Banking Software Selection & Use

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TYPES OF SOFTWARE USED IN BANKS

1. CORE BANKING

Core banking is services provided by a group of networked bank branches. Bank customers may access their funds and other simple transactions from any of the member branch offices.

Core Banking is normally defined as the business conducted by a banking institution with its retail and small business customers. Many banks treat the retail customers as their core banking customers, and have a separate line of business to manage small businesses. Larger businesses are managed via the corporate banking division of the institution. Core banking basically is depositing and lending of money.

Nowadays, most banks use core banking applications to support their operations where CORE Banking stands for "centralized online real-time electronic banking". This basically means that all the bank's branches access applications from centralized datacenters. This means that the deposits made are reflected immediately on the bank's servers and the customer can withdraw the deposited money from any of the bank's branches throughout the world. These applications now also have the capability to address the needs of corporate customers, providing a comprehensive banking solution.

A few decades ago it used to take at least a day for a transaction to reflect in the account because each branch had their local servers, and the data from the server in each branch was sent in a batch to the servers in the datacenter only at the end of the day (EoD).

Normal core banking functions will include deposit accounts, loans, mortgages and payments. Banks make these services available across multiple channels like ATMs, Internet banking, and branches.

2. CREDIT CARD

“A small plastic card issued by a bank, allowing the holder to purchase goods or services on credit”.

Credit Card software manages end to end process starting from application/request, Issuance and Activation, Management of PIN, Transaction Processing and Statement Generation, Recovery of Charges, till settlement of transactions coming from various channels like POS, ATM, and Internet etc. Credit Card software maintains all the static details as well as financial details of the credit card.

Banking Software Selection & Use

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3. DEBIT CARD

“A card allowing the holder to transfer money electronically and withdraw cash through ATM from their bank account when making a purchase”

Debit/ATM Card software is integrated with the CORE banking solutions. Interface is designed between these softwares for communication. Debit Card software manages information capturing, linkage of debit card with CORE banking account, card generation and activation, Management of PIN, Transactions routing to CORE banking and confirmation till settlement of transactions coming from various channels like POS, ATM and Internet etc. Only static details and transaction logs are maintained in the Debit Card application, whereas financial entries are passed in the CORE banking.

4. PREPAID CARD

A card issued by a financial institution that is preloaded with funds and is used like a normal credit card. A prepaid credit card works in the opposite way of a normal credit card, because instead of buying something with borrowed funds (through credit), you buy things with funds that have already been paid. This card functions like a gift card.

Prepaid Card software manages end to end process starting from application/request, Issuance and Activation, Management of PIN, Transaction Processing, Recovery of Charges, till settlement of transactions coming from various channels like POS, ATM, and Internet etc. Prepaid Card software maintains all the static details as well as financial details of the credit card.

5. CONSUMER LENDING APPLICATIONS

Consumer lending software platform is uniquely positioned to enable financial institutions to quickly configure a solution that provides complete end-to-end loan origination processing for all types of consumer lending applications, including personal loans, home loans, revolving line of credit, and auto loans. These also serve as workflow application.

6. WORKFLOW APPLICATIONS

A workflow application is a software application which automates, to at least some degree, a process or processes. The processes are usually business-related but can be any process that requires a series of steps to be automated via software. Some steps of the process may require human intervention, such as an approval or the development of custom text, but functions that can be automated should be handled by the application. Advanced applications allow users to introduce new components into the operation.

For example, consider a purchase order that moves through various departments for authorization and eventual purchase. The order may be moved from department to department for approval automatically. When all authorizations are obtained, the requester of the purchase

Banking Software Selection & Use

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order is notified and given the authorization. A workflow process may involve constant change and update. For example, the normal approver of purchase orders may be on vacation, in which case, the application will request approval from alternate approvers.

7. HUMAN RESOURCE MANAGEMENT SYSTEM

A Human Resources Management System (HRMS) or Human Resources Information System (HRIS), refers to the systems and processes at the intersection between human resource management (HRM) and information technology..

The function of human resources (HR) departments is generally administrative and common to all organizations. Organizations may have formalized selection, evaluation, and payroll processes. Efficient and effective management of "human capital" progressed to an increasingly imperative and complex process. The HR function consists of tracking existing employee data which traditionally includes personal histories, skills, capabilities, accomplishments and salary. To reduce the manual workload of these administrative activities, organizations began to electronically automate many of these processes by introducing specialized human resource management systems. Currently human resource management systems encompass:

1. Payroll 2. Time and Attendance 3. Performance appraisal 4. Benefits administration 5. HR Management Information System 6. Recruiting/Learning management 7. Employee self-service 8. Absence management 9. Analytics

8. REPORTING ENGINES

Banks acquire dedicated reporting engines to meet their reporting requirement. Due to the huge data volumes, banks don’t take risk for generation of reports on their production servers as it may result in performance issues which may hamper the customer service and eventually result in operations and reputational loss to the bank. Data from multiple systems can be combined in one Reporting Engine database. Reporting engines support development of complex reports using data extracted from different banking systems to meet Management and Financial reporting requirements including budgeting & forecasting, profitability analysis, product development analysis etc.

Output of the data can be extracted in different report formats like pdf, excel, csv. Customized report layouts can be designed to have presentable analytical reports showing graphs and data etc.

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Banking Software Selection & Use

TOPIC: Functions in Banking Software

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NON FINANCIAL TRANSACTIONS

CUSTOMER

Centralized Core Banking software are customer centric software, descriptive details of customer are all stored at one place in customer record. All other applications get linked to this and the subsequent account opening when formal banker-customer relationship is established is also based on customer profile thus created. All accounts, deposit contracts, limits and other facilities are linked / tagged with a unique customer number, allotted invariably to all customers. Customer record fetches values from various static tables which are pre-defined to suit individual bank’s way of reporting or recording information. Reports, even when designed to pick information from business applications, can always get relevant information from underlying customer records.

There are separate codes allotted to all professions / occupations viz. doctor, journalist, banker, politician, house-wife, lawyer, teacher, etc. Based on these professions / occupations, MIS can be generated.

CUSTOMER TYPES

Individual o Details of Individual Customers Captured like Name, Father Name, Mother Name,

NIC details, Gender, DoB, Employment Details, Residential / Office Addresses etc o Uniqueness based on NIC No.

Corporate o Details of Company/Business Captured like Business Name, Registration No.,

Registration Date, Industry, Sector, Details of Partners / Directors / Office Bearers / Trustees, Business Address etc

o Uniqueness based on Registration No.

ACCOUNT OPENING

One of the salient features of Customer Centric software is; customer account cannot be opened unless a customer profile is created. All accounts of a customer are linked with one Customer No. that is unique in the database.

Most common accounts opened in Core Banking Software are;

Current Account Saving Account Loans Account Collection Account

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Following the details which are part of the Account Record

Title of Account Nature of Account (Single / Joint) Type of Account (Personal / Business) Category / Product * Currency Tax Details (Tax on Profit & Cash Withdrawals) Zakat Details (For PKR Saving Accounts only) Account Maintenance Charges Details Account Status (Active, Dormant, Unclaimed, Debit Block etc.)

*based on the Category / Product, system automatically applies Interest Rate, Calculation Balance Type (Daily, Monthly Average, and Monthly Minimum) and Interest Capitalization Frequency (Daily, Monthly, Quarterly and Half Yearly).

Account Status Management

Status Details Active All type of transactions allowed.

Dormant After lapse of 12 Months with no activity, account is classified as Dormant. Withdrawals are restricted; customer has to appear in person to Activate the account. However Deposit transactions are allowed.

Unclaimed After passing subsequent 9 years in the dormancy status, i.e., if an account is not operated upon by a customer for a continuous period of ten years, it will be classified as unclaimed deposit account and will be surrendered to SBP.

Operations Blocked by Bank

Banks’ seize / block the operations in the account in case of suspicious behavior on the part of account holder / any other valid reason to restrict deposits & withdrawals in the accounts.

Operations Blocked on Instructions of External Agency

Banks’ seize / block the operations in the account based on the instruction of some external agency like FBR, SBP, FIA etc.

CHEQUE BOOK MANAGEMENT

End to End (E2E) Cheque Book Management is done in the Core Banking Software. Follows are the list of functions performed in Cheque Management Module of Core Banking Software.

Request Capturing: Customer fills in the request for cheque book and submits to branch official. Branch official after verification of signatures, input the request in Core Banking System for New Cheque Book.

Generation of file for Printer: A file is generated at the end of the day containing the cheque books requests captured across the bank during the day and the same file is sent to Printer/Vendor for printing.

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Cheque Book receiving at Branch and Recording: Once the cheque book is printed, it is handed over to Courier Company, the same is received at branch. Branch official mark the cheque book as “Received in Branch” in system and holds it until account holder demands for issuance.

Cheque Book Issuance to Customer: As the account holder approaches the bank and demands physical cheque book, branch official hands over the physical cheque book to account holder and marks it “Issued to Customer” in system thus cheque book is treated as activated. System doesn’t accept cheque no. unless it is marked as “Issued to Customer” and rejects the transaction.

Cheque Leaves Management: Banks offer different sizes of cheque book based on the nature of the account and requirement of the customer. Sample given below;

o Current (50 Leaves)

o Loan (50 Leaves)

o Saving (25 Leaves)

o Minor Accounts (10 Leaves)

Stop Payment Marking: In case the cheque / cheque book is stolen, lost or damaged by the account holder, he approaches the bank for marking of stop payment of cheque(s) so that unauthorized use of the cheque(s) can be avoided. Branch official marks stop payment in the system. Once the cheque is marked as “Stopped”, system doesn’t allow transactions against the same cheque no. However option to withdraw the ”Stop Payment” instruction remains available and can be utilized. Once the Stop Payment instruction is removed, system allows transactions against the same cheque no.

Following are the options available to mark the “Stop Payment of Cheque(s)”;

o Individual Cheque(s) i.e. 9876078

o Range of Cheques i.e. 9876001 to 9876025

Cheque Utilized Marking: System marks the cheque as used/utilized once a financial transaction (Cheque withdrawal, Clearing Debit, Transfer Debit against Cheque) is posted against the same. System doesn’t allow multiple financial transactions against one cheque number.

DORMANT / UNCLAIMED MARKING:

Dormant Account: All depository accounts like Current/Saving etc., which are not operated upon by the account holders for a period of one year, are classified and marked as dormant in the Core Banking System. This entails certain restrictions on the operation of such accounts. Credit entries are allowed without changing the dormancy status of such accounts. Debit transactions/ withdrawals are not allowed until the account holder requests for activation of account.

Unclaimed Account: After passing subsequent 9 years in the dormancy status, i.e., if an account is not operated upon by a customer for a continuous period of ten years, it will be classified and marked as unclaimed deposit account in the Core Banking System and subsequently balance will be surrendered to SBP.

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FINANCIAL TRANSACTIONS

CASH DEPOSIT & WITHDRAWAL:

Cash Deposit & Withdrawal are the basic transactions done in banking in which customer deposits cash in its account or withdraw funds against a valid cheque. These transactions can be Local Branch or Interbranch transaction as well. Banks may charge some amount on account of providing service to account holder at a remote branch for Interbranch Cash Deposit and Withdrawal transactions.

Financial Entries

Cash Deposit (Inter Branch) Cash Deposit (Same Branch)

Charges Applicable (100 + 16% FED) No Charges

Dr. Cash in Hand 100,116.00 Dr. Cash in Hand 100,000.00 Cr. Customer Account 100,000.00 Cr. Customer Account 100,000.00 Cr. Income 100.00 Cr. FED 16.00

Cash Withdrawal (Inter Branch) Cash Withdrawal (Same Branch)

Charges Applicable (100 + 16% FED) No Charges Dr. Customer Account 10,000.00 Dr. Customer Account 10,000.00 Cr. Cash in Hand 9,884.00 Cr. Cash in Hand 10,000.00 Cr. Income 100.00 Cr. FED 16.00

ACCOUNT TRANSFER

Transfer between accounts is amongst the most frequent and commonly used transactions performed in banking. This transaction can be performed through various channels including Branch, ATM and Internet Banking.

This transaction is intended to make internal transfers in the same branch or inter branch. Following are the two mode of debits which are used;

Cheque: Customer Issues a Cheque and bank official debit customer account against a valid cheque no. and remit/transfer funds in beneficiary account.

Debit Authority: This mode is used where customer doesn’t issue a cheque, rather passes written instructions to the bank to transfer specified amount to specified account on single event or at some specified frequency.

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Financial Entries

Dr. Customer A Account Cr. Customer B Account

PAY-ORDER / BANK DRAFT MANAGEMENT

Remittance is the transfer of funds which is one of the major functions / service rendered by the Bank to its customers.

Remittance of funds through Bank is regarded as the most popular, safe, prudent and acceptable form of settlement of payments as physical movement of cash is fraught with risk and can also be quite costly, for obvious reasons.

As stated above, this service is rendered by the Bank through its various products viz. Demand Drafts / Banker’s Cheques, Pay / Cash Orders, Cheques, Traveler’s Cheques, Telegraphic Transfers, Mail Transfers, etc.

Issuance process:

Customer fills a Pay-order / Draft Issuance form and hands it over to bank official who after manual scrutiny post transaction in the following manner in the relevant screen;

› Place the Cheque in MICR › Update Account No. › Update Cheque No. › Input Instrument No. › Input Instrument Amount › Capture Beneficiary Details › Capture Applicant Details › Mode of Issuance (Cash / Transfer) › Complete the Transaction › Cheque Marking as Utilized › Instrument record created with “Issue” Status › Generation of Financial Entries › Updation of Balances in respective Account/GL › Generation of Deal Slip / Endorsement through FBP › Printing of Instrument

Financial Entries Dr. Customer Account 9,232.00 Cr. Instrument Payable Account 9,000.00 Cr. Commission on Issuance 200.00 Cr. FED 32.00

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Payment process:

Customer presents the pay-order / draft in transfer / clearing modes. After manual scrutiny, bank official post following transaction in the system;

› Place Instrument in MICR › Instrument No. Updation › Instrument Amount › Beneficiary Verification › Complete the Transaction › Status Changed to “Paid” › Generation of Financial Entries › Updation of Balances in respective Account/GL › Generation of Deal Slip / Endorsement through FBP

Financial Entries

Dr. Instrument Payable Account Cr. Customer / Clearing

INTEREST CALCULATION & ACCRUALS:

Interest Rate is the rate of return for the lender. Lenders charge fixed/variable Interest on the amount given as Loan. Banks pay Profit/ Credit Interest on the saving products i.e. Saving Accounts and TDRs and charge Mark-up / Debit Interest on the loans accounts and contracts. Interest rates defined as per annum rates. Per annum = per year. ALL interest rates are expressed as annual rates. Following formula is used to calculate the Interest Amount Interest Amount = [Balance] x [Per Annum Interest Rate] x [No of Days] / [Days in the Year] Type of Interest Calculation › Monthly Average: Average of daily closing balance for the whole month is calculated and profit

is paid on monthly average of the account.

› Monthly Minimum: Minimum daily closing balance for the whole month is located and profit is paid of the minimum balance of the account during the month.

› Daily Ending Balance: Profit is calculated on the daily closing balance irrespective of the monthly minimum or monthly average. Day end balance is taken for the calculation and profit payment.

Core Banking software post daily accrual entries so that actual picture of Interest Expense and Interest Income is available all the time.

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Accrual Entry for Profit / Credit Interest:

Dr. Profit / Interest Expense

Cr. Profit / Interest Payable Account

Accrual Entry for Mark-up / Debit Interest

Dr. Mark-up / Interest Receivable

Cr. Mark-up / Interest Earned

INTEREST CAPITALIZATION

As per the product features, interest is capitalized in the accounts on the specified frequency. i.e. Profit / Interest Payable is credited in against the Savings Accounts / TDR and Mark-up / Interest Receivable is debited against the Loans from the Customer Loan Repayment Accounts.

Capitalization Entry for Profit / Credit Interest:

Dr. Profit / Interest Payable Account

Cr. Customer Account

Capitalization Entry for Mark-up / Debit Interest

Dr. Customer Loan Repayment Account

Cr. Mark-up / Interest Receivable

ZAKAT DEDUCTION

Zakat is deducted on the Valuation Date (First Ramadan) on Pak Rupees Savings and Profit & Loss Sharing Accounts and Term Deposits if the credit balance in these accounts is greaten than or equal to “Nisab Amount” declared by Ministry of Religious Affairs (Nisab Amount 41872.00 for 1434H) as per “Zakat and Ushr Ordinance, 1980”. An automated process is designed in the Core Banking Software to accommodate this requirement as humanly it is not possible to perform this activity on millions of accounts.

A program is designed which is executed on the valuation day (First day of Ramadan) to deduct zakat from accounts meeting following criteria;

Currency Pak Rupee Saving Accounts Balance greater then or equal to “Nisab Amount” Account Holders not submitted Declaration for Zakat Exemption

CUSTOMER CHEQUING ACCOUNTS Current Account (CA): A checking account offers easy access to your money for your daily transactional needs and helps keep your cash secure. Customers can use a debit card or cheques to make purchases or pay bills. Accounts may have different options or packages to help waive certain monthly service fees. To determine the most economical choice, compare the benefits of different checking packages with the services you actually need. This account was introduced by the Goldsmiths of England. Due to advantages of this account almost all the commercial banks open this account as the part of their functions. This account is suitable for businessmen who are very often in need of money for making payments. In this account the customer is authorized to deposit or withdraw money any time in or from the bank. The bank does not pay any interest, rather it charge from the depositors its services which are called "Incidental Charges or Service Charges". The cheque book is issued to the customer and can be withdraw money any time. Savings Account (SA): A savings account allows you to accumulate interest on funds you’ve saved for future needs. Interest rates can be compounded on a daily, weekly, monthly, or annual basis. Interest calculations are done on balance as per the product features i.e. Daily Closing Balance, Minimum or Average Balance. Savings accounts vary by monthly service fees, interest rates, method used to calculate interest, and minimum opening deposit. Understanding the account’s terms and benefits will allow for a more informed decision on the account best suited for your needs. Following the examples of Saving Accounts product having different features;

Product Minimum Balance

Slab Interest Rate

Calc Balance

Profit Payment Freq

Other Features

Saving Gold PKR 50,000 Upto 500K 7.00% Average Monthly Free Cheque Book - No

Above 500k - Upto 10M 7.25% Free ATM - No

Above 10M - Upto 50M 7.50%

Above 50M - Upto 100M 7.75% Above 100M 8.00%

Product Minimum Balance

Slab Interest Rate

Calc Balance

Profit Payment Freq

Other Features

Saving Platinum

0.00 Upto 500K 6.00% Minimum Half Yearly Free Cheque Book – Yes

Above 500k - Upto 10M 6.25% Free ATM – Yes

Above 10M - Upto 50M 6.50%

Above 50M - Upto 100M 6.75% Above 100M 7.00%

Running Finance Accounts(RF) Running finance is the finance offerings by financial institutions/bank against securities/collateral. It works under the working capital finance. Specifically, the running finance is a credit facility established for a specific time limit at variable interest rates. The running finance is implemented by means of

allowing the over-draft facility on account and the corresponding amount is determined by the repaying capacity of the borrower. It’s a Chequing Account and customers can avail transactional facilities from various channels like in Current or Saving Accounts. Overdraft is one sort of offering credit by the account providers, in that withdrawals are permitted exceeding available balance of the bank account. It is nothing but an over-drawing leading to a negative balance. For enjoying overdraft facility, there should be some agreement or approval in advance with the account provider. Generally, the over-draft facility is offered by the banks for some maximum amount and the same is required to be returned to them (in the respective account) within some specified time limit.

CUSTOMER NON CHEQUING ACCOUNTS

Non Chequing Accounts (NCA): A non chequing account is the account in which cheque

book is not issued like accounts opened for collection of funds, for disbursement and repayment of loan etc. These accounts are generally linked to main customer account and are opened for specific reasons.

Term Deposit (TD): Term deposits, or TDs, allow you to invest your money at a set interest

rate for a pre-set period of time. TDs often have higher interest rates than traditional savings

accounts because the money you deposit is tied up for the life of the certificate – which can range

from a few months to several years. Be sure you do not need to draw on those funds before you

open a TD, as early withdrawals may have financial penalties. No cheque book / ATM card is issued

against TD and funds can only be withdrawn at maturity or at request for pre-maturity subject to

penalties.

Banking Software Selection & Use

CENTRALIZED OPERATIONS

To relieve the branches of work load of various processes, centralized operations help in productivity

gain, also it minimizes the operational errors and ensures compliance of institutional and regulatory

requirements within the mandated time frame. The approach of centralization of processes helps in

achieving improved controls and process efficiency.

KEY FEATURES

Reduce Burden at Branch: Activities involving huge volume of transactions and consuming higher

amount of time are proposed to be centralized. It helps in reducing work-load / burden at branch user.

Productivity Gain: Branch users are left with more time to perform other routine activities with more

ease & comfort ensuring accuracy & completeness.

Dedicated & Specialized Staff: Dedicated and specialized staff performs functions at centralized location

that are given dedicated and extensive training to perform such activities. These users can perform

these functions more efficiently with effectiveness resulting in improved quality of work in less time.

Improved Customer Service: Branch users can better serve and guide the customer to offer them higher

level of comfort helping in achieving higher customer satisfaction.

Minimize the Operational Errors: Since these users are trained enough to perform their task and there

is no customer interaction, risk of operational errors is reduced if not eliminated.

Improved Controls & Risk Mitigation: In centralized environments, controls are more effectively

implemented. When dedicated teams are performing activities sitting at a centralized location, the

implementation of controls is more effective comparing them to users sitting in scattered remote

locations.

Compliance of Institutional & Regulatory Requirements: Resources at centralized departments are

more familiar and well-informed with the policies and regulations of the bank and the one imposed by

the regulator (SBP).

Quick Impact of Change: Since activities are centralized and performed by group of employees,

informing/updating them with any change in process, policy or regulation is easily achievable comparing

it to implement this down the line to all employees.

Banking Software Selection & Use

CENTRALIZED PROCESSES

Following are the processes which are commonly centralized;

Account Opening

Account Opening is amongst the most sensitive functions performed in branch banking. This

function is centralized to ensure that all requirements related to account opening are fulfilled,

relevant supporting documents are obtained meeting all the internal as well regulatory

requirements.

Clearing

Clearing processing is centralized as it involves huge number of transactions. In branch banking,

users are already engaged in multiple activities like transactions processing as well as in

customer dealing, thus this function is performed centrally to share the burden of work which

enhances productivity at branch level also minimizes the chances of operational errors.

Bulk Salary Processing

Branches maintaining salary accounts become overburdened in salary days when salary of the

account holders is processed in system and also there is long queue of people waiting to

withdraw funds, also branches have to perform routine activities thus the higher volume of

transactions and rush of work often results in errors and reconciliation issues. Core Banking

software support centralized processing of salary files, companies provide salary data in soft

form and same is processed in system through file upload. In this automated process, human

intervention is minimized which results in accurate posting, logs are maintained for accepted

and rejected transactions which helps in resolving the reconciliation issues.

Credit Review, Loan Approvals and Limit Set-up

Before the disbursement of loan, banks take care of all factors in borrowers fact sheet like

business details, need of loan, customer expertise in that business, duration since he is doing

this business, customer repayment capacity, type of property given as security/collateral,

customer credibility etc. There are specialized positions of credit & risk analysts who review all

of the above mentioned details and accept / reject loan proposals, also they take care of all of

the internal as well as regulatory requirements to avoid financial loss in future.

Statement Rendition

As per instructions of State Bank of Pakistan, banks are required to send Statement of Account

to account holders on specific frequency (for Current and Saving Account on Half Yearly basis

and Basic Banking Accounts on annual basis). If this regulatory requirement is not complied, SBP

charge penalty on per instance basis. Branches operating in big cities as well as in remote areas

often fail to comply 100% thus banks have to bear heavy penalties. As the data is placed at

Banking Software Selection & Use

central location, now it’s possible to extract data centrally, generate account statements and

dispatch it to customer through approver courier. Courier companies share the details of

successfully delivered Statement of Accounts in soft form which includes shipment no, account

no., recipient name, date & time which are kept in record for future reference and addressing

customer & SBP queries.

Notices & Reminder Letters

Banks issue notices and reminder letters to account holders on a particular event for

information and reminding purpose like NIC Expiry Letter, Locker Overdue Letter, Dormant

Account letters etc. In de-centralized model, branches were sending these letters to account

holders which had certain flaws and failures resulting in audit objections and related queries.

With the support of Core Banking Software, now data can be extracted at a centralized location

and letters can be sent centrally through courier and later can be tracked through the

confirmation provided by the courier company.

Centralized Payment of Tax to Tax Authorities

Banks collect tax from the account holders on behalf of tax authorities and submit it on a

specific frequency like tax on profit, tax on cash withdrawal, tax/duties on imports and exports

etc. which are later deposited to relevant federal and provincial tax authorities. In is compulsory

to deposit tax on the specified frequency failing which results in audit queries and objections.

Branches some time fails to do so, to handle this, tax collected by all the branches is being

deposited centrally through designated department like Finance Group.

Centralized Payment of Zakat to MORA

Banks collect zakat from account holders on 1st day of Ramadan from Pak Rupee Saving accounts

having balance greater or equal to the Nisab amount. In core banking software, a program is

designed to deduct zakat through automated process and later collective amount is surrendered

to Ministry of Religious Affairs (MORA) centrally.

Budget Allocation and Monitoring

Bank allocate budget of relevant heads keeping in view the historical trend and operational

requirements to its branches/offices. It is the responsibility of the respective branch/office to

ensure that the expenses for the year remain within the budget. Centralized department

monitor the expense position regularly to ensure that expenses remain within the allocated

budget and in case of any exception, budget is revised and relaxation is given based on genuine

reasons.

Vendor Payments

Vendor payments are done centrally to avoid fake payments, over billing etc keeping in view the

budget allocations and consumptions.