CHAPTER -1CHAPTER -1

INTRODUCTION OF THE REPORTINTRODUCTION OF THE REPORT

1.1 INTRODUCTION 1.1 INTRODUCTION

This Internship report is aimed at studying and analyzing Habib Bank Limited (HBL)This Internship report is aimed at studying and analyzing Habib Bank Limited (HBL)

in general and its branch office at Link Road Abbottabad in particular. The mainin general and its branch office at Link Road Abbottabad in particular. The main

purpose of internship is to prepare and submit a report as a partial fulfillment for thepurpose of internship is to prepare and submit a report as a partial fulfillment for the

award of M.com degree from Government College of Management Sciencesaward of M.com degree from Government College of Management Sciences

Abbottabad. Abbottabad.

1.2 Background of Study:1.2 Background of Study:

Pakistan’s economy by the Grace of God is growing with an appreciable rate. SoundPakistan’s economy by the Grace of God is growing with an appreciable rate. Sound

banking system for this growing economy is the need of the day, which must meet thebanking system for this growing economy is the need of the day, which must meet the

financial needs of the growing agriculture, industrial and commercial/services sector.financial needs of the growing agriculture, industrial and commercial/services sector.

Habib Bank Limited has played a pivotal role in the development of Pakistan. HBLHabib Bank Limited has played a pivotal role in the development of Pakistan. HBL

has adopted a customer-oriented approach, in order to provide quality productshas adopted a customer-oriented approach, in order to provide quality products

according to customer needs and stands as a role model for the other banks. In thisaccording to customer needs and stands as a role model for the other banks. In this

report I have tried to cover all the aspects of HBL banking operations.report I have tried to cover all the aspects of HBL banking operations.

1.3 Purpose of study:1.3 Purpose of study:

Basic purpose of working in this organization was to fulfill the requirement of myBasic purpose of working in this organization was to fulfill the requirement of my

course i.e. because it’s a compulsory part of it. Secondly, it was the banking sectorcourse i.e. because it’s a compulsory part of it. Secondly, it was the banking sector

that attracts me and I was keen to gain some knowledge about this sector. Moreover, Ithat attracts me and I was keen to gain some knowledge about this sector. Moreover, I

studied about the functioning of this particular branch, so I got some idea about thestudied about the functioning of this particular branch, so I got some idea about the

corporate and commercial branches. I worked with the intentions to point out thecorporate and commercial branches. I worked with the intentions to point out the

strengths and weaknesses of the bank in accordance with foreign banks. Besides this,strengths and weaknesses of the bank in accordance with foreign banks. Besides this,

some other purpose are associated which includes:some other purpose are associated which includes:

To give a comprehensive review of HBL.To give a comprehensive review of HBL.

To analyze HBL’s organizational, financial and other aspects.To analyze HBL’s organizational, financial and other aspects.

To identify the areas of the bank where there is some room for improvement.To identify the areas of the bank where there is some room for improvement.

To present some feasible solutions for the problems pertaining to HBLTo present some feasible solutions for the problems pertaining to HBL

To apply the knowledge gained in practical field.To apply the knowledge gained in practical field.

1

1.4 Scope of Work:1.4 Scope of Work:

I was provided with the opportunity to work in all the departments, so I got anI was provided with the opportunity to work in all the departments, so I got an

overview of each of them. Banking has a very broad scope. In only eight weeks ofoverview of each of them. Banking has a very broad scope. In only eight weeks of

internship, it is very difficult to understand each and every aspects of bank . Due tointernship, it is very difficult to understand each and every aspects of bank . Due to

the barriers of limited time and space, the scope of work is usually confined. Howeverthe barriers of limited time and space, the scope of work is usually confined. However

this study of HBL will help the management to identify their weaknesses and threatsthis study of HBL will help the management to identify their weaknesses and threats

and over come them by using their strength and capitalizing on the opportunities. Thisand over come them by using their strength and capitalizing on the opportunities. This

internship report will be source of financial data for all those who are interested ininternship report will be source of financial data for all those who are interested in

financial statement analysis of HBL.financial statement analysis of HBL.

1.5 Methodology of the Report1.5 Methodology of the Report

This study involves two types of data for report writing.This study involves two types of data for report writing.

1.5.1 Primary Sources1.5.1 Primary Sources

Interviews and discussion with staff membersInterviews and discussion with staff members

Personal observationsPersonal observations

1.5.2 Secondary Sources1.5.2 Secondary Sources

Previous Internship ReportsPrevious Internship Reports

Annual reports of HBLAnnual reports of HBL

WebsitesWebsites

Newspapers, Brochures & ManualsNewspapers, Brochures & Manuals

1.6 Limitations of the Report1.6 Limitations of the Report

As mentioned earlier, eight weeks of time is very limited for a complete observationAs mentioned earlier, eight weeks of time is very limited for a complete observation

of an institution like HBL. Moreover some of the data was confidential and was notof an institution like HBL. Moreover some of the data was confidential and was not

made available to me. Sometimes due to the busy schedule of the bank, completemade available to me. Sometimes due to the busy schedule of the bank, complete

information regarding different activities was not provided in time. Latest annualinformation regarding different activities was not provided in time. Latest annual

report for fiscal year 2011-2012 was not available for analysis.report for fiscal year 2011-2012 was not available for analysis.

CHAPTER- 02CHAPTER- 02

2

INTRODUCTION TO HABIB BANK LIMITEDINTRODUCTION TO HABIB BANK LIMITED

2.1 Evolution of Banking2.1 Evolution of Banking

Consensus on the organization of word Bank has not yet reached. According to someConsensus on the organization of word Bank has not yet reached. According to some

authors this word is derived from the words Bancus or Banque that mean a bench. Theauthors this word is derived from the words Bancus or Banque that mean a bench. The

explanation of this origin is attributed to the fact that the jews in Lambard transactedexplanation of this origin is attributed to the fact that the jews in Lambard transacted

the business of money exchange on benches in the market place, and when thethe business of money exchange on benches in the market place, and when the

business failed, public destroyed the Banco. Incidentally the word bankrupt is said tobusiness failed, public destroyed the Banco. Incidentally the word bankrupt is said to

have been evolved from this practice. The opponents of this opinion argue that if ithave been evolved from this practice. The opponents of this opinion argue that if it

was so, then how is it that the Italian money changers were never called Banchierei inwas so, then how is it that the Italian money changers were never called Banchierei in

the middle ages ?the middle ages ?

Others authorities hold the opinion that the word Bank is derived from the GermanOthers authorities hold the opinion that the word Bank is derived from the German

word Back was Italianized into Bank. It is therefore, not possible to decide as toword Back was Italianized into Bank. It is therefore, not possible to decide as to

which of the opinion is correct, for no record is available to ascertain the validity ofwhich of the opinion is correct, for no record is available to ascertain the validity of

any of the opinion .any of the opinion .

2.1.1 Early Growth2.1.1 Early Growth

This history of banking is traced to as early as 2000 B.C. The priests in Greece usedThis history of banking is traced to as early as 2000 B.C. The priests in Greece used

to keep money and valuables of the people in temples. The origin of banking is alsoto keep money and valuables of the people in temples. The origin of banking is also

traced to early goldsmiths. They used to keep strong safes for storing the money andtraced to early goldsmiths. They used to keep strong safes for storing the money and

valuables of the people. The goldsmiths used to issue receipts for the money and othervaluables of the people. The goldsmiths used to issue receipts for the money and other

valuable assets deposited with them. These receipts could be used for settlement ofvaluable assets deposited with them. These receipts could be used for settlement of

transactions because people had confidence in the integrity and solvency oftransactions because people had confidence in the integrity and solvency of

goldsmiths. When it was found that these receipts were fully accepted in payment ofgoldsmiths. When it was found that these receipts were fully accepted in payment of

debts; then the receipts were drawn in such a way that it entitled any holder to claimdebts; then the receipts were drawn in such a way that it entitled any holder to claim

the specified amount of money from goldsmiths. A depositor who is to make thethe specified amount of money from goldsmiths. A depositor who is to make the

payments may now get the money in cash from goldsmiths or pay over the receipt topayments may now get the money in cash from goldsmiths or pay over the receipt to

the creditor. These receipts were the earlier bank notes. The second stage in thethe creditor. These receipts were the earlier bank notes. The second stage in the

development of banking thus was the issue of bank notes.development of banking thus was the issue of bank notes.

3

2.2 Banking in Pakistan2.2 Banking in Pakistan

I observed during my internship was that I came to known the historicalI observed during my internship was that I came to known the historical

background of Banking & Financial sector and its improvement and growthbackground of Banking & Financial sector and its improvement and growth

since the formation of Pakistan.since the formation of Pakistan.

At the time of partition there were only 631 bank branches in area which cameAt the time of partition there were only 631 bank branches in area which came

under Pakistani control. But due to blood shed and violence at large scale,under Pakistani control. But due to blood shed and violence at large scale,

most of the branches were closed. At that time Bank of India was acting asmost of the branches were closed. At that time Bank of India was acting as

central bank for both countries and same currency notes were used in bothcentral bank for both countries and same currency notes were used in both

territories. But Reserve Bank of India was biased and Set down Pakistan onterritories. But Reserve Bank of India was biased and Set down Pakistan on

many occasions such as the issue of funds transfer etc.many occasions such as the issue of funds transfer etc.

Thus some drastic steps were taken in government sector for the improvementThus some drastic steps were taken in government sector for the improvement

of overall position. The private sector also responded positively. Some of theof overall position. The private sector also responded positively. Some of the

steps taken by the government in this regard were as under:steps taken by the government in this regard were as under:

Inauguration of State Bank of Pakistan (SBP) on 1st July, 1948.Inauguration of State Bank of Pakistan (SBP) on 1st July, 1948.

Setting up of National Bank of Pakistan in November.Setting up of National Bank of Pakistan in November.

Banking Companies Ordinance 1962 for protection and guidance toBanking Companies Ordinance 1962 for protection and guidance to

banks.banks.

Establishment of specialized banks, such as ADBP (1952); Establishment of specialized banks, such as ADBP (1952);

oo HBFC (Nov, 1952)HBFC (Nov, 1952)

oo P1CIC (Oct, 1957)P1CIC (Oct, 1957)

oo IDBP (Aug. 1961)IDBP (Aug. 1961)

oo NDFC (Jan, 1973)NDFC (Jan, 1973)

In 1990 the government decided to denationalize all the nationalized institutes.In 1990 the government decided to denationalize all the nationalized institutes.

For this purpose, amendments were made to Nationalization Act 1974 and twoFor this purpose, amendments were made to Nationalization Act 1974 and two

nationalized banks were privatized. Along with this a permission to opennationalized banks were privatized. Along with this a permission to open

banks in private sector was also granted.banks in private sector was also granted.

The- privatized banks are;The- privatized banks are;

  

4

oo HBL taken up by a private group in April, 1991HBL taken up by a private group in April, 1991

oo ABL taken up by its own employees in September, 1991.ABL taken up by its own employees in September, 1991.

oo UBL taken up by UAE party in 2002.UBL taken up by UAE party in 2002.

oo December 29, 2003 HBL was taken by AKFEDDecember 29, 2003 HBL was taken by AKFED

 

2.3 Introduction of HBL2.3 Introduction of HBL

HBL was the first commercial bank established in 1947. HBL is one of theHBL was the first commercial bank established in 1947. HBL is one of the

largest commercial bank of Pakistan. It accounts for a substantial share (20%)largest commercial bank of Pakistan. It accounts for a substantial share (20%)

of the total commercial banking market in Pakistan with a network of 1,705of the total commercial banking market in Pakistan with a network of 1,705

domestic branches; 55 overseas branches in 26 countries spread over Europe,domestic branches; 55 overseas branches in 26 countries spread over Europe,

the Middle East, Far East, Asia, Africa and the United States; 3 HBL whollythe Middle East, Far East, Asia, Africa and the United States; 3 HBL wholly

owned Subsidiaries namely Habib Bank Financial Services (PVT) LTD.owned Subsidiaries namely Habib Bank Financial Services (PVT) LTD.

Karachi, Habib Finance International LTD (Hong Kong) and Habib FinanceKarachi, Habib Finance International LTD (Hong Kong) and Habib Finance

Australia Ltd. – Sydney; 2 Joint Ventures namely Habib Nigeria Bank Ltd.Australia Ltd. – Sydney; 2 Joint Ventures namely Habib Nigeria Bank Ltd.

(40%) and Himalayan Bank Ltd. (20%) and 2 representative offices in Iran(40%) and Himalayan Bank Ltd. (20%) and 2 representative offices in Iran

and Egypt. HBL is currently rated AA+ (Long term) and A1+ (Short term)*. Itand Egypt. HBL is currently rated AA+ (Long term) and A1+ (Short term)*. It

is the first Pakistani bank to raise Tier II Capital from external sources.is the first Pakistani bank to raise Tier II Capital from external sources.

Business Operations

1. Banking Sector Overview1. Banking Sector Overview

2. HBl’s Performance Overview2. HBl’s Performance Overview

3. Products and Services3. Products and Services

  Personal BankingPersonal Banking

  Corporate BankingCorporate Banking

  Online ServicesOnline Services

. Virtual Banking. Virtual Banking

5

  Islamic BankingIslamic Banking

4. HBL’s Competitive Strategies4. HBL’s Competitive Strategies

2.4 History of Banking In Pakistan2.4 History of Banking In Pakistan

The partition plan was announced on June 3, 1947 and August 15, 1949 was fixed asThe partition plan was announced on June 3, 1947 and August 15, 1949 was fixed as

the date on which independence was to take effect. It was decided that the Reservethe date on which independence was to take effect. It was decided that the Reserve

bank of India should continue to function in the dominion of Pakistan until Septemberbank of India should continue to function in the dominion of Pakistan until September

30, 1948 due to administrative and technical difficulties involved in immediately30, 1948 due to administrative and technical difficulties involved in immediately

establishing and operating a Central Bank.establishing and operating a Central Bank.

At the time of partition, total number of banks in Pakistan were 38 out of these theAt the time of partition, total number of banks in Pakistan were 38 out of these the

commercial banks in Pakistan were 2, which were Habib Bank Limited and Australiacommercial banks in Pakistan were 2, which were Habib Bank Limited and Australia

Bank of India. The total deposits in Pakistani banks stood at Rs.880 million whereasBank of India. The total deposits in Pakistani banks stood at Rs.880 million whereas

the advances were Rs.198 million. The Governor General of Pakistan, Muhammadthe advances were Rs.198 million. The Governor General of Pakistan, Muhammad

Ali Jinnah issued the order for the establishment of State Bank of Pakistan on 1st ofAli Jinnah issued the order for the establishment of State Bank of Pakistan on 1st of

July 1948.July 1948.

In 1949, National Bank of Pakistan was established. It started with six offices inIn 1949, National Bank of Pakistan was established. It started with six offices in

former East Pakistan. There were 14 Pakistani scheduled commercial banks operatingformer East Pakistan. There were 14 Pakistani scheduled commercial banks operating

in the country on December 1973. The Pakistan Banking Council prepared banksin the country on December 1973. The Pakistan Banking Council prepared banks

amalgamation schemes in 1974 for amalgamation of smaller banks with the fiveamalgamation schemes in 1974 for amalgamation of smaller banks with the five

bigger banks of the country. These five banks are as under:bigger banks of the country. These five banks are as under:

1.1. National Bank of PakistanNational Bank of Pakistan

2.2. Habib Bank LimitedHabib Bank Limited

3.3. United Bank LimitedUnited Bank Limited

4.4. Muslim Commercial Bank LimitedMuslim Commercial Bank Limited

5.5. Allied Bank LimitedAllied Bank Limited

6

In early 90’s after the failure of nationalization policy, Government went forIn early 90’s after the failure of nationalization policy, Government went for

privatization of financial institution. In last ten to fifteen years banking sector inprivatization of financial institution. In last ten to fifteen years banking sector in

Pakistan has shown tremendous growth. Due to its remarkable growth, banking sectorPakistan has shown tremendous growth. Due to its remarkable growth, banking sector

of Pakistan has become very attractive for foreign investors. Many investors haveof Pakistan has become very attractive for foreign investors. Many investors have

already invested and still many more to come.already invested and still many more to come.

2.5 History Of HBL2.5 History Of HBL

Habib Bank Limited was established by Mr. Ismail Habib on August 25, 1942 on theHabib Bank Limited was established by Mr. Ismail Habib on August 25, 1942 on the

desire of Quaid-e-Azam Muhammad Ali Jinnah, father of the nation. It wasdesire of Quaid-e-Azam Muhammad Ali Jinnah, father of the nation. It was

established with paid up capital of Rs. 2.5 million. It was the first Muslim bank of subestablished with paid up capital of Rs. 2.5 million. It was the first Muslim bank of sub

continent. Quaid-e-Azam first of all opened his personal account. continent. Quaid-e-Azam first of all opened his personal account.

The first branch of HBL started functioning on 30The first branch of HBL started functioning on 30 thth August, 1942 at Muhammad Ali August, 1942 at Muhammad Ali

Road Bombay, In 1942, on the desire of Quaid-e-Azam, Habib family migrated toRoad Bombay, In 1942, on the desire of Quaid-e-Azam, Habib family migrated to

Pakistan and later on shifted the Bank's Head Office from Bombay to Karachi on 7Pakistan and later on shifted the Bank's Head Office from Bombay to Karachi on 7 thth

August, 1947 just one week prior to independence, to play its pivotal role in theAugust, 1947 just one week prior to independence, to play its pivotal role in the

development of this newly born country. development of this newly born country.

At the time of independence, the areas which now constitute Pakistan were producingAt the time of independence, the areas which now constitute Pakistan were producing

only agricultural products raw material for indo-Pak subcontinent. Partially noonly agricultural products raw material for indo-Pak subcontinent. Partially no

industries were there to process the raw material; therefore the raw material wasindustries were there to process the raw material; therefore the raw material was

exported from Pakistan. There were 19 non-Indian foreign Banks which were engagedexported from Pakistan. There were 19 non-Indian foreign Banks which were engaged

in the export of crops from Pakistan with only two Pakistani Banks i.e. HBL and thein the export of crops from Pakistan with only two Pakistani Banks i.e. HBL and the

Australia Bank. The circumstances were completely un-certain. The confidence of theAustralia Bank. The circumstances were completely un-certain. The confidence of the

people had been shaken by the un-friendly environment and till the time peace had notpeople had been shaken by the un-friendly environment and till the time peace had not

been restored, people would naturally have been interested in other things. The nationbeen restored, people would naturally have been interested in other things. The nation

was quite young with extreme scarcity of resources and these definitely added to thewas quite young with extreme scarcity of resources and these definitely added to the

difficulties of the govt., to run its own Banking system immediately. difficulties of the govt., to run its own Banking system immediately.

Following the announcement of the independence plan in June, 1947, the HindusFollowing the announcement of the independence plan in June, 1947, the Hindus

residing in the territories now comprising Pakistan started transferring their assets toresiding in the territories now comprising Pakistan started transferring their assets to

India and vice versa. The Banks included those having their registered India and vice versa. The Banks included those having their registered

Offices in Pakistan, transferred them to India in order to bring a total collapse of theOffices in Pakistan, transferred them to India in order to bring a total collapse of the

new state. It had been decided that the Reserve Bank of India would continue tonew state. It had been decided that the Reserve Bank of India would continue to

function in Pakistan so that the problem of demand and time liabilities, coinage,function in Pakistan so that the problem of demand and time liabilities, coinage,

currencies, exchange rate etc be settled between India and Pakistan and the Indiancurrencies, exchange rate etc be settled between India and Pakistan and the Indian

7

Notes would continue to be legal tender in Pakistan till 30Notes would continue to be legal tender in Pakistan till 30 thth September, 1948. Again September, 1948. Again

due to certain differences between Indian Pakistan, the due to certain differences between Indian Pakistan, the

India government withheld Pakistan's share of Rs.75 core in forward and subscribedIndia government withheld Pakistan's share of Rs.75 core in forward and subscribed

heavily to the government of Pakistan to the tide over the crises. heavily to the government of Pakistan to the tide over the crises.

At a time when this newly born country was at whirlwind of crises, it was HBL whichAt a time when this newly born country was at whirlwind of crises, it was HBL which

fulfilled generously the financial needs of all its sectors, paid salaries to thefulfilled generously the financial needs of all its sectors, paid salaries to the

employees of all Govt. departments, helped in the establishment of State Bank ofemployees of all Govt. departments, helped in the establishment of State Bank of

Pakistan which the Quaid-e-Azam inaugurated on July 1Pakistan which the Quaid-e-Azam inaugurated on July 1stst, 1948. HBL after partition, 1948. HBL after partition

opened its branches tFinanceoughout Pakistan to provide finance and other facilitiesopened its branches tFinanceoughout Pakistan to provide finance and other facilities

to the business community. In association with HBL, the Govt. sponsored Pakistanto the business community. In association with HBL, the Govt. sponsored Pakistan

Finance Corporation Limited for financing of cotton. The Bank helped handsomely inFinance Corporation Limited for financing of cotton. The Bank helped handsomely in

the construction of WARSAK DAM PROJECT, WAPDA, & K.D.A. by providedthe construction of WARSAK DAM PROJECT, WAPDA, & K.D.A. by provided

finance and other facilities. finance and other facilities.

2.6 A Bird’s Eye View2.6 A Bird’s Eye View

Year Important Event

19411941 Commenced operation.Commenced operation.

19421942 Deposits reached 20 million rupees.Deposits reached 20 million rupees.

19431943 Moved operations from Bombay to Karachi on the Quaid’s Request.Moved operations from Bombay to Karachi on the Quaid’s Request.

19461946 First Banking Scheme Started for the Muslim Youth.First Banking Scheme Started for the Muslim Youth.

19471947 HBL head office transferred to Pakistan.HBL head office transferred to Pakistan.

19661966 Silver Jubilee.Silver Jubilee.

19741974 Bank was Nationalized.Bank was Nationalized.

19911991 Golden JubileeGolden Jubilee

8

19971997 HBL was Reorganized.HBL was Reorganized.

20042004 HBL was Privatized.HBL was Privatized.

20062006 Largest Private Commercial Bank in Pakistan with branch network of 1477Largest Private Commercial Bank in Pakistan with branch network of 1477

branches within Pakistan and 65 international branches in 26 Countries.branches within Pakistan and 65 international branches in 26 Countries.

20082008 Declared best Bank. Declared best Bank.

20092009 Pakistan’s Largest Banking Network .Pakistan’s Largest Banking Network .

The Best Emerging Market Bank in PakistanThe Best Emerging Market Bank in Pakistan

HBL among Top 500 Global Financial BrandsHBL among Top 500 Global Financial Brands

2.7 HBL at A Glance2.7 HBL at A Glance

Yea

r

DEPOSIT

Rs.Rs.

(in(in

millions)millions)

ADVAN

CES

Rs.Rs.

( in( in

millions)millions)

PROFIT (PRE-TAX)

Rs.Rs.

( in millions)( in millions)

ASSETS

Rs.Rs.

( in millions)( in millions)

BRANCHES

194194

1-421-42

24.024.0 10.310.3 0.40.4 27.027.0 22

194194

77

266.0266.0 63.763.7 1.51.5 321.2321.2 2121

197197

33

7579.87579.8 4005.14005.1 113.0113.0 1167911679 749749

197197

44

8592.88592.8 6212.46212.4 211.8211.8 15,53115,531 10841084

199199

00

120680.2120680.2 81140.981140.9 731.0731.0 228,799228,799 19041904

9

200200

11

283,445283,445 167,225167,225 22242224 333,751333,751 15161516

200200

22

328,182328,182 167,523167,523 40884088 403,013403,013 14731473

200200

33

360,648360,648 183,654183,654 54695469 434,932434,932 14701470

200200

44

404,629404,629 258,306258,306 71467146 486,982486,982 14691469

200200

55

432,545432,545 316,681316,681 1383313833 528,893528,893 14251425

200200

66

459,140459,140 349,432349,432 2053220532 590,291590,291 14251425

200200

77

517,481517,481 354,980354,980 1019910199 654,652654,652 14771477

200200

88

437,098437,098 74,62274,622 1625416254 696,712696,712 14641464

Operational & Financial AspectsOperational & Financial Aspects

2.8 Mission Vision & Objectives:2.8 Mission Vision & Objectives:

MISSION:MISSION: “To make our customers prosper, our staff excel and create value for shareholders” “To make our customers prosper, our staff excel and create value for shareholders”

OROR

To be recognized as the leading financial institution of Pakistan and a dynamicTo be recognized as the leading financial institution of Pakistan and a dynamic

international bank in the emerging markets, providing our customers with ainternational bank in the emerging markets, providing our customers with a

premium set of innovative products and services, and granting superior value topremium set of innovative products and services, and granting superior value to

our stakeholders- shareholders, customers and employees.our stakeholders- shareholders, customers and employees.

10

VISION:VISION:“Enabling people to advance with confidence and success”“Enabling people to advance with confidence and success”

Our BrandOur Brand

Our brand identity is the outward expression of what we stand for as anOur brand identity is the outward expression of what we stand for as an

organization. This is summarized in our vision, mission and is supported by ourorganization. This is summarized in our vision, mission and is supported by our

valuesvalues

Objectives Of HBL:Objectives Of HBL:

Following are some of the main objectives of HBLFollowing are some of the main objectives of HBL

To earn profit for the Bank itself and for its shareholders.To earn profit for the Bank itself and for its shareholders.

To promote and boost up business sector inside the country.To promote and boost up business sector inside the country.

To provide employment opportunities to people.To provide employment opportunities to people.

To help in development and industrialization of the country.To help in development and industrialization of the country.

To provide loan and advances to help out in self employment schemeTo provide loan and advances to help out in self employment scheme

2.9 2.9 Symbol of HBl:Symbol of HBl:

BISMILLAH _ _ _ _ _ _ _ _ _ _ Islamic Culture and ValuesBISMILLAH _ _ _ _ _ _ _ _ _ _ Islamic Culture and Values

11

SWORD _ _ _ _ _ _ _ _ _ _ _ _PowerSWORD _ _ _ _ _ _ _ _ _ _ _ _Power

LION _ _ _ _ _ _ _ _ _ _ _ _ _ _As a symbol of strengthLION _ _ _ _ _ _ _ _ _ _ _ _ _ _As a symbol of strength

2.10 Core Value of HBL2.10 Core Value of HBL

Our values are the fundamental principles that define our culture and areOur values are the fundamental principles that define our culture and are

brought to life in our attitudes and behaviour. It is our values that makebrought to life in our attitudes and behaviour. It is our values that make

us unique and unmistakable. Our values are defined below:us unique and unmistakable. Our values are defined below:

HumilityHumility

HBL encourages a culture of mutual respect and treats both their team membersHBL encourages a culture of mutual respect and treats both their team members

and customers with humility and care.and customers with humility and care.

IntegrityIntegrity

For them integrity means a synergic approach towards abiding their core values.For them integrity means a synergic approach towards abiding their core values.

United with the force of shared values and integrity, they form a network of aUnited with the force of shared values and integrity, they form a network of a

well-integrated team.well-integrated team.

MeritocracyMeritocracy

At every level, from selection to advancement, they have designed a consistentAt every level, from selection to advancement, they have designed a consistent

system of human resource practices, based on objective criteria tFinanceoughout allsystem of human resource practices, based on objective criteria tFinanceoughout all

the layers of the organization. HBL is therefore, able to achieve a specific level ofthe layers of the organization. HBL is therefore, able to achieve a specific level of

performance at every layer of the organization.performance at every layer of the organization.

TeamworkTeamwork

Their team strives to become a cohesive and unified force, to offer the customer, aTheir team strives to become a cohesive and unified force, to offer the customer, a

service beyond his expectations. This force is derived from participated andservice beyond his expectations. This force is derived from participated and

collective endeavors, a common set of goals and a spirit to share the glory and thecollective endeavors, a common set of goals and a spirit to share the glory and the

strength to face failure together.strength to face failure together.

Culture of InnovationCulture of Innovation

Their aim is to proactively responsive to new ideas, and to respect and reward theTheir aim is to proactively responsive to new ideas, and to respect and reward the

agents, leaders and creators of changeagents, leaders and creators of change

2.11 Corporate Banking2.11 Corporate Banking

12

Only local bank with special focus on corporate Banking with a presence in allOnly local bank with special focus on corporate Banking with a presence in all

major locations tFinanceough out the country, offering full range of Bankingmajor locations tFinanceough out the country, offering full range of Banking

products / services and one window interface tFinanceough designatedproducts / services and one window interface tFinanceough designated

Relationship Managers. Our large equity base allows us to take longer per partyRelationship Managers. Our large equity base allows us to take longer per party

exposures to meet the needs of the largest corporate & our extensive local &exposures to meet the needs of the largest corporate & our extensive local &

foreign network allows us to imperiously service our clients.foreign network allows us to imperiously service our clients.

Corporate Manages well diversified portfolio, and include most of the top tierCorporate Manages well diversified portfolio, and include most of the top tier

names of the market . Corporate Banking offers tailor made products / solutions asnames of the market . Corporate Banking offers tailor made products / solutions as

required by corporate customers which include:required by corporate customers which include:

Key Features Of Corporate BankingKey Features Of Corporate Banking

Funded facilities, ranging from short to medium and long term lendingFunded facilities, ranging from short to medium and long term lending

Trade related financing.Trade related financing.

Foreign currency financing.Foreign currency financing.

All sorts of non-funded facilities / services which include Cash receipts /All sorts of non-funded facilities / services which include Cash receipts /

payments, Remittances, Collections, Guarantees, letter of credit etc ..payments, Remittances, Collections, Guarantees, letter of credit etc ..

Customized products / solutionsCustomized products / solutions

2.12 AWARDS:2.12 AWARDS:

  20112011   

            'HBL wins Best Emerging Market Banks award in Pakistan 2011''HBL wins Best Emerging Market Banks award in Pakistan 2011'

  20092009   

            'The Best Emerging Market Bank in Pakistan''The Best Emerging Market Bank in Pakistan'

                       ‘HBL among Top 500 Global Financial Brands’ ‘HBL among Top 500 Global Financial Brands’

  20082008   

            'Best Bank In Pakistan''Best Bank In Pakistan'

                       'Most Innovative Global Trade Finance' 'Most Innovative Global Trade Finance'

                       'Buzziest Brands' 'Buzziest Brands'

13

2.13 Role Of HBL In Banking Sector2.13 Role Of HBL In Banking Sector

The impressive growths in development, which HBL achieve, make this bankThe impressive growths in development, which HBL achieve, make this bank

undoubtedly the most dynamic and progressive. In a very short period of time itundoubtedly the most dynamic and progressive. In a very short period of time it

became one of the leading bank overtaking several other older and its competitorbecame one of the leading bank overtaking several other older and its competitor

banks. The major contributions the bank has made are:banks. The major contributions the bank has made are:

Record setting performance and commitment to serve the customers. Record setting performance and commitment to serve the customers.

Personalized service and dynamic approach.Personalized service and dynamic approach.

Catalyst of changes.Catalyst of changes.

Professional management.Professional management.

Modern banking policy.Modern banking policy.

Human resources development .Human resources development .

Small loans or micro credits.Small loans or micro credits.

Utility bills collection.Utility bills collection.

Credit cards.Credit cards.

Traveler’s cheques.Traveler’s cheques.

Diaries and calendars / received prizes too.Diaries and calendars / received prizes too.

Promotion of sports.Promotion of sports.

2.14 Function of HBL2.14 Function of HBL

HBL is a commercial bank, which transacts the business of banking in accordingHBL is a commercial bank, which transacts the business of banking in according

with the provision of BCO, 1962. Section 7 of the Act authorizes banks to engagewith the provision of BCO, 1962. Section 7 of the Act authorizes banks to engage

in the prescribed form of business. In the light of this section HBL’s functions canin the prescribed form of business. In the light of this section HBL’s functions can

be categorized as under:be categorized as under:

Agency services.Agency services.

General utility services.General utility services.

Underwriting of loans raised by the government.Underwriting of loans raised by the government.

Providing specialized services to customers.Providing specialized services to customers.

2.15 Computerization of HBL2.15 Computerization of HBL

14

HBL has ----------------------------- that are equipped with modern main frameHBL has ----------------------------- that are equipped with modern main frame

computers of various capacities. Every branch has a well established computercomputers of various capacities. Every branch has a well established computer

network.network.

The use of computers has enabled the bank to save the time and efforts raiseThe use of computers has enabled the bank to save the time and efforts raise

efficiency and deliver the goods in a timely manner. The has allowed the bank toefficiency and deliver the goods in a timely manner. The has allowed the bank to

maintain its competitive edge in the market.maintain its competitive edge in the market.

2.16 Online system2.16 Online system

Theme of this service is Access any time, anywhere, and tFinanceough any deviceTheme of this service is Access any time, anywhere, and tFinanceough any device

which symbolizes comfort, convenience and easy accessibility. AC-online a webwhich symbolizes comfort, convenience and easy accessibility. AC-online a web

based service that can be accessed tFinanceough multiple media link like:based service that can be accessed tFinanceough multiple media link like:

i.i. PC via internetPC via internet

ii.ii. Mobile phones with WAP or free SMSMobile phones with WAP or free SMS

iii.iii. Plain telephonePlain telephone

Following are some features:Following are some features:

Accounts statements and electronic data interchangeAccounts statements and electronic data interchange

Graphical analysis Graphical analysis

Alert service facilityAlert service facility

2.17 Local Fund Transfer Facility (LFT)2.17 Local Fund Transfer Facility (LFT)

The bank has recently employed local fund transfer service system, which can affectThe bank has recently employed local fund transfer service system, which can affect

money transfer with in minutes. Similarly the system used for local transfer of moneymoney transfer with in minutes. Similarly the system used for local transfer of money

transaction.transaction.

2.18 Fast Cash Facility2.18 Fast Cash Facility

In the fast cash facility foreign fund transfer in the country in also money transferIn the fast cash facility foreign fund transfer in the country in also money transfer

with in minutes. with in minutes.

2.19 Asset Product Division (APD)2.19 Asset Product Division (APD)

15

Which is responsible for the development and management of retail credit schemesWhich is responsible for the development and management of retail credit schemes

and is presently offering several innovative credit products.and is presently offering several innovative credit products.

2.20 Investment Products Division (IPD)2.20 Investment Products Division (IPD)

It is responsible for developing and managing brands that serve the investment needsIt is responsible for developing and managing brands that serve the investment needs

of the consumer market and focus on deposit mobilization and provision of valueof the consumer market and focus on deposit mobilization and provision of value

added services based on modern technology. This division continuously makes anadded services based on modern technology. This division continuously makes an

effort to provide value-added services and products to its clients.effort to provide value-added services and products to its clients.

2.21 Secure transfer of money2.21 Secure transfer of money

Public needs to transfer money from one city to another. The objective of HBL is toPublic needs to transfer money from one city to another. The objective of HBL is to

ensure the safe and secure and efficient transferensure the safe and secure and efficient transfer

2.22 Corporate Banking2.22 Corporate Banking

HBL’s mission is to serve all corporate needs of its customers and ensure fullHBL’s mission is to serve all corporate needs of its customers and ensure full

satisfaction tFinanceough products innovation, personalized banking tFinanceoughsatisfaction tFinanceough products innovation, personalized banking tFinanceough

relationship banking, best customer services and key contracts.relationship banking, best customer services and key contracts.

2.23 HBL Investment Banking2.23 HBL Investment Banking

HBL provide innovative and unique advice to its customer in meeting in anHBL provide innovative and unique advice to its customer in meeting in an

innovative market. A healthy mixture of structuring, advisory and project financeinnovative market. A healthy mixture of structuring, advisory and project finance

business deals in leading market firms.business deals in leading market firms.

2.24 Enhanced Managerial Activities2.24 Enhanced Managerial Activities

In Pakistan the concept of pf professional management had not yet developed. ButIn Pakistan the concept of pf professional management had not yet developed. But

HBL was considered to the best pioneer in this regard that the band has employedHBL was considered to the best pioneer in this regard that the band has employed

from very first day skillful and professional management which has ability to takefrom very first day skillful and professional management which has ability to take

quick and corrective decision and has flexibility to cope up with changing businessquick and corrective decision and has flexibility to cope up with changing business

and economic condition.and economic condition.

2.25 Flexible Business Style2.25 Flexible Business Style

16

HBL business approach is flexible which means that it changed it style according toHBL business approach is flexible which means that it changed it style according to

market need and was appealing to the customers. HBL’s approach was dynamic andmarket need and was appealing to the customers. HBL’s approach was dynamic and

personalized which made it distinguish from other banks of the era.personalized which made it distinguish from other banks of the era.

2.26 Dynamic Approach Regarding Services2.26 Dynamic Approach Regarding Services

HBL made people of Pakistan saving minded and familiar with banking and in thisHBL made people of Pakistan saving minded and familiar with banking and in this

regard its skilled management contributed very much. In this direction HBLregard its skilled management contributed very much. In this direction HBL

mobilezed saving and opening of accounts.mobilezed saving and opening of accounts.

Following are the factors which contributed in the achievement of the purpose:Following are the factors which contributed in the achievement of the purpose:

Knowledge of customers businessKnowledge of customers business

Market researchMarket research

Visits to customers at there officesVisits to customers at there offices

Development of personalized relationship with business communityDevelopment of personalized relationship with business community

Fixation of seasonal business markets.Fixation of seasonal business markets.

2.27 Better Working Condition2.27 Better Working Condition

From the very first HBL has provided its employees a better workingFrom the very first HBL has provided its employees a better working

environment, salary structure and facilities. It has created such relax environmentenvironment, salary structure and facilities. It has created such relax environment

for its employees in the presence of which employees can polish their skills andfor its employees in the presence of which employees can polish their skills and

abilities.abilities.

2.28 Including In Healthy Competition2.28 Including In Healthy Competition

When HBL entered in the banking field, a new ara of banking began and this eraWhen HBL entered in the banking field, a new ara of banking began and this era

was the phase of competition. Clients are attracted towards those banks whichwas the phase of competition. Clients are attracted towards those banks which

used to provide better and quicker banking services. Keeping in view thisused to provide better and quicker banking services. Keeping in view this

approach HBL made a lot of changes and adopted a modern strategy to provideapproach HBL made a lot of changes and adopted a modern strategy to provide

attractive services to the customers. The competition involved in by HBL was notattractive services to the customers. The competition involved in by HBL was not

only legitimize but also vital for industry. It consists of a wide and increasingonly legitimize but also vital for industry. It consists of a wide and increasing

range of services which were provided speedy, efficiently and with due courtesy.range of services which were provided speedy, efficiently and with due courtesy.

17

2.29 Information Technology2.29 Information Technology

Technology has played a pivotal role in enhancing customer expectations,Technology has played a pivotal role in enhancing customer expectations,

particularly with respect to speed and quality of service. We have fully automatedparticularly with respect to speed and quality of service. We have fully automated

transaction processing system for bank-office support.transaction processing system for bank-office support.

2.30 Branch Expansion Strategy:2.30 Branch Expansion Strategy:

The management decided to broaden the geographical coverage. ThereforeThe management decided to broaden the geographical coverage. Therefore

besides the cities, the bank spread out the branches into small towns and the farbesides the cities, the bank spread out the branches into small towns and the far

flung less developed areas to full its social responsibility.flung less developed areas to full its social responsibility.

2.31 Role in the Field OF Sports2.31 Role in the Field OF Sports

HBl is fully committed to the community services and sports and in this regardHBl is fully committed to the community services and sports and in this regard

bank participated and supported a number of events including nationalbank participated and supported a number of events including national

championship specially in Cricket. From the HBL Shahid Afridi, Younus Khan,championship specially in Cricket. From the HBL Shahid Afridi, Younus Khan,

Umer Gul, and Danish Kaneria some other players are playing in the InternationalUmer Gul, and Danish Kaneria some other players are playing in the International

Cricket. Cricket.

2.32 International Operation2.32 International Operation

HBL took a basic decision to make it present felt internationally and to cater to theHBL took a basic decision to make it present felt internationally and to cater to the

needs of importers and exporters as well as its share in foreign trade andneeds of importers and exporters as well as its share in foreign trade and

international market.international market.

2.33 Keeping Pace with 212.33 Keeping Pace with 21stst Century Century

HBL has stepped into 21HBL has stepped into 21stst century with confidence. HBL stood firm to provide the century with confidence. HBL stood firm to provide the

services, which the customers in the modern day expect from a bank. HBL isservices, which the customers in the modern day expect from a bank. HBL is

equipped with the latest technologies and has professional experience to face theequipped with the latest technologies and has professional experience to face the

future with determination and confidence. HBL has high aims and sense offuture with determination and confidence. HBL has high aims and sense of

direction in order to serve the country with zeal, devotion and enthusiasm.direction in order to serve the country with zeal, devotion and enthusiasm.

2.34 Islamic Banking Division2.34 Islamic Banking Division

18

After the Supreme Court decision on Riba, HBL is undertaking groundwork toAfter the Supreme Court decision on Riba, HBL is undertaking groundwork to

implement Islamic banking. A division was created which in addition to conductimplement Islamic banking. A division was created which in addition to conduct

research also works closely with the commission for transaction of financial system.research also works closely with the commission for transaction of financial system.

2.35 Controls and Management System2.35 Controls and Management System

The control and management system of bank is necessary, since bank deals in money,The control and management system of bank is necessary, since bank deals in money,

all services which deals in money or money transactions require induction of effectiveall services which deals in money or money transactions require induction of effective

and efficient internal control system to protect it in order to built high image of trustand efficient internal control system to protect it in order to built high image of trust

and confidence amongst bank’s customers and public at large. The supervision is theand confidence amongst bank’s customers and public at large. The supervision is the

example of control and management.example of control and management.

19

CHAPTER – 03CHAPTER – 03

HABIB BANK STRUCTURE, PRODUCTS, SERVICESHABIB BANK STRUCTURE, PRODUCTS, SERVICES

AND DEPARTMENTAND DEPARTMENT

3.1 Structure of HBL3.1 Structure of HBL

At the present the Bank operates tFinanceough one central and 23 Regional OfficesAt the present the Bank operates tFinanceough one central and 23 Regional Offices

and 1439 branches, all over Pakistan. The president and Executive Committee lookand 1439 branches, all over Pakistan. The president and Executive Committee look

after the affairs of the Bank. Each Regional Head Quarter is headed by a Chiefafter the affairs of the Bank. Each Regional Head Quarter is headed by a Chief

Executive and assisted by General Manager Operations and General Manager SupportExecutive and assisted by General Manager Operations and General Manager Support

Services. The Regional Head Quarter controls the branches in their area.Services. The Regional Head Quarter controls the branches in their area.

Overseas operations consist of 65 main branches, two affiliates, two representativeOverseas operations consist of 65 main branches, two affiliates, two representative

offices and two subsidiaries.offices and two subsidiaries.

President, from Head Office at Karachi controls the officers of the Bank with the helpPresident, from Head Office at Karachi controls the officers of the Bank with the help

of the senior management. Functional responsibilities of the Banks are broken intoof the senior management. Functional responsibilities of the Banks are broken into

seven groups known asseven groups known as

1)1) International Operations GroupInternational Operations Group

2)2) Corporate Banking and Treasury Investment GroupCorporate Banking and Treasury Investment Group

3)3) Retail Banking and Operation GroupRetail Banking and Operation Group

4)4) Assets Remedial and Administration GroupAssets Remedial and Administration Group

5)5) Assets Remedial Management GroupAssets Remedial Management Group

6)6) Credit Policy GroupCredit Policy Group

7)7) Corporate Bank, Financial Institutions and Project Finance GroupCorporate Bank, Financial Institutions and Project Finance Group

In addition to the overall controlling authority, president also managesIn addition to the overall controlling authority, president also manages

the international Operations Group individually.the international Operations Group individually.

While the Senior Executive Vice President supervise rest of the financial While the Senior Executive Vice President supervise rest of the financial

groups. Each Senior Executive Vice President is individually responsiblegroups. Each Senior Executive Vice President is individually responsible

for the group which is assigned to him. At the level of provinces there arefor the group which is assigned to him. At the level of provinces there are

Regional Head Quarters headed by Regional Chief Executives (RCE).Regional Head Quarters headed by Regional Chief Executives (RCE).

20

Each RCE is assisted by GM operations and GM Support Services.Each RCE is assisted by GM operations and GM Support Services.

Branches are also controlled by the RCEs. Circle Offices of the pastBranches are also controlled by the RCEs. Circle Offices of the past

times have been removed to reduce Managerial Layers, which weretimes have been removed to reduce Managerial Layers, which were

working under the control of Zonal Offices. This Happened as a result ofworking under the control of Zonal Offices. This Happened as a result of

policy of beginning new changes in the organizational structure.policy of beginning new changes in the organizational structure.

3.2 Analysis Of Organizational Structure3.2 Analysis Of Organizational Structure

The purpose of an organizational structure is to help in creating an environment forThe purpose of an organizational structure is to help in creating an environment for

human performance. It is then, a management tool and not an end in its own.human performance. It is then, a management tool and not an end in its own.

Although the structure must define the task to be done, the rules so established mustAlthough the structure must define the task to be done, the rules so established must

also be designed in the light of abilities and motivation of the human recoursealso be designed in the light of abilities and motivation of the human recourse

available. By analyzing the organizational structure of HBL presence of the followingavailable. By analyzing the organizational structure of HBL presence of the following

elements can be found in its structure.elements can be found in its structure.

3.3 Centralized Decision Making3.3 Centralized Decision Making

By looking at the organizational structure of HBL would be found that the structure atBy looking at the organizational structure of HBL would be found that the structure at

HBL is a critical one. All the decisions are made at the top management level and theHBL is a critical one. All the decisions are made at the top management level and the

subordinates have to obey these decisions. This trend in the decision making shows asubordinates have to obey these decisions. This trend in the decision making shows a

pattern of rigidity in structure of HBL.pattern of rigidity in structure of HBL.

3.4 Downward Communication3.4 Downward Communication

Communication is the process by which information is exchanged and understood byCommunication is the process by which information is exchanged and understood by

two or more people, usually with the interest to motivate or in influence the behaviortwo or more people, usually with the interest to motivate or in influence the behavior

of others in the organization. Downward communication is the message andof others in the organization. Downward communication is the message and

information sent from top management to subordinates in a downward direction.information sent from top management to subordinates in a downward direction.

Managers can communicate downward to the employees tFinanceough speeches,Managers can communicate downward to the employees tFinanceough speeches,

messages can communicate downward to the employees tFinanceough speechesmessages can communicate downward to the employees tFinanceough speeches

messages in company publications, information leaflets, tucked into pay envelopsmessages in company publications, information leaflets, tucked into pay envelops

material on bulletin boards, policy and procedures mandates. The same pattern ismaterial on bulletin boards, policy and procedures mandates. The same pattern is

21

followed at HBL. No doubt it’s a very traditional approach but it can create problemsfollowed at HBL. No doubt it’s a very traditional approach but it can create problems

because it ignores the receiver of the communication because the issuer of policiesbecause it ignores the receiver of the communication because the issuer of policies

and procedures does not ensure communication. In reality may the messageand procedures does not ensure communication. In reality may the message

communicated downward are not understood perfectly.communicated downward are not understood perfectly.

3.5 Chain Of Command3.5 Chain Of Command

Chairman

President

Board of Director

Member Executive Board

Regional Chief

Zonal Chief

Branch Manager

Operations Manager

Bank Staff

22

23

3.6 Chain Of Command In Bank Branch:

24

The chain of command is an unbroken line of authority that links all persons in anThe chain of command is an unbroken line of authority that links all persons in an

organization and shows who reports to whom. By analyzing the organizationalorganization and shows who reports to whom. By analyzing the organizational

structure it can be found that there is a scalar principle followed with in the Bankstructure it can be found that there is a scalar principle followed with in the Bank

because each and every person knows to whom can one report. The authority andbecause each and every person knows to whom can one report. The authority and

responsibility for different tasks and duties are different, as well as every one knowsresponsibility for different tasks and duties are different, as well as every one knows

the successive levels of management all the way to the top.the successive levels of management all the way to the top.

3.7Authorities and Responsibilites3.7Authorities and Responsibilites

The chain of command illustrates the authority structure of HBL. Authority is theThe chain of command illustrates the authority structure of HBL. Authority is the

formal and lefitimate right of the manager to make decision, issue orders and allocatesformal and lefitimate right of the manager to make decision, issue orders and allocates

resources to achieve organizational desired out comes. By the analyzing the chain ofresources to achieve organizational desired out comes. By the analyzing the chain of

command of HBL, one can come to the conclusion that, as there is scalar patterncommand of HBL, one can come to the conclusion that, as there is scalar pattern

followed at the organizational setup of HBL therefore it is implied that everyone infollowed at the organizational setup of HBL therefore it is implied that everyone in

his position knows that what is one’s authority and what is the responsibility and thehis position knows that what is one’s authority and what is the responsibility and the

authority it allocated.authority it allocated.

3.8 Delegation 3.8 Delegation

Delegation is the process, which managers use to transfer the authority andDelegation is the process, which managers use to transfer the authority and

responsibility to position below in the hierarchy. Most organizations today encourageresponsibility to position below in the hierarchy. Most organizations today encourage

managers to delegate authority to the lowest possible level to provide maximummanagers to delegate authority to the lowest possible level to provide maximum

flexibility to meet customer needs and adapts to the environment. But at HBL noflexibility to meet customer needs and adapts to the environment. But at HBL no

such system prevails the managers try to keep as much of the authority as they cansuch system prevails the managers try to keep as much of the authority as they can

and if some authority is delegated it is sure that it will be mis useand if some authority is delegated it is sure that it will be mis use

PRODUCTS OF HBLPRODUCTS OF HBL

 3.9 PRODUCTS:3.9 PRODUCTS: 

HBL Muhafiz Rupee Travellers ChequesHBL Muhafiz Rupee Travellers Cheques

HBL Auto FinanceHBL Auto Finance

HBL Flexi Loans for salaried personnelHBL Flexi Loans for salaried personnel

25

HBL LifeStyles Financing SchemeHBL LifeStyles Financing Scheme

HBL i-CardHBL i-Card

HBL House Financing LoansHBL House Financing Loans

HBL Easy AccessHBL Easy Access

HBL Fast TransferHBL Fast Transfer

Haryali Agricultural LoansHaryali Agricultural Loans

HBL E-BankHBL E-Bank

3.9.1 HBL Muhafiz Rupee Travellers Cheques3.9.1 HBL Muhafiz Rupee Travellers Cheques

It was introduced in 1998. A cheques available in denomination of RsIt was introduced in 1998. A cheques available in denomination of Rs

10,000, 25,000, 50,000 and 100,000 with the advantage of 100% free10,000, 25,000, 50,000 and 100,000 with the advantage of 100% free

purchase and encashment.purchase and encashment.

Distinct Properties Of Muhafiz Distinct Properties Of Muhafiz

It can be issued from more than 700 branches all over PakistanIt can be issued from more than 700 branches all over Pakistan

Muhafiz, provides the facility of payment in all branches ofMuhafiz, provides the facility of payment in all branches of

HBL.HBL.

There is no commission and fee charge for purchase of MuhafizThere is no commission and fee charge for purchase of Muhafiz

HBL.HBL.

Keep alive the tradition of Serve you better charge nothing fo theKeep alive the tradition of Serve you better charge nothing fo the

purchase and sale of Muhafiz.purchase and sale of Muhafiz.

3.9.2 HBL Auto Finance3.9.2 HBL Auto Finance

Habib bank Auto Finance, a lease product, designed to offer you anHabib bank Auto Finance, a lease product, designed to offer you an

economical way for owing the car of your choice. Some characteristicseconomical way for owing the car of your choice. Some characteristics

are:are:

Lowest Down Payment Lowest Down Payment

Lowest monthly rentalsLowest monthly rentals

Fixed repayment renures of 36,48 and 60 months.Fixed repayment renures of 36,48 and 60 months.

Lowest processing chargesLowest processing charges

Insurance premium rates as low as 3%Insurance premium rates as low as 3%

26

World wide personal accidental insurance coverage of up to RsWorld wide personal accidental insurance coverage of up to Rs

200,000200,000

All locally assembled a new car can be financed tFinanceoughAll locally assembled a new car can be financed tFinanceough

this scheme.this scheme.

3.9.3 HBL Flexi Loans for salaried personnel3.9.3 HBL Flexi Loans for salaried personnel

HBL had introduced a unique loan system for the middle incomeHBL had introduced a unique loan system for the middle income

serving people in various public sectors. It is basically meant for thoseserving people in various public sectors. It is basically meant for those

in service people who earn more than Rs. 5,000 per month. This loanin service people who earn more than Rs. 5,000 per month. This loan

meets the petty requirement of the salaried class. Since the introductionmeets the petty requirement of the salaried class. Since the introduction

of this scheme Rs 6 billion is advanced tFinanceoughout the country.of this scheme Rs 6 billion is advanced tFinanceoughout the country.

The maximum limit of this loan is Rs. 3,000,000.The maximum limit of this loan is Rs. 3,000,000.

3.9.4 HBL LifeStyles Financing Scheme3.9.4 HBL LifeStyles Financing Scheme

Habib Bank Lifestyle is an economical financing scheme forHabib Bank Lifestyle is an economical financing scheme for

Household Appliances and consumer Electronics. Silent features ofHousehold Appliances and consumer Electronics. Silent features of

HBL LIFESTYLE:HBL LIFESTYLE:

Loan for salaried / self Employed individual or businessLoan for salaried / self Employed individual or business

personspersons

Low Mark-ups leading to affordable monthly installments.Low Mark-ups leading to affordable monthly installments.

Financing from Rs. 10,000 to Rs 500,000Financing from Rs. 10,000 to Rs 500,000

Fixed tensures of 6,12,18,24 and 36 monthsFixed tensures of 6,12,18,24 and 36 months

Low Processing chargesLow Processing charges

Full credit Life InsuranceFull credit Life Insurance

Free Doorstep Delivery of ItemsFree Doorstep Delivery of Items

Avalilable tFinanceoughout Pakistan from over 330 designatedAvalilable tFinanceoughout Pakistan from over 330 designated

Habib Bank BranchesHabib Bank Branches

3.9.5 HBL i-Card3.9.5 HBL i-Card

Offer a number of facilities such as cash withdrawal, FundsOffer a number of facilities such as cash withdrawal, Funds

transfer between accounts, Balance inquiry, Mini Statement, PINtransfer between accounts, Balance inquiry, Mini Statement, PIN

27

Change etc. Accepting at all 1LINK and MNET ATMs across theChange etc. Accepting at all 1LINK and MNET ATMs across the

country.country.

3.9.6 HBL House Financing Loans3.9.6 HBL House Financing Loans

HBL provides the facility of house finance;HBL provides the facility of house finance;

Financing available for:Financing available for:

1.1. Purchase of housePurchase of house

2.2. Home improvement renovationHome improvement renovation

3.3. Self ConstructionSelf Construction

Some characteristics of House Finance of HBL are:Some characteristics of House Finance of HBL are:

Lowest mark-ups leading to affordable monthly installmentsLowest mark-ups leading to affordable monthly installments

5 years fixed Rates / one year Floating Rate available.5 years fixed Rates / one year Floating Rate available.

Lowest processing chargesLowest processing charges

Finance tenures ranging from 3 to 20 years Finance tenures ranging from 3 to 20 years

Financing limit of up to Rs. 7.5 million (Rs. 3.0 million for HomeFinancing limit of up to Rs. 7.5 million (Rs. 3.0 million for Home

inprovemnet / Renovation)inprovemnet / Renovation)

Quick processing Quick processing

3.9.7 HBL Easy Access3.9.7 HBL Easy Access

Online access to banking service at over two hundred branches inOnline access to banking service at over two hundred branches in

PakistanPakistan

3.9.8 HBL Fast Transfer3.9.8 HBL Fast Transfer

A unique solution for overseas Pakistanis to send money back home in aA unique solution for overseas Pakistanis to send money back home in a

swift and convenient mannerswift and convenient manner

3.9.9 Haryali Agricultural Loans3.9.9 Haryali Agricultural Loans

It entails all kinds of agriculture finance facility for the rural market.It entails all kinds of agriculture finance facility for the rural market.

28

3.9.10HBL E-Bank3.9.10HBL E-Bank

It provides services via a dedicated communication link on the internet.It provides services via a dedicated communication link on the internet.

The E-Banking service provide anything anywhere banking to all 5The E-Banking service provide anything anywhere banking to all 5

million customers. This service, designed to be user friendly, assuresmillion customers. This service, designed to be user friendly, assures

secured access and confidentiality.secured access and confidentiality.

3.10 AGENCY SERIVCES TO THE CUSTOMERS3.10 AGENCY SERIVCES TO THE CUSTOMERS

HBL also provides agency services to its customers. Some of which are asHBL also provides agency services to its customers. Some of which are as

follows:follows:

3.10.1 Collection of Checques3.10.1 Collection of Checques

HBL pays and collect cheques on behalf of their customers, and for this itHBL pays and collect cheques on behalf of their customers, and for this it

receives commission form their account holders.receives commission form their account holders.

3.10.2 Collection of dividends3.10.2 Collection of dividends

The Bank provides a very useful service by acting as an agent for itsThe Bank provides a very useful service by acting as an agent for its

customers. It arranges the collection of dividends on shares and securities heldcustomers. It arranges the collection of dividends on shares and securities held

by its customers. The customer is simply to inform the issuer of the securitiesby its customers. The customer is simply to inform the issuer of the securities

that the interst on the secutities is to be credited to his account in the Bank.that the interst on the secutities is to be credited to his account in the Bank.

Bank charges commission for the collection of the diviends on behalf ofBank charges commission for the collection of the diviends on behalf of

account holders.account holders.

3.10.3 Purchase and sale of securities3.10.3 Purchase and sale of securities

HBL if authorized by the customers also make purchase and sale of securitiesHBL if authorized by the customers also make purchase and sale of securities

on the behalf of its customers. Bank charges commission for the purchase oron the behalf of its customers. Bank charges commission for the purchase or

sale made by its on behalf on the customers.sale made by its on behalf on the customers.

3.10.4 Execution of standing instruction3.10.4 Execution of standing instruction

HBL also executes the standing in case if it is ordered by the customers of theHBL also executes the standing in case if it is ordered by the customers of the

Bank to do so. These instructions are usually given in writing to Bank. TheBank to do so. These instructions are usually given in writing to Bank. The

29

Bank debits and credits the accounts of its customer for the transactionsBank debits and credits the accounts of its customer for the transactions

carried out by the individual or firm.carried out by the individual or firm.

3.10.5 Transfer of funds3.10.5 Transfer of funds

HBL, also transfers fund of the customers from one Bank to another Bank. IfHBL, also transfers fund of the customers from one Bank to another Bank. If

the transfer is within one station, they don,t charge any commission and eventhe transfer is within one station, they don,t charge any commission and even

if they charge, they charge on reduced rates.if they charge, they charge on reduced rates.

3.10.6 Acts as an agent3.10.6 Acts as an agent

HBL also act as an agent, correspondent or representative of its customers atHBL also act as an agent, correspondent or representative of its customers at

home and abroad.home and abroad.

3.12.7 General utility services3.12.7 General utility services

HBL also performs a number of generally utility services to its customersHBL also performs a number of generally utility services to its customers

which are as followswhich are as follows

3.10.8 Foreign exchange Business 3.10.8 Foreign exchange Business

HBL transacts foreign exchange business by discounting foreign bills ofHBL transacts foreign exchange business by discounting foreign bills of

exchange and thus provides facilities for financing in foreign trade.exchange and thus provides facilities for financing in foreign trade.

3.10.9 Acts as a referee3.10.9 Acts as a referee

HBL provides useful services to its customers by acting as a referee for itsHBL provides useful services to its customers by acting as a referee for its

credit worthiness. The information is supplied in secrecy and is based oncredit worthiness. The information is supplied in secrecy and is based on

financial standing of the customers.financial standing of the customers.

Acceptance of Bills of exchangeAcceptance of Bills of exchange

HBL also undertakes acceptance business connection with bills of exchangeHBL also undertakes acceptance business connection with bills of exchange

and thus enables its customers to obtain the desired credit.and thus enables its customers to obtain the desired credit.

3.10.10 Issuance of traveler’s cheques 3.10.10 Issuance of traveler’s cheques

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HBL also issues traveler’s cheques. These cheques can be issued to anyoneHBL also issues traveler’s cheques. These cheques can be issued to anyone

whether an account holder or not and charges no commission on issuance ofwhether an account holder or not and charges no commission on issuance of

such cheques. HBL has recently introduced Muhafiz rupee traveler chequessuch cheques. HBL has recently introduced Muhafiz rupee traveler cheques

with enhanced features.with enhanced features.

3.10.11 Collection of Utility Bills3.10.11 Collection of Utility Bills

Electricity, telephone and other such bills can also be deposited with HBL.Electricity, telephone and other such bills can also be deposited with HBL.

3.10.12 Locker Facility3.10.12 Locker Facility

HBL also provides lockers facility to its customers where valuables ofHBL also provides lockers facility to its customers where valuables of

customers can be kept.customers can be kept.

3.11OPERATIONAL POLICY3.11OPERATIONAL POLICY

The operational policies of HBL deal with the method of provison of betterThe operational policies of HBL deal with the method of provison of better

services to its customer. TFinanceough the introduction of new schemes asservices to its customer. TFinanceough the introduction of new schemes as

means of satisfaction for their customers, the operational policy of HBL canmeans of satisfaction for their customers, the operational policy of HBL can

be divided into two spears.be divided into two spears.

Domestic operations.Domestic operations.

International operations.International operations.

3.12 Domestic Operations3.12 Domestic Operations

HBL is quite successfully operating its domestic business , Facilities at theHBL is quite successfully operating its domestic business , Facilities at the

door step across the length and breadth of the country also in conformity withdoor step across the length and breadth of the country also in conformity with

the government,s socio-economic objectives. The number of operatingthe government,s socio-economic objectives. The number of operating

domestic branches total 1350.domestic branches total 1350.

3.13International Operations3.13International Operations

HBL’s overseas branches are continuously rendering satisfactory services andHBL’s overseas branches are continuously rendering satisfactory services and

are also contributing to the channeling home remittances of Pakistan workingare also contributing to the channeling home remittances of Pakistan working

abroad. HBL’s international network comprises of 60 offices in 26 countries,abroad. HBL’s international network comprises of 60 offices in 26 countries,

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Operating in USA, Europe, UK, Middle Ease, Asian pacific Region andOperating in USA, Europe, UK, Middle Ease, Asian pacific Region and

Africa. It is also the largest Banking in financial services provider in Pakistan.Africa. It is also the largest Banking in financial services provider in Pakistan.

HBL concentrates on markets and business they understood. TFinanceough aHBL concentrates on markets and business they understood. TFinanceough a

global network, the Bank provide a comprehensive range of financialglobal network, the Bank provide a comprehensive range of financial

services, personal, commercial, trade services, cash management, treasury /services, personal, commercial, trade services, cash management, treasury /

capital market services, and private Banking. HBL strives to provide highcapital market services, and private Banking. HBL strives to provide high

quality product tFinanceough efficient delivery system and excellent customerquality product tFinanceough efficient delivery system and excellent customer

services. In this way, HBL will grow and achieve.services. In this way, HBL will grow and achieve.

3.143.14 Technology Technology

Software used by HBLSoftware used by HBL

HBL is enjoying the competitive advantage of vast operational area. There are twoHBL is enjoying the competitive advantage of vast operational area. There are two

types of branches come under HBL network. One type is the online branches whereastypes of branches come under HBL network. One type is the online branches whereas

other type is batch branches (offline branches). So obviously HBL uses two types ofother type is batch branches (offline branches). So obviously HBL uses two types of

different software. All batch branches use SIMEX software whereas online branchesdifferent software. All batch branches use SIMEX software whereas online branches

use MYSIS.use MYSIS.

MISYSMISYS

MISYS (online) perform two type of system MISYS (online) perform two type of system

Cashier system Cashier system

This system use only cash transaction like cash withdraw, deposited, Remittance,This system use only cash transaction like cash withdraw, deposited, Remittance,

Accounts opening, LFT etc.Accounts opening, LFT etc.

Equation systemEquation system

Clearing inward or out ward, special or intercity clearing, supervision Clearing inward or out ward, special or intercity clearing, supervision

32

33

3.153.15DEPARTMENTS & RESPONSIBILITIES: & RESPONSIBILITIES:

During my internship, I came to known about the following departmentsDuring my internship, I came to known about the following departments

functioning in my branchfunctioning in my branch

  

1.1. Account opening department.Account opening department.

2.2. Cash department.Cash department.

3.3. Credit department.Credit department.

4.4. Lockers department.Lockers department.

5.5. Bill clearing department.Bill clearing department.

6.6. Foreign exchange department.Foreign exchange department.

7.7. I.T departmentI.T department

 

      3.15.13.15.1  AccountAccount opening department opening department::

In this department customer open the account in the bank. ThisIn this department customer open the account in the bank. This   give facility to give facility to

the customer for opening new account with the bank that they allow him andthe customer for opening new account with the bank that they allow him and

operate this account.operate this account.

These require many document to open this account:These require many document to open this account:

Copy of CNICCopy of CNIC

Utility billUtility bill

Student cardStudent card

Provisional receiptProvisional receipt

Address of customerAddress of customer

Specimen Signature of the customerSpecimen Signature of the customer

Posting the account on the systemPosting the account on the system

Cheque book issue to the customerCheque book issue to the customer

Secrecy of the customerSecrecy of the customer

          3.15.1.13.15.1.1  Types of the AccountTypes of the Account

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1.1.    Individual account Individual account  

2.2.      joint account joint account

3.3. ..   Business account Business account

4.4.       Current accountCurrent account

5.5.       Saving accountSaving account

Individual account:

Bank opens this account by individually. It involves single person only. Bank opens this account by individually. It involves single person only.    Bank Bank

opens this account for one person.opens this account for one person.

Joint account:

                                   Bank opens this account by one or two person. The two people use Bank opens this account by one or two person. The two people use

one account in the bank. Bank considers one account by two people. The twoone account in the bank. Bank considers one account by two people. The two

people of joint account show one account according to the law.people of joint account show one account according to the law.

Business account:

                             In this account, bank only business transaction. It is opened by In this account, bank only business transaction. It is opened by

companies, institution, organization and partnership business. It is purpose ofcompanies, institution, organization and partnership business. It is purpose of

deal with the businessmen.deal with the businessmen.

Current account:Current account:

                           Bank opens current account to every person. Usually, some current Bank opens current account to every person. Usually, some current

account have to pay interest by the customer but its rate is low other accounts.account have to pay interest by the customer but its rate is low other accounts.

Current account offers any facilities to the customer which is mentionedCurrent account offers any facilities to the customer which is mentioned

below:below:

Debit cardDebit card

Cheque book to the customerCheque book to the customer

Automatic bill payments from accountAutomatic bill payments from account

Overdraft facilityOverdraft facility

Clearing services etc.Clearing services etc.

35

Reason for closing customer account:

  Bank ay close this account due to some reason:Bank ay close this account due to some reason:

1.1. Death of a customerDeath of a customer

2.2. Notice by a customerNotice by a customer

3.3. Customer insanityCustomer insanity

  Death of a customer:

                   In the case death of the customer, bank may close the account and stop In the case death of the customer, bank may close the account and stop

all transaction related to the person. Bank stop further transaction such asall transaction related to the person. Bank stop further transaction such as

cheque issue, money transfer etc.cheque issue, money transfer etc.

Notice by the customer:

                   Bank may close this account on the demand of the customer. Customer Bank may close this account on the demand of the customer. Customer

gives application to the bank for closing this account.gives application to the bank for closing this account.

Customer’s insanity:

                 Bank terminates this account due to mental of the customer. Bank stop Bank terminates this account due to mental of the customer. Bank stop

this transaction with this customer. It is all too easy for the customer’s needsthis transaction with this customer. It is all too easy for the customer’s needs  

by the desires of others within a bank who interpret the customer needsby the desires of others within a bank who interpret the customer needs

tFinanceough their own prism. His insanity of the customer, to the knowledgetFinanceough their own prism. His insanity of the customer, to the knowledge

of the bank, has theof the bank, has the  effecteffect  of revoking this authority, and the bank would notof revoking this authority, and the bank would not

be necessary in paying the acceptances. That the bank has not been officiallybe necessary in paying the acceptances. That the bank has not been officially

notified of the customer's insanity does not indicatenotified of the customer's insanity does not indicate

3.16 Cash Department3.16 Cash Department

Cash department has vital role in the banking sector. All cash transactionCash department has vital role in the banking sector. All cash transaction

represent in this account such as cash received fro customer, import and exportrepresent in this account such as cash received fro customer, import and export

transaction, bill payment etc. It involves cash payment and receipt transactiontransaction, bill payment etc. It involves cash payment and receipt transaction

in it.in it.

These are following perform various function in this department:These are following perform various function in this department:

36

Acceptance of depositAcceptance of deposit

Cheque paymentCheque payment

Collection of fundsCollection of funds

RemittancesRemittances

Transfer of funds from one account to anotherTransfer of funds from one account to another

Verification of signatureVerification of signature

PostingPosting

Heading of prize bondHeading of prize bond

There are some functions of cash department in the bank:There are some functions of cash department in the bank:

Receipts and payments:Receipts and payments:

Cash will be received by the Receipts from the customers in the bank. In theCash will be received by the Receipts from the customers in the bank. In the

receipts, the name of the account holder, account number, name of the branch,receipts, the name of the account holder, account number, name of the branch,

dates etc are involved. Customer must also make certain that the receipts aredates etc are involved. Customer must also make certain that the receipts are

signed by the person which deposit cash. In some cases, cash is received fromsigned by the person which deposit cash. In some cases, cash is received from

receipt department.receipt department.

Deposit cash in customer account:Deposit cash in customer account:

When the customer wants to deposit amount in his account .The account inWhen the customer wants to deposit amount in his account .The account in

which the cash will be deposited. Then customer will receive amount andwhich the cash will be deposited. Then customer will receive amount and

credit the customer’s account that shows increase in customer’s bankcredit the customer’s account that shows increase in customer’s bank

accounts.accounts.

Cheque encashment procedure:Cheque encashment procedure:

The cash is paid to the customer in the cash department such as:The cash is paid to the customer in the cash department such as:

Cheque is drawn on some branchesCheque is drawn on some branches

Cheque is not posted on dateCheque is not posted on date

It should be bearer chequeIt should be bearer cheque

Payment of cash:

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After posting the cheque the operation manager cancelled the cheque andAfter posting the cheque the operation manager cancelled the cheque and

returned backreturned back  to cashier. The cashier enters the cheque in cash paid registeredto cashier. The cashier enters the cheque in cash paid registered

and pays against the second signature of receiver on the back of the cheque.and pays against the second signature of receiver on the back of the cheque.

3.17 credit Department3.17 credit Department

A simple but practicalA simple but practical  definition of credit is "the ability to buy with a promisedefinition of credit is "the ability to buy with a promise

to pay," in other words, to obtain present value for a promise to pay in theto pay," in other words, to obtain present value for a promise to pay in the

future. The word "credit" is derived from the Latin "credo. Thefuture. The word "credit" is derived from the Latin "credo. The  banker knowsbanker knows

that he may be asked to expand credit. He first satisfies himself that the abilitythat he may be asked to expand credit. He first satisfies himself that the ability

is such as to defend assurance. This information is obtained from personalis such as to defend assurance. This information is obtained from personal

knowledge of the borrower. Trade inquiries are directed to people sellingknowledge of the borrower. Trade inquiries are directed to people selling

goods to and competitors of the borrower. If all this information isgoods to and competitors of the borrower. If all this information is

satisfactory, the capital factor is studied in the borrower's financialsatisfactory, the capital factor is studied in the borrower's financial  statementstatement

which balance sheet should be taken off at normal intervals. This ratio is oftenwhich balance sheet should be taken off at normal intervals. This ratio is often

called the 2 to 1 ratio, but differs in business. In short, the distinguish betweencalled the 2 to 1 ratio, but differs in business. In short, the distinguish between

a safe risk and an unsafe one that is the quality that marks the good banker.a safe risk and an unsafe one that is the quality that marks the good banker.

This is including different latter issue in the credit department:This is including different latter issue in the credit department:

Establishment of letter of credit:

In case party enjoying regular limit, the L.C is established without adoptingIn case party enjoying regular limit, the L.C is established without adopting

the procedure mentioned above. However the amount of L.C should notthe procedure mentioned above. However the amount of L.C should not

exceed the regular limit. The major non-fund based facilities that areexceed the regular limit. The major non-fund based facilities that are

considered as a part of regular credit facilities are letter of Credit and Bankconsidered as a part of regular credit facilities are letter of Credit and Bank

Guarantee. Banks chargeGuarantee. Banks charge  commission forcommission for  the services rendered by them andthe services rendered by them and

commitments on the pact of the bank these are allowed after making out a verycommitments on the pact of the bank these are allowed after making out a very

careful and detailed assessment of borrower’s requirement.careful and detailed assessment of borrower’s requirement.

    3.17.1 Types of credit3.17.1 Types of credit

These are many types of credit of habib bank which are given below:These are many types of credit of habib bank which are given below:

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Demand finance:

Packing creditPacking credit

Demand finance to studentDemand finance to student

Loan to staffLoan to staff

Loans are offered to the staff in various categoriesLoans are offered to the staff in various categories

  

1.1. loan for purchasing vehiclesloan for purchasing vehicles

2.2. loan correspondentloan correspondent   to month’s salary to month’s salary

3.3. mortgage loanmortgage loan

Running finance:

It include old name overdraft which are meet requirements to the customer.It include old name overdraft which are meet requirements to the customer.

For example:For example:

securedsecured

Which are diifernt forms given belowWhich are diifernt forms given below

1.1. share certificateshare certificate

2.2. depositsdeposits

3.3. mortgage of property etcmortgage of property etc

unsecuredunsecured

  

3.183.18 DEPOSIT DEPARTMENT DEPOSIT DEPARTMENT

  Bank deals in money and they are merely mobilizing funds within theBank deals in money and they are merely mobilizing funds within the

economy. They borrow from one person and lend to another, the differenceeconomy. They borrow from one person and lend to another, the difference

between the rate of borrowing lending forms their spread or gross profit.between the rate of borrowing lending forms their spread or gross profit.

Therefore we can rightly state that deposits are the blood of the bank whichTherefore we can rightly state that deposits are the blood of the bank which

39

causes the body of an institution to get to work. These deposits are liability ofcauses the body of an institution to get to work. These deposits are liability of

the bank so from point of view of bank we can refer to them as liabilities.the bank so from point of view of bank we can refer to them as liabilities.

  “REMITTANCES”“REMITTANCES”

  3.18.1 DEMAND DRAFT:3.18.1 DEMAND DRAFT:

                   Demand draft is a written order drawn by a branch of a bank upon the Demand draft is a written order drawn by a branch of a bank upon the

branch of same or any other bank to pay certain sum of money to or to thebranch of same or any other bank to pay certain sum of money to or to the

order of specified person. It can be issued to the customers as well as nonorder of specified person. It can be issued to the customers as well as non

customer against cash chaque and letter of instruction. Demand draft iscustomer against cash chaque and letter of instruction. Demand draft is

negotiable instruments that can be negotiating at any time before itsnegotiable instruments that can be negotiating at any time before its

cancellation. Its Legal provisions are same as that of cheque.cancellation. Its Legal provisions are same as that of cheque.

  Following parties are involved in demand draft:Following parties are involved in demand draft:

ApplicantApplicant

issuing branchissuing branch

Drawee branchDrawee branch

BeneficiaryBeneficiary

A demand draft may be issued against the written request of the customerA demand draft may be issued against the written request of the customer

before issuing it must be seen that the demand draft is inbefore issuing it must be seen that the demand draft is in

order.order.                                                            

The DD application must be scrutinized by the counter clerk in respect ofThe DD application must be scrutinized by the counter clerk in respect of

following points.following points.

There should be branch where payment is to be made.There should be branch where payment is to be made.

Full name of payer should be mentioned.Full name of payer should be mentioned.

Amount in words and figures must be sameAmount in words and figures must be same

The applicant on two places should sign application.The applicant on two places should sign application.

 

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3.18.2 TELEGRAPHIC TRANSFER:3.18.2 TELEGRAPHIC TRANSFER:

                           Telegraphic transfer means the transfer of funds from one branch to Telegraphic transfer means the transfer of funds from one branch to

another branch of the same bank or upon other bank under specialanother branch of the same bank or upon other bank under special

arrangements just like a telegram. Telegraphic transfer is not negotiable andarrangements just like a telegram. Telegraphic transfer is not negotiable and

the funds are not payable to bearer. Minor cannot avail this facility. Inthe funds are not payable to bearer. Minor cannot avail this facility. In

telegraphic transfer the bankers use secret codes. One code is with issuingtelegraphic transfer the bankers use secret codes. One code is with issuing

person and the second is with an other person. When they combine the codesperson and the second is with an other person. When they combine the codes

it’s become an amount that is called check. The payment is made after theit’s become an amount that is called check. The payment is made after the

confirmation of the check.confirmation of the check.

Following parties are involved in TTFollowing parties are involved in TT

ApplicantApplicant

Drawing branchDrawing branch

Drawee branchDrawee branch

BeneficiaryBeneficiary

Following important things should be included in TT:Following important things should be included in TT:

Full name of the beneficiary or account number should be mentionedFull name of the beneficiary or account number should be mentioned

in the application form.in the application form.

Instruction regarding mode of payment should be obtained.Instruction regarding mode of payment should be obtained.

A record in the remittance outward register should be maintained.A record in the remittance outward register should be maintained.

All the remittance must be controlled tFinanceough number or codes.All the remittance must be controlled tFinanceough number or codes.

  

Pay order:Pay order:

                       Pay order is an instrument tFinanceough which payment can be made Pay order is an instrument tFinanceough which payment can be made

from one bank to another bank. Pay order is meant for bank own payment butfrom one bank to another bank. Pay order is meant for bank own payment but

in practice they are also issued to customers.in practice they are also issued to customers.

     Following parties are involved in pay order:Following parties are involved in pay order:

ApplicantApplicant

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issuing branchissuing branch

PayeePayee

 

3.18.3 MAIL TRANSFER:3.18.3 MAIL TRANSFER:

 

                               Mail transfer is not negotiable and the procedure of it is same with Mail transfer is not negotiable and the procedure of it is same with

the procedure of DD.When a customer request the bank to transfer his moneythe procedure of DD.When a customer request the bank to transfer his money

from this bank to any other bank of the branch of same bank in the city,from this bank to any other bank of the branch of same bank in the city,

outside the city of outside the country the first thing he has to do is to fill anoutside the city of outside the country the first thing he has to do is to fill an

application form. In which he states that I want to transfer the money from thisapplication form. In which he states that I want to transfer the money from this

bank to that specific bank by mail. If the customer is the account holder of thisbank to that specific bank by mail. If the customer is the account holder of this

bank, the bank will debit his account and the concerned officer will fill formsbank, the bank will debit his account and the concerned officer will fill forms

to make the mail transfer complete.to make the mail transfer complete.

                       If the customer is not the account holder of the bank, then firstly he has If the customer is not the account holder of the bank, then firstly he has

to deposit the money and then rest of the procedure will be adopted to transferto deposit the money and then rest of the procedure will be adopted to transfer

his money.his money.

                                       “FAPC & FAFB”                         

  FAPC (finance against packing credit):

 It is a type of bank’s own source finance provided to clients engaged in export

trade. As the term packing indicates that the credit line is granted to an

exporter for the purpose of packing merchandise for shipment to an importer

abroad. An exporter should give documentary proof to the bank consist of L/C

in favor of exporter indicating the description of the merchandise, the purchase

price, date of delivery along with other terms.

 

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FAFB(finance against foreign bills):

               It is a post shipment finance facility which is provided by the banks

to its clients after providing the evidence of shipment, he contacts his bank to

request him to lodge the documents. He then provide the request letter with

sale contract to grant him finance & this department grant him finance (90%

value of commercial invoice).

 

                           “Imports and exports department”

                                            Exports:

 

Introduction and registration:

 

    Imports and exports act 1950 have empowered the federal Govt to control

the import and export in Pakistan. Pakistan is developing country and like

other developing countries its imports exceeds than exports. To control this

situation the registration of import and export has been made obligatory under

the registration order 1993. The authority of registration has been given to

export promotion bureau. No importer and exporter who has no granted

registration shall indent, import and export of any good into or out of Pakistan.

The requirements for getting registration are as under:

 

Application form.

Photocopy of I.D card.

Copy of memorandum and article of association (in case of limited

company).

Ownership deed of office.

Fee payment.

43

Certificate of incorporation.

Applicant should regular taxpayer.

 

The major exports from Pakistan are surgical goods, sports goods hand noted

goods, leather goods, textile goods, etc.

  Export procedure:

All the exports work under the imports and exports act that is changed by the

state in every year. When the importer send the L.C to bank in respect to

import or when the L.C  comes to the advising bank from the issuing bank

then the concerned officer allot the number to the L.C and get registered. The

concerned officer write down the name of issuing bank and the party name in

a register and intimate the party about L.C. the exporter after receiving the L.C

from bank will prepare the documents as per the L.C usually the following

documents have to be prepared by the exporter:

Bill of lading

Covering letter

E- Form

Bill of exchange

Packing list

Commercial invoice

Quota documents in case of quota country

Certificate of origin

Special custom invoice

 The export form (E-FORM):

               E-FORM means “export form” which is the first and foremost

requirement for the exports from Pakistan. It is control instrument by Govt of

Pakistan by which it monitors the receipts from exports and checks the goods

that are transferred without foreign exchange. all banks which are engaged

with the foreign exchange are required to print and maintained the E form that

44

is checked by the state bank of Pakistan. For export an e form is issued by the

bank on the request letter of a company. Two separate registers are maintained

by the bank one for his use and the other one are for the requirement of the

SBP. On issuance of E forms the banker lists it in the register and makes sign

from the exporters. Banks record the name of party, amount, the goods

description, port of destination, importer name port of loading etc.

   The functional utility of E-FORM:

            The export form has four copies. The exporters and banks use it.

Without it the exporter can not make export. These copies are used as:

 

Original copy is for SBP that is checked by the higher authority.

Duplicate copy is for the bank use that is upraised by the custom

authorities.

Triplicate for the use to report of SBP at the time of payment received.

Quartiplacte is for the company used.

 

Usage of E- FORM:

             E- FORM is an important document for export. It has its own

importance such as this form is used as a checker means it monitor that what

things are going abroad and in return what things we are getting. So it creates

a check and balance on the foreign exchange. It shows the total quantity and

quality of the goods that is sending to another country. An E –Form shoe the

party worth that is very helpful for the party and the bank. Bank can create a

party limit for the credit on the behalf of it and a party can arrange a loan for

its future requirements from the bank. It shows the terms of payment by the

importer and the delivery terms by the both parties that is helpful in case of

any discrepancy during the contact.

 

45

Short shipment notice:

               A shipment may be cancelled by the importer or exporter due to

many reasons. The cancellation of the export letter is called short shipment

notice. In this situation the company has to inform the bank. Company has to

give a written letter to the bank that he is not the export so please cancelled

their e form. On the other hand bank at the time of receiving the letter will

stop the e form and cancelled the all documents.

                                                           “IMPORTS”

 Imports regulation:

 

            Import is being regulated by the ministry of commerce and the

government of Pakistan under the import and export act:

Categories of imports:

Imports are classified into the following categories:

Commercial sector imports

Industrial sector imports

Public sector imports

 Registration of importers:

        A person who wants to approach the bank for importing goods from

abroad, he should have to get himself registered with the export promotion

bureau under registration of imports and exports act. He must fulfill the

following conditions before getting himself registered:

NIC NUMBER

NATIONAL TAX NUMBER

MEMBER OF REGISTERED ASSOSITATION

46

Documentary letter of credit:

    A documentary letter of credit is an instrument or document issued by the

bank on the behalf of a customer, authorizing a beneficiary to draw a draft and

drafts or sometimes the requirement of a draft, which will be honored, on

presentation by the bank if drawn accordance with the te3rm and condition

specified in the letter of credit.

 It is the written undertaking by the bank (issuing bank) pay to the seller

(beneficiary) at the request or as per the instruction given by the opener

(applicant) pay at sight or at the future date, a stated sum of money against the

required documents. The documents include the commercial invoice,

certificate of origin, insurance policy or certificate and the documents of

transport relating to the mode sending goods. L/C is therefore is an

arrangement of security for the parties. The conditional guarantee is related to

the documents only and not on the underlying

goods or services.

 

“Establishment of letter of credit”

Procedure:

 

The person applying for the letter of credit must be registered with the EPB.

The opening bank verifies this registration or otherwise exemption. This is

mentioned in the “I” form. The importer also shows the valid certificate of an

organization membership. A category pass book is issued by the EPB for

registered importer specifying his category. This book is centralized by the

centralized banks in the city. It is not necessary for the bank to hold the

original copy of the pass book of all the importers. But some times the

importer gets L.C from more than one bank so the bank have to hold the photo

copy of this pass book. The applicant can get the application from any branch

47

of the Habib Bank Limited. However only some branches are authorized to

open  L.C. That branches how are not authorized have to contact with the

authorized branches to open an L.C. The authorized branches in such case

require the certificate from the applicant branch that the required formalities

are fulfilled and the approval was obtained with required margin.

For establishment of letter of credit, the importer requests the opening bank

with the following documents:

 

 1)      Application and agreement form IB-8:

 

Credit application form is an agreement between the bank and the customer on

the basis of which the letter of credit is opened. This form contains the

undertaking of the importer that get the documents from the bank at the mark

up price. It contains the following information:

Terms of credit.

Description of goods.

Origin of goods.

Port of loading and discharge.

Last date of shipment.

Foreign bank charges.

Terms of shipment. (Partial shipment or transshipment)

Insurance cover note, policy no, and name of insurance company.

Forward booking.

Mode of transmission.

Import registration no.

Any other documents required.

Detailed documents.

 

48

 2) Performa invoice/ purchase order:

           A Performa invoice is quotation of seller containing the description and

the specification of the goods, price, and terms of the sale. Some times the

exporter has their agent in the country. The agent must be registered from the

EPB.

3) Insurance cover note:

              All the goods imported under the documentary credit must always be

insured. In accordance with our country import policy, insured must be issued

by a Pakistani insurance company or the foreign company operating in

Pakistan and such company must be approved by the bank. Insurance covered

based on the following:

 

It is issued in the name of issuing bank A/C importer.

The rider should cover against war.

The port of shipment and the port of destination.

Amount of premium prepaid.

Shipment period.

The description of goods should be the same as per the form.

 4) Appendix B:

     This Performa replaces the import license and is submitted along with L.C

application form duly filled in triplicate. It is conditional undertaking that the

imports goods are not banned, not smuggled. It is also an undertaking that if

the bank is unable to arrange the said currency the importer have to purchase it

from other banks or from any other place. It includes the details and

description of goods, codes, class, type, source of import, country of import,

Performa invoice no etc.

 

49

 5) “I” FORM:

              This form is used at the time of retirement of documents against L.C

established earlier for reporting to the transaction to SBP tFinanceough the bill

of entry deptt. It has four copies that is used as follows:

 

Original is for the use of SBP.

Duplicate for the authorized dealer to be used for processing exchange

control.

Triplicate for the authorized dealer record.

Quartiplacte is for the submission in SBP in the case of import where

the documents are not retired.

 

                        “Approval for establishment of letter of credit”

 After scrutiny of the documents, IB-8 along with attached documents is put

before the corporate head for approval. If the amount of application exceeds

the power of the corporate head the branch concerned prepared the

memorandum for the corporate banking head for obtaining his approval.

In case party enjoying regular limit, the L.C is established without adopting

the procedure mentioned above. However the amount of L.C should not

exceed the regular limit.

 

Types of letter of credit:

 1)      Revocable credit:

                     The letter of credit that can be cancel with the consent of

importer, without giving any prior information to the exporter.

50

 

2) Irrevocable letter of credit:

              The letter of credit that can be cancelled  by the mutual consent of the

both parties. Only one party cannot cancel it.

 

3) Irrevocable confirmed letter of credit:

              When an issuing bank authorizes and or request to an other bank to

confirm his irrevocable credit and adds its confirmation. Such confirmation

constitutes a definite undertaking of such bank in addition to that of the

issuing bank. There are following other letter of credits:

 Revolving Credit

1. Transferable Credit

2. Back to Back Credit

3. Green Clause Credit

4. Red Clause Credit

5. Clean Documentary Credit

6. Transit Credit

7. Stand by Credit

8. Sight Credit

 The applicant:

The applicant of the letter of credit is called the importer or buyer. The buyer

requests to the bank to open a documentary letter of credit in favor of the

seller.

Opening bank (issuing bank or importer bank):

             At the request of the importer an issuing bank issues a credit under the

instructions in the favor of the seller.

51

Advising bank:

An advising bank is a bank in the seller’s country. The issuing bank forwards

the advice of the credit by mail or by any mode to the correspondent bank in

the exporter country as instructions of the opener.

 Beneficiary (exporter):

  The person or body receiving the letter of credit from the importer that is

opened in favor of him.

 

Confirming bank:

The bank that on  the requests of the issuing bank adds confirmation to a

credit. It is definite undertaking of the confirming bank, in addition to the

issuing bank.

 Negotiating bank:

It May or may not be the advising bank. An authorized bank that gives the

value to the draft for processing and payments.

Reimbursing bank: 

Reimbursing bank is the bank, which on the behalf of the opening bank,

honors the Reimbursing claim lodged by the negotiating bank.

  

Modes of payment:

 Sight letter of credit:

         The seller submit all the documents with draft in the importer country

52

Complying with the all terms and conditions. The payments are made on the

presence of the documents.

 

Usance letter of credit:

         Under these circumstances it is agreed that the payment will be made

after a specified period. So the payment is made after or on the expiry of that

date.

  

Risks for importer and exporter:

 

Importer’s risks:

 

He does not know the seller.

He does not know that goods will be delivered in time.

He does not know how to check the goods.

 

Exporter’s risks:

 He does not know the buyer.

He does not know the credit worthiness of the buyer.

He does not wait for payment.

He does not wait for exchange control.

 Buyers and sellers obligations:

The seller’s obligations:

53

Provision of goods as per contract.

License authorization and formalities.

Contract of carriage and insurance.

Delivery at time.

Transfer of risk.

Division of cost.

Notice to buyer.

Proof of delivery.

Good checking marking and packing.

Other obligations.

 Buyer’s obligations:

 

Payment of price.

License authorization and formalities.

Contract of carriage and insurance.

Taking Delivery at time.

Transfer of risk.

Division of cost.

Notice to seller.

Proof of delivery.

Inspection of goods.

 

Possible problems in international trade:

 

Non-payment.

Delay in delivery.

Financing, how and against what.

Currency restrictions.

Regulatory restrictions.

54

Documentation and mode of settlement.

ICC rules and INCO terms. 

HUMAN RESOURCE DEPARTMENT 

 

FUNCTIONAL RESPONSIBILITIES:

 

                               Right Now the responsibilities assigned to FINANCE department at Right Now the responsibilities assigned to FINANCE department at

Corporate Center can be categorized under tFinanceee heads:Corporate Center can be categorized under tFinanceee heads:

Staff matters / Basic FINANCE FunctionsStaff matters / Basic FINANCE Functions

Expenses controlExpenses control

Security mattersSecurity matters

Now I’ll discuss these one by one:Now I’ll discuss these one by one:

 

Background:

 

                       The banking council of Pakistan was responsible for the recruitment, The banking council of Pakistan was responsible for the recruitment,

selection and allocation of human resources. After the dissolution of theselection and allocation of human resources. After the dissolution of the

Pakistan Banking Council, the Banking & Financial Services Commission ofPakistan Banking Council, the Banking & Financial Services Commission of

Pakistan is responsible for these activities.Pakistan is responsible for these activities.

 Procedure:

                        Staff requirements are met according to the changing needs of macro Staff requirements are met according to the changing needs of macro

environment scenario and particularly the arising needs of the bank itself. Aenvironment scenario and particularly the arising needs of the bank itself. A

need analysis is conducted. After assessing the human resources requirementsneed analysis is conducted. After assessing the human resources requirements

and screening of the applications, most probably, the suspects are invited for aand screening of the applications, most probably, the suspects are invited for a

written test.written test.

55

Short listed candidates are called for an interview for personality and socialShort listed candidates are called for an interview for personality and social

appraisal. Interviews are a mix of direct and indirect interviewing techniquesappraisal. Interviews are a mix of direct and indirect interviewing techniques

and information required.and information required.

The selected candidates are sent for training of six months training fromThe selected candidates are sent for training of six months training from

MDI’s.MDI’s.

The training is tFinanceough the lectures regarding banking proceduralThe training is tFinanceough the lectures regarding banking procedural

guidelines and other behavioral aspects. After the completion of trainingguidelines and other behavioral aspects. After the completion of training

employees are allocated to different offices. The effective management ofemployees are allocated to different offices. The effective management of

people in an organization requires an understanding of motivation, job design,people in an organization requires an understanding of motivation, job design,

reward systems, and group influence.reward systems, and group influence.

RecruitingRecruiting

RetentionRetention

Succession planningSuccession planning

Risk ManagementRisk Management

Diversity in our workforceDiversity in our workforce

Management informationManagement information

Progressive compensation and benefits design and implementationProgressive compensation and benefits design and implementation

Employee communications and relationsEmployee communications and relations

Training needs analysis, program design and implementationTraining needs analysis, program design and implementation

Performance evaluationPerformance evaluation

Work-life initiativesWork-life initiatives

“CREDIT & ADMINISTRATION DEPARTMENT”

           The responsibility of providing administrative support for the lending

activities of the Bank, and day-to-day monitoring of credit-exposure, is vested

in the Credit Administration Department (CAD).

   FUNCTIONAL RESPONSIBILITIES:

 The main responsibilities under this department are:The main responsibilities under this department are:

56

Implementation of credit facility and their maintenance according toImplementation of credit facility and their maintenance according to

terms of credit approved.terms of credit approved.

Ensure that standard loan documentation for each credit facility isEnsure that standard loan documentation for each credit facility is

maintained and the correctness & completeness of such documentationmaintained and the correctness & completeness of such documentation

and also responsible for custody of all credit files.and also responsible for custody of all credit files.

Maintain the safe custody of all collateral as per bank’s standardMaintain the safe custody of all collateral as per bank’s standard

operating procedures; undertake periodic evaluation and inspection ofoperating procedures; undertake periodic evaluation and inspection of

hypothecated/ pledged inventories in accordance with the terms ofhypothecated/ pledged inventories in accordance with the terms of

credit.credit.

Ensure compliance withEnsure compliance with

Institutional credit policies & proceduresInstitutional credit policies & procedures

Local regulatory requirements.Local regulatory requirements.

Prepare various portfolio composition reports and other documentationPrepare various portfolio composition reports and other documentation

for submission to GRM’s & RM’s.for submission to GRM’s & RM’s.

  CREDIT FACILITY IMPLEMENTATION PROCEDURE:

Upon approval of credit proposal, the credit proposal and approval are handedUpon approval of credit proposal, the credit proposal and approval are handed

over to CAD. Now CAD determines the nature of documentation required andover to CAD. Now CAD determines the nature of documentation required and

on receipt of same ensures that all legal documents are obtained and areon receipt of same ensures that all legal documents are obtained and are

legally enforceable. After all these activities it can release the facility forlegally enforceable. After all these activities it can release the facility for

utilization.utilization.

“MARKETING DEPARTMENT”

                           The marketing department in HABIB BANK LIMITED is very The marketing department in HABIB BANK LIMITED is very

strong. It is the main source of gaining and maintains the customers that canstrong. It is the main source of gaining and maintains the customers that can

give a large profit to the bank. There are five relationship managers in Habibgive a large profit to the bank. There are five relationship managers in Habib

bank and every person is responsible for the credit of his party.bank and every person is responsible for the credit of his party.

  CUSTOMER DEALING:

  HBL corporate center only deal with the following categories of business:HBL corporate center only deal with the following categories of business:

  

57

  

The organization that have minimum 250 million sales in a year.The organization that have minimum 250 million sales in a year.

The organization that have availed 80 million financeThe organization that have availed 80 million finance

Agri based industry.Agri based industry.

HBL do not deal with the agriculture sector.HBL do not deal with the agriculture sector.

PROCEDURE FOR CREDIT APPROVAL:

       It is the responsibility of the relationship manager to provide or fulfill the It is the responsibility of the relationship manager to provide or fulfill the

requirement of the customer by checking his financial and position. Therequirement of the customer by checking his financial and position. The

procedure of credit approval starts with the credit proposal. First of all theprocedure of credit approval starts with the credit proposal. First of all the

customer request to the bank for credit and on the behalf of him the RM checkcustomer request to the bank for credit and on the behalf of him the RM check

the memorandum. Thethe memorandum. The

Memorandum includes:Memorandum includes:

    

The company information.The company information.

Purpose of credit.Purpose of credit.

Assessment of management.Assessment of management.

Risks.Risks.

Financial analysis.Financial analysis.

Third party or other bank information.Third party or other bank information.

Conclusion and recommendations.Conclusion and recommendations.

    

Then the RM sends it to the authorities who accept or reject the proposal. IfThen the RM sends it to the authorities who accept or reject the proposal. If

they accept the proposal they announced a credit range for the party. At thethey accept the proposal they announced a credit range for the party. At the

end RM sends the proposal to CAD deptt custody and check.end RM sends the proposal to CAD deptt custody and check.

 

58

  EXCESS FACILITY CREDIT BY RM:

                               Relationship manager is authorized to provide the excess facility to Relationship manager is authorized to provide the excess facility to

the customer than the credit line. It may be up tothe customer than the credit line. It may be up to

  

10 percent of excess amount10 percent of excess amount

  OROR

12.5 million Whichever is less?12.5 million Whichever is less?

  It is not more than 15 days if the customer wants to increase this facility heIt is not more than 15 days if the customer wants to increase this facility he

has to contact with the head office.has to contact with the head office.

  TYPES OF CREDIT FACILITY:

  1)1)           fund based: fund based:

It is first type of credit facility. In this facility the bank actually provides fundIt is first type of credit facility. In this facility the bank actually provides fund

to customers.to customers.

2)2)           non fund base: non fund base:

Second type of credit facility that does not provides fun but only give theSecond type of credit facility that does not provides fun but only give the

guarantee. If the customer is unable to make the payment at maturity date thenguarantee. If the customer is unable to make the payment at maturity date then

bank will be responsible to make the payment.bank will be responsible to make the payment.

1. 1.      PLAN OF INTERNSHIP PROGRAMME

 Every body knows that knowledge does not increase withoutEvery body knows that knowledge does not increase without

practice .practice is an important mean to improve the knowledge. Thereforepractice .practice is an important mean to improve the knowledge. Therefore

university provides internship programmed of six to eight week in differentuniversity provides internship programmed of six to eight week in different

organization during M.Com so that we could able to apply in theoreticalorganization during M.Com so that we could able to apply in theoretical

concepts to practical.concepts to practical.

59

I started internship on 5I started internship on 5thth may to 25 may to 25thth June in water works road branch of habib June in water works road branch of habib

bank.bank.

 Work done by me in HBL in different departments:

1. 1.      Account opening department.

2. 2.      Data punching department.

3. 3.      Public dealing department.

 

ACCONTS OPENING DEPARTMENT

  In this account department I gain the particle knowledge about opening. ThisIn this account department I gain the particle knowledge about opening. This

department deals with opening account and saving account for its customerdepartment deals with opening account and saving account for its customer

and all matters regarding there off. The customer opening account/savingand all matters regarding there off. The customer opening account/saving

accounts can be categorized as following:accounts can be categorized as following:

1)1)           Individual Individual

2)2)           Firm Firm

3)3)           Company Company

4)4)           Trust Trust

5)5)           Staff Staff

6)6)           Others Others

OPENING AN ACOOUNT:

 In order to open an account first of all the customer has to fill a formIn order to open an account first of all the customer has to fill a form

prescribed by the bank. The person is required to bring some reference orprescribed by the bank. The person is required to bring some reference or

introduction for opening the account. Introducer may be a person who has anintroduction for opening the account. Introducer may be a person who has an

account with HBL.account with HBL.

60

                         Some important information regarding introducer e.g. the name and Some important information regarding introducer e.g. the name and

account number of the introducer is written on the space provided on theaccount number of the introducer is written on the space provided on the

specimen signature cards. Then in order to find out whether he is a truespecimen signature cards. Then in order to find out whether he is a true

introducer or not a letter is sent to him thanking him for this introduction, sointroducer or not a letter is sent to him thanking him for this introduction, so

that any thing wrong may come into notice.that any thing wrong may come into notice.

There are different requirement for different types of accounts and accountThere are different requirement for different types of accounts and account

holders. An important thing is that the customer should have a corporateholders. An important thing is that the customer should have a corporate

customer. The corporate customer limit is 40 million and this branch alwayscustomer. The corporate customer limit is 40 million and this branch always

deals the corporate customer.deals the corporate customer.

  

General rules for opening an account:General rules for opening an account:

  

One person can open only one account in the same branch with theOne person can open only one account in the same branch with the

same category.same category.

In the event of death of an account holder the credit balance will be

transfer to the heirs of the diseased individual account.

Services charges will be deducted periodically as prescribed from timeServices charges will be deducted periodically as prescribed from time

to time on the accounts that are under the limit of specific account.to time on the accounts that are under the limit of specific account.

Services charges are not applicable on that accounts that are prescribedServices charges are not applicable on that accounts that are prescribed

as exempted.as exempted.

A distinctive number will be allotted to the each account.A distinctive number will be allotted to the each account.

The bank can close those accounts that are under the minimum limit ofThe bank can close those accounts that are under the minimum limit of

the bank.the bank.

Any sum to be deposited in the account should be accompanied byAny sum to be deposited in the account should be accompanied by

paying in slip showing the party account number and the name.paying in slip showing the party account number and the name.

Account holder can only withdraw the sum of money by his ownAccount holder can only withdraw the sum of money by his own

account by cheque.account by cheque.

Cheque should be signed by the account holder by the specimen givenCheque should be signed by the account holder by the specimen given

by the bank.by the bank.

61

Post dated and defective cheque is not accepted.Post dated and defective cheque is not accepted.

If statement of account spoiled a new will be issued on cost.If statement of account spoiled a new will be issued on cost.

Any change in the address should immediately communicate to theAny change in the address should immediately communicate to the

bank.bank.

The account holder wishing to close the account must surrender theThe account holder wishing to close the account must surrender the

cheque book.cheque book.

Account may be transfer from one branch to another same branchAccount may be transfer from one branch to another same branch

without any charges etc. without any charges etc.

o Data punching

Data punching means feeding of data collected into the computer daily orData punching means feeding of data collected into the computer daily or

weekly. We punch data daily which include in the account. First, we enterweekly. We punch data daily which include in the account. First, we enter

transaction of customer on the basis of buying and selling daily in thetransaction of customer on the basis of buying and selling daily in the

customer account then we punch customer data one by one according to datescustomer account then we punch customer data one by one according to dates

and sequence. TFinanceough data punching, we can easily transfer the dataand sequence. TFinanceough data punching, we can easily transfer the data

and money to another account and determine the account information. Afterand money to another account and determine the account information. After

debt and credit amount, we punch data according to their account in thedebt and credit amount, we punch data according to their account in the

computer so that we could check data easily. We make cash debitcomputer so that we could check data easily. We make cash debit

vouchers.cash credit vouchers,sundry debtor and sudry creditvouchers.cash credit vouchers,sundry debtor and sudry credit

vouchers,transfer vouchers,internal account vouchers ,cross branch vouchers.vouchers,transfer vouchers,internal account vouchers ,cross branch vouchers.

We give detail in the system .these allWe give detail in the system .these all

 

Public dealing

Public dealing means have good behavior with the public for increasingPublic dealing means have good behavior with the public for increasing

efficiency and growth. Bank deals with the customer and provides informationefficiency and growth. Bank deals with the customer and provides information

of accounts and others which relates to the accounts. Bank guides that how toof accounts and others which relates to the accounts. Bank guides that how to

open account and forms fill to open new account. Bank issues cheque to theopen account and forms fill to open new account. Bank issues cheque to the

customer for opening new accounts. Bank asks to the customer about theircustomer for opening new accounts. Bank asks to the customer about their

needs and requirements and fulfill on time.needs and requirements and fulfill on time.

Following are includes in public dealing: Accounts Opening, Check bookFollowing are includes in public dealing: Accounts Opening, Check book

issuance, Standing instructions, Marking stock payments, Debit Credit cardissuance, Standing instructions, Marking stock payments, Debit Credit card

62

issuance, Activation of dormant accounts, Making inoperative account intoissuance, Activation of dormant accounts, Making inoperative account into

operation, Recovering of multiple charges availing bank facilities, issuance ofoperation, Recovering of multiple charges availing bank facilities, issuance of

bank account statementsbank account statements

Open new accounts to the customer.Open new accounts to the customer.

Issuance cheque to the customer.Issuance cheque to the customer.

Provides information for opening new account to the customer.Provides information for opening new account to the customer.

Establish good behavior with the customer to increase our product andEstablish good behavior with the customer to increase our product and

services.services.

To solve their problems which create open accounts etc.To solve their problems which create open accounts etc.

1. Main problems in HBL

During my internship I found some major problems in HBL overall management.

There is noticeable communication gap between upper level management and

operational staff.

There is also over staffing in HBL moreover inefficient individuals are in

credit card department.

There is huge difference in approaches of experienced staff & young staff

Imported upper level management

Experienced staff is frustrated mainly because of two reasons

Salaries have not been revised from last 10 years

Experienced Habibians are neither satisfied by the privatization

of bank nor they were taken into confidence at that times

 

63

CHAPTER -04

FINANCIAL ANALYSIS

4.1 CONSOLIDATED STATEMENT OF FINANCIAL POSITION

FOR THE YEAR ENDED DECEMBER 31, 2014

Rs. In 000

Balance Sheet 2014 2013

Assets    

Cash & Balances with Treasury Banks 135,276,934 135,476,687

Balances with other Banks 67,691450 57341,769

Landings to Financial Institutions 34313560 35271477

Investments 924307285 8260692308

Advances 595,295176 563700737

Operating Fixed Assets 27309803 25706315

Deferred Tax Asset - 5103072

Other Assets 82809181 66609013

  1,867003,38

91715271378

 

Liabilities    

Bills Payable 21989658 19,422,316

Borrowings From Financial Institutions 37,430,333 107,864,424

Deposits and other Accounts 721,069,137 653,452,460

Subordinated Loans 4,281,835 4,212,080

Liabilities against assets subject to finance

lease    

Other Liabilities 24,971,618 26,204,580

64

Deferred Tax Liability    

 1,696900814 1572837124

 

Net Assets 170,102,575 142,434,254

Represented By:    

Shareholder's Equity    

Share Capital 10,018,800 9,108,000

Reserves 27,671,813 25,801,889

Un appropriate Profit 4 4,121,103 36,325,458

     

Total equity attributable to the equity

holders of the Bank 8 1,811,716 71,235,347

     

Minority Interest 7,713,023 7,860,200

Surplus on revaluation of assets - net of tax    

  170,102,575 142,434,254

65

4.2 UNCONSOLIDATED CASH FLOW STATEMENT4.2 UNCONSOLIDATED CASH FLOW STATEMENT

FOR THE ENDED DECEMBER 31,2014FOR THE ENDED DECEMBER 31,2014

Cash Flow Statement 2014 2013

For the year ended December 31, 2014   

     

CASH FLOWS FROM OPERATING

ACTIVITIES    

Profit before taxation 25,057,281 19,485,741

Less:   Dividend income and share of

profit of associated and    

joint venture companies (318,539) (281,152)

Gain on sale of investments – net (288,836) (171,403)

  (607,375) (452,555)

  24,449,906 19,033,186

Adjustment for:    

Depreciation/amortization/adjustments 1,666,058 1,670,958

Reversal against diminution in the

value of investments 389,273 1,387,354

Provision against Non-performing

loans and advances-net of reversals 7,559,458 8,276,180

Amortization of premium on

investments (65) (268)

Gain on sale of property and

equipment-net 69,755 257,155

Miscellaneous provisions (16,993) (29,386)

  209,043 321,561

  9,876,529 11,883,554

  34,326,435 30,916,740

Increase/decrease in operating assets    

Government securities    

66

Landings to financial institutions (24,986,471) 840,914

Loans and advances (10,274,430) (4,851,108)

Other assets-net 5,859,907 (1,951,264)

  (29,400,994) (5,961,458)

Increase/decrease in operating

liabilities    

Deposits and other accounts 67,616,677 81,053,273

Borrowings from financial institutions (10,691,316) 4,098,973

Bills payable (266,454) 260,126

Other liabilities-net (1,350,947) 4,083,696

  55,307,960 89,496,068

  60,233,401 114,451,350

Income tax paid-net (10,137,565) (12,265,104)

Net cash flows from operating

activities 50,095,836 102,186,246

     

CASH FLOWS FROM INVESTING

ACTIVITIES    

Net investments in securities,

associated and joint venture companies (35,957,034) (78,588,907)

Dividend income received 319,465 624,628

Fixed capital expenditure (948,433) (1,835,161)

Proceeds from sale of fixed assets 51,667 104,288

Effect of translation of net investment

in foreign branches

         

308,619 1,689,707

subsidiaries and joint ventures    

Net cash flows from investing activities (36,225,716) (78,005,445)

     

CASH FLOWS FROM FINANCING

ACTIVITIES    

Sub-ordinate Loans    

67

Dividend Paid (5,450,436) (4,173,059)

Net cash flows from (used in )financing

activities (5,450,436) (4,173,059)

Increase in cash and cash equivalents

during the year 8,419,684 20,007,742

Cash and cash equivalents at beginning

of the year 108,541,351 84,639,657

Effects of exchange rate changes on

cash and cash equivalents 546,149 4,440,101

  109,087,500 89,079,758

Cash and cash equivalents at end of the

year 117,507,184 109,087,500

     

4.4 Ratio Analysis4.4 Ratio Analysis

Liquidity Ratios

In graphs 2014should be near origin. Round the figures upto 2 decimal

places

You need to provide complete working of the ratios. You are required to

carefully study the table regarding “maturities of assets and liabilities”. Where

you can easily find the current and long term part of assets and liabilities.

Assets and liabilities having upto 1 year maturity are considered as current

assets and current liabilities. This table is given in the annual report of the

selected bank. You need to re-calculate the current and long-term parts of

assets and liabilities according to this table.

 The liquidity of a firm is measured by its ability to satisfy its short term

obligations as they come due.

These are includes:

68

Current Ratio:

  Current ratio = current asset/current liabilities

2014 Rs. In “000” 2013 Rs. In “000”

1867003389/1696900814 1715271378/1572837124

1.10 1.0

Comments:

The current ratio of 2014 and 2013 is quite acceptable.

It means that its current ratio is less liquid. There is small increase in

industry’s ratio which can meet the short term obligations of 2014.

Acid Test Ratio:

 Acid test ratio = current asset – inventories – prepaid

expanses/current liabilities.

2014 Rs. In “000” 2013 Rs. In “000”

1867003389-5856878-

195547/1696900814

1715271378-5855845-

1987544/1572837124

0.5303176 0.4612744

 Comments:

The acid test ratio is slightly high in 2014 than 2013.

Debt Ratio:

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Debt Ratio= Total liabilities/ total assets.

2014 Rs. In “000” 2013 Rs. In “000”

0.8990762 0.9036745

  Comments:

These values indicate that the firm has financed close to total of its

assets with debt. The higher this ratio, the greater the firm’s degree

of indebtedness and the more financial leverage it has.

 [a1]= 2 5,057,281+ 3 4,090,368

 Debt-Equity Ratio:

 Debt-equity ratio = total liabilities / total share holder equity.

2014 Rs. In “000” 2013 Rs. In “000”

9.7483308 10.416626

Comments:

                 It is a ratio of amount invested by outsiders to the

amount invested by the owners of the business. This ratio indicates

the low margin of safety to the creditors.2013 and 2012 has high

ratio as compare to 2014. The firm would not be able to meet the

creditors claim because of low assets or shareholder equity.

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Debt to Tangible Net worth Ratio:

 Tangible Net worth Ratio:

Tangible net worth ratio =total assets- intangible asset-total

liabilities.

  Debt to tangible net worth ratio= Total Debt / Tangible Net

worth Ratio.

working of Tangible net worth required

2014 Rs. In “000” 2013 Rs. In “000”

                1.2081            1.4687

  

 [a1]797,527,672

 Total Capitalization Ratio:

Debt to total capital ratio =long term debt/ (long term debt

+shareholder equity).

 2014 Rs. In “000” 2013 Rs. In “000”

1.122379 1.1162772

Comments:

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                     This ratio is relating the long-term debt to the

permanent capital of the bank. It shows that the fixed assets

decrease than previous years which show a good sign. This ratio is

considered to be satisfactory.

Profitability Ratios 

“Profitability measures enable the analyst to evaluate the bank or

firm’s profits with respect to a given level of sales, a certain level

of assets or the owner’s investment. Without profits, a bank or firm

could not attract outside capital”

 

Net Profit Margin:

Net profit margin = (Net income/ Net sale) * 100

 

2014

Rs. In “000”

2013

Rs. In “000”

         19.52%      16.45 %  

 

Return on Assets:

Return on Asset = Profit before Tax / Total Assets *100 

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2014

Rs. In “000”

2013

Rs. In “000”

2.69681 2.74106

Comments:

                    This ratio shows that the returns on assets are

decreasing as compare to previous years but overall profit with its

available assets is increasing.

DuPont Return on Assets:

DuPont return on assets = (Net income/sale)*(sale/total asset) *100

 

 

  Operating Income Margin:

    Operating income margin = (EBIT/ Net sale) *100

 

Return on Operating Assets:

Return on operating assets = (EBIT/operating asset)*100

 

 [a1]25,057,281

  [a2]= 2

5,057,281+ 3 4,090,368

 Comments:

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2014

Rs. In “000”

2013

Rs. In “000”

         1.7604          1.4975

2014

Rs. In “000”

2013

Rs. In “000”

2.69681 2.74106

                    This ratio indicates that bank’s growth is not good. It

can not cover all assets or expenses tFinanceough net profit before

tax easily. Its not able because its ratio is decreasing than previous

years.

  

Return on Total Equity:

Return on total equity = (Net income/ total equity)*100

 

2014

Rs. In “000”

2013

Rs. In “000”

     19.08%       17.26%

Comments:

                  Return on equity indicates the net income by the total

equity of the owners. In the year of 2013, the total equity is

increasing than previous years and net income is also increasing. In

the year of 2014, the total equity is grater than net income. It means

that generally, the bank has high return, the better off are the

owners.

 

Gross Profit Margin:

Gross profit margin = (Gross Profit/ Net sales)*100

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  Activity Ratios

Activity ratios measure the speed with which various accounts are

converted into sales or cash such as inflows or outflows.

These include:

Total Assets Turnover 

Total assets turnover = Net sales/ total asset

 

2014

Rs. In “000”

2013

Rs. In “000”

          0.0902          0.0910

 Fixed Assets Turnover:

Fixed assets turnover = Net sales/ fixed asset

 

Market Ratios

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2014

Rs. In “000”

2013

Rs. In “000”

     57.39%        55.73%

2014

Rs. In “000”

2013

Rs. In “000”

      0.1082            0.1057

Market ratio relates a firm’s market value, as measured by its

current shares price to certain accounting values.

These include:

Dividend per share

Dividend per share =Total dividend/ no of share outstanding

 

 

 

  Earnin

g per

Share:

Earning per share = Net income/ no of share outstanding.

 2014

Rs. In “000”

2013

Rs. In “000”

                1.56                1.35

Comments:

                      This ratio is decreasing as compare to previous years.

In these ratios, net income is greater than no of shares outstanding.

That’s why, the earning per share is decreasing and growth rate as

well as. It shows low profitability between the shareholders.

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2014

Rs. In “000”

2013

Rs. In “000”

                 0.5440                 0.4582

CHAPTER – 05

SWOT ANALYSIS OF HBL

HBL is considered to be a very sound bank in the financial circles. This is the bank

where customers can safely keep their money as long as they want.

In SWOT analysis the best strategies accomplish in organization’s mission by:

Exploiting opportunities and strengths.

Neutralizing its tFinanceeats and

Avoiding its weaknesses.

Following is a list of SWOT of HBL

Strengths

A skill or capability that enables HBL to conceive and implement its

strategies.

The officers of HBL are considered as one of the most able professionals in

the banking world.

I observed that HBL employees (except annoyed ones) interact with their

clients as if they are their personal friends and discuss about their problems as

their own.

HBL has got a reliable and easy to use internal computer system. HBL

maintained its data properly.

HBL has very good security system.

HBL is the larger commercial bank in Pakistan with the network of over 1466

domestic and international branches.

Being the pioneer of banking in Pakistan, HBL is the oldest and is the richest

in experience.

HBL focuses on consumer banking by lucrative schemes, products and

services suiting best to the wants and demands of the customers.

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HBL has opened all its branches at commercial areas so that the customers or

clients face no problems in reaching to the bank.

The band is always on the look to improve its services both to the domestic as

well as overseas customers.

Human resources development and introduction of new technology towards

modern banking.

24 hours cash access and safe payment products for high value transaction.

Having potential to encounter the competitive environment in the market.

Veteran and experience private management group also involved in other

interests like, textile and cement industry.

Customer enjoys the services at the residential localities.

HBL enjoys deep relations with all most all industries in Pakistan

Weaknesses There is week communication system in overall HBL as well as inside

branches.

Highest number of branches effecting the proper maintenance and difficulty in

providing same working environment at the each branch

Poorer system of recovery of the system is a tFinanceeat to bankruptcy.

Lack of customer feedback.

Low job satisfaction.

Poor ATM’s Service

Inconsistency in efficiency and working atmosphere due to the largest of

branches.

Sense of insecurity in the employees serving at low profitable branches due to

the downsizing.

Females feel uneasy in an environment among the male workers.

Victim of political, legal and socio-cultural pressures

.Lack of professionalism in the branch employees mostly.

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Opportunities Huge untapped market potential in consumer banking as well as Islamic

Banking

Opportunity for developing value added services combined with corporate

banking relationships, cash management services to large and medium sized

corporate clients.

Growing policies of government on business and commerce sector provide

HBL opportunities to take advantages of these policies to meet efficiently with

the business people to solve their problems with the instant cash and financing

facilities.

Government is supporting very bold steps of bringing and promoting IT in

Pakistan. HBL has an opportunity to improve in technology.

Large international network which principally focuses on trade finance with

Pakistan can be utilized to tap trade activities in other markets. In addition,

services such as cross border / offshore financing for corporate customers can

be enhanced.

Customer feedback on different products and accounts has really improved the

bank performance and encourage the atmosphere for other future policies.

HBL also has an opportunity to expand its new technological advancement

more effectively like; phone-banking and internet banking facilities in order to

serve the customer more efficiently, specially

E-banking facility is also a new opportunity which is a flourishing business in

foreign countries and can also be here, if HBL takes the initiatives.

Further reduction in intermediation costs possible, with improving technology.

Due to efficient and veteran management group, HBL can also improve and

expand its foreign operation successfully.

Habib Bank Limited provides opportunity to utilize its skills and efficiencies

in leasing business.

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TFinanceeats Prevailing circumstances increases the difficulties the organization’s achieving

high performance.

Consolidation in the banking sector resulting in increased competition.

Shortage of trained and specialized staff at lower executive and officer levels

The tFinanceeat of inconsistency and government policy regarding to business

and economics sectors, specially political and regional situation which makes

the environment uncertain.

Growing global technological advancement.

Strict regulation by government over credit facilities to the customers as well

as to meet the prudential.

Loss of confidence of overseas customers due to freezing of accounts.

Facing more competition by foreign banks in the market.

Foreign banks are flourishing in field of consumer financing.

Also the increasing operation of private banks.

Highly attractive and advance services by foreign banks to their customers.

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CHAPTER – 06

CONCLUSION & RECOMMENDATIONS

6.1 CONCLUSION

HBL is clearly the first choice of everyone who believes in qualitative approach of

banking an environment of highly responsible people. Bank is enjoying a healthy

market share and taste of good status in terms of its operative features and customer

support. HBL is clearly the best bank operating in Pakistan. Corporate and

commercial functions are distinguished features of HBL experiencing a good

reputation and reasonable mark up with respect to prevailing market mark up with

assurance of satisfaction and support. HBL has more customers as compare to other

banks, if they given proper attention to every customer then in few years it will be the

leading bank of the country (asset point of view)

RAFIQ has become a creditable name in the textile industry of Faisalabad. In a bid to

prepare itself for the challenges / opportunities of the barrier free trade Textile Vision

2005, their planned spinning unit will help them reap the benefits with competitive

edge of cost effective, quality products. The company has already started exporting

quality yarn to various buyers in the region. We may improve net return on funded

facilities from the relationship by rationalizing the credit portfolio in accordance with

their financial requirements as proposed.  In view of the above, we recommend the

proposal for approval.

6.2 Recommendations:

Being a finance student, your main focus should be on finance related issues based on

your training experience and ratio analysis

During my internship, I have realized that habib bank is vast system and spread its

networking all over the world and performing very well. It is difficult to give

suggestion about improving condition of habib bank.

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So, I will few suggestions to habib bank which are given below:

v     Bank must introduce online system all over the world.

 

v     Bank has different schemes which should express to the required

customer so that

      They are introduced reasonable shares in the market.

 

v     Bank should provide interest free loan to the scholar students for their

encouragement.

v     Habib bank should introduced computerize system in all branches.

TFinanceough it, bank can increase more efficiency in the work than without

it.

 

v     Habib bank should create plan for opening a customer account with bank

where he could easily know about the procedure of filling forms or cheque of

new accounts. It saves a lot of times of banks and staff who perform it.

 

v     Habib bank should increase communication with customer so that they

could more establish public relation and expand its growth.

 

v     Habib bank must introduce marketing programs for the clients so that they

could easily know about the market development of bank because it is

problem for clients that he has no idea for usage of new marketing term.

 

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v     Bank should have same behavior with the customer. Bank should not

adopt such a behavior which creates problems between the customer and

banker. For example, bank show good behavior with very close person and

bad behavior show with other person. It is not good position for the banking

growth.

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REFERENCES

Books

HBL Corporate Profile 2011

HBL Annual Reports 2009and 2011 first Quarter

Articles & Documents

Banking sector reforms in Pakistan:

http://www.ishrathusain.iba.edu.pk/speaches/banking_sector_reforms.pdf

www.encyclopedia.com/doc/1G1-61864366.html

Websites

www.hbl.com

www.habibbankltd.com

www.hblasset.com

www.investopedia.com/articles/07/banking.asp

wiki.pediai.com/Q/ Evolution_of_banking

http://www.habibbankltd.com/index.php

www.corporateinformation.com/Company-Snapshot.aspx

www.linkedin.com/companies/habib-bank-limited

 

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