Allied Bank Internship Report 2009

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DEPARTMENT OF MANAGEMENT SCIENCES

ALLIED BANK OF

PAKISTAN

.Allied Bank

Internship Report

2009


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- A l l i e d B a n k InternshipReport

DE DIl 1 O

I dedicate my report

and work to my

parents, Whose rove is

a source of

encouragement for me

at the every step of my

Cfe.

Comsats Institute of information Technology Lahore


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- A l l i e d B a n k Internship Report

Acknowledgement

First of all, I want to express all my humble thanks to Allah who is very

sensitive about Each and every activity of all His men and without whose help,

I am unable to accomplish any objective in my life. Who blessed me with an

opportunity to get internship training in a Dream organization -Allied Bank,

Nawan sheher.

Secondly, I am grateful to my prestigious institute that made this learning

opportunity a part of our education, especially 1 would like to thank the

department of management of sc ience Virtual University of Pakistan

Internship coordinator who not only guided me well but also helped me in

finding such an excellent place for internship. I am also thankful to all other

teachers as the knowledge imparted by t hem enables me to gain knowledge

of the organization in a best way.

I would also thank all the staff of Allied Bank, particularly Mr. Nacem who

gives me an opportunity to work in the Bank and gave me a chance to

explore my knowledge. I would also like to thank all staff member who

prove to by very cooperative with me.

I submit my earnest thank to my affectionate parents, who always remains

at my back to support me, I can never give the return of their un-tired

struggle for mc, but I can only prove myself as they expect form me. And

[ am also grateful to all uther family members and all my friends for their

mural boosting and spiritual support during my study and especially in this

internship program. I want to pay gratitude to all persons, who had helped



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me in completing this support



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Table of Contents

DESCRIPTION__________________________________________________________PAGE #

Executive Summary .........................................................................................-- 7

Vision ...................................................................................................................7

Mission .................................................................................................................7

Core ti:i]ues .........................................................................................................S

Scanned Copy of Internship Letter ....................Error! Bookmark not defined.

Brief Introduction of the Organization's Business Sector ....................................{

import Export Business ........................................................................................9

Running Finance ..................................................................................................9

Cotporale leasing .................................................................................................9

Agriculture Finance ..............................................................................................9

Our banking system today: ................................................................................[0

Types of hanks: ...................................................................................................] I

Cuntnlercial Banks ..............................................................................................l I

Overview of the Organization ............................-----------------------------.....----....l2

History Of Allied Bank Ltd ..................................................................................[3

Cctii pe[ilsrrs... ......................................................................................l $

Probtre'.5'rrfr.rr CnuarurnOrt Brrrrk.r......................................... ....................... ...... ..14

L o erd Pr iv y ro Bo o th s ...........................................................................................1 y

n F s r e i .vilieHibs ............................................................................................................................ 1 ).5'peeifflied Bunk.A .............................................................................................................'

PRODUCT LINE ......................................................................................................................22

n ORGANIZATIONAL STRUCTURE ..........................................................................23

MANAGEMENT SYSTEM OF ABL ...........................................................................2

n Bank's Information .............................................................................................23



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n E.erurrrire C rruinrirtc, ...........................................................................................24.l lj ir.c r.. ............................................................................................................................................... 24



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STRUCTURE OF AB L LlrNITED ........................................................................................24

HX:1NCH ,sL1'11'f1k~ ...............................................................................................................s

n YKO 1.YCIAL I)L.il){ll'Ak7`Lh'.7' ..................................................................................... ....25

n !RAINING AC..'tIEMl1_,5' ......................................................................................................2b

8rarrr.Ir lt'r,r' iri ...........................................................................................................................27

FUNCTIONS OF BRANC H OF Al3L L I D ........................................................................... 27

n Branch Hierarchy ....................................................................28

* Plan of Internship Programme ................................................29

n Training program .....................................................................29

C'rrrrrrre 1)epcrr'ur7c?rr ..............................................................................................29

Structure or the Finance Department .....................................44

Cearreri rpurrnaaia;li,orri~~rr ....................................................................................................44

Brrrrrr-Ir 1)~Irrrrrrrrrrrurl+~rrrrr,;L ........................................................................................45

Finance Departmentalization ..................................................4

n :1


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f)rrlh'r1!'rr'r.I[trJ'lY I J :............................................................................................................. ..5y

n lrr i.'rrr'


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_ M A I l i e d B a n k 10 Internship Report

Sr,kenes Rath,v ....................................................................................................... ioo

Market Analysis .....................................................................................101

Cash Bow analysis .................................................................................105

HorizontaE & vertical analysis .................................................................108

Financial Statemems Scanned Copies (ANNEX LIRE)................................115

I-Balance ShceL ....................................................................................115

2-Profit Loss Account..............................................................................116

3-Cash How StaLeruent .........................................................................117

4-Changes in Equity ..............................................................................11S

SWOT ANALYSIS ...................................................................................119

FUTURE PLANS AND SUGGESTION ..........................................................121

SUGGESTIONS ......................................................................................121

GLOSSARY ......................................................................................................123

REFERNCES ....................................................................................................12S



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Executive Summary

Allied Bank is amongst the leading commercial hunks in the country and

has always played a pioneering role in introducing innovative -

technology-based banking services The role played by its human

resources is highly valued, both in terms of their skills and dedication In

implementing unique harking services. The Bank

Allied Bank Limited was the first bank to he established in Pakistan. It

started out in Lahore by the name Australasia Bank before

independence in 1942; was renamed Allied Bank of Pakistan Limited in

1974 and then Allied Bank Limited in 2005.

In August 2008, because of capital reconstruction, the Bank's ownership

was transferred to a consortium comprising Abraham Leasing Limited

and Abraham Group. Today_ with its existence of over rl) yea s. the

Bank has built itself a foundation with a strong equity. assets and

deposit base- It offers universal banking services. while placing major

emphasis on retail banking. The Bank also has Lhc largest network if

over 700 online branches in Pakistan and offers various technology-

based products and services to its diverse clientele.

VISION

To hc.conle a dynastic and effic ient bank providing integrated solutions

and the first choice of hank for all customers



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MISSION

n To provide value-added services Lo our cuscuniers

n To provide high-tech innovative so lutions to meet customer

requirements



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+ To create sustainable value through growth, eff iciency and

diversity for all stakeholders

n To provide a challenging work environment, and reward dedicated

[cam members

+ To play a proactive role in contributing toy ands the society

CORE VALUES

Integrity

n Excellence in Service

n High performance

Innovation and Growth



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Brief Introduction of the Organization 's Business Sector

IMPORT EXPORT BUSINESS

Allied Bank provides highly efficient trade finance servieec for

import/export business Inc our Clients/Customers through large number of

authoriLed branches where trained and Motivated staff' is a%ailahle to

handle the business on behalf of customer.

RUNNING FINANCE

It is a short term loam allowed by the hank for a period of one year. The

running finance account can he operated and daily sale proceeds can he

deposited into the account,

CORPORATE LEASING

Allied Bank Limited commenced lease operations upon amalgamation

with Ibrahim Leasing Limited. Facilities include leasing for machinery,

commercial vehicles.

AGRICULTURE F1NANCE

The Bank, under the Agricultural Financing Scheme. as decided by the

State Bank of Pakistan, extends short, medium and long term - farm and

[ion-farm credits. The Farm credits ;ire extended fur production (inputs)



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and devclopmenl purposes. Non-farm credits are allowed for livestock

(goats, sheep. and cattle)- poultry and factories including loci: l forestry

and fisheries {inland and marine. excluding deep sea fishing!

The function of eommelcial banking and [lpplication of the fundamental

principles (If the depositor hank relationship have remained essemially

the same since about 5O0 B.CBank operation methods and procedures.

on the other hand, have undergone a constant



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process of evolution because of econontic growth, the mounting volume

of transactions and greater use of banking facilities.

As a result of these contributing factors. methods and practices

necessary to handle the increased volume of detail work have been

developed while other and quicker methods have been adopted in order

to cope with the increased volume. much of which has been

accomplished without Land LEIS increasing the cost of doing business.

During the last twenty years we have experienced a constant transition

from the old to the new - from manual to mechanical methods and

procedure, - from old established practices la current techniques and to

at more scientific approach to the solution of problems brought about by

day to day changes in business practices.

OUR BANKING SYSTEM TODAY:

The Banking Business as we know it today is composed of three separate

and distinct principal functions.

The acquiring of funds to invest and loan.

2- The investing of such funds in loans and bonds_

3- The servicing of such funds, such as providing ofcheckinglsavine facilities. and the collection of draft, notes and

checks.

These functions, while differing in detail of operation. follow the same

principles established hundreds of years go by money-lenders and

exchangers

Bank Definition



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"Banks are institution that enjoys the public money doing nothin g for thepublic

According the banking ordinance 1962 sec (61,

"Banks mean the acceptance of deposit for the purpose the lending or

the investment of deposit of money from die public repayable on demand

or otherwise withdraw able by cheques. drafts. orders, and otherwise"

Banker



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Banker includes at body of persons whether incorporated or not who

curry on business of banking.

Customer

Customer is defined as one who has account with the bank. 'The word

customer signifies a relationship in which duration is no( of the essence.

A person whose money has been accepted by the Bank on the footing

that they Lmdenake to honour cheques up to the amount standing to thiscredit is a customer of the Bank in the sense of the statute. irrespective

of whether his connection is of short or lone* standing- All the city

branches accounts are computerized

TYPES OF BANKS:

Today the principal banking and financial facilities avai lable w serve

cotnmercial are provided, and made available to them through five types

of banks.

Conunerctal Banks

Trust companies

Saving Banks

4 - Saving and Loans association

5 . Finance companies

COMMERC1:Y1. BANKS



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Commercial banks may he defined as "moneyed" ccrporattions,

authorized by law L receive deposits and pay such funds to others on

order discount and negotiate promissory notes, drafts, hills of

exchange,and other evidences of debt: to lend



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money on real or personal security: to make collectives: and conduct

such other moneyed transactions as ale not inconsistent with its charter

or the law under which it operates.

Overview of the Organization

AL the Lime of independence in 1947 the banks s er vices were very badly

affected and by June 30. 1945. he number of offices of scheduled banks

came down to only SI in the territories comprising Pakistan: but by

December 31. 1973 there were following 14 scheduled Pakistanicommercial hanks with 3323 offices u1I over the Pakistan and 74 offices

in foreign countries.

1. National Bank of Pakistan

2. Habib Bank Limited.

3. Habib hank lOycrseasl Limited.

4. United Bank Limited.

5- Muslim Commercial Bank Limited

(i. Commerce hank Limited.

7. Standard haink Limited.

S. Australasia hank limited.

9. Bank of Bahawalpur Limited.

10. Premier bank limited

11. Pak bank limited.

12. Sarhad Bank limited

1 Lahore commercial hanks limited.



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14. Punjab Provincial Cooperative bank limited.

The facts show that commercial banking has made tremendous progress

and achieved at phenomenal growth since independence and that the

commercial hanks have duly played a vital role as a mohiLiter of

people's saving Lo constiLute the most important source of financing in

country economy. However iL was felt that these hank Iaailed to ensure

that the resources so mobilized by them [low in those sectors of

economy where they would



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produce the _gods and services needed badly by a very large number of

people in Pakistan.

History Of Allied Sank Ltd

ABL is the first Muslim Bank established on territory that later on became

Pakistan. It was established on December 3, 1942 as Australasia Bank at

Lahore with capital of 0.12 million. AL that time the chairman was Rh_

Bashir Bak,h. A13L's story was one of the dedication_ commitment to

professionalism and adaptation to changing environmental changes.

The hank's history is divided into many phases. During 25 yeah of united

Pakistan the hank advanced forward in all areas of its activities_ 1970's

were a difficult decade for all Banks of Pakistan. In 1971 East Pakistan

was separated and Australasia Bank lost its 5[1 branches and a lot of

capital as well. Nevertheless the growth remained steady.

In 1974 all the Banks were nationalized including Australasia Bank. The

small provincial Banks were merged into Australasia Bank. On 1st July

1974 the new entity was renamed as ABL of Pakistan Limited "[hen it

started its operations as Public sector financial institution_

Different Phases ofthe RunkAre ii Fe/lows:

THE PRE INDEPENDE.NC'E PERIOD [1942-47)

Australasia Bank had the unique distinction of being closely identified

with some of the country's most Prominent leaders of the freedom

moment. Such as Mian Mumtaz Daullana [Board of directors). Minn



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Iftikhatr Hussain and Maulana Zalar Ali Khan. The bank originally started

its operation in the garage it Khawaja Bashir 13aksla's bungalow (who

was the chairman) near the Lahore Railway Station. But the success of

Bank enforced the directors Lo open its another branch iii Anarkali on 1st

March 1944. Kb. Bashir was first chief executive. He was the person who

was really working in its development. His sincerity of purpose can be

judged from his great moments.



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Another branch was opened at Aniaratsar in 1945. in June 1946, the

bank earned the status of scheduled hank. During 1946-47 many other

branches were opened at Mcleod Road Lahore. Jallandhar. Ludhiana,

Agra and Delhi.

At independence the industrial and coniuiercial sectors were

underdeveloped but ABL contributed a lot in the development of these

sectors.

AUSTRALASIA BANK IN PRIVATE SECTOR (1947-711

It was the only full functional Muslim Bank on the land of Pakistan. On

August 14, 1947 hank was identified with Pakistan moment. Many of its

Board of Directors were prominent Muslim League leaders. Jallandhar

and Ludhiana branches were attacked by rioters because of Muslim staff

appointed in these branches of bank- But when the Pakistan flags wee

hoisted on the branches then all the batiks in India were closed down.

With this. the hank lost a lot or capital and its deposits and almost h

branches. During 1948 new branches were opened it Karachi,

Rawalpindi. Peshawar. Sialkot. Sargodha. Jhang. Gujranwala and Kasur.

But later on its branches were spread to Multan and Quetta - At that

time, the hank financed trade in cloth and food grains and thus

maintained consumers supplies during the riot effected early months of

1948. Australasia[ Bank made a profit of Rs.50,000 in 1947-48.ln August

1948. Australasia Bank became the first Pakistani Bank to successfully

negotiate and open L/C for a Sialkot based importer of hooks. So it also

made correspondence relations with Midland (UKt -Chase Manhattan

(USA) and Lloyd, ( India t.

During the treasury functions of Federal Govt. of Pakistan and it also



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acted as Banker to several local Govt. Bodies and to the Punjab

University during this period. Treasury functions were taken by National

Bank of Pakistan in 1949. In 195(1-5 I. Chairman was replaced with his

own brother Kb. Shari[ Baksh.

During 1955-56. Mr- Naseer A. Sh. became the Chairman of Board and

close working relationship was forged between the new Chairman and

Managing Director. This partnership priwed in modernising its operations

and consolidating its financial position.



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In 1963, Bunk had 29 branches in various cities. And deposits were 119

million and advances were 66 million. Bank was mainly concerned with

g

eneral banking and bade financing (including foreign exchangetransactions). It helped a lot in development of small and medium sized

husiness houses. These were Nishat, Crescent, Pak Cement. Haroon

traders. Takht Bhai Sugar. insar. Punjab soap. Pak fruit and Sahaor Oil

Mills etc. in 1964, 13 new branches were opened including 3 in East

Pakistan. In ]965. 17 new branches were opened and over 83 `/c of gross

profit for the year was earmarked for development expenditure in

connection with opening of new branches.

In 1966 hank opened 26 new branches and doubled its reserved funds.

For the first time in history. its advances were increased to Rs. 160

million and deposits raised by almost 58 'f exceeding Rs. 232 million. In

1966, Central Office was huilt in Karachi but Head Office remaining at

Shah Chiragh Building, Lahore.

16 new branches were opened in 1967 and 2(1 in 196H. Respectively

their funds were increased gradually. 21 new branches were opened in

1971. But separation time the 51 branches were lost by the bank which

was a big loss.

ALLIED BANK: PUBLIC SECTOR YEARS (1974-91)

Under the Nationalization Act or 1974. 14 scheduled banks were taken

over by the Government. Australasia Bank's Board of Directors was

dissolved and the bank was renamed as Allied Bank of Pakistun Limited.

Barbed Bank. Lahore Commercial Bank and Pakistan Bank Limited were

merged into Australasia Bank. At time of merge..ABL was second highest

among :111 the banks Nationalized in 1974.

Allied Banks first Executive Board was constituted of Mr. lybatl A. Ricvi as

President. Mr. Ajnrtl Khalil as Joint ['resident and Mr. Khadim Hussain

Siddique as member. In 1974 Mr_ I.D. Junejo and Mr. Safd:r Abbas Zaidi

joined the Board later. 116 new branches were opened in 1974 and it

started participation in commodity Operation program of Government.



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In 1970's Bank played an important part of a griculuu-a] area loans and

other loans. In 1976 Mr. Ajmal replaced Mr. Iticvi as Chief Executive and

President. During 1974-77,



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361 new branches were opened and 230 of these were located in

villages and small [owns. It also opened its foreign branch in London.

near the Bank of England. in 1980 the Bank of Englund granted Allied

Bank recognition as a full fle dge Bank under the U.K. Banking Act.

In 1981. President was changed. In l984. again new president was come

to know. He tries to increase the international business. It also initiated a

major coLUaler program. In 1985. mainframe computer was installed and

effective management system was developed. During this period

profitability was increased. New President Mr. Mayboul introduced

different schemes in 1987-88. In 1989. new 13 branches were installed.

Over 1991. 745 branches were there in all over the Pakistan_

A NEW BEGINNING

In November/ December 1990. [he Government announced its

commitments to the rapid privatization of the Banking sector. Allied

Bank's management under the leadership of Mr. Khalid Latil' decided to

react positively to this challenge In September 1991. ABL entered in a

new era of its hisLory as world's First bank to he owned and managed by

its employees. The 1350 executives and 721)11 stuff members spread

over 801) branches throughout the ['akistars established a high degree

of cooperation and family feelings

Allied bunk Objectives

Allied hank has Bellowing objectives:

I) Main objective of Allied bank is to cam profit.

ii[ To provide services to their customers and assistance in tlhe



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development 01' commerce and trade.

Allied hank also have another responsibility to give service to their

communities. IL watches the growth and development of his community

especially the commerce and business oF the area.



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Allied Bank Mission

'To provide quality financial services with an edge of technology to

businesses pairticul rrfy mut[ and medium sired enterprises through a

motivated human resource endeavoring to achieve customer satisfaction



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COMPET ITORS

Nationalization of banks in the seventies was a major upset to domestic

banking industry of the country, which changed the whole complexion of

the banking industry. With irrational decision at the top all the

commercial hanks were made subservient to the political leadership and

the bureaucracy. Specialized banking inslilutinns were already working in

the public sector_ The new accountability paradigm changed the

business ethics in the banking indust ry. and with this change started the

disaster. Nationalization of banking indust ry was accompanied by violent

changes in the external value of rupee. The commercial banks thus lust

their assets management equilibrium. initiative and growth momentum.

'They ceased to he a business concern and became big bureaucracies.

This was accompanied by indiscreet loaning under political pressure.

They suffered from three terminal diseases: non-performing loan.: higher

intermediation cost: and loss of initiative and entrepreneurship. The rise

to Labor Unions and Officers Associations made life tough and working

conditions ugly to honest, dedicated and industrious workers in the

realms of domestic banking industry.

The era of nineties was the climes of privatization, deregulation and

restructuring in the domestic banking industry and financial institutions.

The Muslim Commercial Bank was the first hank to privatize. Fol lowed by

Allied Bank limited. United Bank Limited and now the Habib Bank Limited

have been prisatized. One thing good for that particular period vas the

recruitment of fresh officers in the domestic banking industry through

well-organized policies of Banking Council. With the decay of Banking

Council there was flood of insincere. nonprofessional. incompetent

candidates directly appointed) recruited in all the domestic banks of the



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country.



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Public Sector Commercial Banks

'National Bank of Pakistan NBP

First Women Bank Limited FWB

The Bank of Khyber KB

The Bank of Punjab BCH'

The government of Pakistan permitted small private sector hanks to

operate, which indulged in doubtful policies to promote business, The

public sector banking, which constituted the backbone - thus continued to

suffer because of their approach. title and carried over liabilities- Mehran

Bank is the prime example of that kind of lax banking in the country.which ultimately merged into National hank of Pakistan i.e. last resort of

domestic banking industry.

Local Private Banks

My Bank Limited

Bank Al-Falah Limited Bank Al Habib

Limited Askari Bank

Faysal Bank Limited Metropolitan Bank

Limited

i

Prime Commercial Bank Limited 'Saudi Pak

Commercial Bank Ltd I['ICIC Commercial

Baulk Limited Soneri Bank Limited



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Muslim Commercial Bank Limited

Allied Bank of Pakistan

Atlas Bank

Faysal Bank

In the meanwhile. western hanks started entering into the business. They, with the support of

ruling elite, concentrated on the big business_ leaving the routine business to the local hanks,

This reduced the profitability of the local hanks.

Farreign Banks

ABN Antro Bank

AI Baraka Islamic Bank

American Express

The Bank of Tokyo Mitsubishi

CIT1 Bank

Credit Agricole Indo Suez

Deutsche Bank

Doha Bank

Habib Bank A. G. Zurich

Corpnt ation

Mashrey Bank PJSC

man Bank

Rupaii Bank

Standard Chartered Bank



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Specialized

Banks

ComsatsInstitute ofinformationTechnology

Lahore


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IZari Taryiati Bank Lid.

industrial Development Bank of (Pakistan

I l'unjah Provincial Cooperative Bank Limited



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PRODUCT LINE

The lollowing is the list of Product line of Allied Bunk Limited

n interne[ Banking

n Online Banking

ATM Network

Deposit Account

SME

ACricullure

Corporate Leasing

Corporate Banking

Project Finance

Long Term Financing

Short Term Financing

Trade Finance

Investment Banking

Project Finance

Syndication



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Advisory

Financial institution

Cash Manutement

n Home Remittances



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ORGANIZATIONAL STRUCTURE

M A N A G E M E N T S Y S T E M O F A B L

Successful acid profitable banking management depends on two

principal factors.

al The manner in which the functions of banking_ that is the acquiring

of deposits. the investing or converting such deposits into earning

assets, and the servicing of such deposits, are performed

hl The degree to which officers and employees contribute their

talents to the progress and welfare of the bank in discharging duties

and responsihtlittes_ A hied Bank Management

Banks are managed by board of director or similar group of men who

are responsible to the owners. creditors, and the government for Lhe

well being of their institutions_ The government selects all or some of

directors of ABL. Management of ABL are given as follows:

BAr4K'S I N F O R M A T I O N

Direct urs

Mr. Khalid A. Slrerwani is the chairman and Mohanrmadi Yaqoob is

secretary of ABL. are also the hoard of directors.ABL's other directors

are M. Saleeln Shaikh. S. Jauhar Husain, I.A. Lsmaini, Raja Rara Arshad.

Mohammad Salem] Sethi, Athar Mahmood Khan. Stockholders elect the

directors for a term of one year and they are eligible for ncelection.

Voting is cumulative. that is. each shareholder has die right to vote the

member of shares owned by him. The boards may format major

policies and select officers to execute them. They may supervise these

olTicers, review their act.



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Execulisc Committee

Executive Committee consists of Mr. Klralid A. Shcrwani (president). M.

Salmi Shaikh. S. lauhar Husain. I. A. Lismain, Naveed Masud. Bilal

Mustafa, M. Saleem Khan Durruti, Ashfacl Hassan Qureshi. Sharigt Lunar

Faruoyi (secretary I.

Officers

Officers are selected by the directors to manage their hanks. An officers

relationship to the board is that of tut employee to an employer. Chief

Officer (Rashid M. Chaudaryl of ABL is known as Chairman. Senior

Executive Vice President M. Saleem Sheikh. S. Jttuhar.). They are also

members of the board of director and are large shareholders. They are in

a position, to dominate the hank's policies as well as its administration.

The Chief duty of the chairman is to lend the honk's funds. This work is

often subject to little supervision by the hoard of directors.

STRUCTURE OF AEI_ LIMITED

No hank can be expected to operate efficiently unless all employees with

in at department, division or section know:

A) From whom they are Rt receive the work they are to do.

1 What they are supposed to do with the work alter they receive it.

Cy How they are supposed to handle the operation of item.

D) When they are supposed to du work. perform the

operation.



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E) To whom theyg

ive the item or function after finishing it.

To pet-form the functions efficiently the hank hats its Head Office in

Karachi, which is controlled by the president of the Bank. The hank has

repiunal office under head office in major areas of the country. Re gional

Chief heads this office. The region Consist of many zonal offices with a

/tanal chief, There are many branches in a conic to cant' the functions

effectively and performing customer services locally.



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ABL Ltd. is functionally organized into divisions and divisions are further divided into

department and sections. Every prisince has its own regional office :hid zonal offices.

Executive vice president heads the divisions and departments acre further headed by OG1

{Officer of Grade Ii. Manager heads branches.

BRANCH NETWORK

There are Four Provincial Headquarters of Allied Bank Limited situated at Lahore

(Punjab)_ Karachi {Sind], Peshawar {NWFP & Azad Kashmir{ and Quetta (Baluchistan),

800 domestic branches

Arrangements with large number of Correspondent Banks/Exchange Companies.

Oser 20(1 branches for Foreign Currency Accounts

Over 70 branches for trade finance.

Larne number of branches for Inland Remittances

Large number of branches for Rupee "traveller. Cheques

PROVINCIAL HEADQUARTERS

PUNJAB:

196/Upper Mall. Lahore

SINDH:

Jubilee Insurance House, 1.1. Chundritrar Road. Karachi N

W FP:

1st floor, State Life Building The Mall,

AZAD KASHMIR:

Peshawar Cant'.

BALUCHISTAN:

C.C. & I Building, Zau-khoon Road, Quetta,



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- A l l i e d B a n k 43 Internship Report

Now with its network of over st}o branches located in the urban and ruralareas [luoughoLtl Pakistan, Allied Bank is positioned to provide

personalized banking services to its customers at locutions convenient to

the customers. ABL has invested extensively in branch automation_ 560

branches out of a total of 819 branches are computerized Mr. Khalid A.

Sherwatti, look over as President of Allied Bank on 18th October 2000

The President gave policy guide lines and the strategy to run the affairs

of the Bank in the light of changed requirements of the banking industry.

He emphasized that the Bank Executives, officers & stall must work

fearlessly' and put in all-out eFlurt to ensure steady growth of the Bunk.

He emphasized that customers have to be given the best possible service

as it is [hey who are the source of our growth Sc success.

TRAININGi ACADEMIES

Allied Bank limited has five [raining academies. two in Lahore. two in

Karachi. and one in Islamabad. In these training academies the new as

well as the existing staff get [raining. When at new employee comes in

ABL then most often he is sent to any of these academies for training.

The training period may be minimum of one-month upto maximum of one

year. The training period depends upon the nature of the jolt_ During the

[raining the new employees are acquainted with all the necessary

information about [heir jobs.

When any change occurs in the policies of the Bank_ then the seminars

are held in these academies in which employees as well its executrses

participate to gel information about the tress policies of the Bank. For

example if the. Bank policy regarding the financing schemes change then

the Managers of the Advances Section are invited in these seminars. They

learn about the new changes and then implement these changes in their



44/218


branches.

in these academies at permanent staff is present for the training ofemployees. However_ if requires. subject specialists are invited to deliver

lectures on certain suhjccts. For example the Bank has at contract with

Satjjad Associates which send its executives to deliver lectures on

protect finimeinsg. Exams are also held in these training academics.



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Branch Working

The Branch of ABL Ltd. is responsible to provide all services to its

customer. This branch is located in Green Town Lahore.

FUNCTIONS OF BRANCH OF ABL LTD

There are [(Aiming [unctions which are per[urrned by Allied hank

Limited Branch The Bank provides deposit facility to its customers.

The types of deposits are:

a) PLS Saving Account:

in this type. the depositor- shares profit and loss pith the bank,

Ii Fixed Deposits

They hear high pi-tint. but these can only he withdrawn after a fixed

period of time c) Current Accounts

No profit is paid on hear deposits but amount could he withdrawn

without any reslriclion-

-M A l l i e d B a n k , InternshiBRANCHHIERARCHY



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M A N A G E R

Advanc

e Genera! Banking

Token C:unenL Rciniu:u>;ce Account C -learins;

N O N l - C L E R I C A L

S T A F F




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Plan of Internship Programme

I have worked in General Banking Departments and following are the

departments where I worked and their detail is eis .en below

Duration 6 weeks

Timing- 9:00 a.m to 5:00 P.m

Genera] Banking where l worked

General banking is one at the mater departnten[s of Allied Bank_ Ltd. It

consists of sub deparnluent, which are following

1. Current department

2. Token department

3. Remittance debarment

4. Clearing department

c Accounts department

6.

TRAirINC PROGRAM

CURRENT DEPARTMENT

This department maintains all formalities of the accoun[a and accounts

holder, like aecoun[s name. account holder's name, code No., and lull

address. Different cliques debit and credit voucher come from

different depar[mmnts like Token, Clearing. Remittance. Cash. and

Foreign Exchange_ Advance and posted against different accounts,



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A working Journal called Manual is prepared daily which shown the

balance accounts of all parties. Mark-up and profit are calculated daily.

That would he debited or credited from or to Account holders account

after specific period of time. Mark-up is debit from the account after

every three month and profit is credited to accounts alter every 6 month.

New accounts are also opened in this department. Total function perform

by this department is shown by block diagrams. These diagrams show

the sequence of activities. These are simplified diagram of what is

actually being done in current department and what happen to a

customer who conies I[1 open an account in die branch.

Following are the three accounts_ which are maintained by this

department

n Current Account

Saving Account

Fixed Account

TOKEN DEPARTMENT

In token department, token are issued for the encashment of chequesDemand draft. Telegraphic transfer. Mail transfer and miscellaneous

expanses voucher of bank before issuing term we check the following

n Date should be current or previous not advance.

Specimen Signature of account' react shouldthere.

Signature ofbearershould on backside ofcheques.

Amount.thauld he sonic both in .figure and wards.



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In case of Dl), checking sign of authorized officer of hank if there is any

discrepancy in above-mentioned point, no token would he issued. Before

issuing token, we stamped on backside of cheques and write the no. Di

token both from and backside of cheques, etc. After all the process_ die

entry of cheques would he posted on the given register_ which include

token no. Code no and amount. After banking hours. Total Iunount on

register would he tallied with the cash department amount_ that which

has been paid. Any cheques that is returned from the current department

because of any discrepancy. is debited from the total amount on the

register in token department.



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CASH DEPARTMENT

Cash department deals with the cash. which either comes in the Bank or

goes out side the Bank. Cash can be in any form of currency.

SOURCES OF THE CASH

There are different sources through the cash inflows the Bank. These

sources are as follows.

DEPOSITS

This is the major source of the cash inflow. When someone deposits the

cash in the Bank in any currency. it means that the cash is coining in the

Bank.

1. DEMAND DRAFT AND TELEGRAPHIC TRANSFERCOMMISSIONI

These are the second major sources of the cash inflow of the Bank When

the Bank issues the DDs and TTs on the behalf of customer then the

Bank takes certain charges as commission. These DDs and the TTs can

he issued in any currency on the demand of the customer.

2. PRIZE BONDS. FEBCS,NDSCS ETC

Price bonds. FEBCs. and NDSCs are other sources of cash. These

instruments are sold to the general public and cash is received from



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them. Though this cash is ultimately transferred w SBP but still the Bank

has to manage this cash.



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MANAGEMENT OF CASH

It is necessary for every branch to maintain at specific amount of cash

with it at any Lime, so that when it customer conies Lo get cash, he may

gel iL promptly. If a brunch is not able to maintain such appropriate level

if cash then it will have a had effect on its repute and it will not be able

Lo fulfill [lie customer ex cLalions. So, effective matnaizenienL uC cash is

very necessary for every Bank. ABL has put an appropriate limit on iLS

branches [hat [hey should keep that minimum levels of cash wit [hem at

tiny time. This limit is d ifferent Fur main branch and other sub-branches.

TREATMENT OF SURPLUS CASH

The surplus cash means the cash, which is over and above the limit of

any particular branch. It may happen that at branch niay have the

surplus cash with it. If a sub branch has surplus cash with it than that of

limit, [hen iL will transfer it w the main branch on daily bases. IF the

main branch has [he surplus limit [hen he will transfer the surplus

money to head office in Karachi through the SBP if these surplus funds

remain with the main branch. they will be of no use and will act as idle

money because they are earning no profit. So these funds are remitted

to the head office, where they are invested and ~yil] earn profit for the

Bank. The main branch earns the profit on the funds, which it remits to

the head orrice. C un-ently this rate of profit is 13'I. There is no profit

given on the funds which the soh-branches which they transfer to the

main branch.

TREATMENT OF CASH DEFICIT



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As surplus or he cash occurs, similarly the deficit can also be [here in

the Bank. It means that the cash shortage is there in the branch. To

cover this shortage the patterns are followed. If shortage is there in sub-

branch. then it may take the cash from the main branch. If the main

branch has the shortage of cash. then it may take the funds ['tom the

head office. The head office charges certain rate of profit. which is 13 %

on thee funds,



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which iL remits to the main branch. There is no profit charged by the

main branch on the funds provided to the sub-branches.

CASH IN TRANSIT

The rash - which is transferred from any sub-branch to Main branch or

from main branch to SBP is called cash in transit. There is limit of cash in

transit tin actin branch. This I im iL is of Rs. 2(1 millions i.e. main branch

can lake the cash from any sup-branch or can Lransfcr the cash to SBP up

to the I im iL to the 20 millions.

INSURANCE OF CASH

All the cash of the Bank is insured. The major companies, which insure

the cash include Adamjee Insurance Corporation. General Insurance

Company and East West Insurance Company. The Central Office pays all

the expenses of the insurance of cash.

SECURITY ARRANGEMENTS

Few years earlier, the Bank has its own guards for the transfer of Lhe

cash from main branch to SBP or fntm sub-branch to the main branch.

But now the Bank has hired a security company for the transference of

cash. This company is "Brinks". The commission which is charged by the

Brinks Company varies from place Lo place and is dil ferenl for different

amounts of cash,

CLEARING DEPARTMENT



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Introduction

The Bank is the member ofthe Clearing House and receives Cheques.

demand drafts and other negotiable instruments for presentation of its

payment by the branch of a drawee



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hank located within the city other than ABL_ The proceeds of the clearing

instruments are credited into the account of the customer. The clearing

facility is as tilable on all working days.

Wherever the clearing facility is both available or the drawee institution

is not the member of clearing house the Bank receives Cheques. demand

draft or negotiable instruments for collection and upon receipt of

payment Iroril the drawee the same is credited into the account of the

customer. Clearing may be outward or inward.

OUTWARD CLEARING

Suppose a customer deposits cheque in ABL HASSAN ARCADE BRANCH_

drawn on Habib Bank Multan Cant branch. Then the representative of

ABL HASSAN ARCADE BRANCH will take this cheque to the Clearing house

in SBP, where representatives of all hanks gather daily Now in first

clearing this cheque will he exchanged with the representative of Habib

Bank A lultan Cant branch. In the second clearing. if the cheque is

honored. he will tell it to the ABL representative and so the SBP credits

the account of ABL HASSAN ARCADE BRANCH and debits the Habib Bank

Multan Cant branch through the clearing account. This is called Outward

Clearing.

1NW'ARD CLEARING

Suppose a person deposits a cheque in Habib Bank Melton Cant branch,

drawn on any ABL Nlultan branch: let it he the ABL main branch Cant.

The representative of HBL will exchange this cheque with the A BL's

rrpresentative iii the first clearing iii Clearing House. If the cheque is



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honored by the ABL main branch then SBP will debit and credit the

respective accounts. This is called Inward Clearings.

TRANSFER DELIVERY



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The clearing between the ABLs own branches within one city is called

Transfer Delivery. During this clearin g Pak Account is not involved. in ABL.

it is done twice in It week. The Bank charges no commission from its

customers for th is transfer delivery.

BILLIREMITTANCE DEPARTMENT

Bills for collection means the Cheques or DDsITTsIPOs which are receis

ed from or sent to other branches outside the city for collection, drawn

on any other Bank. Bills for collection M Ay be inward or outward.

Remittances means, the transfer of cash from one place to other place

through paper transaction. Remittances may be inward and outward.

BILLS FOR COLLECTION

There are two types of hills for collection

I.Inwardhills for collection (inland &

foreign) 2. Outward hills forcollection

(inland& foreign)

1NWARD BILLS FOR COLLECTION

Suppose a customer Llt ABL Mall Branch Lahore deposits a cheLgLtc draws] in

the name of Habib Bank Multan Cant Branch. Now the .ABL Mall Branch

Lahore will send this cheque Ln ABL Main Branch of Mulutn for collection

from Habib Bank Branch. Now A BL Main MulLan branch will collect this

cheque from Habib Bank Branch through clearing. and will remit the



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amount to the ABL Mall Branch Lahore - This is called Inward Bills for

Collection (inland) for ABL e1ain Branch Mahan. It will he recorded in

Inward Bills Collection Register. In the same w;iv if the cheque is

received for collection drawn on any other Bank from Foreign Branch of

ABL- then this will he called as



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- A l l i e d B a n k 3 fi In ternship Report

Foreign inward Bills for Collection. It will also he recorded in Inward Bills Collection

Register.

OUTWARD BILLS FOR COLLECTION

When any branch of ABL sends a cheque or DD/TTIf O to main branch ABL in another

ci[y for collection from any other Bank. then it is known as Outward Bills for Collection.

Suppose a person deposits a cheque in ABL Rashidabad Mahan branch drawn on Habib

Bank Lahore branch_ Now ABL Rashidahad branch will send this cheque to ABL main

branch Lahore for collection from Habib branch Lahore branch. ABL main branch Lahore

will collect this cheque through clearing from Habib Bank branch through clearing and

will renli[ the amount to ABL Rashidahad branch Mahan_ This is called) Outward Bills for

Collection (inland)

and iL will be recorded in Outward Bills Collection Register.

In the same way, ii ABL Green Town branch sends any cheque or DDJTT/PO to its foreign

branch 'Or collection from any other Bank- then it will be called as Foreign Outward Bills

for Collection and will also he recorded in Outward Bills Collection Rcgis[er.

COMMISSION

The rule of commission for both Inward and Outward Bills for Collection is .25 rk-. with a

limit of minimum of Rs.20, plus courier charges.

REMITTANCES

The remittances call be made through the following anode of transference.

1- Demand Draft WD)

Telegraphic Tran4cr ITT)

3 . Prtvtrtertl Order(PO)

I . SBP Cheque



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-M A l l i e d B a n k 4t, InternshipReport

DEMAND DRAFT

It is a kind of cheque. which is issued by the ABL to the other hanks, or

oCher branches of the ABL on the demand of the client. On the Demand

Draft there are different heads mentioned on that. Such as the amount to

he sent. the name of the person to whom it is to be sent It is very

convenient and safe method of sending the money from one place to

another. The businessman to transfer or send the money from one place

to another usually uses it. If one person issues the DD in the name of

other person. then it can be transferred to the account of the second

person easily. DD can be in Pakistani Rupee or in any Foreign Cur rency.

When DD is issued. it is given to the person, who wanted to make it. At

that time Bank will have no concern with that DD but an advise is sent to

the concerned branch lhaiL we have issued the DD of such amount and

on the name of this person. and you will pay him on the demand of the

client. This DD can he closed before the issuing the amount. On issuance

the DD. Bank lake some commission.

TELEGRAPHIC TRANSFER

It is also a sway of sending the money from one place to another. Like DD

certain forms are to be filled. In this the message sill not he sent through

the paper. but with the help of the fax or Ihins_*s like that.

PAYMENT ORDER

Il is an order issued by the Bank and payable on itself. through this client

can easily transfer the money from one person to another within the



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same city. Il is a written docuiateut on which the certain commission is to

he paid and certain documents are filled by the client. For this certain

amount is needed to deposit with the Bank.



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PROCESS FOR REMITTANCE

All branches ofABL deal with each other through a central account named as "Pak

Account".

PAK ACCOUNT

Pak Account is nutin[ained in Central Office Karachi. In Central Office there is an account

of every branch and all these accounts of all branches are maintained through this Pak

Account. In Pak Account. at specific code has been allotted to every branch's accoul[.

These Pak Account controls all the renhiuances made by different branches.

Remittances may he outward or inward.

REMITTANCES OUTWARD

Suppose a person comes to the ABL HASSAN ARCADE BRANCH and asks to [Hake a

Demand Droll [DD) of Rs.50. 0001- in the name of beneficiary whose Bank is ABL Mall

Branch Lahore. Now the ABL Multan branch will receive the cash and prepare the DD of

Rs.50. 4001- and will send it to the ABL Lahore branch. AL the same time it will also

prepare an advice and send it to the Central Office In this advice, the ABL Multan branch

will tell the Central Office that it has sent a DD oC amount Rs. 50,0001- to the ABL Mall

Branch Lahore. so make its account debited by RN. 50.0001- and make the account of

ABL Mall Branch Lahore credited with the Name amount This is called 'Remittances

Outward"

REMITTANCES INWARD

Similarly when the ABL Mall Branch. Lahore sends at DDITTIPO or cheque to ABL Mohan



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Cant Branch then it will he remittances inward for []us branch. This tope its



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account will be credited by central office in Pak-Account and the account

if ABL Mall Branch, Lahore will he debited.

REMITTANCE IN TRANSIT

Suppose the ABL Main Branch- Malian wants to send the surplus fund to

the central office Karachi - This branch will first deposit the funds in the

State Bank of Pakistan. which will transfer these funds to central office,

Karachi. Here the SBP acts as a cash agent. Now the ABL Lahore. Branch

will send an advice to central office. Karachi that it had remitted thatmany amounts through SBP. This is called Remittance in Transit Now the

SBP Lahore- Branch will remit this fund to the SBP Karachi - Branch and

from there. funds will he ultimately transferred to the central office.

In the same was when ABL Lahore, Branch requires the funds thenCentral Office

will

remit these funds through SBP and will send an advice to the ABL

Lahore. Branch. The funds will be ultimately transferred from SBP

Lahore. Branch to ABL Lahore. Branch. This is also Remittance in Transit.

FOREIGN BILLS AND REMITTANCES

These can he

n Foreign Currency Telegraphic Transfer

n Foreign CurrencyDemandDrafi

Allied hank can transfer funds to the remotest fart of the eountry Cor

paynienilcrcdit to the account of the customer himself or a third party,



66/218


through Telegraph Transfer for the payment on the same or next day.

The Bank also issues the Demand draft for remittance of fund by

customer. The Demand draft can he issued di favor of the purchaser

himself or a third party. It is secured and convenient to send/carry_

instead of cash.



67/218


TELEGRAPHIC TRANSFER

In this case the aulhurity is given to one hank from another hank on the

behalf of the customers though Ielecil]nnwnicatiun to debit their inter

office account with them and credit his/her or party's account mentioned

in telegraphic transfer ['LT.) This is the fastest way of transferring money

from one place to another within the country as swell as out side the

country.

As we know that when a bank issues a T.T. it is given some service to the

customers, so service charges her issuing TT S . credit vouchers areprepared. Crediting [lie cable charges and a dehit advice is made for the

party telling them that so much services charge have been deducted I -

rum your account with us. All the TT'S are serially numbered. There are

two types of TT'S

1. !wonting TT :S

2. Out-going TT'S

So far both type of T.TS separate registers are maintained While issuing a

TT a confidential code no. called the test numbers is also being given to

TT by two authorized officers and this code number IS only under stood by

the two other authorized officers in the receiving hank. By this test some

mulLip[ications 'C done which confirm the instructions in the body of T.T.

MAIL TRANSFER



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As it is clear from its name that in this case the transfer of mone y in the

shape of at document/ takes place through mail. The procedure is like TT.

that is instructions are given to the receiving bank that inter office

account should be debited and 'edited to the mentioned party's account.

It is slower as compared to the TT. Records are maintained in the same

way as of Iclegruphic transfer. commission is also charged in the same

manner but at at different rate.



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ACCOUNT DEPARTMENT

Every Transaction. which takes place, is recorded in the computer.Transaction takes place through different vouchers which are finally

posted to computer. As I already wrote dial total branch was C o

nlpuLCriLed so all transaction in different dept. Would be made on

computer. Each dept prepare at summary of daily transaction 'at is

forwarded to Account dept Since all voucher from differ-it dept also

forwarded to current dept. So this dept. swill tally it such transaction ssiLh

current dept after maintaining the ledger each dept

The dept take care about bookkeeping, maintains ledger and current

accounts of different dept.

Following are the different functions performed by this department.

I. Preparation oftttonthls', quarterly. . S .emicrrtttnatl[' and vearhvbalance

sheet of the hrant.h.

2. To tnainrain all accoeotr.s ofdifferentdepartment.

3. Calculation of profitcifdifferent investmentschemes.

4. Calculation of mark-irp t / ' different advances.

5. Preparation of difkrerrr type of reports for state hank ofPakistan.

ti. Preparation ofdailyposition return ofcash and every account.

7. the most important jiurerion is the clteckin, and tallying daily summaries of

different depetrtitrents with ledger's hrrltrnce

DEPOSITS SCHEME

Deposits to the hank are ats the backbone to the body of elan it is

lil'ehload of at bank. The hank borrows money from general public by

accepting or by an offering suitable rate of lit on them, or simply promise

to repay on demand. When the bank receives the deposits. it becomes

the debtor and client assumes position of creditor.



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AL ABL the main thrust is on customer satisfaction. The Bank provides

many opportunities to place the funds in variety of deposit accounts

including foreign currency



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-M A l l i e d B a n k s, InternshipReport

deposit account and offer a wide range of facilities and services Lai bred

to suit the personal as well as domestic and foreign business

requirements of its customers. The different deposit schemes offered by

ABL are as follows:

1.Current Deposit Scheme

Purpose

The purpose of this account is to provide the facility to die account

holder that he can deposit or withdraw any amount of money from his

balance at any time.

Deposit of Funds

Funds can be credited into the current deposit account in the forth of

cash, Cheques and other financial instruments drawn on any other Bank

or any other branch of ABL. Minimum & Maximum Balance

This account can be opened with a minimum balance of Rs. 100 and

there are no maximum limits on balance.

Mark-Up

No Mark-up is given to the current deposit account holders. Furthermorethe current accounts are exempled from Zakat.

2-PI.S Saving Bank Deposit

Minimum & Maximum Balance

Profit and Loss sharing Bank account can be opened with a minimum of

Rs. thfl. There are no limits on the maximum balance.

Deposit of Funds



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Funds can he deposited into this account through Cash. Cheques and

other financing instruments drawn on any Bank or any other branch of

ABL. The Bank will take care of to sec that the credit and debit entries

are correctly recorded in the accounts of the account holders but in case

ofany error. the Bank shall he responsible make the correct



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adjusting entries without noticing the account holder and recover any

amount clue from the account holden.

Profit

The profit is given after every six nuanihs and the rate of profit is

announced semi annually. The overall profit of Bank for six months is

determined and on that basis the rate of profit on this account is

calculated. The profit is given to the account holder on the month wise

product. It is determined on the minimum balance of account from 7th to

31st of every month. The PLS saving rate announced by ABL on 3lst

June. 2{}0R. l iar the next six months is 2.5%.

Eligibility for Sharing Profit/Loss of the Bank

PLS saving account having a running minimum credit balance ill' Rs. 100.

would he eligible fur sharing profihiloss of the Bank the proportion of the

profit or loss on PLS Saving Account shall be determined by the Bank in

its sole discretion and the Bank decision shall he final and binding on the

PLS Account holder.

The Bank shall he within its rights to make investment of credit

balances/deposits in PLS Saving Account in any manner at its vole

discretion and to make use of thc funds to the best of its judgement in

the banking business under the PLS system

Wilhdrawadii

Account holder can only withdraw sums from his account by [means of

Cheques supplied to him by the Bank for that particular account.

Cheques should he signed as per specimen signature supplied to the

Bank and if there is any alteration in the signature of the drawer. then it

must he authenticated by the drawer's full signatures.



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Post dated and stale Cheques shall not he paid. Withdrawals from PLS

saving accounts are allowed not more than ei ght times in a month and a

total amount not exceeding Rs. 25.000. For withdrawal of larger amount.

seven days notice is required to he given



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-M A l l i e d B a n k s,Internship Report

criItMministraunnDepartment

Human Rewu ru flpartmen;

ST'RUCT'llu IN T'IEE: FINANCE DEPARTMENT

Central Departmentalization

Comsats Institute ofinformation Technology Lahore


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-M A l l i e d B a n k s,Internship Report

cm

Comsats Institute ofinformation Technology Lahore


77/218

-M A l l i e d B a n k s , InternshipReport

B r a n c h D e p a r t i n e n t a i ic a t i o n

B r a m e Manager



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FINANCE DEPARTMENTALIZATION

Following divisions are there in finance departments

ADVANCES DEPARTMENT

n Introduction

Securities.

Types of advances

INTRODUCTION

The function of advances department is to lend money in the form of clean advances,

against pr9omissorv notes. as well as secured adsanccs against tangible and marketable

securities. The bankers prefer such securities that do not run the risk of general

depreciation due to market fluctuations.

Conunon Securities for the hankers advances are as under.-

SECURITIES

1. Guarantees

When an application for advance cannot offer any tangible security. the hanker may rely

on personal guarantees to protect himself against IONS on advances or overdraft to the

applicant.



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2. Mortgage



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A mortgage is the transfer of an interest in specific immovable property

or the purpose of security the payment of money advanced or to be

advanced by way of loan. and existing or future dehi, or the performance

of an engagement which may rise to a pecuniary liability. The transfer is

called a owrtgagor, the transferee a mortgage.

3- Hypothecation

When property in the shape of goods is charged as security for a loan

form the hank the ownership and possession is left with the borrower, thegoods arc said to he Hypothecated The essence of hypothecation is that

neither the property in the goods not Lhe possession of them are

possession is left with the borrower. the. goods are said Lo be

Hypothecated the essence of hypothecation is that neither he properly in

the goods not Lire possession of them are possessed by the lender, but the

security is granted by means of Letter of hyptullrtcation. which usually

p]uvides fur a banker's charge on the hypothecation goods.

4-Pledge

In a pledge the ownership remains with pledge_ but die pledge has the

exclusive possession of property until the advance is repaid in full. While

in case of the default the pledge has the power of sale after giving due

notice.

5. Promissory Note

Sometimes promissory note is also accepted us a security. 'A promissory

note is an instruments in writing containing an unconditional undertaking



81/218


shined by the maker. to pay on demand or at a fixed or determinable

future Lime a certain sum of money only, to or tit the order of certain

persons_ ur Lc) the hearer or the instrument." A promissory note is

incomplete until has been delivered to payee or tire hearer. Moreover. the

sum promised in a promissory note may be made by two or more makers

who may be Liable there on jointly and severally.



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TYPES OF ADVANCES

The advances which are given by Allied Bank Limited are as under:-

1. DEMAND FINANCE {Ordinary Loan)

Demand f=inances are [hose advances which are allowed in lump sum for

a fixed period and are repayable lump sum or gradually in insJallmenLs.

TYPES OF ADVANCES

Demand Finance (Packing CrediL)

n Scheme introduced by Stale Bank of Pakis[an f o r exporter of

carpet. surgical instruments, au Lerf~ percent rate of inLeresl. While

banks pros ides at C{111cessional rate of interest.

Loan ordinary (Demand Finance to Students)

Qari-e-Hasana Scheele Loans are allowed to the students, teachers

without any interest for mark up with the recommendations of the

M PA or MN A.

Demand Finance {Staff}

Loans are offered to the staff of the following four categories.

n Howse Building Loans against mortgage of property.

Loan for purchasing vehicles.

n Loan uyuivalcnt Lo month, salary.



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RUNNING. FINANCE (OverdraftI

Running finance ]old name overdrafts) are advances, which are

generally, given to meet temporary requirements of the customers. A

good customer use he banks running finance limit as at mean of

protecting his credit in the ]narkeL and as a line of security defense to

meet his cumin] itnie'n[s.

TYPES OF RUNNING FINANCE

Unsecured

Under such type of overdraft the hank pay upon the personal security of

the customer's mentioned on the CUSLUETIer t. JCCQU[E.

Secured

Under this type of overdraft the hankallows his customer to withdraw

mutt than his deposits after giving security against the amount

overdrawn.

The securities against which they given are:

Share certificate. Saving certificate

Deposits

Mortgage of property . Guarantee of person

CASH FINANCES (Commercial !mans Inward)



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This Lvpe of loans are given against following:

Against locally manufactured goods.

n Cash finance against Rice and Paddy



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n Against pledge

n Against commodities

n Besides advances against the above commodities parties For advances againstother commodities like tobacco. oil. may approach hank.

To obtain adjustment of an overdue account or to facilitate the borrower to self the

pledged good it is some times necessary u) deliver a portion of the goods. against the

trust receipt and promise from the borrower to deposited the sale proceeds with the

b k -

Sntall Loans

Loan is allowed to contractors clearing and forwarding agents.

FINANCE AGAINST THE FOREIGN BILLS (FAFB)

The advance facility is allowed both to local Foreign hills and is classified as under:-

FAFB (Local) advance against Railway receipts and truck receipt, a company with hills ofexchange and invoices. are given under this head.

FAFB tForeignl advances against Foreign bill. covering bills of exchange hills of lading

airway hills oi' exchange bills of lading airways bills etc -

AGRICULTURE LOANS

Loans to the farmers with holding up to 25 acres for meeting their short terms, medium

and long terms Agricultural production requirements. such as:



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Agricultural inputs

Tube wells

Live Stock Framing Land improvement



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INDUSTRIAL LOANS

Besides the short-term loans which play at part in working capital

medium and long-term loans are also given Lo industrial sector for

purchase of machinery and other capital nature goods.

FOREIGN EXCHANGE DEPARTMENT

international trade is growing and with the development of international

trade it has become more imperative.

For countries Lc) devote more and more attention to the complicated

mechanism of Foreign Exchange. It is more important in rase of

developing countries. It is need of Lime, that at country should conserve

its foreign exchange resources.

MEANING OF FOREIGN EXCHANGE

The foreign exchange term refers to the principles that determine Lhe

rate of exchange. 1L covers following three senses:

The mechanism or system by which international obligations or

indebtedness are fulfilled.

The currency of one country is exchanged for that of another.

The principles on which the people ofthe world settle their debts to one

another.



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FOREIGN EXCHANGE TRANSACTIONS

The foreign exchange transactions are usuallyof two types.

i. Merchandise Transaction

These consist ofvisible imports and exports, i.e. the purchase of goods, for abroadand

sale of goods to abroad.

ii. Service Transaction

These represent inward and outward payments in respect of shipping, insurance,

banking and travel services. It inch:des payments in respect of interest, dividends, rents

andpro/i1.s etc.

iii. Unrequited Transfers

in indicates the payments and receipts from rrf reign countries in shape of such items

as home remittances by workers abroad, gifts, aids etc.

H. Capital Account Transactions

These arefarther dividedinto two classes:

i. Lung Term Capital Transfers

Those trans;fers whereby residents of one conntryacquire securities (stocks and bonds)

and tangible assets (baud etc.) in foreign countries with the purpose ofearningprofits in

future.

ir. Short Term Capital Transfers

Those transfer which move relativelyquickly from country to country;

Fore speculativepurposes

To lake advantages ofdifferences in interest rates

As balancing items where a countryhas a debit or credit balance on currentaccounts.

The important examples are.

Money Gold. and

Holdings ofcommercial credit, hills, cheques etc.



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Transactions with I.M.F



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BILLS DEPARTMENT

Bills department performs the l'o11owing

functions. Inward Bills forCollectiott (IBC)

Outwards Bill for Collection 9OBCI

INWARD BILLS FOR COLLECTION (IBC)

These are bills or cheques etc. which are collected locally. They are

received from outst:uinn blanches banks and parties.

DEMAND DRAFT:

If refers to the payments or money an demand of the holder of draft

Demand draft includes DD issues and DL) payable.

OUTWARDS BILL FOR COLLECTION (OBC)

CLEAN BILLS:

'These are negotiable instruments, drawn on outstation branches, hillssent for collection on behalf of the customers i.e. cheques. drafts or

treasury bills etc.

DOCUMENTARY BILLS:

These are hills accompanied by documents such as R_R.T.R Bil ls of

landing etc. having title to goads, collected by the hankers on behalf of

their customers.



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PAY SLIP:

Pay slip is an instrument in receipt. issued by the hank in the

following cases. On account of expenditure incurred by the

bank.

On account of refund ofan payment to a persons under certain

circumstances.



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PAY ORDER:

Pay order is issued to other banks for collection of I n c a k t h e payment as said.

ACCOUNTS DEPARTMENT

Usually Accounts are maintained in two ways:

Journal System

Vouchers System

Journal system is adopted by some commercial industrial institutions. In journal system

entries are reported in Journal Books and then posted Lo ledger.

Voucher system is used for every transaction. Voucher has to he prepared either in cash or in

transfer or in clearing, the Sheet upon which these voLte'hers are summarized transactions-

wise and consolidated into a figure is called supplementary.

Types of Supplementary

Debit Supplementary

Credit Supplementary

Debit supplementary is u

Documents

Allied Bank Internship Report 2009