Internship Report

Reasons to Choose Banking Sector

In the current era, Pakistan economy is in the boom. Foreign investment is moving towards the

Pakistan. Bank sector is one of the sectors, in which foreign investor has been invested at large

scale. Banking is the sector which is must at every industrial and developing area. In the last

seven years, many of banks have been incorporated.

Askari bank is one of the leading banks in Pakistan who had made the much progress in less

time. It was incorporated in 1991 and just in sixteen years, it has been entered in the first class

banking sector. Human resource department of the Askari bank limited is one the best

department among others. In eight week, it is impossible to learn each and every thing which

may be dealt in the branch. Before going to internship, I reviewed and analyzed many of banks

for internship but I thought the Askari bank limited suitable.

Since the college study, I am studying the banking management as a compulsory subject. And

my specialization is finance in M.Com. I have interest in banking sector. That’s why due to all

above mentioned reasons, I selected the banking sector and then I selected the Askari bank

limited in the banking sector for my internship.

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Introduction

Askari Bank is consistently focused on building long term shareholders’ value, as the primary

objective. The strength of its brand name, supported by strategic expansion and the depth of

bank’s customer relationships, gives it a strong foundation on which to build and continue

growing in the times ahead. The key elements of Askari Bank’s strategy have been to increase

its market share, mobilize its resources, develop retail, agriculture and Islamic banking,

introduce fresh initiatives for corporate and investment banking, capitalize on new business

opportunities and implement various technology initiatives.

Askari Bank’s primary focus remains on improved risk management which it considers to be

one of the essentials for sustainable success in its business. Based on the risk management

guidelines issued by the State Bank of Pakistan (SBP), a risk management strategy has been

developed for assessing, and mitigating / controlling risks.

Bank’s Retail Banking Group gathered further momentum during 2006 and further increased

its share in both business volumes and earnings of the Bank. The Group was also benefited by

a dedicated advertising campaign launched during 2005. While new products are being added,

the distribution channels are also being increased and currently six customer service centers

operate in major cities to serve retail banking customers. We believe that Askari Bank is well

poised to increase its share of the retail banking market which still offers opportunities for

growth.

Agriculture Credit Division of the Bank, strategically headquartered in Lahore, continued to

serve its customer base through various branches located in the small to medium sized cities of

Punjab and a few in Sindh. Since its launch in 2004, the division has strengthened its

operations and has devised various innovative agriculture credit products under the Askari

Kissan Agri Finance Program, which gained quick market acceptance and penetration. After

expanding its reach to most of the agricultural areas of Punjab, the Division is poised to expand

agriculture

Askari Bank co-founded the ATM switch, ‘One-Link’, the first ATM switch in Pakistan. This

switch is now also linked to M-net, the second switch in the country. As a result, the

Bank’s customers can now access their accounts through more than 1,100 online ATMs

throughout Pakistan.

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During the year, the Bank launched the first Mobile ATMs in the country. Using wireless

GPRS technology, these ‘ATMs on wheels’ can be placed at strategic locations at peak times

to serve the customer needs. The Bank’s ‘Data Warehouse’ has become operational and is

being fine tuned for providing the management with accurate, up-to-date information enabling

them to make timely and prudent decisions.

Askari Bank’s progress in the field of Retail Banking was also recognized internationally as

the Bank won The Asian Banker award for the 'Best Retail Bank in Pakistan' for 2004, after

wining the same award for 2003. Your Bank is the first bank in Pakistan to have won these

awards. The Bank won 'The Best Corporate / Institutional

Internet Bank in Pakistan' and 'The Best Consumer Internet Bank in Pakistan' awards for 2004,

from The Global Finance – an international magazine of high repute. The Bank has also won

the 'Bank of First Choice' award for 2005 from the Consumer Association of Pakistan.

Askari Bank recognizes its employees as the prime asset and key contributors to the

performance of the Bank and places great emphasis on the attraction, development, and

motivation of its employees. Operational success requires matching of operational strategies

with that of quality human resource. Retention of high quality human resource and maintaining

quality recruitment are the fundamentals to good organizational growth. During the year, the

compensation package was substantially improved in order to enhance employees’ motivation

and loyalty. Our human resource management objective remains to increase the contribution

from the employees to the Bank’s value addition while maintaining high ethical and

professional standards. For this purpose, various initiatives are being implemented, including

improved training and career development, and stimulating employee initiative, innovation,

commitment and work efficiency. We are also focusing on developing an organization culture

which will enhance employee synergies for achieving excellence in all we do.

Understudy report cover the products, field of activities of the organization. It further will

provide the information to you about the ratios analysis of the bank and SWOT analysis. This

report briefly covers the overall topics which may be the informative for any reader, especially

investors. At the end recommendations are also provided to make the better then the current.

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Bank!!!

There are many definitions of the word “Bank” even the standard encyclopedia and law books

find it difficult to state exactly what a Bank is. There have been many attempts by different

writers to explain the exact significance of the term “Bank”. Here some of the definitions are

quoted as follows.

According to the Banking Companies Ordinance 1962”

Section 5 (b) defines.

“Banker means a person transacting the business of accepting,

for the purpose of lending or investment, of deposits from the

public, and withdrawal by cheques, drafts, order of otherwise,

and include any post office saving banks”

According to Gilbert

“A bank is a dealer in capital or dealer in money. He is an

intermediary party between the borrowers and lenders.”

Importance of Banking

We can take bank just like a heart in the economic structure and capital provided by it is like

blood in it. Banks play very important role in the economic life of a nation. The growth of the

economy is dependent upon the soundness of its banking system. Although banks do not create

new wealth but borrow, exchange and consume. These make generation of wealth. In this way

they become most effective partners in the development of that country.

To encourage the habit of saving and to mobilize these savings is its basic purpose. Banks

deposit surplus from the public and then advances these surpluses in the form of loans to the

industrialists, agriculturists, businessmen and unemployed people under different schemes so

that they set up their own business. Thus banks help in capital formation.

If there are no banks, then there would be concentration of wealth in few hands and great

portion of wealth of a country would be idle. In the fewer developing countries rate of saving is

very low and due to this, rate of investment and rate of growth is also very low. We can take

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bank just like a heart in the economic structure and capital provided by it is like blood in it. As

long as the blood is in circulation, the organs will remain sound and healthy. If the blood is not

provided is not provided to any organ then the organ would become useless. So if the finance is

not provided to agriculture sector or to industrial sector, it will be destroyed.

Loan facility provided by bank works as an incentive to the producer to increase production.

Banks provide transfer of payment facility, which is cheaper, quicker and safe. Many

difficulties in the international payment have been overcome and volume of transactions has

been increased. These facilities are very much helpful for the development of trade and

commerce.

Types of Bank

It is difficult to classify the Banks according to the functions, they perform. However main

kinds of Banks are as:

Central Bank

Commercial Bank

Agricultural Bank

Industrial Bank

Co-operative Bank

Saving Bank

Exchange Bank

Mortgage Bank

Investment Bank

Merchant Bank

Consortium Bank

School Bank

Labor bank

Scheduled Bank

Non-Scheduled Bank

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Size of global banking industry

Worldwide assets of the largest 1,000 banks grew 15.5% in 2005 to reach a record $60.5

trillion. This follows a 19.3% increase in the previous year. EU banks held the largest share,

50% at the end of 2005, up from 38% a decade earlier. The growth in Europe’s share was

mostly at the expense of Japanese banks whose share more than halved during this period from

33% to 13%. The share of US banks also rose, from 10% to 14%. Most of the remainder was

from other Asian and European countries.

The US had by far the most banks (7,540 at end-2005) and branches (75,000) in the world. The

large number of banks in the US is an indicator of its geography and regulatory structure,

resulting in a large number of small to medium sized institutions in its banking system. Japan

had 129 banks and 12,000 branches. In 2004, Germany, France, and Italy had more than

30,000 branches each—more than double the 15,000 branches in the UK.

Evolution of Banking in Indo-Pak Sub Continent

The Indian society was quite familiar with the banking, right for the beginning. There is also

sufficient evidence to show that during 5th century people were accustomed to use hounds as a

credit investment. Loans were given to the people against personal and other securities such as

ornaments, goods and other immovable properties.

Banking in Pakistan

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It was very difficult for Pakistan to build up its own Banking system immediately after

independence without sufficient resources. Following the announcement of the partition plan in

June 1947 there was a haste movement on the parts of banks to transfer their funds and

accounts across the borders. The banks having their registered offices in Pakistan were

transferred to India. In an effort to bring about the collapse of the new state by the persecuting

an international policy of withdrawal, the Indian bank offices closed quickly. Those banks,

which stayed, were considering the winding up of their business. By 30 th 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 sect is the

result of untiring efforts of four decades.

Pakistan Economy

The strong growth momentum that the Pakistan economy ahs achieved in the last few years has

been underpinned by dynamism in industry, agriculture and services. This dynamism has

stimulated the emergence of a new investment cycle in the economy supported by strong credit

growth. The country’s banking sector has risen to the challenge of catering to the needs of a

more dynamic economy. Indeed, new growth opportunities I banking have attracted large

flows of direct foreign investment in the sector, a phenomenon reflected in the acquisition of

local banks by major international banks as well as in the entry of new foreign banks in the

country.

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History of Banking in Pakistan

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Banking in Pakistan is not the overnight miracle. It has many phases to come in currently form.

It is divided in the following major phases.

0---First Phase (1947 1974)

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Establishment of Commercial Banking System

There were 19 non-Indian foreign banks in Pakistan at the time of independence with the status

of small branch network, whose policies and operations were controlled by their head office

abroad. These banks were solely engaged in export of crops from Pakistan. There were only

two banks in Pakistan at the time of Partition, Habib Bank, which had transferred its head

office from Bombay to Karachi after the announcement of the partition, and Australian Bank,

which has been working in Pakistani territories prior to June 1947.The government of Pakistan,

tried hard to eliminate the banking crises.

The imperial bank of India closed down most of its offices in Pakistan, which had been

working as the agent of Reserve Bank of India was not willing to purchase even token amounts

of the government of Pakistan. Securities on the plea that these securities were not marketable.

The Reserve Bank of India was hardly of any help. It refused to help the govt. of Pakistan with

advance argument adhoc securities to enable them to make essential disbursements such as

salaries and other obligations to add to the difficulties.

The Indian govt. withheld Pakistan’s share of 750 million in cash balances held by her at the

time of independence. The forgoing developments clearly brought home the urgency of

assuming the control and currency in Pakistan and brought to the force the need to setup a

central banking institution to take the place of reserve bank of India. Therefore it was agreed

between the Govt. of India and Pakistan to authority of Pakistan from 30 th September 1947 to

30th June 1948.

When it assumed full control of banking and currency in Pakistan the first important task

before the SBP was to issue of currency notes and withdrawal of reserve bank of India, which

had been in circulating in Pakistan so far.

Second Phase (1974-79)

Nationalization of Banks

The banking reforms turned out to be a transitional and temporary step and hardly after 18

months, had the government nationalized the banking system. Thus through the Nationalization

Bank Act 1974, SBP and all commercial banks incorporated in Pakistan and carrying on

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business in or outside the country were brought under the government ownership with effect

from January 1974. The ownership and management of all Pakistan banks stood transferred

and rested in the federal government.

The shareholders were provided compensation in the form of federal government bonds

redeemable at par any time with in a period of fifteen years. The amount of compensation was

equal to the break up value of the shares in case of commercial banks. For the SBP shares the

amount of compensation was estimated on the basis of average of the clearing quotations

during the 6 working days preceding nationalization.

The chairman, director and chief executive of various banks were removed from their offices

other than those appointed by the federal government and the state bank. The central board of

banks, managing committees and similar other bodies were dissolved.

Causes of Nationalization

The nationalization of banks may be justified on the following grounds:

Large business and industrial houses dominate the lending policies of the commercial

banks; this brought forward the problem of concentration of wealth.

Commercial banking operations were guided by profit motives and as a result the

backward regions and the small entrepreneurs were never been their favorite customers.

The operation of banks, unlike after business, have direct implication on the entire

national economy. For instance if the banks raise the cost of their credit, the cost of

every thing may go up.

Unhealthy complications among banks can lead to financial and economic problems.

Results of Nationalization

Although there are doubts about the positive results of the nationalization but we can say that

the nationalization of banks provided efficient professional management to expand banking

services in every nook and corner of the country. Banks laid full emphasis on their lending

policies on priority sector and national building projects, which discouraged non-productive

and unhealthy activities like speculation and hoarding, there was also a recorded increase in the

number of foreign branches of Pakistani banks.

The growth of Pakistani banking system was significant. The banking facilities expanded in the

rural areas. The bank credit increased sharply especially in the public sector. A part from this

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expansion the banking system’s activity seeking to gain credit targets laid down by National

Credit Consultative Counsel (NCCC).

Third Phase (1979-91)

Introduction of Islamic Banking

In 1977 the Bhutto government was toppled. The material law government planned to reform

the banking sector in a novel way. The overall policy was to Islamize the economy and the

banking system, being based on interest was an important target of the new policy. The most

preferred form of Islamic bank financing profit and loss sharing would receive banks to receive

deposit without guaranteeing any return.

The Islamic bank has to acquire a high degree of confidence of the saver to make him deposit

his money with them. Not even the return of the principal amount if guaranteed. The Islamic

bank cannot finance the project of an investor merely on the furnishing of collateral. The bank

will have to be a partner in the project. This will require to careful security of the project and

the assessment of risk involved because profits are the function of the amount of risk in the

project. Honesty and trust from both sides of the market are more important to the system of

Islamic Banking.

Fourth Phase (1991-2000)

Privatization and De-Regulation

The government headed by Prime Minister Nawaz Sharif was not fully satisfied with the

performance of nationalized. The areas, which were severely criticized, were the falling

standard of banking services and common red-tapism. There were complaints about the

services as delay in home remittances, dispatch of cheques, drafts, inefficient counter services,

bad debts of the banks etc. were on sector application for privatization of other banks namely

UBL and HBL were also invited but the bidding response was quite poor.

The privatization of these banks is under consideration. Legislation was enacted to permit the

establishment of new banks and the government approved 10 application from the private

sector for the grant of commercial bank licenses by SBP, out of these 9 new banks have since

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been incorporated. Till March 1994 there were 20 domestic scheduled banks with 9825

branches and 21 foreign banks with 66 branches in operation in the country.

Overall investment of the scheduled banks rose to 76.7%. At present there are 24 domestic

scheduled with 8137 branches and 19 foreign banks with 71 branches are in operation in the

country. Total assets of domestic scheduled banks amounting to Rs.1563.73 billion on 30 th

March 1996.

Banking in Pakistan Today

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History

Askari bank was incorporated in Pakistan on October 9, 1991, as a public limited company. It

commenced operations on April 1, 1992, and is principally engaged in the business of banking,

as defined in the banking companies’ ordinance, 1962. The bank is listed on the Karachi,

Lahore and Islamabad Stock Exchanges and its share have consistently remained amongst the

highest quoted in the banking sector in Pakistan.

Askari Bank has expanded into a nation-wide presence of 121 branches, including six

dedicated Islamic Banking Branches, and off-shore banking Unit in Bahrain. A shared network

of over 1.300 on line ATMs covering all major cities in Pakistan supports the advisory channel

for customer service. As at December 31, 2006, the bank had equity of Rs. 11.1 billion and

total assets of Rs. 166.0 billion, with over 665,000 banking customers, serviced by its 4,585

employees.

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Askari Bank Limited---In Vehari

Vehari is a city in the Vehari District, Punjab, Pakistan. It is located about 100 kilometers from

the regional metropolis of Multan and about 25 kilometers from the southernmost of the five

rivers Sutlej in Punjab, "the land of the five rivers" (The word Punjab comes from both the

Punjabi language and the Persian languages, with the Punjabi "punj" meaning "five" and the

Farsi "aab" meaning "water"). Vehari is to the north of the Sutlej River. A headworks of canals

is located on this river near Luddan on the Luddan-Vehari canal providing irrigation water to

both banks of the river, which includes the upper fringes of the Cholistan Desert.

The summer in Vehari is very hot, but the weather becomes much more pleasant between

October and February. Light rainfall leaves the land generally arid and dusty, but the country's

agricultural products include mangoes in the summer and guava and other citrus fruits in the

winter. Vehari is considered the capital of cotton growing in this part of Pakistan, with dozens

of cotton processing factories and cottonseed oil manufacturing plants, and sugarcane farming

and processing is also common.

Competition in banking sector at Vehari is increasing day by day. One reason may be the

special attention of the government towards the development of the region. Second one we can

say that SME sector is demanding the special attraction of banking sector. Askari bank is one

of them who have paid special attention in SME sector.

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Objectives

To achieve sustained growth and profitability in all areas of

business.

To build and sustain a high performance culture, with a

continuous improvement focus.

To develop a customer service oriented culture with special

emphasis on customer care and convenience.

To build an enabling environment, where employees are motivated to contribute to their

full potential.

To effectively manage and mitigate all kinds of risks inherent in the banking business.

To maximize use of technology t ensure cost effective operations, efficient

management information system,, enhanced delivery capability and high service

standards.

To manage the bank’s portfolio of business to achieve strong and sustainable

shareholders returns and to continuously build shareholder value.

To deliver timely solutions that best meet the customer’s financial needs.

To explore new avenues for growth and profitability.

Strategic Planning

To comprehensively plan for the future to ensure sustained growth and profitability.

To facilitate alignments of the vision, mission, corporate objectives and with the

business goals and objectives.

To provide strategic initiatives and solutions for projects, products, policies and

procedures.

To provide strategic solutions to mitigate weak areas and to counter threats to profits.

To identify strategic initiatives and opportunities for profit.

To create and leverage strategic assets and capabilities for competitive advantage.

Values of Askari Bank Limited

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Integrity is the most valued standard in whatever we do. We understand that our commitment

to satisfy customers’ needs must be fulfilled within a professional and ethical framework. Bank

subscribe to a culture of high ethical standards, based on the development of right attitudes.

The intrinsic values, which are the corner stones of our corporate behavior, are:

Commitment

Integrity

Fairness

Team-work

Service

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Growth in Profit

Internship Report

Creating the new "Askari bank" identity

The management and board of directors of the bank decided to change the name of the bank

from Askari Commercial Bank Limited to

simply Askari Bank Limited. This was for

multiple reasons - firstly, the bank was generally

referred to as "Askari Bank". Secondly, in the current scenario, the word "commercial" has

become redundant since all banks are commercial banks.

The change of name presented an excellent opportunity for a fresh new look for the bank,

which would be a reflection of the bank's desire to continue to evolve with and adapt to the

changing environment and dynamic consumer needs.

Simplicity in Design

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The typefaces used for the logo are simple yet elegant. Without being overly stylish, they make

a solid statement about the bank, its approach to business while maintaining the most critical

aspect of any logo's design: readability. This is loosely defined as the ability of any text to be

readable and recognizable at first glance. The new "Askari bank" logo is distinctive and can be

recognized instantly on sight. The use of all lower case letters and the use of "Askari" and

"bank" as one word gives the logo a unique identity, enabling it to stand out from the crowd.

The new Colors

Change and evolution being the key driving elements of the new brand

identity, the colours of the bank have been revisited completely. The

new colours are blue and grey, with a touch of orange/yellow.

Understanding this selection needs a basic study of colour psychology.

Blue is the colour of peacefulness, loyalty, productivity and strength (or

solidity). It is a colour that induces positive emotions in the human body and its effects on

productivity, even human strength, have been documented. Body builders work in blue rooms

to be able to lift heavier weights!

The second colour used is a dark grey. This is the colour of elegance,

respect, wisdom and balance. Darker shades of grey are said to be more

representative of the properties of the colour black, which are modernity,

power, sophistication and wealth. However, by being grey and not black, it

avoids the connotations of death, fear, etc.

The last two colours, orange and yellow, are used in a combination which is

representative of a rising sun. The colours themselves, aside from the

positive connotations of a rising sun, carry the joint properties of sunlight,

joy, happiness, hope, wealth, energy, enthusiasm.

The stylized "AB"

Evolution, not revolution, is key in the development of a brand. The

stylized AB, presented in 3D and in the new brand colours, is a solemn

nod to the outgoing logo design, which has served the bank very well for

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the first 15 years of its existence. Retaining this icon maintains the recognition of the old logo,

while also creating a positive link between the past, present and future of Askari bank.

Branches Network

Basically Askari bank limited has following types of branches:

Conventional

Islamic

Offshore Banking Unit

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Credit Rating

Awards and Achievements

Over the years, we have received several awards for the quality of our banking service to

individuals and corporate. These include:\

Commercial Bank of the Year

Awards for 1994 & 1996 from the Asia money magazine

Best Domestic Bank of Pakistan

Award for 1995 from the Euro money magazine

The Best Bank in Pakistan

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Awards for 2001 & 2002 from the Global Finance magazine

Best Consumer Internet Bank in Pakistan

Awards for 2002 to 2004from the Global Finance magazine

Best Corporate / Institutional Internet Bank in Pakistan

Award for 2004from the Global Finance magazine

Best Retail Bank in Pakistan

Awards for 2003 & 2004from the Asian Banker, Singapore

Corporate Excellence

Awards for 2002 to 2004from the Management Association of Pakistan (MAP)

Bank of First Choice

Award for 2004from the Consumer Association of Pakistan

Best Corporate Report, for the Financial Sector

1st prizes for 2000 to 2004from the Institute of Chartered Accountants of Pakistan (ICAP) and

the Institute of Cost & Management of Accountants of Pakistan (ICMAP)

Best Presented Accounts

Ranking prizes (2nd or 3rd) for 1997 to 2002 & 2004from the South Asian Federation of

Accountants (SAFA), forth whole South Asian Region

The Best Presented Annual Report

1st prizes for 1997 to 2005 from the National Council of Culture & Arts (NCCA).

The Best Presented Annual Report

The annual report of the bank for the year 2005 won the first prize for “the best annual report”

for the financial sector, instituted jointly by the ICAP and ICMAP for the 6th consecutive year.

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The Best Presented Annual Report

The annual report of the bank for the year 2005 also won the award under the category

“banking sector subject to prudential regulations” by the SAFA, an apex body of the SAARC

countries.

Corporate Excellence

“Corporate Excellence” award for 2005 from the Management Association of Pakistan.

Bank of First Choice

“Bank of First Choice” award for 2005 from Consumer Association of Pakistan.

Others:

Askari Bank has also proved its strength as a leading banking sector entity, by achieving the

following 'firsts' in Pakistani banking:

First Bank to offer on-line real-time banking on a country-wide basis.

First Bank with a nation-wide ATM network

First Bank to offer internet banking services

First Bank to offer e-commerce solutions

First Bank to introduce mobile ATM

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Hierarchy of the Bank

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Hierarchy Bank (Grade Wise)

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Management – Head Office

Shaharyar Ahmad

President and CEO

M.R. Mehkari, SEVP

Group Head- Treasury & International Banking

Agha Ali Imam, SEVP

Group Head- Consumer Banking Services

Mohammad Afir Mian, SEVP

Group Head- Chief Risk Officer

S. Suhail Rizvi, EVP

Group Head- Operations

Abdul Hafeez Butt, SEVP

Country Head- Credit

Israr Ahmad, EVP

Country Head- Establishment

Rehan Mir, EVP

Country Head- Treasury

Tahir Aziz- EVP

Group Head- Corporate & Investment Banking

Abdul Jamil Mubbashar, EVP

Country Head- Risk Management

Khalid Mohammad Khan, EVP

Country Head- Compliance & Data

Saleem Anwar- EVP

CFO

Rana Shahid Habib, EVP

Country Head- Inspection & Audit

Hashim Khan Hoti, EVP

Country Head- Islamic Banking Services

Vadiyya Asif Khan, EVP

Country Head- Corporate Banking

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Mian Muhammad Sharif

Credit Administration

Shahid Ahmed

Chief Economist & Country Head- Strategic Planning

Farooq Abid Tung, EVP

Country Head- Agricultural Credit

Hassan Aziz Rana, SVP

Country Head- Legal Affairs

Muhammad Ehsan Qadir, SVP

Country Head- Operations

Muhammad Ahmad Khan, SVP

Acting Country Head- International

Riaz Khan Bangash, SVP Acting Country Head- Human Resource

Nauman Bashir Khan, SVP Country Head- Electronic Technology.

Management –

In the Country

Basically management of the

Askari bank limited has been

divided into the following

categories. Head of each

category control his/her own

region. Branches under this

head report to the own region

head. Region reports to the

high authority which is the

head office. How ever in any

special case, branch may be

contacted directly through by

the head office.

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Branch Hierarchy (Vehari Branch – 0093)

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Department Askari Bank Limited

There are various departments in the Askari bank limited. But the branch where I have worked

as internee has not all departments due to geographical situation. As I have mentioned above

that Vehari city is an agricultural area, so investment, export and import department are not

here. Farmer sold there crops in local market. There is too much minimum industry. This is, do

business locally. So Vehari branch has following departments.

Let the departments explain briefly.

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Operational / General Banking Departments

This is the section which deals with the general public who make the transaction daily bases. It

is further divided into the following departments.

Account Opening Department: -

This is the department who deal the new clients of

the bank. Opening the account is the main duty of

this department.

Features: -

It opens the account of all type of clients.

It deals in the lockers.

It issues the RTC, TDR, CDR and NDR.

It issues the Cheque Book.

Any other relevant assigned duty by high

authority.

it issues the ATM Card and get the

application for Credit Cards.

Following are the persons who are responsible

for the work in this department.

Mr. Muhammad Aslam; who is the branch

manager.

Mr. Khubaib Shah; Operational Manager.

Mr. M. Imarn; Incharge department.

Mr. Liaqat

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Clearance Department

This department is for clearing locally.

Representations together twice in a day in

national bank clearing house for clearance.

These employees clear the instruments which

have been presented by the clients in their banks

for collection. Outward and inward clearing is

also the responsibility of this department. It has

the following features.

Features

It has the responsibility to clear all the

instruments have been represented by

the clients in the bank for collection.

It has the duty to clear OBC and IBC.

At the day end present the day summary

to high authority, cash Incharge and remittance in charge.

Following are the persons who are responsible for the work in this department.

Mr. Muhammad Islam; Branch Manager.

Mr. Khubaib Shah; Manager Operations.

Mr. Mian Furrukh; Incharge Department.

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Remittance Department

It is the department who works for the clearance

of out side the city instruments presented by the

clients or any bank’s branch from outside the

city. Simply it remits the money and does other

duties. Following are the features of this

department.

Features

It remits the money.

It clears the OBC and IBC instruments.

prepare the Demand Draft, Pay order,

Telex Telegram

Any other relevant duty assigned by the

high authority.

Following are the persons who are responsible

for the work in this department.

Mr. Muhammad Aslam; who is the branch manager.

Mr. Khubaib Shah; Operational Manager.

Mr. M. Atif; Incharge Department.

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Account Department

this is the department who is responsible for all

account statements like as expenses, taxes etc. it

prepare the reports on daily, weekly, monthly,

quarterly, and annually basis. This department has

the importance. It makes the correspondence with

the head branches also. It has the following

features.

Features

It makes the account statements on daily,

weekly, monthly, quarterly and annually

basis.

It deals in the tax also.

It makes the correspondence with head

office and head branches also.

In charge of this department also is the in

charge of all labor type employees. Simply

In charge of this department is also

responsible for maintaining of branch and

refreshment in the branch.

Following are the persons who are responsible for the work in this department.

Mr. Muhammad Aslam; who is the branch manager.

Mr. Khubaib Shah; Operational Manager.

Mr. M. Atif; Incharge Account Department.

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Cash Department

This department simply is the backbone of any branch. It deals with the cash. Cash which is

deposited by clients or withdraw by clients or

deposited or withdraw walk-in-customer. This

department is also collects the charges. It has

the responsibility to balance the debit side with

credit side at the end of the day. It has the

following features.

Features

It deals in cash whether deposited or withdraw

by clients or any other walk-in-customer.

It collects the service charges rendered by the

bank to the valuable clients or walk-in-

customers.

It must to balance the debit side with credit side

at the end of the day.

Bank retain up to six million with the branch,

excess amount cash Incharge send to the head

office.

Following are the persons who are responsible

for the work in this department.

Mr. Muhammad Aslam; who is the

branch manager.

Mr. Khubaib Shah; Operational Manager.

Mr. Muhammad Zeeshan; Incharge Cash Department.

Mr. Hafiz M. Shehbaz; Incharge Teller.

Mr. M. Asif; Teller.

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Foreign Exchange Department

Department which deals with the foreign currency

transactions. It has the importance in cross the

boundary transactions. It has the following

features.

Features

It deals in the foreign currency.

It is directly under the supervision of the

branch manager and branch is responsible

directly to the treasury department or head

branch.

Foreign amount currency is sent through

SWIFT. Askari Bank Limited has the contact with American Express, America for

cross the boundary transactions.

Following are the persons who are responsible for the work in this department.

Mr. Muhammad Aslam; who is the branch manager.

Mr. Mahmood; Incharge Credit Department.

Mr. Muhammad Yasir; Assistant Incharge Department.

Credit Department / Section

We can say to it a section because it has further three departments who deal in the credit. Bank

has two major functions. One is depositing and second one is advances. Credit section deals in

the advances. It is further divided into three departments in the branch.

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Agri-Credit Department

As I have mentioned earlier about the

Vehari city in which Askari branch is

situated where I have worked as internee.

Vehari region basically is a agricultural area.

Government and especially is concentrating

their attentions in the Agri-reforms in this

area. So, it should be clear now that this

department who much has the importance. It

deals in the advances of both type term and

running finances. It advances to the farmers

on low rate. It has the following features

Features

It deals in the Agri-advances.

It provides the loans to the farmers

on low rate.

It deals in both, running and term

financing.

It is also under the supervision of branch manager directly.

Following are the persons who are responsible for the work in this department.

Mr. Muhammad Aslam; who is the branch manager.

Mr. Khubaib Shah; Operational Manager.

Mr. Rao Sajid; Incharge Agri-Credit Department.

Mr. M. Imran; Assistant Incharge Agri-Credit Department.

General Credit Department

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This department deals with the general public

who want to borrow from the bank. Credit

department of this branch of Askari bank

limited provides short term and medium term

advances. Simply it provides medium term

financing. One can say that this is because of

“99% SME lies in Vehari and its surroundings”. It

has the following features.

Features

It provides the medium and short term

loans.

It provides the advances to SME and for

housing also.

It issues the Letter of Guarantee.

Following are the persons who are responsible for the work in this department.

Mr. Muhammad Aslam; who is the branch manager.

Mr. Khubaib Shah; Operational Manager.

Mr. Mahmood; Incharge Credit Department.

Mr. M. Yasir; Assistant Incharge Department.

CBSG Department

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CBSG stands for consumer banking services

group. In the branch it is under the supervision of

branch manager otherwise it is directly under the

regional branch. This department deals with

consumer financing. It provides the loans to

fulfillment the personal needs of the borrower. It

has the following features.

Features

It deals in the personal financing.

It provides the loans to fulfillment the

personal needs of the borrower.

It provides the loans against salary.

Following are the persons who are responsible for the work in this department.

Mr. Muhammad Aslam; who is the branch manager.

Ms. Mahgul Magsi; Incharge Department.

Management Information System Department

Today is the era of online and internet banking. Conventional banking although has the

importance but with the passage of time, importance of this type of banking is decreasing day

by day as compare to the modern banking. Askari bank’s bases are also situated on modern line

banking. It provides the online and internet banking facilities to the valuable clients. For this

purpose, bank has MIS Department in each branch to avoid any type of problem. It has the

following feature.

Features

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To maintain all computer and online

banking equipments on modern lines.

To check and control the flow of

online banking.

To initialize and end the day.

It sends daily all online transaction

record to the head office MIS / Data

Base Department.

Following are the persons who are responsible

for the work in this department.

Mr. Muhammad Aslam; who is the

branch manager.

Mr. Abdul Waheed; in charge

Department.

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During 2006, Askari bank limited continued with its growth momentum and posted substantial

earnings despite highly competitive business environment. Although monetary tightening

helped in reducing inflationary pressures in the economy during fiscal 2006, aggregate demand

remained high as indicated by the strong GDP growth, high growth in private sector credit,

sluggish decline in core inflation and large external account deficit.

The year and year growth in private sector credit remained strong, although down from the

phenomenal growth witnessed last year. The slowdown in private sector credit was not broad

based and was mainly due to net retirement by sugar and cotton spinning sectors. During the

year, SBP announced debt swap option under long term finance export oriented projects (LTF-

EOP) to provide relief to the borrowers of textile sector who were monetary tightening. The

increase in consumer credit also has an expansionary effected corporate finance, as the demand

for automobile and consumer durables, particularly electronic remained high.

In a highly competitive environment, Askari bank limited continually reviewed its policy

pertaining to the sector exposures to derive optimum competitive advantage, maintain the risk

profile and achieve greater customer satisfaction.

On the operations side, during the year under review, Askari bank’s has taken various

initiatives to improve the way of doing business. The significant ones include re-organization

of management structure and technology initiatives. The primary objective of re-organization

is to consolidate and align internal capacities to best serve each business segment. The

technology initiatives are aimed to improve the services quality standards and strengthen

control environment and to prepare the bank for the future challenges.

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Corporate Banking

This business is managed by a central corporate banking division based at head office

Rawalpindi and supported by dedicated marketing and back office units in Karachi, Lahore and

Rawalpindi. The division maintains a diverse portfolio and primarily offers structured

financing solutions to cater for the business

needs of its clients. During 2006, corporate

banking further expanded its customer base

and new relationships were established in

telecommunications sector, fuel and energy,

and fertilizer sectors in order to enhance

focus on relationship management and

services quality, more dedicated and

experienced staff is being assigned to this

division.

The corporate banking will continue to play

a major role in loan syndications and

structured financing transactions with the

objective of providing a range of corporate

banking solutions to its valued clients.

Corporate Banking Division (CBD)

CBD is your long-term business partner that is geared to help you in meeting your business

growth objectives. The business is managed by a team of professionals who understand your

requirements and can firmly stand by your side.

Dedicated relationship managers for each of our corporate clients ensure your satisfaction,

which is our top priority. Our relationship oriented outlook focuses upon providing a complete

array of tailored financing solutions, that are practical and cost effective, some of which

include:

Working Capital Facilities

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Term Loans

Structured Trade Finance Facilities

Letters of Guarantee

Letters of Credit

Fund Transfers / Remittances

Bill Discounting

Export Financing

Receivable Discounting

Investment Banking

The investment banking activity mainly covers, debt / capital markets, advisory services and

trading (both equities and bonds). This division also offers advisory and loan syndication

services. Equity market transactions are handled by capital market desk, based at Karachi,

which include equity portfolios

segregated into trading, investment and

futures, and continuous funding

system. Investment banking

participated in various debt and capital

raising instruments during the year.

Investment Banking Division

IBD provides value-added, specialist services and products through a dedicated team of

professionals, with world-class skills, to provide customized solutions to help our clients meet

their strategic objectives. IBD is responsible for seamlessly originating, executing and

distributing all forms of investment banking transactions ranging from syndicated loans to

complex structured and project financing transactions. Some examples of products offered by

IBD include:

Strategic Advisory

Privatization Advisory

M & A Advisory

Balance Sheet Restructuring

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Syndications

Project Finance

Structured Finance

Islamic Finance

Private Placements of Debt and Equity

Issuance and distribution of Term Finance Certificates, Sukuk Bonds, and Commercial

Paper

Underwritings

Capital Market Hybrid Products

Consumer Banking Services

During 2006, the consumer banking services

offered by the bank were reorganized by

combining consumer financing business and

credit business under one umbrella and were

renamed as consumer banking service group.

Consumer financing offers auto, mortgage,

personal and business finance as the core

products. This business grew by 28% during

2006. the bank’s debit card with the brand name of

ASKCARD registered an increase of 25% in the number of

cards issued. Also, RTC float increased by 55% during

2006.The group is organized on a hub and spokes basis and

its hubs i.e. rawalpindi, Peshawar, Lahore, Karachi (2) and

Quetta which are now supported by 73 spokes i.e., consumer

banking units, operating form the branches in close proximity

of the relevant CBCs.

Rupees Travelers Cheque

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The range of our products and value added services enhances with introduction of Rupee

Travelers Cheques (RTCs) launched in March 2002. In spite of our constraint on issuing higher

denomination of RTCs against restrictions imposed by the Central Bank of Pakistan we have

been striving to attain our shares with sizeable portfolio.

Askari Commercial Bank Limited has always remained at forefront in introducing innovative

and unique products in banking sector. Our financial instruments provide greater financial

freedom and security in an unmatched way to our valued customers.

Askari Bank offers you its "Rupee Traveler Cheques" eliminating all financial risks while

traveling. So avoid risk of carrying cash through Askari Bank's Rupee Traveler Cheques.

You’re Best Traveling Companion.

Why Askari Bank's Traveler Cheques?

Free Issuance.

Free Encashment.

Plus commission for the Customer at the time of encashment if retained for a specific

period.

Nationwide acceptability.

Facility of encashment in cash to the purchaser.

Facility of encashment through clearing.

No purchasing limit.

Valid until encashed.

Easily Transferable.

Account relationship not mandatory.

Fastest refund procedure in case of loss/theft.

Safe & Secure due to foreign printing with multiple security features.

Available in Rs. 10,000 Denomination at all branches of Askari Bank.

No withholding tax on sale or encashment*.

Value plus Deposits

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It is also known as VPCD “Value plus Current Deposit Account”. The first liability product

launched by this unit is showing a remarkable acceptability in the market. The growth of this

product is witnessed by its share, which has presently reached at Rs. 1,079 Million even after

lowering down the profit rates due to sufficient liquidity in the market.

Askari bank leads the way, yet again …… with the introduction of Askari bank’s value plus

rupee deposit account, which promise greater financial freedom and security, in an unmatched

way.

Now one cay open Value Plus account while enjoying the flexibility of a normal checking

account.

Types of Value plus Account:

Value Plus Current Account

Value Plus Saving Account

Value plus Time Deposits.

Extra Features:

Free insurance coverage.

Free on-line fund transfer facility.

Free internet banking facility.

All other benefits of normal checking account.

High monthly return on saving and time deposits.

Partial liquidity offer on all time deposits.

Facility for issuance of debit / supplementary cards.

Askari bank’s unmatched service quality.

Partial Liquidity Offer for Time Deposits:

Offering to public a truly exciting opportunity to make your investment break new grounds for

public. All any one have to do is to invest a minimum deposit of Rs. 25,000 in a value plus

time deposit for a choice tenure i.e. three, six months or one year.

The investment will be held in blocks of Rs. 25,000 each. In case you wish to partially

withdraw some amount from your investment, you have the flexibility of encashed the blocks

that you want, without touching the remaining investment. The un-encashed blocks will

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continue at the same maturity and return ……… and yet you do not lose the share of profit on

the encashed blocks.

Upon maturity you have the freedom of either booking your time deposit for tenure of your

choice, or let the bank roll it over automatically for a like period.

Personal Finance

Personal Finance is a parameter driven product for catering

to the needs of the general public belonging to different

segments. One can avail unlimited opportunities through

Askari Bank's Personal Finance. With unmatched finance

features in terms of loan amount, payback period and most

affordable monthly installments, Askari Bank's Personal Finance makes sure that one gets the

most out of his/her loan. Once a good credit history is established, the door to opportunity

opens much wider.

One of the quickest approval processes around

One can avail unlimited opportunities through Askari Bank’s Personal Finance. With

unmatched financing features in terms of loan amount, payback period and most affordable

monthly installments, Askari Bank’s Personal Finance makes sure that you get the most out of

your loan. No matter what your need is, Askari Bank has more ways to serve you than ever

before.

Product Featuring:

Borrower: Resident Pakistani Nationals.

Facility: Term Finance

Financing Limits: Maximum upto Rs. 500,000/. (Clean)

  Maximum upto Rs. 1 Million. (Secured)

Tenor: Maximum upto 5 Years

Repayment: Monthly Installments

Markup Rates: Competitive

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Servicing: Available at all Askari Bank branches

Balance Transfer Facility: Available

Eligibility to Apply:

Age: Between 21 to 65 years.

Income: Minimum gross monthly income of Rs. 10,000/- only.

Financing

Limits:

Maximum upto Rs. 500,000/. (Clean)

Employment: a) Salaried: Minimum length of confirmed

service with present employer is 6

months with a total length of 1 year

service.

b) Self

Employed:

Minimum 1 year in business.

Charges/Fees: As per current schedule of charges.

When you are working towards your financial goals, how you borrow can be just as important

as how you invest. The right borrowing options can improve your savings, your cash flow and

your ability to take advantage of personal or business opportunities.

So, choose the right options and call us now to enquire about your entitlement amount and

exclusive service. At Askari bank we make every effort to serve our customers with care.

Not restricted to new financing, under Personal Finance scheme, we offer extended facilities,

which are:

Balance Transfer Facility:

It gives the customer the opportunity to pay off his/her outstanding dues on their credit

cards or other loans at a rate of interest much lower than what one pays on them. That

not only frees up their credit limit, but cost of servicing the debt is greatly reduced.

Dream Life (Financing for Consumer Durables):

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Askari Bank Limited is the financial market player in delivering quality service to customers

with highly professional standards. We have joined hands with various Electronic Companies

for sale, of the domestic appliances against consumer financing. Under this scheme, Askari

Bank is financing products of these companies, which would benefit those people who can

only afford to buy home appliances on installments due to limited resources. In addition to this,

we have also signed agreements with other top manufacturers of automobiles for financing of

motorcycles to the general public at most competitive rates.

Bank has established relationship with almost all top manufacturers and dealers of:

Mortgage Finance

Askari "Mortgage Finance" offers the convenience of

owning a house of choice, while living in it at its rental

value. The installment plan has carefully designed to suit

both the budget & accommodation requirements. It has

been designed for enhancing financing facility initially for

employees of corporate companies for purchase/

construction/ renovation of house.

Ever since the inception of life, shelter has been rated among the primary needs of mankind.

Owning a home for oneself still remains an exclusive dream for many. Askari Bank has made

the realization of your dream to have a house of your very own possible. Whether you plan to

build a house, tailor made to your requirements or buy a constructed house, Askari mortgage

finance enables you to pursue your goal without any problems.

Product Featuring:

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Borrower: Resident Pakistani Nationals.

Financing Limits: Maximum upto Rs. 30 Million.

Tenor: Maximum upto 20 years.

Repayment: Monthly Installments.

Prime Security: Mortgage of property.

Markup Rates: Competitive

Servicing: Available at all Askari Bank Branches

Balance Transfer Facility: Available

Balance Transfer Facility: Available.

Eligibility to Apply:

Age: Between 21 to 65 years.

Income: a) Salaried: Minimum gross monthly income of

Rs.20,000/- only and a permanent

employee with atleast 2 years of

service including present employer.

b) Self

Employed:

Minimum length of 1 years in

business.

Charges/Fees: As per current schedule of charges.

Business Finance

In pursuance of the National objectives to revive the

economy of the country, ACBL is providing loans to

small and medium size business enterprises under Askari

Bank's Business Finance Scheme. Our goal is to offer a

loan, which enables business community to receive the financing required by them based on

their cash flows. Our valued customers can enjoy the convenience of getting financing on

attractive terms with the minimum processing turnaround time. You always wanted to put in

that extra money into your business, which makes it grow... and grow!. Now you can stop

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worrying about your daily cash requirements, and start enjoying our unique Askari Business

Finance facility.

Available up to 60% of the assessed market value of your residential property, through

equitable/token mortgage.

Product Featuring:

Borrower: Resident Pakistani Nationals.

Facility: Running Finance/Term Finance.

Financing Limits: Maximum upto Rs.1.0 Million

Maximum upto Rs.50.0 Million

Primary Security: Residential & Commercial / Built up Properly &

Land.

Mode of Financing: Running Finance: One year line of credit

(renewable).

Repayment: Running Finance: Monthly debt servicing on the

outstanding balance.

Markup Rates: Competitive.

Servicing: Available at all Askari Bank Branches.

Balance Transfer

Facility:

Available

Eligibility to Apply:

Age: 21 to 65 Years.

Borrowers: Resident Pakistani Nationals.

Business Requirements: Maximum up to Rs. 500,000/. (Clean)

Employment: Minimum one year's business or professional

experience in the present business

Charge/Fees: As per current Schedule of charges

Enjoy the convenience of most attractive financing with minimum loan approval turnaround

time. Don't wait act now, to enhance your financial resources

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Smart Cash

This personal line of credit would be set up with a specified

credit limit up to Rs. 500,000/-

Product Featuring:

Borrower: Resident Pakistani Nationals

Facility: Personal Line of Credit.

Financing Limits:  Maximum upto Rs. 500,000/-(Clean)

Maximum upto Rs. 1 Million (Secured)

Tenor: One year (renewable).

Repayment: Monthly debt servicing on the outstanding

balance.

Markup Rates: Competitive.

Servicing: Available at all Askari Bank Branches

Balance Transfer

Facility: Available.

Eligibility to Apply:

Age: Between 21 to 65 Years.

Income: Minimum gross monthly income of Rs. 25,000/- only.

Employment:

 

a) Salaried: Minimum length of confirmed service with

present employer is six months with a total length of one

year service. b) Self Employed: Minimum 1 year in

business. (Against security).

Charges/Fees: As per current schedule of charges.

Auto Financing

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Yet another of our products, “Askar” offers the most

convenient and affordable vehicle- financing scheme, which

provides our valuable customers an opportunity to own a

brand new vehicle of their choice. With minimum down

payment, lowest insurance rates and widest range of available

car makes and models, Ask car offers the best value to our esteemed customers.

Askari Bank offers you the most convenient and affordable vehicle financing scheme to help

you own your favorite brand new car.

Product Features:

Borrower: Resident Pakistani Nationals

Facility: Term Financing

Financing Limits:  Rs: 100,000/- to Rs: 3.0 Million

Repayment: Monthly Installments

Markup Rates: Competitive

Balloon Payment: Available

Minimum Income:Salaried: Rs: 10,000/-,

Self Employed Businessman: Rs: 25,000/-

Charge / Fees: As Per current Schedule of Charges

Auto Insurance: Mandatory

Financing Tenor Up to 7 years

Askari Debit Card

Askari Bank is committed to provide you innovative and competitive solutions to your banking

needs in a more efficient and personalized manner. Your Bank enjoys a strategic competitive

advantage over all domestic players by virtue of its leadership, large network and technological

advancement. In line with our tradition of innovation, Askari Bank takes pride in announcing

launch of "Askari Debit Card"- Askari Bank's Debit Card. Askari Debit Card is tailored to your

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shopping needs and is another valuable financial solution reflecting our commitment to build

lasting relationship with you.

Askari Debit Card means freedom, comfort, convenience and security, so that you can have

retail transactions with complete peace of mind. Askari Debit Card is your new shopping

companion which enhances your quality of life by letting you do shopping, dine at restaurants,

pay your utility bills, transfer funds, withdraw and deposit cash through ATM anywhere,

anytime.

Profit / Markup Rates on Retail Products

Rates of Profit Paid to Value Plus A/C Holders & on ABIC

Commission being paid to customers on retention of RTC for a period of One Month,

@ 0.1% of face value of RTC.

Particulars Profit Rates

Value Plus Saving Deposits

Rs. 10,000/- to Rs. 24,999/- 2.50%

Rs. 25,000/- & above 3%

Value Plus Time Deposits

Three months 5%

Six Months 5.50%

One Year 6%

Investment Certificates

First Month 4%

Second Month 4.50%

Third Month 5%

Lending Product Rates

Particulars Markup Rates

Personal Finance

Up to 3 Years 18%

Up to 5 Years 22%

Smart Cash

1 Year (Renewable) 22%

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Business Finance

1 Year 1 Year Kibor + 3% to be reviewed on yearly basis

Mortgage Finance

20 years maximum 1 Year Kibor + 3% to be reviewed on yearly basis.

Auto Financing 13% to 15%

Credit Cards

Despite strong competition, the credit cards business, under the Master Card brand, maintained

its growth in all areas of the business. Net card issuance increased by 59% during the year,

cards in force (CIF) crossed 230K and its loan portfolio increased by 36%, while NPLs

remained will within the industry norms.

Askari Master Card’s rewards program continues to offer attractive features to our valued

customers. Also, strategic alliances with leading services providers in the market benefit

Askari Master Card customer with exclusive travel and leisure facilities.

Treasury and International Operations

International Division

International Division strives to place at the disposal of our branch network, efficient

correspondent banking arrangements on global basis, thereby catering the needs of our client

Diaspora. In short, this is made possible through a variety of arrangements with various banks

which, amongst other benefits, ensures placement of suitable Credit lines at our disposal by our

counter-party banks to facilitate Foreign Trade and Treasury related activities.

Today International Division boasts of multi-faceted correspondent banking relationships with

over 200 Banks in 77 countries around the world thereby improving the capacity of our

branches in serving their clients.

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Alongside, International Division is entrusted to

arrange evaluation/approval of exposure limits

favoring various local/overseas banks and Non-

banking Financial Institutions with whom our

Treasury and branches deal on day-to-day basis.

Within the context comes the Country exposure,

which is managed and monitored at this division,

whereas our liaison with State Bank of Pakistan, in

respect of Foreign Trade related issues, helps us to

provide timely directions and efficient advisory to

our branch network.

Optimum monitoring of business reciprocity with

banks compliments our efforts to manage the

business flows and ensure greater profitability and balanced distribution of business amongst

our correspondents.

In addition and as a part of the ongoing exercise of Know Your Customer (KYC) compliance

with regard to our correspondents, International Division carries out regular Due Diligence

exercises to ensure that our bank deals only with financial institutions that are able to meet the

prescribed standards and criteria.

The monetary tightening aimed at reducing inflationary pressures and fostering economic

growth was reflected in the money market conditions throughout the year. In order to manage

the money market liquidity, SBP used the combination of Overnight Money Market Operations

(OMOs) and increased cash reserve requirement. During the year, discount rate was also

increased by 50 bps. As a result the overnight rates remained under pressure during most of

2006.

Pak Rupee started the year at Rs. 59.81 to a US $ and depreciated to Rs. 60.89 towards the end

of 2006. The depreciation of Pak Rupee against US $ was continues and was mainly

attributable to deterioration in external account. During 2006, weight average yield of

benchmark six months TBs increased by 57 bps (bills per share) to close at 8.81% p.a., while

six months KIBOR increased by 161 bps from 8.80% to 10.41%.

The intense money market competition placed the Treasury in a demanding position, to offer

more innovation in undertaking arbitrage and derivative transactions to maintain, and increase,

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its share in the overall earnings of the bank. The treasuries operations are effectively structured

to measure, manage and mitigate the risk elements associated with the treasury activities,

through the use of IT system and enhanced human resource skills, so that the treasury can

manage the risk better, and also provide advice and services to the branches and their

customers.

The bank increased its overall foreign trade business during 2006. the import business

increased to Rs. 119.3 billion, i.e. growth of 11% over last year, while the exports increased by

6% over last year, to Rs. 97.3 billion.

Standard settlement instructions for commercial payments through our major correspondents

are appended below:

Offshore Banking Unit (OBU)

During the year, Askari bank’s offshore banking unit in Bahrain increased its share of

contribution in the overall earnings of the bank. The OBU remains on a constant look out for

opportunities on the international scene, which are both profitable and provide the bank with a

strategic edge. OBU enhances the Askari bank’s capability in terms of offering a wider range

of services to our customer, and also acts as a look-out for new business opportunities and

relationships in the international markets.

Credit Department

Askari bank’s funded credit portfolio increased by 16% to close at Rs. 102.73 billion as

compared to 23% last year as the bank remained watchful of the impact of growth of risk assets

on capital adequacy.

A review of the securities held against credit limits reveal that the credit portfolio of the bank is

well collateralized, with adequate exposure being covered by securities of liquie nature, such as

deposit, trade documents, equity or debt instruments, guarantees from government or financial

institutions, etc. during the year, bank’s non-performing advances increased to Rs. 3.6 billion,

from Rs. 2.3 billion last year due to further downgrade of certain large exposures.

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Consequently NPLs as a percentage of gross advances increased from 2.7% to 3.6%. However,

despite this increase, the percentage is well within the industry average.

During 2006, askari bank made net provisions of Rs. 1,128 million. Also during the year, the

method of making general provisions, on credit portfolio other than consumer portfolio, was

standardized, as explained in audited finance statements. General provisions against consumer

finance portfolio continue to be made in accordance with the guidelines provide in SBP

Prudential Regulations of Consumer Finance. The cumulative provisions at the close of 2006

increased to Rs. 3.5 billion. These provisions provide 97% coverage to the total NPLs as

compared to 102% last year.

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Agriculture Credit Financing

The role of agriculture in Pakistan economy is of pivotal

nature. Due to diverse geographical and climatic conditions

the country has tremendous potential for growth and

development in agriculture. However, adequate and timely

financial assistance to the farmers will improve production

potential of agriculture sector in the country. The modern

concept of agricultural credit envisages establishment of an

efficient institutional credit system to serve as a package of credit, supplies and knowledge for

the overall strength of the farmers who at present suffer from low productivity and financial

insecurity. A successful credit evaluation system, therefore, should have the basic ingredients

to provide adequate amount at the right time and in the right form to help farmers in making a

productive use of loan funds.

Askari bank’s agriculture credit schemes which were launched in June 2004, under the

umbrella of Agriculture Credit Division continue to be an attractive product for meeting ON

farm and OFF farm financial requirements of the farmers. The credit schemes were introduced

under the title of “Askari Kissan Agri Finance Program (AKAFP)” with the objective of:

Providing financial assistance to small farmers.

Ensuring adequate and timely availability of credit.

Facilitating effective water management system.

Encouraging and promoting mechanized farming.

Providing means for better access to markets.

Promoting livestock development.

Providing inputs finance for effective crop management.

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AKAFP ---- Features

The Askari Kissan Agri Finance Program (AKAFP) has been designed to meet ON FARM /

OFF FARM credit requirements of farmers on the most convenient, flexible, easy terms and

conditions. The program features:

A broad array of credit lines designed to meet farming requirements.

Repay and borrow at your convenience on revolving credit basis at lowest mark-up

rates renewal able after three years.

Convenient repayment terms based on cash flow abilities.

Availability of leased Tractors / Transport without Land / Collateral.

No Hidden Cost.

Availability of interest free package for inputs and tractors etc.

No Pre-adjustment penalties.

Earn prompt payment Bonuses and reduce financial costs.

Insurance cover of leased assets, animals, crops and life assurance of borrowers.

The bank is extending short, medium and long-term loans to the farmers for Crops, Dairy

farming, Poultry, Fisheries, Forestry and Orchids. Loans are also provided for farm

mechanization, transportation, marketing of agriculture produce, storage, land improvement

and aabpashi.

Askari bank’s Agri business philosophy is in line with SBP strategy for increasing the outreach

and flow of agriculture credit coupled with product changes, delivery alternatives, and risk

management, loan pricing and strategic presence.

During the period under review, the growth and performance of the portfolio remained

encouraging. The number of designated branches for agriculture credit increased from 12 to 46

and customer base by 90% as compared to last year. New dairy farming schemes were

introduced for establishment of model dairy farms, milk collection centers, installation of milk

cooling tanks and purchase of cattle etc.

The bank proactively participated at various provincial and national forums for the

development and capacity building for the agriculture sector. Askari bank is working as partner

with National Reconstruction Bureau for implementation of e-passbook system with National

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Reconstruction Bureau and providing platform for integration of the system for the benefit of

all stakeholders.

The division remains proactively engaged in evolving policies and procedures for

strengthening the credit framework for the benefit of all stakeholders, and is determined to

make its full contribution towards ensuring that Pakistan is a food and fiver surplus country.

Kissan Ever Green Finance

Askari Bank has launched this program with the sole

motive to provide dignity, prosperity and freedom to the

tiller of the land. The program is designed to help small,

medium and large farmers in meeting their short-term input

requirements against one time sanction and automatically renewable upto 3 years subject to its

stipulated utilization/periodical adjustment. The credit line is sanctioned in the light of

available cash flows and input requirements i.e. Seeds, Fertilizer & Pesticides etc.

Salient Features of the Program are given as:

Farmer opens a profit earning "Askari Ever Green Account" with the branch. A special

cheque book is issued to the farmer.

Revolving credit limit as "Ever Green Agri Finance" is available to the farmer against

security i.e. mortgaged charge on Agri land through Zari Pass Book.

Hassle free, automatic renewal upon adjustment of entire principal amount with mark-

up once in a year.

The account is farmer friendly which benefits the farmers both ways. If the account is

in credit, it earns profit; otherwise it provides instant finance, to the farmer for his

agriculture needs.

The mark-up is charged for the actual days the finance is utilized.

Profit on credit balances will be paid on half yearly basis as declared by the bank on

PLS savings accounts.

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Kissan Tractor Finance

Traditional modes of cultivation via Bullocks, Camels,

horses etc can no longer keep pace with the demands of

present times due to manifold increase in the

population. Power in the form of modern technology is

therefore the need of the hour. To meet this emergent requirement, Askari Bank has launched

an Askari Kissan Tractor Finance to bring power to the fields.

Salient Features of the Program are:

This program has been designed to benefit the owner as well as non-owner farmers.

The farmer will have privilege of availing non-funded facility at a reduced cost under

this program on account of more equity participation.

Although the facility is available for a period of five years. However, good farmer

bonus will be available to the borrower in case the loan is repaid as per terms of

sanction.

Priority in delivery of tractor will be given by manufacturer as per arrangements with

the bank.

The farmer’s life & tractor will be insured against contingencies, which will provide

comfort and piece of mind.

Kissan Aabpashi Finance

Agriculture farming is impossible without adequate water.

We can combat the prevalent water scarcity by harnessing

more natural resources. Increased use of mechanical means

thus provides a ready alternative. Keeping in view the

scarcity of water, which is the lifeblood of arable lands, Askari Bank has started a program for

farmers, to finance installation of Tube-Wells (electric, diesel and solar energy units) water

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management equipments and water channel development etc., which will help farmers to make

optimum use of limited water resources.

Salient Features of the Program are:

To facilitate the farmer, to overcome the scarcity of water.

To develop mechanical water resources, sprinkler and drip system etc.

To avoid traditional / inefficient modes of irrigation and waste of available water.

To manage natural / available resources through water management practices.

Kissan Live Stock Development Finance

In order to supplement the income of the farmer, Askari

Bank has launched a program enabling the farmer to

purchase Milk Animals, Goats, Sheep, Poultry and

Fisheries without incurring extra expenditure because of

availability at his farm. He will be able to get milk, meat

and eggs etc., which normally do not form part of his diet. This program has the added

advantage that besides fulfilling his own family’s consumption needs he will be able to market

the surplus and earn additional income. This will further improve their cash flows to repay

their other Loans / Revolving Credit on due date.

Salient Features of the Program are:

The program will provide regular day to day income to the farmer to meet his own

consumption and surplus to be marketed.

This will revive / accelerate and supplement the income generating capacity.

It will enhance the repayment capacity of the farmer.

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Kissan Farm Mechanization Finance

Beside Power at the farm i.e. Tractor, the benefits /

advantages of power are maximized with the use of

Mechanical Support i.e. modern and improved equipments

which essentially complement one another due to their cost

effectiveness and time efficiency. Askari Bank has

launched an Askari Kissan Farm Mechanization Finance for the assistance of the small farmers

and provides finance for farm equipment, trailer, thresher, drills & motivators etc.

Salient Features of the Program are:

Under this program the farmer will get benefit of use of modern agricultural tools,

implements and equipments which are cost and time effective.

Improves per acre yield of Agri crops and quality of agriculture produce to get good

price in the market.

Helps to match / compete with international standards for exportable agriculture

produce.

Kissan Farm Transport Finance

A grave handicap that afflicts our farmers is their

inability, due to lack of proper facilities, to take their

produce to the market through efficient means of

transportation. This adversely affects the freshness,

quality of the product and denies them the desirable

Price-Fetching opportunity. Conversely, they lack mobility to acquire much needed inputs

essential for their farming needs. One can safely conclude that if provided with appropriate and

speedy transport, the farmer can benefit by enhancing his selling ability and thus increase his

income / cash flow. it is pertinent to mention that a number of Banks, Leasing Companies and

Private Agencies have geared their marketing efforts to concentrate on and have mainly

captured the urban markets. There is no support provided to cater to the transport needs of

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deserving rural farmer’s community. Askari Bank true to its commitment has taken the lead to

launch Askari Kissan Farm Transport Finance.

Salient Features of the Program are:

To increase mobility and access of the farmer to the markets.

To lower the burden / cost of transportation against hired transport.

To create awareness of market movements in order to obtain maximum price of their

produce.

This will also supplement the income of the farmer which will ultimately enhance the

repayment capacity of the borrower.

Additional income can be generated if used for hired services to the fellow farmers.

Islamic Banking Services

Islamic Banking was launched under the brand 'Askari Islamic

Banking', by opening 6 dedicated Islamic Banking branches in

major cities of the country. Further expansion is planned with

improved capabilities for offering products conforming to the

Shariah principles. Askari Islamic Banking opens the doors for Halal banking solutions. Our

objective is to put in place an efficient banking system supportive to economic justice and

welfare of society in line with Shariah standards.

A comprehensive range of Islamic Banking products and services is being offered, in order to

meet customer's demand of Shariah Compliant Banking, in the following areas:

Islamic Corporate Banking

Islamic Investment Banking

Islamic Trade Finance

Islamic General Banking

Islamic Consumer Banking

Islamic Banking products have been approved by the Bank's Shariah Advisor. As per Shariah

requirements, funds and products of Islamic Banking are managed separately from the

Conventional Banking side. All funds obtained, invested and shared in Halal modes &

investments, under supervision of the Shariah Advisor.

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As every body knows that:

"Knowledge without practice is sterile”

Internship is the practical experience which is gained during the study. It is the part of our

M.Com study. So at the end during summer vacation, it was required to do internship. I

selected Askari Bank Limited, Vehari Branch, which is located in my residential city. I enjoyed

much during the practical experience.

It was almost impossible to work in all the departments within that limited time. But on my

request, the staff of the branch provided me the opportunity to work in the different

departments which was in the branch, for the sake of practical knowledge. I am especially

thankful to branch manager, manager operation, all the staff and employees who cooperated

wit me very much.

On my first day of Internship, Manager handed me over the charge of Assistant to Accountant.

All the work which I learned during eight week internship is explained here according to

department in which I have worked as internee.

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Account Opening / Deposit Department

Customer is a person who has some sort of account, either deposit or current or some similar

relation. A person becomes a customer when the bank agrees to open an account.

It is contractual agreement between bank and customer after which both concerned parties

indulge in a mutually beneficial business relationship.

"Deposits are the blood of a Bank"

Acceptance of deposits is the real source of income of a bank. Deposits department is the

backbone of corporate banking. Deposit is often used to describe the money, which customers

of all kinds leave with the banks.

Deposits account can be defined as an account, which is

opened to earn interest.

The term deposit is highly misleading. It is not something deposited for safe keeping, like

currency in a safe deposit box. Bank deposits are not like that. When one brings currency to a

bank for "Deposit" the bank does not put the currency in a vault. It may put a small fraction of

the currency in the vault as "Reserves" but it will lend most of deposits to some one else or buy

an investment.

Like all banks, deposit department has acknowledged its worth as the most important. Almost

all the operations generate from the deposit department and with due course of time reflect

back to the deposit department.

In order to attract funds, bank has introduced various types of deposits schemes that may suit

the needs and tastes of a large body of depositors.

In this department, I gain the practical knowledge about opening account. This department

deals with opening current and saving account for its customers and all matters regarding

thereof.

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Types of Customers

The customers opening current and saving accounts can be categorized as following.

Individual

Firm

Company

Trust

Staff

Others

Opening Accounts

In order to open an account, first of all the customers have to fill a form prescribed by the bank.

The person is required to bring some reference or introduction for opening the account. In

askari bank limited, Introducer should be the person who has any account with bank.

There are various types of accounts which may be opened by any one like as trust, individual

…etc. some accounts are specific for some specific categories like as Basic Banking Account

for low level of income peoples. Following are the types of which I filled the accounts.

Types of Accounts

Current Account

Current A/c is basically used to meet the daily transactions.

No interest is paid on current accounts

In case of current a/c customers can draw money at any time when customer needs it.

There is no restriction that customer cannot draw money before such & such time so we

can say there is no time limit.

Limited company, partnership firm, club, society or association joint and sole

proprietorship can open this account.

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Minimum balance acceptable by the bank to maintain the account is Rs.5000/-.

There is no minimum balance requirement by the askari bank limited.

PLS

In case of saving accounts, account holder gets profit.

In Bank askari bank limited saving a/c is used as current a/c, & there is no main

difference between current & saving account except profit. Limited company,

Partnership Company, joint & sole proprietorship can open this account.

Balance acceptable by the bank to open this account is Rs.2500.

The profit is given to the customers at minimum balance during the month.

Minimum balance requirement is Rs. 10000.

If balance is below 10000 or no transaction has been made by the client within six

months then some charges are deducted by the bank.

2½% zakat is deducted at 1st Ramazan

Basic Banking Account (BBA): -

It is special type of account.

It is opened for low salary / income persons.

It is opened by Rs. 1000.

Two times by Cheque or cash, amount can be withdrawal or deposited.

No zakat is deducted.

It is just like as C.B. Account nature.

Evidence of profession is required.

Infinite transactions can be made by ATM cards in this account but upto the specified

amount by the SBP.

Foreign Currency Current Accounts

In these accounts depositors can deposit a sum of money in any of the above-mentioned

currencies. The depositor can also withdraw any amount subject to he availability of the

amount. No profit is given on these accounts and no restriction as per the minimum balance

required.

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According to my practice in bank, when a customer wants to open an account, the bank officer

gives him an application form. All information, which is necessary to be known by the bank,

are requirements of the application form. Form also requires the essential documents to be

attached by the customer.

Required Documents

Basically following information is required to open an account:

Title of Account

Full Name of Applicant

Occupation

Address

Telephone No.

Currency of account

Nature of Business

Introducer’s Name, Address & Signatures

Special instruction regarding the account

Initial Amount of the Deposit

Signature of the applicant

Reference’s Signature and name

Some important information regarding introducer e.g. the name and account number of the

introducer is written on the form. Then in order to find out whether he is a true introducer or

not, a letter is sent to him thanking him for this introduction so that anything wrong may come

into notice.

There are different requirements for different types of accounts and accountholders.

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Other Activities in This Department

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Open the account is not only the job of account opening department. Beside this, there are lot

of activities which performed this. That’s why it is said the backbone of the bank. In askari

bank limited, account opening is the main functions and the functions which I am going to

explain here are the secondary functions. In large branches, these activities are performed by

other department except “ISSUANCE OF CHEQUE BOOK”.

Issuance of Cheque Book

During my period of internship, I observed that when an account is opened then a cheque is

issued to the customer for drawing his money at per rules. Following procedure is adopting for

the issuance of cheque. A cheque book contains;

ten,

twenty five,

fifty or

Hundred leaves.

The cheque book also carries a requisition slip for the issuance of the new cheque book. This

slip is duly filled and singed by the customer. The signature of the customer is verified by the

bank and new cheque book is issued to the customer and serial numbers of the cheque are duly

entered in the book of the bank. Along with the signature, person should also write his full

name & address.

Bank deduct the charges five rupees per leave from the customer’s account. The officer keeps

and maintains the cheque book register Cheque book inventory and cheque books issued are

recorded in this register. The account number for which the cheque book is issued and the

number of leaves are also recorded. One cheque in each cheque book is pasted for issuance of

new cheque book. If client fails to present this cheque then Rs. 200 fine along with five rupees

per leave are deducted form the client’s account for issuance new cheque book

Rupees Traveler Cheque: -

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Famously know as RTC, is the alternative for paper currency. It is against various standard lot

size paper currencies like as one RTC is equal to Rs. 2500, 5000, 10000. Askari bank issues

one RTC of Rs. 10000. It has serial number. In case of lost, encashment of RTC can be

stopped. It is convenient to carry and save. Following are the feature and procedure which I

learnt to issue it.

First fill the form then submit the cash to the cashier. It can be issued against cheque of

this branch account.

Send the RTC to the manager operations for sign.

Profit is given on each RTC after two months if According to rule if it is not used.

Call Deposit Receipts: -

Used for government customer. It means it is used by the clients having transactions with the

government. Normally government contractors used it.

Cash or cheque is deposited.

It is in nature of current account.

It is issued free and it has no limit.

No profit is made on CDR.

It can be issued to every one whether existing customer or walk-in-customer. Not

necessary to open the account by walk-in-customer.

It is refundable. One can say it is simply “PAGGRREE” (security).

It is issued against two percent down payment of the contract amount.

Initial deposit should be in cash for open such type of account

Term / Fixed Deposit

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When customer places money with a banker for a fixed period a deposit is termed as

fixed/term/time deposit.

Some important features that I have done in practice are that:

No cheque-book is required.

Time period varies from 3 months, 6 months to 1 year & up to 5 years. The profit rate

varies according to the time period for which it is deposited.

It is in standard lots. Minimum is Rs. 2500.

The term deposit is renewed automatically on the date of maturity at the SBP's applicable

rolling rate of interest; the acknowledgement of receipt of money is taken on the letter of

authority after its proper identification. If a deposit receipt is lost or stolen a duplicate receipt is

issued after obtaining an indemnity. It is necessary to obtain a duplicate receipt if original is

lost because it is so worded that banker undertakes to repay the amount on the presentation of

duly discharged receipt.

Deposits on joint names are payable to conditions agreed at the time of their acceptance.

On expiry the depositor presents the deposit receipt (advice) dully stamped and gets the money

in cash or transfer to his account. It is legally, a depositor cannot demand the payment of his

fixed deposit before the expiry of the stipulated period but generally to oblige the customer,

banker allows them to withdraw their fixed deposit before maturity. In these cases customer are

asked to forgo interest. Deposit receipts issued is called fixed deposit receipts.

Lockers

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It is one of the facilities which is provided by the askari bank limited to its valuable clients.

In askari bank limited, lockers are available in the following forms;

Small Locker (Rs up to 50000).

Medium size locker (Rs. 1000000).

Extra large size locker (Rs. 2500000).

Locker can be issued to each person having account or not.

Insurance is paid by bank.

Two numbers are issued. One is the key and second is locker number.

Licker issuance may be for cash or cheque. In case of cheque, customer should be of

account holder of this branch and cheque should of this branch.

Initial deposit for locker opening is as following;

For small size, Rs 2200 (1100 for key and 1100 for locker).

For medium size, Rs 3200 (1600 for key and 1600 for locker).

For small size, Rs 5000 (2500 for key and 2500 for locker).

Clearing Department

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Second department toward I moved, was the clearance department. It is the department which

is responsible for the clearance of the inward and outward instruments, presented for collection

by the clients or third party.

Clearing is the system by which banks exchange cheques and other negotiable instrument,

drawn on each other, within the specified area, and secure payment for their clients through

clearing house specified time by book entries i.e., State Bank of Pakistan..

Nearly all the banks provide a wide variety of services to their depositors. One valuable service

provided is that of clearing. Clearing department also plays an important role in performing the

activities of the bank.

The basic function of clearing department is to provide services to customers in collection of

their cheques of other banks, whether they are in city or outside the city. The customer can get

the money in his account at Askari Bank Limited from the cheques drawn on another bank.

The bank accepts the cheque in the clearing department & later on collects these cheques from

the bank on which it is drawn through the clearing house

Every bank acts in two ways i.e.

Paying Bank

(The bank, which pays the cheques of his customers, presented by other banks.)

Collection Bank

(The bank, which collects the fate of cheque on the behalf of customers, presented by

other banks.)

Types of Clearing

Clearing department deals with the two type of the clearance.

These are stated below:

o Outward clearing

o Inward clearing

O/C Procedure

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Similarly cheque, which is drawn on other, bank and presented to askari bank limited, Vehari

branch, Vehari are known as outward clearance for askari bank limited, Vehari branch. So

outward clearing results in inflow of funds from paying bank into the clearing account

maintained with clearing house increasing the balance in the clearing account.

Rs. 500 or 16% of instrument amount, whichever is high, deducted from the OBC instrument

amount.

I have done following process in O/C

Receive cheque on the counter and scrutinize it on the following lines

Cheque is drawn on a bank that is a member of clearing-house

It is deposited in an account that is being maintained in the branch

It is in order as to the name of payee, date, amount in words and figure and correctly

endorsed where required.

Check the pay-in slip and counter foils are correctly filled in.

Put the banks special crossing stamp & clearing stamp of the next day.

Detach cheque from pay-in slip

Sort out cheque bank wise and branch wise.

Input in system for each bank

Prepare clearing schedule

Attach the cheques with clearing schedule

Handover the instruments to NIFT

Stamps

Special Crossing

Clearing stamp of next working day.

A/C payee’s only

Payee endorsement confirmed

Outward Return

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Cheque returned will be treated as inward cheque. In the case of cheque is returned because of

wrong presentation e.g., clearing stamp not affixed or wrong discharge given on the cheque

etc. it should be re-lodged in the next day clearing after rectification of the mistake.

If cheque is returned for any other reason then;

Enter the cheque in cheque return register, mentioning the reason as appearing on the

cheque return memo received from the paying bank

Advice the customer about fate

Return the cheque to the customer after getting sign on register

Collect the cheque return charges as per S.O.C

Inward clearing

Cheque drawn on askari bank limited and presented to other Banks or handed over to askari

bank limited agent in clearing house. That is inward clearance for askari bank limited. So

inward clearing results in outflow of funds to collecting bands reducing the balance in the

clearing account.

Receive instrument payable by us in inward clearing.

Time is the essence of clearing, if not returned unpaid then it is presumed to be paid

Check the total number of instrument matches with the clearing schedule and get

signature on it.

Scrutinize the cheque on following lines

Signature verification

Proper presentation

The cheque is in order as to the name, date, amount in the words and figure

Cheque is not damaged or torn nor post dated or stale, alteration, correction and cutting

have been authenticated with full signature of the customer.

Display customer account on the screen and observe

Sufficient balance

Stop payment instruction

Cheque is from a series of cheques that has been issued to that particular customer.

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Post Cheque

Cancel the cheque

If limit account refer to the credit department

PO, DD to respective department for processing and payment (enter in the DD Payable

and Pay order payable register)

Inward return

Return may be of any reason. For example

Clearing stamp not affixed

Defect in cheques i.e., post dated cheque

Insufficient balance

Once the decision is made to return the cheque so deliver to NIFT.

Collection

Clearing department deals with money transfer form on place to another. It uses various

instruments for remittance purposes. These instruments are:

OBC

IBC

Outwards Bills for Collection (OBC): -

Outward Bill for collection, the cheques drawn on the bank that is out of city. These cheques

are not collected through NIFT. The banks clear these by sending them to the relevant branch

through mail. This service includes all activities involved in collecting their claims on

customers of the other branches of same bank or of the other banks, located outside the

clearinghouse area.

Procedure

Receive instrument, this instrument

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It is in the name of the account holding customer

Must not be post dated or stale

Must have same amount in words and figure

Affix special crossing stamp on the face of instrument

Affix OBC stamp on the instrument, and on pay-in slip

Entry in OBC register

Write OBC# on the instrument

Prepare outward bill for collection schedule

Inwards Bills for Collection (IBC): -

The cheques drawn on the bank when comes from outstation, it is called inward bills for

collection. Cheques are entered in inward bills for collection register. The date, signature,

crossing etc. is checked and if all things are in order the amount is realized to the relevant

bank. This cheques should have the stamp by the branch i.e. our branch endorsement is

confirmed.

Procedure

Receive instrument through mail and scrutinize the instrument

Must be drawn on a customer’s account

Must not be mutilated

Must not bear unauthenticated corrections

Must not be post dated or stale

Must bear regular endorsements, if any

Must have the same amount in words and figure

Entry in IBC register

Remittance Department

“When money is transferred from one place to another place or

from one country to another country to fulfill the requirements of

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the customers by the order of the customer, it is called

remittance.”

I worked in this department and realized that Bank remits money in different ways. Some of

these ways are as under:

Pay Order Demand Draft

Pay Order

IBC and OBC are also dealt by this and clearance department together. I spent apart of time of

my internship duration in this department. I worked on IBC and OBC also. I have explained

these two under the clearance department. Other mode of remittance the amount like as Telex

Transfer, Mail Transfer etc., is not treated in the branch. The instruments on which I worked in

this department are explained here.

Demand Draft

DD (Demand Draft) is a cheque issued by the bank drawn on the same bank’s outstation

branch. The bank charge nominal commission on issuance of demand draft. If lost the holder

must in personal request the bank in writing for the duplicate. The bank if satisfied can issue a

duplicate demand draft after getting the indemnity.

Parties

It involves four parties: -

Beneficiary (in favor of DD is issued).

Beneficiary bank.

Applicant of DD

Applicant’s bank

Process for Outward Demand Draft through Cash

When DD is made at customers request on cash the process goes as under:

First customer comes to bank and fills the DD application form.

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Designated officer verifies the signature and particulars of Application.

Designated officer then fills in the charges/commission on application form.

Customer then deposits the money and gets the application stamped and signed by the

cashier.

In Cash department, entry is made in General Ledger Account.

Cashier sends the application back to designated officer who makes the DD by debiting

Transit.

After Preparing DD two-attorney holder signs it.

Three copies of DD are prepared

Original goes to customer

Office copy retains with designated officer for reconciliation.

One copy sent as an advice to drawee bank.

Process for Outward Demand Draft through Account

When an account holder of Bank through his cheque makes DD then first customer

comes to bank and fills the DD application form. A cheque is also required of the

minimum amount of the DD.

Designated officer verifies the signature and particulars of Application and verifies its

validity with the cheque.

Designated officer then fills in the charges/commission on application form.

Designated officer after verification on particular of cheque such as balance, signature,

date, figure in words and digits etc. debits customer and credits the transit account.

In next step officer debits the transit and makes DD.

After Preparing DD two-attorney holder signs it.

Three copies of DD are prepared

Original goes to customer

Office copy retains with designated officer fro reconciliation.

One copy sent as an advice to drawee bank.

Process for Inward Demand Draft

When some other bank draws DD or branch on our branch process goes as under.

First the Branch receives the Advice from the issuing branch by courier.

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Following particulars are verified.

Name

Date

Attorney Holders Signature

Amount in words and figures

Cutting etc.

The designate officer after verification enters the particulars in DD register and makes

the entry in system by giving credit to DD payable.

In next part the officer through clearing receives the original instrument or non-account

holder physically presents the instrument.

Officer again verifies the particulars and if the DD is received through clearing then

designated officer enters it in DD register and giver credit to customer by debiting DD

payable.

If the customer needs the amount in cash then it is verified that the instrument bears the

NIC no of the beneficiary on it

The instrument is marked as PAID and amount is paid to customer.

Charges of Demand Draft:

For Rs. 1___ 100,000 = .11% or minimum Rs. 55 only. (whichever is high)

For Rs. 100,001___ 1,000,000 = .08% or minimum Rs. 225 only. (whichever is high)

Over Rs. 1,000,000 = .06% or minimum Rs. 1100 only. (which ever is high)

Pay order

Pay order is also a cheque drawn on the bank but it is payable in the same city. The bank also

charges nominal charges for its issuance.

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Transfer of money through Pay Order

Pay order is also called as cashier order, manager's cheque, & banker's cheque, & cheque on

services .Pay order is an instrument through which payment can be made from one bank to

another bank within city.

First of all it is not necessary that the person who wants to issue pay order, should be

the customer of the bank. So anybody either he is customer of the bank or not can issue

pay order.

It has the same procedure to issue as DD has.

It the easiest and safe way to transfer the money locally without carrying.

Parties

It involves three parties: -

Bank, who issue it.

Drawer, who give application for pay order.

Drawee (the person in which favor it is issued)

Charges

Rs. 30 for issuance of pay order up to Rs. 1,000,000 at flat rate.

Above Rs. 1,000,000, there are no charges.

Cash Department

Cash department of askari bank limited is given the complete responsibility of handling all

receipts & disbursement of cash, as a result of transaction & near cash items such as traveler

cheque etc (when they are issued against cash).

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It is the sensible department. No one can enter into the cash counter cabin without permission,

even account opening officer for verification of anything else. I also worked with the cash in

charge who sit behind the cash counter. It was allowed to move in the cash In charge officer

freely but not go the cash counter cabin. So whatever I learnt learnt from the cash in charge.

Following are the major functions of the cash dealing department of askari bank limited.

Cash receipts (or receive deposits)

Encashment of valid instruments

Cash department of askari bank limited is a separate close part covered with glasses. No one

other than cash department's employee is allowed to enter into that area. That’s why I did not

work in this department but I have gained knowledge about it from teller of askari bank

limited.

Cash Receipt

The depositor uses cheque deposit slip (or cash deposit slip) for depositing the amount.

Information required

All the details are required regarding date, account number, and amount in words & figures,

title of account & signature of depositors.

Procedure

The cashier first verifies all the requirements of the cash deposit slip that whether these are

fulfilled or not & verifies the amount written in words & figures. The deposit slip is stamped,

cash is received & second copy is given to the depositor.

Encashment of a Cheque

Requirements to Encash a Cheque

Following requirements are essential to encash a cheque.

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No Stop Payment Instruction

No stop payment instruction is presented for the account.

Instrument in Writing

It must be in writing. However, there is no bar on writing material but the cheque

written with lead pencil is not honored by the bank in practice because unauthorized

alternations can also easily be made are difficult to detect so a cheque should be pen

written..

Cheque must not be crossed

The cheque, which could be presented to the drawee bank for encashment over the

counter, should not be crossed whereas crossed cheques are deposited into account.

The sum of money must be certain

A cheque must contain an order to pay a certain sum of money only amount in figures

and words must be same.

Drawer’s Signature

The document in order to be validly called a cheque must bear the drawer's (account

holder) signature or that of his authorized person. At the time of opening an account a

customer provides a banker with a specimen of his signatures, so the signature on the

cheque must tally with that.

Sufficient Balance

Sufficient balance should be present in the customer's (drawer's) account to encash

cheque.

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Stop Payment Instructions

If a customer lost his cheques book he would make stop payment instruction to cash

department of askari bank limited stop payment instructions can be made in two ways.

Verbal

Written

The customer informs the cash department on telephone or face-to-face meeting to stop

payment, but later a written instruction must be made on a prescribed form.

If customer make stop payment instruction to the bank and bank make payment to some one

else after lodgment of stop payment instruction in the computer, Bank would become liable for

this fault.

Agri-Credit Department

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Vehari is an agricultural area. Majority of the population depend on the cultivation for living.

Government of Punjab is providing the incentives to the farmers for the betterment of the

agriculture sector. Askari bank limited is one of them who is paying the special attentions on

the agriculture sector. During my internship I observed that major of the Askari bank limited

agriculture products or services have been introduced by the top management itself. These

products are not the copied of other banks. Head of agriculture finance division, M. Rafeeq,

EVP of this division has been introduced very popular Agri-loaning types. I will say him the

founder of modern Agri-bank products in the Pakistan.

Following are the products are dealt in the Askari bank limited, Vehari branch.

Askari Kissan Ever Green Finance.

Askari Kissan Tractor Finance.

Askari Kissan Ever Green Finance

It is in nature of running finance.

It is sanctioned up to maximum fifty percent of the land or field’s cost price.

No such type of requirement that loan must be used to specify subject. Simply purpose

of loan borrowing isn’t mentioned.

It is for multiple purposes used.

Markup rate is applied to the amount which is withdrawn by the borrower from his

account, not on whole amount.

Askari Kissan Tractor Finance

It is in nature of term finance.

Amount of the loan is paid directly to the tractor dealer rather than the borrower.

Markup is paid on the whole amount of loan.

It is issued for tractor purchasing specifically.

Borrower can not withdraw the amount from his account.

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Down payment

For five acre or above, five percent down payment.

For less than five acre, thirty percent is down payment.

Mark up

Current markup on Agri-term finance is thirteen percent.

It varies from time to time. So, markup rate on finance is varying with the variation and

borrower has to ay according to new markup percentage.

Insurance

Of crops / fields, 2% of total loan as insurance is charged. Askari bank has the contract

with the united insurance.

On life following provisions are made.

Less 55 years----------0.3% of total loan amount.

55 to 65 years---------0.5% of total loan amount.

o Health certificate is required.

Above 65 years-------one percent of total amount.

o Health and medical certified is required.

Askari bank limited has the contract with the metropolitan insurance co.

Evaluation Survey:

For less then .5 million, no evaluation of land is require4d.

For above .5 million, evaluation is required which is made by the evaluation

companies, approved by the PBA.

Procedure:

Application is given to Agri-credit officer.

ACO check documents and if found right and able to get the loan, further procedure is

run.

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All documents along with application are forward to ACO. Application also mentioned

type and limit of loan. Sometime limit is mentioned by ACO.

These documents along with application are forward to regional manager, Lahore.

RGM check it and if found correct then send to agriculture credit department (ACD).

After completing procedure and requirements, ACD send it back to RGM.

RGM send these documents to Agri-department, document forwarding branch.

Agriculture credit department send it to RCAD, Multan.

RCAD sanction the loan limit and send back to Agri-credit department, document

sending branch.

Now procedure is complete and loan is sanctioned.

After all, documents are sent to RGM, Lahore for safe custody.

Later, these documents can be required back by Agri-credit department for removal of

any discrepancy or for any other purpose.

Required Documents:

Fard-e-malkiat.

Khusra gardawri

Osat bay

Four attested photo copies of NIC.

Two attested pictures.

Fard-e-malkiat and attest copies of NIC of two guarantors.

Aks Shajra.

NEC (non-encumbrance certificate).

CBSG Department

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CBSG stands for consumer banking services group. It is the department which is directly under

the divisional office. In branch it is under the branch manager. It is in nature of personal

finance. Lending is made to the salaried employees without any security, just on the salaries.

Lending is made up to fifteen months salary. Following are the features of the financing under

this department.

Features:

It in nature of running finance.

It works directly under the divisional office. In

branch it is under the branch manager.

It is provided to the salaried employees.

Up to fifteen salaries, loan is sanctioned.

Normal markup rate is charged.

Required Documents:

Two attested copies of applicant’ NIC.

Two attested copies of each two guarantor’

NIC.

Evidence or voucher of salary.

Fulfillment of application form.

General Credit Department

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Credit comes from the Latin word "creditus" which means, "to believe." Credit allows us to

buy things, which might not be able to afford all at once by letting us pay over a period of time.

But to obtain credit, creditor believes that bank is trustworthy and responsible.

This is the department who provides the loans for the fulfillment of the needs. It sanctioned the

business loans, house loans and SME loans also.

I worked in this department for one week. As I have told earlier that Vehari is an agricultural

area. Around about 85% to 90% lending is made in agriculture sector by the Askari bank

limited, Vehari branch. In one week which I spent in this department, there was just one or two

case in the process. However I tried lot of to learn about it.

Terminologies:

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.

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.

Pledge

A formal contract whereby the borrower agrees to deposit goods/ documents with the

creditor on the condition that those will be redelivered to the depositor if the debt is

repaid or can be sold by the creditor if the borrower defaults. After recovery of dues

from sale precedes the surplus if any is paid back to the borrower Possession passes to

bank, ownership remains with borrower

Hypothecation

When moveable property/ goods are charged with the amount of debt but neither the

ownership nor the possession is passed to the lender. It is said to be hypothecated. By

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virtue of letter of hypothecation bank can take possession of hypothecated goods in

case of default of the borrower.

Running Finance

The finance type in which markup is charged on the amount which the borrower use.

And on remaining amount which borrower has in the bank account, markup is not

charged. Common users of this type of finance are;

Agriculturists

Seasonal businessmen----etc.

Term Finance

The finance type in which markup is charged on the whole amount. It is irrelevant that whether

borrower use the portion of the whole finance amount or whole finance amount.

Common Required Documents:

The following documentation is made for loan.

An application or request letter for loan by the customer

CSA (credit sanction advice).

Legal opinion of the legal advisor of the bank (for the title deeds)

Consent letter from the regional office

Vetting Certificate (includes consent No., Facility whether fund based or no-fund

based, addresses etc.)

Valuation of property any consultant or any panel of consultants approved by State

Bank of Pakistan

Original title deed or sale deed

Affidavit

Mortgage deed

Mutation document made

Verification of the property by the bank from the competent authority

Hypothecation of stock certificate (Running is to be given against 75% margin of stock)

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Letter of hypothecation (duly signed by the party)

Note/Promissory Note (Bank prepared

itself, duly signed by the party, revenue

stamps of Rs. 100 put on it)

Agreement of finance mark up (Contract

with party for taking mark up on quarterly

basis)

Financial Ratios Analysis

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Financial ratio analysis is the calculation and comparison of ratios which are derived from the

information in a company's financial statements. The level and historical trends of these ratios

can be used to make inferences about a company's financial condition, its operations and

attractiveness as an investment.

Ratio Analysis enables the business owner/manager to spot trends in a business and to compare

its performance and condition with the average performance of similar businesses in the same

industry. To do this compare your ratios with the average of businesses similar to yours and

compare your own ratios for several successive years, watching especially for any unfavorable

trends that may be

starting.

Specialized Analysis

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Following are the ratios which I calculated and explained here.

88%

89%

89%

89%

89%

89%90%

90%

90%

2006 2005

Earning Asset to Total Asset

Internship Report

Earning Asset to Total Asset

= Earning Asset / Total Assets * 100

Year Result Direction

Rs. in 000’

2006 =

147,344,027 * 100

89%166,033,588

2005 =

130,140,120 * 100

90%145,099,907

Comments

This ratio shows the activities of

the management towards the

utilization of resources or assets

for return. Although in year

2006, there is slightly decrease in

the earning asset but still it is sufficient. It shows the effectiveness of the management as this

ratio is showing the higher percentage.

Return on Earning Asset

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= Net Profit After Tax / Earning Asset * 100

Year Result Direction

Rs. in 000’

2006 =

2,249,974 * 100

1.53%147,344,027

2005 =

2,021,996

1.56%130,140,120

Comments

This ratio shows the return on the

earning assets. Simply we can say

that this is the profitability type

ratio. Here is a decreasing trend in

the return on earning asset. It is not

good. Due to economy situation,

there may be some limits which interrupt but there should be higher return on earning assets as

compare to current situation.

Net Margin to Earning Asset

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1.51%

1.52%

1.53%

1.54%

1.55%

1.56%

2006 2005

Return on Earning Asset

Internship Report

= Net Margin / Earning Asset * 100

Year Result Direction

Rs. in 000’

2006 =

5,619,608 * 100

3.8%147,344,027

2005 =

4,502,324

3.5%130,140,120

Comments

This ratio shows the capacity to

earn by the spread of markup

income over the markup

expenses. There is increasing

trend in the current year as

graphical presentation is

showing. But still there is need of

further improvement.

Deposit Time Capital Ratio

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3.30%

3.40%

3.50%

3.60%

3.70%

3.80%

2006 2005

Net Margin to Earning Asset

Internship Report

= Deposit / Equity

Year Result Direction

Rs. in 000’ Rs.

2006 =

131,839,283

11.9311,053,230

2005 =

118,794,690

13.488,813,483

Comments

This ratio shows the contribution of

deposits and capital towards the earning

or assets of the financial institution. As it

is seems that there is decreasing trend in

the deposit time capital ratio but this is

due to the contribution of higher capital.

One can say that company has small deposits to invest or utilize for earning. It will be

preferable if there is an increasing trend in the deposits.

Loan to Deposit Ratio

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11

11.5

12

12.5

13

13.5

2006 2005

Deposit Time Capital Ratio

Internship Report

= Loans / Deposits

Year Result Direction

Rs.

2006 =

107,572,322

0.82131,839,283

2005 =

96,149,137

0.81118,794,690

Comments

Higher of this ratio enable the bank

to have more return with risky

investment through the financial

institution. There is a higher ratio of

deposits as compare to loans. So

bank can interact to the general pubic

by a handsome markup and can earn a

large amount as earning. There is a margin of safety.

General Analysis

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0.805

0.81

0.815

0.82

2005 2006

Loan to Deposit Ratio

Internship Report

Investors’ Analysis

Earning per Share

= Net Profit / No. of Shares

Year Result Direction Remarks

Rs.

2006 =

2,249,974,000

11.23

Decrease in earning per share due to the

economy condition and tuff competition

in the market. It needs improvement.200,433,239

2005 =

2,021,996,000

13.42150,701,800

Graph

Price Earning Ratio

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10

10.5

11

11.5

12

12.5

13

13.5

2005 2006

Earnig Per Share

Internship Report

= Market Price per Share / Earning per Share

Year Result Direction Remarks

Rs.

2006 =

104.95

9.35

There is a decreasing trend in this ratio.

It is not sufficient. There is need of

improvement.11.23

2005 =

126.80

9.4513.42

Dividend Yield Ratio

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9.3

9.35

9.4

9.45

2005 2006

Price Earning Ratio

Internship Report

= Dividend per Share / Market Price per Share

Year Result Direction Remarks

Rs.

2006 =

1

.0095

It shows the portion of current

earning per common share. It is not

sufficient as it is showing the

decreasing trend.

104.95

2005 =

1.50

.012126.80

Graph

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0

0.002

0.004

0.006

0.008

0.01

0.012

2005 2006

Dividend Yield Ratio

Internship Report

Dividend Payout Ratio

= Dividend per Share / Earning per Share

Year Result Direction Remarks

Rs.

2006 =

1

0.089

It shows the ratio of dividend

distributed among the shareholders.

It is low ac compare to last year. It

may be due to high percentage of

retained earning.

11.23

2005 =

1.50

0.1113.42

Graph

By: MC05126 PUGC

107

0

0.02

0.04

0.06

0.08

0.1

0.12

2005 2006

Dividend Payout Ratio

Internship Report

Percentage of Retained Earning

= 100 – Dividend Payout Ratio

Year Result Direction Remarks

2006 = 100 – 8.9% 91.11%

There is an increasing trend in the

ratio. Growing companies retained

high percentage of retained earning.

Here increase may be due to

expansion.

2005 = 100-11% 89%

Graph

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87.50%88.00%88.50%89.00%89.50%90.00%90.50%91.00%91.50%

2006 2005

Percentage of Retaind Earning

Internship Report

Book Value per Share

= Total Equity / No. of Shares

Year Result Direction Remarks

Rs.

2006 =

11,053,230,000

55.15

It shows the value of per share. There

is a decreasing trend in the book

value per share.200,433,300

2005 =

8,813,483,000

58.48150,701,800

Graph

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53

54

55

56

57

58

59

2005 2006

Book Value Per Share

Internship Report

Overall Comments

This type of analysis is also called market analysis. It gives the bird’s eye view of over all

performance of the organization like as price earning ratio dividend pay out ratio and earning

per share etc. is the gauge of the investors. This years company’s over all performance needs

further attention and improvement. Earning per share remains lower then the last year. This

may be due to high expenses ratio as compare to last years. Monetary policy also effect on the

EPS.

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Profitability Ratios

Return on Equity

= Net Profit After Tax / Equity * 100

Year Result Direction Remarks

in 000’

2006 =

2,249,974 * 100

20.36%

This ratio shows the return on the

total equity. There is a decreasing

trend in the return on equity.11,053,230

2005 =

2,021,996 * 100

22.94%8,813,483

Graph

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19.00%

20.00%

21.00%

22.00%

23.00%

2006 2005

Return on Equity

Internship Report

Return on Total Assets

= Net Profit After Tax / Total Assets * 100

Year Result Direction Remarks

in 000’

2006 =

2,249,974

1.4%

This ratio shows the return on total

assets (which has been utilized for

earning). There is increasing trend.166,033,588

2005 =

2,021,996 * 100

1.39%145,099,907

Graph

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1.39%

1.39%

1.40%

1.40%

2006 2005

Return on Assets

Internship Report

Return on Investment

= Net Profit After Tax / Investment * 100

Year Result Direction Remarks

in 000’

2006 =

2,249,974 * 100

1.49%

This ratio shows the return on what

you have been investment. There is a

decreasing trend.151,154,358

2005 =

2,021,996 * 100

1.52%133,332,982

Graph

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1.47%

1.48%

1.49%

1.50%

1.51%

1.52%

2006 2005

Return on Investment

Internship Report

Overall Comments

Profitability is the ability of the institution to generate earnings. Analysis of profit is of vital

concern to stockholders since they derive revenue in the form of dividend and others.

Increasing in the profit may increase the market price of share. Management use profit as a

performance measure. Here the over all profitability of the bank remains lower then the

previous year. It may be due to economy condition of the country and the monetary policy.

From several years, competition environment has been increased in the country. Bank’s

management needs further improvement towards the profitability.

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Solvency Ratios

Debt Ratio

= Debt / Total Assets

Year Result Direction Remarks

in 000’ Rs.

2006 =

154,980,358

0.93

There is a slightly decreasing in the

debt ratio. It shows the better

condition. Public can trust on the

institution.

166,033,588

2005 =

136,286,424

0.94145,099,907

Graph

By: MC05126 PUGC

1150.925

0.93

0.935

0.94

2005 2006

Debt Ratio

Internship Report

Equity Ratio

= Equity / Total Assets

Year Result Direction Remarks

in 000’ Rs.

2006 =

11,053,230

0.067

This ratio shows the equity ratio in

the total asset of an institution. There

is an increasing trend in the equity

ratio. This may be due to the

issuance of or bonus of shares.

166,033,588

2005 =

8,813,483

0.061145,099,907

Graph

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0.058

0.06

0.062

0.064

0.066

0.068

2005 2006

Equity Ratio

Internship Report

Debt to Equity Ratio

= Debt / Equity

Year Result Direction Remarks

in 000’ Rs.

2006 =

154,980,358

14.02

Ratio or equity is increasing as

compare to company’s debt as it is

clear by this ratio.11,053,230

2005 =

136,286,424

15.468,813,483

Graph

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13

13.5

14

14.5

15

15.5

2005 2006

Debt to Equity Ratio

Internship Report

Overall comments

This ratio shows the ability of the firm to meet the debt losses and shows the ratio of debt and

equity in the assets towards the earning. Solvency ratios show the better picture. One can say

solvency ratio is remaining same this year as the last year but with slight difference.

Company’s debt to equity ratio has been decreased. It means bank has been increased equity

ratio which is clear from the equity ratio. Debt ratio has been increased.

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Cash Flow Ratios

Operating Cash per Share

= Operating Cash / No. of Shares

Year Result Direction Remarks

in 000’ Rs.

2006 =

8,356,023,000

41.69

There is a decreasing trend the per

share operating cash. This ratio shows

the funds flow per share. It may be

due to the bonus shares this year.

200,433,300

2005 =

12,269,472,000

81.42150,701,800

Graph

By: MC05126 PUGC

1190

20

40

60

80

100

2005 2006

Operating Cash Per Share

Internship Report

Operating Cash to Cash Dividend

= Operating Cash / Cash Dividend

Year Result Direction Remarks

in 000’ Rs.

2006 =

8,356,026

37.43

This ratio shows the decreasing trend

in the operating cash to cash

dividend.223,246

2005 =

12,269,472

49.02250,285

Graph

By: MC05126 PUGC

120

0

10

20

30

40

50

2005 2006

Operating Cash to Cash Dividend

Internship Report

Operating Cash to Total Debt

= Operating Cash / Total Debt

Year Result Direction Remarks

in 000’ Rs.

2006 =

8,356,026

.054

This ratio shows the bank’s ability to

cover the total debt with the yearly

cash flow. There is a decreasing

trend in the ratio.

154,980,358

2005 =

12,269,472

.090136,286,424

Graph

By: MC05126 PUGC

1210

0.02

0.04

0.06

0.08

0.1

2005 2006

Operating Cash to Total Debt

Internship Report

Overall Comments

These types of ratios indicate the flow of cash in an organization towards the arning. This ratio

shows the organization’s ability to meet any liability in terms of cash. Or one can say that how

much the organization has ability to need the others like as cash dividend, total debt….etc. this

years’ cash flow ratios shows the decreasing trend overall as you can see that operating cash

per share cash flow has been decreased. Firms’ operating cash to cash dividend and total debt

ability has also been decreased. This coming year, bank need more operating cash flows

towards earning and to meet the deficiency so that investors and general public can interest in

the bank’s policies

“In nutshell, banks ability to earn has been effected. Profitability ratio and cash flow has also

been affected. Solvency ratios show the better trend as the bank has been increased the equity

ratio as compare to debt this ratio. This may also be one of the causes of company’s low profit

as compare to last year. But other indicators indicate that bank is in growing progress. So in

expansion it needs further capital. This low earning is temporarily basis.”

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Trend Analysis

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Horizontal Analysis

Profit & Loss Account

Description 2003 2004 2005 2006 Speed Dire-

ction

Trend

Mark up Earned 100% 110.15

%

215.55

%

309.22

%

69.74

%

Favorable

Mark up Expenses 100% 80.98

%

310.11

%

505.75

%

135.25

%

Unfavorable

Net Mark up Income 100% 125.09

%

169.96

%

208.59

%

36.20

%

Favorable

Total Non-Interest

Income

100% 171.27

%

162.78

%

224.30

%

41.43

%

Favorable

Total Non Interest

Expenses

100% 128.37

%

180.44

%

228.41

%

42.80

%

Unfavorable

Profit before Tax 100% 149.48

%

150.34

%

175.98

%

25.33

%

Favorable

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Profit after Tax 100% 174.37

%

183.31

%

203.97

%

34.66

%

Favorable

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Mark up Earned

0% 50% 100% 150% 200% 250% 300% 350%

2003

2004

2005

2006

Mark up Expenses

0% 100% 200% 300% 400% 500% 600%

2003

2004

2005

2006

Net Mark up Income

0% 50% 100% 150% 200% 250%

2003

2004

2005

2006

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Total Non - Interest Income

0% 50% 100% 150% 200% 250%

2003

2004

2005

2006

Total Non - Interest Expenses

0% 50% 100% 150% 200% 250%

2003

2004

2005

2006

Profit before Tax

0% 50% 100% 150% 200%

2003

2004

2005

2006

Profit after Tax

0% 50% 100% 150% 200% 250%

2003

2004

2005

2006

Internship Report

Balance Sheet

Description 2003 2004 2005 2006 Speed Dire-

ction

Trend

Equity & Liabilities 100% 125.50

%

169.93

%

194.45

%

31.48

%

Favorable

Total Equity 100% 119.21

%

174.63

%

219.01

%

39.67

%

Favorable

Total Liability 100% 125.90

%

169.64

%

192.91

%

30.97

%

Unfavorable

Deposits 100% 135.13

%

192.67

%

213.87

%

37.94

%

Favorable

Borrowings 100% 86.66

%

66.42% 94.10

%

-1.97% Favorable

Total Assets 100% 125.51

%

169.93

%

194.45

%

31.48

%

Favorable

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Lending to Financial

Institutions

100% 40.29

%

176.27

%

145.48

%

15.16

%

Favorable

Advances 100% 156.19

%

192.01

%

221.49

%

40.50

%

Favorable

Investment 100% 78% 116.30

%

129.50

%

9.83% Favorable

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Equity and Liabilities

0% 50% 100% 150% 200% 250%

2003

2004

2005

2006

Total Liabilities

0% 50% 100% 150% 200% 250%

2003

2004

2005

2006

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Total Equity

0% 50% 100% 150% 200% 250%

2003

2004

2005

2006

Deposits

0% 50% 100% 150% 200% 250%

2003

2004

2005

2006

Borrowing

0% 20% 40% 60% 80% 100% 120%

2003

2004

2005

2006

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Total Assets

0% 50% 100% 150% 200% 250%

2003

2004

2005

2006

Lending to Financial Institutions

0% 50% 100% 150% 200%

2003

2004

2005

2006

Advances

0% 50% 100% 150% 200% 250%

2003

2004

2005

2006

Internship Report

Vertical Analysis

Profit & Loss Account

Description 2003 2004 2005 2006 Speed Dire-

ction

Trend

Mark up Earned 100% 100% 100% 100%

Mark up Expenses 33.87

%

24.90

%

48.72% 55.39

%

7.17% Unfavorable

Net Mark up Income 66.13

%

75.10

%

51.28% 44.61

%

-7.15% Unfavorable

Total Non-Interest

Income

23.41

%

36.40

%

17.68% 16.98

%

-2.12% Favorable

Total Non Interest

Expenses

35.29

%

41.12

%

29.54% 26.07

%

-3.07% Favorable

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Investment

0% 20% 40% 60% 80% 100% 120% 140%

2003

2004

2005

2006

Internship Report

Profit before Tax 46.68

%

83.35

%

32.56% 26.57

%

-6.70% Unfavorable

Profit after Tax 27.08

%

42.86

%

23.03% 17.86

%

-3.07% Unfavorable

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2003

33.87%

66.13%

23.41%35.29%

46.68%

27.08%

Mark up Expenses

Net Mark up Income

Total Non-InterestIncome

Total Non InterestExpenses

Profit before Tax

Profit after Tax

2004

24.90%

75.10%

36.40%41.12%

83.35%

42.86%

Mark up Expenses

Net Mark up Income

Total Non-InterestIncome

Total Non InterestExpenses

Profit before Tax

Profit after Tax

2005

48.72%

51.28%

17.68%

29.54%

32.56%

23.03%

Mark up Expenses

Net Mark up Income

Total Non-InterestIncome

Total Non InterestExpenses

Profit before Tax

Profit after Tax

Internship Report

Balance Sheet

Description 2003 2004 2005 2006 Speed Dire-

ction

Trend

Equity & Liabilities 100% 100% 100% 100%

Total Equity 5.91% 5.61% 6.07% 6.66% .25% Favorable

Total Liability 94.09

%

94.39

%

93.93% 93.94

%

-.25% Favorable

Deposits 72.74

%

77.75

%

81.87% 79.41

%

2.22% Favorable

Borrowings 18.62

%

12.86

%

7.2% 9.01% -3.20% Favorable

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2006

55.39%

44.61%16.98%

26.07%

26.57%

17.86%

Mark up Expenses

Net Mark up Income

Total Non-InterestIncome

Total Non InterestExpenses

Profit before Tax

Profit after Tax

Internship Report

Total Assets 100% 100% 100% 100%

Lending to Financial

Institutions 6.76% 2.17% 7.01% 5.05% -0.57%

Unfavorable

Advances 52.44

%

65.26

%

59.25% 59.73

%

2.43% Favorable

Investment 25.89

%

16.09

%

17.72% 17.24

%

-2.88% Unfavorable

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(Liabilities & Equities) 2003

5.91%

94.09%72.74%

18.62%

Total Equity

TotalLiability

Deposits

Borrowings

(Liabilities & Equities) 2004

94.39%77.75%

12.86% 5.61%

Total Equity

TotalLiability

Deposits

Borrowings

(Liabilities & Equities) 2005

93.93%81.87%

7.20% 6.07%

Total Equity

TotalLiability

Deposits

Borrowings

Internship Report

SWOT Analysis, is a strategic planning tool

used to evaluate the Strengths, Weaknesses,

Opportunities, and Threats involved in a

project or in a business venture. It involves specifying the objective of the business venture or

project and identifying the internal and external factors that are favorable and unfavorable to

achieving that objective.

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(Liabilities & Equities) 2006

93.94%79.41%

9.01% 6.66%

Total Equity

TotalLiability

Deposits

Borrowings

(Total Assets) 2003

6.76%

52.44%

25.89%

Lending toFin.Institutions

Advances

Investment

(Total Assets) 2004

2.17%

65.26%

16.09%Lending toFin.Institutions

Advances

Investment

(Total Assets) 2005

7.01%

59.25%

17.72%Lending toFin.Institutions

Advances

Investment

(Total Assets) 2006

5.05%

59.73%

17.24%Lending toFin.Institutions

Advances

Investment

Internship Report

The internal and external situation analysis can produce a large amount of information, much

of which may no be highly relevant. The SWOT analysis can serve as an interpretative filter to

reduce the information to a manageable quantity of key issues. The SWOT analysis classifies

the internal aspects of the company as strengths or weaknesses and the external situational

factors as opportunities or threats. Strengths can serve as a foundation for building a

competitive advantage, and weaknesses may hinder it. By understanding these four aspects of

its situation, a firm can better leverage its strengths, correct its weaknesses, capitalize on

golden opportunities, and deter potentially devastating threats.

Internal analysis

The internal analysis is a comprehensive evaluation of the internal environment’s potential

strengths and weaknesses. Factor should be evaluated across the organization.

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External analysis

An opportunity is the chance to introduce a new product or service that can generate superior

return opportunities can arise when changes occur in the external environment. Many of these

changes can be perceived as threats to the market position of existing products and may

necessitate a change in product specification or the development of new products in order for

the firm to remain competitive. Change in the external environment may be related to:

Customers

Competitors

Market trends

Social changes

New technology

Economic environment

Political regulatory environment …. Etc

After working as internee for eight weeks in the Askari bank limited, Vehari branch, and

analyzing the over ratios and other things, I have come across the following SWOT analysis of

Askari bank limited

Strengths

Full day banking:

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One can avail the benefit of the services provided at the bank till 5:00 pm. This is

highly useful for those customers who find it difficult to leave their officers in the

morning. It is also highly useful who deposits their amounts on daily basis at evening.

ATM Network:

Bank has the largest ATM network cross the country. The customers of Askari bank

can withdraw the cash at anytime and at any place. Askari bank limited has one link

1300 ATMs across the country. Not only this, even one can deposit the cash with the

help of ATM cards.

Customized Solutions:

The management of the bank believes in customer focused banking rather than the

products oriented banking. The products and services designed by the bank are

specially tailored to the individual needs of its customers.

Customer oriented banking:

The priority banking centers of the bank offer an unmatched where the customer

receives highly privileged services in a highly elegant environment. It gives the chance

of experiencing new standards in banking. Designed specially for those who appreciate

only the fines things in life, priority banking offers the very high levels of personalized

banking to match customer’s unique status.

Electronic Banking:

The revolution in the banking in the form of electronic banking operations have opened

avenues of excellent, efficient and quick services saving the time and costs of the

customers and fortunately Askari bank is among those few banks who are already

reaping the benefits of electronic transactions.

Phone banking:

Phone banking services is very attractive for those classes of customers who do not

have time to personally come to the bank i.e. banking on the phone line thus saving the

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precious time of the customers. Not only this, even one can transfer electronically

without coming to branch.

Ethical concern and public image:

The organization showing concern for the people, ethics and environment enjoy good

public reputation and are able to reap the benefits in the long run. Askari bank

management is quite sensitive to this issue.

Weaknesses

In my opinion, these are the weaknesses that might be detrimental to the efficiency and

profitability of the bank.

Dual recoding:

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Although all the banking at Askari bank is computerized and online but still the bankers

use the make their entries in the accounting register. This is not the tome consuming but

expensively also.

Low job satisfaction:

Understanding and the effective management of the human resource is the most

difficult challenge faced not only by the bank but by all the organizations. Even though

the people have been sacrificed in the new organizational developments, it is becoming

clear that the true lasting competitive advantage comes through human resource and

how they are managed. Askari bank limited seems to not focusing on this highly critical

issue as the hob satisfaction level of the employees working at Askari bank limited, was

quite loss.

Lack of specialization:

The most and useful concept given by Adam Smith in 1776 seems to be missing

in the bank. The employees are constantly rotated from one job to another job of

totally different characteristic in the view of giving them the know-how of the

working in all the departments. But this is not a very good tactics by the

management. Otherwise the situation might be like this “jack of all and master

in none”.

Centralization:

There is a high degree of centralization in the bank. Almost all the decision-

making is in the hands of the upper management. But centralization is effective

up to a certain level otherwise it becomes inefficient and at times costly too. I

personally observed that delay occurred in the operations of the employees only

due to the fact that they had not got any instructions from the head office.

Lack of staff training facilities:

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Presently there is no specific training program arranged for the new recruiters.

They have to learn based on their observations and also their mistakes. It takes a

bit time for the fresh one to learn the banking. The result is the huge amount of

blunders, mistakes etc. resulting in monetary and non-monetary losses for the

bank. There is pressure not only on the new learner but also on the person

placed upon with this responsibility.

Opportunities

There are opportunities also exist for the Askari bank limited to capture the market not only

from investor’s perspective point of view but also form general public’s point of view.

Following are the main opportunities which Askari bank has in the market.

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Deals in Bulk Business:

Askari bank has been incorporated in 1991. but now it is operating not only in general

banking but also in some other large sectors such as; investment banking, agriculture

banking, Islamic banking. It is the project of Army Welfare Trust. This trust is

operating other big projects like as AIMS, Askari Leasing, Askari Cements, etc. so as it

has a big hand to support at bank, has a greater opportunity to touch the sky.

Attraction to foreign investment:

Askari bank is the second in Asia who has strong check and balance in its branches.

Bank has strong powerful internal audit system. That’s why bad debts of the bank are in

very small amount. Due to this reason, Askari bank getting the trust of foreign investors

and this lead to the foreign investment.

Strong potential for growth:

Askari bank has strong potential for growth. Organization is retained the earning in

large percentage when it is going to expand it business or going to start new business.

As the Askari bank has high retained earning and trust of people also, it has the

opportunity to grow.

Overseas branches:

Today world has become a global village. Regions are going to boundary less. Askari

bank has just one OBU. It has the opportunity to do the business across the boundary.

Branches in remote areas:

Rural areas have almost 60% percent employment which is higher than the urban ratio

of employment. Askari bank has the branches in main cities only. It has the opportunity

to go in the remote areas.

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Islamic banking:

Islamic banking in Pakistan has been started since the decade of 1980. according to a

newspaper, Islamic banking will get ten percent market share of the total banking in

Pakistan at the start of next decade. All banks have started the Islamic banking. But yet

there is no up to the mark progress. Askari bank has the opportunity in this sector.

Sharp increase in imports and exports:

Since the new 21st century, economic indicators of Pakistan are showing towards trend.

Trust of investors has been developed on Pakistan. Industry of Pakistan is increasing.

These all require the business across the boundary. Askari bank limited has the

opportunity to take the market share in the imports and exports as it has strong

worldwide network with the other banks.

Threats

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Opportunities come with the threats. These threats may be from the competitor or general

public or from anyone. Opportunities for Askari bank have also brought the threats. Askari

bank is facing the following major threats from the market today.

Higher employee turnover:

Loyalty or employee satisfaction is this “if employee has the better opportunity, then

also prefer to do work in the Askari bank limited”. but Askari bank is facing high

employee turn over. This leads towards the high expensive for the bank. These

employees also have the secrets of bank which my employee told to other bank

managements. This thing is also harmful for the bank.

High charges:

The schedule of charges indicates that the fees charged by the bank on the various

services it provides are high then the normal. It may result in decrease in the number of

its existing customers. Further more, this could be very alarming situation for the bank

in case some of the competitors grasped the opportunity and lowered its rates. The

result would be either the lost of market share or decrease In the charges resulting in

lowering the bank’s income.

Less attractive rate of return:

Commercial banks face considerable competition in attracting deposits from individuals

or small investors. In contrast, the govt. of Pakistan national saving scheme offers

attractive rate or return on long term fixed accounts, which banks find difficult.

Mergers of banks:

Today banks are merging by mutually exclusively like as merger of prime bank with

ABN. Arrival of new top banks of the world and merger of the banks is increasing the

threats for the growing banks like as Askari Bank Limited.

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Lack of innovative products:

Although Askari bank is leading to other banks in the Agriculture Banking, but still it

has the minimum brand of products except agriculture sector. Day by day new brands

by other banks is increasing the threats for newly growing banks.

Concluding Remarks for Analysis

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Askari bank limited has been incorporated in 1991. It has reached to sixteenth year in the

current year. Having more than 11.1 billion equity and have supported hand of Army Welfare

Trust. It has been grown rapidly. Today it stands in the “A” class banks category due to the

successful strategies. It has been started many of mega projects like as Islamic banking,

banking investment and OBU. I have worked as internee for eight weeks in this bank, Vehari

branch. I have learnt lot of things which could be possible during eight week and which were

operated in that branch. I have made analysis like as SWOT, Financial Ratios. Following are

the points which cover the overall aspects of what I have been analyzed.

Assets of Askari Bank Limited has been increased. And expenses of the bank have also been

increased. Analysis shows that expenses increasing ratio is higher then the increasing trend of

Assets and net margin of the bank. Earning per share has been decreased by Rs. 2.19 which is

approximately less16% then the earning of the last year. One major thing is the dividend yield

ratio and dividend payout ratio. Dividend yield ratio has also been decreased. If an

organization is going to expand its business or that organization is in the growing process or at

initial stages, company retained more retained earning and pays less per share. This year askari

bank is going t expand. It is establishing its branches not only cross country but also in the

remote areas. This thing requires more capital. So, we can say due to this reason askari bank’s

retained earning is high. Overall investor’s analysis is sufficient. High expense ratio has

decreased the overall profit of the bank. It should be controlled to achieve the targets.

Return on equity, assets and on investment is mix. We can say that it is approximately equal to

the last year. Return on assets has been increased. It shows the efficient utilization of the assets

towards the earning. Return on investment still remained the same as last year return on

investment.

In year 2006, bank has been increased the equity ratio in the total capital. It decreased the debt

ratio. In the equity, debt ratio is 14.02 which were 15.46 in year 2005. it shows the trust of

investors in the bank and bank management want to decrease the debt ratio of the bank which

might be favorable for the bank. Effective internal audit is also one of the main causes of the

trust of investors on the bank.

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Earning asset to total asset ratio is 89% which shows the efficient use of the resources towards

the earning of the profit. It shows that management is using the earning resources efficiently.

Return on earning assets is not much efficient but is sufficient as the bank is in growing

process. Net margin has been increased from the last year. Net margin for the bank year 2006

is 3.8% which was 3.5% in the bank year 2005. Net margin is the net earning of the bank on

the advances. Advances include both advances to the public and to the financial institutions.

Net margin can be increased more than current if bank reduce the markup rate slightly. It is due

to because bank’s markup rate of the bank on advances is high more than many of other banks.

If bank reduce the markup rate then it can give the more advances to the public because due to

low markup rate public will borrow from the askari bank limited.

Deposit time capital ratio is 11.93 percent which is less then the last year. This ratio is

favorable for the bank in both cases, in decreasing trend and in increasing trend also. But

generally it is favorable when it shows the high result. Here this ratio is showing the decreasing

trend. It is not favorable because deposit of the bank has been reduced by 11.5%. Although it is

sufficient but should be more than the current. Loan to deposit ratio is sufficient. But it can be

more if bank makes the efforts. I am saying it is because banks main earning is the difference

between markup on advances and deposits.

Bank is not introducing the new products. And it is not marketing the existing products

efficiently than other banks are doing. Bank should introduce the new products. It is coxcomb

that askari bank limited is leading the agriculture banking. Head of the Agriculture division has

introduced the lot schemes and products for the farmers of the country. We can say that in this

sector bank is taking the steps equal to government.

Today era is the era of efficient HR. now almost every organization has the HR Department as

every one knows the importance. Satisfied employees will create the satisfied customers and

satisfied customers will satisfy the employees. So during my internship, I observed that

employee was not satisfied from their job. One reason was the long working hours with the

salary for officially hours. It is very coxcomb that askari bank limited has taken the initiative of

increasing the salaries of employees. It has been increased the salaries of employees more than

the market demand. It proves that HR Department of the bank is strong and efficient also.

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It has another edge that it has the back hand support of Army Welfare Trust which has many of

other projects like as; askari leasing, askari cement etc.

Overall bank’s progressive remained well. Banking is growing rapidly. Just in sixteen years of

banking, it has been spread in various sectors like as investment, OBU, Islamic Banking. it has

the lack of Islamic bank branches. It should increase the Islamic branches cross the country

because today people prefers the Islamic banking. It has been contributed towards the

economic growth. Due to which it has to face challenges from the competitors.

Organization’s Dilemma

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Askari bank has the supporting hand of Army Welfare Trust (AWT) as it is the project of

AWT. Bank has made progress with rapidly growth but still it has some deficiencies. Askari

bank’s ATMs network is limited and existing network is not working properly. As the

Pakistani economy is growing up, competition in each sector especially is obviously will come.

Askari bank according to me has not adopted the right policies in the current year as its overall

progress is below then the last year. HR Department is not working properly. Employees are

not satisfied. According to the current news, bank has taken the steps towards the solution of

this dilemma as it has increased its employee’s salaries more then the market demand. It should

increase the number of branches and should make the efforts towards the increasing of per unit

profit. Debt to equity ratio is favorable but it should insert more investment whether through

equity or debts. Major dilemmas of the bank are the HR solution and the strategies which

should face the competitors. If bank solves these two quandaries, it will get again the best

quality award and “bank of Pakistan”.

Recommendations for Improvement

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Askari Bank Limited is a well-known financial institution in the banking sector, it is said,

nothing is perfect in the world, and there is always space for deficiencies. Deficiencies are

point out for the correction. Following are recommendations for the management of Askari

bank limited to overcome the deficiencies.

Enhance the network:

Although the bank has a network of nationwide branches but it should spread its branch

network in the remote areas specially. Bank should spread its network across the

boundary.

New product introduction:

Bank should introduce the new products and to market its products, it should accentuate

to give advertisements on both print and electronic media.

HR Department Role:

The quality of human resource lies at the center of every organization’s success and no

doubt Askari bank Limited is fully aware of the importance of a satisfied and well-

trained work force that gives completive advantage but the problem which I have

observed is that employees of Vehari Branch don’t have enough training about their

products. The state of the art training and development center at Askari Bank Limited

should arrange workshops and seminars for employees at every level to empower them

professionally.

Satisfy the Employees:

To reduce the high turn over of employee, salary package should be increased and extra

benefits should be given to the employees as the bank timing has been increased. It is

very coxcomb that Askari bank has increased its employees’ salaries more than

demands of the market.

Markup Rate:

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Today is the era of competition. Due to the new mergers and arrival of world class

banks in Pakistan competitive environment is increasing. To compete the competitors,

Askari bank should reduce its service charges and increase the rate of return to

depositors and reduce the markup rate on advances.

Decision Making:

Askari bank should give the authority to lower level management or employees like as

branch manager to make the decision at sight. It will reduce the cost and time and

customer satisfaction level will increase.

Conclusion

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Askari bank has celebrated its 16th birthday in the summer. In

these sixteen years, it has been grown rapidly. Over all

progress of the bank remains good and appraisable. Investors

even foreign have trust on the bank. It has strong internal audit

department as it is the second bank in Asia who has strong

check and balance / audit department. It is to be approved by

the zero percent charges written off. It has been contributed

towards the growth of economy especially in the agriculture

sector. It has been won the 1st prize of Pakistan banker from

the “Asian banker” magazine. Presentation of financial

statements stood first since 1997 to 2005. Bank has been

increased its employees salaries according to market trend.

These all shows the overall effectiveness of the management

not only for earning of profit but in the welfare of employees

and of customer’s satisfaction also. Investors can trust in the

bank. Bank should increase the number of OBU branches and

Islamic branches. it should give the authority to middle level

management to make the decision at the spot to make the

efficient services. It has only six Islamic branches till the start

of year 2007. Overall behavior of the bank and its employees

is very good.

“According to the current trend and past data, it will grow

rapidly and will stand soon at the Pakistan bank.”

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