CONTENT

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CHAPTER ONE
ZTBL INTRODUCTION 1.1 BACKGROUND OF THE BANK AGRICULTURAL DEVELOPMENT BANK OF PAKISTAN (ADBP) CONVERSION OF ADBP INTO ZTBL NATIONAL OPERATION ORGANIZATION MANAGEMENT CORPORATE VISION AIM Aim of the Bank MISSION STATEMENT NATURE OF BUSINESS IMPORTANCE OF AGRICULTURE IN THE ECONOMY ZTBL ROLE IN POVERTY ALLEVIATION PROGRAM Credit Program for Women Micro Credit Scheme CONTEMPORARY BUSINESS CONDITIONS BOARD OF DIRECTOR 1.2 1.3 1.4 1.5 1.6 1.7 1.8 1.8.1 1.9 1.10 1.11 1.12 1.12.1 1.12.2 1.13 1.14

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3 3 3 4 5 5 5 6 6 6 6 7 7 7 8 8 8 9

CHAPTER TWO
DEPARTMENTS 2.1 PERSONAL POLICY DEPARTMEN 2.1.1 AIM 2.1.2 OBJECTIVES 2.1.3 STATEMENT OF FUNCTIONS 2.1.4 TRAINING POLICIES 2.1.5 TRAINING IN STAFF COLLEGES 2.1.6 RECRUITMENT POLICY 2.1.7 PROMOTIONAL POLICY POLICY 2.1.8 PLACEMENT 2.1.9 HEALTH POLICY 2.2 CENTRAL INFORMATION DEPARTMENT 2.2.1 AIM 2.2.2 OBJECTIVES 2.2.3 FUNCTIONS 2.3 CREDIT OPERATIONS DEPARTMENT 2.3.1 AIM 15 2.3.2 OPERATIONAL OBJECTIVES 2.3.3 FUNCTIONS 2.3.4 TERMS OF LOAN (AS PER ADBP RULES 1961 2.3.5 GENERAL CREDIT DISBURSEMENT 2.3.6 LOAN TO SMALL FARMERS 2.4 CORPORATE FINANCE DEPARTMENT 2.4.1 THE AIM OF CFD 2.4.2 OBJECTIVE 2.4.3 FUNCTIONS 2.4.4 WING WISE FUNCTION 2.5 CENTRAL ACCOUNT DEPARTMENT 2.5.1 AIM 2.5.2 OPERATIONAL OBJECTIVES 2.5.3 STATEMENT OF FUNCTIONS 2.5.4 WING WISE FUNCTION OF THE DEPARTMENT

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10 10 10 10 10 11 12 12 13 13 13 14 14 14 14 15 15 15 16 16 17 17 17 18 18 18 19 20 20 20 21 21

CHAPTER THREE
3.1PERFORMANCE OF ZTBL 3.2RESTRUCTURING OF ZARAI TARAQIATI BANK LIMITED 3.2.1 HUMAN RESOURCE DEVELOPMENT

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24 28 29

CHAPTER FOUR
SWOT ANALYSIS OF THE ZTBL 4.1 STRENGTHS 4.2 WEAKNESSES 4.3 OPERATUNITIES 4.4 THREATS

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31 31 32 33 33

CHAPTER FIVE
RECOMMENDAITON & CONCLUSION

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34

EXECUTIVE SUMMARY
ZTBL is one of the largest financial institutions which provide credit facilities to the farmer for the agriculture purpose throughout the Pakistan. The ZTBL is a single largest institution in the country catering to be viable credit needs of the agriculturist and disbursing over Rs. 5000 million per annum for the development and modernization of agriculture. The new status of Zarai Taraqiati Bank as a limited company will go a long way in exploring the new dimensions in agriculture and rural financing for poverty alleviation and development of agriculture sector through good governance delivering high quality, viable and timely financial services to greater number of clients. The operation of the Zarai Taraqiati bank Limited are external to whole Pakistan and also apply to the business of the bank transacted outside. The bank has 49 regional offices and 343 branches throughout Pakistan including (FATA) and (FANA) and Azad Jammu and Kashmir. This project report mainly consists on five chapter in which the brief introduction of ZTBL, back ground of the bank. The performance and the restructuring of ZTBL, personal analysis and observation, SWOT Analysis and Recommendation. In the first chapter of there is brief introduction of ZTBL in which the background of the bank, the conversion of ADBP into ZTBL which have been made to improve the performance of the bank. ZTBL has 49 regions and 343 branches which spread through out the Pakistan. The head office of the bank is in Islamabad in which 9 division and 33 department are working. Mr. Istaqbal Mehdi is a president of the bank. The role of ZTBL in the poverty alleviation, as well as the importance of agriculture and contemporary business conditions have briefly described.

In the second chapter there is a brief explanation of the departments, their aims objects and function in which I have worked these are personnel policy department, central information department, credit operation department, department. The third chapter consists on the performance of ZTBL, in which the disbursement and recovery from 1995 to 2002 have been mentioned, the budget of 2002-2003, the import and export of agriculture items, data of institutional agricultural credit 2001-2002. The restructuring of ZTBL, which aimed at uplifting the agriculture and rural sector by raising from productivity, streaming the institutional credit and performance of the bank, and the steps are taken in the restructuring process are given. The fourth chapter consists of SWOT analysis of the overall organizational setup. The fifth and last chapter consist of recommendation and conclusion on the basis of above study. The whole information given in this report based on throughly study during the internship at ZTBL head office. corporate finance department and central account

CHAPTER # ONE ZTBL INTRODUCTION 1.1 BACKGROUND OF THE BANK

Pakistan is basically an agricultural country and finance was need for its rapid development. With a view to meet this basic need the Agricultural Development Finance Corporation was set up in 1951, and was entrusted with the last of providing financial facilities for the development and modernization of agriculture, including forestry, fisher, animal husbandry, poultry and dairy farming. Later on the Agriculture Development Bank of Pakistan was also established in September 1957 under the Agricultural Development Bank Act. The bank was to provide credit in cash or in kind, warehousing and storage facilities to agriculturists, co-operation societies and other bodies, of which the majority of members were agriculturists. As the function of the Agricultural Development Finance Corporation and the Agricultural Development Bank were similar and since both were working with the capital provided by the government, they were merged into one organization known as Agricultural Development Bank of Pakistan on February 18, 1961.

1.2 AGRICULTURAL DEVELOPMENT BANK OF PAKISTAN (ADBP)

Agricultural Development Bank of Pakistan was established through the ordinance in February 1961 by merger of Agricultural Bank of Pakistan (BP) 1957, and the Agricultural Development Finance Corporation (DFC) 1952. The ordinance and its subsequent amendments define in corporation, functions, share capital and management of the organization. 3

The ordinance is supplemented by board operational rules framed by the federal government. These rules spell out the conditions for the supply of loans, security of lending and recovery of dues. The rules further supplemented by sets of regulations drawn by the board of directors of the bank. The ADBP had than become the single largest institution in the country catering to be viable credit need of the agriculturists and in disbursing over Rs. 5000 million per annum for the development and modernization of agriculture.

1.3 CONVERSION OF ADBP INTO ZTBL

The Federal Government has converted the Agriculture Development Bank of Pakistan (ADBP) into Zarai Taraqiati Bank Ltd (ZTBL) and the new venture has started its operation with immediate effect. The new corporate structure redefines the banks statue as a public limited company with the independent board of directors. Promulgated under the presidential ordinance which aims at ensuring good governance, autonomy, delivering high quality, viable and timely financial services to a greater number of client in the agricultural and rural segment of the country with adequate return to the stake holder. Zarai Taraqiati Bank (ZTBL) has been registered with SECP as a public limited under the companies ordinance, 1984 and by virtue of finance order, all assets, liabilities proceeding undertaking of the ADBP stands transferred to and vested in Zarai Taraqiati Bank with effect from December 14, 2002. The restructuring of ADBP and is conversion into ZTBL basically aims at extending swore credit to the needy segment of productive and yielding agri and non-farm activities. It is hoped that this step shall greatly enhance the credit distribution mechanism. The quintessence of the initiative is basically aimed at increased functional autonomy, improved services, 4

enhanced farm productivity, streamling institutional credit & increase outreach in term of small farmers and women folk.

1.4 NATIONAL OPERATION

The operations of the Zarai Taraqiati Bank Limited are external to whole of Pakistan and also apply to the business of the bank transacted out side Pakistan and the persons conducting such business. The bank has 49 regional offices and 343 branches through out the Pakistan including the Federally Administered Tribal Area (FATA), Federally Administered Northern Area (FANA) and Azad Jammu and Kashmir. The total manpower is 7665 having 4515 officers and 3150 staff. ZTBL has completed its 42 years operational activities. During this period the bank has tried to serve the forming community through the country for their medium and long-term development credit needs.

1.5 ORGANIZATION
The head office of the bank was located in Karachi and was shifted to Islamabad during 1973. Presently there are 9 division and 33 departments in the head office. The field organization is spread over 49 regional offices and 343 branch offices apart from 8 audit directorates in the field, two staff colleges at Islamabad and Karachi. Number of MCOs (Mobile Credit Officers) are 1496, total officers are 4515 and total staff is 3150. Account department at Karachi and legal cell at Lahore.

1.6 MANAGEMENT

During the last 42 years, the bank has been managed by 23 chairmans as the chief executive.

1.7 CORPORATE VISION

Develop and operate ZTBL as a commercially viable bank with focus on Rural and Agricultural Finance.

1.8 AIM
1.8.1 Aim of the Bank
Technology for Agriculture Objectives of ZTBL: The main objective ZTBL are as follows: Sound loaning Substantial increase in loaning Emphasis on small farmers Broad technology spread Substantial increase in recovery.

1.9 MISSION STATEMENT

Being the largest financial institution for giving credit to the farming community in Pakistan, the ZTBL is to achieve self sufficiency in food through increase agriculture productivity. This is to be achieved by improving the quality of credit throughout Pakistan under supervised credit scheme. Poverty reduction is to be achieved through identifying poor living below poverty lien and giving them micro credit loans to generate household income without collateral. ZTBL has five mission statement which are as follow: 6

a. b. c. d. e.

To develop agriculture sector of the country so that it plays its role in the turn round of the economy. To develop water resources so as to bring more land under cultivation. To increase yield per area of cotton, wheat and rice. To develop orchards, livestock fisheries and poultry to bring a correlation between protein food and the population growth. To grow tea, canola, sunflower and the palm oil seeds for substitution of high value imports.

1.10 NATURE OF BUSINESS

The nature of bank is to provide credit facilities, including hiring and renting of any thing which it may advance way of loan and the provision for ware hosing facilities of such terms and subject to such conditions as may be prescribed by its rule to agriculturists for the purpose of agriculture and to persons engaged in cottage industries in rural areas.

1.11 IMPORTANCE ECONOMY

OF

AGRICULTURE

IN

THE

Agriculture is the main stay of our economy. It accounts for 26% of the GDP and employ about 44% of the countrys labor force. This sector is the largest source of foreign exchange earning over 75% besides providing input for textiles, sugar, and vegetable ghee industries of the country. More than 67.5% of the population is directly or indirectly dependent for their livelihood on agriculture. Average size of land holding is 3.8 hectors and 93% the total farms upto 25 acres.

1.12 ZTBL

ROLE

IN

POVERTY

ALLEVIATION

PROGRAM
ZTBL is extensively contributing in the poverty alleviation program. In order to support the governments program for poverty alleviation, ZTBL is contributing its huge efforts by providing loans to rural poor under the following credit programs.

1.12.1

Credit Program for Women

The bank started lending to women since 1987 under IFAB assisted Gujranwala Agriculture Development Project. The aim of the program is to access of credit to women at their doorstep enabling them to under take income as well as loan under micro credit scheme.

1.12.2

Micro Credit Scheme

Under the micro credit scheme, credit facilities are provided to the neglected sectors of the society. Minimum credit limit under the program is Rs. 5000 while the maximum limit is 25000. The scheme is operative through all 343 branches of the bank, assisted by 1353 mobile credit officers. The Zarai Taraqiati Bank Limited (ZTBL) which provides most formal loans in Pakistanis rural areas, lends to large holders for more than small holders, although the impact of credit scheme more cost effective.

1.13 CONTEMPORARY BUSINESS CONDITIONS

Zarai Taraqiati Bank Limited (ZTBL) disbursed around Rs. 29.27 billion among the countrys farming community during the fiscal year 2002-03, as 8

against over Rs. 29.10 billion disburse in 2001-02 sharing one percent growth, whole on the recovery side the bank collected a recovered Rs. 34.282 billion during the fiscal year ended on June 30, 2003 showing 3% growth when compared with around Rs. 33.38 billion recovered during the previous fiscal. The performance show that ZTBLs restructuring plan, started last year in a bid to revap its operations, has started showing visible change in the banks institutional capacity and efficiency. Realizing the banks pivotal role as the largest source of agricultural credit, a credit allocation of over Rs. 34 billion for the year 2003-2004 has been made for the sectoral growth and uplift of organization.

1.14 BOARD OF DIRECTOR

Chairman Sultan ail chaudhry President Muhammad zaka ashraf Secretary EAD Dr. Waqar Masood Additional Finance Secretary M. Tahseen Khan Iqbal Joint Secretary Finance (Member) Rana Wajid Ali President HBC (Member) Zaker Mehmood 9

Khushaly Bank Member Ghalib Nistar Private (Nestle) Syed Yawar Ali Bukhari Company Secretary Vacant

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CHAPTER # 2 DEPARTMENTS
This section which consists of the over view of the department, their aims and objects their functions and working environment. There are 9 division and 33 departments at ZTBL Head Office, from them I have practically worked at 5 departments which are explained below. i. ii. iii. iv. v. Personnel policy department. Credit operation department Central information department Corporate finance department Central account department.

2.1 PERSONAL POLICY DEPARTMENT

2.1.1 AIM
The aim of this department is to utilize efficiently the human resource ability to reach the organizational objective.

2.1.2 OBJECTIVES
The objective of the personnel policy department is to select right employee for the right job, compensation, performance evaluation, promotion, separation, training, retirement policy and services regulation etc.

2.1.3 STATEMENT OF FUNCTIONS

i. ii. To frame personnel policies for the employee of the bank. To update personal manual. 11

iii.

To arrange delegation of administrative and financial power of various executive of the bank and preparation of hand book of these powers.

iv. v. vi. vii. viii. ix. x. xi. xii. xiii.

To declare bonus and arrange formation of various committee. To issue necessary instruction regarding observance of office house, holiday and office procedure. To implement pay package and direction of federal government or SBP relating to bank. To implement decision taken in various meeting with unions or association and their follow up. To analyze the operation of the bank for identifying the problem and locate weak areas. To conduct operation and management studies. To circulate consolidate monthly/quarterly position of arculars/circulars letter issue by various division of head office. To deal with the services matter cases in federal services tribunal/high court/supreme court. To frame/update and interpret services regulation. To conduct study of various laws having bearing on personnel policy.

There are mainly four policies made by personnel policy department at ZTBL, head office which are as under: i. ii. iii. iv. Training policy. Recruitment policy Promotion policy. Placement policy.

2.1.4 TRAINING POLICIES

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The aim of the training is to provide new technical now how to the staff or various level of employee. The bank has establish two staff college one at Islamabad and other at Karachi, training of employees arranged in various institution both within the country and abroad.

2.1.5 TRAINING IN STAFF COLLEGES

i. ii. iii. iv. v. vi. Top management (Chairman and ED). Senior management (Director & Regional Manager). Middle Management (Joint Director & Deputy Director) Operational Management (Staff Officers and Staff) Clerical Staff Subordinate Staff.

2.1.6 RECRUITMENT POLICY

There are no any recruitment at ZTBL since 1996 because of over staffing in the bank. The procedure of the recruitment is as under: The recruitment of grade 16 or above is made through the Pakistan Banking and Finance Service Commission. Recruitment shall be made in the month of February and August of the vacancies are available. Rarely appointed in grade 17 and above. In case of employee die during the services his widow or one of this eligible children should provide employment in the bank at appropriate level. Provincial quotas shall be strictly followed in making appointment. Oversea Pakistan & Jammu and Kashmir are eligible. There is quota for orphan & disable. 13

The medical examination is necessary.

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2.1.7 PROMOTIONAL POLICY

Annual promotion policy was approved by BOD. Then with the passage of time, the promotion are given on the basis of seniority, qualification and competness. Objective The promotion policy aims to ensuring the advancement of the employee in carrer on the basis of achievement and experience. The policy will ensure that all employees are motivated to perform to the optimum and are treated justly and equitably. Eligibility Promotion are made on the basis of seniority 95%. Promotion are made in January each year against budgeted and clear cut vacancies. Promotion against 5% vacancies shall be made on accelerated basis with the approval of BOD.

2.1.8 PLACEMENT POLICY

If any one who full fill the criteria for promotion shall be promoted in the higher scale, of there is no vacancy then he will work on the lower post with higher scale.

2.1.9 HEALTH POLICY

The bank has its health policy which bank is responsible for the health of its employee and their families. There is a separate medical department at the head office, which treat their employee free of cost. 15

2.2 CENTRAL INFORMATION DEPARTMENT

The Zarai Taraqiati Bank Limited is the country's premier development financial institution providing financial and technological services to agriculturists at their door step. As ZTBL is a huge organization in Pakistan availability of adequate and timely information and ability to use it productively are essential ingredients for planning and decision making. Informations is the Key to success of any modern institution.

2.2.1 AIM
To provide essential statistical data comes from the branches or region to the management for the decision making relating to any department.

2.2.2 OBJECTIVES
1. 2. 3. To get the necessary statistical data through the modern techniques efficiently. To provide new or modern data need of the bank along with improvement in concept, design and requirement. To enhance and strength the external and internal capabilities of the central information department.

2.2.3 FUNCTIONS
1. To keep or maintain the past or present statistical data on disbursement or recovery of the bank at branch, region, province and country level. 16

2. 3. 4. 5.

To provide or prepare management information for weekly review meetings. To provide all the necessary information needed by all the divisions of the bank. To collect, Stronger and more certain and spread data on lending and recovery operations under the special schemes of the bank. To provide all needed information to outside agencies regarding to bank operation including federal ministries. State Bank of Pakistan, World Bank, Federal Bureau of Statistics, Provincial Bureau of Statistics, Provincial Government etc.

6. 7. 8. 9. 10.

To provide essential data to the government or various committees made by government on Bankers performance for presentation. To make and spread out regional performance indicators on monthly basis. To collect the data books/general/reports from other institutions within Pakistan and outside for discuss macro economic factors. Together, maintain time series data on prices of major item of agricultural inputs and out puts and its publication. Collect and spread out inter-country data on various dimension of agricultural development.

2.3 CREDIT OPERATIONS DEPARTMENT

2.3.1 AIM
The aim of credit operation department is to sanction and exercise control over processing of general loans consistent with leading policy and credit plan.

2.3.2 OPERATIONAL OBJECTIVES

Appraise and sanction loan cases beyond the sanctioning power or regional manager. 17

1. 2. 3.

Guidance to Regional Manager for proper and expeditions sanction of loans under the general credit. Exercise control over sanctioned by Regional managers. Watch over the supply position of the tractors with manufacturers suppliers.

2.3.3 FUNCTIONS
1. 2. Condemnation for delayed repayments beyond the powers of regional managers. Deal with hypothecation already sanctioned to the registered growers for sugarcane, oil seed and cotton crops under guarantee of the processors of the crops. 3. 4. Enlistments of principle manufacture /supplier if tractors. Pursue the claim of the borrowers with manufacture or suppliers of tractors for compensation of late delivery and delivery of defective tractors. 5. 6. 7. 8. Circulation of tractors prices of various makers for the information of the branches. Formulate and review the procedure for booking and disbursement of tractors loan. Prepare agenda paper on all matters related to credit operation department for board of directors. Compile data / information supplied by the branch regarding Automated Performance Applied System (APAS) and submit consolidate statement to the credit policy department for onward submission to state bank of Pakistan.

2.3.4 TERMS OF LOAN (AS PER ADBP RULES 1961)

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A loan may be short term, medium term or long term according to the period in which it is required to be full repaid. a. A short term loan is a loan in which is to be fully repaid within eighteen (18) months of payments by the bank of the amount of loan or its first installment to the borrower. b. A medium term loan is a loan which is not a short term and is to be fully repaid within five (5) years of payment by the bank of the amount of loan or its first installment to the borrower. c. A long term is a loan which is to be fully repaid in any period exceeding than five years from the date of payment by the bank of the amount of loan or its first installment to the borrowers.

2.3.5 GENERAL CREDIT DISBURSEMENT

General credit disbursement to farmers is taken place for various purposes. Like, seed, fertilizer, pesticides/insecticides, poultry/animal feed, chicks. All the loans operations are being managed under well established credit, dispensing mechanism of supervised credit system of the bank.

2.3.6 LOAN TO SMALL FARMERS

Small farmers constitute the vast majority 90% of the farming population of the country. They are operating 64% of the total cultivated farms area. The bank continued its efforts to pursue its policy of increased financial assistance to small farmers to enable them to exploit the potential of their land to the optimal level. The latest technology suited to small farmers were financed with the main objective to increase productivity of farms and income of small farmers. The credit needs of small farmers fro mechanization of small farm were given due preference. 19

2.4 CORPORATE FINANCE DEPARTMENT

The corporate finance department is a main department of Zarai Taraqiati bank limited. Because it keep the records or maintain the financial position of the bank and all the branches or regions are firstly concerned to this department send the information to the management for the decision making.

2.4.1 THE AIM OF CFD

The aim of corporate finance department is to check the application given to them from branches or regions about credit and availability of funds to them and planning for the banks credit limit.

2.4.2 OBJECTIVE
The main object of the corporate finance department is arrangement of resources for the bank's operation.

2.4.3 FUNCTIONS
1. 2. 3. 4. To arrange government guarantee for loans sanctioned by the State Bank of Pakistan. To arrange adequate resources for bankers operations i.e. credit disbursement, capital and operational expenditure. To ensure maintenance of adequate liquidity in all the units of the organization in accordance with the requirement. To reconcile bank account with the State bank of Pakistan and other commercial bank. 20

5. 6.

To provide funds to needy branches and receive cash back from the branches have surplus them through telephonic transfers. To make / prepare withdrawal applications watch reimbursement position and account of receipt to pursue settlements of withdraw in respect of foreign loan.

7. 8. 9. 10.

To prepare monthly progress of utilization of foreign loans. To plan, design and launch deposit mobilization. To prepare circulars to region-wise and branch wise deposit target. Other miscellaneous assignment of senior management of the bank, ministry of finance and state bank of Pakistan.

2.4.4 WING WISE FUNCTION

There are three wings in corporate finance department which are: * * * Internet Resource wing External Resource wing Remittances and cash management wing

The daily operations of these three wings are controlled by Joint Director or Deputy Director who are the incharge of the wings. To help the J.D or D.D there are assistant of them as (EAD) extra Assistant Director and (A.D) Assistant Director. Internal Resource Wing The duties and responsibilities of this wing is to manage all the resources given to them from the government or customer. The other main responsibility of this wing is to maintain or kept the day to day record of these funds in order to meet the customer need in coming day. The other duty is the collection and policy related to the resources collected from the internal sources.

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External Resources Wing The duties and responsibility of this department is the collection, allocation, and also properly organize and monitoring of these funds. The external resources are collected from foreign donor agencies. These are: 1. 2. 3. 4. 5. 6. World Bank Oversea Economic Corporation Fund (OECF) International fund for Agricultural Development International Bank for Restructuring and Development (IBRD) Asian Development Bank (ADB) International Monitoring Funds (IMF)

The funds are provided by these foreign agencies for the different types of projects and the external resource wing is responsible for proper allocation of these funds to the different task. Remittances and Cash Management Wing The duties and responsibilities of this department is the cash collection from the branches all over the Pakistan. The branches have to report in this department and this wing is to prepare the reports from given information and provided to the management. The branches have to report to this department with regards of daily operation and in response of these information this department forecast the situation about how much fund is need to the particular branch for the operation.

2.5 CENTRAL ACCOUNT DEPARTMENT

Central Account department deal with the accounting practices at Head Office. It mostly deal with the income statement, balance sheet, cash flow statement and other accounting practices. 22

2.5.1 AIM
The aim of this department is to prepare or formulate the accounting policies and procedure in order to show the true financial position of the bank.

2.5.2 OPERATIONAL OBJECTIVES

The main object of central account department is proper accounting of the assets and liabilities of the bank as well as timely preparation of financial accounts and submission of statutory return to the State bank of Pakistan.

2.5.3 STATEMENT OF FUNCTIONS

The central account department performs the following functions. Issuances of instructions relating to accounting policies and procedures. Reconciliation of inter branch transactions / suspense account. Preparation of balance sheet and profit and loss account of the bank. Compilation of the returns / Statement for submission to the State bank of Pakistan. Preparation of weekly statement of position for management information and reporting to the State Bank of Pakistan. Preparation of the payroll and salary slips for head office.

2.5.4 WING WISE FUNCTION OF THE DEPARTMENT

Central accounts department has one wings which perform their own function and coordinate with each other to achieve the overall objectives of the department. These wings and their function are below. Returns and Review Wing 23

Compilation of weekly operational activities of the bank. Compilation Statement of affairs of head office and branches preparation of balance sheet and profit and loss accounts. Preparation of data for computer, clearance of credits and checking of outputs procedures by computer.

Finance Computer Cell Ensure timely production of reports or statement. Develop and implement software system of the IBM system 36. Identification of jobs of finance division to be computerized.

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Central Account and Reconciliation Wing Control the operation of inter-branch transaction. Checking of inter-branch transaction statement. Reconciliation of central accounts.

Policy and Coordination Wing Issuances of procedural instruction relevant to accounts and financial accounts. To deal with all policy matters pertaining to account system of interest based and Islamic Banking. Top act as coordination wing for accounting policy and procedures relating to department of finance division. Permission to release the amount of decrease account holder to the legal heirs. Maintenance of loan balancing record and persuasion thereof. Up-dating of specimen signature booklet. Circulation and adoption of safety measure in respect of loss security documents. To deal with excise / Taxation matters related to bank.

Prudential Regulation Wing Supply of monthly and quarterly position of recovery of classified loans to SBP, after receipt from MIS division. Issuances of instruction to branches for revisal of income / provision in budget under prudential regulation. To prepare balance sheet and profit and loss account of the bank. On Tuesday the data is collected from the regional offices in the form of soft copy and the compile it in two days and the profit and loss account. the balance sheet is prepared and send it to the SBP on Wednesday.

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Supply of monthly and quarterly position of recovery of classified loan to SBP after receipt from MIS division Receive of progress made by the bank regarding recovery of classified and suggest ways and means of improve banks performance.

Tax Wing To issue necessary instruction to the branches to keep the record of with holding case dedicated from the bank and submission thereof to head office. For claiming adjustment against the final liability of the bank. Collection of tax payment documentary evidence from the branches for submission, to tax department along with the income tax return. Issuance of instruction regarding tax deduction at the time of issuance demand drafts, cheque and pay order etc. To coordinate with tax consultant and income tax authorities. To issue necessary instruction regarding sales tax, excise duty etc.

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CHAPTER THREE

3.1 PERFORMANCE OF ZTBL

The table-1 shows disbursement and recovery position of ZTBL during the past seven years. According to the source the year 1995-96 the disbursement of ADBP loan was Rs. 10.34 billion which increase to 11.69 billion in 1996-97, in 199798 the disbursement jumped to Rs. 22.36 billion is almost double the amount advanced during the preceding year. In year 1998-99 disbursement further rose to unprecedented level of Rs. 30.18 billion rupees but suddenly dropped to Rs. 24.42 billion during 19992000 and target has been fixed at Rs. 35 billion for the fiscal 2002-2003. Deposit higher disbursement of agriculture loans the off-lake of fertilizers and production of tractors and other agricultural implements have not shown any reasonable improvement to prove the real disbursement of loans. According to the State Bank of Pakistan latest report the off-take of fertilizer increased by 9.7 percent in fiscal 1999-2000 compared to the previous year and 4.7 percent during 2000-2001 while during the year 2001-2002 it showed a negative growth of minus 9.1 percent. The report suggests that the production and sale of tractors remains stagnant during fiscal 2000-2001 and 2001-2002.

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Table-1 Disbursement and Recovery from 1995-2003 (Billion Rupees) Year 1995-96 1996-97 1997-98 1998-99 1999-2000 2000-2001 2002-2003 (Target) Disbursement 10.34 11.69 22.36 30.18 24.42 27.61 35.00 Recovery 12.78 15.14 32.74 25.85 30.13 NA 39.00

Table-2 The performance of agriculture sector from 1995-96 to 2001-2002 Year 1995-96 1996-97 1997-98 1998-99 1999-2000 2000-2001 2001-2002 Percent growth 11.7 0.1 3.8 2.0 6.1 -2.6 1.4 Major corps 6.0 4.3 8.3 -0.2 15.1 -9.8 -0.5 Minor crops 4.9 0.9 3.3 4.2 -9.1 0.1 1.0

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Composition of Agriculture sector FY 2002 Constant factor cost

M ajor Crops M inor Crops Live Stock Fishing Forestry

ZTBL at a Glance 2001-2002 (Rupees Million)

Description Total outstanding Agri credit disbursement Loan to substance farmers Tractor financial No. Amount Total recovery Cumulative recovery No. of MCOs No. of regional offices No. of branches Total manpower Officers Staff Pakistan 94546.242 29108.015 18904.869 12744 3501.2 33545.930 90% 1496 49 343 7665 4515 3150 Punjab 64680.013 21123.3 13623.5 12249 3369.4 25046 91% 795 21 160 4385 2579 1806 Sindh 19012.410 5865 3375 108 28.7 6075 86% 362 12 87 1678 997 681 NWFP 4081.634 1367.4 1234 232 63 1654 93% 196 9 50 888 544 344 Balochistan 6156.514 493 415 147 39 476.4 85% 91 5 34 520 280 240 AK 95.209 128 128 0 0.00 132.3 98% 30 1 5 105 61 44 FANA 520.902 132 131 8 1.9 163 94% 22 1 7 89 54 35

Budget 2002-2003 29

(Rs. Billion) Resources Internal resources External resources Bank borrowing Privatization proceeds 741.958 563.033 198.063 (-)31.138 12.000 Expenditure Current expenditure Development expenditure .741.958 607.958 134.000

Foreign trade 2001-2002 (Agricultural Items) (Rs. Billion) Export Commodity Quality (000 tones) Cotton 1957 fabrics (million Sq. M) Cotton yarn 544 Rice 1645 Fish & fish 85 preparation Fruits & 429 vegetable Wheat 602 Raw cotton 35 Other export Total Value 69.411 Import Commodity Quality (000 tones) Edible oil 1185 Wheal 57.9 27.1 7.74 6.332 4.158 1.493 386.166 560.291 Tea Sugar Fertilizer Insecticides 267 99 86 1187 31 Value 23.787 3.056 9.593 1.485 10.851 5.265 1.873 0.995 577.483 634.388

Dry fruits 86 Milk & 7 cream Other import Total

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Institutional Agricultural Credit 2001-2002 (Rs. Million) Institution Production Development Total Share(%) Zarai Taraqiati 22010.843 7097.172 29108.015 55 Bank Commercial Banks 15752.00 Domestic private 184.00 Banks Provincial 5080.00 1734.00 404.00 194.00 9429.172 17484.00 588.00 5274.00 33.3 1.1 10.1

Cooperative Banks Total 43026.843

52456.015 100

3.2 RESTRUCTURING BANK LIMITED

OF

ZARAI

TARAQIATI

The new status of Zarai Taraqiati Bank as Limited Company will go a long way in exploring the new dimensions in agriculture and rural financing for poverty alleviation and development of agriculture sector through good governance, delivering high quality, viable and timely financial services to greater number of clients. The restructuring is aimed at uplifting the agriculture and rural sector by raising farm productivity, streamling the institutional credit and increasing income generating capacity of the farming community. The main aspect of the restructuring plan is aimed at alleviating the poor performance of the bank which had not aided the agricultural and rural sector to the optimum level. The restructuring exercise which started last year has turn around the institution to assets the declining recovery to avert of any possible default

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and to redesign institutional architecture for facilitating provision of more agriculture credit boost the agriculture produce. Zarai Taraqiati Bank (ZTBL) has announced voluntary Golden Hand Shake Scheme for its regular employees of less than the age of 59 years and with services of 10 years or more as on 05-09-2003. The scheme is a part of restructuring exercise being carried out in ZTBL which strengthening the financial health of the ZTBL and to make it a commercially viable institution.

3.2.1 HUMAN RESOURCE DEVELOPMENT

Human Resource skill Development is vital to increase the efficiency and effectiveness of any institution. Zarai Taraqiati Bank Limited (ZTBL) is giving greater emphasis upon the training and improvement of the human skill in its restructuring programmes. They are more emphasis on training to employees already working and give them incentives for good performance to ensure improved services. Streaming institutional credit and increase outreach. The training of accounts officers is even more important to bring financial discipline in the organization, which is one of the factors indispensable for good governance. The restructuring of ZTBL has yield positive results with decrease in share for non performing loans (NPLs) in total out standing and higher resources availability disbursement and financial services to small farmers at affordable cost.

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The first benefits of restructuring of ZTBL has been that it has now announced a 3% reduction as incentive to farmers who pay their two consecutive loan installments in time. This incentive has been possible due to enhanced financial viability of ZTBL, through the restructuring. The bank has reduced the mark up rate from 14% to 11% in accordance with the governments policy to provide maximum benefits to farmers and to inculcate timely repayment behavior. In this regard ZTBL has to play an enhanced role to develop the agricultural sector of the country keeping in view the challenges facing their sector in the wake of new global developments.

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CHAPTER FOUR SWOT ANALYSIS OF THE ZTBL

This chapter is concerned with the Strength, Weaknesses, Opportunity and Threats as well as the conclusion and recommendation regarding Zarai Taraqiati Bank Limited.

4.1 STRENGTHS
1. Pakistan is basically an agricultural country, and ZTBL is

one of the large institution which provide the credit to the farmer for agriculture purpose. 2. 3. 4. 5. 6. 7. 8. Professional and experienced team is available in all the New technologies are introducing by ZTBL for the There is expensive machinery and technology available So many fringe benefits is given to the employee of the The substantial loan is given by the bank to their The bank provide its services almost whole the Pakistan. ZTBL has a proper training institute for their MCO (Mobile department at Head Office. agriculture purpose. at Head Office. bank or all the facilities are available for them. employee for any purpose.

Credit Officers) in order to make then updated with the changing policies and programs of the bank. 9. The information is flow systematically as branches to the regions and regions provide information to the head office. 34

10. 11. 12.

Through the restructuring process the over staff have All the branches and regions are interrelated with head The head office Audit Department also checks the whole

highly decrease by Golden Hand Shake scheme. office through the computerized system. payment process. So proper system of check and balance for the payment is there. 13. Performance of all the branches are controlled and evaluated on the basis of monthly operations reports (MRO) received and checked by the branches development and control department. 14. 15. 16. 17. 18. 19. No competitor in the field of loaning to agriculture sector. For the proper training and development to the staff, the One window operation are announced time to time to Data are properly maintained. Government launches different scheme or packages to Playing a greater role in the poverty alleviation program.

staff colleges are available at Karachi and Islamabad. facilitate the farmer.

the farmers like relief packages, tractor scheme etc.

4.2 WEAKNESSES
1. The recovery system is very much low. 2. There is expensive technological machinery like in hard ware and networking department but no is there to use properly. 3. There is still much over staff at the head office. 4. Non-payment attitude and default culture. 5. There is nothing much work to do for upper and lower staff. 6. Political base loaning.

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7. Old staff, unqualified and un-skill persons are also working over there. 8. No proper efforts for the promotion and advertising for the latest agricultural technology is order to motivate farmers to use these technologies. 9. They are not concentrating on small farmers. 10. The loan is not properly utilized for the agriculture purpose. 11. The rule and regulation are not strictly followed like late coming etc. 12. Seniority based promotion. 13. There is no any new recruitment since 1996 because of overstaff so there is lack of new talent. 14. The accountability system is in very bad condition.

4.3 OPERATUNITIES
1. Present government is more emphasizing on the accountability. So this is a golden change for ZTBL for Recoveries of the political loaning. 2. Present government has also introduce micro credit scheme which enhance the operations and profit ability of the bank. 3. This is a time to reduce the over staff and new recruitment should be done.

4.4 THREATS
1. Interference in the posting and transferring by those

personalities whom are related with the operation of the bank. 2. Large no of un-viable branches. 3. Delay in the finalization of the cases field in the banking tribunals/special banking courts. 36

4. Recovery of the loan depends upon the crops the farmer have maintained, flood and drought made causes destruction of the crops which will make the farmer defaulters. 5. Due to shortage of water the agricultural land is going to be expired in Pakistan. 6. Also the rate of the agricultural crops are decreasing season by season.

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CHAPTER FIVE RECOMMENDAITON & CONCLUSION

1. The ZTBL has to improve its recovery system in order to meet the future credit requirements. 2. The efforts have been taken to enhance timely disbursement to small farmers with greater outreach through efficient governance which will alleviate poverty in the rural sector. 3. Providing cheaper and timely funds to activate the entire value chain of agriculture. 4. Branches and Mobile Credit Officers have to direct contact with the farmers and rural people therefore both are playing an important and vital role for the development and uplift of agriculture sector. 5. ZTBL has to eliminate the seniority base promotion. 6. Un-viable branches of the bank should be closed. This will reduce the expenses of the bank. 7. New energic and capable recruitment have been made in order to meet the future challenges. 8. ZTBL is also involved in political base loaning. To reduce the bad debts ZTBL has to close the chapter of the political base loaning, posting and transferring. 9. ZTBL should take steps in order to motivate the farmer for using the latest technology in order to increase the agricultural production. There should be a proper program for this purpose keeping the illiterate farmer in mind. 10. Concentrate on small farmers instead of large farmers. 11. A strong research and training cell should be established at country level to overcome the hurdles conform that textile exporters as well as agriculture export. 12. The branches, regions and the head office must connect with each other through computer system. 38

13. To over come the losses of the bank and to properly and efficiently utilize the assets of the bank.

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