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ACBL Internship Report



“Banking means the accepting, for the purpose of lending, or

investment, of deposits of money from the public, repayable on
demand or otherwise, and withdraw able by cheque, draft, order or

“Banking companies mean companies which transact the business

of banking in Pakistan.”


“The commercial bank receives surplus money from the public and
lend to others who needs funds. Bank collects cheque, bills of
exchange etc from customers. It transfers money from one place to
another. It provides agency and general utility services. Purpose of
commercial bank is to earn profit.”

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The banking sector has witnessed a dramatic change during

the last ten years with the development of Askari Bank, which is not
only redefining priorities and focus of the banks, but also
threatening the domination of traditional players.
The story begins with the incorporation of Askari Commercial
Bank limited in Pakistan on October 09, 1991, Askari Bank
Commenced (begin) to operations in April 1992, as a public limited
company. The bank is listed on the Karachi, Lahore and Islamabad
Stock Exchanges and the initial public offering was over subscribed
by 16 times.
While capturing the target market share amongst the view
banks, Askari has provided good value to its shareholders. Its share
price has remained approximately 12% higher than the average
share price of quoted banks during the last four years.

Askari Bank has expanded into a nation wide presence of 83

Branches, and an Offshore Banking Unit in Bahrain. A shared
network of over 800 online ATMs covering all major cities in
Pakistan supports the delivery channels for customer service. As on
December 31, 2004, the Bank had equity of Rs. 6.016 billion and
total assets of Rs. 107.168 billion, with over 475,000 banking
customers, serviced by a total staff of 2,118.

Askari Bank is the only bank with its operational head office in
the twin cities of Rawalpindi-Islamabad, which have relatively
limited opportunities as compared to Karachi and Lahore. This

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created its own challenges and opportunities, and forced as to

evolve an outward-looking strategy in terms of Askari market
emphasis. As a result, Askari developed a geographically diversified
assets base instead of a concentration and heavy reliance on
business in the major commercial centers of Karachi and Lahore,
where most other banks have their operational Head offices.


While successfully penetrating the key domestic markets

through strategic expansion and business diversification they
remain alive to the challenge emanating from the development in
the global financial markets; the opportunities and threats
engendered by greater deregulation and increased customer
expectations. These provide them the impetus (moment) to make
the best use of available resources, including modern technologies,
to meet the challenges ahead.
Historically, Askari’s core marketing focus for its asset base
has been the middle and upper middle business houses (including
wholesalers and manufacturers) operating in the large urban
centers of Pakistan, which are primarily oriented towards foreign
trade. This segment constitutes significant revenues to the bank.
The liability side remains focused on the middle and upper middle
class retired and serving government and armed forces personal
and mid-size business houses.
Their corporate banking division was established in April 1999
with the primary focus on servicing large corporate and multi-
national companies (MNCs). Benefiting from the bank’s growing

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balance sheet size, this division B now gaining momentum and

their long-term aim D to develop it into an independent.
Strategic business unit (SBU)… This would the bank to
acquire, develop and specialized abilities, and enhance their focus
on serving the emerging needs of the corporate clients.
With this branch network of 75 and further expected increase
in future, the ATM’s facility and internet Banking, Askari Bank’s
reach is ever increasing. In recognition of this reach, they have set
up a retail-banking group in July 2000, the mobile ATM’s facility is
first time started by Askari commercial bank in 2005 dedicated to
serving the urban consumer market; Askari is committed to
aggressively market this segment. The strategy is to provide their
customers with a basket of innovative products to meet their
varying needs.

Askari Commercial Bank is the only Private Sector bank that has
been approved by the World Bank as a Participating Financial
Institution for the US$ 200 million Line of Credit sanctioned
(authorized) to the Government of Pakistan for the Financial Sector
Deepening and Intermediation Project.

Askari's emphasis on further broadening its core foreign trade

business translated into handling a higher volume of Export and
Import business of Rs. 36 billion registering a growth of 42% over
the pervious year. This enhanced foreign trade business was
secured due to excellent customer services and efficient
international settlement arrangements with our correspondent

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Askari Bank is operating throughout Pakistan. Most of the

branches are connected through our State of the Art, On-line
Communications Network, which gives the bank a competitive edge
in providing instant services to its clientele. We also offer direct
access to the latest Foreign Exchange Rates through our Online

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1) Corporate banking and financial institutions group
2) Retail banking group
3) Operations and credit group.


This Group is responsible for serving the needs of large corporate
clients in public and private sector, managing correspondent
banking relationships and undertaking money market transactions.
The Group is organized in three divisions namely
 Corporate and Merchant Banking Division,
 International Division
 And Treasury.


This Division is engaged in provision of financing facilities to large
corporate clients including multinationals. Principal activities include
syndicated loans, guarantees, and working capital finance,
underwriting and advisory services. The Division has played an
important role in providing development finance for the
modernization and expansion of the country's core industries.
Credit risk is well diversified with exposures in sectors like fuel &
energy, chemicals, textiles and fertilizers. Three units have been
set-up at Karachi, Lahore and Rawalpindi for sales and operations,
which are supported by centralized marketing from the Head Office.

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Mainly responsible for managing correspondent banking
relationships and planning overseas operations, the Division plays a
vital role in extending foreign trade transactions support to the
branches. The Bank became a member of SWIFT in the Year 2000
and is also a contributor to the equity of Pakistan Export Finance
Guarantee Agency Ltd With a network of 167 correspondents
spread over 95 countries worldwide, the Bank continued to
reinforce its leadership position in trade finance, transacting
business of over Rs. 70 billion, during this year. Through the
concerted efforts of this Division, we are a participating Bank under
the "Pakistan Trade Enhancement.
Facility" of the International Finance Corporation, and our
customers are entitled to avail of the "Political Risk Guarantees
Scheme" extended by the Asian Development Bank.

Responsible for managing Bank’s liquidity and foreign exchange
transactions, our Treasury in one of the most active in the market.
Through reported transactions, purchase of Government paper and
foreign exchange trading, the Division adds substantially to the
Bank's sustained earnings.


Retail banking group was formed in 2000, this group is responsible

for serving the needs of the retail market. Focusing on individual
consumers and small and medium size enterprises, for purpose of

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product differentiation, the group is managed in three business

 Investments products unit,
 Asset products unit,
 And the credit cards division.


Responsible for developing and managing brands which serve the
investment needs of the consumer market, this unit focuses on
deposit mobilization, provision of value added services based on
modern technology and undertaking the centralized marketing and
advertising for the Bank. This unit is also actively involved in the
acquisition business and has signed-up over 300 merchants nation-
wide which offers shopping discounts to the Bank's Privilege Card

Askari Bank's Value Plus is a unique deposits account, which offers

handsome monthly profits, accidental insurance cover, partial
liquidity on all time deposits and free Privilege Card membership.
The Unit is also administering the sales and distribution, including
arrangement for strategic partnership alliances for Askari- i-Net
Banking, the first internet banking in Pakistan, which allows routine
banking transactions from any where in the World, round the clock,
over the internet.


This Unit is engaged in the development and management of retail
credit schemes. The consumer market in Pakistan has not only
grows exponentially over the last decade or so, but the needs of

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this segment have become extremely diverse. In order to

sustain competition, it is but imperative to continue offering
innovative consumer credit schemes. With the launch of Askari
Bank's Personal Finance an Askar (auto-loans), this unit is
emerging as a significant contributor to the Bank's loan growth. The
unit also administers the first e-commerce banking solution in
Pakistan, under the brand name ASK-IBL online. This is a b2b
automated credit transaction module, offering merchandise credit to
retailers on goods purchased form one of the largest distributors n
the country. Strong collection and prudent risk management
policies have restricted delinquencies to very low levels.


This Division manages Askari Master Card brand and is
headquartered at Karachi. With a new fully automated transaction
processing system, the brand was re-launched in 2001, supported
by an aggressive advertising campaign and strong sales team
network. The product now has portfolio of nearly 20,000 cards, in
less than one year. The brand is accepted worldwide and over
3,000 locations in Pakistan.


A support function group mainly responsible for development of

systems and procedures, process re-engineering, automation and
credit management. The group is organized in three divisions,

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 System and operations division

 Electronic technology divisions
 And the credit division


This group has been instrumental in development of procedures and
manuals for various operating requirements of the bank. After
careful mapping of the existing process flows, the division
recommends automation and re-engineering requirements. To
improve transaction efficiencies. The division is active in providing
equipment procurement support and development of new branches.
The protection of fixed assets of the bank is also managed by the
by this division, as directs function. During year 2001, the division
has proposed several cost cutting initiatives based upon
improvement of our existing procedures and documentation
reduction. Seven new branches have been opened during this year.
The division successfully implements the model branch concept
during 2001, which has been proved to be a milestone towards
improving our customer service standards and achieving process
uniformity with optimum resource utilization.


This division operates as the backbone for all operational functions
in the bank. Responsible primarily for the development of banking
software and provision of computer hardware to all business units,
the division also engaged in the development of technology based
value added customer service products. The division has helped the

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bank in playing the pioneering role in offering Internet banking

service e-commerce solution and on-line banking. The division
provides online real time branch connectivity and has full-
automated transaction processing support programmers in the
place. The division is focusing on use of data-warehousing
technology to enhance the relationship management program of the

Providing extensive support to branches for credit administration,
control and monitoring, the division has played a pivotal role in
helping the bank achieve a remarkable loan
Growth of 31%, with well diversified risk exposures. Most of the
loans are of shot -term trade financing on a secure and self-
liquidating basis. The division has a special assert management
team, which is responsible for ensuring low ratio of bad debts,
effective monitoring of delinquent advances and close follow-up of
recoveries. Bank's head office credit committee, reviews the credit
quality and pricing on regular basis not only to ensure healthy
credit growth but also the management of bank's risk assets in
almost prudent and profitable manner

Taking into account the expanding branch network and the

increasing customer base, credit administration was strengthened
by decentralizing the delegation of lending authorities at the
regional and area management level.

The decentralization has benefited the bank and its customer

tremendously as the new arrangements now provide for faster

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credit delivery, focused credit development, and more effective

monitoring and controls. Further steps are being taken to
streamline credit appraisal procedures and training to credit officers
at all levels.


Strategically, perhaps the most important division at the head office
is responsible for human resource management, including
recruitment staff training and evaluation. The division also handles
matters relating to administration. This division operates on future
oriented strategy focusing on employee’s personal and professional

Staff development activities are geared to enhance their capabilities

for applying the knowledge and facts towards development of
practical situations. Under our human resource management policy,
we develop and groom our management personal for positions of
greater responsibilities analytical, interpersonal, conceptualized and
specialized skills to enable them understand cause-and-effect
relationships and to think logically.

Staff is given on the-the -job as off-site training in diverse areas of

banking and management. Our hiring philosophy is based upon
meritocracy and selecting the right person for the right job. We lay
greater emphasis on employee’s honesty and integrity besides
technical competence. Candidates are selected through well defined
and systematic selection procedure.


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Responsible for bookkeeping and accounts, this division at head

office, prepare all financial return and the MIS through its
management-reporting wing. The division is actively involved in
preparing market comparative analysis, consolidation of bank's
budgets, its monitoring and constant review of various financial

Finance division works as the backbone for the bank's operations.

The division, which reports directly to the president and chief
executive of the bank, has been instrumental in preparation of
banks business plans and future strategies. The budgetary
performance are constantly reviewed and through a sophisticated "
monthly performance report” which is a computer based program,
the division provides feed back to the senior on strategic issue like
reasons for budgetary variance and methods to arrest negative
performance factors.

Preparing the bank's annual accounts and coordinating external

audit is also a direct function of the finance division. Through the
dedicated efforts of staff at this division, the bank has been winning
various awards foe the best presentation of the annual accounts
and also the management has also been able to monitor and review
the bank's performance in proactive manner.

The audit division reports directly to the board through the
executive committee, which is also the audit committee. The audit
division is completely independent of the management and is
responsible for checking and reporting on the management

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compliance with the boards policies and directives, as also the

prudential regulations and other directives of the SBP. However
their role is not intended to just that of fault finding; but also
guiding and assisting branches in improving their operations.

The division is responsible for evaluating every aspect of the bank's

operations with the goal of improving the effectiveness of risk
management and internal control. There is also a regional audit
function attached to each area office; the nature of this business is
of more quality assurance rather than strictly audit. The regional
audit report to the area manager, and assist them in ensuring that
there is proper compliance with all the relative directives, and also
that customer service standards are maintained and improved, at
the branches in the area.

The system of regional and area offices has been introduced since
1999 for effective supervision and control of branches. The scope of
the system also spans the development and management of bank's
business and activities, on a regional basis.

The bank's branch network has been divided into 6 regions:

1) North region
2) Comparison of Islamabad and Rawalpindi area and the north
3) Central region
4) Comprising of Lahore and East area.
5) South region: and

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6) West region

A process of effective decentralization has been implemented, with

delegation of authority and greater responsibility and
accountability. Under this system the regional heads have the
primary responsibility for business development, profitability
productivity, operational efficiency and credit quality.

The system helps the customers through quick decision-making and

fast product delivery. It has now enabled the bank to further
expand and diversify its geographical reach and business activities.

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To be the leading private sector bank in Pakistan

With an international presence,
Delivering quality services
Through innovative technology
An effective resource management
In a modern and progressive organization
Culture of meritocracy, maintain
High ethical and professional standards,
With providing enhance value to all our stakeholders,
And contributing to society


To be the leading bank in the region...


The intrinsic values, which are corner stones of Askari

corporate behavior, are:

• Commitment
• Integrity
• Fairness
• Team-work
• Service

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As Askari Bank looks ahead to the future by moving through the

decade of the 1990's its efforts are guided by a broad framework
of corporate objectives, which are as follows:
 Askari is committed to its identity of " security & trust " and
will endure to uphold this image at al the times.
 It will endure to provide its customers with as many creative
financial services and products, as is required. As today
customer demands a package of services suited to his
particular business, Askari plans to develop different and new
products to cater to the customer's demand. Askari bank has
they strength to be a market leader.
 Bank will keep standing and by and develop, its human
capital base. It is planning to provide all the required training
to its staff towards achieving a higher level of
professionalism. Askari will continue striving to build a strong,
motivated and dedicated work force where total commitment
will be towards customer's satisfaction and wealthy growth of
 Askari bank will endure to provide a competitive return to its
shareholders and will strive to maximize its share value. The
enhancement in its capital and returns will be a continuous
process. Askari bank is interested in being one of the most
financially viable institutions. So it lays great emphasis on
gradual building up to a healthy deposit mix. In the years
ahead, the bank will enhance its focus on growth through
operational efficiency, creating strategic alliances developing
well-structured networking system innovating new products,

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enhancing marketing and sales efforts improving

customer service, achieving greater employee motivation and
providing the best value to its stakeholders - will make it a
leader in the corporate world.


These objectives and guiding mission will be achieved through

• Focused objective
• Winning as a team
• Excellence in delivery
• Relentless quality
• Upward rising sales

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Askari code of business principles is to:

• Deliver solutions that meet customers financial need;
• Build and sustain a high performance culture;
• Build trusted relationships with all shareholders;
• Build and manage the bank’s portfolio of businesses to
achieve strong and sustainable shareholder returns; and
• Create and leverage strategic assets and capabilities for
competitive advantage.


“The Challenge... to bring a dream to life”

From knowing Askari customers' requirements to understanding

employee needs, from utilizing modern technology to making
responsible social contributions, from enhancing stake-holders'
value to practicing corporate ethics, Askari is continuously and
consistently striving to address newer challenges with a single
motivation - the power to inspire and be inspired. Organizational
goal and strategy define the purpose and competitive techniques
that set it apart from others organizations. Goals are often written
down as an enduring statement of company intent.

A strategy is the plan of action that describes the resource

allocation and activities for dealing with the environment and for
reaching the organizational goal. Goals and strategies define the

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scope of operations and the relationship with employees, clients

and competitors.
With over 14 years of experience in trade finance and an extensive
international branch network, Askari Commercial Bank is committed
to help the customer succeed in every competitive environment. To
keep pace with changing needs, ACBL constantly review its
comprehensive cash, trade and treasury products and services,
ensuring that a full range of flexible and innovative services is
always available for the customer wherever they trade.


"Before we discover, we must explore"

Knowing Askari customers and their needs is the key to

Askari business success. Askari products and services are
structured to touch and improve the quality of lives of all segments
of society. Service quality standards are designed and monitored to
ensure a consistent and convenient customer experience. Askari
client relationship managers are well equipped and well trained to
provide most efficient and personalized service to each and every
customer. Askari products and services are as diverse as Askari
market segments. Askari have structured and syndicated financing
arrangements, working capital finance, Balancing-Modernization -
Replacement (BMR) facilities, financing of international trade,
consumer credit, small business loans, credit cards and unparalleled
investment products for the individual saver. Askari Bank is proud
of the pioneering role in providing the most modern technological
services to its customer base, which today exceeds 150,000

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"Unusual effort on part of the employees who are apparently

ordinary workers is one of the key indications of a superior

Askari staff is Askari most valuable asset. The human

resource philosophy at Askari Bank focuses on multi-talent hiring,
professional grooming, requisite training and meritocracy based
reward system. Askari lays great emphasis on the development
and nurturing of "Askari Culture", a cohesive teamwork, where
each relies on the strength of the other and together they achieve
common objectives.
Staff welfare has always been a priority. New initiatives like
hospitalization plan, car buy-back facility and home loan
insurance have added new dimensions to the staff-care policy and
motivated them to out-perform Askari competitors.
Employee productivity enhancement is organized through
extensive in-house and external training programs. Askari
continue to offer opportunities for people to develop their
knowledge, skills and personalities, thus ensuring greater self-
fulfillment and progression in the organization.

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"Modern science is not an option, it is an obligation”

Technology is rapidly changing the way Askari think, act and does
business. It has played a pivotal role in enhancing customer
expectations, particularly with respect to speed and quality of

Askari enjoy a strategic competitive advantage over all domestic

players by virtue of Askari leadership in technological
innovations. Askari have fully automated transaction-processing
systems for back-office support. Askari branch network is
connected on-line real-time and Askari customers have access to
off-site as well as on-site ATMs, all over Pakistan.

Askari Phone Banking service and Internet Banking facility allows

customers to enjoy routine banking services from anywhere in
the world, 365 days a year, 24 hours a day. Askari have also
pioneered commerce venture in Pakistan through a major retail

Askari qualified and experienced technology team is now

focusing on data warehousing to enhance the Customer
Relationship Management (CRM) program

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"Professionalism without integrity is like a book without

Because the right may not always be obvious, Askari must be
guided in every action by a set of well-defined values, governing
Askari decisions. Askari understand that its commitment to
satisfy customers’ needs must be fulfilled within a professional
and ethical framework. Askari subscribe to a culture of high
ethical standards, based upon development of right attitudes.
The following primary core values provide the guiding principles
for Askari corporate behavior:
• Commitment
• Integrity
• Fairness
• Team-work
• Service
As part of Askari internal communications program, these core
values are inculcated in Askari employees through internal
memos, posters and most importantly leading by example.


"The greatest of life's pleasures are shared"

• Askari role as a responsible corporate citizen is as important

to ACBL as the products and services they offer.

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• Askari have made useful contributions in the areas of

sports, culture, poverty alleviation, health & medical
sciences, education and scientific research.
• Askari was one of the co-sponsors of the 9th South Asian
Federation Games, held at Islamabad in the Year 2003.
Askari have also sponsored various sports tournaments at
both amateur and professional level.
• Askari contributions to the NGOs dedicated to the treatment
and welfare of the blind is a ray of hope in the darkness.
Askari have made donations to the drug-addiction control
programs and Askari efforts to help support Aids Awareness
programs and contributions to the mental and social welfare
of women and children have won much acclaim.
• Askari participated in IUCN Water conservation initiative
and have helped in creating better understanding about the
country on the international platform by cosponsoring the
first interactive encyclopedia on Pakistan.


"There is no sin punished more implacably by nature than

the sin of resistance to change"

Askari live in a moment of history where everything is

changing so fast that Askari begin to see the present only when it
is already disappearing.
Askari customer needs are changing and their expectations
are growing. Technology is fast proliferating the distribution
channels and now banking services can be accessed from multiple

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contact points. Askari believe that balanced growth is the key

to survival in today's global banking environment.
From a humble beginning with just 7 branches in 1992,
today Askari enjoy a network of 73 outlets in Pakistan, spread
across the country. A network of self-service ATMs supports these
Askari total assets now exceed Rs.50.9 billion and Askari
have over 17 products and services to match Askari customers'
individual needs. Bank's equity base stands at Rs. 2.58 billion
with 20% growth over the last 5 years. The human resource
capital of the bank today exceeds 1,200 employees. As part of
Askari growth strategy Askari is now extending Askari banking
services to the remote and rural areas.


"Winning isn't everything, it's the only thing.”

Amidst tough competition, Askari efforts to go an extra mile

in providing superior services to Askari customers have been
acknowledged at the national as well as international levels.
These acknowledgements serve as a great source of
encouragement and appreciation at one hand and inspire ACBL to
perform even better, on the other.
The Global Finance Magazine has honored Askari with the
“The Best Bank in Pakistan” award. Askari won the Euro money
and Asia money awards as early as 1994, 1995 and 1996. Askari
have Al+, the highest possible credit rating, for the short-term
obligations, and Askari long-term rating stands at AA. Askari won

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the prestigious "Best Presented Annual Accounts" award from

the Institute of Chartered Accountants in Pakistan, and The
Institute of Cost and Management Accountants, Pakistan, for the
services sector, for 2000. Askari have also received prizes during
the last four years from the South Asian Federation of
Accountants (SAFA) for the "Best Presented Annual Accounts" for
the financial sector, in the SAARC region.

Askari was the first bank in Pakistan to offer Internet Banking

services and b2b e-commerce solutions for merchants looking to
purchase on credit.

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Executive Committee Internal Audit

President and Chief


Corp. Banking & Operating and Retail Banking Credit Cards

Fin. Inst. Group credit group Group

International Credit Rawalpind Planning and

Asset Products
i/Islamaba Corporate affairs

Treasury Electronic North Investment Human

Technology products Resource

Corporate and Systems and Lahore Finance

Merchant Banking Operations

Data Reporting East

Legal Affairs South I

South II


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Board of Directors
Lt. Gen. Waseem Ahmed Ashraf Chairman
Lt. Gen. (R) Masood Perwaiz Chairman Executive committee
Mr. Kalim-ur-Rehman President & Chief Executive
Brig (R) Mohammad Shiraz Baig Director
Brig (R) Muhammad Bashir Baz Director
Brig (R) Asmat Ullah Khan Niazi Director
Brig (R) Mohammad Safdar Ali Director
Mr. Javed Ahmad Noel Director
Mr. Zafar Alam Khan Sumbal Director/Secretary
Mr. Shahid Hafeez Azmi Director
Mr. Mohammad Afzal Munif, FCA Director
Mr. Tariq Iqbal Khan, FCA Director (NIT Nominee)

Audit Committee
Mr. Muhammad Afzal Munif, FCA Chairman
Brig (R) Muhammad Shiraz Baig Member
Brig (R) Asmat Ullah Khan Niazi Member
Mr. Zafar Alam Khan Sumbal Secretary

A.F.Ferguson & Co
Chartered Accountants

Legal Advisors
Rizvi,Isa, Afridi & Angell

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Registrar & Share Transfer Office

M/s THK Associates (Private) Limited
Ground Floor, Modern Motors House,
Beau mount Road, Karachi, 75530
Tel : (021) 5689021, 5686658, 5685681
Fax: (021) 5655595
E-Mail: askari@isb.compol.com

Registered Office /Head Office

AWT Plaza, The Mall,
P.O.Box 1084, Rawalpindi.
Tel: (051) 9063000 Fax: (051) 9272455

Website: www.askaribank.com.pk

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A. Financial policies
B. Procurement policies
C. Marketing policies
D. Promotional policies
E. Lending policies
F. Personal policies


The financial policies of any bank are the most important policies
through which the whole banking activity is conducted. These
policies are primarily conducted on:
• Source of funds
• Use of funds

The bank finance policy is acquiring funds from the following
• Deposits of account holders.
• Interest on advances and loans granted to the borrowers.
• Income and commission from the services provided by the
• Bank open various types of accounts for its customers
Services are provided for earning.
• Interest income and commission bank providing the services
to its customer.


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After the acquisition of the funds their acquisition become

necessary. The bank seeks the best way for making investment to
got more profit with the maximum security. The bank has an
investment portfolio in which it allocate its funds for crediting to
borrowers, investment in the stock market, investment in the real
estate property etc. for allocation of funds a bank has to follow
some banking policies and the prudential regulations of SBP these
A bank has to maintain a liquidity with central bank ,i.e. 25 %of its
total deposits.
A bank cannot invest all of its funds otherwise it will be difficult to
meet urgent needs.
A substantial part of funds is received from interest on loans and
advances. Before granting a loan the bank analyze and observe the
borrower and conduct a complete ratio analysis. Bank prepare
credit line for this purpose the major thing is granting an advance is
the security offered by the borrower and its actual market value.


Procurement policies are more concerned with manufacturing

organizations. In bank industry that is service industry procurement
means the procurement of funds from various sources such as
deposits. It involves attracting and holding the funds of the
depositors. After the acquisition of funds, the bank invest the acquire
funds. One alternative is to lend its money and earned interest
markup or invest in govt. securities etc. as already mentioned in the
above paragraph the major sources of funds for a bank are the
deposit of the general and the other sources of income includes

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interest or markup charges received for various services offered

by the bank to its clients.
A bank tries to attract maximum no. Of accounts so that it can
increase it’s deposits and these lending ability. In order to get
maximum no. of accounts the staff of the bank must be efficient as
compared to the other banks and the manager of the branch must
take personal interest in attracting deposits. Good quality of the
service is the key to success.


Marketing policies are also one of the most important policies

because they are related to the growth of the organization.
Marketing for a bank would mean:

1. Creation of new product and services.

2. The bank marketing must be consumer oriented.

Following are the marketing policies of the ACBL.

a. Keeping the track of latest development in the world

and incorporating the latest and most modern
equipment to make the banking procedures simple and
easy for the customers.
b. Development of products for the customers.
c. Giving good services and maintaining good relations
with the customers.

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These policies can be implemented by providing the right

product and service to the customer at the right place, at the right
time, at the right price.
It is necessary for the managers to keep in touch with consumers,
observe their needs and develop products, which meet their needs.


Public relation and advertising has assumed a great importance in

the modern banking business. As for as promotional activities are
concerned, the main objective of the bank is to inform the existing
clients and other people about its new products or change in the
existing services. ACBL establishes its purpose through:

1. Direct contact with customers.

2. Relation with business organizations.
3. Community relations.


Every bank has its own lending policies except for those, which are
common for all the banks, i.e. the policies, which are imposed on all
the commercial banks by the SBP, are known as prudential
regulations. The lending policies of ACBL are as follows:

1. The bank only invests in those sound and viable projects,

which have good rate of return.
2. Bank prefers to advance loan to their account holders.
3. Loan is given to reliable person only.

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4. No political loan is sanctioned by bank.

5. Any account holder can apply for running finance or demand
finance. The manger apprises the past record of account
holder and his credit worthiness. If he finds any thing wrong
he can refuse to sanction the amount.
6. The bank while taking security prefers govt. Securities to
7. It also advances working capital loans.


Personal policies have an important role in the success of an any

organization. ACBL have its proper personal policies. Good personal
policies motivate the employees towards hardworking.
Following are the main personal policies of ACBL:
1. Selection of employees on merit
2. Selection of capable employees.
3. Attractive salary package for motivation of employees.
4. To train and develop the future management of the bank.
5. Every employee must have certain set of clearly defined
6. Effective communication at al levels of the organization.

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Banking procedures are divided between various

departments. Different departments do their jobs in occurrence with
the bank policies. In ACBL each branch is divided into various
departments. Head of department manages each department &
officials of the branch follow procedures.

The departments working within a branch are as:


 Account opening department
 Remittances department
 Cash department
 Clearing department


 Online banking


 Import department
 Export department
 Foreign currency department


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Account Opening In-charge

Officer Officer

Functions of Account Opening Department

• Providing account opening form according to the customer's

• Guide the customer about the requirements of the account
opening and form filling,
• Check the forms whether they are correctly completed or not,
• Preparing checklist,
• Stamping on the form,
• Maintaining account opening register,
• Pasting of forms in register after release from general banking
in charge,
• Issuance of cheque books,
• Issuance of accounts maintenance certificate,
• Closure of account
• Verification of signature in case of cheque presented before
releasing of account opening from SS card is not yet scanned

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Introductory references As soon as a person opens an account with
the bank, the banker customer relationship is established. In such
situation this is advisable the banker should not open new accounts
of unknown persons unless references regarding the integrity and
responsibility of the purposed persons are obtained from
respectable parties.
Failure to exercise this care may result in serious consequences not
only for the banker concerned but also for the other bankers and
general public. It is not sufficient to obtain the reference but its
genuineness must also be verified. Omission of this may have
serious consequences.
In practice we see that there is tough competition among bankers
for procurement of deposits, so to press a prospective new
customer to find the desired reference may offend him, yet he is to
be welcomed by the banker as a source of fresh deposits. But these
practical difficulties have to be handled tactfully because the risk
involved to carry out this requirement partially or wholly may lead
to undesirable results.


If preliminary necessary inquiries mentioned above are not made
and account is opened, it is possible that an undesirable person is
provided with a chequebook to defraud innocent people or the
person being an undercharged bankrupt may put the banker in
difficult situation.


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Sometimes due to misreading of the balance an account may be

inadvertently overdrawn or the credit entry of customer is placed
into the account of another person by mistake who happens to have
withdrawn that amount. in all such cases the amount can only be
realized if the person is man of integrity.


Have all necessary information with him regarding his Generally a
banker is asked by another banker to give his opinion about his
customer’s financial position. Therefore, it is beneficial for the both
that the banker should customers.


Under section 131 of negotiable instrument act, 1881 a collecting
banker is protected provided he collects the cheques of his
customers in good faith and without negligence. But if the banker
fails to make preliminary inquiries he may be deprived of statutory
protection, being guilty of negligence.



The objective of knowing a customer is to have a fair idea about the
identity, financial resources, and general information about the
customer at the time when the relationship is established. A banker
must have following information about the customer:
 Customer name:
Enter complete name as mentioned in original ID card /other
business documents.

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Nature of business /profession: if customer is of salaried class

enter his employer name. If the customer is a businessman, trader,
sole proprietor, enter the business name, for example “Jamil
Traders”etc.also enter the customer’s title/position and address of
the business/employer. Address with P.O.BOX is not acceptable.
Similarly remarks like
“Private service”, “business” are not acceptable, rather specify
what type of company/business the customer is associated with for
example Manager Philips Electrical Company.

Enter the complete business/residential address. With in the
brackets you may also provide prominent address identification
marks for ease of physically locating the address.

 Contact Numbers:
Enter home, official, mobile, fax number and e-mail address (if
available). Banker can verify the number by giving the customer a
courtesy call or by sending him a e-mail.

 Other/ secondary/ mailing address:

Some customer may volunteer their parents or siblings’ addressor
second home address or a mailing address other than a permanent

 Special instructions:
Clear-cut special instructions must be obtained from customers. If
the customer has not given any special instruction specified column

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must be cancelled by drawing a line, as this column must not be

left blank in any circumstance.

 Existing/other bankers:
Almost most all the bankers usually have a banking relationship
with another bank. In case of customer who does not have an
existing banking relationship, or does not want to disclose the
existing relationship, then it is strongly recommended that at least
for some time this particular account must be kept under



• Minor account
• Illiterate person account
• Joint account


• Proprietorship account
• Partnership account
• Limited company’s account
• Accounts of club societies and associations
• Agent’s accounts
• Trust account
• Liquidator’s account executer’s and administrator’s

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Functions of remittances department

The functions of remittance departments is to handle with the

following instruments:

• Pay Order
• Demand Draft
• Pay slip
• Telegraphic Transfer
• Payment of Remittances
• Cancellation of pay order & demand draft

The remittance department deals with the transfer of money from

one place to another.
This department deals with the local currency transfer only. ACBL
provides these services to both customers & non-customers

Remittance can be made through:

1) Instrument transfer
2) Electronic transfer
3) Mail transfer

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Instruments of the Remittances Departments

Pay order issued from one branch only be payable from the same
branch. It is normally issued for payment in the same city. It is
normally referred as banker's cheque

 Get the application form.

 Issue pay order after recovering cheques.
 Do necessary vouchering.
 Make entry in PO issue register.
 All pay order shall be crossed" payees account only".

Charges on issue of Pay Order

Amount (Rs) Charges (Rs)

Less then 100,000 50
Above 100,000 Nil

Duplicate Pay Order:

 Check the record to insure that payment has not been

 Get application for issuing of duplicate PO.
 Recover charges.
 Issue duplicate pay order.

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It is an instrument on demand for which value has been received,
issued by the branch of the bank drawn i.e. payable at some other
place(branch) of the same bank. In case of agency arrangement-
demand draft can also be issued by one branch of the bank payable
to other branch of the other bank e.g. DD issued by ACBL payable
by MCB.

Charges on issue of Demand Draft

Amount (Rs) Charges (Rs)

1 - 10,000 25
10,000 – 100,000 50 or .1%
100,000 - 1000,000 200 or .07%
Over 1000,00 1000 or .05%

The bank for settlement of it own payment issue pay slip.
• No excise duty
• No commission

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All physical movement of cash in the bank is made through the cash
department. Normally cash department performs following

 Act according to any standing instructions
 Transfer of funds from one account to another
 Handling of ATM
 Verification of signatures
 Handling of prize bond

Cash receipt section

In this section the cashier in following manner receives cash:

Process of deposits

Deposited on
Fill- up deposit Receipt Customer

Cashier counts the amounts Cashier counts the

and fulfills other amount and fulfills
requirement other requirements

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Cash payment section

In this section honoring the cheque through following process

makes payment.

Process of payment

Cheque is presented Cheque is recorded

at token counter & token # is allotted

Cancellation officer
Cashier counts
the amount & cancels cheque
payment is made

Two signatures on
back of the cheque Posting is made
by customer

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The word clearing has been derived from the word “Clear” and is
defined as “ a system by which banks exchange cheques and other
negotiable instruments drawn on each other within a specific area
and thereby secure payment for their clients through the Clearing
House At specified time” in an efficient way”.

1. Since clearing does not involve any cash etc. and all the
transaction take place through book entries , the number of
transaction can be unlimited.
2. No cash is needed as such the risk of robbery,
embezzlements and pilferage are totally eliminated.
3. As major payments are made through clearing, the banks
came manage cash payments at the counters with a minimum
amount of cash in vaults.
4. A lot of time, cost and labor are saved.
5. Since it provides an extra service to the customer of banks
without any service charges or costs, more and more people
are inclined and attracted towards banking.

It is a place where representatives of all banks sit together and
interchange their claims against each other with the help of
controlling staff of State Bank of Pakistan And where there is no
branch of State Bank of Pakistan the designated branch of National

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Bank of Pakistan act as controlling member instead of State

Bank of Pakistan

 It ceases to be a scheduled Bank.
 It is not able to meet its liabilities.
 State Bank of Pakistan or Central Govt. prohibits it to
receive fresh deposits.


 Timing:(Monday through Saturday)
i. 1st Clearing at 10:00 a.m.
ii. 2nd Clearing at 2.30 p.m.

 Each bank will send competent representative to exchange

the cheques.
 Each bank is required to insure that all cheques and other
negotiable instruments are properly stamped and suitably
 An objection memo must accompany each and every cheque
when return unpaid duly initialed.
 Each bank is required to maintain sufficient funds in the
principal account with SBP to meet the payment obligations.
 The State Bank of Pakistan debit the account of each member
of the clearinghouse with the proportionate working expenses
incurred on the operation of clearing house. These expenses
are very nominal.

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The following points are to be taken into consideration while an
instrument is accepted at the counter to be presented in outward

 The name of the branch appears on its face where it is

drawn o.
 It should be stale or post dated or without date.
 Amount in words and figures does not differ.
 Signature of the drawer appears on the face of the
 Instrument is not mutilated.
 There should be no material alteration ,if so, it should be
properly authenticated.
 If order instrument suitably indorsed and the last
endorsee’s account being credited.
 Endorsement is in accordance with the crossing if any.
 The amount of the instrument is same as mentioned on
the paying-in-slip and counterfoil.
 The title of the account on the paying-in-slip is that of
payee or endorsee (with the exception of bearer cheque).

If an instrument is in order than our bank special crossing stamp is

affixed across the face of the instrument. Clearing stamp is affixed
on the face of the instruments, paying-in-slip and counterfoil (The
stamp is affixed in such a manner that half appears on counterfoil
and paying-in-slip). The instrument is suitably discharged, where a

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bearer cheque does not require any discharge and also an

instrument in favor a bank not need be discharged.
The instrument along with pay-in-slip is retained while the
counterfoil is given to the customer duly signed. Then the following
steps are to be taken:

1. The particulars of the instrument and the pay-in-slip or credit

voucher are entered in the outward clearing register.
2. Serial no. Is given to each voucher.
3. The register is balanced; the credit vouchers are balanced
from the instruments and are released to the respective
departments against acknowledgement in the register.
4. The instruments are arranged bank wise.
5. The schedules are prepared in triplicate, two copies which are
attached with the relevant instrument and the third is kept as
office copy.
6. The house page is prepared from schedules in triplicate.
7. The schedules and house pages are signed by the house
incharge with branch stamp.
8. The grand total of the house page is taken and agreed with
that of the outward clearing register.
9. The instrument along with duplicate schedule and house page
are sent to the main office.
However the amount is kept in float till final status of various
instruments is known from respective paying banks in second

The entry of the instrument returned unpaid is made in Cheques

returned Register. If the instrument is not to be presented again in

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clearing then a covering memo is prepared. The covering memo

along with returned instrument and objection memo is sent to the
customer who sent the same to his account.


1. The particulars of the instruments are compared with the list.
2. The instruments are detached and sort out department wise.
3. The entry is made in the inward clearing register (serial no.
Instrument no. Account no. Is written).
4. The instruments are sent top the respective departments
5. The instruments are scrutinized in each respect before
honoring the same.


These are the cheque returned unpaid by us in inward clearing. due
to some objections.


These are the cheques retained unpaid to us which were lodged by
us in Outward Clearing.


Suppose all cheques received in the inward clearing are passed and
later on it is found that a cheque should have been returned, in
such cases, we contact the collecting branch and request them not
to make payment against the proceeds of the cheque which was not
returned unpaid by us in due time. the cheque with objection memo
along with a covering letter is sent to the collecting branch, making

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request to issue a payment order in favour to balance the Cash-

cum-day book we may debit suspense account sundry debtors with
the approval of the manager. When the payment order is received,
it is lodged in clearing and suspense account, sundry debtors is
adjusted accordingly.

In addition to the normal clearing function at Clearing house it is
mutually agreed to hold an extra clearing at the clearing house on
the particular day and time which is known as “special clearing” it is
arranged due to the rush of work arising out of say, more Holidays
declared by the Central Govt. at a time, but normally special
clearing is he4ld on last working day of our half yearly and yearly
closing i.e. 30th June and 31st Dec. every year.

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Online banking means that the customer of ACBL can deposit /
withdraw funds in / from other branches of ACBL. Askari bank
provides online facility to all its branches.


Amount of Deposits Charges ( Rs)

25,000 or below 50
25,000 - 200,000 100
200,001 - 500,000 250
500,001 - 2000,000 500
Above 2000,000 750

Askari bank offers facility of lockers to its customers.

There are three sizes of lockers available:


Size of lockers Rent of locker (Rs) p.a.

Large 2500
Medium 1500
Small 1000

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Although the study of money is important for the understanding of
the way in which our economic system operates, we must recall this
point that most exchange transactions in this system are carried on
today without the use of actual money, i.e. Those are carried on by
means of credit and credit instruments rather than money. While
money still forms the basis of credit and deferred payments, it is
necessary to examine the nature of credit operations, and the
instruments and institutions trough, which these operations are
carried on, in considerable detail.


On the surface, credit operation appears to be of many kinds, but
they all have a fundamental similarity. In credit transactions, one
party to the transaction, the creditor, turns over to the debtor a
certain amount of money, commodities or services at the present
time and relies on the debtor to repay an equivalent amount,
usually the money in the future plus interest at some future time.


There has been much discussion, concerning the essential basis of
credit or borrowing operation. Some writers on the subject have
stoutly insisted that confidence is the basis of all grants of credit,
that if one did not have confidence that the borrower would repay a
loan one would never thinks of making the loan, save on grounds of
friendship of philanthropy. Others have held property, rather than
confidence is the basis of all genuine credit transactions. Some
insist that character is the essential factor, while still other writers

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have indulged in a propensity of alliteration by sating that the

bases of credit are character, capital and capacity; or the man and
the means; or reliability and resources.

The verities of credit may be classified in numerous ways-
according to the status of eh debtor, according to the status of the
creditor, according to the time for which the credit is granted, and
so on; but the most fruitful classification usually indicates the use
to which the credit is put.

1.Public and Private Credit:

In the first place, a distinction is usually made between public and
private credit. Public credit comprises the promises to pay off
governmental bodies, that is, their acquisition of goods in the
present in return for promises to pay in future; and private credit
refers to the promises to pay all non-government debtors. Among
the sub-classes of private credit, the most significant are band
credit, commercial credit and consumption credit.

2. Band Credit:
In Comprehends all kinds of promises to pay off banking
institutions, including demand deposits, time deposits, notes,
bankers, acceptances, cash, letters of credit, debentures, and
bonded obligations. Frequently, the term bank credit is restricted in
use to refer only to the demand deposit liabilities of the commercial
banks, and one must constantly be on guard to recognize the
employment of the term in this restricted sense. As a sub-class of
bank credit, central bank credit is of outstanding importance in

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modern monetary system it includes the central bank's

circulating notes and its deposit liabilities, the better consisting
chiefly of the reserve balances of the commercial banks.

3. Investment Credit.
The credit structure, business if found upon examination to consist
very largely of two forms of credit. Investment credit is extended
through loans, the proceeds of which are put into the fixed assets of
a business enterprise. If the owners of business cannot themselves
furnish all of the capital necessary for investments in land, buildings
and equipment. Obviously what they need is loans of capital
running over a considerable period of years.

4. Commercial credit
In addition to seeking credit in long term investment in fixed
assets, most business periodically ask for credit in the form of short
term loans. Commercial credit is business supplier for current
business operations, such as manufacturing and marketing of
goods. It often take more business capital than business can
themselves supply to pay for raw materials, to make the outlays for
wages and to carry inventories of finished goods until they can be
converted into cash. To help finance such operations short-term
loans usually running from thirty days to six months are negotiated.
Commercial loans like investment loan must ultimately be paid out
of accumulated earnings of a business. But if the business earnings
are of immediate future, such loans can be safely made and
promptly paid. Commercial loans are base done quick assets, such
as raw material and finished goods, which are in constant process
of liquidation and thereby provide the cash with to extinguish loans.

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5. Consumers credit and producers’ credit

Consumers credit involves advance of purchasing power for
economic goods to consumers for consumption purposes. Its
distinguish characteristic lies in the factor that the things acquired
by the debtors as result of the loans are not supposed to furnish
them with the means of repaying the loans the loan must be repaid
out of the income of the borrowers.


There are various types of credit instruments. The more important
credit instruments are as follows:

Bills of exchange:
A bill of exchange is define by negotiable instruments act as "an
instrument in writing, containing an unconditional order, signed by
the maker, directing a certain person, to pay certain sum of money,
only to or to the order of a certain person, or to the bearer the

A Cheque is defined “a bill of exchange drawn on specific banker
and not expresses to be payable otherwise than on demand."
Cheques may be of various types, which are as follows:
Bearer cheque
Order cheque
Open cheque
Crossed cheque
Marked cheque

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These are bills of exchange issued by a banker on his branch office.
Banks draft like bills of exchange, are of great importance in the
financing of trade, especially foreign trade

Promissory note:
It is an instrument in writing containing an unconditional
undertaking, signed by the maker, to pay the certain sum of money
only to or to the order of a certain person to the bearer of the
instrument. a promissory note in order to be the so, must fulfill all

Letter of credit:
A letter of credit as name signifies does one person or bank to
another requesting the letter to pay any amount of money up to a
certain limit to the person write a letter named in the letter or in
whose favor the letter is written. In this letter generally a date is
fixed upto only the addressee should make which advances. Thus a
letter of credit remains in force upto a certain date only. Generally
banks grant this letter of credit.

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The term "foreign exchange" is used to denote either a foreign

currency or the rate at which one currency is converted into
another or the means & methods by which one currency is
exchanged for another.

Functions of Foreign Currency Account Department

Foreign exchange department performs following functions:

• Foreign Bills for collection (FBC)

• Foreign telegraphic transfer (FTT)
• Foreign Demand Draft (FDD)
• Issuance of Proceed realization certificate
• Inward remittances
• Daily Reporting

Requirement of Funds Transfer

For transfer of fund in foreign currency, a person must have his
account in foreign exchange in the bank.
Requirement of account opening is $500 or any other currency
equivalent to $500.

Types of currency Interest p.a.

Dollar .25%
Pound sterling 2%
Euro 1%

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CBD & IBD are strongly positioned across priority markets
with a distinct strategy for developing corporate business. Our
strategic framework generates sustainable returns based on strong
market presence and financial solutions ranging from debt and
equity market transactions to syndicate finance, and from
transaction banking to corporate finance advisory services.

2004 was challenging year due to historic lows in interest rates,

particularly for corporate business. The Corporate Banking Division
(CBD) undertook a number of dept re-pricing swap transactions,
aimed at reducing the financial burden of its key client portfolios
and also managed advisory and loan arrangement activities. The
major new relationships cover telecommunications, oil and gas, and
chemicals sectors. CBD has dedicated marketing and support units
functioning at Karachi and Lahore. In order to enhance focus on
relationship management, and service quality, more dedicated staff
is being assigned.

The investment banking activity mainly covers, debt / capital

markets, advisory services and trading (both equities and
derivatives).After the initial start-up phase, the capital market desk,
based at Karachi, increased the volume of capital market related

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The corporate and investment banking will continue to play a

major role in loan syndications, structured financing and debt /
capital raising transactions with the objective of providing entire
range of corporate and investment banking solutions to its valued
clients under one umbrella.


In 1994, 1996 and 1997 the bank received Euro money and Asia
money awards. Askari has A1+ rating for short-term obligations the
highest possible for the category, while the long-term rating stands
at AA. Askari Bank Won the prestigious “Best presented Annual
Accounts” awards for 2000 and 2001 from the institute of cost and
Management Accountants of Pakistan, for the services sector.

Mr. Kalim-ur-Rahman, President

Askari Bank, with group having
award of
'The Best Retail Bank of Pakistan

For the past four years, the Bank has received prizes from the
South Asian Federalism of Accountants for “The Best presented
Annual Accounts” for the financial sector, in the SAARC region.
Over the years, Askari Bank has proved its strength as a
leading banking sector entity, by achieving the following firsts in
Pakistan banking.

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i) First Pakistani Bank to offer on-line real-time banking

on a countrywide basis.
ii) First bank with a nation-wide ATM network
First bank to offer Internet Banking services
First Bank to offer e-commerce solutions.
The Askari Commercial Bank Limited has been declared “The
Best Bank in Pakistan” by the Global finance, an international
financial magazine of high repute as a result of their latest study of
Banks in the Emerging Markets. This is the 2nd consecutive year
that the magazine has selected their bank for this prestigious
The award will be presented to the Bank on the occasion of
the World Bank IMF meetings in Washington this autumn. While the
magazine will be formally announcing the names of the award
winning Banks in its May 2002 issue, they have already issued
press information for the international media, giving names of the
award winning banks, including the Askari commercial Bank limited.

Over the years, we have received several awards for the

quality of our banking service to individuals and corporate.

These Include:
 Best Commercial Bank Consumer Choice award 2005 by
The Consumers Association of Pakistan
 Best Retail Bank in Pakistan award 2004 & 2005 by The
Asian Banker
 Best Corporate Report 1st prize awarded for 2000, 01, 03
& 04 by Institute of Chartered Accountants of Pakistan (ICAP)

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and institute of Cost & Management of Accountants of

Pakistan (ICMAP)
 Corporate Excellence awards for 2002 & 03 The
Management Association of Pakistan (MAP)
 Best Corporate / Institutional Internet Bank in
Pakistan award for 2004 by Global Finance magazine
 Best Consumer Internet Bank in Pakistan
award for 2002, 03 & 04 by Global Finance magazine
 The Best Bank in Pakistan
award for 2001 & 02 by Global Finance Magazine
 Best Presented Accounts
Ranking prizes awarded from 1997 to 2002 by South Asian
Federation of Accountants (SAFA)
 Commercial Bank of the Year
award for 1994 & 96 by Asia money magazine
 Best Domestic Bank in Pakistan
award for 1995 by Euro money

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The product & services of askari commercial bank limited are

developed keeping in view the customers needs & wants, & the
expectation that the customer attaches with its financial

A product ACBL includes all those services which customer normally

required for effectively managing his business.

ACBL offers the following financial services to its customers.

1) Deposits
2) Advances
3) Products
4) International banking services
5) Agency services to customers


One of the basic functions of commercial banking is to receive

deposits. ACBL accepts deposits in both local & foreign currency.

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Local currency deposits

• Current Account
• PLS Saving Account
• Term Deposit
• Notice Deposit
• Askari Faida Account
• Askari Special Deposit Account
• Value Plus Saving Account
• Askari Advantage

Current Account

A current account is a running & active account, which may be

operated upon any number of transactions during a working day.
The banker undertakes to repay these on demand & therefore
theses account are called demand deposits.

Transaction fee

The bank charges no transaction fees if the minimum balance

requirement is met. However, if the average balance falls below the
min. balance then the fees is charged at the rate of Rs. 10 per

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Saving Accounts

The saving account is usually opened by lower or middle class

people so that they can meet their future contingencies, as the
objective of such account is to promoting the habit of thrift among
people, the bank impose certain restrictions on withdrawals from
the saving accounts.

Transaction fees

Transaction fees are charged of Rs. 20 per transaction if the min

balance is not met.


Advances are major sources of earning of income for commercial

banks. Banks attracts surplus balances from the customers at
low interest rates & makes advances at higher interest rates to
the individuals or business firms.

ACBL offer these facilities in two forms:

• Funded facilities
• Non- Funded facilities

Funded facilities

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In funded facilities the bank actually advance money against

further repayment. These facilities are known as cash credits.

Non- Funded facilities

Non- Funded facilities are those in which bank substitutes its own
credit for its customers.
ACBL offers to its customers are large number of non-funded
These facilities includes:

1. Guarantee
2. Latter of credit
 Irrevocable letter of credit
 Revocable letter of credit
 Sight letter of credit
 Usance letter of credit



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

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his/her loan. Once a good credit history is established, the door

to opportunity opens much wider.


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. The maximum
financing amount is Rs. 10 million with a repayment tenure upto 20


In pursuance of the National objectives to review 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.
Ore valued customers can enjoy the convenience of getting
financing on attractive terms with the minimum processing
turnaround time.

ASKCAR (Car Finance)

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

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choice. With minimum down payment, lowest insurance rates

and widest range of available car makes and models, Askcar offers
the best value to our esteemed customers.


ASKCARD means freedom, comfort, convenience and security, so

that you can have retail transactions with complete peace of mind.
ASKCARD 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.


The range of our products and value added services enhances with
introduction of Rupee Travellers 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.
Total volume handled by the department during the year 2004 is
Rs. 798 Million.


Askpower represents a useful tool with which to make secure

payments without the need to have any account, a debit or credit
card. This card comes with a number of unique features and
diversified usage capabilities like cash withdrawal from ATMs,
payment of utility bills through ATMs and internet Banking, transfer

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of balance to another card and refill option. The prepaid card is

enjoying a great success all over the country.


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.



When you successfully apply for an Askari MasterCard, we will not

charge you any Joining Fee. It’s almost like you are getting it for


Your card provides you with service at thousands of locations in

Pakistan, and at over 23 million establishments worldwide. As an
added convenience, you will have the benefit of receiving your
monthly billing in Pak Rupees, regardless of the currency of

Think of the freedom this gives you!

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With Askari MasterCard, you are always a phone call away from the
assistance you need. To speak to one of our friendly Customer
Service representatives, please call our UAN 111-000-787 for
Karachi, Lahore or Rawalpindi/ Islamabad.


Your Askari MasterCard provides you the experience of revolving

your spending at comparatively low service charges. In addition,
the same rate also applies to cash advance obtained on your Askari


Please report loss or theft of your Askari MasterCard immediately at

our Customer Services UAN 111-000-787 for Karachi, Lahore and
Rawalpindi/Islamabad. Once you have registered the loss of your
credit card, your liability against its fraudulent use will be limited
and we will send a replacement card within 48 hours of reporting.


Save yourself the inconvenience of applying for a separate Askari

MasterCard for your loved ones by requesting supplementary cards
when you apply for your own card. You will receive a consolidated
monthly account statement, which covers all the cards. This offer is
available for your loved ones over 18 years of age.

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Cash advance facility is available for Askari MasterCard holders.

You can get up to 80% of your sanctioned credit limit as cash
advance in Pakistan or anywhere else in the world. The facility is
available at all ATMs displaying the Cirrus logo around the world
and in Pakistan. You may also avail this facility at designated
branches of Askari Commercial Bank, during banking hours.


With Askari MasterCard, you can avail an incredible offer of a

Balance Transfer at the exclusive rate of just 1.5%* per month.
A special privilege exclusively for Askari MasterCard members


Just purchase your travel tickets on Askari MasterCard and you are
automatically covered under our Travel Insurance Plan (in case of
personal accident resulting in death or permanent disablement) for
up to Rs.8,000,000/- on a Gold Card and Rs.4,000,000/- on a Silver


When you purchase your airline tickets for international travel on

Askari MasterCard you get:
 — UPto * Rs.10,000 insurance cover for flight delays
exceeding 6 hours.

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 — Upto* Rs.10,000 insurance cover for baggage delays

exceeding 6 hours.

 — Upto* Rs.20,000 as baggage loss claim.

(*Certain conditions apply)


The next time you travel internationally, be a privileged guest at

the CIP lounge of Quaid-e-Azam International Airport, Karachi and
RAWAL Lounge of Islamabad International Airport. Your Askari
MasterCard entitles you to a host of Complimentary services like;

— Snacks and Beverages

— Free Internet, phone and fax facilities

— Newspapers and magazines

— Flight details information

— Cellular phone charger connections

— So, no matter where you are going, you are always assured of a
red carpet welcome.

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Your Askari MasterCard entitles you to the following exciting

discounts* at Avari Hotel in Karachi, Lahore and Dubai:
— 60% on Room Rack Rates

— 10% on Restaurants

— 15% on Hall Rentals

— 15% on Family Health Club membership only

— 15% at the Business Center

— 10% on Conferences / Meetings Package Rate (cannot be used in

conjunction with Hall Rentals

— 10% at Beauty Saloon

— 10% on Rent a Car

*(Where available. Certain conditions apply)

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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.


The Askari Kissan Agriculture 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

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.

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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.


 Askari Kissan Ever Green Finance

 Askari Kissan Tractor Finance
 Askari Kissan Aabpashi Finance
 Askari Kissan Livestock Development Finance
 Askari Kissan Farm Mechanization Finance
 Askari Kissan Farm Transport Finance
 Ask Card

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“Financial statements are like a firm perfume – to be sniffed but

not to swallowed.” “Abraham Brillof”

The firm itself and outside providers of capital – creditors, and investors – all
take benefit from the firm’s financial statements. The type of analysis varies
according to the specific interest of the party involved. Similarly objectives of
the financial statements analysis vary from person to person.
Trade creditors are primarily interested in the liquidity of the firm.
Their claims are short terms, and the ability of the firm to pay their
claims quickly is best judged by an analysis of the firm’s liquidity.
Bondholders are more interested in the cash flow ability of the firm
to service a debt over a long period of time. They may evaluate
their ability by analyzing the capital statement of the firm.
Investors usually focus on the profitability of the firm. They would
be concerned with the financial conditions insofar as it’s affects the
ability of the firm to pay dividends and avoid bankruptcy.
Management employees financial analysis for the purpose of
internal control and to better provide what capital suppliers seek in
financial conditions and performance from the firm
Management needs to undertake the financial analysis in order to
plan and control effectively.
Financial ratios are the tools, which are used to analyze the
financial conditions and performances.
Finally, financial statement analysis deals with the outcomes of the
past decisions and leads to the future planning.

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Cash and cash equivalents comprise cash and balances treasury
banks and balances with other banks.

Mark-up and return on investments and advances is recognized on accrual
basis except for income which is required to be carried forward in compliance
with Prudential Regulations issued by the State Bank of Pakistan.

Advances are stated net of provisions for non-performing advances.
The management keeping in view the requirements of the
Prudential Regulations issued by the State Bank of Pakistan
determines provision for non-performing advances. In addition a
general provision is maintained on a judgmental basis. Advances
are written off when there is no realistic prospect of recovery.

In accordance with the requirements of BSD circular No. 11 dated
04 August 2004 securities for which ready quotations are available
on Reuters Page (PKRV) or Stock Exchanges are valued at market
value and he resulting surplus/deficit is kept in a separate account
and is shown below the shareholders’ equity in the balance sheet.
Investments where ready quotations are not available are stated at
cost less permanent diminution in value thereof.

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Had there been no change in accounting policy, surplus arising

on revaluation of investment would have been higher by 54.04
million as at December 31, 2004.
Investments are classified as follow:

 Held to maturity
 Held for trading
 Available for sale



Capital work-in-progress is stated at cost.

Fixed assets are stated at cost less accumulated depreciation
except for freehold land, which is stated at cost. Depreciation is
computed over the estimated useful lives of the related assets are
sates set out in note. The cost of assets is depreciated on the
diminishing balance method, except for vehicles, carpets and
renovation costs which are depreciated on a straight-line basis.
Depreciation is charged for the full month on purchase/acquisition
of an asset while no depreciation is charged in the month of
disposal of a n asset. Maintenance and normal repairs are charged
to income as and when incurred. Major renewals and improvements
are capitalized. Gains and losses on disposal of fixed assets are
taken to the profit and loss account.

Assets held under finance lease are accounted for by recording the
assets an related liabilities at the amounts determined on the basis
of lower of fair value of the assets and the present value of

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minimum lease payments. Finance charge is allocated to

accounting periods in a manner o as to provide a constant periodic
rate of charge on the outstanding liability. Depreciation is charged
on leased assets on the basis similar to that of owned assets.

Current tax is the expected tax payable on the taxable income for
the year using tax rates enacted at the balance sheet date and any
adjustment to tax payable of previous years.
Deferred tax is provide for using the balance sheet liability method
providing for temporary differences between the carrying amounts
of assets and liabilities for financial reporting purposes and the
amount used for taxation purposes. The amount of deferred tax
provided is based on the expected manner of realization or
settlement of the carrying amount of assets and liabilities using tax
rates enacted at the balance sheet date. A deferred tax asset is
recognized only to the extent that it is probable that future taxable
profit will be available and credits can be utilized. Deferred tax
assets are reduced to the extent that it is no longer probable that
the related tax benefit will be realized.

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The Bank operates an approved funded gratuity scheme for all its
permanent employees. Contributions are made in accordance with
the actuarial recommendation. The actuarial valuation is carried out
periodically using “Projected Unit Credit Actuarial Cost Method”. The
actuarial gains/losses of one accounting period are recognized in
the following accounting period.


The Bank operates a recognized provident funds scheme for all its
permanent employees for which equal monthly contributions are
made both by the Bank and by the employees to the fund at the
rate of 8.33% of basic salaries of the employees.


The bank grants compensated absence of 15 days per annum to all

its permanent employees. Annual provision for liabilities towards
vested compensated absences is made on the basis of 1st drawn
basic salary.

Foreign currencies are translated into Rupees at exchange rats on
the date of transaction. Assets and liabilities in foreign currencies
are translated into Pak Rupees at the rates of exchange
approximating those ruling at the Balance Sheet date except those

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covered by forward exchange contracts, which are converted at

contracted rates. Exchange gains and losses are taken to the profit
and loss account.

Provision for guarantee claims and other off balance sheet
obligations is recognized when intimated and reasonable certainty
exists for the Bank to settle the obligations. Debating the
customer’s account recognizes expected recoveries. Charge to profit
and loss account is stated net off expected recoveries.

Financial assets and financial liabilities are only offset and the net
amount is reported in the financial statements when there is a
legally enforceable right to set-off the recognized amount and the
bank intend either to settle on a net basis, or to realize the assets
and to settle the liabilities simultaneously.

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BALANCE SHEET AS ON DEC.31 2004 2004 2003

Cash and balances with treasury bank 8,762,866 6,678,026
Balances with other banks 4,847,899 2,650,166
Lending to financial institutions 2,324,839 5,770,842
Investments 17,239,157 22,104,425
Advances 69,938,041 44,777,538
Other assets 1,459,716 1,425,986
Operating fixed assets 2,595,023 1,979,919

107,167,541 85,386,902
Bills payable 1,227,093 973,703
Borrowing from financial institution 13,781,555 15,903,055
Deposits and other accounts 83,381,795 61,656,607
Sub-ordinated loans 1,000,000
Liabilities against assets subject to finance lease 14,159 37,350
Other liabilities 1,282,981 962,592
Deferred Tax Liabilities 526,865 806,753

101,151,448 80,340,060
Net Assets 6,016,093 5,046,842
Represented by:
Head office capital accounts 1,255,848 1,141,680
Capital reserve 4,317,301 2,759,599
Un remitted profits
5,573,149 3,901,279
Surplus on revaluation of securities-net of tax 442,944 1,145,563
6,016,093 5,046,842

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2004 2003
(Rupees in thousand)
Mark-up/return / interest earned 4,487,206 4,073,715
Mark-up/return / interest expensed 1,117,206 1,379,609
Net mark-up / interest income 3,370,000 2,694,106
Provision against non performing loans and advances 277,398 308,528
Provision for diminution in the value of investments 38,066 -
Bad debts written off directly 7 -
315,471 308,528
Net mark-up / interest income after provisions 3,054,529 2,385,578
Fee, commission and brokerage income 649,988 524,775
Dividend income 26,318 37,658
Income from dealing foreign currencies 180,992 112,808
Other income 776,230 278,512
Total non mark-up / interest income 1,633,528 953,753
4,688,057 3,339,331
Administrative expense 1,845,179 1,436,304
Other provisions / write offs - -
Other charges 138 1,227
Total non mark-up / interest expense 1,845,317 1,437,531
2,842,740 1,901,800
Extra ordinary unusual items - -
PROFIT BEFORE TAXATION 2,842,740 1,901,800
Taxation – Current 876,089 873,639
Prior years - -
Deferred 43,611 (74,904)
919,700 798,735
Profit after Taxation 1,923,040 1,103,065
Inappropriate profit brought forward - -
Profit available for appropriation 1,923,040 1,103,065
Transfer to:
Statutory reserves 384,608 220,613
Capital reserves (reserves for the issue of bonus shares) 251,170 114,168
Revenues Reserves 1,036,092 539,948
Proposed cash dividend 251,170 228,336
1,923,040 1,103,065
Un-appropriated profit carried forward - -
Basic earning per share - (Rupees) 15.31 8.78

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(Horizontal Analysis)


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Trend Analysis, also called Horizontal Analysis of the financial

statements is one directional- upward or downward analysis and
involves the computation of the percentage relationship that each
statement item bears to the same item in the base year

2000 2001 2002 2003 2004

Profitability (Rs in million)

Total Income 3840 5047 5704 5028 6121

Interest income 3213 4251 4858 4074 4487
Interest exp 2274 2902 3017 1380 1117
Fee, comm.
506 677 299 638 831
Other income 122 119 247 317 802
Spread 939 1349 1841 2694 3370
680 854 1093 1438 1845
Operating Profit 886 1291 1595 2210 3158
Non performing
134 283 351 308 315
Profit b/f tax 752 1008 1244 1902 2843
Taxation 436 458 557 799 920
Profit after
316 551 687 1103 1923

The operating expenses of the bank has been increased with sharp
margin, the ACBL is newly born bank of only 14 years old and is
growing rapidly so, we can say that the reason behind the rapid
increase of its operating expenses may be the expansion of
business. In order to get handsome profit the expenses are
necessary as it is shown by the fact that if the bank’s operating
expenses have been increased then, there is also an increase in the
profit before income tax and profit after income tax.

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2000 2001 2002 2003 2004

(Rs in million)

Total share
2155 2579 4173 5047 6016
holders fund
Share capital 986 1036 1087 1142 1256
Reserves 1229 1521 1940 2760 4317
Surplus on ROA (60) 22 1146 1145 443

2000 2001 2002 2003 2004

Total share
100 119.6 193.6 234.2 279.2
holders fund
Share capital 100 105.0 110.2 115.8 127.4
Reserves 100 123.7 157.8 224.6 351.2

The shareholder’s fund of the bank is continuously increasing, as

the bank is running on profit, therefore, the business take interest
in this project and wish to participate in it. The bank’s share capital
and reserves are also increasing with the expansion of business.

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2000 2001 2002 2003 2004

Liabilities (Rs. in million)

30360 41200 51732 61657 83319
2882 3222 3392 7329 9777
ordinated - - - - 1000
3058 3980 11016 11354 7055

2000 2001 2002 2003 2004

100 135.7 170.4 203.0 274.4
100 111.7 117.7 254.3 340.0
100 130.1 360.2 371.3 230.7

New if we analyze the liability side of the bank we see that the
bank’s deposits are going on increasing since its birth which is a
very healthy sign for the bank as the bank’s basic business is to
deal in money. The increase in deposits show that the people have
interest in the bank and deposit their fund in the bank without any
hesitation. However it has not been mentioned here that how

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many of the deposit are current and how many of them have
fixed nature but we can say that it is a very important source of the
bank to earn profit. As the banks usually earn through interest or
mark ups imposed on the deposits they keep with themselves.


2000 2001 2002 2003 2004

Assets (Rs. in million)

Advances 17893 23292 30035 44778 69938

Investments 8651 11706 26737 22104 17239
Cash, short funds
and statutory 10056 13436 10061 15099 15936
deposits with SBP
Operating fixed
641 723 1663 1980 2595
Other assets 1213 1824 1817 1426 1460
Total assets 38454 50980 70313 85387 107168

Now we will discuss the assets side of the bank. The liquidity
position is essentially important for the bank, as it must have all the
time sufficient funds to meet the demands for the money that may
be made on it. It is the protection against the risk that losses may
develop if banks are forced to sell or liquidate creditworthy assets in
an adverse market. The current liquidity position of the bank has
improved as indicated by the percentages shown in the table below.

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2000 2001 2002 2003 2004

Assets (Rs. in million)

Advances 100 130.2 167.8 250.2 390.9

Investments 100 135.3 309.1 255.5 199.3
Cash, short funds
and statutory 100 133.6 100.0 150.1 158.4
deposits with SBP
Operating fixed
100 112.7 259.4 308.9 404.8
Other assets 100 150.3 149.8 117.5 120.4
Total assets 100 132.5 182.8 222.0 278.7

An upward trend in deposits accompanied by a upward trend in

advances too, and mark up revenues means in effective credit
policies, efficient credit collection resulting in healthy financial

The property plant and equipment is the kind of asset, which is

required by the service business only to increase its network
therefore the ratio of the bank’s plant and equipments as compared
with the other important particulars of the assets is high. But here
one thing should be mentioned that it is the policy of the bank not
to start the business on the rented premises. The bank has mostly
started business on its own premises. The other assets of the bank
are also showing a good amount that means that bank is in position
to earn money from every available source.

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2000 2001 2002 2003 2004

(Rs. In billion)

Imports 26.2 32.0 40.2 48.7 75.2

Exports 30.6 38.8 47.3 56.8 70.1
Guarantees 4.8 6.2 14.2 14.4 25.3


2000 2001 2002 2003 2004


Imports 100 122.1 153.4 185.8 287.0

Exports 100 126.8 154.5 185.6 229.1
Guarantees 100 129.2 295.8 300.0 527.1

Now we will discuss the business transacted opt the bank in terms
of import and exports we see that imports and exports through
ACBL are continuously on increase which is a very health sign for
the banking business as the banks earn major portion of their profit
through imports and exports. It shows the efficiency of the credit
department. The reasons for this improvement may be
• Careful scrutinizing of all the documents
• Intelligent corresponding with the customer

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• True 7 C’s analysis of the customer such as his business

and moral character
• Granting facility to selected customers who rate well on the
selected criteria for loan disbursement.
This improvement in imports and exports is extremely large if we
compare it with the figures of 2000.

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An analysis of percentage financial statements where all balance
sheet items are divided by total assets and all income statements
items are divided by net sales or revenues.

In addition to other financial ratios over time, it is often useful to

express balance sheet items and income statement items as
percentages. Common –size Analysis, also called Vertical Analysis,
or Component Percentage, or 100 percent Statements as each
statement is reduced to the total of 100 and each individual item is
stated as a percentage of the total of 100.

2000 2001 2002 2003 2004

Profitability (Vertical Analysis)

Total Income 100 100 100 100 100

Interest income 83.6 84.2 85.2 81.0 73.3
Interest exp 59.2 57.5 52.9 27.4 18.2
Fee, comm.
13.2 13.4 5.24 12.7 13.6
Other income 3.18 3.94 4.33 6.30 13.1
Spread 24.4 26.7 32.3 53.6 55.0
17.7 16.9 19.2 28.6 30.1
Operating Profit 23.1 25.6 27.9 43.9 51.6
Non performing
3.49 5.61 6.15 6.12 5.15
Profit b/f tax 19.6 19.9 21.8 37.8 46.4
Taxation 11.3 9.07 9.76 15.9 15.0
Profit after
8.23 10.9 12.0 21.9 31.4

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The most important component of any profit and loss account of a
banking concern is its mark up expenses it has to pay for servicing
the depositors. The foregoing data shows that the markup expenses
absorb about 85% of the revenues (a favorable position). This
shows that the bank has been successful in
• Selling larger volumes of higher profit items.
• Increasing economy in procurement
• Adopting other effective and more profitable deposit raising
policies at a lower lost.

The interest expense of the ACBL is 18.2% of the total revenue of

the bank in 2004, which is remarkable as the bank is earning about
85% of the revenue as interest income. We have handsome
margin between the interest income and the interest expense of the
bank. The data shows that the bank’s other income %age is not as
much high rather it is very low which shows that the bank does not
rely on other sources for its profit but it earns major portion of its
income through its basic business.

The bank seems to have increased control over its operating

expenses, i.e. non-mark up expenses as these now absorb only
30% on average of the total revenues, that is a very healthy sign
for the bank. In the net shell, it would not be wrong to say that the
bank has improved its financial position and operating efficiency
over the last years.
The profit after tax is showing about 31.4% of the total revenues of
the bank although the margin of profit is not too much high but it is

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shown from the data that the bank is going on increasing its
profit after tax over the year.


(Vertical Analysis)

2000 2001 2002 2003 2004

(Vertical Analysis)

Total share
5.29 4.82 5.69 5.65 5.38
holders fund
Share capital 2.42 1.93 1.48 1.28 1.12
Reserves 3.02 2.84 2.64 3.09 3.86
74.6 76.9 70.5 69.0 74.5
7.08 6.02 4.62 8.21 8.74
Other liabilities 7.52 7.43 15.0 12.7 6.31
Total 100 100 100 100 100


The liabilities and owner’s equity are side components of the

bank showing the relationship as compared with the total of the
liabilities and owner’s equity. The bank’s shareholders fund is
showing percentage more than the share capital, which shows that
the bank own capital is lees than the shareholders capital. However
it is also evident from the data that the %age is decreasing of the
overall %age of the share capital over the last two or three years.
But it is also seen that the share capital %age as compared to the
total liabilities of the bank has also been decreased. So we can say
that the same conditions are prevailing regarding the share capital
and the shareholders fund.

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Among the assets of the bank the highest %age is of the

customer deposits. The bank’s management seems to have adopted
a very effective marketing policy, as the deposits of the bank
constitute about 75% of the total assets of the bank. In the last
year, this figure stood at 69% of the total resource. This shows the
high level of products and associated services provided by the bank.

(Vertical Analysis)

2000 2001 2002 2003 2004

Assets (Vertical Analysis)

Advances 46.5 45.7 42.7 52.4 65.2

Investments 22.4 22.9 38.0 25.8 16.1
Cash, short funds
and statutory 26.1 26.3 14.3 17.6 14.8
deposits with SBP
Operating fixed
1.67 1.42 2.36 2.32 2.42
Other assets 3.15 3.57 2.58 1.67 1.36
Total assets 100 100 100 100 100


On one hand Advances have also increased from 52% in the

previous year to 65% in the current year which may indicate that

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the bank utilize the funds raised in the other activities primarily
lending to the financial institutions as it is the most secure source of
financing available in the economy.

Cash, short term funds and statutory deposits with SBP are also
increasing. The property plant and equipment of the bank is
showing a little portion of the bank’s total assets.
In the last the bank is over all showing a good financial health and
is going on healthy tracks in near future it has no risk of
bankruptcy. Although the bank is showing good results but we can’t
say that these are the best conditions prevailing in the bank as we
are unaware of the market conditions and can’t compare it with
other banks.

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The continued viability of any bank depends on its ability to earn an

appropriate return on its assets and capital. Good earning
performance enables a bank to fund its operations, remain
competitive in the market and increase or decrease in market


Formula = Net mark up Received

Capital Funds

2004 = 3370000 = 60.47%

2003 = 2694106 = 69.06%
2002 = 1638357 = 54.13%

2002 2003 2004

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This ratio relates the net profits to the amount of capital funds that
have been employed in making that profit.

The above given ratios suggest that the profitability of the bank has
increased very in the year 2003 indicating more profitable
operations of the bank. While discussing the trend analysis, we
mentioned that the mark up charges have increased in some
proportion but the mark up earned by the bank resulting increase in
the profit available on the capital funds employed. This ratio
showing a very good financial position of the bank.


Formula = Net income after taxes

Total Assets

2004 = 3370000 = 1.79%

2003 = 1103065 = 1.29%
2002 = 686994 = 0.98%

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percentage 1


2002 2003 2004


This ratio indicates the profit earned by the bank on the resources
employed. As far as ACBL is concerned, we observe an increase in
the utilization of the resources. It has increased to 1.29 % in the
year 2003 from 0.98 % in the year 2002, It has increased to 1.79
% in the year 2004 from 1.29 % in the year 2003, the reason
behind the slight increase in the increase of profit may be due to
the efforts of the management.


Formula = Net income after taxes

Total risk assets

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2004 = 1923040 = 2.75%

2003 = 1103065 = 2.46%
2002 = 550051 = 2.36%

2002 2003 2004


This ratio, with some fluctuation in 2003 came up from 2.46% in

2003 to2.75 % in the year 2004. It is indicating active utilization in
the form of advances. The bank is finding it difficult to keep the
level of its expenses less in proportion to the advances it has
disbursed. Lending, no doubt is the core function of a banking
concern. But the bank should find out effective ways of credit
provisions affecting less on profitability of the operations. Non-mark
up revenues should also be increased in the face of lower credit
disbursements resulting in more.

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Formula = Net income before taxes

Total Deposits

2004 = 2842740 = 3.41%

2003 = 1901800 = 3.08%
2002 = 1244022 = 2.47%

percentage 2

2002 2003 2004

Interpret This ratio indicates to what extent deposits which
represent funds mobilization on the part of the bank contribute
towards income generation. Although the other ratios regarding the
profitability are showing satisfactory position of the bank but still
bank need to increase its utilization of resources in order to

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increase its profitability because the banks have to pay heavy

taxes on their profit.


Formula = Operating Expenses

Net Revenue

(Rs. In million)

2004 = 1845 = 30.1%

2003 = 1438 = 28.6%
2002 = 1093 = 19.2%

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2002 2003 2004


This ratio signifies the proportion of the revenues that is used to

cover the operating expenses of the bank. The ratios calculated
above gives a good picture of the bank’s operations. This ratio is
increasing from year 2002 to 2004 and giving a bright picture of the
profits for the bank. With respect to the banking expansions this
ratio is showing a very good picture as we know the expansions
required lot of expansions, although the operating expenses of the
bank are increasing as we have seen in the trend ratio but their
proportion of increase is not alarming.

In short, the bank in an attempt to maintain at a good level of

liquidity, has a low level of profitability but there is a continuous
push in the profits and there are chances that the bank will reach at
a point of high liquidity and profitability.

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The liquidity position of a bank is like a reservoir. It may be

adequate, although nearly depleted, just before the start of the
rainy season. Or it may be inadequate, although three quarters full
just before the summer drought.
Liquidity can be defined as:

“The bank’s ability not only to meet possible deposit

withdrawals but also to provide for the legitimate needs of the
economy as well”


Formula = Advances
Total Deposits

2004 = 69938041 = 83.9%

2003 = 44778000 = 58.6%
2002 = 30035484 = 72.62%

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2002 2003 2004


It demonstrate the degree to which bank has already used up its

available resources to accommodate the credit needs of its

This ratio, a comparison of funds generation and its funds

mobilization, indicates the total loans sanctioned by the bank in
relation to total amount of money deposited with the bank stands at
83.9% compared with the last year figure of 58.6%. This shows
that the bank has greater potential to advance additional loans.
Total loan able funds roughly measured by the deposits are
sufficient to enable the bank to make additional loans without
recourse to more or less continuous borrowing. At present, the
bank has got a relatively small amount of advances as compared
with its deposits raised. One reason for fewer advances is the

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cautious and selective approach on the part of the management

while deciding upon credit proposals.


Formula = Due from banks

Total Assets

2004 = 2324839 = 2.17%

2003 = 5770842 = 6.75%
2002 = 3414470 = 4.86%

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2002 2003 2004


It is an indication of ACBL’s funds management policies. The funds

allocation to the financial institutions has increased to a great
extent despite the fact that still it holds a small proportion relevant
to the total resources raised by the bank. It is a positive indicator in
the sense that the financing to the banks are the most secure ways
of lending. Considering the economic conditions of the country, it
seems to be the best alternative available to the bank. In the
current year this ratio has been reduced to the little extent.
Although it is declining but the situation might not be alarming.


Formula = Due from banks

Due to Banks

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2004 = 2324839 = 16.87%

2003 = 5770842 = 36.29%
2002 = 3414470 = 29.79%



percentage 20


2002 2003 2004


It shows the relationship between what the bank owes from other
banks and what is due to it. An unfavorable condition has been
observed in this ratio in the current year showing the fact that the
bank has to seek fewer funds from the financial institutions owing
to the strong liquid financial position. This ratio is going on
increasing in last year but decreasing in current year, which
involves a slight risk. In the phase of economic instability, the
bank’s management should be efficient to access the risk involved
in lending and they should control this ratio.

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Formula = Due to banks

Total deposits

2004 = 13781555 = 16.54%

2003 = 15903055 = 25.79%
2002 = 11460394 = 22.15%

percentage 15
2002 2003 2004

This ratio is an indicative of the proportion of the lending from the
financial institutions in relation to the total funds raised by the bank
in the form of deposits.

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This ratio for ACBL is 16.54% in the year 2004. There has been
a significant decline in this ratio as previously the bank depended
slightly more on the borrowings from financial institutions. It shows
that the bank is concentrating on raising funds from depositors and
trying to relies less on the borrowed funds.

• It is a favorable indication in the sense that the bank has

large potential to ask for borrowed funds in the phase of tight
liquidity position.
• Further more, it shows the efficiency of the marketing
department to have created so much of deposits that the
bank does not need to look at the financial institutions for
help in improving its liquid position.
• There is another favorable aspect of this declining tendency.
The rate of interest offered to the depositors is very low in
comparison with the interest to be paid to the financial
institutions for their funds. A decline in this ratio means less
mark up burden on the bank resulting in less financial risk for
the bank.

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Coverage ratio measures the capacity of the bank to cover its

interest charges, which are the main obligations on the bank.


Formula = Earning before int. & Tax

Interest Exp.

2004 = 4688057 = 2.54 times

2003 = 3339331 = 2.32 times
2002 = 2336537 = 2.13 times


It shows whether the bank is earning enough profit before mark up

charges to be paid to the financiers and the taxation obligations due
to the government in order to remain solvent.

The above figure shows the acceptable capacity on the part of the
bank to cover its interest payments. It has increased as compared

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with the last year. This increase in the ratio is a sign of

improvement for the bank. But this is a short-term perspective of
the bank’s financial position. In view of the long run financial
perspective, this ratio is good for the bank.



Formula = Capital Funds

Total Assets

2004 = 5573149 = 5.20%

2003 = 3901279 = 4.57%
2002 = 3026550 = 4.30%

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percentage 3


2002 2003 2004


This ratio indicates the extent of the funds employed by the bank in
the total resources as shown in the balance sheet. This ratio has
been decreased in the current year with a very low margin.

Capital Fund to Risk Assets Ratio

Formula = Capital Fund

Risk Assets

2004 = 5573149 = 7.97%

2003 = 3901279 = 8.71%
2002 = 3026550 = 10.07%

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percentage 6

2002 2003 2004


This ratio take into account the difference between cash and
marketable securities & other kind of assets. Cash & marketable
securities, which are risk less items, are excluded to find out the
true picture of the capital adequacy. In case of ACBL the ratio is

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YEARS, FROM 2000 TO 2004


(Rs. In million)








2000 2001 2002 2003 2004

The above graph shows that the profit before tax of the Askari
Commercial Bank shows a trend of increase and continuous
increase in the profit before tax of the bank, it goes on increasing
every year and its ratio has not been fall since the last five years.
In 2004 the profit before tax increased with greater margin as
compared to the previous four years.

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(Rs. In million)


2000 2001 2002 2003 2004

Askari Commercial Bank is known to be the leading bank in the

private sector. Customers’ shows a lot of loyalty to the bank,
therefore, the deposits of the bank go on increasing every year and
its ratio has not been fall since the last five years.


(Rs. In million)

2000 2001 2002 2003 2004

The Askari Commercial Bank has adequate amount of money as

result of deposits it keeps with itself of their valuable customers. It

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keep a certain percentage of money in order to meet the day to

day transactions of the bank and lend reaming amount as advances
and loans which is very important source of business for the bank.
The graph shows that the capacity of the bank to lend the advances
and loans is going on increasing since the last five years and is
highest in the year 2004.

(Rs. In million)



2000 2001 2002 2003 2004

The Askari Commercial Bank is showing a mix trend of increase and

decrease in the investments of the bank, it goes on increasing from
year 2000 to 2002 and its ratio is highest in 2002. From 2002 it
starts declining.

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(Rs. In million)






2000 2001 2002 2003 2004

Total Assets of the bank are increasing every year with the
expansion in the business .In 2004 the assets of the bank has been
increased more than twined a time as compared to the year
2000.which clearly shows the rapid expansion of the bank.


(In Rupees)


2000 2001 2002 2003 2004

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The earning per share of the bank is also showing good position
and is enough to satisfy the shareholders of the bank, the number
of the shareholders fund has also been increased from the last five
years. The graph shows that the bank’s earning per share ratio is
highest in the year 2004 and is lowest in the year 2000.

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An analysis indicating towards the organizations strengths,

weaknesses, opportunities and threat is termed as SWOT Analysis.
Such an analysis is very important for the management in retaining
the strength, overcoming the weaknesses, capitalizing over the
emerging market opportunities, and carving ways to successfully
tackle with the threats and ultimately converting them in the
strengths for the organization.

During six weeks of my stay at Askari Commercial Bank, Shahalam

Market Lahore, I have come across the following SWOT analysis of
the bank.



Askari commercial bank is the leading private sector bank in the
banking network in Pakistan with many of them online branches in
major cities of the country

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The operations performed by the bank are highly automated that
result in assurance for the customers that their transactions are
completed reliably, efficiently and securely.


One can avail the benefit of the services provided at the bank till
5:00 P.m. which is highly useful for those customers who find it
difficult to leave their officers in the morning..

The bank has the largest ATM Network cross the country. The
customers of ACBL withdraw access their funds any time at all the
ATM Sites with ASKCASH Logo.

The management of the bank believes in customer focused banking
rather than the product oriented banking. The products and
services designed by the bank are specifically tailored to the
individual needs of its customers.


The priority banking centres 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 finest
things in life, Priority Banking offers the very highest levels of
personalized banking to match customer’s unique status.

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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
ACBL is among those few banks who are already reaping the
benefits of electronic transactions.


ACBL management is quite prepared to adopt the latest
advancements in technology resulting in revolution in the banking
operations such as check clearing process, computer based teller
equipment, automatic teller machines, and electronic funds
transfers among the others.

Phone banking service is very attractive for those classes of
customers who don’t have time to personally come to the bank i.e.
banking on the phone line thus saving the precious time of the


The organizations showing concern for the people, ethics, and
environment enjoy good public reputation and are able to reap the
benefits in the long run. ACBL management is quite sensitive to this

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In my opinions these are the points that might be detrimental to

the efficiency and profitability of the bank.


The bank has still some of the traditional ways of operations in this
advanced technological environment.

Although the bank has computerized accounting system but, still
the bankers use to make their entries in the accounting register.


Understanding and the effective management of the human
resources 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 resources and how they are managed. ACBL seems to not
focusing on this highly critical issue as the job satisfaction level of
the employees working at ACBL, was quite low.

This famous 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

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in the view of giving them the know-how of the working in all

the departments. But I think this is not a very good tactics used by
the management. Otherwise the situation might be like this ‘Jack of
all and master of none.’

There is a high degree of centralisation in the bank. Almost all the
decision-making is in the hands of the upper management. But
centralisation 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.


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 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.


Apart from the ones discussed in External Factors Evaluation Matrix,

the bank is facing the following threats and opportunities currently:

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These are positive external environmental factors effecting the


• It deals in bulk business.

• A large amount of foreign investment is attracted.

• Strong potential for growth

• Steady increase in Customer Deposits

• Overseas Operations

• Branches In Remote Areas

• Islamic Banking

• Sharp increase in imports and exports


High Employees Turnover

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As discussed above, the job satisfaction level of the employee is

very low resulting in high turnover, which is bad for any
organization as there are huge monetary and non-monetary costs
involved in the fresh recruitments.

High charges
The schedules of charges indicate that the fees charged by the bank
on the various services it provides are extremely high. It may result
in decrease in the number of its exiting 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 rates of return
(approx. 16 to 18 percent annually) on 10-15 year fixed accounts,
which banks find difficult to match.

Stiff Competition
SCB is currently facing strict competition from the foreign banks
especially the American who banks enjoy a good market position.
Collectively U.S. banks hold approximately 9 percent of all
commercial banks' assets. At present, three American banks are
operating in Pakistan: American Express Bank; Bank of America
and Citibank.

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Less Experienced Staff

Owing to huge turnover of the employees, the no. of experienced
and well trained staff is very low. Majority of the staff working in
the bank branches is quite young and inexperienced. If the bank
failed to bring down its high employees turnover, then it would be
lacking the most important resources of any organization i.e. the
experienced staff.


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“The art and science of formulating, implementing and

evaluating cross-functional decisions that enable an organization to
achieve its objectives.”



Generate Implement
Establish Implement Measure
Develop Evaluate, strategies
Long term strategies and
Vision & and Marketing,
objectives Management evaluate
Mission select Finance,
Issues performanc
MIS Issues
strategies e



The strategic management process consist of three stages

1. Strategy Formulation
2. Strategy Implementation
3. Strategy Evaluation


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The strategy formulation stage includes the development of

vision and mission, identification of organization external
opportunities, identification of the organizational internal strengths
and weaknesses, establishment of long term objectives, generation
of alternative strategies and selection of the pertinent strategies to
pursue in the long run. On the other hand, this stage also describes
about the selection of business, allocation of available resources,
expansion of operations, entering into the new markets and the
conditions of mergers and joint ventures.


This stage requires a firm to establish annual objectives, devise

policies, motivate employees and allocate resources so that
formulated strategies can be executed. As for the purpose of
achieving long term objectives the annual objectives are described
and the policies are established for them. By implementation of
strategies, it is evident that employees and the managers put the
formulated strategies to action. That’s why this stage is also called
an action stage of strategic management.


It is the final stage in the strategic management process. The

strategies, which are implemented at the second stage, are now
evaluated as hey are working in accordance with the objectives or
not. Besides it, all strategies are subject to future modification
because external and internal factors are constantly changing.

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The purpose of an external audit is to develop a finite list of
opportunities that could benefit the organization and threats that
should be avoided. There are lots of factors, which are involved in
determining the external environment, but certain key variables are
taken that offer actionable responses. The organization should have
to respond either offensively or defensively to the factors by
formulating strategies that take advantage of external opportunities
or that minimize the impact of potential threats.


External forces/ factors can be divided into five broad categories
1. Economic forces
2. Social, Cultural, demographic and environmental forces
3. Political, Governmental and Legal forces
4. Technological forces
5. Competitive forces


These are positive external environmental factors effecting the


• It deals in bulk business.

• A large amount of foreign investment is attracted.
• Strong potential for growth

• Steady increase in Customer Deposits

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• Overseas Operations
• Branches In Remote Areas
• Islamic Banking
• Sharp increase in imports and exports


• High Employees Turnover

• High charges
• Less attractive rate of return
• Stiff Competition
• Less Experienced Staff


This Matrix summarizes and evaluates economic, social, culture,

and demographic, environmental, political, governmental, legal,
technological and competitive information. It shows the
opportunities and threats that are faced by an organization.

0.0 = Not Important
1.0 = Very Important
1 = The Response Is Poor
2 = The Response Is Average
3 = The Response Is Above Average
4 = The Response Is Superior

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Key External Factors Weights Rating Weighted

1 It deals in bulk business.
0.10 3 0.30
2. A large amount of foreign
investment is attracted 0.10 4 0.40
3. Strong potential for growth 0.05 2 0.10
4. Imports are increasing 0.05 4 0.20
5. Steady increase in Customer Deposits
0.15 3 0.45
6. Overseas Operations 0.03 3 0.09
7 Branches In Remote Areas 0.02 2 0.04

8 Islamic Banking 0.01 1 0.01

9. Sharp increase in imports and exports 0.04 3 0.12

1. High Employees Turnover 0.05 2 0.10
2. High charges 0.05 2 0.10
3. Less attractive rate of return
0.15 3 0.45
4. Stiff Competition 0.10 3 0.30
5. Less Experienced Staff 0.10 2 0.20
TOTAL 1.00 2.86


The above Matrix depicts the opportunities and threats that are
faced by the bank. The weighted score of EFE Matrix of the bank is
2.86 that is above average (2.5). So it shows that the bank is
responding to the existing opportunities and threats in banking

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All organizations have strengths and weaknesses in their functional
areas of business. For analyzing the internal situation of the
organization with regard to its management, marketing, finance,
operations and research and development, internal audit is
performed. The internal audit is executed parallel to the external
audit. This process provides more opportunity for the participants
and the managers to understand the key areas within an

Key internal forces:

1. Marketing
2. Finance
3. Accounting
4. Management
5. Management Information System
6. Production/Operations



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This strategy-formulation tool summarizes and evaluates the major

strengths and weaknesses in the functional area of a business and
it also provides a basis for identifying and evaluating relationships
among those areas. Intuitive judgments are required in developing
an IFE Matrix

0.0 = Not Important
1.0 = All Important

1 = Major Weakness
2 = Minor Weakness

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3 = Minor Strength
4 = Major Strength


Key Internal Factors Weights Rating Weighted

Internal Strength
3 FULL DAY BANKING 0.06 4 0.24
4 ATM NETWORK 0.04 3 0.12
9 PHONE BANKING 0.03 4 0.12
Internal Weaknesses




5. CENTRALIZATION 0.06 2 0.12
Total 1.00 2.80


The above Matrix comprises the strengths and weaknesses of Bank

Askari Commercial Bank and the weighted score of the bank is 2.80
that is above average (2.5) so it depicts that the bank has strong
internal position

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The Competitive Profile Matrix (CPM) identifies a firm’s major

competitors and its particular strengths and weaknesses in relation
to a sample firm’s strategic position.
In CPM critical success factors are taken that include both internal
and external issues. In a CPM, the rating and total weighted score
for rival firms can be compared with the sample firm.


0.0 = Not Important

1.0 = Very Important


1 = Major Weakness
2 = Minor Weakness
3 = Minor Strength
4 = Major Strength

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Askari Bank
Bank Alfalah
Critical Weight Rating Score Rating Score
Customer 0.16 3 0.48 2 0.32
Branch 0.12 2 0.24 3 0.36
Market share 0.09 4 0.36 4 0.36
Service quality 0.10 4 0.40 3 0.30
Advertising 0.05 2 0.10 3 0.15
Online facility 0.09 3 0.27 3 0.27
Full day 0.12 3 0.36 2 0.24
Employee 0.15 3 0.45 3 0.45
Financial 0.12 4 0.48 3 0.36
TOTAL 3.14 2.81


In the above Matrix, the position of Askari bank is stronger as

compared to its rival Bank Alfalah. 3.14 is the total of average
weighted score that reveal the relative strength of the firm against

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its competitor. The total weighted score of Bank Alfalah is 2.81

that show better position. But as compared to Askari Bank it is
slightly less.

Strategy-Formulation Framework can be integrated into three-stage
decision making framework


 External Factor Evaluation (EFE) Matrix

 Competitive Profile Matrix (CPM)
 Internal Factor Evaluation (IFE) Matrix


 Threats-Opportunities-Weaknesses-Strengths (TOWS)
 Strategic Position and Action Evaluation (SPACE) Matrix
 Boston Consulting Group (BCG) Matrix
 Internal-External (IF) Matrix
 Grand Strategy Matrix


 Quantitative Strategic Planning Matrix (QSPM)

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The SPACE Matrix is an important matching tool. It’s four-quadrant

framework indicates that whether aggressive, conservative,
defensive, or competitive strategies are most appropriated for a
specific organization.
Internal dimensions [FS] and [CA]
External dimensions [ES] and [IS].

Assign a numerical value ranging from +1 (worst) to +6 (best) to

each of the variables that make up the FS and IS dimensions.
Assign a numerical value ranging from –1 (best) to –6 (worst) to
each of the variables that make up the ES and CA dimensions.

Aggressive Strategic:
Market penetration, market development, product development,
backward integration, forward integration, horizontal integration,
conglomerate diversification, concentric diversification, horizontal
diversification, or a combination strategy.

Conservative strategies:
Are best options for the firm that lies in this quadrant. Most often
include market penetration, market development, product
development, and concentric diversification.

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Defensive strategies:
Include retrenchment, divestiture, liquidation, and concentric

Competitive strategies:
Include backward, forward, and horizontal integration; market
penetration; market development; product development; and joint


Investment decreased +1
Strong Liquidity Position +6
Strong Cash flow position +4
The Revenues increased +4
Net Income After Tax increased +4
Net Profit Margin increased +4
Return On Equity +2

Strong potential for growth +6

Computerized Banking system +2
Potential for further increase in profits +6
Growth prospects for Islamic Banking +2
Electronic Banking

High Inflation rate -1

Political Instability -3
Competition from Foreign and Local banks -2
Similar Products offered at higher rate by other banks -4
Changes in laws by government -3
Strict SBP regulations -4

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High quality services

Customer oriented banking -2
Vast product variety -2
First ever free visa card -1
Strong top management -1
ES Average is –17/6 = -2.8 IS Average is +18/5 = +3.6
CA Average is –7/5 = -1.4 FS Average is +25/7 = +3.5
Directional Vector Coordinates: x-axis: (-1.4)+(+3.6) = +2.2
y-axis: (-2.8)+(+3.5) = +0.7

Conservative +6 Aggressive
(2.5, 0.75)

-6 -5 -4 -3 -2 -1
-1 +1 +2 +3 +4 +5 +6
Defensive -6 Competitive


Directional vector of the Bank is located in aggressive quadrant

(upper-right quadrant). It shows that the bank has excellent

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position to use its strengths, take advantage of external

opportunities, overcome internal weaknesses, and avoid external
threats. Therefore, market penetration, market development,
product development, backward integration, forward integration,
horizontal integration, conglomerate diversification, concentric
diversification, horizontal diversification, or a combination strategy
can be feasible according to specific circumstances.



The BCG Matrix graphically portrays differences among divisions in

terms of relative market share position and industry growth rare.
Relative market share position is defined, as the ratio of a division’s
own market share in a particular industry to the market share held
by the largest rival firm in that industry.


Division in Quadrant I have a low relative market share position,

yet they compete in a high-growth industry. Generally these firms’
cash needs are high and their cash generation is low. These
businesses are called Question Marks because the organization
must decide whether to strengthen them by pursuing an intensive
strategy (market penetration, market development, or product
development) or to sell them.

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Firm that lies in this Quadrant (often called Stars) represent the
organization’s best long-run opportunities for growth and
profitability. Divisions with a high relative market share and a high
industry growth rate should receive substantial investment or
maintain or strengthen their dominant positions.
Forward, backward, and horizontal integration; market penetration;
market development; product development; and joint ventures are
appropriate strategies for these divisions to consider.


The organization that lies in this Quadrant has a high relative

market share position but compete in a low- growth industry. Called
Cash because they generate cash in excess of their needs, they are
often milked.
Product development or concentric diversification may be attractive
strategies for strong Cash Cows. However, as a Cash Cow division
becomes weak, retrenchment or divestiture can become


The organization that lies in this Quadrant has a low relative market
share position and competes in a slow- or no- market-growth
industry; they are Dogs in the firm’s portfolio. Because of their
weak internal and external position, these businesses are often

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liquidated, divested, or trimmed down through retrenchment.

When a division first becomes a Dog, retrenchment can be the best
strategy to pursue because many Dogs have bounced back, after
strenuous asset and cost reduction, to become viable, profitable



Division Revenues Percent Profits Percentage Percentage Percentage

(000) Revenues (000) Market Growth
Share Rate
Car 2,167,252 33% 371,276 34% 45% +16
Credit 2,758,321 42% 393,116 36% 58% +15
Islamic 656,743 10% 109,199 10% 8% -2
Home 985,115 15% 218,398 20% 15% +16


Car finance division and Islamic Banking have a low market share
position, yet they compete in a high growth industry. These
businesses are called as Question Marks, because the organization
has to decide whether to strengthen them by pursuing an intensive

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strategy (Market development, Market Penetration, Or Product

Development) or to sell them.

Credit Cards represents the organizations best long-run

opportunities for growth and profitability. Credit card division has a
high market share position and a high industry growth rate,
therefore the bank should invest more in this division to maintain or
strengthen their dominant position. Forward, Backward, and
Horizontal Integration, Market Penetration, Market Development,
and Product Development are the appropriate strategies for this
Credit Card Division.
Home Loan division has a low Market Share Position and competes
in a slow or no market growth industry; they are dogs in the firm’s
portfolio. Because of their weak internal and external position, the
businesses are often divested or trimmed through retrenchment.


The Grand Matrix has become a popular tool for formulating

alternative strategies. All organizations can be positioned in one of
the grand strategy matrix’s four strategy quadrants. A firms
division can be likewise positioned. Grand Strategy matrix is based
on two evaluative dimensions

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Rapid Market Growth

Quadrant II Quadrant I

1. Market Development 1. Market Development

2. Market Penetration 2. Market Penetration
3. Product Development 3. Product Development
4. Horizontal Integration 4. Forward Integration
5. Divestiture 5. Backward Integration
6. Liquidation 6. Horizontal Integration
Weak 7. Concentric Strong
Competitive Diversification Competitive
Position Position

Quadrant III Quadrant IV

1. Retrenchment 1. Concentric Diversification

2. Concentric Diversification 2. Horizontal Diversification
3. Horizontal Diversification 3. Conglomerate
4. Divestiture Diversification
5. Liquidation 4. Joint Venture

Slow Market Growth

Bank falls in the first quadrant of the Grand Strategy Matrix. The
Bank is in excellent strategic position. For the bank, continuous
concentration on the current market (Market Development, Market
Penetration) and products (Product Development) is an appropriate
strategy. If the bank is highly committed to a single product, then
concentric diversification may reduce the risk associated with a
narrow product line the bank can afford to take advantage of the
opportunities in several areas. It can take risk aggressively when

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Quantitative Strategic Planning Matrix

Strategic Alternatives

Key Factors Weight AS TAS AS TAS
Advancement in Islamic Banking 0.05 2 0.10 1 0.05
Expand Branch Network 0.05 - - 1 0.05
Enhance Product Portfolio 0.05 2 0.10 3 0.15
Get Into E-Business 0.05 1 0.05 - -
Provide Financial Consultancy 0.10 2 0.20 1 0.10
Government Policies 0.10 1 0.10 - -
Strict SBP Regulations 0.20 1 0.20 3 0.60
2nd Hand Car Finance By City Bank 0.15 4 0.60 3 0.45
Cash Card Introduced By MCB 0.10 2 0.20 4 0.40
Branches of Nationalized Banks in all Cities of0.05 2 0.10 1 0.05
Bank Name 0.05 2 0.10 4 0.20
Credit Card 0.10 4 0.40 3 0.30
Strong Top Management 0.05 1 0.05 4 0.20
Aggressive Banking 0.15 2 0.30 4 0.60
Bad Debt Ratio 0.05 2 0.10 1 0.05
Committed Workforce 0.05 1 0.05 3 0.15
Financial Ratios 0.05 2 0.10 3 0.15
Customer Satisfaction 0.05 4 0.20 3 0.15
Islamic Banking 0.05 3 0.15 4 0.20
No International Branch Network 0.05 1 0.05 3 0.15
Weak IT Structure 0.05 2 0.10 1 0.05
Trade Through NOSTRO Accounts 0.05 2 0.10 1 0.05
Less Job Rotation 0.05 1 0.05 - -
ATM not available In Every Branch 0.10 4 0.40 3 0.30
No Marketing Department 0.10 4 0.40 3 0.30
Sum Total Attraction Score 1.0 4.10 4.70

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AS = Attractiveness Score TAS = Total Attractiveness Score

Attractiveness Score:
1 = not attractive 2 = somewhat attractive;
3 = reasonably attractive 4= Highly Attractive
MP= Market Penetration PD=Product Development

The Bank must consider two alternative strategies i.e. Market
Penetration, and Product Development. The total attractiveness
score of Market Penetration is 4.10 and for Product Development is
4.70. Therefore the strategy which the Bank must adopt is Product
Development as the total Attractiveness score of this strategy is the
highest i.e. it appears to be the most attractive and suitable for the

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One of the most important aims of the student life is to express
himself / herself correctly and adequately. This was the believe in
my mind when I first decided to go to Askari commercial Bank to
complete my internship program.

Determined, Confident and Persistent in the pursuit of knowledge

and learning, I was on my way to Askari Commercial Bank,
Shahalam market Branch in the early morning of July 1, 2005. Just
a day before, I had taken my class of 3rd semester. Normally I
wanted rest and recreation after the tiring class in June but this
time I was anxiously waiting for the start of my internship.


I started my internship from "General Banking" in the first week.

The General banking is basically divided into the following sub
departments, which are as follows:

• Account opening
• Bills and remittances
• Clearing
• Term deposit
• Cash department

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The first day of exposure to the practical field was at the (sub
department) Account opening.
The relationship of customer starts with this department. every one
is not allowed to come and open an account in the bank, for this
purpose there should be an introducer who himself is the account
holder in the same branch. He has to introduce the new client by
signing the opening account form and then his signature are

Applicant's fills the account opening form and provides it to the

bank with photocopy of I.D. card and signatures card.

Then the banker inquires the about the option of opening a joint
account or individual. If the customer wants to open joint account
then either it is "either or survivor" (i.e. Only one persons signature
is sufficient) or jointly (i.e. Both should sign the cheque).

Account opening:
Although the procedure of opening an account in a bank is a quite
complicated job but I am going to tell you only the basic necessities
for opening the account, which are as follows:

• Introduction
• National I.D. card
• Personal data
• Details of dealing with other banks.

These are some of the basic requirements for opening the account.

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Issuance of chequebook
Once the account is opened, ACBL issues the chequebooks to the
customer so that they could withdraw their money whenever they
like. The producer of issuance of the chequebook is as follows:

For the customer who already has an account with the bank, the
lastly consumed chequebook requisition slip with the help of which
a new chequebook is issued. And the person who is going to open a
new account for the first time gets the chequebook free without any
requisition slip.

For the new depositors the cheque book is not issued at the time of
opening of account, rather it is issued after three days but, as the
most of the customers are from the armed forces so the usually get
the cheque earlier. ACBL issues the chequebooks for both the local
and foreign currency accounts.

I remained there in the account-opening department for one week

and daily I learnt a new thing
I come to know about the details of the account opened by the
banks, which I have explained in previous portion of

In the start I have stated the account opening procedure and

issuance of cheque book in a very comprehensive way, now let me
tell u the further related detail of account opening

• First of all a customer come and gets the information

regarding the opening of account. After getting the proper

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information he gets an introducer and goes for opening an

account of any kind whatever he wants
• He fills the from regarding the opening of account which is in
fact a request.
• S.S card is filled which contains the signature that will be
used in future in order to identify that you are the same
particular person who perfectly eligible for receiving the
• The S.S card and the application form is verified and the
verification stamp is imposed on it.
• After verification the application forms are pasted in the file
with the serial, no which is actually the account no. Allocated
to the respective customers.
• The chequebook is issued to the customer after three days.
• A letter of thanks is posted to the customer as well as the
introducer. The introducer is thanked for the two
perspectives. First he should be thanked that because of him
the bank get another customer and the second reason behind
sending the letter to him is that if the customer had
fraudulently get the signature of that person as an introducer
then he should come to know that some one has used his
name as well as signature for his personal benefit and without
the consent of him (introducer).
• The procedure for opening the account comes to an end after
sending the letter of thanks.

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Active and inactive Account

The account becomes Inactive if there is no debit transaction.
Account becomes active if there is credit transaction.


In the second week I was shifted to the TDR (Term Depots

Receipts) department. It was again a good experience to work with
the officer here. First of all he told me about the basics of the TDR.

Deposit is lifeblood of a commercial bank. The main function of a

commercial bank is to channelize the saving from the savers to the
ultimate users of the funds. This process of collecting saving is
called "deposit mobilization".

Deposits are of two types one is the demand deposit and the other
one is time deposit (these have been explained in detail in the
"department" portion). As the name signifies the demand deposit is
payable on demand so no interest or benefit is given on such
deposits but the time deposit is a kind of deposit, which gives you a
benefit in terms of cash. Most of the people who have surplus
money with them especially the landlords deposit their money in
such accounts.

Term deposits are payable on demand with certain maturity.

Different percentages of profit are given in the time deposit (the
detail is given in the Marketing Mix)

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These are called fixed deposit because they are fixed and no
transaction is allowed till maturity. In fix deposit you can open an
A/c of the same title only than A/c number will be changed. While in
other accounts the A/c can't be opened under the same title even in
other branch of the same Bank.

Profit calculation

The Head office determines the provisional rates of the Profit. Every
bank has its own interest rate; usually established banks have low
interest rates then the non-established banks as the have to attract
the Customers.

There are different types of accounts, which are shown in

provisional rates of profit on “PLS deposit” and rate of return
minimum balance, and maturity is also shown in it. After every six
months the rates are revised on PLS deposit

On fixed deposit the interest is given on the Principle amount only

while on other profit and loss deposits the interest is given on profit
an principle amount (provided that the interest has not been
received in the given time). On fixed deposits the month is started
from the day from which you deposit the amount.

As the interest rates vary frequently you will calculate the interest
on the rate which is applicable during that particular duration. It
happens that sometimes the interest rate remains the same. But
during the year 2004 the interest rates were changed two times
within six months. First of all the interest rates were changed at the

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start of the year and then these rates were changed again in
the month of the February i.e. these were changed twice in the six
months. The changing in the interest rate depends upon the will of
the Head office, which has the power to change them at any time.

Zakat is deducted on the first of Ramdan. However, the Bank can't

deduct the Zakat if you have given Affidavit (declaration regarding
not to deduct Zakat on Stamp paper).

Tax is deducted which is known as withholding tax only at the time

of deposit e.g. When you will deposit Rs.100,000 you will have to
give additional money of Rs. 300/- as the withholding tax. (The rate
of withholding tax is 0.3%). If you have National Tax Number NTN
then 0.3% withholding tax is exempt.

The rate of withholding tax on profit is 10% i.e. if you are going to
get a benefit of Rs. 10,000 then you will receive the cash of Rs.
9,000 as the remaining amount will be deducted as the tax.

For non-residents the tax and Zakat is exempt (visa is required as

the proof that the particular person is really a non-
resident).similarly Christians has not to pay the tax, they have to
pay the tax only.

Askari Bachat Certificates are tax-free.

The calculation of interest is done manually on the card and then

you feed (debit) it in the bank's account (Profit Saving Account) and

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will be credited in the customer's account. A computerized

voucher is prepared which will be used as the record.

If there is any mistake in the Debit Credit that will be checked out
through Daily Balance Sheet of the Particular department.

For easy operations Customer prefer to give instruction that their

interest should be credited to their A/c otherwise a manual voucher
will be made that will be cashed on cash counter every time when
you come to take the interest.

Record keeping
The record of the TDR is although feed in the computer but there is
also a hard copy of the record. The verified TDR forms are pasted
with serial number of receipt given to the customer (the receipt of
the form regarding the deposit of the amount).

Askari Bachat Certificates are attached or pasted in the file

according to the date. The date may be of any month and any year
i.e if there is a card of the 8th then on this card you will find the
only 8th date of any month and any year in which the card was


In the third week of my internship I was shifted to the Clearing

section and Bills for collection section as well. Three days I worked
with the "Clearing" and then with the "Bills for collection" section.

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This is a "Inter-city clearing" i.e the cheques of Lahore city from
different banks like National Bank of Pakistan, Standard Chartered
Bank, Muslim Commercial Bank are deposited here. The deposited
cheque is received carefully by checking the title of cheque, date,
amount, and signature on the cheque. All the cheques go to the
State Bank of Pakistan. Everyday NIFT receives all cheques and
arranges them. By establishment of NIFT a lot of time, cost and
labor is saved. The cheques are stamped carefully. Two stamps are
required on the cheques

• Clearing stamp
• Payee's account will be credited

If any stamp is missed or unclear, SBP returned one the cheque

with reason.
When the cheques are deposited they enter all the cheques on the
computer with account number and these figures go to SBP.

There are four types of Balances in the computer

• Available balance
• Float amount
• Block amount
• Ledger balance

NIFT collects all the cheques at 2:00 pm. After that the computer
department give clearing sheet that is checked in clearing.

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Same day clearing

All the cheques are cleared in coming day. But same day cheques
are cleared other same day when it is deposited. The same day
cheque amount is 50,000 below this amount the cheque, can't be
cleared in the same day.

Clearing house
It is a p[lace where representatives of all scheduled banks sit
together and interchange their claim against cash other with the
help of controlling staff of "state Bank of Pakistan" where there is
no branch of State Bank of Pakistan, the designated branch of State
of Pakistan.

So, system by which banks exchange cheques and other negotiable

instruments drawn on each other within specific area and there by
secure payment for their clients through the clearing house at
specific time In an efficient way.


Two types of cheques are deposited here

• Outstation cheques
• Askari other branch cheques (local)

Outstation cheques mean different cities cheques are deposited and

Local means Askari's other Branches like cantt, circular road,
defence, Gulberg etc. Are deposited. All cheques account numbers
on the computer and these figures go to SBP.

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The cheques are cleared in 5-6 days. Because "NIFT" receives

and delivered to SBP where these cheques are cleared in 3 days
and deliver to the banks, which mention on the cheques.

The cheques require three stamps

• Askari crossing stamp

• OBC number
• Payee's account will be credited.

If the cheques are returned due to some reasons, a returned

Random is filled and entries are recorded on the register.


In the fourth week of internship I was transferred to the

"Remittances department". I met there with a quite sophisticated
personality, she tells me about the issuance, procedure and the
entries of the demand drafts and pay orders.


It is an instrument payable on demand for which value has been

received, issued by the branch of the bank drawn. Demand draft is
payable at some other branches of the same bank. But Askari Bank
contract with MCB so ACBL's demand draft is payable at MCB also.

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Demand draft is very useful because there is no chance o fraud.

The person deposit cash and get demand draft. It is used for
outstation payment.

Issuance of demand draft

On the application form following particulars are given:
• Name of beneficiary
• Amount
• Mode of payment
• The place where DD is drawn
• Signature
• Name and address of the beneficiary

Request shall be made on standard application form. The customer

writes his name, address, I.D number, and phone number on the
backside of the application form. Commission is charged as per
schedule of charges. The issuance of DD is computerized and the
amount is automatically protect graphed drawing printing for the
avoidance of forgery.

The withholding tax and excise duty is deducted as per schedule.

when the customer depots cash in the cash department, he got
voucher from the cash department and gave it to the person who
makes the DD.

Payment of DD
When a person brings DD (which have been drawn on you), you will
check it from your DD payable record and ask the customer to sign
twice at the back of the DD so that it could be confirmed that he is

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the eligible person for receiving the benefit, along with this you
obtain the ID of that person verify it and then make the payment.
After making the payment entry is made in the register that this DD
has been paid.

DD payable register
Every day you receive an IBCA from different banks and it contains
a list of DDs, which have been drawn on you. Banker records it in
DD payable register. These DD are those, which other branches
have drawn on your bank.

Payment of DD from Suspense A/c.

The payment of DD is made from the suspence account in the
following cases:

• The amount of DD is paid from suspence a/c if advice is not

received yet.
• If a DD is to be cancelled on the wish of the customer, in such
a case the payment will be made from suspence A/c.

Cancellation of DD
Following procedure is followed for the cancellation of the DD.

• Obtain the application in writing for the cancellation of DD

along with the original DD.
• Verify the signature of the applicant, which should tally, with
the signature on the application form (for opening the DD).
• Mark caution on DD issued register or on computerized entry.

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• Make the payment from suspence account.

• Inform the Drawee bank regarding the cancellation and ask
for IBCA. Inter Branch Credit Advice is the advice regarding
the payment (refund) of the amount which Drawer bank have
sent to them (which was deposited by the customer against
the demand draft).
• When a demand draft is made, an IBCA is sent to the Drawee
bank regarding the payment.

Types of DD
DD’s are of the following types:

• Crossed DD: In the case of crossed DD the amount is

deposited to the A/c of the benificiary.
• Open DD: Incase of open DD the amount is handed over to
the benificiary at the cash counter.

The transfer of funds from one branch to another branch of the
same bank is called telegraphic transfer. The bank apply test on
telegraphic transfer. The applicant receives Commission and
charges, if the Applicant’s account is in ACBL, he pays no charge
above Rs. 100,000/-
If he has no account in the ACBL then he has to pay charges
according to the amount e.g. for Rs. 100,000/- the charges are Rs.

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If the account of benificiary is in another bank, his bank will

present The TT to ACBL through for payment.

Pay order issued from one branch can only be payable from the
same branch. Pay order is used for same city payment. E.g. If ACBL
(Main Branch) issued pay order it is only payable for Main Branch of

• Applicant fill the application
• After paying charges he gets voucher and pay order is issued
• All pay orders shall be crossed "payee's A/c only".

• The applicant give application for cancellation
• Charges are recovered from the applicant.


In the second last week of my internship I worked for two days in

the "ATM section" and then in the "Accounts section".

I worked three days in accounts department but as it is a
confidential department so they did not give me enough in

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formation regarding their working. First day I sorted out the

cheques of ACBL with the help of the serial number and the
nature of the account and arrange them in sequence. After that i
checked the activity which contains the title of the cheque, amount,
date etc. Accounts department maintains the record of expenses of
all the departments, it also maintain the record of all the employees
regarding their basic salary, increment, benefits etc. It is the
backbone of ACBL
On the next day Is worked in the mail dispatch section, the person
appointed here asked me to arrange the letters and to write the
mailing address on the envelopes and then to put the letters into
the envelops. It was an interesting job but, the single thing which I
learned from here was that, I learnt by heart the addresses of
many branches of the ACBL, which helped me to complete the
Marketing Mix portion of the same report where I have given the
detail of the Place of the ACBL. On the following day I repeated the
same job and did nothing else.

I worked two days in ATM department. The countrywide network of
automated teller machine carrying the brand name "ASKCASH".

The branch network is corrected on-line real time and its customers
have access to off-sites as well as on-site atms all over Pakistan.
Being a part of the first inter-bank ATM switch in Pakistan with ABN
AMRO and Habib bank, the customer now here have access to
about 90 atms through the country.

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For ATM cards first the customer open account in the bank after
that he/ she fills the application form for the ATM. the Head office
send a ATM cards in a ATM department but pin codes are sent in
other department. So in this way the customer gates his/ her ATM

ATM means "24 hours services" the customers get money at any
time at any place but during my period the function of ATM were
held by the Head office for three days. The branch has no authority
to held the machine, if it is not working; the Head office knows the
reason for it.
On the whole, it is an excellent strategy of ACBL and to sign a
strategic partnership with ABN-AMRO for ATM sharing arrangement
is first time in Pakistan.S


In the last week I was shifted to the "foreign exchange"

department. For the first three days I worked there but in the last
three days I was shifted again to the account-opening department
due to the absence of one of the Account opening officer. Therefore
I was sent back to the account-opening department.


Doing the internship was a wonderful experience for me but as far

as preparation of the report is concerned it was the most difficult
part of the project. Preparing for report become most difficulty and

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tedious as most of the information was not available not only on

net but also from the bank also. I was unable to get the following

 History of the bank

 Career ladder
 Job description

I was fortunate to have a wonderful Annual report of the bank.

Especially it was rested according to the circular of the State Bank
of Pakistan, therefore, it was quite easy for me to analyse the
income statements of the bank. There are some other necessary
requirements for doing the financial analysis of the income
statements i.e.,

 Information about the trends prevailing in the market,

 And information regarding the positions of the competitors of
the bank that is the reason that I was unable to depict the
true picture of the financial position of the bank.
 We are also unaware about the off balance sheet finance of
the bank so, can say nothing regarding the true liabilities of
the bank

Anyhow, it was a very learning experience for me that I will never

in my entire life.

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After spending six weeks at different departments of the bank,

interacting with the employees, getting their views, observing the
organizational structure and design, I have come up with the
following suggestions that in my view, will definitely improve a few
weaknesses observed in the bank by me.

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Flexible Policies
The bank should be adopt flexible policies, specially in the areas of
the recruitment, promotions, evaluation of the employees otherwise
the high turnover observed in the bank will continue to create
problems for the bank now and in the future.

Job security
The employees in the organization should be insured job security so
that there is no pressure on the employees while performing their

Permanent Hiring
The fresh hiring should be made permanent so that they are
secured of their future. Further the allowances and perquisites
attached with the permanent jobs will also increase the motivation
level of the employees.

Job Training Programs

The bank should place emphasis on the organization of effective
training and development programs for its new as well as existing
employees so that these are gradually updated regarding the recent
developments in the field of banking.

Perquisites and Allowances

The number of allowances and perquisites for the employees should
be increased to ensure that they put their body and soul in the jobs
assigned to them.

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Revival of the Charges

The rates for the various charges provided by the bank should be
brought down a bit, as it would result in increase in the number of
customers of the bank.

Adoption of Effective technology

The current unibank system used by the bank is very slow in
processing so my view is that the bank should try to adopt some
other but more effective form of technology in order to provide
comfort to the customers as well as the staff.

The higher authorities should form team-based management rather
than centralized management. It would result in improvement in
uplifting the morale of the employees. They will be more motivated
and involved in all their operations resulting in overall effectiveness
of the organization.

IBA University of the Punjab Lahore 179