1. Executive SummaryEvery student of Bachelors in Business Administration at Bahria Institute of Management Sciences has an essental requirement to do Six to Eight weeks internship in any of the well reputed organization. The purpose of this program is to acquaint the students with practical applications of theoretical concepts taught to them during conduct of their BBA program. I did internship in Silk Bank. it was a nice opportunity to have a close comparison of theoretical concept in practical field, involving the use of primary and secondary data. All the efforts on the way are summarized in shape of this Internship Report. Report starts with the topic Introduction of banking. The word 'Bank' is said to have been derived from the words Bancus or Banque or Bank. This history of banking is traced to as early as 2000 B.C. Talking about commercial banking in Pakistan It was very difficult for Pakistan to build up its own Banking system immediately after independence without sufficient resources. By 30th June 1948 the number of schedule banks in Pakistan declined from mere scratch. Today there are more than 7000 branches of commercial banks along with an established network of supplementary financial institutions. All this development in the banking sector is the result of untiring efforts of six decades. During the time of my internship in Silk Bank I got the chance to work in all the departments of Silk Bank working there. Duties and learning in each department is given in this report. Talking about financial performance of the bank in 2008 all the financial indicators are showing positive results when the financial performance of the bank in 2008 is compared with financial performance of 2007. During 2008 Silk Bank also won some awards. At the end of this report I have given my suggestion for the improvement of the bank.

2. Introduction2.1. Central background informationThe word 'Bank' is said to have been derived from the words Bancus or Banque or Bank. This history of banking is traced to as early as 2000 B.C. The priests in Greece used to keep money and valuables of the people in temples. These priests thus acted as financial agents. The origin of banking is also traced to early goldsmiths. They used to keep strong safes for storing the money and valuables of the people. The persons who had surplus money found it safe and convenient of deposit their valuables with them. The first stage in the development of modern banking, thus, was the accepting of deposits of cash from those persons who had surplus money with them. The goldsmiths used to issue receipts for the money deposited with them. These receipts began to pass from hand to hand in settlement of transactions because people had confidence in the integrity and solvency of goldsmiths. When it was found that these receipts were fully accepted in payment of debts; then the receipts were drawn in such a way that it entitled any holder to claim the specified amount of money from goldsmiths. A depositor who is to make the payments may now get the money in cash from goldsmiths or pay over the receipt to the creditor. These receipts were the earlier bank notes. The second stage in the development of banking thus was the issue of bank notes. The goldsmiths soon discovered that all the people who had deposited money with them do not come to withdraw their funds in cash. They found that only a few persons presented the receipts for encashment during a given period of time. They also found that most of the money deposited with them was lying idle. At the same time; they found that they were being constantly requested for loan on good security. They thought it profitable to lend at least some of the money deposited with them to the needy persons. This proved quite a profitable business for the_ goldsmiths. They instead of charging safe keeping charges from the depositors began to give them interest on the money deposited with them. This was the third stage in the development of banking.

2.1.1 History of Banking in PakistanThe interesting point which I observed during the span of mine internship was the historical background of Banking & Financial sector which is the one in which great improvement and growth is observed since the formation of Pakistan. For studying the growth of this sector we can divide it into three stages, which are as follows: Pre-Nationalization Era Nationalization Era Post Nationalization Era

A) Pre-Nationalization Era There were only two Muslim banks in Indo Pak before partition; they were .Silk Bank Ltd. (est. in 1941 at Bombay) & Australia Bank Ltd. (est. In 1944 at Lahore). All other banks, at that time, were either owned by Hindus or Foreigners. At the time of partition there were 631 bank branches in area which came under Pakistani control. But due to blood shed and violence at large scale, mostly branches were closed and the disparity can be assessed from the fact that on July 1948 there were 195 branches with deposits of Rs.88 crore (880 million) only. Also a factor lagging in Pakistani industry was a central bank of its own, by that time Reserve Bank of India was acting as central bank for both countries and same currency notes were used in both territories. But Reserve Bank of India was biased and Set down Pakistan on many occasions such as the issue of funds transfer etc. In this period drastic steps were taken in government sector for the improvement of overall position. The private sector also responded to these changes and some very positive changes were observed. Some of the steps taken by the government in this regard were as under: Inauguration of State Bank of Pakistan (SBP) on 1st July, 1948. Setting up of National Bank of Pakistan in November, 1949 to control the 'jute' export in East Pakistan and to act as agent of SBP. Larger powers were given to SBP through SBP Act (1956) for controlling purposes. Banking Companies Ordinance 1962 for protection and guidance to banks. Establishment of specialized banks, such as ADBP (1952); HBFC (Nov, 1952); P1CIC (Oct, 1957) IDBP (Aug. 1961); NDFC (Jan, 1973). These were the steps, which built a strong banking sector in Pakistan. This is also obvious from the facts that by 1973 there were almost 10 foreign banks were working in Pakistan and all over deposit position was around Rs.2300 crore (23,000 million).

A bird eye view of 5 top banks was as given below: BANK POSITION IN 1973 BANK HBL NBP UBL MCB ABL NO. OF BRANCHES 667 579 497 506 145 DEPOSITS (Rs in Million) 6,160 5,660 5,670 1,640 570

B) Nationalization Period On January 01, 1974 all Pakistani banks were nationalized through Nationalization Act 1974. Under this law all Pakistani banks became a public property. All small banks were merged in bigger banks to create 5 major Pakistani banks Pakistani banks. These banks were to control by Pakistan Banking Council. There are still controversies about this act of government as whether it contributed in success of failure of banks. However the major changes after nationalization were as follows: Working of banks was extended to under developed areas. Market expansion for credit and deposits. Decrease in service level of bank officers. Decrease in profitability as well. However the effect of expansion was enormous and it can also be depicted with the help of table 2 which shows the deposit & branch positions of different nationalized banks.

BANK POSITION IN 1992 Bank HBL NBP UBL MCB ABL TOTAL No. of Branches 1926 1448 1684 1288 750 7096 Deposits (Rs. In Millions) 153,431 128,679 87,482 50,013 33,757 453,362

Review of the Banking Sector-2008Performance and prospects The banking sector enjoys monopoly in providing financing to virtually all sectors of the economy. The banking sector in Pakistan has even a greater role to play in supporting the real sector by meeting its financial needs. Due to the recent macro economic pressures banks need to make a sustained deposit growth by increasing financial intermediation. The global financial crises and the closure of the capital market followed by wihdrall from the banking system stressed the Pakistani banks. However the Pakistani banks remained intact from a direct impact of the crisis. Largely because there is no direct exposure to securized instruments, risks of financial stability were largely restriced. Going forward the impending economic slodan may dampen the growth rates of the baking system in coming quarters. Low demand for banks advance will shift asset mix way from advances to Govt papers and deposits are likely to grow at a steady pace Historically the banking sector of Pakistan has enjoyed acceleration in economic activites and strong growth in banks credit and deposits but the recent scenario as marked by passive growth increase in credit risk and lowered reanings. The assets base increased partly through deposit and partly through equity. There is less dependence on borrowed funds although some of the small banks remained highly dependant upon borrowings. Loans growth also remained low as compared to the previous years. Due to the economin crisis there has been as increase in the NPLs of the banking system. The deterioration business and economic environment to some extent increased the credit risk. Which constrained the banks to adopt cautious lending strategy particularly in consumer sector here the advances have been decreasing during the CY 2008. the present

tough economic environment will also enhance the credit risk and affect the earnings due to increased loans loss charges and constrained incomes. The banking sector faced significant liquidity stresses also witnessed a minor increase in advances and their share in total assets. This as aggravated further by collapse of capital market in paksitan and the series of news on financial meltdown in the advanced markets raised general public doubts about the financial strength of some Pakistani banks. Ths further burdened liquidity profiles of the banks. The impact as sever in some banks specially the small banks with the constrained liquidity profile. The banking system is distinct with a high concentration as a feer number of banks hold a major share of the systems total assets and deposits. This concentration has been followed an overall declining trend as the medium sized banks steadily gained market share. However, due to unusal liquidity stress that affects mainly the small and medium sized banks. The deposits in the previous witnessed strong growth/ during the CY08 the deposit based grow slowly but the foreign remittances, a key factor maintained the momentum of growth. There is am increase in share of fixed deposits while the share of saving accounts slowed during the year. Advances witnessed a significant slowdown in sharp contrast to previous years robust growth. There is modest growth that is basically led by public sector enterprises. Segment wise analysis shows that mainly corporate and commodity operations increased their usage of bank credit during the year 2008. while Sme sector advances a slight increase. The advances to agriculture sector slightly contracted which declined their relative share in banks advances. The consumer finance after showing a strong and persistent increase up till the end of CY07 has been gradually declining since then. The decline in consumer loan as most significant in auto loans category however personal laons contributing the largest share of consumer finance followed by auto mortgage laons. A general rise in interest rate and slowdown in stock market during the recent quarters significantly marked down the value of both fixed income and equity securities of banks. Accordingly the overall revaluation surpluses of the system eroded. The equity investment portfolio of the bank faced a significant mark down due to slump in capital market.KSE-100 index plummeted by 36 percent to 5.865 by the end of December 2008. the gradual recovery seen in the market is expected to make up for the impairment losses The heightened credit risk transpired in significant increase in mom performing loans and associated assets quality indicators. The NPLs of banking system increased. The eruption of npls is observed in all classifications catagories requiring provisions with proportionately higher increase in substandard and doubtful catagories. However the infow of fresh npls and deterioration of existing npl hav substantially increased the amount of npls in substandards. Doubtful and loss catagories.this trend indicates that in periods ahead , banks might have to provide additional laons losses in case they are not able to recover restructure These npls. The composition of segment-ise npls of the banking system shows that infection ratio of all the segments except agriculture have increased. The exposure to corporate sector has moved up to around 63 percent of the total

laons portfolio, from around 54 % a year ago . however with worsening business climate, the infection ratio of the corporate sector which remained almost at the same level during the previous to quarters has increased . npls of the sml sector also rising at relatively fast pace analysis of npls by the end use of loans shows that infection is more pronounced in working capital finance indicating slackness in turnover of inventories and receiving in the come around of general slodon in business activities. Consumer financing had been reduceing since the start of CY05. however npls of the sectoe have been increasing in absolute as well as in percentage terms. Rising inflation and contained disposable incomes coupled with increasing lending rate have reduced consumers appetite for credit resulting in increasing defaults rate in the consumer finance Operational risk is an inherent feature o financial institutions by virtue of the nature of their operations and constitutes an important component of their enterprise-ide risk management systems. Theis make the bank to sudden event. Such as equipment failure.a black out terrorism suppy chain interruptions or an e-commerce failure can occur at any point in the time and seriously effect the continuity of busness. Qualification of operational risk is concerned. It is a relatively new area for financial institutions for which backs are still in the process of developing formal models. State bank of Pakistan also asses the gravity of threats emanating from lapses in banks internal control environment .for this purpose it keeps track of the frequency and volume of frauds and forgeries commited in the banking system. A number of banks have moved into Islamic bank segment. Heigh percentage share o cash and balances is itself a reflection of limited inverstment alternatives available to Islamic banking, which has affecter the operating efficiency of these institutions. Factors suck as sbps new requirement for enhancing the min imum capital base to 23 billion by end Cy13 and the introduction of variable CAR based on banks Camels rating are likely to provide fresh thrust to the precess of consolidation in financial secotr which could create strong marker participants and further strengthen banks capacity to withstand any potiental decline in profits The banking sector has shown strong buoyancy to recent and growing challenges emerging from the macroeconomic environment on the back of a healthy capitalbase healthy profitable and strong deposit growth. Going forward, the impending economic sloden and domestic securities issues may dampen the growth of the banking system in coming quarters. Low demand for banks advances and increased risk aversion on the part of banking will further shift asset mix away from advances to govt. papers. Banks will have to brace up ther efforts for mobilizing the deposits. Which are still showing stagnancy in the latest post quarter statistics. Regulatory framework

The state bank of pakistn is commiter to develop and diversify the financial sector in order to enhance its role on supporting the countys economic growth. In its efforts to introduce and implement financial sector reforms essential for the smooth functioning and progressof the financial sector the state bank of Pakistan recently released its 10 year vision and strategy. Strategic plan is the implementation of consolidated supervison of conglometerate groups tht include banks. The need to supervise on a consolidated basis in addition to supervising individual licencedbanks has long been accepted by the international regulatory communities. The validation for implementing a consolidated aapproeach to the supervison of banks is based on the nedd to protect banks from contagin risk the most obvios regulatory concern with a conglometerate is that members bank could be used as a central source of cheap funding for the group. While it is clear commercially attractive for the owners of the conglometerate group to use cheap deposit funding for acivities throughout the group prudential concerns arise here intra group lending occurs with out proper assessment of risks proper pricing for risks and proper consideration of exposure concentrations . the impact of this conflict on market efficiency and fairness is greatly augmented in the case of mixed conglomerates. The major regulatory concerns in the case of a mixed conglomerate is that te group may shift impaired assets from commercial entities with in the group to the bank, thereby shifting risk from shareholders to depositors,weakening the bank and potentially the entire financial system and imposing possible recourse on any depositor protection scheme. In developing an aprro[riate famework for consolidated supervison. Sbp has drawn on international experience and expertise while giving due condisderation to the specific characteristics of pakian financial system and its current stage of development. No reform can be complete without aso further strengthening of the central bank in this cpontext , sbp has lounched awork to modernize the central bank egislation in line with the internation best practice . the sbp act is one of the oldest laws in the world and as such it include some outdated provisions, evn though the law has served the central bank well in delivering several of its function.the new sbp act ought to provide more autonomy to sbp along with proper accountability to persue clearly define goals of monetary and financial stability and would make unambiguous how the sbp has to report on its performacnce to its cabinet and parlimetn. Sbp has advovated commercialization of mircro finance industy whch will elp provide financially and socialy sustainable financial servicestnder this program efforts willl be made to enhance outreach to initially 3 million people relative to feer than 1 million a year back. With the ultimate goal to raise to 10 million sbp is steering the inslamic financial industy to also deepen financial penetration to serve the requirnment of that segment of population and industy which has slef excluded itself from faith reasons. Sbp is planning to launch several initiatives to enhance sme financing and suck initiatives include among others development of credit scoring credit products and modalities . sbp plans to ntroduce a consumer protection bill requires Pakistan banks association to adopt a banking code to commit banks fairmness disclosure and ethical standards while nurturing competitive pricing of products

strengthen the consumer protecton department which as recently established in sbp transforming banking sector ombudsman , introduce the small depositor protection sceme and launch campaign of financial literacy Consolidate and strengthen the banking secor by promoting continued mergers and acquisition, while seeking to restructure the outstanding public financial institutions. To promote consolidation, sbp will maintain its moratorium on new licences but will on on exceptional bases issue license with capital requirement of 300 million dallors. Both exisiting conventional and Islamic banks will need to comply with these requirements over an agreed timetable. Licences for microfinance banks will continue but confined at national and provincial levels

2.2 Company BackgroundOn September 15,2001, under the supervision of the state bank of Pakistan (SBP), the prudential bank as acquired by the management and associates of the Saudi Pak Industrial and Agricultural Investment Company(Pvt) Ltd. On March 31 2008 a consortium comprising of international finance corporation, bank Muscat and nomura European investments. The consortium is led by senior bankers Shaukat Tarin and Sadeq Sayeed who have acquired an 86.55% stake in Silk Bank for around $213 million or %0.47 per share (PKR 29.3 equivalent per share). Under the new leadership, the bank will continue to focus on sme and consumer financing resulting in efforts of increased profitability. The year 2007 marked the year of consolidation for the bank. The bank as at December 2007 had a shortfall of rs.3.1 billion in minimum paid up capital requirement. The shortfall be met by the new sponsors after assuming the control of the bank as per the share purchase agreement. After the bank acquired by the consortium there is been a change in the senior management of the bank. Mr. azmat tarin has taken over as President and CEO of the bank. The change in management taken as is good sign of consolidation of the bank after years of deteriorating profits. The new management bought in a new image for the bank. The bank is currently in process of re-banding with new vision, mission and core values. A new organization structure has been established which supports clear lines of communication and tired level of authority with accountability. The bank also availed the services of a consultancy firm for professional guidance. The new management team bought in focus on the employee training in the areas of internal polcies and procedures, prudential regulations. The management belives tht this will strengthen the control environment. The silk bank has a network of 65 branches throughout Pakistan. Bands head office is in Karachi. The bank offers online and mobile banking. The bank offers online and mobile banking. The bank plans to increase the branch network to increase the market share. Ten new branches were opned to provide banking

facilites and develop the outreach. This will help the bank to increase its customer base. With new management in place the bank now focus on investmen in technology and aligning it to the business strategy. The bank has purchased state of the art core banking system,temenos T-24. the bank belives that this will improve the business efficiency when will aligned with employee training. The bank has developed new policies and procedures and is creating awareness through training workshops covering 32882 participants during the current period. The bank re-organizes itself on modern lines clearly segregating the functions of business risk and operations. Critical functions such as compliance risk management and middle office were setup. The main strategic aim of the bank after the takeover by the consortium is to increase the size of balance sheet by significantly increasing the deposit base with major emphasis on quality and reduction in the NPLs. To achieve its strategic aim the bank plans to increase its branch network, provide highly innovative customer deposit and develop strong risk management systems.

Performance of the Silk bank bank Deteriorating overall performance Gigh npls Declining spreads Lower capital gans

Silk bank bank achieves a modest increasing in its total assets during the year 2008. the banks also expanded the breanch nework from 65 (end jully). The bank mamges to secure high growth in credit comparable to its peer banks. The bank focuses more on the corporate sector financing while the share of consumer financing decreased. Theis is translated into low credit risk. Saudi pak banks performance measured in terms of the both ROE and Roa marked a significant decline. This as mainly due to continues erosion of revaluation surplus and negative spreads with low volume frowth. There is been a substantial growth in other operations system with fee based having a greater proportion. The bank with enhances focus on treasury function achieved higher income from dealing with foreign currencies. This continues to be a stable cource of revenue. The operating cost of bank increased almost doubled mainly becuae of increase in branch network and higher employee compensation. The total net revenue could not be sustained by low net revenue of the banking resulting in pre provision operating profit Suring 1Q09 the banks performance still showed negative ROE the bank has been acquired by a constrotium and still undergoing the consolidation process.

The current macro economic sitation and bullish market further agrivate situation by eroding of revaluation surplus Going forward the new management polans to grow and increase the size of balance sheet by enhancing market share this is planning to launch a suite of products\alternativedelivery channels and services it also plans to launch specialized business units for customer corporate and investment banking the step taken will help the bank move to the next level and change the iage to vibrant progressive and growing bank

3 Companys analysis (in terms of)3.1 Operational analysisVarious departments are working in all the branches of Silk bank to facilitate the customers. Following are the banking departments functioning in silk.

3.1.2 Operational departments of Silk Bank Account opening department. Cash department. Credit department. Lockers department. Bill clearing department. Foreign exchange department.

Accounts opening department Basic function of the accounts department is to open new account and facilitate the customer for the account opening purpose. There are certain formalities which are to be observed for opening of an account with a Bank. These formalities in brief are as under: FORMAL APPLICATION: The customer is to fill "Account Opening Form. It is a formal request by a customer to the bank to allow him to have and operate the account.

Documents require for opening an account: Copy of CNIC Service certificate or student card. Utility bill Provisional receipt KYC (Know Your Customer) SPECIMEN SIGNATURE: When the Banker is satisfied about the integrity of the customer, he agrees to open the account. The Banker obtains the specimen signatures of the customer on the signature book or on card. Posting the account on the system: After that officer has to post the new account on computer system for further processing. During the process customer id and account number is generated. New account remains active for one day after that it is blocked by the head office until CNIC of the customer is verified from NADRA. Cheque book issuing: After the CNIC verification account opening officer has to issue a cheque book to customer so that he can be able to make withdrawal from his account. Now a day in Silk Bank cheque book issuing process is centralized that take 06 days to complete. SECRECY: The secrecy of depositors account is the. Responsibility of every official engaged in the Bank service. Types of accounts: Individual accounts: Individual accounts are the most common personal investment accounts. Opened by single person. JOIN ACCOUNT: A joint account occurs when two or more than two customers have one account. The parties to a joint account are considered in law as they are one person. Business accounts: Business accounts can be opened by institutions, companies, partnerships, trusts and non-profit organizations. Following documents are required. BOOKS RELATING TO CUSTOMERS: Pay-in-Slip

When money is to be deposited in the bank the pay in slip is to be filled. The object of this book is to provide the customer with the banks acknowledgement for receipt of money to be credited his account. Cheque Book A chequebook contains a number of cheques, which is given to a customer upon written request and after marking the payment for the chequebook. It enables a customer to make withdrawal from his account or make payment to various parties by issue of cheques. GROUNDS FOR CLOSING THE CUSTOMERS ACCOUNT: The banker may close the account of the customer due to following reasons: Notice by a Customer Death of a Customer Customers Insanity By order of court I) NOTICE BY CUSTOMER: The banker closes the account of the customer on the application of the customer for closing his account. II) DEATH OF CUSTOMER: On death of his customer, the bank must stop payment on cheques drawn on him by the deceased customer because the death revokes his authority to pay such cheque. The heirs or the executors of the deceased customer are not authorized to operate on the account; it can act only in accordance with provisions mentioned in the letter of probate issued by a competent courts. III) CUSTOMERS INSANITY: If the customer becomes insane or mental it terminates the bankers authority to act as his customers agent. Since the banker customer relationship comes to end, in such as situation, it is usually considered that the bankers authority to pay his customers cheques is revoked by notice of insanity. However, the bankers treat their customers as it unless a fairly inclusive evidence of the customers insanity is available to them. IV) ORDER OF COURT: A court of law may serve a banker with an order in garnish proceeding in execution of a decree prohibiting him from honoring a customers cheques. Cash department Cash Department is very sensitive and risky part of the bank. Very causations and competent personnel are needed for the Job. SILK BANK has really such a diligent staff with appreciable competencies and will to do work. Main function of cash department is to deal with cash payment and cash receipts.

Cash deposit procedure: The customer fills the pay slip. The cashier receives the pay slip and cash. He counts the cash and makes the detail of the notes at the back of the pay slip. Then he compares the detail with amount written on slip and signs the pay Slip. Then he credits the entries in the computer by serial No, account type, Account number and amount. Puts the stamp of the cash Received on the payment slip. The first portion is for bank record while other one is given to the customer. Cash payments procedure: When a customer comes to withdraw a certain amount from his account, he brings a Cheque along with him. In this case the following steps are taken. The cashier receives the cheque and checks it whether it is post dated or predated. Cheque can be cashed within six months. A predated cheque cannot be cashed. He takes two signatures at the back of the cheque from the bearer. He gives the cheque for posting at the computer. The computer checks out whether there is balance in the account or not. Other instructions are also received e.g. blocked, frozen, Etc. the posting is done in the computer and the cheque is stamped posted with the serial number and date. He gives the cash to bearer and the respected account is debited. Online fund transfer: Another function of the cash department is of online transfer of funds. Customer has give filled remittances form with cash or without cash (from account transfer) to the cashier in cash department who will then credits the beneficiary account. Balancing cash at the end and transferring excess cash: At the day end cash department is responsible for balancing the cash. Physical cash should be balanced with the amount in the computer. Branchs limit for cash is 40 million. CREDIT DEPARTMENT Introduction Securities Types of credits Introduction: The function of credit department is to lend money in the form of clean advances, against promissory notes, as well as secured advances against tangible and marketable securities. The bankers prefer such securities that do not run the risk of general depreciation due to market fluctuations. Common Securities for the bankers advances are as under:-

SECURITIES: 1. Guarantees When an application for advance cannot offer any tangible security, the banker may rely on personal guarantees to protect himself against loss on advances or overdraft to the applicant. 2. Mortgage A mortgage is the transfer of an interest in specific immovable property for the purpose of security the payment of money advanced or to be advanced by way of loan, and existing or future debt, or the performance of an engagement which may rise to a pecuniary liability. The transfer is called a mortgagor, the transferee a mortgage. 3. Hypothecation When property in the shape of goods is charged as security for a loan form the bank the ownership and possession is left with the borrower, the goods are said to be Hypothecated The essence of hypothecation is that neither the property in the goods not the possession of them are possession is left with the borrower, the goods are said to be Hypothecated the essence of hypothecation is that neither the property in the goods not the possession of them are possessed by the lender, but the security is granted by means of letter of hypothecation, which usually provides for a bankers charge on the hypothecation goods. 4. Pledge In a pledge the ownership remains with pledge, but the pledge has the exclusive possession of property until the advance is repaid in full. While in case of the default the pledge has the power of sale after giving due notice. 5. Promissory Note Sometimes promissory note is also accepted as a security, "A promissory note is an instruments in writing containing an unconditional undertaking signed by the maker, to pay on demand or at a fixed or determinable future time a certain sum of money only, to or to the order of certain persons, or to the bearer or the instrument." A promissory note is incomplete until has been delivered to payee or the bearer. 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. TYPES OF ADVANCES: The advances which are given by Silk Bank Limited are as under:1. Demand Finance (Ordinary Loan) Demand Finances are those advances which are allowed in lump sum for a fixed period and are repayable lump sum or gradually in installments.

TYPES OF ADVANCES Demand Finance (Packing Credit) Scheme introduced by State Bank of Pakistan for exporter of carpet, surgical instruments, at zero percent rate of interest. While banks provides at concessional rate of interest. Loan ordinary (Demand Finance to Students) Qarz-e-Hasana Scheme Loans are allowed to the students, teachers without any interest or mark up with the recommendations of the MPA or MNA. Demand Finance (Staff) Loans are offered to the staff of the following four categories. House Building Loans against mortgage of property. Loan for purchasing vehicles. Loan equivalent to months salary. 2. Running Finance (Overdraft) Running finance (old name overdrafts) are advances, which are generally, given to meet temporary requirements of the customers. A good customer use the banks running finance limit as a mean of protecting his credit in the market and as a line of security defense to meet his commitments. TYPES OF RUNNING FINANCE Unsecured Under such type of overdraft the bank pay upon the personal security of the customers mentioned on the customers account. Secured Under this type of overdraft the bank allows his customer to withdraw more 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 SMALL LOANS Loan is allowed to contractors clearing and forwarding agents. 3. Finance against the Foreign Bills (FAFB) The advance facility is allowed both to local foreign bills and is classified as under:FAFB (Local) advance against Railway receipts and truck receipt, a company with bills of exchange and invoices, are given under this head. FAFB (Foreign) advances against foreign bill, covering bills of exchange bills of lading airway bills of exchange bills of lading airways bills etc.

4. 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: Agricultural inputs Tube wells Live Stock Framing Land improvement 5. Industrial Loans Besides the short-term loans which play a part in working capital medium and long-term loans are also given to industrial sector for purchase of machinery and other capital nature goods. Bills clearing department Inroduction Every bank acts in two way i.e. Paying Bank Collecting Bank Here in theory no legal obligation on a banker to collect cheques, drawn up to other banks for a customer. It is, however, an important function of crossed cheques. A large part of this work is carried out through the N.I.F.T. National Institutional Facilitation Technologies (Pvt.) Limited: NIFT is a joint venture between a consortium of six major banks and private sector. It is responsible for the establishment and management of automated clearinghouse facilities in Pakistan. NIFT is proactively involved in the modernization of payment systems in Pakistan. Function of Clearing Department The following are the main functions of clearing department. To accept transfer deliveries and clearing cheques from the customer of the branch and to arrange for their collection. To arrange the payment of cheque drawn on the branch and given for collection to any other branch of silk Bank of Pakistan or any other members, or submembers of the local clearing area.. To collect amounts of cheques drawn on members, sub-members of the local clearing house, sent for collection by those silk Bank Limited, branches which are not represented a the local clearing area. Procedure of Depositing Cheques in Clearing Department Whenever a customer wants to deposit cheque, etc, he fills a pay in slip and hands it over the counter along with the instruments he wants to deposit with bank. As far as possible, the customer desire that on of the staff member fill in a slip for him, he should be obliged promptly.

One portion of the perforated pay in slip is handed over to the depositor and the portion becomes the regular portion of a credit voucher

TYPES OF CHEQUES COLLECTED BY CLEARING DEPARTMENT Transfer Cheques Transfer cheques are those cheques, which are collected and paid by the same branch of bank. Transfer Delivery Cheques Transfer Deliver cheques are those cheques, which are collected and paid by two different branches of a bank, situated in the same city. Clearing Cheques Clearing cheques are those cheques in which the payee (Person who deposit cheques for collection) and the drawer of a cheque maintain the account with different banks. These clearing instruments are handed over to NIFT after posting necessary stamps and checking them for any errors. Then further process of clearing is carried on the behalf of NIFT. Forex Department International trade is growing and with the development of international trade it has become more imperative. For countries to devote more and more attention to the complicated mechanism of Foreign Exchange. It is more important in case of developing countries. It is need of time, that a country should conserve its foreign exchange resources. Meaning of Foreign Exchange The foreign exchange term refers to the principles that determine the rate of exchange. It 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 of world settle their debts to one another. Letter of Credit: It is a negotiable instrument through which the bank of the exporter deals with bank of the importer through the guarantee of a bank. There are different parties involved in the L/C, e-g importer, exporter, importer bank, exporter bank, and advisory bank. LC involves banking channels in foreign trade to mitigate risk. The procedure of opening of an L/C is as follow The first thing is the Performa invoice. The Performa invoice is a document (say a clip), which is, sends by the exporter to the importer and includes the

information like. Descriptions of goods, what type of goods you are needed and what are the quality, rate and originating country etc. Before to open a L/C the bank also consider that the goods which the importer is importing is allowed by govt. of Pakistan or not. Because the importer is not allowed to import that goods which are prohibited by the Govt. of Pakistan. The importer is asked to show the membership certificate of any chamber of commerce and industry affiliated with the Pakistan federation of chamber of commerce and industry. Fill the import form of the govt. of Pakistan, which is the proof of this that there is no objection on the goods, which the customer is importing. What type of goods you are needed and what are the quality, rate and originating country etc. Necessary Documents required for L/C: NTN Tax Authority registration certificate Chamber of Associations trade certificate Type of Business NIC Margin Registration No. Application for L/C On providing these documents the importer will be given the L/C form named as IB-8. Contents of IB 8 Request for LC Rate Importer and Exporters particulars Amount Terms Partial Shipment (Allowed, not allowed) Transshipment (Allowed, Not Allowed) Port of Loading and destination Payment Mode Sight On seeing the documents the importer has to pay. At Sight and Negotiation: It means that exporter will submit his documents with the bank and immediately asks for payment. Acceptance: On showing the documents to the importer, the bank asks him to accept that he will pay within 30, 60, 90, 120, 180 etc days.

Documents Required:Certificate of Origin. Commercial Invoice Bill of Lading / Air way bill. Charges: For L/C following charges are applicable; Commission Postage L/C Advising commission L/C amendment Commission L/C confirmation Commission L/C Negotiation Commission Payment Mode: In foreign trade payment modes are Advance Payment: Importer makes payment before delivery of goods. Open A/C: Importer makes payment after receiving the goods. Issuing foreign exchange accounts cheques books Another function of foreign exchange department is to issue foreign exchange accounts cheques books to customers on request. This process is not yet centralized. Cheque book is issued within 15 minute of receiving request from customers after making necessary register entries and posting stamps on it.

3.2 Financial analysisThe main contribution to the profit of the bank comes from its net interest earnings although the non-interest earnings are also quite a significant contributor. Of these, the fee, commission and brokerage income takes the highest share with 47% and other income, which constitutes to 30% of total nonmarkup/interest. The NPLs of the bank have been declining till FY07; a significant surge was seen in mid FY08. The bank has been stringent in its policies indicating that it s protecting itself from exposures to poor customer. 2009 has been the year with highest NPLs for the bank. However, Silk bank is not alone in this matter, as the whole banking system is trying to oust NPLs as an industry; players are heavily investing out of consumer finance and are diverting their attention to government bonds, public sector enterprises and corporate finance to move forward. The above graphs compare two types of advances in 2008 and 2009. The composition of short-term advances has decreased whereas that of the long-term advances has increased. A decrease in short term advances indicates the bank s aversion from quick money recovery and on-the-spot lending as the operating

environment does not bode favorable with NPLs rising and instability peaking. Taking a more long-term approach for the time being is indicating that the bank foresees visible benefit in locking their money with solid and stable clientele as opposed to deteriorating and cash dry companies. The conservative approach the bank is taking might benefit them in the long-run when matters in the country at hand seem very dim and lackluster for spiraling economic activity. The liquidity profile of the company shows good signs as most of the ratios have been increasing. The earning assets (advances, lendings to financial institutions and investments) of the bank have been within a safe range over the years. In FY09 the lendings to financial institutions of the bank have been decreasing whereas the investments have witnessed a major increase that has led to an overall increase in the earning assets of the bank. Moreover, the investments have been made mostly in the government securities. Keeping in mind the current downward trend of the stock market, investment in the government securities would protect the bank from the fluctuations being experienced by the stocks. As can be seen, the cost of funding the earning assets is much below that of the yield on the earning assets, leaving a large net interest margin for the bank. However, as evident, the cost of fund is rising and must be checked before net interest margin begins to slim down in times where liquidity is of great concern. The advances to deposits have also dropped from 0.76 to 0.67 in 2009 as the bank tries to take a strong hold on whom and where they are disbursing the money. The Earning Assets Composition further highlights the fact the Silk bank has significantly cut down on their advances and have allocated more towards investments. As mentioned earlier, the industry and silk bank on the whole are heavily investing in government bonds and Public Sector Enterprises where cash stripped companies are in dire need of money to settle inter-corporate debt. This year the bank gave 20% bonus issue (20 shares for every 100 shares owned) thus increasing the total number of issued shares to 9,108,000. The debt management of the bank indicates a shift to equity. Therefore we see a constant decline in debt to assets ratio over the years. Hence, a shift to equity from debt is evident. A systematic trend can be seen as silk bank continues to alleviate their debt to equity ratio. In 2005, the bank had Debt-Equity of 11.84% whereas now it stands at 9.24%. Debt to assets ratio has also declined since 2006 and been maintained at 0.90% showing a continuous effort to release leverage and strengthen the system with equity.

3.3 Human resource assessmentThe importance of manpower cannot be denied in any organization. In case of banks it is the most valuable asset, because the bank is very sensitive organization and to be in harmony with this sensitivity, need for proper human resource is felt badly. Critical analysis of silk bank necessities recommending suggestions that would increase banks efficiency and effectiveness. evelopment of Managerial Leadership D In services industries like banks the need of managerial skill is much more important. It makes positive contribution towards higher effective results. Without development of managerial leadership, the effective utilization of the human resource will be impossible.silk bank should also focus on this area and should avoid deficiencies in managerial leadership, by applying the modern styles of management. Political interference: The political intervention in the bank needs to be stopped so that the top hierarchy as well as the personnel placed at other important levels of the institution is not changed Just on political grounds and the on going developmental work is not obstructed. It will enable the management to formulate long term strategies and their proper implementation because the long term policies, accurately based on calculated risk, have proved the pivotal role players for organizational sustainable development. Basis for Promotion: A sizeable portion of the officers of silk bank, are promoted in without test and interviews to officers cadre. The promotion policy must be too tight and transparent that no one may have the chance to be promoted on criteria other than the required qualification, experience and performance. As for the present excess staff, those not found up to the required criteria, may be given GHS etc.

Management Changes on Merit: In silk bank, though vary rare fresh recruitments are made, and the bank faces saturation in personnel, now clipping will be more helpful. This downsizing will leave the bank with the staff, to be retained on the basis of ultimate meritocracy with zero tolerance of incompetence. Now in this remaining workforce, a cultural change right from the top management down to the front line, that better suits to the present day needs of banking environment could be included through proper discipline and training. Needs of change in Recruitment Policy: It is important to say that the external level market is full of the required talent like MBA, M. Com etc, but on the country only graduation with simple subjects is still

the requisite qualification for officers cadre, which has already worked amply in the devastation of silk bank. Therefore the recruitment qualification to the officers framework should be enhanced for simple graduation, to professionally qualify preferably Masters in their respective fields. Refresher Courses: The Human of the bank should frequently conduct meaningful refresher courses, seminars and workshops with a view to improve the knowledge of the staff. Due to severe competition and technological developments, the banking business is experiencing rapid changes therefore the HRD should have arrangements for staff trainings to cope with the new changes that may become threats for the interest of the bank. Computer Trainings: The present conventional and orthodox training programmes need to be made more comprehensive and reinforced with inclusion of computer training courses. Training for Credit Management: Special trainings on credit management should be imparted to the finance dealing Staff. Financing is main fountain banks income. Sound finance is extremely necessary for opening of springs of the smooth inflow of the income. Training with Clear Objectives: Training needs assessment is necessary so that only the relevant staff is sent for the training courses. Change in Appraisal System: The present performance appraisal system is good. However, it needs to be implemented in true sense. The drawbacks that are obvious like nepotism and favoritism etc. need to rooted out and the culture of ultimate meritocracy in appraising needs be inculcated. ntroduction of New Courses: I The human recourses division of the bank should focus on the restoration of the corporate image of the bank by floating programmes such as, marketing excellence, courses on corporate culture and others. Usually in businesses the wholesalers, retailers and other intermediaries are finished by opening a network of the business own outlets. It works as profit maximization devise. In my opinion the above two programmes marketing excellence and corporate culture, added with the best counter service and outdoor informal relationship with the potential customers by the line managers will save the sum of money spent on various media of advertisement. Cheaper means for Postings etc.

The culture of attachment of hopes with the elements outside silk bank, for promotion, transfers, postings, and other benefits requires eradication from the roots. Customers Orientation: Every entrepreneur if concerned about the success of his business, has to understand, recognize, carefully and appropriately that his customer is The King of the business system and the original spring of the business revenue. Silk bank should recognize its customers as the mainstream of the banks revenue. They need to be provided the deserved respect, quality and in time service and to be politely dealt with. Career Development: As a matter of personnel policy HRD of silk bank should prepare a plan showing the future growth potential of employees on the job performance and evaluation and it should be made known to the employees. In this regard, employees should be given opportunities to show their performances, which would help in their career development.

3.3.1 Recruiting ProcessSilk bank has a well established HRM department which is dedicated for hiring capable, skillful and well educated employees which are selected through special selection processes like interviews and written test to ensure that the most appropriate candidates are hired .It also keeps in view the need and demands of existing employees. Selection Devices In silk bank, the application forms must be submitted by candidate by their CV and by giving basic information about himself/herself. Interviews are conducted by top management and evaluate the candidate. Sometime written test are also conducted. Silk bank investigate the background of candidate and physical fitness tests are used for selection of the candidates. Orientation When the new employee is hired the management organizes the orientation program to introduce the rules, working and culture of organization to new employee. Types of Training Silk bank have different training programs. Silk bank organize different training programs for their employees for updating of knowledge of business and technology. It may be on the job or rotation of job or in form of lectures.

Career Development There are great chances of promotion for the hard working employees and for those who shoe their best performance and achieve the goal effectively and efficiently. Employees Performance Management In silk bank, top management evaluates the performance of his employees that the employees are achieving their goals or not, what improvement in employees makes them more successful. It is evaluated after a specific period of time. Motivation In silk bank, the employees are motivated by giving them bonuses, compensations and other facilities necessary for living a good life that fulfils their social and the safety needs. Marketing analysis Marketing is the process of playing and executing the conception, pricing, promotion and distribution of ideas, good and services to create exchange that satisfy individual and organizational objectives. Silk bank also adopts certain marketing techniques to enhance the image of the bank. Most of the marketing takes place through various deposits mobilization schemes through advertising in news paper and other media and there is more emphasis on customer services to have more satisfied client who can recommend to their associates and friends. SPONSORSHIPS PRINT ELECTRONIC

Environmental analysis (in terms of)Silk bank has good relationship with their customers, suppliers. Managers try their best to great good environment with them and solve problems in well manner. The general environment effects on Silk bank economic. Silk bank work in legal way, all the decisions of the managers are legal and they give benefit to their customers, stakeholder, stockbroker and employees. Silk bank fulfils the demographic conditions; Silk bank is introducing new types of accounts of different age groups, level of education income of family location. Now in silk bank, there is bit change of technology.

4.1 Industry & market analysis4.1.1 Major products lines market segmentsDeposit Accounts Current Accounts Make unlimited transactions while maintaining a low minimum balance every month. silk bank is currently offering three types of accounts in current account category. Their detail and name is as under. silk bank Business Value Account Current Account Basic Banking Account (BBA) silk bank Business Value Account Unique transactional account for Businessmen Up to 5.35%* profit per annum Profit calculated daily, paid every quarter Minimum balance of Rs. 20,000 silk bank DebitCard and Inter Branch Transaction System (IBTS) facilities Up to 10 Bankers Cheques free (at minimum balance of Rs. 500,000) Funds transfer to any bank through silk bank PhoneBanking Current Account Minimum balance of Rs. 5,000 Unlimited transactions Non-profit bearing Silk bank DebitCard and Inter Branch Transaction System (IBTS) facilities Funds transfer to any bank through silk bank PhoneBanking Basic Banking Account (BBA) Can be opened with only Rs. 1,000 No minimum balance requirement Upto 2 withdrawal and 2 deposit transactions free every month

Unlimited withdrawals through silk bank DebitCard Non-profit bearing Savings accounts Avail the flexibility of making transactions while earning profit on daily/monthly basis. silk bank is currently offering five types of accounts in savings account category. Their detail and name is as under. silk bank Value Account PLS-Savings Account Remittance Munafa Plus Savings Account Daily Munafa Account Daily Progressive Account silk bank Value Account 7.19%* profit per annum Profit calculated monthly, paid every quarter Deposit ranges from Rs. 10,000 to Rs. 1,000,000 Two withdrawals free every month PLS-Savings Account 5.06% profit per annum* Profit paid bi-annually silk bank DebitCard and Inter Branch Transaction System (IBTS) facilities Funds transfer to any bank through silk bank PhoneBanking Minimum balance of Rs. 20,000 Unlimited transactions Remittance Munafa Plus Savings Account Special account for receiving foreign remittances 5.12%* profit per annum Profit paid every month Minimum balance of Rs. 20,000 Daily Munafa Account Profit calculated daily, paid every month Up to 8.84% profit per annum* silk bank DebitCard and Inter Branch Transaction System (IBTS) facilities Funds transfer to any bank through silk bank PhoneBanking Minimum balance of Rs. 20,000 Daily Progressive Account Unique transactional account for Institutions Profit calculated daily, paid every month Up to 11.57% profit per annum* Inter Branch Transaction System (IBTS) facility

Funds transfer to any bank through silk bank PhoneBanking Minimum balance of Rs. 20,000

4.2 Competitor analysis 4.2.1 Major competitorsIncrease in competition due to increasing number of foreign and domestic private banks offering highly specialized and attractive services. UNITED BANK LIMITED One of major competitor is UBL. It was established in November 7, 1959. Its chairman was His Highness Shaikh Nahayan Mabarak Al Nahaya. UBL has a large network of branches, which extends to the remotest areas of the country. In December 1983, there were 1623 branches whereas in 1974 it had only 1238 branches and in October 2003 these figures show total number of 1007 branches. It has 1121 Domestic, 17 Overseas Branches. UBL has assets of over Rs. 620 billion and a solid track record of fifty years - in addition to the convenience of over 1121 branches serving you throughout the country and also at several overseas locations Its Subsidiary is: United Bank AG Zurich, Switzerland United National Bank Limited, UK (Joint venture with NBP) UBL Fund Managers Limited United Executors and Trustees Company Limited

Alfalah Bank Bank Alfalah Limited was incorporated on June 21st, 1992 as a public limited company under the Companies Ordinance 1984. Its banking operations commenced from November 1st ,1997. The bank is engaged in commercial banking and related services as defined in the Banking companies ordinance, 1962. The Bank is currently operating through various branches in Pakistan, Bahrain, Bangladesh & Afghanistan, with the registered office at B.A.Building, I.I.Chundrigar, Karachi. The Bank is currently operating through 195 branches in 74 cities, with the registered office at B.A.Building, I.I.Chundrigar, Karachi Vision

To be the premier organization operating locally & internationality that provides the complete range of financial services to all segments under one roof. Mission To develop & deliver the most innovative products, manage customer experience, deliver quality services that contributes to brand strength, establishes a competitive advantage and enhances profitability, thus providing value to the stakeholders of the bank.

Standard Charter Bank Pakistan The history of Standard Chartered in Pakistan dates back to 1863, when the Chartered Bank of India, Australia and China first established its operations in Karachi. In 2006 Standard Chartered Bank acquired Pakistan's Union Bank. On 30 December 2006, Standard Chartered merged Union Bank with its own subsidiary, Standard Chartered Bank (Pakistan), to create Pakistan's sixth largest bank. Standard Chartered aspires to be the best international bank for its customers across its markets. The Group earns around 90 per cent of its income and profits in Asia, Africa and the Middle East, from its Wholesale and Consumer Banking businesses. The Group has 1700 branches and outlets located in 70 countries. The extraordinary growth of its markets and businesses creates exciting and challenging international career opportunities. Standard Chartered Bank (Pakistan) Limited is Pakistan's oldest and largest foreign commercial bank. It employs over 9000 people in its 162 branches in Pakistan. Askari Bank Askari Bank Ltd (formerly Askari Commercial Bank) was incorporated in Pakistan on October 9, 1991, as a Public Limited Company. It started its operations during April 1, 1992. The bank principally deals with banking, as defined in the Banking Companies Ordinance, 1962. The Bank is listed on the Karachi, Lahore & Islamabad Stock Exchanges and its shares are currently the highest quoted from among the new private sector banks in Pakistan. Askari Bank has expanded into a nationwide presence of 150 branches, and an offshore banking Unit in Bahrain. A shared network of over 1,100 online ATMs covering all major cities in Pakistan supports the delivery channels for customer service. As on December 31, 2007, the bank had equity of PKR 12.27 billion and total assets of PKR 182.17 billion, with over 800,000 banking customers, serviced by 6,808 employees. Muslim Commercial Bank Limited MCB Bank Limited formerly known as Muslim Commercial Bank Limited was incorporated by the Adamjee Group on July 9, 1947, under the Indian Companies Act, VII of 1913 as a limited company. The bank was established with a view to provide banking facilities to the business community of

the South Asia. The bank was nationalized in 1974 during the government of Zulfikar Ali Bhutto. This was the first bank to be privatized in 1991 and the bank was purchased by a consortium of Pakistani corporate groups led by Nishat Group. As of June 2008, the Nishat Group owns a majority stake in the bank. The president of the bank is Mr. Atif Bajwa (previously with Citi Bank). MCB is Pakistans fourth largest bank by assets having an asset base of US$ 5.9 billion, and the largest by market capitalization having a market capitalization of US$ 1.8 billion. The Bank has a customer base of approximately 4 million and a nationwide distribution network of 1,081 branches, including 8 Islamic banking branches, and over 300 ATMs, in a market with a population of over160 million. uring the last fifteen years, the Bank has concentrated on growth through improving service quality, investment in technology and people, utilizing its extensive branch network, developing a large and stable deposit base and managing its non-performing loans via improved risk management processes. MCB has 1081 branches (as of 31st December, 2009) including local branches, and business establishments in SriLanka and Bahrain including newly established Rep.Office in Dubai, UAE. The Bank has also formed a private company in Hong Kong (fully owned subsidiary of MCB) in partnership with Standard Chartered Bank, handling trade transactions of select countries in the Asia-Pacific region. MCB has been successful in turning around its operations since its privatization and is moving forward to set high performance standards with the continuous support of its customers and leadership in banking technology.

4.2.2 Their market sharesThe banking industry was faced with a rather challenging year in 2009. With the repercussions of the financial global crisis still clutching world economies, Pakistan was fighting domestic economic hurdles, which included but not limited to the slowdown of exports, rising security concerns, inflation and energy crisis gripping the country and a GDP achieved of only 2.5%. The domestic remained largely immune to the financial stress faced by developed nations; this was mostly attributed to the fact that our markets don t has significant international exposure. Our financial markets also don t has innovative and complex derivative products, which inadvertently have become one of the many reasons why our situation is a lot better than theirs. However, the financial markets in Pakistan faced various episodes of liquidity stress during FY 09 as the year kicked started with the build-up of liquidity pressure in the money market that peaked during October-November 2009. The overall liquidity profile of the banking system was strained due to high public sector demand for bank credit and pick up in credit to private sector. The SBP continuously tried to offset the situation by injecting funds into the market through

discounting and open-market-operations OMOs to keep the market liquid. In comparison, OMO average outstanding balance was Rs 76.2 billion in FY09 as opposed to Rs 23.6 billion in the last quarter. Due to inflationary pressure spinning off from rising international commodities, SBP continued with its monetary tightening stance during the first two quarters of FY09. With the subsequent decline in prices, inflationary pressures eased off which lead to a decline in CPI post March FY 09 to which SBP acted by lowering its discount rate by 100 BPS in April FY09. CRR and SLR requirements, which were increased in May FY08, were reduced during the first half of FY09 to alleviate temporary liquidity strains, which the financial market was facing come October-November 2009. INVESTMENTS Overall banking investments for December 2009 were Rs 1,753 billion, a 62% jump from CY08 where net investments of the banking system were Rs 1,080 billion. The total asset mix of the banks continued to invest heavily in government papers and bonds in public sector enterprise. The increase has accounted for more than one third of the overall growth in the banking systems asset base. Major increase upon break up of government papers was seen in short-term market treasury bills and long-term Pakistan Investment Bonds. Deposits showed some robust growth, CY08 registered deposits of the banking industry at Rs 4,217 billion whereas in December 2009 deposits were at Rs 4,787 billion. The deposit base of the system posted a 6.8% growth for the quarter but a 13.5% Yo-Y increase.

========================================================================= ======== Customers 2008 2009 Growth % of total Since 2008 deposits (2009) ========================================================================= ======== Fixed deposits 186,206,978 208,459,070 12% 31% Savings 271,240,066 314,040,743 16% 46% Current Account Remunerative 2,739,417 1,811,833 -34% 0.3% Current Account Non-Remunerative 130,326,871 149,221,644 14% 22% Fin.Inst - Remunerative deposits 2,368,970 1,616,443 -32% 0.2% Fin Inst - Non-Remunerative deposits 4,208,243 7,600,346 81% 1% ===============================================================

RiskDepleting asset quality Weak internak risk management system Risk management The bank reorganizxed itself under the new management critical function such as compliance risk management was setup. The bank has shifted its focus to more effective risk management and for this bank as setup is risk management committee and asset and liability committee (ALCO) in the year 2007 The RMC is responsible for determination of general principals for measuring managing and reporting the risk explore of the bank risk policies over all risk explore over all investment strategy and the capital development and risk tolerance. The ALCO is responsible for compostion of assets and liabilties management of liquitidy timely identification of sources of market and liquidity risk, prices of deposit and avances deciding on required maturity profile and the mix of incrememntal assets and liabilites defining the interna rate view of the bak and seceding future strategies for treasury receiving funding policies and evaluating the marker and liquidity risk n new product. Saudi pak has taken over by new mamangemtn since the take over risk managmnet function has been continuesly mproved. Credi risk is overviewed by broads risk cometee in addition to which there are committee of the management authorities have bbeen appropriately delegated and separate risk management units operates for the corporate/ sme and consumer business with properly laid down policies and procedures formulated in the form of manuals and productsprogram . credit admin unit have also been established in the various aforesaide segments of the bank.the bank ahs its on credit rating system for corporate commercial and relationshipSME which is further being revamped in consumer banking separate collection units also operate for recovery and additionally a new collection system is beng procured

for the consumer business. A centralized special asset management unit is responsible for the classigfied corporate/ sme portfolio and its recovery . a new credit card policy manual has been finalized which will be approved by the board in 2009 in which target market and risk acceptance critera have been outlined and per party limits revised to spread the risk over a broader base heavy investment in technology has been initiated to enhance the evel of effectivness mis and monitoring . a process of mpost approval review of credit lines have commenced which will be gradually converted into a risk asset review unit (RAR) as thr RAR function is currently being performed by internal audit department . Appropriate policies and procedures have been documented and disseminated and internal control unit is in operation which is continuesly being expanded. An independent audit function has been established by the bank. Repoting to the audit commtee of the board . A compliance department has been established to ensure that legal and regulatory risks are properly addressed in addition to the implementation of anti money laundering. Know your customer(AML/KYC) policies, and strict monitoring of transaction appropriate training plans have been implemented including training on AML/KYC contingency plans are in place and are in the procees of being tested self assessment of key risk indicators KRIs and compliance of standards codes and guide lines will be regularly carried out and documented. Reviews of internal control system have been initiated and are planned to be completed in 2009. the bank as reported above has aquired the t24 system from temenos which is currently in process of implementation further the bank is also implementing oracle financials to improve upon its mis and improve controls over financial reporting. Credit risk Financital made upto 44% of the total assets of the bank at the end of year 2004. the portfolio mix is more towards corporate financing wth major concentration in textle sector. The bank has a diversified portfolio into various sub sectors of the economy. More focus of corporate financing lower as the credit rsk profile of the bak and major portion of trade financing mitigate liquidity risk The consumer finances portfolio constituted about 7% of the total advances the managers plan to continue minimum focus on consumers financing maximum focus on consumer financing and maximum towards te corporate sector. The owers the credit risk for the bank. The bank showed an increase in NPLs despite low consumer focus.

4.3 Technology analysis

Silk bank was the first commercial bank to be established in Pakistan in 1947. Over the years, Silk bank has grown its branch network and become the largest private sector bank with over 1,450 branches across the country and a customer base exceeding five million relationships. Silk bank E-Bank It provides services via a dedicated communication link on the internet. The EBanking services provide anytime, anywhere banking to all 5 million customers. This service, designed to be user friendly, assures secured access and confidentiality.

4.3.1 Technical methods that affect the industry 4.3.2 InnovationsAuto Cash (Debit/ ATM Card) Silk bank icard is used for dual purposes-a debit card and an ATM card and provides u the direct access to cash in your account. silk Bank icard as your Debit Card When payment is made at any merchant location using the card, exact purchase amount is deducted from your account. Convenient, secure, quick and easy payment option Nationwide acceptability at various merchant locations displaying ORIX Network logo Free of charge debit card transactions More advanced information systems in banks that are more secured than before to eliminate any chances of fraud and which are even more user friendly to help employees to use them not only to make critical decisions but also satisfy customer need in a more timely manner. Advancements in online transfer from inter branch to an even more helpful inter bank transfers. More advanced means of connectivity between branches through better and advanced software and hardware to maintain connections with banks in remote areas and during natural calamities in Pakistan. These might include better connection through WiFi or WiMax, both new technologies. Digital imaging of cheques will also be an innovative technology and introduce paper free environment

5 Departments Worked During InternshipDuring the time of my internship in Silk bank branch f-8 Markaz I got the chance to work in different departments of Silk bank. Talking about financial performance of the bank in 2009 all the financial indicators are showing positive results when the financial performance of the bank in 2009 is compared with financial performance of 2008. During 2009 Silk bank also won some awards. At the end of this report I have given my suggestion for the improvement of the bank. Following are the names of departments in which I got the chance to work in: Account Opening Remittance Car Finance Accounts Clearing / Collection

6 Identification of a main problemThe management should try to decrease job insecurity among the employees. Training program should be started for internees and newly appointed employees. There should be transport facility for the employees. The number of employees should be increased in order to decrease the workload. The bank charges high service charges as compared to the other banks, so these should be lowered down. Surveys must be conducted regarding customer satisfaction level and all employees of this dept. should look forward to getting feedback whenever possible. Adding of value added features that offer competitive advantage is also a means of avoiding customer dissatisfaction. Quick response to customer queries is necessary to maintain a healthy relationship with the customer.

7 FindingsSilk bank among Top 500 Global Financial Brands Top management is highly qualified and highly paid individuals Silk bank is backed by high level corporate giants Silk bank wins two Global Finance Awards The Best Emerging Market Bank in Pakistan Great market penetration

8 Conclusion and RecommendationsNo doubt that Silk bank is the largest bank in the private sector and since its establishment it has progressed and improved tremendously and has a customer base exceeding 5 million but it can still advance further if it adopt new changing IT technologies as there is still room for some improvements. It should train its employees about the new IT trends. Moreover certain needs of the employees should also be considered like bank timings should be acceptable and employees should be given importance and must be consulted in some decision making processes. Improved friendly relations are required between the top and the middle management. This will make the employees work even better for their organization.