Accountants, Pakistan, for the services
sector, for 2000. Askari have also received prizes during the last
four years from the South Asian Federation of Accountants (SAFA)
for the "Best Presented Annual Accounts" for the financial sector,
in the SAARC region.
Askari was the first bank in Pakistan to offer Internet Banking
services and b2b e-commerce solutions for merchants looking to
purchase on credit.
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MANAGEMENT SYSTEM
CORPORATE INFORMATION
MANGERIAL POLICIES
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ORGANOGRAM
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BOARD OF DIRECTORS
Executive Committee
President and Chief Executive
Internal Audit
Corp. Banking & Fin. Inst. Group
Operating and credit group
Regions Retail Banking Group
Credit Cards
International Credit Rawalpindi/Islamabad
Asset Products Planning and Corporate affairs
Treasury Electronic Technology
North Investment products
Human Resource
Corporate and Merchant Banking
Systems and Operations
Lahore Finance
Data Reporting East
Legal Affairs South I
South II
West
ACBL Internship Report
CORPORATE INFORMATION
Board of Directors
Lt. Gen. Waseem Ahmed Ashraf Chairman
Lt. Gen. (R) Masood Perwaiz Chairman Executive committee
Mr. Kalim-ur-Rehman President & Chief Executive
Brig (R) Mohammad Shiraz Baig Director
Brig (R) Muhammad Bashir Baz Director
Brig (R) Asmat Ullah Khan Niazi Director
Brig (R) Mohammad Safdar Ali Director
Mr. Javed Ahmad Noel Director
Mr. Zafar Alam Khan Sumbal Director/Secretary
Mr. Shahid Hafeez Azmi Director
Mr. Mohammad Afzal Munif, FCA Director
Mr. Tariq Iqbal Khan, FCA Director (NIT Nominee)
Audit Committee
Mr. Muhammad Afzal Munif, FCA Chairman
Brig (R) Muhammad Shiraz Baig Member
Brig (R) Asmat Ullah Khan Niazi Member
Mr. Zafar Alam Khan Sumbal Secretary
Auditors
A.F.Ferguson & Co
Chartered Accountants
Legal Advisors
Rizvi,Isa, Afridi & Angell
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Registrar & Share Transfer Office
M/s THK Associates (Private) Limited
Ground Floor, Modern Motors House,
Beau mount Road, Karachi, 75530
Tel : (021) 5689021, 5686658, 5685681
Fax: (021) 5655595
E-Mail: [email protected]
Registered Office /Head Office
AWT Plaza, The Mall,
P.O.Box 1084, Rawalpindi.
Tel: (051) 9063000 Fax: (051) 9272455
Website: www.askaribank.com.pk
MANGERIAL POLICIESA. Financial policies
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B. Procurement policies
C. Marketing policies
D. Promotional policies
E. Lending policies
F. Personal policies
FINANCIAL POLICIES
The financial policies of any bank are the most important policies
through which the whole banking activity is conducted. These
policies are primarily conducted on:
Source of funds
Use of funds
SOURCE OF FUNDS:
The bank finance policy is acquiring funds from the following
sources:
Deposits of account holders.
Interest on advances and loans granted to the borrowers.
Income and commission from the services provided by the
bank.
Bank open various types of accounts for its customers
Services are provided for earning.
Interest income and commission bank providing the services
to its customer.
USE OF FUNDS:
After the acquisition of the funds their acquisition become
necessary. The bank seeks the best way for making investment to
got more profit with the maximum security. The bank has an
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investment portfolio in which it allocate its funds for crediting to
borrowers, investment in the stock market, investment in the real
estate property etc. for allocation of funds a bank has to follow
some banking policies and the prudential regulations of SBP these
are:
A bank has to maintain a liquidity with central bank ,i.e. 25 %of its
total deposits.
A bank cannot invest all of its funds otherwise it will be difficult to
meet urgent needs.
A substantial part of funds is received from interest on loans and
advances. Before granting a loan the bank analyze and observe the
borrower and conduct a complete ratio analysis. Bank prepare
credit line for this purpose the major thing is granting an advance is
the security offered by the borrower and its actual market value.
PROCUREMENT POLICIES
Procurement policies are more concerned with manufacturing
organizations. In bank industry that is service industry procurement
means the procurement of funds from various sources such as
deposits. It involves attracting and holding the funds of the
depositors. After the acquisition of funds, the bank invest the acquire
funds. One alternative is to lend its money and earned interest
markup or invest in govt. securities etc. as already mentioned in the
above paragraph the major sources of funds for a bank are the
deposit of the general and the other sources of income includes
interest or markup charges received for various services offered by
the bank to its clients.
A bank tries to attract maximum no. Of accounts so that it can
increase it’s deposits and these lending ability. In order to get
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maximum no. of accounts the staff of the bank must be efficient as
compared to the other banks and the manager of the branch must
take personal interest in attracting deposits. Good quality of the
service is the key to success.
MARKETING POLICIES
Marketing policies are also one of the most important policies
because they are related to the growth of the organization.
Marketing for a bank would mean:
1. Creation of new product and services.
2. The bank marketing must be consumer oriented.
Following are the marketing policies of the ACBL.
a. Keeping the track of latest development in the world
and incorporating the latest and most modern
equipment to make the banking procedures simple and
easy for the customers.
b. Development of products for the customers.
c. Giving good services and maintaining good relations
with the customers.
These policies can be implemented by providing the right product
and service to the customer at the right place, at the right time, at
the right price.
It is necessary for the managers to keep in touch with consumers,
observe their needs and develop products, which meet their needs.
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PROMOTIONAL POLICIES
Public relation and advertising has assumed a great importance in
the modern banking business. As for as promotional activities are
concerned, the main objective of the bank is to inform the existing
clients and other people about its new products or change in the
existing services. ACBL establishes its purpose through:
1. Direct contact with customers.
2. Relation with business organizations.
3. Community relations.
LENDING POLICIES
Every bank has its own lending policies except for those, which are
common for all the banks, i.e. the policies, which are imposed on all
the commercial banks by the SBP, are known as prudential
regulations. The lending policies of ACBL are as follows:
1. The bank only invests in those sound and viable projects,
which have good rate of return.
2. Bank prefers to advance loan to their account holders.
3. Loan is given to reliable person only.
4. No political loan is sanctioned by bank.
5. Any account holder can apply for running finance or demand
finance. The manger apprises the past record of account
holder and his credit worthiness. If he finds any thing wrong
he can refuse to sanction the amount.
6. The bank while taking security prefers govt. Securities to
shares.
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7. It also advances working capital loans.
PERSONAL POLICIES
Personal policies have an important role in the success of an any
organization. ACBL have its proper personal policies. Good personal
policies motivate the employees towards hardworking.
Following are the main personal policies of ACBL:
1. Selection of employees on merit
2. Selection of capable employees.
3. Attractive salary package for motivation of employees.
4. To train and develop the future management of the bank.
5. Every employee must have certain set of clearly defined
duties
6. Effective communication at al levels of the organization.
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DEPARTMENTS
GENERAL BANKING DEPARTMENT
CREDIT DEPARTMENT
FOREIGN EXCHANGE DEPARTMENT
Banking procedures are divided between various
departments. Different departments do their jobs in occurrence with
the bank policies. In ACBL each branch is divided into various
departments. Head of department manages each department &
officials of the branch follow procedures.
The departments working within a branch are as:
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GENERAL BANKING DEPARTMENT
Account opening department
Remittances department
Cash department
Clearing department
PRIVILEGE BANKING DEPARTMENT
Online banking
Lockers
CREDIT DEPARTMENT
FOREX DEPARTMENT
Import department
Export department
Foreign currency department
ACCOUNTS DEPARTMENT
IT- DEPARTMENT
ACCOUNT OPENING DEPARTMENT
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Account Opening In-charge
OfficerOfficer
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Functions of Account Opening Department
Providing account opening form according to the customer's
requirements,
Guide the customer about the requirements of the account
opening and form filling,
Check the forms whether they are correctly completed or not,
Preparing checklist,
Stamping on the form,
Maintaining account opening register,
Pasting of forms in register after release from general banking
in charge,
Issuance of cheque books,
Issuance of accounts maintenance certificate,
Closure of account
Verification of signature in case of cheque presented before
releasing of account opening from SS card is not yet scanned
IMPORTANCE OF INTRODUCTION FOR A\C OPENING
Introductory references As soon as a person opens an account with
the bank, the banker customer relationship is established. In such
situation this is advisable the banker should not open new accounts
of unknown persons unless references regarding the integrity and
responsibility of the purposed persons are obtained from
respectable parties.
Failure to exercise this care may result in serious consequences not
only for the banker concerned but also for the other bankers and
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general public. It is not sufficient to obtain the reference but its
genuineness must also be verified. Omission of this may have
serious consequences.
In practice we see that there is tough competition among bankers
for procurement of deposits, so to press a prospective new
customer to find the desired reference may offend him, yet he is to
be welcomed by the banker as a source of fresh deposits. But these
practical difficulties have to be handled tactfully because the risk
involved to carry out this requirement partially or wholly may lead
to undesirable results.
PRECAUTIONS TO AVOID FRAUD
If preliminary necessary inquiries mentioned above are not made
and account is opened, it is possible that an undesirable person is
provided with a chequebook to defraud innocent people or the
person being an undercharged bankrupt may put the banker in
difficult situation.
1. SAFEGUARD AGAINST UNINTENTIONAL OVERDRAFT
Sometimes due to misreading of the balance an account may be
inadvertently overdrawn or the credit entry of customer is placed
into the account of another person by mistake who happens to have
withdrawn that amount. in all such cases the amount can only be
realized if the person is man of integrity.
2. INQURIES ABOUT CUSTOMERS
Have all necessary information with him regarding his Generally a
banker is asked by another banker to give his opinion about his
customer’s financial position. Therefore, it is beneficial for the both
that the banker should customers.
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3. PROOFS FOR REASONABLE CARE AND INQUIRY
Under section 131 of negotiable instrument act, 1881 a collecting
banker is protected provided he collects the cheques of his
customers in good faith and without negligence. But if the banker
fails to make preliminary inquiries he may be deprived of statutory
protection, being guilty of negligence.
ACCOUNT OPENING PROCEDURE &PRECAUTIONS:-
KNOW YOUR CUSTOMERS
The objective of knowing a customer is to have a fair idea about the
identity, financial resources, and general information about the
customer at the time when the relationship is established. A banker
must have following information about the customer:
Customer name:
Enter complete name as mentioned in original ID card /other
business documents.
Nature of business /profession: if customer is of salaried class enter
his employer name. If the customer is a businessman, trader, sole
proprietor, enter the business name, for example “Jamil
Traders”etc.also enter the customer’s title/position and address of
the business/employer. Address with P.O.BOX is not acceptable.
Similarly remarks like
“Private service”, “business” are not acceptable, rather specify
what type of company/business the customer is associated with for
example Manager Philips Electrical Company.
Address:
Enter the complete business/residential address. With in the
brackets you may also provide prominent address identification
marks for ease of physically locating the address.
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Contact Numbers:
Enter home, official, mobile, fax number and e-mail address (if
available). Banker can verify the number by giving the customer a
courtesy call or by sending him a e-mail.
Other/ secondary/ mailing address:
Some customer may volunteer their parents or siblings’ addressor
second home address or a mailing address other than a permanent
address.
Special instructions:
Clear-cut special instructions must be obtained from customers. If
the customer has not given any special instruction specified column
must be cancelled by drawing a line, as this column must not be left
blank in any circumstance.
Existing/other bankers:
Almost most all the bankers usually have a banking relationship
with another bank. In case of customer who does not have an
existing banking relationship, or does not want to disclose the
existing relationship, then it is strongly recommended that at least
for some time this particular account must be kept under
observation.
TYPES OF ACCOUNTS
1) ACCOUNTS OF GENERAL CUSTOMERS
Minor account
Illiterate person account
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Joint account
2) ACCOUNT OF SPECIAL PERSONS
Proprietorship account
Partnership account
Limited company’s account
Accounts of club societies and associations
Agent’s accounts
Trust account
Liquidator’s account executer’s and administrator’s
account
REMITTANCE DEPARTMENT
Functions of remittances department
The functions of remittance departments is to handle with the
following instruments:
Pay Order
Demand Draft
Pay slip
Telegraphic Transfer
Payment of Remittances
Cancellation of pay order & demand draft
The remittance department deals with the transfer of money from
one place to another.
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This department deals with the local currency transfer only. ACBL
provides these services to both customers & non-customers
Remittance can be made through:
1) Instrument transfer
2) Electronic transfer
3) Mail transfer
Instruments of the Remittances Departments
PAY ORDER
Pay order issued from one branch only be payable from the same
branch. It is normally issued for payment in the same city. It is
normally referred as banker's cheque
Get the application form.
Issue pay order after recovering cheques.
Do necessary vouchering.
Make entry in PO issue register.
All pay order shall be crossed" payees account only".
Charges on issue of Pay Order
Amount (Rs) Charges (Rs)
Less then 100,000 50
Above 100,000 Nil
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Duplicate Pay Order:
Check the record to insure that payment has not been
effected.
Get application for issuing of duplicate PO.
Recover charges.
Issue duplicate pay order.
DEMAND DRAFT
It is an instrument on demand for which value has been received,
issued by the branch of the bank drawn i.e. payable at some other
place(branch) of the same bank. In case of agency arrangement-
demand draft can also be issued by one branch of the bank payable
to other branch of the other bank e.g. DD issued by ACBL payable
by MCB.
Charges on issue of Demand Draft
Amount (Rs) Charges (Rs)
1 - 10,000 25
10,000 – 100,000 50 or .1%
100,000 - 1000,000 200 or .07%
Over 1000,00 1000 or .05%
PAY SLIP
The bank for settlement of it own payment issue pay slip.
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No excise duty
No commission
CASH DEPARTMENT
All physical movement of cash in the bank is made through the cash
department. Normally cash department performs following
functions
Receipt
Payments
Act according to any standing instructions
Transfer of funds from one account to another
Handling of ATM
Verification of signatures
Posting
Handling of prize bond
Cash receipt section
In this section the cashier in following manner receives cash:
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Fill- up deposit slip
Deposited on Receipt Customer
Process of deposits
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Cash payment section
In this section honoring the cheque through following process
makes payment.
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Cashier counts the amounts and fulfills other
requirement
Cashier counts the amount and fulfills other requirements
Cheque is presented at token counter
Cheque is recorded & token # is allotted
Cashier counts the amount & payment is made
Cancellation officer cancels cheque
Posting is madeTwo signatures on back of the cheque by customer
Process of payment
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CLEARING DEPARTMENT
MEANING OF CLEARING
The word clearing has been derived from the word “Clear” and is
defined as “ a system by which banks exchange cheques and other
negotiable instruments drawn on each other within a specific area
and thereby secure payment for their clients through the Clearing
House At specified time” in an efficient way”.
1. Since clearing does not involve any cash etc. and all the
transaction take place through book entries , the number of
transaction can be unlimited.
2. No cash is needed as such the risk of robbery, embezzlements
and pilferage are totally eliminated.
3. As major payments are made through clearing, the banks
came manage cash payments at the counters with a minimum
amount of cash in vaults.
4. A lot of time, cost and labor are saved.
5. Since it provides an extra service to the customer of banks
without any service charges or costs, more and more people
are inclined and attracted towards banking.
CLEARING HOUSE
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It is a place where representatives of all banks sit together and
interchange their claims against each other with the help of
controlling staff of State Bank of Pakistan And where there is no
branch of State Bank of Pakistan the designated branch of National
Bank of Pakistan act as controlling member instead of State Bank of
Pakistan
MEMBERSHIP CEASES
It ceases to be a scheduled Bank.
It is not able to meet its liabilities.
State Bank of Pakistan or Central Govt. prohibits it to
receive fresh deposits.
RULES AND REGULATIONS HAVE CLEARING HOUSE:
Timing:(Monday through Saturday)
i. 1st Clearing at 10:00 a.m.
ii. 2nd Clearing at 2.30 p.m.
Each bank will send competent representative to exchange
the cheques.
Each bank is required to insure that all cheques and other
negotiable instruments are properly stamped and suitably
discharged
An objection memo must accompany each and every cheque
when return unpaid duly initialed.
Each bank is required to maintain sufficient funds in the
principal account with SBP to meet the payment obligations.
The State Bank of Pakistan debit the account of each member
of the clearinghouse with the proportionate working expenses
incurred on the operation of clearing house. These expenses
are very nominal.
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.
OUTWARD CLEARING AT THE BRANCH:
The following points are to be taken into consideration while an
instrument is accepted at the counter to be presented in outward
clearing:
The name of the branch appears on its face where it is
drawn o.
It should be stale or post dated or without date.
Amount in words and figures does not differ.
Signature of the drawer appears on the face of the
instrument.
Instrument is not mutilated.
There should be no material alteration ,if so, it should be
properly authenticated.
If order instrument suitably indorsed and the last
endorsee’s account being credited.
Endorsement is in accordance with the crossing if any.
The amount of the instrument is same as mentioned on the
paying-in-slip and counterfoil.
The title of the account on the paying-in-slip is that of
payee or endorsee (with the exception of bearer cheque).
If an instrument is in order than our bank special crossing stamp is
affixed across the face of the instrument. Clearing stamp is affixed
on the face of the instruments, paying-in-slip and counterfoil (The
stamp is affixed in such a manner that half appears on counterfoil
and paying-in-slip). The instrument is suitably discharged, where a
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bearer cheque does not require any discharge and also an
instrument in favor a bank not need be discharged.
The instrument along with pay-in-slip is retained while the
counterfoil is given to the customer duly signed. Then the following
steps are to be taken:
1. The particulars of the instrument and the pay-in-slip or credit
voucher are entered in the outward clearing register.
2. Serial no. Is given to each voucher.
3. The register is balanced; the credit vouchers are balanced
from the instruments and are released to the respective
departments against acknowledgement in the register.
4. The instruments are arranged bank wise.
5. The schedules are prepared in triplicate, two copies which are
attached with the relevant instrument and the third is kept as
office copy.
6. The house page is prepared from schedules in triplicate.
7. The schedules and house pages are signed by the house
incharge with branch stamp.
8. The grand total of the house page is taken and agreed with
that of the outward clearing register.
9. The instrument along with duplicate schedule and house page
are sent to the main office.
However the amount is kept in float till final status of various
instruments is known from respective paying banks in second
dealing.
The entry of the instrument returned unpaid is made in Cheques
returned Register. If the instrument is not to be presented again in
clearing then a covering memo is prepared. The covering memo
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along with returned instrument and objection memo is sent to the
customer who sent the same to his account.
INWARD CLEARING OF THE BRANCH:
1. The particulars of the instruments are compared with the list.
2. The instruments are detached and sort out department wise.
3. The entry is made in the inward clearing register (serial no.
Instrument no. Account no. Is written).
4. The instruments are sent top the respective departments
5. The instruments are scrutinized in each respect before
honoring the same.
OUTWARD CHEQUES RETURNED UNPAID:
These are the cheque returned unpaid by us in inward clearing. due
to some objections.
INWARD CHEQUES RETAINED UNPAID:
These are the cheques retained unpaid to us which were lodged by
us in Outward Clearing.
RETURN OF CHEQUES AFTER CLEARING HOUSE:
Suppose all cheques received in the inward clearing are passed and
later on it is found that a cheque should have been returned, in
such cases, we contact the collecting branch and request them not
to make payment against the proceeds of the cheque which was not
returned unpaid by us in due time. the cheque with objection memo
along with a covering letter is sent to the collecting branch, making
request to issue a payment order in favour to balance the Cash-
cum-day book we may debit suspense account sundry debtors with
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the approval of the manager. When the payment order is received,
it is lodged in clearing and suspense account, sundry debtors is
adjusted accordingly.
SPECIAL CLEARING:
In addition to the normal clearing function at Clearing house it is
mutually agreed to hold an extra clearing at the clearing house on
the particular day and time which is known as “special clearing” it is
arranged due to the rush of work arising out of say, more Holidays
declared by the Central Govt. at a time, but normally special
clearing is he4ld on last working day of our half yearly and yearly
closing i.e. 30th June and 31st Dec. every year.
ONLINE BANKING
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Online banking means that the customer of ACBL can deposit /
withdraw funds in / from other branches of ACBL. Askari bank
provides online facility to all its branches.
ONLINE CHARGES
Amount of Deposits Charges ( Rs)
25,000 or below 50
25,000 - 200,000 100
200,001 - 500,000 250
500,001 - 2000,000 500
Above 2000,000 750
LOKERS
Askari bank offers facility of lockers to its customers.
There are three sizes of lockers available:
CHARGES
Size of lockers Rent of locker (Rs) p.a.
Large 2500
Medium 1500
Small 1000
CREDIT DEPARTMENT
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Although the study of money is important for the understanding of
the way in which our economic system operates, we must recall this
point that most exchange transactions in this system are carried on
today without the use of actual money, i.e. Those are carried on by
means of credit and credit instruments rather than money. While
money still forms the basis of credit and deferred payments, it is
necessary to examine the nature of credit operations, and the
instruments and institutions trough, which these operations are
carried on, in considerable detail.
THE NATURE OF CREDIT
On the surface, credit operation appears to be of many kinds, but
they all have a fundamental similarity. In credit transactions, one
party to the transaction, the creditor, turns over to the debtor a
certain amount of money, commodities or services at the present
time and relies on the debtor to repay an equivalent amount,
usually the money in the future plus interest at some future time.
THE BASIS OF CREDIT
There has been much discussion, concerning the essential basis of
credit or borrowing operation. Some writers on the subject have
stoutly insisted that confidence is the basis of all grants of credit,
that if one did not have confidence that the borrower would repay a
loan one would never thinks of making the loan, save on grounds of
friendship of philanthropy. Others have held property, rather than
confidence is the basis of all genuine credit transactions. Some
insist that character is the essential factor, while still other writers
have indulged in a propensity of alliteration by sating that the bases
of credit are character, capital and capacity; or the man and the
means; or reliability and resources.
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TYPES OF CREDIT
The verities of credit may be classified in numerous ways- according
to the status of eh debtor, according to the status of the creditor,
according to the time for which the credit is granted, and so on; but
the most fruitful classification usually indicates the use to which the
credit is put.
1.Public and Private Credit:
In the first place, a distinction is usually made between public and
private credit. Public credit comprises the promises to pay off
governmental bodies, that is, their acquisition of goods in the
present in return for promises to pay in future; and private credit
refers to the promises to pay all non-government debtors. Among
the sub-classes of private credit, the most significant are band
credit, commercial credit and consumption credit.
2. Band Credit:
In Comprehends all kinds of promises to pay off banking institutions,
including demand deposits, time deposits, notes, bankers,
acceptances, cash, letters of credit, debentures, and bonded
obligations. Frequently, the term bank credit is restricted in use to
refer only to the demand deposit liabilities of the commercial banks,
and one must constantly be on guard to recognize the employment
of the term in this restricted sense. As a sub-class of bank credit,
central bank credit is of outstanding importance in modern
monetary system it includes the central bank's circulating notes and
its deposit liabilities, the better consisting chiefly of the reserve
balances of the commercial banks.
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3. Investment Credit.
The credit structure, business if found upon examination to consist
very largely of two forms of credit. Investment credit is extended
through loans, the proceeds of which are put into the fixed assets of
a business enterprise. If the owners of business cannot themselves
furnish all of the capital necessary for investments in land, buildings
and equipment. Obviously what they need is loans of capital
running over a considerable period of years.
4. Commercial credit
In addition to seeking credit in long term investment in fixed assets,
most business periodically ask for credit in the form of short term
loans. Commercial credit is business supplier for current business
operations, such as manufacturing and marketing of goods. It often
take more business capital than business can themselves supply to
pay for raw materials, to make the outlays for wages and to carry
inventories of finished goods until they can be converted into cash.
To help finance such operations short-term loans usually running
from thirty days to six months are negotiated. Commercial loans
like investment loan must ultimately be paid out of accumulated
earnings of a business. But if the business earnings are of
immediate future, such loans can be safely made and promptly
paid. Commercial loans are base done quick assets, such as raw
material and finished goods, which are in constant process of
liquidation and thereby provide the cash with to extinguish loans.
5. Consumers credit and producers’ credit
Consumers credit involves advance of purchasing power for
economic goods to consumers for consumption purposes. Its
distinguish characteristic lies in the factor that the things acquired
by the debtors as result of the loans are not supposed to furnish
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them with the means of repaying the loans the loan must be repaid
out of the income of the borrowers.
TYPES OF CREDIT INSTRUMENTS
There are various types of credit instruments. The more important
credit instruments are as follows:
Bills of exchange:
A bill of exchange is define by negotiable instruments act as "an
instrument in writing, containing an unconditional order, signed by
the maker, directing a certain person, to pay certain sum of money,
only to or to the order of a certain person, or to the bearer the
instrument".
Cheque:
A Cheque is defined “a bill of exchange drawn on specific banker
and not expresses to be payable otherwise than on demand."
Cheques may be of various types, which are as follows:
Bearer cheque
Order cheque
Open cheque
Crossed cheque
Marked cheque
Drafts:
These are bills of exchange issued by a banker on his branch office.
Banks draft like bills of exchange, are of great importance in the
financing of trade, especially foreign trade
Promissory note:
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It is an instrument in writing containing an unconditional
undertaking, signed by the maker, to pay the certain sum of money
only to or to the order of a certain person to the bearer of the
instrument. a promissory note in order to be the so, must fulfill all
conditions.
Letter of credit:
A letter of credit as name signifies does one person or bank to
another requesting the letter to pay any amount of money up to a
certain limit to the person write a letter named in the letter or in
whose favor the letter is written. In this letter generally a date is
fixed upto only the addressee should make which advances. Thus a
letter of credit remains in force upto a certain date only. Generally
banks grant this letter of credit.
FOREIGN EXCHANGE DEPARTMENT
The term "foreign exchange" is used to denote either a foreign
currency or the rate at which one currency is converted into another
or the means & methods by which one currency is exchanged for
another.
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Functions of Foreign Currency Account Department
Foreign exchange department performs following functions:
Foreign Bills for collection (FBC)
Foreign telegraphic transfer (FTT)
Foreign Demand Draft (FDD)
TDR
Issuance of Proceed realization certificate
Inward remittances
Daily Reporting
Requirement of Funds Transfer
For transfer of fund in foreign currency, a person must have his
account in foreign exchange in the bank.
Requirement of account opening is $500 or any other currency
equivalent to $500.
Types of currency Interest p.a.
Dollar .25%
Pound sterling 2%
Euro 1%
THE CORPORATE AND INVESTMENT BANKING DIVISIONS
CBD & IBD are strongly positioned across priority markets
with a distinct strategy for developing corporate business. Our
strategic framework generates sustainable returns based on strong
market presence and financial solutions ranging from debt and
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equity market transactions to syndicate finance, and from
transaction banking to corporate finance advisory services.
2004 was challenging year due to historic lows in interest rates,
particularly for corporate business. The Corporate Banking Division
(CBD) undertook a number of dept re-pricing swap transactions,
aimed at reducing the financial burden of its key client portfolios
and also managed advisory and loan arrangement activities. The
major new relationships cover telecommunications, oil and gas, and
chemicals sectors. CBD has dedicated marketing and support units
functioning at Karachi and Lahore. In order to enhance focus on
relationship management, and service quality, more dedicated staff
is being assigned.
The investment banking activity mainly covers, debt / capital
markets, advisory services and trading (both equities and
derivatives).After the initial start-up phase, the capital market desk,
based at Karachi, increased the volume of capital market related
transactions.
The corporate and investment banking will continue to play a major
role in loan syndications, structured financing and debt / capital
raising transactions with the objective of providing entire range of
corporate and investment banking solutions to its valued clients
under one umbrella.
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AWARD AND ACHIEVEMENTS
In 1994, 1996 and 1997 the bank received Euro money and Asia
money awards. Askari has A1+ rating for short-term obligations the
highest possible for the category, while the long-term rating stands
at AA. Askari Bank Won the prestigious “Best presented Annual
Accounts” awards for 2000 and 2001 from the institute of cost and
Management Accountants of Pakistan, for the services sector.
Mr. Kalim-ur-Rahman, President
Askari Bank, with group having
award of
'The Best Retail Bank of Pakistan
2004'
For the past four years, the Bank has received prizes from the
South Asian Federalism of Accountants for “The Best presented
Annual Accounts” for the financial sector, in the SAARC region.
Over the years, Askari Bank has proved its strength as a
leading banking sector entity, by achieving the following firsts in
Pakistan banking.
i) First Pakistani Bank to offer on-line real-time banking on a
countrywide basis.
ii) First bank with a nation-wide ATM network
First bank to offer Internet Banking services
First Bank to offer e-commerce solutions.
The Askari Commercial Bank Limited has been declared “The
Best Bank in Pakistan” by the Global finance, an international
financial magazine of high repute as a result of their latest study of
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Banks in the Emerging Markets. This is the 2nd consecutive year that
the magazine has selected their bank for this prestigious Award.
The award will be presented to the Bank on the occasion of
the World Bank IMF meetings in Washington this autumn. While the
magazine will be formally announcing the names of the award
winning Banks in its May 2002 issue, they have already issued press
information for the international media, giving names of the award
winning banks, including the Askari commercial Bank limited.
Over the years, we have received several awards for the
quality of our banking service to individuals and corporate.
These Include:
Best Commercial Bank Consumer Choice award 2005 by
The Consumers Association of Pakistan
Best Retail Bank in Pakistan award 2004 & 2005 by The
Asian Banker
Best Corporate Report 1st prize awarded for 2000, 01, 03 &
04 by Institute of Chartered Accountants of Pakistan (ICAP)
and institute of Cost & Management of Accountants of
Pakistan (ICMAP)
Corporate Excellence awards for 2002 & 03 The
Management Association of Pakistan (MAP)
Best Corporate / Institutional Internet Bank in Pakistan
award for 2004 by Global Finance magazine
Best Consumer Internet Bank in Pakistan
award for 2002, 03 & 04 by Global Finance magazine
The Best Bank in Pakistan
award for 2001 & 02 by Global Finance Magazine
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Best Presented Accounts
Ranking prizes awarded from 1997 to 2002 by South Asian
Federation of Accountants (SAFA)
Commercial Bank of the Year
award for 1994 & 96 by Asia money magazine
Best Domestic Bank in Pakistan
award for 1995 by Euro money
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PRODUCTS AND SERVICES
PRODUCT AND SERVICES
The product & services of askari commercial bank limited are
developed keeping in view the customers needs & wants, & the
expectation that the customer attaches with its financial
institutions.
A product ACBL includes all those services which customer normally
required for effectively managing his business.
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ACBL offers the following financial services to its customers.
1) Deposits
2) Advances
3) Products
4) International banking services
5) Agency services to customers
1) DEPOSITS
One of the basic functions of commercial banking is to receive
deposits. ACBL accepts deposits in both local & foreign currency.
Local currency deposits
Current Account
PLS Saving Account
Term Deposit
Notice Deposit
Askari Faida Account
Askari Special Deposit Account
Value Plus Saving Account
Askari Advantage
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Current Account
A current account is a running & active account, which may be
operated upon any number of transactions during a working day.
The banker undertakes to repay these on demand & therefore
theses account are called demand deposits.
Transaction fee
The bank charges no transaction fees if the minimum balance
requirement is met. However, if the average balance falls below the
min. balance then the fees is charged at the rate of Rs. 10 per
transaction.
Saving Accounts
The saving account is usually opened by lower or middle class
people so that they can meet their future contingencies, as the
objective of such account is to promoting the habit of thrift among
people, the bank impose certain restrictions on withdrawals from
the saving accounts.
Transaction fees
Transaction fees are charged of Rs. 20 per transaction if the min
balance is not met.
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2. ADVANCES
Advances are major sources of earning of income for commercial
banks. Banks attracts surplus balances from the customers at
low interest rates & makes advances at higher interest rates to
the individuals or business firms.
ACBL offer these facilities in two forms:
Funded facilities
Non- Funded facilities
Funded facilities
In funded facilities the bank actually advance money against further
repayment. These facilities are known as cash credits.
Non- Funded facilities
Non- Funded facilities are those in which bank substitutes its own
credit for its customers.
ACBL offers to its customers are large number of non-funded
facilities.
These facilities includes:
1. Guarantee
2. Latter of credit
Irrevocable letter of credit
Revocable letter of credit
Sight letter of credit
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Usance letter of credit
3. PRODUCTS
PERSONAL FINANCE
Personal Finance is a parameter driven product for catering to the
needs of the general public belonging to different segments. One
can avail unlimited opportunities through Askari Bank's Personal
Finance. With unmatched finance features in terms of loan amount,
payback period and most affordable monthly installments, Askari
Bank's Personal Finance makes sure that one gets the most out of
his/her loan. Once a good credit history is established, the door to
opportunity opens much wider.
MORTGAGE FINANCE
Askari "Mortgage Finance" offers the convenience of owning a
house of choice, while living in it at its rental value. The installment
plan has carefully designed to suit both the budget &
accommodation requirements. It has been designed for enhancing
financing facility initially for employees of corporate companies for
purchase/ construction/ renovation of house. The maximum
financing amount is Rs. 10 million with a repayment tenure upto 20
years.
BUSINESS FINANCE
In pursuance of the National objectives to review the economy of
the country, ACBL is providing loans to small and medium size
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business enterprises under Askari Bank's Business Finance Scheme.
Our goal is to offer a loan, which enables business community to
receive the financing required by them based on their cash flows.
Ore valued customers can enjoy the convenience of getting
financing on attractive terms with the minimum processing
turnaround time.
ASKCAR (Car Finance)
Yet another of our products, Askar offers the most convenient and
affordable vehicle- financing scheme, which provides our valuable
customers an opportunity to own a brand new vehicle of their
choice. With minimum down payment, lowest insurance rates and
widest range of available car makes and models, Askcar offers the
best value to our esteemed customers.
ASKCARD
ASKCARD means freedom, comfort, convenience and security, so
that you can have retail transactions with complete peace of mind.
ASKCARD is your new shopping companion which enhances your
quality of life by letting you do shopping, dine at restaurants, pay
your utility bills, transfer funds, withdraw and deposit cash through
ATM anywhere, anytime.
TRAVELLER CHEQUES
The range of our products and value added services enhances with
introduction of Rupee Travellers Cheques (RTCs) launched in March
2002. In spite of our constraint on issuing higher denomination of
RTCs against restrictions imposed by the Central Bank of Pakistan
we have been striving to attain our shares with sizeable portfolio.
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Total volume handled by the department during the year 2004 is
Rs. 798 Million.
ASKPOWER
Askpower represents a useful tool with which to make secure
payments without the need to have any account, a debit or credit
card. This card comes with a number of unique features and
diversified usage capabilities like cash withdrawal from ATMs,
payment of utility bills through ATMs and internet Banking, transfer
of balance to another card and refill option. The prepaid card is
enjoying a great success all over the country.
VALUE PLUS
The first liability product launched by this unit is showing a
remarkable acceptability in the market. The growth of this product
is witnessed by its share, which has presently reached at Rs. 1,079
Million even after lowering down the profit rates due to sufficient
liquidity in the market.
ASKARI MASTER CARD
NO JOINING FEE
When you successfully apply for an Askari MasterCard, we will not
charge you any Joining Fee. It’s almost like you are getting it for
FREE!
GLOBAL ACCEPTABILITY
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Your card provides you with service at thousands of locations in
Pakistan, and at over 23 million establishments worldwide. As an
added convenience, you will have the benefit of receiving your
monthly billing in Pak Rupees, regardless of the currency of
purchase.
Think of the freedom this gives you!
24-HOUR CUSTOMER SERVICE
With Askari MasterCard, you are always a phone call away from the
assistance you need. To speak to one of our friendly Customer
Service representatives, please call our UAN 111-000-787 for
Karachi, Lahore or Rawalpindi/ Islamabad.
LOW SERVICE CHARGES
Your Askari MasterCard provides you the experience of revolving
your spending at comparatively low service charges. In addition, the
same rate also applies to cash advance obtained on your Askari
MasterCard.
ZERO LOSS LIABILITY
Please report loss or theft of your Askari MasterCard immediately at
our Customer Services UAN 111-000-787 for Karachi, Lahore and
Rawalpindi/Islamabad. Once you have registered the loss of your
credit card, your liability against its fraudulent use will be limited
and we will send a replacement card within 48 hours of reporting.
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SUPPLEMENTARY CARDS FOR YOUR LOVED ONES
Save yourself the inconvenience of applying for a separate Askari
MasterCard for your loved ones by requesting supplementary cards
when you apply for your own card. You will receive a consolidated
monthly account statement, which covers all the cards. This offer is
available for your loved ones over 18 years of age.
CASH ADVANCE FACILITY
Cash advance facility is available for Askari MasterCard holders.
You can get up to 80% of your sanctioned credit limit as cash
advance in Pakistan or anywhere else in the world. The facility is
available at all ATMs displaying the Cirrus logo around the world
and in Pakistan. You may also avail this facility at designated
branches of Askari Commercial Bank, during banking hours.
BALANCE TRANSFER FACILITY
With Askari MasterCard, you can avail an incredible offer of a
Balance Transfer at the exclusive rate of just 1.5%* per month.
A special privilege exclusively for Askari MasterCard members
FREE TRAVEL INSURANCE
Just purchase your travel tickets on Askari MasterCard and you are
automatically covered under our Travel Insurance Plan (in case of
personal accident resulting in death or permanent disablement) for
up to Rs.8,000,000/- on a Gold Card and Rs.4,000,000/- on a Silver
Card.
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STRESS FREE TRAVELLING
When you purchase your airline tickets for international travel on
Askari MasterCard you get:
· UPto * Rs.10,000 insurance cover for flight delays exceeding
6 hours.
· Upto* Rs.10,000 insurance cover for baggage delays
exceeding 6 hours.
· Upto* Rs.20,000 as baggage loss claim.
(*Certain conditions apply)
COMPLIMENTARY CIP & RAWAL LOUNGE FACILITIES
The next time you travel internationally, be a privileged guest at the
CIP lounge of Quaid-e-Azam International Airport, Karachi and
RAWAL Lounge of Islamabad International Airport. Your Askari
MasterCard entitles you to a host of Complimentary services like;
· Snacks and Beverages
· Free Internet, phone and fax facilities
· Newspapers and magazines
· Flight details information
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· Cellular phone charger connections
· So, no matter where you are going, you are always assured of a
red carpet welcome.
DISCOUNT AT AVARI HOTELS
Your Askari MasterCard entitles you to the following exciting
discounts* at Avari Hotel in Karachi, Lahore and Dubai:
· 60% on Room Rack Rates
· 10% on Restaurants
· 15% on Hall Rentals
· 15% on Family Health Club membership only
· 15% at the Business Center
· 10% on Conferences / Meetings Package Rate (cannot be used in
conjunction with Hall Rentals
· 10% at Beauty Saloon
· 10% on Rent a Car
*(Where available. Certain conditions apply)
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AGRICULTURE BANKING
The role of agriculture in Pakistan economy is of pivotal
nature. Due to diverse geographical and climatic conditions the
country has tremendous potential for growth and development in
agriculture. However, adequate and timely financial assistance to
the farmers will improve production potential of agriculture sector in
the country. The modern concept of agricultural credit envisages
establishment of an efficient institutional credit system to serve as a
package of credit, supplies and knowledge for the overall strength
of the farmers who at present suffer from low productivity and
financial insecurity. A successful credit evaluation system,
therefore, should have the basic ingredients to provide adequate
amount at the right time and in the right form to help farmers in
making a productive use of loan funds.
ASKARI KISSAN AGRICULTURE FINANCE PROGRAM
The Askari Kissan Agriculture Finance Program (AKAFP) has been
designed to meet ON FARM / OFF FARM credit requirements of
farmers on the most convenient, flexible, easy terms and
conditions. The program features:
A broad array of credit lines designed to meet farming
requirements.
Repay and borrow at your convenience on revolving credit basis at
lowest mark-up rates renewal able after three years.
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Convenient repayment terms based on cash flow abilities.
Availability of leased Tractors / Transport without Land / Collateral.
NO HIDDEN COST.
Availability of interest free package for inputs and tractors etc.
No Pre-adjustment penalties.
Earn prompt payment Bonuses and reduce financial costs.
Insurance cover of leased assets, animals, crops and life assurance
of borrowers.
PRODUCTS
Askari Kissan Ever Green Finance
Askari Kissan Tractor Finance
Askari Kissan Aabpashi Finance
Askari Kissan Livestock Development Finance
Askari Kissan Farm Mechanization Finance
Askari Kissan Farm Transport Finance
Ask Card
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FINANCIAL ANALYSIS
OBJECTIVES OF FINANCIAL STAEMENTS
ACCOUNTING POLICIES
BALANCE SHEET
INCOME STATEMENT
TREND ANALYSIS
COMMON SIZE ANALYSIS
RATIO ANALYSIS
GRAPHS OF STEADY GROWTH
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OBJECTIVES OF FINANCIAL STSEMENTS
“Financial statements are like a firm perfume – to be sniffed but not to swallowed.” “Abraham Brillof”
The firm itself and outside providers of capital – creditors, and investors – all
take benefit from the firm’s financial statements. The type of analysis varies
according to the specific interest of the party involved. Similarly objectives of
the financial statements analysis vary from person to person.
Trade creditors are primarily interested in the liquidity of the firm.
Their claims are short terms, and the ability of the firm to pay their
claims quickly is best judged by an analysis of the firm’s liquidity.
Bondholders are more interested in the cash flow ability of the firm
to service a debt over a long period of time. They may evaluate
their ability by analyzing the capital statement of the firm.
Investors usually focus on the profitability of the firm. They would
be concerned with the financial conditions insofar as it’s affects the
ability of the firm to pay dividends and avoid bankruptcy.
Management employees financial analysis for the purpose of
internal control and to better provide what capital suppliers seek in
financial conditions and performance from the firm
Management needs to undertake the financial analysis in order to
plan and control effectively.
Financial ratios are the tools, which are used to analyze the financial
conditions and performances.
Finally, financial statement analysis deals with the outcomes of the
past decisions and leads to the future planning.
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ACCOUNTING POLICIES
CASH AND CASH EQUIVALENTS
Cash and cash equivalents comprise cash and balances treasury
banks and balances with other banks.
REVENUE RECOGNITION
Mark-up and return on investments and advances is recognized on accrual
basis except for income which is required to be carried forward in compliance
with Prudential Regulations issued by the State Bank of Pakistan.
ADVANCES
Advances are stated net of provisions for non-performing advances.
The management keeping in view the requirements of the
Prudential Regulations issued by the State Bank of Pakistan
determines provision for non-performing advances. In addition a
general provision is maintained on a judgmental basis. Advances
are written off when there is no realistic prospect of recovery.
INVESTMENTS
In accordance with the requirements of BSD circular No. 11 dated
04 August 2004 securities for which ready quotations are available
on Reuters Page (PKRV) or Stock Exchanges are valued at market
value and he resulting surplus/deficit is kept in a separate account
and is shown below the shareholders’ equity in the balance sheet.
Investments where ready quotations are not available are stated at
cost less permanent diminution in value thereof.
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Had there been no change in accounting policy, surplus arising on
revaluation of investment would have been higher by 54.04 million
as at December 31, 2004.
Investments are classified as follow:
Held to maturity
Held for trading
Available for sale
CAPITAL WORK-IN-PROGRESS, OPERATING FIXED ASSETS
AND DEPRECIATION
Capital work-in-progress is stated at cost.
Fixed assets are stated at cost less accumulated depreciation
except for freehold land, which is stated at cost. Depreciation is
computed over the estimated useful lives of the related assets are
sates set out in note. The cost of assets is depreciated on the
diminishing balance method, except for vehicles, carpets and
renovation costs which are depreciated on a straight-line basis.
Depreciation is charged for the full month on purchase/acquisition
of an asset while no depreciation is charged in the month of
disposal of a n asset. Maintenance and normal repairs are charged
to income as and when incurred. Major renewals and improvements
are capitalized. Gains and losses on disposal of fixed assets are
taken to the profit and loss account.
Assets held under finance lease are accounted for by recording the
assets an related liabilities at the amounts determined on the basis
of lower of fair value of the assets and the present value of
minimum lease payments. Finance charge is allocated to
accounting periods in a manner o as to provide a constant periodic
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rate of charge on the outstanding liability. Depreciation is charged
on leased assets on the basis similar to that of owned assets.
TAXATION
Current tax is the expected tax payable on the taxable income for
the year using tax rates enacted at the balance sheet date and any
adjustment to tax payable of previous years.
Deferred tax is provide for using the balance sheet liability method
providing for temporary differences between the carrying amounts
of assets and liabilities for financial reporting purposes and the
amount used for taxation purposes. The amount of deferred tax
provided is based on the expected manner of realization or
settlement of the carrying amount of assets and liabilities using tax
rates enacted at the balance sheet date. A deferred tax asset is
recognized only to the extent that it is probable that future taxable
profit will be available and credits can be utilized. Deferred tax
assets are reduced to the extent that it is no longer probable that
the related tax benefit will be realized.
STAFF RETIREMENT BENEFITS
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DEFINED BENEFIT PLAN
The Bank operates an approved funded gratuity scheme for all its
permanent employees. Contributions are made in accordance with
the actuarial recommendation. The actuarial valuation is carried out
periodically using “Projected Unit Credit Actuarial Cost Method”. The
actuarial gains/losses of one accounting period are recognized in
the following accounting period.
DEFINED CONTRIBUTION PLAN
The Bank operates a recognized provident funds scheme for all its
permanent employees for which equal monthly contributions are
made both by the Bank and by the employees to the fund at the
rate of 8.33% of basic salaries of the employees.
COMPENSATED ABSENCES
The bank grants compensated absence of 15 days per annum to all
its permanent employees. Annual provision for liabilities towards
vested compensated absences is made on the basis of 1st drawn
basic salary.
FOREIGN CURRENCIES
Foreign currencies are translated into Rupees at exchange rats on
the date of transaction. Assets and liabilities in foreign currencies
are translated into Pak Rupees at the rates of exchange
approximating those ruling at the Balance Sheet date except those
covered by forward exchange contracts, which are converted at
contracted rates. Exchange gains and losses are taken to the profit
and loss account.
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PROVISION OF CONTINGENCIES
Provision for guarantee claims and other off balance sheet
obligations is recognized when intimated and reasonable certainty
exists for the Bank to settle the obligations. Debating the
customer’s account recognizes expected recoveries. Charge to
profit and loss account is stated net off expected recoveries.
OFF-SETTING
Financial assets and financial liabilities are only offset and the net
amount is reported in the financial statements when there is a
legally enforceable right to set-off the recognized amount and the
bank intend either to settle on a net basis, or to realize the assets
and to settle the liabilities simultaneously.
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BALANCE SHEET
AND
INCOME STATMENT
BALANCE SHEET AS ON
DEC.31 2004 20042003
ASSETS:
Cash and balances with treasury bank 8,762,866 6,678,026
Balances with other banks 4,847,899 2,650,166
Lending to financial institutions 2,324,839 5,770,842
Investments 17,239,157 22,104,425
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Advances 69,938,041 44,777,538
Other assets 1,459,716 1,425,986
Operating fixed assets 2,595,023 1,979,919
107,167,541 85,386,902
LIABILITIES:
Bills payable 1,227,093 973,703
Borrowing from financial institution 13,781,555 15,903,055
Deposits and other accounts 83,381,795 61,656,607
Sub-ordinated loans 1,000,000
Liabilities against assets subject to finance lease 14,159 37,350
Other liabilities 1,282,981 962,592
Deferred Tax Liabilities 526,865 806,753
101,151,448 80,340,060
Net Assets 6,016,093 5,046,842
Represented by:
Head office capital accounts 1,255,848 1,141,680
Capital reserve 4,317,301 2,759,599
Un remitted profits
5,573,149 3,901,279
Surplus on revaluation of securities-net of tax 442,944 1,145,563
6,016,093 5,046,842
ASKARI COMMERCIAL BANK LIMITEDPROFIT AND LOSS ACCOUNT
FOR THE YEAR ENDED 31ST DECEMBER, 2004
2004 2003(Rupees in thousand)
Mark-up/return / interest earned 4,487,206 4,073,715Mark-up/return / interest expensed 1,117,206 1,379,609Net mark-up / interest income 3,370,000 2,694,106Provision against non performing loans and advances 277,398 308,528Provision for diminution in the value of investments 38,066 -
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Bad debts written off directly 7 -315,471 308,528
Net mark-up / interest income after provisions 3,054,529 2,385,578NON MARK- UP/ INTEREST INCOMEFee, commission and brokerage income 649,988 524,775Dividend income 26,318 37,658Income from dealing foreign currencies 180,992 112,808Other income 776,230 278,512Total non mark-up / interest income 1,633,528 953,753
4,688,057 3,339,331NON MARK-UP / INTEREST INCOMEAdministrative expense 1,845,179 1,436,304Other provisions / write offs - -Other charges 138 1,227Total non mark-up / interest expense 1,845,317 1,437,531
2,842,740 1,901,800Extra ordinary unusual items - -PROFIT BEFORE TAXATION 2,842,740 1,901,800Taxation – Current 876,089 873,639
Prior years - -Deferred 43,611 (74,904)
919,700 798,735Profit after Taxation 1,923,040 1,103,065Inappropriate profit brought forward - -Profit available for appropriation 1,923,040 1,103,065APPROPRIATIONS:Transfer to:Statutory reserves 384,608 220,613Capital reserves (reserves for the issue of bonus shares) 251,170 114,168Revenues Reserves 1,036,092 539,948Proposed cash dividend 251,170 228,336
1,923,040 1,103,065Un-appropriated profit carried forward - -Basic earning per share - (Rupees) 15.31 8.78
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TREND ANALYSIS (Horizontal Analysis)
FINANCIAL SUMMARY
Trend Analysis, also called Horizontal Analysis of the financial
statements is one directional- upward or downward analysis and
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involves the computation of the percentage relationship that each
statement item bears to the same item in the base year
The operating expenses of the bank has been increased with sharp
margin, the ACBL is newly born bank of only 14 years old and is
growing rapidly so, we can say that the reason behind the rapid
increase of its operating expenses may be the expansion of
business. In order to get handsome profit the expenses are
necessary as it is shown by the fact that if the bank’s operating
expenses have been increased then, there is also an increase in the
profit before income tax and profit after income tax.
IBA University of the Punjab Lahore
2000 2001 2002 2003 2004Profitability (Rs in million)
Total Income 3840 5047 5704 5028 6121Interest income 3213 4251 4858 4074 4487Interest exp 2274 2902 3017 1380 1117Fee, comm. Exch.Income
506 677 299 638 831
Other income 122 119 247 317 802Spread 939 1349 1841 2694 3370Operating expenses
680 854 1093 1438 1845
Operating Profit 886 1291 1595 2210 3158Non performing assets
134 283 351 308 315
Profit b/f tax 752 1008 1244 1902 2843Taxation 436 458 557 799 920Profit after taxation
316 551 687 1103 1923
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SHAREHOLDER’S FUNDS
TREND ANALYSIS
The shareholder’s fund of the bank is continuously increasing, as
the bank is running on profit, therefore, the business take interest in
this project and wish to participate in it. The bank’s share capital
and reserves are also increasing with the expansion of business.
LIABILITIES
IBA University of the Punjab Lahore
2000 2001 2002 2003 2004Shareholder’s Funds
(Rs in million)
Total share holders fund
2155 2579 4173 5047 6016
Share capital 986 1036 1087 1142 1256Reserves 1229 1521 1940 2760 4317Surplus on ROA (60) 22 1146 1145 443
2000 2001 2002 2003 2004Shareholder’s Funds
%AGE
Total share holders fund
100 119.6 193.6 234.2 279.2
Share capital 100 105.0 110.2 115.8 127.4Reserves 100 123.7 157.8 224.6 351.2
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TREND ANALYSIS
New if we analyze the liability side of the bank we see that the
bank’s deposits are going on increasing since its birth which is a
very healthy sign for the bank as the bank’s basic business is to
deal in money. The increase in deposits show that the people have
interest in the bank and deposit their fund in the bank without any
hesitation. However it has not been mentioned here that how many
of the deposit are current and how many of them have fixed nature
but we can say that it is a very important source of the bank to earn
profit. As the banks usually earn through interest or mark ups
imposed on the deposits they keep with themselves.
IBA University of the Punjab Lahore
2000 2001 2002 2003 2004Liabilities (Rs. in million)
Customers deposits
30360 41200 51732 61657 83319
Refinance borrowings
2882 3222 3392 7329 9777
Sub-ordinated loans
- - - - 1000
Other liabilities
3058 3980 11016 11354 7055
2000 2001 2002 2003 2004
Liabilities PERCENTAGE
Customers deposits
100 135.7 170.4 203.0 274.4
Refinance borrowings
100 111.7 117.7 254.3 340.0
Other liabilities
100 130.1 360.2 371.3 230.7
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ASSETS
2000 2001 2002 2003 2004Assets (Rs. in million)
Advances 17893 23292 30035 44778 69938
Investments 8651 11706 26737 22104 17239Cash, short funds and statutory deposits with SBP
10056 13436 10061 15099 15936
Operating fixed assets
641 723 1663 1980 2595
Other assets 1213 1824 1817 1426 1460
Total assets 38454 50980 70313 8538710716
8
Now we will discuss the assets side of the bank. The liquidity
position is essentially important for the bank, as it must have all the
time sufficient funds to meet the demands for the money that may
be made on it. It is the protection against the risk that losses may
develop if banks are forced to sell or liquidate creditworthy assets in
an adverse market. The current liquidity position of the bank has
improved as indicated by the percentages shown in the table below.
TREND ANALYSIS
2000 2001 2002 2003 2004Assets (Rs. in million)
Advances 100 130.2 167.8 250.2 390.9
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Investments 100 135.3 309.1 255.5 199.3Cash, short funds and statutory deposits with SBP
100 133.6 100.0 150.1 158.4
Operating fixed assets
100 112.7 259.4 308.9 404.8
Other assets 100 150.3 149.8 117.5 120.4
Total assets 100 132.5 182.8 222.0 278.7
An upward trend in deposits accompanied by a upward trend in
advances too, and mark up revenues means in effective credit
policies, efficient credit collection resulting in healthy financial
development.
The property plant and equipment is the kind of asset, which is
required by the service business only to increase its network
therefore the ratio of the bank’s plant and equipments as compared
with the other important particulars of the assets is high. But here
one thing should be mentioned that it is the policy of the bank not
to start the business on the rented premises. The bank has mostly
started business on its own premises. The other assets of the bank
are also showing a good amount that means that bank is in position
to earn money from every available source.
BUSINESS TRANSACTED
IBA University of the Punjab Lahore
2000 2001 2002 2003 2004
Business Transacted
(Rs. In billion)
Imports 26.2 32.0 40.2 48.7 75.2Exports 30.6 38.8 47.3 56.8 70.1Guarantees 4.8 6.2 14.2 14.4 25.3
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TREND ANALYSIS
Now we will discuss the business transacted opt the bank in terms
of import and exports we see that imports and exports through
ACBL are continuously on increase which is a very health sign for
the banking business as the banks earn major portion of their profit
through imports and exports. It shows the efficiency of the credit
department. The reasons for this improvement may be
Careful scrutinizing of all the documents
Intelligent corresponding with the customer
True 7 C’s analysis of the customer such as his business and
moral character
Granting facility to selected customers who rate well on the
selected criteria for loan disbursement.
This improvement in imports and exports is extremely large if we
compare it with the figures of 2000.
IBA University of the Punjab Lahore
2000 2001 2002 2003 2004
Business Transacted (PERCENTAGE)
Imports 100 122.1 153.4 185.8 287.0Exports 100 126.8 154.5 185.6 229.1Guarantees 100 129.2 295.8 300.0 527.1
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COMMON SIZE ANALYSIS
(VERTICAL ANALYSIS)
COMMON SIZE ANALYSIS
An analysis of percentage financial statements where all balance
sheet items are divided by total assets and all income statements
items are divided by net sales or revenues.
In addition to other financial ratios over time, it is often useful to
express balance sheet items and income statement items as
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percentages. Common –size Analysis, also called Vertical Analysis,
or Component Percentage, or 100 percent Statements as each
statement is reduced to the total of 100 and each individual item is
stated as a percentage of the total of 100.
INTERPRETATION
The most important component of any profit and loss account of a
banking concern is its mark up expenses it has to pay for servicing
the depositors. The foregoing data shows that the markup expenses
absorb about 85% of the revenues (a favorable position). This shows
that the bank has been successful in
Selling larger volumes of higher profit items.
Increasing economy in procurement
Adopting other effective and more profitable deposit raising
policies at a lower lost.
IBA University of the Punjab Lahore
2000 2001 2002 2003 2004Profitability (Vertical Analysis)
Total Income 100 100 100 100 100Interest income 83.6 84.2 85.2 81.0 73.3Interest exp 59.2 57.5 52.9 27.4 18.2Fee, comm. Exch.Income
13.2 13.4 5.24 12.7 13.6
Other income 3.18 3.94 4.33 6.30 13.1Spread 24.4 26.7 32.3 53.6 55.0Operating expenses
17.7 16.9 19.2 28.6 30.1
Operating Profit 23.1 25.6 27.9 43.9 51.6Non performing assets
3.49 5.61 6.15 6.12 5.15
Profit b/f tax 19.6 19.9 21.8 37.8 46.4Taxation 11.3 9.07 9.76 15.9 15.0Profit after taxation
8.23 10.9 12.0 21.9 31.4
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The interest expense of the ACBL is 18.2% of the total revenue of
the bank in 2004, which is remarkable as the bank is earning about
85% of the revenue as interest income. We have handsome margin
between the interest income and the interest expense of the bank.
The data shows that the bank’s other income %age is not as much
high rather it is very low which shows that the bank does not rely on
other sources for its profit but it earns major portion of its income
through its basic business.
The bank seems to have increased control over its operating
expenses, i.e. non-mark up expenses as these now absorb only 30%
on average of the total revenues, that is a very healthy sign for the
bank. In the net shell, it would not be wrong to say that the bank
has improved its financial position and operating efficiency over the
last years.
The profit after tax is showing about 31.4% of the total revenues of
the bank although the margin of profit is not too much high but it is
shown from the data that the bank is going on increasing its profit
after tax over the year.
LIABILITIES AND OWNER’S EQUITY
(Vertical Analysis)
IBA University of the Punjab Lahore
2000 2001 2002 2003 2004(Vertical Analysis)
Total share holders fund
5.29 4.82 5.69 5.65 5.38
Share capital 2.42 1.93 1.48 1.28 1.12Reserves 3.02 2.84 2.64 3.09 3.86Customers deposits
74.6 76.9 70.5 69.0 74.5
Refinance borrowings
7.08 6.02 4.62 8.21 8.74
Other liabilities 7.52 7.43 15.0 12.7 6.31
Total 100 100 100 100 100
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INTERPRETATION
The liabilities and owner’s equity are side components of the
bank showing the relationship as compared with the total of the
liabilities and owner’s equity. The bank’s shareholders fund is
showing percentage more than the share capital, which shows that
the bank own capital is lees than the shareholders capital. However
it is also evident from the data that the %age is decreasing of the
overall %age of the share capital over the last two or three years.
But it is also seen that the share capital %age as compared to the
total liabilities of the bank has also been decreased. So we can say
that the same conditions are prevailing regarding the share capital
and the shareholders fund.
Among the assets of the bank the highest %age is of the customer
deposits. The bank’s management seems to have adopted a very
effective marketing policy, as the deposits of the bank constitute
about 75% of the total assets of the bank. In the last year, this
figure stood at 69% of the total resource. This shows the high level
of products and associated services provided by the bank.
ASSETS (Vertical Analysis)
2000 2001 2002 2003 2004Assets (Vertical Analysis)
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Advances 46.5 45.7 42.7 52.4 65.2
Investments 22.4 22.9 38.0 25.8 16.1Cash, short funds and statutory deposits with SBP
26.1 26.3 14.3 17.6 14.8
Operating fixed assets
1.67 1.42 2.36 2.32 2.42
Other assets 3.15 3.57 2.58 1.67 1.36
Total assets 100 100 100 100 100
INTERPRETATION
On one hand Advances have also increased from 52% in the
previous year to 65% in the current year which may indicate that
the bank utilize the funds raised in the other activities primarily
lending to the financial institutions as it is the most secure source of
financing available in the economy.
Cash, short term funds and statutory deposits with SBP are also
increasing. The property plant and equipment of the bank is
showing a little portion of the bank’s total assets.
In the last the bank is over all showing a good financial health and is
going on healthy tracks in near future it has no risk of bankruptcy.
Although the bank is showing good results but we can’t say that
these are the best conditions prevailing in the bank as we are
unaware of the market conditions and can’t compare it with other
banks.
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RATIO ANALYSIS
PROFITABILITY RATIOS
LIQUIDITY RATIOS
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ASSET QUALITY RATIOS
PORTFOLIO MANAGEMENT
CAPITAL ADEQUACY RATIO
CAPITAL GEARING RATIOS
PROFITABILITY RATIOS
The continued viability of any bank depends on its ability to earn an
appropriate return on its assets and capital. Good earning
performance enables a bank to fund its operations, remain
competitive in the market and increase or decrease in market
funds.
RETURN ON CAPITAL FUND
Formula = Net mark up Received
Capital Funds
2004 = 3370000 = 60.47%
5573149
2003 = 2694106 = 69.06%
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3901279
2002 = 1638357 = 54.13%
3026550
INTERPRETATION
This ratio relates the net profits to the amount of capital funds that
have been employed in making that profit.
The above given ratios suggest that the profitability of the bank has
increased very in the year 2003 indicating more profitable
operations of the bank. While discussing the trend analysis, we
mentioned that the mark up charges have increased in some
proportion but the mark up earned by the bank resulting increase in
the profit available on the capital funds employed. This ratio
showing a very good financial position of the bank.
RETURN ON INVESTMENT
Formula = Net income after taxes
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Total Assets
2004 = 3370000 = 1.79%
5573149
2003 = 1103065 = 1.29%
85386902
2002 = 686994 = 0.98%
70313073
INTERPRETATION
This ratio indicates the profit earned by the bank on the resources
employed. As far as ACBL is concerned, we observe an increase in
the utilization of the resources. It has increased to 1.29 % in the
year 2003 from 0.98 % in the year 2002, It has increased to 1.79 %
in the year 2004 from 1.29 % in the year 2003, the reason behind
the slight increase in the increase of profit may be due to the efforts
of the management.
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RETURN ON RISK ASSETS
Formula = Net income after taxes
Total risk assets
2004 = 1923040 = 2.75%
69938041
2003 = 1103065 = 2.46%
44777538
2002 = 550051 = 2.36%
23291367
INTERPRETATION
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This ratio, with some fluctuation in 2003 came up from 2.46% in
2003 to2.75 % in the year 2004. It is indicating active utilization in
the form of advances. The bank is finding it difficult to keep the
level of its expenses less in proportion to the advances it has
disbursed. Lending, no doubt is the core function of a banking
concern. But the bank should find out effective ways of credit
provisions affecting less on profitability of the operations. Non-mark
up revenues should also be increased in the face of lower credit
disbursements resulting in more.
RETURN ON DEPOSITS
Formula = Net income before taxes
Total Deposits
2004 = 2842740 = 3.41%
83318795
2003 = 1901800 = 3.08%
61657000
2002 = 1244022 = 2.47%
41200166
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INTERPRETATION
Interpret This ratio indicates to what extent deposits which
represent funds mobilization on the part of the bank contribute
towards income generation. Although the other ratios regarding the
profitability are showing satisfactory position of the bank but still
bank need to increase its utilization of resources in order to increase
its profitability because the banks have to pay heavy taxes on their
profit.
OPERATING EXPENSES TO NET REVENUE
Formula = Operating Expenses
Net Revenue
(Rs. In million)
2004 = 1845 = 30.1%
6121
2003 = 1438 = 28.6%
5028
2002 = 1093 = 19.2%
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5704
INTERPRETATION
This ratio signifies the proportion of the revenues that is used to
cover the operating expenses of the bank. The ratios calculated
above gives a good picture of the bank’s operations. This ratio is
increasing from year 2002 to 2004 and giving a bright picture of the
profits for the bank. With respect to the banking expansions this
ratio is showing a very good picture as we know the expansions
required lot of expansions, although the operating expenses of the
bank are increasing as we have seen in the trend ratio but their
proportion of increase is not alarming.
In short, the bank in an attempt to maintain at a good level of
liquidity, has a low level of profitability but there is a continuous
push in the profits and there are chances that the bank will reach at
a point of high liquidity and profitability.
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LIQUIDITY RATIOS
The liquidity position of a bank is like a reservoir. It may be
adequate, although nearly depleted, just before the start of the
rainy season. Or it may be inadequate, although three quarters full
just before the summer drought.
Liquidity can be defined as:
“The bank’s ability not only to meet possible deposit
withdrawals but also to provide for the legitimate needs of the
economy as well”
ADVANCES TO DEPOSITS RATIO
Formula = Advances
Total Deposits
2004 = 69938041 = 83.9%
83318795
2003 = 44778000 = 58.6%
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61657000
2002 = 30035484 = 72.62%
51731506
INTERPRETATION
It demonstrate the degree to which bank has already used up its
available resources to accommodate the credit needs of its
customers.
This ratio, a comparison of funds generation and its funds
mobilization, indicates the total loans sanctioned by the bank in
relation to total amount of money deposited with the bank stands at
83.9% compared with the last year figure of 58.6%. This shows that
the bank has greater potential to advance additional loans. Total
loan able funds roughly measured by the deposits are sufficient to
enable the bank to make additional loans without recourse to more
or less continuous borrowing. At present, the bank has got a
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relatively small amount of advances as compared with its deposits
raised. One reason for fewer advances is the cautious and selective
approach on the part of the management while deciding upon credit
proposals.
DUE FROM BANKS TO TOTAL ASSETS
Formula = Due from banks
Total Assets
2004 = 2324839 = 2.17%
107167541
2003 = 5770842 = 6.75%
85386902
2002 = 3414470 = 4.86%
70313073
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INTERPRETATION
It is an indication of ACBL’s funds management policies. The funds
allocation to the financial institutions has increased to a great
extent despite the fact that still it holds a small proportion relevant
to the total resources raised by the bank. It is a positive indicator in
the sense that the financing to the banks are the most secure ways
of lending. Considering the economic conditions of the country, it
seems to be the best alternative available to the bank. In the
current year this ratio has been reduced to the little extent.
Although it is declining but the situation might not be alarming.
DUE FROM BANKS TO DUE TO BANKS
Formula = Due from banks
Due to Banks
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2004 = 2324839 = 16.87%
13781555
2003 = 5770842 = 36.29%
15903055
2002 = 3414470 = 29.79%
11460394
INTERPRETATION
It shows the relationship between what the bank owes from other
banks and what is due to it. An unfavorable condition has been
observed in this ratio in the current year showing the fact that the
bank has to seek fewer funds from the financial institutions owing to
the strong liquid financial position. This ratio is going on increasing
in last year but decreasing in current year, which involves a slight
risk. In the phase of economic instability, the bank’s management
should be efficient to access the risk involved in lending and they
should control this ratio.
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DUE TO BANKS TO TOTAL DEPOSITS
Formula = Due to banks
Total deposits
2004 = 13781555 = 16.54%
83318795
2003 = 15903055 = 25.79%
61656607
2002 = 11460394 = 22.15%
51732000
INTERPRETATION
This ratio is an indicative of the proportion of the lending from the
financial institutions in relation to the total funds raised by the bank
in the form of deposits.
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This ratio for ACBL is 16.54% in the year 2004. There has been a
significant decline in this ratio as previously the bank depended
slightly more on the borrowings from financial institutions. It shows
that the bank is concentrating on raising funds from depositors and
trying to relies less on the borrowed funds.
It is a favorable indication in the sense that the bank has large
potential to ask for borrowed funds in the phase of tight
liquidity position.
Further more, it shows the efficiency of the marketing
department to have created so much of deposits that the
bank does not need to look at the financial institutions for
help in improving its liquid position.
There is another favorable aspect of this declining tendency.
The rate of interest offered to the depositors is very low in
comparison with the interest to be paid to the financial
institutions for their funds. A decline in this ratio means less
mark up burden on the bank resulting in less financial risk for
the bank.
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COVERAGE RATIO
Coverage ratio measures the capacity of the bank to cover its
interest charges, which are the main obligations on the bank.
INTEREST COVERAGE RATIO
Formula = Earning before int. & Tax
Interest Exp.
2004 = 4688057 = 2.54 times
1845317
2003 = 3339331 = 2.32 times
1437531
2002 = 2336537 = 2.13 times
1092515
INTERPRETATION
It shows whether the bank is earning enough profit before mark up
charges to be paid to the financiers and the taxation obligations due
to the government in order to remain solvent.
The above figure shows the acceptable capacity on the part of the
bank to cover its interest payments. It has increased as compared
with the last year. This increase in the ratio is a sign of
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improvement for the bank. But this is a short-term perspective of
the bank’s financial position. In view of the long run financial
perspective, this ratio is good for the bank.
CAPITAL ADEQUACY RATIOS
CAPITAL FUNDS TO TOTAL ASSETS RATIO
Formula = Capital Funds
Total Assets
2004 = 5573149 = 5.20%
107167541
2003 = 3901279 = 4.57%
85386902
2002 = 3026550 = 4.30%
70313073
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INTERPRETATION
This ratio indicates the extent of the funds employed by the bank in
the total resources as shown in the balance sheet. This ratio has
been decreased in the current year with a very low margin.
Capital Fund to Risk Assets Ratio
Formula = Capital Fund
Risk Assets
2004 = 5573149 = 7.97%
69938041
2003 = 3901279 = 8.71%
44777538
2002 = 3026550 = 10.07%
30035484
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INTERPRETATION
This ratio take into account the difference between cash and
marketable securities & other kind of assets. Cash & marketable
securities, which are risk less items, are excluded to find out the
true picture of the capital adequacy. In case of ACBL the ratio is
decreasing.
GRAPHS OF STEADY GROWTH
THE GRAPHS OF GROWTH ARE SHOWN FOR THE LAST FIVE
YEARS, FROM 2000 TO 2004
PROFIT BEFORE TAX
(Rs. In million)
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The above graph shows that the profit before tax of the Askari
Commercial Bank shows a trend of increase and continuous
increase in the profit before tax of the bank, it goes on increasing
every year and its ratio has not been fall since the last five years.
In 2004 the profit before tax increased with greater margin as
compared to the previous four years.
DEPOSITS
(Rs. In million)
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Askari Commercial Bank is known to be the leading bank in the
private sector. Customers’ shows a lot of loyalty to the bank,
therefore, the deposits of the bank go on increasing every year and
its ratio has not been fall since the last five years.
LOANS AND ADVANCES
(Rs. In million)
The Askari Commercial Bank has adequate amount of money as
result of deposits it keeps with itself of their valuable customers. It
keep a certain percentage of money in order to meet the day to day
transactions of the bank and lend reaming amount as advances and
loans which is very important source of business for the bank. The
graph shows that the capacity of the bank to lend the advances and
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loans is going on increasing since the last five years and is highest
in the year 2004.
INVESTMENTS
(Rs. In million)
The Askari Commercial Bank is showing a mix trend of increase and
decrease in the investments of the bank, it goes on increasing from
year 2000 to 2002 and its ratio is highest in 2002. From 2002 it
starts declining.
TOTAL ASSETS
(Rs. In million)
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Total Assets of the bank are increasing every year with the
expansion in the business .In 2004 the assets of the bank has been
increased more than twined a time as compared to the year
2000.which clearly shows the rapid expansion of the bank.
EARNING PER SHARE
(In Rupees)
The earning per share of the bank is also showing good position and
is enough to satisfy the shareholders of the bank, the number of the
shareholders fund has also been increased from the last five years.
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The graph shows that the bank’s earning per share ratio is highest
in the year 2004 and is lowest in the year 2000.
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SWOT ANALYSIS
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SWOT ANALYSIS
An analysis indicating towards the organizations strengths,
weaknesses, opportunities and threat is termed as SWOT Analysis.
Such an analysis is very important for the management in retaining
the strength, overcoming the weaknesses, capitalizing over the
emerging market opportunities, and carving ways to successfully
tackle with the threats and ultimately converting them in the
strengths for the organization.
During six weeks of my stay at Askari Commercial Bank, Shahalam
Market Lahore, I have come across the following SWOT analysis of
the bank.
STRENGTHS
LEADING PRIVATE SECTOR BANK:Askari commercial bank is the leading private sector bank in the
banking network in Pakistan with many of them online branches in
major cities of the country
AUTOMATIC OPERATIONS:
The operations performed by the bank are highly automated that
result in assurance for the customers that their transactions are
completed reliably, efficiently and securely.
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FULL DAY BANKING
One can avail the benefit of the services provided at the bank till
5:00 P.m. which is highly useful for those customers who find it
difficult to leave their officers in the morning..
ATM NETWORK
The bank has the largest ATM Network cross the country. The
customers of ACBL withdraw access their funds any time at all the
ATM Sites with ASKCASH Logo.
CUSTOMIZED SOLUTIONS
The management of the bank believes in customer focused banking
rather than the product oriented banking. The products and services
designed by the bank are specifically tailored to the individual
needs of its customers.
CUSTOMER ORIENTED BANKING
The priority banking centres of the bank offer an unmatched where
the customer receives highly privileged services in a highly elegant
environment. It gives the chance of experiencing new standards in
banking. Designed specially for those who appreciate only the finest
things in life, Priority Banking offers the very highest levels of
personalized banking to match customer’s unique status.
ELECTRONIC BANKING
The revolution in the banking in the form of electronic banking
operations have opened avenues of excellent, efficient and quick
services saving the time and costs of the customers and fortunately
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ACBL is among those few banks who are already reaping the
benefits of electronic transactions.
ELECTRONIC FUNDS TRANSFER
ACBL management is quite prepared to adopt the latest
advancements in technology resulting in revolution in the banking
operations such as check clearing process, computer based teller
equipment, automatic teller machines, and electronic funds
transfers among the others.
PHONE BANKING
Phone banking service is very attractive for those classes of
customers who don’t have time to personally come to the bank i.e.
banking on the phone line thus saving the precious time of the
customers.
ETHICAL CONCERNS AND PUBLIC IMAGE
The organizations showing concern for the people, ethics, and
environment enjoy good public reputation and are able to reap the
benefits in the long run. ACBL management is quite sensitive to this
issue.
WEAKNESSES
In my opinions these are the points that might be detrimental to the
efficiency and profitability of the bank.
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NOT HIGHLY AUTOMATED
The bank has still some of the traditional ways of operations in this
advanced technological environment.
MANUAL BOOK-KEEPING
Although the bank has computerized accounting system but, still
the bankers use to make their entries in the accounting register.
LOW JOB SATISFACTION
Understanding and the effective management of the human
resources is the most difficult challenge faced not only by the bank
but by all the organizations. Even though the people have been
sacrificed in the new organizational developments, it is becoming
clear that the true lasting competitive advantage comes through
human resources and how they are managed. ACBL seems to not
focusing on this highly critical issue as the job satisfaction level of
the employees working at ACBL, was quite low.
LACK OF SPECIALISATION
This famous and useful concept given by Adam Smith in 1776
seems to be missing in the bank. The employees are constantly
rotated from one job to another job of totally different characteristic
in the view of giving them the know-how of the working in all the
departments. But I think this is not a very good tactics used by the
management. Otherwise the situation might be like this ‘Jack of all
and master of none.’
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CENTRALIZATION
There is a high degree of centralisation in the bank. Almost all the
decision-making is in the hands of the upper management. But
centralisation is effective up to a certain level otherwise it becomes
inefficient and at times costly too. I personally observed that delay
occurred in the operations of the employees only due to the fact
that they had not got any instructions from the head office.
LACK OF TRAINING FACILITIES
Presently there is no specific training program arranged for the new
recruiters. They have to learn based on their observations and also
their mistakes. It takes a bit time for the fresh one to learn the
banking the result is huge amount of blunders, mistakes etc.
resulting in monetary and non-monetary losses for the bank. There
is pressure not only on the new learner but also on the person
placed upon with this responsibility.
OPPORTUNITIES
Apart from the ones discussed in External Factors Evaluation Matrix,
the bank is facing the following threats and opportunities currently:
These are positive external environmental factors effecting the
organization.
It deals in bulk business.
A large amount of foreign investment is attracted.
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Strong potential for growth
Steady increase in Customer Deposits
Overseas Operations
Branches In Remote Areas
Islamic Banking
Sharp increase in imports and exports
THREATS
High Employees Turnover
As discussed above, the job satisfaction level of the employee is
very low resulting in high turnover, which is bad for any
organization as there are huge monetary and non-monetary costs
involved in the fresh recruitments.
High charges
The schedules of charges indicate that the fees charged by the bank
on the various services it provides are extremely high. It may result
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in decrease in the number of its exiting customers. Further more,
this could be very alarming situation for the bank in case some of
the competitors grasped the opportunity and lowered its rates. The
result would be either the lost of market share or decrease in the
charges resulting in lowering the bank’s income.
Less attractive rate of return
Commercial banks face considerable competition in attracting
deposits from individuals or small investors. In contrast, the Govt.
of Pakistan national saving scheme offers attractive rates of return
(approx. 16 to 18 percent annually) on 10-15 year fixed accounts,
which banks find difficult to match.
Stiff Competition
SCB is currently facing strict competition from the foreign banks
especially the American who banks enjoy a good market position.
Collectively U.S. banks hold approximately 9 percent of all
commercial banks' assets. At present, three American banks are
operating in Pakistan: American Express Bank; Bank of America
and Citibank.
Less Experienced Staff
Owing to huge turnover of the employees, the no. of experienced
and well trained staff is very low. Majority of the staff working in the
bank branches is quite young and inexperienced. If the bank failed
to bring down its high employees turnover, then it would be lacking
the most important resources of any organization i.e. the
experienced staff.
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STRATEGIC MANAGEMENT
“The art and science of formulating, implementing and evaluating
cross-functional decisions that enable an organization to achieve its
objectives.”
STATEGIC MANAGEMENT PROCESS:
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Develop Vision & Mission
Perform External Audit
Establish Long term objectives
Generate Evaluate, and select strategies
Implement strategies Management Issues
Implement strategies Marketing, Finance, MIS Issues
Measure and evaluate performance
ACBL Internship Report
Stage1_________________Stage2___________________Stage3
The strategic management process consist of three stages
1. Strategy Formulation2. Strategy Implementation3. Strategy Evaluation
STARTEGY FORMULATION STAGE:
The strategy formulation stage includes the development of vision
and mission, identification of organization external opportunities,
identification of the organizational internal strengths and
weaknesses, establishment of long term objectives, generation of
alternative strategies and selection of the pertinent strategies to
pursue in the long run. On the other hand, this stage also describes
about the selection of business, allocation of available resources,
expansion of operations, entering into the new markets and the
conditions of mergers and joint ventures.
STARTEGY IMPLEMENTATION STAGE:
This stage requires a firm to establish annual objectives, devise
policies, motivate employees and allocate resources so that
formulated strategies can be executed. As for the purpose of
achieving long term objectives the annual objectives are described
and the policies are established for them. By implementation of
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Perform internal audit
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strategies, it is evident that employees and the managers put the
formulated strategies to action. That’s why this stage is also called
an action stage of strategic management.
STRATEGY EVALUATION STAGE:
It is the final stage in the strategic management process. The
strategies, which are implemented at the second stage, are now
evaluated as hey are working in accordance with the objectives or
not. Besides it, all strategies are subject to future modification
because external and internal factors are constantly changing.
EXTERNAL AUDIT:
The purpose of an external audit is to develop a finite list of
opportunities that could benefit the organization and threats that
should be avoided. There are lots of factors, which are involved in
determining the external environment, but certain key variables are
taken that offer actionable responses. The organization should have
to respond either offensively or defensively to the factors by
formulating strategies that take advantage of external opportunities
or that minimize the impact of potential threats.
KEY EXTERNAL FACTORS:
External forces/ factors can be divided into five broad categories
1. Economic forces
2. Social, Cultural, demographic and environmental forces
3. Political, Governmental and Legal forces
4. Technological forces
5. Competitive forces
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OPPORTUNITIES FOR ASKARI COMMERCIAL BANK
These are positive external environmental factors effecting the
organization.
It deals in bulk business.
A large amount of foreign investment is attracted.
Strong potential for growth
Steady increase in Customer Deposits
Overseas Operations
Branches In Remote Areas
Islamic Banking
Sharp increase in imports and exports
THREATS FOR ASKARI COMMERCIAL BANK
High Employees Turnover
High charges
Less attractive rate of return
Stiff Competition
Less Experienced Staff
EXTERNAL FACTOR EVALUATION MATRIX:
This Matrix summarizes and evaluates economic, social, culture,
and demographic, environmental, political, governmental, legal,
technological and competitive information. It shows the
opportunities and threats that are faced by an organization.
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Weights:
0.0 = Not Important
1.0 = Very Important
Rating:
1 = The Response Is Poor
2 = The Response Is Average
3 = The Response Is Above Average
4 = The Response Is Superior
EXTERNAL FACTOR EVALUATION MATRIX
Key External Factors Weights Rating Weighted Score
Opportunities
1 It deals in bulk business.0.10 3 0.30
2. A large amount of foreign investment is attracted 0.10 4 0.40
3. Strong potential for growth 0.05 2 0.104. Imports are increasing 0.05 4 0.205. Steady increase in Customer Deposits
0.15 3 0.456. Overseas Operations 0.03 3 0.097 Branches In Remote Areas 0.02 2 0.04
8 Islamic Banking 0.01 1 0.01
9. Sharp increase in imports and exports 0.04 3 0.12
Threats
1. High Employees Turnover 0.05 2 0.102. High charges 0.05 2 0.103. Less attractive rate of return
0.15 3 0.454. Stiff Competition 0.10 3 0.305. Less Experienced Staff 0.10 2 0.20
TOTAL 1.00 2.86
Explanation:
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The above Matrix depicts the opportunities and threats that are
faced by the bank. The weighted score of EFE Matrix of the bank is
2.86 that is above average (2.5). So it shows that the bank is
responding to the existing opportunities and threats in banking
industry.
INTERNAL AUDITAll organizations have strengths and weaknesses in their functional
areas of business. For analyzing the internal situation of the
organization with regard to its management, marketing, finance,
operations and research and development, internal audit is
performed. The internal audit is executed parallel to the external
audit. This process provides more opportunity for the participants
and the managers to understand the key areas within an
organization.
Key internal forces:
1. Marketing
2. Finance
3. Accounting
4. Management
5. Management Information System
6. Production/Operations
STRENGTHS OF ASKARI COMMERCIAL BANK
LEADING PRIVATE SECTOR BANK:
AUTOMATIC OPERATIONS:
FULL DAY BANKING
ATM NETWORK
CUSTOMIZED SOLUTIONS
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CUSTOMER ORIENTED BANKING
ELECTRONIC BANKING
ELECTRONIC FUNDS TRANSFER
PHONE BANKING
ETHICAL CONCERNS AND PUBLIC IMAGE
WEAKNESSES OF ASKARI COMMERCIAL BANK
NOT HIGHLY AUTOMATED
MANUAL BOOK-KEEPING
LOW JOB SATISFACTION
LACK OF SPECIALISATION
CENTRALIZATION
LACK OF TRAINING FACILITIES
INTERNAL FACTOR EVALUATION MATRIX:
This strategy-formulation tool summarizes and evaluates the major
strengths and weaknesses in the functional area of a business and it
also provides a basis for identifying and evaluating relationships
among those areas. Intuitive judgments are required in developing
an IFE Matrix
Weights:
0.0 = Not Important
1.0 = All Important
Rating:
1 = Major Weakness
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2 = Minor Weakness
3 = Minor Strength
4 = Major Strength
INTERNAL FACTOR EVALUATION MATRIX
Key Internal Factors
Internal Strength
Weights Rating WeightedScore
1. LEADING PRIVATE SECTOR BANK 0.10 3 0.302. AUTOMATIC OPERATIONS 0.05 4 0.203 FULL DAY BANKING 0.06 4 0.244 ATM NETWORK 0.04 3 0.125. CUSTOMIZED SOLUTIONS 0.05 4 0.206.CUSTOMER ORIENTED BANKING 0.07 4 0.287. ELECTRONIC BANKING 0.04 3 0.128 ELECTRONIC FUNDS TRANSFER 0.05 4 0.209 PHONE BANKING 0.03 4 0.1210 ETHICAL CONCERNS AND PUBLIC IMAGE
0.05 4 0.20
Internal Weaknesses
1 NOT HIGHLY AUTOMATED 0.05 2 0.102 MANUAL BOOK-KEEPING 0.10 1 0.103 LOW JOB SATISFACTION 0.05 2 0.10
4. LACK OF SPECIALISATION 0.05 2 0.105. CENTRALIZATION 0.06 2 0.12
6. LACK OF TRAINING FACILITIES 0.15 2 0.30
Total 1.00 2.80
Explanation:
The above Matrix comprises the strengths and weaknesses of Bank
Askari Commercial Bank and the weighted score of the bank is 2.80
that is above average (2.5) so it depicts that the bank has strong
internal position
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THE COMPETITIVE PROFILE MATRIX:
The Competitive Profile Matrix (CPM) identifies a firm’s major
competitors and its particular strengths and weaknesses in relation
to a sample firm’s strategic position.
In CPM critical success factors are taken that include both internal
and external issues. In a CPM, the rating and total weighted score
for rival firms can be compared with the sample firm.
Weights:
0.0 = Not Important
1.0 = Very Important
Rating:
1 = Major Weakness
2 = Minor Weakness
3 = Minor Strength
4 = Major Strength
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COMPETITIVE PROFILE MATRIX
Askari
Bank
Bank
Alfalah
Critical
Success
Factors
Weigh
t
Ratin
g
Score Ratin
g
Score
Customer
satisfaction
0.16 3 0.48 2 0.32
Branch network
0.12 2 0.24 3 0.36
Market share 0.09 4 0.36 4 0.36
Service quality 0.10 4 0.40 3 0.30
Advertising 0.05 2 0.10 3 0.15
Online facility 0.09 3 0.27 3 0.27
Full day
banking
0.12 3 0.36 2 0.24
Employee
satisfaction
0.15 3 0.45 3 0.45
Financial
position
0.12 4 0.48 3 0.36
TOTAL 3.14 2.81
EXPLANATION:
In the above Matrix, the position of Askari bank is stronger as
compared to its rival Bank Alfalah. 3.14 is the total of average
weighted score that reveal the relative strength of the firm against
its competitor. The total weighted score of Bank Alfalah is 2.81 that
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show better position. But as compared to Askari Bank it is slightly
less.
STRATEGY-FORMULATION FRAMEWORK:
Strategy-Formulation Framework can be integrated into three-stage
decision making framework
THE INPUT STAGE:
External Factor Evaluation (EFE) Matrix
Competitive Profile Matrix (CPM)
Internal Factor Evaluation (IFE) Matrix
THE MATCHING STAGE:
Threats-Opportunities-Weaknesses-Strengths (TOWS)
Matrix
Strategic Position and Action Evaluation (SPACE) Matrix
Boston Consulting Group (BCG) Matrix
Internal-External (IF) Matrix
Grand Strategy Matrix
THE DECISION STAGE:
Quantitative Strategic Planning Matrix (QSPM)
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THE STRATEGIC POSITION AND ACTION
EVALUATION (SPACE) MATRIX:
The SPACE Matrix is an important matching tool. It’s four-quadrant
framework indicates that whether aggressive, conservative,
defensive, or competitive strategies are most appropriated for a
specific organization.
Internal dimensions [FS] and [CA]
External dimensions [ES] and [IS].
Assign a numerical value ranging from +1 (worst) to +6 (best) to
each of the variables that make up the FS and IS dimensions. Assign
a numerical value ranging from –1 (best) to –6 (worst) to each of the
variables that make up the ES and CA dimensions.
Aggressive Strategic:
Market penetration, market development, product development,
backward integration, forward integration, horizontal integration,
conglomerate diversification, concentric diversification, horizontal
diversification, or a combination strategy.
Conservative strategies:
Are best options for the firm that lies in this quadrant. Most often
include market penetration, market development, product
development, and concentric diversification.
Defensive strategies:
Include retrenchment, divestiture, liquidation, and concentric
diversification.
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Competitive strategies:
Include backward, forward, and horizontal integration; market
penetration; market development; product development; and joint
ventures.
SPACE MATRIX OF ASKARI BANK
FINANCIAL STRENGTH
Investment decreased +1Strong Liquidity Position +6Strong Cash flow position +4The Revenues increased +4Net Income After Tax increased +4Net Profit Margin increased +4Return On Equity +2
+25INDUSTRIAL STRENGTH
Strong potential for growth +6Computerized Banking system +2Potential for further increase in profits +6Growth prospects for Islamic Banking +2Electronic Banking
+18ENVIROMENTAL STABILITY
High Inflation rate -1Political Instability -3Competition from Foreign and Local banks -2Similar Products offered at higher rate by other banks -4Changes in laws by government -3Strict SBP regulations -4
-17COMPETITIVE ADVANTAGE
High quality services -1Customer oriented banking -2Vast product variety -2First ever free visa card -1Strong top management -1
-7CONCLUSION
ES Average is –17/6 = -2.8 IS Average is +18/5 = +3.6
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CA Average is –7/5 = -1.4 FS Average is +25/7 = +3.5Directional Vector Coordinates: x-axis: (-1.4)+(+3.6) = +2.2
y-axis: (-2.8)+(+3.5) = +0.7
EXPLANATION:
Directional vector of the Bank is located in aggressive quadrant
(upper-right quadrant). It shows that the bank has excellent position
to use its strengths, take advantage of external opportunities,
overcome internal weaknesses, and avoid external threats.
Therefore, market penetration, market development, product
development, backward integration, forward integration, horizontal
integration, conglomerate diversification, concentric diversification,
horizontal diversification, or a combination strategy can be feasible
according to specific circumstances.
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ES
CA IS
-1-2-3-4-5-6 +1 +2 +3 +4 +5 +6
+3
+6
+5
+2
+1
+4
-1
-2
-3
-4
-5
-6
(2.5, 0.75)
Conservative Aggressive
Defensive Competitive
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THE BOSTON CONSULTING GROUP
(BCG) MATRIX:
The BCG Matrix graphically portrays differences among divisions in
terms of relative market share position and industry growth rare.
Relative market share position is defined, as the ratio of a division’s
own market share in a particular industry to the market share held
by the largest rival firm in that industry.
QUESTION MARKS:
Division in Quadrant I have a low relative market share position, yet
they compete in a high-growth industry. Generally these firms’ cash
needs are high and their cash generation is low. These businesses
are called Question Marks because the organization must decide
whether to strengthen them by pursuing an intensive strategy
(market penetration, market development, or product development)
or to sell them.
STARS:
Firm that lies in this Quadrant (often called Stars) represent the
organization’s best long-run opportunities for growth and
profitability. Divisions with a high relative market share and a high
industry growth rate should receive substantial investment or
maintain or strengthen their dominant positions.
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Forward, backward, and horizontal integration; market penetration;
market development; product development; and joint ventures are
appropriate strategies for these divisions to consider.
CASH COWS:
The organization that lies in this Quadrant has a high relative
market share position but compete in a low- growth industry. Called
Cash because they generate cash in excess of their needs, they are
often milked.
Product development or concentric diversification may be attractive
strategies for strong Cash Cows. However, as a Cash Cow division
becomes weak, retrenchment or divestiture can become
appropriate.
DOGS:
The organization that lies in this Quadrant has a low relative market
share position and competes in a slow- or no- market-growth
industry; they are Dogs in the firm’s portfolio. Because of their weak
internal and external position, these businesses are often
liquidated, divested, or trimmed down through retrenchment. When
a division first becomes a Dog, retrenchment can be the best
strategy to pursue because many Dogs have bounced back, after
strenuous asset and cost reduction, to become viable, profitable
divisions.
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BCG MATRIX
Division Revenues
(000)
Percent
Revenues
Profits
(000)
Percentage Percentage
Market
Share
Percentage
Growth
Rate
Car
Finance
2,167,252 33% 371,276 34% 45% +16
Credit
Card
2,758,321 42% 393,116 36% 58% +15
Islamic
Banking
656,743 10% 109,199 10% 8% -2
Home
Loan
985,115 15% 218,398 20% 15% +16
Interpretation:
Car finance division and Islamic Banking have a low market share
position, yet they compete in a high growth industry. These
businesses are called as Question Marks, because the organization
has to decide whether to strengthen them by pursuing an intensive
strategy (Market development, Market Penetration, Or Product
Development) or to sell them.
Credit Cards represents the organizations best long-run
opportunities for growth and profitability. Credit card division has a
high market share position and a high industry growth rate,
therefore the bank should invest more in this division to maintain or
strengthen their dominant position. Forward, Backward, and
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Horizontal Integration, Market Penetration, Market Development,
and Product Development are the appropriate strategies for this
Credit Card Division.
Home Loan division has a low Market Share Position and competes
in a slow or no market growth industry; they are dogs in the firm’s
portfolio. Because of their weak internal and external position, the
businesses are often divested or trimmed through retrenchment.
GRAND MATRIX:
The Grand Matrix has become a popular tool for formulating
alternative strategies. All organizations can be positioned in one of
the grand strategy matrix’s four strategy quadrants. A firms division
can be likewise positioned. Grand Strategy matrix is based on two
evaluative dimensions
Rapid Market Growth
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Quadrant II
1. Market Development2. Market Penetration3. Product Development4. Horizontal Integration5. Divestiture6. Liquidation
Quadrant I
1. Market Development2. Market Penetration3. Product Development4. Forward Integration5. Backward Integration6. Horizontal Integration7. Concentric
Diversification
Quadrant III
1. Retrenchment2. Concentric Diversification3. Horizontal Diversification4. Divestiture5. Liquidation
Quadrant IV
1. Concentric Diversification2. Horizontal Diversification3. Conglomerate
Diversification4. Joint Venture
Slow Market Growth
Interpretations:
Bank falls in the first quadrant of the Grand Strategy Matrix. The
Bank is in excellent strategic position. For the bank, continuous
concentration on the current market (Market Development, Market
Penetration) and products (Product Development) is an appropriate
strategy. If the bank is highly committed to a single product, then
concentric diversification may reduce the risk associated with a
narrow product line the bank can afford to take advantage of the
opportunities in several areas. It can take risk aggressively when
necessary.
Quantitative Strategic Planning MatrixStrategic Alternatives
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Strong Competitive
Position
Weak Competitive Position
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MP PDKey Factors Weight AS TAS AS TASOpportunities
Advancement in Islamic Banking 0.05 2 0.10 1 0.05Expand Branch Network 0.05 - - 1 0.05Enhance Product Portfolio 0.05 2 0.10 3 0.15Get Into E-Business 0.05 1 0.05 - -Provide Financial Consultancy 0.10 2 0.20 1 0.10ThreatsGovernment Policies 0.10 1 0.10 - -Strict SBP Regulations 0.20 1 0.20 3 0.602nd Hand Car Finance By City Bank 0.15 4 0.60 3 0.45Cash Card Introduced By MCB 0.10 2 0.20 4 0.40Branches of Nationalized Banks in all Cities of Pakistan
0.05 2 0.10 1 0.05
1.0StrengthsBank Name 0.05 2 0.10 4 0.20Credit Card 0.10 4 0.40 3 0.30Strong Top Management 0.05 1 0.05 4 0.20Aggressive Banking 0.15 2 0.30 4 0.60Bad Debt Ratio 0.05 2 0.10 1 0.05Committed Workforce 0.05 1 0.05 3 0.15Financial Ratios 0.05 2 0.10 3 0.15Customer Satisfaction 0.05 4 0.20 3 0.15Islamic Banking 0.05 3 0.15 4 0.20WeaknessesNo International Branch Network 0.05 1 0.05 3 0.15Weak IT Structure 0.05 2 0.10 1 0.05Trade Through NOSTRO Accounts 0.05 2 0.10 1 0.05Less Job Rotation 0.05 1 0.05 - -ATM not available In Every Branch 0.10 4 0.40 3 0.30No Marketing Department 0.10 4 0.40 3 0.30Sum Total Attraction Score 1.0 4.10 4.70
AS = Attractiveness Score TAS = Total Attractiveness ScoreAttractiveness Score: 1 = not attractive 2 = somewhat attractive;
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3 = reasonably attractive 4= Highly AttractiveMP= Market Penetration PD=Product Development
Interpretation:
The Bank must consider two alternative strategies i.e. Market
Penetration, and Product Development. The total attractiveness
score of Market Penetration is 4.10 and for Product Development is
4.70. Therefore the strategy which the Bank must adopt is Product
Development as the total Attractiveness score of this strategy is the
highest i.e. it appears to be the most attractive and suitable for the
bank.
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TRAINING PROGRAMME
INTERNSHIP EXPERIENCES
DIFFICULTIES FACED…
INTERNSHIP EXPERIENCES
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One of the most important aims of the student life is to express
himself / herself correctly and adequately. This was the believe in
my mind when I first decided to go to Askari commercial Bank to
complete my internship program.
Determined, Confident and Persistent in the pursuit of knowledge
and learning, I was on my way to Askari Commercial Bank,
Shahalam market Branch in the early morning of July 1, 2005. Just a
day before, I had taken my class of 3rd semester. Normally I wanted
rest and recreation after the tiring class in June but this time I was
anxiously waiting for the start of my internship.
FIRST WEEK
I started my internship from "General Banking" in the first week.
The General banking is basically divided into the following sub
departments, which are as follows:
Account opening
Bills and remittances
Clearing
Term deposit
Cash department
The first day of exposure to the practical field was at the (sub
department) Account opening.
The relationship of customer starts with this department. every one
is not allowed to come and open an account in the bank, for this
purpose there should be an introducer who himself is the account
holder in the same branch. He has to introduce the new client by
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signing the opening account form and then his signature are
verified.
Applicant's fills the account opening form and provides it to the
bank with photocopy of I.D. card and signatures card.
Then the banker inquires the about the option of opening a joint
account or individual. If the customer wants to open joint account
then either it is "either or survivor" (i.e. Only one persons signature
is sufficient) or jointly (i.e. Both should sign the cheque).
Account opening:
Although the procedure of opening an account in a bank is a quite
complicated job but I am going to tell you only the basic necessities
for opening the account, which are as follows:
Introduction
National I.D. card
Personal data
Details of dealing with other banks.
These are some of the basic requirements for opening the account.
Issuance of chequebook
Once the account is opened, ACBL issues the chequebooks to the
customer so that they could withdraw their money whenever they
like. The producer of issuance of the chequebook is as follows:
For the customer who already has an account with the bank, the
lastly consumed chequebook requisition slip with the help of which
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a new chequebook is issued. And the person who is going to open a
new account for the first time gets the chequebook free without any
requisition slip.
For the new depositors the cheque book is not issued at the time of
opening of account, rather it is issued after three days but, as the
most of the customers are from the armed forces so the usually get
the cheque earlier. ACBL issues the chequebooks for both the local
and foreign currency accounts.
I remained there in the account-opening department for one week
and daily I learnt a new thing
I come to know about the details of the account opened by the
banks, which I have explained in previous portion of "Departments".
In the start I have stated the account opening procedure and
issuance of cheque book in a very comprehensive way, now let me
tell u the further related detail of account opening
First of all a customer come and gets the information
regarding the opening of account. After getting the proper
information he gets an introducer and goes for opening an
account of any kind whatever he wants
He fills the from regarding the opening of account which is in
fact a request.
S.S card is filled which contains the signature that will be used
in future in order to identify that you are the same particular
person who perfectly eligible for receiving the benefits.
The S.S card and the application form is verified and the
verification stamp is imposed on it.
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After verification the application forms are pasted in the file
with the serial, no which is actually the account no. Allocated
to the respective customers.
The chequebook is issued to the customer after three days.
A letter of thanks is posted to the customer as well as the
introducer. The introducer is thanked for the two
perspectives. First he should be thanked that because of him
the bank get another customer and the second reason behind
sending the letter to him is that if the customer had
fraudulently get the signature of that person as an introducer
then he should come to know that some one has used his
name as well as signature for his personal benefit and without
the consent of him (introducer).
The procedure for opening the account comes to an end after
sending the letter of thanks.
Active and inactive Account
The account becomes Inactive if there is no debit transaction.
Account becomes active if there is credit transaction.
SECOND WEEK
In the second week I was shifted to the TDR (Term Depots Receipts)
department. It was again a good experience to work with the officer
here. First of all he told me about the basics of the TDR.
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Deposit is lifeblood of a commercial bank. The main function of a
commercial bank is to channelize the saving from the savers to the
ultimate users of the funds. This process of collecting saving is
called "deposit mobilization".
Deposits are of two types one is the demand deposit and the other
one is time deposit (these have been explained in detail in the
"department" portion). As the name signifies the demand deposit is
payable on demand so no interest or benefit is given on such
deposits but the time deposit is a kind of deposit, which gives you a
benefit in terms of cash. Most of the people who have surplus
money with them especially the landlords deposit their money in
such accounts.
Term deposits are payable on demand with certain maturity.
Different percentages of profit are given in the time deposit (the
detail is given in the Marketing Mix)
These are called fixed deposit because they are fixed and no
transaction is allowed till maturity. In fix deposit you can open an
A/c of the same title only than A/c number will be changed. While in
other accounts the A/c can't be opened under the same title even in
other branch of the same Bank.
Profit calculation
The Head office determines the provisional rates of the Profit. Every
bank has its own interest rate; usually established banks have low
interest rates then the non-established banks as the have to attract
the Customers.
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There are different types of accounts, which are shown in
provisional rates of profit on “PLS deposit” and rate of return
minimum balance, and maturity is also shown in it. After every six
months the rates are revised on PLS deposit
On fixed deposit the interest is given on the Principle amount only
while on other profit and loss deposits the interest is given on profit
an principle amount (provided that the interest has not been
received in the given time). On fixed deposits the month is started
from the day from which you deposit the amount.
As the interest rates vary frequently you will calculate the interest
on the rate which is applicable during that particular duration. It
happens that sometimes the interest rate remains the same. But
during the year 2004 the interest rates were changed two times
within six months. First of all the interest rates were changed at the
start of the year and then these rates were changed again in the
month of the February i.e. these were changed twice in the six
months. The changing in the interest rate depends upon the will of
the Head office, which has the power to change them at any time.
Zakat is deducted on the first of Ramdan. However, the Bank can't
deduct the Zakat if you have given Affidavit (declaration regarding
not to deduct Zakat on Stamp paper).
Tax is deducted which is known as withholding tax only at the time
of deposit e.g. When you will deposit Rs.100,000 you will have to
give additional money of Rs. 300/- as the withholding tax. (The rate
of withholding tax is 0.3%). If you have National Tax Number NTN
then 0.3% withholding tax is exempt.
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The rate of withholding tax on profit is 10% i.e. if you are going to
get a benefit of Rs. 10,000 then you will receive the cash of Rs.
9,000 as the remaining amount will be deducted as the tax.
For non-residents the tax and Zakat is exempt (visa is required as
the proof that the particular person is really a non-
resident).similarly Christians has not to pay the tax, they have to
pay the tax only.
Askari Bachat Certificates are tax-free.
The calculation of interest is done manually on the card and then
you feed (debit) it in the bank's account (Profit Saving Account) and
will be credited in the customer's account. A computerized voucher
is prepared which will be used as the record.
If there is any mistake in the Debit Credit that will be checked out
through Daily Balance Sheet of the Particular department.
For easy operations Customer prefer to give instruction that their
interest should be credited to their A/c otherwise a manual voucher
will be made that will be cashed on cash counter every time when
you come to take the interest.
Record keeping
The record of the TDR is although feed in the computer but there is
also a hard copy of the record. The verified TDR forms are pasted
with serial number of receipt given to the customer (the receipt of
the form regarding the deposit of the amount).
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Askari Bachat Certificates are attached or pasted in the file
according to the date. The date may be of any month and any year
i.e if there is a card of the 8th then on this card you will find the
only 8th date of any month and any year in which the card was
issued.
THIRD WEEK
In the third week of my internship I was shifted to the Clearing
section and Bills for collection section as well. Three days I worked
with the "Clearing" and then with the "Bills for collection" section.
CLEARING
This is a "Inter-city clearing" i.e the cheques of Lahore city from
different banks like National Bank of Pakistan, Standard Chartered
Bank, Muslim Commercial Bank are deposited here. The deposited
cheque is received carefully by checking the title of cheque, date,
amount, and signature on the cheque. All the cheques go to the
State Bank of Pakistan. Everyday NIFT receives all cheques and
arranges them. By establishment of NIFT a lot of time, cost and
labor is saved. The cheques are stamped carefully. Two stamps are
required on the cheques
Clearing stamp
Payee's account will be credited
If any stamp is missed or unclear, SBP returned one the cheque with
reason.
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When the cheques are deposited they enter all the cheques on the
computer with account number and these figures go to SBP.
There are four types of Balances in the computer
Available balance
Float amount
Block amount
Ledger balance
NIFT collects all the cheques at 2:00 pm. After that the computer
department give clearing sheet that is checked in clearing.
Same day clearing
All the cheques are cleared in coming day. But same day cheques
are cleared other same day when it is deposited. The same day
cheque amount is 50,000 below this amount the cheque, can't be
cleared in the same day.
Clearing house
It is a p[lace where representatives of all scheduled banks sit
together and interchange their claim against cash other with the
help of controlling staff of "state Bank of Pakistan" where there is no
branch of State Bank of Pakistan, the designated branch of State of
Pakistan.
So, system by which banks exchange cheques and other negotiable
instruments drawn on each other within specific area and there by
secure payment for their clients through the clearing house at
specific time In an efficient way.
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BILLS FOR COLLECTION
Two types of cheques are deposited here
Outstation cheques
Askari other branch cheques (local)
Outstation cheques mean different cities cheques are deposited and
Local means Askari's other Branches like cantt, circular road,
defence, Gulberg etc. Are deposited. All cheques account numbers
on the computer and these figures go to SBP.
The cheques are cleared in 5-6 days. Because "NIFT" receives and
delivered to SBP where these cheques are cleared in 3 days and
deliver to the banks, which mention on the cheques.
The cheques require three stamps
Askari crossing stamp
OBC number
Payee's account will be credited.
If the cheques are returned due to some reasons, a returned memo.
Random is filled and entries are recorded on the register.
FOURTH WEEK
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In the fourth week of internship I was transferred to the
"Remittances department". I met there with a quite sophisticated
personality, she tells me about the issuance, procedure and the
entries of the demand drafts and pay orders.
DEMAND DRAFT
It is an instrument payable on demand for which value has been
received, issued by the branch of the bank drawn. Demand draft is
payable at some other branches of the same bank. But Askari Bank
contract with MCB so ACBL's demand draft is payable at MCB also.
Demand draft is very useful because there is no chance o fraud. The
person deposit cash and get demand draft. It is used for outstation
payment.
Issuance of demand draft
On the application form following particulars are given:
Name of beneficiary
Amount
Mode of payment
The place where DD is drawn
Signature
Name and address of the beneficiary
Request shall be made on standard application form. The customer
writes his name, address, I.D number, and phone number on the
backside of the application form. Commission is charged as per
schedule of charges. The issuance of DD is computerized and the
amount is automatically protect graphed drawing printing for the
avoidance of forgery.
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The withholding tax and excise duty is deducted as per schedule.
when the customer depots cash in the cash department, he got
voucher from the cash department and gave it to the person who
makes the DD.
Payment of DD
When a person brings DD (which have been drawn on you), you will
check it from your DD payable record and ask the customer to sign
twice at the back of the DD so that it could be confirmed that he is
the eligible person for receiving the benefit, along with this you
obtain the ID of that person verify it and then make the payment.
After making the payment entry is made in the register that this DD
has been paid.
DD payable register
Every day you receive an IBCA from different banks and it contains
a list of DDs, which have been drawn on you. Banker records it in
DD payable register. These DD are those, which other branches
have drawn on your bank.
Payment of DD from Suspense A/c.
The payment of DD is made from the suspence account in the
following cases:
The amount of DD is paid from suspence a/c if advice is not
received yet.
If a DD is to be cancelled on the wish of the customer, in such
a case the payment will be made from suspence A/c.
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Cancellation of DD
Following procedure is followed for the cancellation of the DD.
Obtain the application in writing for the cancellation of DD
along with the original DD.
Verify the signature of the applicant, which should tally, with
the signature on the application form (for opening the DD).
Mark caution on DD issued register or on computerized entry.
Make the payment from suspence account.
Inform the Drawee bank regarding the cancellation and ask
for IBCA. Inter Branch Credit Advice is the advice regarding
the payment (refund) of the amount which Drawer bank have
sent to them (which was deposited by the customer against
the demand draft).
When a demand draft is made, an IBCA is sent to the Drawee
bank regarding the payment.
Types of DD
DD’s are of the following types:
Crossed DD: In the case of crossed DD the amount is
deposited to the A/c of the benificiary.
Open DD: Incase of open DD the amount is handed over to
the benificiary at the cash counter.
TELEGARPH TRANSFTER
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The transfer of funds from one branch to another branch of the
same bank is called telegraphic transfer. The bank apply test on
telegraphic transfer. The applicant receives Commission and
charges, if the Applicant’s account is in ACBL, he pays no charge
above Rs. 100,000/-
If he has no account in the ACBL then he has to pay charges
according to the amount e.g. for Rs. 100,000/- the charges are Rs.
250/-
If the account of benificiary is in another bank, his bank will present
The TT to ACBL through for payment.
PAY ORDER
Pay order issued from one branch can only be payable from the
same branch. Pay order is used for same city payment. E.g. If ACBL
(Main Branch) issued pay order it is only payable for Main Branch of
ACBL.
Procedure
Applicant fill the application
After paying charges he gets voucher and pay order is issued
All pay orders shall be crossed "payee's A/c only".
Cancellation
The applicant give application for cancellation
Charges are recovered from the applicant.
FIFTH WEEK
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In the second last week of my internship I worked for two days in
the "ATM section" and then in the "Accounts section".
ACCOUNT SECTION
I worked three days in accounts department but as it is a
confidential department so they did not give me enough in
formation regarding their working. First day I sorted out the
cheques of ACBL with the help of the serial number and the
nature of the account and arrange them in sequence. After that i
checked the activity which contains the title of the cheque, amount,
date etc. Accounts department maintains the record of expenses of
all the departments, it also maintain the record of all the employees
regarding their basic salary, increment, benefits etc. It is the
backbone of ACBL
On the next day Is worked in the mail dispatch section, the person
appointed here asked me to arrange the letters and to write the
mailing address on the envelopes and then to put the letters into
the envelops. It was an interesting job but, the single thing which I
learned from here was that, I learnt by heart the addresses of many
branches of the ACBL, which helped me to complete the Marketing
Mix portion of the same report where I have given the detail of the
Place of the ACBL. On the following day I repeated the same job and
did nothing else.
ATM SECTION
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I worked two days in ATM department. The countrywide network of
automated teller machine carrying the brand name "ASKCASH".
The branch network is corrected on-line real time and its customers
have access to off-sites as well as on-site atms all over Pakistan.
Being a part of the first inter-bank ATM switch in Pakistan with ABN
AMRO and Habib bank, the customer now here have access to
about 90 atms through the country.
For ATM cards first the customer open account in the bank after
that he/ she fills the application form for the ATM. the Head office
send a ATM cards in a ATM department but pin codes are sent in
other department. So in this way the customer gates his/ her ATM
cards.
ATM means "24 hours services" the customers get money at any
time at any place but during my period the function of ATM were
held by the Head office for three days. The branch has no authority
to held the machine, if it is not working; the Head office knows the
reason for it.
On the whole, it is an excellent strategy of ACBL and to sign a
strategic partnership with ABN-AMRO for ATM sharing arrangement
is first time in Pakistan.S
SIXTH WEEK
In the last week I was shifted to the "foreign exchange" department.
For the first three days I worked there but in the last three days I
was shifted again to the account-opening department due to the
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absence of one of the Account opening officer. Therefore I was sent
back to the account-opening department.
THE PROBLEMS I FACED
Doing the internship was a wonderful experience for me but as far
as preparation of the report is concerned it was the most difficult
part of the project. Preparing for report become most difficulty and
tedious as most of the information was not available not only on net
but also from the bank also. I was unable to get the following
material.
History of the bank
Career ladder
Job description
I was fortunate to have a wonderful Annual report of the bank.
Especially it was rested according to the circular of the State Bank
of Pakistan, therefore, it was quite easy for me to analyse the
income statements of the bank. There are some other necessary
requirements for doing the financial analysis of the income
statements i.e.,
Information about the trends prevailing in the market,
And information regarding the positions of the competitors of
the bank that is the reason that I was unable to depict the
true picture of the financial position of the bank.
We are also unaware about the off balance sheet finance of
the bank so, can say nothing regarding the true liabilities of
the bank
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Anyhow, it was a very learning experience for me that I will never in
my entire life.
CONCLUSIONS
AND
RECOMMENDATIONS
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After spending six weeks at different departments of the bank,
interacting with the employees, getting their views, observing the
organizational structure and design, I have come up with the
following suggestions that in my view, will definitely improve a few
weaknesses observed in the bank by me.
Flexible Policies
The bank should be adopt flexible policies, specially in the areas of
the recruitment, promotions, evaluation of the employees otherwise
the high turnover observed in the bank will continue to create
problems for the bank now and in the future.
Job security
The employees in the organization should be insured job security so
that there is no pressure on the employees while performing their
tasks.
Permanent Hiring
The fresh hiring should be made permanent so that they are
secured of their future. Further the allowances and perquisites
attached with the permanent jobs will also increase the motivation
level of the employees.
Job Training Programs
The bank should place emphasis on the organization of effective
training and development programs for its new as well as existing
employees so that these are gradually updated regarding the recent
developments in the field of banking.
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Perquisites and Allowances
The number of allowances and perquisites for the employees should
be increased to ensure that they put their body and soul in the jobs
assigned to them.
Revival of the Charges
The rates for the various charges provided by the bank should be
brought down a bit, as it would result in increase in the number of
customers of the bank.
Adoption of Effective technology
The current unibank system used by the bank is very slow in
processing so my view is that the bank should try to adopt some
other but more effective form of technology in order to provide
comfort to the customers as well as the staff.
Decentralization
The higher authorities should form team-based management rather
than centralized management. It would result in improvement in
uplifting the morale of the employees. They will be more motivated
and involved in all their operations resulting in overall effectiveness
of the organization.
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