1

A
demand.

CHAPTER ONE

Introduction

INTRODUCTION
well-developed monetary sector is pre-requisite for the development of any

country. The banking system can contribute greatly to the realization of a nations potentialities for development by helping to keep aggregate demand

in proper balance with the supply of those resources, which are responsive to monetary

EVOLUTION OF BANK
Different opinions exist about the origin of the Bank. According to some authorities the word Bank itself derived from the words Bancus or Banque, that is a bench. The early bankers, the Jews in Lombrady, transacted their business of money exchange on benches in the market place. When the business failed the Banco was broken by the people; and the word Bankrupt has evolved from this practice. This etymology is however ridiculed by Macleod on ground that the Italian money changers as such were never called Banchieri in the Middle Ages. There are the others who are of the opinion that word Bank is originally derived from the German word Back meaning a joint stock fund, which was italianised into Banco when the German the greater part of the Italy. Banks are financial intermediaries. By endowing its obligations with attractive features, an intermediary sells its obligations at a higher price than it has to pay for the

obligations it buys. The spread between the interest rate it pays on its own obligations of others constitutes the margin from which the other expenses of doing business must be deducted. The next profit after these deductions represents the return to the shareholders for their participation in the activity of financial intermediary.

FORMAL DEFINITION
Bank is an institution transacting the business of accepting for the purpose of money from public, repayable on demand or otherwise and withdrawal by cheque, draft, order and includes any post office saving bank. These are the following types of banks Central Bank Commercial Bank Industrial Bank Exchange Bank Saving Bank Mortgage Bank

COMMERCIAL BANKS
Commercial banks are companies which transact business of banking in Pakistan Commercial Banks have constituted the most important source of institutional credit in the economy of Pakistan.

COMMERCIAL BANKING SCENARIO IN PAKISTAN

At the time of independence in 1947, there were 38 scheduled banks with 195 offices in Pakistan. But by December 31, 1973 there were 14 scheduled Pakistani Commercial Banks with 3,233 offices all over Pakistan and 74 offices in the foreign countries. Nationalization of Banks was not done 1st January 1974 under the Nationalization Act 1974 due to certain objectives. But it had negative effects on the efficiency of the banking sector. Afterwards, a Privatization Commission was set up on January 22, 1991. The commission transferred many banks to the private sector, i.e., MCB and ABL. The government approved and permitted the establishment of 10 new

private banks in August 1991. Hence many new private banks have incorporated since then. Askari Commercial Banks is one of the namely established private scheduled banks. It is a branch of Army Welfare organization, (AWT).

ARMY WALFARE TRUST

Army welfare trust was established mainly for the welfare of army officials. The office of army welfare trust is situated at AWT PLAZA Rawalpindi. AWT offers the AWT Saving Scheme to the army officials only. AWT has further as units. 1. 2. 3. 4. Askari Associates Askari Leasing Askari General Insurance Private Businesses (a) (b) (c) 5. Askari Commercial Textile Mill Cement Industry Petroleum

Askari Association deals with the share holding. Askari General Insurance & Askari Leasing are registered at stock exchange. Cement Industry, Firstly produced Nizam Cement. Recently AWT invested their capital with Mobil named as Askari Mobil.

ARMY WELFARE TRUST AWT

ASKARI ASSOCIATE (PVT) Ltd.

ASKARI GENERAL INSURANCE

ASKARI COMMERCIAL BANK

ASKARI LEASING

BUSINESSES

CEMENT

PETROLEUM

TEXTILE

AN INTRODUCTION TO ASKARI COMMERCIAL BANK, LIMITED.

Askari Commercial Bank, Limited was incorporated on October 09, 1991 as a Public Limited Company and is listed on Karachi, Lahore and Islamabad Stock Exchanges. The bank obtained its business commencement certificate on February 23, 1992. The bank, since its inception has achieved and sustained an increasing trend of profitability and growth by focusing on the basic essentials of banking. The Head Office of Askari Commercial Bank, Limited at AWT Rawalpindi. The Head Office leads and supervises all the branches scattered in the far off areas. The departmentalization of head office has been done on the basis of functions. In order to perform various functions there are eight divisions of the Head Office.

PRESIDENT SECRETARIAT
The president supervises all the working of the branches. He holds meeting with the branch managers and make the policies in the coordination with Board of Directors.

AUDIT DIVISION
The head of this department is called Audit Chief. This division audits the various branches and certifies that their working is flawless.

CREDIT DIVISION
The credit division supervises the credit department of different branches. It sanctions the various credit advises sent to it by different branches and monitors the loans.

CORPORATE AND PLANNING DIVISION

This division is responsible for the corporate affairs and the various planning schemes of Askari Commercial Bank, Limited.

FINANCIAL DIVISION
The financial division permeates into the aspects of the banks. It makes the financial statement and look after monetary affairs of the bank.

BUSINESS DEVELOPMENT DIVISION

This deals in marketing aspects, promotional and other areas of the business development like expansion and enhancement.

INTERNATIONAL DIVISION
The international division is responsible for managing international relations with other foreign banks. All sorts of international affairs are settled here.

HUMAN RESOURCES DIVISION

The human resources division manages the personal affairs and administers the personal policies.

LAW DEPARTMENT
This is the department that coordination all the divisions. All the divisions are bridged together through this department

ORGANIZATIONAL
The organizational chart is given on next page

CHART

HIERARCHY STRUCTURE
PRESIDENT

SENIOR EXECTIVE VICE PRESIDENT EXCUTIVE VICE PRESIDENT SENIOR VICE PRESIDENT BRANCH HIERARCHY

VICE PRESIDENT

ASSISTANT VICE PRESIDENT

OFFICER GRADE

OFFICER GRADE

OFFICER GRADE

JUNIOR OFFICER

PABX OPERATOR

DRIVER

PEON

CHAPTER TWO

Account Opening Department

ACCOUNT

OPENING DEPARTMENT

Borrowing funds from different sources has become an essential feature of todays business enterprises. But in the case of a bank borrowing funds from outside parties is all more vital because the entire banking system is based on it. The borrowed capital of a bank is much greater their own capital. Banks borrowing is mostly in the form of deposits. These deposits are lent out to different parties. Such deposit creation is done through opening an account in the bank.

TYPES
In ACBL, there are the following types of accounts: Current Account. Saving Account. Askari Special Deposit Account. Askari Bachat Certificate. Notice Deposit. Term Deposit.

OF ACCOUNTS

Current account
In current account there is no interest on it. It is for only transaction purposes. They are paid on demand. When a banker accepts a demand deposit, he incurs the obligation of the paying all cheques drawn against him to the extent of the balance in the account. As there is no profit paid on this account it is also called chequing account because cheques can be drawn on it. Current account is mostly opened for business.

Saving account
The purpose of this account is to induce the habit of saving individuals in the neighborhood. The profit is PLS saving and ASDA Accounts in ACBL are chequing accounts paid on the basis of profit and loss sharing at the rate of 8.5% six monthly. The minimum deposit for opening the account is Rs.100/- (as obvious in the Annexure). Though individuals open such accounts for saving purpose persons belonging to Armed Forces, and different military institutions open this account.

Askari special deposit accountant (ASDA ACCOUNT)

ASDA account is an interest bearing current account interest is paid on it at the rate of 8.00% with the minimum balance from Rs.50000 Million to Rs.0.499 Million. The payment of return is monthly, where as the rate of return with aspect to the amount of minimum deposit clear from deposit schedules in annexure. It is also chequing account because cheques can be drawn on it. It is necessary for this account that the client must maintain a minimum balance of Rs.0.05 million at the end of the month, no interest is paid. Thats why it is similar to current account. It is mostly opened by business but individuals too open this account.

Askari bachat certificate

ABCs are long term fixed deposit for 3 and 5 years. These are not term deposits because payment of return is on monthly basis rather than on maturity of deposits. The minimum balance requirement is Rs.25000/- and maximum balance requirement is Rs.1.0 million. If ABC is for 3 years, the rate of return for 3 years is 12%; if ABC is for 5 years the rate of return is 13.00%. Because in such account the balance is kept for

either 3 or 5 years within the bank no cheque is drawn on it. Thats is why it is not a chequing account, but only payment of return is made monthly.

Notice deposits
Notice deposits are kind of fixed deposits. The minimum balance requirement for opening the account is Rs.5000/- and payment is drawn on maturity of the specific period. Notice deposit is of the two kinds: One for which a prior notice of 30 days and above is required from the customer before with drawing deposited amount and for which rate of return is 8%. Second for which a prior notice of 30 days and above is required from the customer before with drawing the deposited amount and for which rate of return is 10%.

Term deposits
A term deposit is a deposit that is made for a certain periods of time. At the end of the specific period, the customer is allowed to with draw the principle amount. ACBL term deposits are of types clear in the deposit scheme in the Annexure. One of them is Askari Advantage one month. The rate of return on this account is 12.0% for 4 years. The term deposit account varies from one month to 5 years, and the minimum balance requirement is Rs.5000/- for all other nine accounts (as clear from deposit scheme in the annexure).

PROFIT
Monthly payment of return
Profit = (deposited amount *rate of return) / 12 Where 12 = no of the months in a year Profit = (50000* 9.5) / 12 =Rs.395/-

CALCULATION METHOD

On Maturity basis
Profit = (Principal amount * Rate of return) * (no of days or no of the months from the date account opening).

For PLS saving account

Profit (minimum balance * rate of return) / 2 = (100 * 8.5%) / 2 8.5/2 = Rs.4.25/-

The amount of profit is given to deposits in three ways:

By cash By sending a bank draft to depositors home address or officers The amount is credited in any one of the checking accounts of

or whichever is specified as mailing address. the depositor.

ACCOUNT

OPENING PROCEDURE

For the chequing accounts (C/A, ASDA, SAVING), there are different types of account holders are required for all these types of account holders. The operation / procedure requirement that is needed for Individual Account differ greatly from Joint Account Proprietorship Partnership, Limited Company and Club Society or Association as explained below.

INDIVIDUALS
right to operate it is called individual account.

ACCOUNT

When a single man or woman opens an account in his/her own name and has the

Documentation
For literate person copy of National Identity Card is required as a primary requirement. For illiterate person and Pardanashin Woman, along with the copy of

National Identity Card requirement he or she must come in person for opening the account.

OPERATION
The person place a Check Mark in the type of account and type of operation required. He/she fills in part-1 of the form, a fix his/her either two or four similar signature (or thumb expression in the signature space and get it introduced and signed by a person who already has an account with the bank and write his account no in the specific rows in a specific space. The person fills in next of kin position where he/she father, mother, husband/wife or any other relatives name, his/her address, phone no and affix his/her signature to certify this requirement. This requirement is needed because in his/her absence bank can have correspondence with the specific person. The person put her/his signature (or thumb expression) on the signature specimen card (SS CARD) similar in the area on the form. One the back of SS card mailing address, telephone no, person to contact and introducer space is filled in. All these requirement are necessary for future. The person deposits the initial amount for opening account on to the cash counter. The person put his signature on form-A (check book requisition) on two places in authorized signature and fills in the Title of Account space by writing his name. If the person put his signature in Urdu or any language other than English, he signed a Vernacular Form where he undertakes that affixed signature are original and his own signature. The next day is the opening of account.

JOINT

ACCOUNT

When two or more persons, neither partners, nor trustees, open an in their name is called joint account. Joint account can be opened by husband and wife or two persons of same sex.

Documentation
For joint account copy of N-I-C Card of all the persons is obtained other things remaining same as in individuals account. OPERATION The person checks the type of amount and type of operation required in the respective box on the form. The persons fill in the Part-I and Part-II in the form. Signatures of both persons are obtained on the form in the area specified for signature and SS Cards. In the title of account space names of all persons are maintained. Accounts holder specified in the form that they will operate the form singly or jointly.

PROPRIETORSHIP

ACCOUNT

When the owner of the firm operating singly, opens an account in his firm name of when an owner of a firm operating singly, opens an account in his firm name, this account is called a proprietorship account proper himself liable for all his acts.

Documentation
For this kind of account, an application for opening the account on the firm letter pad (having the firm name) is required along with the N-I-C Card of proprietor.

OPERTION
All operation remains the same except that the firm name is written in the Title of the Account area and signature of the proprietor are affixed in the SS Card and the area specified for signatures on the form.

PARTNER

SHIP ACCOUNT

The account is opened in the firm name and all partners designate one or two persons to act on behalf of the partnership firm all acts on behalf of firm. The partners in the partnership firm are liable for the acts of the firm jointly and severely. Every

partner has in a firm has an implied authority bind his co. partners by drawing and enclosed cheques.

Documentation
Copy of N.I.C. Card of all partners. Application to open the account on the firm letter pad. Partner ship deed in case registered partnership firm. Letter showing the implied authority of one or more partners to act on behalf of the firm. In case of non-registered partnership firm, understanding on behalf of the firm to remain liable for all acts of the firm. Name, address of all partners is written on the pad.

OPERATION
All other requirement remain same except that the form is dully signed by all partners cards are signed by all those partners who will act on behalf of the firm and along filling Part-I, Part-IV is also filled.

LIMITED
Documentation
Memorandum of associations. Articles if the association. Resolution of the Board of Directors. Certificate of incorporation.

COMPANY ACCOUNT

Certificate of commencement of business. N.I.C.

OPERATION
The person authorized in the resolution of the Board of Directors put their signature on SS Cards.

Next of Kin requirement is not need in case of a limited company. After completing all these formalities, introducers signature is verified customer signatures are admitted by stamping Admitted near signatures and again signatures on SS card are admitted in the same way. The same process of verification and admission of signature is repeated on the form-A and signature on next of Kin area. After completing each and every formalities, are signed by all those partners who will act on behalf of the firm and along filling part-I, part-IV is also filled.

LETTER
opener and Account introducer for the trust the have on ACBL.

OF THANKS

At the start of the letter 2nd day, ACBL issues letter of thanks to Account

STAMPING POSTED
After completing all this process, the forms are signed from manages of the branch after which they forms are stamped across as POSTED on one corner of the front side of the form. Then they are posted in the respective. Account opening file very next day chequebook is issued to the customer. The account opening form is attached in the Annexure.

OTHER

RESPONSIBILITIES OF ACCOUNT OPENING DEPARTMENT

Cheque-book issuing
Check books are issued only for chequing account such as current account, saving account and ASDA account. They are not issued for other fixed and term deposits because of their long term accounts nature. When an account is opened, cheque-book is usually issued the next day, however they too are issued on the same day of opening the account keeping in view the energy requirements the account holder and after that cheque-books are issued whenever customer need cheque-books. Cheque-books leaves varies with the nature of the account. For example, 25 leaves and 50 leaves chequebook are issued for current and ASDA accounts. Where as 10 leaves and 25 leaves chequebook are for saving accounts. Usually 25 leaves cheque-

books are given only army fund accounts, and 10 leaves cheque-books are handed over to easily individuals account, holder. In ACBL, the fact behind issuing current and ASDA and 50 leaves for and 10 leaves and 25 leaves for saving accounts is the SEP requirement which is of the view that, because current and ASDA accounts are for business transactions purposes, there fore they need more leaves cheque-book. There is Rs.2/- excise duty and 50-paisa provincial tax carried on chequebook leave.

Issuing procedure
Firstly, signatures on chequebook requisition are verified by matching with signatures on SS Cards. Secondly, cheque book leaves number, account number, account holders name are mentioned in the cheque book is made by mentioning and the total of sum of excise duty and provincial tax. Fourthly, the name of A/c holder and date of cheque book issuance is written on cheque book requisition the account opening officer puts his initials on requisition leave. Fifthly, A/c number is stamped over the leaves of cheque book and finally authorized person affix his signature over the debit voucher and he voucher is attached from the cheque book and is handed over to the customer.

Receiving inward checks

Another responsibility and function of account opening department is to receive inward cheques for collection of other banks as well as of ACBL. Then these cheques are sent to clearing official who clears these checks at SBP from other banks.

Account closing
Account is closed on the written request of the customer ACBL debits Rs.100/as charges for closing the customer account from that account. The account holder with draws the amount by writing a cheque and just leaves Rs.100/- in his account. But to surrender the chequebook yet if some leaves are yet to be write to the bank as a necessary requirements for closing the account.

Procedure
1. The customer for individuals account write an application to the manager of the bank an a simple paper about the closing of his account with the bank (In case of proprietor ship partnership and limited company account the application should be written an firm or company letter-head). 2. The individual or in case of other type-proprietor firm and company surrender the cheque book to the bank. 3. The chequebook is then torn from one side and is attached with the application. 4. In case of Ltd. Company Account resolution of the board of directors is also obtained to attached it with the application. 5. The account opening form of the account holder is taken from the account-opening file, and the application, chequebook, and resolution of board of directors in case of limited company account are attached with the form. 6. Lastly, it is written in Red Ink on the form that account closed and Date of account closing.

Everyday posting
At the end of each day, posting of cheque books is performed, the account department OG3 makes credit vouchers of excise duty and provincial tax on cheque book leaves, and posts it in the company.

PROCEDURE
Askari Bachat certificate

FOR OPENING OTHER ACCOUNT

The ABC application form is filed and signed. All the requirements are properly fulfilled. The detail is written. The credit voucher is made against the cash that the customer deposits to The certificate is filled according to the specification. The certificate is then handed over the customer. The entry is made in the ABC register. the bank.

The application is then posted in the file.

Notice deposit
The procedure for issuing notice deposit in ACBL is as follows: The customer comes to the bank and specifies the number of days for The credit voucher is made for the amount of cash to be deposited the The notice/deposit form is then filled by the officer. The date of which he wants to deposit hid money in notice deposit. presence of account is not necessary. opening, the period the name of the customer, the signature etc. are all written on the form. The notice deposit receipt is filled according. All the requirements are carried out the signature of the customer and the authorized officer, the stamp of the bank etc. The notice deposit receipt is then given to the customer. The number of the notice deposit form and notice deposit is noted The number of the notice deposit form and notice deposit receipt is After completion of the form, it is posted in the notice deposit file. A 0.2% tax on the principal amount is taken while issuing the receipt. A credit voucher made and the amount is credited to the tax on ND.

receipt is then given to the customer. noted in the notice deposit register.

Term deposit
Any person can open a term deposit. He needs not have an account in the bank. The procedure is the came as that of the notice deposit.

3
the basic requirement.

CHAPTER THREE

Foreign Exchange department

FOREIGN

EXCHANGE DEPARTMENT

The FOREX department works effectively with an extensive correspondent network and deals with import, export and foreign remittances. The detail is as follows:

Import section
In case of import, first a L/C is opened in the bank on behalf of importer. Importer submits a request for opening a L/C and prepares an application form. The importer seeking to open a L/C, must be registered with Export Promotion Bureau, it is A documentary letter of credit can be defined as: A conditional guarantee given by a bank to named beneficiary (seller of goods), to make payment for the goods dispatched by him to the buyer, against presentation of the called for documents and compliance with all other terms and conditions of the credit.

TYPES
Revocable credits

OF DOCUMENTARY CREDIT

A revocable credit may be amended or cancelled by the issuing bank at any moment and without any prior notice to the beneficiary.

Irrevocable credits
An irrevocable credit is one, which neither can be cancelled nor can be amended without the issuing the bank, the confirming bank if any, and the beneficiary.

confirmed credits
All credits, whether revocable or irrevocable, are advised to the beneficiary without any engagement on the part of the advising bank, although they do include an undertaking of the issuing bank to cover the negotiation of correct documents, if they are presented. However, such an undertaking of the issuing bank does not bind the advising bank at all that it will also definitely take such action for the simple reason that the undertaking to beneficiary is solely of the issuing bank. The advising bank may refuse to pay, accept or negotiate the documents, though correctly tended by the beneficiary, for any commercial, economic or political reason, prevailing at that time, under which the bank feels that it would not be possible to obtain reimbursement from the issuing bank, for the money paid to the beneficiary. Therefore, to avoid this risk, the beneficiary may ask the importer to provide him a guarantee from a bank operating in his country, preferably his own bank, to the effect that against presentation of correct documents by the beneficiary, the payment shall be made to him immediately Without Recourse. In such cases, the issuing bank requests the advising bank to provide the desired undertaking/guarantee to the beneficiary. This guarantee is in addition to, and not in substitution for, the undertaking already given by the issuing bank.

Red clause or packing credits

A Red clause Credit is one which contains a special clause, authorizing the advising or confirming bank to make advances to the beneficiary, enabling him to

manufacture or purchase the goods required to be exported under the credit. In other words, a red clause credit is a Pre-shipment advance to the exporter. The amount of advance, which may be up to 100% of the amount of credit, is clearly specified in the credit.

Revolving credits
A revolving credit is one where, under the terms and conditions thereof, the amount of the credit is automatically renewed or reinstated, without specific amendment to the credit, after each drawing. A Revolving Credit may revolve either in relation to Time or in relation to Value. A credit, which revolves in relation to time, is a more useful and practical instrument. For example, a revolving credit can be made available for Rs.50000/- on monthly basis, with an overall validity period of six months. In this case, the beneficiary can present the documents for Rs.50000/- only, in a month, irrespective of the fact whether or not he has drawn any sum during the previous month. Thus total liability on account of negotiation of documents under the credit will not exceed Rs.300000/- in any case. However, such credits may be issued either on Cumulative or Non-Cumulative basis. If the credit is Cumulative, the amount not utilized during one month can be carried forward and made available in the following or subsequent months. However, in case of Non-Cumulative credit, any short falls in drawings in a particular month are cancelled and not carried forward to the next or subsequent months.

Transferable credits
A credit may be Transferable only if it specifically indicates so. The transferable credit is usually established when the first beneficiary is not in a position to supply the goods himself, and wishes to transfer a part or all of his under the credit to one or more beneficiaries, who are willing to supply the goods.

Back-to-back credits
When a credit is not Transferable, and the beneficiary is also not in a position to supply the goods himself, he approaches his bank to issue a fresh credit on his behalf in favor of another beneficiary, who is willing to supply the goods. As a consequence, the

beneficiary of the original/first credit becomes the applicant of the Second Credit, who is responsible for reimbursing his bank for all payments made under the Second Credit, regardless of the fact whether or not he himself is paid under the First Credit. Diagram shows back-to-back credit:

PROCEDURE
General consideration

FOR OPENING LETTER OF CREDIT

1. Letters of credit are normally opened against prior sanctioned limits. However, where prior sanctioned limit is not available, the branch first submits a CLP to the competent authority. 2. Appropriate margin against letter of credit as prescribed in the LC limit is recovered prior to opening of letter of credit. 3. Where the amount of credit is Rs.5000000/- or above, credit report of the beneficiary is also obtained before establishing the letter of credit. The charges of this report are recovered from importer.

LC application
a) Application is made by the importer on the banks standard form ACBFE 201. b) In case of guarantee, the guarantor signs the clause printed at the foot of the form on the reverse. c) The signature of both the applicant and guarantor are verified. The application form should bear special adhesive stamp of appropriate value. d) The application should be filled by the importer himself. e) The instructions in the letter of credit should be precise and free from any ambiguity. f) The blank spaces in the application must be completed and alteration should be properly authenticated under the signature of the opener. g) Details of every LC opened must be recorded in the Category Post Book. In the cases where original category Pass Book is in the custody of some other bank, attested copy of category Pass Book and NOC is obtained from that bank before opening any LC and that bank is of details of LC opened.

DOCUMENTATION
I. II. III. IV. Indent/Performa invoice/firm order Insurance certificate Insurance cover note Import registration certificate

Indent/Performa Invoice/Firm Order

An Indent/Performa Invoice/Firm Order contains quantity unit price and total cost of the goods is obtained along with LC application form prior to opening the letter of credit. The Indent/Performa Invoice/Firm Order is a signed document and is countersigned by the importer. It is ensured that price is competitive and the amount of LC does not exceed the amount of Indent.

Insurance Certificate
The insurance certificate is obtained for the goods being imported, which insures that the goods are risk free.

Insurance Cover Note/Policy

Under the existing Exchange Control Regulations the insurance for import is covered in Pakistan. The points are noted while scrutinizing the Insurance Cover Note/Policy: The insurance cover note/policy has been obtained for CFR/FOB value It has been issued in the joint name of the bank and the applicant. Risk to be covered clearly stated. Expressions such as all Usual Risks +10% and the premium paid receipt is obtained.

are not accepted. Appropriate Risk is covered for the item being imported plus the risks of War and SRCC or any special risks arising from the nature of the merchandise are specified such as Breakage of glass, damage to refrigerators etc. Where shipment on deck is allowed, the insurance cover note/policy must cover such shipment.

The insurance company should be on the approved list of the bank and

the amount of interest should be within the limit of the insurance company as prescribed by the Head Office.

Import Registration Certificate

To get registered with Export Promotion Bureau and to get Import Registration Certificate is a basic requirement for every importer.

HOW

TO ESTABLISH A

LETTER

OF

CREDIT?

Documentary Letter of Credit can only be opened by branches authorized to deal in foreign exchange. The branches, which are not authorized to deal in foreign exchange, submit their customers application for opening letter of credit duly completed and signed in all respect along with all other documents to the nearest authorized branch. After completion of the above formalities the opening should proceed further as under: 1) Foreign currency amount is converted into Pak Rupee, at TT/OD selling rate. 2) The names of advising and reimbursing banks are from the International Division. 3) Margin, commission, postage and cable/telex charges (if LC is being opened by cable/telex) are calculated. If the LC is being opened on behalf of an authorized branch it is ensured that margin as prescribed by SBP/Head Office has been fully recovered, where as the commission on LCs of unauthorized branches is shared equally by the opening branch and the forwarding branch. 4) Full particulars of the LC recorded in the LC opening register. 5) Separate folio is allotted for each customer in this register and necessary entries for LC liability and margin are recorded at the time of opening of LC. 6) Vouchers are passed on the same day.

AMENDMENTS

IN

LETTER

OF

CREDIT

An irrevocable letter of credit once communicated to and acted upon by the beneficiary can be amended without the consent of all parties concerned with LC. Such a credit can only be amended or cancelled with the consent of all parties, i.e., the

opener, the beneficiary, the opening bank and the confirming bank (if any). All the amendments must be within the Exchange Control Regulations in Pakistan.

Types of Amendments:
Usually the following types of amendments may be needed 1. Verifying the signature of the opener of the LC, whenever a request for amending the import LC is received. 2. Checking that amendment is in accordance with the International Rules and Regulations. 3. If the amendment involves any increase in the amount of LC, it is acceptable only if it is covered within the prior sanctioned limits of the party. 4. In case of extension of date of shipment/negotiation it should be ensured that the amended date is not beyond the validity of permissible period. 5. If the change of beneficiary is requested in letter of credit by the opener it should be proved by documentary evidence, e.g., the original letter from the beneficiary showing his inability to ship the goods or new contract of sale. 6. If the seller and purchaser subsequently decide to change the mode of shipment, such type of amendment can also be incorporated in letter of credit. This amendment is also incorporated in insurance cover note/policy. 7. Sometimes partial shipment or transshipment is requested by the importer. This type of amendment requires change in insurance cover/policy.

LC sight
Documents are received The documents are verified as per covering schedule. A scrutiny sheet is prepared and all discrepancies are recorded. In case of discrepancies, an advice is sent to negotiating bank with intimation to importer. After that negotiating bank contact with the importer, ask the importer to accept the discrepancies until such time the are held on risk and responsibility of negotiating bank.

 On receipt of instructions of importer/negotiating bank regarding acceptance of the discrepancies/payment instructions further action is accordingly taken. If the issuing bank refuses to accept the documents it must give reply to, by any fastest means of communications (usually fax machine is used) to the negotiating bank or remitting bank (or to the beneficiary if it received documents directly from him), the issuing bank shall then be entitled to claim from the remitting bank refund of any reimbursement which have been made to that bank. The documents are lodged in PAD register when all documents are in order and running PAD number is marked on all documents under banks stamp. An advice is sent to importer along with I-Form to be signed and then returned. TT/OD selling rate prevailing on the date of lodgment to be maintained on the covering schedule along with date. If forward exchange has been booked and documents are received within the validity period then the bill amount is to be converted into Pak Rupees on booked rate and forward contract is set off. However F.C. charges are converted on TT/OD selling rates. The vouchers are prepared and are posted. Vouchers are passed at the time of lodgment of documents.

P.A.D. RETIREMENT
The Importers Debit Authority is received and signatures are verified. It is ensured that I-Form is returned duly signed by the importer. Vouchers are prepared and posted for the retirement of documents. The markup is recovered from the date of negotiation to the date of payment and charges as per bank schedule are recovered. Documents are delivered after endorsing bill of exchange to customer along with cost memo against his acknowledgment. The documents for the SBP monthly returns are stamped.

LC USANCE
Documents are received.

 The documents are verified as per covering schedule. A scrutiny sheet is prepared and all discrepancies are recorded. In case of discrepancies, an advice is sent to negotiating bank with intimation to importer. After that negotiating bank contact with the importer, ask the importer to accept the discrepancies until such time the are held on risk and responsibility of negotiating bank. On receipt of instructions of importer/negotiating bank regarding acceptance of the discrepancies/payment instructions further action is accordingly taken. If the issuing bank refuses to accept the documents it must give reply to, by any fastest means of communications (usually fax machines is used) to the negotiating bank or remitting bank (or to the beneficiary if it received documents directly from him), the issuing bank shall then be entitled to claim from the remitting bank refund of any reimbursement which have been made to that bank. An advice is sent to importer and bill of exchange and I-Form is presented to importer for signing and then returning. On receipt of signed Bill of Exchange, customers account is debited by the document value being the stamp duty. Then the Treasury Department is advised about the maturity of the date. Acceptance numbers are allotted and the details are entered in register duly marking the maturity dates. The documents are lodged in PAD register when all documents are in order and running PAD number is marked on all documents under banks stamp. The documents are delivered after endorsing bill of exchange to customer. The vouchers are prepared and are posted. The negotiating bank is informed of the maturity. The client is advised three days prior maturity to keep sufficient funds in his account on maturity. The payment is at maturity to negotiating bank duly informing the Treasury Department. The vouchers are prepared and are posted.

EXPORT SECTION
Export is another section of Foreign Exchange Department. It too generates income to the bank as well as the country. In ACBL Multan, it is operated by two persons. Under the registration (import and export) order 1952 no person can export any commodity from Pakistan unless he is duly registered as an exporter with the Export Promotion Bureau. Bank should ensure that the exporter is registered with WPB before certifying any export Form-E for him. The registration number should be quoted on the relative export form.

Requirement of E-Form
Every exporter is required to furnish a declaration to customs authorities for the good being exported. The declaration is submitted on a prescribed Form-E in quadruplicate, which is certified by the authorized dealers.

Issuance of E-Form
1. E-Form in quadruplicate is issued to the exporter having an account with the bank against written request. In case the exporter maintains an account at a branch other than the exchange dealing branch, the request is routed through the branch, which has the account within it. 2. Before issuing E-Form, it is ensured that the exporter has given the attested photocopies of required documents such as Valid Export Registration Form, NIC, and Challan copy of Renewal Fee Paid to the bank. 3. Credit Report of the exporter is also obtained to ensure the Credit Worthiness of the exporter. 4. The set of E-Form after completion is then entered in the E-Form Issuance Register and acknowledgment is obtained from the exporter or any authorized person of the exporter. 5. Utmost Care is taken while issuing E-Form because it is the security document. Blank E-Form is never issued. 6. If full details of consignment is not available, at least exporters name, address, goods to be exported etc., must be filled in the E-Form.

Certification of E-Form
Before lodgment of E-Form to customs authorities, it is required to be certified by the Authorized Dealers. When the quadruplicate set of E-Form is presented for certification, that set is very minutely scrutinized and following details are checked: Export Registration Number (is correctly mentioned on the E-Form). Signatures of the exporter or his authorized signatory are duly verified at the counters. All blank space in E-Form is correctly, legibly and properly filled in without any overwriting. After certifying the correctness of the E-Form, it is then entered in E-Form certification register in the folio allotted to each exporter separately. Bank/Branch stamp is then affixed beneath the certificate available and signed by the authorized officer. All the four copies of the E-Form duly certified are delivered to the exporter or his authorized person.

Submission of E-Form
After certification of E-Form, all the four copies are submitted to the customs authorities for clearance of consignment. Three copies of E-Form are returned by the customs authorities retaining the original after endorsement of shipment on the relative portion on E-Form. The quadruplicate copy is retained by the exporter while the duplicate and triplicate copies are submitted to the authorized dealers along with other documents for negotiation within 14 days from the date of shipment. The bank retains the duplicate copy for its record while the triplicate copy is surrendered to SBP on realization of proceeds.

Utilization of E-Form
E-Form is invariably utilized and received within 21 days form the date of certification or 14 days from the date of shipment failing which the exporter is persuaded to submit the form without further delay. In case the exporter does not respond to the requests, the matter is reported to SBP.

Cancellation of E-Form
E-Form is cancelled in two ways:

If goods are not exported and E-Form is not presented to the customs authorities, the same is surrendered to the bank for cancellation, which is recorded in separate file, duly marked Cancelled. If E-Form has been in the hands of customs authorities but the goods could not be shipped due to non-availability of space in ship or due to any other reason, the exporter is required to submit three copies of E-Form along with original Shut Out Notice duly stamped and certified by customers to the bank. The bank submits all the three copies along with Shut Out Notice to SBP under a covering letter for cancellation and record at their end.

Certification of E-Form in case of advance payment

Sometimes the exporter may receive payment for the item to be exported in advance without waiting for the documents. In such a case the advance payment received for this purpose is required to be declared by the exporter for such on the prescribed form Advance Payment Voucher. A proceeds certificate is issued to the exporter for such payments which is required to be produced at the time of certification of E-Form as well as at the time of presentation of documents to the bank. Advance payment is certified of the reverse side of E-Form under the seal and signatures of the authorized dealer, which is required for reporting to the State Bank of Pakistan.

Negotiation
Negotiation is giving the value to the beneficiary for drafts and/or documents as distinct from merely examining and forwarding them to he issuing bank. Documents are submitted at the counters of negotiating bank along with the covering letter of exporter after completion of shipment formalities. Documents contain, besides other documents as per LC terms, the original LC along with all relevant amendments duly authenticated by the Advising Bank. All documents are carefully scrutinized and are comply with the terms and conditions of the LC. No documents should be inconsistent with each other or with terms and conditions of LC.

EXPORT

FINANCE SCHEME

State Bank of Pakistan introduced a Refinance Scheme for products in 1973 which was renamed in 1977 Export Refinance Scheme. The purpose of this scheme is to boost export and earns foreign exchange.

Salient features of the scheme

The finance shall be sanctioned by one of the scheduled banks for the exports of eligible items only, both on pre-shipment or post-shipment basis, at concessionaire rates prescribed by the SBP. State Bank of Pakistan sanctions limits to the scheduled banks to obtain refinance from SBP for the finance made by them under the scheme. It is at the option of the bank to obtain refinance from SBP or to finance the exporter from their own resources. But the bank shall not recover markup exceeding the prescribed concessionaire rates. Finance allowed under the scheme is exempt for calculation of per-party exposure credit ceiling and liquidity requirement. The finance under the scheme is available for exports through banking channel for I) II) III) IV) Exports of all eligible items, Exports of eligible commodities locally produced and supplied locally against international tenders, Export of eligible commodities from the tariff areas of Pakistan to Export Processing Zones in Pakistan, and All inputs/supplies by indirect exporters against export commitment of main exporter under an Irrevocable Letter of Credit. The scheme operates under two parts viz. Part-1 & Part-2. The maximum period of finance allowed under Part-1 of the scheme, both on pre-shipment and post-shipment basis is 180 days.

Export finance under Part-1

Export finance is allowed for exports against a Letter of Credit or a Firm Contract. In case of a LC name of the commodity and the amount of LC are noted but in case of the contract, full details of the contract are noted and exporter verify the signature of buyer on the firm contract. Sales on consignment basis do not qualify for

refinance facility. Finance is allowed for total period of 180 days inclusive of preshipment and post-shipment period. However, if the exporter avails finance on postshipment basis, it shall be for 180 days or the date of realization of proceeds whichever occur earlier.

Documentation
Pre-shipment

DP Note Undertaking (as per Annexure A of the said scheme) on non-judicial stamp paper Copy of letter of credit or firm contract/firm export order

Post-shipment

DP Note Undertaking (as per Annexure A of the said scheme) on non-judicial stamp paper Copy of letter of credit or firm contract/firm export order Bill (s) of lading Invoices Duplicate copy of form (s) E

Procedure

The party sent a request letter. The scrutiny sheet is prepared, the case is stamped with ACBL stamp and authorized persons affix their signatures. The above mentioned documents are sent to SBP for approval. The FAPC number is entered into to the respective register. A separate file is maintained. On approval, SBP sends an advice to bank. On the 180th day SBP debits his balance and the banks account.

Export finance under part-2

An exporter avails of finance limit at the concessionaire rate in a financial year to half of the export performance of eligible commodities made by him during the previous financial year. The limit is available to the exporter on revolving basis. Where in outstanding balance on any date shall not exceed Half of the export performance. The exporter shall be required to repatriate export proceeds of eligible items (excluding

receipts from exports for which finance has been obtained during the period) two times of the daily average of finance obtained by him during the monitoring period.

Documentation

Copy of Letter of Credit DP Note Undertaking (as per Annexure of the said scheme) on non-judicial stamp paper Form EE Customers invoices Bill of lading

OPENING

AND MAINTENANCE OF FOREIGN CURRENCY ACCOUNTS OPENING

1. All persons, firms and companies of local or foreign origin, whether resident or non-resident, can open foreign currency accounts. All foreign currency account are interest based and are not PLS based. 2. Accounts may be opened in any foreign currency. 3. Deposits are FC Accounts may be made in the form of cash, travelers cheques, FEBCs, FDDs/FTTs etc. 4. Travelers cheques issued by banks/institutions operating in Pakistan whether local or foreign cannot be deposited in Foreign Currency Accounts. However, T/Cs issued against Foreign Currency Account can be deposited into foreign currency account. Now the question arises that how it can be verified that a particular T/C is issued against quota or F.C A/c. The answer is that T/Cs issued against quota Not encashable in Pakistan stamp is affixed on it. The quota T/Cs have to be surrendered against Pak. Rupees. 5. Banks or any other agency cannot inquire or raise any question about the sources of funds deposited in foreign currency accounts by the customers. However, on few occasions banks can disclose the secrecy of F.C. Accounts if (i) it is in the interest of the nation (ii) in the interest of the bank (iii) through court orders and (iv) desired by Government agency (Narcotic Control Board SRO).

6. Any amount, at any time, can be withdrawn from these accounts and there is no limit for cash withdrawals. 7. Sale proceeds of goods exported from Pakistan, earnings of residents of Pakistan on account of services rendered in Pakistan, earnings or profits of the overseas offices/branches of Pakistan firms/companies/banks etc. are not eligible for credit to foreign currency accounts. 8. State Bank of Pakistan has given permission to utilize the funds lying in foreign currency accounts for adjustment towards export proceeds, short realized/not realized within the admissible period.

FOREIGN

REMITTANCES

The word remittances means transfer of finds from one place to another. It may be inland remittance or remittance abroad. Inland remittance means transfer of funds from one place to another within national boundaries. While remittance abroad or foreign remittance means transfer of funds one country to another. Foreign remittance can either be inward or outward. In case of inward remittance, foreign exchange flows in while in case of outward remittance, foreign exchange flows out. In banking terms in case of inward remittances, authorized dealers purchase foreign exchange when it is received in the forms of MTs, TTs, Drafts, Bills TCs and Foreign Currency Notes. In contrast, when it is outward remittance, authorized dealers sell foreign exchange by issuing MTs, TTs, Drafts, Bills, TCs, and Foreign Currency Notes.

Classification of inward remittance

Inward remittances mainly fall in one of the following five categories:

Indenting commission Advance payment against exports Sale proceeds of exports Passage money Miscellaneous earning

Indenting commission
The remittance is received in favor of indenting agent in Pakistan, who negotiated/corresponded sale on behalf of foreign exporter.

advance payment
A Pakistani exporter may negotiate with a buyer abroad on the condition that full or part of the sale proceeds may be remitted before shipment.

Sale proceed of exports

Sale proceeds of a Pakistani exporter is received in part in full as per terms of the Documentary Credit or Firm Contract.

Miscellaneous earnings
The remittance is received for rendering any service to foreign customer/clients viz. Cost of advertisement, fee of legal service etc.

REPORTING

OF INWARD REMITTANCES REQUIREMENTS)

(SBPS

All inward home remittances are to reported to Exchange Control Department, SBP, either on I.R.V. (Inward Remittance Voucher) Code No. 9610 or on form R with the monthly returns as per procedure laid down in para 7 ch XXII of Exchange Control Manual 1992. If amount of remittance is up to Rs.10,000 or its equivalent in foreign currency enter in I.R.V. In case amount of remittance is over Rs.10,000 or its equivalent in foreign currency complete and signed form R to be submitted to Exchange Control with monthly returns. In case of home remittance, beneficiary should not be referred for purpose of remittance. Form R and IRV should be submitted by the bank to SBP on behalf of beneficiary.

4
R
Pay order. Pay slip. OBC. IBC.

CHAPTER FOUR

Remittance Department

REMITTANCE DEPARTMENT
emittance department provides to the customer of the bank. The main function of this department is transfer of funds.

INSTRUMENTS
Demand Draft. Telegraphic transfer. Mail transfer.

OF

BILLS

AND

REMITTANCE DEPARTMENT

The instruments that are handled in the Remittance department are as follow:

Demand Draft
A demand draft is an instrument, which is drawn by one bank upon another bank for a specific sum of money payable on demand. It is made by the bank and given to the purchaser against cash or cheque. If two banks are involved, then one banks sends a DD to anther bank. But in customer Bank case the customer sends his DD to the receiver.

Issuance Procedure
A demand draft application to given to the customer, he fills in a relevant information and signs it. The officer in charge then checks the information form. The charges such as commission, excise duty, postage are charged as per effective schedule of Charges. Tax is exempted if he is taxpayer and knows his No. In case of cash deposit the cashiers counts his amounts and sign the DD application and enters it in the register. The cash received equals the amount of remittance and the cheques there on. Then the officer of the bills and remittance department signs it and operation manager counter signs it. The entry is the made in the DD issuing register. It is given to the customer. Vouchers are passed. The vouchers and the DD form given for posting at the computer. The DD advises be printed at the computer and mailed to the respective branch.

Note: On the country, when a DD is received i.e. a customer go to bank with the DD, the procedure is as fallow. The DD credit advice is received through mail. The Nos are checked and signatures are verified. An entry is made on the DD payable register, and the voucher is made. The DD credit is attached with the vouchers and given for the posting at the computer. When DD is received, The test Nos are checked, and the payment is made.

 The vouchers are given for posting. And the payment is made. The vouchers are given for posting. And the entry that was made in register is closed. I.e. DD payable is nil.

TELEGRAPHIC TRANSFER/ MAIL TRANSFER

Concept
A telegraphic transfer is a fastest and safest way to transfer money. The message is fixed. Mail transfer is Sowa than a T.T. the transfer is through mail.

Issuance
The request for maintenance through T.T is taken on the standard printed from. The customer fills it and signs it. The Head and remittance department checks it, the charges such as commission, tax and telex as per effective schedule and sign it . If he fills the tax exemption form then no tax is levied. Then a neat T.T is made on the white slip. There are 3 copies. The original faxed to the branch, one to the Head Office and one are kept as record. The entry is made in the TT issuing register. When commission bill is received, it is attached to the T.T office copy in the file.

Payments
When a T.T arrives, the test numbers are checked and the signatures are The entry is done in the T.T payable register. If there is no account then the T.T receipt needs revenue stamps and The T.T receipt is strictly non-negotiable. verified.

then the payment is made.

PAY ORDER
Concept
It is a cheque drawn by a bank on itself. Pay order is an instrument in which three parties are involved. The purchaser, the bank and the receiver. It can be purchased by any customer. It is usually made by govt. Bodies. A single bank is included in this case.

Issuance
The standard form is given to the customer; he fills in the detail and signs it. The concerned staff checks the form. Charges as per effective schedule are applied. The cash of the pay order is received. A cost memo is signed, stamped and handed over to the applicant as a receipt. Then the pay order receipt is filled accordingly. Counter foil is also filled. An entry is made in the pay order issued register. Then the authorized office after checking the pay order signs it. The pay order is then handed over to the application after obtaining his signature on the P.O form. A voucher is also made and posted at the computer Cr. bills payable account P.O issued. On presentation of the pay order receipt the receipt is signed by two authorized officers of the branch. The P.O entry is made in the P.O issued register. Then the amount is credited to the account of the customer or paid in cash. The P.O is posted at the computer.

PAY
Concept

SLIP

It is an instrument used by the banks for its payment. The slips are issued to the employee of the banks their bills and invoices. The bills are transferred to pay slips. In this case only one bank is involved and that is the issuer as well as the payer.

Procedure
Procedure prescribed for P.O for issuance and payment is followed for Pay Slips are the issued by the bank for the settlements of this own No excise duty is applicable on P.S. pay slips with the following expectations. payment

Issuance
A credit voucher is sent from the account department to the remittance department. The Pay Slips books is taken out and filled according to the credit voucher. It is entered in the P.S./P.O register. An authorized officer, AVP, signs it. The Payslips is handed to the customer. A voucher made and posted payment. The P.S. is received on the counter, clearing or transfer. On receiving the P.S. if it is transferred in the P.S. register. The payment is made and the P.O. is posted at the computer. If Askari branch is in that city, the OBC forwarding schedule in sent to that Askari Branch. Otherwise it is addressed to the particular Branch to whom the cheque belongs.

OUTWARD BILLS
Concept

FOR

COLLECTION

The bills, which are sent to, their city banks for the local clearing in that city are called outward bills for collection.

Procedure
The cheques that are banks in other cities are separated. That are entered in the OBC register, the number is written in the stamps. The OBC forwarding schedules / (Annexure) are prepared for the different branches. The respective cheques are attached with the schedule. Two authorized officers sign the schedule. The office copy is filled and the original schedule is mailed. On clearance the respective banks send back the OBCS along with IBCA. Inter branch credit advice. The OBC numbers are checked from the OBC register and then any entry is made. Charges i.e. commission charges and postage charges are deducted from the A/C. Vouchers are made. At the end of the day. The contra vouchers are made.

INWARD BILLS
Concept

FOR

COLLECTION

The bills, received from other banks out of city for the local clearing, are called inward bill for collection.

Procedure
The OBC of the other branches will be IBCs of this branch. So an OBC forwarding schedule is received by mail. The cheques are entered in the IBC register. The IBC numbers are allotted to them. The cheques are lodged for clearing. After realization, an IBCA is prepared and mailed to the branch. At the end of the day two contra vouchers are made and posted.

OTHER FUNCTIONS
Balancing the Register
At the end of the day, all the registers are balanced with the computer balances. The heads and checked are as follows. branches. DD payable. TT payable. MT payable. OBC lodged. OBC Collection IBC lodged. IBC collection Bills payable.P.S. Issued. Bills payable P.O. issued.

If the payables are not cleared for a lot of days, a reminder is sent to the respective

5
T
may be classified as follows.

CHAPTER FIVE

CREDIT DEPARTMENT

CREDIT DEPARTMENT
he earning of a commercial bank are chiefly derived from interest charge on loans and discounts it is there necessary to consider the position of a banker with regard to loan advances. The profitable uses which banker with regard

and advances. The profitable uses which bankers in the country make of their funds Call loans and repayable at short notice. Investment in Government and other stock exchange securities. Purchase and discounting of bills. Loans and advances.

LENDING POLICY
This policy statement sets out the principles for Board of Directors who will determine credit activity of ACBL. The Board of Directors delegates authority to Credit

Committee to approve, to direct, and to review commercial lending of ACBL to ensure its efficiency and effectiveness. The purpose of this policy statement board which are the implemented by the credit committee. The pollicies are defined under the following headings.

CREDIT PRINCIPLE
The following principles are to be adopted for lending authority, approval, monitoring and control on a basis consistent with ABCLs operational objectives and business stages.

OBJECTIVES
Providing suitable credit services and products. Not compromising ABCLs standards in extending credit. Transactions, which dont apparently exhibit adequate commercial consideration, will not be undertaken accept when authorized by the credit committee/president

STRUCTURE
The authority structure should enable effective adoption to changes in the economical, technological regulatory and competitive environment.

PEFORMANCE
The education and admission of the loan portfolio should contribute with in defined and acceptable risk limitation toward attaining satisfactory return on the banks capital. Credit advancement shall focus on the development and enhancement of customer relationship and are measured on the basis of the net yield for each customer relationship where individual transaction should also be profitable

ADMINISTRATION
The administration of the loan process should insure compliance with all laws and regulations of regulatory authorities and the credit policy of the ACBL. Lending where repayment and performance on mark up or profit servicing deteriorates are

identified at early stage and closely monitored by the branches to avoid loan losses. Loan facilities and related security are closely and regularly monitored by separate unit unconnected with the credit approval process regularly in order to access the collectiability of the loan portfolio and effectiveness of the security.

CREDIT PORTFOLIO LIMITS

The nature of the credit portfolio are governed by guidelines set down by the credit committee from time to time, which are in keeping with local regulatory requirement. These guidelines are consistent with overall ACBLs limits.

TOTAL FACILITIES
The aggregates of all the facilities shall confirm to regulatory requirement as specified from time to time.

TERM FACILITIES
Aggregate term facilities for more than one year should not exceed 30% of credit portfolio. Any facility for more than one year shall require prior approval of the credit committee.

UNSECURED FACILITIES
The aggregate of all advances to a single person should not exceed than the guidelines stipulated by the regulatory authorities.

SECURITY
Security accepted as collateral for credit facilities are properly valued by approved surveyors. Appropriate margins of security are taken in accordance with not only local regulations and practice but such margins should also reflect disposal costs and potential price movement of the underlying assets.

EXPOSURE AGAINST NON-FUNDS BASED FACILITIY

The aggregate of contingent or non- funds based facilities should not exceed ten times the paid-up capital and general reserves free of loses, provided always that this limit is within the relevant regulation currently in force.

FINANCING AGAINST SHARE

Where as credit facility will not be extended towards floatation of share capital of Public Listed Companies, facilities will not be consider against unlisted shares. Where facilities are considered against quoted share. Which are freely marketable, such financing are subject to the margin requirement of the regulatory authorities or as determined by the credit committee whichever being the higher.

BORROWER FINANCIAL STATEMENT TOTAL BORROWINGS

Credit facilities extended will not exceed to time the capital and reserves free of losses as per audited accounts for the borrower. The borrowers account must be audited by a recognized Charted Accountant wherever the credit exposure is in excess of Rs.10.00 million. Where credit exposure is in excess of RS. 2.00 million but bellow RS. 10.00 million accounts must be signed by the borrower and the internal auditor/charted accountant. For amount less than 2.00 million accounts may be signed by the borrower only

BORROWER LIQUIDITY/ LEVERAGE RATIOS

The branches must also ensure that the current ratio of the borrowers is equal to or less than one. The debt- equity ratio should not exceed 60:40 except in cases where a debt- equity ratio has been specified by the regulatory authorities. This condition may be subject to change by the regulatory authorities.

CREDIT REVIEWS
All limits are subject to at least an annual review and where necessary branch managers will forward half- yearly reviews. This review function is the

responsibility of the branches that will submit periodic reports to the credit division immediately notifying any change in environmental factors. The changes are assessed on expiry of limits or reassessed before the scheduled periodic review whenever necessary.

CREDIT APPROVAL
The primary individual factor determining the quality of the banks credit portfolio is the ability of each individual, counter party to honor, on a timely basis, all credit commitments made to the bank. This must be accurately determined by the authorizing credit personal prior to credit approval. The credit approval process must be as follows:

AUTHORITY
Credit are extended in accordance with the authority levels approved/ delegated by the Board of Directors from time to time; provided credit approval is required at short notice rather than that at normal span, the proposal may be referred directly to the credit division. The credit division has authority with the agreement of a quorum of the members of with the appropriate credit committee, to extend the loan.

DOCUMENTATION
It is the essential that the proposal defines clearly the purpose of the facility, the source of repayment, the agreed repayment schedule, the value of security and the customer relationship consideration implicit in the credit division. The security to be accepted as collateral for the facility and all documentation relating to the security of the facilities must be in the approved form. All approval procedures and required documentation must be completed and security is perfected, prior to the disbursement of the facility.

CREDIT RISK ASSESSMENT

It is necessary to have a detail and complete credit risk assessment for each facility. Customer relationship must not be over emphasized. It is the absolute responsibility of the proposing officers and the branch managers to ensure that all

necessary proposal documentation is collected before the facility request is sent to the credit division or committee.

PREVEVTION OF CRIMINAL USE OF BANKING CHANNELS

The branch manager shall ensure that all credit facilities being proposed, every efforts has been made to determine the true identity of a customer and in case of each transaction the source of funds is established. The relevant Prudential Regulations applicable must be compiled with before forwarding credit applications to the approved authority

CREDIT ADMINISTRATION
The principle elements of credit administration are as follows: 1) credit approval 2) credit maintenance 3) facility evidence maintenance 4) credit monitoring and review

CREDIT FILE MAINTENANCE

The credit file on each facility must contain all information necessary to facilitate ready monitoring of that facility. The primary items will include: Credit Application is received from the customer and Credit Report about it is received from the credit information Bureau of the SBP whenever necessary Credit approval documentation summarizing details of the borrower; credit requested, purpose of credit repayment sources collateral description, valuation and guarantors. Evidence of the credit approval and date upon which approval was granted together with any comment and maintained by the credit division. Details if all related facilities to the same customer group are to the credit by the branches and maintained by the credit division.

 An assessment of the competence and quality of the borrowers management, the general economic and competitive environment of the borrowers industry and any other pertinent factor which may affect the borrowers ability to repay the facility. All supporting data such as financial statements and analysis therefore references, credit investigation, results and notes of all discussions with the borrower and other relevant parties. Written instructions for the disbursement schedule of funds. Summary sheet containing information on amount dates for mark up /profit charges and commitment fees, identification of industry risk and classification/ rating of the borrower, guarantor and security details of overdue payments. Each credit file must be maintained in saved in fireproof location at branches and access restricted to authorized personal.

FACILITY EVIDENCE MAINTENANCE

All legal documents and register of security must be maintained at branch such documents may include: Signed credit agreement Signed guarantees or other evidence of credit security or collateral All concerned documents are held in the secure location.

agreements.

CREDIT MONITORING
RESPONSIBILITY

REVIEW

Responsibility lies in branch manager to monitor the overall profile and risk aspect of the credit portfolio in accordance with criteria setout in banks Credit Policy. This quarterly review is held to judge performance responsibility of the manager to ensure at each credit extension the portfolio complies with all limits set. The branch manager must provide a quarterly classification summary to the Credit Division which include following information:

Total Facilities Term Facilities Exposure to customer group Unsecured facilities Industry exposures. He will provide a commentary on any local development, which may impact upon limit setting and the risk of the credit portfolio.

ASSESSMENT
A formal assessment of each customer is carried out on a regular basis. It facilities to any one customer group are booked in the customers circumstances, which may adversely affect the management of the facility, and in particular the credit rating assigned to the customer must be documented and advised by the manager.

PRINCIPLES OF LENDING
PROFITABILITY
The credit advancement shall focus on the development and enhancement of customer relationship and are measured on the basis of net yield for each customer relationship where individual transaction is profitable.

SOURCE AT REPAYMENT
It is from productive use of the facility on the normal cause of business operation the borrower can repay the request loan in a timely manner.

CHARACTER AND ABILITY OF BORROWER

The integrity of the borrower and his ability to conduct business are of paramount importance and can precedence over the values of securities offered. The individual proprietors/partners/directors and / or managers are men of undoubted integrity and having sufficient experiences in their line of business,

PURPOSE AND AMOUNT OF FACILITY

The purpose of advance is within the policy of the bank in accordance with SBP directives and Exchange Control Regulations. It must be ensured that advance is not and shall not be used for any spectacular purpose. The amount requested for finance is the reasonable proportion for any purpose.

PERIOD
The repayment perios is definite and should not be in access of one year for the term facility. Any proposal For facility more than one year are subject to prior approval of credit committee.

SECURITY
Facilities are adequate and are secured properly by approved surveyors of the bank; the securities are properly valued by approved surveyors of the bank. Appropriate margins are taken in accordance with not only local regulation and practices but such margins should also reflect disposal costs and potential price moments of underlying assets.

LEVEL OF LENDING
THE STRUCTURE FOR LENDING IN ACBL HAS FOUR LEVELS:
Branch Credit Committee Credit Committee at Head Office Executive Committee Board

BRANCH CREDIT COMMITTEE

The Branch Credit Committee gives first approval. It has discretionary powers with in which it implements Credit Facility decisions. The credit department in branch prepares credit line proposal (CLP) for each advance along with other supporting documents. The supporting documents and CLP are presented to the Branch Credit Committee for

considerations. The branch credit committee exercises judgment individually and judiciously on accordance with Banks lending criteria. If the proposal is within the discretional powers of the committee, the proposal may be approved after thorough evaluation of the credit risk. The approval limit is returned to Credit Department of Branch for post approval administration. After that disbursement authorization certificate are obtained from the committee, which are signed by the Branch Committee and counter signed by the Resident Auditor to ensure that support is perfected before release of funds. The Branch Credit Committee shall prepare minutes of its meetings, and send copy of the minutes, copy of CLP (approved), and security details sheet to Credit Division of Head Office within 7 days of the sanctioning for post factor review. In case the CLP is beyond the powers of Branch Committee, the proposal is forward for approval of the Head Office Credit Division with the recommendation by the Branch Committee.

HEAD OFFICE CREDIT COMMITTEE

The 2nd approval level in lending organization is Head Office Credit Committee. When the CLP is beyond the discretionary power of the Branch Credit Committee, the CLP is sent to Credit Division at Head Office along with all supporting documents and recommendation of Branch Credit Committee. The Head Office Credit Division processes the proposal is handed over to Head Office Credit Committee for their decision. The CLP is reviewed by Head Office Credit Committee and decided upon as per the policies of the Bank if the proposal is within its powers. The Head Office Credit Committee conveyed the proposal to the Branch Credit Department, which maintain all relevant records for approval either by Credit Committee/Executive Committee or the Board.

EXECUTION COMMITTEE
The next level for sanctioning the Credit facility is the Executive Committee. If a proposal is beyond the discretionary powers of the Credit Committee, it is forwarded to the Executive Committee for their decision.

BOARD
The highest authority of Credit Approval vets in the Board of Directors. All CLPs beyond the power of the Executive Committee s referred to the Board by the Secretariat Division along with the form.

URGENT APPROVAL
In exceptional circumstances if an approval is required at short notice, outside of the normal time scales for approval, the proposal is referred directly to the Credit Division at Head Office. All such referrals are accompanied by a priority decision request. The Credit Division with the agreement of a quorum of the members appropriate Credit Committee, will advise approval for the proposed facility. All such approvals, together with appropriate supporting documents, are submitted to Credit Committee or Board for Information and post factor approval at their next regular meeting.

RENEWALS / REVIEW
The reviews/renewals of Credit line Proposals would be on half yearly basis or as per the original sanction advice, and shall pass through the same process and levels as for the original proposal.

INDUSTRIAL CREDIT POLICY

TERM FACILITIES
The bank will provide credit facilities for fixed term investment to well reputed and established industrial groups for a period not exceeding 5 years. Subject to the general guidelines outlined in credit the policy. The maximum amount of credit will not exceed the lower of any regulatory requirement or guidelines set down by the credit committee. The rate of mark up is competitive with risk. The credit facilities may be extended both directly and through lease arrangements the tension of industrial credit by ACBL are following means:

MARK-UP FINANCING:
The bank will provide Term Credit facilities on mark up basis for fixed investment on the terms elaborated above. Initially the Credit facilities are extending to industrial projects backed by established and well-reputed industrial groups. However at, subsequent stage new entrants may also be considered for credit facilities.

BRIDGE FINANCING:
The bank will provide bridge-financing facilities to the projects having obtained firm underwriting commitment. The financing is repaid out of the proceeds of public issue of shares.

LOCALLY MANUFACTURED MACHINERY FINANCING:

To encourage the use of locally manufactured machinery; the State Bank of Pakistan presently provides confessional line of credit to different banks. The profit on such financing is shared between SBP and loan administrating bank. Askari Commercial Bank will approach SBP for a line of LMM financing and after sanctioning of such line of credit by SBP. The bank will initiate extension of LMMM financing on the terms and conditions prescribed by SBP.

4-LEASE FINANCING
ACBL will provide lease financing to well-established and reputed concerns through arrangements with some leasing companies. The rate of return on lease financing is currently higher than mark-up rates, i.e., ranging from 20-22% per annum relative to mark up rate of 16%-18% per annum. Through this means the banks may provide financing to leasing companies for onward lease to already identified client with lease rental assigned to the bank and first charge perfected on leased assets. The repayment to under these arrangements is typically 3 to 4 years depending upon the repayment capability of the client.

TYPES OF ADVANCES
Advances can be classified in to two categories. Secured Advances Unsecured/Clean Advances

SECURED ADVANCES
Secured advances will include pledge, hypothecation charges or mortgages on tangible readily reliable unencumbered assets, the sale proceed of which will repay the customers obligations and /or acceptable bank guarantee and letters of credit and assignment of receivable from government controlled bodies offered as security for customer obligation.

UNSECURED /CLEAN ADVANCES

Such advances include lending which are not covered by any tangible security.

LOAN APPLICATION PROCEDURE

For availing the credit facilities the applicants apply through any branch of the bank on prescribed application form. The branch will evaluate the application and if it meets with credit standards of the bank forward the application to credit division at head office with their recommendations. Application may also be received directly by the Credit Division. The credit division after reviewing the application will prepare credit summary for presentation to credit committee and if the Executive Committee for their acceptance in principal or rejection of detailed processing. In case of acceptance of the proposal for detailed appraisal, the applicants are issued Form A or Form B for submitting detailed information on the project being considered for financing. On the basis of information received from the client and gathered by the Credit Division through other sources detailed appraisal report on the project are prepared by the credit division for representation to the Credit Committee/ executive Committee for approval. Subsequent to the approval of the credit, the branch will

ensure that the client complete all the legal formalities as prescribed by the bank before any draw down is permitted.

LEGAL DOCUMENTATION
The client will complete the legal documents as prescribed by the bank before funds can be released.

DISBURSEMENT
In completion of legal documents and security arrangements and receipt of a completion certificate from recognized legal counsel, the bank according to the approval schedule prepared by bank after obtaining confirmation of other payments have been funds from the sponsors other sources. The funds are released in installments as per term of credit sanction. Before release of any successive installment the branch will satisfy the credit division that the funds already released by the bank and co-financiers have been implementation of the project and the project is proceeding as envisaged without cost overruns, delays or any other adverse development. The release of funds is matched with the physical progress of the project.

FEES AND CHARGES

The client will pay to the bank following main fees and charges: Preliminary appraisal fee of RS.1000/- to be paid with preliminary application. This fee is non- refundable. However, it may be adjusted against the detailed appraisal fee in case the proposal is accepted for detailed processing by the credit committee. Detailed appraisal fees at the rate of % of financial assistance are refunded in case the finance by at the bank. Legal documentation fee is charged at the rate of %of the financial assistance or actual cost incurred the bank which ever is higher. Commitment fees are charged at the rate of 1-1/2% per annum on the amount of the funds approved by the bank but remaining undistributed 30 days from the date of sanction.

Monitoring fee are charged at the rate of 1/10% per annum of funds outstanding against the client during the currency of loan. Any other cost incurred by the bank in connection with extension with credit facilities including cost relating to the appraisal and monitoring of the project are recovered from the client.

TERMS AND CONDITIONS OF INDUSTRIAL CREDIT

Industrial credit facility by the bank is subject to standard terms and conditions.

MERCHANT BANKING
In merchant banking the bank for time being will limit its operations to the selective underwriting of public issue of shares by reputed companies only. The public offering are being underwritten by commercial banks, investment banks and modarbas at underwriting commission of 1-1/2% to two and half percent (21/2%) thereby earning substantial profits without involvement of fund based facilities. All underwriting facilities shall require the approval of credit committee and if necessary the Executive Committee. The branches will not communicate the interest or agreement in principle.

SANCTIONING OF ADVANCES

1- Credit Line Proposal (CLP) for all credit facilities in accordance with lending criteria committee regulatory requirements. 2- Credit Line Proposals are completed by the incharge of credit department in the branch and the manager. The branch manager and incharge Credit Department shall both put signatures on the CLP after their individual satisfaction. The CLP number and other information are recorded in the CLP register. 3- If the proposal is with in the discretionary powers of the Branch Credit Committee, than CLP along with supporting documents are presented to the Branch Credit Committee in its meeting for decision on proposed facility. The committee shall

exercise the delegated power judiciously and prudently whereby credit risk are evaluated by applying conventional sound lending standards. 4- The minutes are sent to Credit Division at Head Office within one week of the date of the meeting along with copy of the approved limit and a security details sheet mentioning the document obtained concerning the sanctioned advances for information and action, where necessitated. The original CLP and supporting document are retained by the branch for customer's credit file. 5- At Credit Division the designated officer shall examine this sanctioned advance to ensure the limit sanctioned is within the lending criteria of the bank and the power of the branch credit committee. The concerned branch is advised on the case where necessary. Credit Division shall also maintain branch wise record of all such advances sanctioned by the Branch credit Committee. 6- In case, the proposed advance is beyond the powers of the branch credit Committee than CLP along with the supporting documents are initially received by the Branch Credit Committee and are forwarded to Head Office with its recommendation. 7- The Credit Division at Head Office will also record these CLPs received from branches in their Credit Line Proposal Register, process the proposal that ensures also that the same is in line with the Bank's policy and confirms to the requirements. After processing credit division shall present the proposal, with views, to Credit Committee/Executive Committee or Board for consideration. 8- In case the proposal is approved, the sanction advice are sent to the branch and a set of a records are retrained for maintaining credit file for the borrowers at the Head Office. The credit files are recorded in the file register. 9- Upon receipt of approval the branch shall enter its receipt in CLP register and record the particulars of sanctioned proposal particulars of sanctioned proposal in limit sanctioned register. Thereafter the branch proceeds to complete all documentation formalities and perfection of security as stimulated in the sanction advice.

PREPARATION

OF

SPREAD SHEET

The spreadsheet are prepared for a series of financial statements (say 3-4 years) since it provides useful comparisons and sets out trends over the period which are of

immense importance in evaluating the financial strength and repayment capacity of the business enterprise. Notes to audit accounts must also be studied and incorporated in the spreadsheet. According to prudential Regulations every bank shall as a matter of rule, obtain copy of account relating to the business of the borrower for analysis record in the following manners:

I. II.

Where the bank's exposure does not exceed Rs.2.00 million. the borrowers duly sign Accounts. Where the exposure exceeds 2 millions but does not exceed Rs. 10 million, the Accounts are duly signed by the borrowers and counter signed by the Internal Auditors of the Branch or Chartered Accountants. Where the exposure exceeds Rs.l0 million, the Accounts are duly signed by the practicing Chartered Accountants.

III.

Spread Sheet Main Features

The main feature of spreadsheet and the guidelines to prepare the same are given bellow:

Detailed Item Description

1. Name 2. Location 3. The principal place of Business. 4. Amounts in 5. Use figure in thousands to permit recording of all significant amounts. 6. currency 7. Insert the currency of the amounts Pak Rs. 8. Auditor 9. If audit account, the name of the auditor 10. Audited or unaudited 11. Unqualified or Qualified 12. Date

13. Credit Report A credit report is the report about a party at branch level consisting of necessary information to assess net worth of the party. It is concise but comprehensive and contains he following information 1. Name and Address. 2. Date of Establishment. 3. Date of Account Opening 4. Nature of Business. 5. Experiences in the line of business. 6. Past performance and present status. To prepare the comprehensive credit report as discussed above, the following point are paid special attention. 1) It is prepared by using all the resources at command 2) It is factual and non exaggerated 3) It is reviewed and change made when ever the occasion so demand. 4) Financially statements submitted by the parties are accepted after making independent investigation from the market regarding their genuineness. It is very common that parties overestimates their assets and under valued their liabilities, we should make our own conservative of their assets and liabilities based on our investigation 5) Discrete inquiries are made to find out certain hidden liabilities of the parties which may effect the business abruptly and adversely. 6) A report from previous bankers should also be obtained. 7) If the business is running into loss it are ascertained that loss is not due to bad management. 8) Conduct of the account should also be evaluated conservatively goodwill is an indicator of future prospects of the business. 9) Good will of the customer should also be evaluated conservatively. Goodwill is an indicator of future prospects of the business. 10) Trading profit and loss accounts where available are critically examined. 11) In the case of partnership concern, the following information should also be given:

(a) (b) (c)

Name of the partners with their individual contribution towards Borrowing power of the partner if partnership deed in available. Profit and loss counts for the last three years.

the capital of the firm and their profits.

12. In case of limited Company the following points should also be concerned:(a) (b) said. (c) if any. (d) Terms of debentures, if issued. After preparation of credit report, interview with the customer and analysis the applicants financial statements, the manager are in a position to decide whether the proposal is justified for further process for final approval. If he finds justification as per bank's lending criteria the CLP are prepared. In the CLP the branch should highlight the strong points, recognize the weak points and make suitably the pertinent recommendation keeping in view all the negatives and positives of the proposal. Verification of existing borrowing and charges on the properties Certificate of in corporation and certificate of commencement of Purpose of their advance should not be varied from what they business are examined.

LENDING
Lending with Service Charges

MODES OF FINANCING

Bank provides finance and will recover only service charges besides the finance amount. The rate of service charges is determined by State Bank of Pakistan and will not include cost of deposits and provision for Bad Debts. Lending without any return (Qarz-E-hasna)

Lending with out any Return (Qarz-e-Hasna)

The object of this mode of financing is socioeconomic justice and presently it is applicable to providing financial assistance to meritorious and deserving students to complete on their education and to indigent persons for meeting expenditure on marriage of girls and medical or surgical treatment. Neither any extra amount is recovered from the receiver of the finance nor any The loan are payable as when the receiver of finance is in a position to repay. Bankers will thus not earn any profit on their Quarz-e-Hasna financing but they compulsory conditions about the date of return of finance are set.

will have to bear the administrative costs involved there in.

3. Trade Related Mode of Financing

MARKUP
It is a sale of goods at a province mutually agreed between the buyer and the seller. The sale price consist of cost of goods plus margin of profit and the same is payable by the buyer on deferred payment basis either in lump sum or in installments. For example, the bank purchases a particular item for Rs. 200/- and sells it to the client for Rs. 225/-. The difference of Rs.25/- is the amount of markup. The bank will recover the sale price of Rs.225/- from the client on deferred payment basis.

Mark Down
It is a purchase by the bank of trade bills / marketable securities belonging to a client an agreed price which is lower than the face price. The difference between the two represents the amount of profit . The customer will simultaneously agree to buy the same from the bank if it remains unpaid on the date. For example the bank may purchase a trade bill for Rs2OO./- face value of which is Rs.225/- In case Rs.25/- is the amount of profit (mark down).

Buy Back Argument

The bank will purchase goods or securities from the client at an agreed price and at the same time as per agreement signed between two. Who will purchase the same goods or Securities from the bank at price higher than Bank's purchase price payable at future date.

Lease Functioning
A lease is an arrangement by which a firm acquire the right to use an asset
without owing it for

certain periodic cash payment to another firm which owns the asset.

The return on lease financing is paid in shape of 'rent' . The owner is "Lessor" and user is 'Lessee".

Hire Purchase
It is a technique for vehicle machinery and equipment for medium and long term period under joint ownership subject to security and insurance cover. The return is in shape of mark-up Financing for land developments are done on the basis of developments Charges rate, which be determined by State Bank of Pakistan. Basically to be used for orchards including nurseries forestry and water course improvements.

Musharika
It is an agreement between Bank and its client to participate in a business as temporary partners providing agreed of funds for sharing' profits or losses during a specified period of law.

Modarba
It is an agreement where one party invests funds and other party puts in managerial efforts / skills to carry on a business.

Equity Participation
Under this mode, the banker/financier purchases the shares of the company at market price or at agreed price. Profit is in shape of interim or annual division and appreciation in the value of market price of shares and loss is in form of reduction in the market price shares.

Participation Term Certificate (PTCs)

PTCs were introduced in 1980 to replace debentures for providing medium and long-term local currency finances. They are negotiable instruments issued by a company in consideration of any fund, money or accommodation received or to be received by it whether in cash or against any promise , guarantee. undertaking, for its benefit. The main features are as follows: Funds under the PTC arrangements can be obtained either from a single financial institution or from a financial consortium or syndicate . PTCs are issued for a specific period not exceeding ten years, excluding the grace period.

Term finance Certificate (TFC)

TFCs are part of the non-participatory redeemable capital. An amalgam of buyback and mark-up .It is the most criticized instrument of financing currently being used in Pakistan and DFLs. Neither has it been recommended by the state Bank nor it has any legal basis. It was innovated by DFT in 1984-85 and afterwards became a major mode of term finance in place of PTC. According to the General practice of banks/DFLs in TFCs, the borrowing company sells the item concerned, that it had agreed to purchase merely as the result of a paper deal with the item supplying firm, to the financing institution for a certain "Sale price" and then again purchase the same from financing institution for a sum called "purchase Price" which is paid in installments in accordance with the redemption dates of the TFCs issued again it by borrower company.

TYPES
Financial against foreign bills

OF

CREDIT FACILITIES

A loan advance against a clean (or against other securities mentioned below) foreign bill. The repayment of bill is effected from proceeds of the bill against which loan is advanced.

Security for the Loan

The loan through usually advanced in local currency is advanced against the security of foreign bill. The bank on the maturity of the bill should presents it to the Drawee who ordinary would be expected to make payment against it. If however the bill is not honored by the Drawee the bank should have resource against the customer to whom the loan was extended.

Additional Security
An additional security for the loan provide for the situation when the Drawee does not honor the bill the bank should obtain the following:

Demand Promissory Notes

The demand promissory note is from the customer for the amount of the profit being extended. If the customer is a company, the director and shareholders of the company are also required to execute such Promissory Notes in their personal capacity.

Mortgage/Pledge /hypothecation of Goods

A mortgage is the transfer of an interest in specific immovable property by the borrower (mortgager) to the lender (mortgage) as security for the payment of debt. Pledge is a formal contract of security whereby the goods/documents ale deposited with the creditor or lender on condition that they are redelivered to the depositor if the debt is repaid or can be sold if the borrower defaults. In this case, the lender has the right to retain the goods/document5 till the debt is paid.

In Hypothecation, the goods are kept as security with the Bank but neither the ownership nor the possession is passed to the creditor. The ownership or possession of the goods remains with the borrower, however in case of defaults the Bank can take possession of the goods.

Charge
When immovable property of one person is made a security for the payment of another person, and the transaction does not amount to a mortgage, the latter person is said to have a Charge on the property The property is registered under the Registration Act. A charge can be fixed or floating. A fixed charge, or mortgage, on the borrower's property prevents dealings in it, and binds property in the hands of the third parties. Whereas the floating charge leaves the company free as long as the company remains a going concern; but when the company goes into liquidation, the floating charge becomes immediately fixed.

Letter of Set Off

A letter of set off are obtained from the customer and the director /shareholder /partner / Guarantor of the company. A letter of set off gives the right to Bank to claim on the assets of the company.

Personal

Guarantee

The personal guarantees of directors and shareholder are obtained if the customer is a company.

Other Securities
Other securities appropriate to the kind of deposit can be obtained

FINANCE AGAINST PACKING CREDITS

Credit guarantee to exporters to facilitate purchase of raw material for the purpose of the manufacturing finished goods. The Credit is ordinarily guaranteed after the evidence of Letter of credit firm contact in favor of borrower.

SECURITY FOR THE LOAN

The loan is advance against the security of inventory purchased by the borrower. It is important that hypothecation Agreement with respect to such inventory be executed by the customer.

Additional Security
An additional security for the loan, the bank should obtain the following Demand Promissory Note Mortgage/ Pledge/ Hypothecation of goods Floating Charge Letter of set off Personal Guarantee Other Securities.

LETTER

OF

CREDIT

1. Payment against document

The bank being issuing bank on the Customer's behalf of a letter of credit pays the negotiating or advancing bank and debits the account of the customer.

Security for the Loan

Until the realization of the amount a full set of document representing title to the goods shipped by the foreign exporters, is held by the bank as security.

Finance Against Trusts Receipts

Documents of title of the goods imported through the letter of credit are handed over the customer against the trust receipt to be signed by the letter signifying that the

customer holds the good in trust for the bank. The objectives being that the customer shall discharge the loan from the sales proceed of the goods.

Financial Against Imported Merchandize

Documents to title under the letter of the credit issued by the bank are handed over to clearing agent for clearance, who after clearance and until the repayment of the loan holds them as agent of the bank, goods are released against receipt of their sales proceeds.

Security for the Loan

The imported goods operate as a security for the loan advanced . The bank can have recourse to these goods, if the customer failing in the discharge of its obligations.

Additional Securities
In such cases mentioned above and as additional security for the credit facility the bank should obtain the following securities at the time of issuing the letter of credit. Demand Promissory Note Mortgage / Pledge / Hypothecation of goods Floating Charge Letter of set off Personal guarantee Other Securities.

CASH FINANCE
An advance is granted on a short-term basis on security of inventory.

Security for Loan

The inventory pledge/ hypothecated operates as a security for the loan. It is important that a Pledge / Hypothecation agreement with regard to the Pledge/Hypothecated goods be executed with the customer.

Additional Security
Demand Promissory Note. Mortgage / Pledge/ Hypothecation of goods Floating Charge Letter of setoff Personal Guarantee Other Securities.

6
CHEQUE

CHAPTER SIX

Cash Department

CASH DEPARTMENT
Cash department is very sensitive and risky part of the bank. Very cautious and competent personnel, are needed for the job. ACBL has really such a diligent staff with appreciable competencies and will to do work. Main function of Cash department is to deal with cash payment and cash receipts.

Cheque is bill of exchange drawn on specified banker and not expressed to be payable other wise than on demand.

The Request of a Cheque

It should be in writing. The drawer must not put any condition for the payment of the Cheque. Drawn on a specified banker only. Payable on demand. A certain sum of money.

 Payable to a specified person. Signed by the drawer.

Types of Cheques
There are three types of cheques. 1. 2. 3. 4. 5. 6. cash. The paying cashiers book is used to note the details of the outgoing cash. The daily cash position books are used to prepare the daily ending balance of the cash on hand. The books for foreign currency are separate while the books for the Pakistani Rupee are separate. Receiving Cashier's Book Receiving Cashier's Book Paying Cashiers Book Paying Cashier's Book Daily cash position Book Daily cash position Book FCY Pak. Rupee. FCY Pak Rupee. FCY Pak Rupee.

The receiving cashiers book is used to write down the details of the incoming

CASH DEPOSIT PROCEDURE

A customer comes to deposit cash in his account. The procedure followed in the cash department in this case as follows: 1. The customer fills the pay -in slip. There are two types of pay-in slips. The red slip is Filled if he is a current holder. The cashier receives the pay -in slip and cash. 2. 3. 4. 5. 6. He counts the cash and makes the detail of the notes at the bank of the Then he compares the detail with amount written on the pay-in slip. Signs the pay-in Slip. Writes the entries in the Receiving cashier's book, i.e. serial No, account Puts the stamp of the Cash Received on the pay-in slip of writes the pay-in-slip.

type, Account Number, Cheque No and amount. serial number from the receiving cash book.

7.

The first portion i.e. the Receipt is taken and given to the customer.

While the latter portion is handed over to the person for the entry in order to update the data.

CASH PAYMENT PROCEDURE

When a customer comes to withdraw a certain amount from his account, he brings a Cheque along with him. In this case the following steps are taken. 1. The cashier receives the Cheque and check it whether it is posted or predated. Cheque can be cashed within six months. A repeated Cheque can not be cashed. 2. He takes two signatures at the back of the Cheque from the bearer. 3. He gives the Cheque for 'posting " at the computer. The computer checks Out whether there is balance in the account or not. Other instructions are also received e.g. blocked, frozen, etc. The posting is done the a/c is debited and the Cheque is stamped posted" with the serial number and date. 4. The cashier counts the cash and makes the detail at the back of the Cheque. 5. The cash is paid to the person and the Cheque is stamped Cash Paid" immediately. 6. The entry is made in thc Paying Cash book and the Serial number is written on the Cheque.

CALCULATION OF ENDING CASH BALANCE

The official time for receiving deposits and payments is till 1:35. However some important customer are accommodated afterwards. The cash in hand is counted. It contains the cash at the counter and the cash in the strong room. Then opening balance is taken, i.e., the ending balance of the previous day. The receipts are added. The payments are deducted. This daily cash position is written down on the daily cash position book.

CASH MANAGEMENT
Cash management is a technique of managing cash according to the requirements of the bank on daily basis. The operation manager manages this aspect of cash. Every Branch has an accountant at the State bank Of Pakistan . A 5% of the total deposits has to be maintains so there are two main sources of the cash. State Bank of Pakistan. head Oftice.

If Branches borrows cash from Head Office it has to pay an interest of 13%. On the other hand. If the cash is remitted to head Office, The branch gets a profit at 12.75%.

LIQUIDITY MAINTENANCE
ACBL has to
maintain 35%

liquidity at SBP. Every branch maintain 5% of its

deposits at the local SBP. But this 30% is kept in the form of Approved securities, e.g.. Foreign Investment Bills and Treasury Bills.

7
Clearinghouse

CHAPTER SEVEN

Clearing Department

CLEARING

DEPARTMENT

There is no legal obligation on a banker to collect cheques drawn upon other banks for a customer. However it is function of almost every modern bank of the collection of cheques and bills on behalf of the customer. Clearing department services are provided in order to make arrangements for the economic collection of the cheques, DDs pay and other negotiable instruments. A large part of this work is carried on through the clearinghouse.

Clearinghouse is a place where all the representation of different banks and exchange all means of transaction other than cash and then settlement procedure carried out for the balancing of the SBP accounts. The clearance house is in the new State Bank Building Pull Mouj Dria. All the clearing members of each bank go to the clearinghouse for the first clearing at 9:30 and for the second clearing at 1:30.

First clearing
The clearing members take the outward cheques and go to the clearinghouse. The outward cheques are given to the respective branch members and inward cheques received. A summary is prepared and given to the supervisor of the clearinghouse. He balances the accounts of all the banks.

Second clearing
After the outward cheques, they are checked and the ones to return are to be attached with a memo. Then at 1:30, clearing members goes for the second clearing. At this returned cheques are received. Once again, the summery is prepared and given to the supervisor for balancing. The supervisor balances the accounts of nearly 25 banks. The SBP gives ending position to each member.

ROLE

OF THE CLEARING DEPARTMENT

Suppose X is an account holder of ACBL, and he has to pay Rs.2, 000/- to pay who is an account holder of MCB. X draws a cheque in favor of Y and gives it to Y. Now Y instead of coming to ACBL for payment, deposit the cheque at MCB. The MCB clearing members will bring those cheques to the clearinghouse and gives it to ACBL clearing members. The ACBL clearing members brings it back to the bank and checks the validity of the cheques and in the second clearing the MCB members it told that his cheque has been cleared.

Book keeping
There are three registers in this department: Clearing summary register. Inward clearing register. Outward clearing register.

Clearing summary register

In this register the clearing summary balance is made. The received cheques and the delivered cheques are written in the respective columns.

Inward clearing register

The inward clearing register used to write the details of the inward cheques cleared. Inward cheques are those cheques, which have been recovered from the different banks. The amount of these will be credited from one SBP Account. So these cheques are against us and have a negative effect.

Outward clearing register

The outward clearing register is used to write down the detail of the outward cheques. Outward cheques are those cheques, which have been delivered to different banks. The amount of these cheques will be debited to SBP account so these cheques are in favor of us and have a positive effect. Different instruction is dealt in he clearing department. All negotiable instruments e.g. Cheques Pay slips Pay orders Term deposits In order to make arrangements for the speedy and economic collection of cheques, bills and other documents payable or deliverable at or through offices of members of clearing house clearing services are provided in all the big cities by State bank of Pakistan. Where State Bank of Pakistan has no office.

Procedure
The following procedure is adopted by the branch for clearing items.

All cheques, drafts, pay orders etc. accepted for clearing shall be stamped with clearing stamp on the face of the instruments, customers, counterfoil and the pay in slip with date of the next working day, say 1.11.96 because the instrument has to be presented on 1.11.96. All cheques received for outwards clearing to be deposited by the customers are be accepted on the banks relevant pay-in slip (ACB DEP FM 007/008) duly filled in by the depositor as per printed columns of the pay-in slip.

The depositor should write the instrument number, the name, and the branch of the bank drawn on and should sign at the prescribed column (deposited by) for his signature. Immediately on the receipt of the instrument the cleaning official of the bank affixes the banks crossing and clearing stamps on the face of the instrumented endorsement stamp of the bank. The pay-in-slip shall be stamped on both parts with the clearing signature beneath the stamp. The pay in slip along with the instrument is passed on to the operation manager for his signature on the pay-in-slip. All instrument received over the counter and from branches for outward clearing are entered in the outward clearing register (Askari Commercial Bank CLG BK 953). All columns of the registers are filled in for each instrument received from any other branch of the bank, the name of the branch is mentioned in the column for the name of depositor. All instruments are received for outward clearing shall be sorted bank wise. They are posted at the computer in the next date are received print out. The grand totals of all schedules amount and number of instruments must agree with the totals as per outwards clearing register.

SBP Accountant and clearing

All the clearing transaction are done through the SDP Account. At the end of the working day this SBP. Account has to be 5% a penalty is charged against the bank. Hence through cash management, limit is maintained taking into account the clearing transactions.

Clearing position statement

After the 1st and 2nd clearing the clearing positioned is prepared. A B Inwards cheques, Demand Draft, Pay orders, palsys etc. out wards Cheques, Pending cheques If amount B is greater than amount A, it means that our cash balance at SBP has increased and so it is a favorable for bank. On the contrary, if A is greater than and B it means that one SBP account has decreased and here it is favorable for the bank.

8
A

CHAPTER EIGHT

Accounts Department

ACCOUNTS DEPARTMENT
ccounts department is a department, which deals and checks all the activity of all the department. It also deals in expression of finance of the bank. Salary payment is also one function of the bank.

Preparation of Daily Bank Position Statement

The department prepares Banks Daily Position. It is prepared by taking in to account two computer printouts. The set of a computer printouts is called End of the Day. The first job in the morning is to prepare this statements, i.e., UNIDOO 100 and UNIDDO 170 are consulting while making it.

UNIDOO 100
A statement is showing the assets and liabilities of the branch at the particular date.

UNIDDO 170 (Statement of The Deposits)

A statement showing the details deposits in local currency and foreign currency. After preparing the statement, the officer who has made the statement signs it and then Manager Operation counter signs it. Then it is fixed to Head Office.

Checking Banks Daily Activity

Accounts department deals and checks the entire working of a branch, all the vouchers that have been posted at the computer are scrutinized in accounts departments. The End of Day. , I.e., computer print is also received from the computer. The next day the activity is separated some statements from the End of Day. Then next day activity separated some statements from the End of Day. The vouchers are sorted out head wise. The vouchers are matched with the entries in the statements. An abnormality if occurs, is immediately dealt with. All the vouchers and instruction are checked individually against the computer printouts. After checking they are signed by the incharge accounts department and the counter signed by the manager operations.

Payment of Salaries
Payment of salaries is also a function of the accounts department. Head Office provides the salary schedules to each branch. According to the schedule are out on a salary statement.

Pay Structure
There are three types of pay structure.

Basic Salary
It is a salary that is obtained after adding the allowances in the basic salary.

Gross Salary
It is the salary that is obtained after adding the allowances in the basic salary.

Net Salary
It is a salary that is left after adding in the allowances and deducting the provident fund and deductions. Net Salary = Basic Salary +Allowances Deduction. It is a tradition of an Askari Commercial Banks that the pay is dispatched on the 26th of each month all over Pakistan. The maintenance and record keeping of allowance is done the Accounts Department

Medical Allowances
Medical Allowances is 10% of the basic pay. It is also cumulative in nature.

House Rent Allowances

The house rent allowances is 45%of basic pay.

Electricity Allowances
Electricity Allowances are 10% of the basic pay.

Washing Allowances
Washing Allowances are Rs.60/- (for peons and drivers only).

Special Technical Allowances

Rs.230 (to at computer, typing and cash).

Group Insurance
100% for every employee.

Provident Fund
One basic salary in one year. (Deducted from the employers salary). One basic salary in one year. (Provided by the band).

Gratuity
8.3370 of basic salary.

Preparation of the Statements

The accounts department prepares various statements and sends then to Head Office on monthly basis. The monthly statement sends to finance Division at Head Office are: Statements and Liabilities. Statements and Expenditure. Statements of sundry creditors outstanding. Statements of sundry Debtors outstanding. Statements of operations in sundry creditors during the month.

 Statements of operation in miscellaneous expenditure account during the month. ` Salary statement.

Petty cash statement. Statement No 4,5,8 and 9 manually prepared. The rest of are computerized statements. The monthly statements that are sent to the personal and administration division or human resources division at Head Office are as follows: Salary Statements. Advanced Rent Statement. Maintenance of Bank Vehicles.

Half- Yearly Statements To The Head Office

SBP RETURNS
The accounts department sent various statements to the state bank of Pakistan.

MONTHLY STATEMENT TO SBP

A monthly statement is prepared and sent to SBP. The statement is called statement of liabilities and assets as on 30th of the month. It includes classification of other private sector and advances and Bills purchased and discounted by scheduled Banks of Pakistan.

Half-Yearly Statement Of Assets And Liabilities

This is a statement showing the details of assets and liabilities as on 30th June and then on 31st December of each year.

CLASSIFICATION OF DEPOSITS
This statement is yellow and shows the classification in color of deposits according to the following areas. 1- Nature of the deposit

2- No. of the account 3- Type of the deposits 4- Categories of the deposit 5- Rate of the interest /profit

CLASSIFICATION OF ADVANCES
This statement provides the details of the advances. The advances are classified into various categories: Nature Borrower Purpose No of account Security Managing Retained Rate of interest Amount

Classification of Bills Purchased and Discounted

This statement classifies the bills purchased and discounted according to: Nature Category of bills Amount

CLASSIFICATION OF INVESTMENT IN SECURITIES AND SHARES

This statement reveals the area of the investment according to: Nature Amount Type of securities

All the elements actually provide clear pictures of the port of advances, deposits and bills purchased. The accounts also deal in the express of the bank. The different bills are dealt with in this department.

DEPRECIATION CALCULATION
The depreciation of assets is calculated through straight line method. The depreciation is calculated both manually and on the computer. All the accounting functions are organized by the incharge of Account Department calculated the manually checks it with computer data.

RATE OF DEPRECIAION
Furniture and fixtures Machinery and equipment Renovation Carpet and vehicles Others 20% 20% 20% 10% written down value 20% written down value on the original cost on the original cost on original cost

MAINTENANCE OF THE LEDGER

Although all the working at the accounts department is computerized. But the incharge of the account department maintains some ledger on manual basis. There are: Level Record Register Furniture and Fixture Bank Vehicles Register Computer Register Machinery and Equipment Renovation register

9
Credit Card

CHAPTER NINE

Plastic Money

PLASTIC

MONEY

Plastic money is the instrument, which can be used as a medium of exchange in place of cash. It is sound & safe method of transaction. For example credit cards etc.

Credit Card, card that identifies its owner as one who is entitled to credit when purchasing goods or services from certain establishments. Credit cards originated in the United States in the 1930s; their use was wide-spread by the 1950s. They are issued by many businesses serving the consumer, such as oil companies, retail stores and chain stores, restaurants, hotels, airlines, car rental agencies and banks. Some credit cards are honored in a single store, but others are general-purpose cards, for use in a wide variety of establishments. Bank credit cards, now also in use in Europe, are examples of the general purpose card. Establishments dispensing almost every form of product or service are honoring such cards, and it is predicted that credit cards might some day eliminate the need for carrying cash.

When a credit card is used, the retailer records the name and account number of the purchaser and the amount of the sale, and forwards this record to the credit card billing office. At intervals, usually monthly, the billing office sends a statement to the card holder listing all the charged purchases and requesting payment immediately or in installments. The billing office reimburses the retailer directly. Most of the work involved in credit card operations is now handled by computers. Charges for the use of a credit card are sometimes paid directly by the card holder, and sometimes borne by the retail establishments that accept them. In the latter case, the cost is absorbed into the price of the merchandise. Department stores usually charge interest to credit customers who do not settle their bills within a month, but certain credit plans do not charge interest until a bill has been outstanding for several months. Interest rates for overdue balances are regulated by state law. A continuing problem involved in the use of credit cards is the ease with which they can be used fraudulently if stolen or lost, although the liability of the owner is limited.

PAKISTAN

SCENARIO

Allied & Muslim commercial banks joined hands with master card international and introduced cards usable both at home and abroad. MCB went a step a head by introducing a card with the holders photograph. CITI BANK and ASKARI COMMERCIAL BANK have also introduced photo card. Today there are eight issuers of the card in Pakistan, which include American express, Citi Bank, Muslim Commercial Bank, Allied Bank, Diners Club, National Bank of Pakistan, ANZ Grind lays Bank and Askari Commercial Bank.

ACBLS OFFERING
The bank is already offering credit cards like Master Cards international in collaboration with an international financial service organization. In order to enable them to render more personalized services, they have financial arrangement to offer master cards international directly to their customer.

Credit card issuing is an important activity that the most successful and modern banks are doing, and are generating profit from it. Credit cards arc, actually, of two types: Master Card Visa Card ACBL issues three types of master cards: Local Card Silver Card Gold Card

Local Card:
This master card is issued for the amount of Rs. 25000/- and more. This local card operates on national level, meaning that it works only in Pakistan.

Silver Card
This master card is issued for the amount of Rs. 35000/-and more. This is an international card. which is acceptable all over the world.

Gold Card
This master card is issued for the amount of Rs. 200000/- and more. This is an international card, which is acceptable all over the world. All these three types of credit cards issued only to those individuals, which hold accounts with the bank. The bank also takes care that a sufficient amount of security has been maintained with the bank. The security is almost 125% of the amount the credit card. ACBLs credit card is given only to those who have accounts with the bank; and when application made by the customer is submitted for consideration, the banker make himself sure that whether the card seeker is the account-holder of the bank or not. The

banker make sure that the cardholder is credit-worthy and maintain sufficient security against the credit card (about 125% of the amount of the card). Documents Required Card seekers are required to submit following documents to the banker in ACBL:

Application to the manager Personal account statement for last three months Proof of income Four colored passport-size photographs bearing the name of the An attested copy of national identity card In case the client has maintained a chequing account with the bank, a

applicant at the back

direct debit authority is submitted to banker which authorize the banker on behalf of the client to debit his account for the charges that are due on him because of his purchases made through the card and to recover 2% bank charges for the card monthly

In case of an army-man for silver and gold card, Ex-Pakistani leave is

also asked to submit to the banker

PROCEDURE
I. II. III. IV. V. VI. VII. VIII. IX.

FOR ISSUING CREDIT CARDS

Customer gives all necessary documents to the banker. Banker prepares the credit line proposal (CLP). Banker verifies all these documents. Documents are then sent to head office. CLP is approved from head office. Approval goes to Karachi main office where CCs is embossed. Embossed CCs is sent to issuing office. Customers affix their signature on acknowledgment receipt and receive the cards. The acknowledgment receipt is then sent to Head Office.

ACBLs Credit Cards have world-wide acceptability. These cards provide the banks customers with services at thousands of locations in Pakistan and at about 14 million outlets worldwide. These cards provide the customers with the benefit receiving

their monthly billing in Pak. Rupees regardless of the currency of purchase. There are three payment choices for the bills received for the purchases made by the customers: 1. Settle your account in full within the specified time. 2. Pay just the minimum amount required. 3. Make partial payment. With ACBL credit card customers are automatically covered under Askari Credit Card Travel Insurance Plan up to Rs.1000000/- (which is a value for the gold card) if you charge the tickets on your card. Regular monthly statements help the customers keep track of their expenses. Moreover, they conveniently get a supplementary credit card at a special rate for their loved ones over 18 years of age. In case, the credit card is lost, customers need to report on during banking hours need to follow up in writing within three days. Once the customers make themselves registered, their liability for the fraudulent use of card will be limited and a replacement card will be issued to them.

CHAPTER TEN

10
A
TERMS

ATM Facilities

utomated Teller Machine is a hi-teq. Invention in the field of the banking, it facilitate that a depositor can withdraw money at any time without the need of banking personnel. We can also deposit money with the help of this

machine. But it is not so much practiced here because of some drawbacks.

AND CONDITIONS FOR ISSUE OF

ATM

CARD

In these terms and conditions, Cardholder means the individual to whom the ATM Card (ASKCARD) is issued, Bank means Askari Commercial Bank Limited and Bank Account means the account of the Cardholder maintained with the Bank. 1. The issue of ATM card (ASKCARD) entitles the Cardholder to avail the facilities of the Banks Automated Teller Machines (ATMs) also referred to as machines. 2. It is a condition of issue and use of the Card that the Cardholder maintains a Current or PLS-SB Account with the Bank at one of its branches in Pakistan. In the event of the stopped for any reason, whatsoever the Card shall immediately be returned to the Bank by the Cardholder and its validity shall cease to have any effect on the date of such closure of A\C henceforth. 3. The card shall remain the property of the Bank at all times. The bank may, at its sole discretion and without prior notice, cancel or refuse to re-issue or renew the

card or suspend its use for the time being and call for its return at any time, in which case the Cardholder shall immediately return the Card to the Bank. 4. The cardholder shall be responsible for the payment of any taxes, duties, levies, which may be attracted, to payments related to the issuance and use of the card by the cardholder. 5. The cardholder undertakes not to disclose his/her Personal Identification Number (PIN) to any other person. In the event of the PIN becoming known to someone other than the cardholder, that person may be treated by the Bank as an acting agent of the cardholder. The Cardholder indemnifies the bank against all losses or damages which may occur as a result of the PIN becoming known to anyone else from any source whatsoever. 6. The bank shall not be responsible for any loss or damage arising directly or indirectly from any malfunction of the Card or ATM or any technical or nontechnical defect or breakdown of the machine and/or any part thereof or the temporary non-availability of case in such machines. 7. Except as otherwise prescribed by law, ACBL shall have no responsibility or liability for any act or omission or inability to perform any of its obligations hereunder which results from any cause beyond ACBLs control. 8. The Cardholder agrees to accept that any cash or instrument(s) delivered through ATM with the use of Card shall be, for the all the purposes, at the entire risk and sole responsibility of the Cardholder. The bank would hence be assuming no responsibility whatsoever in this behalf. The Cardholder understands and accepts that the crediting of account, as specified on the frontal side of the envelope, designed for the purpose, will be subject to: i. In the case of Cash Delivery: Upon physical checking and verification of the currency note(s) that would be found contained in the envelope, and confirmation of the correctness of the particulars mentioned on envelope. ii. In the case of Delivering the Instrument(s): Upon checking and confirmation of the correctness of the particulars of instrument(s) that would be found contained in the envelope and after its clearance and/or realization of its proceeds through lodgments in collection as per procedure. 9. The physical checking and verification of cash so delivered shall be carried out by the Bank through its two officials, whose count, checking and findings will be

accepted by the Cardholder as correct and final. The Cardholder also expressly waives its rights to, in any way, question or challenge the same. 10. The amount stated on the ATM screen or on the printed transaction record/slip shall not for any purpose whatsoever be takes as conclusive of the status of the Cardholders account with the bank. 11. The Cardholder further undertakes to accept full responsibility for all transactions made by the use of the Card whether or not made with his/her knowledge/authority or consent and he/she shall accept the Banks record of transactions as binding for all purposes. 12. The Cardholder shall take every possible due and proper care to prevent the Card from being lost, mislaid or stolen and shall not pass the Card to any other person. He shall notify the Bank immediately if the Card is lost, mislaid or stolen or if it comes into the hands of a third party. 13. Where oral notice or loss or theft of Card is given, it must be simultaneously confirmed in writing to the Card issuing branch of the Bank and proper acknowledgment obtained thereof. 14. The Cardholder accepts all debits made to his/her Bank Account arising from the use of the Card without limitation, (except after written notice of loss has been acknowledged by the Bank) including any debits on account of fraud, forgery, pilferage or otherwise on the part of the Cardholder. 15. The Cardholder agrees to pay and authorizes the Bank to debit his/her Bank Account, as the case may be, with all charges, rates, etc., as may be applicable/due on account of issuance of ATM Card (ASKCARD), its renewal/re-issuance and other ATM based facilities, as the case may be. 16. The Cardholder shall ensure to keep sufficient credit balance in the Bank Account to which the Card relates before making any withdrawals. If for any reason the account gets overdrawn by the use of the Card, the Cardholder authorizes the Bank to charge markup and/or service charges at the prevailing rates, on the amount remain outstanding. Cardholder shall be responsible for immediately making up the deficit. The bank is authorized to cancel the Card and/or demand the overdrawn balance together with mark-up & liquidated damages.

17. The Bank reserves the right at any time or from time to time to reduce or increase the total cash sum allowed to be withdrawn by the Cardholder from the ATMs through a transaction, during any period. 18. The Banks record of any transaction generated electronically or otherwise shall be conclusive evidence of such transaction. 19. The bank reserves the right to add/amend these terms & condition, at its sole discretion, which shall be binding on the Cardholder. 20. This Agreement shall be governed, interpreted and enforced in accordance with the Laws of Pakistan. 21. The bank is authorized to make all such enquiries that it may deem necessary in connection with the ATM card application. 22. In the event that any one or more of the provision set out here in above shall be held by a court of competent jurisdiction to be invalid, illegal or unenforceable in any respect, the validity, legality or enforceability of the remaining provision shall not be affected or impaired thereby.